Tamil Nadu to import Pakistani cement

Chief Minister of Tamil Nadu M. Karunanidhi announced that he had given a go-ahead signal to import of cement from Pakistan.

Tamil Nadu, one of the 28 states of India that lies on the eastern coast of the southern Indian Peninsula, is starved of the commodity that it needs for fast growing infrastructure building requirements. And the step taken by the chief minister appeared to be in frustration over the Indian cement companies’ disregard to urgings to increase supplies and bring down prices.

The “Money Control” wrote: “Karunanidhi seems to be winning round two of the battle between the State government and cement companies. The Tamil Nadu chief minister first gave a nationalisation ultimatum to bring down prices and that didn’t work. So now he is importing from Pakistan”.

“Money Control” stated that the Tamil Nadu Cement Corporation or TANCEM would import at comparatively cheaper prices. Mr Chitty Babu of Confederation of Real Estate Developers Association of India stated that builders would be happy to get a “huge relief of Rs25 per 50-kg bag”.

Analysts at stock brokerage firms in Karachi commented that given the gap between the currency value of the Indian and Pakistani rupee, the exporters would fetch Rs240 per bag. That would doubly benefit the local cement companies.

The export price to India carries significant premium over what the cement fetches in local markets and unlike local sales, exports were exempt from general sales tax (GST) and Central Excise Duty (CED).

The previous week, almost all stock brokerage firms had come up with the latest data for January 2008, which showed cement exports to have touched new peak at 618,000 tons in January. That beat the previous highest export at 575,000 tons achieved in August 2007.

The January figures of sales outside the country were 152 per cent higher on year-on-year basis and 60 per cent up when compared to December 2007. On the other hand, local dispatches stood at 1.6 million tons in the month under review, down by 13 per cent compared to the same month last year.

Analyst Bilal Hameed at JS Global stated in a report on the sector that aggregate (local plus exports) dispatches stood at 2.2 million tons in January 2008, representing an increase of six per cent YoY. That represented growth of six per cent in local dispatches and 148 per cent in exports during the first seven months of FY08.