Cement has been taxed at 28 percent under the new tax regime GST as compared to 30 to 31 percent in the previous system of taxation. The reduction in cement prices as a result of this fall in the tax rate is expected to vary from state to state.
Throwing more light on the above development, Sanjay Gupta, CEO, Star Cement said the company has implemented GST from July 1 and have taken a price cut of Rs 10-15 per bag. The price cut will vary from state to state but the average would be around Rs 12/bag, he added.
He said the company is expecting an impact on volumes due to GST for one quarter because of slow offtake in June and the situation is still same in early part of July.
He said 75 percent of their dealers have already migrated to GST and the rest are in the process, and hopes that migration will be smooth for dealers. The migration is likely to get completed by July 15, post which volumes will be back to normal.
The company is targeting sales volume growth of 10-12 percent in FY18, he said.
With regards to subsidy payments, he said as of FY17 end the outstanding was Rs 700 crore from the government, out of which Rs 62 crore were received in May and expect Rs 11-12 crore in next few days. Going forward, expect Rs 200 crore to come in terms of subsidy by FY18.
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