Cement makers are likely to take a marginal hit after the rise in diesel prices for retail and bulk buyers. Since diesel is mainly used for transportation of cement and its raw materials, coal and fly ash, industry experts say it will be adding to the cost of sales and not the production cost. The rise in transport cost in terms of per tonne per kilometre would be a Rs 1 on a 50-kg bag. About 55 per cent of all cement is transported through road and the rest is largely by rail.
“This will not be our costs. Transporters’ charges would go up and we will have to compensate while making payments,” says the managing director of a large cement company. Since 80 per cent of our cement reaches consumption centres via roads in a radius of 400 km from the manufacturing site, we will incur an additional cost of 70-80p a bag, he adds.
However, for some in the industry, the transport distance even stretches to 500-600 km.