Prices have already started firming up and the cement bigwigs say that the stress on housing will be a major blessing for the industry. "Although the move as such is not likely to boost prices, it will definitely contribute to the tempo of demand growth," said Anil Singhvi, treasurer, Gujarat Ambuja Cements.

The finance minister has identified housing as a priority area, and announced proposals to build 20 lakh additional dwelling units during the current financial year. The budget allocation for the Indira Awas Yojana programme has also been raised to Rs 1,600 crore from Rs 1,144 crore last year. Besides, the repeal of the Urban Land Ceiling and Regulation Act is also expected to "free" the supply of usable urban land for housingconstruction.

Another key feature of the budget which cement producers will derive satisfaction from is the imposition of an eight per cent non-modvatable duty. The industry is especially threatened by the prospects of cheap imports from South-East Asian countries, which have large cement capacities.

The companies had sought a whopping 130 per cent hike in countervailing duty of Rs 800 per tonne to "fully compensate domestic fiscal levies and infrastructural inadequacies". Currently, import of cement is subject to a 40 per cent customs duty, besides the special import duty of 2 per cent.Cement producers had also sought a 100 per cent duty exemption in imported coke an fuel oil (for captive power generation) to boost exports of cement, but Yashwant Sinha's proposal to levy eight per cent countervailing duty on imports will adversely affect the captive power plans of many companies."This is definitely a good budget and initiatives for the housing sector will do a lot of good for the cement industry," said DD Rathi, senior president, Indian Rayon & Industries.

The industry is optimistic that the thrust on housing will prop up demand and shore up bottomlines of cement companies which has taken a severe beating in the last fiscal.

ACC, the country's largest cement producer, ended a disastrous 1997-98 with a shocking 82 per cent drop in net profits to Rs 13.44 crore, and dividend payout has halved to Rs 15 per share of Rs 100 (15 per cent) during the year. Gross margin fell sharply from 3.60 per cent to 0.64 per cent reflecting one the most crippling cement recessions in recent times.

Even Grasim Industries cement operations were adversely hit due to the industrial recession with realisation down 15.6 per cent to Rs 1,118 per tonne in 1997-98 against Rs 1,325 per tonne in the 1996-97 fiscal. Gujarat Ambuja Cements has been among the few companies to buck the trend a post impressive growths in turnover and profits.