Ramco Cements faces new setback as Tamil Nadu's mining tax may increase costs

Subscribe to enjoy similar stories. Mines in Tamil Nadu will now attract additional tax, dealing a fresh blow to The Ramco Cements Ltd, which focusses on south India. Under the Tamil Nadu Mineral Bearing Land Tax Act 2024, the Tamil Nadu government has notified the levy of a mineral-bearing land tax of ₹160 per tonne on limestone in the state, effective 20 February.

This tax must be paid in advance on dispatch of minerals and is in addition to the royalty charged for limestone mining. Costs of production for cement makers with exposure to this region will rise, hurting earnings outlook. With about half of its total clinker capacity in Tamil Nadu, Ramco is seen as the worst-affected among its listed peers.

Also read: Sun Pharma is betting big on speciality. Will it pay off? “Regional concentration of The Ramco Cements places it at a disadvantage versus other listed peers like Dalmia Bharat/UltraTech Cement/Ambuja Cements, which have 25%/3%/1% of aggregate clinker capacity in Tamil Nadu," said a Kotak Institutional Equities report dated 12 March. It has trimmed Ramco’s FY26 and FY27 Ebitda estimates by 5% and 4%, respectively, led by higher costs.

This comes at a time when margin tailwinds for the sector are fading as the cost of petroleum coke, a key fuel, have started to inch up. While this would hurt the entire sector, it puts Ramco in a particularly tight spot. That’s because, as Elara Securities (India) pointed out, while Ebitda per tonne for its peers rose sequentially in Q3FY25, Ramco's fell about ₹56 to ₹653 owing to weak pricing in its core south India market.