Indian cement prices to remain firm

Indian cement prices to remain firm
Published: 30 December 2007

Cement prices will continue to remain on the higher side due to rising production cost. Refusing to take a call on future price trends, Mr Sumit Banerjee, Managing Director, ACC Ltd, said “the input cost has gone up drastically, thus pushing up the cost of production. We will pass on the rise in cost of production to the consumer. Cement business will become difficult from the energy point of view.” Coal accounts for about 27 per cent of ACC’s production cost.

Cement companies procure a portion of their requirement at a concession through linkages with Coal India Ltd (CIL). After a three-and-a-half year hiatus, CIL has announced a 10 per cent across-the-board hike in the price of coal produced by its subsidiaries, with the exception of the North-Eastern Coalfields, where the price has been raised by 15 per cent.

In a pre-Budget memorandum, the Cement Manufacturers’ Association of India has demanded duty-free coal imports as the Government has not only removed duty on cement imports but also scrapped the countervailing duty.

“It is a lopsided treatment meted out to the cement companies. After paying the import duty on coal, we have to bear the freight cost to transport the same to the plant site,” said Mr Banerjee.

Ruling out any impact of cement imports on domestic prices, he said “the quantity of imports was too small to have any impact on the prices. The only solution to bring prices down is to increase capacity.”

About the Government projects being delayed due to high cement prices, Mr Banerjee said “the projects might have been delayed due to supply constraints. Anything that needs to be built will be done irrespective of cement prices. Moreover, the cost of cement accounts for a small portion of the total project cost”.

On the recent Monopolies and Restrictive Trade Practices Commission (MRTPC) order blaming cement companies of price fixing, Mr Banerjee said “we have appealed against the order. It is a judiciary process and will be dealt legally. I don’t want to say anything more as it may lead to a misunderstanding”. (Hindu Business Line).