Cement companies up prices by Rs 3

Cement companies up prices by Rs 3
Published: 19 September 2007

Cement companies have hiked prices by Rs 3 per bag, especially across the western region. Continuous efforts by the Centre to control soaring prices of the commodity have failed to create any major impact so far. All major players, including Ambuja Cement and Ultratech have introduced the new rates from Monday, sources in the industry said.

Last week, ET had reported that companies are silently aiming to hike prices by Rs 3-5, despite permission to import cement from Pakistan, Bangladesh and China, putting a downward pressure on prices. In a meeting with commerce and industry minister Kamal Nath in March, cement manufacturers had agreed to hold prices for one year.

"The government’s move to control prices came into the open when it decided to cut import duties. Initially, it created some concern. Now, the companies are growing more confident of braving any impact," said an industry expert wishing anonymity. The companies are quite sure that there will not be huge imports, and even in such a case, they would reduce prices by Rs 5 or so, he added. Pakistani companies are willing to sell cement for Rs 190-200.

Cement prices started rising soon after the Supreme Court imposed a ban on overloading vehicles, following which freight charges went up. "Initially, the price rise was driven by the increase in freight. Also, there was a hike in fuel costs. However, after some time, the prices were led by the boom in real estate and demand supply gap," sources said.

When overloading was banned in November 2005, the cement price stood at Rs 145 and today, it has soared to around Rs 220 in most parts of the country. The Centre has issued several warnings and has also described the price hike of Rs 40 to 50 as limitless profiteering. The price without hike in Mumbai is around Rs 240-250, in Delhi, it’s Rs 220-225, down south, its about Rs 250-270 and Ahmedabad, the price is around Rs 220.