Indian producers asked to stabilise prices

Indian producers asked to stabilise prices
Published: 03 May 2006

The government has requested the Cement Manufacturers Association to call a meeting of its members urgently and decide on steps for lowering of cement prices, instead of waiting for the rainy season when cement prices automatically tend to fall. Conveying this at a meeting held under his chairmanship here this afternoon to discuss the recent increase in cement prices, Dr. Ajay Dua, Secretary (Industrial Policy & Promotion), Ministry of Commerce and Industry, also indicated that the position would be reviewed within a fortnight. Builders’ Association of India (BAI); Cement Manufacturers’ Association; Gandhidham Chamber of Commerce & Industry; representatives from the Ministries of Coal, Power, Railways, Consumer Affairs; Urban Development and Petroleum & Natural Gas and all other stakeholders attended the meeting.

Responding to a suggestion from the Builders’ Association to ban exports of cement, Dr. Dua who was assisted by Ms. Charushila Sohoni, Chairman/Tariff Commission, along with representatives of Coal India Limited etc., said that government would not like to take a view on this suggestion at present as India should not lose its export markets which took time to develop. Instead, the government’s view was that the Cement Manufacturers Association should work out a solution within a fortnight through discussions amongst its members.

The builders said that there had been a very steep increase in price of cement – in fact more than 50 per cent in the 4 to 5 months period, starting from November 2005 and that the increase was particularly steep in the Northern and Western markets compared to the South and the East.

The cement manufacturers on their part explained that they were required to buy more coal in the open market which was being given by Coal India Limited through e-auctions, and that e-auction prices were on an average 40% higher than notified prices. Secondly, there had been acute shortage of power and not only had the price of power had gone up by 10 to 15% but also they were required to set up either their own captive power stations or use diesel, the cost of which had also gone up. Thirdly, the Supreme Court Order of November 2005 that trucks could not be overloaded compounded the problem, according to the cement manufacturers, who said that the freight cost had also gone up.

Summing up, Dr. Dua remarked that roughly cost increase had been only 15 per cent, but increase in prices in certain cases have been as high as 40 to 50 per cent and on an average was about 30 per cent. He, therefore, underlined the government’s view that corrective measures would have to be taken by the manufacturers to bring down the prices.