Cement companies created price rise?

Cement companies created price rise?
Published: 13 March 2006

Concerned over the unprecedented rise in cement prices during the last two months, a body of engineering construction contractors on Friday blamed top cement manufacturers of creating artificial shortage for increasing the cement prices.

"To improve the falling profitability, cement producers have formed an arrangement to jack up the price per bag without disturbing production," Builder’s Association of India Chairman (Delhi) Arun Sahai told reporters. He said the builders were incurring severe losses as they operate on a fixed contract basis which was devoid of price variation and arbitration clauses.

The cement prices in the capital had gone up to Rs 215 per bag against Rs 145 per bag at the beginning of the year, he said, adding it could go further up to Rs 250 per bag if no action was taken to break this cartel.

BAI has written to MRTPC regarding this in February and might add a petition in the case filed by it in 2001 against cement producers when similar situation occurred.

Dismissing the manufacturers claim that the rise in cement prices was due to increase in the freight rates, Sahai said, "on account of rise in freight rates they have already raised Rs 20, but prices have gone up by Rs 70 since January. Cement manufacturers are deliberately choking up supply in big consumption centres at different times thereby creating artificial shortage, he said, adding "price increase is not announced at the same time by all the producers, but done in a staggered manner. Only road freight has gone up by about Rs 10 due to Supreme Court’s ruling which banned excess loading on the truck," Sahai said.