Cement companies are set to raise the prices of the building material by Rs 3-5 per 50 kg as soon as the next financial year begins on the back of rising input costs and higher demand. | |
| "There is continuous input cost pressure. However, we are not saying that we are increasing or decreasing the cement rates as they are market-driven," said H M Bangur, managing director, Shree Cement and president of the Cement Manufacturers' Association (CMA). |
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| In its latest report, Mumbai-based brokerage house Edelweiss maintained a positive price outlook for April with an expected hike of Rs 3-5 a 50 kg bag across the country. In Gujarat, the report said, the rise could be Rs 5-7 a bag due to increase in the value added tax. |
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| Confirming this, A K Saraogi, chief financial officer of north-based JK Cement, said, "The cost of production has gone up. We will pass on this rise to the end consumers. The rise will depend on region to region and will be between Rs 3 to Rs 5 a bag." However, he did not say when the hike would be enforced. |
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At present, the national average retail price of a 50 kg bag of cement is around Rs 240-245. In cities like Mumbai, Rs 265-275 a bag is the average.
CONCRETE RISE
Cement prices in Mumbai over the last two years | | Month | Wholesale prices
per 50 kg bag | | Dec 2005 | Rs 165 | | Jan 2006 | Rs 170 | | Feb 2006 | Rs 175 | | Feb 2006 | Rs 185 | | Mar 2006 | Rs 195 | | Apr - Aug 2006 | Rs 215 | | Sept 2006 | Rs 222 | | Nov 2006 - Feb 2007 | Rs 230 | | Mar 2007 | Rs 240 | | Mar-Dec 2007 | Rs 240-245 | | Source: Cement Stockists and Dealers Association of Bombay |
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| Sources in the one of the top multinational cement companies with its operations in the country said, "There is no option left but to hike rates." |
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| Sanjay Ladiwala, president, Cement Stockist and Dealers' Association of Bombay, said, "There is a likelihood of prices going up by Rs 5 a bag in April. This hike would be seen more in the west and south parts of the country. The prices in the northern region may or may not follow suit and there are very slim chances of any hike in the east." |
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| From April 2007 to February 2008, the industry produced 151.26 million tonnes of cement, of which 150.56 million tonnes were dispatched, according to statistics from CMA. JK Cement's Saraogi added that higher demand was driving up the prices. |
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| Hitesh Agarwal, head of research, Angel Broking, said, "The imminent cost pressure, built up in the last three to four months, is quite visible now. I would be surprised if cement makers do not raise the prices which would possibly be of Rs 5 a bag." |
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| March to the beginning of the monsoon in June is the peak season for construction and cement consumption across the country. |
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| Moreover, the industry is likely to see the third-lowest growth in production in this decade in FY08. |
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