Cement companies peeved over move to check prices

The country's major cement manufacturers have reacted strongly to the government's suggestion to rein in prices, saying the hike is a "natural market reaction" to high demand and increasing input costs.

"The government's concern is out of proportion. This is a free market and things will balance out. If anything, taxes count up to 33 per cent of the costs. A reduction in taxes can bring down prices," said a spokesperson with one of the leading cement companies.

"We are already operating in more than 100 per cent capacities and there is hardly any hoarding either," said a senior executive with another leading manufacturer.

"While the demand is high, the price hike is also owing to immense input costs pressure. After the Supreme Court ruling on overloading, freight costs have gone up by about 40 per cent. And the availability of transport is another issue," he added.

Concerned over the continuous increase in cement prices, government had earlier in the week, called upon the manufacturers to work out ways to cut prices.

Ajay Dua, secretary, Department of Industrial Policy and Promotion had said, "The prices have increased more than the increase in input costs. Therefore, there is a need to take corrective measure by manufacturers to bring down prices."

Cement prices have peaked at Rs 240 per 50 kg bag in the Mumbai retail market, while in Delhi it is about Rs 235. Since November last year, the prices have gone up by more than 50 per cent.

But the manufacturers point out at other commodities and sectors where "price hike have been faster."

Said a manufacturer, "Real estate prices have gone over the top, but this has hardly evoked any response. Moreover, cement constitutes to only about 7 per cent of the total cost of construction."