Retail rate to reach Rs 270/bag.
ACC, Ambuja and JK Lakshmi, following UltraTech, have increased cement prices in Mumbai by Rs 3 a bag (50 kg), effective from September 1. Its wholesale price has reached Rs 258 from Rs 255 earlier. In the retail market, each bag of cement will now cost above Rs 270 from Rs 260-265 earlier.
City-based dealers have confirmed the move. They said that all the companies will now follow these big players in raising prices. Other players, which scaled up prices, include Indorama and Vasvadatta Cement, they said. Top dealers told Business Standard that UltraTech was the first to initiate the move which became effective from August 25.
When contacted, spokespersons of ACC and UltraTech declined to comment.
| SHOOTING UP Prices of cement in major cities | |
| Centre | Price/50 kg |
| Delhi | 233 |
| Jaipur | 214 |
| Chennai | 250 |
| Bangalore | 260 |
| Thiruvananthapuram | 260 |
| Kolkata | 229 |
| Patna | 234 |
| Mumbai | 270 |
| Source: Market reports | |
Mumbai is the largest cement market in the country with a consumption of around 650,000 tonnes per month. This hike is the second one in the current calendar year after April.
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The western region, where the prices have so far been stable, seems to be following the southern market where prices went up by Rs 3-5 in the last one month. These two regions are witnessing higher consumption growth compared to the country’s average.
“Cement companies have gone for such a step due to high demand in the region. However, how sustainable this could be is yet to be seen,” said a Mumbai-based analyst tracking the sector.
The companies have long been complaining about the rise in input costs and their inability to pass it on to the consumers. “Though the companies have passed on Rs 3 hike to customers, it is certainly not enough,” said another cement industry analyst, who did not wish to be named. She further added that companies will try to mitigate the cuts in margins through such measures.
On an average, the industry’s profit margins have shrunk to around 24 per cent from nearly 40 per cent last year. However, there are some exceptions too. Binani Cement has not raised prices. “We have not increased our rates and have no intention to do it at the moment,” said Vinod Juneja, managing director, Binani Cement.