Cement makers do a volte face

Agree to cut prices after meeting Chidambaram.

A day after telling the government that it would not cut prices, the cement industry today assured Finance Minister P Chidambaram that it will look into the issue of lowering its price tags.

"The minister asked us to explore the possibility of moderating prices and we have offered to look into it," Manoj Gaur, the president of Cement Manufacturers' Association of India (CMAI) and executive chairman of Jaiprakash Associates Ltd, told Business Standard after the meeting.

On Monday, the country's steel producers had rolled back price hikes announced on 1 March after a similar meeting with top government officials. Alarmed at rising prices and their political fallout, the government has asked industry to look at the possibility of reducing prices.

To rein in rising cement prices "� in Delhi, the price of a 50-kg bag of cement has risen from Rs 190 a year ago to Rs 230 now "� Chidambaram, in his Budget speech on 28 February, had announced a reduction in the excise duty on cement, from Rs 400 per tonne to Rs 350 per tonne for those selling at Rs 190 per bag or below and a duty of Rs 600 per tonne for those selling above Rs 190 per bag.

Defiant cement producers raised prices by Rs 10-12 per bag the very next day, upon which Chidambaram said cement prices have gone beyond "reasonable limits".

In a meeting with Industry Secretary Ajay Dua on Monday, the CMAI had refused to cut prices on the ground that cement companies would not be able to absorb the new excise duty and also bring down prices.

Cement producers have said the new excise rates will impair their profit margins by as much as 25 per cent.

In January, the finance minister had alleged price manipulation by the cement manufacturers. The same month, the government had brought import duty on cement down to zero.

In recent times, cement has had a weightage of 1.73 per cent in the wholesale price index and witnessed inflation levels of about 10-15 per cent.