Cement companies, which have increased the retail prices by 8 per cent post Budget, are planning to go for another round of hike. This time, it’s the power crisis in Andhra Pradesh that is forcing these companies to increase the price.
Cement prices have already been increased by Rs 15 to Rs 20 per bag and is now at Rs 190-210 in the state, as compared with Rs 170 to Rs 195 following the announcement of excise duty roll back of about 2 per cent in the Budget.
“A hike of Rs 7 to 8 per bag can be attributed to the recent Budget,” said a representative of a cement company.
Other factors that led to its rise include the cess on coal, which has increased the cost of production. Cement companies pay a 10 per cent excise duty if the price exceeds Rs 190 per bag or Rs 290 per tonne. Clinker prices too have gone up recently by Rs 75-100 a tonne.
Among the southern states, cement is priced at Rs 250-270 a bag in Tamil Nadu, Rs 260-275 in Karnataka and Rs 240-260 in Kerala. In Tamil Nadu, the increase has been the most – by Rs 30 to 40 from the earlier Rs 205 to Rs 240 a bag.
This time, according to the industry circle, the prices would go up as the Andhra Pradesh government had issued load relief orders imposing a one-week a month power holiday on the cement sector. The orders came into effect from March 12. This apart, there will be power cuts during the peak hours every day. As a result, production would decline 25-30 per cent.
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The impact of power cuts would be felt towards the end of the month, which is when the demand too is likely to increase, the official said.
The demand for cement in February stood at 2 million tonne. Prior to that, it had declined due to the agitations for and against Telangana during November-December. With normalcy returning now, several infrastructure and residential projects are back on track.
AP, which has a production capacity of 36 million tonne cement, caters to many parts of north India, southern states and Orissa in addition to meeting its own demand.