Gujarat cement makers asked to reduce prices

The Gujarat government has asked manufacturers to bring down the price of cement by Rs 10 per bag in the state to facilitate the growth of infrastructure projects.

Cement manufacturers said they had rejected the government's proposal, while an official told Business Standard the discussions were yet to be concluded.

"I cannot tell you by how much have we asked manufacturers to bring down the prices. The talks are still on," Gujarat Chief Secretary PK Laheri said.

Cement is currently selling in the state in a price band of Rs 152-158, with a few premium brands priced at a little over Rs 160. Around the same time last year, the prices were in a band of Rs 145-146.

Laheri said a price cut was necessary as it would break the cartel among cement manufacturers who were artificially inflating the prices.

"Gujarat is now the second-largest producer of cement and is also a significant market. The government has told producers they can set any price for exports, but as far as the local market is concerned they have to lower the prices," he said.

The chief secretary said there were ample reasons to show that the current prices were artificially created.

Industry sources said the Gujarat government was under pressure from the builders' lobby to negotiate the cement prices. Builders have even threatened to go on strike to convey their reservations over the current high prices.

On their part, manufacturers said they had brought down the price in Gujarat by Rs 5 a bag in the beginning of the month to bring it in line with the manufacturing cost.

"The current price is realistic. We have nothing else to say," a functionary of the Cement Manufacturers Association (CMA) said, adding that the association had no role to play as far as discussions between the government and some individual manufacturers were concerned.

An executive of a leading cement manufacturer said the government should not compare the current prices with last year's prices as the market dynamics had changed.

"In fact, the Rs 145-146 band was available even in 1995-96. Prices had gone below Rs 100 in a particular year because of cut-throat competition. And let us not forget that we even offered a price of Rs 110 per bag after the Gujarat earthquake," he said.