Stung by the government’s response to the recent price hikes, the cement industry has hinted that they would not increase the prices further.
The department of industrial policy and promotion (DIPP) had said that the price hike by the cement industry was unacceptable in the face of excise reliefs given to the players.
Since February, there has been three rounds of price rises, taking the average price up by around Rs 10-15 for a 50-kg bag.
In 2007, the government announced several measures to keep cement prices under check. But the last few months saw the government taking several favourable decisions for the cement industry such as excise duty cuts, re-imposition of countervailing duty on cement imports from Pakistan and opening of the export route.
However, top cement makers told Business Standard that they were unhappy with the government’s reaction on “something which is purely market-driven.” They further added that on an year-on-year basis, cement prices were ruling only marginally higher.
Hari Mohan Bangur, president, Cement Manufacturers’ Association (CMA), said, “Raising the price is a company’s individual decision and CMA does not have the power to ask the players to reduce prices.”
Bangur is also the chairman and managing director of the North-based Shree Cement.
“The government is harping on a wrong thing. In a free market economy, why does the government provide us (the cement industry) coal linkages at a controlled price? Cement prices are ruled by the market dynamics and there is no collective decision of hiking prices,” said an executive of a company who did not wish to be named.
Amrit Lal Kapur, managing director of Ambuja Cements, said, “Any further rise in prices seems unlikely and we have no intention to hike prices. Cement prices will remain stable and as demand will slow down in the next couple of months, prices will be under pressure as incremental capacities will outpace the demand.”
According to Bangur, cement prices already had declined during the later part of the last year. So, looking at today’s prices and comparing them the last year’s price in the same period, it is up only 4-5 per cent, added Bangur. “This is not as high as it is being made out to be,” added Bangur.
Vinod Juneja, managing director, Binani Cement, said that price rise was purely a demand and supply game. “It is not a continuous scenario. In near future, prices will be rationalised. For the time being, we have no plans to raise the prices,” added Juneja.
Industry sources told Business Standard that over a month back, the DIPP secretary had convened a meeting of cement makers. They added that Uttar Pradesh witnessed a sharp rise in demand, resulting in shortages. This has led players operating in UP to go for specific price rise.
A K Saraogi, chief financial officer of the Kanpur-based J K Cement, said, “The maximum retail price (MRP) has not seen much change. It is about 3-5 per cent. It is not the companies but the dealers who are raising prices.”
