Govt order hits cement scrips

STOCK REPORT

Cement shares witnessed a selling spree after the government had asked cement manufacturers to curb the rise in product prices.

Gujarat Ambuja Cements plunged 7.5 per cent to Rs 106, ACC lost 7.09 per cent to Rs 897.2, UltraTech Cement went down 4.81 per cent to Rs 720.65, Grasim shed 2.32 per cent to Rs 2,250.8, India Cements fell 4.18 per cent to Rs 205.1, OCL India tanked 9.74 per cent to Rs 179.3, Dalmia Cement plummeted 9 per cent to Rs 352.8, Birla Corporation declined 6.43 per cent to Rs 336.2, Chettinad Cement lost 4.94 per cent to Rs 521.6, Deccan Cement lost 5 per cent to Rs 145.80, Mangalam Cement shed 5 per cent to Rs 198.15, and Shree Cement slipped 3.96 per cent to Rs 1,049.55.

Union commerce minister Kamal Nath on Friday asked cement manufacturers to take steps to moderate the sharp increase in prices.

"It is a matter of concern that the prices of cement have gone up. The government can't remain a silent spectator," he told cement makers. Kamal Nath asked them for suggestions on ways to tackle the rise in cement prices by Monday.

Cement manufacturers have been raising prices regularly since last November, as demand outstripped supply in the wake of a boom in construction activity.

Also the court ruling against overloading of trucks put upward pressure on cement prices. Rajan Kumar, analyst, Networth Stock Broking, says, "The cement prices have risen by more than 25 per cent since the beginning of 2006. Most cement companies are already operating at full capacity to meet the increased demand, and there are no capacity additions in immediate future. So, the demand-supply disparity will be there for around one year."

However, the industry experts feel that cement makers may reduce prices ahead of monsoon season. "Cement makers may cut down prices by Rs 5-10 a bag by June to accommodate the ministry's demand," Kumar said.