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Builders, cement makers in India dispute over cement prices ahead of CCI order

Apr, 25 2012

(India)  --  Builders and cement companies in India are in dispute over the rising prices of cement, ahead of the verdict from the Competition Commission of India (CCI) on the cartelisation among cement companies which is expected next week.

The real estate dealers have alleged the prices of cement have increased due to collusion among the cement companies. The National Real Estate Development Council had in November moved CCI, alleging an unduly steep increase in cement prices. Cement makers have increased prices by 50 per cent in the past six months and as much as 20 per cent after the Union Budget.

The cement companies have refuted the charges, calling them “ridiculous”. They have blamed the factors like demand and supply, railway freight rates and excise duty for the rise in prices.

“ 50-kg bag of cement used to cost Rs 170. It went up to Rs 250 before the Budget and costs Rs 300 now, said R K Arora, chairman, Supertech.

“Excise duty went up by two percentage points but cement prices have gone up by at least 20 per cent. Therefore, we are including a cost escalation clause in our buyer-builder agreement due to uncertainty in the prices,” he added.

Shree Cement managing director (MD) H M Bangur dismissed the charges of cartelisation. “Cement is a commodity and all commodity prices move in tandem. You can’t allege (from this) that there is cartelisation,” he said.

Vinod Juneja, MD of Binani Cement said that the increase in rail freight rates and general inflation had impacted the prices a bit.

An Ambuja Cement spokesperson also said that cement production was a cyclical business. During the monsoon in June-July, as construction falls, demand for cement also falls, thereby bringing down the prices, too.  The prices go up from October to December as it is the peak season for construction.

The National Real Estate Development Council had also alleged that even though the installed capacity of large cement plants had increased from 223 million tonnes in 2009-10 to 234 mt in 2010-11, the capacity utilisation in 2010-11 declined to 76 per cent from 83 per cent in 2009-10.

By: Rashmi Kalia (ARI-C NEWS)

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