Builders accuse cement cos of unfair practices

Builders accuse cement cos of unfair practices
The Hindu Business Line, April 17, 2009, Page 17

Say prices have gone up due to cartelisation.

Our Bureau, Mumbai

The Builders Association of India has alleged that cement prices had risen by Rs 15-30 a bag on account of ‘cartelisation’ among some manufacturers.

BAI said current prices were Rs 265-275 a bag in most places in the western and northern parts of the country.

This, they said, was despite a drop in demand with the overall slowdown impacting the economy. The cement industry was an exception to the slowdown witnessed since October 2008. While price reductions were seen all around to stimulate demand, cement manufacturers had resorted to price hikes from February.

“Prices of all commodities except gold and cement have dropped. In an environment where the industry as a whole is trying to lower prices to stimulate demand, cement prices continue to rise,” Mr Anand J. Gupta, General Secretary, Builders Association of India, said.

Mr Gupta said the domestic cement industry appears to have ignored the earlier order by the Monopolies and Restrictive Trade Practices Commission and pleas from the construction sector.

Slowdown in housing

With the housing segment experiencing slowdown, the capacity utilisation of cement companies have come down to 86 per cent in 2008-09 and set to decline further in the first quarter of the current fiscal due to capacity addition of 28.55 million tonnes.

He charged that by and large cement companies produced blended cement by adding 25 per cent fly ash to Portland cement and production cost worked out less in the process.

Mr Sunil Mantri, President-elect, Maharashtra Chamber of Housing Industry, said prevailing prices of Rs 265-270 a cement bag would raise the price a sq.ft. by Rs 50-Rs 75, at a time when builders were trying to induce demand with reduced prices. Mr Mantri said this would raise the prices of low cost housing that the developers were trying to provide. A sq.ft. of built-up area needed half a bag (50 kg) of cement.

WAGON SHORTAGE

Asked whether they had requested cement manufacturers to reduce prices, the members said they were told that coal and shortage of railway wagons had led to the price hike. This apart, the Construction Industry Development Council had also represented to the cement manufacturers the plight of the developers.

The BAI demanded a ban on cement exports and removal of import duties, appointment of a cement regulatory authority to monitor demand and supply and ensure fair trade practices, besides operationalising the Competition Commission.