Cement: Builders threaten to move MRTPC

Cement prices have been stable for the past couple of years at Rs 125 to Rs 145 per bag. However, prices have been on the upswing from December 2005 with cement prices hitting Rs 220 in the past four and a half months, a rise of 38 per cent in four months.

Cement companies claim that the rise in prices is on account of higher input costs on coal, shortage of electricity and the recent decision by the Supreme Court banning trucks to carry loads over nine tonnes which has increased freight charges.

However, not many people agree with the explanation of cement companies. According to the secretary of industrial policy and promotion Ajay Dua, the input costs for cement companies had risen by 15 per cent while cement prices had shot up by as much as over 40 per cent in the northern and western regions.

Builders and people involved in infrastructure segment claim that cement companies are hoarding cement bags and the growth of exports has taken place at the expense of the domestic market.

According to the cement statistics for 2005, of the 126.37 million tonne produced in 2005-06 nearly 5.40 million tonnes was exported. The previous year saw a production of 127.57 million tonne out of which only 4.07 million tonnes were exported.

‘‘A bulk of this exports was to the Gulf countries, especially Dubai. With crude prices shooting through the roof, there has been a lot of infrastructure development in the Gulf. The proximity of Dubai to India is also forcing infra companies in Gulf to source more from the Indian market and Indian companies are also getting a better price,’’ a cement analyst said.

Meanwhile, shares of most of the cement majors—barring Gujarat Ambuja—took a dip today on the back reports that the government could take steps to curb cement exports.