Cement makers reject builders’ call for price cuts

Hyderabad, July 23, 2014 – Cement manufacturers have refused to cut prices in Andhra Pradesh-Telangana States even as builders from the region are continuing a boycott of cement purchases in protest against “cartelisation” by producers.

It is not possible to sell cement at less than Rs.335 a bag in Andhra Pradesh and Telangana as it would push cement companies into losses, representatives of the cement industry said.

In a press conference held here on Tuesday, they said if the price was brought down below Rs.335, companies will have to shut down operations due to losses.

At present, a bag cement is sold at Rs.315 and Rs.325 in Telangana and Andhra Pradesh, respectively. Builders in the region, however, allege “cartelisation” among cement producers and unilateral price hike by over 50 percent in the last one month, and have been continuing a boycott of cement purchases for the last three weeks.

Cement companies reject the claim.

“Cement prices have never been constant. The industry in both States have been incurring losses for the last three years due to low prices and a dip in demand,” said S Anand Reddy, Joint Managing Director, Sagar Cements.

It was not the first time that the price has crossed Rs.300 for a bag, he said adding price rise in neighbouring States and accumulated losses for the last three years led to high prices in the region.

“Already, Bheema Cements and Panyam Cement have been shut down and at least four companies are ready for sale,” he added.

Power, diesel prices hiked

S Sambasiva Rao, Executive Director, MyHome Industries, said present manufacturing cost per bag of cement is Rs.185-200, and the excise duty, value-added tax and transportation costs were Rs.40, Rs.45 and Rs.65-85, respectively.

The hike in power tariff and diesel prices also adversely affected the industry in the last three years, he added.

“This is true as Sagar Cements alone suffered a loss of Rs.37 crore last fiscal and Rs.10 crore in the first quarter of the current fiscal,” Reddy said.

The total installed capacity in both States is about 70 million tonnes a year, while the demand is only about 20 mt, he added.