The Hindu : Business : Centre wants cement prices rolled back

Online edition of India's National Newspaper
Saturday, May 13, 2006

Business

Business

Centre wants cement prices rolled back

Special Correspondent

A ban or cess on exports hinted; Nath asks for response by May 15

NEW DELHI: The Union Government has warned of strict action against cement companies including imposing a cess on or banning exports in case the soaring prices are not brought down voluntarily by May 15.

Commerce and Industry Minister Kamal Nath told representatives of the cement industry at a meeting here on Friday that the price rise was "unjustified and unacceptable.'' He, therefore, directed them to inform the government by Monday about the action being taken to check rising prices.

Mr. Nath told representatives of the Cement Manufacturers' Association that the Government would consider various options, including a ban on exports and imposing a cess on exports in case prices were not brought down. Describing the price hike of 40 to 50 per cent in cement as "limitless profiteering,'' he did not accept the argument of the industry that the price rise was due to increase in cost of inputs like coal, freight and power. He argued that the rise in input costs should have meant an increase of only seven to eight per cent in cement prices.

Unjustified price rise

This is the second meeting of the cement industry called by the Commerce and Industry Ministry to resolve the situation of spiralling cement prices. Mr. Nath said the Government could not remain a silent spectator to a situation that impacted on other sectors of the economy. Besides, he noted that increase in prices had taken place during the months when construction activity was in full swing as against the monsoons when prices tended to decline. "We certainly want the cement industry to grow and be a healthy industry but limitless profiteering is just not acceptable,'' he said.

Minister of State for Industry Ashwani Kumar pointed out that after taking all input cost increases into account, the rise in cement prices should have been about Rs. 16 a bag only as against the actual increase of Rs. 41 a bag. Though this was the average increase in price per bag since December 2005, he said the increase in Mumbai had been Rs. 71, in Pune Rs. 63, in Goa Rs. 79, in Lucknow Rs. 48 and in Delhi Rs. 45. The cement producers said the price rise was due to increase in costs of coal, electricity and freight charges. They said the factors included the Supreme Court judgement against overloading of trucks, increased dependence on purchase of coal from open markets where prices were high and rising cost of power.

Cement shares tumble

PTI reports from Mumbai:

Following the Government's directive to cement companies, cement stocks led by ACC remained under pressure on the bourses on Friday and closed with further losses.

Marketmen said any cut in the product price might impact the earnings of cement companies and their profit margins.

ACC dropped by Rs. 68.45 or 7.1 per cent to Rs. 897.20, Gujarat Ambuja Cements by Rs. 8.60 to Rs. 106, Madras Cements by Rs. 115.40 to Rs. 2,868.20, Manglam Cements by Rs. 10.40 to Rs. 198.15 and Grasim by Rs. 53.55 to Rs. 2,250.80, Dalmia Cements by Rs. 34.85 to Rs. 352.80 and Shree Cement by Rs. 43 to Rs. 1,049.55 among others.

Printer friendly page
Send this article to Friends by E-Mail

Business

News Update

Stories in this Section