Cement industry says no significant price hike soon
Indian Express

Under attack from various quarters for price increases, the cement industry today hit back at critics vowing that the demand-supply situation has been restored to a level of parity and that there would be no significant price hikes in the near future. The industry also targeted the Government and allied sectors like the Railways and real estate for lack of cooperation.

“Earlier this year the industry could not keep pace with demand, leading to price hikes. However, the situation has changed. We are investing Rs 50,000 crore over three years to set up additional capacity of 110 million tones (mt), taking the overall capacity to 270 mt,” said Shree Cement MD H M Bangur. “We have been billed as a cartel given to unjustified price hikes, which is a misconception. Between April-November this year, prices have gone up by less than 3 per cent even as we withstood higher taxes and fuel costs.”

The sector was punished by the finance minister in this year’s budget when an additional excise duty of Rs 200 per tonne was levied on cement costing more than Rs 190 per bag. But, the industry believes it was economics at work and there is little merit that they have been unscrupulous. Further, the industry is made to pay for fly ash even as companies the world over are paid for using such pollutants.

“Under the garb of administrative charges we are paying between Rs 300-550 per tonne for fly ash. We are asking that we be given fly ash free as per Government directives,” Bangur said. The industry consumes 20 mt of fly ash every year and ends up paying Rs 800 crore towards surcharges.

“Imports from neighbouring countries like Pakistan were encouraged while we endured high taxes. We didn’t complain and managed to maintain profitability largely due to high volumes,” said J K Cement Group executive president R G Bagla. Currently, around 40,000 tonnes of cement is imported every month (0.5 mtpa) from Pakistan, even as India exports 7 mtpa.

“The Railways and real estate took advantage of our negative image and jacked up their prices,” he added. The country consumes 165 mt of cement and has an installed capacity of 173 mt. Demand has been growing at a CAGR of 10 per cent over the last ten years.

The breakdown
• Industry claims to have filled the demand-supply gap
•Aims to take capacity up to 270 mt by 2011
•Industry bears surcharges worth Rs 800 cr on fly ash while worldwide firms are paid for using fly ash
•Royalties and taxes constitute 60% of ex-factory price of cement

Stable cement prices expected
Financial Express

Cement prices in the country are likely to remain stable for the next six months, a grouping of manufacturers said on Monday. “At present, we do not see any price hike or price reduction in the coming six months. In fact, cement prices have gone up by just over 3% in the last ten years, which is even lower than the prevailing inflation rate,” HM Bangur, president, Cement Manufacturers’ Association, said here.

Asked about the shortage of cement in the country, Bangur admitted that six months ago that there were shortages mainly due to logistics and other associated problems, but claimed there was no shortage now. To improve the availability of cement and to meet the rising demand of cement, the domestic cement industry would add 110 million tonne to production capacity in the next three years, at an estimated investment of Rs 50,000 crore.

The government has time and again locked horns with cement Companies to arrest its rising price. In the last Budget, the government introduced a dual tax policy for cement based on the price, a move strongly opposed by cement makers. To ease the availability of cement in the domestic market and push prices down, the government also permitted the import of cement at a lower duty from certain countries. In April-November, cement production in the country increased by roughly 8%.

“The cement industry is closely linked to the Economy. With the country’s Economy set to grow at an impressive 9%, the demand for cement would grow by 11-12%,” Bangur said.
India produces 160 mt of cement and is the second-largest producer in the world. The working group on the cement industry for the 11th Five-Year Plan projected cement demand of 257 mt in the terminal year 2011-12.

Cement manufacturers rubbished the allegation of cartelisation and pointed out that in a country with over 50 cement manufacturers and 135 cement plants, it is impossible to rig prices.
On the issue of imported cement, mainly from Pakistan, cement manufacturers said that they saw no threat from this, but demanded a level playing field for all. “While domestic industries are subject to heavy taxation and duties, imports are free from paying countervailing duty,” Bangur said.

No hike in 6 months, say cement manufacturers
Tribune

Denying cartelisation in the industry, the Cement Manufacturers’ Association (CMA) today said the price of cement in the country was likely to remain stable in the next six months and that the industry would enhance production of cement by 110 million tonnes in the next three years to meet future demand.

“There is no cartelisation in the industry… If there are only three or four players then there could be cartelisation. How can there be cartelisation, when over 50 companies are marketing their product in the country,” H.M. Bangur, who was elected new president of the CMA today, told newspersons here.

His statement comes a fortnight after minister of state for commerce and industry Ashwani Kumar had warned government intervention if there was any evidence of cartelisation in the cement industry. Maintaining that there is “neither shortage nor surplus” of cement in the country, Bangur said the cement industry as a whole would invest Rs 50,000 crore for capacity addition in three years.

Pointing that there was only about 3 per cent increase in the price of cement during April-November 2007, Bangur said the hike was more due to reasons beyond the control of the cement industry. “Input cost, including that of coal prices have gone up and the freight charges have gone up, which definitely have bearing on the price. However, in the past two years the cement industry has booked profit through volumes and enhancing efficiency in production line,” he added.

On the government’s decision to allow import of cement to bridge the demand-supply gap, Bangur said “in an open economy the market is open for all players. But what we want is a level-playing field.”

Cement price outlook stable
Business Standard

The cement industry on Monday denied charges of cartelisation and assured sufficient capacity additions to meet the rising demand. It also said that the price outlook for the commodity is stable for the near future.

“The industry is making an investment of Rs 50,000 crore to add 110 million tonnes capacity over the next two-three years, taking the total production capacity to about 275 million tonnes,” said H M Bangur, the newly elected president of the Cement Manufacturers’ Association and managing director of Shree Cement.

The demand for cement is expected to double every seven years but we are equipped to meet all of the needs, he added.

Unlike last year, cement prices have been largely stable in the current financial year. “Price is determined by factors of demand and supply. The price increase in the current year has been just 3 per cent, which is less than the inflation rate. Prices are expected to remain stable as enough cement is available.” Currently, cement prices are ruling in the range of Rs 225-230 per 50kg bag.

The industry denied any shortage in cement supplies. “We do not find cement shortage in any part of the country, except in areas where logistics is a problem. There is no cartelisation in the industry since we are not hoarding inventories,” said R G Bagla, group executive president, JK Cement.