Cement firms rebuff FM
Business Standard, 10-07-07

The war of words between the cement industry and Finance Minister P Chidambaram has intensified. The industry today countered Chidambaram’s allegation that the industry is cartelising to raise prices and cut production.

On the contrary, industry players said, cement production has been rising to meet spiralling demand.

Chidambaram told a regional language daily yesterday that he is disappointed with the manner in which the cement industry had exploited the situation where demand has exceeded supply.

Industry players who did not wish to be identified said the industry is utilising 100 per cent of its production capacity, against the global average of 90 per cent, and that there has been no price hike this year.

The CEO of a cement company quoted the official data released by the Cement Manufacturers Association that showed that the monthly production in January-June this year is higher than the previous year.

PRODUCTION FIGURES

             2006         2007
January   13.07       14.05
February 12.26       13.00
March     14.15       14.95
April       13.23       13.97
May        12.99      14.26
June       12.91      13.66*

Figures in million tonne
* Provisional figures
Source: Cement Manufacturers’ Association


“Production has been going up for the last two years. Measures have been taken to enhance production further. The industry will add 80-100 million tonne in the next three or four years.”

In 2004-05, the industry produced 127.57 million tonne, rising to 155.31 million tonne in 2006-07 — up 21.74 per cent. In the current financial year, production is expected to cross 165 million tonnes, he added.

The chief finance officer of a leading cement company said a price hike took place last year, but not this year. “Why single out the cement industry? Other sectors, such as steel, have also hiked prices,” he said, adding that steel companies raised prices by Rs 500-1,000 a tonne this month.

The managing director of a multinational cement company said the taxes levied on the cement industry are one of the highest in the country. “We contribute nearly 67 per cent of our income, including royalty payment for limestone, to the exchequer. Instead of giving relaxation on the tax front, the industry is being pressured to go in for price cuts,” he added.

Sources in the industry said they are anticipating a rise in royalty on coal too. “A notification is expected soon,” they said.