| Date: |
06-01-2015 |
| Subject: |
Cement price hike throws housing sector out of gear |
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CHENNAI: An abnormal increase of 40% in the price of cement in the last one month has thrown construction industry out of gear in south India.
At a time when cement is sold at 245 per bag of 50kg across northern and western parts of India, in the four southern states alone, the price has gone up by 100 per bag. The cement is now sold at 340 per bag to institutional buyers and at 375 per bag to retailers. The impact on the budget housing segment in Chennai is a cost escalation of 2.5-3% per sq ft of built-up area, said Confederation of Real Estate Developers' Association of India (CREDAI) Tamil Nadu chapter president N Nandakumar.
"Many builders are trying to cut down costs to deliver apartments to low income groups in Chennai's suburbs at 2,000 per sq ft. An increase of 100 per bag of cement works out to an increase of 50 per sq ft in cost of construction," said Nandakumar. On a 600 sq ft apartment, the cost escalation is 30,000 and it is big money for that segment, he said. CREDAI Chennai vice-president Suresh Krishn said cement manufacturers had increased price of even bulker cement by 40% in a month. Bulker cement is purchased by makers of ready-mix concrete. Cement manufacturers cut down production to increase cost, he said.
Many government infrastructure projects had slowed down owing to hike in cement price, said Builders' Association of India patron R Radhakrishnan. "People in the construction industry may have to look at setting up permanent berths at Krishnapattinam and Karaikal ports to import cement from Indonesia. Imported cement will cost only 200 a bag," he said.
Cement manufacturers say they are under severe cost pressure owing to lower utilisation of their manufacturing capacity. Increase in input costs like coal, power and transportation had crippled the industry and slashing prices would be suicidal, said an industry source. "Moreover, for every bag of cement sold at around 370, cement manufacturers pay 140 as VAT, excise duty and freight charges. There are other overheads too and manufacturers hardly make any money," said an industry source.
Builders' Association of India, CREDAI, Valuers' Association of Tamil Nadu and Engineers' Association of Tamil Nadu and other allied organisations have called for a statewide agitation including observing a day-long fast on Tuesday, demanding that government rein in cement prices.
Source : timesofindia.indiatimes.com
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