The Hindu Business Line : Prices not very high, says JK Cements

I do not know as to how they say that prices are high or prices are low, when there is a free economy. There is no dearth of cement in any province except in some remote areas, where the prices may be high. If one asks for cement, it is available: Mr R.G. Bagla `Logistics a major problem faced by industry'

The outcry over rising cement prices is a handiwork of some vested interests, according to JK Cements. The company's Group Executive President, Mr R.G. Bagla, says that he doesn't understand why people are complaining about cement prices, as prices are not very high.

He further says logistics is a big problem being faced by the industry, as the freight rates have gone up by 70-80 per cent.

Excerpts from CNBC - TV18's exclusive interview with Mr Bagla:

The offer made by cement companies to give a 5 per cent discount on Government supplies, how will this work?

I also heard on TV and radio that the Minister has announced that 5 per cent price discount will be given to Central Government projects. I do hope that this authorisation must have come from the President of the Cement Manufacturers Association.

Since most Central government projects that you bid for are on a tender basis, on what basis will the discount be calculated?

I don't know how the Government is saying that prices are very high. I will say that this is only a hype created by some vested interests, may be by builders. But I don't know and I don't want to comment.

You are saying 5 per cent discount is neither here nor there, because on what basis will this discount be given?

The cement industry is always cooperating with the Government. In fact, many times we have said that if you were making roads with cement-concrete, we would provide them cement.

There were also reports that cement companies have offered not to raise prices. But traditionally in May and June don't prices go up because of monsoons?

Cement is a cyclical industry. In monsoon, prices are very low. They look up by the end of October. There are hundreds of celebrations going on in India in various provinces. So this is the period when prices are generally high.

But I fail to understand as to how high they are. Some retailer in remote areas may have quoted very high prices.

Cement prices have gone up by almost Rs 30-50 per bag in the last six months. Isn't that an abnormal movement?

No, I can give reasons for that. In fact, Rs 30 price rise is not a very correct assessment. Nowhere prices are higher than Rs 170 per bag.

The Supreme Court's order to load only up to the carrying capacity has created havoc. Logistics has created a problem. Freight rates have gone up by about 70-80 per cent. Railway wagons are not available either.

With the announcement of the Government are you saying that there is going to be no impact on demand or on realisations or on prices because you were expecting prices to slacken out anyway by the monsoon season?

I think during last monsoon also, there was not such a big drop in the demand. In any case, whatever demand is there, it is squarely met. This time we had achieved about 11 per cent growth in production and 11 per cent growth in despatches from the plants also. So there is no insatiable demand, which the cement industry cannot fulfil.