The Hindu Business Line : `Cement imports from Pakistan may not impact retail costs'

Hyderabad April 15 The import of cement from Pakistan may not bring in much relief in the retail price across different regions of the country and may fail to improve the supply scenario in a significant manner, according to industry observers.

"The first consignment from Pakistan-based Lucky Cements reached Mumbai at a port price of Rs 155 per bag and was stopped there for clearance from the Bureau of Indian Standards (BIS). But when it comes out and reaches retail markets, the price would not be cheaper than current retail prices," Mr Ramesh Chandro, President, All India Mini Cement Manufacturers Association, told Business Line.

A detailed analysis carried out by Networth Stock Broking tabulated the difference between the port prices and retail price of the Pakistan cement.

"When all additions such as handling charges and transport costs are added, the retail price could not be lesser than Rs 215 in Mumbai," Mr Chandro explained.

Further, from the second consignment itself, the exporters from Pakistan hinted at a hike of Rs 10 per bag (to Rs 165), Mr Ramesh said. "If this happens, the price would be higher than what is currently being sold in retail markets."

Price levels

The price of export cement in Pakistan was $47 per tonne in January 2007 and now it has gone up to $64-65 per tonne. "If this surge continues, importing cement would be a highly untenable solution," he added.

Currently, the retail price of cement is between Rs 240 and Rs 245(for premium) in Mumbai, Rs 215 and Rs 225 in Chennai, Rs 225 and Rs 235 in Bangalore and Rs 215 and Rs 220 in Hyderabad.

On the consumption front, in 2006-07 the domestic consumption stood at 155 million tonnes (mt) while 9 mt were exported. "This marks over 11 per cent growth over the consumption in 2005-06. We are predicting that the consumption could grow at 12.5 per cent during the current year, which translates to 175 mt demand for the domestic market. It is impossible to add 20 mt additional capacity this year alone," Mr Ramesh said.

Capacity blocks

According to Mr S N Reddy, Chairman, Builders Association of India (AP), implementation of a broader plan for capacity expansion in the country is the need of the hour. "It remains to be seen if the cement from Pakistan would really land here at a competitive price. But the capacity building and cement pricing issues should be addressed immediately to sustain growth requirements of infrastructure industry," Mr Reddy said.

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