The Hindu Business Line : Govt ready to take stringent action against cement producers: Rosaiah

Hyderabad, April 21 The Group of Ministers (GoM), set up to look into the recent increase in cement prices in Andhra Pradesh, would be submitting its report to the Chief Minister, Dr Y.S. Rajasekhara Reddy, on Tuesday.

“We will brief the Chief Minister on the discussions tomorrow.

Though it might not be immediate, the State Government will take stringent decisions shortly if the price of the commodity is not brought down,” the State Finance Minister, Mr K. Rosaiah, told a press conference here on Monday.

According to him, there was no justification for the price rise as the minerals required for cement are available in the State and even after liberal calculations the cost of production was only between Rs 84 and Rs 100 per bag.

Restrictions possible

“The Government has so far not put any restrictions on the companies selling cement to other States, but what we are telling the producers is to first ensure that enough quantity is available in here and then you export it,” Mr Rosaiah added.

The Finance Minister also said that the State Government will not hesitate to put ‘regulations’ to fix the amount of cement to be sold in the State as compared to the total quantity being produced.

“The State Government has limited powers if a situation arises if a ‘ban’ has to enforced; we are in touch with the Union Government on the issue,” he said.

The State Government has warned that it would import cement from Iraq, Pakistan and Indonesia if manufacturers did not reduce prices.

He also said that the Government would check if the cement industry is following guidelines and production limits approved by them.

“The limestone mines are given on lease to these companies. We have asked the Mines Department to check if these companies are adhering to the rules and commercial tax department to check if the taxes are being paid on time and factories department to see if they are complying to labour rules,” Mr Rosaiah said.

CLASH OF INTEREST

The current tussle between the Government and the cement companies has something to do with the clash of interests between the policy makers and the manufacturers and was a result of the ‘long neglect of the ground realities,’ according to the industry sources.

“The State Government has swung into action now due to the shortage of cement for the social housing schemes in the State. As there is a huge variation between the market prices and the agreed price of cement to be supplied to the Government schemes, many companies are not fulfilling their supply commitments. This irked the Govt as any slow down in social housing could affects in prospects in the election years,” said a source in the industry.

The average cement price on supplies to the State Government is at Rs 135 to Rs 140 (ex-factory) while the market price is at Rs 175-80 per bag.

“As market prices are more lucrative some cement suppliers turned greedy and had not been supplying from the monsoon season to Government schemes. But, it woke up now to issue due to polls-driven compulsions,” he added.

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