The Hindu Business Line : Coimbatore builders seek Govt help to curb prices

Coimbatore, April 25 Reeling under the impact of continuous rise in steel and cement prices, the construction industry associations in Coimbatore have sought immediate intervention of the Central and State Governments to rein in the prices and break the “steel and cement cartels” failing which the user industries would “take to the streets to protect the interests of the stakeholders”.

They also want the Tamil Nadu Government to provide for a price escalation clause to be built into all contracts for infrastructure works irrespective of the duration for their execution.

Speaking to the media here, Mr G. Srinivasan, Chairman, Builders’ Association of India (BAI), Coimbatore Centre, said the contractors were not able to complete the works they had taken up because of the continuous spurt in prices of raw materials. The absence of any escalation clause in the contracts entered into has been working to their disadvantage and the contractors were facing a “panic situation”.

He said it was only recently the State Government agreed to include a provision for cost escalation in contracts that had an execution period of more than one year, subject to certain conditions. But most of the projects that were of medium level were to be completed within a year, which affected the contractors as these have been left out of the cost escalation benefit.

He contested the argument of the steel manufacturers that they had raised the product prices because of the increase in input costs. He said in the last one year, the price of steel had nearly doubled and there was neither shortage of raw materials nor demand-supply mismatch. The profit margin of steel companies that was in 10-15 per cent range in the past had shot up to 40-50 per cent in recent years, he said.

Mr Srinivasan said the General Council of the BAI would be meeting in Thiruvananthapuram on May 11 which would discuss the issue of rising input costs. While the user industries were asking for reduction in steel prices, the manufacturers were talking about holding the price line for a limited period, implying a possible price increase subsequently.

Mr Sriram, former Chairman, BAI Coimbatore Centre, said many project works in Coimbatore have been re-tendered repeatedly due to contractors not willing to take up the work at the rates specified and in some projects, the contractors have abandoned the work mid-way. Foregoing the earnest money deposit (EMD) caused a lower loss than completing the work that would leave a bigger hole in their pockets due to unremunerative rates.

The BAI, along with Association of Consulting Civil Engineers (India), Coimbatore Chapter, Indian Institute of Architects, Coimbatore Centre and Coimbatore Property Developers Association (CPDA) sought immediate remedial measures such as duty-free import of steel like cement to stabilise the domestic price, ban on export of steel and trading in steel in the commodities exchange, appointment of regulatory authorities to oversee the working of cement and steel industries and declaring steel as an essential commodity to save the construction sector.

They also wanted full reimbursement of increased steel prices in all ongoing and future projects.

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