The Hindu Business Line : Govt sees cement prices stabilising at Rs 200 a bag

Fall in line
Prices have come down in Gujarat, Maharashtra & Rajasthan.
Dalmia Cement will cut prices by Rs 3 a bag.
Jai Prakash Group will reduce prices by up to Rs 7.50 a bag

Ambarish Mukherjee

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New Delhi, May 15 The Government is expecting cement prices to settle down in the region of Rs 200 for a 50-kg bag within the next few days with a standard market fluctuation of approximately 10 per cent across the country following assurance from cement manufacturers to bring down prices, the Minister of State for Industries, Mr Ashwani Kumar, told Business Line.

“Prices have already come down in the western region which has the highest demand. Prices have softened in Gujarat, Maharashtra and Rajasthan. Now companies like Dalmia Cement, which has a strong presence in South India, has said they will cut prices by Rs 3 a bag. The Jai Prakash Group has also assured that it will reduce prices by up to Rs 7.50 a bag,” the Minister said.

The Finance Minister, Mr P. Chidambaram, was also optimistic on a further cut in cement prices. “I think there is a scope for significant reduction in cement prices,” he told reporters after the Cabinet meeting here.

On its part, the Government has assured the cement manufacturers that their demands related to abatement of excise duties and coal linkages will be considered sympathetically.

Mr Kumar said that the total excise component for a bag is around 30-35 per cent and the cement makers have agreed that if any excise benefit is extended to the industry it will be passed on to the consumers.

Explaining the industry’s position on Government intervened price reduction he said that there are diverse views among the cement manufacturers on pricing and some sections think that reduction in prices and large-scale imports may lead to decline in domestic production but that will not be the case.

“There would be investments of over $500 billion in various infrastructure projects in India in the next few years which will exponentially increase the demand for cement. Therefore in the medium term there is no justification for apprehending excess cement capacity or losses for cement companies,” he said.

In the long run, the Minister said, prices will come down further as pressure on global cement prices will start easing from October onwards after the Beijing Olympics are over. But domestic demand will go up from around that time only because of the works for 2010 Commonwealth Games in India, he pointed out.

Cement prices were ruling in the range of Rs 210-250 a bag in April following which exports were banned.

Worried over rising inflation the Government had been engaging with the cement manufacturers repeatedly during the past few weeks.

A meeting on cement prices was held by the Prime Minister on Monday following which the Industry Minister, Mr Kamal Nath, met cement manufacturers on Wednesday after which the price reduction was announced.