Jul 15 2012 | Survey

Pricing Pressure

Cement Survey

The cement industry is facing tough times as of now in the wake of the recent ruling of the Competition Commission of India (CCI) having imposed fine of Rs 6,300 cr on some of the prominent names of the cement industry. These companies are likely to explore legal option and may contest the ruling. Falling demand, overcapacity and the onset of monsoon are likely to add pressure points to the cement prices. It seems to be difficult for cement companies to sustain the price level. Project Reporter conducted a survey during the month of June 2012 to find out whether further fall in cement prices are likely?

The survey findings indicate that 67% of the respondent expects further fall in cement prices. 45% of the respondents are expecting a fall of 5-10%, 13% are hopeful that the cement prices will crash between 11-15% and 9% expect the fall to be above 15%. The views of some of the respondents are provided below. Edited excerpts...

S K Makkar, Vice President, Simplex Infrastructure Ltd
Cement price will fall down from 5-10% because of the following main reasons.
1.During the moonsoon period construction activities remains slow.
2.Real estate & construction business is sluggish.
3. Overall Development and country growth is Slow.

The above position may continue till Sept/oct. 2012.

Sudhan Radhakrishnan, Manager
The core purpose of de-centralizing cement was to bring down the prices by inviting competition. Nowadays even quality cement is not available except for a few reputed brands.These few brands hold market monopoly, thereby controlling cement prices. CMA should be headed by the manufacturers, independent government bodies, selected economic advisors and people’s representative.This would bring more clarity into the cement pricing.

Shailesh Modi, Owner, S S Modi Consultant
The cement and steel are the main content of any structure and Important also. We cannot replace both the element 100%, which are main cause of increase in the construction cost. There is a need for reducing cement prices.

Rahul Wankhede, Deputy Manager, Shapoorji Pallonji Co Ltd
Cement prices would rise due to high input cost and shrinking margins.

Jayant Sheth, Proprietor, Struct-Mast Engineers
Cement prices will fall. Many projects have been shelved. The RMC plants are observing Sunday as holidays. Many industrial units have invited rate tenders but going slower for new projects. Builders in Mumbai are having very less projects on going.

RP Rao, CEO, R P Rao & Constructions
Andhra pradesh is falling short of sand supply, once the sand supply starts, automatically the cement prices will be increased by another 10%.

K Srinivas, Asst. Professor, NICMAR
Given the current volatile situation that is prevailing in business circles, it is futile to expect that the prices of cement will fall in the coming months.

Prakash Bhatia, Senior Manager, ICICI bank
Because of cement manufacturer’s cartel it will not fall.

Narayan S, Marketing Consultant, Consultant
Cement still works on understanding from all companies. Difficult to break the cartel.

Indrajeet Mondal, Area liaison officer, Eastern Tradelinks.
I presume that the prices of cement may not fall due to the constantly rising costs of logistics, fuel, power, landscape & manpower.

Geetha, CEO, MGK Mines India
I don’t think cement prices will come down, because the constructions are going non stop.

Sheetal Dhodapkar, Proprietor, DesignInt
That will be beneficial to construction industry. GDP will increase. In India 75% consumers are middle income group. Fall in IT sector is very big set back for our society.

If cement prices fall down, ultimately increasing real estate value can be controlled.

Nikul Joshi, Proprietor, Neon Realtors
It will not fall because all the cement manufacturers are greedy and are part of a big cartel.

Gopalkrishna, Manager, TML
Input costs and transport cost are increasing hence price line will be maintained, variation will be @ 5%.

*Respondents comment are made in personal capacity and should not be taken as the view of the company they represent. Also the comments are arranged in random order.

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