Cement price rise hits dealers, manufacturers unfazed

Bhuvan Gupta

February 7, 2019

Chennai: The abrupt jacking up of cement prices in Chennai has adversely affected dealers and their customers, even as the manufacturers seem unperturbed about it.

In less than a week, prices of 50 kg cement bags have gone up by at least Rs. 30 across brands and grades of cement quality, stumping traders and developers alike.

Vijay Kumar, the owner of Muthukani agency was paying Rs. 350 for 53 grade (commonly known as grade ‘A’) cement bags from brands like UltraTech, Ramco and Coromandel, up till last week. All of a sudden, the same bags cost Rs. 390 and above.

“The rates changed from February 1. I feel that the prices have increased because the elections are coming, and the big companies probably need the extra money to fill the government’s coffers,” Vijay speculated.
The manufacturers however, cited other reasons for the rise.

“The prices were hiked due to an increase in raw material costs, and the prevailing low profits,” said Gautam Selvaraju, Assistant Manager at Orient Cements said.

Naren, a Senior Officer at Birla Shakti Cements said, “It was done to stabilize the brand, as cement is one of the few commodities that are sold below the maximum retail price (MRP)”.

Even though they gave differing reasons for the price hike, both Naren and Gautam mentioned that the decision was taken by the companies after their top executives attended meetings with the Cement Manufacturers Association (CMA), that were headed by India Cements Managing Director (MD) N. Srinivasan.

Commenting on the impact of the price rise, Vinayaga Arumugam, Assistant Manager at Orient Cements said, “There are some fluctuations in sales, but these are just knee jerk reactions. Cement prices change quite frequently, and like always, normalcy will be restored this time too”.

In stark contrast to Vinayaga’s claims, Vijay Kumar stated how the dip in his sales was more than just a temporary variation.

“Our business is going slow for quite some time now. While we had over 50 bags being sold every day earlier, only around 20 bags are needed nowadays,” Vijay said.

“The demand for cement decreased considerably after demonetization, and on top of that, the heavy GST also cuts into our revenue,” he signed off with a sigh.