Builders oppose hike in cement prices

'Raw material prices down, but customers not benefiting'

Developers and builders have approached the Competition Commission of India (CCI) asking it to prevent cement manufacturers from hiking prices as the cost of construction of apartments, houses and commercial complexes is going up.

The Confederation of Real Estate Developers Associations of India (CREDAI) Bengaluru secretary Suresh Hari said: “Bengaluru, Karnataka, Tamil Nadu and Kerala have been hit by rising cement prices. Companies have increased the prices of cement unilaterally.

CREDAI Delhi has moved the CCI. Cement manufacturers in the country were fined in 2012 to the tune of Rs 6,000 crore. Yet no lessons seem to have been learnt. Cartelisation seems to be at work.”

In its submission to the Commission, CREDAI has pointed out that the cost of raw materials used in manufacturing cement has actually come down between January and September but cement companies never passed on this benefit to customers. Instead, they seem to be working together to control supply and prices of cement. CREDAI has said it is well known that the real estate sector is under pressure currently, with a consequent decrease in cement demand. Housing and other real estate sectors account for nearly half of the cement demand in the country.

The prices of cement have jumped up by 20-40 per cent in top cities across South India in the last couple of months. “It is notable that the cost of raw material for cement production has come down significantly during January to September. It is unfair that the cement manufacturers indulge in practices that control the prices of cement. CCI has warned CMA in the past as well, but it is unfortunate that they seem to be continuing with their price and market manipulation,” Getamber Anand, president, CREDAI National, has said.

The confederation complained that there seems to be no ground for supply restriction and the recent price increase in cement. The confederation also brought to notice the Commission’s order of June 20, 2012, wherein cement manufacturers were directed to ‘cease and desist’ from indulging in any activity relating to agreement, understanding or arrangement on prices, production and supply of cement in the market. “In that order, the Commission had determined the penalty amount on various cement companies. However, various cement manufacturers challenged the order before the Competition Appellate Tribunal that chose to grant stay on the penalties. But the Appellate Tribunal did not find anything wrong in the order of ‘cease and desist’ which continues to operate till date,” says CREDAI.

CREDAI Bengaluru secretary Hari said the cement companies were also not producing to installed capacity.

“The companies are not producing enough. And at the same time, prices are being jacked up. It is a unilateral act. Let them increase the production and pass on the fall in prices of raw materials to consumers. Things will immediately change and the market would restore itself to normal pricing and supply.”