Comments on: What is the Cement Story in India?

By: sandeep rai

sandeep rai — Thu, 26 Jun 2008 05:13:51 +0000

i want to know the price trend of cement bag since june 2006 till date

By: Krishna Moturi

Krishna Moturi — Mon, 28 May 2007 19:35:09 +0000

The federal inflation team (chidambaram, montek and manmohan) needs to be aware of the next 10 yr sustained demand cycle for cement as a result of 100% FDI in realestate sector and come up with a holistic approach of dealing with it.

half-baked measures like “taking away import-tartiffs knowing that cement wouldn’t be importable in current scenario of clogged-ports” and “bringing in price-control mechanisms knowing they will scuttle growth”…..is all politically-motivated tactics to look good when they go to public for impending federal elections.

As we all agree, price-gouging (if exists) would have to be dealt-with penalties, but looking at the input costs and supply-demand stats, it wasn’t a price-gouging scenario. Market(cement Mfgrs) is still so fragmented even after all that acquisitions made by big cement giants (Lafarge,Holcim..etc), that it would be very difficlut too hash-out and maintain a prce-gouging scheme on a sustained basis.

By: M.L.Chatterjee

M.L.Chatterjee — Mon, 16 Apr 2007 08:58:01 +0000

Dear sir,
It would be helpful if the market price of cement per bag on the following dates are indicated:

Prevailing as on 25.06.2005, 28.10.2005,31.03.2006 and 30.04.2007 per return

Regards

By: Shwet Agarwal

Shwet Agarwal — Mon, 02 Apr 2007 10:49:53 +0000

As remarked earlier by my learned friends, the Congress government though having a Super team of Chidambaram, Manmohan and Montek has failed miserably to control prices coupled with that instead of paying attention to areas where there is actual speculation like Real Estate, Food commodities, commodity goods like gold/silver etc. Where is manmohaneconomics ?
In one hand you are increasing interest rates this wilbound to have effect on prices with companies increasing the consumer prices.
India is growing and it needs no hurdles from the Government now….please let the market takes it own course look at China the country has changed overnight…Government should worry and make plans to grow the infrasturture and the left front.

By: Aditya

Aditya — Fri, 23 Mar 2007 10:10:25 +0000

What I fail to understand is the negative approach towards cement companies for controling inflation; instaed of letting free market prevail we are getting price controls through incentives. Are we truly against further growth in industries as at lower prices newer plants are unattractive; hence if prices are not controlled and are higher people will easily run towards building more plants.

What about steel, oil and land land why no controls there if we are out to curb inflation.

These looks like a typical Congress thing. Where they don’t get big money from they (Congress) gets them (cement companies) even.

By: Balaji Viswanathan

Balaji Viswanathan — Thu, 22 Mar 2007 20:18:35 +0000

Dear Anonymous Coward,
I made a word mistake – pricing instead of taxation. Thanks for the nitpick.

The law in this case is not as confusing as rest of Indian laws, and if you are having no problems in accepting them, I dont think this is going to add much to the confusion mess – keep below a price for a temporary period till capacity buildup occurs and take lower excise. The industry could lobby for a slight bump in the limit say to Rs.200 or something and maybe even try to get in some temporary sops in other aspects, like faster reforms for capacity building and better credit access for expansions.

The government has its responsibility in controlling inflation in the core sectors and this last minute fire fighting cannot be blamed too much, though it is another point that we should kick their ass for not responding with better and less clumsy measures earlier.

By: Anonymous Bureau

Anonymous Bureau — Thu, 22 Mar 2007 10:42:10 +0000

Balaji Viwanathan says:
“I guess most posters failed to notice the implication of the dual pricing policy.”

It is a dual taxing policy.

Balaji Viwanathan says:
“But, care must be taken to make sure markets remain mostly free and supply-demand laws are mostly maintained.”

You have confusing tax laws and yet maintain free market. Wow!
You also maintain supply-demand laws! ha ha!

Which country do you belong. This is a non-fiction blog, go write your fiction at some other blog!

By: Manu

Manu — Wed, 21 Mar 2007 07:28:39 +0000

This policy is rooted in the Nehruvian hatred for profit-making. Chidambaram and his cronies are simply displeased that businesses in a certain sector will make a lot of money.

As Tushar points out above, cement is a very small portion of the overall prices of real estate.

By: Balaji Viswanathan

Balaji Viswanathan — Sat, 17 Mar 2007 07:42:55 +0000

I guess most posters failed to notice the implication of the dual pricing policy. It is a carrot & stick mechanism, where the companies are given carrots (low excise duty) if they keep the price below the government expectations and hit by the stick (higher duties) if they go overboard. As a policy it is fundamental to realpolitik & everywhere from giving sops to R&D and sunrise industries to incetivising small saving for individuals we see this.

Now, the fundamental question is what price is the right price. This is not easy to answer and if you believe in capitalism should be left to free markets. But, sometimes illiquid & inelastic markets dont exactly act free and a temporary/minor government intervention in a few core sectors cannot be totally unjustified. Fuel, Cement & steel are core elements of our economy and a few percentage change in prices can snowball into a huge inflation monster and I believe that the government cannot be blamed too much for intervention.

But, care must be taken to make sure markets remain mostly free and supply-demand laws are mostly maintained. And also, long term the industry must still have incentive to invest and grow so that India’s fundamentals are strong. I might also go an extra step of giving tax sops for additional capacity addition investments and slightly increase overall tax (excise etc) so that lazy dogs are punished and fiery movers are rewarded. Frequently this policy must be reexamined so that we dont end up the China way of overproducing everything with government fiat.

By: Harish Babu

Harish Babu — Wed, 14 Mar 2007 17:04:23 +0000

Government is trying to curb the inflation by trying to decrease the demand pressure rather than investing on the supply side. Cement industries are running at full capacity and increasing demand from the real estate and infrastructure projects have put pressure on its operations. This reminds me of the steps taken by the government to stop the raising sugar prices last year. Sugar companies are running in loses today and their share prices have almost bottomed out.