Cement industry in South India facing various pressures: N Srinivasan

Industry unable to increase prices even as cost of production rises

The cement industry in the south is facing the twin pressure of falling demand and a sharp rise in raw material and other costs.

Stating them, N Srinivasan, vice chairman and managing director of India Cements, said industry players had not been able to increase the price to compensate the cost pressure.

The company, which increased its prices along with its peers recently, said it was still under pressure to meet the costs and report better financial results.

While the retail cement prices haven’t gone up considerably, the cost of raw materials and other manufacturing costs had  increased manifold in the last several years, he said.

The manufacturer gets around Rs 180 for a bag of cement if the retail price is around Rs 370 per bag as value added tax comes to around Rs 48; excise duty is around Rs 39.

“Cement is treated as a commodity when it comes to the market. But it has to be manufactured,” said Srinivasan.

He said the industry was anticipating the economy would revive and all pending projects would get implemented, boosting demand.

The industry also expects boost from the proposed capital city in Andhra Pradesh. According to him, the cement industry in the south was suffering from over-capacity.

He explained that of the 70-80 producers in the country, almost 45 were present in the south. Of the total 360 million tonne capacity, more than half is situated in the south.This has left the region with overcapacity.

Refuting allegations of real estate developers that the increased cement prices were affecting property sales, he stated the cost of cement in the overall real estate development cost was not high.