Cartel pushing up price to raise election funds, market watchers suspect

A fortnight ago, cement sold for Rs.280 a bag. Today, it costs Rs.350. And it may cross Rs.400 soon, according to market sources.

One fallout is that construction workers have been rendered jobless in Madurai and its peripheries. While the general public is unaware of the factors behind the price rise, market watchers suspect the role of a cartel.

The truth is, with not many large-scale civil works in progress in and around Madurai, the price of cement should actually come down. From last month’s price of Rs.275-280, it should have fallen to Rs.250. Instead, it is rising. It will be wiser for the stakeholders to go slow in such a situation, says L. Balaji, a senior valuer associated with the Valuers’ Association.

S. Guna Shekaran, president of the Association of Madurai Civil Engineers, says the steep rise in cement has resulted in construction activities coming to a standstill in the Madurai region.

“In my firm, on an average, 100 workers are engaged in daily construction works on various sites. But in the last 10 days, only 20 per cent of the usual workforce is being employed,” he points out.

Says a leading civil contractor, who executes works for the Education Department, “In such a volatile situation, we have very little room to revise our estimates because we may end up incurring a loss. We may be forced to adopt other means to offset the loss.”

Attributing the steep rise to the role of a cartel comprising big cement manufacturers, he says, “With general elections fast approaching, political parties may approach the cement industry for funds (donations).”

G. Shanmugam, a cement dealer, says there is no stock in the godowns of major cement manufacturers in and around the city. The price, which closed at Rs. 350 per bag on Saturday, may touch Rs. 375 by Monday. “It looks like the manufacturers are creating a demand in the market,” he says.

Carpet area

Fearing that cement prices may shoot up further, middle-class home buyers engaged in constructing new homes are cutting back on carpet area. Navaneethan, working with a Central government undertaking, says: “I planned to build a 1,250 sq.ft. house in TWAD Nagar. Spiralling cement prices have forced me to reduce the carpet area by 150 sq.ft. I plan to add a small portion later if the price stabilises.”

S. Vijayan, a civil engineer from Gomathipuram, says small budget home buyers are forced to suspend construction activity in the wake of a 40 per cent rise in cement prices between August 30 and September 15. If the prices do not fall, there may be a delay in executing works and the schedule of handing over buildings to owners will go awry.

A senior banker working for a public sector undertaking says at a time when home loan melas organised by reputed builders are getting a lukewarm response, an abnormal price rise in cement may destabilise the industry.

Consumer activist Seetharaman says the stoic silence maintained by political parties over spiralling cement prices only raises doubt in the minds of people.

Denying the cartel theory, a senior sales manager working for a leading private cement company blames the falling rupee value. Prices have risen across the board, he points out. Even onions are not spared, he notes.

Another executive of a cement company says construction activity has picked up after a lull both in the public and private sectors. As a result, there is not enough stock in cement godowns. The rise and fall of cement prices is only a cycle and this trend will correct itself, he argues.


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