The spiralling cement prices, which was a cause of concern, has now dipped by more than Rs. 20 a bag, bringing some relief to both consumers and construction industry stakeholders.
The cost per bag here was between Rs. 330 and Rs. 350; it is now between Rs. 300 and Rs. 330, depending on the grade and brand.
The decline in prices comes as cement manufacturers and their association were asked by the Competition Appellate Tribunal in May this year to pay 10 per cent of the Rs. 6,307.32 crore fine imposed for cartelisation on manufacturers by the Competition Commission of India in June 2012.
According to the Builders’ Association of India (BAI) national managing committee member M. Ramesh, the price of a bag, which was around Rs. 250 nearly two years ago, suddenly started moving upwards without any justification.
“It reached a peak price of Rs. 350 without any abnormal increase in their raw material or operational cost. The BAI approached the Competition Commission against the cartelisation and the commission agreed with the argument. A hefty fine was imposed both on 11 companies and the Cement Manufacturers Association.”
Meanwhile, the decline in prices, he said, would help a large number of developers as well as individuals planning to construct homes.
Mr. Ramesh said cement comprises about 10 to 15 per cent of the raw material cost in construction and a usual 10 square-house requires about 400 to 500 bags.
Stating that the commission’s order on cartelisation could deter companies from raising prices abnormally in future, he conceded that the benefit of declining price of cement may not be passed on to consumers by contractors/ developers.