Tiruchirapalli

Rise in input costs cuts down profit margin of building contractors

Even masons now charge ₹ 800 per day, ₹100 more than what used to be the daily labour rate earlier.

Even masons now charge ₹ 800 per day, ₹100 more than what used to be the daily labour rate earlier.  

Though construction activities have resumed to a considerable extent after relaxation of lockdown restrictions, building contractors have their fingers crossed due to the sudden escalation in the cost of inputs.

The cost of cement has risen by ₹ 50 for a 50-kg bag, and branded steel costs ₹ 8,000 more per tonne. Likewise, the cost of M.sand per load of four units has also gone up by ₹ 1,000.

Earlier, a bag of cement used to cost anywhere between ₹ 350 to ₹ 400, depending on the brand. Steel used to be available in the range of ₹ 53,000 per tonne, and a load of four units of M.sand used to cost ₹ 16,000. To top it, the masons now charge ₹ 800 per day, ₹100 more than what used to be the daily labour rate earlier, according to Raja, a building contractor.

"We cannot recover the higher costs from the clients. The concept of escalation clause does not exist for small buildings. There is bound to be a drastic cut in the profit margin," he explained.

Kamaludeen, a cement trader in Tiruverumbur, said the sudden rise in the cost of cement is the reason why it is now being sold in loose for ₹ 12 per kg from ₹10 earlier. Labourers are also becoming scarce for loading, unloading and delivery of cement bags at the construction sites, he said.

“For now, the traders of building materials are able to generate tidy profits, as they are in the process of clearing inventory that had stagnated in the last two months as the lockdown was intense. But, the margin will take a hit when we start getting new stocks,” a seller of branded paints and emulsions, said.

The strain in the supply chain is bound to remain for some months since the manufacturers of building materials have cut down production to less than 50 % of their usual levels, the traders say.

The only silver lining for the building contractors is that there is no scarcity of work force, and they can retain the goodwill of the clients by completing construction activities without undue delay.

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Printable version | Aug 7, 2020 6:43:36 AM | https://www.thehindu.com/news/cities/Tiruchirapalli/rise-in-input-costs-cuts-down-profit-margin-of-building-contractors/article31870615.ece

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