CHENNAI: Construction industry bodies in the four southern states on Wednesday threatened to stop purchasing cement from June 30 and bring all works, both government and private, to a halt on July 7 if cement prices are not brought back to their pre-June levels.
Terming the decision a regrettable but unavoidable measure, the Confederation of Real Estate Developers’ Associations of India, the Builders’ Association of India and several other construction industry bodies in the state stated that if cement prices were not brought down following that, all construction work in Tamil Nadu, Karnataka, Andhra Pradesh and Kerela would be stopped “indefinitely.”
“The current prices of cement, hiked by more than 25%-30% in Tamil Nadu, Andhra Pradesh, Karnataka and to some extent in Kerela, are untenable to the construction industry. We have appealed to both the government and cement manufacturers to bring the prices down, but failing that we have no choice but to stop purchasing cement from June 30 and stop all construction work from July 7,” said CREDAI Chennai president Ajit Chordia at a press conference here.
The statement comes following the `70 per 50kg hike on whole sale cement prices in Tamil Nadu, which came into effect from the first week of June. Cement prices also went up in Andhra Pradesh by about `90 per 50kg and by varying amounts in Karnataka and Kerela at the same time.
Maintaining that the industry did not want to pass on the cement price burden to customers, CREDAI said, “There is no option but to stop our work indefinitely if there is no decrease in cement prices...We have been forced to take this extreme step.”
Builders’ Association of India past national president and trustee R Radhakrishnan said that if current cement prices were to remain unchanged they would add on a cost of about `40-45 per sq ft when passed on to the customer. He also added that there were around `1 lakh crore worth of projects currently in progress in south India and all would be affected if the construction industry were to stop work on them.
TANCEM (Tamil Nadu Cement Corporation) promoted by the state government retails cement per bag at `265 and was making profits, but private companies sold it at `365 per bag, he said.
While the Cement Manufacturers Association has not made an official statement to the construction industry’s ultimatum, a highly placed source in the organisation said that general problems like sub-5% GDP growth, a sluggish demand for cement, excess capacity, low price realisation, escalation in costs and the high incidence of tax on cement compared to other core sectors were all factors and that the increase could not be called a hike but only a recovery.