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July 5, 2001
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Money > Business Headlines > Report July 5, 2001 |
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Cement firms pen new survival strategy, kick off phased price hikeRumi Dutta Cement manufacturers, after having traversed the ups and downs of the price trends, have now designed a fresh survival strategy. As per the strategy, the cement prices would be increased in a phased manner across the country, with effect from July 4. Having increased prices by Rs 5 per 50 kg bag on Wednesday, they plan phased price hikes, with the next one due on July 9. This time the cement majors have also managed to persuade the smaller players in the cement industry to join the league. Following the common game plan, cement majors Larsen & Toubro, The Associated Cement companies, Gujarat Ambuja and Grasim have increased prices in the Bombay markets by Rs 5 per 50 kg bag with effect from Wednesday. The retail price in the Bombay market quoted by L&T is Rs 175, GACL Rs 173 and ACC and Grasim Rs 171 per 50 kg bag. Smaller players such as Jaypee Reewa, Lakshmi, Manikgarh Cement, whose prices had plummeted to Rs 140 per bag in the last month, have raised prices by Rs 15 per bag, bringing their prices back to levels earlier this year. According to industry sources, the cement producers are planning to cut production by around 15 per cent during the monsoon months of July and August. The marketing head of a leading cement manufacturing firm said: "Irrespective of whether the demand scenario improves or not, we plan to increase prices in a phased manner. During the monsoons, we cannot expect demand to increase by cutting prices. We have also withdrawn the discounts available to the dealers." According to analysts, as long as the manufacturers are able to regulate supply, they can manage to keep the prices under control. The cement players are looking at driving up the prices to Rs 184 per bag level prevalent in December last year. However, any price hike beyond that is unsustainable, they said. Moreover, the Crisil report on 'fair' cement price is the latest weapon in the manufacturers' armour, who are looking at smashing any objections raised against their pricing strategy. According to the report, the fair ex-stockist cement price from a new plant should be around Rs 216-222 and from existing plants Rs 180-193. Powered by YOU MAY ALSO WANT TO READ:
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