Cement price hike not to impact Telangana projects

​Hyderabad: Cement has turned costlier in Andhra Pradesh and Telangana as companies have gone for a hike recently, citing rise in input costs. But will this lead to cost overrun in government projects in the two Telugu states?

Industry insiders say the price hike will not have any adverse impact on the government projects as companies have already promised to supply cement at subsidised prices to all government works. “We have a gentlemen’s agreement with the State governments, under which have agreed to supply cement at Rs 230 per bag. This agreement will continue even if there is any increase in market price of cement,” M Ravinder Reddy, Director-Marketing, Bharathi Cement, told The Hans India.

Reddy admitted that companies had recently increased cement prices by anywhere between Rs 20 to 30 a bag. “Some said that we increased prices by up to Rs 70 a bag, but that’s not true. The increase varies from market to market, but it’s not more than Rs 30. We have no other option except going for the increase as prices of coal, fuel and other input materials have gone up significantly,” he maintained, pointing out that cement prices declined in the last quarter.
       
However, real estate developers said that cement prices were increased from Rs 280 a bag a week ago to Rs 350 now in Hyderabad, resulting in a hike of Rs 70. They alleged that cement companies formed a cartel and enhanced the prices.

Asked about cement sales in Telugu states, Reddy said that sales were extremely good in Telangana last fiscal. “Cement sales in Telangana went up by a whopping 40 per cent in FY18. It is first time after YSR government that we have witnessed such a phenomenal growth in cement sales. This is largely due to irrigation projects that Telangana government has taken up,” he said.

He however said that in Andhra Pradesh, cement sales growth was just two per cent. “But AP also recorded good growth of 30 per cent in the last quarter (January-March 2018), though the overall growth was less compared to Telangana,” he said. 

According to industry estimates, two Telugu states consume roughly 20 million tonnes of cement annually. The consumption reached 22 million tonnes last fiscal and companies are hopeful that the growth momentum will continue.  Companies sold over 28 lakh tonnes in the two states in the last quarter alone.