Realty sector reels under cement price hike in AP

Vijayawada: Real estate associations are contemplating to issue an ultimatum to cement companies in the state threatening to stop purchase of cement over the abnormal price increase and alleged deliberate reduction in production in order to create artificial scarcity in the open market during the summer in which construction activity is high in general.

Highlights:l

• Cement companies are accused of cutting production to create scarcity and jack up prices
• Real estate bodies furious over silence of the state government on the cement firms’ syndicate
• Threaten to declare ‘purchase holiday’ as a protest

The Confederation of Real Estate Developers’ Associations of India (Credai), the apex body of realtors, is seeking the state government’s intervention on the issue before taking any tough decision on halting purchases.The cement prices in the state rose by 25 to 35 per cent during the last one week, touching Rs 360-Rs 370 per a bag of 50 kg as against around Rs 270 a week ago.

The real estate organisations are alleging that the cement companies in the state cut the production to around by 20 per cent of their total capacity in an attempt to create artificial scarcity and jack up prices. As a result, construction work has slowed down for a week across the state, which is likely to affect construction of houses under government schemes.
Credai vice-president Are Siva Reddy told the Hans India that the price hike had badly hit not only real estate sector but contractors and common people who build new houses under government schemes or for their individual needs.

He alleged that the cement companies increase price every two or three months, particularly in summer, as construction activity would be high during the season. In fact, costs of all construction materials have gone up by around 80 per cent during demonetisation period, with no relief in sight even now. The prices of steel also rose to Rs 8,000 to Rs 9,000. “It is unfortunate that ultimately, it is the common man who buys flats and small houses with their hard earning money, who is affected most by the price surge,” said Siva Reddy.

However, the representatives of real estate firms are furious at the silence of the state government towards the alleged cartelization of cement companies. The state government came to an understanding with the cement companies on supply of cement at reduced rates for irrigation projects and other government works. “The companies supply cement to government at Rs 260 per bag.

So the government is not taking action on the companies and has been ignoring our (realtors) grievances,” said a realtor.Amaravati region realtors’ association president Gadde Rajaling said that Chief Minister N Chandrababu Naidu held a meeting with the representatives of cement companies three months ago following their representation to him. But, there has no change in situation, he said.

“Cement companies are increasing prices every 15 days imposing heavy burden on the construction sector. We depend completely on companies of Andhra Pradesh and Telangana in view of transport expenses involved in procuring the commodity from other states,” he said.Both Siva Reddy and Rajaling said they would hold a meeting in a couple of days and take a decision over the issue. Declaring purchase holiday is one the options, Siva Reddy said.