Hike in cement prices leaves builders high and dry

Realtors in the city are on tenterhooks, thanks to the unprecedented hike in cement prices, several construction companies have either stopped work altogether or have slowed down their work. If the cement prices went up by 12 per cent last year, this year the construction industry is hit by a phenomenal rise of about 50 per cent. A high grade cement bag that costs Rs 250, two weeks ago, is today available at Rs 350/50 kg.

It is not just cement prices that realtors are worried about Nageshwar Rao, partner of Meghana constructions says, “It is not just the cement price but also the sand and steel has increased. Many builders would go slow and the project deadlines are bound to be delayed.”

While some builders believe that price fluctuations of cement is a regular phenomenon and they hike yearly once and then stabilize in a month or two. “Cement work approximately takes four months and if prices go down after that it would be no help and we have to sell the finished projects by burning hole in our pockets, unless the rates has stabilized we cannot resume our work”, claims Prassana Kumar owner of New City Builders.

On the other hand manufactures claim that the increase in the cement prices is due to the increase in cost of raw materials and recent power cuts has added up to it.

“Construction business deals with many other minor segments like plumbing, painting, labour, wiring, unless government takes up an initiative to regulate the prices of the sand, cement and steel all these segments will be in troubles as construction is the bread earning profession for many” says Gopal, owner of GVR constructions.

Government is also keen about the price of cement and Telangana Chief Secretary Rajiv Sharma on Monday held talks with the representatives of several cement companies asking them to reduce the price of cement. According to sources cement company owners asked 10 days time to discuss among themselves and get back to the government.

Rajiv Sharma has raised the issue of the provision that mandates the cement companies to supply 18 per cent of their cement production to the State government at 50 per cent of the market price, in return to the benefits provided by the government, including allocation of limestone mines and others.

Both the state governments – AP, TS – are worried about the possibility of abnormal cement prices having an adverse impact on the government’s flagship programmes like constructing 2 BHK houses at a cost of Rs 3 lakh per unit. The representatives of the cement companies were said to have explained to the Chief Secretary about the sharp increase in the cost of overheads such as severe power cuts imposed on the industrial sector, hike in raw material and labour charges and other factors for their decision to increase the price.