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Setback for FM as cement firms say no scope for price cut

Setback for FM as cement firms say no scope for price cut
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First Published: Fri, Mar 23 2007. 12 27 AM IST
Updated: Fri, Mar 23 2007. 12 27 AM IST
Monica Gupta
New Delhi: Cement manufacturers, who met the finance minister and other officials at the industry ministry on 22 March, declined to cut the prices of cement further. The government has been concerned about spiralling cement prices and wants to rein them in as part of its battle against inflation.
In this year’s Budget, finance minister P. Chidambaram had said that companies selling cement for more than Rs190 per bag would have to pay an additional excise duty of Rs200 per tonne, a sort of disincentive for companies to raise their prices. Cement companies still chose to raise their prices.
The meeting on 22 March was the second convened by the finance minister since the Budget.
Speaking to reporters after meeting representatives of the cement industry, Chidambaram said: “I got the impression that there are some sober voices within the industry while some appear to have a hawkish view. We have seen the prices in December 2005, January, June and December 2006. We have told them that we know about their sales, their profit before tax and their profit after tax. Some have a sober view to help the government in moderating prices, others are hawkish. I hope that they will discuss among themselves and come back with a firm proposal.”
Following a meeting with Chidambaram, the representatives met industry secretary Ajay Dua. The secretary declined to comment, but an industry ministry official, who did not wish to be identified, said the representatives had refused to cut prices.
“They pointed out that there is no scope for a price-cut. Their contention is that for 15 years they have not made any profits, they are only doing so in the last 15 months so they do not want to cut prices,” he said.
Manoj Gaur, president of the Cement Manufacturers Association, an industry body, told reporters that the finance minister had convened the meeting to discuss how prices could be moderated. “We have given him our proposal,” he said but declined to elaborate on specific details.
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First Published: Fri, Mar 23 2007. 12 27 AM IST
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