Cement manufacturers seem to have developed cold feet over price hike issue as the government through one of its ministers expressed its unhappiness over surging steel and cement prices. According to some dealers, cement price may not happen in January except in some micro regions which may be due to local reasons.
Usually cement manufacturers hike price at the beginning of the month but in January it did not happen and dealers feedback indicated it to happen in mid-January. But even that didn’t happen as the Highway Minister Nitin Gadkari expressed his strongly against soaring steel and cement prices. Ongoing CCI investigation ad lower than expected demand for the commodity is also playing on the minds of the cement manufacturers. According to some dealers, holding on to the current price is also difficult considering the present demand conditions. According to analysts, commissioning of new capacities in various regions esp. east will also result in pricing weakness.
CCI has already initiated an investigation against many cement companies for alleged violations under Sec 3 of the Competition Act, 2002, which deals with the anti-competitive agreement or cartels. Several offices of the companies have been raided as part of this inquiry. It may be noted that under the Competition Act, 2002, the CCI has the power to levy a maximum penalty of a) 3 times of PAT for each year of continuance of the cartel or b) 10% of turnover, whichever is higher.
Cement manufacturers now may wait for budget announcements, especially its allocation for infrastructure and concessions to housing and real estate sector before taking a final call on price hike.