The leading manufacturers are offering various incentives like quantity discount, trade discount, credit note, among other marketing gimmicks. With the competition becoming fierce, the trade has become hazy amid longer credit cycles, apart from disparity in prices. In a bid to offload unsold stocks, some diehard traders have even started under billing. Until now the cartel of cement producers remains united but it may break up, if the competition increased further.

With the advent of monsoon, all public and private work will come to an end, resulting in lower off-take. Realising the fall in demand, stockists are keen to reduce their inventory. Until now, traders were normally using popular tools like price undercutting -- selling the goods with razor sharp margin,but now some disparate players offer under billing. In which, one has to give a cheque for the full amount, but the actual payment would be much lesser. ``Some traders are offering credit note, like a gift voucher on purchases, a new gimmick.'' said an insider.

Contradictory prices create chaos among consumers as well as wholesale traders. The prices per bag varies from Rs 94-124, a whopping difference of Rs 30 per bag, normally it remains around Rs 15 per bag. Instead of some uniformity, one can find the rate that varies from dealer to dealer. If the prevailing trend continues, it may jeopardised the voluntary agreement made by the cartel, which is holding the price line, albeit in a theoretical way.'' said a prominent trader.

Though the cartel has issued a fiat that members should not sell their goods in the builder quanta -- a special category of bulk deal, in which goods were directly sold to builders only. It was a popular tool of price undercutting. In the recent past, the cartel has ordered to stopsale in such category, however some smart operators have continued the activity in the name of institutional sales, it is nothing but an old wine in the new bottle, say trade sources.

According to unconfirmed reports, recently Larsen and Toubro had sold 1.40 lakh bags to Nirma institute for Rs 95 free on road (FOR) Bhavangar. It excludes dealer commission of Rs 2 per bag, hence actual realisations comes at less then Rs 93, including freight, the trader said. When contacted, company sources didn't confirm the deal, terming it as a `trade secret'.

Confirming the trend, Sardar Sarovar announced the FOR price was Rs 1,920 per tonne for it's Canal located at Bahruch. The cost per bag comes at Rs 96 per bag, and this too is valid for three months with credit period of 30 days. While the bulk deals take place at around Rs 95-97, retail consumers are paying as high as Rs 130 per bag. As cement attracts sales tax of Rs 17.50 and octroi of Rs 2.50, merchants evading tax makes a profit of Rs 20 per bag. According toan analyst, the economics of the cement is interesting. While the other commodities become dearer, cement remains statistic. In fact, prices fall when inflation is taken in to account. Although general price inflation exist, actual production costs for the manufactures remains constant, as most of the producers are extracting more lime from the mines than their contract terms, he explained. If such type of exploitation continues, it will lead to an early closure of lime mines. The state government, who leases the mines, would be the loser in such cases.