But for the opposition, the cement prices would have been raised right at the beginning of the new year. Now the cartel is understood to have adopted a new two-pronged strategy: One, the usual curtailing of production on the one hand, and slowly but silently raise the prices over a period of time. Cement prices have been moving northwards since November, and retail prices in Mumbai have reached levels of Rs 190-195 per 50 kg bag. Dealer prices are hovering around the Rs 184 mark.

Interestingly, in order not to disturb demand, the last round of intended price hike in fact, had to be suspended and instead prices had been slashed to Rs 3 per bag and the price hike has been decided, to be implemented in a phased manner.

Given the all-round demand for the commodity, it may not be out of place to say here that the prices may even reach Rs 215-20 by March end, adding substantial support to the otherwise stagnant, if not declining, bottomlines to the cement corporates.

Currently, the industry seems to be in a wait and watch mode as far as consolidation is concerned, with the fortunes of the industry now witnessng an upturn after a significant period. This has been primarily due to the sustained price increase that has been maintained as builders and dealers cry hoarse over alleged cartelisation by manufacturers. Meawhile, the builders and contractors have been threatening to stop cement purchases unless the Centre takes action against the manufacturers for " artificially hiking cement prices."

At a recently held meeting of the Joint Acton Committee - comprising Builders Association of India, Mahaashtra Chamber of Housing Industry and other associatons - the members decided to move the Centre to initiate action, against the cement makers under the Monopoly Restrictive Trade Practice (MRTP) Act for " unfair business practice."

Industry sources however pointed out that it would be difficult for builders to stop work, who have time-bound contracts. However, private builders may resort to such a move, if the situation arose.

The efforts to cover up the last year's sluggishness in price, comes at a time when the cement industry finds itself on a hot-bed of activity after witnessing a dull first half last year. Given the overall concerted efforts, the new year will ring in hectic activity with consolidation taking place in the industry - the biggest in scale, of course being, the demerger of Larsen & Toubro's (L&T) cement division. L&T, which has the largest cement capacity in India of about 14 million tonne, is looking out for a strategic partner for its cement division. L&T has proposed a two phased entry for the foreign partner, which will eventually reach a situation where L&T and the partner will hold equal stakes in the joint venture.

The Financial Express had reported earlier that L&T has asked the partners to submit non-binding indicative bids, for the cement company partnership by January 31, 2001.

The restructuring of the BK Birla group's cement business is also on the anvil with talks for the sale of the Manikgarh unit still on hold. Previous talks with Britain's Blue Circle Plc, had subsequently broken down. Also, the Mehta-group owned Saurashtra and Gujarat Sidhee Cement which have been in the red for quite some time, is also scouting for suitors.

Agency to review production cost urged
The Andhra Pradesh government has convinced the cement manufacturers to agree to appoint an independent outside agency to review the cost of production, in order to fix the maximum retail price for cement in the state. After the discussion with the cement manufacturers at his office, the industries minister K Vidyadhar Rao said, the independent agency is expected to submit its report in three weeks time, and the same will be implemented throughout the state.

According to the informed sources the minister had told the industry delegation in clear terms, that if they did not cooperate with the government in bringing down the cement price, the state has decided to import cement either from Korea or from Japan.

"We are not interested to inflict losses on you but at the same time we cannot be silent spectators when the common man is exploited", the minister said.

According to industry sources, the cement prices in the neighbouring states are much higher when compared to Andhra Pradesh. The whole sale price is stuck at Rs 165 per bag for over two weeks, says the industry sources.Interestingly, the state government had obtained contract rate from the cement manufacturers at a price of Rs 125 per bag, and the officials argue that this price would include the profit margin.