Cement manufacturers on Tuesday sought the Centre’s intervention to end the alleged cartelisation by builders who were adopting a ‘profiteering approach.’ The manufacturers also alleged there was a lobby among builders and there was no administration to rein them in and their profiteering approach. The comments come days after Union Road Transport Minister Nitin Gadkari had said the big players in the steel and cement industry were indulging in cartelisation to jack up prices.
Speaking at an event in Mumbai recently, Gadkari had said, “regarding steel and cement, this is really a problem for all of us. Actually, I feel this is a cartel by some big people who are doing cement and steel”. Noted industrialist N Srinivasan on Tuesday said the South India Cement Manufacturers Association representing the traders from the southern parts of the country was formed in December 2020 with an objective to act as an interface between cement manufacturers and the government.
Srinivasan, also the Vice Chairman and Managing Director of city-based The India Cements Ltd, said a memorandum had been submitted to Prime Minister Narendra Modi urging the government to take proactive measures to break the builders lobby. Briefing reporters, he said, the cement industry was a ‘shining example’ of the Centre’s ‘Atma Nirbhar’ campaign as everything in industry was done in India including technology and maybe some machines may be imported from other countries but everything else was run by an Indian.
India was ranked second in terms of cement capacity accounting to 500 million after China’s 2.6 billion, he said. “The United States is a 70 million tonne industry and so India is streets ahead in cement production. Cement production in South India alone is three times of the United States”, he said.
Srinivasan said Andhra Pradesh, Telangana and Karnataka account for nearly one-third of India’s limestone deposit and have the potential to become a ‘cement hub’ for future development. Despite the huge potential, he said the industry was ailing due to the poor growth of the housing sector due to the ‘artificially high prices of flats and houses’.
“There is a clear cartel working among builders under the banner of CREDAI and Builders Association of India who are holding on to prices despite having a margin of more than 100 per cent. Unfortunately, no concrete action has been by the administration to rein them in and their profiteering approach,” Srinivasan said in the memorandum. Confederation of Real Estate Developers Association of India and Builders’ Association of India (BAI) are two associations that represent the real estate sector in the country. Giving an example, Srinivasan said, the major cost of flat price being land, the association made a check on the guideline rate for land in high end areas of Chennai.
“It is Rs 10,000 per square foot. Given an FSI of 2/2. 4, the cost of land in a flat would be approximately Rs 4,200 per square foot. Adding to it is construction cost approximately Rs 2,000-Rs 2,500 a square foot, the total cost of a completed flat works out to a maximum of Rs 6,700 per square foot. However, the selling price is ranging from Rs 15,000-Rs 20,000,” he said. Noting that there was a huge unsold inventory in the housing space, he alleged that the builders’ lobby was not allowing the prices to slide. “Only if builders had cut the price and sold the inventory, we would have seen a total revival of realty demand. Builders have just not taken advantage of the Prime Minister’s affordable housing scheme. Thus also denying benefit to the public at large,” he said.
Srinivasan representing the traders’ body urged the Centre to take proactive measures to break the builders’ lobby. “Ask each builder to come clean on costing and ask them to reduce the price at least by 50 per cent. CREDAI and Builders Association of India have a lot of explanation to do on behalf of their members,” he said.