Cement prices set to increase in North too: Sanjay Ladiwala

Excerpts from Bazaar on CNBC-TV18 Watch the full show » RELATED NEWS Huge demand to up cement prices in North: Binani Cement BSE | NSE 10/02/12

In an exclusive interview with CNBC-TV18, Sanjay Ladiwala, President of the Cement Manufacturers Association (CMA), spoke on the recent price hike in three states.

Below is a verbatim transcript of the exclusive interview with Sanjay Ladiwala on CNBC-TV18. Also watch the accompanying video.

Q: Do you see big price hikes?

A: Yes, there have been price hikes in the Southern and the Western regions--not big though considering what had come off in the recent months, but yes a start for price hikes.

Q: Can you quantify which parts of the country are expected to see what kind of price increases?

A: Andhra has started with a chain average of Rs 10-12 per bag, that was the first price hike that was heard of. The figures for Tamil Nadu are not yet clear but it should be in that vicinity. Maharashtra is looking at between 5 and 8 a bag, and in some regions, like Gujarat, it is in Rs 8-10 per bag. There is no such news available in the North, it will follow suit a little later but these are the starting indications.

Q: Do you see any specific trigger to these price increases?

A: Yes. The government has given priority for allotment of railway wagons to food grains and fertilizers. Therefore, there will be a lot of rakes that will be allotted to cement and to food grains and fertilizers. So there are a lot of rakes which were actually to be allotted to do some movement of cement regularly but which have been reduced and been transferred to those categories which are getting much more priority now. Therefore, there is a severe dearth of availability of railway wagons and transportations to markets is getting very difficult and it is basically a logistical problem.

Q: Is this a temporary demand-supply led mismatch spike, and will it stick then because there is a lot of supply which is coming in the next few quarters? Do you think in the face of that supply these kinds of Rs 10-15 a bad price hikes will stick or it is just a few weeks' phenomenon?

A: This is an aberration now because if this problem were to continue and railway wagons are not available for a length of time and even for say two-three weeks, I am not talking months, then it is likely to be a major trigger and bring about a turnaround in the prices which were moving southwards. However, on the other hand, that would also create problems of production because there is a limit to which cement and other things to be stored. So I don't think this will be allowed to happen, and in all likelihood this maybe a temporary phenomenon--this is a wait and watch situation because there is definitely a dearth of wagons and the government will give priority to food grains looking at the scarcity in all the regions.