Construction costs for real estate developers have gone up by 15-20% in the past three months because of a steep rise in cement prices, says the National Real Estate Development Council (NAREDCO).
The industry body claims that cement manufacturers have increased the price of cement by . 100 per bag in the last three months and are also creating an artificial scarcity of cement in the market, leading to project delays.
“This will surely have an impact on our costs,” says a DLF spokesperson.
Navin Raheja, president of NAREDCO, alleged that cement companies have a formed a cartel and have raised prices saying the cost of one of their main inputs, coal, has gone up. While cement prices have been going up since August, coal prices have only started rising since mid-October. The industry body has now lodged a formal complaint with the Competition Commission of India against cement manufacturers.
Last month, another real estate industry body, Confederation of Real Estate Developers Association of India, had also approached CCI, asking for an enquiry into the artificial shortage of cement and the abnormal price increase by cement manufacturers. “We are yet to get a response from CCI,” says Geetambar Anand, vice-president of Credai.
Cement prices have gone up from . 180 per bag in August to . 280 per bag in October. There is a shortage of cement in the market because of which cement manufacturers are not giving any credit line to developers who are being forced to pay upfront, and in some cases wait for up to 15 days for deliveries of cement bags. “This has thrown our construction schedules awry. At least 50% of time is getting wasted on our construction sites,” says Anand, who is the managing director of ATS Infrastructure.
The developers, says Raheja, are being forced to import cement from Pakistan and other countries, which is much cheaper today. The landed cost of such import is about . 235 per bag. Cement manufacturers though say prices have remained steady in the last one year, despite input cost like coal, power and logistics having gone up by . 30 per bag.