Andhra Pradesh seeking lower cement prices for govt procurement

By Narayana Krishna

HYDERABAD: In a bid to bring down its construction costs, Andhra Pradesh has asked cement makers to cut prices to below 220 rupees per 50-kg bag for all state government supplies, a source in the known of the development told Cogencis today.

Ultra Tech Cement Ltd, India Cement Ltd, Sagar Cements Ltd, and JSW Cements Ltd are among the big cement sellers with a manufacturing base in the state.

On Wednesday, Andhra Pradesh Chief Secretary I.Y.R. Krishna Rao met top officials of panchayat raj, water resources, industries and transport, roads and buildings departments to ensure supply of cement at concessional rates.

The state industries department has conveyed the government’s stand on prices to the companies, the source said. The government’s cement requirement in the current financial year is pegged at 3 mln tn, the source said.

According to the source, the Centre has notified rates for procurement of cement for National Highway Projects at 171-220 per 50 kg bag.

Cement industry representatives are likely to meet Andhra Pradesh industry secretary today to submit their view on the pricing issue, the source said.

Cement retail price in Andhra Pradesh is currently at 270-320 per 50 kg bag.

The combined installed capacity of the Andhra Pradesh cement industry is around 30 mln tn per year, and cement companies currently operate at 50-60% of capacity.

The source said the companies and the government are likely to arrive on a decision on pricing in the next few days.

Following the bifurcation of Andhra Pradesh, the residual state is developing its capital near Vijayawada-Guntur. The state government is also developing huge infrastructure, which would require large quantity of cement in the coming years, the source said.

At 1304 IST, shares of Andhra Cement were down 1.7% at 8.60 rupees on the National Stock Exchange, while those of UltraTech were up 1.7% at 3,082 rupees. Shares of Sagar Cements were down 2.5% at 350 rupees and those of India Cements were down 1.5% at 91.05 rupees.

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