In TN, real estate business, cement makers spar over price hike yet again

Real estate builders and cement producers within the State are yet again sparring over the rise in cement costs. Real estate gamers have warned that this might result in a rise in condo costs, whereas the cement business attributes the hike to to a rise of their enter price.

The rise in cement costs has been a politically-sensitive matter, and each events have been engaged in a disagreement over the problem in recent times. Developers have alleged cartelisation by the cement business, a cost which has been denied by the opposite facet. In flip the cement gamers have alleged that the builders ought to deliver down their inflated condo costs first.

The costs of cement, metal and different development supplies have been on the rise. Builders declare the retail cement costs have elevated about 13% to as much as ₹520 per 50 kg bag, up from ₹460 in May. “When it comes to construction, there are two important ingredients — one is cement and the other is steel. The prices of both these have gone up in the last two months. Anyone who is doing a project now will have to spend additional money, and because of this, apartment prices are likely to go up,” Suresh Krishn, Tamil Nadu president, The Confederation of Real Estate Developers Association of India (Credai) mentioned.

According to an analyst at analysis agency Emkay, cement costs in Tamil Nadu have gone up by 3.4% on the compound annual progress fee (CAGR) over the previous 4 years. Prices have elevated round 20-22% in FY21 from FY20 and have gone additional up by 3-4% within the final 3-4 months.

Padam Dugar, vice chairman and managing director of Dugar Housing Limited and president of Credai – Chennai Chapter identified that there’s a large price distinction between the cement bought in Tamil Nadu and that in neighbouring states like Andhra Pradesh. “A ₹50 increase in cement price will result in a ₹20 hike in cost per square foot. Taking into account time and other inflationary factors, we need to ensure that the burden of increase in final real estate cost be equally shared by the developers and customers,” Arun Mn, founder and managing director of Casagrand mentioned.

A senior cement business govt mentioned that enter prices have gone up and to that extent there is a rise in price. He identified that petroleum coke (petcoke) costs, a key enter, have gone as much as $130 from $45 per tonne, whereas diesel costs have gone as much as ₹90 per litre from ₹60 thereby leading to elevated freight price.

Cement costs have been growing throughout India as nicely. Natasha Trikha, analyst, CARE Ratings, identified that all-India wholesale and retail costs of cement elevated by 4.4% and three.3% to ₹358 and ₹371 per 50 kg bag respectively on a yearly foundation for the month of March 2021. Further, costs averaged ₹370 (wholesale) and ₹378 (retail) per 50 kg bag for the interval April-May 2021.

“In the overall prices of a property, there is an interplay of land costs, raw material costs, labour costs, taxes, etc. Among these, land cost has the highest share as compared to various other inputs like labour, materials and other services,” Mani Rangarajan, group COO, Housing.com, Makaan.com and Proptiger.com. mentioned. Hence, the land price has extra affect on condo costs. But the steep rise in costs of uncooked supplies, particularly since March this 12 months, can even have a bearing on the ultimate price of properties, he added.

Prateek Kumar, Research Analyst – Cement & Logistics, Antique Stock Broking Limited mentioned that the price enhance in cement doesn’t occur because it does within the case of FMCG firms or paint firms the place there may be an annual hike in costs. “Here it happens sporadically. Because of this factor the prices sometimes tend to look very high or very low as the demand-supply equation plays out,” he added.

The present spat comes when a brand new DMK authorities has come to energy. “They (State government) should call the manufacturers and the end-users and discuss the issue,” Mr. Krishn mentioned. The authorities has to arrange a crew to grasp this market and arrive at a choice,” M. Paneerselvam of Akila India Kattida Tholilalargal Mathiya Sangam mentioned.

Recently, TN Industries Minister Thangam Thennarasu had mentioned that the Chief Minister can be consulted on the problem and costs can be introduced down.

TUG OF WAR

What the builders and development business say

• Prices of main uncooked supplies cement, metal have gone up
• Wholesale cement costs have elevated to ₹460-470 (per 50 kg bag) in June from ₹420-450 in May
• Retail cement costs have elevated to ₹460-520 (per 50 kg bag) in June from ₹420-460 in May
• Higher cement costs would result in enhance in remaining costs of residential properties
• Need State authorities intervention to manage the cement and different uncooked materials costs

What the cement business says

• The enter price for cement has gone up, leading to greater costs.
• Power, gasoline and freight bills account for practically 50-55% of the overall expenditure incurred by the cement gamers.
• Input price for cement has gone up by ₹180-200/tonne, in response to analysts
• Prices of petroleum coke (petcoke), a key enter for cement have elevated to $130 per tonne from $45 per tonne
• Diesel costs have gone over ₹90 per litre from ₹60, leading to greater freight price