Real estate developers, already reeling under the pressure of poor demand, claimed that margins were hit by at least five per cent, even though steel prices had softened over the last six months. Cement prices have increased by up to 10 per cent.

However, the infrastructure industry is also facing cement shortage, and several companies working on a public-private partnership (PPP) model, are now seeking additional funds from the government to meet the increased cost.

"In the last three-four months, cement prices have gone up by up to nearly 30 per cent in some areas, and as a result the cost of projects have also appreciated. Consequently, several companies are required to make separate claims with the government to factor in the increased prices. In most cases, the additional fund sanctions takes a long time," said a senior official at Kolkata-based construction major Simplex Infrastructure. While confirming the rise in demand from realtors and the infrastructure sectors, Vinod Juneja, managing director, Binani Cements, denied that there was a 30 per cent rise in the price of the commodity.

While demand from realty is up by around five per cent, demand from the infrastructure sector is up by around 9-10 per cent in the last three months. On top of this, there is an issue of wagon shortage in western India that has resulted in a seven to eight days delay in delivery," he said.

Despatches have gone up by 9.15 per cent between January to March 2009 on a year-on-year basis, showed data from the Cement Manufacturers' Association(CMA). H M Bangur, president of the CMA and managing director of Shree Cement said that while demand had risen, production had also gone up by around 10 per cent in the last quarter.

Source: Business Standard Cement price hike puts developers' margins under pressure