AP and Telangana Realty developers boycott cement purchase against price hike
In the wake of the unreasonably high increase in cement prices, the Joint Action Committee (JAC) of builders and developers in Andhra Pradesh and Telangana which was formed has stepped up their demand seeking a role-back of the prices. In retaliation, they have decided to extend the boycott on buying cement by another week, till July 26th, 2014. To extend moral support, the real estate community in the other southern states have condemned the rise in cement prices which was brought about by cement manufacturers in the two states last month.
JAC formed in protest
Incidentally , the Confederation of Real Estate Developers’ Associations of India (CREDAI) in conjugation with its Andhra and Telangana chapters as well as other associations had formed a Joint Action Committee in protest against the price rise of cement. They went a step further by boycotting the purchase of cement from cement manufacturers, from July 5th-12th, 2014. The extended boycott is likely to send a strong message out to cement manufacturers at a time when developers are already reeling under the effect of hike in raw materials and construction costs.
Positive outcome expected
By extending the boycott by a week till July 26th, the protest initiated by the JAC along with its associate members has entered the third week. The Telangana government has decided to conduct discussions between the JAC and the Cement Manufacturers Association (CMA), in an effort to break the deadlock. A positive outcome is expected out of the discussions as the government has assured to take a re-look at the cement prices in the wake of the prolonged boycott by the JAC. Currently, the government is in discussions with the CMA to resolve the issue at the earliest. The JAC is hopeful that there will be a positive outcome out of the present discussions, in terms of reduction in cement prices. Considering the current scenario in the realty market of Andhra and Telangana, a role-back in prices is imperative so as to safeguard the interests of individual builders and developers as well as the construction industry as a whole.
Impact on Realty market
The unreasonable and untimely increase in cement prices in Andhra and Telangana has come at a time when the realty market in the region is going through a tough phase in terms of fall in property prices coupled with rise in construction and raw material costs. This has resulted in an increase in the inventory pile-up of the projects of most developers. Hence, any further hike in costs is likely to effect their margins considerably, plunging the realty market in the region into a bigger abyss. It is in this context that the government should step in to control any unwarranted hike in cement prices for the time being.
