India Cement's Coromandel (top) brand is still selling at Rs 151 per bag excluding discounts which reduce the price still further. That means India Cements has not implemented even the previous price hike announced on May 20.

Naturally, L&T has also maintained its prices at similar levels. Smaller players did not dare to raise theirs as per the Association agreement for fear of sharp market reprisals.

The market is used to a pattern of brand price differences and that gap cannot be bridged by the `B grade' players.

Today everyone has to follow IndiaCement's lead, particularly in Tamil Nadu - a market with far more potential in terms of price realisation compared with Andhra Pradesh. An outward agreement to follow the Association's diktat but an inward pressure to follow India Cements seems to be the name of the game. This is of course causing much disquiet in the minds of other manufacturers and stockists, for stability in prices is being pushed further away.

Many of them are silently fuming and plotting, but doing little else.``It will take a minimum of 21 days for a price hike to be implemented after the announcement of list price,'' said an industry source. ``For the first week there will be no action. In the second week the industry leaders will throw out some feelers. In the third week the price will finally touch the levels announced, by which time another list price would be announced which would take another 21 days and so on....''

Distributors scoffed at the latest price hike. ```Maybe at the end of 15 days we'll see a list price hike ofRs 3,'' they said. Cement stocks were in excess of demand and the market may not take the raise, they felt.

However some other industry sources felt that the market could tolerate a list price of Rs 160 (compared to the prevailing Rs 151 of the top brands now). Retail prices would naturally be higher. Wholesale distributors claim that they get a margin of Rs 3-5 per bag after passing on some benefits to bulk stockists.

The uncertainty about prices will prevail also due to the huge gap in prices between the trade and non-trade segments. For non-trade segments, cement is sold at Rs 125 to Rs 135 per bag, causing more disquiet among traders.

Strangely, the top cement manufacturers India Cement, L&T, Dalmia, Indian Rayon and others are doing very well with the revised prices of May 20.

Industry sources maintain that Indian Rayon is able to achieve a net profit of Rs 20 per bag (despite the freight expenses of nearly Rs 28), L&T around Rs 35 per bag and India Cements even higher at Rs 38!. The ex-factoryprice is expected to be around Rs 50 per bag. The excise, sales tax, packaging, turnover tax, freight, handling charges contribute to around Rs 76 on an average to the cost of a bag of cement (containing 50 kgs).

Of course not all mills run efficiently. Yet industry sources feel that the Rs 160 list price per bag from leading players with the corresponding changes at the next rung would ensure that there is enough to go around for all the manufacturers. But clearly not for the hapless consumers. And the stockists are having their own problems in this tight liquidity situation, with average outstandings claimed to be around Rs 1 crore at any given time.

Meanwhile the moves and countermoves in the industry are going to intensify in earnest with additional capacities being added by L&T, ACC, Zuari and, of course, India Cements.

India Cements is reportedly trying its best to grab shelf space wherever possible not only in the top grade cement but also in the secondary grades.

Coromandel, though a leadingbrand in Chennai is positioned as a second brand to` Shankar' cements (also India Cements) in the Kerala market so as not to miss the second grade cement market.

Likewise, Raasi is perceived to be a low-end brand with huge credits and large outstandings and is sold as far as Madurai and Tirunelveli districts.