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Cement wars erupt in Gujarat, India

A price war for cement has erupted in the northern Indian state of Gujarat that is threatening the livelihood of the industry.

India - A price war for cement has erupted in the northern Indian state of Gujarat that is threatening the livelihood of the industry. Dow Jones is reporting that a new entrant into the market, Sanghi Industrial Ltd., is selling cement at below cost to buy market share. Other cement companies are fleeing to neighbouring Indian states in an effort to find customers that will pay a more sustainable price.

"It is no longer viable to sell in Gujarat as cement prices have fallen below the variable cost of production," said a disgruntled cement company executive. Cement prices in Gujarat have fallen to 95 rupees (US$1=INR45.82) per 50 kilo bag compared to INR110 per bag in September, after the entry of Sanghi, said the executive.

Customers in neighbouring states such as Haryana, Punjab and Delhi, are still paying cement prices of INR110-INR120 per bag. Gujarat, which has the largest concentration of industries in India, consumes 200 000 tonnes of cement a month.

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