Dec 2, 2020

Material Rates are increased, How can run Construction Industry?

Material rates are increased, Construction Sector in trouble

All we are known about construction industry is just step up to back to normal conditions after effect of COVID19 and Lockdown situations.

Before the yaer ago this sector is little affected due to Rera, GST and demonetization.
In May and June lockdown is over and all construction sector work is going to start. but during lockdown all are facing another big problem as all material rates are increased due to shortage of material.

Now another big problem is stand at front of construction industry is the Material rates of Steel and Cement are increased 20-22% more than existing rates.

From last few days, the row iron supply to steel industry is not sufficient this is affecting directly on the production. due to this rate of reinforcement steel is increased upto 20-22%. it is directly affecting on real estate and construction sector businessman.

In Jalna District of Maharashra, there is near about 25 nos of steel factories which are manufacturing 6mm to  40mm diameter steel bars. and annual production is  1.75 lakhs Metric Ton.
Two month ago steel rates are ₹. 38000 per Metric Ton now it is incresed upto ₹. 47500 per Metric Ton including GST. 

After unlock of all the sctors the real estate sector is started and it required materials but now due to shortage of material the rates are increased it is affecting on construction sector.

 From Jalna, Maharashtra, The steel is distribute and sold in Maharashtra, Karnataka, Andhra pradesh, Telangana, Madhya pradesh states. but currently this district can't full fill the requirements due to shortage of row material.

Also, The production of row iron metal from mine is decreased, due to that the rate of row material is increased. and another side demand is increased due unlock, but due to low manufacturing of reinforcement steel, the rates are incresed from ₹.38000-₹. 40000 to ₹.47000 - ₹. 47500 per metric ton within 2 months.

As per the statement of Polad manufacturer Association Mr. Sunil Goel, " Now production is going normal, the labour are return from other states and back to work after lockdown. but row material is still shortage, and situation is becomes critical. the income from iron and wastage is also decreased. now this situation is seems all over india, due to all this reasons the rates are going to increase."

As per Statement of CREDAI Member,
Not only Steel rates are increased but also Cement rate is also increased, two month ago cement bag rate is ₹. 240 per bag and now it is ₹.300 per bag. due this this the business calculations are collapsed. ALot of people are lost there jobs during the lockdown which is started by government to stop the Coronavirus. Increased unemployment affects sell of flats in apartments, and decreased in sell means loss of real estate. and other end the material rates are increased now it going to serious effect on the construction industry.
If you are Plan to 1,00,000 Sqft Built up area building. Then Steel is Supposed to 3.50kg Per Square Feet.

Required Steel = 1,00,000 Sqft X 3.50 Kg/Sqft = 3,50,000Kg i.e. : 350MT

Amount as per Existing Rates 
350MT X  ₹38,000 = ₹1,33,00,000

Amount as per New Rates
350MT  X ₹47,500 = ₹1,66,25,000

Difference in Amount = ₹ 33,25,000
Rate per Sqft = ₹33.25 per Sqft Extra amount required per Square feet.
(This is basic amount we have not included loading, unloading, labour, overheads, instrest, etc.)

(Source: News paper)


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