Less than a week after the Indian Steel Alliance reduced hot rolled coil prices by Rs 1,500-2,000 a tonne and the government cut excise duty on steel from 16 per cent to 8 per cent, various downstream steel users like automobile firms, pipe makers and cold rollers have raised their prices.

The country's largest utility vehicle maker, Mahindra & Mahindra, on Wednesday said it would hike the prices of all its vehicles by Rs 4,000-6,500, or 1 per cent, with effect from March 15. M&M vice-president (marketing) Rajesh Jejurikar attributed the price hike to rising steel prices.

Bhushan Steels, a leading producer of cold rolled coils, too, has informed its customers that its prices will be higher by Rs 2,000 per tonne effective April 1. Steel pipe companies like Jindal Pipes and Surya Roshni have also raised prices by Rs 1,200-1,300 per tonne.

These companies have alleged that they are paying more for hot rolled coils now than in February.

They said a large part of their orders booked in February were at Rs 23,000 per tonne and not Rs 27,000, the price taken into consideration by the Indian Steel Alliance while cutting prices to Rs 25,000.

The new price was, therefore, Rs 2,000 higher than the earlier one, they said, adding this had mitigated the impact of a reduced excise duty.

However, Indian Steel Alliance members said orders for hot rolled coils were booked at Rs 27,000 per tonne. Companies belonging to the alliance had raised prices in mid-February citing increased cost of inputs, especially metallurgical coke.

Steel Minister B K Tripathy had earlier said carmakers were unnecessarily making noise as they had negotiated bulk steel contracts before the prices were hiked.

Surya Roshni President S K Agarwal said the increase in hot rolled coil prices and the resultant hike in prices of tubes and pipes had forced 30 per cent of its customers to switch to ductile iron and PVC or plastic pipes, severely affecting the company's sales.

"Our total volume is 200,000 tonnes per year, which will go down to 160,000 tonnes this year due to the price hike. The domestic tube and pipe industry lifts 2 million tonnes of hot rolled coils annually. This year it will drop 20 per cent to around 1.6 million tonnes," Agarwal said.