Financial Daily from THE HINDU group of publications
Tuesday, May 23, 2006
Financial Daily from THE HINDU group of publications Tuesday, May 23, 2006 |
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Corporate
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Sick Units Industry & Economy - PSU States - Tamil Nadu Industry seeks revival of Hind Copper R.Y. Narayanan
Contentious issues Indian metal manufacturers indulged in cartelisation in fixing the price of copper by deciding on the final price on the basis of monthly average LME price. Manufacturers, instead of fixing the price on the basis of cost of production, were fixing the price on par with international prices.
Coimbatore , May 22 The Southern India Engineering Manufacturers' Association (SIEMA), Coimbatore, has demanded that the working of public sector Hindustan Copper Ltd be revamped so that it works at optimum capacity that would help to rein in copper price that has been continuously on a rise. It has also expressed the view that Indian metal manufacturers were indulging in cartelisation in fixing the price of copper by deciding on the final price on the basis of monthly average LME price that worked against the user industries. In a representation to the Finance Minister, Mr P. Chidambaram, SIEMA Vice-President, Mr C.R. Shanmughasundaram, said Hindustan Copper had more than doubled the basic rate (duty and taxes were extra) of copper rod in the last one year — from Rs 192 per kg in June 2005 to Rs 408 per kg in the third week of May 2006. During this month, copper rate has been revised thrice — from Rs 374 in the first week to Rs 390 in the second and to Rs 408 in the third week. He said while commodities trading in copper had pushed up prices by 100 per cent in the past 10 months, the volume of physical delivery was a mere 2 per cent of the traded volume in the commodities market and nearly 95 per cent of India's copper requirement was met through imports. The private sector has one million tonnes smelting capacity, out of which about 50 per cent was re-exported. He said that while Hindustan Copper has the capacity to produce around 1.50 lakh tonnes of copper per year, it was working at about 20 per cent of its capacity. Though its mines had lower percentage of ore concentrates, the company was running profitably even when the basic copper price was around Rs 165 per kg. Mr Shanmughasundaram said that in the Budget for this year Customs duty on copper concentrates was reduced from 5 per cent to 2 per cent and duty on semi-finished rods and products was cut to 7.5 per cent from 10 per cent. However, the domestic smelters were pricing their products in India at `par with international price' based on 7.5 per cent import duty `thereby enjoying additional profit', he said. He alleged that the Indian producers acting as a `cartel' fixed a provisional price for copper and fixed a final price on the basis of the monthly average LME price at the end of the month and issued final invoice to local industries keeping them in the dark about the price. He requested the Centre to bring the Customs duty to nil but keep the excise duty at 16 per cent for all items falling under chapter 74 including scrap to help the organised sector. He also urged that Hindustan Copper should be activated to work at full capacity to keep prices under check.
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