Business Daily from THE HINDU group of publications
Thursday, Jul 26, 2007
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Business Daily from THE HINDU group of publications Thursday, Jul 26, 2007 ePaper |
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Cement Industry & Economy - Regulatory Bodies & Rulings Cement companies deny cartelisation in prices
Though the industry is operating to full capacity the demand continues to far exceed supply. MRTPC’s enquiry, in the early 1990s, on similar charges, has still not come to any conclusion.
Our Bureaus New Delhi/Chennai, July 25 Major cement companies have strongly denied any attempts at cartelisation as has been alleged by the Monopolies and Restrictive Trade Practices Commission (MRTPC). The Commission had issued notices to 14 of the largest cement manufacturing companies following a preliminary investigation by the Commission’s Director-General of Investigation and Registration (DGIR) that found that these companies indulged in cartelisation. The notices have been sent to Zuari Cement, OCL Ltd, Dalmia Cement, ACC, Ambuja Cement, Ultratech, Grasim Industries Ltd, Sanghi Industries, Saurashtra Cement, J K Cement, India Cement, Birla Corporation Ltd, Binani Industries and NCL Industries Ltd. The cement manufacturers have been asked to reply within four weeks. The investigation found that these companies used the forum of the Cement Manufacturers’ Association (CMA) to decide on the terms of sale including the prices. The investigation states, “…the respondent cement manufacturing companies are in a position to decide on the terms and conditions of the sale of cement including the increase in the price of per bag of cement at the retail level during the course of meetings of the CMA Marketing Committee.” Production
The DGIR studied the prices of cement during 2005 and 2006 and found that the increase in the cost of production was Rs 136.14 per tonne or about Rs 7 per 50-kg bag between March 2005 and March 2006. Prices, on the other hand, increased by Rs 56 per bag in Delhi and Rs 50 in Mumbai during the same period. As per the CMA’s annual report for 2005-2006, production increased by 11.16 per cent over the preceding year. “It, therefore, follows that increase in the price of cement during the year 2005-2006 has to be attributed to reasons different from increase in the cost of production and shortage of supply/production,” the report said. Demand Continues
Categorically denying any cartelisation in prices, a leading manufacturer said that the industry was operating to full capacity and still there was hardly any material in the market as demand continues to far exceed supply. Mr A.V. Dharmakrishnan, Executive Director-Finance, Madras Cements Ltd, said imports had been freed, but still no large-scale inflow of cement had taken place. This only showed that there was not much difference between international and domestic prices, he said and added that MRTPC had initiated an enquiry against the cement industry in the early 1990s on charges of cartelisation, which has still not come to any conclusion.
Related Stories: More Stories on : Cement | Regulatory Bodies & Rulings | Economic Offences
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