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Most of the 11 cement companies fined by the Competition Commission of India have decided to appeal the Competition Appellate Tribunal against the penalty of ₹6,714 crore.
Holcim Group-owned ACC and Ambuja Cement, which together have been fined ₹2,312 crore, said the management believes that it has a strong case on merits to challenge the CCI order and has accordingly decided to appeal before the tribunal though they are yet to receive the certified copy of the order.
Similar views were expressed by Shree Cement, JK Cement, Ramco Cement and Jaiprakash Associates.
Aditya Birla Group-owned UltraTech Cement, which faces a penalty of ₹1,175 crore, said the company will decide on the future course of action after fully examining the order.
However, most analysts feel that all the companies will appeal against the CCI order as it is very difficult to prove the charges of price cartelisation among the cement manufacturers.
In 2012, the CCI had ordered these 11 companies and cement manufacturers association to pay a penalty ₹6,317 crore after hearing a petition filed by the Builders’ Association of India.
The order was relating to potential price collusion by these companies between May 2009 and March 2011. It was observed that cement companies maintained their profitability by maintaining high prices, despite fall in demand by cutting down on their capacity utilisation.
Last December, the tribunal set aside the CCI ruling and directed it to hear the case afresh. On Wednesday, the CCI levied a higher penalty of ₹6,714 crore on cement companies amounting to 20-75 per cent of their FY’16 operating profits.
Amey Joshi, Associate Director, India Ratings and Research, said eight of the 11 companies maintain a low leverage, and thus, will be in a position to absorb the burden if at all the penalty has to be paid. The cement industry in India is unique, with about 60 per cent of the industry’s total capacity being controlled by top eight companies.
The rest of the industry is highly fragmented, with small- to medium-sized companies, mostly with uneconomical size of operations.
It was a mixed day for cement stocks on the stock exchanges. While UltraTech Cement was up 0.67 per cent at ₹4,063, ACC and Ambuja Cement fell one per cent each to ₹1,688 and ₹277, respectively. India Cements and Century Textiles moved up one per cent each to ₹151 and ₹731. Shree Cement gained 0.66 per cent to ₹17,212.
Jaiprakash Associates tanked 4 per cent to ₹11 and JK Cement was down 0.16 per cent at ₹791.
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