The India’s top 4
cement companies ACC, Ambuja Cement, UltraTech Cement & Shree Cement may have to shell out about Rs. 2,200 crore, if the CCI (Competition Commission of India) charges a
penalty of 8% on the average turnover of the past 3 years.
Cement companies are
yet to receive any notice of penalty relating to manipulating the market.
The firms have been
charged with inflating prices & reducing production. The penalty, if
levied, will weigh heavily on the companies, particularly when the prices are
on the downtrend due to lower demand & excess production capacity added in
the past few years.
Considering that the
CCI started investigation in 2011, it will take into account the average
turnover from 2010 to 2008 for calculating the penalty. ACC’s average turnover
between 2008 & 2010 was Rs. 8,150 crore. An 8% cent fine will work out to
about Rs. 650 crore.
Similarly, the
penalty for Ambuja Cement could amount to about Rs. 550 crore considering its
average turnover of Rs 6,895 crore.
The penalty on
UltraTech Cement could be nearly Rs. 731 crore on its turnover of Rs. 9,142
crore excluding Grasim Industries cement business revenue.
The companies to file
an appeal with the Appellate Tribunal against the fine.
“If the cement firms
are in collusion in fixing prices, then cement price should be the same for all
brands at a given location. This is not the case now,” said a cement company
official..
But, going by news
reports, if such a move is true, not only would it be unjust but will be
disastrous to the economy.
They were reacting to
unconfirmed news reports that following an enquiry into a complaint from the
BAI (Builders Association of India), the CCI is set to penalise cement firms
for unfairly controlling the market.
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