The Competition Commission of India well known as CCI has imposed over Rs.6,700 cr penalty on 11 cement companies - UltraTech, Ramco, Binani, JK Cement, Jaiprakash Associates, Lafarge, India Cements, ACL, Century, ACC, Shree Cement, besides CMA – Cement Manufacturers’ Association for cartelisation.
CCI has passed the final order, followed by the directions issued by the CAT - Competition Appellate Tribunal remanding the matter back, while keeping aside the original order of the fair trade regulator, that had also imposed fine on cement companies. The CCI stated that the cement companies utilized the platform offered by the CMA and shared details in relation to prices, capacity utilization, production and dispatch, thus confining both production and supplies in the market. Further, the CCI also discovered the cement companies to be acting in concert in fixing cement prices.
Penalties of Rs.1,147.59 cr on ACC, Rs.1,163.91 cr on ACL, Rs.167.32 cr on Binani, Rs.274.02 cr on Century, Rs.187.48 cr on India Cements, Rs.128.54 cr on JK Cement, Rs.490.01 cr on Lafarge, Rs.258.63 cr on Ramco, Rs.1,175.49 cr on UltraTech and Rs.1,323.60 cr on Jaiprakash Associates were imposed by CCI. To add to this, a penalty of Rs.73 lac was slapped on the CMA.
Grilling the companies, the CCI mentioned that the actions of the companies and the CMA were not only detrimental to consumer interest but also left a negative impact on the whole economy, as cement was a vital input in construction and infrastructure industry, and also critical to economic development.
The regulator has slapped Rs.397.51 cr fine on Shree Cement, for carrying out unfair businesses practices via a separate order.
In late 2015, the CAT had revoked CCI’s order, slapping a combined penalty of Rs.6,316 cr on cement companies for allegedly formulating a price cartel.
The tribunal repressed the commission’s order after observing that then CCI chairperson – Ashok Chawla was party to the order, in spite of not being present during the hearings. The tribunal also permitted the cement companies to withdraw the Rs.630-cr deposited by them in accordance to its interim order. In May 2013, the interim order had stayed the penalty but directed the companies to deposit 10 per cent of its pending disposal of their appeal.
In June 2012, the commission had fined ACC, UltraTech Cement, Ambuja Cements and Jaiprakash Associates a little over Rs.1,000 cr each for forming a cartel. The other companies that were fined included Century Cement, Madras Cements, Binani Cement, JK Cement, Lafarge India, India Cements and Grasim Cements (now merged with UltraTech). The CMA was a party in the above case and it was also fined a token amount.
Dynamic Levels research team has identified two best stocks Heidelberg Cement and Visaka Industries in the Cement sector while all other stocks are struggling. Heidelberg Cements has 31 Mutual Fund Holding and has registered a growth of 8% in its EPS trading at a PE ratio of 47. It has been a top performer with percentage change of 29 per cent after Brexit i.e since 24th June.
Visaka Industries is trading at the lowest PE of 9 and has registered 86 per cent growth along with a price movement of 34 per cent after Brexit.
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