India cement units are cooperating closely with CCI, says Holcim

Swiss cement major's India units facing cement cartelisation probe

Swiss cement major Holcim’s India units —  Ambuja Cements and ACC — are cooperating closely with the Competition Commission of India (CCI) on the cement cartelisation probe, a Holcim official said.

The official refused to comment further as the matter is still ongoing. The official was responding to an email query from Business Standard on the CCI probe and its impact on the sale of Holcim's India-based cement companies.

The Holcim official did not comment on the sale of its India units, calling them “market rumours”.

On December 10, 2020, the CCI initiated a fresh probe against Indian cement companies and raided several cement producers. On the same day, Ambuja Cements and ACC, in a regulatory filing, said the CCI initiated an investigation against cement firms in India, including Ambuja Cements and ACC, regarding alleged anti-competitive behaviour.

“Ambuja Cements is of the firm view that it has acted and continues to act in compliance with competition laws and are fully cooperating with the investigation and providing all necessary information to the authorities. Ambuja Cements has a long-standing commitment to fair competition as reflected in its Code of Business Conduct and Ethics,” it had said.

The CCI probe in 2020 came at a time when an appeal filed by cement companies, including Ambuja, was pending in the Supreme Court since 2018. The appeal in the SC has challenged an NCLAT order, which had dismissed the plea filed by the cement firms, including Ambuja and ACC, challenging the fine of Rs 6,700 crore imposed by the CCI on 10 cement companies for cartelisation and fixing prices.

In its annual report for fiscal 2021, Ambuja Cements said it filed an appeal against the CCI order, which levied a penalty of Rs 1,163.91 crore on the company, which was dismissed by the NCLAT in July 2018 and CCI’s order was upheld. Further, Ambuja said it challenged the NCLAT judgement before the Supreme Court in September 2018. The Supreme Court has admitted the company’s appeal and ordered for the continuation of the interim order passed by the tribunal.

In another case, Ambuja said following a reference filed by the director (supplies and disposals) of the Haryana government, the CCI on January 19, 2017, had imposed a penalty of Rs 29.84 crore on the company. Ambuja filed an appeal before the Competition Appellate Tribunal (COMPAT) and obtained an interim stay on the operation of the order. Further, by virtue of government of India notification, all cases pending before the COMPAT were transferred to the NCLAT.

Last week, the Adani and JSW groups submitted their non-binding bids for Ambuja Cements and its subsidiary, ACC. UltraTech is also reportedly in the race but its acquisition may hit the CCI hurdle. Holcim, according to bankers, wants to close the deal early and exit India.

Holcim owns 63.19 per cent in Ambuja Cements and 4.48 per cent in ACC. Ambuja Cements, in turn, owns 50.05 per cent in ACC.

Holcim Group has not given an official reason to exit India but has announced a portfolio transformation strategy in 2021 to divest strategically and use the proceeds to make acquisitions in mature markets.

As part of the plan, it sold its assets in Malawi, Zambia, and Madagascar, and signed a deal to exit the Brazilian market.