Makers term charges baseless.
The 212-million-tonne domestic cement industry is again at the receiving end of allegations of cartelisation and hiking prices.
The Builders Association of India has alleged that India’s cement industry, the world’s second largest, is operating as a cartel.
The recent allegation has come on the back of a continuous rise in cement prices from February by up to Rs 15-20 for a 50 kg bag. The association said top players such as ACC, Ambuja Cements, Grasim, UltraTech and Jaypee Cement, which control almost half the domestic cement market ,are in a dominant position to determine and monitor prices.
The association has asked for a regulatory authority to be set up to ensure unfair trade practices are not followed by the industry. It has also asked for a complete ban on the exports of cement which, it added, is a contributing factor to intermittent shortages and frequent price hikes.
This is not the first time the builders have alleged cartelisation in the industry — an allegation which has always been refuted by the cement companies.
When contacted, spokespersons of ACC, Ambuja Cements and Aditya Birla group (Grasim and UltraTech) refused to comment on the issue.
Officials in the cement industry, who did not wish to be named, said, “The builders association is in the habit of raking up the issue. We have players who even import clinker across the region to increase supplies in the market. In a scenario where supplies have not been hit despite a rise in demand, how can there be a cartel?”
Another industry source said, at a time when industry produced beyond its capacity in March with the utilisation level reaching 103 per cent, allegations of cartelisation are baseless. In March alone, industry recorded the highest-ever production of 18.10 million tonnes against 16.39 million tonnes in the same month last year.
Industry has admitted that there has been a rise in prices, but ruling out any cartel, company officials said it is entirely demand-supply dynamics which decide the prices of cement. “Cement constitutes around 8-12 per cent of the construction costs of the project. With a rise of 2-3 per cent in prices, what impact will it have?” they asked.
Last year, in an interview with Business Standard, Amrit Lal Kapur, managing director of Ambuja Cements, had said allegations of cartelisation was “absolutely false”. We study the market and decide our own prices, he had added.
The cement industry had come under intense pressure from the government in 2007 and 2008.
In a conference last year, Sumit Banerjee, managing director of ACC, the country’s largest cement maker, had said, “Cartelisation is an impractical theory as there are many players.”
In 2008-09, the domestic cement industry added 13.51 million tonnes of new capacities. The capacity utilisation for the entire financial year, as expected, slipped to 88 per cent from 94 per cent last year.
The industry produced 181.42 million tonnes in FY09, up 7.79 per cent, against 168.31 million tonnes in FY08.
