Are cement companies fixing prices?

25 July 2007

Cement stock prices dived after MRTPC issued notices to 14 cement companies for cartelisation including ACC, India Cements, Ambuja Cement, JK Cement and others.

MRTPC has ordered a probe into the business practices of the cement manufacturers. There are allegations that they have acted in a cartel and colluded to hike prices.

Anil Singhvi, partner at Notz Stucki maintains that there is no substance for the MRTPC notice against cartelisation. He said, "The period they are taking is 2005-2006, for which the DGI has filed the report. There is a preliminary investigation filed by two builders. I saw the complete complaint and there was no truth in the complaint and there was no substance as well."

He doesn''t even think there was any substance in this for even DGI even to have sent this report to MRTPC.

While, RG Bagla, group executive president at JK Cements has completely denied the possibility of cartelisation due to competitive pressures. He has denied receiving any notice from MRTPC so far either.

"When there are 20 competitors operating in a market, how there can be a cartel. There is demand and adequate supply, so there is no question of any cartel or any consulted effort by anybody," is his retort.