Stocks of Cement companies like ACC, Binani and Ambuja Cements were trading lower on Thursday after Competition Commission imposed Rs 6,715 crore penalty on 11 cement companies for cartelisation. The regulator has also asked all the companies to “cease and desist” from indulging in any activity relating to agreement, understanding or arrangement on prices, production and supply of cement in the market.
Shares of ACC, Binani Industries and Ambuja Cements closed 1.25 per cent, 3.06 per cent and 0.54 per cent down at Rs 1686.35, Rs 106 and Rs 277.50 respectively. While Ultratech Cements, India Cements and JK Cement ended 1.58 per cent, 1.87 per cent and 0.50 per cent up at Rs 4093.00, Rs 152.65 and Rs 796 respectively.
ACC has been imposed with a fine of Rs 1,147.59 crore, while penalties on Jaiprakash Associates Ltd and Ultratech are Rs 1,323.60 crore and Rs 1,175.49 crore, respectively. The fines on other companies are Rs 274.02 crore (Century), Rs 187.48 crore (India Cements), Rs 128.54 crore (J K Cements), Rs 490.01 crore (Lafarge), Rs 258.63 crore (Ramco), ACL (Rs 1,163.91 crore) and Binani (Rs 167.32 crore), according to the BSE release.
Cement Manufacturers Association (CMA) has been imposed with a fine of Rs 0.73 crore. While pulling the companies, CCI said the actions of the companies and the CMA are not only detrimental to the interests of consumers, but also to the whole economy as cement is a critical input in construction and infrastructure industry and vital for the economic development.
In a separate order, CCI has imposed Rs 397.51 crore fine on Shree Cement Ltd, for unfair businesses practices.
Brokerage House Religare Institutional Research however still have a positive stance on the cement companies and said that the correction in the shares were expected by the Street. It said, ” We remain positive on the cement sector as we believe we are amidst an upcycle –utilisation levels are likely to improve over the next few years with incremental capacity addition lower than demand. Post the correction, we recommend investors
to accumulate cement stocks. Our top large-cap picks are Ambuja Cements and Ultratech Cement and among mid-caps we prefer Shree Cement and JK Lakshmi Cement (not part of the 10 companies penalised).”