Cement manufacturers located in and around some of Builders? Association of India (BAI) centres in the country have for the first time decided to supply cement to BAI members at concessional rates after entering into negotiated agreements with them.
Several BAI members are seeing this as an olive branch offer by the cement industry as BAI had been the principal party in a case lodged in July 2010 with the Competition Commission of India (CCI). BAI had alleged that cement companies were hiking prices by way of cartelisation.
The CCI had in its verdicts in June and July 2012 slapped a penalty of over R6,700 crore against 12 cement manufacturers and the Cement Manufacturers? Association (CMA) for price cartelisation, something which has been challenged by cement companies at the appellate tribunal co urt where the case is currently sub judice.
While CCI had imposed a penalty of R6,307.32 crore on 11 cement companies including ACC, Ambuja Cement, Ultratech, Grasim, JK Cements, India Cements, Madras Cements, Century Cements, Binani Cements, Lafarge India and Jaypee Cements, it had in a separate order imposed a penalty of R397.51 crore on Shree Cement on July 30, 2012.
According to BAI ex- national president BN Dixit, who attended BAI?s managing committee and general committee meetings in Mumbai recently, where the concessional supply gesture by cement companies to BAI members was shared for the first time, Nagpur-based Murli Industries was selling cement to BAI members in the Nagpur-Pune region of Maharashtra at an ex-factory price of R190 per bag.
BAI sources said retail cement prices at different places around the country were currently in the R220-320 a bag range, with rates being on the higher side in north-eastern states, West Bengal and Kerala as not many production units were located there.
Jamshedpur-based BAI past national vice-president Ashok Choudhary, however, alleged that cartelisation by cement industry was still on and that ?only its contours had changed?, and that the industry was extending this gesture as BAI has been adamant at the tribunal hearings on getting the penalty increased from R6,700 crore to around R40,200 crore, which, as per CCI rules, would be three times the purported profit earned by the companies during the period in question.
Speaking at a forum here recently, Choudhary said cement companies were now trying to appease BAI by asking some of its centres to form nodal agencies so that cement could be supplied to BAI members at a concessional rate.
?It is only now that they (the cement companies) are trying to come to the negotiation table. It is a big benefit from the consumer?s point of view; we (BAI members), however, would now have to examine as to how we can make the best of it?, said Choudhary.
Talking to FE from Hyderabad, BAI national president and CEO of BSCPL Infrastructure (BSCPLI) B Seenaiah said, ?Many cement manufacturers in Andhra Pradesh are delivering cement at the doorstep to BAI members at R190 (a bag) where the distance is within 200 km, the rates getting modified upward as distance from the manufacturing units increased.? The retail price fixed by cement producers today for locations near to their plant should not be more than R220-230 (per bag), he added.
BAI?s Jodhpur centre chairman Kapil K Gupta said that association had recently entered into a one-month agreement with Ultratech whereby the cement company was to supply cement to its 70-odd BAI members at R190 a bag.
?I suspect they have gone back to the cartel mode again as they have suddenly increased the rate from R190 to R255 (per bag). For the last 15 days they have not delivered a single bag of cement to us (BAI members) against our advance payment for 50,000 bags; they are also now saying that their commitment is only for 50,000 bags; the pressure on them seems to have withered?, said Gupta, speaking to FE from Jodhpur, adding that if BAI members were to book for further supply of cement they would now have to pay at the new rate of Rs.255.