Nitin Gadkari sees profiteering by cement and steel units

By: |
December 13, 2020 6:30 AM

The minister for MSMEs and highways Nitin Gadkari on Saturday came down heavily on steel and cement industries for jacking up prices, without valid reasons.

In a recent report, ICICI Securities said cement’s industry average operating margin grew 25% Y-o-Y in FY’20 and further rose 20% Y-o-Y to over Rs 1,250/tonne in the first half of the current fiscal.In a recent report, ICICI Securities said cement’s industry average operating margin grew 25% Y-o-Y in FY’20 and further rose 20% Y-o-Y to over Rs 1,250/tonne in the first half of the current fiscal.

The minister for MSMEs and highways Nitin Gadkari on Saturday came down heavily on steel and cement industries for jacking up prices, without valid reasons.

Stating that these two industries appeared to take unfair advantage of the government’s initiatives to help businesses, Gadkari wondered what prompted steel firms to raise prices by 55% in the last six months. He indicated that commensurate increases were absent in the price of key inputs like power and raw materials.

Gadkari accused cement units of forming cartels to raise the prices of the building material, even as the construction industry is struggling to recover after being hit hard by the pandemic and the lockdown.

“I decided to make all roads concrete. I wanted to encourage the cement industry. But they are only taking (unfair) advantage of the situation and making cartels. So, I am now allowing bitumen (for road construction),” Gadkari at a Ficci event.

The minister, however, said that there was nothing wrong for a businessperson to earn profit; in fact, that is her “fundamental right” since she is not in the business for “charity”, but there has to have reasons for raising prices. (ends)

Already at a 12-year high following around Rs 2,500 per tonne increase effective December 1, the price of hot-rolled coil (HRC), the benchmark steel product, is expected to go up further during the month by at least Rs 1,500 a tonne. According to the steel industry, the price rise is on the back of increase in iron ore prices. Analysts attribute the trend to higher international prices, higher local demand, subdued production and limited imports.

After the December price hike, the wholesale price of HRC (ex-Mumbai) currently stands at Rs 48,300 per tonne, the highest since 2008, according to SteelMint. The current price is around 32% higher than that of July, 2020. According to Morgan Stanley, “The increase for December was largely anticipated, but our dealer checks suggest there is potential for yet another hike in mid-December.”

Recently, the Competition Commission of India conducted raids at offices of UltraTech Cement and two subsidiaries of the world’s largest cement maker LafargeHolcim.

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