Displaying items by tag: India

India: Sagar Cements has appointed K Rajendra Prasad as its nominee director on the company's board. Previous to this Prasad was working as the deputy general manager (EPM) at the Andhra Pradesh Industrial Development Corporation in Hyderabad.

Shree Digvijay Cement Company, a subsidiary of Cimpor, has reported that Antonio Carlos Custodio de Morais Varela resigned as a director of the company on 17 July 2012. The move follows Custodio de Morais Varela's assignment to the executive committee of Cimpor following the takeover of the Portuguese producer by Brazil's Camargo Corrêa.

India: Encouraged by the general response to its US1.1bn penalty imposed on 11 Indian cement companies for a price-fixing cartel, India's competition watchdog, the Competition Commission of India (CCI), has said that it will show leniency to those companies and individuals that provide information on cartels and anti-competitive agreements.

"It is the right time to reach out to people and encourage them to come out with information on more cartels," said CCI Chairman Ashok Chawla. Chawla said that the Competition Act provides for 'leniency programmes' for those who help the CCI tackle the 'pernicious practise of cartelisation,' and pointed out that the facility had not yet been used.

India: Coal India Ltd (CIL) has threatened to cut coal supplies and break long-term linkages with four of UltraTech Cement's captive power plants in the states of Rajasthan, Madhya Pradesh and Chhattisgarh due to non-completion of the units.

Maharatna CIL has threatened to break long-term linkages and cut coal supplies for 16 captive power plants, including four of UltraTech Cement's captive power plants. When the Indian state-owned CIL signs long-term linkages with a proposed plant, deadlines for the different stages of completion of a plant and the date of commissioning are agreed. All of these plants were incomplete when the Standing Linkage Committee reviewed their implementation status.

"If the captive plants are found to be commissioned with all the milestones achieved, the Fuel Supply Agreement (FSA) may be concluded with them within three months from the date of issuance this notice. Otherwise, linkages may be cancelled," said CIL.

India: Pine needles, a major cause of forest fires in Himachal Pradesh, are now helping villagers earn money. The needles are being used as biofuel by a cement plant, with locals supplying production on a per-kilo basis. "Gujarat Ambuja Cements is using pine needles along with charcoal in its kiln," said the Divisional Forest Office, Pradeep Thakur. The substitution rate varies from 25-30%. "The needles have good calorific value and it's a good source of additional income for the villagers. In the Hamirpur forest division alone, more than 200 families are involved in the job. According to an official, an average a family can earn US$270/month through pine needles.

Manju Devi, a villager, said, "Since pine needles are not used in homes (due to the presence of various nitrogen oxides), they lie unused in the forests. The demand picked up after the company started procuring them and we are now earning up to US$750 in a season (from May to June)."

India: Jammu & Kashmir Cements Limited (JKCL) has reported that it achieved an all time record turnover of US$21.8m in the fiscal year that ended 31 March 2012 compared to US$14.8m achieved in the previous fiscal year. This represents a year-on-year increase of 47%. It announced a bold 2012-2013 turnover target of US$32.5m. The company also announced that it produced 172,300t of clinker and 17,600t of cement during the year. It has targeted 255,000t of clinker and 266,200t of cement in the current fiscal year.

In addition, JKCL announced that its cement grinding and packing unit at Samba, would be put into trial production in November 2012 at a cost of around US$5m.

India: Holcim-controlled Associated Cement Companies (ACC) is mulling a US$913m integrated cement complex in the state of Andhra Pradesh. The company is planning a 5Mt/yr integrated cement complex, along with an 8Mt/yr cement grinding unit and a 100MW captive power plant at Gollapalli village in Kadapa district in Andhra Pradesh. To support the cement plant the company is also creating a 7Mt/yr captive limestone mine.

While ACC has made no official comment, industry insiders have expressed surprise that ACC is planning further cement capacity in south India, which is already reeling under excess capacity. ACC has already announced its plans to increase its capacity by 5Mt/yr through brownfield expansion at its Jamul plant in Chattisgarh.

India: The announcement last week that 11 Indian cement producers face a combined US$1.1bn penalty for a price-fixing cartel will cast a long shadow over the country's increasingly vulnerable-looking cement industry.

For years the Indian cement industry has been beset by suspicions of over-capacity despite a constant stream of new capacity. Now the Competition Commission of India (CCI) thinks that it has got to the heart of the paradox by accusing manufacturers of limiting production amid high demand and colluding to artificially raise prices.

The amount that the CCI has fined the companies, 50% of their net profits for the two fiscal years to 31 March 2011, is quite astonishing. If enforced in its entirety the fine effectively negates a large portion of the sector's profits for an entire fiscal year. This is clearly not a slap-on-the-wrist from the CCI.

In the 1990s and early 2000s a similar cartel case involving European (and specifically German) cement producers led to fines in the order of hundreds of thousands of US Dollars. The industry has since cleaned up its act considerably as a result. Indian producers would be foolish not to follow suit. What are the likely effects in the Indian case?

Removing the cartel that the CCI purports to have found would reduce prices, which are inflated by an oft-quoted 25% median in a cartel. This is clearly good news for consumers and potentially the development of the Indian economy in general. The obvious losers in this situation would be the producers, which would see a reduction in profitability. Some of the smaller producers would find such a situation very challenging, with the risk of going bust or being absorbed into larger companies.

Another possibility is that the accusations will spread along the value chain. Shortly after the announcement of the fine, the Builders' Association of India (BAI), announced that it wants the fine increased to accommodate compensation claims from contractors and consumers that it feels are out-of-pocket as a result of the cartel. Many will feel aggrieved now that they 'know' the cement companies were profiteering - sorting out claims from affected parties could be a long and costly exercise.

The effects of the fine could also extend to outside of India. Indian cement producers, very good customers of the Chinese and European cement plant manufacturers in recent years, will have to deal with lower revenues. This will clearly dampen their enthusiasm to contract further capacity and may cause knock-on-effects for Sinoma, KHD, Polysuis and other major suppliers. The cement industries of neighbouring countries, like Pakistan, may also be affected.

Whatever happens in the Indian cement industry as a result of the CCI's fine, the authority, only formed in 2009, has shown that it is serious about taking on corruption in India. In the long run that can only help develop the potential of the country.

"The first thing for any new competition regulator is to go out and find the cement cartel. My experience of this subject is, it is always there, somewhere," wrote Richard Whish, a Professor of Law at King's College London in 2001. "The only countries in which I had been unable to find the cement cartel is where there is a national state-owned monopoly for cement."

India: Having welcomed the Competition Commission of India's (CCI) decision to impose a record US$1.1bn penalty on 11 cement companies, the Builders' Association of India (BAI) has asked the competition watchdog to review the size of penalty.

The BAI has urged the CCI to, "review the quantum of the penalty and also to conduct an inquiry into the losses incurred by contractors due to such profiteering by cement manufacturers and to consider reimbursing the losses to the contractors."

D L Desai, a trustee of the BAI, said that it had urged the CCI to impose a fixed percentage of the penalty as a deposit with the CCI in case the cement manufacturers approach the Appellate Authority in an attempt to challenge the fine.

"We are happy that the CCI has taken action to penalise the cement companies. It (will) give a boost to the construction industry, leading to the revival of our economy, which is currently going through a difficult phase," said BAI Secretary Anand Gupta.

"The construction industry is a major driver of the Indian economy and any unfair practices as indulged in by the cement companies have adverse impact not only on this industry but the overall economy," he added.

India: In one of the largest fines of its kind, India's antitrust body has imposed a penalty of a combined US$1.1bn on 11 cement companies for price fixing. The companies penalised by the Competition Commission of India (CCI) include ACC and Ambuja Cements (both units of Swiss cement-maker Holcim), UltraTech Cement, Jaiprakash Associates, India Cements, Madras Cements and the local unit of France's Lafarge.

"The commission has found that the cement companies have not utilised the available capacity, so as to reduce supplies and raise prices in times of higher demand," said the CCI in its judgement. It said that the penalty on each company amounted to 50% of their profit for the financial years 2009-10 and 2010-11.

ACC has been fined US$201m and Ambuja has to pay US$204m. India's largest producer of the building material, Ultratech Cement, has to pay US$206m, while Lafarge's Indian unit will have to shell out US$84m. Jaiprakash Associates has been fined US$232m.

On 21 June 2012 the CCI said that the cement companies' action of limiting supplies to the market through an 'anti-competitive agreement' was not only detrimental to consumers but also to the economy, as the building material is a critical input for infrastructure projects. The regulator asked the companies to pay the fine within 90 days. The companies can challenge the regulator's orders in the Competition Appellate Tribunal, a quasi-judicial body and can then appeal to India's Supreme Court.

In response UltraTech said that it hasn't indulged in any cartelisation and that it would appeal against the order in the appellate tribunal. In Zurich Holcim said it would, "contest the allegations and findings against (ACC and Ambuja) in the order and will pursue all available legal steps to defend their respective positions." In Paris Lafarge said, "We will see the detailed report and decide the suitable actions to take. Lafarge has a strict policy to comply with competition laws."

The CCI started accepting cases in 2009, replacing a relatively toothless antitrust body that had been in place since 1970, and has been becoming increasingly assertive. The biggest penalty it had imposed so far was in 2011, when it ordered DLF Ltd., India's biggest property developer by sales, to pay US$120m for abusing its dominant market position by changing agreements signed with some property buyers.

The judgement comes at a bad time for cement companies, as demand for construction materials is weak due to sluggish economic growth and a fall in spending on infrastructure projects. The cost of raw materials such as coal is on the rise as well, pressuring margins.

India: South India's largest cement maker by volume, The India Cements Ltd, has received clearance from the environment ministry to proceed with capacity expansion of its existing two plants.

The company sought the Terms of Reference (TOR) approval for expanding capacities in Padaveedu, Salem district at its Sankaridurg plant and in Dalavoi, Ariyalur district. The green ministry approved the TRO of India Cements on 25 April 2012 and 26 April 2012 respectively.

Company officials maintain that this is only a process and nothing has been finalised vis-a-vis expansion of capacities. "We are getting the required approvals in advance. Nothing is on the board. We want to be ready and when there is a need we should not be seen as waiting for regulatory approvals," said a company official.