Govt issues stiff warning against cement cartelisation, high prices

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New Delhi, Dec 4 (UNI) The government today warned cement manufacturers against any attempts at cartelisation saying it has adequate powers to break such a move.

The government also expressed concern at the spiralling cement prices and avowed to resort to imports for stabilising them.

These remarks came from Minister for Industrial Policy and Promotion Ashwini Kumar while speaking to reporters on the sidelines of the India Economic Summit here, being jointly organised by the World Economic Forum (WEF) and CII.

''We have already told the industry not to think that the government is helpless. There can be no profits through cartelisation,'' Mr Kumar said.

The Minister noted that a number of cases were pending before the Monopolies and Restrictive Trade Practices (MRTP) Commission and will be dealt by it suitably.

''We will try to ensure there is no cartelisation and will do all in our power to prevent it,'' he said.

The Minister attributed the high cement prices to a mismatch between demand and supply. He said the demand was robust due to enhanced pace of construction activity in the country.

Mr Kumar said the government has had meetings with cement manufacturers and asked them to lower prices and increase production capacities.

The government has also affected imports through the MMTC. These measures should have a softening impact on prices.

The Minister, however, was very firm on cartelisation, saying that ''If there is any proof of cartelisation and price rigging we will take appropriate measures.'' Cement prices have shown a secular rise, but the government's warnings have not had a bearing on cement manufacturers.

Prices shot up from Rs 158 per 50 kilogram bag in December 2005 to Rs 229 for the same quantity in July 2007, while the Wholesale Price Index (WPI) for cement increased 9.1 per cent in 2007 fiscal year, compared to 3.9 per cent during 2006 fiscal.

In a bid to check prices the government has abolished the import duty on cement this year.

Domestic cement consumption for the first half of the financial year was 53.62 million tonnes per annum (mntpa), up 10.9 per cent from consumption in the first half of the last financial year.

However, on account of increased demand in the country, exports declined by 37.7 per cent on a year-on-year comparison for the same period.

Apart from an increase in installed capacity from 165.6 mntpa at end-March'07 to around 171 mntpa at end-July'07, higher domestic demand has resulted in an increased capacity utilisation.

Industry capacity utilisation was 96.9 per cent during the April to July period of this fiscal.

All the major players have resorted to a combination of greenfield capacities, as well as a takeover of existing capacities for growth.

UNI

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