CCI to come out with final report on cement cartel in 15 days

CCI is probing the cement cartelisation issue on various fronts like retail sales price of the building materials and creation of the artificial shortage scenario by producing less than their capacity

New Delhi: The Competition Commission of India (CCI) on Wednesday said it will take at least 15 days time to come out with its final report on alleged cartelisation by 39 cement companies, reports PTI.

“There will be 2-3 meetings of the members. So far, there had been no sittings. It will take at least 15 days for us to prepare the final report,” a senior CCI member told PTI on condition of anonymity.

He said allegations of cartelisation were there against 39 cement makers, both large and small, but he did not name any saying, “This would be improper”.

The Indian cement industry comprises of 183 large cement plants and more than 360 mini cement plants. Large producers, around 40 of them, contribute 97% to the installed capacity which now stands at around 330 million tonnes a year.

Cartels are arrangements between firms not to compete on price and product and are aimed at raising the price above the competitive levels. For consumers, cartelisation results in higher prices, poor quality and less or no choices of goods.

CCI is probing the cement cartelisation issue on various fronts like retail sales price of the building materials and creation of the artificial shortage scenario by producing less than their capacity.

The official wondered how come the cement price was higher in Kolkata where there is no cement plant and it needs to be transported from other places than places like Satna in Madhya Pradesh where cement is actually being produced.

“At one point of time, the average price of cement in Kolkata was Rs280 for a bag of 50 kg and it was Rs282 a bag at the same time in Satna,” he said.

The watchdog is also looking into the supply shortage issue and found that cement companies were running far below than their plant capacity at around 70%.

“When you are increasing the price, you are saying there is a shortage and price is determined by the demand-supply dynamics. If so, then how come you are not producing to your rated capacity?” he wondered.

“It seems that now-a-days, price has no co-relation with the cost of production,” the official said.

He said cement companies were making higher profits by selling their products at higher prices and “circumstantial evidences” found that their return on capital is higher than that of the other industries, where it varies between 15%-16%.

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IIP growth likely to moderate in February: Experts

“Notwithstanding the improvement in core sector growth, IIP growth is expected to decelerate to around 4.2% in February from the 6.8% reading in the previous month. A lower PMI and easing export growth in the month point towards a moderation of manufacturing growth,” ICRA economist Aditi Nayar said

New Delhi: The country’s industrial output growth in February is expected to fall below 6.8% recorded in January even though there are some signs of pick-up in manufacturing and consumer goods, reports PTI.

“As far as the IIP growth is concerned, it will remain flat in February this year and our projection is about 6.14% for the month. Though, this is little less than the previous month, it is still a good number,” Bank of Baroda chief economist Rupa Rege-Nitsure told PTI.

The IIP for the month of February is scheduled to be released on Thursday.

Growth in factory output growth, as measured by the Index of Industrial Production (IIP), grew 6.8% in January 2012, over the previous month, mainly due to improvement in the manufacturing sector. It was, however, higher at 7.5% in January 2011.

“We have seen stronger activities in some core sectors (in February) like manufacturing and consumer goods in which the growth is likely to improve and touch more or less the same number,” Ms Rege-Nitsure added.

IIP growth has been revised upwards to 2.5% in December, from the provisional estimates of 1.8%.

However, DK Joshi, chief economist, Crisil said, “It is difficult to predict at this moment. However, there could a moderation in growth in some of the sectors.” 

Echoing similar views, ICRA economist Aditi Nayar is of the view that the IIP growth could further decelerate to 4.2%.

“Notwithstanding the improvement in core sector growth, IIP growth is expected to decelerate to around 4.2% in February from the initial 6.8% reading in the previous month. A lower PMI (Purchasing Managers Index) and easing export growth in the month point towards a moderation of manufacturing growth,” she said.

According to the data released last month, output of the manufacturing sector, which constitutes over 75% of the index, rose 8.5% in January, compared to 8.1% in the same month last year.

During the April-January period of 2011-12, the IIP growth stood at 4%, as against 8.3% in same period in 2010-11.

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Commexes turnover zooms 52% to over Rs181 lakh crore in FY11-12

The major part of business came from trading in bullion, agri commodities, energy and metals, the data released by commodity market regulator Forward Markets Commission on Wednesday showed

New Delhi: Driven by bullion and agri commodities trading, the turnover of 21 commodity exchanges in the country jumped by about 52% to Rs 181.26 lakh crore in 2011-12, reports PTI.

The turnover of the exchanges stood at Rs119.48 lakh crore in the previous fiscal 2010-11.

The major part of business came from trading in bullion, agri commodities, energy and metals, the data released by commodity market regulator Forward Markets Commission (FMC) on Wednesday showed.

Total turnover in bullion trade skyrocketed by 85% to Rs101.81 lakh crore in the last financial year, from Rs54.93 lakh crore in 2010-11.

The turnover in agri-commodities like chana, guar, mentha, etc, rose by 51% to Rs21.96 lakh crore in 2011-12 against Rs14.56 lakh crore in 2010-11.

While, the turnover from commodity trade in metals rose by 8% to Rs28.96 lakh crore in 2011-12 fiscal from Rs26.87 lakh crore in the year-ago period.

Trade in energy rose by 23% to Rs28.51 lakh crore in FY11-12 compared to Rs23.10 lakh crore in last fiscal.

In bullion, turnover in silver surged by more than two-fold to Rs58.26 lakh crore in 2011-12, from Rs27.93 lakh crore in 2010-11, while the business from gold rose by 61% to Rs43.55 lakh crore in FY11-12, compared to Rs27.01 lakh crore in last fiscal.

Similarly, in agri commodities, the rise in turnover was mainly contributed by chana, guar, soyabean seed, refined soyabean oil and mustard.

The turnover in rapeseed/mustard rose by 92% to Rs2.15 lakh crore in 2011-12, whereas chana (gram) turnover jumped by 143% to Rs3.06 lakh crore in the fiscal.

In refined soyabean oil, the turnover rose by 56% to Rs5.38 lakh crore in the last fiscal, while that of soyabean seed increased by 37% to Rs1.48 lakh crore in FY11-12.

The turnover from guar seed rose by 33% to Rs3.38 lakh crore in 2011-12, from Rs2.54 crore in 2010-11.

For last couple of months, soyabean and some other farm commodities like chana, mustard, guar, etc, have come under the lens of the regulator as their prices have risen sharply in view of demand-supply mismatch.

Earlier this month, FMC had banned commodity exchanges from offering new futures contracts in soyabean to curb price volatility and speculation in the oilseed.

That apart, the commodity market regulator had enhanced the deposit amount that buyers have to keep with exchanges for trading in soyabean, pepper and cardamom by 10% of the value of these commodities.

It has also reduced open position limits—a restriction on the quantity of commodities that can be traded in the futures market—on soyabean, mustard seed, chana and refined soyabean oil contracts to curb excessive price volatility.

At present, there are five national and 16 regional commodity exchanges in the country.

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