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New UserCement firms to approach COMPAT against Rs 6,700 cr CCI order
02 Sep 2016
Cement firms including ACC, Ambuja and IndiaCementstoday said they will move COMPAT against fair trade regulator CCI's order to impose Rs 6,700 crore penalty, while others like Ultratech and Shree Cementadopted a wait-and-watch approach. Cement firms including ACC, Ambuja and IndiaCementstoday said they will move COMPAT against fair trade regulator CCI's order to impose Rs 6,700 crore penalty, while others like Ultratech and Shree Cementadopted a wait-and-watch approach.
Yesterday, the Competition Commission of India(CCI) had slapped an over Rs 6,700 crore penalty on 11 cement firms for indulging in cartelisation.
In separate regulatory filings, LafargeHolcim-controlled Ambuja Cementsand Accas well as IndiaCementsand Ramco Cements said that they will approach the Competition Appellate Tribunal (COMPAT) against the judgement.
However, Aditya Birla Group's Ultratech Cement, Shree Cement, Jaiprakash Associatesand Jk Cementsaid they will decide the future course of action after studying the order and seeking legal advice.
Even as cement companies have taken a cautious approach, CREDAI, the apex body of private real estate developers, said the judgement is "encouraging" for the entire construction ecosystem.
"Developer community has always claimed that there is an unprecedented increase of cement prices at certain times of the year and it results into cost of the construction for affordable homes going up," it said in a statement.
Analysts say the order may put pressure on companies with relatively high levels of debt and can have implication on new capex.
IndiaRatings said the order will put pressure on credit metrics for firms with relatively high levels of leverage.
Religare said though the order is not in favour of cement players, it expects the judgement to be contested and will turn out to be a long-drawn process.
In the medium term, Edelweiss said, "If we assume that top-12 cement players in Indiahave to pay this fine, close to about 40 per cent of annual cash flows of the entire sector would not be available either for debt/equity/new capex. This would have implications for the cement cycle."
CCI had imposed a fine of Rs 1,147.59 crore on ACC, while penalties on Jaiprakash Associatesand Ultratech are Rs 1,323.60 crore and Rs 1,175.49 crore, respectively.
The fines on other firms are Rs 274.02 crore (Century), Rs 187.48 crore (IndiaCements), Rs 128.54 crore (JK Cements), Rs 490.01 crore (Lafarge), Rs 258.63 crore (Ramco), ACL (Rs 1,163.91 crore), Binani (Rs 167.32 crore), while industry body CMA faces a fine of Rs 0.73 crore.
Through a separate order, the regulator slapped a fine of Rs 397.51 crore on Shree Cementfor unfair businesses practices.
The latest order has been passed by CCI following the directions issued by COMPAT, which had remanded the matter involving the cement companies to CCI for passing fresh order. The tribunal had also set aside fine on 10 cement firms imposed earlier.
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