Investors should closely track the cartelisation probe against cement companies, as it raises serious questions about fair market practices. The companies’ responses and regulatory scrutiny could impact sector dynamics, pricing power, and growth outlook. This development signals potential volatility ahead, affecting both investor confidence and the broader industry’s competitive landscape.
Following the CCI probe news, cement stocks came under pressure on Monday, July 7. India Cements slipped up to 2.07%, while UltraTech Cement fell 1.60% intraday. Shree Digvijay Cement and Dalmia Bharat also declined, hitting intraday lows of 2.19% and 1.06%, respectively.
What is cartelisation of the cement industry?
Cartelisation in the cement industry refers to a formal or informal agreement among major cement manufacturers, such as ACC, Ambuja Cement, UltraTech Cement, and others, to manipulate prices and control supply, thereby increasing profits and dominating the market. In India, the Competition Commission of India (CCI) has repeatedly investigated these companies for anti-competitive practices, with allegations dating back over a decade, including a significant case in 2012 where 10 cement manufacturers were fined Rs 6,300 crore for price-fixing.
The Builders Association of India (BAI) and other construction sector groups have accused these companies of colluding to raise cement prices, especially post-lockdown when demand surged, causing significant price hikes that harm consumers and the construction industry. The CCI’s ongoing investigations, including raids on company premises, aim to curb such practices, which are seen as detrimental to economic growth and fair competition, prompting calls for a cement regulatory authority to prevent unethical trade practices.
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Recent Update
As per NDTV The Competition Commission of India (CCI) has directed UltraTech Cement, which owns India Cements, along with Dalmia Bharat Cements and Shree Digvijay Cements, to submit audited financial statements following an investigation into alleged cartelisation in ONGC tenders. The CCI’s probe, initiated after a 2020 ONGC complaint, found that India Cements, Shree Digvijay, and Dalmia Cement, with a middleman named Umakant Agarwal, engaged in anti-competitive collusion. UltraTech must provide India Cements’ financial records for FY15–FY19, while Dalmia Bharat and Shree Digvijay are required to submit records for FY11–FY19 within eight weeks.
How are Companies Addressing the Claims
Several cement companies, including Shree Digvijay Cement, Dalmia Bharat Cement, UltraTech Cement, and India Cements, have issued clarifications regarding ongoing investigations by the Competition Commission of India (CCI). These companies explained that the cases are still at an early stage, with no final findings or penalties imposed. Some companies clarified that the reports in the media were misleading, as they are either not under investigation directly or are still reviewing the investigation reports. All companies stated they are cooperating fully with the authorities and will defend their cases as needed.
Written By Fazal Ul Vahab C H
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