Drop prices or face takeover, TN tells cement units

With prices of cement in Tamil Nadu soaring, the State Government has said that it might take over private cement factories in the State.

In a press release issued after a high-level meeting presided over by the Chief Minister, Mr M. Karunanidhi, the Government said that if the private sector cement units did not drop cement prices, the Government would have no option but to take over the units in the interests of the public.

Plan to import

The meeting, which reviewed the hike in the price of cement, also decided to import one lakh tonnes of cement by Tamil Nadu Cements Corporation through MMTC to tide over the shortage.

The imported cement would be distributed to the public through the State civil supplies corporation at cost price, without any profit, the release said.

It was also decided that the cement corporation would float global tenders for direct import of cement at the earliest.

Sources in the industry, who did not want to be named, laughed away the takeover threat as “empty”, noting that the State had no powers to do so.

Demand trend

According to a report of Edelweiss Research, the year-on-year demand of cement works out to 18 per cent for Tamil Nadu. Recently, prices in Andhra Pradesh were increased by Rs 3 to Rs 5. Sources in the industry, who did not want to be named, noted that the industry had no option but to raise rates because of increase in prices of coal by Coal India Ltd as well as that of imported coals.

Cement shortage to continue

Prices may remain firm in the coming months.

The cement industry is likely to add around 15 million tonnes of fresh capacity in 2007-08 – a little over half of the 27 million tonnes it had talked about at the beginning of the financial year.

As a result, the cement capacity in the country will be 182 million tonnes by March 2008, 8.5 per cent short of the target set by the working group on cement industry for the Eleventh Five Year Plan (2007-12).

Analysts felt this could keep cement prices buoyant in the months to come.

The industry and the government have been locked in a confrontation for several months now over high cement prices, prompting the Centre to allow duty-free imports. Some quantities of imported cement have already reached the Indian markets from Pakistan.

Nine months after promising to put up additional capacities of 27 million tonnes, cement companies have added a mere 11.50 million tonnes till date. While the Cement Manufacturers' Association says the industry has so far added 6.35 million tonnes, the figure does not include the capacity expansion of two companies – ACC and Binani Cement. ACC added 1.4 million tonnes at its two plants and Binani added 4.1 million tonnes recently.

Market players said the industry may add another 3.5 million tonnes in the next three months, taking the total tally to 15 million tonnes.

Market players said that the delay in projects was mainly on account of supply constraints on the plant and machinery front and environment clearances from the government. H M Bangur, president, CMA, and the managing director of Shree Cement, said, "We will not be able to meet the target as project delays are taking place. There will be at least one quarter’s delay."

"As most of the projects are greenfield ventures, unlike the earlier expansions which were through modernisations, debottlenecking and brownfield projects, the time being taken for operationalisation is more,” said A K Saraogi, chief financial officer, JK Cement, adding: “Additional land requirement and delay in delivery of equipment are adding to the problems."

Market players said that the gestation period for the newer plants had increased by around 6-8 months. Normally it should have been 20-22 months, but now it was reaching 26-28 months, they added.

K C Jain, managing director, Mangalam Cement, said, "My assessment is that by March, 2008, industry will add another 6-7 million tonnes."

Top News - 20th Dec

IFCI invites bids to sell shares in 100 firms

A day after cancelling the stake sale process, IFCI today invited bids from merchant bankers to value and buy shares in unlisted firms to enable the company to sell them.

"We have identified 100 companies wherein IFCI would like to sell off its stake," an IFCI official told PTI.

Merchant bankers and other interested parties are requested to submit bids before January 10, 2008 in this regard, he added.

IFCI has over time acquired stake in many companies either directly or in lieu of debt, he said.

Atul Rai, CEO and managing director, IFCI, had said yesterday: "We need the capital."

IFCI sold its stake in National Stock Exchange and rating agency ICRA this year.

Share of IFCI closed at Rs 76.40 - down 23.6% on the BSE today after the institution aborted the process for equity sale as the highest bidder - the Sterlite-Morgan Stanley consortium - put conditions with its bid.

TVS can sell Flame, says Madras HC

A division bench of the Madras High Court today suspended the interim order restraining TVS Motor Company from booking or selling its recently launched 125-cc bike Flame.

After hearing the arguments of both parties for about two hours on Thursday, the bench suspended the interim order of the single judge and posted the case to January 4 and 5, 2008, for further hearing all petitions. Bajaj Auto had accused TVS of copying its patented DTSi technology in its 125-cc motorbike TVS Flame.

However, TVS responded that the Flame was fitted with a three-valve engine based on CCVTi (Controlled Combustion Variable Timing Intelligent) technology, which is different from the technology used by Bajaj Auto.


Tatas world's 3rd most accountable group

The Tata Group, easily India's most respected business house, has been named the world's third most accountable and transparent company by Britain's One World Trust although US hotel chain Orient-Express has not found it worthy of an alliance.

According to Rob Lloyd, the report's lead author, the assessment is a measure of the extent to which organisations have the policies and systems in place to enhance consistent and coherent accountability to the people they affect." The report ranked GE number 1 and GlaxoSmithKline number 2 among the most transparent and accountable companies.

Tata Group, was however, considered ahead of Coca-Cola, Petrobras, HSBC Holdings, PriceWaterCooopers International and Google, when measured on the parameters of transparency and accountable leadership among global companies.

The annual Global Accountability Report considered the Tata Group at number 10, among the world's 30 most powerful organisations from the inter-governmental, non-governmental and corporate sector, to be accountable to civil society, affected communities and wider public.

Orient-Express Hotels had recently rejected an offer of alliance from Tatas, saying tying up with the "predominantly Indian" hospitality firm will erode the US hospitality chain's brand image. Tata Group's interests range from hotels to steel to salt and software and auto.

One World Trust rated UN Development Programme followed by Asian Development Bank and Christian Aid the most transparent and accountable organisations among world's top 30 organisations.

Stop cartelisation, MRTPC tells cement firms

Anti-monopoly watchdog Monopolies and Restrictive Trade Practices Commission (MRTPC) today held major cement manufacturers, including L&T Cement, Birla Cement, Grasim and ACC, guilty of cartelisation under the aegis of Cement Manufacturers' Association.

Announcing its order after 17 years of judicial investigation, the commission warned cement producers and Cement Manufacturers' Association not to repeat unfair trade practices.

"We issue a cease-and-desist order... And direct them not to indulge in any such arrangement directly or working through CMA," said a three-member bench consisting Justice O P Dwivedi, M M K Sardana and D C Gupta.

Passing the order, MRTPC also directed the cement companies, including Century, Dalmia, Jaypee and Mysore, to file a compliance report within eight weeks.