Indian producers forced to make 10% provision of CCI fine

The 11 cement companies fined by the Competition Commission of India (CCI) last year will be forced pay 10 per cent of the total amount levied in the June quarter of this year.

The Supreme Court has instructed the companies in question to abide by the Competition Appellate Tribunal’s directive to pay 10 per cent of the INR60bn (US$1.1bn) record high fine issued for cartel practices back in June 2012.

The top four cement companies — ACC, Ambuja Cements, UltraTech Cement and Jaiprakash Associates — were fined in excess of INR1,000 crore each. Others that were fined include Grasim (now part of UltraTech), JK Cement, India Cements, Madras Cement, Century Cement, Binani Cement and Lafarge India. These companies were fined 50 per cent of their average profit for fiscal years 2009-10 and 2010-11, the period for which they were investigated.

Given subdued domestic demand and rising production costs, the provision is expected to have a serious impact on the bottomline for the cement producers for the June quarter.