Indian cement producers to appeal CCI fines

LafargeHolcim, India Cements and Ramco Cements have said that they will appeal against yesterday’s ruling by the Competition Commission of India (CCI) which levied fines totalling INR67bn (US$1bn) against 11 firms, the Press Trust of India reports.

Four of the other affected companies – UltraTech, Shree Cement, Jaiprakash Associates and JK Cement – have said they will seek legal advice and may subsequently submit appeals of their own.

LafargeHolcim has said it believes it has a strong case on which to challenge the CCI’s ruling. This view is shared by many analysts, who point to the difficulty faced by competition bodies when trying to prove price fixing in the cement market.

However, it is challenged by Anil Singhvi of Ican Investment Advisers, who told ET Now that “[the] tribunal will find it difficult to reject the contention of CCI”. Mr Singhvi predicted that the CCI’s ruling would ultimately be upheld by India’s Supreme Court.

Others have focussed on the implications that paying up would have on firms. Industry analysts Edelweiss said: "If we assume that top-12 cement players in India have 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."

Cement consumers have welcomed the ruling, with the Confederation of Real Estate Developers' Associations of India (CREDAI) describing it as “encouraging” and stating: "[The] 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".