homeinfrastructure NewsDon't expect price controls on steel, cement; difficult to prove a cartel in steel industry: Go India Advisors
Don't expect price controls on steel, cement; difficult to prove a cartel in steel industry: Go India Advisors
Road and highway minister Nitin Gadkari has said there is a cartel in the cement and steel industries and that cement manufacturers are exploiting the situation in the real estate sector, as prices of the two commodities rise. However, Rakesh Arora, Managing Partner, Go India Advisors does not expect price controls in the industry, which, according to him, would be very harsh.
Road and highway minister Nitin Gadkari has said there is a cartel in the cement and steel industries and that cement manufacturers are exploiting the situation in the real estate sector, as prices of the two commodities rise.
However, Rakesh Arora, Managing Partner, Go India Advisors does not expect price controls in the industry, which, according to him, would be very harsh.
Speaking to CNBC-TV18, Arora said that the Competition Commission of India (CCI) raided the top 5 cement companies in early December simultaneously and they seized equipment, material, data, and other things.
“So the investigation is going on for more than one month now. Probably they will have some data points to indicate whether there is a cartel going on in cement or not,” he said.
He noted that the cement capacity utilization was declining over last two years, but the prices were rising.
He said that the past fines haven't been enough to deter cartelization in cement
According to him, given the pressure from the minister and if it goes to the Prime Minister’s Office (PMO), cement prices might cool off. “Because cement companies may not want to take the government head-on,” he said.
However, in the steel industry, Arora believes there is a lesser case of cartelization.
“Steel is a global commodity and prices have been going up globally and nobody can control steel prices globally. So there is less of a case of a cartel there,” he said.
Arora is of the view that there is further room for an upside in steel stocks due to the strong global cycle and a possible export tax on steel will be viewed negatively in the budget 2021.
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(Edited by : Ankit Gohel)
First Published: Jan 11, 2021 11:35 AM IST
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