InvestorQ : What do you see the impact of the CCI investigations into the cement companies like Shree Cements, Ultratech, ACC and Ambuja?
Anamika Sodhani made post

What do you see the impact of the CCI investigations into the cement companies like Shree Cements, Ultratech, ACC and Ambuja?

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Angel dcosta answered.
3 months ago
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The CCI, which regulates competition and prevents the creation of monopolies, has been aggressive in its investigations of cement companies. Most of the large cement makers in India like Ultratech, Shree Cements, ACC, Dalmia and Ambuja have been under the scanner. The allegations pertain to cartelisation by cement companies to prop up prices.

Brokers like Motilal have estimated that In case the Competition Commission of India or CCI actually levies a stiff penalty, the potential impact on stock prices could be in the range of 5-10%. That perhaps explains why these cement stocks saw a sharp correction in price on Friday 11 December. The last major such order by CCI had been in 2012.

However, on the previous occasion all the cement companies had appealed against the order and the matter is still sub-judice in the Supreme Court. Companies have till now only paid 10% of the penalty; and that too under protest. Back in 2012, cement companies had ROEs of 20%, but now it is just about 10% making the case weaker for CCI.

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