cool down, Udayan
It was heartening to witness Udayan talking so very emotionally on CNBC TV 18 against the announcement that cement companies have unanimously decided to keep the prices of cement unchanged for one year. I don’t see anything so out of the way that would warrant such an outburst from Udayan. Anyway leaving aside Udayan, let’s try to weigh it. Under pressure from government the cement sector has decided to freeze prices for a year. Do we really think the companies wouldn’t have accounted for any sort of hit on their profitability? It is said that the prices are too high and even though the demand may justify such prices, since the prices of raw material and fuel costs continue to be under certain level, the companies are already enjoying extra-high margins, so a check on it is in no-way out of the way – and that’s what the government’s are supposed to do. If we are vehemently supporting the government’s way out of business and want it to limit itself to the business of governing and regulation then we need to be ready for such interference. Mind you, such interference happens in any country day in and day out. So cool down Mr. Udayan!
But I also have another thought. Couldn’t it be that the sector has its hand in the government’s glove? Indian cement sector is pretty attractive after the world has witnessed entry of Holcim and Lafarge and these players have the wherewithal of giving the domestic industry run for its money. I have a feeling that in return for agreeing to government’s demand of freezing prices, the industry has sought a kind of assurance from the government that foreign players won’t be given any preference. Or maybe, if no such assurance has been received then I am sure domestic industry could be comforting themselves in the view that with such a perceptibly retrograde step, foreign companies’ interest in Indian cement sector would wane off.
Let’s see what happens, but am not much bothered about the stock market.
P.S. All said and done, I don’t agree to such freeze of price, though I won’t label it wrong the way Udayan does.
