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TN threatens to take over cement units

The state government threatens to nationalise cement units in the state if manufacturers fail to lower prices. Lalatendu Mishra & GC Shekhar report.

business Updated: Jan 02, 2008 19:44 IST
Lalatendu Mishra & GC Shekhar
Lalatendu Mishra & GC Shekhar
Hindustan Times

After the finance minister, it is now the turn of Tamil Nadu Chief Minister Karunanidhi’s turn to tame cement producers. The state government has threatened to nationalise cement units in the state if manufacturers fail to bring down prices and make it affordable for consumers.

Cement manufacturers, however, said that nationalisation of assets of multinational as well as Indian companies was absurd in a liberalised economy. Cement prices in Tamil Nadu have risen by more than Rs 30 per bag to Rs 230-250 per bag in the past year.

A high level meeting, headed by the chief minister, discussed ways to make cement affordable for the public and bring down the retail price of cement, a press release issued by the state government said, adding that MMTC had already initiated measures to import one lakh metric tonne of cement at the national level. In addition, the Tamil Nadu Cement Corporation (TANCEM) would import cement directly to cater to the demand in the state.

TANCEM would import 1 lakh tonne of cement and sell it at no profit through retail outlets of the state civil supplies corporation. TANCEM has also bee asked to float global tenders to import cement.

“If cement manufacturers do not bring down the price of cement even after all these measures in the interest of the public, the state has no other option but to nationalise all the private cement factories in the state,” the government said.

Reacting to the announcement an official with a cement manufacturer said, “How can the state government do it? Does it make sense to say listed cement companies would be nationalised in a market economy?”

Cement companies that have units in the state, include ACC, where Swiss company Holcim holds a major stake; and Grasim, besides Tamil Nadu-based companies like India Cement, Madras Cement, Chettinad Cemetns, Dalmia Cement and state undertaking TANCEM. Another official with a private company said it would be better if the government concentrated on turning around its own TANCEM, which was a loss making unit. “The same chief minister nationalised Madras Aluminum Company in the 70s and look what happened eventually. It has come under Sterlite's fold after privatisation. One must think about the grim realities in a globalised market instead of making baseless statements,” said a senior official of a leading cement company.

Private cement companies also point out that cement prices were bound to fall in the next 4 months as companies were increasing capacity, besides the recent move by the Centre and states to import cement.