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R.Ranganathan M.Sc., [ MBA - IIMA]     Just some blunt, forthright views       on some subjects / outfits

 
     
 

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Cement Pricing
 

 

 'please articulate concerns with the farmer who buys a bag of cement'!  Chidambaram's interview

refer also Close MRTPC and also Gift Iron Ore

2 price increases have been effected by Steel companies in 2008.  Kamal Nath and Chidambaram are mum. Paswan says he cannot do anything. Manmohan does not seem have clearance to say anything on the double standards - on which, he has, is a mystery [ After June 2007, I bought Steel shares and earned over 40% ]

June 15: Governement is ordering a probe now into overstated loss due to subsidies, of the Indian Oil Marketing Companies. The overstatement was also used as a justification for  raising petrol and diesel prices on 4-6-2008
 
 
As a Member of the Indian Parliament and a Minister, he is responsible to the Indian Public first. Should he not have opened his mouth in India long back, to the Indian Public ? 
   
  The Finance Minister proclaims in London to Shri. Udayan Mukerjee of CNBC that the Government does not plan any price control on Cement. And some rethinking has to be done on the Sugar front. 

It is a pity that the Finance Minister is not shred to pieces by the Press - that is the continuing bane of the Indian Press

After creating unwanted misgivings and fear amongst the Investors in the 2 sectors and maintained stoic silence for nearly 3 months, he opens his mouth for the benefit of the likely Foreign Investors. 


   
Who is promoting cartelisation ?
   
  The Finance Minister, after his needless and uncalled for meeting with Cement Manufacturers in March 2007 said in an interview with CNBC TV18 that ' some manufacturers are agreeable to a roll back on prices and some others are not. So I have asked them to come to an unanimous decision and then meet me' 

He is degrading Indian Manufacturers in a foreign soil, on flimsy grounds, as if he / the government is lilly white. His position is actually much worse. Did not Brinda Karat produce records in the Parliament to show that the Government collected 5000 Crores more with the petrol price hike in June 2005 or so, than what was warranted by the crude price increases in the International market


 
 
Accusations with contradictions ?
   
  In the interview, he also makes clear that he was aware that some form of Cartel exists in the Cement Industry before his March 2007 meeting and a complaint is with the MRTPC. 

His admission that there are 2 sets of opinions amongst the Cement Makers does not indicate the presence of a Cartel - at least openly. 

Having advised them to come together to fix a Price that suits him / the Governmental gimmick for public consumption, 

or, in simple terms, to form a Cartel to fix the prices

[ if they can fix the prices today to suit Chidambaram / Government, you are also in effect giving them the power and the precedence, to fix the prices the way they want, at a later date - does not the precedence would make it an officially permitted cartel ? Lawyers should check ]

it is a poor joke that he is misusing the coverage that he gets from the media, to accuse them of forming a cartel. He should not have called for any 'Price Fixing mechanism' if they were suspect


 

Advertisement panels on site:  I do not endorse any other commercial skin / hair product as I do not even retail my own invention, Swapna, in this site. Effective 28th July 2008, I have gradually released this site  to Google to place their advertisements panels. This is to generate some revenue - if they do not clash with my views. These mechanically placed advertisements can be reviewed only after September 5, 2008

 

If we have to accept his arguments
   
  could / should he not have lowered the Customs and CVD and whatever recourse that the Government had in early March 2007.  [ by the time, these cuts were imposed, possible Pakistan exporters also raised the prices - so nothing tangible was achieved for cement consumers ]

 to improve the Supply position of Cement in India. That would have dampened the prices then and allowed Market Forces to come into play - with some benefit or demonstrated needs for further governmental support on the supply side. 

He failed

in what could have been done and when it should have been done.  And he blabbers, as and when the Print and TV media gives him a chance - affecting the investing public


 
 
Who is affected by his constant nibbling ?  without any concrete action
   
  There are 70 Million Demat accounts as per news in CNBC in July 2007. Even if 10% of them had invested in Cement Stocks in January 2007, by end March 2007, they had lost nearly 40% like me

 Now that they are recovering from the loss, there is MRTP intervention as of 25-7-2007. It is the Investing Public who get affected and not the Cement Makers or the Government. The Government earns extra stamp duty due to constant reshuffling by the investing public

Only the Business Sentiment gets routinely affected and the investing public suffer, by the Government's needless pronouncements


One July 27, 2007 news

Cartelisation   and or  Supply - demand mismatch   - One World wide case

OPEC, the Cartel of the oil producing Countries, existing since 1973, say that the reasonable price for crude is between 60 to 65 Dollars. Yet, the reality is that the Crude price is above 73 Dollars per barrel on 24-7-2007.

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You can read below the interview details. But why waste time, if you have already wasted enough reading this much, trying to make sense out of nonsense pronouncements ?

 

This site is the detailed catalogue for my invention. Yet, I do not retail Swapna, through this site. Hence, there is no question of my endorsing any other commercial skin / hair product.

 

Still confident of near 9% GDP growth this yr: FM

2007-06-27 15:42:56 Source : Moneycontrol.com
 
Cement share prices went up over 6% of all significant players on 28-6-2007
 
 

Q: The other thing that has worried global investors over the last few months and you will probably talk to them about that, is the Government’s attempt to say fix or control prices in a few sectors like cement?

A: We have not controlled prices of any commodity.

We have not tried to ‘control’ cement prices; we have tried to ‘influence’ cement prices, just as the Tamil Nadu Government did a few years ago by having a dual sales tax rate. They succeeded because more than the dual sales tax rate, they had other secret and perhaps despicable instruments in their hands.

We tried to influence cement prices, but we failed. We went back to imposing an ad-valorem excise duty.  
 

Q: There is a freeze on prices on the table as well for the cement manufacturers?  

 

A: There is none, there is no freeze. In fact prices have moved up a few rupees in South India.
 
 

Q: Didn’t you strike a sort of a deal with the cement companies that they should not raise prices during the year? There is no such pact?  

 

A: Not to my knowledge, nobody told me about it.
 

Q: Does the Finance Ministry and Commerce Ministry have differing views on the subject?  

 

A: All I said is, nobody has told me about a deal. The cement manufacturers voluntarily said they will hold prices, but they have not.


 

Q: So prices have gone up?  

 

A: They have, in the last week or last 10 days or so. I am told prices have moved up a couple of rupees - in South India, at least. I don’t know about all India. 
 
 

Q: But you have been on record saying that you do not like prices being above Rs 200 odd and you think that’s an unfair price?  

 

A: I am on record and I know you disagree with that.
 

Q: There is no disagreement on that - there is just a fundamental disagreement on the fact that you may choose to think one price is fair and go against market forces?  

 

A: I am answerable to the people who expect prices to remain moderate. And therefore, I do think, and I have no hesitation in saying that again - I think the price increases effected by the cement manufacturers were completely unwarranted, completely untenable. 

Yet, because we believe in a market-driven economy, we did not impose price control. [ why then make a song and dance ? ]
 
 

Q: What about other commodities like steel, where initially at least there has been some kind of hesitation about their inclination to raise prices as well?  

 

A: Please understand. Government owes a responsibility to consumers. Government can and should try to talk manufacturers to moderate prices or to restrain price increases. That’s a function of Government. I know that some people can take a very different view of government, but that they are entitled to. They should elect themselves to Government and take a different view. 

But I believe government owes it to the people. Short of price control - we are not advocating price control at all. We try to influence manufacturers to hold back prices, restrain prices, when we think that price increases are unwarranted and arbitrary.
 
 

Q: But aren’t these commodities cyclical, I mean they go to downturns and upturns?

 
A: Yes of course they are. Of course they are cyclical. But that doesn’t mean that some people should act as a cartel. Please remember, there are three cases pending before the MRTP against cement manufacturers filed two-three years ago, not after the recent months. So there is a complaint of acting as a cartel. I don’t know if they act as a cartel, but there is a complaint of them acting as a cartel.

Q: But you believe that is the case?

 
A: I don’t have to come to any conclusion. It is the MRTP, which has to come to a conclusion. All I say is, the very textbooks, that tell you and me about market economics, also use the word ‘cartel’.
 

Q: What will be your policy response to many of these commodity sectors over the next one year? Would you just let them be?  
 

A: We’ll let them be. But if they face investigation by MRTP, they will face investigation. If there is a competition commission, I am sure that will look into it, if it is within its jurisdiction. But we are not going to impose price controls. Let me make that very clear. 

Despite inspired accounts in some sections of the media that we are imposing price controls, we did not impose any price control.
 
 

Q:Right now let me have it on record - there is no price freeze for cement manufacturers?  

 

A: No, not to my knowledge.

 

Q: So in the next few quarters, if steel and cement companies want to raise prices, you would not have any objections? 

 

A: You are getting into a circular argument. I have made our position clear. I don’t know why you should virtually act as a lobbyist for the cement industry.
 

 

Q: I am not, I am just articulating concerns which global investors…  

 

A: I am sorry, please articulate concerns with cement consumers also, please articulate concerns with the farmer who buys a bag of cement.  [ what concern for the farmer and his cement needs. How much cement that a normal farmer needs per year. In the last 30 years, I have only bought 4 bags because of some minor repair / construction. For routine needs if any, cement is available in 1 kg and 5 kg packings ]
 

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