Even as the Competition Commission is reported likely to impose a penalty on cement companies, including UltraTech Cement, for alleged cartelisation, UltraTech has received environmental clearance for its expansion plans for two of its plants in Madhya Pradesh.
The Environment Ministry's expert panel has given its approval for environment clearance for UltraTech Cement's capacity expansion in clinker plant from 3.59 million tonnes per annum (MTPA) to 6.2 MTPA and its cement plant from 4 MTPA to 10.33 MTPA. The Aditya Birla Group-promoted company also plans to expand its captive power plant from 46 megawatt (MW) to 122 MW. The plants are located in Damodarpura and Khor villages in Neemuch district of Madhya Pradesh.
The clearance, however, comes with some tough conditions. The company will have to set aside five per cent of its total project cost of Rs 1,950 crore for enterprise social commitment. It will also have to spend an estimated Rs 110 crore annually for environment protection. 33 per cent of the total plant area of 222.142 hectares has to be developed as green belt and Ultra Tech officials will be responsible for ensuring adherence to environment guidelines.
Additionally, the company will have to take measures to ensure air and water qualities in the area and minimise water and electricity consumption by using updated technologies. Non-compliance with any of the conditions will result in the ministry canceling its environment clearance which will lead to plant closure.
On June 20, sources told NDTV Profit that the Competition Commission of India (CCI) is likely to penalise 11 cement companies of the 39 investigated for alleged cartelisation in a case going back to 2007-08. The cement companies allegedly decreased production together in a bid to inflate prices.
UltraTech, Ambuja Cements, ACC, India Cements, Madras Cement, Jaypee Cement are among the companies found guilty, sources said
The case goes back to 2007-08 when realtors' body Builders Association of India (BAI) had alleged that the retail prices fixed by 11 members of cement manufacturers association (CMA) were almost similar. The investigation was first handed to the Serious Fraud Investigation Office (SFIO) and later to CCI.
The penalty is likely to be in the range of 8-10 per cent of past three year’s average turnover and may amount to Rs 3,000 crore, sources said, and may impact 40-100 per cent of FY13 earnings of the cement companies.