CCI orders enquiry into price cartelisation by sugar industry
Description : Industry
Date : Aug-19-2010
Competition Commission of India has ordered an enquiry into alleged price cartelization by sugar industry.
Meanwhile, the sugar industry is allegedly generating unions to control prices of sugarcane in states like Maharsahtra, Gujarat, and Andhra Pradesh.
The commission, however, is in the possession of an internally circulated document.
Ass per that, the sugar co-operatives have fixed a state wise minimum floor price for sugarcane from July 23 to August 31.
The prices for Maharashtra, Gujarat and Andhra Pradesh have being set between Rs. 2700 to Rs. 2800.
Moreover, the price for Karnataka is fixed at Rs. 2670 to Rs. 2750 for different grades of cane.
The decision, however, to fix floor prices was taken by the sugar industry in July.
It was at an all industry meet in Maharashtra to discuss ways of protecting the industry from volatile cane price in the domestic market.
But, however, the sugar industry refuses to acknowledge this.
On the other hand, the CCI under the MCA jurisdiction is not taking this move by the sugar industry carelessly.
It has ordered the co-operatives, sugar industry bodies and the agriculture ministry to come up with an explanation.
Meanwhile, if they are found guilty, a penal action can be taken against them for indulging in monopolistic trade practices.
Earlier, Sugar companies welcomed the move to get Rs. 27 a liter for ethanol as the surging demand for fuel has landed sugar companies in a sweet spot. Oil companies will now have to buy ethanol from sugar companies to be used for blending with automobile fuel.
Since sugarcane production is expected to be higher this year after improved acreage for the crop hence the move has come at a good time for sugar companies. However the higher sugarcane availability is expected to depress prices even as sugar prices are off their peak seen last year.
the industry is expected to produce 160 crore liters during the current sugar year as selling ethanol to oil companies also opens another revenue stream for sugar companies.
While it is a party time for sugar companies, the oil companies are clearly unhappy as this mandate would mean an additional outgo of around 500 - 600 crore rupees from their kitty.
The chemical industry has also opposed the move of the government for having fixed the price at Rs. 27 per liter and have asked the government to leave the pricing to market forces.
The government had in the past made ethanol blending mandatory but it could not be implemented due to non availability of ethanol.
Shree Renuka Sugars will have a plant that will provide 3000 tons per day and will be operational in January next year. Further there are several companies who are gearing up for the opportunity.
Description : Industry
Date : Aug-19-2010
Competition Commission of India has ordered an enquiry into alleged price cartelization by sugar industry.
Meanwhile, the sugar industry is allegedly generating unions to control prices of sugarcane in states like Maharsahtra, Gujarat, and Andhra Pradesh.
The commission, however, is in the possession of an internally circulated document.
Ass per that, the sugar co-operatives have fixed a state wise minimum floor price for sugarcane from July 23 to August 31.
The prices for Maharashtra, Gujarat and Andhra Pradesh have being set between Rs. 2700 to Rs. 2800.
Moreover, the price for Karnataka is fixed at Rs. 2670 to Rs. 2750 for different grades of cane.
The decision, however, to fix floor prices was taken by the sugar industry in July.
It was at an all industry meet in Maharashtra to discuss ways of protecting the industry from volatile cane price in the domestic market.
But, however, the sugar industry refuses to acknowledge this.
On the other hand, the CCI under the MCA jurisdiction is not taking this move by the sugar industry carelessly.
It has ordered the co-operatives, sugar industry bodies and the agriculture ministry to come up with an explanation.
Meanwhile, if they are found guilty, a penal action can be taken against them for indulging in monopolistic trade practices.
Earlier, Sugar companies welcomed the move to get Rs. 27 a liter for ethanol as the surging demand for fuel has landed sugar companies in a sweet spot. Oil companies will now have to buy ethanol from sugar companies to be used for blending with automobile fuel.
Since sugarcane production is expected to be higher this year after improved acreage for the crop hence the move has come at a good time for sugar companies. However the higher sugarcane availability is expected to depress prices even as sugar prices are off their peak seen last year.
the industry is expected to produce 160 crore liters during the current sugar year as selling ethanol to oil companies also opens another revenue stream for sugar companies.
While it is a party time for sugar companies, the oil companies are clearly unhappy as this mandate would mean an additional outgo of around 500 - 600 crore rupees from their kitty.
The chemical industry has also opposed the move of the government for having fixed the price at Rs. 27 per liter and have asked the government to leave the pricing to market forces.
The government had in the past made ethanol blending mandatory but it could not be implemented due to non availability of ethanol.
Shree Renuka Sugars will have a plant that will provide 3000 tons per day and will be operational in January next year. Further there are several companies who are gearing up for the opportunity.
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