Cement companies nemesis...
The indian story lost some of its sheen yesterday.Global investors have watched with gr8 dismay as our commerce minister announced that cement prices would be frozen for next 1 year,regardless of what happens to input prices.. its yesterday once more...control raj is back.prices are not determined by demand and supply logic,but by union ministers!
This is the kind of stuff which often leads to de-rating of entire markets...first gov played spoilsport with oil then sugar then steel and now cement...the gov is panicking after its recent electoral debacles...as UP elections get nearer one has to live with more of such populist moves.moves that ostensibly help the masses but spell trouble for several sectors...as an investor in cement companies one should know that while prices may not fall much from these levels but the price freeze may rob them of any significant outperformance
one can only hope that this move does not have deeper ramifications for the sector.manufacturers could postpone ,shelve new capacity additions fearing this price freeze,global investors like holcim and lafarge,which had taken large bets on india may rethink their strategy.Afterall who wants to operate in a controlled price environment?finally it sends the negative signal that gov having made the blunder of excise duty levy isnt mature enough to step back and undo the harm.instead to salvage its bruised ego,it has to push such an unfair move down the throats of investors.it's truly sad
This is the kind of stuff which often leads to de-rating of entire markets...first gov played spoilsport with oil then sugar then steel and now cement...the gov is panicking after its recent electoral debacles...as UP elections get nearer one has to live with more of such populist moves.moves that ostensibly help the masses but spell trouble for several sectors...as an investor in cement companies one should know that while prices may not fall much from these levels but the price freeze may rob them of any significant outperformance
one can only hope that this move does not have deeper ramifications for the sector.manufacturers could postpone ,shelve new capacity additions fearing this price freeze,global investors like holcim and lafarge,which had taken large bets on india may rethink their strategy.Afterall who wants to operate in a controlled price environment?finally it sends the negative signal that gov having made the blunder of excise duty levy isnt mature enough to step back and undo the harm.instead to salvage its bruised ego,it has to push such an unfair move down the throats of investors.it's truly sad
posted by rocky at
11:03 PM
1 Comments:
such declaration a made merely for political interest and they hamper the growth of particular sector..
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