Want cement cos to make profit, not profiteer: Kamal Nath

Nifty BSE | NSE 25/05/12 Are Mutual Funds betting on Nifty?

Clarifying the government's stand on the ban on cement exports, Commerce Minister Kamal Nath mentions that he has not said that they will ban cement exports, rather he would look at all options.

He says that the government wants cement companies to be healthy and profitable. He does not want cement companies to take advantage of the demand-supply mismatch. Nath also mentions that they are examining the reasons whether levies can be absorbed.

According to Nath, the ban on exports may not be imposed if companies choose to absorb duties. In his view, cement companies must make profits; he is concerned about excessive profits.

Excerpt's from CNBC-TV18's exclusive interview with Kamal Nath:

Q: The market is very worried by what you said this afternoon. Did you actually go on record saying that you are considering banning exports for cement?

A: I didn't say that. I said that we are going to look at all aspects to see if cement companies will absorb new levies that have been imposed. We do not want them to profiteer; we want them to make a profit in a healthy way. At the same time we have to ensure that there is no extra fat there. It's a question of having muscle and not fat.

Q: What is profiteering in your eyes, since these are cyclical businesses, which sometimes do well and sometimes don't. Where does the concept of profiteering come in?

A: Excessive profit; taking advantage of a supply-demand mismatch or temporary supply demand constraints, raising prices by taking advantages is profiteering.

Q: It is disturbing to hear you say that because in all industries across the world when demand exceeds supply prices go up. Isn't that the basic law of economics that when demand exceeds supply prices move it?

A: It's certainly the law and that's how the market operates. The market operates on supply demand basis but when there is an unnatural temporary situation, one has to consider it. So we are examining the options on whether these levies can be absorbed. Infact the Finance Minister has said that his intention was to ensure that there is no increase in prices. It's a matter of looking into this whole issue in detail and also for cement companies to see to what extent these levies can be absorbed with or without them being passed on.

Q: If they cannot absorb the levies and choose to pass it on would you consider banning exports to cool prices?

A: I do not think there is any point in answering the question, which starts with IF because that would be another question.

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