Notification No. 14/4/2002- DGAD DATE 13/02/2003-II

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Views of the Petitioner

39. Designated Authority sent initiation notification along with questionnaire proforma to the knownexporters/producers in subject countries as also embassies of the subject countries in India. Only two companiesfrom Singapore and South Africa and one trader from Singapore has responded to the Designated Authority. It isacknowledged in the preliminary findings that none of the exporters have furnished complete response in the formand manner prescribed and vital information was withheld by the exporters/ producers. Even after acknowledgingthat the exporter has not provided complete information, partial information has been accepted and dumping margindetermined in the preliminary findings, resulting in lower dumping margin. It is worthy to note that the deficiencies in the response are in the nature of information consciously withheld by the exporters. Such being the case,acceptance of partial response is nothing but a bonus to the exporters for providing partial response.

40. The Designated Authority has determined separate dumping margin for

a) Mitsui & Company,
b) Mitsui Phenol Singapore

The response filed by Mitsui & Company states that the goods exported by the company were goods produced byMitsui Phenol Singapore. This is in response to the question in the questionnaire with regard to identity of theproducer. Followings are relevant in this regard: -

Since Mitsui & Company is not a producer of the subject goods, the company is not entitled for determinationof dumping margin in isolation. At best, the company could seek fixation of anti dumping duty rate along with theconcerned producer.

Since Mitsui & Company and Mitsui Phenol are affiliates, sales made by Mitsui & Company should be treatedas sales made by Mitsui Phenol through its affiliates. Thus, Mitsui & Company is left with no sales which did notoriginate in Mitsui Phenol. Such being the case, Mitsui & Company could not have demanded a separate dumpingmargin.

The response filed by Mitsui Phenol is deficient to the extent that the company has not disclosed the fact thatthe exports to India were in fact carried out by Mitsui & Company. Thus, the same export transaction to India hasbeen treated twice for determination of dumping margin - once as exports of Mitsui & Company and again asexports of Mitsui Phenol.

In response to the disclosure, the domestic industry on the issue of dumping from M/S Mitsui PhenolSingapore Ltd, maintains that the exporter has not furnished profit & loss statement of the company, which is verycritical for determination of fair cost of production of the company (relevant for determination of whether the salesmade in the domestic market of the exporting country were in ordinary course of trade. As regards Mitsui & Co,Designated Authority is fully justified in treating exporter as non-cooperative, as vital information has not beenprovided by the company though they maintain that There is no legal basis for the exporter to claim separatedumping margin in case the exporter is a trader. As regards M/s Merisol, since the exporter has not providedinformation desired by the Authority, it has been rightly held that the exporter has not cooperated in theinvestigations

Examination by the Authority

41. The Authority sent questionnaire to all the known exporters for the purpose of determination of normal valuein accordance with Section 9A(1)©. The Authority received responses from the following exporters and exportersassociation.

Mitsui & Co Ltd. Singapore Branch.

Mitsui Phenol Singapore Ltd(MPSL), Singapore.

Merisol RSA (pty) Ltd, South Africa.

42. The Authority notes that M/s Mitsui & Company Ltd, Singapore Branch is a public company Incorporated andlisted in Japan. They have exported to different importers in India during POI though they don’t have any domesticsales. On the other hand M/s Mitsui Phenol Singapore Pte ltd, Singapore has exported to India during the POIthrough trading houses and they have made domestic sales also during this period.

Normal value and Export Price determination for Singapore:

43. Only M/s. Mitsui & Co Ltd, Singapore branch and M/s Mitsui Phenol Singapore Ltd, Singapore haveresponded from amongst the exporters of Singapore. M/s Mitsui Phenol Singapore Pte. Ltd. has given informationrelating to sales made in the home market and they have given an account of volumes sold along with invoicenumbers and dates as per appendix I. They have added that they had sold phenol into India via Trading Houses andthey have given customers names and addresses along with the details of shipment made. However they have notenclosed any profit and loss statement and balance sheets for the last three years in their submissions. TheAuthority also notes that the exporter has not submitted any information regarding financing and interests costs asrequired in the Appendix-8,9 and 10 in their submission as per their response to the questionnaire .

However the Authority notes that they have submitted the different transactions pertaining to domestic salesby giving invoice numbers, date volume sold and rate per unit in Appendix 1. The Exporter has also submittedinformation with regards to Appendix 3, which shows the export to India and domestic market sales. They have alsosubmitted Appendix 4 and Appendix 5, which show sales price structure for exports to India and Sales pricestructure to Domestic sales. Further they have submitted the information under major heads excepting financial andinterests costs as per Appendix 8 & 9 which gives the ex factory price for domestic sales and sales price for exportto India. The Authority, for the purpose of preliminary determination, had accepted the data submitted by theexporter for normal value and export price determination by taking ex factory price for domestic sales as normalvalue on weighted average basis and ex factory price for sales to India as Export price also on weighted averagebasis subject to further verification and investigation. The Authority notes that they have not participated in thePublic hearing conducted by the Authority and have not responded to the information sought during the preliminaryfindings and the subsequent letters written by the Authority to them to provide additional information as well. TheAuthority hereby declares the exporter as uncooperative and has constructed the normal value as per the factsavailable as per Rule 6(8) as the exporter has not submitted the relevant documents even after preliminary findingsand subsequent letters written to them to provide the same. The Authority has therefore assessed the normal value for the exporter as per the best information available. The Authority has also accepted the data made available by the domestic industry with suitable normation and applicable adjustments. The normal value for this exporter comes to US$ **** per MT.

The Authority also notes that the firm has exported **** MT of subject goods to India at the rate of US$ ****during the POI and ex factory price after making all adjustments come to US$**** per MT. The Authority has allowed various adjustments as claimed by the exporter while arriving at the net export price at the ex. Factory level. These include discount @ US$ ****per MT, Charges before FOB @ US$****, after FOB adjustments @ US$ **** towards overseas freight and @ US$ **** towards overseas Insurance on per MT basis. The authority has determined normal value as US$ **** per MT and Export price as US$**** per MT. Accordingly the dumping Margin comes to US$ **** per MT or 70.88 % of the export price.

M/s Mitsui & Co, Singapore

44. M/s. Mitsui & Co. Ltd. Singapore Branch has submitted similar arguments as made by M/s Mitsui Phenol Pteltd. Singapore. They have not submitted any information as per Appendix I of the questionnaire. However, as perAppendix III, they have confirmed that they do not any domestic market sales. They have given an account ofexports made to India by giving customers names and addresses along with details of shipments made. They havegiven further information as regards sales price structure for exports to India and countries other than India. Theyhave also calculated the price at the ex factory level for exports to India after making adjustments towardsdiscounts/commissions and overseas freights. However they have not submitted any information towards appendixVII onwards. . However, the Authority had accepted the exporter’s submissions for the limited purpose of preliminary findings subject to further verification and investigation. However, after the preliminary findings, the exporter was asked to submit the detailed information pertaining to the investigation along with the information listed in the preliminary findings but the exporter has submitted no relevant information till date. The firm has claimed that they made exports to third country and they had given an account of third country sales during POI. However, the Authority notes that the firm has not submitted any information listed in the letter written to them on 20th September 2002 with regards to the details of the raw material consumed and their expenses, complete details of the utilities, basis of determination of adjustments in the Appendix IV, V and VI, profit and loss accounts and balance sheet for the POI and three years prior to that etc, . As the required information has not been made available to the Authority, the Authority has been constrained to construct the normal value as per the best information possible as per Rule 6(8) . In this regards, the Authority has also accepted the data made available by the domestic Industry with applicable adjustments and suitable normation as has been done in the case with Mitsui Phenol Singapore Ltd. The Authority has therefore determined the normal value for Mitsui & Co. Ltd. as US $ **** per MT. From the Exporters data, the Authority notes that the firm has exported **** MT of subject goods to India for a total value of US $ **** during the period of investigation and their ex factory export price has been taken as US $ **** pre MT after making adjustments towards discounts/commissions and overseas freight. The Authority has allowed discounts/Commission @ of US$ @ **** , overseas freight @ of US $**** , overseas insurance of US$ **** as claimed by the exporter on per MT basis. The dumping margin for M/s. Mitsui & Co. comes to US$ **** per MT or 60.56 % of export price.

Other Exporters from Singapore

45. As regards determination of normal value for other non-cooperating exporters, the Authority has taken normalvalue as determined in the case of M/s Mitsui & Co. Singapore as mentioned in the preceding paragraph. Asregards the export price the Authority has taken the lowest export price from Singapore to India during POI as theexport price for non-cooperating exporters. The ex factory export price has been arrived after making adjustmentstowards commission, ocean freight and insurance. The authority has determined normal value as US$ **** per MTand Export price as US$**** per MT for non-cooperating exporters. The Dumping margin for Non-cooperatingexporters comes to US$. **** Per MT or 91.70% of the export price.

Normal Value and export price for Merisol RSA (pty), South Africa

46. M/s. Merisol RSA (pty), South Africa has responded to the questionnaire but has given incompleteinformation with regards to the different Annexure. As per the Appendix 1 they have submitted detailed informationabout the various sales in their domestic market by mentioning the invoice numbers, volume sold, sales value andrate per unit. They have also given invoice numbers of their domestic sales with quantity and rate per unit withrespect to two principal grades, drum sales and bulk sales. In the Appendix 2 they have submitted an account ofPhenol exports to India for the POI. They have backed this information by giving an account of sales to Indiancustomers by name giving a breakup of invoice values, ocean freight, insurance, commission, etc. In the Appendix 3they have given an account of exports to India, sales to third countries and also sales in their domestic markets.They have submitted Appendix 4 and 5 giving sales price structure for exports to India and sales price structure fortheir domestic sales. However they have not given sufficient information regarding their other product’s quantity and value. However they have given an account of factory costs and profit of exports to India and for their domestic market with regards to their bulk and drum sales though they have not submitted required information about their financing and interests costs and they have not submitted net profit which they have added to their ex factory costs in the Appendix 8 and 9.

The Authority, after the public hearing, had asked the exporter to provide additional information especiallyrelating to the costing and had also asked the exporter about their willingness to have the data submitted by themverified but the exporter has not replied to the Authority letter till date. The exporter was asked to furnish information relating to the basis of allocation of expenses to the product under consideration, basis of adjustments claimed in the various Appendices, copies of profit & loss and balance sheet for the POI and three years prior to that, net profit/loss before tax and unit selling price in the Appendix VIII and IX amongst others. As the exporter has not submitted the required data, the Authority has been constrained to determine the normal value as per the best information possible as per Rule 6(8). In this regards, the Authority has also accepted the data made available by the domestic industry with applicable adjustments and suitable normation. Normal Value for the bulk sales come to US$ **** per MT and US$ **** per MT from drum sales. As regards determination of export price, the Authority notes that the exporter has exported **** MT of subject goods to India for a value of US$ **** at the rate of US$ **** per MT for bulk sales and ***** for US$**** at the rate of US$**** per MT for drum sales. The export price has been determined at the ex factory level after making adjustments towards inland freight @ US$**** for bulk and US$**** for drum sales on per MT basis. Packing @ US$**** per MT in the case of drum phenol has been allowed by the Authority. Storage @ US$**** , handling, @ US$ ****, others, @ US$ ****, have been allowed for the bulk sales on per tonnage basis. As regards drum sales, commission has been allowed @ ****, inland freight @ US$ ****, handling @ US$ ****, others @ US$ ****, overseas freight @ US$ ****, overseas insurance @ US$**** and shipping charges @ US$ **** have been allowed on per tonnage basis. Thus after all adjustments, the export price has been worked out as US$**** for bulk sales and US$ **** for drum sales.

Dumping margin comes to US$ **** per MT or 74.14% of the export price for bulk sales and US$ **** per MTor 75.38 % of Export price for drum sales.

Normal Value and Export Price for other exporters from South Africa

47. As regards the export price, the Authority has taken the lowest export price from South Africa to India duringPOI as the export price for non-cooperating exporters both for bulk as well as drum sales. The authority hasdetermined normal value as US$**** per MT and US$**** per MT for bulk sales and drum sales respectively as has been done in the case of M/s Merisol Pty Ltd and Export price as US$ **** per MT and US$**** pre MT both for bulk sales and drum sales respectively for Non-cooperating exporters. Dumping margin comes to US$ ***** per MT or 146.87% of Export price and US$ **** per MT or 108.69% of export price for bulk and drum sales respectively.

Normal value and Export Price for European Union

48. The Authority notes that none of the exporters from EU has filed any response. As no information aboutdomestic sales price structure of the subject goods, its cost of production in EU and other information as per thequestionnaire has been furnished, the Authority has proceeded to rely upon the best available information fordetermination of normal value. The petitioners have claimed normal value in respect of EU on the basis ofconstructed cost of production. The Authority finds that none of the exporters have given any information to enable it to determine the normal value based on the domestic sales price. The Authority confirms, in the absence of any response from the exporters from subject countries in the form and manner prescribed, having made the findings with regard to exports from subject countries on the basis of the facts available to it as per rule 6(8) supra.

Accordingly, the Authority has constructed the normal value on the basis of facts available with the applicableadjustments. The normal value so determined for EU is US $**** per MT.

The Authority has taken into account transaction wise data from the information sent by Kandla Port Customswith regards to import from EU as this shows higher volumes. The Authority notes that the European Union hasexported 11878MT for US$5203737 at the rate of US$ 438.09 per MT and after making adjustments for oceanfreight, overseas insurance, commission, port expenses, inland freight, the export price comes to US$ **** at the ex factory level. The Authority has made adjustments for US$ **** as overseas freight, **** for marine insurance, ****% as commission, and US$ **** each as port expenses and inland freight as per the best information available on per tonnage basis as pre the information made available by the petitioner. The Dumping margin comes to US$ **** per MT or 77.87% of the export price.

Serial No	Country	Dumping Margin %
1.	European Union	77.88
2.	Singapore Mitsui & Co. Mitsui Phenol Singapore Ltd. Other Exporters	60.56 70.88 91.70
3.	South Africa a. Merisol, RSA 1.Bulk sales 2. Drum sales b. Others 1. Bulk sales 2. Drum sales	74.14 75.38 146.47 108.69

D. Injury:

Issue regarding Injury Parameters and profitability and Causal Link:

Views of the M/s Merisol, South Africa, FMA, M/s Mitsui & Co, Mumbai, Pragati Chemicals Ltd. and others:

49. In para 33 of the preliminary findings, the Authority observed that the domestic industry has suffered injury onaccount of decline in production, capacity utilization and increase in inventory. The result is based on erroneousprinciples used for annualizing the period of investigation data. Comments have also been made that all the 15injury parameters have not been examined by the Authority.

Various interested parties have commented upon the fact that HOCL made every high profit during the AM01.It is also said that manufacturers of Phenol are cash rich today as could be seen from their financial results of thelast few years. They have also commented upon the fact that Authority has not examined upon the fact that therewas a causal link between injury and failure of the domestic Industry to export. It has also been pointed out that ifthe interest and depreciation of the Hydrogen peroxide plant is excluded then profit of the profit on phenol plant forAM 01 would have been 60.89 Cr.

In response to the disclosure, the EU has brought the attention of the Authority towards the fact that it isrequired by Article 7.4 of the WTO Anti Dumping agreements to apply the lesser duty rule and there is no indicationin the disclosure that this has been done.

Views of the Domestic Industry:

50. The domestic industry has already provided detailed information to the Designated Authority as perparameters prescribed in application proforma. The same have been dealt by the Designated Authority inpreliminary findings in so far considered relevant.

The specific parameters laid down under the Rules, such as imports from other countries, possible contraction indemand, export performance and technological factors have not caused injury to the domestic industry. Variousparameters relating to the Injury include

Natural and potential decline in sales: -

a. Sales volumes of the domestic industry declined in the investigation period as compared to previousyears. Sales of the domestic industry declined in spite of alleged excess demand in the country.

Profits:

b. The domestic industry was making profits till 2000-01 after imposition of safeguard duty. However, in2nd quarter of investigation period triggered by the commencement of production in Singapore, theexporters from subject countries reduced their prices drastically. The domestic industry had no optionbut to reduce its prices even to a level of losses from a situation of profits. Analysis of the quarterlyperformance shows that the profitability of the domestic industry kept declining within the investigationperiod.

Market share:

c. Share of subject countries in imports of Phenol in India was just 31.48% in 2000-01 and increasedsignificantly to 79.43% in period of investigation. Share of the subject countries in demand of Phenol inIndia also increased significantly from about 5% in 2000-01 to above 40% in the investigation period.Further, the imports from subject countries increased significantly in relation to production of Phenol bythe domestic industry.

Productivity:

d. The productivity of the domestic industry declined between 98-99 and investigation period even afterreduction in number of employees. The productivity, which was 78.10 in 1998-99 declined to just 46.19in the investigation period.

Return on investments

e. Return on investment for the domestic industry for the product under consideration was positive up to2000-01. However, the same become negative in the investigation period.

Utilization of capacity

f. The capacity utilization of the domestic industry declined.

Factors affecting domestic prices,

Price undercutting

51. Landed value of imported material from subject countries was significantly below the selling price of thedomestic industry causing severe price undercutting in the Indian market. Imports were undercutting prices to a level of more than 25%. Further, the significant price undercutting faced by the domestic industry was in spite ofsignificant reduction in the prices by the domestic industry.

Price suppression/depression

52. The landed value of imports was not only below the selling price of the domestic industry but also below thecost of production and non injurious price for the domestic industry causing severe price suppression/depression inthe Indian market.

The magnitude of the margin of dumping:

53. The dumping margin from the subject countries is not only more than de-minimus but also very significant.The impact of dumping on the domestic industry is significant.

Actual and potential negative effects on cash flow:

54. The cash flow which was negative in 1998-99 became positive thereafter till 2000-01. However, cash flowsituation of the domestic industry deteriorated significantly in the investigation period after the imports from subject countries started in substantial volumes.

Inventories:

55. Stocks with the domestic industry increased to such an extent that the domestic industry had to takeshutdown twice in the investigation period in order to reduce its inventory levels.

Employment:

56. The employment level with the domestic industry declined between 98-99 and investigation period even afterincrease in capacity.

Wages:

57. The domestic industry has no other option but to increase the wages for the employees due to the prevailingregulations in the country.

Growth:-

58. The domestic industry has enhanced capacity by de-bottlenecking in an effort to reduce the incidence of fixedcosts. However, its impact has been nullified by the dumped imports. The domestic industry has not been able togrow in the investigation period with increasing demand in the market.

Ability to raise capital investments:

59. The domestic industry cannot think of raising fresh capital at this stage, given the poor performance of itsproduct for some time.

Capacities with the exporters:

60. It is submitted that the exporters in the subject countries are holding significant surplus capacities. In fact, thenew plant which has commenced commercial production in Singapore has exports as its primary thrust market. VastIndian market is naturally quite lucrative to the exporters.

Significant increase in the rate of imports:

61. Imports from the subject countries have very increased very dramatically. These have shown very highgrowth rate in a very short period.

62. It may be seen from the above that Dumping from subject countries caused material injury to the domesticIndustry. The exports from the subject countries were causing threat of material injury.

Examination by the Authority

63. The principles for determination of injury set out in Annexure-II of the Anti- Dumping Rules lay down that:

a. A determination of injury shall involve an objective examination of both (a) the volume of dumpedimports and the effect of the dumped imports on prices in the domestic market for like article and (b) theconsequent impact of these imports on domestic producers of such products.

b. While examining the volume of dumped imports, the said Authority shall consider whether there hasbeen a significant increase in the dumped imports, either in absolute terms or relative to production orconsumption in India. With regard to the effect of the dumped imports on prices as referred to in subrule(2) of Rule 18 the Designated Authority shall consider whether there has been a significant priceunder-cutting by the dumped imports as compared with the price of like product in India, or whether theeffect of such imports is otherwise to depress prices to a significant degree or prevent price increasewhich otherwise would have occurred to a significant degree.

The following parameters have been analyzed for the purpose of assessment of injury to the domesticindustry.

Sales Volume and Value

The Authority observes that there is a decline in the sales volume as well as the sales value in the POI as compared to the previous year. The unit price realization has also gone down by about 26% in the POI over the previous year.

Volume and Market Share of Dumped Imports

Country	European Union (Kandla Port Customs)		Singapore (Exporters information claimed confidential)		South Africa (Exporters Information claimed Confidential)
Year	Qty MT	% Share	Qty MT	% Share	Qty MT	% Share
2000-01	****	11.05	****	0.58	****	3.34
POI (9 Months)	****	29.13	****	32.30	****	14.80
POI Annualised	****	29.13	****	32.30	****	14.80

The Authority has examined the information regarding the volume of exports from the subjectcountries during the period of investigation and the preceding years. In percentage terms the importsfrom subject countries accounted for a market share of 64.3% in 1999-2000, 31.48% during 2000-01and 76.23% during POI. When compared to the previous year 2000-01 the share in the market hasshown a significant increase during the POI. The Authority notes that there has been a significantincrease in the imports from the subject countries during the POI

Market Share of Imports from Subject countries
Year	Imports From Subject Countries MT	Total Imports MT	% Share
1999-2000	18730	29128	64.3
2000-2001	4502	14298	31.48
POI Annualised	41441	54364	76.23

Market Share of Imports from Subject Countries (% of the Total Demand)

64. The Authority has calculated the total demand in the country by adding the total imports to the sales of the domestic industry as well as other producers of the product under consideration. The Authority notes that the imports from the subject countries could acquire a market share of 36 % of the total demand in a short span of 9 months.

Year	Imports from Subject Countries MT	Total DemandMT	% Share
1999-2000	18730	98764	22.92
2000-2001	4502	81691	5.51
POI (Annualized)	41441	113089	36.6

It is also examined that the sales volumes of the domestic industry as represented by the petitionercompanies also declined during the POI by 26% in comparison to the previous year.

	Unit	1998-99	1999-00	2000-01	POI	POI Annualisd
Installed Capacity	MT	40,000	40,000	40,000	30,000	40,000
Effective Capacity	MT	45000	45000	49000	49000	49000
Production	MT	40142	39261	39055	21756	29008
Capacity Utilization	%	89.2	87.25	79.7	59.2	59.2
Capacity Utilisation as per Installed capacity	%	100.355	98.1525	97.6375	72.52	72.52
Opening Stocks	MT	2464	2885	1517	1920	1920
Closing stocks	MT	2885	1517	1920	2399	2399
Indigenous sales	MT	39956	40325	38633	21288	28384
Cost of Production*	Rs../MT	100	103.69	133.47	135.8	135.82
Selling Price*	Rs./MT	100	94	140	108.3	108.3
Profit/Loss*	Rs./MT	100	48	173	-25	-25
Empolyees	Nos	100	98	97	91	91
Productivity/Emp	MT	78.1	77.9	78.27	46.19	46.19
ROI	%	9.23	3.64	20.47	.82	.82
Wages	Rs/Month	100	111	115	136	136
Cash Flow	Rs lakhs	****	****	****	****	****
Indexed Figures

Production & Issue of Capacity Utilization of the petitioner

Views of M/s Merisol, South Africa, Foseco Ltd, Govt of Maharashtra, FMA, and others.

65. It is a matter of public domain information from the Balance Sheets of HOCL, that the installed capacity ismuch lower than the effective capacity, the effective capacity claimed by the Petitioners is 45000 to 49000 MTPA.However, the balance sheet and the information put out by the Government of India for the privatization of thePetitioner, clearly, states that the installed capacity is 40000 MTPA. In the light of the above, the Petitioners must be put to strict proof of their claim. It is submitted that the information of the Government of India and auditors beaccepted and the injury parameters be reworked using these figures.

Rated capacity of HOC’s phenol plant is 40000 TPA as per its published Balance Sheet. HOC has beenachieving very high capacity utilization based on its rated capacity.

Views of the Petitioner

66. Installed capacity of the domestic industry was 40000 MT. After restructuring plan undertaken by thecompany, the company has effectively increased its capacity to 49000 MT. Therefore, the effective capacity of the company now is 49000 MT. With regard to capacity mentioned in the Annual Reports and dis-investment proposal, please note that the capacity mentioned therein (40000 MT) is installed capacity, whereas the capacity relevant for the purpose of anti dumping investigations is effective capacity (which is 49000 MT). It is submitted that ‘installed capacity’ and ‘effective capacity’ need not be the same. Installed capacity refers more to what was the capacity installed by the company, whereas the effective capacity refers to what is the maximum possible production which the company can effectively achieve.

Examination by the Authority

67. The Authority has taken note of the various submissions made by the interested parties regarding thereworking of the capacity utilization on the basis of the installed capacity of the petitioner. The Authority has alsotaken note of the petitioner’s plea that after de bottlenecking, their effective capacity has increased and they are in a position to produce more than the installed capacity. The Authority has now worked out the capacity utilization of the domestic industry based on their installed as well as the effective capacity and it concludes that the capacity utilization of the domestic industry has worsened in the POI.

68. Price Undercutting and Price Underselling

Price Undercutting during POI
Country	Net selling Price petitioner	Landed Price fromsubject country	Price Undercutting
EU	****	****	****
MPSl, Singapore	****	****	****
Mitsui & Co, Singapore	****	****	****
Merisol, Bulk, S. A.	****	****	****
Merisol drum, S.A	****	****	(-) ****

Price Underselling during POI
Country	Non Injurious Price of petitioner	Landed Price from Subject country	Price Underselling
EU	****	****	****
MPSl, Singapore	****	****	****
Mitsui & Co, Singapore	****	****	****
Merisol bulk, South Africa	****	****	****
Merisol drum sales, S.A	****	****	****

69. In considering the effect of the dumped imports on prices, it is considered necessary to examine whetherthere has been a significant price undercutting by the dumped imports as compared with the price of the like product in India, or whether the effect of such imports is otherwise to depress prices to a significant degree. The Authority has compared the landed value of imports of subject goods from subject countries during the POI with the net sales realization and has found that there has been a significant price under-cutting by the dumped imports. The landed value of imports has been found to be significantly lower than the domestic industry’s net sales realization.

The Authority has also examined the claim of the petitioner that the domestic industry is suffering on accountof the losses. The Authority notes that price underselling is an important indicator to make an assessment of theinjury. The Authority has worked out the Non-injurious price for the product under consideration and compared thesame with the landed value to arrive at the extent of price underselling. The analysis shows a significant incidence of price underselling causing injury to the domestic industry. The imports have had significant suppressing/ depressing effect on the prices in the domestic market, as the domestic industry has not been able to raise its selling price in view of the dumped imports.

Selling Price/Profitability

70. The authority notes that selling prices of the domestic industry is significantly below the price, which wouldhave permitted the domestic industry, a fair recovery of its cost of production and earn a reasonable return. Thus,the dumped imports have prevented the domestic industry from effecting legitimate price increase to realise areasonable price. The industry has suffered material injury on account of depressed selling prices resulting in nonrecovery of cost of production and thereby suffered financial losses.

Other injury parameters evaluated by the authority are as follows:

71. The employment levels of domestic industry have not undergone any significant change during the period ofinvestigation.

There is a marked rise in the closing stocks during POI indicating that there is a significant change in the inventoryposition of the domestic industry during the period of investigation.

Some exporters/Users have opined that during the POI, HCL has made profits and HOCL has incurred loss.

They wanted the Authority to examine this issue. They have also argued the fact that data pertaining to the M/sHerdillia Chemicals Ltd (HCL) should be examined and they should not be allowed to take the benefit of AntiDumping Duty. Though the Authority has excluded the HCL as part of the domestic Industry as mentioned above, ithas examined the records submitted by HCL and has come to a conclusion that there is no truth in the submissionthat HCL made profits during the POI. In fact they had made a loss of Rs **** during POI.

Month/Year	Cost of Production (HOCL) Rs/ MT	Net sales Realisation (HOCL)Rs/ MT	Profit/Loss (HOCL) Rs/. MT
98-99	100	100	100
99-00	103	94	48
2000-01	133	140	173
Apr.01- June-01	135	132	115
July 01-Sept 01	132	107	-13.5
Oct.01-Dec 01	140	87	-170
PERIOD OF INVESTIGATION	135	108	-25

Indexed figures considering 1998-99 as 100.

The Authority also notes that the depreciation of the hydrogen peroxide plant has not been taken into account inworking out the profitability of this plant.

Cumulative assessment of injury

72. As per annexure-II (iii), in cases where imports of a product from more than one country are beingsimultaneously subjected to Anti-dumping investigation, the Authority is required to cumulatively assess effect ofsuch imports, only when it determines that (a) the margin of dumping established in relation to imports from eachcountry is more than 2% expressed as percentage of export price and the volume of the imports from each countryis 3% of the imports of like article --- and (b) cumulative assessment of the effect of imports is appropriate in light of the conditions of competition between the imported article and the like domestic article. The Authority has found that the margin of dumping in respect of each of the subject country is more than 2% and the volume of imports from each country is also more than 3%. The Authority has also found it appropriate to cumulatively assess the effect of imports of the subject goods on the domestically produced like article and has found that there is a cumulative effect of injury by imports of subject goods on the domestic industry.

E. CAUSAL LINK

73. In determining whether material injury to the domestic industry was caused by the dumped imports, theAuthority took into account the following facts: -

a. The Authority observes that there is a single market for the subject goods where dumped importscompete directly with the goods produced by the domestic industry. Decline in demand is not a factorcausing injury to the domestic injury. The imported subject article and the domestically produced goodsare like articles and are used for the same applications/end uses. Thus, pricing becomes the mostimportant factor determining purchase of the article from either imported sources or domestic sources.

b. The imports from Subject countries undercut and suppressed the prices of the product in the Indianmarket to such an extent that the domestic industry was prevented from recovering full cost ofproduction and earn a reasonable profit from the sale of subject goods in India.

c. The Authority has also examined that demand of the subject goods have increased during the POI andhas not found any sign of contraction of demand, changes in the pattern of consumption, traderestrictive practice of and competition between the foreign and the domestic producers anddevelopment in technology. In view of the above, the Authority determines that the dumped imports,through the effect of dumping, have caused material injury to the domestic Industry.

d. The landed value has been determined for the subject goods after adding onto the weighted averagec.i.f. export price, the applicable level of customs duties (except duties levied under Section 3, 3(A), 9,9(A) and 1% towards landing charges.

e. While determining the non-injurious price for the like articles for the domestic industry, the Authority hasused the actual cost of production of the subject goods to determine optimum cost of production for thedomestic industry which would take into account the normated best consumption norms and the actualprice of the raw materials which are consumed for the production of the subject goods during the periodof investigation. For calculation of injury margin, it has compared the ex-factory non-injurious pricedetermined for the period of investigations with the landed value of the imported goods.

74. Duty up to dumping margin:

The Authority recommends the amount of anti-dumping duty equal to the margin of dumping or less, which if levied,would remove the injury to the domestic industry.

F. CONCLUSIONS

75. The Authority has, after considering the foregoing, concludes that:

(i) Phenol or product under consideration has been exported to India from subject countries below itsnormal value;

(ii) The Indian industry has suffered material injury;

(iii) The injury has been caused by the dumped imports from subject countries;

(iv) The Authority considers it necessary to impose an anti dumping duty on all imports of Phenol fromsubject countries in order to remove the injury to the domestic industry. The margin of dumpingdetermined by the Authority is indicated in the paragraphs above. The Authority recommends theamount of anti dumping duty equal to the margin of dumping or less, which if levied, would remove theinjury to the domestic industry. For the purpose of determining injury, the landed value of importscompared with the non-injurious selling price of the petitioner companies determined for the period ofinvestigation.

(v) Accordingly, the Authority recommends that the definitive anti dumping duties be imposed from thedate of notification to be issued in this regard by the Central Government on all imports of subjectgoods originating in or exported from subject countries. The anti-dumping duty shall be the differencebetween the amount mentioned in col. 3 and the landed value of imports of Phenol falling under chapter29 and 27 of Customs tariff, for all exporters/manufacturers from the countries mentioned in Col. 2 ofthe Table below:

Serial Number	Countries/exporters	Amount (US$ Per MT)
(1.)	(2.)	(3.)
1.	Singapore: a. Mitsui & Co. Ltd b. Mitsui Phenol Singapore Pte Ltd Other Exporters	710.84 710.84 710.84
2	South Africa a. Merisol RSA 1. Bulk Sales 2. Drum Sales b. Other exporters 1. Bulk Sales 2. Drum Sales	710.84 778.59 710.84 778.59
3.	European Union	710.84

vi). Landed value of imports for the purpose shall be the assessable value as determined by the Customsunder the Customs Act, 1962 and all duties of customs except duties under sections 3, 3A, 9 and 9A ofthe Customs Tariff Act, 1975.

76. Subject to the above, the Authority confirms the preliminary findings dated 24th June 2002.

77. An appeal against this order shall lie before the Customs, Excise and Gold (Control) Appellate Tribunal inaccordance with the Act, supra.

Sd/-
(L.V.SAPTHARISHI)
Designated Authority

Issued by:

Government of India
Ministry of Commerce & Industry, Department of Commerce
Directorate of Anti-Dumping and Allied Duties, New Delhi.