DG Safeguard Initiates Investigation on Flexible Slabstock Polyol Import on Manali Petrochemicals Chennai Complaint
[Safeguard
Initiation Notice F.No. D-22011/04/2014
dated 22nd May 2014]
Sub: Initiation of safeguard investigation concerning
imports of Flexible Slabstock Polyol
of molecular weight 3000 to 4000 into India.
An application has been filed before me under Rule 5 of
the Customs Tariff (Identification and Assessment of Safeguard Duty) Rules,
1997 by M/s. Manali Petrochemicals Ltd, Chennai
through their consultant M/S APJ-SLG Law Offices for imposition of Safeguard
Duty on imports of Flexible Slabstock Polyol of molecular weight 3000 to 4000 (hereinafter
referred to as PUC) into India to protect the domestic producers of PUC against
serious injury/threat of serious injury caused by the increased imports of PUC
into India.
2. Domestic Industry
M/s Manali Petrochemicals Ltd having two manufacturing plants
at Chennai (Plant 1 and Plant 2) are the sole
applicant constituting domestic industry in this case. The domestic industry have claimed that they are the only producer of PUC
in India and thus they have the standing to file the present petition.
3. Product Involved
The product under
consideration (PUC) in the present case is Flexible Slabstock
Polyol of molecular weight 3000 to 4000. It is a
clear viscous liquid, manufactured by polymerization of propylene oxide and
ethylene oxide with a trio chain starter. It is a polyether and on reaction
with catalysts and additives yields polyurethane foams used in upholstery,
mattresses, pillows, bolsters, transport seating and packaging. The PUC is
transported in tankers or stored in steel drums. PUC is classified under
Customs sub-heading nos. 39072010 of Chapter 39 of the Customs Tariff Act,
1975.
4. Period of Investigation (POI)
The applicants for
the purpose of the present application have considered the data for the period
from 2010-11 to 2013-14. The applicants have submitted all the data from
2010-11 to 2013-14. The period for investigation selected is 2010-11 to 2013-14
which is long enough in order to take into consideration the market conditions
and to ascertain the need of imposition of Safeguard Duty.
5. Source of information
The import data
for the product under consideration has been taken from DGCIS as provided in
the monthly CDs of DGCIS received in the Directorate. Since the import data for
2013-14 is available up to Dec 13 only in the Directorate, the same has been
annualized from available nine months. Further, the data pertaining to other
safeguard economic parameters for the period from 2010-11 to 2013-14 has been
verified to the extent necessary, through onsite verification of the
manufacturing units of the applicant and such verified data for the POI has
been taken into consideration for injury analysis.
6. Increased Imports (Absolute & in
relative terms)
PUC is imported into India from a number of countries,
and primarily from Singapore, Netherland, USA, Korea RP, Thailand and Taiwan.
The imports of PUC have shown an increasing trend in absolute terms as well as
compared to the total production. The imports and production of PUC during
financial year 2010-11 to 2013-14 remained as under:-
|
Financial Year |
Total Imports (MT) |
All India Production (MT) |
Total Demand (MT) |
Import as a % of production |
|
2010-11 |
46,121 |
16,510 |
62,736 |
279 |
|
2011-12 |
36,898 |
18,381 |
55,090 |
201 |
|
2012-13 |
42,026 |
13,986 |
55,477 |
300 |
|
2013-14 |
54,567 (annualized) |
13,811 |
68,040 |
395 |
The Imports have slightly declined in 2011-12 vis-à-vis the base year 2010-11. However, thereafter imports
have surged steeply to 42,026 MT in the year 2012-13 and further to 54,567 MT
in the year 2013-14 (annualized). Therefore, imports have increased by 18% in
the year 2013-14(annualized) when compared to the base year. Further the import as a percentage of domestic production have increased
to 395% in 2013-14 (annualized) from 279% in 2010-11.
7. Injury
The applicant have claimed that
the increased imports of PUC have caused and are threatening to cause serious
injury to the domestic producer of PUC as indicated by the following factors:
a) Production: The production of the
domestic industry has declined in 2013-14 to 13811 MT
vis-à-vis the base year 2010-11 when it was 16,510 MT.
|
Year |
Qty (MT) |
|
2010-11 |
16,510 |
|
2011-12 |
18,381 |
|
2012-13 |
13,986 |
|
2013-14 |
13,811 |
b) Capacity Utilization: Capacity
utilization of the domestic industry has declined in the most recent period of
2013-14 to 55% from the base year 2010-11 when it was 90%.
|
Year |
Installed Capacity (MT) |
Capacity utilized (%) |
|
2010-11 |
18,375 |
90 |
|
2011-12 |
25,000 |
74 |
|
2012-13 |
25,000 |
56 |
|
2013-14 (annualized) |
25,000 |
55 |
c) Share of domestic producer in domestic
demand: Market share of domestic producer has fallen in current year. Applicant
had a market share of 26% in 2010-11 and 24% in 2012-13 which fell to 20%
during 2013-14. From base year also, market share of DI fell to 20% in current
year vis-à-vis 26% in base year. The market share of imports increased from 74%
in 2010-11 to 80% in 2013-14.
|
Financial Year |
Total Import (MT) |
Sales of DI (MT) |
Total Demand (MT) |
Market Share (%) |
Inventories (MT) |
|
|
|
|
|
|
DI |
Import |
|
|
2010-11 |
46,121 |
16,615 |
62,736 |
26 |
74 |
244 |
|
2011-12 |
36,898 |
18,192 |
55,090 |
33 |
67 |
384 |
|
2012-13 |
42,026 |
13,451 |
55,477 |
24 |
76 |
872 |
|
2013-14 |
54,567 (annualized) |
13,473 |
68,040 |
20 |
80 |
463 |
d) Changes in the level of Sales
:- Though the sales of the domestic
industry increased in 2011-12 as compared to the year 2010-11, it declined from
16,615 MT in 2010-11 to 13473 MT in 2013-14. This clearly shows that the
domestic industry suffered loss in sales, market share, caused by increased
imports.
e) Profit/loss – the profitability of the
domestic industry has steeply deteriorated to such a situation that the
domestic industry is now suffering financial losses. This is evident from the
table below:-
|
Financial Year |
Profit/(Loss) (Rs. /Lacs) (Indexed) |
|
2010-11 |
100 |
|
2011-12 |
324 |
|
2012-13 |
(331) |
|
2013-14 |
(559) |
f) Inventory- Inventory of the DI has
accumulated very steeply in the current year 2013-14 to 463
MT vis-à-vis 244 MT in the base year. This is evident from the table
below:
|
Financial Year |
Inventory at the end of the year (MT) |
|
2010-11 |
244 |
|
2011-12 |
384 |
|
2012-13 |
872 |
|
2013-14 |
463 |
g) Employment & Productivity- Employment has
shown a declining trend in all the years i.e. 2011-12, 2012-13 and 2013-14 vis-à-vis
the base year. Productivity has marginally increased in 2013-14 vis-à-vis the base year. This is evident from the table
below:
|
Financial Year |
Number of employees at the end of the year |
Productivity per employee (MT) |
|
2010-11 |
358 |
46 |
|
2011-12 |
332 |
55 |
|
2012-13 |
310 |
45 |
|
2013-14 |
292 |
47 |
8. The domestic industry has requested for immediate
imposition of safeguard measures for a period of three years in their application.
The domestic industry has also requested for imposition of provisional
safeguard duty in view of steep deterioration in performance of the domestic
industry as a result of increased imports of PUC.
9. The application has been examined and it has
been found that prima facie increased imports of PUC have caused or are
threatening to cause serious injury to the domestic producers of PUC and such
increase in imports has caused irreparable damage to the domestic industry and
accordingly, it has been decided to initiate an investigation through this
notice.
10. All interested
parties may make their views known within a period of 30 days from the date of
this notice to:
The Director General
(Safeguards)
Bhai Vir
Singh Sahitya Sadan: 2nd
Floor,
Bhai Vir
Singh Marg,
Gole
Market, New Delhi-110 001, INDIA.
Telefax: 011-23741542/
23741537
E-mail:
dgsafeguards@nic.in
11. All known interested parties are also being
addressed separately.
12. Any other party to the investigation who wishes
to be considered as an interested party may submit its request so as to reach
the Director General (Safeguards) on the aforementioned address within 15 days
from the date of this notice.
13. In terms of Rule 6(7) of Customs Tariff (Identification
and Assessment of Safeguard Duty) Rules, 1997, any interested party may inspect
the public file containing non-confidential versions of the evidence submitted
by the other interested parties after the expiry of 30 days from the date of
this notice.