F. DUMPING:

6. None of the exporters/producers of Bisphenol-A in the subject countries responded to the Authority’s request for relevant information. In the post-preliminary stage of these investigations, M/s Bayer AG, Germany in a letter to the Authority stated that they had not received official information about the opening of these proceedings against Bayer AG, Germany nor did they receive a questionnaire. Information about these proceedings were received by them through the notification dated 27^th April, 2000. They also asserted that Bayer AG does not directly export Bisphenol-A into India. Bayer AG acts through its authorized exporter and distributor Helm AG, Germany as well as through Helm’s Indian subsidiary Helm India Pvt Ltd, Mumbai. Bayer AG also requested the Authority to allow their distributor and exporter Helm to present the relevant facts and figures. In the personal hearing allowed to them also on 13^th November 2000, Helm India presented certain facts and gave written submissions of these facts as brought out by them at the time of the personal hearing.

The Authority has examined Normal Value in relation to the subject goods in accordance with Rule 9A (1) (c). The assessment of Normal Value in Taiwan has been given at Para H.8 (I) and (ii) of the Preliminary Findings notified by the Authority on 27/4/2000. The constructed Normal Value of Bisphenol -A for exporters from Taiwan had been taken at USD ***/kg or Rs ***/per kg for the purpose of preliminary findings. The Authority has re-determined the constructed normal value in Taiwan for the purpose of final findings as USD ***/kg or Rs ***/kg at an average exchange rate of Rs 42.39=lUSD during the period of investigation.

EU

The assessment of Normal Value in European Union has been given at Para H.9 of the Preliminary Findings. The Normal Value of Bisphenol -A for exporters from EU had been considered as USD * * */kg or Rs * * */per kg for the purpose of preliminary findings.

However Helm India Pvt Ltd. at the time of the one-to-one hearing, gave written submissions of the views expressed by them at the said hearing. They submitted extracts of Bisphenol-A domestic prices in Europe as published by "ICIS LOR" an independent chemical information service (copyright: Reed Business Information Ltd.,)and exchange rate pages published by the said agency. As pa the information contained therein for the months of August 1998, November 19’98, February 1999 and May 1999, the average stated domestic price of Bisphenol-A in the domestic market of Europe was USD ***/kg or Rs ***/kg at average exchange rates of lUSD=1.78DM and Rs 42.39=IUSD during the period of investigation. Since the claim of average inland freight of USD ***/MT and documentary evidence thereof was made at the final stage of these investigations, the same is disallowed by the Authority.

Information as furnished by DGCIS has been relied upon by the Aut-honty for determination of export price from the subject countries. The assessment of export price from Taiwan and the EU has been given at Para H. 10 of the Preliminary Findings. The ex-factory export price of Bisphenol A after adjustments had been considered as Rs * * */per kg and Rs * * */kg for exporters in EU and Taiwan respectively for the purpose of provisional findings.

In the case of exporters of Bisphenol-A from Taiwan. the weighted average cif price of export as determined by the Authority was Rs * * */kg. After deductions on account of ocean freight @5%, insurance @ 5%, Commission @3% for the Indian agent, commission @3% for the agent in the exporting country and port handling charges @ 1%, the export price at ex-factory level comes to Rs ***/kg or USD ***/kg for exports of the subject goods from Taiwan.

In the case of exporters of Bisphanol_A from the EU, the weighted average price as determined by the Authority was Rs ***/kg. her deductions on account of ocean freight @5%, Commission @ 3% for the Indian agent, commission @ 3% for the agent in the exporting country and port handling charges @a 1%, the ex-factory price comes to Rs * * */kg or USD * * */kg for exports of the subject goods from the EU.

9. Views expressed by Domestic Industry:-

None of the exporters from the subject countries have provided information in the form and manner prescribed. The Designated Authority is fully justified in proceeding with the determination of normal value as per best available information in accordance with the Rules.

10. Dumping Margin: Authority’s Position: The Authority followed the consistent practice of adopting the principles governing the determination of Normal Value, Export Price and Margin of Dumping as laid down in Annexure I to the anti-dumping rules. Based on the normal value and export price as indicated above, the Authority assessed the dumping margins in case of all exporters from EU and Taiwan as given in the table below:-

G. INJURY:-

11. Argument raised by domestic industry:-

The petitioners views have been reflected in Para B. 2 of the Preliminary Findings, and vide their letter dated September 12, 2000 the domestic industry has stated inter alia that there has been a significant increase in the cost of production due to increase in input prices. The domestic industry has stated that phenol and acetone are major raw materials for producing Bisphenol-A. They account for about 85% of total raw material cost for the production of Bisphenol -A. Prices of phenol and acetone are beyond the control of the petitioner and have increased significantly during the post investigation period. Further prices of furnace oil and power have also increased very significantly which has resulted in significant increase in variable cost. This has led to significant increase in the total cost of production inspite of ever increasing production of the company. The cost increases are largely on account of increases in these inputs as a result of levies such as safeguard duty on phenol and acetone. The steep increase in the cost of production has resulted in nullifying the effect of the provisional anti-dumping duty imposed and the duty recommended is insufficient to protect the legitimate interests of the industry.

12. Arguments raised by M/s Petro Araldite Pvt Ltd, Chennai:-

As brought out in Para 1.5 of the Disclosure Statement, the views brought out by M/s Petro Araldite are as follows:-

1.This respondent is a joint venture company set up to manufacture epoxy resins in a world class plant at Chennai, Tamil Nadu, with a capacity of 30,000 Tons per annum to cater not only to the domestic market but also for export markets. This joint venture was promoted by Ciba India Pvt. Ltd. with the technology from Ciba Speciality Chemicals - Basle, the world leader in the epoxy resin manufacture and well known by its "Araldite" brand name. This joint venture has 76% share holding by Ciba India Pvt. Ltd. and balance 24% held by their joint venture partner WS Tamil Nadu Petroproducts Ltd. This plant at Chennai went on stream during 1999.

2. During the period of investigations, they have been a direct importer for their own use of Bisphenol-A. As an interested party by virtue of being a significant user of Bisphenol-A for their own manufacture of epoxy resins, they had presented their views as follows. vide their response to the importers questionnaire dated 5^th June, 2000 in response to the Preliminary Findings dated 27^th April, 2000. The Authority notes that they were not mentioned as an interested party in the petition filed by the domestic industry.

Since the plant went on stream in mid, 1999 , the market consumption scenario of Bisphenol-A has changed significantly. This is seen from the following table:

1997-98 1998-99

Imports 897 1376

Production 4192 5242

Total (I+P) 5089 6618

This shows that apparent consumption (less export) grew by 30% between 1997-98 and 1998-99 while domestic production grew by 25%. Significantly, the local production during 1998-99 crossed 100% capacity utilisation. Hence, this is reflective of the overall growth in the Bisphenol-A market, and increase imports has held to bridge the gap in domestic availability. This repondents entry as a major consumer of Bisphenol-A drawn both from the only local .producer and also by way of imports through the advance licensing route for exports of their end products during 1998-99 has significantly contributed to this changed market scenario.

1. The mere increase in imports in a growing market cannot be taken as causing injury to the only domestic producer when their capacity is already fully utilised. With further market growth it is only inevitable that imports would go up further, unless domestic capacity is enhanced.

2. With increase in capacity utilisation levels from current 20-25% in year 2000 to 45-50% for year 2002, their Bisphenol-A consumption will go up from current annual level of nearly 3500 tons to 7000 tons during 2002. Their exports constitute 30% of total output and it is expected that this proportion will be maintained for the next 2 years. Our Bisphenol-A consumption for exports alone at present 900 tons during 2000 would also double to around 1800 tons in the year 2002.

3. At full capacity in a few years time, coupled with increased exports and growth in the domestic market, we expect to consume around 16000 tons of Bisphenol-A which is far beyond the capacity of the monopoly of the local Bisphenol-A producer.

4. We believe that the domestic size and growth of the epoxy resin industry can be enlarged if imported Bisphenol-A is available at a reasonable price (even with normal duty protection) without any anti-dumping duty. This is more so when existing domestic capacity is already fully utilised. Having a free and open market situation is in the interests of users for - domestic and export markets to grow- and also for the sole domestic Bisphenol-A producer- being benefited by a large overall market size and be motivated to become globally competitive.

Details of epoxy resin exports made by this respondent are as follows:-

1996-97 0 0

1997-98 0 0

1998-99 0 0

POI (Apr'98-Sep'99) 541.48 ***

13. Views expressed bar Heim India Pvt. Ltd.

As brought out in Para VII of the Disclosure Statement, Helm India made the following submissions:-

1. Helm India Pvt. Ltd. is a 100% owned subsidiary of Helm AG, Germany involved in indenting (export and import) of Chemicals, Pharmaceuticals, Feed food additives. Bayer AG, Germany has authorised Helm Ag, Germany as its exporters and distributor of Bisphenol-A in Europe as well as India. The Indian business is carried out through the intermediation of its subsidiary M/S Helm India Pvt. Ltd. The Helm India Pvt. Ltd. has also exported Kesar Petroproducts Bisphenol-A to their principals M/S Helm Ag Germany mainly for China market during the past several years.

2. The domestic consumption of Bisphenol A in India grew by 30% in 98-99 viz a viz the production capacity which only grew by 25% in the same period creating a shortage of Bisphenol A during the POI.

The demand for Bisphenol A in India has been growing steadily due to the increased production of Polycarbonate resins and epoxy resins. The demand for Polycarbonate resins is mainly for the production of high impact plastics used in automotive, consumer plastics and especially for compact disks.

The epoxy resins has the second largest use of Bisphenol A which has its enduse in flexible packaging, adhesives, laminates, paints, encapsulants for electric components etc. which has in turn increased the demand for Bisphenol-A.

In view of the Global competition and increased quality consciousness, the local producers for the above mentioned products have been looking for Bisphenol A of good quality at competitive prices and with timely delivery which was missing from the Indian producer.

Other Arguments: .

1. Non-availability of material

Kesar was unable to meet the increasing demand of Bisphenol A in the Indian market due to the limited availability of Bisphenol A from their end during the period of investigation as they had problems with their catalyst which resulted in the drop of production from January, 99 onwards which is evident from the enclosed Force Majure certificate which was provided this respondent from Indian merchant chambers which finally resulted in cancellation of their export order of 108 mt during January, 99.

2. Price

As per paragraph 10 of the notification dated 24th April, 2000 the average of CIF export of Bisphenol A into India was Rs. 44.99. As per our calculation this price is equivalent to USD 1150/ - per mt, CIF Indian port (average exchange rate Rs. 39.18). After deduction of costs like ocean freight = USD 50/- per mt, port handling charges = USD 10/- per mt, inland freight = USD 15/- per mt the ex factory export price was USD 1075/- per mt.

3. Normal value - domestic price in the EU

The average domestic price in the EU during the time of investigation was equivalent to USD 1060% per mt ex factory. The ex factory export price of USD 1075/- per mt is to be compared with the ex factory domestic price in the EU (normal value) of USD 1060/- per mt.

Determination of domestic price

Considering the domestic prices on basis free delivered (FD) North-West Europe (NWE) published by "CIS Lor" being an independent chemical information service, the average `free delivered price’ was equivalent to USD 1100/- per mt during the time of investigation.

Deducting an average inland freight of approx. USD 40/- per mt the average domestic price on basis ex factory was USD 1060/- per mt., this respondent has come to the conclusion that the export price was ever higher than the normal value.

The flake form offered by Kesar used to be environmentally unfriendly as in many cases there were significant proportion of fine broken flakes which caused considerable plant problems and dusty conditions.

These reasons prompted many producers to import Bayer material which was in prill form.and was very easy to handle and much safer to the environment.

Conclusion

1. In view of the above reasons it is felt that there was no dumping activity by Bayer.

2. Quality goods were exported at the prevailing market levels with an intention of serving the Indian consumers for their enhancement and in turn making them competitive with their products in India and internationally.

3. Hence it is requested that the anti dumping notification 85/2000 dated 06/06/2000 covering Bisphenol A from Bayer Ag, Germany should be withdrawn with immediate effect.

14. Authority’s Position:-

The Authority has taken into account all indices regarding injury while doing the final determination. This involves all relevant principles for determination of injury as specified under Annexure II of the anti-dumping rules viz., the volume of dumped imports, their effect on price in the domestic market and its effect on the production, capacity utilisation, sales, profits, market share etc. of domestic industry. While determining the non-injurious price for the like article for the domestic industry, the Authority has made appropriate analysis of all the relevant factors such as usage of raw material, usage of utilities, etc., and the actual expenses during the period of investigation including factors such as investments and capacity utilisation. The Non-injurious price for the domestic industry has been determined considering a reasonable return on the capital employed by the petitioner. For calculation of injury margin, the ex-factory non-injurious price of the domestic industry has been compared with the landed value of the imported goods.

The quantum of imports, production, capacity and capacity utilisation, sales and market share, closing stocks, landed values of the subject goods from the subject countries and selling prices of tile petitioner were as given below:-

(a) Quantum of Imports:-

15. The above indicators demonstrate the following:-

Thus all vital economic indicators having a bearing on the state of the domestic industry have shown significant improvement in the period of investigation.

16. In the course of the investigations the following aspects were also brought to the notice of the Authority:-

(i) M/s Kesar Petroproducts Ltd., (as brought out in pare. 3 (a) of the preliminary findings), has a capacity to produce 5000 MT of Bisphenol-A of which 3600 MT is sold in the domestic market. Phenol is the basic raw material required for the manufacture of the subject goods and it is attracting safeguards duty. As such the cost of manufacture of Bisphenol-A has gone up further compared to the cost of production in the international market. In the .recent past the petitioner has resorted to closure of its plants without giving prior notice to the customers which left them without supply of Bisphenol-A for quite some time.

(ii) ) A major user of Bisphenol-A viz., M/s Petro Araldite Pvt Ltd., Chennai, has stated that with increase in capacity utilisation levels from current 20-25% in year 2000 to 45-50% for year 2002, their Bisphenol-A consumption would go up from current annual level of nearly 3500 tons to 7000 tons during 2002. Their exports constitute 30% of total output and it is expected that this proportion will be maintained for the next 2 years. Their Bisphenol-A consumption for exports alone at present 900 tons during 2000 would also double to around 1800 tons in the year 2002. At full capacity in a few years time, coupled with increased exports and growth in the domestic market, they expect to consume around 16000 tons of Bisphenol-A which is far beyond the capacity of the monopoly of the local Bisphenol-A producer.

(iii) The Indian Chemical Manufacturers’ Association in its views to the Authority have stated that economy of scale is a major reason for Bisphenol-A not being competitively produced The Government should fix up DEPB for exports of epoxy and other Bisphenol based end products that would help exporters prefer local Bisphenol versus imports. The Government should also consider raising duty on electronic grade epoxy resin. This would create additional demand for Bisphenol-A.

The Authority observes that:-

(i) The landed prices as per DGCIS data from EU and Taiwan were Rs 61.741kg and Rs 63/kg in 1998-99 whereas the selling price of domestic industry (net of excise duty) in 98-99 was its ***/kg. Similarly, the landed values of imports from EU and Taiwan as per DGCIS data in 99-00 (April-September) were Rs 61.49/kg and Rs 59.81/kg from EU and Taiwan respectively while domestic industry selling price was Rs ***/kg. In the POI the landed prices from EU and Taiwan were Rs 61.6/kg and Rs 61.40/kg respectively whereas domestic industry selling price was Rs ***/kg. Therefore the landed values of imports from the subject countries were far higher than the selling prices of domestic industry which does not establish injury to the petitioner from these dumped imports.

Annexure II (ii). of the Antidumping Rules states that "With regard to the effect of the dumped imports on prices as referred to sub-rule (2) of rule 18 the designated authority shall consider whether there 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 or prevent price increase which otherwise would have occurred to a significant degree."

The dumped prices as shown above have been significantly higher than the selling prices of the petitioner during the period of investigation. Therefore the question of price undercutting or injury from dumped imports does not arise.

(iii) The closing stocks of domestic industry were lowest at 126.6 MT in 98-99 Le, the first 12 months of the POI, when in the same year total imports grew by 53% over 97-98 and selling prices of domestic industry grew by 15.5%. The production was also higher at 524.2 MT.

(iii) The demand for Bisphenol-A increased from 3020 MT in 1997-98 to 4598 MT in 1998-99. The demand for 99-2000 is 7919 MT. The demand level in 1998-99 represents an increase of 52% over that of 97-98. The demand level in 99-2000 represents an increase of 72% over that of 98-99. As pointed out by interested parties,, the demand for Bisphenol A in India has been growing steadily due to the increased production of Polycarbonate resins and epoxy resins.

Although the petitioner was able to meet the demand in 98-99, the production of the petitioner in 99-2000 (Apr-Sep) was 2705 MT whereas demand was 3304 MT. In 1999-2000 the petitioner’s production was 6147 MT while the level of demand was 7919 MT. Annexure II (ii) of the Anti-dumping Rules state that while examining the volume of dumped imports, the said authority shall consider whether there has beam a significant increase in the dumped imports , either in absolute terms or relative to production or consumption in India. It is seen that the share of dumped imports in demand increased from 24.9% in 97-98 to 28.7% in 98-99 and declined to 24% in 99-00(Apr-Sep’99). Share of dumped imports declined to 23% in 1999-2000 (12 months). The share of the’peitioner in demand was 70.2% in 97-98, remained ‘at the same level -in 98-99 and increased thereafter to 74.06% (in Apr-Sep’99), and to 75.7% in 1999-2000 (12 months).

(iv) The domestic industry incurred losses amounting to (-177.54) lakhs in 98-99 and (-173.34) lakhs in 99-00. However in spite of these losses their annual report for 1999-2000 shows a tremendous increase in licensed capacity from a level of 5000MT to 20,000MT which is not an indicator of injury. Their installed capacity also increased from 5000MT to 6000 MT. In their response dated 29/11/2000, they have not indicated this increase. They have merely stated that production can be increased by technical innovation and bottle necking in which they have made investments.

As per the provisions contained in para (iv) Annexure II of the Anti-dumping Rules, the examination of the impact of the dumped imports on the domestic industry concerned, shall include an evaluation of all relevant economic indicators and indices having a bearing on the state of the industry, including natural and potential decline in sales, profits, output market share, productivity, return on investments or utilisation of capacity factors affecting domestic prices etc. As stated in Para 13 (e) the domestic industry has shown improvement arid increase in all vital economic indices.

17. It is recognised that the imposition of anti-dumping duties might affect the price levels of the products manufactured using the subject goods and consequently might have some influence on relative competitiveness of these products. Some interested parties have argued that increase in import duty on Bisphenol-A will trigger off increase in prices of epoxy resins etc. which would have an adverse effect on exports. Interested parties have stated that prices of phenol arid acetone had dropped and in particular phenol prices had reduced from Rs 40/kg to Rs 29/kg. International epoxy resin prices have dome down and are further dropping. With low prices, prevailing in the international market, no customer would give higher prices to local epoxy manufacturers. Dealers are importing epoxy resin and selling at cheaper prices than epoxy manufacturers. The Authority note that prices /rates at which phenol and acetone have been purchased by the petitioner have declined since 1995-96 and were as follows:-