No material impact of anti-dumping duty on co: MRF

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No material impact of anti-dumping duty on co: MRF

Philip Eapen of MRF said that the anti-dumping duty hike will not make any material difference to the company. The gap between Chinese and Indian tyre prices is in the 25-35% range.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See latest News about MRF See previous management interviews See what other Experts & Brokerages are saying about MRF MRF BSE | NSE 25/05/12 Are Mutual Funds betting on MRF?

Philip Eapen , Executive Director - Marketing at MRF said that the anti-dumping duty hike will not make any material difference to the company. The gap between Chinese and Indian tyre prices is in the 25-35% range.

He said market prices will likely remain unchanged.

A government panel recommended the anti-dumping duty per truck tyre to be hiked to USD 135. The hike was mooted to curb Chinese tyre imports. Government currently levies duty of USD 99 per truck tyre.

Excerpts from CNBC-TV18's exclusive interview with Philip Eapen:

Q: How material is this hike in anti-dumping duty and do you think it will adequately protect the industry from Chinese imports?

A: It's a welcome step and has come as a result of representations over a long period of time. With the anti-dumping duty, they've raised the reference price from USD 99 to USD 135. The duty here is 10% or even lower, whereas on natural rubber we pay 20% import duty, but that's another story of inverted duty structure.

But of course, this increase in the price to USD 135 makes it a little more unattractive for people to import these tyres. But I must tell you that it's not going to make material difference, because there is still a large gap between the price of Indian tyres and the Chinese ones.

Q: How much of a gap does it close between Chinese and domestic tyre prices?

A: If you take top brands like MRF, where there's a difference of almost 35-40% between Chinese tyres. That would probably make it to 25-27%. For other cheaper brands, where Chinese was cheaper by 35%, now it would make it about 30% or 28%. So there would be some bridging of the gap, but that may only affect the middlemen's margins. The market price might remain unchanged. But we have to wait and see what happens.

Q: How significant is the Chinese threat for both the OEM and for the replacement market for truck tyres?

A: There is no one Chinese brand, you have about 50-60 brands coming into India and nobody knows what they are buying. But they know that they are buying Chinese tyres and the prices are on a different scale.

Therefore, we are fighting with numerous brands that keep changing from time to time and the price levels are also different. Of course, the reference prices will make it difficult for them to sell at cheap prices. But the threat is still looming large, because if a customer sees this whopping difference of 25-30% between Indian price and the Chinese price, he forgets whether the quality is good, he just goes for it, because it's 30% cheaper. So that threat continues but this might diminish the middlemen's margins to some extent.