The US Department of Commerce today revised the countervailing duty (CVD) for off-road tyre import from India to 4.94 percent from 5.06 percent. However, the CVD against the biggest player in the segment, Balkrishna Industries was left unchanged at 5.36 percent.
Speaking to CNBC-TV18 on the impact of the development, Director Finance BK Bansal said only 5-7 percent of the company’s exports to the US are subject to the CVD, and there is not much risk of an upward revision. CVD could, in fact, come down in the next review, he said.
Exports contribute nearly 85 percent to the company’s total revenues. Of this, US contributes roughly 16-17 percent.
CVD, an import tax imposed on certain goods in order to prevent dumping or counter export subsidies, is subject to annual review by the department of commerce for next 5 years, he said.
The company currently operates at utilisation of 55-60 percent, which he said would improve going ahead. While volume growth during the last quarter was magnified due to the low base effect, he said volume growth of 12-15 percent is more sustainable if global environment remains stable, he said.Below is the verbatim transcript of BK Bansal's interview to Reema Tendulkar & Nigel D'Souza.
Reema: For your company the countervailing duty (CVD) is unchanged but for a couple of the other imports of Indian companies, the countervailing duty has come down to 4.72 percent versus 4.9 percent. Would that make you all a little less competitive? Could you tell us how it changes the scenario going ahead?
A: The initial duty which was levied was a preliminary duty and the final duty was determined somewhere in the month of January 2017. There is no significant change between the preliminary duty and the final duty; it's a normal thing which happens during the course of verification and their working. It is not going to impact significantly because the difference between preliminary duty and final duty is very less.
Nigel: I want to understand for the future, in case this duty is moved on, is it a pass-through clause and have you undertaken some price hikes in the last six months or so and also tell us how much low is your pricing in comparison to other global peers?
A: This duty is levied on importers. So importer has to pay it. As far as pass-through is concerned, it is a different thing. The prices are determined independently considering various factors relevant to the market. So, both are completely independent things.
Reema: Is there risk of any revision in the duties of Balkrishna Industries any time soon?
A: We do not see any such risk. Of course these duties are subject to annual review for next five years and there is a likelihood that it may come down because whatever was to be levied, it has already been levied and CVD takes into account various benefits which we avail from the government. We do not see any major benefit availing from the government in the future, so chances of increasing it is very less.
For entire interview, watch accompanying video.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
