ET INTELLIGENCE GROUP: Shares of Balkrishna IndustriesBSE -1.07 % have gained 13% on the BSE over the past month following the company's decision to increase product prices and the fact that the off-highway tyre maker would be the only company from India not to face anti-dumping duty in the US market. According to news reports, the US Department of Commerce recently released an order imposing countervailing duty (CVD) and antidumping duty (ADD) on offthe-road tyres from India and Sri Lanka.
he order excluded Balkrishna Industries from the list of ADD while imposing 5.36% CVD on it.
“The impact of CVD would be limited to 0.3-0.5% of sales since these products constitute only 7-8% of the total sales,“ said company's finance director Basant Kumar Bansal.
The US accounts for nearly 16% of the total sales of the company . The impact of the duty is limited since tyres of more than 39 inches are not included in the US regula tor's order. In addition, the company has started adding the CVD component in the relevant product prices from the second quarter of the current fiscal. Bansal also expects to offset the CVD impact through higher operating leverage.
CVD and ADD seek to prevent the prac tice by some exporters to sell their prod ucts at artificially low prices. When ADD is imposed, it has a wider ramification given the scope for further surveillance by the regulator.Moreover, a company facing ADD has to make disclosure of costing and pricing practices every year.
CVD, on the other hand, is not subjected to annual review by the regulator since it is meant to offset the subsidy given by the country of export. On the operating front, the company has maintained its volume guidance of 1,60,000-1,70,000 tonnes for the current fiscal, implying a 15% year-on-year volume growth. Analysts expect the company to maintain a similar growth rate between FY17 and FY19 considering market share gain and pick-up in mining and construction seg ments due to a revival in commodity prices.
Source: economictimes.indiatimes.com