WORLD TRADE
ORGANIZATIONG/SG/N/8/IND/3
G/SG/N/9/IND/2
27 January 1999
(99-0308)
Committee on Safeguards Original:  English
NOTIFICATION UNDER ARTICLE 12.1(b) OF THE
AGREEMENT ON SAFEGUARDS ON FINDING A SERIOUS INJURY
OR THREAT THEREOF CAUSED BY INCREASED IMPORTS
INFORMATION TO BE NOTIFIED TO THE COMMITTEE
WHERE A SAFEGUARD INVESTIGATION IS TERMINATED
WITH NO SAFEGUARD MEASURE IMPOSED
INDIA
The following communication, dated 15 January 1999, has been received from the Permanent
Mission of India.
_______________
Please refer to India's communication dated 6 May 1998, circulated as WTO Document
No. G/SG/N/6/IND/5 dated 12 May 1998, regarding noti ce of initiation of a safeguard investigation
concerning imports of "Hard Board (High Density Board)" into India.  The Director-General
(Safeguards) has now completed the investigation unde r reference.  In this connection, a copy of the
Notification No. SG/INV/1/98 dated 12 November 1998, containing the Final Findings of the
Director-General (Safeguards) is forwarded herewith.
CONTENTS
Page
A. PROCEDURE ............................................................................................................................... .2
B. VIEWS OF DOMESTIC PRODUCERS ...............................................................................................4
C. VIEWS OF EXPORTERS .................................................................................................................8
D. VIEWS OF IMPORTERS ...............................................................................................................10
E. FINDINGS OF THE DIRECTOR -GENERAL ....................................................................................13
F. CONCLUSIONS AND RECOMMENDATIONS .................................................................................20G/SG/N/8/IND/3
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Page 2
DIRECTOR-GENERAL (SAFEGUARDS)
5TH FLOOR, DRUM SHAPE BUILDING
I.P. BHAWAN, I.P. ESTATE
NEW DELHI-110002
NOTIFICATION
SG/INV/1/98
12 November 1998
Subject: Safeguard Investigation concerning imports of Hard Board (High Density Fibre
Board) into India – Final Findings
1. Having regard to the Customs Tariff Act 1975 and the Customs Tariff (Identification and
Assessment of Safeguard duty) Rules, 1997 thereof.
A. PROCEDURE
2. The Notice of Initiation of a Safeguard Investigation concerning imports of Hard Board into
India was issued on 24 April 1998 in pursuance of an application filed by the All India Fibre Board
Manufacturers Association and was published in the Ga zette of India Extra Ordinary part II – section
3 –sub-section (i) on 24 April 1998.  A copy of the Notice was also sent to all known interestedparties namely:
Association
The All India Fibre Board Manufacturers Association
C/o Jolly Board Ltd., Mumbai-400020
Domestic Producers
(i) The Western India Plywoods Ltd., Kannur – 670010
(ii) Jolly Board Ltd., Mumbai – 400020
(iii) National Boards Ltd., Bangalore (havin g factory at Panikhaiti, Guwahati – 781026)
Importers
(i) Sri Durga Enterprises, Chennai – 6000012
(ii) Rainbow Exports, Ghandhidham – 370201(iii) Balaji Timber & Plywood, Chennai – 600007
(iv) Team Traders, Chennai-600003
(v) Jai Mirror Industry, Chennai – 600 112
(vi) Indomal Marketing P. Ltd., Chennai – 600 007
(vii) Sri Krishan Timber Traders, Chennai – 600 112(viii) Mahaveer Agencies, Chennai – 600 003
(ix) Indo Thai Enterprises, Chennai – 600 040
(x) Gautam Glass, Hyderabad
(xi) Fibre Foils Ltd., Mumbair – 400093
(xii) Hindustan Electro Graphites Ltd., Bhopal – 462016G/SG/N/8/IND/3
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Exporters
(i) Agro Lines Co. Ltd., Thailand
(ii) Thai Cane Board Co. Ltd., Thailand.(iii) Metro Fibre Co. Ltd., Bangkok
(iv) Masonite Africa Ltd., South Africa
3. A copy of the Notice was also sent to the following exporting countries through their
Embassies in New Delhi:
(a) Thailand;
(b) South Africa;
(c) Malaysia;
(d) Italy; and
(e) Pakistan
4. Questionnaires were also sent on the same day to the aforesaid Domestic Producers,
Importers and Exporters who were asked to submit their response by 7 June 1998.  Replies to notice
and questionnaire were received from the following parties:
Domestic Producers
(i) M/s. Western India Plywoods, Kannur
(ii) M/s Jolly Board Ltd., Mumbai
(iii) M/s. National Boards Ltd., Bangalore
Importers
(i) Sri Durga Enterprises, Chennai-600112
(ii) Indo Thai Enterprises, Chennai-600040
Exporters
(i) M/s. Agro Lines Co. Ltd., Bangkok, Thailand5. Response to the notice has also been filed by the following:
(a) M/s. Mahaveer Mirror Industries, Chennai-600003
(b) M/s. System Building Technologists, New Delhi
(c) M/s. Sejpal and Others, Mumbai-400057
6. Verification of the information considered necessary for the investigation was done and to
this end a team of officers visited the premises of M/s. National Board Ltd. Guwahati;  M/s. JollyBoard Ltd., Mumbai;  M/s. Western India Plywoods Ltd., Kannur;  M/s. Mahaveer Mirror Industries,
Chennai and M/s. Indo Thai Enterprises, Chennai.  The outcome of the verification was conveyed to
the concerned parties.
7. A Public Hearing was also held on 25 September 1998, notice for which was sent to all
interested parties on 28 August 1998.  The parties were asked to submit in writing the information
presented by them in the Public Hearing so as to reach the Office of the Director-General
(Safeguards) by 6 October 1998 and to collect copies of written submissions made by other parties on
7 October 1998.  Rebuttals, if any, were asked to be submitted by 26 October 1998.G/SG/N/8/IND/3
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B. VIEWS OF DOMESTIC PRODUCERS
8. The domestic producers have made the following main points:
(a) National Boards Limited, Bangalore
(i) They are manufacturers of Hard Board also k nown as High Density Fibre Board (A Grade) of
various specification/description by Dry Process meeting the ISI specifications (IS 1658-
1977).  Their plant at Panikhaiti, Guwahati is designed to manufacture Standard Hard Board
for which they possess the necessary industrial license.
(ii) Their product is used for wall and ceiling linings panelling, partition, furniture, slates
chalkboards, television, radio backs, automobile caravans, rail coach interiors, flush doorfacings, exhibition work etc.
(iii) They manufacture and sell only "A" Grade quality Hard Board.(iv) Since Imported "B" and "C" grade cannot be di stinguished from their "A" grade, customers
are substituting their product with the imported ones.
(v) Imported product and their product are the same.(vi) Due to curtailment of production and erosion of profits on account of massive imports during
May-July 1997 they had to lay off workers and close their operation for some days.  The total
man-days lost were 24,824 including that of contractual workers.
(vii) Their sales realization dropped appreciably due to price undercutting by exporters.  The
selling price of Re 10,426/MT inclusive of excise duty in April/June 1997 declined toRe 10,151/MT in January/March 1998 and has shown a declining trend since then.
(viii) Their inventory has increased from 814 MT in 1996-1997 to 1,473 MT in 1997-1998 which is
attributed exclusively to increased imports.
(ix) During the year 1997-1998 there has been a sudden surge in the imports of Hard Board which
resulted in their losing 1/3
rd of their domestic market share.
(x) Apart from huge quantities of Hard Board flooding the Indian Market, the landed cost of
imported Hard Board has progressively declined ranging from Re 91.22 per sheet to Re 83.91
per sheet inclusive of customs duty.  The landed cost is less than their ex-Mill prices
compelling them to reduce their prices further to stay in the market.
(xi) As part of the adjustment plan they intend to install Bamboo Chipper Machine which will
help them to use bamboo as raw material as against firewood and this will enable them to
reach optimum production target of 14,000 MT per annum against their installed capacity of
15,000 MT per annum.
(xii) They have successfully substituted cardnol (15 per cent) in place of phenol which will reduce
the manufacturing cost by Re 50/-MT.G/SG/N/8/IND/3
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(b) Western India Plywood Ltd., Kannur
(i) They are manufacturers of Hard Board (also called High Density Fibre Board), through Wet
Process of various description, conforming to BIS 1658 of 1977.  Besides Hard Board they
also manufacture plywood, densified wood, furniture, glass reinforced plastics, DAP Resinand DAP Monomer.
(ii) Hard Boards manufactured by the company are used by the Automobile Industry for door
pads.  Building industry for partitioning, ceiling, shoe manufacturing, furniture making etc.
In respect of industrial users the company deals directly with them as their requirements are
finely specified and varies from order to order.  They have been supplying to Maruti and other
automobile manufactures since inception and have met very demanding specifications, oftenthe specifications are far more rigid than ASTM or BSS specifications.
(iii) Their sales realization dropped substantially due to price undercutting by foreign producers.
The selling price which was Re 14,804.34 per MT during October/December 1997 declined to
Re 13,981-39 P in January/March 1998.
(iv) Their inventory increased from 1,336 MT in 1996-1997 to 2,776 MT in 1997-1998.(v) During the financial year 1997-1998 there had been a sudden surge in the imports of Hard
Board which captured one third of their market share.
(vi) Besides huge quantities of Hard Board flooding the Indian market, the landed cost of
imported Hard Board has progressively declined to rates ranging from Re 91.22 per sheet to
Re 83.91 inclusive of customs duty.  These rates were less than their ex-mill prices.
(vii) Internationally Hard Board is manufactured in 3 grades viz. A, B and C while the company
manufactures only A grade.
(viii) Most of the Hard Board imported into India was of "B" and "C" grade and off cut sizes.  The
said grades of goods imported is comparable to their product and cannot be distinguished.
Their customers were substituting their product with the imported ones, which is causing
them grievous injury.
(ix) As part of the adjustment, they have undertaken modernization of their Plants at a cost of
Re 63 Crores for enhancement of their capacity from 24,700 MT per annum to 34,000 MT per
annum.  Heavy imports at cheaper rates have seriously jeopardized their plans to
modernize/enhance their capacity.  They are confident of making Hard Board in two yearstime which will compete in price with the imported board and it will not be possible for the
Thai-based manufacturers to meet the quality requirements of the automobile industry.
(x) The company has completed the replacement cum modernization project and commercial
production has commenced from 14 March 1998 in the new plant imported fromM/s. Sunds De Fibrator.  AB Sweden who are reportedly the internationally renowned
suppliers of machinery for manufacture of Hard Board.  The modernization of the plant has
resulted in considerable savings of inputs and a marked improvement in the quality of Hard
Board manufactured.G/SG/N/8/IND/3
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(c) Jolly Board Ltd. Mumbai
(i) They are manufacturers of Hard Board, Insulation Board and Ceiling Tiles.
(ii) Imported Hard Boards are same as the Hard Board (one side smooth) manufactured by them.(iii) Their sales realization dropped substantially due to price undercutting by exporters.  The
selling price of Re 14,924 per MT inclusive of excise duty in October 1997 declined to
Re 13,592/- and Re 12,376/- per MT during January 1998 and March 1998 respectively.  The
trend in declining selling prices continue.  Sales of Hard Board have been adversely affected
because of cheap imports coming in from South East Asia particularly Thailand who were in
a position to reduce their prices to half because of advantage from the devaluation of "Baht".They had reduced their prices by 20 per cent to be on par with Thai manufactures and had to
curtail production for avoiding inventories getting built up due to massive imports.
(iv) Their inventory has increased from 120 MT in 1996-1997 to 650 MT in 1997-1998.
(v) During the financial year 1997-1998 there had been a sudden surge in imports of Hard Board,
consequent to which they lost 1/3
rd of their market share to the importers.
(vi) Besides huge quantities of Hard Board flooding the Indian market, the landed cost of
imported hardboard has progressively declined to rates ranging from Re 91.22 per sheet toRe 83.91 inclusive of customs duty.  These rates were less than their ex-mill prices.
(vii) Internationally Hard Board is manufactured in 3 grades viz. A, B and C while the company
manufactures only A grade.
(viii) Most of the Hard Board imported into India was of "B" and "C" grade and off cut sizes.  The
said grades of goods imported is comparable to their product and cannot be distinguished.
Their customers were substituting their product with the imported ones, which is causing
them grievous injury.
(ix) Hard Board imports originating from Thailand were at prices 50 per cent lower than
prevailing prices of Indian product, even afte r paying import duty of 35 per cent.  Besides
devaluation of Thai currency as an advantage,  Thailand has four Hard Board mills producing
17,000 MT per month as against capacity of 4,000 MT p.m. of Indian manufacturers.  The
enormous capacity and its optimum utilization, with poor domestic demand has forced them
(Thai manufacturers) to sell their product at rock-bottom prices with very little profit which
has its adverse impact on the Indian manufacturers.
(x) As part of the adjustment plan, they have undertaken capacity expansion/enhancement by
30,000 MT at a total cost of Re 15 Crores by setting up a plant at Sangli which is nearing
completion.  They are switching over to a chan ge of raw material from firewood to bagasse
for manufacture of Hard Board in order to reduce cost at their new plant at Sangli,
Maharashtra.
(d) All India Fibre Board Manufacturers' Association
(i) The contention of the importer that the Hard Board manufactured by National Board is not
"Hard Board" is not correct.  It is reiterated that whether it is one side smooth or both sidessmooth, the Hard Board manufactured by National Boards continues to remain Hard Board.
There are two ways in which Hard Board can be manufactured namely wet process and dryG/SG/N/8/IND/3
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process.  WIP and JBL use wet process and Nation al Board uses dry process.  In fact the dry
process is the latest and superior to the wet process due to pollution problems created by the
discharge of effluent in the wet process.  The licence issued to National Boards industry is for
the manufacture of Hard Board.  The excise paid by National Boards Ltd. for years is underHard Board classification.  In all documents pertaining to State/Central Government and other
municipal authorities their product is referred to as Hard Board for the purpose of sales tax
and other levies.  The ISI certification is also in the name of Hard Board.
(ii) It has been stated by the importers that Hard Board manufactured by National Board Limited
is used only by manufacturers of slates which is not correct.  National's sale to slate industries
hardly constitutes 15/20 per cent of their total sales.  The balance sales are towardsmanufacture of writing pads, examinati on pads, lamination, photo frames etc.
(iii) The imported Hard Board from Thailand is very much competing with the National Hard
Board in all applications of Hard Board except "slate making" which constitutes hardly
15/20 per cent of National's sales.  National Hard Board is the worst affected unit due tomassive imports.
(iv) Due to different interpretation of certain items and due to difference in opinion on the
allocation of cost to various heads due to multi-product manufacture in the case of WIP, the
Officers of the DG (SG) observed that WIP and National's cost had been over stated to someextent.
(v) With the commencement of massive imports coming into the Indian markets the Indian
industry started piling up their stocks and had been forced to curtail their production.
Notwithstanding increase in the Customs duty by 10 per cent even considering the postbudget landing cost of imported and indigenous hardboard, there is still a gap of 28 per cent
on 8' x 4' x 3 mm;  41 per cent for 2' x 4' x 3 mm and over 100 per cent in rejected Hard
Board.  The landing rate of imported Hard Board in whatever garb it has come, whether B
grade, C grade, rejected Hard Board, offcuts and scrap had not only been lesser than the cost
of indigenous Hard Board, but the gap between them is substantial.  If this gap persists, it will
be well nigh impossible for the indigenous industry to compete with B grade, C grade,
rejected Hard Board, offcut sizes and other varieties being imported into the country  in onegarb or another.
(vi) The fall in capacity utilization of Western India is entirely due to the massive imports coming
into the country.  Notwithstanding lesser capacity utilization, the fact that stocks have piled
up with the indigenous manufacturers matching with the quantity of imported Hard Board
clearly shows the nexus between imports and falling production capacity utilization and sales
of the indigenous industry.
(vii) At no point of time the Hard Board Manufacturer Association had stated that Hard Board of
size 8' x 4 ' is used by the automobile sector onl y.  In fact, most of the users of Hard Board in
India buy Hard Board in 8' x 4', 6' x 4' and then they cut it according to their requirements.
(viii) It is not correct to say the automobile sector did not use imported Hard Board.  Mayur
Industries and Auto Interiors Pvt. Ltd. who ha ve been the two biggest vendors of automobile
industries have imported several consignments of Hard Board only for supply to the autoindustry.
(ix) At no point of time there had been any shortage of Hard Board as alleged by the importers.
Hard Board manufacturing is a continuous process and the plant has to be shut down everyG/SG/N/8/IND/3
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Page 8
year for annual maintenance, boiler inspection, during which time the supply of the boards to
the market could get disturbed.  During such times both Western India and JBL have
meticulously ensured free and equitable distribution of their products to all their regular
dealers depending upon their normal of takes in the earlier periods and did not allow anycasual ad hoc "fair weather dealer" to exploit the situation.  Therefore, the allegation of
shortage of hardboard is nothing but a ploy to justify the easy imports of offcuts and rejects.
(x) The rate of  2' x 4' had never been proportionate to the size of 8' x 4' and it has been invariably
lesser than the standard size rate as would be evident from the data submitted by Agrolines
themselves where the price of 8' x 4' is US$1.45, whereas that of 2' x 4' was 0.33 cents
equivalent to US$1.32 for 8' x 4'.  Undercutting of Hard Board prices under the garb ofB grade, C grade, off cuts, rejected Hard Board and scrap is killing the indigenous industry.
The Indian consumers had always been using indigenous Hard Board in 8' x 4' and 6' x 4' size
and cutting it as per their requirements.  Imports are taking place at ridiculously low rates
which is ruining the indigenous industry and it has to be thwarted if the indigenous industry
has to survive.  Even today Hard Boards are being imported into the country at prices rangingfrom US$1.20 to US$1.45 per sheet of 8' x 4' x 3 mm.
C. 
VIEWS OF EXPORTERS
9. The following main points have been made by the exporters.
Agrolines Company
(i) M/s. Agro Lines Company Thailand a subsidiary of Sun Hua Seng Group (SHS) was
established in 1992 with a purpose to produce quality Hard Board to meet domestic and
overseas demand.
(ii) During 1992 to 1996, 90 per cent of their production was for domestic consumption.  The
balance was exported to countries like Indonesia, Malaysia, Philippines, Fiji, Japan and
Papa New Guinea.
(iii) Due to economic compulsion caused by financial crisis, the local demand for the product has
declined and the company expects to export besides the countries at (ii) to new markets likeTaiwan, Hong Kong, China, Sri Lanka,  Macronesia Islands, Brunei and India.
(iv) They export Hard Board under HS Code 4411.11 (441111005) – Fibreboard of wood/other
ligneous material of density exceeding 800 Kgs/cubic metre of various standard sizes and
specifications.  Hard Board manufactured by them is used as construction material, furniturematerial, in packaging, the industrial use being for lamination and for use by audio
component manufacturers etc.
(v) They have a capacity of 48,000 MTs per annum against which they produced 37,492 MT,
42,777 MT and 44,932 MTs during 1996, 1997 and 1998 respectively;  their capacityutilization being 78.11 per cent, 89.10 per cent and 93.61 per cent during the said period.
(vi) Their cost of production of sheet of size 4' x 8' x 3 mm was as under:
1996 63.39 Baht
1997 43.00 Baht
1998 38.03 Baht
1999 38.03 Baht (Projected)G/SG/N/8/IND/3
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(vii) Their export selling price per unit of Hard Board size 1,220 x 2,440 x 3 mm (8' x 4' x 3 mm)
was as under:
1996 US$2.96
1997 US$2.10
1998 US$1.80
(viii) They have two agents in India namely:  M/s. Sri Durga Enterprises Chennai – 600012 and
M/s. Kelbro Corporation, Chennai – 600010.
(ix) The decline in the c.i.f. prices in the case of Hard Board supplies by Agro Lines Co. Ltd, had
been the result of the sharp drop in the Exchange rate of the Thai Baht against US$ since late
1997.  This situation which had developed over a period of time i.e., between the second half
of 1997 and the first half of 1998 was a natural economic and market driven phenomenon and
was not the result of any artificial conditions or intervention by the exporting country's
Government with a view to protecting the exporting companies.
(x) The drop in prices was the result of certain economic developments and there was nothing
unusual in Agro Lines Co. Ltd., following the general  pricing pattern adopted by the Thai
companies as well as the companies from the other countries in the region.  Moreover the
price of Hard Board sold in Thailand was lower than the price of Hard Board exported toIndia at any given point of time.
(xi) There is no specific process limitation or cost escalation in the manufacture of 4' x 2' sheet
size even though the manufacturers generally prefer to supply 8' x 4' sheet to the extent
possible for obvious reasons such as manufacturing and shipment convenience, costadvantage etc.  The prices generally offered by Agro Lines Co. Ltd for supply of the smaller
size of the Hard Board sheet i.e. 4' x 2' size etc. is directly proportionate to the price of a
8' x 4' sheet size or in most of the cases it is higher in comparison.  The Indian manufacturers
are therefore not in any way at a disadvantage in this regard.
(xii) It is a fact that the import prices have been steadily coming down during the last year, with
regard to Hard Board sold by Agro Lines Co. Ltd.  The prices were fluctuating widely during
the period as various lower grades of material were acceptable to Indian Market particularly
the high seasonal demand for paper clipping boards and photo frames in the first quarter of
the year (1998) in comparison to some of the indigenously produced material available in the
market.  During  this period a substantial quantity of Grade "B", Grade "C" as well as Grade
"R" (Rejected Grade) were imported from Agro  Lines Co. Ltd. as the Hard Board supplied
with these defects were found to be acceptable to the Indian market because of its value for
money.
(xiii) Presently the prices are around US$1.70 to 1.75 per sheet (8' x 4').  There is no doubt that the
prices have more or less stabilized at  a higher level than it was being supplied earlier thisyear.  With the Thai Baht getting stronger against the US$ and the general improvement in
economic situation in that country there is no reason to believe that the prices will go any
lower in the near future and consequently there seems to be no justification whatsoever for the
safeguard intervention.
(xiv) It is with the interest of the end users of various products in view, that the Government of
India had relaxed the import conditions as well as customs duties when the liberalization
process commenced in 1991-1992.  The conscious decisions adopted by the Government has
been to take India towards a market driven economy which alone will correct the imbalancesG/SG/N/8/IND/3
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in the sheltered economy prevailing till then.  In the long run this was expected to help Indian
products reach higher standards in quality, capacity etc. resulting in substantial export
earnings for the country as well.
(xv) The Government of India has increased the Basic Customs Duty for Hard Board and MDF by
10 per cent in the 1998-1999 budget.  The overall cascading impact of this increase works out
to approximately 14 per cent.  This increase in customs duty along with the escalation in the
cost of imports due to the depreciation of th e Indian Rupee against the US$, the import cost
has gone up by nearly 27-28 per cent during the last year as far as Hard Board is concerned.
(xvi) No further duty burden on the import of Hard Board be imposed and on the other hand to
consider rolling back of pre 1998 level the customs duty on Hard Board in the interest of the
end users of this product in India who mainly belong to the lower income segment of the
population.
D. VIEWS OF IMPORTERS
10. The importers/users have made the following main points:
(a) M/s. Mahaveer Mirror Industries, Chennai-600003
(i) The application made by the All India Fibre Board Manufacturers Association is totally
misleading with a view to taking advantage of monopolistic atmosphere created by domesticproducers.  The imports of Hard Board was as a sequel to combat the monopolistic trend and
exploitation by the domestic producers.
(ii) National Boards Ltd. (NBL) is not manufacturing "Hard Board" which could be considered as
similar to the ones being imported.  NBLs capacity utilization and other factors pertaining toNBL which have been furnished in support for imposing safeguard duty has no relevance.
(iii) Imported Hard Board is of inferior quality to that of product manufactured by M/s. Western
India Plywoods but equivalent to the product of  M/s. Jolly Board, quality wise.  No import of
Hard Board is being made which is similar to the product of NBL.
(iv) All Types of Hard Board cannot be called as High Density Fibre Board:  There are many
foreign substances found in "Hard Board" whic h are absent in High Density Fibre Board and
Medium Density Fibre Board.
(v) The quality of imported Hard Board is such that its use has been rejected by the automobile
industry due to high water absorption vis-à-vis the indigenous product.
(vi) The domestic producers have furnished exaggerated figures of imports by including all kinds
of High Density Fibre Boards, Medium De nsity Fibre Boards, Masonite Board etc.
(vii) The figures in respect of imports of Hard Board are furnished on the basis of projections and
not on actual basis.  The quantity of Hard Board imported into India is very meagre vis-à-vis
the total quantum of domestic production.
(viii) The Hard Board manufactured by Jolly Bo ard and Western India Plywood respectively are
different with regard to its specifications which is also evident from the price differential oftheir products marketed.G/SG/N/8/IND/3
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(ix) The domestic manufacturers should have no objection to the import of admittedly B and
C Grade material, since the domestic producers claim they manufacture only "A" grade Hard
Board.
(x) Domestic producers Western India Plywoods and Jolly Board in connivance with each other
monopolized and maintained a high price level.  The production of Hard Board increased by
just 193 MTs during 1994-1995 to 1996-1997 which in itself reveals that they were not alive
to the increase in demand but preferred to jack up prices at regular intervals.
(xi) The domestic manufacturers have miscalculated the landing cost of imported Hard Board by
excluding L/C expenses, bank charges, C&F Port Trust charges etc. which works out at
around 10 per cent in addition, for working out the correct feasible landing cost.  Besides in
order to project a low landed cost they have included all cut & offsize Hard Boards instead of
standard size Hard Board.
(xii) No undercutting of prices – reduction in prices due to emergence of more suppliers and
overseas competition amongst them.
(xiii) Misguiding cost of production furnished by domestic manufacturers.  The cost of sales of
indigenous Hard Board at Re 13,910/- per MT is an exaggeration.  Depreciation and interest
cost should not be taken into account as the Plants are 30-40 years old and their accumulatedreserves are quite satisfactory and the domestic producers (WIP-JB) have registered good
profits during the period under consideration, of course, there may be some repairs and
maintenance not affecting the cost of production.
(xiv) The domestic producer (WIP) used to export 1/3
rd of their production.  The fall in capacity
utilization is due to lesser exports.  Shut down and labour redundancy as a sequel is due to
other extraneous factors and not due to imports.
(xv) Expansion of capacity will not reduce the cost of production but the capacity utilization to the
optimum.  Post budget landed cost of sales of imported Hard Board (1998-1999) is 12.12 per
cent higher than pre-budget cost.  The cost of imports per MT prior to 1998-1999 budget
works out to Re 13,834/- which is almost equivalent to the cost of sales of domesticproducers.
(xvi) With the imposition of additional 8 per cent duty on all imports and enhancement of basic
customs duty from 30 per cent to 40 per cent, plea for imposition of 42.66 per cent safeguard
duty of the landed cost inclusive of custom s duty, may not arise since there may be no
adverse impact of imports on either price or quantity of sales of domestic producers.
(xvii) It is not true that the imported Hard Board supplied by M/s. Thai Plywood (reportedly a Thai
Government Owned company) is akin to the Hard Board manufactured by National Boards
Limited, Guwahati.  The Bangna Board manuf actured by M/s. Thai Plywood is one side
smooth only and other side it is net finish.  It is not similar to M/s. National Boards Limited.
It is similar to the one manufactured by M/s. Western India Plywood and M/s. Jolly Boards
Limited.
(xviii) Western India Plywoods and Jolly Boards Ltd. are the only two local manufacturers of Hard
Board in India.
(xix) NBL's product is not used for manufacturing of writing pads because the lamination is not
effective on both sides smooth Hard Board of NB L's.  Further in the photo framing industryG/SG/N/8/IND/3
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Page 12
the printed paper picture slips down after fixing the NBL's both side smooth Hard Board due
to uneven flat surface and lack of net finish on one side of the Hard Board.  NBL's product is
used in these two industries as a last resort.
(xx) The NBL's product produced with Dry Process do not face competition from the Hard Board
imported from Thailand as there is no factory in Thailand making Hard Board with dry
process.  Hence, there is no question of import of both side smooth Hard Board from
Thailand.
(xxi) Local manufacturers have stated that they are going for the larger expansion plans of
50,000 metric tonnes.  This kind of expansion would  have been permitted by the Governmentand the financial institutions  on the basis of proper surveys and reliable projections given by
the domestic manufacturers with regard to the demand in the Indian market.  If it is true then
there should not be hue and cry from domestic manufacturers when the quantity imported into
India is around 10,000 metric tonnes.
(xxii) In the Central Budget declared on 2 June 1998 the Customs Duty on import of Hard Board,
MDF Board and Particle Board is increased by 10 per cent resulting in overall effect of
increasing 11 per cent.  Consequently the import of Hard Board became completely unviable
and also due to the devaluation of India Rupee by about 8 per cent in terms of US$.  Due to
the above increase in the cost of imports, the importers were forced to stop importscompletely.  The consignments which were booked prior to the budget were only received.
M/s. Kitply Industries Limited alone imported Hard Board  after budget due to the company's
prior commitment to the foreign suppliers.
(xxiii) The domestic producers have reduced the price by less than 10 per cent which is not due to
the import but due to the general recession in the market.
(xxiv) When there is increase in the capacity utilization of the local plants, could be labour
redundancy as claimed by them in the application is not understood.
(xxv) The selling price of imported Hard Board is higher than the selling price of the local
manufacturers of Hard Board.
(xxvi) Prior to imports, the dealers had to literally beg for their requirements before the domestic
manufacturers.  There was no supply of Hard Board of more than 50 sheets at a given time
against the requirement of 300 to 400 sheets.  The domestic manufacturers have taken the
advantage of a monopolistic situation created by  them by not increasing the production but
increasing the price with the increase in demand.
The import of Hard Board has come as a relief in the drought situation created by the
domestic manufacturers.
(b) M/s. Sri Durga Enterprises Chennai-600012
They have expressed identical views to that of M/s. Mahaveer Mirror Industries.
(c) M/s. Indo Thai Enterprises, Chennai-600040
(i) The landed cost computation of imported Hard  Board is erroneous and is exclusive of C&F
expenses.G/SG/N/8/IND/3
G/SG/N/9/IND/2
Page 13
(ii) For an import of 4,800 sheets of B Grade Hard Board the C&F, loading/unloading expenses
works to nearly Re 16,000/- to Re 18,000/- or Re 3.75 per sheet.
(iii) The computation of landed cost is mere cosmetic.  Most of the importers go for import cover
owning to volatility in the market and hence an arbitrary price of dollar is vague or
misleading.
(iv) The proposed SG duty by the domestic producers is not in the interest of the consumers.  This
will lead to cartelization.  In the event, of imposition of safeguard duty, it will come under
MRTP purview.
(v) The Supreme Court judgement on plywood based industries in the North Eastern region in
particular and the country in general should be considered before slapping safeguard duty.
(vi) Domestic companies can act as canalizing agencies or may consign or have some pact with
the exporting countries through bilateral dialogues.
(vii) The imported "B" grade Hard Board is similar to that of Hard Board manufactured by
domestic producers and can be used interchangeably.
(d) M/s. System Building Technologists (SBT) New Delhi-110019, and
(e) M/s. Sejpal & Others, Mumbai-400057
(i) They are importers of Densified Wood Fibre Plates for manufacturing door shutters falling
under Chapter 4411.11 and 4411.19 of Customs Tariff Act 1975.
(ii) The item imported is not in the form of plain sheets but moulded plates specifically meant for
assembly of finished door shutters.  The goods imported are not manufactured in the country.
(iii) The Government of India keeping in mind the enormous environmental benefits have
exempted payment of customs duty on "Densified Wood Fibre Plate" to the established actual
assemblers of door shutters.
(iv) The moulded Densified Wood Fibre Plates for door shutters are a different class and type of
material quite distinct from sheets.
(v) While considering the application of domestic Hard Board producers for imposition of
Safeguard duty, Densified Wood Fibre Plates may be excluded.
E. FINDINGS OF THE DIRECTOR -GENERAL
11. I have carefully gone through the case records and the replies filed by the domestic producers,
importers and exporters of Hard Board.  Submission ma de by the various parties and the issues arising
therefrom are dealt with at appropriate place as under:
(a) Product Involved
(i) The product under investigation is Hard Board of density exceeding 0.8 gm/cubic centimetre
and is generally classified under sub-heading No. 4411.11 and 4411.19 of the First Schedule
to the Customs Tariff Act, 1975, and under 44111100 and 44111900 of the Indian Trade
Classification (ITC).  Hard Board is a sheet material manufactured from fibres ofG/SG/N/8/IND/3
G/SG/N/9/IND/2
Page 14
lignocellulosic material with the primary bond deriving from the felting of the fibres and their
inherent adhesive properties.  It is produced by wet process and dry process.  In the wet
process fibre separated from chips of Nilgiri and Ainwood is diluted with water and pumpedto the wet forming machine at a further diluted consistency.  Chemicals like paraffin wax andbinding resins are added to give the board predetermined properties to ensure uniform quality
and to improve the water resistance of the board.  The pulp is dosed to the inlet of the forming
machine where an endless fibre mat is formed which is cut into sheets for further processing.
In the dry process the chips are exposed to high steam pressure for a short time in a steel
cylinder and thereafter a valve is quickly opened and the contents blown out.  Due to the rapid
decrease of pressure, the chips are exploded into fibre-bundles and fibre.  Dry fibres are
handled pneumatically and fed through blowers on the forming machine.  Appropriate resin isthen mixed and the board is formed and the sheets are pressed under heat and pressure.  Hard
Board is available in A, B and C Grades which are used for interior decoration, frame making,
furniture making, for door trims in automobiles, for packaging and by drum manufacturers.
The domestic producers manufacture only "A" Grade Hard Board.  Hard Board is also being
classified under 44112900 and 44119900 of ITC.
(ii) The domestic producers manufacture Hard Board by wet process and dry process meeting the
ISI specifications (IS:  1658-1977).  The general and preferred size being 8' x 4' x 3 mm and
6' x 4' x 3 mm, although thickness and size may vary on customer's request.  As per the
specifications laid down, Hard Board is generally classified into the following three typesaccording to their method of manufacture and other related mechanical and physical
properties namely Medium Hard Board, Standa rd Hard Board and Tempered Hard Board.
The product under investigation would come under the scope of Standard Hard board which
has been defined as a homogeneous fibre building board having a density exceeding 0.8 gm
per cubic centimetre.
(iii) Besides Standard Hard Board, Densified Wood Fibre Plates are also being imported for
manufacturing door shutters falling under Chapter 4411.11 and 4411.19 of the Customs Tariff
Act 1997.  These are not in the form of plain sheet but are moulded plates specifically meant
for assembly of "door shutters" which are not reportedly manufactured in India.  The
domestic manufacturers have also excluded the quantum of imports if any in this regard from
the figures furnished by them.  Therefore these are not covered in the present proceedings.Similarly, Mesonite Board is also not covered in the present proceedings.
(iv) The classification of the product involved i.e. Hard Board under Customs Tariff Act, 1975 or
ITC is indicated only for the purpose of convenience and in no way has any bearing on the
scope of the product covered in the present investigations.
(b) Domestic Industry
The application has been filed by the All India Fibreboard Manufacturers Association on
behalf of the domestic producers of Hard Board.  There are three domestic producers of Hard Board
accounting for the entire domestic production of Hard Board namely M/s. Western India PlywoodsLtd., Kannur (WIP), M/s. Jolly Boards Ltd. (JBL ) Mumbai and M/s. National Boards Ltd. (NBL),
Bangalore and all are members of the Associat ion.  NBL manufacture Hard Board (both sides
smooth) by dry process whereas JBL and WIP manuf acture Hard Board (one side smooth other side
net finish) by wet process.  The application, therefore is considered to have been made by the
domestic industry.G/SG/N/8/IND/3
G/SG/N/9/IND/2
Page 15
(c) Increased Imports
Till 1994-1995 there were no imports of Hard Bo ard entering into India.  From 1995 onwards
Hard Board is being imported into India from Thaila nd, South Africa, Italy and Pakistan.  Hard Board
attracted import duty of 65 per cent in 1994-1995.  Fifty per cent in 1995-1996 and 35 per cent in1996-1997 and 1997-1998.  The Customs Duty was enhanced by ten percentage points in the budget
1998-1999.  The domestic producers stated that the imports of Hard Board were 141.57 MT in
1995-1996;  839.14 MT in 1996-1997 and 11,227 MT in 1997-1998.  The applicants claimed the
import figures to be part data only, as data of imports of Hard Board through the Ports of Vizag,
Kandla and Dry Port/ICD are not available in public domain for the relevant period.  The DGCIS data
relates to and includes import data of all types of fibre building board including Hard Board.  The
importers alleged that the statistics furnished by the domestic producers with regard to import of HardBoard appeared to be inclusive of all varieties of Hard Board including  certain specialized varieties
of fibre board and medium soft board.  However, the importers did not substantiate and furnish any
authentic statistics of imports of Hard Board into India during the relevant periods.  The importers
relied on the details furnished by the domestic producers and modified the same by deleting such
quantum of imports effected by certain firms who in their opinion did not import Hard Board similarto the one manufactured by the domestic industry.  The import figures furnished by applicants have,
however, been subjected to verification and adjusted for exclusion of products other than Hard Board
for the purpose of investigation.
Accordingly the imports and domestic production of Hard Board during 1995-1996 to 1997-
1998 are observed as under:
Year Domestic Production
(MT)Imports (MT) Import as a % of
domestic production
1995-1996 43,738 136.55 0.31
1996-1997 45,808 1,734.18 3.78
1997-1998 40,858 9,749.50 23.86
From the data tabulated above it is observed that the imports in absolute terms have increased
from 136.55 MT in 1995-1996 to 9,749.50 MT in 1997-1998, registering an increase by about
7,040 per cent.  As a percentage of domestic production the imports have increased from 0.31 per cent
in 1995-1996 to 23.86 per cent.  Thus, the imports have increased both in absolute terms as well ascompared to domestic production.
(d) Injury
The factual position regarding various parameters having a bearing on the state of domestic
producers is tabulated as under:
Year Installed
capacity
(MT)Production
(MT)Capacity
Utilization %Sales (MT) Closing Stock
(MT)
1995-1996 57,250 43,738 76.04 44,644 1,637
1996-1997 57,250 45,808 80.01 45,175 2,270
1997-1998 57,250 40,858 71.37 38,229 4,899G/SG/N/8/IND/3
G/SG/N/9/IND/2
Page 16
It is observed from the data tabulated above that the domestic production which had gone up
from 43,738 MT in the year 1995-1996 to 45,808 MT in the year 1996-1997 has come down to
40,858 MT in the year 1997-1998 i.e. a fall in production of 10.80 per cent.  The capacity utilization
which had gone up from 76.4 per cent in the year 1995-1996 to 80 per cent in the year 1996-1997 hasgone down to 71.37 per cent in the year 1997-1998.  The domestic sales which had also gone up from
44,644 MT in the year 1995-1996 to 45,175 MT in the year 1996-1997 have come down to
38,229 MT in the year 1997-1998 i.e. a loss of 15.37 per cent resulting in significant increase in
closing stock to the tune of 4,899 MT in 1997-1998 as compared to 2,270 MT in the year 1996-1997.
The domestic producers could achieve the reduced sales only at reduced prices.  National Board
reduced its selling price (inclusive of Central Excise Duty) from an average of Re 10,426/- per MT in
April-June 1997 to Re 10,151/- per MT in January-March 1998.  Similarly, in the case of WesternIndia the average selling price declined from Re 14,804/- per MT during October-December 1997 to
Re 13,981/- per MT in January-March 1998 and in the case of Jolly Boards the average selling price
declined from Re 14,924/- per MT in October 1997 to Re 13,592/- in January 1998 and to Re12,376/-
per MT in March 1998.
The domestic industry has also lost employment.  National Board alone have lost
24,824 man-days in 1997-1998.  Jolly Board lost 3,540 man-days.  In all the domestic industry lost
28,364 man-days in 1997-1998.
It is therefore, observed that the domestic industry has suffered a significant overall
impairment in its position and thus have suffered serious injury.
(e) Causal link
Although the domestic industry has suffered a significant overall impairment as observed
above, it is necessary to analyse the cause thereof.  The domestic industry comprises of threemanufacturers namely National Board Limited (NBL), Western India Plywood Limited (WIP) and
Jolly Board Limited (JBL).  NBL has an installed capacity of 15,000 MT per annum.  WIP
24,700 MT per annum and JBL 17,550 MT per annum.  Altogether, the domestic industry has a total
installed capacity of 57,250 MT per annum.  The production and capacity utilization which reached a
peak of 45,808 MT and 80.01 per cent respectively in 1996-1997, declined to 40,858 MT and
71.37 per cent respectively in 1997-1998.  At the same time the apparent domestic consumption
(domestic sales plus imports) increased marginally to 47,979 MT in 1997-1998 from 46,909 MT in1996-1997 i.e. an increase of about 2.28 per cent.  The domestic producers, however, lost their share
in the apparent domestic consumption from 45,175 MT in 1996-1997 to 38,229 MT in 1997-1998 i.e.
they lost a share of 6,946 MT.  The import during this period increased from 1,734.18 MT in 1996-
1997 to 9,749.50 MT in 1997-1998 i.e. an increase of 8,015.32 MT which replaced the domestic sales.
In this regard the domestic producers have stated that the imports of off-cuts i.e. Hard Board of sizessmaller than 8' x 4' x 3 mm/6' x 4' x 3 mm and generally of size 2' x 4' x 3 mm which entered at prices
which were lower than the prices of sheets of standard size i.e. 8' x 4' x 3 mm have replaced their "A"
grade Hard Boards.  The off-cuts of size 2' x 4' x 3 mm entered the Indian market at an average c.i.f.
price of Re 15.81 per piece (Re 63.24 for size 8' x 4' x 3mm) in 1997-1998 as against an average c.i.f.
price of Re 79.68 per sheet of size 8' x 4' x 3 mm and Re 58.48 per sheet of size 6' x 4' x 3 mm(Re 77.97 for size 8' x 4' x 3 mm).
The imported Hard Board had been entering the Indian market at declining prices in
1997-1998.  Sheets of size 8' x 4' x 3 mm which were imported at US$2.4 (Re 86.24) per sheet in
July 1997 declined to about US$2.3 (Re 83.72) per sheet for imports entering during August 1997 toNovember 1997.  The prices further declined to US$2 (Re 72.80), US$1.9 (Re 75.06) and US$1.7
(Re 67.57) per sheet in the subsequent period till March 1998.  The off-cuts (2' x 4' x 3 mm) pricesG/SG/N/8/IND/3
G/SG/N/9/IND/2
Page 17
declined from Re. 17.66 per piece in October 1997 to about Re 13.65 per piece in February-
March 1998.
It has been contended that the NBL product suffered in quality.  In this regard, it is observed
that generally the Hard Board manufactured through dry process is of better quality as compared to
Hard Board manufactured through wet process and fetches a higher price internationally.  In the case
of NBL who use dry process for manufacturing thei r product, however, fetches the lowest prices in
the domestic market which perhaps may be due to quality considerations.  WIP and JBL products
have not been reported to have any quality problems.  On the contrary it has been submitted that WIP
product is superior in quality as compared to the imported Hard Board and JBL product matches with
the imported Hard Board in quality.
It would be appropriate to mention here that the NBL product is "both sides smooth" whereas
the WIP and JBL products are "one side smooth and one side net finish".  The slate manufacturers use
"both side smooth" Hard Board and it has been stated by the domestic producers that about 20 per
cent of NBL product is used in the slate industry.  The balance of the NBL product is used for otherpurposes for which one side smooth and one side net finished Hard Board is used.  The imported Hard
Board is generally one side smooth and one side net finished.  The Automobile Industry generally
uses Hard Board with one side net finished in sheets of size 8' x 4' x 3 mm/6' x 4' x 3 mm.  These
sheets of 8' x 4' x 3 mm/6' x 4' x 3 mm, are also used for other purposes and the Indian market had all
along been using sheets of sizes 8' x 4' x 3 mm/6' x 4' x 3 mm.  The imported off-cuts of size2' x 4' x 3 mm have, however substituted the sheets of 8' x 4' x 3 mm/6' x 4' x 3 mm for uses other
than in the automobile industry.  The imported Hard Board, therefore, competed and replaced the
product of not only WIP and JBL but also that of NBL.  It may also be observed that Mangalam
Timbers till two years back manufactured Medium-Density Fibre board of 9 mm to 12 mm thickness
for export.  They lost some sales and explored th e domestic market cutting into NBL's market share
by reducing thickness to 3 mm.  The Association have admitted that approximately a quantity of
2,500 MT of MDF is being sold by M/s. Mangal am Timbers per annum.  MDF being both sides
smooth and being qualitatively superior to that of  Hard Board (both sides smooth) replaced NBL's
product to some extent.  An analysis of individual performance indicates that NBL had a market share
of 10,650 MT in the total domestic sale of 45,175 MT (i.e. 23.57 per cent) and a share of 22.7 per cent
in the total apparent consumption of 46,909 MT.  NBL's loss of sale was 3,996 MT in 1997-1998 out
of the total loss of sales of about 6,946 MT suffered by the domestic industry.
It would be appropriate here to discuss the performance of the three domestic producers
separately.  JBL registered an increase in the production, capacity utilization and sales in 1997-1998
as compared to 1995-1996 and 1996-1997.  JBL achieved a production of 12,864 MT in 1997-1998
(11,898 MT in 1996-1997), capacity utilization of 73.3 per cent in 1997-1998 (67.79 per cent in 1996-1997) and sales of 12,334 MT in 1997-1998 (11,852 MT in 1996-1997).  WIP, however, lost
production of about 2,661 MT (11.4 per cent) in 1997-1998 over 1996-1997, with corresponding
decline in the capacity utilization to 83.73 per cent in 1997-1998 from 94.5 per cent in 1996-1997.
Similarly they lost sales from 22,673 MT in 1996-1997 to 19,919 MT in 1997-1998 i.e. 2,754 MT
(12.14 per cent).  The worst sufferer was NBL who lost production from 10,568 MT in 1996-1997 to7,313 MT in 1997-1998 i.e. 3,255 MT (30.8 per cent) and loss of capacity utilization from 70.45 per
cent in 1996-1997 to 48.75 per cent in 1997-1998.  They also lost sales in 1997-1998 to 6,654 MT
from 10,650 MT in 1996-1997 i.e. a loss of 3,996 MT (37.5 per cent).
From the above it is observed that JBL (which represent 30.66 per cent of the total domestic
capacity) achieved higher production, capacity ut ilization and sales in 1997-1998 as compared to
1996-1997.  JBL lost on profit but still in 1997-1998 they made a profit of 5.9 per cent on sales.  In
1995-1996 they made a profit of 16.1 per cent on sales and in 1996-1997 they made a profit of 7 per
cent on sales.  WIP (which represent 43.14 per cent of the total domestic capacity) also made a profitG/SG/N/8/IND/3
G/SG/N/9/IND/2
Page 18
on sales of 8.3 per cent in 1995-1996, 8.5 per cent in 1996-1997 and 7.9 per cent in 1997-1998.  It is
also observed that WIP product fetches the highest price in the domestic market.  Their product is
admittedly of better quality and generally meant for automobile industry.  They are targeting to
manufacture a board of superior quality for the automobile industry which cannot be substituted byimported Hard Board.
As far as NBL (which represent only 26.2 per cent of the total domestic capacity) is
concerned, as already discussed, they manufacture Hard Board with both sides smooth using dry
process whereas the imported Hard Board is generally one side smooth and one side net finished.
Although slate industry uses NBL product, a major proportion of NBL product is used for the same
purposes as others' products.  Owing to their quality constraints, NBL product fetches the lowestprice.  They are the only one incurring losses as a result of higher cost of production as compared to
their sales realization.  They have, however, been suffering on account of various factors such as
inferior quality, locational disadvantages etc.
It has also been argued that the domestic producers did not meet with the domestic demand
and short supplied the material.  In this regard, it is observed that the domestic producers, in all had an
installed capacity of 57,250 MT per annum as against the total domestic consumption of about 47,000
to 48,000 MT per annum.  In the last three years WIP has been able to achieve a capacity utilization
of about 102 per cent, JBL of about 73 per cent and NBL of about 70 per cent.  They could thus have
achieved a total production of about 48,500 MT (24,700 x 102% + 17,550 x 73% + 15,000 x 70%).They have, however, explained that during plant shut down for maintenance etc, there could have
been some temporary short supplies in the market.  In this regard, it is also observed that the inventory
of the domestic producers has increased from 2,270 MT in 1996-1997 to 4,899 MT in 1997-1998.
There is, therefore, no ground to hold that domestic producers were not able to meet with the domestic
demand.
From the above discussions, it is observed that while the undercutting of domestic prices by
the imported Hard Board entering at declining prices was one of the most important reasons, other
factors also existed which caused serious injury to the domestic industry.
(f) Adjustment Plan
In the year 1997-1998, about 90 per cent of the imports originated from Thailand.  The
domestic producers have stated that Thailand has four Hard Board mills which produce a total of
17,000 MT of Hard Board per month as against Indi a's capacity of 4,000 MT per month.  Analysing
the variable cost of Thai producers as compared to Indian producers, they have submitted the
following data:
Item Thai Cost
(Re)Indian Cost
(Re)
(i) Raw material "waste wood" 800/MT 1,200-1,300/MT
(ii) Electricity 2 per unit 4 per unit
(iii) Fuel 200/MT 600/MT
To meet with the competition offered by the Thai imports on account of the above
disadvantages suffered by the domestic producers, they have submitted individual adjustment plans.
JBL intend to expand their capacity from 17,550 MT to 47,550 MT at a total outlay of
Re 15 Crores out of which they have already spen t Re 8 Crores.  Through expansion they expect toG/SG/N/8/IND/3
G/SG/N/9/IND/2
Page 19
achieve economy of scales.  They are also planning change over to 100 per cent use of Bagasse for the
manufacture of Hard Board in place of waste wood.  This would also result in saving of fuel cost as
Bagasse contains one third pith and waste which can be used as fuel for energy generation.  They also
intend to reduce power generating cost and labour co st by shifting their plant from Mumbai to Sangli
and to get the benefit of setting of plant in backward region.  Besides, it appears that JBL also intend
to avail the benefit of exemption from payment of Central Excise duty on Hard Board manufactured
from Bagasse.
WIP also has ambitious expansion plans of doubling their capacity with a total outlay of
Re 80 to 85 Crores, out of which they have already spent nearly Re 60 Crores.  They intend to achieve
reduction in cost of production through economy of scales, automation, energy saving and qualityimprovements.  WIP intends to make in two years, a board which will compete in price with the
imported board and which will be superior in quality to meet the requirements of the automobile
industry to the exclusion of imported Hard Board.
NBL intend to install a Bamboo Chipper which will result in reduced cost of production,
better availability of raw material and increased yield of timber to finished product.  They have also
substituted cardnol (15 per cent) in place of phenol.  All these efforts are expected to cut down the
cost of production by about 15 per cent.
From the above it is observed that JBL are already in the process of restructuring and thereby
reducing the cost of production.  Use of Bagasse in the manufacture of Hard Board may also entitle
them to the Central Excise exemption on Hard Board manufactured therefrom, as an added advantage.
WIP product fetches the highest price in the domestic market and their product is admittedly
of better quality and generally meant for the automobile industry.  In their adjustment plan they havespecifically stated that they would not achieve any cost savings in 1998-1999, rather the cost will go
up because of interest and depreciation costs.  Subsequently, the manufacturing cost will remain the
same as the current manufacturing cost.  The restru cturing plan of WIP will, therefore, not make them
cost competitive with the currently imported Hard Board.  They have, however, stated that they are
targeting to manufacture a board of superior quality for the automobile industry which cannot be
substituted by imported Hard Board.  Imposition of safeguard duty is, therefore, inconsequential for
them.
As far as NBL is concerned, as already discussed owing to their quality constraints, their
product fetches the lowest price.  They are the only one incurring losses as a result of higher cost of
production as compared to their sales realization.  They have been suffering on account of various
factors including, inter alia , inferior quality, locational disadvantages but it is observed that they have
not provided details of any comprehensive and sustainable restructuring plan which would enable
them to produce quality product at competitive prices and thus meet with the import competition in a
time bound manner.  In fact they have stated that despite their good intention, major expansion plans
could not be pushed through because of disturbed political conditions and violent activities.  The
constraints on raw materials availability had put a limit on increasing their capacity besides the"drives" in their plant at Guwahati is outdated and its replacement would involve a considerable
amount.
(g) Public Interest
Hard Board is used for various applications including furniture, photo frames etc.  It is
observed that throughout the country Hard Board is used in the manufacture of furniture, photo
frames etc. and a large number of people earn their livelihood therefrom.  They are an important user
group of Hard Board, but no representation has been made on their behalf, perhaps as they are not anG/SG/N/8/IND/3
G/SG/N/9/IND/2
Page 20
organized group.  Safeguard duty on imported Hard Board would adversely affect their interest.
Imposition of safeguard duty can be justified only if it is in public interest.  The term "public interest"
is a much wider term and covers in its ambit the general social welfare taking into account the larger
community interest including that of small users of Hard Board.  The domestic producers havesubmitted no convincing and sustainable restructuring plan whereby the domestic industry as a whole
will be able to supply comparable product at competitive prices.  It would, therefore, not be in public
interest to recommend imposition of any safeguard duty on imported Hard Board.
(h) Share of exporting countries
On the basis of information available, share of exporting countries in India's imports of Hard
Board was as under:
1997-1998
Country
Quantity %
Thailand 8,722.59 89.46
South Africa 328.36 3.36
Others 698.55 7.18
Total 9,749.50 100.00
F. CONCLUSIONS AND RECOMMENDATIONS
12. As discussed above, the domestic producers of Hard Board have suffered a significant overall
impairment and thus suffered serious injury caused mainly by the increased imports of Hard Board.The domestic producers have, however,  submitted no convincing and sustainable restructuring plan
whereby the domestic industry as a whole will be able to supply comparable product at competitive
prices.  The restructuring plans of the domestic i ndustry also do not justify imposition of safeguard
duty as it may result only in realization of enhanced profits or reduction of losses for some of them.
The objective of safeguard duty is to prevent or re medy serious injury to the domestic industry with a
view to enabling them to make a positive adjustment to the competition offered by the increased
imports.  It appears that in the present case imposition of safeguard duty will not fully meet with this
objective nor would this be in public interest.
In view of the foregoing discussions and considering that the Government of India has
already increased the rate of import duty by ten percentage points with effect from 2 June 1998 and
the level of protection to domestic producers of Hard Board has increased from 35 per cent to 45 per
cent no recommendation to increase the existing level of protection of 45 per cent ad valorem  by
imposing safeguard duty on Hard Board imported into India, is made.
(R.K. Gupta)
DG (Safeguards)
__________