Page 281 - Manual Of SOP

Manual of OP for Trade Remedy Investigations

(n) If captively generated power is supplied to the Grid and power is drawn
from the Grid by the manufacturing units, complete details including the
basis of pricing etc. must be obtained. This is necessary to ensure that no
profit is allowed over and above the prescribed rate of return on the captive
power generated. Alternatively, the arm’s length price of power may also be
considered;

(o) Costs not relevant to PUC should be segregated and then disallowed;
(p) Expenses as specifically mentioned in Para (4)(vii) of the Annexure-III are not
to be considered for NIP computations;

(q) Common expenses or overheads, which are not directly related to any
specific product to be apportioned on areas on able or scientific basis;
(r) Depreciation on re-valued assets, if any, is to be identified and the impact
of revaluation isto be excluded while arriving at the reasonable cost of
production. The impact of revaluation of fixed assets shall not be considered
in the calculation of capital employed;
(s) Depreciation for facilities not deployed on the production of the subject
goods is to be excluded from NIP workings;

(t) The reasonableness and justification of various expenses/working capital
requirements claimed for the period of investigation are to be examined
and scrutinized;

(u) The average capital employed i.e. the sum of “net fixed assets”and
“net working capital” shall be taken on the basis oft heaver age of the
respective heads as on the beginning and at the end of the period of
investigation;

(v) Reasonable Return @ 22% per annum (12 month period) on Average
Capital Employed (“ROCE”) for PUCis to be allowed (no specific ROCE is
provided under the act or rules, however, the standard Indian practice is
to give 22% return per annum). The return amount includes the incidence
of profit, interest cost and the impact of taxation. This rate of return is
proportionately adjusted if the period of POI is different from 12 months.
For example, if POI is 18 months, theoretically total return amount will be
33% (22%X18/12) of the average capital employed – For rationale and
background of this refer Chapter 19- General Issues);

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