Page 280 - MANUAL OF SOP

Determination of Non Injurious Price

then weighted average needs to be worked out for computing NIP for the
company as a whole on the basis of volume of domestic production of PUC.
(f) Installed capacity/Production to be confirmed by supporting documents
including various returns submitted to the different government departments
like the Pollution Control Board etc.;

(g) Optimisation of Capacity Utilisation to nullify injury, if any, caused to the DI
by inefficient utilization of production capacities (Para 4(iii) of the Annexure-
III). If there is capacity enhancement during the injury period, optimum
production is determined in terms of highest capacity utilization percentage
to determine optimum production in absolute number;

(h) Optimisation of Raw Material Cost and Utilities to nullify injury, if any,
caused to the DI by inefficient utilization of raw materials or utilities (Para
4(i) and 4(ii) respectively of the Annexure-III);

(i) Raw Materials Cost (subject to optimization), Utility Cost (subject to
optimization),and Consumables Cost is generally treated as a variable cost.
However, if proper valid justification is submitted along with supporting
documents, appropriate treatment can be considered in case of other heads
of expenditure also.

(j) The year wise cost of sales figure should also be verified for the injury period
to ensure fair analysis of the trends over the entire period;
(k) Sometimes, it is seen that the imports are in bulk quantities, whereas
domestic sales are sold in small packing, the NIP for bulk and retail sale
is generally worked out separately, since packing cost can be a significant
component of cost. In other words, only the packing cost will vary based
on the nature of packing, whereas all other costs will remain the same. The
average cost is then worked out separately for packed quantity and bulk
quantity for DI as a whole. Export quantities (not sold domestically) are
generally not considered for weighted average workings;

(l) Wherever captive inputs are used and are transferred at cost price (as
reconciled with format C) and return @ 22% is allowed after optimization to
remove inefficiencies as per Annexure-III. Similarly, expenses not admissible
under Annexure-III should also be removed;
(m) Wherever captive inputs are used and are valued at market value in
determination of NIP, then no return on captive inputs be allowed.

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