Case Study

Rohan Shah, Amaya Exim

By Pooja Kothari

For generations, Rohan Shah's family had been into the indenting business. So when he finished his graduation from Bryant University in the US and came across an opportunity to represent an international manufacturer in India, Shah promptly started a new business under Amaya Exim. That was in 2006.

The company represented manufacturers from around the world, and distributed their products in India. It worked exclusively with "principals", as they are called in trade jargon, in China, Taiwan, United States and Europe, and earned a commission on sales.

The firm dealt with products, such as solvents, bulk drugs and intermediates, dyes intermediates, organic or inorganic chemicals and specialty or performance chemicals. These were used by manufacturers across the country.

To put it simply, Amaya ran a business-to-business operation. As an indenting agent, it could sell minimum one container of a product, not smaller quantities. So, it would place orders for containers, and sell them to either end-users, who had the capacity to buy an entire container, or to a trader, who would then sell to companies that needed smaller quantities of those products. The business did well. Amaya built a reputation for high-quality products and competitive prices—a must in the indenting business. Since the manufacturer sits far away from the user of its products, it is up to the indenting agent to ensure the interests of both the buyer and the seller are looked after. In 2009-10, the company did 540 crore in indenting sales.

One of the companies that Amaya represented in India was Changzhou Yabang Chemical Company of China. It was the largest manufacturer of maleic anhydride (MA) not only in China, but in the entire Southeast Asia. MA is a raw material used to make unsaturated polyester resin (UPR). Companies that make composites, or reinforced plastic, use MA as a raw material.

The MA industry in India was almost non-existent. There was a sole manufacturer in south India, who could hardly meet the demand from the entire country. In fact, such was the state of things that users found it more competitive to import MA than purchase it locally.

"It was one of our first products, and we enjoyed very good volumes in it, so much so that we were the largest indentor of this product," says Shah. He dealt with nearly 1,200 metric tonnes of MA per month, selling it to a mix of end users and traders. The trades accounted for a considerable share of Amaya's business in volume terms.

In February 2007, the government of India moved an initial notification on behalf of the domestic manufacturers of this product, calling for the introduction of an antidumping duty on all MA products from China, Taiwan and Indonesia. The duty was to be applicable only to imports from these regions, not from the entire world. That almost sounded like a death knell for Amaya's trade in MA. Because margins were wafer thin, any duty would push up prices, and make it less competitive to import the product into India.

Amaya first response was that it was someone else's problem. "We hadn't lost any money, and we could always find a new manufacturer to represent," says Shah.

However, given his family's experience in the field, Shah decided against that short-term approach. He instead sought legal opinion on the matter to check whether the decision was a fair one on the part of the government.

It made perfect business sense to take this approach. Fighting for the rights of a client based in China would earn them the goodwill of clients from all over the world. "We didn't tell our client that it was their problem. We chose to reassure them that we'll get this removed," says Shah, who had been approached by two other manufacturers of MA to represent them instead.

Once convinced that he had a "good case in hand", Shah "appointed one of the top practitioners of trade law" and took legal recourse to justice.

However, in August 2008, government officials went to China to inspect the plants of Amaya's "principals", and concluded that China was dumping MA into the Indian market. The government, thereafter, imposed a flat anti-dumping duty of $95 per metric tonne on all MA imports from their principals in China.

Around the time the final findings of the inspection were made public, the local supplier, on whose behest the government had imposed the duty, shut down his production facility in south India and started importing MA from Malaysia—without any antidumping duty on it.

Being India's largest indentor of maleic anhydride, the duty hit Amaya hard. Between August 2008 and November 2010, the firm did no business in MA, except for the small quantities it sold to export-oriented units that were exempt from this duty. "We did negligible business of around 100 metric tonnes a month in that time," recalls Shah.

The Decision Amaya decided to take further legal action. "We didn't do that just for our own benefit, but also for the numerous domestic manufacturers, who were using this product," says Shah. In February 2010, Shah initiated a mid-term review with the government, challenging the imposition of anti-dumping duties, and asking for a second round of investigation. This time round, he was much smarter about the move. He brought on board two associations—the IPA (Indian Plasticisers Association), and UPRA—whose members used this product extensively as a raw material.

Amaya built its case from the perspective of those manufacturers this time round, highlighting how their operations were being affected by this monopoly. In addition, since there was no one manufacturing the product in India any more, the entire logic of "anti-dumping" had become flawed. This involved a fair amount of paper work. Despite the presence of lawyers, Shah had to work hard to build the case. "The lawyers will only finally represent in their jargon what you will tell them," he says. Challenging the government on its decision is a bold step. "Once you decide to do that, you better make sure that you have done your ground work. That means being well-versed with the subject, and drawing up appropriate grounds to fight," he adds.

He co-ordinated with local manufacturers, who were using MA. He helped them fill up a 30-page questionnaire demanding data from importers. "I had to sit with people and explain to them that this was for a bigger cause. There were many who didn't co-operate. But I got all the big importers to come on board. That made our case stronger," says Shah.

Not ready to take no for an answer, Shah even flew several times to Delhi to make his case to government officials. But finding his way across the corridors of power was easier said than done. The babus of Udyog Bhawan wouldn't meet him, despite visiting them several times. "So I simply walked into their offices to get a hearing," laughs Shah.

By August 2010, the findings of the mid-term review were made public. "Those were totally in our favour, and suggested that the antidumping duties should be abolished," recalls a relieved Shah, who has started indenting in the product once again.

The entire fight cost Shah and his principals more than $75,000 in lawyer fees, air fare for trips to Delhi and China, and so on. In hindsight, that seems to be money well spent. In November 2010, the government removed the antidumping duty on MA imports. In the first month itself, Amaya did trade volumes of 600 metric tonne, and that has gone up to 1,400 metric tonne per month since then.

Business aside, winning the case has "added credibility" to the company, and earned it lots of goodwill. Amaya's Chinese principals have greater faith in its ability to represent their interests. The government authorities as well as people in the market know that Amaya is a "serious contender" in its field. "This reputation is only created with time and experiences; it cannot be bought with money," says Shah. Although the legal battle was long drawn out, it was worth it at various levels, feels Shah. At 26, he couldn't have learned more—not least about the workings of the government from close quarters in these three years. Through the past few years, there were many times, especially when dealing with the government that Shah felt like "giving up".

He learnt who his true well-wishers were. "I got like a 100 phone calls the day we won the case. Everyone wants to be a part of the good times. However, most of these people weren't there with us through the struggle of the past few years," says Shah. The best part is that he has earned his company the distinction of being the only indenting agency in the country to have fought an anti-dumping case against the government—and won it.

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