Temporary production cut from 29 September 2026 on US tariff and cost pressures
Divyashakti Ltd will temporarily reduce production levels with effect from 29 September 2026.
By ScoutQuest · · 2 min read
- Production Cut Effective Date
- temporarily reduce production levels with effect from 29 September 2026
- US Duty Burden
- US tariffs of 12.5% and 25% plus about 4% CVD, overall effective duty burden of about 41%
- Crude Oil & Ocean Freight
- crude oil rising from around USD 45 to approximately USD 108 per barrel; ocean freight from approximately USD 1,300 to as high as USD…
What the company said
Divyashakti Ltd has informed the stock exchanges that it has decided to temporarily reduce its production levels with effect from 29 September 2026. The company says this operational measure is meant to align production with prevailing demand, input costs, raw material availability and logistics conditions.
The cost pressures it lists
- US tariffs: with effect from 1 September 2026, additional tariffs of 12.5% and 25% plus approximately 4% countervailing duty (CVD) on affected Indian-origin products, taking the overall effective duty burden to approximately 41%.
- Crude oil: prices have risen from around USD 45 per barrel to approximately USD 108 per barrel, pushing up the cost of petroleum-based and other key raw materials.
- Ocean freight: rates have risen from approximately USD 1,300 per container to as high as USD 9,000 per container, making exports considerably more expensive and contributing to delays in dispatches.
What it means for the business
The higher landed cost has reduced the competitiveness of these products in the US market and put pressure on the company's export volumes, selling prices and margins. The company says it has continued to absorb a significant portion of the cost increases, but it has become increasingly difficult to pass on the full increase to customers. As a result, margins and cash flows remain under considerable pressure.
What the company plans to do
It will monitor the international trade environment and geopolitical situation, raw material and consumable prices, container availability, freight rates and market conditions. As these stabilise and costs move towards more sustainable levels, the company will review the situation and progressively restore normal production levels.
What to track
- Any update on how and when production levels are restored
- Movement in US tariff levels and in ocean freight rates
- Whether the company is able to pass on higher costs to customers
- The trend in raw material and consumable prices
More numbers
- Additional US tariff on affected Indian-origin products12.5%
- Additional US tariff on affected Indian-origin products25%
- Countervailing duty (CVD), approximately4%
- Overall effective duty burden, approximately41%
- Crude oil price, earlier level per barrelUSD 45 per barrel
- Crude oil price, current level per barrelUSD 108 per barrel
- Ocean freight, earlier rate per containerUSD 1,300 per container
- Ocean freight, high rate per containerUSD 9,000 per container
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