Budget Review 2012 FOR NRIs 1 March 2011

Budget at a glance
The Union Budget 2011-12 highlighted an increased thrust on the
` Crore
expenditure outlay for infrastructure, agriculture and social sectors.
2010- 2010- 2011-
2011 2011 2012 The increase in budget allocation to infrastructure projects by 23%
Budget Revised Budget
Estimates Estimates Estimates y-o-y, 24% y-o-y for education sector and increase in farm credit by
Revenue
Receipts
682212 783833 789892 26.7% y-o-y is positive in the medium to longer term as it

addresses the nation’s need to meet its future infrastructure and

Capital Receipts 426537 432743 467837
social needs. In the short term though, the lower budgeted
Total Receipts 1108749 1216576 1257729
expenditure for subsidies, especially for oil products and 25%
Non-Plan
735657 821552 816182 increase in tax revenue seems like a stretched target in the current
Expenditure
On Revenue
Account
643599 726749 733558 environment.
Interest
248664 240757 267986
Payments
On Capital
92058 94803 82624 The reduction in the budgeted subsidy bill especially for oil and food
Accounts
products, pointed out to a controlled de-regulation of diesel and other
Plan
373092 395024 441547
Expenditure petroleum products or roll out of NBS scheme for urea which seems difficult
On Revenue
315125 326928 363604
Account to achieve due to the current inflationary trends as well as the recent geo-
On Capital
57967 68096 77943 political pressures. We believe that the overall fiscal deficit target of 4.6%
Accounts

Revenue Deficit 276512 269844 307270

for FY12 seems stretched and the overall net borrowing target of ` 343,000
Revenue Deficit
(4.0) (3.4) (3.4) crore has an upside risk, primarily due to the underlying assumptions of a
(% of GDP)
Fiscal Deficit 381408 400998 412817 controlled subsidy bill, divestment to the tune of ` 40,000 crore, flat non-
Fiscal Deficit (% plan expenditure and no scope for one time wind falls similar to 3G and
(5.5) (5.1) (4.6)
of GDP)

Source: Union Budget 2011-12, HISL Advisory BWA auctions.

Fiscal deficit % to GDP

From a medium term point of view though, the budget had various positive

announcements particularly on education, infrastructure, political

9.3 8.9
10
8.1 8.2 willingness to roll out GST, food security bill and DTC at the earliest,
8 6.7 6.7 reduction in corporate surcharge to 5% from 7.5% and direct transfer of
6.0
6 4.9 5.1 subsidies which is likely to result in efficient subsidy utilization. However,
4.6
3.8 4.1
3.5
4 timely and efficient implementation of the above mentioned steps would be

2
the positive trigger to watch out for in the medium term.
FY02 FY05 FY08 FY11Re FY14BE

Source: Union Budget 2011-2012, HISL Advisory

From a market perspective, we believe that the Union Budget 2011-

12 largely remains neutral as the market participants would have

Inflation Trends
hoped to hear more positive updates on FDI per se in selected

sectors and concrete steps of fund mobilization to achieve the

18

8
targeted fiscal and revenue deficit. Hence the budget passes out to

(2) be a non event as far as market dynamics are concerned and soon

(12) the market would be looking for further global cues and domestic

events in the near term future.

Fo o d A rticles P rimary A rticles
Fuel Gro up
Source: Bloomberg, HISL Advisory

Page 1
What we Like

• FIIs who meet the KYC requirements are permitted to invest in SEBI registered mutual funds, dealing in equity

schemes. This would enable Indian mutual funds to have direct access to foreign investors and widen their

investment base.

• FII limit for investment in corporate bonds with residual maturity of 5 years, issued by the companies in

infrastructure sectors is being raised by USD 20bn to a total of USD 40bn. This will allow the country to fill-in the gap

of 12th five year plan, which has total fund requirements of USD 1tn and will also encourage the private players to

invest in the infrastructure segment.

• The government undertaking are allowed to issue tax free bonds of ` 30,000 crore in order to enhance the

infrastructure development like railways, ports, housing and highways.

• SIDBI has been allocated ` 5,000 crore to fund any shortfall of banks on priority sector lending and NABARD has

been allocated ` 3,000 crore in order to finance 15,000 cooperative societies and about 3, 00,000 handloom

weavers. This will enable the government to generate an all inclusive growth specifically for micro and small

enterprises.

• An allocation of ` 52,000 crore for the education sector, an increase of 24% over last year will help to take

advantage of anticipated demographic dividend.

• Increase in farm credit target by 26.7% to ` 475,000 crore will help to improve the agricultural productivity and yield

over the medium term, helping to address structural supply side concerns to a certain degree.

• Increased political will for the implementation of DTC and GST to be a positive step for both individuals and corporate

in medium to long term.

• Improved thrust on investments on cold chain logistics including 15 mega food parks would help to address supply

chain bottle necks.

What could have made it better…

• Concrete announcements on the FDI front in respect of retail and insurance

• Direct initiative by the government to curb the current high degree inflation and address supply side constraints

• Detailed clarification over lower subsidy allocations and flat non planned expenditure in order to assess the overall

fiscal deficit figure of 4.6% of GDP which currently seems bit stretched, hence net market borrowings of ` 343,000

crore is also lower than our expectations and poses an upside risk

• Clarification over achievement of divestment target of ` 40,000 crore also poses risk as the government has achieved

only 56% of the divestment target last year

• Any specific announcements towards increase in irrigation projects points to continued dependence on rain god

“Indra” to curtail supply side food inflation constraints.

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 Financial Statement
` Crore
2010-2011
2009-2010 2010-2011 Budget 2011-2012
Particulars Revised
Actual Estimates Budget Estimates
Estimates
Revenue Receipts 572811 682212 783833 789892
Tax Revenue 456536 534094 563685 664457
Non-tax Revenue 116275 148118 220148 125435

Capital Receipts 451676 426537 432743 467837

Recoveries of loans 8613 5129 9001 15020
Other receipts 24581 40000 22744 40000
Borrowings and other liabilities 418482 381408 400998 412817

Total Receipts 1024487 1108749 1216576 1257729

Non-Plan Expenditure 721096 735657 821552 816182

On Revenue Account 657925 643599 726749 733558
Interest Payments 213093 248664 240757 267986
On Capital Accounts 63171 92058 94803 82624

Plan Expenditure 303391 373092 395024 441547

On Revenue Account 253884 315125 326928 363604
On Capital Accounts 49507 57967 68096 77943

Total Expenditure 1024487 1108749 1216576 1257729

Revenue Expenditure 911809 958724 1053677 1097162
Of Which Grant for creation of
31317 90792 146853
Capital Assets
Capital Expenditure 112678 150025 162899 160567

Revenue Deficit 338998 276512 269844 307270

(5.2) (4.0) (3.4) (3.4)

Effective Revenue Deficit 245195 179052 160417

(3.5) (2.3) (1.8)

Fiscal Deficit 418482 381408 400998 412817

(6.4) (5.5) (5.1) (4.6)

Primary Deficit 205389 132744 160241 144381

(3.1) (1.9) (2.0) (1.6)

Source: Union Budget 2011-2012, HISL Advisory

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Sector wise expectations from FY12 Budget and Implications

Agriculture sector Positive

Budget Announcement Impact Impact on companies
Positive sentimentally for agri Agri input companies
Increase in farm credit target from ` 375,000 crore to
input sectors such as particularly farm equipment
` 475,000 crore to help improve productivity and input fertilizers, tractors, seeds and companies and fertilizer
usage in the agriculture sector
pesticides companies to benefit
Interest subvention proposed to be enhanced from 2% Fertilizer, pesticides and seed
Positive for fertilizer, pesticides
to 3% for providing short term crop loans to farmers companies to benefit over a
and seed companies
who repay their farm loan on time longer period of time
Basic custom duty reduction from 7.5% to 5% for Negative for domestic micro-
Jain Irrigation
micro-irrigation system irrigation equipment providers
Allocation of funds for bringing about green revolution
in eastern part of country to help improve productivity - -
and yields over a medium term point of view

Automobile / Tractors Positive

Budget Announcements Impact Impact on companies
Positive as no rise in excise
No roll back of excise duties All Auto companies
duty
Exemption from basic custom duty and special CVD in Positive for fuel efficient hybrid
Mahindra and Mahindra
critical parts for Hybrid vehicles vehicles
Farm credit increased by ` 100000 crore to ` 475000 Positive for tractor industry as it Mahindra and Mahindra and
lakh crore will spurt tractor demand Escorts

Aviation Negative
Budget Review Impact Impact on companies
Rates of service tax on travel by air revised; Domestic Negative for airlines since it SpiceJet, Kingfisher and Jet
travel by ` 50 and International travel by ` 250 would hurt airline demand Airways

Capital Goods / Power Positive

Budget Review Impact Impact on companies
Excise Duty exemption for domestic suppliers
Positive for power equipment
producing capital goods needed for expansion of BHEL, L&T, Thermax
players
existing mega or ultra mega power projects

Plan allocation for power sector increased to ` 66,383

Positive for power, distribution All companies in the power
crore for FY12 and is revised downwards for FY11
and equipment companies sector
from ` 60,751 crore to ` 45,668 crore

Plan allocation for new and renewable energy Neutral for renewable energy
Tata Power, Suzlon, Moser
increased to ` 2,150 crore for FY12 from ` 1,950 companies as the increase is
Baer, Lanco Infratech
crore earlier and revised to ` 2,492 crore in FY11 marginal
Positive for the companies
Positive for Power Grid,
A concessional rate of 5% basic customs duty, 5% importing these products as the
Siemens (as it would be able to
CVD and Nil SAD is being extended to parts and procurement price would reduce
export from its international
components for manufacture of 23 specified high and negative for domestic
manufacturing units)
voltage transmission equipments companies as they would have
Negative for Crompton Greaves
to compete with foreign players
Basic customs duty on solar lantern/ lamps reduced Negative for domestic
Moser Baer
from 10% to 5%. companies
Full exemption from basic customs duty is provided Positive for companies
for toughened glass and silver paste imported for manufacturing solar cells / Moser Baer
manufacture of Solar cells/Modules Modules
Extension of sunset clause for tax holiday for power
sector to March 2012 from March 2011, which Positive for companies Adani Power, JSW Energy, JP
includes power generation, transmission and commissioning projects by Power Vetnures, NTPC, Power
distribution lines and renovation and modernization of March 2012 Grid
existing network of transmission or distribution lines

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Cold Storage Positive
Budget Review Impact Impact on companies
Positive for companies setting
Capital Investment in cold storage chains would be
up cold chains and for Blue Star, Siemens India,
eligible for viability gap funding of the Finance
companies providing these Voltas
Ministry and has been granted infrastructure status
services
Cold storage/cold room (including for farm level pre-
cooling) or industrial projects for preservation,
storage or processing of agricultural, apiary,
Blue Star, Siemens India,
horticultural, dairy, poultry, aquatic and marine Positive for domestic companies
Voltas
produce and meat is being notified under project
imports. These projects will attract a customs duty of
5%.

Full Central Excise duty exemption for air conditioning

equipment and panels of 3 Tonne air-conditioning
capacity and above, and refrigeration panels required
for the installation of a cold storage, cold room or Positive as this would reduce Blue Star, Siemens India,
refrigerated vehicle for the preservation, storage, the prices Voltas
transport or processing of agricultural, apiary,
horticultural, dairy, poultry, aquatic and marine
produce is being provided.

Cement Neutral
Budget Announcements Impact Impact on companies
Marginally negative as it will
Excise duty structure revamped, with excise duty on
increase prices by ` 0.70 - 3
ex-factory basis against MRP earlier along with Neutral to cement companies
per 50 kg bag and the same will
specific duty of ` 160 per MT (` 8 per bag).
be passed on
Positive for cement companies
Custom duty on pet coke and gypsum to reduced to
as cost of imported raw All cement companies
2.5%
material to decline

FMCG Neutral
Budget Expectations Impact Companies to be impacted
GST roll-out is likely to stay on course Positive All FMCG companies
Allocation to Bharat Nirman Programme increased by Positive as this would increase
` 10,000 crore and wage indexation of MGNREGA the disposable income with All FMCG companies
scheme rural population
Negative for companies as the
Products attracting 1% concessional excise rate
prices would increase for
without CENVAT credit facility which were earlier
consumers affecting the
exempt or attracted nil duty
demand
• Margarine Britannia, Zydus Wellness
• Pasta, sphagetti, macaroni, noodles etc., Nestle, ITC, GSK Consumer,
tapioca and substitutes HUL
• Coffee or tea pre mixes, sauces, ketchup and
the like, soups and broths and preparations,
all kinds of food mixes, including instant food HUL, Nestle, Tata Global
mixes, betel nut product known as “ supari”, Beverages, Tata Coffee
ready to eat packaged food, milk containing
edible nuts with sugar or other ingredients
• Fruit pulp or fruit juice based drinks,
Dabur, Nestle, Parle Agro,
Flavoured milk of animal origin, Tender
Zydus Wellness
coconut water
• Tooth powder Colgate, Dabur
Minimum Alternate Tax (MAT) raised to 18.5% of Marginally Negative for Dabur, Marico, Godrej
book profits (from 18.0%) companies paying MAT Consumer Products
Allocation of ` 300 crore to bring 60,000 hectares Positive for companies doing Ruchi Soya Industries, Godrej
under oil palm plantations plantation of Palm Oil Industries

Page 5
Financials and Real Estate Positive
Budget Announcement Impact Impact on companies
Positive, as the government
In order to resolve the supply side constraints,
manages the supply side
augmentation of storage capacity through private
constraints well, we may see
entrepreneurs and warehousing corporations has been
slow down in further tightening
fast tracked. In view of recent episode of inflation, All banks and NBFCs
in the monetary policy and with
stated a need for State Governments to enforce a
increase in government
reformed Agriculture Produce Marketing Act as well as
spending, the current liquidity
creation of modern storage capacity.
situation will also ease out

Positive as supports the public

` 6,000 crore to be provided during 2011-12 to sector banks to maintain the
enable public sector banks to maintain a minimum of credit off take above 20% as All public sector banks
Tier I CRAR of 8%. well as strengthing the balance
sheet size
Positive as supports the
` 500 crore to be provided to enable Regional Rural Regional Rural banks to support Indirectly to all public sector
Banks to maintain a CAR of at least 9% as on March rural developments as well as banks as they lend to Regional
31, 2012. strengthing the balance sheet Rural Banks
size for these banks

Positive, with the new reforms

in banking sector, the system
To take the process of financial sector reforms
will become more transparent
further, various legislations proposed in 2011-12.
as well as user friendly. For
Amendments proposed to the Banking Regulation Act All banks and NBFCs
new banking license, the
in the context of additional banking licences to private
discussion paper is already in
sector players
process and more clarity can
emerge in near future

Positive, transparent and

“India Microfinance Equity Fund” of ` 100 crore to be effective lending towards micro
created with SIDBI. Government considering putting finance groups would add in It would be impacting the
in place appropriate regulatory framework to protect development of rural and semi banks being a preliminary
the interest of small borrowers. Also, “Women’s rural areas and would protect lender as well as micro finance
SHG’s Development Fund” to be created with a corpus the interest of borrowers, companies
of ` ` 500 crore lenders as well as investors at
the same time

` 5,000 crore to be provided to SIDBI for refinancing

incremental lending by banks to Small and Medium
Enterprises. ` 3,000 crore to be provided to NABARD
to provide support to handloom weaver co-operative Positive, this will further
societies which have become financially unviable due enhance SME lending and boost
All banks and NBFCs
to non-repayment of debt by handloom weavers up the over all development of
facing economic stress. Public sector banks to achieve the economy
a target of 15% as outstanding loans to minority
communities under priority sector lending at the
earliest.

Liberalising the existing scheme of interest subvention All banks and financial
of 1% on housing loans by extending it to housing Positive, it will promote the institutions including GIC
loan up to ` 15 lakh where the cost of the house does affordable housing schemes Housing, LIC Housing, HDFC as
not exceed ` 25 lakh from the present limit of ` 10 further well as Affordable pricing Real
lakh and ` 20 lakh respectively. Estate Players like HDIL
All banks and financial
Considering the increase in prices of residential
Positive, it will promote the institutions including GIC
properties in urban areas, enhanced the existing
affordable housing schemes Housing, LIC Housing, HDFC as
housing loan limit from ` 20 lakh to ` 25 lakh for
further well as Affordable pricing Real
dwelling units under priority sector lending.
Estate Players like HDIL

Page 6
Gems and Jewellery Neutral
Budget Announcements Impact Impact on companies
The Concessional excise duty of 1% without CENVAT
credit facility is being imposed on the following goods,
namely:-
Negative for gems and Titan, Gitanjali Gems, Rajesh
(i) Articles of jewellery manufactured or sold under a
jewellery retail companies Exports, Shrenuj
brand name
(ii) Branded articles of gold, silver, platinum,
palladium, rhodium, iridium, osmium, or ruthenium
Excise duty is being reduced on serially numbered
gold bars, other than tola bars, made starting from Positive for gold refining
Rajesh Exports
the ore/concentrate stage in the same factory from companies
` 280 per 10 grams to ` 200 per 10 grams
A concessional excise duty rate of ` 200 per 10 grams
Positive for gold refining
is being extended to serially numbered gold bars Rajesh Exports
companies
manufactured by refining of gold dore bar

An import duty structure of ‘Nil basic customs duty,

CVD of ` 140 per 10 gram and Nil SAD is being
prescribed for gold dore bars having gold content not Negative for gold refining
exceeding 80%, imported for refining and companies as it would increase
manufacturing serially numbered gold bars in India. cost of procurement. However,
Customs duty on gold ores and concentrates for use this would lead increased Rajesh Exports
in manufacture of gold is being fully exempted. These procurement of gold ores than
goods will, however, be levied concessional CVD at gold dore leading to higher
the rate of ` 140 per 10 gms of gold content. Gold ore value addition
is also being fully exempted from additional duty of
customs (special CVD).

Basic customs duty on rhodium is being reduced from Positive for all gold and Titan, Gitanjali Gems, Rajesh
10% to 2% jewellery companies Exports, Shrenuj

Infrastructure Positive
Budget Announcements Impact Impact on companies
Increase in infrastructure development funds by Positive as boost to Positive for all infrastructure
` 2000 crore infrastructure projects companies
More investments in infra Positive for all infrastructure
Allocation of ` 214,000 crore towards infrastructure
projects companies
Quality as well as funding in Positive for all infrastructure
PPP participation encouraged
infra projects companies
Indication of more
IIFCL disbursement target to increase by ` 5000 crore infrastructure projects in road, Positive for all infrastructure
to ` 25,000 crore rail, power, water, was companies
management
Funding of infrastructure
projects from public through Positive for all infrastructure
Infrastructure bonds of ` 30000 crore will be issued
public participation by giving companies
tax sops

Direct foreign funds would be

FII limit in investment in corporate infrastructure Positive for all infrastructure
available to infrastructure
bonds to be raised companies
companies

Page 7
IT Neutral
Budget Announcements Impact Impact on companies
Negative for Mid- cap IT
No extension of the sunset clause on tax exemption
Companies tax rate is likely to Already factored in the
for software technology parks under Sec. 10A / B
go up in FY12, that are estimates of IT Companies.
which is due to expire in March 2011
relatively less prepared for SEZ
Allocation for education increased by 24% over Positive for the education Educomp,NIIT Ltd, Everonn and
current year Sector Core Project
Increase in MAT from 18% to 18.5% for units Neutral:This does have a cash
All IT companies
operating in SEZ flow impact; though P&L neutral
Positive: the reduction in
Surcharge on domestic companies reduced from 7.5% surcharge would lead to lower
All IT companies
to 5%. tax outgo for domestic IT
companies
Rolta and Infotech Enterprise
Allocation for defence at ` 1.64 lakh cr and FY12 Positive for companies catering
solutions and vakarangee
defence capex seen at ` 69,199 cr to defence
software

Logistics Positive
Budget Review Impact Impact on companies
A Tariff rate of 5% is being prescribed on Letters,
envelops, lettercards and postcards. However, they Negative for couriers Gati
would attract 1% duty without CENVAT credit facility.
Augmentation of storage capacity through private
entrepreneurs and warehousing corporations has been
Positive: attract fresh
fast tracked. Capital investment in creation of modern Gateway Distriparks and Gati
investments into the sector
storage capacity will be eligible for viability gap
funding of the Finance Ministry.
Full exemption is being extended on imports of spares
and consumables required for repair of Positive: no import duty on ship
Shipping Corporation of India
ocean going vessels by ship owners for such vessels parts
which are registered in India.

Media Positive
Budget Review Impact Impact on companies
Colour, unexposed cinematographic film in jumbo rolls
of 400 ft and 1000 ft is being fully exempted from UTV Software and EROS
Positive for movie producers
Central Excise duty so that imports of this item are International media
not required to pay CVD
Exemption is being provided to motion pictures,
Positive for gaming companies UTV Software
music, gaming software for use on gaming consoles.

Mining Sector Negative

Budget Announcement Impact Impact on companies
Increase in export duty of iron ore lumps and fines
Sesa Goa and NMDC to be
from 15% and 5% respectively to 20% to protect Negative for iron ore exporters
impacted negatively
natural resource of the country
Positive for value addition
Exemption of export duty on iron ore pellets aimed at
exporters and to encourage -
encouraging value addition within the sector
capacity building in the same.
Basic custom duty on ores increased from 2% to Marginally negative for ore
-
2.5% mining companies.
Positive for companies
Basic custom duty on stainless steel scrap is being
manufacturing through the EAF -
fully exempted
route.

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Social Reforms Positive
Budget Announcement Impact Impact on companies
Positive for the economy on a
Allocation for education increased by 24%. Allocation
medium term to realize the
under Sarva Siksha Abhiyan increased by 40% to ` -
benefits of the demographic
21,000 crore
dividend

Linking of NREGA to CPI to help provide real income Positive for wealth distribution
-
to rural population and protect them from inflation over a medium term

Increase in wages of anganwadi workers from ` 1,500

Positive for wealth distribution
to ` 3,000 per month and for anganwadi helpers to -
over a medium term
` 1,500 from ` 750

Pharma Neutral
Budget Expectations Impact Impact on companies
Allocation to Ministry of Health and Family Welfare Positive: This will improve
have been increased by 20% to 26,760 crore for FY12 healthcare access in the Positive for the pharma sector
from ` 22,300 crore. country
Neutral: This is likely to impact
Central Excise duty rate of 4% is being increased to formulation companies, which
All pharma companies
5% they will pass it on to the
customers
Negative: The increase in
Tax on all services provided by hospitals with 25 or service tax for private hospitals
Fortis Healthcare and Apollo
more beds with facility of central air conditioning will will lead to increase in patients
Hospital
have pay service tax of 5% costs admitted to private
hospitals
Cipla, Ipca Labs, Ranbaxy,
Increase in MAT from 18% to 18.5% for units Neutral: Impact on cash flow,
Cadila healthcare, Divis's
operating in SEZ not reported profits
Lab,Aurobindo Pharma

A Concessional import duty regime of 5% basic

customs duty is being prescribed on specified raw
Positive for the sector Opto Circuits
material for the manufacture of syringes, needles,
catheters, cannulae on actual basis

Endovasular Stents are being fully exempted from Positive for the stents
Opto Circuits
basic customs duty of 5% manufacturing companies

Marginally negative for Vaccines

Vaccines to attract 1% excise duty GlaxoSmithline Pharma
manufacturing companies

Retail Negative
Budget Expectations Impact Impact on companies
Outright exemption from additional duty of customs of
4% provided for goods imported in pre-packaged
Positive as this would reduce Titan, Pantaloon Retail,
form and intended for retail sale and certain specified
cost of procurement Shoppers Stop
goods namely, ready-made garments, mobile phones
and watches
Skumar Nationwide,
Negative as this would increase
Raymonds, Provogue,
Levy of 10% Central Excise duty on branded apparels the garment prices affecting the
Pantaloon Retail, Shoppers
demand
Stop
Positive for companies setting
Capital Investment in cold storage chains would be
up these chains and for Reliance Industries, Pantaloon
eligible for viability gap funding of the Finance
companies providing these Retail, Shoppers Stop
Ministry and has been granted infrastructure status
services

Page 9
Textiles Neutral
Budget Expectations Impact Impact on companies
Positive for companies
Neutral as the increase is expanding capacities like Alok
Plan allocation for textile sector increased marginally
marginal and would not have a Industries, Vardhman Textiles,
to ` 5000 crore from ` 4725 crore
significant impact on the sector Raymond, Sangam India,
RSWM

The optional scheme for payment of excise duty on

readymade garments and textile made up, which bear
a brand name or are sold under a brand name would
no longer be available. An excise duty of 10% is Negative as this would lead to
Raymond, Skumar Nationwide,
imposed on such goods without cenvat credit facility. price increases affecting the
Provogue
The general SSI exemption has been extended to demand of the products
such goods. The tariff value for charging duty on
readymade garments and textile made-ups would be
at 60% of the retail sale price.

Negative for Reliance Industries

Basic customs duty on polytetrametylene ether glycol Negative for companies
Positive for JBF Industries, Alok
(PT MEG) reduced from 7.5% to 5% subject to actual supplying the products and
Industries, Indo Rama
user condition. positive for the buyers
Synthetics, Garden Silk

Basic customs duty on Rayon grade wood pulp Positive as this would reduce
Grasim Industries
reduced from 5% to 2.5%. cost of purchase

Basic customs duty on nylon chips, yarn and fibre

Neutral as this would have
reduced from 10% to 7.5%.
same impact on selling as well Century Enka
Basic Customs duty on caprolactum reduced from
as raw material cost
10% to 7.5%

Basic customs duty on raw silk (not thrown) of all Positive as this would reduce
Himatsingka Seide
grades reduced from 30% to 5%. cost of purchase

Neutral to Negative for

companies buying these
Excise duty of 5% has been imposed on automatic Alok Industries, Arvind Ltd,
machines for expansion as it
looms and projectile looms. Sangam India
would increase the capital cost
though marginally

Positive for companies

Excise duty on parts of 40 specified textile machinery manufacturing these products
Lakshmi Machine Works
and equipments has been reduced from 10% to 5% as the prices would reduce
affecting the demand

Urea and Fertilizer sector Positive

Budget Announcement Impact Impact on companies
Positive for the fertilizer sector
sentimentally. A concrete
NBS scheme for urea being debated on the similar announcement though is All urea companies may benefit
lines as announced for complex fertilizer. Further, awaited for the same. from the NBS policy if and
provided infrastructure status to fertilizer plants to Infrastructure status to benefit when the final announcement
boost capacity addition within the sector companies who would comes through.
undertake fresh investments in
capacity building
Positive for the producers as it
Medium term vision to move to direct subsidy transfer will help them to move to free
All fertilizer companies to
to end users to benefit fertilizer companies along with market pricing mechanism with
benefit in the long run
OMC's from direct transfer to kerosene users the government providing the
subsidy directly

Page 10
Disclaimer:
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