Microsoft PowerPoint - Union Budget

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Analysis of Union Budget 2008-09 Research

1 Analysis of Union Budget Research team Birla Sun Life AMC Ltd 29 th Feb 08 1

2 Economic Survey: highlights GDP growth rate expected at 8.7% in v/s 9.6% in Agricultural growth is at 2.6% vis-à-vis 3.8% in Manufacturing growth is at 9.4 % vis-à-vis 12% in Maintaining growth at 9 per cent will be a challenge and raising it to two digits will be an even greater one - Economic Survey Gross domestic savings as a % of GDP has grown from 29.8% in to 35.6% in Gross investment to GDP has grown from 28.2% in to 36.3% in

3 Economic Survey: highlights Containing inflation while sustaining growth primary Govt. concern Inflation expected to decline from 5.6% in to 4.1% in Headline inflation on 16 th February, 2008 was 4.89% Tax to GDP seen improvement Tax to GDP has improved from 11.4% in to 12.5% in State finances improve distinctly States now enjoy a revenue surplus of 0.3% and fiscal deficit of 2.3% of GDP 3

4 Government Finances RE B E (Rs. Cro re ) 1. Re v e n u e re c e ip ts (a +b ) 3 0 5, , , , ,9 3 5 (a ) Ta x re v e n u e 2 2 4, , , , ,1 5 0 (b ) No n -ta x re v e n u e 8 1, , , , , Re v e n u e e x p e n d itu re 3 8 4, , , , ,1 1 9 (a ) In te re s t p a ym e n ts 1 2 6, , , , , Re v e n u e d e fic it (2-1 ) 7 8, , , , , Ca p ita l re c e ip ts 1 9 2, , , , ,7 2 4 (a ) R e c o ve ry o f lo a n s a 6 2, , , , ,4 9 7 (b ) O th e r re c e ip ts (m a in ly P S U d is in ve s tm e n t) 4, , , ,1 6 5 (c ) Bo rro win g s a n d o th e r lia b ilitie s d 1 2 5, , , , , Ca p ita l e x p e n d itu re 1 1 3, , , , , To ta l e x p e n d itu re [2 +5 =6 (a )+6 (b )] 4 9 8, , , , ,8 8 3 (a ) P la n e xp e n d itu re 1 3 2, , , , ,3 8 5 (b ) No n -p la n e xp e n d itu re 3 6 5, , , , , Fis c a l d e fic it [ (a )-4 (b )] 1 2 5, , , , , P rim a ry d e fic it [7-2 (a )=8 (a )+8 (b )] (1,1 4 0 ) 1 3,8 0 5 (7,6 9 9 ) (2 8,3 1 9 ) (5 7,5 2 1 ) Revenue receipts expected to increase by 14.8%, revenue expenditure by 11.8% FM is hopeful of maintaining 8.8% GDP growth 4

5 Government Finances Fiscal deficit Revenue deficit RE BE FM is projecting a fiscal deficit of 2.5% of GDP in This does not take into account the Rs. 60,000crs debt waiver to farmers and the impact of the 6 th Pay Commission. If we factor in Rs. 20,000crs on account of the debt waiver (Rs.60,000crs to be provided over a period of 3 years) and an additional Rs. 25,000crs (internal estimates) on account of the Pay Commission, the fiscal deficit becomes almost Rs. 180,000crs, it would translate into a fiscal deficit of 3.4%. 5

6 Key Taxation Proposals Peak customs duty unchanged General CENVAT on all goods reduced from 16% to 14% Short term capital gains tax increased from 10% to 15% STT paid now treated business expense instead of earlier set off provision against tax liability Commodity transaction tax to be introduced on the same lines as STT Central sales tax reduced from 3% to 2% from Apr 08 Banking and Cash Transaction Tax to be withdrawn from Apr 09 Corporate tax and dividend distribution tax unchanged Direct tax slab restructured as: Upto Rs.1.5 lakhs - nil (increased from Rs.1.1 lakh earlier) Rs % Rs % Rs.5 lakhs and 30% ( net gain of Rs.55,000 to tax payers at highest slab) 6

7 Fillip to the debt markets Proposal to launch exchange traded interest rate futures Develop a transparent credit derivatives market Exempt debt instruments issued in demat form and listed on a stock exchange from TDS 7

8 Budget impact - debt markets Participation of banks in the secondary market of corporate bonds will increase after removal of TDS When the adjustment is made for the debt waiver to farmers and pay commission the current deficit figures will deteriorate. This will be negative for the GSec market No comment on inclusion of Oil Food and fertilizer bonds as part of SLR is good for the Gsec market We feel that Corporate bonds should outperform GSecs 8

9 Sector Impact 9

10 Agri-Inputs Budget Impact: Positive Sector outlook: Positive Fertilizer subsidy provided at Rs.31,000 crs for against Rs.22,000crs in Reduction in custom duty to 5% from 7.5% on phosphoric acid and 2% from 5% on sulphur. R&D tax benefit to seeds manufacturing companies. Inclusion of seeds in VAT list - marginally negative for seed companies. Key beneficiaries: Coromandel, Advanta, Kaveri seeds, United phosphorus, Tata Chemicals, Jain Irrigation. Analyst: Paresh Khandelwal 10

11 Automobiles Budget Impact: Positive Sector outlook: Positive Excise duty cut to 12% from 16% for: Small cars Two wheelers/ three wheelers Buses and chassis Change in the income tax slabs to improve disposable income in the hands of the customers. Increase in agriculture focus loan waiver, thrust on irrigation and further increase in agriculture credit to support tractor segment. Key beneficiaries: Maruti, Tata Motors, Ashok Leyland, Bajaj Auto, Hero Honda, Mahindra & Mahindra Analyst: Achala Kanitkar 11

12 Banking Budget Impact: Neutral Sector outlook: Positive Loan waiver to marginal and small farmers One time settlement giving 25% rebate Loan waivers likely to be reimbursed by government through budgetary support. It is sentimentally negative though it would not impact EPS and Net worth of banks. Total amount loans to be waived: Rs.50,000crs OTS scheme: Rs.10,000crs Banking and cash transaction tax to be removed from Apr 09. Key companies impacted: All PSU banks Analyst: Ajay Garg 12

13 Cement Budget Impact: Marginally Negative/ Neutral Sector outlook: Positive Excise duty on bulk cement increase from Rs. 400 / T to higher of Rs. 400/ T or 14% ad valorem Excise duty on clinkers increased from Rs. 350/T to Rs. 450/T Bulk Cement and Clinker form a very small part of overall sales of cement companies hence the impact is minimal Key companies impacted: All cement companies Analyst: Vineet Maloo 13

14 Education Budget Impact: Positive Sector outlook: Positive Education Sector allocation up 20% Y-o-Y at INR 344 bn. Of this, Rs 131 bn is allocated for the Sarva Siksha Abhiyan (SSA) Focus also on the upper primary, retention and quality of education Key beneficiaries: Educomp, Everonn, NIIT and Core Projects Analyst: Atul Penkar 14

15 FMCG Budget Impact: Neutral Sector outlook: Positive Increase in excise for non-filter cigarettes to bring parity with filter cigarettes. Marginal impact on ITC; would influence its long-term strategy of converting beedi-smokers. Excise cut on tea and coffee mixes to 8% from 16% Rs.40crs allocation under Special Purpose Tea fund for re-plantation Rs.20crs to Tea Research institute no impact Key beneficiaries: Tata Tea, Nestle, HUL Marginally negative: ITC Analyst: Dipika Chheda / Sanjay Chawla 15

16 Hotel Budget Impact: Positive Sector outlook: Neutral Tax exemption to 2,3 & 4 star hotels for new properties established in UNESCO recognized areas. The move should be positive for companies in the 4 star space. Key beneficiaries: Indian Hotels, Kamath Hotels Analyst: Paresh Khandelwal 16

17 Infra / Capital Goods Budget Impact: Neutral Sector outlook: Positive Higher budget allocation under key schemes like Bharat Nirman etc. National fund for power transmission & distribution to be set up Customs duty on project imports reduced from 7.5% to 5%. A Additional 4% special CVD to be imposed on few specified power projects To open bidding for 5 more UMPP subject to support from various states Double taxation on dividend distribution removed Key beneficiaries: BHEL, L&T, Crompton & Greaves, IVRCL, Gammon Analyst: Ankit Sancheti 17

18 Information Technology Budget Impact: Neutral Sector outlook: Neutral Introduction of 12% service tax on customised software Increase in excise duty on packaged software to 12% from 8% Service tax on customised software applicable on domestic sales and not applicable to exports Both service tax and excise duty are pass through and hence no impact Key beneficiaries: None Analyst: Atul Penkar 18

19 Media & Telecom Budget Impact: Neutral Sector outlook: Positive Specified parts of set-top boxes, namely SMPS power board and IR module, for use in manufacture of set-top box, have been exempted from customs duty. Customs duty on convergence products to be reduced from 10% to 5% Wireless data modems: exempt from excise duty Telecom Tower companies were expecting infrastructure status which did not come through. Key beneficiaries: WWIL, Dish TV, none in telecom. Analyst: Atul Penkar / Mahesh Patil 19

20 Metals Budget Impact: Neutral Sector outlook: Positive Reduction in Customs duty on Iron & Steel scrap and Aluminium scrap from 5% to nil Neutral for large steel companies but negative for merchant sponge iron producers Positive for scrap users, specially stainless steel makers Neutral for Aluminium. Key beneficiary: Jindal Stainless Analyst: Vineet Maloo 20

21 Oil & Gas Budget Impact: Neutral Sector outlook: Positive Excise duty structure on unbranded petrol and diesel changed to specific rate structure. Petrol Existing New Diesel Existing New Advalorem (6%) (Rs./ltr) Advalorem (6%) (Rs./ltr) Specific (Rs/ltr) Specific (Rs/ltr) Total (Rs/ltr) Total (Rs/ltr) Change is neutral on current crude and retail prices. Key beneficiaries: None Analyst: Achala Kanitkar 21

22 Pharmaceuticals Budget Impact: Neutral Sector outlook: Neutral Excise Duty reduced from 18% to 6% Relatively beneficial for MNCs; domestic cos have shifted to excise free locations Custom duty on specified life saving drugs and their bulk cut from 10% to 5% Custom duty reduced from 30% to 20% on Vitamin premixes for animal food and poultry Weighted deduction on outsourced research raised to125% Hospitals set up in Tier II and Tier III towns provided tax holiday for 5 years Key beneficiaries: MNC pharmaceutical companies Analyst: Ajay Argal 22

23 Paper Budget Impact: Positive Sector outlook: Positive Reduction in excise duty for certain units importing pulp from 12% to 8%. Reduction in excise duty on certain types of papers from 12% to 8%. Key beneficiaries: Ballarpur Industries Analyst: Paresh Khandelwal 23

24 Disclaimer The information contained in this article is not a complete presentation of every material fact regarding any industry/security or the fund and is neither an offer for units nor an invitation to invest. This communication is meant for use by the recipient and not for circulation/reproduction without prior approval. Risk Factors: Mutual Fund investments are subject to market risks and the NAVs of the schemes may go up or down depending upon the factors and forces affecting the securities market. Past performance of the schemes managed by Birla Sun Life Asset Management Company Limited is not necessarily indicative of future performance of the schemes. Please read the offer document carefully before investing. 24

25 Thank You 25

Microsoft PowerPoint - FY Q Results.ppt [互換モード]

Microsoft PowerPoint - FY Q Results.ppt [互換モード] FY3-2012 3 rd Quarter Results Tokyo Stock Exchange / Nagoya Stock Exchange 8593 Results announcement date : February 3, 2012 Inquiries: Corporate Communications Department Tel 81+3-6865-3002, Fax: 81+3-6895-5306