Budget 2013-14 Analysis by Ventura Securities

7/30/2019 Budget 2013-14 Analysis by Ventura Securities

1/42

Infrastructure Thrust

Fiscal Deficit under control

Uncertainty over GAAR

Thursday, 28 th Feb, 2013Balancing fiscal consolidation with growth

Service tax reforms

Check on expenditure

question

CAD a serious concern

Hostage to foreign inflows

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Budget in brief

The Union Budget 2013-14 promises to return the economy back to a high growth trajectory while at the sametime keeping a strict check on fiscal profligacy that the country can ill afford.

The fact that the FM was able to contain fiscal deficit to 5.2% of GDP in the current year is a remarkableachievement given the overall slow down and the runaway subsidy bill. Going into the new fiscal FY13-14the fiscal deficit has been pegged at 4.8% of GDP and this in our opinion is not an unachievable task. PChidambaram as Finance Minister exudes confidence and he has an admirable track record of deliveringon his promises.

The Finance Minister has done a great balancing act in a rather difficult year. He has promoted

Balancing fiscal consolidation with growth

2 Thursday, 28 th Feb, 2013

manufacturing industr b proposing an Investment Allowance. Further to prevent revenue leakages andaugment revenue resources he has come out with a number of innovative measures which while beingingenious evoke confidence. He has sought to promote investment in infrastructure by issue of tax freebonds, freeing up NELP blocks, referring stalled infra projects to the CCI and increasing tax holiday periodfor power sector. In addition several measures to boost investments, savings and capital markets shouldyield handsome dividends as the year rolls by.

However the resurfacing of the GAAR issue can be a big negative for the markets. Especially given the factthat the FM has gone on record to state that the CAD (Current Account Deficit) can only be bridgedthrough foreign flows constituting of FDI, FII and ECBs. With the TRC (Tax Residency Certificate) declaredinsufficient, uncertainty over the implementation of the law could lead to foreign investors turning cautiousand the momentum of the flow of funds could slow down.

I have been at pains to state over and over again that India, at the present juncture,does not have the choice between welcoming and spurning foreign investment.



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Real GDP growth rate Seems to have bottomed out

8.4% 8.5%

7.5%

8.0%

8.5%

9.0%


Whatever may be the final estimate (of the GDP), it will be below Indias potential

growth rate of 8%

6.7%

6.2%

5.2%

6.20%

5.0%

5.5%

6.0%

6.5%

7.0%

2008-09 2009-10 2010-11 2011-12 2012-13E 2013-14E



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Fiscal Deficit Reigned in to manageable levels

4.8%

5.7%

5.1% 5.2%4.8%

4.0%

5.0%

6.0%

7.0%As % of GDP


Fiscal consolidation cannot be effected only by cutting expenditure. Wherever possible, revenues must also be augmented

0.0%

1.0%

2.0%

3.0%

2010-11 2011-12 2012-13BE 2012-13RE 2013-14BE



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Subsidies Should be of lesser concern going forward

2.0%

2.5%

3.0%

200000

250000

300000

Rs. in Crore


We must redeem our promise by 2016-17 and bring down the fiscal deficit to 3%, therevenue deficit to 1.5% and effective revenue deficit to 0%

0.0%

0.5%

1.0%

.

0

50000

100000

2010-11 2011-12 2012-13BE 2012-13RE 2013-14BE

Food Fertilizers Petroleum Interest and Others Subsidies as a %of GDP (RHS)



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Market Borrowings Not extraordinarily worrying

350,000

400,000

450,000

500,000

550,000Rs. in Crore


(Apart from borrowing) There are only three ways before us: FDI, FII or External Commercial Borrowing (ECB).

50,000

100,000

150,000

200,000

250,000

300,000

2010-11 2011-12 2012-13BE 2012-13RE 2013-14BE



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Budgetary Measures

In his budgetary speech, the Finance Minister has outlined several initiatives to kick start growth, boostrevenues and target spending .

Initiatives to kick start growth; control spending

800000

1000000

1200000

1400000Rs. in Crore


The economic space that we have gained has given me the confidence to be moreambitious in 2013-14.

0

200000

400000

600000

2010-11 2011-12 2012-13BE 2012-13RE 2013-14BE

Corporation tax Income tax Wealth Tax

Customs Union Excise Duties Service Tax

Taxes of the Union Direct Indirect



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Revenue measures

In a bid to curtail revenue losses he has introduced several measures like the 1% TDS on immovableproperty, withholding tax on royalty payments, voluntary disclosure scheme for Service Tax evaders since2007 and final witholding tax on share buybacks by unlisted companies

Further there has been no revision of the income slabs and the rates which is pragmatic given thepressures on revenue. Further a tax on the super rich introduced has gone down well with the markets.A 15% Investment allowance on plant and machinery over Rs 100 crores should definitely provide a fillip toasset creation and spur investment in the manufacturing sector. This is over and above the depreciationrates prevailing.Surcharge introduced on companies earning a taxable income of Rs 10 crore or more should also help

Pragmatic and achievable


.

Pruning of the negative list to only two sectors should help increase the gamut of services liable to servicetaxBut the biggest clincher is the Voluntary Compliance Encouragement Scheme on Service tax whichproposes to tax the 10,00,000 non service tax payers out of the 17,00,000 lacs registered assessees. Thisitself should lead to a healthy collection; although the estimated amount has not been quantified.Further reduction in STT and introduction of CTT (Commodities transaction Tax) should help lower cost of transactions for traders in the equity markets.

Non Tax revenue estimates (in the form of divestment, sale of other market securities and enhanceddividends from PSEs) are also pragmatic and achievable

Wherever possible, revenues must also be augmented



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Indirect Taxes

Status quo on the normal rate of excise duty (12%), service tax rates (12%) and peak customs duty (for nonagricultura imports) maintained. Relief is from the fact that customs duty on crude oil imports was not hiked (as feared earlier).

Customs duty proposals on leather & leather goods lowered to 5% from 7.5% while concessionary period on environmental

friendly vehicles extended to FY2015. On pre forms of precious and semi precious stones duty lowered to 2% from 10% Export duty on de-oiled rice bran oil cake withdrawn 10% Duty imposed on export of raw ilmenite & 5% on upgraded ilmenite

Contributing to growth


Significant concessions provided to the aircraft MRO (maintenance, repair and overhaul) industry Raw silk duty increased from 5% to 15% Duty on steam coal and bituminous coal equalized to 2% and CVD of 2% Duty free limit on gold jewellery raised to Rs 50,000 for males and Rs 1,00,000 for female passengers. Duty on imported high end vehicles raised to 100% (75%), +800 cc motorcycles to 75% (60%) and

yatchs 25% (10%)

Excise duty proposals Hand made carpets and textile floor coverings of coir / jute and ships and vessels totally exempted.

Consequently no CVD on imported ships

There will also be no change in the normal rate of excise duty of 12% and normal rateof service tax of 12%



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Indirect Taxes (contd)

Excise duty on Cigarettes and cigars to be increased by 18% Excise on SUVs increased to 30% (27%). Not applicable to taxis Duty on marble increased from Rs 30 / sq mt to Rs 60 / sq mt

Silver manufactured from smelting zinc / lead taxed at 4% Duty on mobile phones above Rs 2000 raised to 6% (1%) Branded alternate medicines to be taxed on MRP. Abatement of 35% to exist

Service Tax further stream lined to have only two sectors on the negative list

VDIS on service tax to provide a windfall


testing activities in relation to agricultural produce VDIS scheme for service tax to provide a windfall to the exchequer; although not quantified in the

budget document

I hope to entice a large number of assesses to return to the tax fold. I also hope tocollect a reasonable sum of money



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Direct Taxes

Status quo maintained on income slabs and rates as per last year.However a Rs 2,000 tax credit is provided to every assessee with an income upto Rs 5,00,00010% surcharge imposed on assessees with income of Rs 1 crore and above

Surcharge raised to 10% (5%) on domestic companies with taxable income above Rs 10 crore. For foreigncompanies surcharge increased to 5% (2%)1 st home buyers who take a loan not exceeding Rs 25 lacs to be provided an additional deduction of interest of Rs 1 lac . This limit is over and above the current Rs 1.5 lacs. This is to be claimed in AY FY14-15. If limit not exhausted, can be carried over to the next assessment year.For persons with disability or suffering from certain ailments permissible premium rates of insurance have

Additional tax on the super rich


been increased to 15% from 10% on the sum assuredDonations to the National Childrens Fund eligible for 100% deduction.Investment allowance of 15% on investment in Plant & Machinery of over Rs 100 crore provided.Section 80-IA benefits to power sector eligible date extended to March 2014.Timeline on concession rate of tax of 15% on repatriation of dividends from a foreign subsidiary to adomestic parent company extend to FY2013. Further Dividend Distribution Tax set to 0% on that portion of the dividend distributed by the Indian parent.

When I need to raise resources, who can I go to except those who are relatively well placed in society?



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Direct Taxes (contd)

Withholding tax on Interest paid on investments made through Rupee denominated long terminfrastructure bonds to NRIs reduced to 5% from 20%Securitization Trusts to be exempt from Income Tax. Tax on income distributed by the Securitization trusts

to be at the rate of 30% for companies and 25% for individuals / HUF.Investor Protection Fund set up by a depository exempt from Income TaxPass through status provided to Category I Alternate Investment Funds (AIF) and Angel Investorsrecognized as Category I AIFs. This is on par with Venture FundsRGESS timeline extended 3 consecutive years and income limit augmented to Rs 12 lacs from Rs 10 lacs.MF also made an eligible investment.

Revenue leakage loop holes plugged effectively


1% TDS to be imposed on immovable propert transactions above value of Rs 50 lacs. Agricultural land ishowever exemptTo plug loop holes a withholding tax of 20% is top be imposed on unlisted companies who distributeprofits through buy back of shares.Tax rates on payment of royalties and fees for technical services to non resident Indians hiked to 25% from10%. However applicable rates to be as stipulated in the DTAA.

With a view to improve the reporting of such (immovanle properties) transactionsand the taxation of capital gains, I propose to apply TDS at the rate of 1% .



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Direct Taxes (contd)

STT (Securities Transaction Tax) reductions are as follows Equities 0.01% (0.017%) MF / ETF redemptions at fund counters 0.001% (0.25%)

MF / ETF purchase / sale on exchanges 0.001% (0.01%)

CTT (Commodities Transaction Tax) on non agricultural commodities of 0.01% to be introduced. However it will be allowed as a deduction.

Lowering of STT to benefit equity traders


It is time to introduce Commodities Transaction Tax (CTT) in a limited way



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GAAR still unresolved

The FM has again raked up the controversy of GAAR by suggesting that the TRC (Tax ResidencyCertificate) merely itself would not be sufficient for foreign investors & non-resident Indians to avail taxtreaty benefits.

Further tax authorities have been provided with additional powers to decide on tax issues at their discretion.This change has impact on all non-resident investors and FIIs using these routes for channelinginvestments into India and seeking to claim tax treaty benefits.Moreover the change is proposed with retrospective effect from FY12-13 which will bring any investor,availing treaty benefits under scrutiny.

FII and FDI flows likely to be affected


ore con ons wou nee o e u e an am gu y on ese a ona con ons as spoo e

foreign investorsWe expect markets to sell off and FII buying to be restrained until further clarifications are not provided toinvestors

Impermissible tax avoidance arrangements will be subjected to tax after a determinationis made through a well laid out procedure involving an assessing officer.



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Expenditure


Government expenditure boosts aggregate demand and it has both good and bad consequences.



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Non Plan Expenditure Subsidies to be a lesser worry going forward

(Rs. in Crore) 2011-12 2012-13BE 2012-13RE 2013-14BE Chg BE FY14/FY13Non-Discretionary ExpenditureInterest Payments and Debt Servicing 273149.9 319759.0 316674.0 370684.0 16%Defence 170913.3 193407.3 178503.5 203672.1 5%

Pension 61166.05 63183.41 63836.41 70726.00 12%Police 33106.46 35611.28 37130.97 40895.49 15%Subsidies 217941.1 190015.1 257654.4 231083.5 22%Discretionary Expenditure

Assistance to States from NCCF/NDRF 2458.9 4620.0 4375.0 4800.0 4%General Elections 79.1 91.5 72.5 230.2 152%Pa ment a ainst Debt Waiver and Debt


Faced with a huge fiscal deficit, I had no choice but to rationalise expenditure.

Relief Scheme for Farmers 1176.4 0.0 0.0 0.0 -100%Postal Deficit 5716.3 5727.1 5838.1 6717.1 17%Reimbursement of losses to Railways 652.0 600.0 637.0 660.0 10%Subsidy to Railways towards dividendreliefs and concessions 2034.4 3003.9 2384.2 2746.0 -9%General Services 19145.6 21291.4 21022.5 22673.0 6%Social Services 19444.2 20784.1 21303.7 23114.0 11%Economic Services 19043.3 20479.2 18643.6 20905.2 2%

Other Non-Plan Exp 69598.1 95946.5 77937.2 115868.4 21% Amt met from Famers Debt relief fund andNCCF/NDRF -3635.3 -4620.0 -4375.0 -4800.0 4%Total 891989.8 969899.9 1001638.0 1109975.0 14%



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Non Plan Expenditure(contd) Defense expenditure kept at last years level

600000

800000

1000000

1200000Rs. in Crore


...I assure him (Defense Minister) and the house that constraints will not come in theway of providing any additional requirement for the security of the nation

0

200000

2010-11 2011-12 2012-13BE 2012-13RE 2013-14BE

RE - Int Payment & Debt Servicing RE- Defence

RE- Subsidies RE Others

CE- Loan and Advances to State, UT CE- Defence

CE- Others Capital Expenditure (CE)

Revenue Expenditure (RE)



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Interest Payments Creeping up beyond 3% of GDP; worrisome

3.1%

3.1%

3.2%

3.2%

3.3%

3.3%

250,000

300,000

350,000

400,000Rs. in Crore


In the budget for 2012-13, the estimate of Plan Expenditure was too ambitious and the estimate of non-Plan Expenditure was too conservative.

2.9%

2.9%

3.0%3.0%

50,000

100,000

150,000

,

2010-11 2011-12 2012-13BE 2012-13RE 2013-14BE

Int. Payment and Debt Servicing (LHS) Interest Payment as a %of GDP (RHS)



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Plan Expenditure Positively growth oriented

300000

400000

500000

600000Rs. in Crore


As a proportion of total expenditure, it (Plan Expenditure) will be 33.3 percent

0

100000

200000

2010-11 2011-12 2012-13BE 2012-13RE 2013-14BE

RE- State Plan RE- Central Plan CE- State Plan

CE- Central Plan Capital Expenditure (CE) Revenue Expenditure (RE)



20/42

Savings, Investments& Capital Markets

Without savings and investments it would be difficult to kick start growth. Recognizing this urgent needthe FM has undertaken several initiativesThe time limit on the RGESS (Rajiv Gandhi Equity Savings Scheme) has been increased to three years from

one year and the income limit has been expanded to Rs 12, lacs from Rs 10 lacs. Further investment inmutual funds along with equity shares is also allowed to improve the attractiveness of the scheme.Inflation indexed bonds and certificates are expected to be introduced after consultation with The RBIAdditional deduction of Rs 1 lac on interest is allowed over and above the existing Rs 1.5 lacs where theloan amount does not exceed Rs 25 lacs. Further if the amount of loan is not exhausted in year 1, the limitcan be extended to the next year also.

Conducive to put India on 7% growth path


n or er o w en e nsurance sec or reac nsurance compan es are perm e o open o ces n er

cities and lower without prior permission of the RBI. Further Banks are also permitted to operate asinsurance brokersFor capital markets, SEBI has been directed to simplify procedures for FIIs. Ambiguity between FII and FDI is to be resolved by classifying any stake in a company more than

10% as FDI FIIs allowed to hedge their Re exposure in the currency segment of the Indian derivative markets.

Permitting FIIs to use their bond investments as collateral for margin requirements Angel investor funds to be recognised as Category I AIF venture capital funds

Increasing savings and their optimal allocation for productive uses lead to higher economic growth



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Savings, Investments &Capital Markets (contd)

SMEs along with startups to be permitted to list on the SME exchange without making an IPO.However with certain restrictions

Stock Exchanges allowed to introduce a dedicated debt segment

Mutual Funds distributors allowed to participate in the Mutual Fund segment of stock exchanges Asset backed securities, ETFS and debt mutual funds to be included in the eligible list of securities in

which Pension & Provident Funds can invest. STT on equity futures and ETF and MF products reduced to improve attractiveness.

Reduction in STT to benefit traders


With the object of developing the debt market, stock exchanges will be allowed tointroduce a dedicated debt segment on the exchange



22/42

(Rs. in Crore) 2010-11 2011-12 2012-13BE 2012-13RE 2013-14BEChg FY13

BE/REChg BE

FY14/FY13

Revenue Receipts 788,472 751,436 935,684 871,828 1,056,331 -7% 13%Net Tax Revenue 569,869 629,764 771,070 742,115 884,078 -4% 15%Non tax Revenue 218,603 121,671 164,614 129,713 172,253 -21% 5%Capital Receipts 402,428 568,918 555,240 564,148 608,967 2% 10%Recoveries of receipts 12,420 18,850 11,650 14,073 10,654 21% -9%Other Reciepts (Disinves tments ) 22,846 18,088 30,000 24,000 55,814 -20% 86%Debt Reciepts 367,162 531,980 513,590 526,075 542,499 2% 6%Total Receipts 1,190,900 1,320,354 1,490,924 1,435,976 1,665,298 -4% 12%

Non Plan Expenditure 818,299 891,991 969,900 1,001,638 1,109,976 3% 14%

Budget Summary Nominal GDP to grow at 12%


, , , , , Interest Payments 234,022 273,150 319,759 316,674 370,684 -1% 16%Non Plan Capital 91,808 79,941 104,304 81,939 117,067 -21% 12%

Plan Expenditure 379,029 412,375 521,025 429,187 555,322 -18% 7%Plan Revenue 314,232 333,737 420,513 343,373 443,260 -18% 5%Plan Capital 64,797 78,638 100,512 85,814 112,062 -15% 11%Total Expenditure 1,197,328 1,304,366 1,490,925 1,430,825 1,665,298 10% 12%

GDP Nominal 7,795,313 8,974,947 10,159,884 10,028,118 11,371,886 -1% 12%Gross Fiscal Deficit 373,590 515,992 513,591 520,925 542,499 1% 6%

Fiscal deficit as a % of GDP 4.8% 5.7% 5.1% 5.2% 4.8% 3% -6%Revenue Deficit 252,251 394,351 350,425 391,244 379,838 12% 8%Revenue deficit as a % of GDP 3.2% 4.4% 3.4% 3.9% 3.3% 13% -3%Primary Deficit 139,568 242,842 193,832 204,251 171,815 5% -11%Primary deficit as a % of GDP 1.8% 2.7% 1.9% 2.0% 1.5% 7% -21%

We are the 10 th largest economy in the world. We can become the 8 th or perhaps the7 th , largest by 2017



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Sector Summary Favouring infrastructure sector

Sector Budget Impact Key Highlights

Auto & Auto Ancillaries Neutral Excise duty on non-taxi SUVs hiked

Aviation Neutral Concessions announced only for MRO industry

Banking / FinancialServices

MarginallyPositive

Additional interest deduction beneficial for HFCs; Interest subvention scheme extended to

private sector banks


While every sector can absorb new investment, it is the infrastructure sector that needs large volumes of investment

Capital Goods PositiveInvestment allowance of 15% on investment of

Rs 100 crore or more during 1/4/2013 to 31/3/2015in plant and machinery and Infrastructure push

Cement PositiveNo hike in excise duty; Infrastructure push in the

areas of road, irrigation and low cost housing

FMCG / Consumer Durables Negative Increase in the specific excise duty on cigarettes(not exceeding 65 mm) by 18%



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Sector Summary(contd)

Sector Budget Impact Key Highlights

Healthcare / Pharma NeutralRs 37,330 crore allocated to the Ministry of

Health & Family Welfare

Infrastructure PositiveClearance of stalled road projects; setting up of

regulatory authority for road sectors

IT / BPOs Neutral0% customs duty on plant & machinery for semiconductor industry

Healthcare and education clear cut beneficiaries


The 12th Plan projects an investment of USD 1 trillion or Rs 55,00,000 crore ininfrastructure

Media Negative Duty on STB increased from 5% to 10%

Metals & Mining Neutral A PPP policy framework with Coal India Ltd as inorder to increase the production of coal

Oil & Gas Positive NELP blocks that were awarded but are stalled tobe be cleared

Power Positive 80 IA benefit for power plants extended byanother year



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Sectoral Measures and Impact


The key to restart the growth engine is to attract more investment, both fromdomestic investors and foreign investors



26/42

Auto & Auto Ancillaries Increase in duties accentuating slowdown

Budget Expectations Budget Declaration Impact

N.AExcise duty raised to 30% from 27% for non-taxiSUVs Negative

N.A Duty on luxury motor vehicles hiked from 75% to100%; on motorcycles (engine capacity > 800 cc)to 75% from 60%

Negative

N.A Higher allocation of Rs 2,03,672.1 crore to Positive


SUVs occupy greater road and parking space and ought to bear a higher tax

e ence + . over

N.A More than doubled the allocation to Rs 14,873crore for JNNURM (v/s Rs 7383 RE) Positive

N.A. Exemption on specified parts of electric andhybrid vehicles Positive

Impact Companies

Gainers Ashok Leyland, KPIT, Bharat Forge

Losers Tata Motors, Mahindra & Mahindra, MarutiSuzuki India Ltd



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Aviation MRO industry given a boost


Tax incentives toMaintenance, Repair &overhaul (MRO) service

Time period for consumption/installation of partsand testing equipments imported for MRO of aircrafts by units engaged in such activitiesextended from 3 months to 1 year

Positive

N.ABasic customs duty exemption extended to partsand testing equipments for MRO of aircrafts

artsPositive


Encouraging the MRO sector will generate employment besides other benefits

Impact Companies

Gainers GMR Infra

Losers



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Banking / FinancialServices

HFCs to benefit from interest deductions


Allocation of equity capital for infusion in PSU banks Rs15000cr- Rs20000cr

In order to comply with Basel III norms, allocatedRs14,000cr for capital infusion (Rs 12,517cr RE) Positive for PSUs

Commercial banks to beallowed to issue tax-freeinfrastructure bonds

N.A. Negative


I propose to set up Indias first Womens Bank as a public sector bank and I shall provide Rs 1,000 crore as initial capital.

N.A arm oan n eres su ven on sc eme

continued and extended to private sector banksNegative

N.A To set up Indias first Womens bank via publicsector; provided for Rs 1000cr as initial capital Positive

Infrastructure status toaffordable housing N.A. Neutral

N.A. RGESS investees can invest in MFs

Positive for AMCs (L&T

Finance, Bajaj Finserv andBajaj Holdings)



29/42

Banking / FinancialServices (cntd)

Interest subvention scheme extended toprivate banks


N.A.

Reduced STT in -a. Equity futures 0.017% to 0.01%b. MF/ETF redemptions at fund counters 0.25%to 0.001%c. MF/ETF purchase/sale on exchange 0.1% to0.001%

Positive for IIFL, MOSL andReligare

Introduction of CTT at 0.01 on non-a ricultural


I propose to provide a further amount of Rs14,000 crore for capital infusion .

N.A. commodities (gold, silver, base metals) futurescontracts; to be allowed as deduction

Negative for MCX

Additional deduction of interest upto Rs 1,00,000on loan upto Rs 25 lacs for first home

Positive for HFCs like LICHousing Finance, HDFC,

Dewan Housing and GruhFinance

Impact Companies

Gainers HFCs, IIFL, MOSL and Religare

Losers Private sector banks, MCX, FT



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Capital Goods Indirect beneficiary


Basic customs duty reduced from 7.5% to 5% on20 specified machinery for use in leather andfootwear industry

Positive

Budgetary provision towardsrestructuring of state power distribution companies

State Governments to prepare the financialrestructuring plans. No specifications about anyallocation

Neutral


To attract new investment and to quicken the implementation of projects, I proposeto introduce an investment allowance for new high value investments.

s , cr prov e or se ng up o wa er

purification plantsPositive

Accelerated depreciation onplant & machinery fromcurrent 15%-20% to 25%-30%for the next 3-5 years

Investment allowance of 15% on investment of Rs 100 crore or more during 1/4/2013 to 31/3/2015in plant and machinery (additional)

Positive

Impact Companies

Gainers Sadbhav Engineering, Jindal Saw, BHEL, Praj Industries, Thermax

Losers



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Cement Boost from infra & housing push


Increase in excise duty oncement by changing theexisting slab

N.A. Positive

Announcements of infraprojects related to highways,freight corridor and irrigation

A boost to infrastructure in the areas of road,irrigation and low cost housing

Positive


Bottlenecks stalling road projects have been addressed and 3,000 kms of road projects in Gujarat, Madhya Pradesh, Maharashtra, Rajasthan and Uttar Pradesh.

overnmen cou rev ew

import duty on coal, pet cokeand gypsum, which are usedin the cement manufacturingprocess

Duties on Steam Coal and Bituminous Coalequalised with 2% custom duty and 2% CVDlevied on both

Neutral

Impact Companies

Gainers All

Losers



32/42

FMCG / Consumer Durables Cigarette manufacturers impacted sharply


Direct tax relief for the middle

class

Relief of Rs 2,000 for tax payers with total

income upto Rs 5 lacsNeutral

10%-12% increase in exciseduty on cigarettes

Increase in the specific excise duty on cigarettes(not exceeding 65 mm) by 18 percent

Negative

N.A.Increase in the rate of tax on payments by way of royalty and fees for technical services to non-

Negative


What does a Finance Minister turn to when he requires resources? The answer iscigarettes

res en s ore gn company rom o

NREGA had an allocation of Rs 33,000 cr in 2012-13 Allocation at Rs 33,000 cr Neutral

Impact Companies

Gainers

Losers ITC, Godfrey Phillip, VST Industries



33/42

Healthcare / Pharma Healthy dose of allocations


Increase in MAT rate from

18% to 20%N.A. Positive

Weighted deduction onInhouse Research to increasefrom 200% to 225%

N.A. Negative

Increase in allocation to Rs 37,330 crore allocated to the Ministry of


Health for all and education for all remain our priorities

NRHM (National Rural health

Mission)

ea am y e are ou o w c ew

National Health Mission to get an allocation of Rs 21,239 crore (+24.3% from FY13 RE)

Positive

Impact Companies

Gainers

Losers



34/42

Infrastructure Major beneficiary of the budget


Creation of long termdedicated debt funds for infrastructure

With 4 Infrastructure Debt Funds (IDF) registered

and 2 launched, they are to be encouraged toprovide long-term low-cost debt for infrastructure projects

Negative

N.A.

3,000 kms of road projects in Gujarat, MadhyaPradesh, Maharashtra, Rajasthan and Uttar Pradesh to be awarded in the first six months

Positive


Doing business in India must be seen as easy, friendly and mutually beneficial

of 2013-14

N.A. To set up regulatory authority for road sector Positive

Investment allowance of 15% on investment of Rs 100 crore or more during 1/4/2013 to 31/3/2015in plant and machinery (additional)

Positive



35/42

Infrastructure


N.A. Generation-based incentive for wind energy

projects with allocation of Rs 800 cr Positive

N.A. Upto Rs 50000 cr Tax Free Infra Bonds issuance Positive


Five inland waterways have been declared as national waterways

Impact Companies

Gainers IRB Infra, L&T, Suzlon, Adani Ports

Losers



36/42

IT / BPOs Greater focus to education through IT


N.A.0% customs duty on plant & machinery for semi

conductor industryPositive

Removal of MAT on SEZ units N.A. Negative

Increased allocation under schemes such as RAPDRP,UIDAI and N-eGP e-

Allocated Rs 65,867 cr to the MHRD (+17% of RE)Allocated Rs 27,258 cr for Sarva Siksha Abhyaan Positive


Investment in the Rashtriya Madhyamik Shiksha Abhiyan (RMSA) cannot be postponed any longer.

governance

Impact Companies

Gainers CMC, Redington, HCL Info, Educomp, Everonn

Losers



37/42

Media Radio broadcasters to benefit fromimpending auction


Custom duty on set-top box

(STB) likely to be reducedfrom existing 5%

Duty on STB increased from 5% to 10% Negative

N.A. About 839 new FM radio channels to beauctioned in 2013-14Positive


To encourage domestic production of set top boxes as well as value addition, I propose to increase the duty from 5 percent to 10 percent.

Impact Companies

Gainers ENIL

Losers Den Networks, Hathway Cable, Dish TV



38/42

Metals & Mining No surprise for the steel sector


Likely increase in import duty

on steelN.A. Negative

N.A.Levy of 4% excise duty on silver manufacturedfrom smelting zinc or lead Negative

A PPP policy framework with Coal India Ltd as inorder to increase the production of coal


In the medium to long term, we must reduce our dependence on imported coal

Impact Companies

Gainers CIL

Losers Steel sector, Hindustan Zinc



39/42

Oil & Gas Impending NELP clearances a big positive


N.A.

The oil and gas policy regime is set to move from

profit sharing to revenue sharing (or production-linked) contracts

Positive

Exploration and production of shale gas to beannounced

Positive

Natural gas pricing policy to be reviewed and Positive


The 5 MMTPA LNG terminal in Dabhol, Maharashtra will be fully operational in 2013- 14

uncer a n es regar ng pr c ng o e remove

NELP blocks that were awarded but are stalled tobe cleared Positive

Exemption of 5% import dutyon LNG N.A. Negative

Impact Companies

Gainers ONGC, RIL, IOC, BPCL

Losers



40/42

Power / Utilities Hints at power sector revamp


Extensions of sunset clause

for power generating cosbeyond 2013

80 IA benefit for power plants extended byanother year Positive

Relief from import duty onThermal coal

Duties on Steam Coal and Bituminous Coalequalised with 2% custom duty and 2% CVDlevied on both

Neutral


I would urge State Governments to prepare the financial restructuring plans quickly, signthe MOU, and take advantage of the scheme

N.A. enera on- ase ncen ve or w n energyprojects with allocation of Rs 800 cr Positive

Impact Companies

Gainers NTPC, Power Grid Corp, NHPC, Suzlon

Losers



41/42

Miscellaneous Govt. looks to revive textile sector


N.A. Excise duty exempted on ships & vessels

Positive for GE Shipping,

Gujarat Pipavav, PipavavDefence

N.A.Zero excise duty route restored on readymadegarments; TUFS to be allocated Rs 2,400 crore Positive for textile sector

N.A. Excise duty on marble slabs increased from Rs Negative for real estate


The major focus would be on modernisation of the powerloom sector. I propose to provide Rs 2,400 crore in 2013-14 for the purpose.

per sq m r o s per sq m r sec or

N.A. Additional deduction of interest upto Rs 1,00,000on loan upto Rs 25 lacs for first home

Positive for real estatesector



42/42


All the strength and succour you want is within yourself. Therefore, make your own future.

Ventura Securities LimitedCorporate Office: C-112/116, Bldg No. 1, Kailash Industrial Complex, Park Site, Vikhroli (W), Mumbai 400079This report is neither an offer nor a solicitation to purchase or sell securities. The information and views expressed herein are believed to be

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Budget 2013-14 Analysis by Ventura Securities

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