Download CRISIL BudgetSpeak

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March 2012
CRISIL BudgetSpeak
Hopes & Fears
(Industry pre-budget views)
CRISIL BudgetSpeak
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Foreword
Budget 2012-2013 is right around the corner. The industry is hoping that the Union
finance minister will be able to give a shot in the waning economy’s arm. This is
imperative in the backdrop of a distinct slowdown in the domestic and international
economy.
To get a better perspective on industry expectations from the Union budget, CRISIL
Research carried out detailed interactions with management of companies under its
independent equity research (IER) coverage. CRISIL: BudgetSpeak is a dossier on
expectations of corporate India from this budget and aims at providing a glimpse of
what is expected from our government in a milieu where high inflation and ballooning
fiscal deficit are at center stage. This is a pre-cursor to our post-budget analysis report,
which is a detailed discussion on the impact of the announcements made in the budget.
Over the years, CRISIL Research has leveraged its integrated research capabilities spanning the entire economy-industrycompany spectrum to deliver insights and opinions, which help clients make informed decisions. BudgetSpeak is yet
another initiative by CRISIL Research and highlights the hopes and fears of various industry participants.
Tarun Bhatia
Director, Capital Markets
We provide comprehensive research coverage on around 65 industries and over 100 companies.
CRISIL BudgetSpeak
Index
Page
CRISIL’s view: Budget FY13...................................................................................................................................................... 1
IER – Companies under coverage ............................................................................................................................................. 2
Industry views: Budget FY13 ..................................................................................................................................................... 6
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CRISIL’s view: Budget FY13
The 2012-13 Budget is being prepared against a backdrop of sharp slowdown in
growth, fiscal slippage and persistently high inflation. The external environment too is
extremely challenging, with weak growth in advanced economies and recession in
Europe. In this scenario, CRISIL believes there is a need for a dynamic and credible
budget that addresses the issues highlighted below.
Most importantly, we expect the budget to take steps to set the fiscal house in order.
This would entail reduction in deficit and improving the quality of expenditure (that is
reduce consumption expenditure and increase investment expenditure). The fiscal
deficit is expected to be at least 1 percentage point higher than the budgeted target of
4.6 per cent of GDP in 2011-12 due to revenue shortfall and significant overshooting of
subsidies. Besides trimming the fiscal deficit in 2012-13, the budget should also lay out
a credible roadmap to reduce the deficit gradually over the medium term.
The task of fiscal consolidation has been made difficult by the slowdown in growth. Revenue buoyancy (the growth in tax
revenue relative to GDP growth) is sensitive to the growth rate — it is higher in an upturn and lower in a downturn. Raising
the service tax and widening its net can help improve the revenue position to some extent in 2012-13. But the key to fiscal
consolidation lies in reforming the subsidy regime and avoiding populist measures like the farm loan waiver, demand for
which will only intensify as we move closer to the national elections.
There is no denying that until and unless durable employment opportunities are created, it is essential to provide a safety net
to the poor via schemes like the Mahatma Gandhi National Rural Employment Guarantee Scheme (MNREGS). But while the
MNREGS has given a significant push to rural wages, it has done little to raise production or productivity, specifically in
agriculture. Instead it has added to inflationary pressures. Since these wages are now indexed to inflation, it is imperative to
also link them to productivity. The budget must initiate this measure and also lay out a mechanism for monitoring it.
The agriculture sector, which has remained insulated from the reform process thus far, is in dire need of a shot in the arm.
This is evident from the fact that supply remains stagnant despite the sharp increase in food prices in the past few years.
Clearly, favourable terms of trade are insufficient to improve production in agriculture. The government needs to make solid
investments in agriculture and lessen its excessive dependence on credit to fire agricultural growth.
The budget is not a platform for launching reforms, and rightly so. However, considering the prevailing drought of reforms
and the urgent need to enhance business confidence, the budget can be used as an opportunity to signal that reforms are
back on track. Announcements on Direct Tax Code (DTC) as well as Goods and Services Tax (GST) timelines and steps to
revive FDI in retail are some of the reforms CRISIL looks forward to in the forthcoming budget.
Dharmakirti Joshi
Chief Economist
1
CRISIL BudgetSpeak
IER – Companies under active coverage
M Cap in
Company
Rs mn #
Industry
NTPC Ltd
1,507,271 Power Utilities, Electrical equipment
Fundamental
Valuation
Fair Value
Grade
Grade
(Rs/share)
5/5
5/5
238
Hero MotoCorp Ltd
427,392 Auto and auto components
5/5
3/5
1,890
DLF Ltd
404,781 Real Estate Management & Development
3/5
3/5
356
Power Finance Corporation Ltd
265,966 Banking and financial services
4/5
5/5
256
Apollo Hospitals Enterprise Ltd
78,562 Pharma, Health Care Providers & Services
5/5
3/5
655
Fortis Healthcare (India) Ltd
44,873 Pharma, Health Care Providers & Services
3/5
3/5
112
Gitanjali Gems Ltd
36,968 Gems and jewellery/specialty retail
3/5
5/5
555
TTK Prestige Ltd
32,310 Consumer and household durables
5/5
3/5
2,392
Monnet Ispat & Energy Ltd
31,156 Metals & Mining
4/5
4/5
572
Phoenix Mills Ltd
29,389 Real Estate Management & Development
3/5
4/5
232
Shriram City Union Finance Ltd
27,865 Banking and financial services
3/5
5/5
673
Omaxe Ltd
27,276 Real Estate Management & Development
2/5
2/5
125
Parsvnath Developers Ltd
26,350 Real Estate Management & Development
2/5
3/5
63
Responsive Industries Ltd
26,034 Construction & Engineering
4/5
2/5
107
The Supreme Industries Ltd
25,132 Containers & Packaging
4/5
5/5
239
Era Infra Engineering Ltd
24,947 Construction & Engineering
4/5
4/5
170
eClerx Services Ltd
22,139 IT Services, technology, hardware and equipment
4/5
3/5
760
ABG Shipyard Ltd
21,369 Shipping
3/5
2/5
371
Alok Industries Ltd
17,252 Textiles, Apparel & Luxury Goods
3/5
5/5
29
Sterlite Technologies Ltd
16,438 IT Services, technology, hardware and equipment
3/5
5/5
51
JM Financial Ltd
12,898 Banking and financial services
4/5
5/5
36
Century Plyboards (India) Ltd
12,364 Construction & Engineering
3/5
4/5
64
Time Technoplast Ltd
10,338 Containers & Packaging
4/5
5/5
62
S.E. Investments Ltd
9,866 Banking and financial services
2/5
2/5
190
Symphony Ltd
9,805 Consumer and household durables
3/5
3/5
1,119
Development Credit Bank Ltd
9,304 Banking and financial services
2/5
4/5
61
Zylog Systems Ltd
9,052 IT Services, technology, hardware and equipment
3/5
5/5
656
JBF Industries Ltd
8,108 Chemicals
3/5
5/5
194
Electrosteel Castings Ltd
7,913 Metals & Mining
3/5
5/5
35
Kewal Kiran Clothing Ltd
7,886 Textiles, Apparel & Luxury Goods
4/5
3/5
672
Sanwaria Agro Oils Ltd
6,039 Agri and forest products
2/5
1/5
15
Rainbow Papers Ltd
5,902 Agri and forest products
3/5
3/5
67
Insecticides (India) Ltd
5,301 Chemicals
3/5
3/5
385
Panacea Biotec Ltd
5,029 Pharma, Health Care Providers & Services
3/5
4/5
100
Dynamatic Technologies Ltd
4,812 Auto and auto components
4/5
5/5
1,131
KRBL Ltd
4,643 Agri and forest products
3/5
5/5
31
Everest Kanto Cylinder Ltd
4,410 Oil, Gas and Conumable Fuels
3/5
5/5
74
Dhanuka Agritech Ltd
4,232 Chemicals
4/5
4/5
109
KNR Constructions Ltd
3,905 Construction & Engineering
3/5
4/5
157
Dhunseri Petrochem and Tea Ltd
3,901 Chemicals
3/5
5/5
243
Phillips Carbon Black Ltd
3,872 Chemicals
4/5
5/5
212
Maharaja Shree Umaid Mills Ltd
3,602 Textiles, Apparel & Luxury Goods
2/5
5/5
279
Infinite Computer Solutions (India) Ltd
3,569 IT Services, technology, hardware and equipment
3/5
5/5
139
Marg Ltd
3,536 Construction & Engineering
3/5
5/5
267
Butterfly Gandhimathi Appliances Ltd
3,517 Consumer and household durables
3/5
3/5
378
Spanco Ltd
3,483 IT Services, technology, hardware and equipment
3/5
5/5
289
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M Cap in
Company
Rs mn #
Fundamental
Valuation
Fair Value
Grade
Grade
(Rs/share)
Industry
Navin Fluorine International Ltd
3,440 Chemicals
3/5
3/5
329
Ashiana Housing Ltd
3,213 Real Estate Management & Development
4/5
5/5
205
Shri Lakshmi Cotsyn Ltd
3,202 Textiles, Apparel & Luxury Goods
2/5
3/5
136
MBL Infrastructure Ltd
3,034 Construction & Engineering
3/5
5/5
249
C&C Constructions Ltd
2,718 Construction & Engineering
2/5
5/5
144
Thangamayil Jewellery Ltd
2,345 Gems and jewellery/specialty retail
2/5
5/5
213
MSP Steel & Power Ltd
2,097 Metals & Mining
2/5
5/5
55
ARSS Infrastructure Projects Ltd
2,035 Construction & Engineering
2/5
5/5
570
Omnitech Infosolutions Ltd
1,945 IT Services, technology, hardware and equipment
3/5
5/5
254
Sangam (India) Ltd
1,819 Textiles, Apparel & Luxury Goods
3/5
3/5
51
Technofab Engineering Ltd
1,622 Construction & Engineering
3/5
5/5
200
Vipul Limited
1,614 Real Estate Management & Development
2/5
5/5
27
Dolphin Offshore Enterprises (India) Ltd
1,421 Oil, Gas and Conumable Fuels
2/5
5/5
122
Harrisons Malayalam Ltd
1,414 Agri and forest products
3/5
4/5
86
Somany Ceramics Ltd
1,288 Construction & Engineering
4/5
5/5
68
Omkar Speciality Chemicals Ltd
1,150 Chemicals
3/5
5/5
110
Hitech Plast Ltd
883 Containers & Packaging
3/5
5/5
90
Sanghvi Forging and Engineering Ltd
544 Construction & Engineering
2/5
4/5
43
Diamines and Chemicals Ltd
421 Chemicals
3/5
5/5
78
Kanpur Plastipack Ltd
250 Containers & Packaging
2/5
3/5
25
Pondy Oxides and Chemicals Ltd
247 Chemicals
2/5
5/5
34
Note:
1
Market cap and Market price is as on 21st Feb 2012
2
Nomenclature
Fundamental grade
Valuation grade
5/5 Excellent fundamentals
4/5 Superior fundamentals
3/5 Good fundamentals
5/5 Strong upside (>25% from CMP)
4/5 Upside (10-25% from CMP)
3/5 Align (+-10% from CMP)
2/5 Moderate fundamentals
1/5 Poor fundamentals
2/5 Downside (- 10-25% from CMP)
1/5 Strong downside (<-25% from CMP)
IER – Companies not under active coverage
Company
Industry
Havells India Ltd
Power Utilities, Electrical equipment
Religare Enterprises Ltd
BFSI
UTV Software Communications Ltd
Media & Entertainment
Pantaloon Retail (India) Ltd
Retail
E.I.D Parry (India) Ltd
Chemicals
Hindusthan National Glass & Industries Ltd
Containers & Packaging
Polaris Financial Technology Ltd (Formerly Polaris Software Ltd)
IT Services, technology, hardware and equipment
Hubtown Ltd (Formerly Ackruti City Ltd)
Real Estate Management & Development
Plethico Pharmaceuticals Ltd
Pharma, Health Care Providers & Services
OCL India Ltd
Construction & Engineering
Aarti Industries Ltd
Chemicals
Aptech Ltd
Diversified consumer services - Education
Kirloskar Ferrous Industries Ltd
Auto and auto components
The West Coast Paper Mills Ltd
Agri and forest products
Wendt India Ltd
Machinery
3
CRISIL BudgetSpeak
Company
Industry
Sagar Cements Ltd
Cement
Indiabulls Securities Ltd
BFSI
Siyaram Silk Mills Ltd
Textiles, Apparel & Luxury Goods
Ramkrishna Forgings Ltd
Auto and auto components
Confidence Petroleum India Ltd
Oil, Gas and Conumable Fuels
Modison Metal Ltd
Power Utilities, Electrical equipment
Visaka Industries Ltd
Construction & Engineering
Lakshmi Energy & Foods Ltd
Food Products
Simplex Projects Ltd
Construction & Engineering
RPG Life Sciences Ltd
Pharma, Health Care Providers & Services
Plastiblends India Ltd
Chemicals
Eimco Elecon (India) Ltd
Machinery
Nissan Copper Ltd
Metals & Mining
Aarvee Denims & Exports Ltd
Textiles, Apparel & Luxury Goods
Filatex India Ltd
Textiles, Apparel & Luxury Goods
KSE Ltd
Food Products
Orient Ceramics and Industries Ltd
Construction & Engineering
The Jeypore Sugar Company Ltd
Food Products
Savera Industries Ltd
Hotel Restaurants & Leisure
Ginni Filaments Ltd
Textiles, Apparel & Luxury Goods
Kandagiri Spinning Mills Ltd
Textiles, Apparel & Luxury Goods
Chaman Lal Setia Exports Ltd
Food Products
Wall Street Finance Limited
BFSI
GKB Opthalmics Ltd
Consumer and household durables
Jasch Industries Ltd
Textiles, Apparel & Luxury Goods
Beardsell Ltd
Construction & Engineering
KLRF Ltd
Food Products
Jumbo Bag Ltd
Containers & Packaging
Hydro S&S Industries Ltd
Chemicals
Sumedha Fiscal Services Ltd
BFSI
Lakshmi Finance & Industrial Corporation Ltd
BFSI
Sudarshan Chemical Industries Ltd
Chemicals
Punjab Chemicals and Crop Protection Ltd
Chemicals
Maithan Alloys Ltd
Metals and Mining
Nahar Spinning Mills Ltd
Textiles, Apparel & Luxury Goods
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CRISIL BudgetSpeak
Industry views: Budget FY13
Agri and forest products
“We believe that the budget should extend interest subvention on interest payouts to all
the rice exporters. While SSI units are getting it, major exporters like us are not. Rising
cost of funds has affected us, the largest basmati exporters, the most and we are finding
it difficult to compete in the international markets. Some relief in the Minimum Alternate
Tax, which has gone up consistently, would be welcome too. GST should be
implemented at the earliest so that all companies get a level playing field. Besides, if the
Rakesh Mehrotra, CFO,
KRBL Ltd
budget could provide some relief in interest cost and offer incentives for setting up
godowns that would also be helpful.”
“We believe that custom duty on imported fibers (viz. all types of pulp/wastepaper)
should be removed. Excise duty on paper and paper board which was increased from
4% ad valorem to 5% in 2011-12, should be reinstated to 4%. The Duty Drawback
Incentive of 5.5%, prevalent in 2010-11, has been reduced to 1% for export of paper’ we
believe this should be restored too. Further, with respect to CENVAT credit on captive
goods, 50% excise duty paid should be allowed to be availed immediately and balance
to be claimed in next financial year while the unutilized CENVAT credit at month end to
Ajay R. Goenka, Chairman & MD, be refunded instead of being carried forward. Import of duty-free coal should also be
Rainbow Papers
considered to meet the energy requirement of the Indian paper industry.”
Banking and financial services
“We hope, in this budget, asset financing NBFCs be allowed to access ECBs which are
fully hedged against currency risk. This can open up another viable and relatively
cheaper route of funding for NBFCs. We expect the budget to announce a major
initiative whereby NBFCs are made to account a certain proportion of total assets /
loans created by the financial sector in India (at present ~10%). We foresee the budget
to address that NBFCs need not create Debenture Redemption Reserve (DRR) for
repayment of debentures issued by them through public issue. Overall, we expect the
ultimate goal to drive policy measures unlike now where government/ RBI is stuck in
Subhasri Sriram, ED & CFO,
Shriram City Union Finance Ltd
micro-policy making regarding NBFCs and losing sight of the larger objective of
expanding financial inclusion, provision of credit and other financial services to the
excluded sections of the population.”
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“I expect the budget to not only incentivise banks to set up more branches in rural areas
but also to encourage NBFCs and MFIs, who are uniquely positioned to reach out to the
rural areas, to play a significant role. Inclusion of provisions relating to LLPs to allow
them to raise foreign debt through external commercial borrowings would be helpful.
There should be a reduction in the Securities Transaction Tax, which will not only
encourage more foreign investors to invest in India but also have a significant
sentimental impact on the markets to drive retail participation as well. However, the
Manish Sheth, CFO,
reduction in STT should not lead to introduction of Commodities Transaction Tax.”
JM Financial Ltd
“The main focus of the budget should be facilitating employment creation in the MSME /
SME segment - in the infrastructure, housing and manufacturing industries. Improving
productivity of government expenditure (at least 50% improvement in three years)
should be a key initiative with proper targets and measures. There should be measures
to correct the supply constraints especially in food items so that we don’t have to slow
down the economy due to inflation. Additionally, we hope for stable liquidity conditions
Murali Natrajan, MD and CEO,
for the banking industry.”
Development Credit Bank Ltd
Chemicals
“We hope excise duty is reduced, which would indirectly offset higher fuel costs (coal/
furnace oil/ power). We expect GST to be implemented, which would give vital support
to manufacturing activities. Further, income tax (corporate) could see a cut.”
Girish Satarkar, CEO, Diamines
and Chemicals Ltd
“As government is promoting agriculture in all possible ways, we believe that the budget
could give some relaxations in terms of VAT/local taxes for agro chemicals, one of the
critical agri inputs”.
Rajesh Aggarwal, MD,
Insecticides (India) Ltd
7
CRISIL BudgetSpeak
“Just as there is no excise or VAT/CST on other agri-inputs, we expect that abolition of
the same on pesticides will directly reduce the cost of pesticides and make it more
affordable for farmers. Public- Private Partnership should be extended in many more
areas related to agriculture and agri-inputs. Supply chain management needs to be
strengthened for better crop yield. The villages need regular supply of electricity for
various requirements – like running water pumps for irrigation, for running cold storages
(which are forced to use gensets during power cuts, which is not a financially viable
option), etc. We also believe that credit facilities at lower interest rates would give a
M.K. Dhanuka, MD,
Dhanuka Group
much-needed boost to the pesticides industry. Minimum support prices should be
increased for various crops, so that farmers get the much-needed pricing support. If
farmers can be offered crop insurance facilities at nominal rates, it will enable farmers to
mitigate the risk of failed crop.”
Construction & Engineering
“We would like the government to implement a national manufacturing policy and GST
on a priority basis, make the defence offset procedure compulsory and create a proper
body to implement it. We would like to see an increase in the weightage of locally
manufactured goods in government procurements. Simplification of labour laws to
promote the employment in manufacturing sector, increase the rate of depreciation on
Jayanti Sanghvi, MD,
Sanghvi Forging & Engineering
investment in capital goods and reduction in the bottlenecks in raising money from
capital market for SME companies are a few other expectations.”
Ltd
“We expect a positive attempt in this budget to push private investment and accelerate
infrastructure spending. Proactive measures in this regard could be exempting
infrastructure companies and SEZ units from MAT provisions; relaxation of norms on
long-term funds (insurance and pension) to invest in the infrastructure sector; permitting
banks to issue long-term tax-free infrastructure bonds. We also hope for a support
mechanism in dredging and road & rail connectivity under marine infrastructure. In real
estate, the scope of the 1% interest rate subsidy should be broadened to include
housing loans up to Rs 20 lakh; give infrastructure status to housing sector; tax
GRK Reddy, Chairman & MD,
exemption limit should be hiked to Rs 3 lakh against interest paid on housing loans; and
MARG Group
relax FDI up to 51% in multi-brand retail. We also look forward to clarity on
implementation of revised DTC and its impact on SEZ.”
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“In view of the acute shortage of urban housing in the country, we are expecting the
government to offer adequate fiscal incentives in this budget to accelerate investments
in this sector which would be good for the growth of our industry too.”
Abhishek Somany, Joint MD,
Somany Ceramics Ltd
“We are awaiting the budgetary announcements like everyone else, no special
expectations. We hope whatever the announcements, they should be simple and clear
so that we can comply with the requirements.”
Avinash C. Gupta, CMD,
Technofab Engineering Ltd
“We believe the budget should aim at containing inflation and at the same time take
measures to promote growth. Thrust on the housing and infrastructure sectors must be
prioritized, the sooner the better. We do not see any major change in direct or indirect
taxes. Some changes in the line of GST and DTC might be introduced next year.”
Sajjan Bhajanka, Chairman,
Century Plyboards (India) Ltd
“We expect an amendment of the condition of retention of capital goods for five years
even after the purpose for which they were imported has been served. Imported goods
should be allowed to any eligible construction project and also be taken out of the
project temporarily to some other project without payment of duty. Alternatively, the
removal of capital goods may be allowed on payment of duty on the depreciated value.
Second, as per the current provisions of service tax relating to commercial or industrial
construction service, a service tax is levied on construction of commercial or industrial
building meant for ‘commercial use’. However, disputes have arisen in cases where
buildings are being constructed for governmental organisations, for e.g. ‘Delhi Jal
G S Johar, Chairman,
C&C Construction Ltd
Board’. There is no clarity on the leviability of service tax. Further, under the category of
commercial or industrial construction, infrastructure facilities like roads, airports, railway,
transport terminal, bridge, tunnel, long distance pipeline and dams have been excluded.
However, there is no exemption for power projects/plants, which is the need of hour.”
9
CRISIL BudgetSpeak
Consumer and household durables
“We believe the government has to take bold initiatives to control the subsidies so as to
contain the deficit. GST should be introduced forthwith as it will improve tax
compliances, smoothen tax administration and reduce unscrupulous practices. We
would also like to see the government introducing the Direct Tax Code after considering
the suggestions from various trade chambers & associations.”
Achal Bakeri, CMD,
Symphony Limited
Gems and jewellery/specialty retail
“Abolition of excise duty on jewellery, capping VAT at 1% under the GST regime,
allowing duty free imports of cut and polished diamonds in bonded warehouse for value
add and re-export are some of our expectations from this year’s budget. Creation of an
Indian brand development fund to promote exports will also help in boosting the
organized segment of the Indian jewellery industry.”
Mehul Choksi, CMD,
Gitanjali Group
IT Services, technology, hardware and equipment
“In this year’s budget, we hope the STPI scheme is brought back in force for another
decade to boost the Indian IT industry. Providing special incentives for small and midsized IT companies for setting up technology centers would be a bonus. This will help
them in the longer run and will boost the exports business through off-shoring.
Additionally, we hope for the right infrastructure – road, power and other utilities - in
defined time lines. This is a big hurdle for Indian IT companies to attract and convince
Atul Hemani, MD,
Omnitech Infosolutions Ltd
10
global customers at times for their off-shoring business.”
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“We eagerly look forward to strong thrust and key policy decisions within the
infrastructure space of the country in the upcoming budget. Power and telecom are two
critical sectors that have not been able to capitalise on their full potential due to
challenges in adoption, implementation and execution of some key policy decisions. In
our opinion, greater momentum on this front and an effective execution framework for
initiatives like 'National Broadband Network' and 'Private Participation in Transmission
Sector' will yield positive results. Additionally, we strongly believe that the continuation
Anupam Jindal, CFO,
Sterlite Technologies Ltd
of fiscal benefits and stimuli with proactive measures to increase export incentives will
go a long way to ensure sustainable and long-term growth for the country.”
“Withdrawal of section 10B benefits has ended the tax holiday enjoyed by IT companies
engaged in development of software for export due to their STPI (Software Technology
Parks of India) status. The introduction of 18% MAT for firms based in SEZs (special
economic zones) has led to double whammy. The impact of higher tax rate is evident in
the FY12 bottom line. We believe lower taxation is essential for the software industry to
grow at a healthy pace. Further, the current dollar scarcity has forced export-oriented
companies like ours to take high-cost rupee loans. We hope the government introduces
Sudarshan Venkatraman,
Chairman,
measures to facilitate higher US dollar fund flow in the Indian economy.”
Zylog Systems Ltd
“Investment should be encouraged in power distribution and infrastructure space. Banks
should be tuned to changing business models which allow private participation in
troubled government assets. If financial institutions and the government provide the
necessary support, then private companies can turnaround the efficiency and help the
government to better utilise these assets”
Kapil Puri, CMD,
Spanco Ltd
Metals & Mining
“In this budget, we expect export duty on iron ore/ iron ore fines to be raised to give a
boost to local players and to promote exports of value-added items. We also foresee the
government spending more on infrastructure development and introducing steps to
increase foreign investments in India.”
Suresh Kumar Agarwal, MD, MSP
Steel and Power Ltd
11
CRISIL BudgetSpeak
“In this Budget, we expect the government to address the issue of raw material security
(mainly coal and iron ore) from the perspective of steel and power industry since both
these industries are heavily dependent on the government for the availability of raw
material. The government is required to strictly monitor the price behaviour of iron ore
since the cost of mining is not increasing at a pace the prices are moving; this is
affecting the margins of the steel players, especially the ones whose operations aren’t
integrated. We believe a decent amount of steel capacity will be added in the next
couple of years. It is critical for government to create a platform for a congenial and
Ajay Bhat, CFO,
Monnet Ispat & Energy Ltd
robust investment climate wherein the existing and the incremental capacities may
operate and grow – for example, investments to develop infrastructure and other
facilities will create demand for steel.”
Real Estate Management & Development
“Grant of industry status has been a long pending demand of the sector. A real estate
regulator, which will act as a facilitator, is also the need of the hour. Approval delays are
an area of huge concern; approvals need to be speeded up for faster execution of
projects. The proposed Real Estate Regulation Bill needs to be reviewed. The
government can consider rationalizing the tax structure and implementing GST at the
earliest. The limit of priority sector lending for housing in urban areas should also be
increased from the present Rs 25 lakh to Rs 45 Lakh. We expect the government to
open up FDI in multi-brand retail which will help in creating demand in the retail space.
Rohtas Goel, Chairman and
Doubling of the deduction of Rs 1.5 lakh for interest paid on home loans could ease the
Managing Director, Omaxe Ltd
burden on buyers. We also expect tax benefits to the corporates through the creation
Special Residential Zones (SRZs).”
“Many countries have given infrastructure status to the real estate sector which helps
them arrange funding from domestic as well as foreign markets at an affordable interest
rate. A similar status for the real estate sector in India will solve the funding problem to a
great extent. Since real estate is a major driver for economic growth and generator of
jobs across various verticals and associated industries, the government can also
consider granting it an industry status. Other expectations include reduction in home
loan interest rates, a hike in the tax rebate on home loan interest repayment from Rs 1.5
Pradeep Jain, Chairman,
Parsvnath Developers Ltd
12
lakh to Rs 3 lakh, reconsideration of the service tax rebate in residential housing
development and tax rebates under Section 80 IB (10).”
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“The consideration of raising the priority sector lending limit for housing loans by the
government will help in increasing the purchasing power of individuals to some extent.
The other thing is the possibility of some relief to individual income tax payers in the
forthcoming budget by raising the exemption limit, as provided in the Direct Taxes Code
(DTC), and hiking the slabs for different tax brackets. Both these things will increase the
disposable income of the salaried middle class to pay more for a house at the same
level of income. For example, if a man earlier was looking for a house worth Rs 40 lakh,
Ankur Gupta, Joint MD, Ashiana with the same level of income, he would be able to look at buying a Rs 42-43 lakh
Housing Ltd
home.”
Textiles, Apparel & Luxury Goods
“The fashion industry needs the government’s support in terms of research and
development, subsidy or concessions in taxation or any other financial aid. Levy of
excise duty of 4.635% of MRP on all branded apparels is ~10% of wholesale price,
which has proven detrimental for the growth of the industry and volumes have shrunk
considerably post levy of excise duty. We hope the budget includes branded apparel in
the list of 130 items, which fall in the category of 1% excise duty. This would go a long
way in employment retention, survival of the industry and augmentation of direct tax
Kewalchand Jain, CMD,
collection for government.”
Kewal Kiran Clothing Ltd
13
CRISIL BudgetSpeak
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