Re.

1/- For Private Circulation only

Profit is the Answer

Volume 1 : Issue 5 , 10th March 2010 Total Pages: 4

My Dear Client/Friends,

Market watched the Budget and as I mentioned in my earlier communication to you, several issues which had question marks
were reasonably resolved by a very good Budget presented by our Finance Minister, Hon’ble Shri Pranab Mukherjee.

He was clear, he had to confront the Commodity Prices, he was also clear that the stimulus package would not be withdrawn at
this early stage to a larger extent, he had also taken cognizant of the fact that exports are suffering because of the European
Market, but, despite all these challenges, the Budget has come up very well, but, more heartening is the fact that, our calculated Crisis Gone..Progess Ahead
predictions on the budget and the repercussion of the same stood true.
Global economy update: The acute phase of the financial
If you could kindly go to the last line of my earlier communication which says “that the best time to buy and gain during the period crisis has past and a global economic recovery is underway.
immediately after the Budget or just before the Budget” and while I wrote this comment on the budget in my earlier communica- However, the recovery remains fragile and is expected to
tion dated February 08, 2010 Nifty stood at 4760 and on the day of the Budget i.e. February 26, 2010, Nifty went up till 4922.30, slow in the second half of 2010 as the growth impact of fiscal
and a week after the Budget i.e. March 08, 2010 Nifty stood at 5124. Hence our judgment was on the right direction. and monetary measures wane and the current inventory cycle
runs its course. Although global growth is expected to return
However, on the disinvestment front, the Government instead of its targeted Rs. 30,000 Crores has decided to raise Rs. 40,000 to positive territory in 2010, the pace of the recovery will be
Crores, which will obviously reduce the fiscal deficit. It has also taken the bold step to raise the urea retail prices by ~10% and slow and subject to uncertainty. According to World Bank
has also introduced Nutrient Based Subsidy policy for the Fertilizer Sector. This will reduce Govt’s fertilizer subsidy burden. All global output is forecast to contract by 2.2 percent in 2009,
these actions are valued by foreign funds in its parameters of investment and these are positive signals for the market. but to register positive growth of 2.7 and 3.2 percent in 2010
and 2011 respectively. The main drag on global growth is
Again Government would like to yield maximum out of disinvestment and hence I feel by the time you receive this communication coming from high-income countries, whose economies are
market will do very well and I’ll always advise you to kindly take advantage of our recommendations and take the full benefit of expected to have contracted by 3.2 percent in 2009. Pros-
the market. pects for developing countries are for a relatively robust re-
covery in 2010, with growth of 5.1 percent in aggregate.
With kind personal regards
Regional Outlook: South Asian Countries: The stabiliza-
tion and progressive thawing of global financial markets in
early 2009 and the rebound of world trade a output growth
beginning in the second half of 2009 have contributed to im-
proving conditions in South Asia. This process has been sup-
ported by improved investor sentiment on comparatively
Hemal Kampani
strong growth outturns (India
and Bangladesh), ongoing or
new International Monetary
Fund (IMF) stabilization pro-
NIFTY: The Road Ahead … - The Tech Desk grams (Pakistan, Sri Lanka,
and most recently the Mal-
dives), steep reductions in in-
terest rates, and improved po-
litical stability.
East Asia & Pacific: East Asia's rebound from the global
downturn over the course of 2009 was quicker and more ro-
bust than in other parts of the world. China led the global re-
covery in industrial production, with contributions to growth
from the high-income OECD countries emerging only later in
the year. The recovery in East Asia was underpinned by do-
mestic stimulus programs put in place by a number of econo-
mies.
US: The US, hit by the financial meltdown, is on recovery
path and has witnessed good growth in recent quarters. De-
spite improving economic situation, the labour market contin-
ues to remain sluggish, with jobless rate hovering at around
10 per cent. On the other hand, manufacturing activity
strengthened in most of the districts, especially in the high-
tech equipment, automobile, and metal industries.
Source: World Bank, Various

What Indian Market can Expect...

“India’s shares may “outpace” other emerging markets as the
country’s economy strengthens… India’s macroeconomic fun-
damentals have significantly improved”
- Mark Mobius, Templeton Asset Management

“ ...consensus estimate of the growth in Sensex earnings is 20-

22%. But much of that growth would be concentrated in com-
modity companies, which stand to gain from rising commodity
prices. From an FY11 perspective, the market is fairly valued.”
- Alroy Lobo, Chief Strategist &
Global Head of Equities, Kotak
“I don't look to jump over 7-foot bars: I look around for 1-foot bars that I can Asset Management.
step over.” - Warren Buffett
“ To breach the 10% growth
In the beginning of February, Nifty retraced almost to its 200 Day Exponential Moving Aver- mark, we will need special ef-
age (DEMA) of 4655, after the January high of 5310. This was the first time Nifty came so forts, but it is all well within the
close to its 200 DEMA ever since it broke it at 3430 in April 2009. As per the Technical Analysis theory, 200 DEMA is a very deci- realm of the possible now. The
sive factor to determine whether a stock is in bull or bear run. Though, this was a normal retracement for Nifty since it had rallied savings rate is at 32.5%. We have to ensure that it does not
more than 2700 points since March 2009. drop further. As the stimulus is gradually rolled back and the
demographic dividend sets in, my expectation is that our sav-
Ever since Nifty tested its 200 DEMA, it was in a range between 4675 and 4950. This range had been an upside biased though. ings will go up to over 36%, which is an extremely robust fig-
Moreover, a consolidation like this helped Nifty to strengthen for another strong upside rally. Post budget, Nifty broke this range ure. “
with high volume and moved in a steep uptrend. Nifty went on making higher highs and higher lows to cross 5100. - Kaushik Basu, Chief Economic Advisor, Finance Ministry
Nifty had earlier made a triple top at 5182 in October and twice in December 2009. Thus, 5182 will remain a critical resistance for
Nifty. A closing above this level will ensure that Nifty will test its January highs of 5310. Another critical thing to be seen here is “The Indian National Accounts are probably one of the best in
the fact that every time Nifty gives a strong up-move, it comes with huge volume, however, when Nifty retraces, the volumes dry Asia. In some respects, we are at par with some of the devel-
down. This is a strong sign of continuation of the Bull Run. Thus, for traders, every dip in the market is a strong buying opportu- oped countries…India is the first country in the world, where
nity. And the current trend shows that the road ahead for Nifty is very encouraging with plenty of room for upside. IMF is conducting this S&A 2008 revision workshop.”
- Dr. Pronab Sen, India’s Chief Statistician.

Page ::-- 1
 Union Budget 2010-2011 : Fiscal Consolidation to lead the way
The Finance minister is man true to his words. As promised in the last budget in July 2009, Mr
Pranab Mukherjee has gone back to fiscal consolidation from this year. He plans to bring the
fiscal deficit to 4.1% by FY13 in a calibrated manner, that too without increasing taxes for the
corporate sector and common man. We applaud his efforts. Also the Govt. is moving in the right
direction with dates set for introduction of GST and Direct Tax Code. Higher dis-investment to
finance social and rural infrastructure is also a step in right direction. Partial roll back of fiscal
stimulus where it has outlived its usefulness shows the Govt.’s commitment to fiscal responsibil-
ity in the medium to longer term. However, on the negative side the budget would also have an
inflationary impact on account of higher excise duties and higher transportation cost.
Partial Stimulus Rollback: The world still needs the stimulus to deal with the recession, but the
Indian Govt. has started the process of exit from the stimulus package in a calibrated manner. >
The excise duty has been rolled back by 2% (the rollback is only a third of the total benefit given
of 6%). This will impact cement, capital goods and autos. > The excise hike of Re1/ litre on both petrol and diesel. > Restoration of basic duty on diesel and petrol to 7.5% from 2.5% earlier and for
other refined products it has increased back to 10% from 5% earlier. > However the service tax has been maintained at 10%.
Direct Tax Reforms: > Corporate taxes - Though the corporate tax rates have been maintained, the surcharge has been reduced from 10% to 7.5%. Also the MAT rate has been increased from
15% to 18%. The STPI and EOU benefits has ended with non-extention of the deadline beyond Mar 31, 2010. > Income taxes - The Slabs for income tax have been increased substantially giving
benefit to middle and upper middle class households. This will lead to loss of Rs26000cr for the Govt tax revenue. Also the exemption limit has been increased by Rs20,000 for investment in Infra-
structure bonds.
Disinvestment: In RE 2009-10, proceeds of Rs.25000 cr on account of disinvestment of NHPC, NTPC, Oil India, REC, and NMDC
have been estimated. The Govt. has constituted a “National Investment Fund” (NIF) into which the proceeds from disinvestment of
Government equity will be channelized. The funds so credited to NIF will be withdrawn and used for part funding the various Social
Sector schemes. Other than this, receipts of Rs.958 cr have been assumed on account of bonus shares issued by IOC in RE 2009-
10. For FY11 a much higher disinvestment target has been fixed at Rs40,000. We can expect dis-investment of Coal India, Power
Grid, RITES, BSNL, SAIL, EIL, SUJVNL during the year 2010- 11. This dis-investment has helped bring down fiscal deficit by 60 bps
for 2010-11.
Inflationary Impact: > Power - Higher prices of coal due to the clean energy cess will raise the cost of power generation by Rs 0.03/
Kwh which will pass on the electricity consumer care. > Steel - Hike in excise duty by 2% which translates into Rs 600/T will be
passed on to end consumer. > Cement - Prices are likely to go up by ~Rs1.5 – 3.0/50Kg bag however due to oversupply concern
the hike may not pass onto the end users for the short term. > Auto - We expect the prices to be severely affected due to increase in
excise and increase in input prices. > Transportation - a) Hike in diesel and Petrol prices by Rs 2.71/L and Rs2.5/L would increase
the transportation cost. b) Exemption of service tax of 10% on transport via rail has been withdrawn. As a result bulk transporters such as Steel , Cement , Auto ,Fertilizer companies as well as min-
ing companies will have an incremental affect on their freight cost by Rs 100/T.c) Due to increase in customs duty on other petroleum product from 8%-10%. Jet fuel will be costlier by Rs 1500/Kl.
Impact on FMCG: > MAT rate increased from 15% to 18%: Will increase the tax outgo. However decrease in surcharge by 2.5% is a relief. > Increase in excise duty on Cigarettes to 16%: This
would require the companies to increase the prices further by 6-7%. > Higher allocation to NREGA to Rs 41K Crs will enhance rural income and there by boost FMCG spending.
Banking <Positive>: > Extension of the prepayment period for 'agricultural debt waiver and debt relief scheme’ from Dec 2009 to June 2010. This was a demand by the banking sector, as due to
poor monsoon some loans were turning into NPLs. This will lead to lower NPAs for the PSU banks This will provide interim relied to mostly PSU banks like PNB, Bank of Baroda. > Also Incentive of
additional one per cent interest subvention to farmers who repay short-term crop loans as per schedule, increased to 2% for 2010-11. > RBI to consider giving some additional banking licenses to
private sector players, including NBFCs if they meet the RBI’s eligibility criteria. Possible beneficiaries would be Reliance Capital, Dhanalaxmi Bank > Recapitalization of PSU Banks to the extent of
Rs16500cr. Would benefit small banks like UCO Bank, Central bank of India, Andhra Bank where tier 1capital is low. > The Fiscal Consolidation promised in the budget is positive for the banking
sector in two ways- one it limits the inflationary pressure on interest rates and secondly the lower than anticipated borrowing program of the govt will not crowd out bank credit. > Additional limit of
Rs20,000 on income tax exemption limit for investment in infrastructure bonds. This is a huge positive for infrastructure finance companies, as it would lower their financing cost. Positive for PFC,
REC, IDFC. > Government to provide further capital to strengthen the RRBs so that they have adequate capital base to support increased lending to the rural economy.
Fertilizer <Positive>: > A Nutrient Based Subsidy policy for the fertilizer sector has been approved by the Government and will become effective from April 1, 2010. This will lead to an increase in
agricultural productivity and better returns for the farmers and overtime reduce the volatility in demand for fertilizer subsidy and contain the subsidy bill. > Under the new policy, the companies can
fix retail fertilizer prices. However the urea prices will be increased by Rs 483 per tonne or 10 per cent. The hike in urea prices is not going to impact the bottom-line or EPS of fertilizer companies,
as extra 10 per cent will go from farmer’s pocket directly. However, looking at the shift in policy, it’s a big positive for the industry. We believe it will be marginally positive for the complex fertilizer
manufacturers like Coromandel, RCF etc.
Infrastructure Sector (Roads, Power, Airport, Realestate Developers) <Positive to Neutral>: > We consider 1% interest rate subvention towards housing loans below Rs. 10 lacs (where cost
of house does not exceed Rs. 20 lacs) is a calibrated effort from the Govt to continue with the stimulus associated with the low cost housing segment. We expect the demand situation in this seg-
ment continue to be buoyant and obvious beneficiaries will be companies operating in this space. > Planned allocation towards NHAI has been increased by 13% to Rs. 19894 crs and is expected
to maintain the momentum in highways construction which has been quite active for the last 3-4 months. (Companies like Nagarjuna Construction, IRB Infra, IVRCL and others). > Targeted dis-
bursements by IIFCL are Rs. 9000 crs by Mar 2010 and Rs. 20000 crs by Mar 2011. Along with this refinancing facility to the extent of Rs. 25000 crs in the next three years under Take out financ-
ing scheme is also expected to address the much debated issues of financing faced by the infra developing companies. (Big infra companies like Reliance Infra) > Planned allocation to the power
sector increased from Rs. 2230 crs to Rs. 5130 crs. We expect central utilities like NTPC to be a major beneficiary of these increased planned allocations by the Govt. > Optimism regarding issues
of competitive bidding for allocating captive coal blocks is also expected to be a big trigger for the power generating companies in a situation where fuel security is considered as a prime risk by all
private power developers as well as steel companies.
(Companies like GMR, Adani Power, Jindal Saw, etc) >
Govt focus on promoting renewable energy can be ex-
pected with planned budgetary allocation towards the same Fiscal Balance
being increased by 61% to Rs. 1000 crs from Rs. 620 crs. In Rs Trillion
(Companies like Tata power, Websol Energy Systems,
FY09AE FY10BE FY10RE FY11BE % change
Moserbaer, etc). > Increase in Mat Rate increased from Total Revenue Receipts 5.4 6.17 5.8 6.85 18.10%
Increase in
15% to 18% can have a marginal negative impact upon the Tax revenue 6.05 6.41 6.33 7.466 17.90%
earnings of companies engaged in development space and Corporate 2.13 2.56 2.55 3.01 18.00% Tax slabs
enjoying tax holidays and coming under alternative tax re-
gime. (all the IPP’s as well as other infra developers like On Income 1.2 1.12 1.31 1.28 -2.30%
Rollback of excise duty
GMR Infra, GVK Power, etc) > The Govt has imposed a Excise 1.08 1.06 1.02 1.32 29.40%
Cess on domestic as well as imported coal to the extent of by 2% & incre ase in
Rs. 50 per ton for the purpose of building up of National Customs 0.99 0.98 0.847 1.15 35.80%
Clean energy fund and promoting clean technology in the customs on o il
Service tax 0.61 0.65 0.58 0.68 17.20%
energy space. We expect this move to have a marginal Service Tax rate
negative impact (~1.5 – 2.5%) upon the fuel cost of power Centre's Share 4.43 4.77 4.68 5.37 14.70%
companies however this Clean energy fund can be consid- Non Tax Revenue unchanged, but mo re
0.97 1.4 1.12 1.48 32.10%
ered to be big push towards setting up of renewable energy se rvices taxed
projects) > Concessional customs duty of 5% along Capital Receipts 2.09 4.06 4.49 4.26 -5.10%
with Exise duty exemptions to machinery and equip- Total Receipts 8.83 10.2 10.21 11.09 8.60%
ments required for Solar projects can give a good boost
to the companies engaged in Solar Power projects and Non Plan Expenditure 6.08 6.96 7.06 7.356 4.20% Non plan exp
participating in National Solar Power mission (Companies
Plan Expenditure 2.75 3.25 3.15 3.73 18.40% controlled
like Tata power) > On the wind power segment the Govt
has announced to provide Central Exise exemption to Revenue Account 2.34 2.78 2.64 3.15 19.30%
certain specified inputs required for rotor blade manu-
Capital Expenditure 0.4 0.47 0.51 0.58 13.70%
facturing. We expect this move to be a big incentive for Expenditu re g rowth
the companies operating in the manufacturing of wind Total Expenditure 8.83 10.21 10.21 11.086 8.60%
power equipments space and also the companies engaged kept in check
in wind power generation. Companies like Tata Power,
Suzlon, etc). Fiscal Deficit 3.36 4.01 4.14 3.81 -8.00%
With the policies and different planned expenditure pro- Revenue Deficit Decrease in deficit in
2.53 2.83 3.29 2.76 -16.10%
grams that the Govt has announced we believe Infrastruc- both absol ute terms
ture is the area where they tried to continue with the stimu- Primary Deficit 1.44 1.77 1.94 1.32 -32.00%
lus directly or indirectly in the nature of different social sec- and in %
tor spending and other forms of reforms. We expect all the
spending programs to have a significant impact upon the FD % of GDP 6.00% 6.80% 6.90% 5.50% (140bps)
continuation of investment cycle of the economy and top- RD % of GDP 4.50% 4.80% 5.50% 4.00% (150bps)
line expansion of all the companies in this space to happen
in a pretty significant way in the coming few years. PD as of GDP 2.60% 3.00% 3.20% 1.90% (130bps)
Continued in Pg 4 S ou rce: RBI, Bl oomberg

Page ::-- 2
STOCKS for The MONTH Swing Trading, Stop Loss & Price Target?
What Does Swing Trading Mean?
Listed below are some of the Stock that we believe are provide good entry levels and
A style of trading that attempts to capture gains in a stock within one
will give good returns in the coming month. Readers are requested to maintain the level
to four days. Swing traders use technical analysis to look for stocks
and maintain stop loss.
with short-term price momentum. These traders aren't interested in
STOCK BUY@ STOP LOSS TARGET the fundamental or intrinsic value of stocks, but rather in their price
trends and patterns.
ASHOK LEYLAND 52-53 50 60
What Does Stop-Loss Order Mean?
IVRCL 327 320 360
An order placed with a broker to sell a
ORIENTAL BANK OF COMMERCE 295-300 280 326 security when it reaches a certain
price. A stop-loss order is designed to
GE SHIPPING 285-288 275 315 limit an investor's loss on a security
JSW STEEL 1190 1140 1275 position.
Also known as a "stop order" or "stop-
CHAMBAL FERT 60-61 58 67
market order".
TATA STEEL 590 574 630 What Does Price Target Mean?
RIL 1010 980 1070 1. A projected price level as stated by an investment analyst or advi-
sor.
CIPLA 306 296 333
NOTE. ALL STOP 2. A price that, if achieved, would result in a trader recognizing the
JP ASSOCIATES 140 135 156 LOSS ARE ON best possible outcome for his or her investment. This is the price at
CLOSING BASIS. which the trader would like to exit his or her existing position so that

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Top 10 Open Ended -Tax Savings Funds - Period (Last 12 Months) By Amit Basu
Tax Saving is in the priority list for everyone now. The approach fol- Last 12
Rank Scheme Name Date NAV (Rs.)
lowed by most of us is the last minute scampering to find out how Months
much you need to invest in order to avail the maximum benefit under 1 ICICI Prudential Taxplan - Growth Mar 10 , 2010 124.51 156.8004
Section 80C. Tax saving, if not planned properly, can lead to incorrect
investment decisions. While no investment is good or bad in itself, it is 2 Bharti AXA Tax Advantage Fund - Eco - Growth Mar 10 , 2010 22.85 151.2942
the suitability of the product for an individual which decides whether an 3 Bharti AXA Tax Advantage Fund - Regular - Growth Mar 10 , 2010 22.8 150.7459
investment is good or bad for him. Hence, we have again provided you
a list of the TOP 10 Open ended Tax saving Mutual Funds to make 4 Canara Robeco Equity Taxsaver - Growth Mar 10 , 2010 22.47 142.3305
your decision making a little easier. Remember, For best results invest 5 Birla Sun Life Tax Relief 96 - Growth Mar 10 , 2010 10.7 140.4125
in a systematic manner. Plan your Tax Saving early and benefit by be-
6 HDFC Taxsaver - Growth Mar 10 , 2010 199.867 138.3389
ing a smart investor.
7 L&T Taxsaver Fund - Growth Mar 10 , 2010 14.79 134.2151

*Note: - Returns calculated for less than 1 year 8 ING Tax Saving Fund - Growth Mar 10 , 2010 25.41 130.6813
are Absolute returns and returns calculated for 9 HDFC Long Term Advantage Fund - Growth Mar 10 , 2010 116.263 123.8817
more than 1 year are compounded annualized.
10 DSP BlackRock Tax Saver Fund - Growth Mar 10 , 2010 15.158 119.4313

Page ::-- 3
Union Budget 2010-2011 : Fiscal Consolidation to lead the way (Contd)
Healthcare <Neutral>: During the budget plan allocation to Ministry of Health & Family Welfare increased from Rs 19,534 crore in 2009-10 to Rs 22,300 crore for 2010-
11. As expected there were no major sops for the pharmaceutical sector as a whole. But in order to encourage R&D activities, weighted deduction on expenditure in-
curred on in-house R&D enhanced from 150 per cent to 200 percent. This would benefit research oriented pharma companies like Biocon, Cipla, Ranbaxy, Divis Lab
and others. But on the other hand MAT increase from 15% to 18% will nullify this positive effect. So overall it’s neutral for the pharmaceutical industry.

IT (Pain for Smaller/medium IT companies)<Neutral to Positive>: No extension of STPI: Neutral for Infosys, TCS, Wipro. We believe the non extension of STP law is on the card. It will have
virtually no impact on the EPS of the above mentioned companies as they have their SEZ units . However It will increase the tax outgo for Small/Medium IT companies from FY11 onward. This will
increase the effective tax rate from 14-15% to 22%. > Service tax refund simplified for IT/ITES: Positive impact on IT, BPO. > MAT increased from 15% to 18%: Negative for IT. It will increase the
tax outgo further. However the reduction in surcharge from 10% to 7.5% was a relief. > National Clean Energy Fund for funding research and innovative projects in clean Energy technologies to
be established: Positive for IT especially for Wipro which has strong hold in providing green technology. > Excise Duty on CFLs cut to 4%: Positive for Wipro Consumer care. > Service tax re-
tained at 10%: Positive for all under service gambit. > Reduction in duty for photovoltaic units: Positive for Moserbaer. > Central excise on LED lights cut to 4%: Positive for MIC, Wipro Con-
sumer care. > Technology driven tax administrative reforms: Positive for IT. We expect this would increase govt IT spending. > New technology platforms for new legislations: Positive for IT. This
would also increase administrative IT spending in state and central level. > UID scheme Budget allocation increased from Rs100Crs to Rs 1900 Crs : Positive for IT. Stock in focus TCS , Wipro,
Bartronics. > Smart Card extended to NREGA: Stock in focus Bartronics. > Anomaly regarding the computation mechanism for profits eligible for tax holidays removed: Positive for Infosys, TCS.
> Weighted deduction for expenditure on in-house research increased to 200% from 150%: Positive for Wipro , TCS and other IP related IT companies. Telecom (Already discounted in the
price) > MAT increased from 15% to 18%: Negative for Telecom. However the reduction in surcharge from 10% to 7.5% was a relief. Hyper competition in domestic market had enough effect on
their EPS. So a little increase in MAT rate here and there doesn’t really matter . We believe the next trigger for the telecom sector as a whole would be the 3G rollout.

OIL & Gas <Neutral>: Union Budget 2011-12 may not descend too well for Oil and Gas sector as FM will continue with its current method of paying out oil subsidy in cash and decision to imple-
ment Kirit Parikh Committee recommendations will be taken on due course. However, the industry was expecting a clear subsidy sharing mechanism of cash subsidy/oil bonds and clarity of tax
holidays for natural gas production under NELP I-VII. Key Highlights : > Increase in Minimum Alternate Tax Rate (MAT) from current 15% to 18% of book profit. While Oil exploration and produc-
tion companies had sought an exemption from MAT. > Oil Ministry will take decision on Parikh Committee Report on deregulation petrol and diesel prices in due course. > FM will continue with its
current method of paying out oil subsidy in cash Petroleum subsidy for 2010-11 is expected to be at around Rs 31.08 bn. > Restoration of the basic custom duty of 5 per cent on crude petroleum
from nil.> Restoration of basic duty on diesel and petrol to 7.5% from 2.5% earlier while the same has increased back to 10% for other refined products from 5% earlier. > Enhancement of Central
Excise duty on petrol and diesel by Re.1 per litre each to Rs 14.35 and Rs 4.6 per litre respectively. Impact > The hike in central excise tax for refined products is negative for oil marketing compa-
nies such as Indian Oil Corporation, HPCL, BPCL etc. > Restoration of customs on crude is negative for all refiners specially Reliance Industries Ltd, Essar Oil with their input cost going up. > Re-
liance Industries Ltd. will also be hit by the increase in MAT to 18%. > The incidence of customs and excise duty would result in petrol prices going up by Rs 2.71 a litre in Delhi and diesel by Rs
2.55 per litre which are currently at Rs 44.72 and Rs 32.92 per litre respectively.

Auto & Auto ancillary <Positive>: The direct impact of the budget on the Vehicles Segment Probable Proposed Present Average No of units Expected Price
Automobile industry is minimal as the hike in the excise duty at least by 2% Rise In Prices Structure Structure Price sold in a year Rise
was expected; however, indirect impact on the auto industry is there. We be-
Two Wheelers 1142.02275 10% 8% 75000 7613485 Rs.800-2500
lieve that the impact will be POSITIVE on this sector in the upcoming time pe-
riod. Following are some of the highlights of the budget on the sector: Direct Small Cars 1048.2637 8% 8% 550000 952967 Rs.5000-12000
Impact:
Large Cars 3856.7936 22% 20% 3200000 602624 Rs15000-200000
As expected, government has increased the peak excise duty by 2% to 10%.
Ad valorem component of excise duty on large cars & multi utility vehicles in- Commercial Vehicles 1218.057 24% 22% 1500000 406019 Rs 14000-100000
creased by 2% to 22%. Indirect Impact: Govt. has allocated Rs.40100
Crore under NREGA scheme-Higher allocation of fund in National Rural Em-
Additional Revenue by the way of Exercise In Crores Rs.7265
ployment Guarantee Act (NREGA) will act as a catalyst for the two wheeler
sector. This allocation will also remove the dismal effect of lower Kharif production to a certain extent on the sales of two wheeler sector. This move is a positive signal for the two wheeler manu-
facturers. Hero Honda will be the major beneficiary as the company is having 40-45% of exposure in rural areas.

Full exemption from excise duty for trailers& semi trailers used in agriculture. Fuel - Impact will not be significant on the industry. Initially, some turbulence will be there, but will pacify at the
later stage. Govt. has increase the excise duty of Rs1/litre on both petrol & diesel; however, govt. has exempted the central excise duty to both electric vehicles as well as vehicle which provide
eco friendly solution. Domestic manufacturers like Maruti & Tata will benefit from this as company is having models with alternative fuel mechanism. Commercial Vehicles - The demand for the
M&HCVs will increase in the upcoming period as the govt. has allocated Rs. 19894 Crore, an increase of 13% as compared to 2009-10. Govt. has stressed on constructing 20km/day. In overall,
govt. has allocated Rs. 173552 Crore for rural & urban infrastructure. For implementing the same, demand for the M&HCVs will increase accordingly. Companies like Tata Motors, Ashok Leyland
& M&M will benefit from this. Higher Tax Slabs - This will act as a positive catalyst for the Automobile Industry when many launches are expected in the coming financial year.

Motto of Promoting Equality— Budget Review

The tax slabs in India are set in the ascending order of net income levels in bid to promote equality among various income group people. Like, for instance, there is no
tax payable for people whose income is less than Rs.1, 60,000. However as your income crosses this stipulated level, the person is taxable at the rate of 10% up to
certain level and even higher as levels step up. Such measures of tax slabs are usually proposed to instill a sense of equality where poor contributes less towards the taxa-
tion and nation’s developmental and social sector needs, while the richer pays more from their higher income. New tax proposals by finance minister in budget 2010:
 No tax limit up to income of Rs.1.6 lakh.
Taxable Tax -before Tax after Saving(Rs)
 For income between 1.6 lakh to 5 lakh, the tax liability will be 10%.
Income budget(Rs) budget(Rs)
 For income between 5 lakh to 8 lakh, the tax liability will be 20%.
(Rs)
 Individuals with income of above 8 lakh will have tax liability of 30%.
200000 4120 4120 0
The limit of no tax liability during the old regime was Rs.1.6 lakh which remains the same this time
500000 55620 35019 20601
around. In effect, the tax slab for the lower to lower-middle class population remains unchanged and
1000000 210120 158619 51501 brings no incremental benefits. The population which comes under the income group of around Rs.1.6
1200000 271919 220419 51500 lakh forms the bottom broad base of the pyramid which enjoys no specific tax slab adjustment this time
1500000 364619 313119 51500 around.
2000000 519119 467619 57680 The second tax slab proposal which is Rs.1.6 lakh to Rs.5 lakh, attracting 10% tax liability on the
2500000 673619 622119 57680 net income, has witnessed an increment at its upper band from Rs.3 lakh in previous year to Rs.5 lakh
for the upcoming financial year. In effect, the policy change will benefit only the selected section of the
4000000 1137119 1085619 57680 population whose income is more that Rs.3 lakh. For those whose income is more than Rs.1.6 lakh and
below Rs.3 lakh, the net effect is same as previous year- no incremental savings. Coming to third tax
slab proposal which is Rs.5 lakh to Rs.8 lakh, attracting 20% tax liability on the net income, has wit-
nessed an increment at both its lower and upper band. As per the old regime, the population with income above Rs.5 lakh and below Rs.8 lakh attracted a higher tax liabil-
ity of 30%. These income group people will now save tax as they have to pay lesser tax at the rate of 20% in line with adherence to the new tax slab proposals.

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