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METALS & MINING
BUDGET HIGHLIGHTS & IMPACT
Iron Ore (Negative)
n Export duty on iron ore fines quadruples to 20% while raised by onethird
for lumps
Impact: 300% increase in export duty on iron ore fines to 20% came as a
big negative surprise as expectations in case of increase were limited to 10%
and in best case 15%. Export duty on lumps also increased to 20%. This would
have significant negative impact on Sesa Goa.
Steel (Neutral)
n Sustained infrastructure thrust to stimulate steel demand
Impact: Budgetary support for steel intensive infrastructure sector increased
by 23% to Rs.2140bn. Positive for steel companies as higher outlay for road,
railways, power, urban and rural infrastructure development to lead to higher
steel consumption.
n Excise duty on steel/auto/consumer durable remains untouched at 10%
Impact: Further rollback of excise duty to 12% for steel, automobiles or
consumer durables would have been negative. So no duty change comes as
a relief.
n Increase in effective MAT by 0.075% to 19.425%
Impact: Negligible impact for steel and sponge iron players who have reasonable
contribution from power unit sales. MAT of 18% + 7.5% surcharge which
effectively meant 19.35% tax replaced by 18.5% + 5% surcharge which
effectively means 19.425%, so negligible change.
Stainless Steel (Positive)/ Ferro Alloys (Negative)
n Duty cut on stainless scrap to 0 from 2.5% and from 5% to 2.5% on
ferro- nickel
Impact: The Budget has proposed to cut duty on stainless scrap to 0 from
2.5% and that on ferro- nickel to 2.5% from 5%. This would translate into
reduced cost of production by $15-17/t for stainless steel companies so
marginally positive for stainless steel companies. Ferro alloy companies would
be hit as imports become cheaper by 2.5%.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
METALS & MINING
BUDGET HIGHLIGHTS & IMPACT
Iron Ore (Negative)
n Export duty on iron ore fines quadruples to 20% while raised by onethird
for lumps
Impact: 300% increase in export duty on iron ore fines to 20% came as a
big negative surprise as expectations in case of increase were limited to 10%
and in best case 15%. Export duty on lumps also increased to 20%. This would
have significant negative impact on Sesa Goa.
Steel (Neutral)
n Sustained infrastructure thrust to stimulate steel demand
Impact: Budgetary support for steel intensive infrastructure sector increased
by 23% to Rs.2140bn. Positive for steel companies as higher outlay for road,
railways, power, urban and rural infrastructure development to lead to higher
steel consumption.
n Excise duty on steel/auto/consumer durable remains untouched at 10%
Impact: Further rollback of excise duty to 12% for steel, automobiles or
consumer durables would have been negative. So no duty change comes as
a relief.
n Increase in effective MAT by 0.075% to 19.425%
Impact: Negligible impact for steel and sponge iron players who have reasonable
contribution from power unit sales. MAT of 18% + 7.5% surcharge which
effectively meant 19.35% tax replaced by 18.5% + 5% surcharge which
effectively means 19.425%, so negligible change.
Stainless Steel (Positive)/ Ferro Alloys (Negative)
n Duty cut on stainless scrap to 0 from 2.5% and from 5% to 2.5% on
ferro- nickel
Impact: The Budget has proposed to cut duty on stainless scrap to 0 from
2.5% and that on ferro- nickel to 2.5% from 5%. This would translate into
reduced cost of production by $15-17/t for stainless steel companies so
marginally positive for stainless steel companies. Ferro alloy companies would
be hit as imports become cheaper by 2.5%.
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