You are on page 1of 32

Wealth Research, Unicon Financial Intermediaries Pvt Ltd

Tight rope walk: Deftly handled

Last year has been a roller coaster ride in steering the economy
through the depths of recession. In hindsight, the fiscal stimulus and
the focus on common man, the twin themes of last year’s budget
have paid rich dividends in helping the economy battle the winds of
recession and the Finance Minister showed no signs of deviating
from this path in the current budget too, and rightly so, in our

Going into this budget, the marketplace was concerned on how the
budget would shape the economy’s trajectory in the coming year
and we feel that Mr Mukherjee had delivered a budget which was
similar in takeaways compared to last year but importantly, it
balanced the varied demands of fiscal prudence, taming the
runaway inflation, bridging the fiscal deficit while maintaining support
to the various programs initiated last year to sustain the fledgling
growth momentum coming out of recession. With this, we feel that
the stage is set for a sustainable growth going forward.

Major Themes
The current budget is a multi pronged strategy to help achieve the
objective of 9% growth by 2012, with the various measures being fiscal
prudence through gradual rollback of stimulus package, rationalization of
subsidies, continued focus on Rural India with increasing spends on
programs such as NREGA, Bharat Nirman & associated programs, and
relief for common man through direct tax reforms. All through, the
overriding theme has been inclusive growth, the flagship initiative of the
UPA government. This budget would result in higher disposable incomes,
much needed thrust to the Infrastructure sector & better amenities in terms
of Education, Healthcare and Food security.

The budget was instantly welcomed by the investor community and the
markets cheered the proposals, gaining over 2% before partly paring the
gains towards the end of the session. While some of the stimulus
measures from last year have been rolled back, we feel that the resultant
fiscal prudence, the stress on inclusive growth, the Infrastructure push
along with the tax reform has the potential to drive the markets higher in
the medium to long term.

Wealth Research, Unicon Financial Intermediaries Pvt Ltd

Macro Backdrop (economic survey)
• Economy likely to grow by 8.75% in FY11, return to 9% growth by FY12.
• High double digit food inflation of 17.9% in December 2009-10 a major concern
• Gross fiscal deficit pegged at 6.5 % of GDP in 2009-10
• 32.5% savings & 34.9% investment (as % of GDP in 2008-09) puts India in league of world’s fastest
growing nations.
• Domestic Oil production to rise 11% in 2009-10, Gas output up 52.8% to 50.2 billion cubic meters
• The industrial growth is estimated at 7.7% for the period April-November 2009-10. This industrial
growth is likely to be supported by renewed momentum in the manufacturing sector, which is estimated
to double from 3.2% in 2008-09 to 8.9% in 2009-10

Key Takeaways of Budget 2010-11

Agriculture Sector
• INR 4 Bn provided to extend the green revolution to Eastern region comprising Bihar, Chattisgarh,
Jharkhand, Eastern UP, West Bengal and Orissa.
• INR 3 Bn provided to organise 60,000 “pulses and oil seed villages” in rain-fed areas during 2010-11
• INR 2 Bn provided for sustaining the gains already made in the green revolution areas through
conservation farming, which involves concurrent attention to soil health, water conservation and
preservation of biodiversity.
• FCI to hire godowns from private parties for a guaranteed period of 7 years.
• Debt waiver scheme extended to June 30, 2010 and interest subvention to farmers increased to 2% for
• The Government has decided to set up five mega food park projects over and above the earlier ten.
• External Commercial Borrowings to be available for preservation or storage of agricultural and allied
produce, marine products and meat.
• A Nutrient Based Subsidy policy for fertiliser sector will be effective from April 1, 2010.

Export Thrust
• Extension of existing interest subvention of 2% for one more year for exports covering handicrafts,
carpets, handlooms and small and medium enterprises
• Similarly, specified raw materials and equipment imported by manufacturer-exporters of leather goods,
textile products and footwear industry are fully exempt from customs duty, subject to specified

Wealth Research, Unicon Financial Intermediaries Pvt Ltd

• Customs duty on unworked corals has been reduced from 5% to Nil.

• INR 1.73 Tn provided for infrastructure development which accounts for over 46% of the total plan

Social Sector Development

• An amount of INR 480 Bn allocated for rural infrastructure programmes under Bharat Nirman and INR
1.2 Tn allocated for Rajiv Awas Yojana.
• A new initiative, “Swavalamban” will be available for persons who join New Pension Scheme (NPS).
• Allocation for urban development increased by 75% to INR 54 bn in 2010-11.
• Allocation for Housing and Urban Poverty Alleviation raised to INR 10 Bn in 2010-11.
• Scheme of 1% interest subvention on housing loan extended up to March 31, 2011.

• Plan allocation for school education increased by 16% to INR 310 Bn in 2010-11.
• States will have access to INR 36.7 bn for elementary education under the Thirteenth Finance
Commission grants for 2010-11.

• An Annual Health Survey to prepare the District Health Profile of all Districts shall be conducted in
• Plan allocation to Ministry of Health & Family Welfare increased from INR 195.3 Bn in 2009-10 to INR
223 Bn for 2010-11.
• Allocation for Mahatma Gandhi National Rural Employment Guarantee Scheme stepped up to INR 401
Bn in 2010-11.
• Rashtriya Swasthya Bima Yojana benefits extended to all such Mahatma Gandhi NREGA beneficiaries
who have worked for more than 15 days during the preceding financial year.

National Security
• Allocation for Defence increased to INR 1.47 Tn including INR 0.60 Tn for capital expenditure.
• About 2,000 youth to be recruited as constables in five Central Para Military Forces from Jammu and
Kashmir in the year 2010

Direct Tax
• Direct tax Code and Goods & Service tax to be implemented from April 2011.

Wealth Research, Unicon Financial Intermediaries Pvt Ltd

• Income tax slabs for individual taxpayers to be as follows
Income upto INR 0.16 M Nil
Income above INR 0.16 M and upto INR 0.5 M 10 %
Income above INR 0.5 M and upto INR 0.8 M 20 %
Income above INR 0.8 M 30 %

• Deduction of an additional amount of INR 20000 allowed, over and above the existing limit of INR
100000 on tax savings, for investment in long-term infrastructure bonds as notified by the Central
• Current surcharge of 10% on domestic companies reduced to 7.5%.
• Minimum Alternate Tax (MAT) increased from the current rate of 15% to 18%.
• Limits for turnover, over which accounts need to be audited enhanced to INR 6 Mn for businesses and
to INR 1.5 M for professions.

Indirect Taxes
• Rate reduction in Central Excise duties to be partially rolled back and the standard rate on all non-
petroleum products enhanced from 8% to 10% ad valorem.
• The ad valorem component of excise duty on large cars, multi-utility vehicles and sports-utility vehicles
increased by 2 percentage points to 22%.
• Restore the basic duty of 5% on crude petroleum; 7.5% on diesel and petrol and 10% on other refined
products. Central Excise duty on petrol and diesel enhanced by Re.1 per litre each.
• Some structural changes in the excise duty on cigarettes, cigars and cigarillos to be made, coupled with
some increase in rates. Excise duty on all non-smoking tobacco such as scented tobacco, snuff,
chewing tobacco etc to be enhanced.

Wealth Research, Unicon Financial Intermediaries Pvt Ltd

Unicon View

The Finance Minister Mr. Pranab Mukherjee presented a balanced budget on the back of preserving growth
momentum of economy and containing high fiscal deficit. However, he highlighted three challenges for the

1. Reverting to growth of 9% by 2011-12

2. Strengthening food security with inclusive growth
3. To overcome weaknesses in the public delivery mechanism.

The government has not taken any measures on the inflation front, which is likely to be fueled by increased
disposable income in hands of individuals. Also, the higher fuel prices are likely to skyrocket the inflation figures
in the near and medium term. The revenue is being garnered through Divestment (INR 400 bn), 3G Auction
(INR 350 bn), tax revenues along with reduction in subsidies. The guidance on reducing the fiscal deficit to
5.5% of GDP in 2010-11 from 6.9% in 2009-10 sets up a roadmap for fiscal prudence.

Accordingly, the actual net market borrowing of the Government has been set at INR 3.45 Tn for FY11. Further,
by raising the personal income tax limits the government is trying to encourage consumption and savings by the
individuals. The government has stepped up expenditure to stimulate the domestic demand in the economy.
The total expenditure is estimated to increase 8.6% to INR 11.08 Tn in 2010-11 from 2009-10. The increase in
expenditure is likely to stimulate the domestic demand.

• The Plan and Non Plan expenditures are estimated to increase by 15% and 6% to INR 3.73 Tn and INR
7.35 Tn, respectively in BE 2010-11.
• The Gross Tax Receipts are estimated at INR 7.46 Tn and the non tax revenue receipts are estimated
at INR 1.48 Tn representing a growth of 32% growth over BE 2009-10.
• The proceeds from disinvestments (INR 260 bn) of public sector units are likely to be utilised to meet
the capital expenditure requirements of social sector schemes for creating new assets.
• The government is estimated to gain on account indirect tax benefit of INR 260 bn and the direct tax
proposals are estimated to result in a revenue loss of INR 260 bn for the year amounting to a net gain
of INR 205 bn.
• The increase in excise duty and widening base for service tax are necessary to trim the budget deficit
and it is sufficiently broad based to minimize the impact on consumption and growth.
• We are expecting rural consumption demand to increase on increased investments in agriculture,
accelerated irrigation program and extending the farm loan waiver limit to June 2010.

Wealth Research, Unicon Financial Intermediaries Pvt Ltd

• By increasing the expenditure to 46% of total plan allocation, the funding problems pertaining to
infrastructure are expected to marginally ease.
• On the social sector front, higher outlay is made on health with impetus given on education and
employment generation through NREGS.

Budget at a Glance
(INR Mn) 2008- 2009-2010 2009-2010 2010-2011 % Change
2009 Budget Estimates Revised Estimates(RE) Budget Estimates(BE) over RE

1. Revenue Receipts 5402590 6144970 5772940 6822120 18.17

2. Tax Revenue 4433190 4742180 4651030 5340940 14.83
(net to Centre)
3. Non-tax Revenue 969400 1402790 1121910 1481180 32.02
4. Capital Receipts$ 3436970 4063410 4442530 4265370 -3.99
5. Recoveries of 61390 42250 42540 51290 20.57
6. Other Receipts 5660 11200 259580 400000 54.10
7. Borrowings and other 5660 4009960 4140410 3814080 -7.88
8. Total Receipts$ 8839560 10208380 10215470 11087490 8.54
9. Non-plan 6087210 6956890 7063710 7356570 4.15
10. On Revenue 5590240 6188340 6419440 6435990 0.26
Account of which,
11. Interest Payments 1922040 2255110 2195000 2486640 13.29
12. On Capital Account 496970 768550 644270 925080 43.59
13. Plan Expenditure 2752350 3251490 3151760 3730920 18.38
14. On Revenue 2347740 2783980 2644110 3151250 19.18
15. On Capital Account 404610 467510 507650 579670 14.19
16. Total Expenditure 8839560 10208380 10215470 11087490 8.54
17. Revenue 7937980 8972320 9063550 9587240 5.78
18. Capital Expenditure 901580 1236060 1151920 1500250 30.24
19. Revenue Deficit 2535390 2827350 3290610 2765120 -15.97
-4.5 -4.8 -5.3 -4 -24.53
20. Fiscal Deficit 3369920 4009960 4140410 3814080 -7.88
-6 -6.8 -6.7 -5.5 -17.91
21. Primary Deficit 1447880 1754850 1945410 1327440 -31.77
-2.6 -3 -3.2 -1.9 -40.63
@ Actuals for 2008-09 are provisional.
$ Does not include receipts in respect of Market Stabilization Scheme.
* Includes draw-down of Cash Balance.
Note : GDP for BE 2010-2011 has been projected at Rs.6934700 crore assuming 12.5% growth over the advance
estimates of 2009-2010 (Rs.6164178 crore) released by CSO.

Wealth Research, Unicon Financial Intermediaries Pvt Ltd

Major increase in allocations

Central Plan Outlay by Sectors

INR Mn 2009-2010 2009-2010 2010-2011 % Change Over
Budget Estimates Revised Estimates Budget Estimates RE
(RE) (BE)
Agriculture and Allied Activities 106290 101230 123080 21.58
Rural Development* 517690 515600 551900 7.04
Irrigation and Flood Control 4390 4040 5260 30.20
Energy 1155740 1096850 1465790 33.64
Industry and Minerals 357400 306940 390190 27.12
Transport ** 943060 889480 1019970 14.67
Communications 167310 160990 185290 15.09
Science Technology & 112070 99080 136770
Environment 38.04
General Economic Services 62700 54460 75540 38.71
Social Services*** 1038560 1013700 1275700 25.85
General Services 14000 13530 15350 13.45
Grand Total 4479210 4255900 5244840 23.24
* Includes provision for rural housing but excludes provision for rural roads.
** Includes provision for rural roads.
*** Excludes provision for Rural Housing.

Wealth Research, Unicon Financial Intermediaries Pvt Ltd

Proposal/Announcement Current Status Expectations / Implications Companies
Unicon’s Impacted
Hike in Minimum alternate Currently, MAT is - Effective tax hike GMR Infra, IRB
tax (MAT) rate to 18% payable at 15% of 2.7% would be Infra., Madhucon
marginally Projects, GVKPIL,
Surcharge reduced to Surcharge levied negative Nagarjuna
7.5% at 10% Constructions,
IVRCL, Patel
Engg., Akruti etc

Defence fund allocation INR 1362.64bn - Positive BEML, BEL,

increased to INR (including INR Larsen & Toubro
1473.44bn (including INR 478bn for capital etc.,
600bn for capital expenditure)

Higher fund allocation of Expected in line Positive Larsen & Toubro,

INR 1735.52bn (for with continuous HCC, Patel Engg.,
infrastructure thrust of GoI to IVRCL, IRB Infra,
development - 46% of the accelerate GMR, Nagarjuna
total plan outlay) infrastructure Constructions etc.
Roads INR 198.94bn INR 176.05bn development
Railway INR 167.52 bn INR 158.02bn
Urban Devp. INR 54bn INR 30.6 bn
Bharat Nirman INR 480 bn Nil
Rural Devt. INR 661bn

No excise on manufacture Current excise - Positive VST Tiller, M&M

of trailers levied at 8%
Plan allocation for power INR 22.3bn - Indirectly benefit to Crompton
sector excluding RGGVY capital goods Greaves, Elecon
INR 51.3bn companies Engg., ABB,
Tunnel boring machine for Currently subject - Positive NHPC, JP Hydro
hydro-electric power to excise and as their project
projects fully exempted custom duty cost would come
from basic customs duty down
with Nil CVD
Project import status to Currently, no such - Neutral as the -
‘Monorail projects for status benefit would be
urban transport’ at a passed on to the
concessional basic duty of contractee on
5% granted case basis

Resale of specified Not allowed for - Positive but impact -

machinery for road re-sale for certain would be marginal
construction projects on years and differ from
payment of import duty at case to case
depreciated value

Wealth Research, Unicon Financial Intermediaries Pvt Ltd

Higher disbursement by INR 90bn for - Positive All companies
IIFCL at INR 200bn FY10

Take out financing - - Positive All companies

scheme to provide finance
of ~INR 250bn over next
three years

Hike in 80C limit by INR - Positive for the -

20,000 for individuals/HUF sector to mobilize
investing in Infrastructure fund resources

Unicon’s Take: Except hike in MAT (which is marginal in nature, incremental hike of 2.7%), overall initiatives
including policy measures, would have far reaching positive impact on the overall growth of the sector and the
companies. Overall, budget proposals for the sector are Positive. Larsen, BEML, Patel Engg are our top picks.

Proposal/Announcement Current Status Expectations / Implications Companies
Unicon’s Impacted
Excise duty hiked to 10% Currently excise In line with our Neutral as excise
is levied at 8% expectation could be passed
on to the end user

Relatively negative India Cement,

for southern based Dalmia Cement
companies as they etc.
have less power to
pass on the cost to
end user
Cement plants (capacity >
50 tonnes /day)

Cement cleared in
package form

Excise hiked to INR

290/tonne where Retail INR 230/tonne
Sale Price <= INR
190/50kg bag or <= INR

Excise hiked to 10% of

retail sale price where 8%
Retail Sale Price > INR
190/50kg bag or <= INR

Cement cleared other

than in packaged form 8% or INR
10% or INR 290/tonne 230/tonne
whichever is higher whichever is

Wealth Research, Unicon Financial Intermediaries Pvt Ltd

Hike of INR 375/tonne on
cement clinker INR 300/tonne

Cess on Coal of INR Currently no such - Marginally All companies

50/tonne, (both for cess was levied negative as it
domestic as well as would reduce the
imported) operating margins

Higher fund allocation for In line with our Positive for the All companies
development of Urban and expectation sector as cement
Rural Infrastructure demand will spurt

Unicon’s Take: Hike of 2% in excise duty was well expected but levy of cess on Coal (INR 50/tonne) was not
expected. Overall, budget proposals for the sector has Neutral to negative impact, as fuel hike from mid-night
will also impact the operating margins of all companies. However this will not be material as the sector has seen
strong demand during first 10 months of the current fiscal. This, coupled with emphasis on accelerating Urban /
Rural infrastructure and realty would offset the marginal hike in excise and cess with reduced surcharge (now at
7.5% from 10%). Overall, we remain positive for the sector over long-term. Shree Cement & Ultratech Cement
Ltd are our top picks.

Proposal/Announcement Current Status Expectations / Implications Companies
Unicon’s Impacted
Scheme of 1% interest Scheme benefit - Positive Unitech, DLF,
subvention on housing was available till HDIL, Sobha,
loan upto INR 1Mn, where FY10 Purvankara,
the cost of the house <= Omaxe,
INR 2Mn extended up to Parsvnath, DB
FY11. Fund allocation of Realty, Godrej
INR 7bn Properties and
INR 12.7bn allocated for INR 1.5bn - Positive Unitech, DLF,
Rajiv Awas Yojana HDIL, Sobha,
Parsvnath, DB
Realty, Godrej
Properties and
80IB(10) benefit extended - In line with our Positive HDIL, Unitech etc
by another one year expectation
100% deduction under New provision - While the benefit DLF, Unitech
Income-tax Act extended is extended to the
to new hotels of two-star hotels to promote
category and above tourism, this have
anywhere in India which positive impact for
starts functioning after Realty sector
April 1, 2010

‘Construction of complex Currently not - Negative Unitech, DLF,

Wealth Research, Unicon Financial Intermediaries Pvt Ltd

service’ brought within the covered HDIL, Sobha,
ambit of service tax unless Purvankara,
the entire consideration Omaxe,
for the property is paid Parsvanath, DB
after the completion of Realty, Godrej
construction Properties and
Hike in basic exemption - - Positive for the All companies,
limit for individuals sector as this will e.g. DLF, Unitech,
lead to spurt in DB Realty, Godrej
better standard of Properties, Sobha
living and spurt in Developers,
demand for realty Purvankara,
Unicon’s Take: While overall Budget proposals are positive for the sector, bringing construction services within
the ambit of Service tax would have negative impact and we expect that representation would be made by the
Industry. HDIL is out top pick.

Proposal/Announcement Current Status Expectations / Implications Companies
Unicon’s Impacted
Allocation of INR 51.3 bn INR 22.3 bn for In line with the Will help KEC International,
for Power sector (except 2009-10 expectations companies in Jyoti Structures,
RGGVY) power Kalpataru Power,
transmission Bharat Bijlee,
sector to improve EMCO, Crompton
top line Greaves

INR 55 bn for Rajiv below expectations

Gandhi Grameen INR 70 bn for
Vidyutikaran Yojana 2009-10
INR 37 bn for ~INR 21 bn for In line with the
Restructured Accelerated 2009-10 expectations
Power Development and
Reform Programme.
Cess of INR 50 / tonne on - - Marginally (by 3-4 NTPC, Tata
coal (imported and paise per unit) Power, CESC,
domestic) increase the cost Reliance Infra,
of power Adani Power, JSW
generation, which Energy
will be passed on
to the end users
Plan outlay for the Ministry INR 6.2 bn Will help Suzlon, Moser
of New and Renewable companies in Bear, Wabsol
Energy increased to INR renewable energy Energy
10 bn in 2010-11 sector to improve
top line
Concession of 5% in Subjected to - This’ll help in Moser Bear,
customs duty for basic excise and improving Wabsol Energy
machinery, instruments, customs duty investments in

Wealth Research, Unicon Financial Intermediaries Pvt Ltd

equipment and appliances renewable energy
etc. required for the initial sector and
setting up of photovoltaic improve revenues
and solar thermal power for equipment
generating units. suppliers for solar
These are also exempted and geothermal
from Central Excise duty. power generation
Similarly, ground source
heat pumps used to tap
geo-thermal energy would
be exempt from basic
customs duty and special
additional duty.
Exempt of a few specified Subject to basic - Reduce costs of Suzlon
inputs required for the excise duty setting up wind
manufacture of rotor power farms and
blades for wind energy improve
generators from Central investments in the
Excise duty sector
16% Excise duty on Fully Exempt from - Will increase costs Tata Power, Adani
Electrical energy supplied excise duty for players Power
from a Special Economic involved, although
Zone to the Domestic costs would be
Tariff Area and non - passed on to the
processing areas of SEZ end consumers,
Change being made making
retrospectively w.e.f. 26
June, 2009.
Imposition of Service Tax Exempt from - Marginally PTC
on services provided by service tax increase the costs
Electricity Exchanges of exchanges and
stakeholders like
Rate of MAT increased to 15% of book - Marginally GVK Power Infra,
18% of book profits profits increase the tax Tata Power,
rates for CESC, Reliance
companies under Infra,
MAT purview,
though the costs
would be passed
on to consumers
Exemption of Subject to basic - Marginally Power Grid,
Transmission of electricity service tax increase the costs Reliance Infra,
from service tax for players in the Tata Power,
segment, though CESC
it’ll be passed on
to consumers
Unicon’s Take: The announcement of excise and customs duty waver for solar, wind and geothermal power
generation equipments will help in increasing investments in the renewable energy. Higher funds allocation to
power sector, especially for transmission infrastructure improvement will help players in the segment. Jyoti
Structures & KEC International are our top picks.

Wealth Research, Unicon Financial Intermediaries Pvt Ltd

Oil & Gas
Proposal/Announcement Current Status Expectations / Implications Companies
Unicon’s Impacted
Customs duty on crude 0% - -ve for upstream ONGC, OIL, IOCL,
petroleum increased from companies and BPCL, RIL, Cairn,
Nil to 5% OMCs, due to Essar Oil, CPCL,
higher subsidy MRPL,
Customs duty on Motor 2.5% - burden.
Spirit (petrol) and HSD
(diesel) increased to Announcement of
7.5%. petroleum ministry IOCL, BPCL,
to hike the petrol HPCL
and diesel prices
make the effect as

Customs duty on other 5% - Neutral, as the -

specified petroleum cost will be passed
products increased to on
Excise duty on petrol and INR 13.35/lt for - -ve for OMCs, due IOCL, BPCL,
HSD (diesel) increased by Petrol without to higher subsidy HPCL
INR 1/lt, to brand name burden.
INR 14.35/lt for Petrol INR 14.5/lt for Announcement of
without brand name Petrol with brand petroleum ministry
INR 15.5/lt for Petrol with name to hike the petrol
brand name INR 3.6/lt for and diesel prices
INR 4.6/lt for Diesel Diesel without make the effect as
without brand name brand name neutral
INR 5.75/lt for diesel with INR 4.75/lt for
brand name diesel with brand
Rate of MAT increased to 15% of book - Marginally reduce RIL, Cairn India
18% of book profits profits the PAT for
companies under
MAT purview
Decision on Kirit Parikh Administered In line with the Neutral in the IOCL, HPCL,
Committee’s Price Mechanism expectations short term, +ve for BPCL, ONGC,
recommendations of for Petroleum OMCs and GAIL, OIL, RIL,
deregulation of petroleum products upstream Essar Oil
prices to be taken in due companies in the
course long term, if
Unicon’s Take: The announcement of petrol and diesel price hike by the petroleum minister neutralises the
increase in duty on crude and petroleum products in the budget. While Budget 2010-11 was neutral for the
sector in terms of policy announcement, we expect government to slowly move forward towards deregulation of
petroleum prices, which can help oil & gas companies, which can help in reducing the under-recoveries. GSPL
& IGL are our top picks.

Wealth Research, Unicon Financial Intermediaries Pvt Ltd

Auto/Auto Ancillaries
Proposal/Announcement Current Status Expectations / Implications Companies
Unicon’s Impacted
Excise Duty Hiked by 2%
 Two Wheelers Increased from This is in line with This would be Hero Honda,
8% to 10% Unicon neutral for the auto Bajaj Auto, TVS
expectations industry as Motors
 Small Cars Increased from companies would Maruti, Tata
8% to 10% raise the prices of Motors
 Large Cars, MUV and Increased from vehicles, which Maruti, Tata
SUV’s 20% to 22% would offset this Motors, M&M
 Commercial Vehicles Increased from hike in excise. Tata Motors,
& Buses 8% to 10% Ashok Leyland
Central Excise duty of 4% Full exemption This is positive for
on electric and other eco- from Central companies
friendly (non-petrol & non- Excise duty was manufacturing
diesel) vehicles provided electric cars as
this central excise
duty would help
Some critical parts or sub- them avail the
assemblies of such MODVAT benefits.
vehicles exempted from
basic customs duty and The exemptions
special additional duty. from customs duty
These parts would also on the parts would
enjoy a concessional CVD help them
of 4% compete with
Chinese players.
Government has taken This is positive for Mahindra &
various steps for farmers auto companies Mahindra, Hero
eg: 2% loan subsidy for with a rural focus Honda, Bajaj Auto
farmers and extension of as it will leave
farm loan payment by 6 more disposable
months. income in the
hands of farmers.
Increase of 13% to INR INR 175.2 Bn last A general increase This would be Tata Motors,
198.94 bn for construction year in infrastructure positive for auto Ashok Leyland
of National Highways spend was sector, especially
expected. commercial
Basic duty of 5% on Government had This will have aNegative for
crude petroleum; 7.5% on provided full negative impact on
diesel and petrol and 10% exemption from new car vehicles players
on other refined products.basic customs purchasers. such as Maruti,
Central Excise duty on duty to crude Tata Motors.
petrol and diesel by INR 1petroleum and
per litre each. proportionately
reduced the basic
duty on refined
Unicon’s Take: Budget 2010-11 was Neutral for the sector in terms of policy announcement, we expect

Wealth Research, Unicon Financial Intermediaries Pvt Ltd

companies to offset the rise in duties by a hike in prices. Market leader Maruti Suzuki has already announced a
hike in prices of its models with immediate effect and others would follow suit.

However demand for automobiles is on a strong uptrend and would not be significantly affected by a rise in
duties. The passenger vehicle industry recorded outstanding monthly sales of 226,221 vehicles in month of Jan
2010, up 42% y-o-y reflecting the momentum in domestic market. Domestic sales grew 32% to 145905 vehicles
while exports spurted by an impressive 77% to 38,118 vehicles partially gaining from low base effect. The
demand for automobiles would infact be helped by the other announcements in the budget such as direct tax
changes and agricultural allocations. M&M and Hero Honda remain our top picks from the sector.

Proposal/Announcement Current Status Expectations / Implications Companies
Unicon’s Impacted
Central Excise Duty Hiked Currently excise In line with Unicon This would be SAIL, Tata Steel,
to 10% is levied at 8% expectations negative for all JSW Steel,
metal companies. Hindalco, Nalco,
Increase in allocations for A general increase This would SAIL, Tata Steel
infrastructure and housing in spends was increase demand
expected. for steel,
especially long
Increase in MAT to 18% 15% currently On expected lines Companies with Sterlite, JSPL,
power subsidiaries JSW Steel,
may see a Navabharat
marginal rise in Ventures, Monnet
their effective tax Ispat

However the
impact would be
marginal as the
increase in taxes
would be passed
on to end
Clean energy cess on This would have a
domestic and imported marginal impact
coal of INR 50 per tonne. on steel
companies, if any.
Unicon’s Take: The increase in excise duty will increase the domestic metal prices, which will negatively
impact the demand for the metals to some extent. However the other measures announced in the budget would
help sustain the strong volume growth for the domestic metal companies. Steel production globally has seen as
steady revival after being badly hit during the recession. Steel prices however would remain under pressure due
to surplus steel capacity globally and concerns of cheap imports from China.

We had however expected an increase in the export duty of iron ore by 5% to help preserve the natural
resources of the country. This demand of the steel industry was not considered in this budget and would be a

Wealth Research, Unicon Financial Intermediaries Pvt Ltd

slight negative for the steel companies. Overall the budget is Neutral for the metal sector. Tata Steel remains
our top pick

Proposal/Announcement Current Status Expectations / Implications Companies
Unicon’s Impacted
Allocation of INR 24 bn for From June 2009, The textiles The current Alok Industries,
Technology Upgradation there was no industry had allocation would Bombay Rayon
Fund Scheme (TUFS) reimbursement of sought INR 20 only cover the
the TUFS subsidy billion for the period up to June
TUFS backlog in 2010.
calendar year
2009 and another
INR 30 billion for

The allocation is
slightly lower than
Unicon Estimates
Interest subvention of 2% Interest This would be Heavily leveraged
on pre-shipment export subvention was slightly negative companies such
credit up to March 31, available only till as restricting the as Raymond,
2011 or exports covering March 31, 2010 interest subvention Arvind Ltd. and
handicrafts, carpets, for all textile to the handloom Alok Industries
handlooms and small and companies and SME sector
medium enterprises would leave a
large number of
exporters in the
textiles and
clothing sector
without this
One-time grant of INR 2 Some of the Tirupur is the
bn to the Government of world's largest "Knitwear capital"
Tamil Nadu towards the retailers including of India and has
cost of installation of a Walmart, Primark, spurred up the
zero liquid discharge Reebok, etc textile industry in
system at Tirupur import textiles India for the past
from Tirupur. three decades. It
contributes to a
huge amount of
foreign exchange
in India.
Unicon’s Take: India's textile industry had been battered by the economic slowdown for much of 2008/09 but
has begun to recover in the past 2-3 quarters with major textile firms reporting strong growth. The recovery was
partly led by stimulus measures such as softening interest rates announced by the government last year.

The budget was disappointing for the textile industry which did not gain much except for a grant to a textile
cluster in Tamil Nadu while other demands remained untouched. Textile makers had sought removal of duties
on manmade fibres. Industry players have also been asking that export credit for textile and clothing units be

Wealth Research, Unicon Financial Intermediaries Pvt Ltd

provided at a uniform rate of 5% interest. Export credit is currently provided at about 8% interest. However,
these demands were not addressed in the budget. The budget was Neutral for the textile sector. Alok
Industries and Banswara Syntex are our top picks from the sector.

Proposal/Announcement Current Status Expectations / Implications Companies
Unicon’s Impacted
Increase in excise duty to Excise duty at 8% In line with our -ve for the FMCG All FMCG
10% (roll back of the cut in currently estimation companies companies
excise duty as part of the
stimulus last year)
Increase in MAT to 18% Current MAT at In line with our -ve for companies HUL, Dabur,
15% estimation (at the that are currently GCPL, Colgate
upper end of 16- under MAT regime
Excise duty enhanced on Lower level of NA -ve for companies ITC
all non-smoking tobacco excise duties manufacturing
such as scented tobacco, tobacco products
snuff, chewing tobacco
etc. Also, introduction of
compounded levy scheme
for chewing tobacco and
branded unmanufactured
tobacco based on the
capacity of pouch packing
Promoting of a ‘brand’ of No service tax NA -ve for FMCG All FMCG
goods, services, events, currently companies as the companies
business entity etc under cost of advertising
the ambit of Service tax and branding
would increase
Full exemption from No excise duty on NA -ve for companies Procter & Gamble
excise duty on baby & these products which have focus (for its range of
clinical diapers and in this segment sanitary and baby
sanitary napkins is being napkins), HUL,
withdrawn. These items GCPL
will now attract duty at

Reduction in excise duty Current excise NA +ve for companies Reckitt Benckiser
on goods covered under duty at 16% that have focus on (Unlisted), Dabur
the Medicinal and Toilet this segment & to an extent on
Preparations Act to 10% all FMCG
Govt focus on Rural India, Continuing focus NA +ve for all FMCG All FMCG
increase in allocations to of government on companies as they companies
NREGA, Bharat Nirman Rural India would directly
etc benefit from the
rising disposable
rural incomes

Wealth Research, Unicon Financial Intermediaries Pvt Ltd

Steps by govt to control Currently, inputs NA +ve for FMCG All FMCG
food inflation reeling under high companies as their companies
inflation cost of raw
materials would
stabilise if the
inflation is tamed
Unicon’s Take: We feel that the FMCG companies’ high growth in the last year was on the back of higher rural
disposable incomes driven by govt’s increased focus on rural areas. However, while this policy is continuing, the
rising raw material prices combined with the rollback in excise duty cut & MAT rate hike would result in some
pressure on this sector. Dabur & Marico are our top picks in this sector.

Information Technology
Proposal/Announcement Current Status Expectations / Implications Companies
Unicon’s Impacted
MAT hiked to 18%, to be Currently, MAT is In line with our No major impact
effective from next at 15% expectation for the bigger TCS, Wipro,
financial year. players. Their tax Infosys
rates are anyway
set to increase
with the expiration Mostly mid cap
of STPI benefits, companies such
so they would as 3i Infotech,
have marginal Nucleus software,
impact in earnings Polaris, Rolta,
for a year. Patni, Oracle
Financial, Patni
However, the mid computers, Tech
cap IT companies Mahindra etc.
like Rolta, Nucleus
Software, Polaris,
3i Infotech, Oracle
Financial, Patni
etc would have a
higher impact in
terms of increase
in MAT.
STPI benefits to expire in Same as proposal In line with our Negative for all All IT companies
March, 2011 – Status quo expectation companies as their
maintained effective tax rates
would increase
Rs 1,900 crore allocated NA NA Some of the +ve for IT
to the Unique implementation companies
Identification Authority of partners could be
India (UIDAI) from the domestic
for 2010-11 IT companies
A Technology Advisory NA NA Could be the +ve for IT
Group for Unique Projects source of some e- companies
(TAGUP) to be set up to governance
look into various projects
technological and
systemic issues for

Wealth Research, Unicon Financial Intermediaries Pvt Ltd

effective tax
administration and
financial governance.

Allocation for Defence NA NA Could result in IT +ve for companies

increased to Rs. 1,47,344 investments for such as Infotech,
crore including Rs 60,000 product Rolta, Patni &
crore for capital development and Mindtree
expenditure. R&D

Pre-packaged IT software, Service tax NA +ve for product 3i Infotech,

with the license for right to applicable focused Nucleus, Polaris,
its use, is being exempted companies OFSS etc
from service tax (subject
to specified conditions)

Unicon’s Take: We feel that there were no major surprises in the budget with regards to the Information
Technology sector. However, the MAT increase by 3% is at the higher end of our 16-18% estimation and this
would affect the companies, especially the mid cap IT firms as their effective tax rates would increase by ~3%.
However, Defence sector spending and focus on e-governance points to the unmistakable trend of increasing
domestic government IT spends which augurs well for the IT companies. Overall, a mixed bag for IT sector.
TCS & Patni Computers are our top picks from this sector.

Proposal/Announcement Current Status Expectations / Implications Companies
Unicon’s Impacted
MAT hiked to 18% - to be Currently, MAT is In line with our Since the -ve for Bharti,
effective from next at 15% expectation telecoms service Rcom and Idea.
financial year. providers are
currently under
MAT, this move
would impact them
Full exemption from basic Currently attracts NA +ve for all the All Telecoms
customs duty, CVD & the basic telecoms service companies
special additional customs customs, CVD providers as
on battery chargers and and 4% special cheaper mobiles
hands free phones additional would aid in
customs duty driving penetration
Unicon’s Take: Like in IT, the only negative we see is the increase in MAT by 3%. This would result in the
outgo of higher tax even while the Telecoms companies have been facing intense competition in the previous
two quarters. Bharti remains our top pick from this sector.

Wealth Research, Unicon Financial Intermediaries Pvt Ltd

Proposal/Announcement Current Status Expectations / Implications Companies
Unicon’s Impacted
Plan allocation for school It was INR 26,800 NA +ve for Education Educomp,Everonn,
education increased by crore in 2009-10 companies Edserv,Core
16% to INR 31036 crore in projects etc
States will have access to NA NA +ve for Education Educomp,Everonn,
INR 3675 crore for companies Edserv,Core
elementary education projects etc
under the Thirteenth
Finance Commission
grants for 2010-11.

Unicon’s Take: While the magnitude of yoy increase in plan allocation for Education is not huge, it does set a
pointer to the governments’ intent in making Education one of the centerpieces of the policy. Also, since
Education is majorly a state subject, most of the funding for universal schooling and increasing literacy would be
taken up by the respective state governments. We are positive of the growth prospects in this space. Educomp
remains our top pick.

Proposal/Announcement Current Status Expectations / Implications Companies
Unicon’s Impacted
Excise duty on Rhodium Current levy at - Reduced costs Gitanjali Gems,
reduced to 2% (Polishing 10% would improve Titan, Rajesh
Jewellery) operating margins Exports, Flawles
Diamonds etc
Exemption from additional Currently levied at - Positive Shoppers Stop,
custom duty on pre- 4% Pantaloon Retail,
packed goods (Watches & Titan, Trent etc

Hike in customs duty – a) Currently it is INR - Marginally Gitanjali Gems,

serially numbered Gold 200/10gm for negative Rajesh Exports,
Bars to INR 300/10gm b) serially numbered etc
other form of Gold gold bars and INR
increased to INR 750/10 500/10gm
gm otherwise

Unicon’s Take: While Budget 2010-11 was neutral for the sector in terms of policy announcement, we expect
firm demand for the sector on the back of lower personal income taxes which will lead to higher consumption.
Pantaloon Retail is our top pick.

Wealth Research, Unicon Financial Intermediaries Pvt Ltd

Proposal/Announcement Current Status Expectations / Implications Companies
Unicon’s Impacted
Air travel brought within Currently service - Would impact King Fisher
the ambit of service tax tax is imposed only negatively for low Airlines, Spice Jet,
for First and cost carrier Jet Airways, etc
Business class on
routes only
Unicon’s Take: Overall Budget proposals for the Aviation sector is Negative as it is to be expected to increase in
both low cost and normal taxes

Proposal/Announcement Current Status Expectations / Implications Companies
Unicon’s Impacted
Exemption of service tax Currently service - Positive Gateway
on expansion of cold tax is levied @ Distriparks, Blue
storage 10% star, Arshiya,
Voltas, Venky’s
India etc
Levy of customs duty @ Current custom - Positive Venky’s India,
5% on expansion of cold duty is higher Blue star, Arshiya,
storage upon grant of than 5% GateWay
project import status and Distriparks, Voltas,
exemption from excise Currently excise etc
is levied
Exemption from customs Currently is levied - It will boost Arshiya, Blue Star,
duty to truck refrigeration at 5% manufacture of Voltas, etc
units refrigerated vans
or trucks
External Commercial Currently not - ECB can help Gateway
Borrowings for cold chain allowed players fund their Distriparks,
players allowed capex Arshiya, Container
requirements at Corporation, etc
concessional rates
Exemption of service tax Currently fruits, - Will Improve the All players like
on food grains and pulses vegetables, milk bottom line of Gateway
by road transportation are exempted retail players Distriparks, KRBL
Ltd, Blue Dart, etc
Minimum Alternate Tax Currently MAT is In line with our Will marginally All players like
(MAT) rate hiked to 18% levied at 15% expectation impact the Gateway
earnings of the Distriparks, Gati,
companies Mundra Port, etc
Delay in Implementation Currently not In line with our Cost of doing All players like
of Goods and Services implemented expectation business will Gateway
Tax (GST) remain high till its Distriparks,
implemntation Arshiya, Container

Wealth Research, Unicon Financial Intermediaries Pvt Ltd

Corporation, All
cargo Global, Gati,
Blue Dart, etc
Unicon’s Take: Budget proposals are positive for the sector as transportation segments accounts ~62% of total
logistics market, reiterating the fact that is the most important logistics function for all industries and also
expansion in manufacturing sector over the past years has opened opportunities for logistics market. Gateway
Distriparks, Mundra Port, Blue Star, Voltas are our top picks.

Proposal/Announcement Current Status Expectations / Implications Companies
Unicon’s Impacted
Minimum Alternate Tax Currently MAT is - As profit on sale of
All players like
(MAT) hiked to 18% levied at 15% vessels are SCI, Mercator
subjected to MAT,lines, GE shipping
which will Co, Essar
marginally reduceShipping, Varun
the profits Shipping, etc
Hike in custom duty to 5% Currently custom - Negative as the All players like
and duty is Nil operational cost SCI, Mercator
would rise lines, GE shipping
Hike in excise duty on fuel Co, Essar
by Re 1 Shipping, etc
Unicon’s Take: Overall budget proposals Neutral for the sector. Tax relief or any other incentives not offered to
shipping industry. But increasing investments in ports and infrastructure has been given major thrust. Mercator
Lines, GE Shipping & SCI are our top picks.

Pharmaceuticals / Healthcare
Proposal/Announcement Current Expectations / Implications Companies Impacted
Status Unicon’s
Excise Duty of drugs Currently Lower than our Neutral, as Elder, Cipla, Lupin, Jubilant, Sun
Hiked to 6% excise is levied expectation of companies Pharma, Jubilant Organosys,
at 4% 8% would pass the Biocon
increase in cost
to consumers

MAT has been increased MAT stands at Above Negative for Elder, Lupin, Sun pharma,
to 18 % 15% expectations companies Ranbaxy,Cipla
operating from
SEZ and export
oriented zones
Weighted average R&D Weighted Higher than our Positive as Lupin,Ranbaxy,Drreddy’s,
deduction increased to average R&D expectation companies AurobindoBiocon,SPARC,Piramal
200% for in-house R&D deduction at would get Lifescinces, Glenmark
150% motivated to
invest more in
Weighted deduction on Weighted In line with our Positive as this Ranbaxy, Lupin, Cipla,SPARC,

Wealth Research, Unicon Financial Intermediaries Pvt Ltd

payments made to average R&D expectations will benefits the Piramal Lifescinces, Ranbaxy,
National Laboratories, deduction at companies Glenmark
research associations, 125% which are
colleges, universities and involved in out
other institutions, for sourced R&D
scientific research like major
enhanced 175% domestic
Income tax surcharge At present it is This will benefit Elder, Cipla, Lupin, Jubilant, Sun
reduced to 7.5% at 10% all pharma Pharma, Jubilant Organosys,
companies as Biocon
their net income
will increase
Central excise duty at 4% Currently it Positive as it will Elder, Lupin, Sun pharma,
on corrugated boxes and stands at 8% reduce glenmark Ranbaxy,Cipla,
cartons packaging aurobindo
material cost
Full exemption currently Currently Positive and Fortis Healthcare and Apollo
available to medical available major Hospitals
equipment and devices beneficiaries are
such as assistive devices, hospitals
rehabilitation aids etc.
Healthcare allocation Currently at Positive for Cipla, Ranbaxy, Sun Pharma,
increased to INR 223 bn INR 196 bn Pharma Elder, Lupin, Fortis Healthcare
companies as and Apollo Hospitals
well as
Specified inputs for the Positive as this Most of the companies lie in the
manufacture of orthopedic will benefit the un organized sector
implants exempted from medical device
import duty industry
specifically in
artificial joints
Unicon’s Take: The budget has been overall positive for the pharmaceutical industry barring increase in excise and
MAT. However these increases would get offset as the R&D deduction limit has been increased and the companies
could pass on the increase to customers. Also the tax surcharge has been reduced which would further improve
profitability. Positive for the industry on the whole. Our top picks for the sector are Lupin, Fortis, Aurobindo

Proposal/Announcement Current Expectations / Implications Companies Impacted
Status Unicon’s
Already announced Will be In line with It will lead to Tata Chem, Zuari RCF,
Implementation of the implemented expectations improved Coromandel, Chambal, Deepak
nutrient based by April 2010 productivity and fertiliser
subsidy(NBS) more income for

Wealth Research, Unicon Financial Intermediaries Pvt Ltd

It was announced that Bonds are No expectations Farmers will get Tata Chem, RCF, Coromandel,
fertiliser companies will issued to cash directly Chambal, Deepak fertiliser
not be issued subsidy by companies once the UID is
way of bonds implemented to
facilitate the
purchase of the
required fertilizer
which will
improve soil
Unicon’s Take: The budget has set the tone for decontrol of the fertilizer industry which will only further strengthen the
fragile industry. With the bonds being stopped and the cash subsidy directly going onto the hands of the farmer will lead
to the usage of a balanced fertilizer improving the soil fertility and enhancing the yield. The budget is positive for the
sector with a progressive outlook. Our top picks remain Tata Chemicals, RCF, Zuari and Chambal fertilisers

Proposal/Announcement Current Expectations / Implications Companies Impacted
Status Unicon’s
INR 4 Bn provided to This region Improved Adventa, Bayer cropscience,
extend the green had been utilization and Monsanto
revolution to the eastern suffering a lot productivity in
region of the country on productivity the region
INR 300 crore provided During the Help in higher Agri companies
for pulses and oilseed floods and agricultural
cultivation, water drought, output and take
harvesting, watershed productivity care of food
management and soil gets a beating security.
health,enhancing the and results in
productivity of the dry land lower crop
farming areas production.
INR 200 crore provided for
conservation of soil and
preservation of fertility
Government would like to Agricultural
continue with the practice sector
of extending Government
subsidy in cash, thereby
bringing all subsidy
related liabilities into
Government’s fiscal
Provide project import It will improve
status with a concessional the warehousing
import duty of 5 % for the facilities and
setting up of mechanised reduce loss of
handling systems and damage and
pallet racking systems in loss.
‘warehouses for food

Wealth Research, Unicon Financial Intermediaries Pvt Ltd

grains and sugar as well
as full exemption from
service tax
Provide concessional
customs duty of 5 % to
specified agricultural
machinery not
manufactured in India
To exempt the testing and Currently it Positive for Aries Agro, REI Agro, Kaveri
certification of agricultural attracts service companies in seeds, Bayer Cropscience
seeds from service tax tax this space as it
would motivate
them to invest in
Unicon’s Take: Overall a good thrust for the agricultural sector as the thrust is clearly to secure India’s food supply and
ensure increase in productivity and acreage of the agricultural produce. Our top picks are Monsanto, Advanta and
Bayer Cropscience

Proposal/Announcement Current Expectations / Implications Companies Impacted
Status Unicon’s
Debt repayment period Currently given In line with our Positive: It would Bank of Baroda, Punjab National
extended to June 2010 till June 2009 expectation reduce the Bank etc.
recognition of
agri NPAs of
PSU banks
RBI considering giving Only few In line with our Encourages IDFC, Exim Bank, TATA, Birla
licenses to private sector private banks expectation setting up of group, Reliance Capital,
NBFC are there new private Indiabulls etc.
Recapitalisation of The banks NA This will All the regional banks
Regional Rural Banks were last increase the
(RRB) capitalized in capital base &
2006-07 business of
RRBs and would
lead to higher
Public banks to receive Few banks are In line with our Banks capital IDBI, Dena bank, UCO bank ,
INR 16.5 bn to attain the facing a capital expectation adequacy will Syndicate Bank
minimum 8% of Tier-I dearth which is improve
capital by March 31, 2011 hindering
Governments net market - NA This will stabilize All banks
borrowings of INR 3.45 Tn interest rates
and thereby the
bond yields
Unicon’s Take: Union Budget 2010-11 was positive for the banking and financial sector in terms of policy
announcement. Also the increase in loan growth/fees from the infrastructure sector which is being boosted by
government policy initiatives. We expect banks, NBFCs & Financial institutions to post healthy growth on the back of

Wealth Research, Unicon Financial Intermediaries Pvt Ltd

higher fund allocation. Bank of Baroda, Punjab National Bank & IndusInd bank are our top picks.

Proposal/Announcement Current Expectations / Implications Companies Impacted
Status Unicon’s
Customs duty of 5%, full Under the - +ve Will help in Dish, SUNTV, Hathway, Den
exemption from special ambit of marginally Digital, WWIL
additional duty for Digital customs duty improving
Head End equipments and special bottom-line by
additional duty reducing costs
Online news agencies Charged at - +ve Will reduce All news agencies
exempted from service tax 10% service tax Zee news, NDTV and CNBC 18
outflows of news
Rationalizing customs Under the - +ve Will reduce UTV Software
duty while importing digital ambit of the cost of
masters of films, music customs duty operations and
and gaming software for help in driving
duplication or distribution use &
penetration of
these products
Unicon’s Take: The Media & Entertainment industry has been impacted in the last fiscal due to decline in corporate
advertising spends with economic downturn in the backdrop. The last quarter witnessed a revival in ad spends. With
recovery in economic growth, high-advertising sectors such as financial services, automobiles, telecom, FMCG and
other consumer sectors, ad spend is likely to grow at a comfortable pace of ~13% in 2010. Alternate revenue streams
for television broadcasting like subscription, are expected to pick up over the medium to long-term, thus reducing
dependence on ad revenues.

Overall, sector outlook remains positive, given the revival in ad spends with improving economic sentiment. Dish TV,
Sun TV are our top picks from this sector.

Hotel & Tourism

Proposal/Announcement Current Expectations / Implications Companies Impacted
Status Unicon’s
Investment-linked tax Benefits only - Will help in All companies across the sector
deduction for setting up for 2,3,4 star improving setting up new 2-star and above
new 2 star and above hotels in NCR bottom-line by category hotels
hotels anywhere in India region reducing tax Hotel Leela, Taj GVK, ITDC, East
burden and India Hotel, Indian Hotels, Asian
encouraging Hotels and Royal Orchid Hotels
reinvestment of
profits in the
Unicon’s Take: FY10 has so far witnessed a positive growth in foreign tourist arrivals and foreign exchange earnings.
The hotel companies are also banking on the Commonwealth Games (CWG) 2010 to be played in Delhi. With more
than 100,000 visitors expected for the games, hotel chains and travel agents are expecting a 25% increase in room
rentals. Increased emphasis on infrastructure augurs well for the industry.

Wealth Research, Unicon Financial Intermediaries Pvt Ltd

Overall, sector outlook continues to remain positive, given the growth opportunity in the sector, on the back of strong
growth in economic activity which translates into higher tourism, business travel and hence higher occupancy rates.
Hotel Leela & Royal Orchid Hotels are our top picks from the sector.

Consumer Durables
Proposal/Announcement Current Expectations / Implications Companies Impacted
Status Unicon’s
Excise duty has been Charged at 8% In line with Hike in excise Videocon, Blue Star, Whirlpool,
rolled back to 10% expectations duty coupled Hitachi, LG
with the rising
input costs could
escalate product
prices that will
dampen demand
Customs duty on key Charged at - Will help in Whirlpool, MIRC Electronics, IFB,
inputs for microwaves cut 10% reducing cost of Panasonic, Sharp, Videocon, LG
to 5% producing
ovens thus
improving profits
Central excise duty on Charged at 8% In line with Will bring duty Havells, Eveready, MIC
LED (Light Emitting expectations on energy- Electronics, Panasonic Energy
Diodes) lights cut to 4% efficient LED at
par with CFL
and help in
Central excise duty on Charged at 8% - Will help in Whirlpool, Philips, Ion Exchange,
replaceable kits for reducing cost of HUL
household water filters cut replaceable kits
to 4% for household
water filters thus
improving profits
Unicon’s Take: Given the growing pressure for fiscal discipline, the finance minister did resort to moderate roll back in
duty cuts given to a wide spectrum of consumer durables as expected. Prices of steel, copper, aluminum, polymers and
chemicals have gone up which contribute to ~ 65% - 70% of the total costs for consumer durables companies. The
consumer durables companies have either already raised the prices of their products or are planning to do so in near

However, overall sector outlook remains positive, given the penetration level of consumer durables is very low in India,
as compared to other countries which translates into unrealized potential of high growth. Havells, MIC Electronics &
Whirlpool are our top picks.

Proposal/Announcement Current Expectations / Implications Companies Impacted
Status Unicon’s
Central excise duty on Charged at 8% - Reduce costs for Rollatainers, TCPL Packaging

Wealth Research, Unicon Financial Intermediaries Pvt Ltd

corrugated boxes and packaging
cartons cut to 4% companies and
indirectly help
retail, FMCG,
Import of compostable Under the - Reduce costs for All companies across the sector
polymer exempted from ambit of packaging importing compostable polymer
basic customs duty customs duty companies and
indirectly help
retail, FMCG,
Unicon’s Take: Budget 2010-11 reduced the customs and excise duties for packaging companies, which will help
packaging companies to improve their profit margins, lowering environmental impacts and move towards cleaner
environment by promoting use of bio-degradable materials. The reduction in costs will also help user industries, such as
FMCG, Retail, Consumer Durables, etc. Essel Propack is our top pick.

Wealth Research, Unicon Financial Intermediaries Pvt Ltd

Annexure – Sectoral Expenditure plan

Sector Expenditure Plan INR Mn

Infrastructure Infrastructure Development 1735520
Infrastructure Allocation for road transport 198940
Infrastructure Railways 167520
Energy Allocation for power sector excluding RGGVY 51300
Energy Solar, small hydro and micro power projects to be 5000
set up in Ladakh region of Jammu and Kashmir.
Energy Plan outlay for the Ministry of New and Renewable Energy 10000
Environment One-time grant to the Government of Tamil Nadu towards the cost of 2000
& Climate installation of a zero liquid discharge system at Tirupur to sustain
Changes knitwear industry.
Environment Special Golden Jubilee package provided for Goa to preserve the 2000
& Climate natural resources of the State, including sea beaches and forest cover.
Environment Allocation for National Ganga River Basin Authority (NGRBA) 5000
& Climate
Education Plan allocation for school education 310360
Education In addition, grant under Thirteenth Finance Commission grants for 2010- 36750
11 to states for elementary education.
Health Plan allocation to Ministry of Health & Family Welfare 223000
Rural Allocation for Rural Development 661000
Rural Allocation for Mahatma Gandhi National Rural Employment Guarantee 401000
Development Scheme
Rural Allocated for rural infrastructure programmes under Bharat Nirman. 480000
Rural Allocation for Indira Awas Yojana 935000
Rural Allocation to Backward Region Grant Fund 73000
Urban Allocation for urban development 54000
Urban Allocation for Housing and Urban Poverty Alleviation 10000
Urban Allocated for Rajiv Awas Yojana 12700
Micro small and Allocated funds for the year 2010-11 24000
Micro small and The corpus for Micro-Finance Development and Equity Fund 4000
Unorganised National Social Security Fund for unorganised sector workers to be set 10000
Sector up with an initial allocation
Social Welfare Mahila Kisan Sashaktikaran Pariyojana to meet the specific needs of 1000
women farmers to be launched

Wealth Research, Unicon Financial Intermediaries Pvt Ltd

Social Welfare Plan outlay of the Ministry of Social Justice and Empowerment 45000
Social Welfare Plan allocation for the Ministry of Minority Affairs 26000
Strengthening Allocated to the Unique Identification Authority of India (UIDAI) for 2010- 19000
Transparency 11
Security and Allocation for Defence 1473440

Wealth Research, Unicon Financial Intermediaries Pvt Ltd

Unicon Research Team
Madhumita Ghosh - VP Research
Arvind Rana
Falgesh Sanghvi
Nivedan Reddy
Rabindra Basu
Rahul Dholam

This document has been issued by Unicon Securities Private Limited (“UNICON”) for the information of its customers only. UNICON is governed by
the Securities and Exchange Board of India. This document is not for public distribution and has been furnished to you solely for your information and
must not be reproduced or redistributed to any other person. Persons into whose possession this document may come are required to observe these
restrictions. The information and opinions contained herein have been compiled or arrived at based upon information obtained in good faith from
public sources believed to be reliable. Such information has not been independently verified and no guarantee, representation or warranty, express or
implied is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. This
document has been produced independently of any company or companies mentioned herein, and forward looking statements; opinions and
expectations contained herein are subject to change without notice. This document is for information purposes only and is provided on an “as is”
basis. Descriptions of any company or companies or their securities mentioned herein are not intended to be complete and this document is not, and
should not be construed as an offer, or solicitation of an offer, to buy or sell or subscribe to any securities or other financial instruments. We are not
soliciting any action based on this document. UNICON, its associate and group companies its directors or employees do not take any responsibility,
financial or otherwise, of the losses or the damages sustained due to the investments made or any action taken on basis of this document, including
but not restricted to, fluctuation in the prices of the shares and bonds, reduction in the dividend or income, etc. This document is not directed to or
intended for display, downloading, printing, reproducing or for distribution to or use by any person or entity who is a citizen or resident or located in
any locality, state, country or other jurisdiction where such distribution, publication, reproduction, availability or use would be contrary to law or
regulation or would subject UNICON or its associates or group companies to any registration or licensing requirement within such jurisdiction. If this
document is inadvertently sent or has reached any individual in such country, the same may be ignored and brought to the attention of the sender.
This document may not be reproduced, distributed or published for any purpose without prior written approval of UNICON. This document is for the
general information and does not take into account the particular investment objectives, financial situation or needs of any individual customer, and it
does not constitute a personalized recommendation of any particular security or investment strategy. Before acting on any advice or recommendation
in this document, a customer should consider whether it is suitable given the customer’s particular circumstances and, if necessary, seek professional
advice. Certain transactions, including those involving futures, options, and high yield securities, give rise to substantial risk and are not suitable for all
investors. UNICON, its associates or group companies do not represent or endorse the accuracy or reliability of any of the information or content of
the document and reliance upon it is at your own risk.

UNICON, its associates or group companies, expressly disclaims any and all warranties, express or implied, including without limitation warranties of
merchantability and fitness for a particular purpose with respect to the document and any information in it. UNICON, its associates or group
companies, shall not be liable for any direct, indirect, incidental, punitive or consequential damages of any kind with respect to the document. No part
of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical,
photocopying, recording, or otherwise, without the prior written permission of UNICON Securities Private Limited.

Wealth Management
Unicon Financial Intermediaries. Pvt. Ltd.
Ground Floor, Jhawar House,
285, Princess Street, Mumbai-400002
Ph: 022-66181200 / 100
Visit us at

Wealth Research, Unicon Financial Intermediaries Pvt Ltd