Budget: A mixed bag for business houses

TATAS: The Rs 35,000 crore group has got both bouquets and brickbats. A 5% cut in the duty provisions on cold-rolled steel would provide substantial protection to Tisco against rising imports. The rise in excise across-the-board on medium-utilitive vehicles will mean the flagship company of the group, Telco,will suffer. Tata Chemicals, the urea producer, will have to sell fertiliser that will be dearer by Rs 1,000 per tonne.

A V BIRLA (Aluminium, cement, VSF, fertiliser, refineries, power and telecom): Impetus to housing may just allow Grasim to get away to a good start to this year, while Indo-Gulf Fertilisers will be under pressure to sell urea (which contributes to around 90 per cent of its sales) at Rs 1,000 more per tonne. Capital goods for refineries have been exempt from the eight per cent special import duty, so the group’s collective brains trust, may heave a sigh of relief.

RELIANCE: With crude import duties down and huge reliefs in the infrastructure sector, it appears the Reliance group (a major player in petrochemicals, oil and gas, power, telecom, textiles, roads, ports and refineries) has thought this one out well. Paraxylene will attract lower duties, but Reliance can compete due to its low production costs. The eight per cent protection can make a huge difference to Reliance’scompetitiveness in petrochemical and textiles, because the company till date sold at international parity.

HINDUSTAN LEVER: The Rs 8,363-crore company, the largest multinational firm in the country, has not benefited from the budget. On the contrary, the 8 per cent increase in excise duty on packaged tea will affect either the demand or lead to a hike in prices. Packaging costs too have go up.

ESSAR: The group has interests in oil and gas, steel, power, telecom and refineries. With large scale reliefs in the infrastructure sector, it would appear that the Essar group is sitting on a number of good projects.

BAJAJ: It appears that Bajaj Auto will gain most not necessarily just from the business prospects, but also from the influence that Rahul Bajaj, the chairman and managing director of the company, has obviously had on the finance minster’s policy-framing. The eight per cent special import duty is obviously a straight indicator that Indian industry’s plea for a level-playing field.

R P GOENKA: The group, which is involved in tyre, carbon black, power and telecom, hasn’t got much for their major operations. There have been substantial incentives in power, but unfortunately none for transmission and distribution, which is the major activity of the RPG group.

THAPARS: Ballarpur Industries (BILT), the Rs 1239 crore flag ship of the Thapars, will gain due to the increase in import duty on paper and products.

THE IMPACT ON CORPORATES
ACC
Positive
Increased spending in infrastructure and no railway freight hike is positive

Bajaj Auto
Negative
Raw material cost hike due to change in Modvat, increase in steel import duty to affect negatively

Tisco
Neutral
Hit by imported coal price hike, steel prices are low.

Reliance
Neutral
Increased pricing pressure following10-10.5% customs tariff hike, Modvat to affect profits

Telco
Negative
Excise hike, raw material cost hike and slightly higher diesel car volumes tohit the company

ITC Ltd
Positive
March price hike of brands exceeds excise hikeHLL Neutral 8% excise hike to be passed on to consumers and will not affect volumes

Hindalco
Positive
5% upside on earnings on additional protetion

Indian
Neutral
Modvat to affect negatively, but redemption in Rayon raw material prices

Crompton
Neutral
8% additional duty benefits on capital goods Greaves
to be negated by increase in raw meterial prices.

Source DSP Merrill Lynch