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February 29, 2008 21:20 IST
What the Budget does - Fourth UMPP at Tilaiya to be awarded shortly; Chhattisgarh, Karnataka, Maharashtra, Orissa and Tamilnadu urged to bring five more UMPPs to the bidding stage by extending the required support.
- Rajiv Gandhi Grameen Vidyutikaran Yojana to be continued during the Eleventh Plan period with a capital subsidy of Rs 280 bn; allocation of Rs 55 bn for FY09.
- Rs 8 bn to be provided for Accelerated Power Development and Reforms Project (APDRP) in FY09.
- Proposal to set up a national fund for transmission and distribution (T&D) reform in the power sector.
- Exemption from 4% additional duty of customs has been withdrawn on power generation projects (other than mega power projects), transmission, sub transmission and distribution projects, and specified goods for high voltage transmission projects.
- Custom duty on project imports reduced from 7.5% to 5%
- Initiatives like skill development programme and setting up of industrial training institutes to be taken
- Defense allocation to be increased by 10%
- Excise duty being exempted on end-use basis, on refrigeration equipment (consisting of compressor, condenser units, evaporator, etc) above 2 TR (tonne refrigeration) utilising power of 50 KW and above.
- Parent company allowed to set-off the dividend received from its subsidiary company against dividend distributed by the parent company; provided that the dividend received has suffered DDT and the parent company is not a subsidiary of another company.
Also read: How Budget affects your stocks Impact on sector - Aggressiveness in allotting UMPPs to prospective bidders expected to be helpful for engineering companies providing equipments and EPC services for power plants.
- Setting up of a national fund for T&D reforms to aid growth prospects of equipment suppliers and T&D project developers.
- Removal of exemption from additional customs duty on power generation, transmission and distribution projects to increase cost for companies importing such projects, which shall consequently be beneficial for domestic project developers. However, on the other hand, reduction in custom duty on project imports to nullify the impact.
- Initiatives like skill development programme and setting up of industrial training institutes to reduce talent crunch for engineering companies, which are reporting high levels of attrition
- Increase in defense allocation to aid prospect of companies providing defense equipments and technologies.
Impact on companies - Allocation of UMPPs to support growth if equipment and service providers like BHEL, L&T and Siemens.
- Greater focus on the T&D front to be beneficial for ABB, Siemens, Crompton Greaves [Get Quote], Emco, Bharat Bijlee [Get Quote]. Also, companies providing T&D project services like Jyoti Structures [Get Quote] and Kalpataru Transmission to benefit.
- Removal of exemption from additional customs duty on power generation, transmission and distribution projects to benefit domestic companies like BHEL, L&T, Siemens and Reliance Energy [Get Quote].
- Skill development initiatives to pare pressure of attrition from companies like L&T and BHEL.
- Increase in defense allocation to aid prospects of Tata Power [Get Quote], L&T and Bharat Electronics [Get Quote].
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