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Summary
of Contents
PULSE TRACK
-
Interest on CRR to
be positive for the sector
RAILWAY
BUDGET SPECIAL
Railway Budget 2007-08
Railway minister
Lalu Prasad Yadav continues to guide the Indian Railways (IR) on a
profitable growth path. Announcing his fourth budget for the IR
today, he indicated that the capital expenditure (capex) binge of IR
would continue. In a move to boost IR's key revenue stream (ie
freight), the minister also extended major concessions on the
freight rate front. He also reduced the passenger fares in a bid to
increase the passenger traffic. The other salient features of the
Railway Budget 2007-08 are an impressive reduction in the operating
cost of IR, significant policy shifts to turn around the loss-making
businesses of the national carrier, continued freight
rationalisation and an increase in the capex of IR to make the
railways more competitive.
The major
beneficiaries of these moves are likely to be Texmaco, Kalindee Rail
Nirman Engineers (Kalindee Rail) and Stone India. A few days back,
in our special note "Turnaround Express going strong", dated
February 22, 2007, we had mentioned how we expected companies like
Hind Rectifiers, Simplex Casting, Stone India and Texmaco to show a
healthy growth in their earnings on the back of the growing capex of
IR.
Besides these
companies, oil refiners, cement, steel and iron ore companies would
benefit from the railway budget due to the reduction announced in
the freight rates, though the impact on earnings is expected to be
marginal.
SECTOR UPDATE
Information Technology
Policy
tangles
The Indian
information technology (IT) service companies have been demanding
the extension of the prevailing tax exemptions on software
technology park (STP) registered units under the Section 10A/10B of
the Income Tax Act. As per the current guidelines, the tax
exemptions for such units would cease to exist with effect from
March 2009. But the industry associations are lobbying for the
extension of the exemptions for another ten years in line with the
proposed tax exemptions for the units located in the special
economic zones
(SEZs). |
