budget 2011’s impact on steel , cement &

8/4/2019 Budget 2011’s impact on Steel , Cement &

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By,Siddartha,Rithika,Nikhil,Sadiq,Omar.



� Budget focuses on iron ore conservation which has a neutral impact ondomestic steel players

The export duty on iron ore fines and lumps has beenhiked to 20 per cent each from 5 per cent and 15 per cent.This will benefit the domestic steel industry in the long term,as emphasis on conservation will help India to maintain self-sufficiency iniron ore.

� The Government raised ad-valorem export duty on iron ore fines andlumps to 20 per cent each from 5 per cent and 15 per cent, respectively.



� The Union Budget 2011-12 will have a neutral impact on domesticsteel players.

� The export duty on iron ore fines and lumps has been hiked to 20per cent each from 5 per cent and 15 per cent.

� This will benefit the domestic steel industry in the long term, asemphasis on conservation will help India to maintain self-sufficiency in iron ore.



� Due to good monsoons and a good hike in the construction thisyear there is 4.5% of growth rate this year for cement. Which isgoing to increase to 8% to 9% in the next 3 months .

� As due to the demand government is keen on raising taxes.

Let me raisesome taxes..I

am thegovernment



� The demand growth in cement, coupled with an overcapacityscenario will lead industry operating rates for 2010-11 to decline to

around 82 per cent from 85 per cent in 2009-10.

� Despite robust demand growth, capacity additions of 34 milliontonnes during the year are expected to further pull down industryoperating rates to 78 per cent in 2011-12.

� However, cement prices are expected to recover by 3-4 per cent in2011-12 on the back of expected recovery of operating environmentbeginning from the second half of the year.



� The Union Budget 2011-12 has proposed the replacement of existingexcise duty rates with a 10 per cent ad valorem rate and an additional Rs160 per tonne of cement.

� This results in an effective 2-4 per cent increase in the excise duty for thecement industry. In the current operating environment, we believe thecement players will not be able to pass on the increase in duty tocustomers.

� The Union Budget has proposed a reduction in custom duties for gypsumfrom 5.0 per cent to 2.5 per cent. However, gypsum accounts for a mere 2-3 per cent of the total cost of sales for cement players.

� The Union Budget has proposed a reduction in custom duties for pet cokefrom 5.0 per cent to 2.5 per cent. However, pet coke is used as rawmaterial by a select few companies only.



� Construction expenditure to nearly double; over 2010-11 to 2014-15 toRs16,809 billion from Rs 8,895 billion between 2005-06 and 2009-10 butmargins to remain under pressure over the medium term

� The infrastructure segment is likely to comprise 85 per cent of totalconstruction investment, driven primarily by the power, roads, irrigationand urban infrastructure sectors.

� During 2010-11 to 2014-15, construction investment in the industrialsegment is expected to touch Rs 2,505 billion with the oil and gas sectorbeing the principal driver. This investment is 1.2 times the totalinvestment during 2005-06 to 2009-10.



� A. Increase in the Minimum Alternate Tax to 18.5 per cent is expected to beoffset by a reduction in surcharge to 5 percent.

� The foreign institutional investment limit has been increased by $20 billion forinvestment in corporate infrastructure bonds. Further, tax-free bondsamounting to Rs 300 billion can be issued in the roads, ports, railways and

housing sectors. Also, allocation for Bharat Nirman has been raised by 20 percent in 2011-12 from 2010-11.

� These proposals are expected to address the funding needs of theinfrastructure segment, and could lead to faster implementation ofinfrastructure projects. However, these may not improve the bottom-line ofconstruction companies.

budget 2011’s impact on steel , cement &

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