BACK TO BUDGET HOMEPAGE

Budget 2009-10: Auto Ancillaries
In line with the subdued demand witnessed in the auto industry, the auto ancillary industry also went through tough times in FY09. In fact, with a significant part of the revenues for the industry also coming from exports to the developed markets, which remained in shambles, it will not be wrong to say that the Indian auto ancillary industry suffered even more than the auto industry. However, some respite was provided to players with strong positioning in the replacement market as demand in this market remained robust on account of strong OEM auto sales in the previous fiscals. Going forward, while domestic markets have begun to look up, uncertainty continues to plague exports.

 Budget Measures
  		• Reduction in excise duties in select segment of automobiles
  		• Fringe benefit tax (FBT) abolished.
  		• Rate of minimum alternate tax (MAT) on book profits has been increased from 10% to 15%, but with a provision of carrying forward the tax credit on MAT to ten years from the current seven years.
  		• Higher allocation towards defense and agricultural credit
  		• A weighted deduction of 150% for expenditure relating to in-house research and development will be extended

     Budget Impact

  • Higher defence and agri credit allocation will encourage new vehicle buying which in turn will benefit the industry players.

  • Increased thrust on road infrastructure is a positive for all the automobile manufacturers especially passenger vehicles and CVs. This in turn will drive demand for auto components.

  • As the Indian auto ancillary industry becomes more sophisticated, weighted deduction on R&D will further incentivize players to spend more on R&D.


     Company Impact

  • Excise duty reduction in certain segments of automobiles will help all the players in the industry.

  • Weighted deduction on R&D expenses is a positive for players like Bharat Forge that have increased their thrust on in-house research and development.


     Views on News
  		• Sundram Fasteners: Needs to tighten its screws (Aug 16, 2010) (Cool Hand Luke)
  		• Apollo Tyres: Deflated by rubber prices (Jul 30, 2010)
  		• Bharat Forge: Continues to see good times (Jul 26, 2010)
  		• Exide Industries: Energetic start to FY11 (Jul 13, 2010)
  		• Apollo Tyres: Applying brakes on costs (May 28, 2010)
  		• More Views on News

  • Your feedback is important to us. Please Write to us.

    		•   

    Sector Performance
    COMPANY PRICE (Rs)
    AMARA RAJA BATT. 195.0
    (2.7%)
    AMTEK AUTO 184.5
    (3.1%)
    ASAHI INDIA 91.2
    (5.0%)
    BHARAT FORGE 359.5
    (1.0%)
    BOSCH LTD. 5,988.0
    (-0.3%)
    EXIDE INDUSTRIES 156.6
    (6.0%)
    FAG BEARINGS 809.5
    (0.2%)
    MAHINDRA FORGINGS 102.5
    (0.4%)
    MUNJAL SHOWA 59.7
    (-1.6%)
    NRB BEARINGS 106.5
    (-1.0%)
    RICO AUTO 29.2
    (1.9%)
    SKF INDIA 562.6
    (-0.3%)
    SONA KOYO STEER 19.8
    (1.0%)
    SUNDARAM CLAYTON 221.0
    (1.0%)
    SUNDRAM FASTENERS 57.8
    (2.7%)
    UCAL FUEL 90.4
    (-0.2%)
    WHEELS INDIA 283.4
    (0.8%)