X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
"The budget benefits will result in reduction of tariff by almost 5 to 6 paise" - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • A  A  A
  • Mar 1, 2001

    "The budget benefits will result in reduction of tariff by almost 5 to 6 paise"

    Mr. R. K. Kanga is a Senior General Manager with the Tata Power Company Limited. We caught up with him to take his views on the Budget 2002.

    EQM: What’s your view of Budget 2002?

    Mr. Kanga:  The budget is wonderful. It encourages a lot of infrastructure build up for the country, which is very essential. For the last 2 budgets there was not much of encouragement for the infrastructure sector, but this budget certainly took care of that. The biggest plus of this budget is that interest rates have been reduced and this means funds will be cheaply available now for infrastructure development. Following the budget signals, the RBI has again cut interest rates. So funds will be cheaply available for infrastructure development.

    There was a lot of stress by the finance minister on development of roads for rural sector. He has given out Rs 7.5 bn for rural electrification, which is very positive. There is a higher outlay for the power sector in this budget, indicating that the government wants to upgrade, renovate and spend on maintenance of government owned state electricity boards (SEBs). It will improve the plant load factor of government owned power stations.

    He has also extended the benefit u/s 80 IA, which is meant for power companies’ transmission and distribution upto 2003, which has now been extended to 2006. The II-tier benefit of 100%, which was available u/s 80 IA for only the first five years and was reduced from then on, has been changed. Now, the benefit is 100% for the entire block of 10 years. It is a really positive sign. If you go by the income tax method then you may take charge depreciation in the first five years itself, and normally end up in losses and not pay tax. But from the sixth year onwards you pay tax. So, the current budget proposal will change all that.

    Another important issue was that 80 IA benefit for the telecommunications sector was not available earlier. It was stopped from the year 2000 onwards. But in this budget it has been given a retrospective effect upto 2003. This is very beneficial for new telecom companies, which have set up operations from 2001 onwards.

    Pegging the fiscal deficit at 5.1%, and targeting to reduce this to 4.7% in the next year is very commendable, considering the tightrope the finance minister has to walk. Overall it was a good job by the finance minister.

    EQM: What kind of signal does the budget send out to Tata Power?

    Mr. Kanga:  It sends out a very positive signal. It clearly shows that the country needs power and the FM is very keen for development of the power sector in India. He has in fact said that the power reforms bill will be introduced in the current session of parliament, which underlines the government’s determination for pushing reforms.

    The benefits of extension of 80 IA till 2006 will also accrue to Tata Power, especially to the new power plants we are setting up in Belgaum, Jojobera and Wadi. The extension of section 80 IA benefits to telecommunications will also help Tata Power, considering our bandwidth and telecommunication plans.

    Reduction in the corporate and the dividend taxes will not really benefit the shareholders directly but the benefits will be passed onto our customers in the form of lower tariffs. We have worked out that the combined benefit of lower dividend and corporate tax will result in a reduction of tariff by almost 5 to 6 paise.

    EQM: What are the issues that should have been addressed in this budget?

    Mr. Kanga:  We were looking out for Minimum Alternate Tax (MAT) to be removed for infrastructure companies. This is because it really doesn’t make sense that on the one hand you give tax benefits u/s 80 IA, where we don’t have to pay any tax, and on the other hand to charge us MAT.

    Secondly, we wanted the LNG sector to be recognised as an infrastructure industry. But he has reduced the countervailing duty on LNG from 16% to 0.

     

     

    Equitymaster requests your view! Post a comment on ""The budget benefits will result in reduction of tariff by almost 5 to 6 paise" ". Click here!

      
     

    More Views on News

    NTPC: Higher Tax Provision Impacts Profits (Quarterly Results Update - Detailed)

    Mar 30, 2017

    NTPC declared results for the quarter ended December 2016. The company reported revenue growth of 10.9% while profits declined by 7.5% YoY.

    NTPC: Capacity Addition a Key to Earnings Going Ahead (Quarterly Results Update - Detailed)

    Nov 23, 2016

    NTPC declared results for the quarter ended September 2016. Here is our analysis of the results.

    Power Grid: Robust Performance Continues (Quarterly Results Update - Detailed)

    Nov 23, 2016

    Power Grid Corp (PGCIL) declared its results for the quarter ended September 2016. The company reported a revenue and profit growth of 28% YoY and 32% YoY respectively.

    Power Grid: Steady Start to the Year (Quarterly Results Update - Detailed)

    Sep 29, 2016

    Power Grid Corp (PGCIL) declared its results for the quarter ended June 2016. The company reported a revenue and profit growth of 31% YoY and 35% YoY respectively.

    NTPC: Good Start to the Year (Quarterly Results Update - Detailed)

    Sep 29, 2016

    NTPC declared results for the quarter ended June 2016. Here is our analysis of the results.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    Proxy Plays: A Smart Way to Bet on 'Off Limits' Companies(The 5 Minute Wrapup)

    Aug 4, 2017

    The small-cap space is full of small players that are clear proxies to great growth stories and Indian megatrends.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    S&P BSE POWER


    Aug 16, 2017 (Close)

    MARKET STATS