13-10-2010, 10:08 AM
ANALYSIS OF STEEL SECTOR.pptx (Size: 93.26 KB / Downloads: 129)
ANALYSIS OF STEEL SECTOR
SECTORS DRIVING STEEL INDUSTRY
Being a core sector, steel industry tracks the overall economic growth in the long term. Also, steel demand, being derived from other sectors like automobiles, consumer durables and infrastructure, its fortune is dependent on the growth of these user industries
BUDGET MEASURES
Increased focus on infrastructure development. IIFCL to refinance 60 per cent of commercial bank loans for PPP projects in critical sectors over the next fifteen to eighteen months. IIFCL and Banks are in a position to support projects involving total investment of Rs.1 trillion.
Allocation under Jawaharlal Nehru National Urban Renewal Mission (JNNURM) increased by 87% YoY to Rs.1.3 trillion in 2009-10.
Allocation for housing and provision of basic amenities to urban poor enhanced to Rs.39.7 bn in 2009-10.
Blueprint to be developed for long distance gas pipelines leading to a National Gas Grid to facilitate transportation of gas across the length and breadth of the country.
Increase in tax exemption limits for citizens.
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
Increased focus on infrastructure development would result in development of highways, ports, bridges etc, which will consequently increase the demand for steel.
Increased spending on government programs such as JNNURM scheme will result in higher steel consumption.
Plans to cover long distance gas pipelines would mean increase in demand for steel pipes and tubes.
Increase in tax exemptions for citizens would result in higher disposable income that will likely trigger increased demand for consumer durables, white goods etc, thus eventually boosting the demand for steel.
The union budget proposals of finance minister Pranab Mukherjee, will “indirectly boost the overall demand for steel”.
Apart from a higher outlay on housing and rural infrastructure, incentives to individuals for investing in infrastructure bonds will also spurt steel demand.
The decision to raise outlay on urban development and housing by 75% to Rs 5,400 Crore and an additional 25% of plan outlay for rural infrastructure, has come as a shot in the arm for domestic steel companies.
The changes in income tax slabs will leave more disposable income in the hands of consumers. This will in turn boost demand for consumer durables which use value added steels.