Budget 2014-15 and its Impact on Various Sectors
Esha Agrawal
FM Arun Jaitley said that Modi govt budget for middle class is committed to lower taxes and lower taxes gave people money to spend which in turn helps in economic growth. FM Hikes Income Tax exemption limit in personal income tax from Rs 2 lakh to 2.5 lakh, tax exemptions limit in investments under 80C from Rs 1 lakh to Rs 1.5 lakh and interest on housing loan from self occupied property from Rs 1.5 lakh to 2 lakh. Fm also raises limit for investment in PPF from Rs 1 lakh to Rs 1.5 lakh. These measures will help salaried class and middle class to do tax saving of upto Rs 39,655.FM also raised the tax exemption limit of senior citizen from Rs 2.5 lakh to Rs 3 lakh and reintroduced Kisan Vikas Patras. He also introduced NSC with insurance cover to provide additional benefits to small investors.
There is no change in the rate of surcharge either for corporate or for individuals and education cess of 3% is also the same.
Clean energy cess on coal raised from Rs 50 per tonne to Rs 100 per tonne, rate of basic excise duty on footwear reduced from 12% to 6%, reduction in rate of custom duty on certain commodity example LCD, LED'S abolition of 4% SAD on certain specific commodities example PVC'S , baggage allowance for passengers returning from abroad has been raised from Rs 35,000 to Rs 45,000.
Export duty on bauxite raised from 10 % to 20%
Online and mobile advertising have been removed from negative list and radio taxi also been brought within the ambit of service tax. earlier. Loading/unloading and transportation of cotton been exempted from service tax.
Indian accounting standard to be applicable optionally from FY 15-16 onwards and from FY 16-17 onwards, the same shall be mandatory.
FDI in defence raised from 26% to 49%, AAR'S direct and indirect tax extended to resident private companies, no retrospective amendment in taxation.
However the FM tries to relief common man by keeping duties on commonly used day to day items unchanged and tries to make it costlier for smokers and tobacco by hike in excise rate, budget made cigarettes, aerated drinks with sugar, pan masala, gutka and chewing tobacco, Zarda- scented tobacco, radio taxi, imported electronic products, broken diamonds, portable X-ray machines costlier, andCRT television, LED/LCD TVs especially below 19 inch, footwear priced between Rs 500 to Rs 1000 per pair, soaps, desktops, laptops and tablets, RO- based water purifiers, LED lights, sports gloves, branded petrol, matchbox, life micro insurance policies, pre forms of precious and semi precious stones is cheaper
FM announced setting up of five new IITS and IIMs ,the government will set up four new AIIMS .
Budget also introduced the new scheme called " Beti Bachao, Beti padho" and allocated Rs 100cr for this in the union budget. This scheme will help in generating awareness and improve the efficiency of delivery of welfare services meant for women.
Impact on budget on Airlines
The budget has proposed introduction of e-visa to encourage foreign tourist arrivals, it does not have any short term impact but in long term it will have positive impact, besides development of Sarnath-Gaya-Varanasi Buddhist circuit as a world class tourist destination and creation of five other tourist circuits would lead to increased air travel in the long run. The govt has proposed Rs 6500 crore equity infusion in Air India.
Impact of budget on Telecom
A basic custom duty of 10% has been imposed on specified telecom products. Since large portion of the equipment used will remain subject to nil import duty this is not expected to have a significant impact, budgeted receipts from auction of spectrum and levy of one time charges have been estimated at Rs 45,400 crore for 2014-15 against Rs 40,800 crore in 2013-14.
Impact of budget on Road
In 2014-2015 the situation is expected to improve a little to around 3,500km from 2,623km in the previous year with over 80% of contract awarded on an engineering procurement construction basis. Implementation may improve a little. Proposed investment of Rs 37,880cr for national highways and state roads workout to around 12% increase over last year spend. Additionally allocation of Rs. 500cr. Could help kick start some expressway projects. The govt. Also plans to set up an institution called "3Pindia" with the corpus of Rs 500cr.
Impact of budget on Real State Sector
Budget has raise the interest subvention limit from Rs 1.5 lakh to Rs 2 lakh and overall exemption under section 80c from Rs 1lakh to 1.5 lakh. Buyer of properties priced upto Rs 30 lakh are to expected to be the biggest gainer. FDI norm in the real estate have been relaxed by reducing the minimum built up area from 50000 sq.mts to 20000 sq. mts and lowering minimum capitalization from$10m to $5m. This is expected to allow developers, especially mid-sized ones, flexibility in raising capital and consequently, infuse much needed liquidity in the sector. Currently nearly 15 – 17% of the upcoming supply falls in this category, which is likely to increase over the long term.
The FM announced a package of Rs 3,600 crore to provide safe drinking water in some 20000 habitations over the next three years. The FM also said that every household is intended to be covered by total sanitation by the year 2019, the 150 year of Mahatma Gandhi's birth anniversary, through the Swatchh Bharat Abhiyan
Esha Agrawal !!!!!!!!
A Case Study on Branding and Re-Branding your Business – Hero Moto Corp
I want to present a case study about Branding and Re-Branding businesses.
A case of Hero-Honda partnership in India, before and after. When the brand was Hero-Honda, it was selling two wheelers in India like hot cakes.Now, after the demerger of Hero and Honda, both are having their own brand Hero MotoCorp and Honda respectively.
Post demerger, what I have observed is remarkable. As far as I know Hero Bikes are very rarely seen on the roads, but Honda bikes are selling in quantities just as before when the company was Hero-Honda.
Now, I want to give additional information in respect of both the companies. Hero used to make bicycles in India and it still makes. Later on it expanded and entered into partnership with Honda (a car manufacturer).Now, after their demerger, Hero MotoCorp and Honda are selling their own two wheelers independently.
My point is that, as of today, young people are becoming brand conscious and would not like to buy a bike from a bicycle manufacturer (Hero, an Indian Company). But, everyone would like to buy a bike from a car manufacturer (Honda).
As on date, Honda sells its cars in India on large scale. At the same time Hero sells bicycles in India at this very moment. (Natural inclination of the buyer is to buy from a car manufacturer, and I think this is what is happening).
Now, given a choice to a customer to buy a two-wheeler, what you think who stands more chance to get the customer?
From my perception, its Honda and not Hero.
So, to conclude, at this juncture, it is imperative for Hero to re-brand its two-wheeler division. At least the brand name should be different for bicycles and two-wheelers. There is no need to stick to the word Hero. If that word is not there, sky is not going to fall. They can establish their own separate Brand with a nee Avatar. That's the beauty of newness and innovation.
I hope this message reaches the company and they take appropriate steps to re-brand themselves to face the foreign competition. Or else, in few years, they will witness the results.
The reason explained in above article can be just one of the reason but it can be crucial for the company's success.
Below is some data which may interest you and will also testify the logic given in above article.
Source: http://www.xbhp.com/talkies/news/28871-march-2014-two-wheeler-sales-figures-xbhp-news.html
| Company | Units Sold in March 2013 | Units Sold in March 2014 | % Growth |
| Hero MotoCorp | 468,283 | 524,028 | 11.9 |
| Honda Motorcycle & Scooter India (HMSI) | 252,787 | 392,148 | 55.0 |
| Suzuki Motorcycle India Ltd (SMIL) | 25,717 | 30,594 | 19.0 |
| Bajaj Auto | 267,037 | 270,591 | 1.33 |
| TVS Motor Company | 167,583 | 196,826 | 17.44 |
| Yamaha Motors India | 50,473 | 61,239 | 21.33 |
| Mahindra Two Wheelers | 19,591 | 7774 | 152.00 |
The biggest challenge in front of Hero MotoCorp is to face the complacency. If the company remains complacent about its past success and growth rate of 11.9%, its still going to lose the market share.
I conclude my article with one powerful sentence which I have read somewhere "If you keep doing what you were doing, you will keep getting what you were getting" – Anonymous. Surviving the failure is easier than surviving slow growth. You never be aware about the fact that you are in problem (especially when there is positive growth seen from the financials and turnover units) or whether you are doing good. But one thing is definite; you are not doing the best.
Disclaimer: This article is written and published just to give a management/leadership insight into the case. I am neither related either to Hero or Honda or any other vehicle manufacturers in any waynor I hold any security of any nature in any of the above mentioned companies. I am not even connected as consultant to any of the vehicle manufactures. The article should not be taken as an advice to buy or sell any securities. The views are purely personal views.
(Written by CA Rajesh Pabari – for feedback kindly contact carajeshpabari@gmail.com or WhatsApp on +919022780919)
Mandatory Inclusion of Women in Board of Directors of Companies
Section 149 of the Companies Act, 2013 read with Rule 3 of the Companies (Appointment and Qualification of Directors) Rules, 2014 makes it mandatory for every listed company and every public company having paid-up share capital of not less than Rupees one hundred crore or turnover of Rupees three hundred crore or more to appoint at least one woman director.
As per information obtained from MCA21 database, there are 1,26,077 public limited companies in the country. 4,83,323 companies, including public limited companies, are having women Directors as Board Members.
This was stated by Smt. Nirmala Sitharaman, MoS in the Ministry of Corporate Affairs in written reply to a question in the Rajya Sabha today.
Source- PIB
Government may look at amending Companies Act if needed: Nirmala Sitharaman
Amendments in Companies Act
Companies Act 2013 has been enacted only last year and so far a little more than half of its provisions have come into force. Matters arising from the operation of provisions already brought in force are getting attention of Government in the form of issue of circulars, suitable statutory orders and amendments in Rules to remove doubts or practical difficulties; amendments in the Act would be considered in case the above measures prove insufficient.
This was stated by Smt. Nirmala Sitharaman, MoS in the Ministry of Corporate Affairs in written reply to a question in the Rajya Sabha today.
Relaxation in Companies Act
Section 462 of the Companies Act 2013 envisages relaxations in the form of not applying some provisions of the Act or applying them with exceptions or modifications to specific class/classes of companies. Before grant of such relaxation, draft notifications have to be laid before each House of Parliament. Preparation of such notification is under active consideration.
This was stated by Smt. Nirmala Sitharaman, MoS in the Ministry of Corporate Affairs in written reply to a question in the Rajya Sabha today.
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