The Union Budget presented yesterday, has been largely hailed by steel companies, and is expected to help the Tata major Tisco compete better and face up to the sluggish steel market conditions.
"The decision to increase customs duty on cold rolled coils by five per cent to 30 per cent from the existing 25 per cent will help create a price differential between hot rolled and cold rolled coil prices which is good," Tisco senior executive director, and vice president (finance), Ishat Hussain, said.
The eight per cent across the board hike in import duty too is expected give a temporary respite to the steel arena including Tisco. This will act as a protective short term measure, but the domestic industry will have to restructure itself to face the times ahead, industry sources pointed out.
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One will, however, have to see what effect the protective eight per cent import duty will have on the local dynamics, the sources added.
"The basic problem with the steel industry is that there is a pressure on prices and there is not much demand, and the eight per cent import duty will put a dampner on dumping thereby providing the industry a temporary respite," Ishat Hussain said.
The duty differential on HR and CR is expected to help boost demand for CR coils thereby incre-asing a corresponding demand on HR coils, which will help offtake of Tisco's HR products.
The import duty of eight per cent too will help Tisco compete better vis a vis the cheap imports from CIS countries which were flooding the domestic market thereby affecting the margins of the domestic manufacturers.
However, Tisco's input costs is expected to go up on account of the five per cent increase in duty on coking coal. The modvat credit being restricted to 95 per cent too is expected to affect Tisco's input costs.
However the budget has failed to evoke any major interest in the Tisco stock.
The scrip lost Rs 3 after the Budget was announced.
There is a feeling that the budget lacks thrust and it does not provide any strong workable incentives, and though it looks good on paper, it will be difficult to translate it into action. This has dampened sentiments and interest in the Tisco stock.