A Road Less Taken… A look at the fresh net worth criteria for road projects

Kamal Nath, road transport and highways minister, is termed as the “man in a hurry”. Just after he took over the ministry in June 2009, he announced a plan to build a road network of 20 km per day, 7,000 km each year and 35,000 km in the next five years. This target was set in spite of a not-so-impressive track record of the National Highways Authority of India’s (NHAI) which has built only 5-6 km of roads per day over the financial years 2005-09. Shockingly, NHAI was reported as taking an average of three years to award a contract and another three to complete the construction!! With this backdrop, his target of achieving 20 km a day seemed like just another target set by a ministry. However, the minister has taken some concrete steps towards  enabling development of road network. One such step includes alteration of the net worth criteria announced in March end. 

Automobiles – Round Up 2009-10

I was reading about India being the second fastest growing automobile market after China. A look at the numbers reveal that China’s automobile market grew by 42%, followed by India’s at 26% and third comes Germany with 23% year-on-year growth.

Sales growth of automobile vehicles in India during financial year 2009-10 was the biggest percentage rise in seven years. This growth came over a 3.3% increase in the previous year. Payment of the sixth pay commission arrears, new model launches and higher farm income drove sales.

Consumers of automotive vehicles…..get ready to shell out more

Natural rubber prices are expected to remain firm in the near future which would adversely impact its user industries like tyre manufacturing. The tyre industry is facing a sharp surge in raw material costs as it consumes 60% of the rubber output in India.

The widening global demand-supply mismatch is resulting in natural rubber prices soaring to record-highs. A disruption in tapping activities in Kerala as heavy rains lashed the largest NR producing state, together with a surge in demand resulted in a rise in domestic prices.

Personal Income Tax Slabs for FY ’11

With the beginning of the new financial year 2010-11, I thought it would be helpful to update changes in the Personal Income Tax Slabs.

India Infoline in one of its reports on the Union Budget gave details on the changes in personal IT slabs:

	Male			Female
Taxable Income (Rs)	Pre-Budget (Rs)	Post-Budget (Rs)	Savings   (Rs)	Pre-Budget (Rs)	Post-Budget (Rs)	Savings   (Rs)
2,00,000	4,120	4,120	0	1,030	1,030	0
3,00,000	14,420	14,420	0	14,420	14,420	0
5,00,000	55,620	35020	20,600	52,530	31,930	20,600
8,00,000	1,48,320	96,820	51,500	1,45,229	93,730	51,500
9,00,000	1,79,219	1,27,719	51,500	1,76,129	1,24,629	51,500
11,00,000	2,65,121	2,08,471	56,650	2,61,722	2,05,072	56,650
12,00,000	2,99,111	2,42,461	56,650	2,95,712	2,39,062	56,650
15,00,000	4,01,081	3,44,431	56,650	3,97,682	3,41,032	56,650
20,00,000	5,71,031	5,14,381	56,650	5,67,632	5,10,982	56,650

Note: Education cess @ 3% and 10% surcharge on the income above Rs10 lakh

Taxable Income	FY 2009-10			FY 2010-11
	From	To	Tax Rate (%)	From	To	Tax Rate (%)
Male	0	160,000	0	0	160,000	0
	160,001	300,000	10	160,001	500,000	10
	300,001	500,000	20	500,001	800,000	20
	500,001	onwards	30	800,001	onwards	30
Female	0	190,000	0	0	190,000	0
	190,001	300,000	10	190,001	500,000	10
	300,001	500,000	20	500,001	800,000	20
	500,000	onwards	30	800,001	onwards	30
Senior Citizen	0	240,000	0	0	240,000	0
	240,001	300,000	10	240,001	500,000	10
	300,001	500,000	20	500,001	800,000	20
	500,000	onwards	30	800,001	onwards	30

Hope this info helps you understand your tax liability. So get set and start tax planning from today!

Power starved India faces slow capacity addition in FY 2010

A glance at the power sector statistics for the financial year 2010 depicts a mixed trend. While the power generation was close to the ministry’s target at 97.7%, capacity addition lagged at 52%.

While demand is rising at a fast pace, inability of the companies to add capacity at an equally fast or higher rate, will result in continuation of power shortages.  

Electricity Capacity Addition during 2009-10
In MW	Hydro	Thermal	Nuclear	Total
Target	845	13,002	660	14,507
Achievement	39	9,106	440	9,585
Achievement to target ratio	4.6%	70.0%	66.7%	66.1%
Source: Power Ministry

 

Electricity Generation during 2009-10
In gwh	Hydro	Thermal	Nuclear	Total
Target	115,468	648,480	19,000	789,512
Achievement	106,656	640,523	18,654	771,173
Achievement to target ratio	92.4%	98.8%	98.2%	97.7%
% y-o-y growth	-5.7%	8.5%	26.8%	6.6%
Source: Power Ministry

Power generation target was achievable mainly due to higher raw material supply to the sector. It includes coal, natural gas and uranium.  However, according to the power ministry, the short supplies of domestic coal and delay in materialization of import of coal resulted in under utilisation of capacity at some of the power plants with the estimated loss of generation of 14,470 million kwh during the period April’09-Mar’10. The Coal ministry claims that lack of available rail wagons led to shorter supply of coal. However, this argument between rail ministry and Coal India occurs regularly but there is no clear accountability.

A look at the coal despatches statistics reveal a sharp 5.3% growth in coal despatches during  April-February 2009-10. While coal traffic on railways rose by a robust 7.9%, that for thermal power plants increased by a slower 4.8%. This has led to a shortfall of coal at power plants.

Coal Statistics (in million tonnes)
	Apr-Feb 08-09	Apr-Feb 09-10	% y-o-y growth
Coal production	431.6	466.0	8.0%
Despatches of coal	436.1	459.3	5.3%
Coal traffic on railways	331.8	357.9	7.9%
For thermal power	234.1	245.5	4.8%
Source: CCIL, Rail Ministry

 Higher gas availability from the Reliance Industries owned KG-D6 basin bolstered growth in thermal power. With RIL taking the approval to commercialise four new discoveries, gas-power power plants and fertilizer units will be the key beneficiaries.

While generation has been close to the target, capacity addition has lagged. Why I say lagged is because there is a big difference in the way the capacity addition numbers are presented by the government. One is the capacity added data (which shows 66.1% achievement of target) and the other is commercializing new units which may or may not have been completed in the same year. I look at the stats from the second angle to assess capacity addition as it will be this capacity which will finally contribute to the generation. No point in a capacity being added & not being commercially used.

I plan to deal with the topic of delays in capacity addition and reasons for the same in another post.

Intro to this blog

It has been over five years since I have been tracking Indian Industries. Since college days I have tried to implement several management tools on numerous industries as part of various projects. However, I have realised that any number of years are insufficient to know an industry, as we are a part of a highly dynamic environment.

A colleague cum friend suggests that blogging will be the best way to enhance my knowledge, and here I go…. Hope you will contribute to my blog by giving suggestions and help widen my horizon.

Auto round-up 2009-10

The automobile industry in 2009-10 recorded a 26 per cent growth in domestic sales. The strong sales have made India the second fastest growing market after China (42 per cent), followed by Germany (23 per cent).

Sales growth of automobile vehicles in India during financial year 2009-10 was the biggest percentage rise in seven years.

Tyre Industry – Update

Natural rubber prices are expected to remain firm in the near future which would adversely impact its user industries like tyre manufacturing. The tyre industry is facing a sharp surge in raw material costs as it consumes 60% of the rubber output in India.