Economy and Business 

Budget may exempt export profits from corporate tax

What is India News Service, 29 June 2004, 1700 hrs

The budget is likely to restore 100 per cent corporate tax exemption on export profits. The liquor industry is under severe pressure as molasses have become more expensive. TVS Motor Company showed a slump in 2003-04 as two stroke motorbike sales have fallen. The Sajjan Jindal group, promoters of Jindal Iron and Steel Company, is close to acquiring Southern Iron and Steel Company Ltd (SISCOL) for and undisclosed sum.

The UPA government will announce the five-year National Foreign Trade Policy at the end of July. The policy will aim at increasing India\92s share in world exports to 2 per cent from 0.8 per cent. Tax exemption on export profits could be a significant decision. Exporters say this could compensate them for high transaction costs arising out of infrastructure bottlenecks. Commerce and industry minister Kamal Nath met finance minister P Chidambaram and is believed to have strongly taken up the exporters\92 demand for tax exemption.

With the prices of molasses having gone up five-fold in a year, the liquor industry is under severe pressure. The cost of domestically produced molasses, a key input, has gone up from Rs 1,000 a metric tonne to Rs 5,000. Declining cane crushing in UP, Maharasthra, Karnataka and Tamil Nadu is the cause of the price hike. The Confederation of Indian Alcoholic Beverages Companies (CIABC) has demanded waiver of central excise.

The just-ended financial year saw TVS Motor Company registering a growth of less than 5 per cent. The biggest hit was the dip in sales of two stroke bikes to 1.70 lakh as against 3.0 lakh the previous year. The company has budgeted Rs 200 crore for product development this year. Company sources foresee a 20 per cent growth this year, fuelled by increased demand for its recently launched products.

The Sajjan Jindal group, promoters of Jindal Iron and Steel Company and Jindal Vijayanagar Steel Ltd, is close to acquiring Southern Iron and Steel Company Ltd (SISCOL), promoted by Lakshmi Machine Works, for an undisclosed sum. SISCOL has a 3-lakh tonne wire rod-manufacturing unit in Salem. It registered revenues of Rs 270 crore in the previous fiscal (2003-04).

Overall:

Exporters could get relief: The budget is likely to restore 100 per cent corporate tax exemption on export profits.

Liquor industry is under pressure: With the prices of molasses going up five-fold in the last one year, the Indian liquor industry is reeling.

2003-04 was dull for TVS Motor Co: It just managed a 5 per cent growth.

Sajjan Jindal to acquire SISCOL: The group is close to acquiring Southern Iron and Steel Company Ltd (SISCOL) for an undisclosed sum.