Reliance Industries: Brutal margins, savage cuts:: Kotak Securities PDF Link

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Reliance Industries (RIL)
Energy
Brutal margins, savage cuts. We have cut our FY2013-14E EPS by 8% to reflect lower
refining and petchem margins. Near-term margins may remain subdued given weakness
in global demand and continued high input costs. The ongoing buyback program may
support the stock price in the near term although RIL may need to rediscover its
historical advantages (scale and execution) to excite investment interest in the medium
term. Earnings alone may not be sufficient to support the stock price.

Strategy: Restructuring, extensions and refinancing, the order of the month:: Kotak Securities PDF Link

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Strategy: Restructuring, extensions and refinancing, the order of the month
` FCCB activity: previous and upcoming
` The FCCB universe: average yields come off peaks but remain above 20%
` KIE generalized CB valuation model: mispricing and implied credit risk
premium

United Spirits: Everything has a price - UNSP stock trades at ten-year low valuations :: Kotak Securities PDF Link

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United Spirits: Everything has a price - UNSP stock trades at ten-year low
valuations
` Likely implications of KFA loans, if any
` FY2012E performance marred by many one-offs
` Cheap valuations probably capture many of the risks

Consumer products: Bazaar bytes #5: Taking a deep dive into the deodorants category:: Kotak Securities PDF Link

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Consumer products
India
Bazaar bytes #5: Taking a deep dive into the deodorants category. Deodorants
has become critical for consumer companies over the last one year—HUL (market
leader), Jyothy (through Henkel) and Marico (through Paras’ brands). We take a deepdive into it—size, growth rates, key players, market share and finally its changing
contours. We see increasing activity levels in this nascent category with potential for
category growth acceleration. A large and growing presence of grey market is a
concern that the incumbents will have to cope with. Most of the market fragmentation
(top-3 players account for ~30% of the market now versus 50% in 2005) is likely
behind us, in our view—a positive for incumbents.

Technology: How relevant is Infosys' upcoming FY2013E revenue guidance? :: Kotak Securities PDF Link

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Technology: How relevant is Infosys' upcoming FY2013E revenue guidance?
` Guiding in a highly uncertain environment a challenging task
` What to do about the 'guidance' noise element and how to play the
stock/sector in the run-up?

Biocon: Biocon-Pfizer deal off :: Kotak Securities PDF Link

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Biocon: Biocon-Pfizer deal off
` Recap of the deal signed in October 2010
` Near-term financial impact may be limited only if there is no change in
revenue recognition policy
` Pfizer - an important partner for Biocon
` Downgrade to ADD (was BUY); TP Rs280 (Rs380 earlier), 14X FY2013E
(16X earlier)

RAILWAY BUDGET 2012-13:: Kotak Securities PDF Link

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RAILWAY BUDGET 2012-13
Focus on economic viability; uncertainty ahead
q The 2012-13 railway budget has focused on raising revenues and improving the operating ratio.
q With a view to increase revenues, passenger fares have been raised - the
first time after several years. Freight rates had been increased a few days
back and that too, steeply.
q Operating ratio, consequently, is expected to come down to 85% v/s
95% in FY12RE. The target is to reduce the same to 75% by 2016-17.
q Growth rates in freight loading and passenger traffic have been assumed
at a reasonable 5.6% and 5.4%, respectively. FY12 freight loading
growth was at about 5%.
q Economic viability, rather than social desirability, has been preferred.
q The Railway Minister has also proposed to set up Railway Tariff Regulatory Authority (RTRA) It would be a step towards delinking of Indian
Railways and Ministry of Rail to avoid conflict of interest, we believe.
q Railway modernization and safety will be targeted. Recommendations
made by expert committees to be adopted.
q Continued investments have been proposed towards additional railway
lines, doubling of lines, gauge conversion and electrification. Execution
to be important, in our view.
q Plan outlay is budgeted to rise to a record Rs.601bn.
q While the GBS is seen at Rs.240bn, internal accruals are expected to bring
in Rs.181bn.
q PPP is proposed to be encouraged; strategic initiatives outlined
q Overall, the budget is focused on controlling the deficit while continuing
investments to make railways one of the largest and best networks globally. It tries to align the annual targets with the Vision 2020 statement
of the railways and the 12th 5-year plan.
q However, implementation has to follow to make the proposals effective.
q Moreover, there is uncertainty whether the budget proposals will be
passed in the current form. We will watch out for the same.
q For the markets, it is largely a non-event. Whether the focus on deficit is
also reflected in the Union Budget, is something we will watch out for.

Buy ALLCARGO GLOBAL LOGISTICS : TARGET PRICE: RS.190: Kotak Securities PDF Link

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ALLCARGO GLOBAL LOGISTICS LTD
PRICE: RS.140 RECOMMENDATION: BUY
TARGET  PRICE:  RS.190 CY12E P/E: 7.4X
To form a new company for its Non Vessel Owning Container Carrier (NVOCC) business. It is also looking forward to add capacities
in all areas.
Despite sluggish growth in World Trade and poor container shipping
market, Allcargo has been performing strongly, both in the NVOCC segment
and the Container Freight Station (CFS) business. It is now in the process of
forming a new company for its Non Vessel Owning Container Carrier
(NVOCC) business. The company has announced the merger of the project
division of its fully owned subsidiary into itself and has also constituted a
Committee of Directors to look into the demerger of its global Less than
Container Load (LCL) business. On expansion front, it is increasing the CFS
capacity at JNPT through a new facility with an annual capacity of ~1.5 lakh
TEUs. Company would also enhance the capacity at its Chennai CFS from 1.2
lakh TEUs to 1.5 lakh TEUS through renovation of the facility and purchase
of gantry cranes. Management indicated that the NVOCC and the CFS
segment would continue to grow at 10 to 12% CAGR despite bad times as
the company primarily operates in LCL segment which is more immune to
sluggishness in container trade. In the project cargo and engineering
solution division, the company has made a relatively huge capex of Rs 3.25
bn in CY11 primarily to enhance the fleet. We expect this segment to report
revenue growth of 25% CAGR to Rs 4.8 bn in CY12E. Overall we expect the
company to report a healthy topline growth of 12% CAGR to ~Rs 36 bn in
CY12E. The margins are also expected to expand as Allcargo takes an
absolute margin in its NVOCC segment and the current slowness in the
container shipping market has made the base low. Increased contribution
from high margin CFS business in total revenues would also help the
margin. Despite strong operational performance and estimated as well, the
stock price has remained flat YoY. We reiterate BUY on Allcargo with an
unchanged 12 month price target of Rs 190 for the stock. Downside to our
call includes: 1) Further competition in the CFS segment. 2) Slowing down
of container trade

Economy: Pushing Indian Railways back on track :: Kotak Securities PDF Link

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Economy
Railway Budget
Pushing Indian Railways back on track. The Railway Budget has adequately
addressed the ongoing financial woes with revenue-enhancing measures. The
passenger fare hikes come on the back of freight rate hikes on March 6, 2012. The
budget aims to lower the operating ratio to 84.9% in FY2013 from 95% in FY2012.
This is definitely a positive given that the trend returns to the pre-Sixth Pay Commission
era when the ratio was ~76% in FY2008. The budget also provided for safety,
modernization and infrastructure development through a plan outlay of Rs601 bn.

Railway Budget - higher freight cost for commodities:: Kotak Securities PDF Link

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Railway Budget—higher freight cost for commodities. A 30% rise in freight rates
for coal and cement as highlighted in the Railway Budget would increase landed price
by Rs150-180/ton for the commodities. While the power sector may be less impacted
by the increase due to the cost-plus nature of their sales arrangements, the cost burden
will likely be borne by cement manufacturers both in terms of input cost for coal and
outward freight for cement. We evaluate other data points from the budget, including
investment in new infrastructure that could improve evacuation infrastructure for coal.

ECONOMIC SURVEY - MARCH 2012 :: Kotak Securities PDF Link

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ECONOMIC SURVEY - MARCH 2012
The Economic Survey has sounded an optimistic stance on the Indian
economy going ahead, for FY13 and FY14. It has forecast a growth of 7.6%
in FY13 and 8.6% for FY14, on the back of a 30%+ investment rate. To
achieve this, it has advocated a strong agriculture and infrastructure push
through. Removal of bottle-necks and administrative reforms in both these
segments, have been recommended.

RBI keep the cash reserve ratio (CRR) of scheduled banks unchanged :: Microsec Research

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 RBI keep the cash reserve ratio (CRR) of scheduled banks unchanged at  4.75 per cent of their net demand and time liabilities and also keep the  policy repo rate under the  liquidity adjustment facility (LAF)  unchanged at 8.5 per cent. Consequently, the reverse repo  rate under the LAF will remain  unchanged at 7.5 per cent, and the marginal standing facility (MSF) rate and  the Bank  Rate at 9.5 per cent.

Guidance

Recent growth-inflation dynamics have prompted the Reserve Bank to indicate that no further tightening is required and that future actions will be towards lowering the rates. However, notwithstanding the deceleration in growth, inflation risks remain, which will influence both the timing and magnitude of future rate actions.

Regards,

Team Microsec Research

Buy GUJARAT APOLLO LIMITED (GAL): Target Rs 170: Kotak Securities PDF Link

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GUJARAT APOLLO LIMITED (GAL)
PRICE: RS.136 RECOMMENDATION: BUY
TARGET  PRICE:  RS.170 FY13E P/E: 9.5X
q Gujarat Apollo has been observing sluggish demand across Mobile Equipment Group (MEG) divisions. Public spending in new road construction
and maintenance has slowed down due to 1) increase in interest rates 2)
issues related to land acquisition and environmental clearances continues
to affect execution 3) elections in five states including Uttar Pradesh led
to a halt in government spending in respective areas.
q Margins are expected to remain subdued in short and medium term for
the company on account of higher input prices. Company has taken few
price hikes in the past to partly pass on the raw material pressure to its
customers.
q Unlike TIL (that operates in North and East India), GAL has not been observing significant increase in receivables. Company continues to enjoy
strong balance sheet at the end of 9MFY12. We highlight that company's
stock has outperformed the BSE MIDCAP index in past one year.
q We believe that the company is well positioned to benefit from the likely
recovery in road construction and maintenance activity in India over
FY13. We maintain our 'BUY' recommendation with a one year DCF
based unchanged price target of Rs 170.
Company Highlights
We recently interacted with the management of GAL to get perspective on the overall business environment unfolding mainly in the domestic markets. Below are the
key highlights of our interaction.
n Company has been experiencing moderate pick up in the Industrial Product
Group (IPG) segment which includes Asphalt Batch-mix plants, Asphalt Drum-mix
plant and Crushing and Screening plants. However, the pickup in demand in still
significantly lower than expected.
n Order flows from NHAI have expedited in 9MFY12 and we believe that this is
likely to benefit the company and its peer group (TIL, Greaves Cotton) with a lag
of 2-3 quarters.
n Concerns regarding muted public spending on road construction and maintenance continue to exist. Road sector has been observing sluggish growth due to
1) YoY increase in interest rates 2) issues related to land acquisition and environmental clearances continues to interrupt execution 3) elections in five states including Uttar Pradesh led to a temporary halt in government spending in respective areas.
n Company has been observing slowdown primarily in the MEG segment. Demand
for Asphalt Paver and Hydraulic paver has significantly declined vis-à-vis last
year.
n In 9MFY12, GAL has reported muted YoY revenue growth in IPG segment to
Rs.1.2 bn. However, revenues in MEG segment at Rs 409 mn were significantly
lower vis-à-vis last year at Rs 542 mn. We highlight that in last quarter, MEG segment was negatively impacted by inability of BSII and BSIII compliant engines for
Hydraulic Pavers. This has led to the production halt of over one month in the
quarter.

Cement - Budget: Neutral for excise; positive for coal imports; :: Edelweiss PDF link

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The Budget 2013 had two main announcements: a) Increase in excise duty to 12% (from 10%) while reducing the fixed component to INR120/t (from INR160/t earlier) and also introducing 30% abatement on retail price; and b) reducing the import duty on thermal coal to zero from 5%. While the change in excise rate may lead to duty being higher by ~INR60/t, we expect the industry to be able to pass it on to the consumers and hence assess the impact as neutral. The reduction in customs duty on imported coal will reduce the cost for coverage companies in INR9-29 range. The largest beneficiary will be India Cement due to >60% exposure to imported coal.    

MONETARY POLICY RBI on pause, indicates smaller and slower rate cuts: :: Kotak Securities PDF Link

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MONETARY POLICY
RBI on pause, indicates smaller and slower rate cuts next fiscal …
RBI retained status quo on rates, as expected. However, policy language indicates
growing tolerance of RBI towards slower growth choosing to retain its focus over inflation ("…notwithstanding the deceleration in growth, inflation risks remain, which
will influence both the timing and magnitude of future rate actions…"). We opine
going forward the rate cuts are likely to be smaller and slower in next fiscal year
dependent on trilogy of inflation, growth and external front.

CEMENT SECTOR UPDATE -March 2012:: Kotak Securities PDF Link

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CEMENT SECTOR UPDATE
PRICES CONTINUE TO STAY FIRM AND HIKED BY Rs 10-25 PER
BAG ACROSS REGIONS
q After witnessing declines in cement prices during December to first week
of January, cement prices have been continuously firming up and have
now been hiked by Rs 10-25 per bag post hike in railway freight rates
last week
q Demand growth has started reviving and is expected to be strong during
FY13.
q Since we have now begin to see demand growth revival, we would recommend a selective approach to cement sector and would prefer players
having attractive valuations and higher capacities since delta effect of
higher cement prices will be much more with these players.
Demand supply scenario
Cement demand had remained slow till Oct, 2011 and started reviving since Nov,
2011 due to demand coming from individual housing units as well as infrastructure.
Cement demand growth since Nov, 2011 has grown in double digits on a monthly
basis and demand growth for Apr, 11 - Feb, 12 period now stands at 6.9%. Our
interaction with companies and dealers indicate that this demand growth is likely to
be sustained in near future. We also expect revival in infrastructure award process
during FY13 which would also result in keeping cement demand growth strong.
Cement demand has a correlation with GDP growth and has grown at 1.2-1.3x GDP
growth since 2005. But it has defied that correlation during FY11 and FY12 till date
due to lack of infrastructure activity as well as slowdown in real estate due to higher
interest rates. GDP growth is expected to be around 7.5% going forward, we thus
expect cement demand to improve by 9.5-10% going forward. Focus on infrastructure creation as well as pre-election spend during FY13 and FY14 would be key drivers for the cement demand growth going forward.

March 17: Economy News : Kotak Securities PDF Link

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Economy News
4 The government may fall short of the revised target for direct tax
collection of Rs5.8 trillion for 2011-12 fiscal by at least Rs500 bn going by
the latest data on advance tax payments (ET).
4 The subsidy payments of about Rs111 bn for imported urea and
phosphatic and potassic fertilisers are pending due to shortfall in budget
provisions (ET).
4 Food Minister has ruled out clearance of Food Security Bill in the ongoing
Budget session of Parliament stating that consultations are still on to sort
out problems raised by states (BS).
4 The government could raise only Rs55 bn through Securities Transaction
Tax (STT) so far for current fiscal. This is 20% lower than a year-ago (ET).
Corporate News
4 L&T Construction has bagged orders worth Rs 11.4 bn, including
construction of a large IT campus facility in Kolkata. The Kolkata project is
estimated at Rs 9.7 bn and would be executed with a joint venture with
Shapoorji & Pallonji Company Ltd within 32 months (BS).
4 Ashok Leyland  in JV with Nissan is readying an entry into the sub-onetonne mini truck market (ET).
4 Infosys has said that it is expecting an increase in pricing in the consulting
and systems integration business. Company has said that its engagement
in verticals such as retail and life sciences is bringing in higher margins (BL).
4 Mahindra & Mahindra has committed. Rs 17.8 bn in its South Korean
arm Ssangyong Motor Company just as it completes one year of
Ssangyong ownership.Under its ownership,Ssangyong has posted a growth
of nearly 40% in 2011 (ET).
4 Eyeing the $24-billion US healthcare market, Wipro Technologies has
launched its NextGen Care Management solution. This solution is aimed at
primary care physicians and healthcare providers and is tailored for the US
healthcare market (BL).
4 The International Air Transport Association (IATA), the apex body for the
global airline industry, has initiated discussions with  Kingfisher Airlines
on the terms on which the carrier can settle its dues (BL).
4 NMDC Limited is set to acquire Wonarah rock phosphate reserves of
Minemakers Limited for about $15 million. NMDC will complete the
acquisition of the rock phosphate asset in Australia by the end of next
month (BS).
4 SKS Microfinance Ltd has received sanction for two 'rated pool
assignment' transactions worth Rs 1 bn each, from two different banks,
totalling Rs 2 bn. This would facilitate company raising capital for fresh
lending (BL)

JANUARY IIP: Industrial production in January at 6.8%:: Kotak Securities PDF Link

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JANUARY IIP: CAME AT 6.8%
Industrial production in January at 6.8%; sharply higher than revised 2.5% (from 1.8%) in December
Industrial production in January surprised on the upside with 6.8% growth from
2.5% growth in December (revised upwards from 1.8%). High volatility in IIP and its
component makes it extremely difficult to rely on the series for policy analysis and
makes it difficult to predict its future trend.
Cumulative growth during Apr-Jan FY12 has slowed to 4% vs. 8.3% last year, while
the advance GDP estimates indicate the industrial sector growth for the entire FY12
at 3.9%.
3MMA of IIP recovered sharply to 5.07% vs. 7.37% 3MMA in January 2011. Sharp
growth in manufacturing sector at 8.5% (wt. 75.53%) saved the day. Slower growth
in Electricity (wt. 10.32%) at 3.2%, and contraction in mining sector at -2.7% (wt.
14.16%) brought down the industrial growth, though.

Buy ENGINEERS INDIA LTD (EIL): Target RS.320:: Kotak Securities PDF Link

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ENGINEERS  INDIA LTD (EIL)
PRICE: RS.273 RECOMMENDATION: BUY
TARGET  PRICE:  RS.320 FY13E P/E: 13.7X
Engineers India Ltd (EIL) is India's leading publicly held company engaged in
the areas of Hydrocarbon, metal and infrastructure consultancy. The
company has a healthy market share in the Hydrocarbon consultancy
segment and enjoys entrenched relationship with few of the major oil & gas
companies like HPCL, BPCL, ONGC and IOC. Driven by increased activity in
global energy scenario and rapid development in Indian Hydrocarbon space,
we believe that the company is well poised for 13% CAGR in net profits
between FY11-13E.
In our estimates, we project a 21% CAGR in consolidated revenues between
FY11-13E from Rs.28 bn in FY11 to Rs. 41.6 bn in FY13E. Within the revenue
streams, we expect consultancy & engineering business to grow at 6% CAGR
and Lumpsum turnkey project segment (LSTP) to grow at 30% CAGR
between FY11-13E mainly driven by 1) current order book at Rs 57 bn 2)
continued momentum in the domestic Hydrocarbon Industry mainly refining
and petrochemicals 3) pick up in investments in projects in power and
infrastructure space 4) company's new initiative adding to revenues and 5)
meaningful contribution from overseas Hydrocarbon markets mainly Middle
East.
At the current price, company's stock looks reasonably valued on  a
discounted cash flow basis. We therefore initiate coverage on EIL stock with
a BUY rating and one year DCF based target price of Rs.320.

FY13 Budget Review - Not much to cheer about :: Edelweiss PDF link

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After record high fiscal slippage (~1.3% of GDP) in FY12, the Union Budget for FY13 too failed to cheer. While FY13 fiscal targets are certainly more credible than last year, we see clear upside risks, possibly to the tune of 0.4% of GDP. Gross tax revenue growth (~19% YoY), while high, is still achievable given the hike in excise & service tax. However, non-tax revenues look optimistic while subsidies are clearly underprovided. Accordingly, FY13 fiscal deficit could reach 5.5% of GDP, implying only a mild consolidation from 5.9% in FY12. Accordingly, the net budgeted market borrowing of INR4.8trn also faces upside risks, implying that bond yields could come under pressure. Meanwhile, the policy announcements for reviving investments were incremental at best.  In nutshell, we feel that the Budget did make an attempt to be effective but reached only so far. 

What Anna Hazare liked and didn’t like about Budget 2012 (First Post)

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Pranab Mukherjee has presented a budget today, a long one in which he even quoted Shakespeare. I wish he had quoted an Indian author instead. There are so many here. Or he could have said something from the Gita.

Anyway, this is what I liked about his budget:

Black money: The finance minister said they will

Maruti Suzuki: Likely fuel price hike, diesel tax could derail volume growth :: Kotak Securities PDF Link

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Maruti Suzuki: Likely fuel price hike, diesel tax could derail volume growth
` We expect a stringent tax on diesel passenger vehicles in the Union Budget
` We maintain our SELL rating on the stock

Fertiliser - Budget brightens prospects; :: Edelweiss PDF link

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The Budget 2012-13 provides for 150% investment linked deduction of capex for fertilisers from the current 100% deduction. In our view, the fertiliser companies incurring significant capex would eventually become MAT paying companies owing to these deduction benefits. Apart from this, govt announced various sops like custom duty exemption for fertiliser equipments, lowering of withholding tax on ECBs from 20% to 5% and moving towards direct subsidy payouts. While the budget is positive for the sector as a whole, Coromandel International (Coromandel) would be a key beneficiary in the near term.

Union Budget-2012-13-Not much to cheer about :: Edelweiss PDF link

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      Stated fiscal consolidation will be hard to achieve

?       Govt announces gross fiscal deficit for FY13 at 5.1% of GDP (against 5.9% of GDP in FY12), which may be difficult to achieve. We see risks of slippages to the tune of 0.4% of GDP, taking the fiscal deficit to as high as ~5.5% of GDP.

?       While tax revenues are not unrealistic, fuel subsidy is clearly underprovided and revenues from telecom look optimistic. 

Automobile - Budget: Neutral to marginal negative :: Edelweiss PDF link

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We view the impact of budget on the automobile sector as neutral to marginally negative. As expected, excise duty in general has increased at least 2% for most product categories. However, no special duty has been levied on diesel engine vehicles, as was feared. Excise duty has been rationalized into ad-volarem from ad-volarem + fixed rate for large passenger vehicles and commercial vehicle chassis. We expect companies to take price hikes and pass on the burden; hence, their earnings are unlikely to be significantly affected. M&M is likely to be the biggest beneficiary of no duty hike on diesel engines.

Oil and Gas - Budget: Indicative Q4FY12 GOI subsidy a positive; Higher cess a negative; :: Edelweiss PDF link

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The govt, in its FY13 budget, has increased cess on domestic crude oil production from INR2500/MT (USD6.9/bbl) to INR4500/MT (USD12.4/bbl). We are negatively surprised by this and estimate FY13 EPS of Cairn to fall 11%. On the positive side, govt has budgeted INR430bn as oil subsidy for FY13. We expect this to include INR400bn of govt sharing for Q4FY12 which would be paid in Q1FY13. This implies only ~36-39% sharing by upstream companies for FY12, partly nullifying the impact of higher cess on ONGC. We estimate ONGC’s net realization in FY12 to be USD54/bbl at 39% upstream sharing. We cut our fair value of ONGC to INR362 (4.5%) and that of Cairn to INR 319 (6.7%). Maintain ‘BUY’ on ONGC, BPCL, and HPCL, and ‘HOLD’ on Cairn.

Multiple investment opportunities

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1.   Muthoot Finance NCD - Demat account compulsory

      -----------------------   ----------------------------    

13.25% interest for 36/60 Months & 13% for 24 Months.  No TDS irrespective of investment amount.  "AA-/Stable" rating by CRISIL/ICRA.  Issue closes on 17/03/2012.

2.  SBI Tax Advantage Fund - Series 2  - Can be held in Demat account also

      -------------------------    --------     ------------------------------------   

Invest up to Rs.1 Lac & enjoy Income Tax benefit up to Rs.30,900/- u/s.80-C.  Issue closes on 21/03/2012.    Minimum lock in period of 3 years among all tax saving schemes.

3.  IDFC Long Term Infrastructure Bonds - Can be held in Demat account also    

      ---------------------------------------   ------------------------------------   

Invest Rs.20,000/- and avail additional tax benefit of  Rs.6,180/- u/s 80-CCF. This is over and above Income Tax benefit u/s.80-C. 8.43% interest - Annual & cumulative options available. AAA rated by ICRA & FITCH. Issue opens on 19/03/2012.

Highlights: Union Budget 2012-13 ::Tata Mutual Fund

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Mr Pranab Mukherjee has presented the budget keeping in mind the five focus area:
•	Revival of domestic consumption
•	Achieve an enabling environment for revival of high growth
•	Remove supply bottlenecks
•	Intervene decisively to address malnutrition
•	Expedite improvement in delivery systems and address black money

Budget 2012: Text of Pranab Mukherjee's speech (ET)

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Madam Speaker,

I rise to present the Union Budget for 2012-13.

For the Indian economy, this was a year of recovery interrupted. When one year ago, I rose to present the Budget, the challenges were many, but there was a sense that the world economy was on the mend. The Budget was presented in the first glimmer of hope. But reality turned out to be different. The sovereign debt crisis in the Euro zone intensified, political turmoil in Middle East injected widespread uncertainty, crude oil prices rose, an earthquake struck Japan and the overall gloom refused to lift.

2. While I believe that there should be no room for complacency, nor any excuse for what happens in one's own country, we will be misled if we ignore the ground realities of the world. The global crisis has affected us. India's Gross Domestic Product (GDP) is estimated to grow by 6.9 per cent in 2011-12, after having grown at the rate of 8.4 per cent in each of the two preceding years. Though we have been able to limit the adverse impact of this slowdown on our economy, this year's performance has been disappointing. But it is also a fact that in any cross-country comparison, India still remains among the front runners in economic growth.

3. For the better part of the past two years, we had to battle near double-digit headline inflation. Our monetary and fiscal policy response during this period was geared towards taming domestic inflationary pressures. A tight monetary policy impacted investment and consumption growth. The fiscal policy had to absorb expanded outlays on subsidies and duty reductions to limit the pass-through of higher fuel prices to consumers. As a result growth moderated and the fiscal balance deteriorated.

4. But there is good news in the detail. With agriculture and services continuing to perform well, India's slowdown can be attributed almost entirely to weak industrial growth. While we do not have aggregate figures for the last quarter of 2011-12, numerous indicators pertaining to this period suggest that the economy is now turning around. There are signs of recovery in coal, fertilisers, cement and electricity sectors. These are core sectors that have an impact on the entire economy. Indian manufacturing appears to be on the cusp of a revival.

Exclusive Budget Summary by Mr. Naren Sankaran - CIO - Equity - ICICI Prudential AMC

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Exclusive Budget Summary by Mr. Naren Sankaran

Mr. Naren Sankaran (CIO - Equity, ICICI Prudential AMC) has an outstanding and rich experience of around 21 years in almost all spectrum of the financial services industry ranging from investment banking, fund management, equity research, and stock broking operations. His core competency lies in being involved in the entire gamut of equity market space with extensive knowledge of Indian equities and the economy. After obtaining a B. Tech degree from IIT Chennai, Mr. Naren finished MBA in finance from IIM Kolkota and worked with financial service organizations like Refco Sify Securities India Pvt.Ltd., HDFC Securities Ltd. and Yoha Securities in various positions prior to joining ICICI Prudential AMC. Mr. Naren has many laurels to his credit. He is a leading voice on the Indian economy/equity markets across the investment and financial services fraternity. He has been recognized as amongst the Best Market Minds - 2009 by Outlook Profit. Mr. Naren was also adjudged the Best Fund Manager and the Smartest Fund Manager - 2010 by Business World. At ICICI Prudential AMC, Mr. Naren Sankaran oversees the equity investments across the Mutual Fund and International Advisory Business. He is instrumental in overall equity investment strategy development and execution. He also directly manages the ICICI Prudential Dynamic Plan and the ICICI Prudential Top 100 Fund.

Save TAX: Apply in Infra-Bond to save additional tax upto Rs. 20,000 U/S 80CCF

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Details	PFS (PTC India)	PFC Infra Series 86	IFCI Infra Bonds Series V	IDFC Infra Bond III
OPENS	30.12.2011	29.02.2011	29.02.2012	19.03.2012
CLOSES	27.03.2012	23.03.2012	27.03.2012	30.03.2012
FACE VALUE	5000	5000	5000	5000
MINIMUM APP.	5000	5000	5000	10000
OPT I	8.93% (10 yrs) Cumm.	8.43% (10 yrs) (Annual)	8.50% (12 yrs) (Cumm)	8.43% (10 yrs) (Annual)
OPT II	8.93% (10 yrs) Annual	8.43% (10 yrs) (Cumm)  .	8.50% (12 yrs) (Annual)	8.43% (10 yrs) (Cumm)
OPT III	9.15% (15 yrs) Cumm.	8.72% (15 yrs) Annual	8.72% 15 yrs (Cumm)
OPT IV	9.15% (15 yrs) Annual	8.72% (15 yrs) (Cumm)	8.72% 15 yrs (Annual)
Buyback	5th Year & 7th Year	5th Year – 10 Yrs Option & 6th Year – 15 Yrs Option	5th Year & 7th Year for 12 Year option : 5th & 10th Year for 15 Year Option	5th Year
Rating	BWR AA’, CARE‘A+’, ‘A+’ by ICRA	“AAA” by CRISIL & ICRA	“A+” BY CARE & “LA” by ICRA	“AAA” from ICRA  & “AAA(Ind)” from Fitch
Cheque in favor of	PFS Infra Bond Account	PFC Infrastructure  Bonds Collection A/c	“IFCI limited – Infra Bond”	“ IDFC Infra Bonds -Tranche III”

Thanks & Regards,