The finance ministers’ budget announcement hands out a mixed bag of goodies to some

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of India’s biggest business families.

While groups such as Tatas, Birlas and Mahindras could benefit from the budget proposals, upcoming infrastructure specialists such as GVK, GMR, Essar group, Mukesh Ambani-controlled Reliance Industries and Anil Dhirubhai Ambani group could potentially get impacted negatively, said experts.

Among the big companies, Reliance Industries and several members of the R-Adag will be negatively impacted by a higher incidence of minimum alternate tax (MAT) as these companies have been managing their tax outgo very efficiently by way of appropriate structuring. RIL believes the hike in import duty along with hike in MAT would impact its business negatively as it imports large amounts of crude from foreign countries. “Also, even though our SEZ refinery is export oriented, we have to import petroleum grade naptha and specialised petro products for the refinery, which would have to bear the impact of higher import price. The exact amount or the impact could only be calculated in due time," a senior RIL official said.

Other major groups that could lose on this front would the Essar group most of whose profit making firms are liable to pay MAT on book profits. The Godrej group also sees some pressure on its appliances business with the hike in excise rates and potential increase in freight costs on account of a hike in auto fuel prices. “The major negative from the budget was the increase in MAT, which will negatively impact many companies like Reliance, Cairn, Bharti Airtel, Reliance Communications, Cipla, Sterlite and Hindustan Zinc, among others,” said Amar Ambani — vice president Research, India Infoline. “For the infrastructure financing sector, the increase in MAT would act as a deterrent,” said Hemant Kanoria, chairman and managing director, Srei Infrastructure.

“A clear disappointment is the lack of extension of STPI benefits given the huge role mid-sized IT and BPO companies play in employment generation in the country,” said Ananda Mukerji, MD & CEO, Firstsource Solutions.

“Companies paying taxes at the marginal rate will benefit from the reduction in surcharge. Mahindra & Mahindra, several companies in the Tata group and the AV Birla group would see savings on this count,” said Rajeshree Sabnavis, partner, BMR Advisors.

“Most of our companies are marginal tax paying companies hence the surcharge reduction would be beneficial. The excise increases will have some negative impact but we hope that’s offset by higher demand due to the government spend,” said a top official at Aditya Birla Management Corporation. Piramal Enterprises group led by Ajay Piramal which has many of its companies paying tax at the marginal rate would benefit from a decreased income tax outgo but the increase in excise duties could put pressure on margins, said officials.

“For every Rs one crore of investment in R&D now Rs 2 will be available as deduction. This is very positive and will help future investments,” said M&M’s Phadke. Jayant Davar, president, Automotive Component Manufacturers Association (ACMA) said the increase in the income tax weighted deduction for in-house R&D from 150 per cent to 200 per cent, and for outsourced R&D from 125 per cent to 175 per cent would be a shot in the arm for R&D activities.

(With inputs from Zehra Naqvi, Kumar Shankar Roy &

Sanjeev Sharma)