Budget FY2016

Budget FY2016

02 March 2015 1

Price Performance

28 Feb15 1M 3M 1Y

(%) (%) (%)

Nifty 8,902 -0.1 3.7 41.8

Sensex 29,362 -0.7 2.3 39.0

BSE Midcap 10,811 0.0 5.3 66.3

Indices Performance

Strong positives over the medium term

The contraction in the Fiscal Deficit to 4.1% of GDP and, the likely further

decline to 3% in three years can be a strong enabler of positive changes e.g.

holding inflation down over the medium term. A few other proposals too have

potentially strong medium term positive effects. The plug-and-play model

could catalyse projects in power and other infrastructure sectors. The move

towards lower and simpler tax regulations, coupled with the above, could add to

Indias attraction as a destination for manufacturing FDI. These positives are

likely to prevail over the negative effects of proposals that raise the effective tax

rate in the near term and of expectations unmet.

Tax revenue grew at half the 20% budgeted pace: All segments of tax

revenue are seen to grow below budget in FY2015, particularly Service tax and

Excise. The exception is Income tax that grew by 15% y-o-y.

And yet, the deficit target was reached: The Fiscal Deficit for FY2015 is

now estimated at INR5.1 trillion. This would be 2% higher than that for FY2014

but, 3% lower than the budgeted amount of INR5.3 trillion. Total Expenditure

for FY2015 was restricted to 6% below budget. Plan Expenditure cut by 20%,

Non-Plan Capital Expenditure by 13% and Interest Expenditure by 4%.

Deficit compression is likely to be sustained: The elasticity in several items

of expenditure is likely to persist. The budget for FY2016 projects a further fall

in Plan Expenditure and 9% y-o-y fall in Subsidies. After budgeting for 25%

growth in Excise and Service tax and only 10% growth in Corporation Tax the

Fiscal Deficit for FY2016 is projected to rise 8% y-o-y, well below the projected

growth in nominal GDP.

Several medium-term positives outweigh a few near-term negatives:

FY2016 corporate earnings would be impacted by the rise in surcharge on taxes.

The uptick in Service tax and Excise duty too could dampen sentiment on

equities. These negatives forces are likely to be offset by the positive effect of

the anticipated acceleration in economic activity in FY2016. Other proposals in

this budget, such as the decline in the fiscal deficit ratio, the move towards a

lower and simpler tax regime and the stimulus to infrastructure that would be

provided by plug-and-play projects could create conditions that extend the

high-growth phase beyond FY2016. The combination of USD2trillion economy

growing at c8%, with improving public finances, falling inflation and simpler tax

rules can draw in larger FDI into manufacturing.

Risk factors: Conditions that may follow the planned withdrawal of stimulus in

the advanced economies may impact global interest rates and capital flows. A

significant rise in global energy prices may have a large impact on the

expenditure projected in the budget.

Budget FY2016

Research

02 March 2015

Anand Shanbhag

Email: [email protected]

Tel: +91 22 6606 9402

28

Feb15 + /-

1M + /- YTD

(%) (%)

Bank Nifty 19,691 -3.9 5.1

CNX Auto 8,935 -1.2 7.9

CNX Energy 8,696 -1.8 0.6

CNX Pharma 11,799 1.9 7.8

CNX Finance 8,033 -2.9 7.6

CNX FMCG 21,102 0.4 4.9

CNX IT 12,660 7.2 12.9

CNX Media 2,231 -6.8 -6.5

CNX PSU Bank 3,858 -12.7 -9.6

CNX Realty 239 6.3 17.9

CNX Infra 3,307 0.8 8.8

Budget FY2016

02 March 2015 2

Summary of the budget

Year ending Mar11 Mar12 Mar13 Mar14 Mar15 Mar16

INRbn Actual Actual Actual Actual RE BE

Receipt 8,237 7,884 9,202 10,566 11,685 12,218

Tax revenue 5,699 6,298 7,419 8,159 9,085 9,198

Corporation Tax 2,987 3,228 3,563 3,947 4,261 4,706

Taxes on Income 1,466 1,703 2,015 2,429 2,786 3,274

Wealth Tax 7 8 8 10 10 0

Customs 1,358 1,493 1,653 1,721 1,887 2,083

Union Excise Duties 1,383 1,456 1,765 1,702 1,855 2,298

Service Tax 710 975 1,326 1,548 1,681 2,098

Others 20 28 31 31 34 36

Less - NCCD transfer -39 -40 -44 -47 -51 -57

Less - State's share -2,193 -2,554 -2,915 -3,182 -3,378 -5,240

Non-tax revenue 2,186 1,217 1,374 1,989 2,178 2,217

Expenditure 11,973 13,044 14,104 15,594 16,812 17,775

Non-Plan Revenue 4,925 5,389 6,011 6,448 7,105 7,499

Defence Services 921 1,030 1,113 1,244 1,404 1,521

Subsidies 1,734 2,179 2,571 2,546 2,667 2,438

Grants to State and U.T. Gov. 498 515 480 606 803 1,086

Pensions 574 612 695 749 817 885

Police 273 331 373 421 481 518

Other General Services (Organs of State, tax collection, external affairs etc.)

169 192 218 238 258 309

Social Services (Education, Health, Broadcasting) 350 194 212 256 256 291

Economic Services (Agriculture,Industry, Power, Science & Tech.) 281 218 222 250 271 290

Other 125 117 129 139 149 160

Non-Plan Interest 2,340 2,732 3,132 3,743 4,114 4,561

Non-Plan Capital 918 799 824 871 913 1,062

Defence Services 621 679 705 791 820 946

Others 298 120 119 80 94 116

Plan Revenue 3,142 3,337 3,292 3,527 3,669 3,300

Plan Capital 648 786 844 1,006 1,011 1,353

Revenue Deficit 2,523 3,943 3,643 3,570 3,625 3,945

Fiscal Deficit 3,736 5,160 4,902 5,029 5,126 5,556

Budget FY2016

02 March 2015 3

Service tax and Excise have

grown far slower than budgeted. Corporation tax

and Customs too grow slower than budgeted.

Plan Expenditure cut by

20%, Non-Plan Capital Expenditure by 13%.

Interest Expenditure 4% below budget.

Deficit compression likely to be sustained

Fiscal deficit for the year ending March 2015 is now estimated at INR5.1 trillion, 3% below budget

and only 2% growth over FY2014. Tax revenue for FY2015 is now estimated to grow 10% y-o-y,

half the budgeted growth. The deficit was held in check by severe cuts in the Plan Expenditure

and in Non-Plan Capital Expenditure. Interest expenditure too grew less than budget. Non-Plan

Revenue expenditure grew more than the budgeted amount due to Defence and Subsidies. The

budget for FY2016 projects 25% growth in Excise and Service tax and only 10% growth in

Corporation Tax. It projects a further fall in Plan Expenditure and 9% y-o-y fall in Subsidies. The

Fiscal deficit for FY2016 is projected to rise 8% y-o-y. This would be well below the growth in

nominal GDP.

Tax revenue growth in FY2015 was half the budgeted 20%

Six segments of tax that provide revenue to the Central Government, viz.

Corporation Tax, Income Tax, Wealth Tax, Customs, Excise and Service Tax are

now estimated to have grown 10% y-o-y to contribute an aggregate INR12.5

trillion for the year ending March 2015. The budgeted revenue was INR13.6

trillion, representing a targeted growth of 20% y-o-y.

The largest variance from the budgeted revenue was in Service Tax, that is now

estimated at INR1,681bn (+9% y-o-y) compared with the budget of INR2,160bn

(+40% y-o-y). Excise is now estimated at INR1,855bn (+9% y-o-y) compared

with the budget of INR2,071bn (+22% y-o-y). Revenue from Corporation Tax

and from Customs is estimated to grow 8% and 10% y-o-y; about 6% lower

than budgeted growth. Income Tax is estimated to grow 15% y-o-y for FY2015,

only 2% lower than budgeted growth.

And yet, the Fiscal Deficit target was reached

The Fiscal Deficit for FY2015 is now estimated at INR5.1 trillion. This would be

2% higher than that for FY2014 but, 3% lower than the budgeted amount of

INR5.3 trillion.

The success in reaching the targeted deficit was the result of restricting Plan

Expenditure (c30% of total expenditure) to 20% below budget and Non-Plan

Capital Expenditure (c6% of total) to 13% below budget. Non-Plan Interest

Expenditure (c24% of total) is reported to be 4% below budget.

Non-Plan Revenue Expenditure is the largest segment comprising over 40% of

total expenditure of the Central Government. It is now estimated to have grown

10% y-o-y for FY2015, higher than the budgeted 7% growth. Subsidies, the

largest item accounting for more than a third of the Non-Plan Revenue

Expenditure grew 5% y-o-y, compared with budgeted growth of 2% y-o-y.

FY2016 revenue to be led by a recovery in GDP growth

Gross tax revenue from the six segments is budgeted to grow 16% y-o-y over

FY2015. This is not a particularly aggressive growth compared with the 10% y-o-

Budget FY2016

02 March 2015 4

FY2016 growth in Service

tax and Excise could accelerate as the GDP

recovers. Lower target for Corporation Tax may

reflect slower rise in profitability.

y growth for FY2015 and is modest compared with the 20% growth that had

been budgeted for FY2015.

The budgeted growth in Excise (24% y-o-y) and in Service Tax (25% y-o-y)

could be realized if the real growth of Indias GDP does recover to c8%, as

projected by a few global institutions and by credit rating agencies. Revenue

from Corporation Tax (10% y-o-y) and from Customs (10% y-o-y) is modest and

virtually unchanged from the actual growth for FY2015. The targeted growth in

Corporation Tax may also suggest that corporate profitability is not expected to

materially improve in FY2016. Income Tax (on individuals and non-corporates) is

budgeted to grow 18% y-o-y, a small rise from the 15% growth for FY2015.

Net tax revenue is projected to grow by only 1% y-o-y for FY2016 because the

budgeted transfer to States would grow 55% y-o-y. The States share of gross

tax revenue is projected to rise to 36% in FY2016 from an average of 28% in the

preceding five years.

The budget projects c5% y-o-y fall in Plan Expenditure for FY2016. Non-Plan

Capital Expenditure is budgeted to grow 16% y-o-y while Plan Interest

Expenditure is projected to grow 11% y-o-y. Non-Plan Revenue Expenditure is

budgeted to grow 6% y-o-y despite a 9% fall in Subsidies. Grants to States and

Union Territories are budgeted to grow 35% y-o-y.

The budgeted Fiscal Deficit for FY2016 would rise by 8% y-o-y to INR5.6 trillion.

However, the budget projects only a 2% rise y-o-y in market borrowings for

funding the deficit.

Budget FY2016

02 March 2015 5

Steady decline in the deficit

ratio would support the recovery in GDP growth

during FY2016.

Faster implementation of

projects possible if well-

known hurdles are cleared in advance.

Effective tax rate would creep up in FY2016 for

corporates and high-income

individuals.

Significant medium-term positives outweigh a few near-term negatives

Earnings of the corporate sector would be impacted by the rise in surcharge on taxes. The uptick

in Service tax and Excise duty too could dampen sentiment on equities. These negative forces are

likely to be offset by the positive effect of the anticipated acceleration in economic activity in

FY2016. Other proposals in this budget, such as the decline in the fiscal deficit ratio, the move

towards a lower and simpler tax regime and the stimulus to infrastructure that would be provided

by plug-and-play projects could create conditions that extend the high-growth phase beyond

FY2016. The combination of USD2trillion economy growing at c8%, with improving public

finances, falling inflation and simpler tax rules can draw in larger FDI into manufacturing.

Calibrated fall in deficit likely to encourage growth

The ability to meet the deficit target despite low growth in tax revenues suggests

that the government is regaining control over expenses. So, it could have

targeted an even lower growth in Fiscal Deficit for FY2016 i.e. the deficit could

possibly be pushed below 3.9% of GDP and the milestone of 3% be realized

quicker. However, a rapid compression of the deficit could create an obstacle to

the recovery of economic growth. So, the gradual decrease in the deficit is likely

to be a supporting factor for a quicker return to the high growth path.

A few targeted programs can help to revive projects

The plug-and-play model for Ultra Mega Power Projects could be capable of

rapidly reviving investment demand in a critical segment of the economy. The

intentions behind the plug-and-play projects are to resolve the well known

obstacles to such projects at the inception stage itself and could enable rapid

progress and commissioning of these projects.

Lower, simpler tax rules can enhance image to investors

A 25% tax on corporate earnings would be a highly visible change from the

current 30% base rate. While the removal of tax exemptions and shelters could

mean that the effective tax rate may change little, it does point a simpler tax

regime. Even if the implementation of this change would wait for four years, it

sends a strong signal to global investors that India is becoming more business-

friendly.

This message is likely to be reinforced by the decision to defer the

implementation of GAAR by two years.

Rise in tax surcharge may impact near-term sentiment

Earnings of corporates and of non-corporates with taxable income exceeding

INR10mn would be subject to a higher marginal tax during FY2016. This would

tend to erode the net profits of the corporate sector and would thus be

marginally negative for sentiment on equities. The rise in the rates of Service tax

and Excise duty too tend to act against the sentiment on equities.

Budget FY2016

02 March 2015 6

Annexure

Direct Taxes

1 Surcharge proposed to be levied on individuals, HUFs,bAOPs, BOIs, artificial juridical persons, firms,

cooperative societies and local authorities having income > Rs. 1 cr = 12%

2 Surcharge proposed to be levied in the case of domestic companies

a) Having income > Rs.1 cr and upto Rs.10 cr = 7%

b) having income > Rs.10 cr = 12%

3 Surcharge proposed to be levied in the case of foreign companies

a) Having income > Rs.1 cr and upto Rs.10 cr = 2%

b) Having income > Rs.10 cr = 5%

4

Proposed to levy a surcharge @12% as against current rate of 10% on additional income-tax payable by

companies on distribution of dividends and buyback of shares, or by mutual funds and securitisation

trusts on distribution of income.

5

Education cess on income-tax @ 2% for fulfilment of the commitment of the Government to provide quality

based education and

1% of additional surcharge called Secondary and Higher Education Cess on tax and surcharge is proposed to be continued for the FY16 for all taxpayers.

6

Proposed to amend the provisions of section 269SS and 269T of the Income-tax Act so as to prohibit acceptance or re-payment of advance in cash of Rs. 20,000 or more for any transaction in immovable

property. It is also proposed to provide a penalty of an equal amount in case of contravention of such

provisions.

7 Reduce rate of Corporate Tax over next 4 years from 30% to 25% along with rationalisation and removal of

various kinds of tax exemptions and incentives for corporate taxpayers

8

It is proposed to defer applicability of General Anti Avoidance Rule (GAAR) by 2 years. It is proposed to be

applicable for income of the FY 2017-18 (A.Y. 2018-19) and subsequent years. It is also proposed that the investments made upto 31.03.2017 shall not be subjected to GAAR.

9 Proposed to provide pass through status to all the subcategories of category-I and also to category-II

Alternative Investment Funds (AIFs) governed by the regulations of SEBI.

10 To facilitate technology inflow to small business at low cost, Income tax rate on royalty and fees for technical service proposed to be reduced from 25% to 10%.

11 It is proposed to amend the provisions of section 194LD of the I-T Act so as to extend the period of applicability of reduced rate of tax at 5% in respect of income of foreign investors (FIIs and QFIs) from

corporate bonds and government securities, from 31.5.2015 to 30.06.2017.

12 It is proposed to abolish the levy of Wealth-tax with effect from 2016-17(AY). The revenue loss on account of such abolition is proposed to be compensated by increase in the existing

surcharge by 2% in case of domestic companies and all non corporate taxpayers ( for income > Rs.1 cr)

13 Increase the deduction unit u/s 80 D for health insurance premium from Rs.15000 to Rs.20000 for individuals and from Rs.20000 to Rs.30000 for senior citizens

14 Increase the deduction limit u/s 80CCD for contribution to National Pension Scheme from Rs.1 lakh to

Rs.1.5 lakh.

15 Increase the deduction limit u/s 80CCC for contribution to pension fund of LIC or IRDA approved insurer

from Rs.1 lakh to Rs.1.5 lakh.

16 Transport allowance exemption increased from Rs.800 to Rs.1600 per month.

Budget FY2016

02 March 2015 7

Indirect Taxes A) Excise Duty

1 Central Excise Duty increased from 12.36% to 12.5% to subsume education cess.

2 Hike in excise duty on cigarettes to 25% for length upto 65mm and 15% for other cigarette lengths.

3 Reduction in excise duty on leather footwear with retail price> Rs.1000 from 12% to 6%

4 Clean Energy Cess increased from Rs.100 to Rs.200 per metric tonne of coal

5 Inputs for use in the manufacture of LED drivers and MCPCB for LED lights, fixtures and LED lamps from

12% to 6%.

6 Excise duty on chassis for ambulances is being reduced from 24% to 12.5%

7 Excise duty on sacks and bags of polymers of ethylene other than for industrial use is being increased from 12% to 15%.

B) Service Tax

1 Increase in service tax rate plus education cess from 12.36% to 14%

2 Service tax exemption to be provided on Varishta Bima Yojana for Senior Citizen

3 Service provided by a Common Effluent Treatment Plant operator for treatment of effluent is being exempted

from service tax.

4 Service tax to be levied on the service provided by way of access to amusement facility such as rides,

bowling alleys, amusement arcades, water parks, theme parks, etc.

5 Service tax exemption extended for pre cold storage services to incentivize value addition in fruits and

vegetables sector.

6

A uniform abatement is being prescribed for transport by rail, road and vessel to bring parity in these sectors. Service Tax shall be payable on 30% of the value of such service subject to a uniform condition of

non-availment of Cenvat Credit on inputs, capital goods and input services. Presently, tax is payable on 30% of the value in case of rail transport, 25% in case of road transport and 40% in case of transport

by vessels.

C) Customs Duty

1

Proposal to reduce the rates of basic customs duty on certain inputs, raw materials, intermediates and

components (in all 22 items) so as to minimise the impact of duty inversion and reduce the manufacturing cost in several sectors.

2 Basic customs duty on sulphuric acid for the manufacture of fertilizers is being reduced from 7.5% to5%.

3 The tariff rate of basic customs duty on bituminous coal is being reduced from 55% to 10%.

4 Increase in basic customs duty on Metallurgical Coke from 2.5% to 5%.

5

Increase in effective rate on Commercial Vehicles from 10% to 20%. Customs duty on commercial vehicles in

Completely Knocked Down (CKD) kits and electrically operated vehicles including those in CKD

condition will continue to be at 10%.

6

Tariff rate on iron & steel and articles of iron or steel, falling under Chapters 72 and 73 of the Customs Tariff,

from 10% to 15%. However, there is no change in the existing effective rates of basic customs duty on these

goods.

7 The effective rates of Additional Duty of Customs levied on imported Petrol and High Speed Diesel Oil (commonly known as road cess) are being increased from Rs.2/litre to Rs.6/litre only.

Budget FY2016

02 March 2015 8

Budget FY2016

02 March 2015 9

Market Outlook:

In line with our expectations, Nifty has moved sideways

for almost 15 days within in the tight band of

8913-8669 levels. Despite showing sharp weakness

during the last week, Nifty made a smart recovery but

was not able to move above the resistance of around

8913 levels. The bullish sequence of higher tops and

bottoms is still intact in Nifty as per longer timeframe.

If Nifty manages to close above 8997 levels by this

week, then that is going to be an upside breakout of the

consolidation and we may see potential upside till

9073/9250 levels. Trend reversal is seen below 8650

levels. So, we suggest exercising caution below 8650

levels on Nifty.

Budget FY2016

02 March 2015 10

SKS MICROFINANCE

SKS MICROFINANCE BUY

Market Price : INR 437 (28th Feb 2015)

Buy Range : INR 437-425 Targets : INR 525-540

Stoploss : INR 395 Holding Period : up to 2 months

Investment Rationale: SKS Microfinance is moving in rising channel indicating strength in the stock.

Relative Strength Index is improving from oversold zone indicating bulls are taking control. In advancing

trend, each up move extends to new price highs while

the sell offs in between do not decline as far as the price levels seen on previous sell offs. SKS will

continue to move in this channel until either trend line is broken. Based on the chart pattern we have set

price target of 525-540 for short term.

BIOCON BUY


Buy Range : INR 427-420 Target : INR 470/482

Stoploss : INR 402 Holding Period : up to 1 month

Investment Rationale: Biocon has given breakout

from down sloping trend line along with volumes.

Positive divergence is observed on MACD momentum indicator signifying advancing trend for short term.

Based on Fibonacci price extension we have set price target of 470/482, which is 100% & 123.6% of the

total move i.e. from 402-454, which is added to recent

swing low of 418.

Source: Bloomberg

Source: Bloomberg

Budget FY2016

02 March 2015 11

SINTEX INDUSTRIES BUY

Market Price : INR 114 (28th Feb 2015) Buy Range : INR 114-110

Target : INR 144 Stoploss : INR 102

Holding Period : up to 2 months

Investment Rationale: Positive trend is observed on

Sintex Industries daily charts. The stock is making higher highs and higher lows indicating advancing

trend. Moreover, positive DMI is greater than negative DMI suggesting bulls have the edge. Based on

Fibonacci price extension we have set price target of

144, which is 178.6% of the total move i.e. from 71-105, which is added to recent swing low of 84 for arriving the estimated target.

EROS INTERNATIONAL MEDIA BUY


Buy Range : INR 394-385 Target : INR 460

Stoploss : INR 359 Holding Period : up to 3 months

Investment Rationale: Eros International Media is looking bullish on daily charts. The stock is comfortably

trading well above its 50 & 100 day moving indicating strength in the stock. Based on Fibonacci price

extension we have set price target of 460, which is

123.6% of the total move i.e. from 319-400, which is added to recent swing low of 359.

Source: Bloomberg

Source: Bloomberg

Budget FY2016

02 March 2015 12

YES BANK BUY

HINDUSTAN UNILEVER BUY


Targets : INR 1057 Stoploss : INR 829


Investment Rationale: Hindustan Unilever is

consolidating in tight range of 880-920 levels for almost 1 month. The stock is moving in strong

uptrend. We can see the stock is making higher highs

and higher lows. Based on Fibonacci price extension we have set price target of 1057, which is 78.6% of

the total move i.e. from 744-969, which is added to recent swing low of 880.


Buy Range : INR 862-845

Target : INR 1005 Stoploss : INR 780


Investment Rationale: Yes Bank has reversed its recent weakness and entered into a new short term

uptrend. The rise in the last two sessions was accompanied with above average volumes, which augurs well for the uptrend to continue. We have set

price target of 1005 based on Fibonacci price extension. Based on Fibonacci price extension we have

set price target of 1005, which is 100% of the total

move i.e. from 670-895, which is added to recent swing low of 780.

Source: Bloomberg

Source: Bloomberg

Source: Bloomberg

Budget FY2016

02 March 2015 13

BAJAJ AUTO BUY


Target : INR 2304

Stoploss : INR 2042 Holding Period : up to 1 month

Investment Rationale: On daily charts, Bajaj Auto is

moving in downward sloping channel. Currently, the

stock is trading near lower end of the trend line. So we may see quick bounce from lower end of the trend line

and will attempt to test the resistance line (joining the peaks). The stock will continue to trade in the channel

till it breaks out of the trading zone.

Source: Bloomberg

02 March 2015 14

Tata Securities Limited Corporate Identity Number U67120MH1994PLC080918

One Forbes, Dr V.B. Gandhi Marg, Fort, Mumbai 400 001

Tel: 91 22 6745 9000 Fax: 91 22 6610 6722

Web: www.tatasecurities.com SEBI Registration Number BSE INB010664150 INF011207954 NSE INB/F/E231288730 Portfolio Manager

INP000003872 Depository Participant of CDSL: IN-DP-CDSL-450-2008 Depository Participant of NSDL: IN-DP-NSDL-298-2008

Merchant Banker INM 000011302

Compliance Officer: Anoop Goyal : 022 6182 8282, e-mail id: [email protected]

ABOUT TATA SECURITIES LIMITED

Tata Securities is a wholly owned subsidiary of Tata Capital Limited, which is a subsidiary of Tata Sons Limited. Tata Securities holds membership on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) and is also Depository Participant of NSDL and CDSL. TSL offers, both institutional and retail clients, quality products and

services like Equity Trading, IPOs and Mutual Funds. Tata Securities also provides corporate advisory for M & A transactions, equity and debt capital market services to companies and institutions, under its Category I Merchant

Banking License issued by SEBI.

Tata Securities also offers clients to trade on internet through its portal www.tatasecurities.com. Tata Securities is a national distributor of Mutual Funds and a lead broker for public issues of NCDs, Bonds and IPOs.

The corporate office of Tata Securities is located at Thane and is equipped to handle all corporate functions including an inbound customer servicing desk. It also houses a full fledged research desk which provides necessary

research supports to clients. We hereby declare that our activities were neither suspended nor we have defaulted with any stock exchange authority with whom we are registered in last five years. However SEBI, Exchanges and Depositories have conducted the routine inspection and based on their observations have issued advice letters or

levied minor penalty on TSL for certain operational deviations. We have not been debarred from doing business by any Stock Exchange / SEBI or any other authorities; nor has our certificate of registration been cancelled by SEBI at

any point of time.

DISCLAIMER This report is for the personal information of the authorized recipient and does not construe to be any investment,

legal or taxation advice to you. Tata Securities Limited (Tata Securities or TSL) is not soliciting any action based upon it. Nothing in this research report shall be construed as a solicitation to buy or sell any security or product, or

to engage in or refrain from engaging in any such transaction. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of the reader.

This research report has been prepared for the general use of the clients of the TSL and must not be copied, either in whole or in part, or distributed or redistributed to any other person in any form. If you are not the intended

recipient you must not use or disclose the information in this research report in any way. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. TSL will not treat

recipients as customers by virtue of their receiving this report. Neither this document nor any copy of it may be taken or transmitted into the United States (to US Persons), Canada or Japan or distributed, directly or indirectly, in the United States or Canada or distributed, or redistributed in Japan to any residents thereof. The distribution of

this document in other jurisdictions may be restricted by the law applicable in the relevant jurisdictions and persons into whose possession this document comes should inform themselves about, and observe any such restrictions.

We have reviewed the report, and in so far as it includes current or historical information, it is believed to be reliable though its accuracy or completeness cannot be guaranteed. Neither TSL, nor any person connected with it,

accepts any liability arising from the use of this document. The recipients of this material should rely on their own investigations and take their own professional advice. Price and value of the investments referred to in this material

may go up or down. Past performance is not a guide for future performance. Certain transactions -including those involving futures, options and other derivatives as well as non-investment grade securities - involve substantial risk and are not suitable for all investors. Reports based on technical analysis centers on studying charts of a stock's

price movement and trading volume, as opposed to focusing on a company's fundamentals and as such, may not match with a report on a company's fundamentals.

Opinions expressed are our current opinions as of the date appearing on this material only. While we endeavor to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance or

other reasons that prevent us from doing so. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice. Our proprietary trading and

investment businesses may make investment decisions that are inconsistent with the recommendations expressed herein.

Further, the report is based upon information obtained from sources believed to be reliable, but TSL does not make any representation or warranty that it is accurate, complete or up to date and it should not be relied upon as such.

It does not have any obligation to correct or update the information or opinions in it. TSL or any of its affiliates or employees shall not be in any way responsible for any loss or damage that may arise to any person from any

inadvertent error in the information contained in this report. TSL or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular purpose, and non-infringement.

The recipients of this report should rely on their own investigations. This information is subject to change without any prior notice. TSL reserves at its absolute discretion the right to make or refrain from making modifications and

alterations to this statement from time to time. Nevertheless, TSL is committed to providing independent and transparent recommendations to its clients, and would be happy to provide information in response to specific client queries.

02 March 2015 15

Before making an investment decision on the basis of this research, the reader needs to consider, with or without

the assistance of an adviser, whether the advice is appropriate in light of their particular investment needs, objectives and financial circumstances. There are risks involved in securities trading. The price of securities can and

does fluctuate, and an individual security may even become valueless. International investors are reminded of the additional risks inherent in international investments, such as currency fluctuations and international stock market or economic conditions, which may adversely affect the value of the investment. Neither TSL nor the director or the

employee of TSL accepts any liability whatsoever for any direct, indirect, consequential or other loss arising from any use of this research report and/or further communication in relation to this research report.

Disclosure of Interest Statement in the above report as on 2nd March 2015 1. Name of the analyst : Anand Shanbhag/Praveen Kumar Dodda

2. Qualifications of the analyst : MBA/ BE,MBA 3. Research Analyst or his/her relatives has actual/beneficial ownership of 1% or more securities of the subject

company at the end of the month immediately preceding the date of publication of Research Report: No 4. Tata Securities Limiteds actual/beneficial ownership of 1% or more securities of the subject company at the end of the month immediately preceding the date of publication of Research Report : No

5. Broking relationship with company covered : No 6. Investment Banking relationship with company covered : No

7. Research Analyst has served as an officer, director or employee of Subject Company: No 8. Research Analyst or his/her relatives financial interest in the subject company : No 9. Tata Securities Limiteds financial interest in the subject company : No

We or our associates may have received compensation from the subject company in the past 12 months. We or our

associates may have managed or co-managed public offering of securities for the subject company in the past 12 months. We or our associates may have received compensation for investment banking or merchant banking or brokerage services from the subject company in the past 12 months. We or our associates may have received any

compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months. We or our associates have not received any compensation or

other benefits from the subject company or third party in connection with the research report. Our associates may have financial interest in the subject company.

Our associates may have actual/beneficial ownership of 1% or more securities of the subject company at the end of the month immediately preceding the date of publication of Research Report.

Investments in securities are subject to market risk; please read the SEBI prescribed Combined Risk Disclosure

Document prior to investing. Derivatives are a sophisticated investment device. The investor is requested to take into consideration all the risk factors before actually trading in derivative contracts. Our research should not be considered as an advertisement or advice, professional or otherwise.

No part of the compensation of the analyst(s) was, is, or will be directly or indirectly related to the inclusion of

specific recommendations or views in this research. The analyst(s), principally responsible for the preparation of this research report, receives compensation based on overall revenues of TSL and TSL has taken reasonable care to achieve and maintain independence and objectivity in making any recommendations.

Neither TSL nor its directors, employees, agents, representatives shall be liable for any damages whether direct or

indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information contained in this report.

We and our affiliates, officers, directors, and employees worldwide may: (a) from time to time, have long or short positions in, and buy or sell the securities thereof, of company (ies) mentioned herein or (b) be engaged in any

other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company (ies) discussed herein or act as advisor or lender / borrower to such

company (ies) or have other potential conflict of interest with respect to any recommendation and related information and opinions at the time of publication of Research Report or at the time of public appearance.

Copyright in this document vests exclusively with Tata Securities Limited.

Documents

Budget FY2016