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omshivaya
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   Posted: 28/Feb/2007 at 3:21pm |
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IT has been screwed(supposedly) by PC.
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The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it
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basant
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Posted: 28/Feb/2007 at 3:51pm |
WHile Infosys says that its margins would go down by about 1.5% the problem is about the negative impact these news flow have on the markets. SO if margins were to drop by 1.5% then a 1.5% drop in stock price should have been enough but there is always a magnified approach of maybe 5-7 times either way - less on the upside compared to the downside though.
"Evverything gets detroyed a hundred thousand times faster then it is constructed" - Read it in Market wizards
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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
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chic_1978
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Joined: 10/Aug/2006
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Posted: 28/Feb/2007 at 3:56pm |
Yes
Both Infosys & TCS are royally screwd by FM.
Even service tax on commercial property rent will adversely effect both Adlabs & PVR .....
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happy & wise investing
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PrashantS
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Posted: 28/Feb/2007 at 3:58pm |
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but actuallly it will be a great buy at 1500....if it comes down
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BubbleVision
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Posted: 28/Feb/2007 at 4:04pm |
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BasantJi... I dont rembember that ...Please say whose Interview it was (if you can recall).. I will read it today!
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You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer!
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basant
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Posted: 28/Feb/2007 at 4:35pm |
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The word "Read" refers to in the past tense. I also forgot which interview it was in.
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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
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omshivaya
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Posted: 28/Feb/2007 at 4:55pm |
| MAT drives software hard |
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NEW DELHI: PC seems to have hit the IT and BPO industry hard with his proposal to tax 11.22 percent of the adjusted book profits as minimum alternative tax (MAT). Simply put, this would knock off 1.5 percent of Infosys' profitability for instance.
The proposal sent the entire software industry into a tizzy and utter confusion prevailed. Though no one was available to immediately comment on the Union Budget from the IT software and services lobby organization Nasscom, representatives from Infosys, TCS, Nucleus Software and Flextronics confirmed it could mean a `hard hit' for the industry.
Infosys CFO V Balakrishnan told Indiatimes Infotech that the impact would be substantial for the industry, but a little less for his company as it pays slightly higher tax overseas (read the US) and enjoys double taxation credit. The net impact for Infosys therefore would be 1.5 % of its total net income, he said.
According to Deepak Ghaisas, CEO, I-Flex Solutions "This is totally negative for the software sector since none of our issues have been addressed. He did not say anything about the continuation of STPI scheme nor was there anything concrete on SEZs. On the other hand, he has extended MAT to IT companies. They have also imposed a 1% education cess."
A spokesperson of another IT biggie TCS said MAT extension to IT industry would mean big erosion in profitability of the company.
While the government's announced intention to increase the outlay for e-governance and IT education means good news for the IT industry as a whole, it is MAT which has clearly driven the IT industry mad.
Though there was an overall negative sentiment on the bourses, IT companies stocks including that of TCS, Wipro, Infy and Satyam tanked and experts warned that the situation is unlikely to improve in the short term.
According to Nucleus Software managing director Vishnu Dusad, "it would have been better if the government had looked at the positive benefits of higher personal income tax from the IT professionals rather than trying to erode our margins so seriously."
In his Budget speech, FM Chidambaram announced that IT companies will now have to pay 11.22 per cent of their adjusted book profits as minimum adjustable tax (MAT). In a way, this pertains to tweaking the definition of MAT, say chartered accountants.
The move will hit the smaller IT companies even more as they are already squeezed for margins. The industry expressed fears that they may have to revisit their contracts with the clients.
Said Ankur Rohatgi, vice-president of Delhi-based software solutions firm Netaquila Solutions: "This is quite serious. We will have to re-evaulate our pricing with our clients. And if we can't recover MAT from our clients, we won't be able to continue. Our margins, and that of most smaller companies, are so very low."
The IT industry's one of the most talked-about carrots -- ESOPs – too have been brought under the fringe benefit tax (FBT) audit. "FBT on ESOPs is in any case mindless in my opinion. An executive going on a business trip also comes under FBT. Where is the fringe in that?
Besides, ESOPs have in any case failed. People get equity, but not options. Most companies have moved away from the options scenario due to the volatile stock markets," added Rohtagi.
The extension of MAT to the IT companies has sent shock waves across the sector. MAT will require IT cos to pay 11.22% of adjusted book profits. Along with 1% education cess, the total payable goes up to 11.33%. It is unlikely to be taken easily by the industry and it is expected to lobby hard with the government in the coming weeks before the Budget is passed.
It was a good story for the IT hardware sector, however. The Budget gave the hardware industry what it wanted: a status quo in policies and duty rates. The sector wanted the CST to be totally scrapped, but the FM made a beginning by starting the process of phasing CST out in stages.
Hence, CST will be reduced from 4% to 3% this year. "The good thing is that the government's overall push for e-governance projects, higher outlay on IT education, computerisation of PDF and FCI will result in a positive demand for the demand for PC hardware," said MAIT executive director Vinnie Mehta.
The budget also proposes to increase the allocation for e-governence to Rs 719 crore from Rs 395 crore. The FM said the central government will support the e-governance initiatives of various state governments and included Rs 500 crore for this purpose, up from Rs 300 crore.
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Edited by omshivaya - 28/Feb/2007 at 5:03pm
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The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it
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BubbleVision
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Posted: 28/Feb/2007 at 5:04pm |
"Read" has the same spelling in past tense as well as future tense! A magical word in English!!! 
Thanks for a great quote anyway BasantJi!
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You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer!
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