The Hindu Business Line : ITC: A welcome lapse for it

The ITC stock on Thursday moved up 3 per cent as the Presidential ordinance, issued on January 25, bringing about an amendment retrospectively to the Central Excise Act, 1944, to enable recovery of excise dues from the company, has purportedly lapsed and no fresh Bill, as yet, seeking to perpetuate the amendment was placed before Parliament.

The market seems to have read the Government's move as a positive for the cigarette manufacturer inasmuch as revival of the excise claim of Rs 803 crore made by the Revenue Department on ITC may have been put on the backburner.

The Supreme Court's verdict on the excise claim had gone in favour of ITC and the subsequent review plea by Cegat has also been turned down by the apex court.

The Ordinance had empowered the Central Government to make rules allowing it to issue notification with retrospective effect. The Ordinance had also amended the definition of "sale price" so that the excise authorities could recover the disputed amount relating to the period between 1983 and 1987.

However, according to legal experts and industry source, the Government may, if it wants to, can bring a fresh ordinance retaining the same amendment. Industry sources aver that while the company may not immediately want to ruffle the Government feathers by challenging the proposed change in excise rules, it would certainly not allow the situation to drift indefinitely.

The scheduled board meet on Saturday is likely to take a view on this, sources added.

Betting on transformation

The stocks of IDBI and IDBI Bank were up by around 10 per cent on Thursday on forthcoming transformation and merger of the two.

According to dealers, the investors were aggressively picking up the stock in anticipation of settlement of IDBI's old debt exposures in project financing and reduction in NPAs.

The merged entity (from April 1) with a relatively clean balance sheet would provide opportunity for fresh valuation, as it would play in a free environment, at a lower cost of borrowing, get entry into lucrative retail banking and with enhanced chances of NPA recovery, a senior banker said.

Steel scrips losing their sheen

The steel stocks are seeing selling pressure and the market prices are facing resistance even as a hefty rise in the price of finished items have been indicated by almost all the players.

According to commodity analysts and stock dealers, after the recent Fed rate hike, funds have aggressively been selling commodity positions weakening the sentiment for the metals in the global markets.

On the other hand, more and more players are confirming hikes in the iron ore prices. Overall apprehension in the market was that even a hefty rise in the prices of finished items may not cover the input costs. A section of the market unloaded substantially the stocks of Tata Steel and SAIL.

Jayanta Mallick

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