SP Tulsian`s view on capital goods space

SP Tulsian, sptulsian.com shares his view on capital goods space.

Tulsian told CNBC-TV18, “All the valid commercial reason or may be the economic reasons for this duty to get enlarge or enhance to the extent of about 21% mainly to control the current account deficit and mainly to give the protection to the capital goods industry because the kind of investments which we have seen getting created in this capital goods sector, forget the two companies BHEL and L&T which have been the traditional players.”
He further added, “The new players having entered into this field like BGR energy, JSW Steel, Bharat Forge, they have all created huge space in the turbine, boiler and generator and apart from the other may be the like of low voltage switch gears and panel boards and all kind of things which are largely covered by Crompton Greaves, ABB, Siemens and all that. So I think you need to provide the protection to this company and even if I take the call against this that okay this may increase the capital cost of the power generating companies I don’t think that that will really be too substantial because if you take the capital cost even if an increase of Rs 5 crore per megawatt and the core capital cost of all these equipments are at Rs 2.5-3 crore that will increase the cost may be by about Rs 20-25 lakh per megawatt. So I don’t think that really will be too bad for the power generation company as well.”
“Overall in the larger interest may be largely to control the current account deficit and give protection to this capital goods industry I think this is justified and based on that since it is overdue, probably some unanimity is now reaching between the power generation company, heavy industries, PMO, finance ministry. So may be something will come in respect to the increase of this duty to about 21%."