All export oriented companies in the Colombo share market are winners in the 2012 budget, especially due to the 3% devaluation of the rupee, while the rest will see a negative impact.
The growth in the domestic economy and new North & East markets will boost volume growth while ensuring the overall profitability, analysts say. Firms such as Dipped Products PLC, Textured Jersey will see immediate benefits but those dependent on imported raw materials will experience an adverse effect escalating their cost of sales to go up and reducing margins.
"But the growth in the domestic economy with new markets such as the North and East will increase their volume growth which will add to their bottomlines," an analyst said.
He said that industries such as cables, which solely depend on imported copper, will see low margins, but the rapidly growing construction activities in the country will have a positive impact on their bottomlines.
Analysts also said that milk powder import tax which is to be increased aimed at encouraging local dairy production will see firms such as Kothmale Holdings and Lanka Milk Foods being benefited.
They also said that the proposal cutting taxes on vehicles for tourism will see all the passenger motor vehicle importers benefited. Further, the import tariff and VAT which will be reduced on heavy vehicle imports will enhance firms such as DIMO and Ashok Leyland who are the major importer of heavy vehicles (TATA, Leyland).
With maize taking up nearly 40% of feed cost of most poultry operators; Bairaha Farms and Ceylon Grain Elevators along with its subsidiary, Three Acre Farms continue to see their margins being affected with the high Cess of imported green grams, peanuts,ginger and maize so as to increase self-sufficiency in the domestic cultivation of these crops.
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