Power equipment shares slip

Written by Reuters | Mumbai, February 29: | Updated: Feb 29 2008, 21:20pm hrs
Power equipment contractors are likely to be adversely affected by the federal budget move to increase service tax on all works contracts to 4 percent of the value, from 2 percent now.

Companies such as KEC International Ltd , Kalpataru Power Transmission Ltd , Jyoti Structures Ltd , which operate as engineering, construction and procurement contractors for power transmission and distribution projects, see this as a negative.

"This changes our view of the budget to negative. This (service tax increase) will impact our bottom-line directly," KEC's Managing Director Ramesh Chandak said.

The increase is effective from March 1.

Shares in KEC and Kalpataru Power, which had been trading up to 4 percent higher, slipped into negative territory while Jyoti Structures trimmed early gains and was up 1.4 percent.