The Union Budget 2013, presented by the Finance Minister P. Chidambaram is along the expected lines. The budget appears to have been prepared with an eye on the general elections likely next year with a focus on infrastructure development and welfare schemes targeted at women, youth, scheduled castes and tribes, disabled people, and minority community.

Reintroduction of investment allowance for investments in plant and machinery of over Rs 100 crore will encourage new investments and is a step in right direction.

The finance minister has shown his serious intent of implementing GST by earmarking a sum of Rs 9,000 crore for compensation to the state governments for the revenue loss on account of CST. We welcome this move as this is expected to herald a more predictable and uniform tax structure across the country.

For the oil and gas sector, we are happy to see government reemphasise the need for a natural gas pricing policy. We eagerly await more clarity on this as well as the shale gas policy as we believe India, which imports about 80% of its oil and gas needs, cannot wait any longer to develop its own natural resources towards meeting its energy requirement. We were hopeful that the Finance Minister would view our request for removing service tax on service providers to E&P companies favourably, since that drains away a substantial part of the funds committed for exploration.

For the upstream sector, the budget has been largely neutral, in the absence of any specific announcement targeted at the sector, which is amongst the largest contributors in terms of direct taxes as well as forex earner for the country. We are disappointed that the finance minister has not removed the tax anomaly between branded and unbranded fuel, given that such fuel have been proved to increase engine efficiency and enhance their life, thereby reducing consumption.

The finance minister has cleared the confusion around classification of imported coal for tax purpose and has proposed a uniform 2% custom duty and 2% CVD for both, met coke as well as steam coke. This would increase the cost of power as the present duty on steam coal was only 1%.

We are happy to see that the government's increased spent on welfare projects without commensurate raising of taxes have come from the reduction of subsidy bill post partial deregulation of diesel and putting a cap on the number of subsidised cooking gas cylinders. From a humble beginning as a pilot project last year, it is encouraging to see that direct cash transfer scheme has now touched 11 lakh lives. Although there is still a long way to go before the entire nation is mapped, once fully implemented, this will allow the government to continue its welfare schemes for the needy and yet control its subsidy bill by eliminating wastage. The ultimate deregulation of petroleum sector will lead to increased competition, thereby benefiting the consumers in the long run in terms of improved service and competitive prices.

About Essar Oil
Essar Oil is a fully integrated oil & gas company of international scale with strong presence across the hydrocarbon value chain from exploration & production to refining and oil retail. Essar Oil owns India's second largest single site refinery having a capacity of 20 MMTPA and complexity of 11.8, which is amongst the highest globally. It has a portfolio of onshore and offshore oil & gas blocks with about 1.7 billion barrels of oil equivalent in reserves & resources. There are more than 1,600 Essar-branded oil retail outlets in various parts of India.
About Essar Group

The Essar Group is a multinational conglomerate and a leading player in the sectors of Steel, Energy, Infrastructure and Services. With operations in more than 25 countries across five continents, the Group employs 75,000 people, with revenues of US$ 27 billion.

Media Contacts:
Rabin Ghosh, Corporate Communications, (Mumbai)
Tel: 91 99 301 36268, email: rabin.ghosh@essar.com
Parikshit Kaul, Corporate Communications (New Delhi),
Tel: +91 98735 70816, Email: parikshit.kaul@essar.com
Priyank Talati, Corporate Communications (Ahmedabad),
Tel: +91 91 9979868817, Email: priyank.talati@essar.com
Jayesh Thanki, Corporate Communications (Vadinar),
Tel: +91 99 798 91425, Email: jbthanki@essar.com

Adfactors PR
Hiral Vora, (Mumbai): +91 97 699 98892, hiral.vora@adfactorspr.com

Investor Relations:
Suresh Jain, Chief Financial Officer, Essar Oil Ltd
Email: suresh.jain@essar.com
Pramod Bhandari, Head-Investor Relations, Essar Oil Ltd
Tel: +91 98197 30915, Email: pramod.bhandari@essar.com

distributed by