Shares of logistics firms flare up on GST Bill news

by / Monday, 16 February 2015 / Published in News & Updates

Shares of logistics companies rallied on the news that much-awaited Goods and Services Tax (GST) Bill which seeks to bring in uniform goods and services tax across the country is to be moved in the winter session of Parliament. Stocks of logistics companies gained 13 to 20 per cent on Monday.

Among them, top gainers on the BSE were Gati 18.42 per cent, Patel Integrated Logistics 20 per cent, Snowman Logistics 15.37 per cent, Allcargo Logistics 13.53 per cent, and Transport Corporation of India 6.19 per cent.

Some of these logistics firms outperformed the broader market and even hit the upper circuit in the intra-day trade with Gati and Patel Integrated Logistics gaining 20 per cent each.

Logistics companies came into focus during the market hours after finance minister Arun Jaitley, speaking at Citi Bank Investor Conference in New Delhi, said that the government would bring in the Goods and Services Tax (GST) Bill in the upcoming winter session of Parliament. The winter session of the Parliament starts from next Monday.

Prashant Deshpande, senior director, Deloitte India, said, “With GST coming there will be an opportunity for the logistics companies to restructure their supply chain for manufacturing and distributing companies, as of today the supply chain is dictated by the central sales tax. After implementation of GST, logistics companies will be able to re-model their mother warehouses and regional warehouses.”

Currently logistics, manufacturing and distribution companies pay indirect tax along with all entry taxes which adds up to 30 per cent plus but with a cumulative tax like GST it will be reduced to 22-23 per cent, mitigating the overall tax impact, Deshpande said.

Narayan Shetkar, director, Singhi Advisors said, “Overall, supply chain will benefit as state wise different taxes will go out, removing procedural hassles and improve turnaround time of the logistics companies as they would get rid of small regional warehouses.”

GST Bill to become a law needs to be passed by a two-thirds majority in both houses of Parliament and by the legislatures of half of the 29 states.

See Article :