Thursday, June 5, 2008

India Inc.’s capex plans soar to $174bn

by Jo Black

Brushing aside the concerns of slowdown in the industrial growth, capital expenditure announcements by India Inc. soared by 66 per cent during Jan-Mar 2008 to a whopping USD 174 billion as compared to USD 105 billion lined up in Oct-Dec 2007, revealed the findings of ASSOCHAM Investment Meter (AIM).

In a AIM Study on “Investment Announcement during 4th Quarter (Jan-Mar 2008)”, it has further revealed that with the investment climate for infrastructure industries improving, corporate India has continued to bet big on the infrastructure sector.

A capital outlay of more than USD 109 billion was announced during Q4 of fiscal 2008, on top of the USD 85 billion in third quarter of the same fiscal.

The huge investments flowing into the infrastructure sector indicate that the economy is getting into the mode of absorbing even more investments in a far more efficient way, stated Mr. Venugopal N Dhoot, ASSOCHAM President.

As per the Study, while steel has continued to lead the list of sectors attracting highest planned investment for the second quarter in a row, following the third quarter its magnitude has fallen by 28 per cent.

Steel, with investment announcements worth USD 22.30 billion, accounted for nearly 13 per cent of the total capex planned in Q4 of 2007-08, as against almost USD 31 billion in Q3 of the same year.

The sector attracted almost a third of the investments proclaimed across the sectors in Oct-Dec 2007.

However, few of the announcements made in Q4 could be an overlap of previous months.

The companies in the Oil & Gas sector also divulged their expansion plans of USD 22.20 billion.

The investments in the sector saw a leap of almost 40 per cent in the fourth quarter of the financial year 2008 over the third quarter of the same financial year.

Real estate and retail have emerged as lucrative investment avenues. The real estate sector witnessed investment announcements of over USD 18 billion in the last quarter of 2007-08 which included development of housing projects and hotels among others.

The sector experienced the maximum absolute jump of about USD 12 billion in Q4 as compared to Q3 of FY2008.

The retail sector players plan to pump in USD 10 billion, as stated by the companies during Jan-Mar 2008.

Most of the outlay was earmarked for expansion activities in the form of malls or standalone outlets.

The sector did not witness any major player creating an investment corpus for foraying into the retailing business.

According to the study, investment announcements in the real estate sector formed 11 per cent of the total capex plans of the industry.

Retail too claimed nearly 6 per cent of the total investment expenditure planned by the India Inc over the quarter ending March 2008.

The investments in infrastructure constituted almost 63 per cent of the total planned capital investments announced during the fourth quarter.

The industries included in the infrastructure sector were telecom, real estate, ports & shipping and aviation apart from the six core infrastructure industries.

 

 

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