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India Inc pumps in 81% of total investments in infrastructure: Assocham

India Inc pumps in 81% of total investments in infrastructure: Assocham
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First Published: Mon, Feb 04 2008. 03 29 PM IST
Updated: Mon, Feb 04 2008. 03 29 PM IST
New Delhi: Of around Rs4,19,334 crore ($104 billion) of planned private investment by Indian Inc. in Q3 of current fiscal, a little over 81% of it has gone into core, physical and service infrastructure, which amply indicates that if bottlenecks are removed for infrastructure sector, volumes of such investment could multiply manifold.
According to a study carried out by Assocham which analysed Indian industry’s Q3 private investment announcements and plans, out of a total investment of Rs4,19,334 crore across 28 sectors, Rs3,41,308 crore went to core, physical and service infrastructure.
Key Findings
* While steel with $31 billion remained the single major source of investment generation, other industries that attracted substantial capital expenditure included oil ($16 bn), power ($13 bn), telecom ($8.2 bn), real estate ($6.2 bn), cement ($4.8 bn), shipping & logistics ($2.8 bn), ports ($3 bn) and aviation ($0.3 bn)
* With high domestic and export demand, huge capacity expansion is under way in steel sector as major producers announced investment plans of $31 bn (Rs1, 23, 700 cr) contributing share of 36.5%
*Abhijeet Group contributed $13 bn (Rs55,000 cr) in the sector as the amount by the group would be invested for building up steel plants in West Bengal, Jharkhand and Maharashtra
* The demand for oil & petroleum led companies to provide a capex of $16 bn (Rs62, 850 cr) in the sector; major contribution came from Essar Oil with a capital announcement of $6 bn (Rs24,000 cr) for tripling the capacity of its Vadinar refinery
* The third largest set of investments were announced in the power generation sector as the surging demand for power by household and industry fuelled investments with companies realizing tremendous growth potential in the sector; investments worth $13 bn (Rs54,144 cr) were announced in the sector; other major investment announcements were by L & T worth $5 bn (Rs20,000 cr) for generating power, followed by Neyveli Lignite Corporation Ltd which intended to invest $4.3 bn (Rs17, 500 cr for setting up mine and thermal power station in Perambul district in Tamil Nadu
* As the Indian telecom subscriber base grew to 264.8 million in November ‘07 there lies more growth potential in the telecom sector with spectrum allocation for 3G and 2G mobile services, WiMAX broadband, lower tariffs, mobile number portability and listing of infrastructure entities; telecom sector contribution to total investment in Q3 of current fiscal is $8.2 bn (Rs33, 080 cr)
* Despite high interest rates dampening short-term demand for houses, real estate firms have maintained an investment momentum; in Oct- Dec ’07, total amount of investments announced in the sector were $6.2 bn (Rs21,668 cr) and major contributor was Vipul Infrastructure Developers Ltd; amounting to $3.2 bn (Rs13,000 cr) for developing realty projects in Bhubhneshwar and Hyderabad in the next five years
*Presently under capacity crunch, cement companies made investments worth $4.8 bn (Rs19,200 cr)
* Scarcity of bulk carriers and offshore supply vessel in global market forced several Indian companies to set up large shipbuilding yards at an investment of $2.8 bn (Rs11,536 cr) during the study period; main contributors were Mercator, L&T, Shipping Corporation of India, SKIL Infrastruction, Good Earth Maritime and Apeejay Shipping which jointly plan to invest $2.5 bn (Rs10,000 cr) and Essar Shipping & Logistic Ltd which announced its investment plan of $0.3 bn (Rs1, 536 cr) in the sector for buying six new ships till 2012
* With intense pressure on Indian ports for upgradation, investments in the sector for developing new facilities by public and private players were sought; L & T contributed Rs5, 550 cr for building new integrated airport passenger terminal at Chhatrapati Shivaji International Airport (Mumbai) followed by Reliance Industries who are planning to convert Rewas port by announcing $1.3 bn (Rs5200 cr) investment in the sector
* As the number of air travelers increased by 38.5% in 2006-07, demand for air services surged with expansion of businesses domestically and internationally, inducing investments up to $0.3 bn (Rs12,00 cr) in the aviation sector by Kingfisher Airlines for expansion and restructuring of its aviation arm
Infrastructure Sectors (in crore)
Steel 1,23,700 36.5
Oil & Gas 62, 850 18.5
Power 54, 144 16
Telecommunication 33,080 10
Real Estate 24,848 7
Cement 19,200 6
Shipping & Logistic 11,536 3.3.5
Ports 10,7503
Aviation 1,200 0.5
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First Published: Mon, Feb 04 2008. 03 29 PM IST