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Q3 of fiscal ’09 saw companies’ investment plans fall: CMIE

Q3 of fiscal ’09 saw companies’ investment plans fall: CMIE
PTI
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First Published: Sun, Jan 04 2009. 10 18 PM IST
Updated: Sun, Jan 04 2009. 10 18 PM IST
Mumbai: The sharp fall in global financial markets, banks’ liquidity crunch and unsuccessful attempts by some Indian firms to raise funds from the primary markets have affected the investment plans of many companies, the Centre for Monitoring Indian Economy, or CMIE, has said.
In the first two quarters of 2008-09, Indian industry saw investment worth Rs40,000 crore commissioned.
However, the commissioning in the third quarter of the financial year was considerably lower at Rs13,309 crore.
CMIE’s CapEx team contacted companies setting up projects worth Rs6 trillion.
While 77% of the Rs6 trillion investment is on, the remaining 23% (about Rs1.4 trillion) is dogged due to the liquidity crunch. These projects have either been shelved or deferred, CMIE said.
Of the investment of about Rs1.4 trillion that has been shelved or deferred, 81% (Rs1.13 trillion) is in the steel sector.
Tata Steel Ltd managing director B. Muthuraman recently said the global financial turmoil has further delayed the firm’s two phases of Jharkhand steel project expansion, costing Rs20,000 crore and Rs22,000 crore, respectively.
The projects have made little progress in terms of land acquisition since a memorandum of understanding was signed in 2005.
JSW Steel has also decided to go slow on its capex plans of Rs59,500 crore. Although projects have been delayed, the companies have not scrapped them completely, CMIE said.
The negative global sentiment is expected to make Indian firms go slow on fresh capital investments, CMIE said.
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First Published: Sun, Jan 04 2009. 10 18 PM IST