Corporate India on an investment roll

Dispelling the general notion that fixed-asset creation is at a standstill in the corporate sector, latest annual reports show that corporate India added fixed assets worth Rs 33,366 crore (Rs 333.66 billion) in 2003-2004, 33.1 per cent higher than the Rs 25,070 crore (Rs 250.7 billion) fixed assets created in the previous year.

While big companies seem to have funded the new fixed-asset creation from their internal accruals, small and medium companies used a mixture of internal accruals and borrowings. Fixed-asset formation was largely aimed at expanding and modernising existing capacities.

Companies in the information technology and telecom industries spent huge resources on acquiring land and creating the superstructure on it, as also the acquisition of stakes in overseas ventures.

Private sector giant Reliance Industries added Rs 4,319 crore (Rs 43.19 billion) in fixed assets, taking its gross block to Rs 56,860 crore (Rs 568.6 billion) in 2003-2004. The company invested Rs 1,119 crore (Rs 11.19 billion) in property development rights, Rs 1,040 crore (Rs 10.4 billion) in plant and machinery and Rs 1,360 crore (Rs 13.6 billion) in capital work in progress.

Hindalco added plant and machinery worth Rs 706 crore (Rs 7.06 billion). During the year, Hindalco increased the capacity of its copper cathode plant by 100,000 tonnes to 250,000 tonnes per annum; the installed capacity of its sulphuric acid facilities increased by 300,000 tonnes to 735,000 tonnes and phosphoric acid capacity increased by 70,000 tonne to 180,000

tonnes.

Bharti Tele-Ventures spent Rs 2,471 crore (Rs 24.71 billion) on acquisitions and goodwill. Of this, Rs 192 crore (Rs 1.92 billion) was spent on the acquisition of a 26 per cent stake in Bharti Mobile from Telia Overseas AB Sweden. Acquisition of plant and machinery accounted for the another Rs 2,028 crore (Rs 20.28 billion).

G E Shipping acquired new ships worth Rs 977 crore (Rs 9.77 billion), and invested Rs 223 crore (Rs 2.23 billion) in ships under construction.

The addition of the new tankers more than doubled its existing tanker capacity from one million DWT in 2002-03 to 2.19 million DWT.

Indian Oil expended Rs 2,269 crore (Rs 22.69 billion), Chennai Petroleum completed refinery expansion projects worth Rs 1,477 crore (Rs 14.77 billion) while Bharat Petroleum Corporation Ltd acquired fresh fixed assets for Rs 1,616 crore (Rs 16.16 billion).

Tata Steel incurred capital expenditure of Rs 764 crore (Rs 7.64 billion) on the ongoing expansion of its crude steel making capacity to five million tonnes and Rs 240 crore (Rs 2.4 billion) on the modernisation of plant and machinery.

Tata Motors spent almost Rs 500 crore (Rs 5 billion) on new product development, on upgrading existing product platforms, and capacity expansion for all its product lines.