Gujarat Receives Investment Commitments of $246 Billion with 8,500 Signatures in Two Days

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Researched by Industrial Info Resources (Sugar Land, Texas)--The recently concluded two-day Vibrant Gujarat Global Investors' Summit (VGGIS) 2009 that was held at Ahmedabad saw 8,558 memorandums of understanding being signed, with investment commitments of $246 billion made by domestic and international industrial majors across various sectors in the state. Day 1 saw commitments worth $154 billion being signed followed by memorandums worth $92.5 billion being signed on Day 2. The proposed projects promise employment opportunities for more than 2.5 million people, accounting for nearly 5% of Gujarat's population.

The earlier three VGGIS held in 2003, 2005 and 2007 together brought in investment commitments of $129 billion. Before VGGIS 2009 kicked off, the state government was expecting 3,000 commitments worth $203 billion to be signed.

Investment commitments signed on the second day of the event, January 13, 2009, include the following:

• Commitments from Central Public Sector Undertakings
• Central public sector undertakings have reportedly committed to invest more than $26.1 billion. Total commitments made, including indirect investments, amount to $30.8 billion.
• Oil & Natural Gas Corporation Limited (BSE:500312) (New Delhi): investment commitment of $5.3 billion over the next three to four years, generating more than 1,500 employment opportunities
• Power Finance Corporation Limited (BSE:532810) (New Delhi): agreed to finance projects proposed in the power sector, which received investment commitments of more than $63.1 billion to set up 51,936 megawatts (MW) of power generation capacity
• Bharat Heavy Electricals Limited (BSE:500103) (Mumbai): memorandum worth $3.3 billion with Gujarat State Electricity Corporation Limited (GSEC) (Vadodara, Gujarat) and IDFC Projects Limited, a wholly owned subsidiary of Infrastructure Development Finance Company Limited (BSE:532659) (IDFC) (Chennai, Tamil Nadu), for a 3,200-MW supercritical thermal power project in Sarkhadi

• Reliance-Anil Dhirubhai Ambani Group (R-Adag) (Mumbai)
• Three commitments worth $2.16 billion to develop a port jetty in Saurashtra, a power project and three cement manufacturing units

• Infrastructure
• Vadodara Municipal Corporation and Vadodara Urban Development Authority: 19 memorandums worth $1.06 billion for commercial and residential projects and development of shopping malls
• Milestone Realty: $165 million in land development
• DLF Limited (BSE:532868) (Gurgaon, Haryana): $144 million for residential and retail projects
• NRPL: $119 million for upscale residential projects

• Biotechnology
• Intas Biopharmaceutical Limited (Ahmedabad, Gujarat): memorandum worth $32.6 million to set up a production unit to manufacture monoclonal antibodies in Sanand
• Brabourne Enterprises Limited (BSE:500384) (Mumbai), formerly RPG Life Sciences Limited, part of the RPG Group (Mumbai): $20.36 million over three to five years to enhance existing biotech bulk dug and formulation facilities

• Power
• Astonfield Renewable Resources Limited (New York, New York City): memorandum worth $800 million to set up a 200-MW solar photovoltaic power project
• IDFC:
• Commitment to set up a 10-MW solar power project
• 49:51 joint venture with GSEC for the proposed project
• Raychem RPG Limited (Mumbai), a part of the RPG Group: two memorandums worth $30.5 million for power transformers and industrial enclosures
• RPG Cables Limited (BSE:517056) (Mumbai), a part of the RPG Group: $20.31 million for a power project near Baroda

• Automotive
• Setco Automotive Limited (BSE:505075) (Kalol, Gujarat), a manufacturer of automotive clutches: memorandum worth $50.78 million over the next two to three years, creating 450 direct and 750 indirect employment opportunities
• $15.21 million for a new special economic zone production unit to cater to the global market
• $10.15 million for the modernization and expansion of a manufacturing unit in Kalol near Vadodara over the next two years
• $20.3 million to set up a new production unit in Kalol in collaboration with FTE Automotive GmbH (Ebern, Germany)
• CEAT Limited (BSE:500878) (Mumbai), a part of the RPG Group: $142 million to set up a radial tire manufacturing plant in Halol for buses, trucks, light trucks and passenger cars

• Agriculture & Food-Processing
• 188 memorandums worth $7.1 billion with the potential to generate 380,000 jobs to develop agribusiness infrastructure, including biomass recycling, cold chain facilities, food-processing plants, onion drying and processing centers and supply of vaporizing equipment. Proposed projects include:
• $1.99 billion integrated food park
• $1.83 billion biomass waste recycling projects
• $405 million bioeconomic industrial zone
• Temptation Foods Limited (BSE:519228) (Mumbai), processor of frozen fruits and vegetables ($365 million)
• Infrastructure Leasing & Financial Services Limited (Mumbai) ($305 million)

• Logistics & Transportation
• Container Corporation of India Limited (BSE:531344) (New Delhi): memorandum worth $20.31 million for Gujarat's first multimodal freight logistics park catering to the manufacturing and retail sectors

• Education
• Commitment between Pennsylvania State University and Sardar Patel University in Vallabh Vidyanagar to offer a five-year integrated undergraduate and graduate course in information science and technology, entailing a two-year academic session in Gujarat followed by a three-year academic session in Pennsylvania.
• Microsoft Corporation (NASDAQ:MSFT) (Redmond, Washington): memorandum to set up computer training institutes to train 20,000 teachers in information technology (IT) and to enhance the use of IT in the education sector.

At the valedictory ceremony of the event, Gujurat's Chief Minister Narendra Modi received a standing ovation from the delegates for having attracted huge investments to the state amid the prevalent financial crisis worldwide. Buoyed by the resounding and unprecedented success of the event, prominent industrialists lauded Modi as the "future Prime Minister" of India.

Anil Ambani, Chairman of Reliance-Anil Dhirubhai Ambani Group (R-Adag) (Mumbai), hailed Modi as the "next leader of India" and commended his efforts toward converting "adversity into opportunity." Addressing Modi, he said, "Under your leadership there is a newfound confidence in Gujarat, enthusiasm and determination to succeed."

Essar Group (Mumbai) Chairman Shashi Ruia and Bharati Group (New Delhi) Chairman Sunil Mittal emphasized that the commitments should not be dismissed as mere "paperwork to be signed and forgotten" and that industry majors should tap into the state's industrial atmosphere and forge ahead with investment plans.

The Congress Party, however, expressed doubts over the feasibility of investments for which memorandums were signed and dismissed the event as "fake" and a "Narendra Modi-scripted lie." Citing official figures to substantiate its claims, the party pointed out that only 22% of the memorandums signed in the 2005 and 2007 summits have been implemented, although Modi insists the figure is much higher at 63.5%.

Between December 2005 and December 2007, 363 commitments were signed for 454 projects in the state, of which only 45 projects have taken off. Investment commitments to the tune of $31.4 billion were made but actual investments made amounted to only $4.57 billion, including funds in the pipeline.

The Congress further accused Modi of presenting inflated figures by including routine projects executed by government bodies to portray high investment commitments. For instance, civic bodies such as Ahmedabad Municipal Corporation signed memorandums worth $25.65 billion. Modi was also accused of being negligent toward local industries while trying to earn the favor of industrial honchos by doling out concessions.

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