Indian Public Sector Units Estimate $60 Billion Investment in 2010-11

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Researched by Industrial Info Resources (Sugar Land, Texas)--According to the reports tabled as part of the Indian Union Budget 2010-11, key public sector units (PSUs) of the country have planned for a massive capital expenditure in the next financial year. A total investment of $60.56 billion has been estimated, with nearly $26.14 billion earmarked by the power and petroleum companies.

Terrestrial transport and telecom companies also will figure among the big spenders looking to ramp up investments during the next fiscal. Major investments are likely to be seen in the shipping, urban development and steel sectors as well.

In the urban development segment, the Metro Rail Corporations of New Delhi, Chennai and Bangalore have all planned for investments, with Delhi Metro Rail Corporation (New Delhi) looking to spend about $890 million. Telecom utilities Mahanagar Telephone Nigam Limited (BSE:500108) (MTNL) (New Delhi) and Bharat Sanchar Nigam Limited (BSNL) (New Delhi) have allocated $262.24 million and $3.27 billion, respectively, toward capex outlay for the next fiscal year. Steel Authority of India Limited (BSE:500113) (SAIL) (New Delhi) has proposed an investment of $2.61 billion to $2.83 billion for this period, although the amount is yet to be finalized.

NTPC Limited (BSE:532555) (New Delhi) has planned for a capex of $4.87 billion during 2010-11, which is reported to be the maximum investment in the power sector. The figure is estimated to be 50% more than the revised values for the current financial year. In general, power sector PSUs' planned expenses for the next financial year are likely to be in the range of $11.1 billion, while the revised capex for the current fiscal year stood at $8.42 billion.

The firms in the oil and gas sector have set aside $15.13 billion for fresh investments in the next fiscal year. Oil & Natural Gas Corporation (BSE:500312) (ONGC) (New Delhi) plans to infuse $5.78 billion, while Indian Oil Corporation Limited (BSE:530965) (IOCL) (Mumbai) has set aside around $2.79 billion, followed by the overseas wing of ONGC, ONGC Videsh Limited (New Delhi), which is planning to spend $1.89 billion next year. The total budgeted amount for the sector stood at $12.52 billion for the current fiscal, while the revised expenses were about $12.86 billion.

Although the PSUs have proposed large capex outlays for the next fiscal year, private sector firms are reported to be remaining cautious and are likely to hold on for another semester before deciding on new expenditure. Meanwhile, industrial production in the country has been on the rise since the last quarter of 2009, recording growth of 11.7% and 16.8%, respectively, in November and December last year, with the manufacturing sector alone recording a growth rate of 18.5% in December 2009. According to the Indian Ministry of Commerce, industrial recovery is imminent and factory output levels are set to grow in double digits over the month.

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