New investment project announcements fall sharply

Lowest numbers in over a decade

by Mahesh Vyas

New investment proposals worth Rs.1.25 trillion were observed during the quarter ended December 2016. This is low compared to the average Rs.2.36 trillion worth of new investments seen per quarter in the preceding nine quarters of the Modi government.

Data suggests that demonetisation has hit the pace of announcement of new investment proposals during the quarter ended December 2016. 227 new investment proposals worth Rs.818 billion were announced during this quarter till November 8. In comparison, only 177 investment proposals worth Rs.437 billion were made between November 9 and December 31, 2016.

The fall in investment proposals becomes more apparent when we adjust these values for the number of days in each period. The quarter consisted of 39 days before demonetisation and 53 days, after. Evidently, the quarter had more days in the post-demonetisation period and yet, the investments during this period was lesser than in the shorter pre-demonetisation period.

New investments worth Rs.20.97 billion were announced, on an average, per day during the 39 pre-demonetisation days from October 1 through November 8. This average dropped sharply by 61 per cent to Rs.8.24 billion during the 53 post-demonetisation period. The number of projects announced per day dropped from 6 to 3 by a similar comparison.

If the pre-demonetisation rate of new investment proposals had continued during the post-demonetisation period, the quarter could have ended with new investment proposals worth Rs.1.89 trillion. This would still be lower than in the preceding quarter (Rs.1.94 trillion) or the average new investment proposals worth Rs.2.36 trillion since the establishment of the Modi government.

New investments, therefore, had slowed during recent quarters and, demonetisation has further slowed down their pace.

The slowdown in new investment proposals is stark in terms of the number of new proposals. Only 404 new investment proposals were observed during the quarter ended December 2016. This is the lowest number of new projects announced in a quarter in over a decade. The number of new projects had dropped to below-500 for the first time in a decade during the pervious (September 2016) quarter. The fall to close to just-over 400 projects is a very sharp fall to a new low.

On an average 7-8 projects are announced per day. The post-demonetisation fall in this average to just 3 projects per day reflects a new level of anxiety on the investments front.

Evidently, uncertainties caused by demonetisation have played a role in the fall in the flow of investments. The investments climate has been weak for some time. This is now expected to remain weak for some more time.

CMIE STATISTICS
Unemployment Rate
Per cent
4.8 -0.0
Consumer Sentiments Index
Base September-December 2015
93.0 +0.8
Consumer Expectations Index
Base September-December 2015
91.0 +0.6
Current Economic Conditions Index
Base September-December 2015
96.0 +0.9
Quarterly CapeEx Aggregates
(Rs.trillion) Dec 16 Mar 17 Jun 17 Sep 17
New projects 2.32 3.77 2.02 0.88
Completed projects 1.00 1.91 1.13 0.70
Stalled projects 1.13 0.70 2.66 0.64
Revived projects 0.18 0.67 0.29 0.14
Implementation stalled projects 0.82 0.33 0.67 0.50
Updated on: 20 Oct 2017 8:20PM
Quarterly Financials of Listed Companies
(% change) Sep 16 Dec 16 Mar 17 Jun 17
All listed Companies
 Income 2.1 6.2 10.2 10.2
 Expenses 1.9 6.3 11.9 10.5
 Net profit 14.6 40.3 16.8 -18.9
 PAT margin (%) 6.9 6.1 6.1 5.4
 Count of Cos. 4,503 4,503 4,427 4,257
Non-financial Companies
 Income 0.6 5.9 11.8 10.9
 Expenses -0.2 7.2 15.5 11.1
 Net profit 26.7 24.6 -1.1 -24.3
 PAT margin (%) 6.9 6.2 6.3 5.3
 Net fixed assets -9.2 7.5
 Current assets 8.1 2.1
 Current liabilities 11.7 8.5
 Borrowings 3.1 4.9
 Reserves & surplus 8.4 6.5
 Count of Cos. 3,476 3,482 3,432 3,324
Numbers are net of P&E
Updated on: 20 Oct 2017 8:30PM
Annual Financials of All Companies
(% change) FY13 FY14 FY15 FY16
All Companies
 Income 12.6 10.0 5.1 1.1
 Expenses 12.8 9.8 5.2 1.2
 Net profit 1.0 -2.2 1.4 -12.6
 PAT margin (%) 3.5 3.2 3.2 3.0
 Assets 14.3 12.3 9.4 9.4
 Net worth 9.6 9.6 8.7 10.0
 RONW (%) 6.8 6.2 6.1 5.2
 Count of Cos. 26,117 23,850 23,499 19,777
Non-financial Companies
 Income 12.0 9.7 4.3 0.1
 Expenses 12.3 9.3 4.4 -0.6
 Net profit -8.5 -2.7 -5.9 11.6
 PAT margin (%) 2.4 2.2 2.1 2.6
 Net fixed assets 12.9 11.6 13.3 14.4
 Net worth 7.9 8.2 7.2 10.1
 RONW (%) 5.5 5.1 4.9 5.5
 Debt / Equity (times) 1.1 1.1 1.1 1.0
 Interest cover (times) 2.1 2.0 1.9 2.0
 Net working capital cycle (days) 72 69 67 66
 Count of Cos. 20,489 19,109 18,976 16,329
Numbers are net of P&E
Updated on: 20 Oct 2017 4:58PM

Time-series available since 2007-08