New investment proposals improve

by Mahesh Vyas

New investments worth Rs.2.6 trillion were witnessed during the March 2017 quarter. This is higher than the Rs.1.4 trillion worth of new investment projects witnessed in the preceding, December 2016 quarter. The March ending quarter usually sees an increase in new investment proposals. This is because during this relatively cooler quarter, a number of state governments conduct their investment fairs.

During January-March 2017, investment fairs were conducted by Gujarat, West Bengal, Andhra Pradesh and Jharkhand. Besides, Karnataka government held the AERO India fair during this period. These government fairs that are held to attract investments to the state, lead to an increase in the number of investment proposals announced.

A fairer comparison of the new investment proposals during March 2017 would therefore be those that were witnessed during March 2016 quarter. During the March 2016 quarter, investment fairs were held in Andhra Pradesh, West Bengal, Karnataka, Maharashtra and Haryana. During this quarter the total new investment propsals was Rs.3.3 trillion.

Thus, the new investment proposals announced during the March 2017 quarter (Rs.2.6 trillion) is lower than the proposals made in the year-ago quarter (Rs.3.3 trillion).

Nevertheless, there is a small improvement in the new investment proposals data. There are two measures by which the new investments data are slightly promising. But, there is another that negates this promise.

First, the new investment proposals during the March 2017 quarter are 13 per cent higher than the average quarterly new investment proposals seen during the preceding 10 quarters of the Modi government. This is remarkable as it comes immediately after the onslaught of demonetisation in the preceding quarter.

Secondly, the March 2017 quarter is the first after the first quarter under the Modi government that new investment projects and project revivals is higher than the sum of projects that exited the investments pipeline. Projects that exited the investment pipeline include those that got completed, those that were abandoned, shelved, stalled or those that had to removed from the pipeline because of no information. Thus, there is an addition to the stock of investments in the pipeline after a long time.

On the flip side, the increase we see in investment proposal is largely because of the 100 aircraft that Spicejet announced that it intends to buy. This announcement is worth Rs.731 billion and it alone accounts for over 28 per cent of the entire new investment proposals. These aircraft would be purchased from Boeing and so they do not generate any direct employment. But, this does reflect confidence that air traffic in India would continue to increase in the coming year. The aircraft would be delivered between 2018 and 2024 and Spicejet could buy an additional 50 aircraft.

Purchase of aircraft skewed new investment proposals in December 2014 as well when Indigo announced the purchase of 250 A320 aircraft. It then accounted for about 37 per cent of all new investment announcements in the quarter.

CMIE STATISTICS
Unemployment Rate
Per cent
4.3 +0.0
Consumer Sentiments Index
Base September-December 2015
95.1 +0.4
Consumer Expectations Index
Base September-December 2015
94.8 +0.3
Current Economic Conditions Index
Base September-December 2015
95.5 +0.5
Quarterly CapeEx Aggregates
(Rs.trillion) Sep 16 Dec 16 Mar 17 Jun 17
New projects 2.38 1.50 2.97 1.71
Completed projects 2.23 0.95 1.86 1.12
Stalled projects 0.65 1.01 0.35 2.66
Revived projects 0.91 0.18 0.62 0.29
Implementation stalled projects 0.38 0.82 0.33 0.67
Updated on: 22 Sep 2017 4:20PM
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 16.7 -18.4
 PAT margin (%) 6.9 6.1 6.1 5.4
 Count of Cos. 4,500 4,502 4,424 4,203
Non-financial Companies
 Income 0.6 5.9 11.7 10.8
 Expenses -0.2 7.2 15.5 11.0
 Net profit 26.6 24.5 -2.2 -23.7
 PAT margin (%) 6.9 6.2 6.3 5.3
 Net fixed assets -9.2 7.6
 Current assets 8.1 2.0
 Current liabilities 11.6 8.5
 Borrowings 3.1 4.8
 Reserves & surplus 8.4 6.5
 Count of Cos. 3,481 3,487 3,436 3,285
Numbers are net of P&E
Updated on: 22 Sep 2017 4:30PM
Annual Financials of All Companies
(% change) FY13 FY14 FY15 FY16
All Companies
 Income 12.6 10.0 5.0 1.0
 Expenses 12.8 9.9 5.1 1.2
 Net profit 1.0 -2.2 1.1 -15.2
 PAT margin (%) 3.5 3.2 3.2 3.0
 Assets 14.3 12.3 9.4 8.8
 Net worth 9.6 9.6 8.8 7.7
 RONW (%) 6.8 6.2 6.1 5.3
 Count of Cos. 25,932 23,621 23,131 19,375
Non-financial Companies
 Income 11.9 9.7 4.1 0.0
 Expenses 12.3 9.3 4.3 -0.6
 Net profit -8.4 -2.4 -6.3 6.5
 PAT margin (%) 2.4 2.2 2.1 2.7
 Net fixed assets 12.9 11.6 13.1 13.9
 Net worth 7.9 8.2 7.3 7.0
 RONW (%) 5.5 5.1 4.9 5.6
 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 67
 Count of Cos. 20,312 18,893 18,620 15,945
Numbers are net of P&E
Updated on: 21 Sep 2017 10:15AM

Time-series available since 2007-08

Growth dropped to 5-quarter low during Q1 2017-18