New Delhi: Capital expenditure in key
sectors, including power and telecom, is expected to grow at a
moderate pace over the next three years, with total
investments projected at Rs 10,50,000 crore, a Crisil Research
study says.
According to the study spanning 11 key sectors, aggregate
industrial investments would continue to grow despite the
current economic slowdown amid expectations of a relatively
muted GDP growth.
The study stated that aggregate industrial investments
would grow at a moderate pace over the next three years, with
total investments projected at Rs 10,50,000 crore.
This is in contrast to a decline in corporate investments
following deceleration in economic growth witnessed earlier.
"Power, telecom and gas distribution are expected to
witness strong investor interest. Continuing supply deficit
and increased government thrust to augment power generation
capacity would attract investments into the power sector.
"In telecom, the factors drawing investor interest,
despite high competition, are the continuing buoyancy in
mobile subscriber growth and the sheer size of the addressable
market," Crisil Research Head Manoj Mohta said.
"The anticipated increase in natural gas supply is
expected to propel investments in gas pipelines and city gas
distribution networks," Mohta added.
The report stated the capex growth can be largely
attributed to continued investments in sectors such as power
and telecom along with expectations of a gradual economic
recovery by 2010-11.
Meanwhile, slowdown in developed economies and falling
prices have reduced the attractiveness of the business case
for investing in capacity expansion projects in the metals,
oil refining, and textiles sectors. Crisil Research expects
some of the projects in these sectors to be delayed beyond
their planned commissioning dates.
Further, in sectors facing overcapacity such as cement
and automobiles, the flow of investments would be subdued.
"In the past, between 1997-98 to 2002-03, private sector
investment contracted in response to slowdown in economic
growth. However, based on our current assessment of over 500
projects and interactions with stakeholders, we project a
seven per cent Compounded Annual Growth Rate (CAGR) in
investments between 2008-09 and 2011-12, " Mohta said.
Although this growth is far lower than the 30 per cent
CAGR witnessed in the previous three years, it is still
significant, he added.
Crisil Research's study on industrial capex provides a
detailed assessment of investments projected to take place
during 2009-10 to 2011-12 across power, telecom, oil refining,
oil exploration, gas transmission and distribution, steel,
aluminium, automobiles, cement, textiles, and fertilisers
sectors.
Bureau Report
First Published: Thursday, August 06, 2009, 15:48