India Inc adds up fixed assets

Purchase of assets increases to Rs 52,511.08 crore in 2004-05.

India Inc is stacking up fixed assets with a scorching pace. In the financial year ended March 31, 2005, the purchases of fixed assets by Indian companies rose to a staggering Rs 52,511.08 crore, an increase of 47.08 per cent from Rs 35,700.34 crore spent a year ago.

The total spend during 2002-03 was Rs 29,970.55 crore. Industry analysts said the rise in fixed asset spending was an indication of expansion of these companies. The drivers of the expansion processes have been a booming economy and favourable market conditions besides a rise in the demand for products and services.

The rally in 2004-05 was led by Reliance Industries (RIL) with a total spend of Rs 5,244.01 crore "" an increase of 21.41 per cent, from Rs 4,319.08 crore spent on purchasing fixed assets in 2004.

Tata Steel was in the second slot with a 106 per cent increase and a total spend of Rs 1,978.36 crore (Rs 960.33 crore), while HPCL with a 44.44 per cent increase and a spend of Rs 1,284.86 crore (Rs 889.5 crore) ranked third.

Hindalco Industries with a spend Rs 1,173.34 crore (Rs 703.03 crore), VSNL with Rs 1,060.58 crore (Rs 472.59 crore) and GE Shipping with Rs 1003.32 crore (Rs 1143.79 crore) were the other large purchasers of fixed assets during the year under review.

The other large spenders were Bharti Tele-Ventures with Rs 881.83 crore (Rs 211 crore), Indian Oil with Rs 849.26 crore (Rs 431.27 crore), Tata Motors with Rs 817.47 crore (Rs 288.97 crore) and Infosys Technologies with Rs 793.89 crore (Rs 429.87 crore).

GE Shipping's spend on creating fixed assets dipped during the year.

The State Bank of India, too, pared its spend to Rs 806.62 crore from Rs 955.54 crore in the previous year. ICICI Bank with Rs 379.53 (Rs 483.83 crore), Moser Baer with Rs 352.56 crore (Rs 744.87 crore) and Neyveli Lignite with Rs 283.32 crore (Rs 348.26 crore) are among other companies which curtailed their spending on fixed assets.

The rise in RIL spend was triggered by an increase in capacity addition and the resultant overall increase in output, especially at the company's vinyl chloride monomer plant at Jamnagar. A capacity addition and investments in infrastructure have been the reasons for the increase in spends by Tata Steel and HPCL.

Investments in the submarine cable SEA-ME-We-4, acquisition of Tyco Global Network, the purchase of national long-distance bandwidth and dark fibre from Bharti Tele-Ventures were the reasons for the increase in spend by VSNL, sources in the Tata group said.