India Inc to cash in on their plans

Bank balance worth Rs 1 trillion utilised for expansion, diversification, acquisition.

India Inc is using cash and bank balance of over Rs 1,00,000 crore for expansion, diversification and acquisition.

According to Capitaline Plus data, 365 firms had cash worth Rs 1,00,000 crore as of March 2005. Announcements made by companies during 2005-06 reveal that all front line companies have drawn up their capital expenditure plans based on their cash pile.

Dr Reddy's Labs, Ranbaxy Labs, Sun Pharma, Jubilant Organosys, Torrent Pharma, Dishman Pharma, Jet Airways, Satyam Computer, Maruti Udyog, VSNL, Tata Chemicals, Amtek Auto, Tata Motors, Mahindra & Mahindra, Aban Lloyd and Jain Irrigation have already used their war chest for acquisitions. Infosys Technologies, TCS, GSK Pharma and a few others, on the other hand, are using the cash to paying out hefty dividends.

Public sector undertakings such as Neyveli Lignite, Steel Authority of India, NTPC, GAIL, Bharat Heavy Electronics and National Aluminium Company are planning expansion and modernisation of their plants. In the private sector, Reliance Industries, Tata Motors, Maruti Udyog, Mahindra & Mahindra, Tata Power, Larsen & Toubro, Ashok Leyland, Jaiprakash Associates and many others are planning expansion by setting up new units in India and overseas. Dr Reddy's went for a major overseas acquisition of German generic drug maker Betapharm for Rs 2,550 crore.

Notable among other pharmaceutical deals are Ranbaxy's acquisition of Ethimed NV in Belgium and Romanian pharma company Terapia for $324 million and Sun Pharma's acquisition of a stake in a Hungary-based pharmaceuticals company.

Among other overseas deals are Satyam Computer's acquisition of Knowledge Dynamics Pte and Bharat Forge's buyout of Imatra Kilsta AB and Federal Forge Inc, USA.

Tata Motors acquired 92.5 per cent of INCAT International Plc for Rs 380 crore. On the domestic turf, Jet Airways agreed to purchase Air Sahara at a consideration of Rs 2,217 crore. Apart from these, ONGC has sealed a deal for buying up Spic Petro for around Rs 1,200 crore.

Among major expansion plans are Tata Motors' proposal to invest Rs 2,500 crore in a plant in Uttaranchal to make its fast-selling light commercial vehicles.

GE Shipping has contracted to buy 110000 DWT Aframax crude carrier, estimated to cost around Rs 300 crore, and Tata Power is spending Rs 860 crore or a new 250 mw coal-based unit at Trombay thermal station.

Public sector steel giant SAIL has plans to invest Rs 800 crore in developing coal mine and another Rs 667 to revive Iisco and modernise Rourkela Steel.