Fresh Investment Q1/FY24
Dominance of Public Sector
Fresh investment in the first quarter of FY2024 (Q1/FY24) increased by 32.87 percent on a Y-o-Y basis. The quarter belonged to the Government sector. Both Central and State government capex zoomed in this quarter. On the other hand, the Private sector, after announcing record fresh investment intentions in the preceding quarter (Q4/FY23), moderated its commitments in Q1/FY24. Among the states, Maharashtra, despite the ongoing political uncertainty, managed to secure first place both in terms of the number of projects and investments planned therein.
According to the 91 Survey of Projects Investment in India, the first quarter of FY2024 saw the announcement of 2,642 new projects worth Rs 7,81,806.88 crore. A year ago, during the same period, the country saw the announcement of 2,612 new projects with a total investment commitment of Rs 5,88,412.53 crore. On a Y-o-Y basis, this indicated a healthy growth of 32.87 percent.
India witnessed a significant surge in project investment across major sectors in the last quarter of FY2023. During the quarter, fresh investment increased by a whopping 167.27 percent on a Y-o-Y basis. While the private sector maintained its dominance in the project investment landscape, the public sector too increased its investment commitments. In all, 2,779 new projects worth Rs 14,60,955.67 crore were announced during the quarter - Q4/FY23.
Projex by Sector
Manufacturing: In the Manufacturing sector during the Survey period, both the number of new projects and fresh investment committed therein declined. The sector, which was dominating capex landscape in the last few quarters, saw a fall 17.47 percent in fresh investment in Q1/FY24 on Y-o-Y basis.
Along with the fall in the number of new projects from 561 to 501 between Q1/FY23 and Q1/FY24, the percentage share of the Manufacturing sector in total investment also declined from 43.33 percent to 26.92 percent between the two quarters. As a result, the quantum of fresh investment too declined by 17.47 percent from Rs 2,54,975.18 crore in Q1/FY23 to Rs 2,10,437.53 crore in Q1/FY24. Another reason for the decline was the decrease in the number of mega projects, from 32 projects worth Rs 2,06,632.97 crore in Q1/FY23 to 20 projects worth Rs 1,49,534.08 crore in Q1/FY24.
Some of the sectors that bucked the downward trends were Food products, Petrochemicals, Cement, and Automobiles. Sectors that registered sharp falls included Drugs & Pharma, Basic Metals, and Electronics.
Mining: The Mining sector has seen a sharp rise in investment of 34.79 percent Y-o-Y despite a decline in the number of projects (from 82 to 34). Six mega-value projects made the growth possible.
The mega projects the sector attracted during the Survey period included a Rs 8,999 crore lignite mining project of GMDC in Odisha and a couple of oil exploration projects of ONGC in Andhra Pradesh, Gujarat, and Assam.
Electricity: while the preceding quarter i. e. Q4/FY23, marked announcement of a number of mega green hydrogen and semiconductors projects, Q1/FY24 was dominated by Hydel based pumped storage power projects of mega sizes. In all, 33 new Hydel power projects entailing a total investment of Rs 1,45,318.97 crore were announced during the quarter. These hydro projects intend to create around 40,000 MW of new power generation capacities.
The quarter also saw the announcement of 41 Solar, Wind and Solar+Wind (hybrid) power projects with a total generation capacity of 7,085 MW. These projects will bring in fresh investment of Rs 34,257.30 crore. In all, 77 new projects worth Rs 1,80,476 crore were announced in this sector in the first quarter, indicating a growth of 156.60 percent over the investment figures of a year ago.
The Power Distribution sector too saw increased capex activities during the first quarter. In all, 89 new projects worth Rs 14,346 crore were announced.
Services & Utilities: (Transport & Social Infrastructure): The increased capex spending by both the Central and the State-owned agencies saw the all-important Infrastructure sector maintain its dominance in the capex arena during Q1/FY24 too. In all, the sector saw the announcement of 1,995 new projects with a combined investment of Rs 3,59,594.51 crore. This indicated a healthy rise of 61.32 percent over the investment figures observed in Q1/FY23. Within this sector, star performers were the Roadways, Railways, Shipping Infra, Construction, and Data Centres.
During the first quarter of FY24, the National Highways Authority of India (NHAI) announced a total of 22 highway projects worth Rs 36,526.29 crore with a combined length of 1,146.44 km. Of this, the most expensive highway was the 257 km Pulimath-Angamaly project in Kerala, being set up at a cost of Rs 19,428.48 crore. This was followed by the 176.8 km Gadchiroli-Durg Expressway project with an investment of Rs 7,147 crore.
Additionally, state-owned Road building agencies and Public Works Departments (PWDs) announced around 400 road projects entailing a total investment of around Rs 1,25,000 crore.
In the Railways sector, 42 new projects worth Rs 10,995.40 crore were announced. Eighteen of these projects were for the renovation and upgradation of the stations. The largest project was the Rs 4,320 crore 24 km long Faridabad-Palwal metro line of the Haryana Mass Rapid Transport Corpn.
The construction sector comprising Real Estate, Commercial Complex, Shopping Plazas, Hospitals, Hotels, and Industrial & IT Parks, saw the announcement of 778 new projects worth Rs 1,30,609 crore.
Among the sub-sectors, the major player was the Real Estate sector. Fresh investment in this sector has increased consistently in the last couple of quarters. Reflecting the uptick, the sector saw the launching of 495 new Real Estate projects with a total capex of Rs 81,568.26 crore during Q1/FY24. Compared with a year ago statistics, this indicated a healthy growth of 46.33 percent.
The Survey quarter also saw the announcement of additional nine Data Centres at a total capex of Rs 11,715.74 crore. As of 30 June 2023, there were 148 Data Centres coming up across India at a total cost of Rs 2,04,670 crore.
Irrigation: This sector experienced a steep decrease in investment, dropping by 76.68 percent Y-o-Y. Both the number of new projects and the investment planned therein declined sharply. During the Survey period, 35 new irrigation projects worth Rs 4,787 crore were announced. A year ago, during the same timeline 78 new projects worth Rs 20,529.89 crore were announced.
Projex by Ownership
The Government sector broke the dominance of the Private sector in total fresh investment commitment by accounting for 50.31 percent of the total fresh capex emanated in Q1/FY24. The Private sector, which dominated the fresh capex announcement for the last 13 quarters, lost steam after registering a stellar performance in Q4/FY23. In that quarter, the Private sector accounted for around 72 percent of the total fresh investment announced. The bulk of the investment was for setting up Green Hydrogen, Semiconductors, and Hydel Power projects.
Fresh investment in Q1/FY24 by government agencies registered a growth of 80.90 percent on a Y-o-Y basis.
Government agencies announced 1,490 new projects worth Rs 3,93,361.93 crore in Q1/FY24 as against 1,523 new projects worth Rs 2,17,443.0 crore announced a year ago during the same period.
During the Survey period, the Private sector announced 1,152 new projects worth Rs 3,88,444.95 crore as against 1,089 projects worth Rs 3,70,969.53 crore announced in Q1/FY23. Though the private investment accounted for 49.69 percent of the total such new investment, it grew at a mere rate of 4.71 percent on a Y-o-Y basis. The bulk of the private investment was found in sectors like Food processing, Electronics, Automobiles, Hydel and Solar power, Ports, Real Estate, and Data Centres.
On the other hand, much of the government investment commitments were found in the Petrochemicals, Mining, Hydel Power, Water Supply Schemes, Roadways, Power Distribution, and Industrial Parks sectors.
Projex by States
Maharashtra, though figured in the top 10 list of states in terms of fresh investment in most of the quarterly Surveys of projects investment, rarely it topped the list. The political uncertainty that prevailed in the state in the last couple of years saw the state losing some high-ticket private investment intentions to the neighbouring states. However, in the quarter ended June 2023, the state ascended to the premier position with 476 new projects worth Rs 2,38,501 crore. The state cornered almost one-third of the total fresh investment announced in Q1/FY24.
Among the mega projects launched in the state, prominent ones are the Rs 63,426 crore Versova-Virar Sea link project, the Rs 12,482 crore EV project and the Rs 12,628 crore Industrial Park of MIDC. Besides, the state has also attracted five mega Hydel power projects and Data Centres by Microsoft and Amazon.
The second-ranked Karnataka attracted 174 new projects worth Rs 81,957.12 crore. The Rs 27,000 crore petrochemicals project of the Mangalore Refineries was the largest investment intention the state attracted in Q1/FY24. In Q1/FY23, Karnataka was the leading state in attracting fresh project investments but lost slid to the second position following the sharp decline in its share in total investment from 21.99 percent to 10.48 percent. The number of projects also decreased from 244 to 174.
Gujarat managed to retain its third rank by attracting 262 new projects worth Rs 74,054.20 crore. Its share of total fresh investment decreased marginally from 10.69 percent in Q1/FY23 to 9.47 percent in Q1/FY24. Sectors like Electronics, Lignite Mining, Oil Exploration, Hydel and Solar power attracted a sizable amount of new investments. The Rs 17,500 crore Metallurgical Grade Silicon & Polysilicon project at Jamnagar was the largest project attracted by the state in Q1/FY24.
While Telangana slipped from fourth rank in Q1/FY23 to fifth in Q1/FY24 because of a fall in both the number of new projects and investment commitments, the northern state, Uttar Pradesh managed to improve its rank from fifth a year ago to fourth in Q1/FY24. The state saw the announcement of 19 Ethanol projects, a dozen of Highways, and two high-ticket Hydel-based power projects.
The Indian economy is expected to grow at around 6 percent in the next couple of years. This would provide the momentum required for executing the announced capex intentions, especially in the sunrise sectors like Green Hydrogen, Semiconductors, Electric Vehicles, and Non-conventional power. Faster execution of projects in these sectors would provide the much-needed fillip to foreign companies to invest in India. This is particularly true in the case of technology companies, which often seek high-growth, large-scale markets to expand their reach and enhance their global presence.
We expect the pace of fresh investment announcements by the Indian private sector to remain positive in the remaining quarters of FY2024. We also expect the private project implementation ratio to improve. At present the ratio is hovering around 30.92 percent vis-à-vis 36.55 percent seen in the public sector.
From the government side, we expect the persistence of its efforts at enhancing the ease of doing business, the extension of PLI scheme, and faster implementation of the key infrastructure projects worth Rs 5.14 lakh crore planned under the PM Gati Shakti National Master Plan.
About Projects Today
Projects Today is India's largest online databank on new and ongoing projects in India. The website, launched on 8 September 2000, aims to provide the required foresight to its clients based on sectoral insights its research team possesses. The project-related information provides an invaluable marketing resource to assist the business development efforts of the organisations that focus on the new projects market. It is widely used by the project fraternity, primarily, as a business opportunity identifier.
Projects Today conducts Survey of Project Investment, at the end of every financial quarter to gauge the trends in projects investment in India by sectors, state, ownership, etc.
Disclaimer : The opinions expressed within this interview are the personal opinions of the interviewee. The facts and opinions appearing in the answers do not reflect the views of Indiastat or the interviewer. Indiastat does not hold any responsibility or liability for the same.
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