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As per the 73rd Projex Investment Survey of Projects Today, during Q3/FY19 (Oct-Dec 2018), 2,670 greenfield projects were announced in India. These projects would bring in fresh investment to the tune of Rs 3,39,257 crore. When juxtaposed with Q2/FY19 projex figures, it indicates a growth of 10.5 percent. The growth came on top of the 47.8 percent growth in projex recorded in Q2/FY19 on Q-o-Q basis.

Mr. Shashikant Hegde, CEO, Projects Today
Mr. Shashikant Hegde, CEO, Projects Today

While the Manufacturing sector maintained the growth momentum observed in Q2 with a subdued growth rate of 17.2 percent, the Power sector rebounded with a growth of 44.7 percent in projex vis-à-vis a steep fall of 60.3 percent recorded in the preceding quarter. The slowdown in fresh investment intentions by the Central government units saw a lower growth of 12.1 percent in the Infrastructure sector. The sector had posed a healthy growth of 68.3 percent in the preceding quarter.

Belying our expectations, the poll-bound states like Rajasthan, Madhya Pradesh and Chhattisgarh saw healthy increase in state government projex announcements. Telangana was an exception, where overall fresh investment fell by 63.4 percent. While Telangana saw the same government returning to power, Rajasthan, Madhya Pradesh and Chhattisgarh saw change in governments. This means some of the projects, schemes announced by the erstwhile government in Q1/FY19 and Q2/FY19, are likely to get reviewed by the newly-formed governments. We have already seen some reversals in Rajasthan.

Private projex growth slowed in Q3
The elections in five states and the ensuing General Election seem to have made private promoters to go slow on their fresh projex commitments. In all, private companies announced 841 new projects entailing a total investment of Rs 1,30,683 crore, indicating a Q-o-Q growth of 6.2 percent. In Q1/FY19 and Q2/FY19, such investments had recorded a robust growth rates of 25.6 percent and 35.3 percent respectively.

Among the major states, Karnataka cornered around one-fourth of the total fresh private projex announced in Q3/FY19. Uttar Pradesh, Odisha, Andhra Pradesh and Maharashtra were the other states who cornered around 10 percent each of the fresh private investments. In all, 19 mega projects (projects investment of Rs 1,000 crore or more) were announced by private companies in Q3/FY19.

Fresh projex announcements by the government sector had increased by a healthy 57.5 percent in Q2/FY19. This was made possible due to 181.3 percent growth recorded in fresh projex of the Central government agencies.

On the other hand, fresh investment intentions by state-owned agencies after registering negative growths in the first two quarters of the current fiscal FY19, bounced back with a growth of 23.4 percent in Q3/FY19.

As against 1,957 government projects worth Rs 1,84,074.3 crore announced in Q2/FY19, around 1,829 new projects worth Rs 2,08,573 crore were announced in Q3/FY19. The Steel, Roadways, Railways, Metro, Housing and Healthcare sectors saw large-size investment proposals from the government entities.

Manufacturing and Power led the growth
The Manufacturing, Power and Infrastructure sectors posted positive growth in Q3/FY19. While the Mining sector after two quarters of positive growths, saw fresh investment declining by a whopping 65 percent. Irrigation continued its negative growth trend in the third quarter too.

The Manufacturing sector increased its share in the total fresh investment pie from 20.85 percent in Q1/FY19 to 33.4 percent in Q3/FY19. The sector attracted 429 projects worth Rs 1,13,305 crore in Q3/FY19. These included 17 mega projects (investment of Rs 1,000 crore or more). Steel projects of JSW and SAIL, passenger car project of Hyundai Motors, caustic soda project of Vedanta, aluminium project of Hindalco, viscose staple and PTA projects of Aditya Birla Nuvo and MCPI respectively were some of the mega projects announced in this sector. Textiles, Plastic and Paper products were the other sub-sectors to receive sizeable fresh investment during Q3/FY19.

One super mega thermal power project by NTPC and three mega Solar projects led to the 44.65 percent Q-o-Q growth seen in the Power sector. Scores of mega-size thermal power projects under execution or recently commissioned are awaiting new promoters to take over and salvage them. The tough stand taken by RBI on the issue of referring such projects to NCLT, non-availability of regular fuel supply arrangements, defaults in payments by state Discoms, increased cost of borrowings, huge debt have forced project promoters to go slow on projects which are currently in initial stages of implementation.

During Q3/FY19, 28 new Solar power projects were announced. Falling tariff rates have dithered project developers in the Solar power sector. Solar auctions have gone unbid as a result.

Fifty-five oil blocks were allocated to the private and public sector oil exploring companies during the quarter ended December 2018. Of these, 41 blocks were bagged by Vedanta and nine blocks by Oil India. The promoters have not yet firmed up the amount of investment they will be spending on developing these fields. In all, 78 new projects were announced in this sector. Of these, the Uranium Corpn of India’s Rs 3,301 crore Uranium Ore (Tummalapalle) Project was the largest.

The Infrastructure sector, where public sector units dominate, accounted for around 56 percent of fresh projex announced during Q3/FY19. In all, 2,084 projects entailing a total investment of Rs 1,89,720 crore were announced during the quarter. These included 702 Road projects, 239 Water supply and treatment projects, 231 Real Estate projects and 151 Hospital projects.

NHAI’s 88 new highways announced in Q3/FY19 would see investment to the tune of Rs 75,000 crore. Of these, the Rs 6,345 crore Kherkhunta-Dodka expressway, the Rs 6,265 crore Choutala-Rasiser expressway and the Rs 5,500 crore Dhadhaniya Sasan-Sanchore highway were noteworthy.

In the Railway sector, two mega Metro rail projects were announced during Q3/FY19. These were Rs 12,000 crore Thane ring road project of the Maharashtra Metro Rail Corpn and Rs 8,739 crore Wadala-CST Metro Rail Project of the Mumbai Metropolitan Region Devp Authority.

The revival in the Construction sector seen in Q2/FY19 continued in Q3/FY19 too. The Real Estate and Commercial Complexes sectors together saw announcement of 352 new projects with a total investment commitment of Rs 33,900 crore. Compared with the preceding quarter’s projex statistics, this indicated a growth of 13.9 percent. Post general election, the pace of investment in this sector is expected to increase further.

Though 33 new irrigation projects were announced during Q3/FY19, since none of them were mega in investment size, the fresh investment fell by 71.86 percent. Irrigation mainly being the state government subject, investment by state agencies has to increase in coming years to decrease dependency of the Indian farm sector on seasonal rainfalls.

Maharashtra the torch bearer
Maharashtra topped the fresh projex table by cornering around 13.61 percent of the total fresh projex announced in Q3/FY19. The premier state attracted 314 new projects entailing a total projex of Rs 46,188 crore. The Rs 12,000 crore Thane ring road project of the Maharashtra Metro Rail Corpn and the Rs 8,739 crore Wadala-CST Metro Rail Project of the Mumbai Metropolitan Region Devp Authority were the top two new projects announced in the state in this quarter.

Andhra Pradesh with 188 new projects worth Rs 40,545 crore ranked second. It was followed by Karnataka, Rajasthan and Uttar Pradesh. Together, these five states garnered around 56.2 percent of the total fresh projex emanated in Q3/FY19.

Karnataka, favourite of Private Promoters
Karnataka pipped the neighbouring Andhra Pradesh to become the favourite investment destination of the private sector. In Q2/FY19, Andhra Pradesh was the topper in this category. In Q3/FY19, Karnataka attracted 136 new private projects with a total investment commitment of Rs 30,320 crore. The state accounted for 23.2 percent of the total private fresh projex announced in Q3/FY19.

The other four topper states were Uttar Pradesh (84 projects worth Rs 15,061 crore), Odisha (17 projects worth Rs 14,218 crore), Andhra Pradesh (60 projects worth Rs 14,157 crore), Maharashtra (106 projects worth Rs 13,145 crore). Together, the top five states accounted for 66 percent of the total fresh private projex.

Projex in 2018-19
The positive growth seen in private fresh investment announcements three-quartersst of the current fiscal FY19 augurs well for project investment in India. The revival in projects investment looks real. However, the country is fast moving into the General Election mode. This will have an impact on announcement of fresh investment, especially from the private sector in the last quarter of FY19. We expect state government spending to compensate this to some extent.


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