A trillion dollar opportunity

The next 7 years (2010 – 2017) of infrastructure investments in India would see an investment of almost a trillion dollars opportunity (approx 50 lakh crore rupees). Lots of money to be made for all the corrupt fellas as well as for the ones who want to earn legally.

And the infrastructure push just for the next one year is $140 billion (approx 7 lakh crores). Once in the lifetime of the growth of a country you can see such an explosive growth.  If you can identify the correct companies and make investments, it will give you the kind of returns which you would have never imagined.

India is roaring towards an infrastructure boom and plenty of jobs will be created like never before as capital expenditure in the next financial year is expected to surge up to a whopping Rs 700,000 crore or about 10 per cent of the expected gross domestic product of about Rs 70,00,000 crore. Companies in auto, power, railways, irrigation, airports and ports sectors are on a major expansion spree and Indian banks and financial institutions are pooling in massive resources.

But this may not be enough and some bankers expect companies to access other financing avenues such as capital market and overseas borrowing. Yet others feel that financial closure of many projects might have already been achieved and the implementation might not lead to fresh sanctions.

There is an overall economic recovery, thanks to improving operating profits and favourable equity market conditions this year. Almost every infrastructure sector is witnessing investments driven largely due to government support.

Both Crisil and the Centre for Monitoring Indian Economy (CMIE) have nearly doubled their capital expenditure (capex) estimates for the next fiscal year to a whopping Rs 6,60,000 crore and Rs 7,00,000 crore, respectively.

“Every capacity addition activity leads to job creation, it cannot be a jobless growth. I cannot put a number on how many jobs would be created from the projected Rs 7,00,000 crore capex spending during 2010-11, but for every industrial job created, the multiplier effect in form of other jobs like contracts, etc, is 1:4,” says Ajit Ranade, chief economist of Aditya Birla group.

Some of these investments include

NTPC – 16,400 crore investment to expand coal based electricity production by 4100 MW
Mahindra & Mahindra – 2500 crores at Chakan near Pune to make 3 lakh vehicles annually
Tata Motors – 1500 crores at Sanand in Gujarat to make the Nano car
Renault Nissan – $990 million (approx 4500 crores) in Chennai to make 4 lakh cars annually
Maruti Suzuki – 2500 crores investment in Rohtak, Haryana
JSW Energy – 4200 crores
GVK Power – 3200 crores
Tata realty – 1370 for highways
IRB – 1824 crores for highways
Jindal – 47,000 crores for coal to liquid fuel plant & thermal power plant in Orissa
Tata –  21,000 crores project in Kalinganagar, Orissa

“There would be huge money coming as foreign direct investment in the next fiscal while the external commercial borrowing norms are expected to be relaxed further. Besides, India’s savings rate is 34-35 per cent of GDP, which translates into huge savings at the projected Rs 70,00,000 crore GDP for fiscal 2010-11. Hence I think, despite having high borrowing plans from the India Inc, capex spending by private and public sectors could be easily absorbed,” says Ranade of Aditya Birla.

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Above picture courtesy: Abhijitkar