On the back of strong industrial production, corporate India is opening its wallet to increase its production capacities. For the quarter ended June, projects worth Rs 5.82 lakh crore were added - the second highest ever after the Rs 8.81 lakh crore committed in the March 2009 quarter. According to the CMIE Quarterly Survey, projects worth Rs 5.82 lakh crore were either announced or proposed or were under various stages of implementation during the April-June quarter. “This data is significant and a clear indication on how the growth story is unfolding. We are definite that the country is progressing towards a 9% plus GDP growth. At this point, we are more inclined to believe that this growth will continue. Besides, the capex boom has just started,’’ Dipankar Mitra, economist with Motilal Oswal said. According to the CMIE data, projects worth Rs 54,884 crore were completed during the April-June quarter (Rs 1,00,270 crore in the same quarter last year). But strikingly, projects worth Rs 12,869 crore were shelved by India Inc compared with Rs 13,461 crore in the year-ago period. With all these, the order book of projects outstanding as on June 30, 2010, stood at Rs 105.19 lakh crore. “A key indicator to the growth story is the capacity utilisation levels of companies. We are now seeing new highs with every passing month on utilisation levels,’’ said an analyst with a fund house. “This clearly means that companies should start enhancing production capabilities, which is reflected in the announcements of either greenfield (new) investments or brownfield capacity additions. The story looks rosy, but external threats of Eurozone trouble still hang.’’ However, Mitra of Motilal said that for the moment the European trouble may not hamper investments. “Unless there is a major derailment of economic situation like the collapse of the Euro or disintegration of the EU, we do not see any big trouble for investments,’’ he said.
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