Investments In Rajasthan Q3 Fy'09: Aim

ASSOCHAM INVESTMENT METER RAJASTHAN March 2009

Prepared by: Nusrat Ahmad ASSOCHAM Research Bureau

Email: [email protected] url: http://www.assocham.org/arb/

RAJASTHAN

In dark clouds of economic slowdown, silver lining emerged for Rajasthan as the western desert state attracted highest investment plans during OctoberDecember 2008-09 by corporate India, bringing a considerable shift in its ranking order, among the 21 India states.

Rajasthan is turning to be one of the most favourable investment destinations, carving top position in the third quarter of the financial year 2008-09 (OctoberDecember), witnessing a major jump from 13th position in the same period of the financial year 2007-08, according to a paper brought out by ASSOCHAM.

As India Inc expressed investment plans in Rajasthan, the state registered a major jump by 245.84 per cent during October-December 2008-09 as compared to the corresponding period of the last year (2007-08).

The Indian desert state, Rajasthan, have lured the investors to express their plans for undertaking projects in the region in the third quarter of the current fiscal with Rs.11, 102 crore as compared to Rs. 3,210 crore in the same period of the previous fiscal registering a maximum growth of 245 per cent.

ASSOCHAM observed that the number of companies planning investments in Rajasthan dipped by 133 per cent from 7 domestic corporate houses expressing to investments during Oct-December 2007-08 to just 3 major Indian players in the same months of the fiscal 2008-09.

Introduction Data Source The report prepared is based on the data tracked from various investments announcements planned by the Indian companies, in the domestic market in print and electronic media.

Time period The data analyzed for the report include the time period January -December 2007-08 and 2008-09 respectively.

Methodology The corporate houses that have expressed investment plans for a particular region have indicated a spread of 3-5 years for their plans to fructify.

Ranks have been assigned, based on the descending order of the amount of investment planned for the state. Comparative analysis has been drawn for the same time period of two different years.

India Inc. investment announcements are planned (not realized), hence industrialists express to invest a large sum of amount in particular sector across 2-3 states, but they do not disclose the ratio of the sum in each state. Thus, to avoid the problem of double counting, ARB, divide the capex amount in equal ratio among the number of states where investment is planned.

Corporate investments in Rajasthan (Oct-Dec 2008-09 over Oct-Dec 2007-08) During the year 2007, the Indian economy boom as Indian industrialist expressed to invest across various sectors and states with the purpose to modernize, expand and set-up new plants. However, the preceding year (2008), started with moderate downfall in terms of the capex planned by the business leaders.

Investment plans by the corporate sector is driven by expectations about the future. Projects are undertaken in those regions where India Inc. foresees returns. In light of this the year 2008 started with turbulence in the global financial markets leading to credit crunch and shaking investors’ confidence, becoming a cause of concern for the corporate India. However, states like Rajasthan tapped the opportunity in attracting Indian corporate houses to invest in sectors such as energy, hospitality and food processing.

During October-December 2008-09, India Inc. expressed to invest Rs. 11, 102 crore in Rajasthan, registering a sharp growth by 245 per cent as compared to the corresponding period of the last year (2007-08), with investment announcements worth Rs. 3,210 crore.

(Planned Capex in Rs crore) Oct-Dec 2007 Oct-Dec 2008

3,210

11,102

Source: Assocham Investment Meter.

Growth rate (in %)

245.84

Major sectors attracting investments announcements (Oct-Dec2008 over Oct-Dec 2007)

The state with prospects and resources for mineral, textiles, agro processing, chemicals, energy and cement sectors attracted Indian corporate leaders towards the state to utilize it and expand their businesses.

During the third quarter of 2007-08 hospitality sector topped the charts with maximum capex announced worth Rs. 1800 crore in the region. However, in the same period of the financial year 2008-09, the energy sector notched the top position in Rajasthan witnessing whooping amount worth Rs. 11,000 crore by major domestic player.

In October-December 2007-08, the metals and mining sector witness second highest investment announcements totaling Rs. 450 crore, followed by FMCG sector attracting Rs. 310 crore in the desert region. However, in the same period of FY 2008-09, food processing sector attracted 2nd highest amount of planned capex worth Rs. 101.5 crore.

Top Sectors attracting investments for the period October-December 2007-08 Capex (in Rs. crore) Sno. Sector

Top Sectors attracting investments for the period October-December 2008-09 Capex (in Rs. crore) Sno. Sectors

1

Hospitality

1800

1

Energy

11000

2 3

Metals & mining FMCG

450 310

2

Food Processing

101.5

Source: Assocham Investment Meter.

Top Indian Corporate Houses expressing investment plan: (Oct-Dec2008-09 over Oct-Dec 2007-08)

ASSOCHAM observed that the number of companies planning investments in Rajasthan dipped by 133 per cent from 7 domestic corporate houses in OctDecember 2007-08 to just 3 major Indian players in the same month of the fiscal 2008-09. In Oct-Dec 2007-08…. Dawney Day Hotels planned the largest investment decision of Rs. 1600 crore for setting up four star hotel in Jaipur. JB group ranked second with Rs. 500 crore investment announcements in diversified category including sectors such as mining, oil & gas, alternative energy, diamond & jewellery, hospitality and real estate.

Hindustan Copper Ltd ranked third with investment plans amounting to Rs. 450 crore with the purpose of developing two green filed copper mines

Adarsh Derivaties had come up with an investment decision of Rs. 310 crore occupying fourth rank, for setting up 3 plants for processing and storage of organic products in the region. In October-December 2008-09…. Cairn India Ltd made the largest capital expenditure announcement worth Rs. 11,000 crore for the development including a modern processing terminal at Mangala along with a 600 km evacuation pipeline in the West Coast.

Top Indian companies planning to invest during the period Oct-December 2007 -08 Capex

Top Indian companies planning to invest during the period Oct-December 2008-09 Capex

Sno.

Company Name

(Rs. crore)

Sno.

Company Name

(Rs. crore)

1 2 3

Dawney Day Hotels JB Group Hindustan Copper Ltd

1,600 500 450

1 2

Cairn India Ltd Vikas WSP

11,000 100

4 5

Adarsh Derivaties 310 Panaromic Universals 200 Source: Assocham Investment Meter

3

The Sommelier

1.50

In the food processing sector, two companies namely, Vikas WSP and The Sommelier planned investments during the period worth Rs. 100 crore and Rs. 1.5 crore respectively.

Vikas WSP plans to utilize the amount to produce 8,000 tonnes of organic guarseed, whereas, The Sommelier, a wine lounge company expressed to expand the business.

ANNEXURE I Growth rate (q-0-q) (Oct-Dec 2008-09 over Oct-Dec 2007-08)

State Rajasthan Bihar Punjab UP MP Karnataka Delhi Gujarat Himachal Pradesh Aandhra Pradesh Haryana Orissa Maharashtra Tamil Nadu Assam Jharkhand West Bengal Total

Growth Rate (in %) 245.84 100.00 41.66 26.85 -47.76 -53.82 -59.65 -64.13 -84.00 -84.04 -86.87 -88.68 -91.92 -95.56 -97.53 -98.76 -98.97 -75.27

Source: Assocham Investment Meter, Oct-Dec 2007-08 & 2008-09.

Ranking in descending order of the amount of investment planned for the state by corporate India (Oct-Dec 2008-09 over Oct-Dec 2007-08)

Rank State Rajasthan Madhya Pradesh Orissa Maharashtra Karnataka Gujarat Uttar Pradesh Andhra Pradesh Haryana Tamil Nadu Punjab Delhi West Bengal Bihar Jharkhand Himachal Pradesh Assam Chattisgarh J&K Kerala Uttaranchal

Oct-Dec 2008-09 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

Oct-Dec 2007-08 13 6 3 1 8 10 14 7 9 4 17 15 2 21 5 16 11 20 19 18 12

Source: Assocham Investment Meter, Oct-Dec 2007-08 & 2008-09

ANNEXURE II

Investments in Rajasthan during the calendar year 2008 (January-December)

2008 was not an investor friendly year for Indian corporates, sectors and states, as impact of slowdown was well reflected in the expansion, modernization and up gradation plans of India Inc, with declining numbers in investment announcements.

However, the year 2008 saw major shifts in investment destinations, as Rajasthan, considered to be one time BIMARU state, have shed its image, getting attention from corporate India for investment purpose to utilize the untapped resources in the region. The desert state witnessed investments worth Rs. 93,354.78 crore during the period January-December 2008.

TOP 5 SECTORS WITH INVESTMENTS PLANS DURING JAN-DEC 2008 (in Rajasthan)

Sectors

Amount (Rs. Crore)

Real Estate Energy Infrastructure Ratail Aviation Steel

43,550.00 19,960.00 6,950.02 6,700.00 6,666.67 5,600.00

Source: Assocham Investment Meter

TOP 5 COMPANIES PLANNING INVESTMENTS DURING JAN-DEC 2008 (in Rajasthan)

Company

Amount (Rs. Crore)

Omaxe Ltd

40,000

Parsvnath Developers Cairn India Ltd. Jindal Stainless Ltd Sun City Projects

20,000 19,400 5,600 1,800

Sector Real Estate Aviation, Infrastructure, Retail Energy Steel Real Estate

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