Infrastructure and related companies are increasing their capital expenditure (capex) for FY25, driven by a growing economy and demand supported by a number of government initiatives. It is anticipated that the current fiscal year would involve a significant amount of capital expenditures as businesses expand and add capacity via both inorganic and organic means.
For example, JSW Steel has set aside Rs 20,000 crore for capital expenditure in FY25 since it anticipates a robust fiscal year with continued economic growth and high steel demand. Last year, the corporation invested Rs 17,000 crore in capital expenditures.
“This includes costs designated for Bhushan Power & Steel’s phase-II and Dolvi’s phase-III growth. We have Rs 10,500 crore in substantial cash on hand. Additionally, JSW Vijayanagar Metallics, slurry pipelines, and the pellet factory in Odisha would all be completed with its utilization, stated joint MD and CEO Jayant Acharya.
About 75% of the Rs 17,000 crore would be spent in India, mostly on the Kalinganagar project. The remaining amount will go toward routine upkeep costs, expanding the raw materials division, and realigning blast furnaces. The electric arc furnace (EAF) project in Ludhiana will receive part of it, with the remainder going toward Europe. About Rs 12,000 crore would be spent in India, according to T V Narendran, CEO & MD of Tata Steel.
The Mumbai-based company estimated that it would spend Rs 16,000 crore on capital expenditures in FY24; however, real spending came to Rs 18,207 crore.
For FY25, UltraTech Cement has set aside Rs 9,500 crore (Rs 9,187 crore in FY24) for capital expenditures, which would be used to support plans for capacity development and meet the growing domestic demand. The Aditya Birla Group plans to invest over Rs 32,400 crore over the next three years to expand its production capacity and finalize the purchase of Kesoram Cement.
A capital expenditure of Rs 3,500-4,000 crore (Rs 3,500 crore) has been set aside by Larsen & Toubro (L&T) for the construction of data centers, electrolyser manufacture, and equipment upgrades.
“We have been doing this at the same ballpark every year,” R Shankar Raman, CFO and president of L&T, stated.
For FY25, Jindal Stainless (JSL) has set aside Rs 4,700 crore in capital expenditures, the majority of which would go toward the company’s intended expansion goals. According to MD Abhyuday Jindal, prospects of a surge in domestic demand are partly responsible for the increase in capex, which increased from Rs 3,800 crore in FY24.
JSL plans to use internal accruals to finance almost 90% of the capital expenditures, including a spillover of Rs 800 crore from FY24. According to Jindal, the capital expenditure would go toward expanding brownfield operations, finishing up a 54% ownership in Chromeni Steels in Mundra, and establishing a 1.2 million tonne per annum (MTPA) stainless steel melt shop in Indonesia.
In the fiscal year 2024-25 (FY25), Indian infrastructure companies and allied firms are significantly increasing their capital expenditures (capex) to bolster the nation’s economic growth and enhance their operational capacities.
Government Initiatives:
The Indian government has maintained a robust focus on infrastructure development, allocating ₹11.11 lakh crore for capex in FY25. This allocation reflects an 11.1% increase from the previous fiscal year, underscoring the government’s commitment to stimulating economic activity through substantial public investment.
Corporate Investments:
- UltraTech Cement: The country’s largest cement producer has announced plans to invest ₹1,800 crore (approximately $206 million) to enter the wires and cables market. This strategic diversification aims to capitalize on the sector’s projected compound annual growth rate of about 13% from 2019 to 2024.
- NTPC Limited: India’s state-owned power company is set to invest over ₹2 lakh crore (more than $23 billion) in renewable energy projects in Madhya Pradesh. This investment will encompass solar, wind, and hydroelectric power projects, aligning with the nation’s shift towards sustainable energy solutions.
- Tata Steel: The steel giant has earmarked ₹17,000 crore for capex in FY25, with approximately 75% allocated for domestic projects. Key initiatives include the expansion of the Kalinganagar plant and the enhancement of raw material capabilities.
- Tata Power: The company plans to invest nearly ₹1.46 lakh crore in capex between 2024 and 2029, dedicating 60% of this investment to renewable energy projects. This strategy aims to significantly boost its annual revenues and profits by 2030.
Sectoral Shifts:
Analyses indicate a strategic pivot in India’s capex focus from public-led transport infrastructure to energy infrastructure between FY25 and FY30. This shift emphasizes investments in electricity generation and power grid integration to meet the growing energy demands of the nation.
In summary, the concerted efforts of the Indian government and private sector to escalate capex in FY25 reflect a unified approach to fostering economic resilience and sustainable growth. These investments are poised to enhance infrastructure, promote energy efficiency, and stimulate overall development across the country.
Group Media Publication
Construction, Infrastructure and Mining
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