India's private corporate sector bullish on capex despite global uncertainties: Govt survey

New Delhi, April 29 (IANS) Despite challenges like weak demand, geopolitical tensions, and high borrowing costs, about 30 per cent of firms in the private corporate sector planned to invest in upgradation in FY 2024–25, supporting the sharp increase in capital expenditure (capex) last fiscal, a government survey showed on Tuesday.

The slightly lower intended capex for FY2025–26, though still above the 2023–24 levels, reflects cautious planning after a strong 2024-25. Overall, the trend indicates growing corporate confidence and a judicious approach to investment amid improving economic certainty, according to the survey data released by the Ministry of Statistics.

According to survey estimates, nearly 40.3 per cent of enterprises plan to undertake capex on core assets during 2024-25. Additionally, 28.4 per cent intend to invest in value addition to existing assets, while around 11.5 per cent focus on opportunistic assets, and 2.7 per cent on debt strategies.

The strategy of investing in distressed assets and non-performing loans was adopted by less than one-half of a percent of enterprises. Meanwhile, about 16.9 per cent allocated their capex towards other diverse investment strategies.

According to the findings, the average gross fixed assets per enterprise in the private corporate sector increased from Rs 3,151.9 crore in 2021–22 to Rs 3,279.4 crore in 2022–23 (4 per cent growth), and further to Rs 4,183.3 crore in 2023–24, reflecting a significant 27.5 per cent growth.

The estimated capex per enterprise for the years 2021–22, 2022–23, and 2023–24 was Rs 109.2 crore, Rs 148.8 crore and Rs 107.6 crore, respectively.

Moreover, the estimated provisional capital expenditure per enterprise for purchasing new assets in 2024–25 is Rs 172.2 crore.

There has been an overall increase of 66.3 per cent in aggregate capex (unweighted) over the four-year period from 2021-22 to 2024-25.

The strategy of 40.3 per cent of enterprises is to undertake capex on core assets during 2024–25, followed by 28.4 per cent to invest in value addition to existing assets, according to the survey.

In 2022–23, the Parliamentary Standing Committee recommended that the Ministry of Statistics develop a comprehensive methodology to capture capex data from the private sector.

The primary objective of the capex survey is to estimate the capex trends of private corporate sector enterprises from the past three financial years (2021-22, 2022-23 and 2023-24), along with anticipated capital expenditure for the current year (2024-25) and upcoming financial years (2025-26).

A total of 2,172 enterprises submitted complete information for all five years of the reference period, forming a fixed panel. The results show an overall increase of 66.3 per cent in aggregate capex (unweighted) over the four-year period from 2021-22 to 2024-25, according to the survey.

--IANS

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