Capital expenditure (capex) by a clutch of 49 state-owned companies hit a five-year low of R1.2 lakh crore in FY16, data sourced from Capitaline shows. Moreover, going by management commentary and analyst estimates, there’s unlikely to be any big surge in spends this year, reports Yoosef KP in Mumbai. ONGC, for instance, which accounted for close to 10% of the total capex last year, has pared its outlay to R29,000 crore from R36,000 crore. The oil explorer has indicated it might increase capex only in FY18.
“Our KG 98/2 investments are likely to take off in FY18. So, we will be definitely having some investments from KG 98/2 coming into that,” AK Srinivasan, director (finance), ONGC, said post the company’s Q1 results. In FY16, the company spent less than a third of the proposed budget.
Steel maker SAIL has trimmed its outlay by R500 crore to R6,000 crore, while GAIL has lowered its capex plan by R200 crore (y-o-y) to R1,500 crore.
Analysts point out the glut in sectors such as oil & gas and metals spaces, leaves PSUs operating in these sectors with little incentive to add capacity.
The smaller spends on capex have, however, boosted the combined
cash reserves of these companies by 13.4% (y-o-y) to R1.07 lakh crore at the end of FY16.
Having reported a gross merchandise value of R5,000-6,000 crore at their sales in early October, the country’s three top online retailers are hoping to top this up with a GMV of R4,000-5,000 crore during the second round, which kicked off on Monday. That’s not very much more than the spoils last year.
For both offline and online players, however, the money will be made from electronics, apparel and household appliances. Brick and mortar stores are going to be relying more on promotions and festive demand to fight the competition from their online counterparts, according to Rajat Wahi, retail head at KPMG.
If the total online spends at Amazon, Flipkart and Snapdeal don’t add up to very much more than was reported during the festive season of 2016, industry watchers attribute it to the smaller discounts this time around.