The share of gross fixed assets formation in gross capital formation increased from 93.87 per cent in 1997-98 to 96.84 per cent in 1998-99. On the other hand, the rate of gross capital formation declined from 17.16 per cent in 1997-98 to 11.30 per cent in 1998-99. Net capital formation shows a similar trend, declining from Rs 18,307 crore in 1997-98 to Rs 11,453 crore in 1998-99.

Reliance Industries (Rs 2,235 crore) leads the ranking chart of top 10 based on gross capital formation during 1998-99, followed by Hindalco (Rs 1,624 crore), Grasim (Rs 1,260 crore), Oswal Chem & Fert (Rs 1,069 crore), Tata Steel (Rs 1,042 crore), Larsen & Toubro (Rs 929 crore), Ispat Industries (Rs 908 crore), Chambal Fertilisers (Rs 781 crore), Telco (Rs 718 crore) andArvind Mills (Rs 666 crore). In 1997-98, top 10 were Reliance Industries (Rs 5,512 crore), Ispat Industries (Rs 1,277 crore), Tata Steel (Rs 1,135 crore), Larsen & Toubro (Rs 1,112 crore), Telco (Rs 878 crore), Essar Steel (Rs 800 crore), Videocon International (Rs 763 crore), Arvind Mills (Rs 754 crore), Usha Beltron (Rs 745 crore) and Indo-Gulf Corporation (Rs 724 crore). Six companies namely Arvind Mills, Ispat Industries, Larsen & Toubro, Reliance Industries, Telco and Tisco are common in both the list of top 10.

During 1998-99, Reliance entered the new phase of its growth, with commissioning of facilities having commenced at the new Jamnagar petrochemicals complex, being set up at a capital outlay of over Rs 5,500 crore. The entire Jamnagar complex is the first world-scale manufacturing complex of its kind, having a fully integrated petroleum refinery, petrochemicals complex, captive power plants and a captive port with related infrastructure.

Gross and net capital formations are obtained here byadding increases in gross or net fixed assets and inventories. The list of 125 companies is selected from the private corporate sector and their net sales figures are more than Rs 500 crore during 1998-99. The industries have been classified into 20 categories. They are aluminium (2 units), automobiles (12), cement (4), other chemicals (10), electricity (5), electrical goods (8), engineering others (10), fertilisers (12), food products (7), computer (software & hardware) (3), pharmaceuticals (8), iron & steel (5), tea (2), cotton textiles (3), man-made fibres (4), tobacco (3), paints (2), tyres & tubes (6), misc (12) and diversified (7).

In the case of some companies, the accounts do not relate to a full year, but no adjustments have been made in the computation. Some companies revalued their buildings, land, plant and machinery during the study period and some big companies merged with small ones during the period. The basic data compiled are based on audited annual accounts for the period April to March31 in the respective years 1996-97, 1997-98 and 1998-99. The accounts closing dates of the companies are spread over all the months of any financial year.

Gross capital formation of the 125 large companies declined from Rs 25,479 crore in 1997-98 to Rs 19,657 crore in 1998-99. In the case of components, gross fixed assets formation constituting the bulk of gross capital formation also declined from about Rs 23,918 crore in 1997-98 to Rs 19,036 crore in 1998-99. The inventory accumulation declined from Rs 1,561 crore in 1997-98 to Rs 621 crore in 1998-99. The share of inventory accumulation in gross capital formation declined from 6.13 per cent in 1997-98 to 3.16 per cent in 1998-99.

Net capital formation decreased during 1997-98 to 1998-99 by Rs 6,854 crore. In 1998-99, net fixed assets formation constituted 94.58 per cent of the net capital formation. The share of net fixed assets formation rose from 91.47 per cent in 1997-98 to 94.58 per cent in 1998-99. In the case of components, the gross fixed assetsformation rate declined from 19.28 per cent in 1997-98 to 12.86 per cent in 1998-99. The inventory accumulation rate declined from 6.41 per cent in 1997-98 to 2.40 per cent in 1998-99.

The study shows an intriguing feature in 1998-99, when the gross fixed assets formation rate was higher than the corresponding gross capital formation rate, the rate of inventory accumulation rate was significantly lower than the corresponding rate of gross fixed assets formation. This seems to suggest that the large companies invested moderately in fixed assets in 1998-99. The rate of net capital formation declined from 15.68 per cent in 1997-98 to 8.48 per cent in 1998-99. The net capital formation rate was lower than the gross capital formation rate in both the years. The rate of net fixed assets formation also declined from 18.12 per cent in 1997-98 to 9.92 per cent in 1998-99.

The top 10 companies in terms of gross capital formation rate during 1998-99 are Suashish Diamonds (96.28 per cent), TVS Suzuki (79.25),Aurobindo Pharma (71.12), Hind Lever Chem (68.89), Infosys Technologies (63.44 per cent), Oswal Chem & Fert (61.61 per cent), Nirma (55.93 per cent), Videocon Appliances (54.45 per cent), Adani Exports (47.68 per cent) and Chambal Fertilisers (46.16 per cent).

Of these, only two companies namely Nirma (54.06 per cent) and Infosys Technologies (43.48 per cent) find a place among the top 10 in 1997-98. Industry-wise, automobiles, other chemicals, electrical goods, engineering others, fertilisers, man-made fibres, misc recorded gross capital formation exceeding Rs 1,000 crore in all two years studied. In aluminium and diversified, gross capital formation was over Rs 1,000 crore in 1998-99, but less in 1997-98. And in the case of iron & steel, gross capital formation was over Rs 1,000 crore in 1997-98 but less in 1998-99.

Out of the total gross capital formation of Rs 19,657 crore in 1998-99, fertiliser group constituted Rs 3,046 crore followed by engineering others (Rs 2,511 crore), man-made fibres (Rs 2,382crore) and aluminium (Rs 1,722 crore). Among the major industries, aluminium (33.83 per cent), computer (software & hardware) (24.36 per cent), electrical goods (18.33), fertilisers (16.39), cotton textiles (19.96), paints (17.41) and tea (32.55) recorded the higher rates for gross capital formation in 1998-99. But in 1997-98, the significant gross capital formation rate was witnessed in the case of automobiles (15.21 per cent), electrical goods (22.63), engineering others (23.91), fertilisers (28.40), compute (25.33), pharmaceuticals (19.65), cotton textiles (29.64), man-made fibres (29.6), tobacco (18.88), paints (19.78) and misc (16.04).

Significant inventory accumulation was registered in the case of engineering others (Rs 271 crore), electrical goods (Rs 184.82 crore), electricity (Rs 164 crore), misc (Rs 158 crore) and fertilisers (Rs 107 crore) during 1998-99.

But in 1997-98 significant inventory accumulation was witnessed in the case of automobiles (Rs 183 crore), other chemicals (Rs 177 crore),fertilisers (Rs 225 crore), pharmaceuticals (Rs 195 crore), iron & steel (Rs 438.18 crore), man-made fibre (Rs 250 crore) and tobacco (Rs 253 crore).