Many are utilising the profits generated in the current year to add capacity
GN Bureau | December 19, 2016
State-owned enterprises aren’t holding back on their capital expenditure (capex spends) even though there has been negative cash flows last year. Many are utilising the profits generated in the current year to add capacity and bridging the deficit with borrowings, reported Financial Express.
Steel major SAIL is on track to complete its Rs 4,000-crore capex programme for the year, having spent Rs 2,374 crore or well over 50 percent of the outlay in the first six months. The management has planned for a capacity expansion of 50 percent at a cost of nearly Rs 40,000 crore.
NTPC has invested close to Rs 13,400 crore between April and September, nearly half the outlay envisaged for the year; the lack of free cash flows in each of the last three years hasn’t stopped the power producer from enhancing capacity.
Kulamani Biswal, finance director, has said that the company had issued Rs 1,470 crore worth of bonds at around 7.5 percent. “We have also mopped up Rs 2,000 crore via Green Masala Bonds at 7.4 percent to fund solar and wind power projects,” Biswal was quoted as saying.
Smaller PSUs like Container Corporation of India seem to be on course to meet their capex targets for FY17. CMD V Kalyana Rama said: “We have completed about 40% of the work in the first six months.”
Oil marketing company BPCL has spent just Rs 3,800 crore in H1FY17. While that is less than half the targeted Rs 13,000 crore, the management is confident spends will pick up soon.
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Should agriculture income be taxed?
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