Manufacturing still lags in project completion

After a drop in the financial year's second quarter, commissioning of projects saw a 22 per cent growth in the third quarter (September to December) of 2014-15 over a year before.

This took place even as the manufacturing sector witnessed a drop in capacity creation. Also, average quarterly investments in these projects could not reverse a declining trend since 2011-12, says a report by the Centre for Monitoring Indian Economy.

The body said 271 projects with investments worth Rs 65,400 crore were completed in the third quarter. This is an interim figure and should improve further, with more information on completion coming with a lag.

Though the quarter was a sharp recovery from the second quarter, the performance was nowhere compared to the April-June quarter in year-on-year growth, when there was a 100-plus per cent growth over a year before in project completion. As many as 289 with investment of Rs 110,000 crore were completed. However, this was majorly due to some large projects scheduled to get commissioned by March 2014 doing so in the next quarter.

The second quarter (July-September) saw a drop in project commissioning. As many as 252 projects with investment of Rs 55,600 crore were commissioned. Even in the third quarter, the manufacturing sector saw a sharp drop, of 47 per cent, in new capacity creation on an yearly basis. Sixty-one projects were commissioned in the sector, with investment worth Rs 8,000 crore.

The largest one commissioned in the sector was Welspun India's integrated textile expansion and upgradation project at Anjar and Vapi in Gujarat. The company had invested Rs 1,200 crore.

Manufacturing has been a cause of concern. Its production declined to a five-year low of 7.8 per cent in October in the Index of Industrial Production. Finance Minister Arun Jaitley had on Monday also expressed concern at the patchy performance of factory production.

PROJECT PUSH
Significant projects commissioned during quarter ended December

• Andhra Pradesh Power Development Corporation commissions Rs 9,400-cr Sri Damodaram Sanjeevaiah thermal power project
• Emaar MGF Land completes Rs 8,500 cr Palm Drive Residential Project in Gurgaon, Haryana
• MP Power Generating Co Ltd commissions Rs 7,800 cr Shree Singaji Stage-I thermal power project at Purni
• Reliance Power commissions 100-Mw Rs 2,100 crore solar power project at Dhorsar, near Jaisalmer
• BASF India Ltd establishes Rs 10,000-crore integrated hub for polyurethane manufacturing and production at Dahej in Gujarat
• Warora-Chandrapur Ballarpur Toll Road Ltd completes Rs 700 crore, 64-km highway project in Maharashtra
• Shanghai Hitachi sets up Rs 450-crore AC compressor plant at Changodar in Ahmedabad, Gujarat
• Yokohama India Pvt Ltd sets up tyre manufacturing plant at Bahadurgarh, Haryana, at Rs 300 crore

In the quarter ended December, only two sectors witnessed growth over a year in commissioning of projects - power generation and real estate. The former saw 21 projects with investment worth Rs 26,600 crore, for an additional capacity of 1,931 Mw. In real estate, 103 projects were completed, of which 94 were home building ones.

Transport services saw commissioning of 17 projects with investments worth Rs 9,600 crore. These included nine road projects, for 75 km of length.

Average quarterly commissioning of projects had reached a peak of Rs 100,000 crore in 2011-12. It has been declining since, to Rs 91,800 crore in 2012-13, to Rs 79,600 crore in 2013-14 and Rs 77,300 crore in the first three quarters of 2014-15.