Uptick in project completions

by Mahesh Vyas

Investment projects to set up new productive capacities worth Rs.1.45 trillion were completed during the quarter ended December 2021. This is higher than the Rs.1.15 trillion worth of completions recorded in the preceding quarter that ended in September 2021. Completions in the quarter of December 2021 were the highest compared to the levels achieved in any of the past six quarters. These were the quarters that were impacted by the lockdowns triggered by the Covid-19 virus.

Project implementation and consequently project completions were severely impacted during the quarters of June, September and December 2020 because of restrictions on movement to contain the spread of the Covid-19 virus. Completions during these three quarters averaged at Rs.0.67 trillion compared to an average of Rs.1.4 trillion during the preceding three quarters.

Projects completions improved from the quarter ended March 2021 when they clocked Rs.1.17 trillion. Completions dipped to Rs.0.74 trillion in the quarter of June 2021 before bouncing back to Rs.1.15 and Rs.1.45 trillion in the next two quarters. The average completion of projects per quarter during calendar year 2021 works out to Rs.1.12 trillion.

The improvement in project completions in the latest quarter, the December 2021 quarter is a significant break-out from the earlier quarters. Expected revisions to the first estimate of Rs.1.45 trillion could take project completions close to Rs.2 trillion. This would make it among the better quarters in terms of project completions. Only four out of 32 quarters since 2014 have crossed Rs.2 trillion worth of project completions. The average project completion during a quarter before the pandemic was close to Rs.1.4 trillion. This is the average since 2014.

The pick-up in completion of projects seen in the quarter ended December 2021 has been partly influenced by political activism. The largest project completed during the quarter was the Purvanchal Expressway. This 341-km, Rs.225 billion project was inaugurated by the Prime Minister in November 2021. The 257-km, Rs.98 billion Sarayu Nahar project was inaugurated by the Prime Minister in December 2021. In December 2021, the Prime Minister also inaugurated the Rs.86 billion, 1.27 million tonnes of urea per annum FCI fertiliser plant at Gorakhpur in Uttar Pradesh. During the quarter, the Prime Minister also inaugurated the Rs.26 billion Arjun Sahayak Irrigation project in Uttar Pradesh.

Just these four projects inaugurated by the Prime Minister during the quarter of December 2021 add up to projects worth Rs.435 billion or over 30 per cent of the total projects completed during the quarter. The Prime Minister does not normally inaugurate so many projects in a state. These inaugurations by the Prime Minister may therefore be seen in light of the elections due in the state, possibly in February 2022. But, that need not take away the fact that the projects have been completed. It is likely though, that the completions were bunched together for this quarter by either delaying their inauguration or by hurrying their completion.

Uttar Pradesh accounted for over 36 per cent of the total completion of projects during the quarter of December 2021. This is a record. This is by far the largest share of the state in accounting for completion of projects during a quarter. Exactly five years ago, in the quarter of December 2016, the state had seen a spike in completions. Its share had shot up to 20 per cent then. Usually, the state accounts for less than 10 per cent of total completion of projects. In the past four quarters, the share of projects completed in Uttar Pradesh had risen to around 15 per cent and this shot up to 36 per cent in the most recent quarter.

Other large projects completed during the December 2021 quarter includes JSW Steel’s Rs.150 billion, Dolvi plant in Maharashtra whose capacity was expanded from 5 million tonnes to 10 million tonnes. Power Grid Corpn completed a Rs.147 billion project of linking of grids. Bharatiya Rail Bijlee completed a Rs.106 billion thermal power plant in Nabinagar in Aurangabad in Bihar.

While there is a perceptible uptick in project completions during the quarter ended December 2021, the performance is still much below expectations. Rs.1.45 trillion worth of projects have been completed and the expectation is that this could reach Rs.2 trillion as additional information flows in during the coming months. There are nearly 345 additional projects that are expected to be completed during the quarter that could potentially take the completions to Rs.2.3 trillion. We believe completions may not cross Rs.2 trillion. But, the expectation when the quarter began was that projects worth Rs.2.61 trillion would be completed during the quarter.

Thus, the shortfall in completions, compared to expectations is of the order of projects worth nearly a trillion rupees. Expectations have been tempered. Project-wise analysis indicates that completions during the quarter of March 2022 could add up to Rs.2.76 trillion. We believe that only Rs.2.2 trillion worth of projects will be completed during the quarter of March 2022.

Fiscal 2021-22 is thus likely to end with project completions of the order of Rs.7 trillion. This would be much higher than the Rs.3.2 trillion worth of completions recorded in 2020-21. The highest value of projects completed so far is Rs.6.5 trillion in 2016-17. Fiscal 2021-22 could break that record.

Unemployment Rate (30-DAY MVG. AVG.)
Per cent
7.0 -0.8
Consumer Sentiments Index
Base September-December 2015
59.2 +0.3
Consumer Expectations Index
Base September-December 2015
60.6 +0.5
Current Economic Conditions Index
Base September-December 2015
57.0 0.0
Quarterly CapEx Aggregates
(Rs.trillion) Mar 21 Jun 21 Sep 21 Dec 21
New projects 2.36 2.74 2.25 2.51
Completed projects 1.17 0.74 1.18 1.53
Stalled projects 0.28 0.33 0.03 0.03
Revived projects 0.23 0.12 0.28 0.39
Implementation stalled projects 0.34 0.38 0.25 0.65
Updated on: 19 Jan 2022 8:28PM
Quarterly Financials of Listed Companies
(% change) Mar 21 Jun 21 Sep 21 Dec 21
All listed Companies
 Income 15.1 39.2 27.9 17.0
 Expenses 7.4 38.6 27.3 18.0
 Net profit 337.8 142.5 52.7 12.8
 PAT margin (%) 8.8 9.0 9.6 19.4
 Count of Cos. 4,401 4,495 4,546 145
Non-financial Companies
 Income 17.8 56.1 36.1 18.9
 Expenses 10.7 57.1 36.6 22.3
 Net profit 222.4 199.3 59.5 4.9
 PAT margin (%) 9.0 8.5 8.8 17.7
 Net fixed assets 2.3 4.9
 Current assets 4.3 11.0
 Current liabilities 1.2 0.9
 Borrowings -4.5 12.2
 Reserves & surplus 11.7 12.4
 Count of Cos. 3,247 3,301 3,304 104
Numbers are net of P&E
Updated on: 19 Jan 2022 8:28PM
Annual Financials of All Companies
(% change) FY19 FY20 FY21
All Companies
 Income 13.4 0.6 -1.5
 Expenses 13.8 0.4 -4.1
 Net profit 12.7 -6.9 62.0
 PAT margin (%) 2.0 2.1 5.7
 Assets 9.9 8.8 10.7
 Net worth 8.2 4.5 13.3
 RONW (%) 3.6 3.5 8.2
 Count of Cos. 32,530 31,471 11,634
Non-financial Companies
 Income 14.2 -1.2 -3.0
 Expenses 14.3 -0.9 -5.3
 Net profit 22.1 -21.1 49.3
 PAT margin (%) 2.8 2.3 5.3
 Net fixed assets 6.0 11.2 1.5
 Net worth 7.8 2.2 11.0
 RONW (%) 6.3 4.9 9.1
 Debt / Equity (times) 1.0 1.1 0.8
 Interest cover (times) 2.2 1.9 2.8
 Net working capital cycle (days) 74 81 80
 Count of Cos. 25,943 25,015 8,657
Numbers are net of P&E
Updated on: 18 Jan 2022 2:48PM