India Market

Huge capacity additions lined up in second half of 2012-13

Projects worth Rs.3.7 trillion to get commissioned

We expect industrial & infrastructural projects worth Rs.3.7 trillion to get completed in the second half of 2012-13. This will be substantially higher than the project completion of Rs.2.8 trillion seen in the same period of the preceding year. We have arrived at this forecast by talking to the promoters of the projects worth Rs.4.5 trillion that are scheduled to get completed in the second half of 2012-13 and doing a detailed scrutiny of the information available on these in the public domain.

Projects worth Rs.1.3 trillion have already been completed in the first half of 2012-13. The large completion in the second half is expected to take the total completion for 2012-13 up to Rs.5 trillion. This will be a quantum jump over the Rs.4.3 trillion completion seen in 2011-12.

The electricity, steel, petroleum products, LNG storage & distribution and cement sectors are slated to see huge capacity additions in the second half of 2012-13.

We expect 16,952 mw power generation capacity to come on stream during October 2012-March 2013. We have received confirmation about commissioning of 1,570 mw of this capacity in October 2012 itself. The largest project to be completed in the remaining months is the first unit of Kudankulam atomic power plant of 1,000 mw. The project is being implemented up by Nuclear Power Corporation of India and is almost on the verge of completion. Besides, Talwandi Sabo Power and Emco Energy are expected to commission two power generation units each, adding capacity of 1,320 mw and 900 mw, respectively. The sector has already seen a capacity addition of 8,532 mw in the first half 2012-13. Total addition in 2012-13 is expected to be 25,484 mw. Huge capacities have already been created in the electricity sector in the last two years. In 2010-11, power generation capacity of 16,336 mw was added and in 2011-12 a capacity of 23,170 mw was added.

The petroleum products industry is expected to add 5.6 million tonnes of capacity in 2012-13. It has added 2 million tonnes capacity in the first half and the rest is scheduled to be commissioned in the second half. Indian Oil is expected to complete its 3 million tonnes expansion of Mathura refinery and Chennai Petroleum is expected to complete the de-bottlenecking of its Manali refinery by March 2013. The petroleum products capacity addition in 2012-13, however, will be substantially lower than the 25.7 million tonnes addition that took place in 2011-12.

The LNG storage & distribution industry added pipeline capacity of 213 km in the first half of 2012-13. Besides, GAIL is expected to add 2,087 km of pipeline in a staggered manner during the year. This, coupled with the 1,750 km pipeline addition by Gujarat State Petronet will take the total capacity addition up to 4,050 km for the year 2012-13.

The steel industry, which saw a capacity addition of 3.5 million tonnes in the first half of 2012-13 is now expected to add 12.8 million tonnes capacity in the second half. The major contributors to this will be SAIL (3.4 million tonnes), RINL (2.3 million tonnes), Bhushan Steel (2.1 million tonnes) and Jindal Steel (2 million tonnes). Total capacity addition in the steel industry during 2012-13 is expected to be 14.4 million tonnes. This will be only a shade lower than the capacity addition seen by the industry in the preceding year. In 2011-12, capacity addition in the steel industry had peaked at 16.8 million tonnes.

The cement industry is slated to add 21.2 million tonnes of production capacity in 2012-13. Of this, 5.7 million tonnes has already been added in the first half. The large projects expected to be completed in the second half belong to ABG Cement (3.3 million tonnes), Vicat Sagar Cement (2.8 million tonnes), Heidelberg Cement India (1.9 million tonnes), Cement Manufacturing Company (1.6 million tonnes) and Century Textiles & Industry (1.5 million tonnes).