As order books gain from India’s increased capital outlay, some of the large capital goods and engineering companies combined are spending upwards of Rs 11,500 crore in creating new facilities, data shows.
Nine of the engineering and capital goods companies, where data was available, including Siemens, Larsen & Toubro (L&T), and KEC International, combined have a capex of roughly Rs 11,500 crore or more under way. Others such as ABB India and Thermax Global are also adding capacities; however, the companies do not disclose capex numbers.
With a presence in the transmission and distribution (T&D) segment, Kalpataru Projects International’s tower manufacturing capacity is operating at full utilisation. The company plans to invest about Rs 500 crore in the current financial year. Amit Uplenchwar, director for the company, noted this is the highest ever as the company is expanding to newer segments such as metro systems.
Engineering services firm ABB India did not share the exact capex numbers; however, in a response to Business Standard, said, “The company follows a very clear capital allocation policy. Approximately 30 per cent to 35 per cent is dedicated to meeting the networking capital expansion needs for growth, and the balance would be earmarked for inorganic and organic options.”
Thermax Global does not disclose capex numbers but informed analysts it will be investing in capacity expansion in the chemicals, industrial water products, and the biggest portion of their capex in the green energy segment.
Investments in green and new energy are a common theme amongst those adding new factory units. G Balaji, president, energy industries – process automation, ABB India, noted that while ABB India is investing equally across all divisions, the energy division’s capex is focused on emerging areas like hydrogen.
Earlier this month, Siemens announced it will be doubling its capex commitments to Rs 1,000 crore. The company executives noted the stated amount is to be spent in the next three years. The incremental capex is to help expand capacities at a switchgear and clean air tech factory in Goa and for a metro-train manufacturing capacity in Aurangabad.
Of the nine entities, L&T, which is also executing the largest order book in the company, has the highest capex under way. In a call with analysts in January, L&T informed of Rs 4,800 crore of investments planned across semiconductors, electrolysers, and data centre business segments.
In a more recent announcement made in May, the company said L&T Valves has set up a new manufacturing facility in Saudi Arabia. West Asia, and particularly Saudi Arabia, has emerged as the largest international market for the company over the last few years.
Source: Company Announcements, Analyst Call transcripts.
Note: *Capex spread beyond FY25.
First Published: Jun 01 2024 | 12:09 AM IST
