Business

India Inc. holds on to cash, cuts capex despite lower tax rate

Every penny counts: Companies such as Hindalco and Tata Steel have cut down on capital expenditure.

Every penny counts: Companies such as Hindalco and Tata Steel have cut down on capital expenditure.   | Photo Credit: SAM PANTHAKY

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Top 1,000 listed firms to save up to ₹65,000 crore from tax cuts, says Ind-Ra

The top 1,000 listed entities will save up to ₹65,000 crore from the tax cut measures announced in FY20, which will include ₹9,000 crore savings for banks and ₹6,000 crore for the struggling non-banks, according to estimates by India Ratings and Research.

However, companies are seen holding on to cash and cutting down on capital expenditure (capex) in the remaining part of this fiscal.

Hindalco Industries has cut down its capex of ₹2,700 crore committed for this fiscal to ₹2,300 crore in the first quarter. The company further cut its capex to ₹2,000 crore after the end of the second quarter.

“We have reduced our capex to ₹2,000 crore and most of it will go towards our downstream expansion,” Satish Pai, MD, Hindalco Industries, told The Hindu. On debt reduction, he said, “We have net debt of ₹40,710 crore. At current LME (London Metals Exchange) prices, we will not be able to repay any debt.”

Tata Steel has reduced its capex guidance to ₹8,000 crore from ₹11,000 crore committed at the start of this fiscal.

“Capex numbers may see more reduction in the coming quarters,” said Tata Steel Group CFO Koushik Chatterjee.

“The slowdown had an impact on the working capital.” In the prevailing conditions, JSW Steel has deferred its capex of ₹4,700 crore to the next fiscal.

Reliance Industries, which drove India Inc.’s capital expenditure in the last three years with investments exceeding ₹3.5 lakh crore, has reached the fag end of its capex cycle.

Airport expansion

Talking about private sector capital expenditure, S.N. Subrahmanyan, MD and CEO, L&T, said, “Capex is happening in the expansion of some airports because there is no space. There is no significant capex happening in the private sector.”

Telecom major Vodafone Idea has reduced its capex for this fiscal to ₹13,000 crore from the ₹17,000 crore announced earlier.

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Printable version | Dec 15, 2019 7:44:48 AM | https://www.thehindu.com/business/india-inc-holds-on-to-cash-cuts-capex-despite-lower-tax-rate/article30063686.ece

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