Investment Scenario

India's economy has been witnessing steady growth since the last decade. It has been holding its ground at an average of 5-6 per cent and is expected grow at close to 7 per cent in the 2010 fiscal on the back of notable growth in the manufacturing and services sectors, according to Dr C Rangarajan, Chairman of the Prime Minister's Economic Advisory Council (PMEAC).

Indian companies planned investments worth nearly US$ 20.1 billion in January 2009, registering a rise of 36 per cent from January 2008 and the government has received investment proposals totalling US$ 11.1 billion in September 2009.

According to government data, electrical equipment and metallurgical industries and cement and gypsum industries lead in proposed investments. As of September 2009, investment intentions for the year for licensable and delicensed sectors taken together indicate a preference for electrical equipment, cement and gypsum and metallurgical Industries with investment of US$ 6 billion, US$ 1.2 billion and US$ 931.4 million respectively.

As of September 2009, Maharashtra, Andhra Pradesh and Gujarat were the leading states in terms of the number of industrial entrepreneurs memoranda (IEMs) filed. In terms of amount of proposed investment through IEMs, the three leading states were Chhattisgarh, Gujarat and Orissa.

For the period from January 2005 and September 2009, Orissa received proposed investments of US$ 30.01 billion, followed by Chattisgarh and Jharkand at US$ 18.25 billion and US$ 13.2 billion respectively.

Consultancy major Grant Thornton has said that a total of 267 merger and acquisition (M&A) deals were announced during 2009, for a total value of US$ 10.03 billion. The deal sphere was dominated by domestic deals with 142 domestic deals with an announced value of US$ 5.80 billion.

Among the major deals of the year was the merger of Reliance Industries with Reliance Petroleum. Other major acquisitions of the year included Tech Mahindra’s acquisition of Satyam Computers for US$ 576 million in April 2009, mining firm Sesa Goa acquiring Dempo Mining Corp for US$ 350 million in June 2009 and mobile services company Sterling Infotech buying S Tel for US$ 230 million in June 2009.

Red herring prospectus for IPOs filed with the Securities and Exchange Board of India (SEBI) and fund-raising plans announced by listed companies to stock exchanges suggest that 129 companies intend to tap the capital market in 2010—companies have lined up equity raising plans of US$ 32.1 billion, close to two-and-a-half times of what they raised through share sales in 2009.

In 2009, 96 companies raised US$ 13.85 billion through qualified institutional placements (QIPs), initial public offers (IPOs) and right issues to existing shareholders.