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India, Inc. sits on cash pile
By agencies
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Friday, 10 June 2005, 19:30 IST
MUMBAI: India Inc seems to be swimming in hard cash. Every second manufacturing company has a bag full of liquid assets that are stashed away in bank deposits, cash in hand, debentures/bonds, government securities and mutual funds. A analysis of over 1,000 companies for 04-05, shows that at least 100 companies have over 
1 trillion each lying idle, pending utilization.
The study, which excludes all banks and financial companies, shows that as much as Rs 10 trillion is lying in banks and liquid assets. This is because most capex programs are on hold for various reasons. The companies include a wide range of manufacturing majors like Reliance Industries, Bajaj Auto, ONGC, IOC, Reliance Energy, GE Shipping, Essar Shipping and Bharti Tele.
Of the total cash hoard of Rs 10 trillion, India Inc has at least Rs 5 trillion currently lying in bank deposits. An upturn in the commodity cycle has led to increased sales, and better cash flows. On the flip side, enhanced efficiency and improved cost cutting has meant less cash outgo. Also, corporate debt restructurings have led to lower interest payments, and better cash flows.
While companies have gone on a fund-raising spree in 04-05, most of them were forced to put off their capex program due to various reasons.
Among the various sectors in which companies have stockpiled cash, are power, petrochemicals, shipping, oil and gas, auto and telecom.
1 trillion each lying idle, pending utilization.
The study, which excludes all banks and financial companies, shows that as much as Rs 10 trillion is lying in banks and liquid assets. This is because most capex programs are on hold for various reasons. The companies include a wide range of manufacturing majors like Reliance Industries, Bajaj Auto, ONGC, IOC, Reliance Energy, GE Shipping, Essar Shipping and Bharti Tele.
Of the total cash hoard of Rs 10 trillion, India Inc has at least Rs 5 trillion currently lying in bank deposits. An upturn in the commodity cycle has led to increased sales, and better cash flows. On the flip side, enhanced efficiency and improved cost cutting has meant less cash outgo. Also, corporate debt restructurings have led to lower interest payments, and better cash flows.
While companies have gone on a fund-raising spree in 04-05, most of them were forced to put off their capex program due to various reasons.
Among the various sectors in which companies have stockpiled cash, are power, petrochemicals, shipping, oil and gas, auto and telecom.