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India's private companies sitting on Rs 150,000-cr cash

Last updated on: December 15, 2010 16:07 IST

India's private companies sitting on Rs 150,000-cr cash

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B G Shirsat in Mumbai

Private companies were sitting on almost Rs 150,000 crore (Rs 1,500 billion) in cash and bank balances as on September 30, unaudited balance sheet data for 580 firms compiled by Business Standard Research Bureau show.

The cash in hand has been mostly carry-forward over six months, the rise being a marginal four per cent or Rs 5,850 crore (Rs 58.50 billion) over the Rs 144,150 crore (Rs 1,441.5 billion)  as on March.

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Image: A bank employee counts bundles of currency at a cash counter in Agartala.
Photographs: Jayanta Dey/Reuters
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India's private companies sitting on Rs 150,000-cr cash

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Only 29 companies hold a large portion of corporate cash balances, with Rs 101,800 crore (Rs 1,018 billion) on their balance sheets, 68 per cent of the total for these companies.

Reliance Industries has the largest cash balance, at Rs 13,636 crore (Rs 136.36 billion), while Infosys Technologies is second with Rs 12,722 crore (Rs 127.22 billion).

Tata Motors has the third-largest with Rs 8,889 crore (RS 88.89 billion), followed by Sterlite Industries with Rs 7,406 crore (Rs 74.06 billion) and Tata Steel at Rs 7,146 crore (Rs 71.46 billion).

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Image: Reliance Industries' KG-D6 facility located in Andhra Pradesh.
Photographs: Reuters
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India's private companies sitting on Rs 150,000-cr cash

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During the six months to September, the 580 studied here aggregated an increase of Rs 106,733 crore or Rs 1,067.33 billion (11.5 per cent) in reserves and surpluses through retained profit for the six months and issuance of equity shares by a few others.

The borrowing by these companies increased Rs 55,640 crore (Rs 556.4 billion) or 7.9 per cent, while equity capital increased by Rs 2,460 crore (Rs 24.6 billion) or 4.26 per cent through fresh equity and bonus shares.

Cash cushion
Cash balance with companies (Rs  cr) 
  Sept '09 Mar '10 Sep '10
Reliance Ind 13,636.00 13,462.65 13,636.00
Infosys Tech 9,797.00 10,556.00 12,722.00
Tata Motors 8,001.42 8,743.32 8,888.94
Sterlite Inds 3,034.82 3,337.76 7,406.00
Tata Steel 5,922.92 6,787.81 7,146.58
Hindustan Zinc 1,437.38 927.53 4,938.34
JP Associated 4,429.39 3,879.18 4,296.89
Wipro 3,115.90 6,487.80 3,784.40
TCS 3,019.63 4,718.59 3,599.32
Piramal Healthcare 24.61 15.64 3,109.43

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Photographs: Uttam Ghosh/Rediff
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India's private companies sitting on Rs 150,000-cr cash

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However, investments in fixed assets in the past two financial years and in the first six months of the current one suggests that companies are unlikely to spend the cash on expanding their business, due to continuing uncertainty on demand growth.

Even so, the cash balance covers only a third of corporate debt, of Rs 763,590 crore (Rs 7,635.9 billion).

Growth in the fixed assets of these firms was up by only four per cent, or Rs 41,412 crore (Rs 414.12 billion).

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India's private companies sitting on Rs 150,000-cr cash

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It seems the companies are looking for greater certainty and signs of a permanent increase in sales before they let go their cash hoards.

Given low demand and capacity utilisation in certain industries, companies are wary of investing their cash in new capacity.

The unaudited balance sheet data show 11.2 per cent rise in inventory in the first six months of this financial year, while investment in subsidiaries and liquid funds increased 7.3 per cent.

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Photographs: Uttam Ghosh/Rediff
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Technology companies held the most cash as a sector, at Rs 24,375 crore (Rs 243.75 billion), followed by refineries with Rs 16,738 crore (Rs 167.38 billion), construction at Rs 15,610 crore (Rs 156.1 billion), non-ferrous metals at Rs 12,887 crore (Rs 128.87 billion), automobiles at Rs 11,770 crore (Rs 117.7 billion) and steel with Rs 10,027 crore (Rs 100.27 billion), unaudited data suggests.

However, hefty cumulative borrowings in construction, refineries, steel and automobiles suggest the cash balances there may be to complement the loan funds.



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