Take away the public sector investments in refining or power, exclude the capital sunk into industries like mining and irrigation, and cut to the Indian private sector in manufacturing and service. Which are the business groups or mega-corporations burning capital expenditure of a magnitude that counts? Hmm...there aren't too many names that come to mind, right?

Except, maybe, the Ambanis, the A.V. Birla Group and the Tata Group. In absolute terms, these three colossi of Indian business unsurprisingly occupy the top three positions in private sector investments simply because they are the biggest conglomerates in the country-last year Reliance had a group turnover of Rs 65,000 crore, the A.V. Birla group's global commodity empire has sales of Rs 30,000 crore, and the 80 companies in the Tata Group clock Rs 45,000 crore.

But even in percentage terms-that is, investments as a percentage of total sales-these three powerhouses easily account for at least 90 per cent of the money being pumped into asset-creation or asset-acquisition. Together, say analysts, the Tatas, the A.V. Birla group and the Ambanis would be committing at least Rs 60,000 crore to these endeavours over the next five years.

Reliance, for instance, will spend Rs 18,000 crore (a little over half of which has already been burnt) on its ambitious Infocomm project.

The Tata Group has earmarked Rs 15,000 crore for its basic telephony game plan (for which the proposed equity dilution by Tata Sons in Tata Consultancy Services would help). And Kumar Mangalam Birla has been splurging big bucks on acquisitions, in commodity businesses like aluminum and cement, and in sunrise ones like business process outsourcing, apart from venturing into areas such as entertainment. ''If you had to look at the top 10 Indian business houses, you'd find that the percentage of investments being made by the top three is gradually increasing,'' points out Rajeev Gupta, Executive Vice President, DSP Merrill Lynch.

Of course, it isn't as if there's absolutely zilch being invested by the rest of industry.

The multinationals for their part may largely be in less capital-intensive industries like pharmaceuticals and chemicals, but in a sector like automobiles, for instance, the likes of Hyundai have pumped in billions in putting up car capacities. ''There are quite a few companies coming in privately that are making sizeable investments, which we rarely get to hear of,'' says Raamdeo Agrawal, Joint Managing Director, Motilal Oswal Securities, a Mumbai-based broking firm.

Yet, if capex was a criterion, but for a few sectors, few MNCs appear to really be betting big on India. In cement, for example, global giants such as Lafarge, Holcim and Cemex did threaten a few years ago to gobble up domestic capacities that were there for the taking, but they eventually got tied down by other global commitments. In steel, where there is scope for consolidation, the global majors haven't evinced much interest, thanks perhaps to the overcapacity scenario prevailing internationally.

As for the other Indian business groups that in the nineties appeared to be thinking big, they've only flattered to deceive.

RPG Enterprises wouldn't be able to hold a candle to the aspirations of the Ambanis or the Tata Group, and the same can be said about the various other factions of the Birla group (K.K., C.K., S.K.), the Khaitans, the Muthiahs and the Mittals, to name just a random few.

The Tata Group, for its part went through its share of pain in the nineties when it restructured its portfolio, shedding unviable and unremunerative businesses (indeed that exercise will continue for years to come).

Kumar Birla is now doing the same. The Ambanis ensured that they were top dog in their core business of petrochemicals by gobbling up smaller, less viable capacities (as standalone units) of other players, and today are the world's second largest polyester manufacturers. Such dominance has helped these giants generate strong cash flows, which enables them to plunge into new businesses without overstretching themselves.The last decade may have belonged to the glimmer-twins of Indian it, Infosys and Wipro, but the big boys are back in business now. Size clearly matters.

-Brian Carvalho

FDI Reloaded
Suddenly, India's record looks better.

Last year, the Government of India created a committee to contemporarise the Indian definition. The committee suggested the inclusion of 14 more heads; this was whittled down to eight by the Technical Monitoring Group. Based on the new definition, it transpires that India actually attracted $14.8 billion (Rs 68,080 crore) in FDI over the past three years, and not $8.8 billion (Rs 40,480 crore) as originally reported.

Still, not everyone is convinced. One MNC exec says, "Many of these inflows are actually loans that will be recalled at some point in time.'' An official at India's Commerce Ministry retorts that were China to be as transparent, its FDI for 2002 would come down from the reported $40 billion (Rs 184,000 crore) to $20 billion (Rs 92,000 crore). Touche!

-Ashish Gupta

WESTWARD HO
Gucci in Kolkata

West Bengal chief Minister Buddhadeb Bhattacharya may wear his communist credentials, er, on his feet-he sports Kolhapuri sandals-but when it comes to investments in his state, only the best will do. So, on a recent visit to Italy, the cm visited the Gucci facility near Florence. Now, at Bhattacharya's suggestion, a team from Gucci is hitting the state for a reccie trip. "I had a good round of discussions with Gucci officials," says Arun Bhattacharya, Principal Secretary to the cm. "They are interested in West Bengal because good leather is easily available and the state has skilled leather workers". Next step: a July visit by the Gucci team.

-Debojyoti Chatterjee

THE BT 50 INDEX
India's first free-float index, BT 50, was the first to signal a clear recovery.

One of the advantages of a free-float index is that it is far more responsive than other indices-put simply, it is faster to indicate either an uptrend or a downtrend. True enough, BT 50 Index, India's first index based on free-float did just that with the recovery underway. But we are getting ahead of the story.

In early 2003, BT decided to launch its own stockmarket index because of issues it had with the construct of India's two most commonly used indices, BSE's Sensex, and NSE's Nifty. Both are based on market capitalisation; that is, the weightage allotted to a certain company in the index is based on its market capitalisation. The problem: the inclusion of closely held companies with large market capitalisation distorts the index. Corollary: the total exclusion of such companies will render the index unrepresentative. The Nifty, for instance, includes Wipro, one such company, while the Sensex doesn't.

BT decided to adopt the free-float method, wherein the market capitalisation of a company is based on the quantum of shares available in the market for trading. Ergo, this method excludes the holding of promoters and strategic investors. However, while companies are required to furnish their shareholding pattern to the exchanges, the current format of disclosure isn't very strong-some companies have reported that their free float is 100 per cent, while it is common knowledge that a major portion of the equity of these companies is held by a few strategic investors. BT discounted these strategic holdings when it was calculating free float. Free float didn't just help us choose the companies that should constitute the index; it helped us allot them weightages. To complete the methodology: the free float is according to data as on December 31, 2002; the index begins in January 2002, a relatively stable period; and its base value, like other indices is 100. Keep tracking!

-Narendra Nathan