About
CapEx is a database of investment projects that involve the setting up of new capacities. The name “CapEx” is a concatenation of the short-form of Capacity Expansion, or of Capital Expenditure.
An investment project involves some capital expenditure and it involves some capacity expansion. The CapEx database is about the announcement of such projects, their implementation and their final culmination into new capacities.
Investment projects in CapEx are not about financial investment projects. For example, it is not about investments into the secondary capital markets. It is also not about an investment into a portfolio with a private equity investment fund or about the investments of a private equity fund or a mutual fund. Private equity investors may invest into capacity expansion projects which are of interest to the CapEx database. But, investments made into the equity investment fund or by the fund itself is not the subject of the CapEx database. The subject of the CapEx database is the project that involves creating of new capacities.
The CapEx database captures only those projects that entail a capital expenditure of Rs.10 million or more. Projects with investments of less than Rs.10 million are not included.
The CapEx database picks information on investment projects by scanning a host of sources. The database is created and updated from publicly available information and by contacting the promoter or implementing companies through emails and phone calls. There is no official, regular or fixed source of information that goes into the making of the CapEx database. The database is built from all available credible sources. The CapEx database is a creation of CMIE.
CMIE has been monitoring the creation of new capacities ever since it was established in 1976. The monitoring work started being databased systematically in 1996. The current CapEx database therefore contains information on projects since 1996.
The CapEx database records the progress in implementation of investment projects. The database is not merely a listing of the projects. It is a monitoring machinery that records the various events that a project goes through in its life-cycle.
The life-cycle of a project begins when it is first announced as a proposal. It then goes through various stages of implementation such as acquisition of land, financial closure, ordering of machinery, undertaking civil construction, trial runs, etc. The life-cycle of a project ends when the new capacity is created and deployed into production. Sometimes, the end is less rewarding. A project may get abandoned before its completion. Or, its implementation may get suspended because of some reason. Worse still, a project may simply disappear leaving no trace of any kind. This happens when some unknown promoter (often from outside the country) proposes a project and then does not report anything on the project and is also not traceable.
The CapEx database captures new projects being announced, tracks the various events of all the projects in its radar and captures the end of the project. None of these are comprehensive or perfect in any sense, because there is no systematic source of this data, there is no standard of disclosure and there is no measure of the accuracy of the information available publicly or privately.
This lack of systematic information makes the CapEx database a particularly valuable tool in anticipating the creation of new capacities in India. CMIE’s long experience in building and maintaining such a database and in applying it in its own research ensures the utility of the database.
A useful derivative of the CapEx database is the set of aggregates that are generated using the project-level database. These are aggregates of investments from snapshots of the database at various points in time. They include aggregates of the value of new investments or of the completion of projects during a time period. These provide a time-series of the investment activity in the country and are therefore a useful set of macro-economic indicators of the investment cycles in the country.
The CapEx database also provides aggregate estimates of the total investments on hand (ie total live projects) in the country. These are also segregated into those under implementation and those in the initial stages of announcement.
Another useful derivative of the CapEx database is the set of projections of new capacities expected in future time-zones. For example, CapEx can provide an estimate of the expected additional steel capacity that is likely to be commissioned in 2012-13. CapEx is about current investment projects to create productive capacities for the future. Implicit projections are therefore a natural corollary of the CapEx database.