In the economic realm, "capital goods" is a specialized term which refers to real objects owned by individuals, organizations, or governments

to be used in the production of other goods or commodities. Capital goods include factories, machinery, tools, equipment, and various buildings which are used to produce other products for consumption. This term also refers to any material used or consumed to manufacture other goods and services.

Capital goods are generally man-made, and do not include natural resources such as land or minerals, or "human capital" the intellectual and physical skills and labor provided by human workers. In most cases, these goods require a substantial investment on behalf of the company making a product; the purchase of these goods are usually considered a capital expense. Capital goods are important to businesses, because they use these items to make functional goods for the buying public or to provide consumers with a valuable service. As a result, capital goods are sometimes referred to as "producers' goods" or "means of production." The economic term "capital goods" should not be confused with the financial term "capital," which simply means money. An important distinction should also be made between "capital goods" and "consumer goods," which are products directly purchased by consumers for personal or household use. For example, cars are generally considered consumer goods because they are usually bought by an individual for personal use. Dump trucks, however, are usually considered capital goods, because they are used by construction and manufacturing companies to haul various materials in order to make other products such as roads, bridges, dams, and buildings. Similarly, a chocolate candy bar is a consumer good, but the machines used to produce the chocolate candy bar are considered capital goods. Capital goods, then, are products which are not produced for immediate consumption. Rather, they are objects that are used to produce other goods and services. These types of goods are important economic factors because they are key to developing a positive return from manufacturing other products and commodities.

Cygnus Business Consulting & Research 2007

The overall growth rate of index of industrial production (IIP) during FY07 was 11.3% compared to 8.2% in FY06. The growth rate achieved by the mining, manufacturing and electricity sectors during FY07 was 5.1%, 12.3% and 7.2% respectively compared to 1.0%, 9.1% and 5.2% during corresponding period of the previous year. The Indian Industry grew by 11% and manufacturing by 12% in 2006-07, supporting capital goods industry to grow significantly. Reflecting the buoyant capacity addition in the manufacturing industry, the capital goods industry grew by a healthy 17.7% in 2006-07. According to the estimates made by the Government, the investment requirement for infrastructure is around USD450 billion during the 11th five year plan. This is going to boost construction equipment segment to grow further.

In the domestic market, heavy engineering provides growing opportunities in projects such as refinery upgradation and modernisation of fertilisers plant. The Government of India plans to add 100,000MW capacity to the power sector to achieve its goal Mission 2012: Power for all. The focus is also on the construction of several UMPPs which will ensure continuous growth of the electrical industry, both upstream and downstream, at least for the next few years. Thus, the power sector provides good business prospects to the capital goods manufacturing companies in medium- to long-term. This report covers industry segments like Textile machinery, Construction machinery, Heavy engineering (electrical and non-electrical), Machine tools, Earthmoving and material-handling equipment, Processing machinery, and Agro implements (power driven). This report will be useful for capital goods manufacturing industry, industry analysts, engineering consulting organisation, foreign companies interested in Indian capital goods industry and financial institutes. The report (total 90 pages) is having 10 chapters, 3 annexure, 26 figures and 13 tables

21st of July 2010 | 10:23 GMT | Alina Dumitrache

Fiat Announces Demerger of Its Capital Goods Businesses

STORY HIGHLIGHTS:

The companies will have their own board Demerger date set for January 1, 2011 Shareholders meeting to take place on Sept. 16, 2010

The demerger will be made at book value Italian car manufacturer Fiat announced today its Board of Directors intents to separate its capital goods businesses by way of a demerger. The Fiat Board has approved Fiat Industrial S.p.A. and liabilities will be separated from the car business and relating

components, which include Fiat Group Automobiles, Ferrari, Maserati, Magneti Marelli, Teksid, Comau and FPT Powertrain Technologies. The demerger date is expected to be January 1, 2011, when shares of Fiat Industrial will be assigned to Fiat shareholders on a one to one ratio. After that date, the companies will have their own management teams and boards of directors. This move will allow both businesses to strategically develop independently of each other. Additionally, the Board believes that the transaction would allow for the proper valuation in the capital markets of these two businesses. As a result of the demerger the Total Equity of Fiat will be reduced by EUR 3,750 million, which will decrease the nominal value of each class of shares that, after the demerger date, will be equal to euro 3.50. The Board of Directors has authorized the Chairman and the CEO of Fiat to call the ordinary and extraordinary shareholders meeting to approve the demerger, which is expected to be duly convened with a full quorum on September 16, 2010. The Demerger will be made at book value and will therefore have no effect on the consolidated results of the Group or on the statutory result of Fiat S.p.A. for the year ended December 31, 2010, a company statement reads. No shareholder withdrawal rights will be triggered as a result of the Demerger.