1 madhya pradesh: means business industries. 2 overview mp is the second largest state in the...
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Madhya Pradesh: Means Business
Industries
2
Overview
MP is the second largest State in the Country stretching over 308,000 sq kms.
The State is blessed with large mineral resources of coal, diamond, limestone, methane etc.
MP is among the top 4 states of the Country for industrial investments.
Per capita GSDP USD 369**
Manufacturing sector USD 8.5 bn**
(Registered & Unregistered)
Gross state domestic product (GSDP) USD 23,983.63 Mn**
Average growth rate 5.5% per annum
Advantage MP
Total electricity generation capacity 6,449.25 MW*
India’s first greenfield SEZ Indore SEZ
Industrial Centers 8
The State is centrally located
Investor friendly Government policies
Madhya Pradesh has one of the upcoming industrial base in India
Economic Snapshot Madhya Pradesh is emerging as a key growth center for the Country
Madhya Pradesh (MP) – State that means businessOverview
MP is rich in low grade coal suitable for power generation. Potential of hydro-energy generation. Installed power capacity (MP’s share)
Hydel Power Generation: 852.7 MW* Thermal Power Generation: 2,147.5 MW*
Power Electricity generation capacity at present is 6,449.25 MW and estimated to rise to a surplus in 2008-09
*Ministry of Power (powermin.nic.in) **Source: Indiastat.com (as on 23 Feb 2006)
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RO
AD
NE
TW
OR
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IRP
OR
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• The State is well connected with the rest
of India with almost 425 trains passing
through the State on a daily basis. Of
these 175 trains pass through the State
capital Bhopal alone.
• The total length of roads spanning MP is 67,600 kms.**
• National highways of 5,200 kms run through the State.*
• 18 National highways including trunk routes of Delhi-Mumbai, Delhi-Chennai, Delhi-Bangalore, Delhi- Hyderabad.
• The total length of State highways in the State is 9,885 kms.**
• Convenient linkages to western ports i.e. Kandla Port, Jawahar Nehru Port Trust.
• 25 airstrips.**
• Convenient air links from key Indian cities like Delhi & Mumbai to Bhopal, Jabalpur, Gwalior, Indore and Khajuraho.
• 5 operational airports.
• Indore airport has the capability of handling international cargo.
• An international airport proposed in Bhopal.
Enabling Infrastructure
MP IS CENTRALLY LOCATED AND WELL
CONNECTED WITH ALL MAJOR CITIES IN INDIA
*Source: Department of Road Transport & Shipping (morth.nic.in) **Source: www.destinationmadhyapradesh.com
INDORE BHOPAL
JABALPUR
GWALIOR
KHAJURAHO
4
Third largest producer of
cement in India*
12 blocks with reserves
totalling 2,585 million tons
of coal has been identified
Largest producer of pulses
and oilseeds in the Country
(~75% of soyabean
production)
31% of the State under forest
cover with a largely unexploited
species of rare, valuable
medicinal- herbal plants
Over 2,000 kms of roads
being developed with
Private Partnership (BOT)
Over 18,000 technical
graduates and 230,000
graduates add to workforce
each year
Over 144 BCM of coal bed
methane reserves available
Over 100 agricultural farms with
an area of over 20,000 acres is
available on lease to investor
India’s 1st operational
Greenfield SEZ at Indore
Favourable climatic
conditions for cotton
and over 40,000 power-
looms are driving the
textile industry
Availability of coal and natural gas
(G.A.I.L pipeline) along with support
from Government to make investment
in Thermal Power Plants lucrative
Offers diverse tourists destinations
catering to various segments of
tourism such as religious (Bhojpur),
eco/ adventure (Panchmari), heritage
(Sanchi, Khajuraho) tourism etc.
Madhya Pradesh: A Preferred Investment Destination
Various blocks available
for power, cement, iron
and steel units
*Source: www.mpsidc.org & Brochure: MP Means Business
5
0
50
100
150Mumbai
Delhi
Bangalore
Chennai
PuneHyderabad
Indore
Bhopal
Ahemadabad
Mumbai(780 Kms)
(MPV - 1000) Pune(800 Kms)
(MPV - 206.51)
Bangalore(1400 Kms)
(MPV - 254.52)
Chennai(1430 Kms)
(MPV - 362.84)
Hyderabad(840 Kms)
(MPV - 257.9)
Delhi(740 Kms)
(MPV - 789.5)
Ahmedabad(570 Kms)
(MPV - 220.63)
Kolkata(1350 Kms)
(MPV - 613.19)
Key Markets
(Distance From Bhopal)
MPV – Market Potential Value
Source: (Reference: RK Swamy)
MP: The Right Place with the Right Environment
MP is centrally located. The State is at an easy distance from
all the key consumer markets in the Country.
DESTINATION MADHYA PRADESH
- Distances rounded off**Source: India Today (September ‘06 Issue)
Fastest mover* in overall
performance among the
big States in the Country.
Fastest mover in agriculture
Fastest mover in
infrastructure development.
Ranks 2nd in terms of
governance.
Ranks 3rd in terms of law &
order
Cost of skilled labour is USD
2.4/day vis-a-vis USD 3.5 –
USD 4.0/day in metros
* Fastest mover is the State where the rate of improvement between 2003 & 2006 was greater than that between 1991 & 2003
Bhopal and Indore have substantial cost
advantages, even when compared to other Tier
III and IV cities.
Savings in Office Space Rates
(A comparison of rates in Central Business Districts)
The cost of land is one of the lowest in the Country. Even central hubs such as Indore and Bhopal fare well against other cities in terms of low land cost.
(Estimated Values for Multi-product SEZs)
Savings in Land Cost
0%
20%
40%
60%
80%
100%Vishakapatnam
Chennai
Greater Noida
Chandigarh
Jaipur
Indore
6
Industrial Policy: Catalyst for the InvestmentsThe Government of MP has devised an investor friendly industrial policy,
which is aimed at achieving global competitiveness. The policy emphasizes
on industrial growth in the state through adopting cluster approach,
establishing specialized infrastructure and offering favourable incentives.
The main thrust of this policy is:
• Establishment of a Madhya Pradesh Trade and Investment
Facilitation Corporation which would take decisions about
rationalization of taxes, facilities of mega projects and other related
matters.
• Enacting an Industrial Facilitation Act and to change the rules of
business with a view to make single window system decisive and result
oriented.
• Developing infrastructure for supporting the identified industrial
clusters
• Reviving closed down/ sick industrial units by granting special packages.
• Attractive incentive schemes.
CLUSTER APPROACH
• Indore – Pharmaceutical, Textile, Food Processing, IT, Auto Components
• Bhopal – Engineering, Biotechnology, Herbal, IT, Food Processing
• Jabalpur – Garment, Mineral, Forest & Herbal, Food Processing
• Gwalior – Electronics, IT, FMCG, Engineering, Food Processing
• Rewa – Refractories, Lime Stone, Forest Based
• Sagar – Mineral Processing
• Special package for Mega Projects on project basis by apex level investment promotion empowered committee headed by the Chief Minister.
• Industrial investment promotion assistance – 50% to 75% of commercial tax for 3-10 years
• Concessional registration charges and stamp duty exemption for Term Loans.
• Interest subsidy on term loan for 5 – years @ 3% to 5%.
• For thrust sector industries, 25% capital subsidy would be provided limiting up to a maximum of USD 56,000
• Land on 75% concessive rate for Mega Projects limited to USD 4.4 million.
• Entry tax exemption for 5 years.
• 5 years electricity duty exemption on captive power generation
• 15% capital subsidy to SSI up to USD 33,000 in backward areas
• Infrastructure grant up to USD 0.22 million crore for developing private sector industrial parks
• Partial reimbursement for Project report, ISO Certification, Patent and Technology Purchase cost
SPECIAL INCENTIVES
SP
EC
IALI
ZE
D I
NF
RA
ST
RU
CT
UR
E Crystal IT Park Indore
Food ParksMandsaur, Khargone, Chhindwara, Hoshagabad, Mandla and Bhind
Stone Park Katni
Herbal Park Rewa
Granite Park Chhatarpur
Life Sciences Project Bhopal
Apparel Park Indore (SEZ)
Gems & Jewellery Park Indore
7
Area Developed: 2,492 Hectares
Allotted: 1431 Hectares
Units established: 575
Major Groups: Tata, Ranbaxy, Eicher,
Bridgestone, Hindustan Motors, Kinetic,
SRF, S Kumars, Gajra, Nicholas Piramal,
Indorama, IPCA, Bhilwara
Special Infrastructure: SEZ, Crystal IT
Park, Food Park, Apparel Park
In a bid to build a competitive environment; industries and their ancillaries would be promoted in clusters based on the availability of raw materials,
skilled labour and market potential. Under this Industrial Policy through Madhya Pradesh Audyogik Kendra Vikas Nigam Ltd (MPAKVNs)
scheme, the State Government, has identified industrial clusters. Many of the industrial giants have their establishments in these areas, however 44% of
developed area is still untapped and open for investment.
Total developed area
7,147 Hectares
Total allotted area3,089
Hectares
Total units established
1,360
Growth centres 19
Doing Business Made Easy Through MPAKVNIN
DO
RE
AK
VN
Area Developed: 1,330 Hectares
Allotted: 618 Hectares
Units established: 286
Major Groups:HEG, Crompton
Greaves, P&G, Godrej, Lupin, IFB,
Oswal, Nahar
Special Infrastructure: ICD, Food
Park
Area Developed: 2,262 Hectares
Allotted: 800 Hectares
Units established: 326
Major Groups: JK, Surya Roshini,
Godrej, Grasim, Cadbury, Hotline,
Crompton Greaves
Special Infrastructure: ICD, Food
Park
Area Developed: 273 Hectares
Allotted: 115 Hectares
Units established: 121
Major Groups: Birla, Jaypee
Special Infrastructure: Integrated
infrastructure development centres
(IIDC)
Area Developed: 790 Hectares
Allotted: 125 Hectares
Units established: 52
Major Groups: Raymond, Hindustan
Petroleum, PBM, Ayur
Special Infrastructure: Stone Park,
Food Park
BH
OP
AL
AK
VN
GW
AL
IOR
AK
VN
JAB
AL
PU
R A
KV
N
RE
WA
AK
VN
Pithampur, Kheda, Dewas, Maksi, Megh Nagar
Malanpur, Malanpur Phase II, Banmore, Chainpura, Siddhgawan, Pratappura
Rewa, Waidhan
Borgaon, Maneri, Purena
Mandideep, Pillukhedi,
Mandideep Phase II
Source: MPSIDC
Industries
9
MP: The Emerging Power
• Madhya Pradesh is an emerging industrial powerhouse of
the country.
• The State houses around 1,800 companies and 19
industrial growth centers (located across 7147 Hectares.)
that are close to major cities. This makes good social
infrastructure accessible to industrial units.
• Further, there are around 171,000 small-scale industries
that contribute significantly to the economy.
• MNCs like Cadbury, Bridgestone, Hindustan Lever, Coke
and renowned Indian companies like Ranbaxy, Tata,
Grasim, Hindustan Motors, Eicher, Kinetic, Hotline,
Raymonds, Lupin, Crompton Greaves, Surya Roshni,
Nahar Spinning, Anant Spinning, Godrej, HEG and
several other big groups have presence in Madhya
Pradesh.
• These companies not only meet local requirements, but
also export a variety of products and services to both
developed and developing countries.
10
MP: Attracting Investments• MP offers an unparallel locational advantage to companies as they
incur lower transportation cost for transferring goods to every corner
of the country.
• Further, cost of basic requirement such as land, water, skilled
manpower is less as compared to other states.
• State has peaceful & conducive atmosphere for industrialization, law
and order situation in the state is under control.
• State also allows the industrial units to have captive power plants to
produce power as per their requirement.
• The State Government desires to have a higher rate of economic
development through rapid industrialization. Some of the key
initiatives taken by government recently include:
•New Industrial Policy-2004
•Madhya Pradesh Trade and Investment Facilitation Corporation
(TRIFAC)
•Udyog Mitra Yojana- 2004
•Industrial Facilitation Council
•Industrial Projects – SEZ, Indore, Food Park, Apparel Parks,
etc
•Modernization of Roads and other infrastructure
•Power Sector Reforms
Company Location Investments
BORL Bina 1,267
Bina Thermal Bina 542
STI Power Chainpura 261
HEG Ltd. Mandideep 111
LG Hotline Malanpur 111
Biofill Pharma Pithampur 24
Eicher Group Pithampur 24
Enbee Pilukhedi 22
JK Industry Banmore 22
Pratibha Syntex Pithampur 19
Hindustan Copper Balaghat 18
Escorts Malanpur 9
Maral Overseas Nimrani 7
Caparo Engineering Pithampur 7
Coca Cola Pilukhedi 7
Lupin Mandideep 4
MOIL Balaghat 4
HP Bottling Plant Maneri 4 F
ew
La
rge
& M
ed
ium
Pro
ject
s U
nd
er
Imp
lem
en
tatio
n
In US$ Million
11
Enabling Infrastructure• State Government is committed to support the investors &
provide them a hassle free atmosphere in the Government
machinery. The state has taken several initiatives to promote
investments in the state by creating enabling infrastructure.
Some of the key initiatives are highlighted below.
• A Special Economic Zone at Indore is being established in
1038 hectares of land with the investment of US$ 222
million, has become operational.
• 8 IIDs (Integrated Infrastructure Development Centre) are
being setup at Nandantola, Nimrani, Jagga Khedi,
Lamtara, Naogaon, Sindiya, Pratappura, Jaderua
• 165 Industrial Areas with basic infrastructure facilities are
functional.
Investment Highlights
• 217 proposals of foreign direct investment with an
investment of US$ 1.3 billion are cleared by GOI for M.P.
• 207 letter of Intent with a proposed investment of US$
804 million are cleared by GOI for M.P.
• 1978 Industrial Entrepreneurs Memorandum have been
issued by GOI in favour of industrial groups who have
shown interest to invest in M.P. with a proposed
investment of US$ 14.43 billion.
M.P.S.I.D.C.
M.P. – SPECIALIZED INFRASTRUCTURE
Growth Centres
Integrated Infrastructure Development Centers
Food Parks
SEZ Indore
Stone Park ES
TA
BL
ISH
ED
Crystal IT Park
Apparel Parks
Diamond Parks
Agri Export Zones
PR
OP
OS
ED
12Source: Ministry of Commerce and Industry, Department of Commerce
FOR SEZ UNITS
Income Tax Incentives
100% tax holiday for a period of any 10 consecutive years out of 15 years beginning from the year in which the SEZ is notified
Exempt from dividend distribution tax
Long-term capital gains arising on transfer of shares in developer company tax exempt
No minimum alternate tax (MAT)
FOR DEVELOPERS OF SEZ S
Income Tax Incentives
15 year corporate tax holiday on export profit – 100%
for initial 5 years and 50% for the subsequent 5 years
50% of reinvested reserves for the balance 5 years
Common Incentives
Indirect Tax Incentives
Nil customs duty
Nil excise duty
Exemption from central sales tax
Exemption from service tax
Exemption from securities transaction taxOther Benefits
Duty free procurement of capital goods (including
second hand capital goods), raw materials and
consumable spares from domestic market
Full freedom for sub-contracting labour
Facility to realize and repatriate export proceeds
within 12 months
Facility to retain 100% foreign exchange receipts in
the export earners foreign currency account
Other Benefits
Full freedom in allocation of developed plots to
approved SEZ units on purely commercial basis
Full authority to provide services like water, electricity,
security, restaurants and recreation centres on
commercial lines
No net foreign exchange earning requirement
imposed
SEZ units will be eligible to obtain clearances/ permissions from different departments under single agency clearance system
SEZ authority will ensure continuous and good quality of power supply
M.P. has liberal labor policy providing complete flexibility in SEZs
SEZ Development Committee monitors infrastructure development for each SEZ
SEZ Advantage
Madhya Pradesh Government has adopted the SEZ policy for developing Special Economic Zones in the state. The SEZs, earmarked as duty-free enclaves,
aim at promoting rapid industrial development and employment generation. The approved policy regime includes:
• Exemption of all state and local taxes
• Exemption from stamp duty and registration fees
• Grant of labour, energy, environment, industrial health and safety related permits and approvals through a dedicated single window mechanism
• Exemption from electricity duty; cess and any other tax or levy on sale of electricity for self generated and purchased power.
• Expeditious process for land acquisition to set up SEZs
13
Thrust Areas
Cement
Auto & Auto Components
Textiles & Apparels
Pharmaceuticals
Engineering & Electrical Equipment
Chemicals
• Industry in Madhya Pradesh is largely resource driven, leveraging the state’s natural wealth in the form of limestone, coal,
soya, cotton, bauxite, iron-ore, silica etc. Therefore the state has a strong industrial base in sectors like textile, cement,
steel, soya processing and optical fibers.
• However, there have been a few exceptions to the resource driven industrialisation and the State as a result of its
aggressive incentive policies and strong solicitation/facilitation is developing into a strong base in the Auto, auto ancillary
and textile sectors.
• Substantial opportunity would emerge in following sectors.
Cement
15
Cement: Evolving Landscape
MP: The Cement Production Powerhouse
MP is Naturally Strong
MP: A Preferred Investment Destination
Exploring the Opportunities: Project Profiles
Way Forward
Sector Profile: Cement
16
Cement: Evolving Landscape•India is the second largest producer of cement in the world after China.
The Indian cement industry’s capacity as on March 2005 was around 160 mn
tonnes (including the mini cement plants). It consists of over 54 cement
players and more than 129 manufacturing plants and is highly fragmented and
regional in nature.
• Its estimated market size in value terms is around US$ 8.89 billion and
around 130 mn tonnes per annum (mtpa) in volume terms. It owes its
regional nature to the concentration of cement plants near the clusters of
limestone reserves, located only in few states. This has led to a surplus
situation in some regions and shortages in others.
Korea, 3%
Russia, 2%Italy, 2%USA, 6%
Japan, 3%
India, 6%
China, 44%
Others, 37%
Spain, 2%
•India is one of the fastest growing markets for cement ~7.2% CAGR (2000-01
to 2004-05). The demand in the Country is riding high on the continuing growth
in all the sectors especially in the IT/ITeS, Hospitality industries which in turn
has driven the retail, real-estate and infrastructure boom.
India: A Major Consumer of Cement
2004
Key Drivers of Growth
• Strong housing demand• High level of commercial construction activity• Increased government focus on infrastructure
spending• Higher investment in industrial projects
The industry is not only looking for locations with availability of limestone for production of cement, but also for
availability of coal for their captive power plants
• Even though industry has huge potential, it faces certain challenges, for
instance, the high power and fuel costs and erratic power supply in most of the
states is affecting the companies.
Hence, most companies have opted to set up their own captive power units to get a regular supply of power and optimise costs.
17
MP: The Cement Production Powerhouse
• M.P. is the third largest producer of cement in the Country. It caters to 13% of the
national demand. The State’s rich limestone reserves and the logistical
advantages of these sites reduces the overall cement manufacturing & supply
chain cost, helping the cement companies to get a higher Return on Investment
(ROI).
• At present several major groups such as Birla Corporation, Vikram Cement, Prism
Cement, J.P. Rewa, Diamond Cements, & ACC cement are present in Madhya
Pradesh. Out of these units J.P. Rewa & ACC are in process of investing US$
244 million for expanding their production capacities.
• The State also has the appropriate knowledge pool to operate the cement plants.
With the expected demand projection and the inherent advantages, MP is likely to attract significant investment in
the sector to become the Cement Production Powerhouse of the Country
•Being centrally located and in proximity to key cement consuming states such as Maharashtra, Uttar Pradesh, Gujarat, Andhra
Pradesh etc, cement plants in MP can cater to different regions of the state. Apart from access to large market the centrally located
plants benefit in terms of stable market demand. Further as a result of constant demands the state has one of the highest capacity
utilisation rates in the Country (around 94%).
•It is estimated that India needs an additional capacity of around 70 MT to meet its domestic demand by 2009. With its inherent
advantages in terms of availability of raw material and its cost competitiveness, MP is likely to continue as a leader in cement
industry.
160 MT
220 MT
130 MT
187 MT 70 Mt of Capacity required to meet domestic demand alone
Installed Capacity Requirements: India
2005 2009
18
Limestone Reserves
Coal Reserves
MP Is Naturally Strong
•Madhya Pradesh has a vast reserve of limestone. The total
reserves of limestone is 3625.98 mn tonnes spread across
the districts of Damoh, Hoshangabad, Mandsaur,
Narsinghpur, Rewa, Satna, Panna, Katni, Sagar, Dhar,
Khargone, Jhabua, Balaghat, Sidhi and Morena.
Availability of high quality limestone for cement production and coal for captive power plants makes Madhya Pradesh
an ideal location for cement production.
Proportion of Own Power To
Purchase (India) Likely To
Increase Further
•In India, energy costs account for 35 per cent of the total
production costs. Further, the power costs are high in
India and are growing at a rapid rate. The industry is trying
to insulate itself against this by setting up captive thermal
power plants. The share of energy costs can be reduced to
16-20% if captive power plants are set-up.
•Madhya Pradesh has a several locations (marked in circle)
that offer limestone and coal. This provides an excellent
opportunity to set-up a captive power plant to ensure
regular and cost competitive supply of power.
•The industry is expected to witness a significant boom as
several project of similar profile are likely to mushroom near
the limestone reserves of the State.
Captive Plants43%
Electricity Boards
57%
19
Nagpur(350 Kms)
Lucknow(680 Kms)
Kanpur(600 Kms)
Mumbai(780 Kms)
Pune(800 Kms)
Bangalore(1400 Kms)
Chennai(1430 Kms)
Bhubaneshwar(1200 Kms)
Hyderabad(840 Kms)
Delhi(740 Kms)
Jaipur(580 Kms)
Ahmedabad(570 Kms)
Kolkata(1350 Kms)
Patna(910 Kms)
Madhya Pradesh Has Access To Key
Cement Markets Across The Country.
Key Markets
(Distance From Bhopal)
Add-ons to Natural Advantage
North South East West Central
North 21.5 0.2 3.4
South 29.9 0.7 5.9 0.2
East 0.1 0.1 16.8 0.3 1.3
West 0.2 0.7 0.3 17.3 1.1
Central 2.52.5 2.52.5 0.10.1 14.414.4
Cement Movement Across The Country 2004-05 (MT)
Source
Destination
•With land rates being as low as US$ 2 per sq mt in the industrial belts of
Rewa, MP has the lowest cost of land in the Country.
•The key cement markets are in close proximity to MP and are well connected
through railway lines and roads. This ensures high and sustained demand of
cement produced in these plants.
•MP also has a strategic locational advantage; as some of the key cement
consuming centers like Kanpur, Nagpur, Patna, Nasik etc are in close
proximity to its limestone reserves. Since, freight expenses form 16-22% of
the operating costs the proximity to these markets would serve as an edge in
the long run.
•Further, the largest cement consuming states of Maharashtra and Uttar
Pradesh are deficient in cement as they have only 1.9% and 1% of the total
limestone reserves of the country.
•Even today around 25% of the cement produced in the central India is
exported in surrounding regions of North, East and West. With the rising
industrial and infrastructural activity expected to happen both within the state
and its surrounding regions, the state holds a huge potential for cement
manufacturers
20
MP : A Preferred Investment Destination
2.2 Mn 2.2 Mn TonnesTonnes
4.2 Mn 4.2 Mn TonnesTonnes
1.55 Mn 1.55 Mn TonnesTonnes
2 Mn 2 Mn TonnesTonnes
3 Mn 3 Mn TonnesTonnes
(Vikram Cements Ltd.)
2 Mn 2 Mn TonnesTonnes
(Maihar Cements Ltd.)
1.02 Mn 1.02 Mn TonnesTonnes
(Diamond Cements Ltd.)
• Most of the leading cement
manufacturers of the Country have
presence in MP. Seven major Cement
plants are operating in the State with the
annual installed capacity of 15.97 million
tonnes.
• Availability of raw material and investor
friendly environment has facilitated
several leading players in setting up their
shops in the state. Eyeing the potential
opportunity, the existing players are
proposing to expand their operations in
the State. For instance, JP Cements and
ACC Ltd. have proposed expansion of
around 1.3 mn tonnes each in annual
capacity.
• Satna region of MP, has the most
number of cement plants in the
Country.
Installed CapacityInstalled Capacity
Presence of leading cement manufacturers and their expansion plans, are true reflection of investor confidence and
the huge potential the State holds for the cement manufacturers.
21
Way Forward
Proposed Projects
Location Player Description
Sidhi Jaiprakash Associates Ltd.
Install Cement unit with installed capacity of 2 million tonnes
Satna JV (SAIL & JAL) Install Cement unit with installed capacity of 2.2 million tonnes
Satna M/s Rewati Investments
Install Cement unit with installed capacity of 2 million tonnes
New Limestone Area
Grasim Install a Cement plant with an investment commitment of US$ 111 million
Considering the present scenario & the availability of raw material, there is a scope of further investment of
$2.5 bn* in this sector in the state.
•M.P. State Industrial Development Corporation has prospected that Damoh-Panna area, and Bela-Pagra of
Rewa have limestone deposits of 8 mn tonnes and 20 mn tonnes respectively.
•Besides these areas, the area around Raghurajnagar and Nagod Tehsil of Satna district also have deposits of
limestone.
Source: www.destinationmadhyapradesh.com
Auto & Auto Components
23
Evolving Landscape
Madhya Pradesh : Auto Hub of India
Advantage Madhya Pradesh
M.P.: An Investment Destination
Offering Specific Incentives
Exploring the Opportunities: Project Profiles
Sector Profile: Auto & Auto Components
24
333 350 407
602 616
780
1,027
1,386
1,771
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06
Evolving Landscape•The Indian automotive industry has flourished in the recent years. This extra-
ordinary growth in the Indian automotive industry has been a result of the
increase in the per-capita disposable incomes which has resulted in
improvement in the living standards of the middle class.
•Car Companies in India have lined up more than US$ 6.67 Billion investments.
•Most automakers of the world either have active presence in the Country or they
source components from Indian component manufacturers. The leading global
players such as Hyundai, Ford, Mercedes, Toyota, Suzuki and GM have set up
base in India.
•The growth of the industry is primarily driven by the cost advantage of
manufacturing components in India, which is typically lower by about 30% as
compared to developed countries.
•As the automobile industry has grown and matured, the Indian auto components
industry has also grown tremendously, and is rapidly achieving global
competitiveness both in terms of cost and quality.
•The Indian automotive component industry has grown at a staggering pace over
the last few years. The US$ 8.7 billion industry has registered a 30% jump over
last year. The exports have increased from US$ 1 billion in 2003-04 to US$ 1.4
billion in 2004-05.
•Industry observers believe that while Indian automobile market is likely to grow
at a measured pace, the auto components industry is poised for a take-off and is
one of the handful of industries where India has a distinct competitive
advantage.
US$ Million
India’s Auto Ancillary Exports
675,100707,200
902,100
1,061,5001,143,000
519,800
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
4.75
27.57
17.657.67
20.58
April- August
Full Throttle- Car Sales Have Soared This Year
25
MP: Auto Hub of India •MP has been actively promoting the development of the engineering industry in the
state. The state is one of the leaders in auto and auto ancillary industry with around 5
Original Equipment Manufacturers (OEMs) and over 100 auto component
manufacturers.
•Madhya Pradesh has an auto component industry of around US$ 306 million.60% of
the auto industry in Madhya Pradesh is controlled by Auto component players.
•The State has developed an industrial cluster at Prithampur which provides readily
available infrastructure for companies willing to set up manufacturing facilities in the
State. The estate is spread over an area of 5,000 hectares. The proposed multi
product SEZ is in the vicinity of the industrial estate.
•The state is witnessing an upsurge in investments in the sector. The strategic
location, Government cluster development initiatives, skilled workforce are some of
the factors that are providing the state a competitive edge over other states.
Pithampur Auto Cluster Development
The Union government of India has sanctioned an auto cluster in the Pithampur
industrial area. The Government of India will grant an amount of US$ 11 million for
the purpose. Local industrialists have agreed to contribute US$ 3 million for the
project.
The cluster would be equipped with the world’s largest testing facility, with
capabilities of testing various category of vehicles in different climatic conditions at
different stages. The track would also issue certificates for vehicles produced in the
Country and abroad.
Madhya Pradesh: Competitiveness
Strategic location
Highly productive & disciplined workforce
Presence of large number of players across the value chain
Proactive and professional approach of State Government
Quality network of educational institutions
Key Players
26
Automotive Proving Grounds - Pithampur
• Area of Land – 4,000 Acres
Exemptions-• Registration Fees & Stamp Duty• Sales Tax• Entry Tax, • Octroi, • Works Contract Tax• Property Tax• Other Local taxes
Proposed Facilities-
• High Speed Test tracks
•Oval shaped test tracks at the outer boundary
•Two straights of 3500 meters & Curves of radius
100m each
•Maximum testing speed of 350 Km/ hr
• Dynamic Platforms
•Dynamic Area of 150 meters radius
•Two acceleration lanes of 1000m
•Testing speed more than 200 km/hr
• Straight Line Braking
•Four different braking surfaces
•Low with basalt tiles 250 m long
•Low with ceramic tiles 250 m long
•High (Asphalt): 200 m long
•Acceleration lane length of 1000 m
Phase I: August 2009
Phase II: October 2010
•Buildings
•General Roads
•Vehicle Dynamics Lab
•Power train lab
•Wet skid pad
•Sustainability track for
trucks
•High speed circuit
•Gradient Test Tracks
•Braking test tracks
•External noise test track
•Accelerated fatigue
•Gravel track
•Off road track
•Dry Handling Track
•Comfort Track
Project Implementation Schedule
27
Automotive Proving Grounds - Pithampur
28
Advantage MP
•Pithampur is an industrial
estate spread over 5000
hectares of Madhya
Pradesh, India. •Pithampur is a hub for the
automobile manufacturing
industry and in addition to
units such as Eicher
Motors, Kinetic Honda,
Hindustan Motors and Bajaj
Tempo Ltd.•With 5 OEMs ( plus 2
proposed) and over 100
component manufacturers,
Pithampur is an ideal
location for Auto and Auto
component industry
Pithampur- The Auto-Auto Component Hub of India
•Being centrally located and in
close proximity to key Indian
cities MP is the ideal location
for Auto-Auto Ancillary
industry.•Specialised infrastructure in a
cluster and government
support have enabled MP to
surge ahead of other states.
Madhya Pradesh- Strategically Placed For Auto
•With cost reduction and precision engineering being the mantra for most OEMs India is all set-to become the Auto component supplier of the world.
•Following the Country’s WTO commitments, the Government announced the Auto Policy of 2002, aimed at developing India as a manufacturing and export base for small cars and auto ancillaries.
India- The Emerging Power
•The global automotive parts industry has undergone a sea change over the past decade. Consolidation and restructuring have accelerated with the opening of new and increasingly important markets.
•The search for scale and scope economies by large manufacturers and the difficulty of smaller manufacturers to sustain themselves in the investment race have led to increased outsourcing to countries like India
•Suppliers are diversifying geographically, increasing research and development, and entering into joint ventures in an effort to seek more module contracts.
•The world is also witnessing mushrooming of OEMs in India, China, Thailand etc.
World is looking at India
29
Offering Specific Incentives
•Commercial tax rates levied on automobile components industries and trade are being rationalized and will be brought at par with the rates prevalent in other competing states.
•Entry tax rates on raw material such as steel being used by automobile component industries shall be rationalized.
Following the Country’s WTO commitments, the GoI announced the Auto Policy of 2002, aimed at developing India as a manufacturing and export base for small cars and auto ancillaries. Accordingly, the policy enumerated several measures to develop the automobile market, including:
•Removal of the clause on minimum foreign direct investment;
•Removal of earlier stipulations on indigenisation and import-balancing requirements;
•Permitting foreign automobile manufacturers to set up wholly-owned subsidiaries in India, without requiring approval from the Foreign Investment Promotion Board;
•Specific fiscal incentives for cars less than 3.8 meters in length, to enable India to emerge as the Asian base for the export of small cars and multi-utility vehicles;
•Incentives to manufacture automobiles using alternative fuel technology, such as CNG and electric batteries;
•Proposals to discourage the use of old vehicles by levying higher taxes on older vehicles;
•Proposal for a terminal life policy for commercial vehicles (CVs) along with incentives for the replacement of such vehicles.
There are several trends w.r.t government legislations that are making Indian companies increasingly competitive:
•Safety norms to be brought on par with that of developed countries
•Emission norms and environmental standards in line with those in the developed world
•Fiscal duties have been significantly reduced over the years
•Gradual de-reservation of items for small-scale sector augurs well for the industry
•Value added tax (VAT), as a system of taxation, aimed to harmonise the tax structure across states
•Exports are virtually not subject to any taxes on account of the various advance license schemes, etc.
Na
tio
na
l P
oli
cy
Sta
te S
up
po
rt
Re
gu
lato
ry T
ren
ds
Government initiatives would act as a key driver for
growth of your investments.
30
MP: A Strategic Location
Mumbai
(780)
Vishakapatnam
(1310)
Kandla
(933)
Haldia
(1350)
Bhilai
Nagpur
(352)
North
(42%)
West
(28%)
South
(25%)
East
(5%)
Jamshedpur
(1220)
Satara, Pune, Ahmednagar, and Raigad
(800)
• The cluster at Pithampur also has significant
locational advantages on following three aspects.
1)Proximity to steel plants of Bhilai, Nagpur etc is
likely to result in reduction raw material costs. The
cost of raw material is around 60% of the total
production costs of which steel is the key component
within the raw material.
2)Proximity to ports both in east coast and west coast
provides a vital linkage to the international markets.
Since, the auto industry is exports driven this linkage is
critical to the development of the cluster. Further,
water linkages to both sides provides better linkages to
countries.
3)Proximity to Markets: Being centrally located and
being well connected to major cities such as Delhi,
Mumbai, Pune, Kolkatta etc. assists the companies to
reduce logistic costs.
Further, automobile manufacturers are spread across
the country. Being centrally located the auto
component manufacturers would have access to a
larger client base in the country.
Key Steel Plants
(Distance from Bhopal)
Key Ports
(Distance from Bhopal)
Region
(Share of Passenger Car Market)
31
132.9
149.18112.14
147.66
136.5112.65
102.88
0
50
100
150Delhi
Kolkatta
Mumbai
ChennaiHyderabad
Indore
Pune
MP: A Preferred Investment Destination
•Some of the other supporting factors assisting your business would be:
1. Central location
2. Availability of skilled manpower
3. Low operating cost
4. Co-operative Labour Union etc.
•Madhya Pradesh is one of the leading states in the Country for the auto and
auto ancillary industry in the Country. To its advantage several units are
cluttered around a small stretch of land which would enable both forward and
backward support to your business.
•The low set-up costs make business proposition one of the best in the world.
For example, cost of developed land in Pithampur industrial area is only US$
1.7- US$ 4 pr sq meter.
•The city of Indore also fairs well in terms of low cost of living index. Hence,
the companies in Indore can expect manpower costs savings of upto 30% in
comparison to companies in Chennai, Mumbai, Pune etc. Manpower costs
are approximately 8-10% of the total costs.
• In terms of technical manpower as well the state is well placed with over
18,000 technical graduates and an overall and an overall figure of 230,000
graduates add to the workforce every year.
Market Intensity Index Comparisons- A Reflection of Low Cost of Living
•Information Technology Based Designing & Testing
– Leverage the Proving Grounds @ Pithampur
- Leverage Embedded Software @ Bhopal
•Research & Development Center
•Manufacturing Hub For South-East Asia
•Auto- Component Manufacturing Facility
•Offshoring/ Outsourcing Auto Components
Investment Opportunities in MP
Textiles & Apparel
33
Textile: Evolving Landscape
Madhya Pradesh : Emerging Textile Hub of India
Madhya Pradesh’s Inherent Advantages
M.P.: An Investment Destination
Offering Specific Incentives
Exploring the Opportunities: Project Profiles
Sector Profile: Textiles
34
India contributes to about 25% share in the world trade of cotton yarn. It is the
world’s third-largest producer of cotton and second-largest producer of cotton yarns
and textiles.
Indian textile industry has about 22% to the world spindleage and about 6% to the
world rotor capacity installed. It has second highest spindleage in the world after
China with an installed capacity of 38.60 Million
It has the highest loomage (including handlooms) in the world and contributes with a
share of 61%. It contributes about 12% to the world production of textile fibers and
yarns.
India is one of the largest consumers of cotton in the world, ranking second to China
in production of cotton yarn and fabrics and first in installed spinning and weaving
capacity
Through export friendly government policies and positive efforts by the exporters,
textile exports have more than doubled from USD 7.55 billion in 1993-94 to USD 17
billion in 2005-06.
The ready made garment sector is the biggest segment in the India’s textile export
basket contributing over 46% of the total textile exports.
Export of cotton based items continue to pre-dominate which is natural in view that
India is the world’s third-largest producer of cotton
Exports have grown at an average of 9.47% p.a over the last decade. Textile exports
in 2005-06 has gone up to USD 17 billion which is 23% higher than previous year.
The industry is poised to play an increasingly important role in global cotton and textile markets as a result of domestic and multilateral policy reform.
Production Of Fibers (Mn Kgs)
Raw cotton 4122
Man-made fibre 1023
Production Of Yarn
Cotton yarn 2272
Filament yarn 1109
Ind
ian
Pro
du
ctio
n
Sta
tist
ics
(200
5)
About 4% of Gross Domestic Product
About 14% of total industrial production
Employs 20% of work force
About 17% of gross export earnings
Commodities (Million USD)
Readymade garments 6038.69
Cotton textiles 3290.31
Man-made textiles 1948.72
Wool & woolen textiles 66.57
Silk textile 406.82
Handicraft , Coir etc 1314.13
Total 13065.24
Ind
ia’s
exp
ort
of
text
iles
(200
4-05
)C
on
trib
uti
on
of
Tex
tile
Sec
tor
Textile Evolving Landscape
35
MP: Emerging Textile Hub of India
Spinning Units 40
Spindles 14,14,000
Export-Oriented Spinning Units 12
Rotors 14,348
Looms 6,500
Exclusive Weaving Units 8
Power Looms 43,290
Power Loom Units 17,524
Handlooms 47,000
Composite Mills 20
Infrastructure at a glance•The industrial history of MP dates back to the later part of 19 th
Century when in 1866, a cotton textile unit established by then
Maharaja Holkar at Indore.
•Presently, the textile industry in the state is thriving in the
southwest (Malwa) region. A large number of cotton textile mills
are clustered around Indore, Ujjain, Burhapur etc.
•Easy availability of cotton, Ginning and Pressing units, skilled
manpower, developed education system, entrepreneur skills etc
are some of the reasons for rapid growth of the industry in the
State.
•Presence of major textile players such as Bhilwaras, Indo-Rama,
Bhaskar, Oswals, Parasrampuria, Maikal, S-Kumar’s etc and the
proposed expansion plans indicate the high investor confidence in
the State.
•The state is focussing on cluster development around sectors of
strategic advantage by developing infrastructure in and around
these clusters. Growth of export oriented spinning and large scale
knitted garment units near Indore, and growth of Chanderi &
Maheshwari products are excellent examples of cluster
development.
Bhaskar Industries Ltd.
36
MP Making Businesses Work
Process Raw Material Spinning Weave/ Knit ProcessingStitching
(Garment/ Apparel)
Ad
van
tag
e
Mad
hya
Pra
des
h
Market
• Climatic Conducive for cotton production with large varieties available within and surrounding States
• Being centrally located and well connected the raw material can also be brought on short notice from any part of the Country
• Over 40 spinning units
• Over 1.4 million spindles
• The manpower has on the job experience in latest technology
• Several units are available for procurement by investors
• Over 47000 handlooms are installed in MP
• Over 43,000 power looms
• Rich tradition of weaving and knitting
• Several export oriented processing units are present in the state which can be developed further.
• The state has a blend of both new age and traditional processing capabilities essential to promote Indian products internationally.
• MP is renowned for skills of its people in stitching garments.
• Manpower is well trained and is capable of producing world-class garments/ apparels.
• Further, the states strong leather industry is likely to complement the textile industry.
• Strategic central location to develop warehouse
• Well connected with the entire Country through railway network
• Proximity to ports in Maharashtra and Gujarat provide cost competitiveness both for exports and imports
Madhya Pradesh Has Strengths Across The Value ChainMadhya Pradesh Has Strengths Across The Value Chain
•Availability of skilled manpower at competitive costs•Government initiatives in terms of proposed apparel parks, fiscal incentives etc would benefit the investors.
•Success Stories: S Kumars, Bhilwaras, Oswals, Maikal, Indo-Rama etc.
•Madhya Pradesh is poised to become the next destination for leading textile companies, who would find market environment
conducive to park their investments.
•The state presents a tremendous opportunity by providing significant advantages across the value chain.
•The state has several units in a cluster, which could be acquired and refurbished to provide a quick start to your business.
• In terms of technical manpower as well the state is well placed with over 18,000 technical graduates and an overall and an overall
figure of 230,000 graduates add to the workforce every year.
37
MP: A Preferred Investment Destination
Tex
tile
Clu
ster
s in
Th
e S
tate
Ava
ilab
ility
of
Raw
Mat
eria
l
Malwa Region
•Madhya Pradesh is poised to become one of the leading states in textile industry through its cluster development initiatives. To its advantage several powerloom/ handloom units are cluttered around a small stretch of land. To provide a kick start to your business there is a significant opportunity to target and acquire these units.
•The clusters also have significant locational advantages. For instance, Malwa region near Indore cluster is a leading cotton growing belt and a textile hub in the Country providing the competitive edge to your company. The material costs account for nearly 55-60% of the costs of production in India. Even a 10% of savings due to proximity to Malwa region could result in ~5% increase in operating margins.
•To further support your business endeavours Government of Madhya Pradesh has created specialised infrastructure in the form of Apparel parks. Being an industry with social importance, the Government also provides special fiscal and non fiscal incentives to the units in the state.
•Some of the other supporting factors assisting your business would be:
1. Central location
2. Low set-up costs (Land, building etc)
3. Availability of skilled manpower
4. Low operating cost
5. Co-operative Labour Unions (one of the best in the Country)
6. Government support etc.
Handloom Clusters
Power-loom Clusters
Proposed Apparel Parks
Malwa region is a leading cotton
growing belt
38
Offering Specific Incentives
•Special Incentives to Readymade Garment, Powerlooms and Made-up Garment industries:
• Benefits under Government of India’s schemes such as Apparel Park Scheme, Textile Centre Infrastructure Development Scheme (TCIDS)
• Modernization of units of this sector through Technology Upgradation Fund Scheme (TUFS), Group Work Shed Scheme.
• Exempted from the binding of minimum wage fixation on a daily basis.
•An Apparel Training Institute would be set up with the assistance of Apparel Export Promotion Council in the State, so that maximum number of trained worker could get employment in the Ready-made Garment industry.
•Efforts to establish a national level fashion designing technology institute in the State in order to facilitate textile industry of the State regarding the information for design development and to provide forecasts.
•In order to accelerate the pace of modernization of the unorganized power-loom sector, modern power loom clusters would be developed at Burhanpur, Indore and Ujjain with financial assistance sought under Government of India’s Group Shed Scheme.
•Development of the process house through private participation by providing necessary facilities and if required their cases would be considered by the committee for Mega Projects.
•The provision related to labour laws declared for Special Economic Zone will be made applicable to the projects / special areas established such as Apparel Park, Garment Complex and unit established/being transferred under Group Work Shed Scheme.
•Cotton ginning and pressing units would be provided high quality cotton and they would be encouraged for modernization under centrally sponsored schemes with the help of their recognized associations.
•Construction of tar roads for smooth transportation to Cotton Mandi and construction of cement platform for storage of cotton, using Mandi Board's fund would be taken up on priority basis.
•Units purchasing yarn produced within the State, would be given a "set off" of 2% (Two percent) on Commercial Tax would be given.
For ensuring maximum value addition in utilizing available resources and strengthening the different components of the Madhya Pradesh
offers special incentives to units present in the state. This has further increased the competency of the units in the state and has made
investments more lucrative.
Highlights ofHighlights of Special Incentives Given to Textile Industry
39
118
102.88 98.1
136.5
112.14
147.66
149.18
97.57
106.980
50
100
150Delhi
Kolkatta
Mumbai
Chennai
BhopalIndore
Ahemadabad
Surat
Jaipur
The Way Forward…
Potential ProjectsPotential Projects
Segment Investment Required (US$ Million)
No. of Units Output Employment
Quantity in Million Value (US$ Million)
Spinning (1 mn Spindels) 489 10 131 Kgs 408 16,000
Weaving (1000 looms) 171 21 117 Kgs 104 2984
Processing 102 4 120 Kgs 200 1,600
Circular Knitting (1000) 111 33 127 Kgs 378 1,700
Garment Woven 254 520 130 pcs 722 107,000
Knitwear 185 333 100 Pcs 389 35,000
Total 1,313 921 2,200 164,240
•With all the right ingredients in place, Madhya Pradesh has several locations which are suited for developing textile units. Investments are likely to flow in the next few years. The state is likely to witness the resurgence of textile industry, which would play a significant role even at national level. The improving infrastructure and rising standard of living are likely to infuse capital into the state.
•The state could attract investments of around US$ 1.3 billion thereby generating direct employment for over 0.16 million people. Further, with the mordenization initiatives undertaken by the Government the states competitiveness in the textile industry is likely to rise.
•MP also fairs well in terms of low cost of living index. Hence, the companies in Indore can expect manpower costs savings of 20-30% in comparison to companies in Chennai, Mumbai, Surat, Ahmedabad etc. The manpower costs in India typically form 8-10% of the total costs.
Market Intensity Index Comparisons- A Reflection of Low Cost of Living
Source: Madhya Pradesh Textile Report, MPSIDC
Pharmaceuticals
41
Evolving Landscape
Madhya Pradesh : Gaining Momentum
M.P.: An Investment Destination
Sector Profile: Pharmaceuticals
42
The global pharmaceuticals market generated total revenues of USD
534.8 billion in 2005, representing a compound annual growth rate
(CAGR) of 7.7% for the five year period spanning 2001-2005.
Market size expected to reach USD 767.2 billion by the end of 2010.
With an estimated market value of USD 8.2 billion (at consumer
prices, inclusive of exports) in 2004, India accounts for 2% of the
world market for pharmaceuticals.
According to the global ranking estimates, India ranks as the 4th
largest pharmaceutical market in volume terms and the 13th largest
market in value terms.
The significant difference in the value and volume wise rankings of
the Indian companies is largely attributed to the prices of drugs
manufactured in the Country, which rank among the lowest in the
world. With the quality being maintained at par with international
standards, India exports drugs to more than 200 countries across
the world.
With formulations contributing to 50% of the exports, India’s pharma
exports were approximately USD 3.17 billion.
Projections of growth of Indian pharma market (exclusive of exports)
range from USD 11.9 bn in 2009 to USD 25bn by 2010
Challenges faced by Global Companies Today
Reduced growth rate
Increasing cost of R&D
Shorter time span for exclusivity
Fewer block busters
Price pressure from Generics
Higher complexity through more number of smaller revenue drugs
Evolving Landscape
Potential
Low-cost, high-quality production
Large and growing US FDA approved plant capacity
Synthetic Chemistry talent for early stage compound development
Low cost of research and world-class testing facilities
Cost of a research scientist in India is only about 1/6th to 1/4th of that in USA
Contract Research and Manufacturing (CRAM)
IT enabled services including clinical/market data analysis
Clinical Trials: Revenues to grow from $70 million (2002) to $1-1.5 billion by 2010 driven by a 60% cost advantage and large gene pool for trials
Major opportunities in Biotechnology are in the areas of Bio-informatics, Bio-pharma etc.
Many international biotech companies like Chiron Corp, GSK and Sigma Aldrich Corp have expressed interest especially in Bio-manufacturinga
43
MP: Gaining Momentum
Ranbaxy is the largest Indian pharmaceutical company by sales. During 2005, its revenue was US$ 813 million while net profit stood at US$ 50 million. Ranbaxy has manufacturing facilities in seven countries (including India), most of which are USFDA approved.
Ranbaxy is investing US$ 100 million for expanding production capacity of Indian, Brazilian and US manufacturing utilities.
It has a bulk drug and formulation plant at Dewas in Madhya Pradesh. In the current year Ranbaxy is investing US$ 100 million for expanding production capacity of Indian, Brazilian and US manufacturing units.
IPCA Laboratories is one of India's leading pharmaceutical companies with a strong thrust on exports. The Group's principal activities comprise manufacture and distribution of drugs and pharmaceuticals. The products include tablets, capsules, basic drugs, orals, liquids and injectables.
It has a bulk drugs and formulation unit at Ratlam and a bulk drug facility in Indore in Madhya Pradesh.
IPCA Laboratories plans to invest US$ 22 million to expand its formulations capacity at Ratlam in Madhya Pradesh. It also plans to invest US$ 14 million in the first phase to set up a new export oriented formulations unit in Indore.
Nicholas Piramal India Limited (NPIL) is one of the leading pharmaceutical and healthcare company with sales of US$ 290 million in 2005-05. NPIL is ranked fourth in domestic formulations sales and second in total domestic pharmaceuticals sales.
Its Pithampur plant in Madhya Pradesh is accredited by reputed organisations like Allergan, Novartis, Solvay and IVAX, among others.
Nicolas Piramal is planning to invest US$ 45 million to enhance its research and development activities besides strengthening its manufacturing facilities
Located at the very heart of India, Madhya Pradesh is
the second largest State and is easily accessible from
every corner of the Country.
Madhya Pradesh has a made a lot of progress in the
last couple of years and is paving way to be at the
forefront of the Pharma industry.
Major players such as Ranbaxy and IPCA already have
a foot hold in the State and are on the road to expansion
under the favourable industrial policies and initiatives by
the State Government.
Madhya Pradesh is envisaging a pharma cluster at
Indore and has constituted a board for Biodiversity and
life sciences under the chairmanship of the Chief
Minister.
Efforts are also being made to establish national level
training centres through support of large industrial
houses of MP. This would ensure that the State will
never be short of professional expertise. This is an
added advantage to the investors looking to invest in the
in the State as there would be a wide availability of
qualified and skilled professionals at a relative low
manpower investment cost.
44
MP: Offers The Right BlendAlbert David is one of India's leading pharmaceutical companies in the country with a strong thrust on exports. During the current fiscal year, the company has achieved an excellent annual sales turnover of US$ 19.55 million) and ranks 58th out of 22,000 plus companies competing in the Indian pharma market.
The Group's principal activities comprise manufacture and distribution of
drugs and pharmaceuticals, Disposable Syringes, Oral solids etc.
It has a syringes unit at Mandideep and a bulk drug facility in Indore in
Madhya Pradesh.
The company invested over US$ 222 million in the State and employs
over 175 people .
Lupin Laboratories is one of the leading pharmaceutical and healthcare
company with sales of US$ 290 million in 2005-06. Lupin is among the few
companies from India with global scale manufacturing facilities that
measure up to world's best quality standards.
The focus areas of the company includes anti-Tuberculosis,
cephalosporins, cardiovascular, anti-asthma, Non-steroidal anti-
inflammatory drugs
Its Mandideep plant in Madhya Pradesh manufactures cephalosporins,
lisinopril etc. .
The company invested over US$ 178 million in the State and employs
over 300 people .
Lupin Laboratories is expanding its manufacturing plant at Mandideep with
an investment of US$ 4.5 million.
By leveraging the existing manufacturing base, a strong
health care system along with a low cost resource pool
Madhya Pradesh has the potential to further develop the
pharmaceutical industry in the State.
Madhya Pradesh’s network of health facilities comprises 145
hospitals, 343 community health centres, 1,705 primary
health centres. It also has 34 Ayurvedic and 4 homoeopathic
hospitals. The number of in-patient beds in Madhya
Pradesh’s hospitals is 20,839.
MP has the right blend on freshers and laterals for the
pharmaceutical industry. The institutes across the State are
well equipped to provided to train manpower in each domain.
There are 9 key pharmacy colleges in the state supported by
6 medical colleges and 43 management institutes (including
one of the six Indian Institutes of Management at Indore).
The laterals have experience of working in India’s leading
pharmaceutical companies such as Ranbaxy, Lupin, NPIL,
Albert David etc.
•B. R. Natha College of Pharmacy, Mandsaur•College of Pharmacy, Indore•Department of Pharmacy, Bhopal•Dr. Harisingh Gour Viswavidyalaya, Sagar• Institute of Pharmacy, Gwalior•R.K.D.F. Institute of Sciences & Technology, Mandideep•Shri G.S. Institute of Technology & Science, Indore•V.N.S. Institute of Pharmacy, Bhopal
Key Pharmacy Institutes Pass-out ~300 Students Each Year
45
MP: A Preferred Investment Destination
• Madhya Pradesh is all set to become the next pharma hub of India through its cluster development strategy and government support
to the investors. There are many significant avenues and areas that can be tapped for setting up and scaling up your business
operations.
INDICATOR VALUE (US $)
Industrial land (per sq m) 5-30
Office space rent (per sq ft per month) 0.5 - 1
Residential rent (for a 2,000 sq ft house, per month)
280 - 350
5-star hotel room (per night) 80-100
Electricity (per kWh) 0.09 - 0.13
Water (per 1000 liters) 0.2
COST INDICATORS FOR ESTABLISHING AND OPERATING BUSINESS IN MP
• To further support your business endeavors Government of Madhya Pradesh is developing specialized infrastructure in the form of
SEZ Indore. Being an industry of economic importance, the Government also provides special fiscal and non fiscal incentives to
the units in the state.
Drug Research & Discovery
Drug Research & Discovery
Approval & Launch
Pre-clinical Development
Clinical Development Manufacturing Marketing/
Exports
• Availability of skilled manpower
• Low attrition rates
• Government support
Madhya Pradesh has strengths across the value chain
• Central location
• Low cost of labour
• Specialized infrastructure (SEZ)
• Low operating cost
• Low set-up costs (Land, building etc)
• Specialized infrastructure (SEZ)
• Low operating cost
• Availability of skilled manpower
• Low attrition rates
• Government support
• Availability of large target population
• Target population with diverse genetic set-up
• Availability of skilled manpower
• Low attrition rates
• Low cost of labour
Market Intensity Index Comparisons- A Reflection of Low Cost of Living
147.66
108.17 112.65102.88
132.9
0
20
40
60
80
100
120
140
160
Mumbai Bangalore Hyderabad Indore Pune
Engineering & Electrical Equipments
47
Evolving Landscape
Madhya Pradesh : Gaining Momentum
M.P.: An Investment Destination
Sector Profile: Engineering & Electrical Equipments
48
Key developments observed during post liberalization period
“Better profitability, spruced up manufacturing setups, aggressive implementation of quality initiatives marked by higher growth and better returns on capital employed…the hallmark of Industrial India – the engineering & capital
goods sector is back with a bang” – ET 500
Exports
8% share in 1990s
14% share in 1999-2000
21% share in 2004-05 (USD 16.4 billion)
Production 34.4% share in total industrial production
Up by 5% share during last decade
Foreign Technology Agreements
51% of foreign technology collaborations were approved in the engineering industry
FDI 36% of the total approvals went to the engineering industry
(1991-2005)
De-licensing 34% share in number of approvals and 40% share in investment
Evolving Landscape India has a strong engineering and capital goods base. The Indian engineering manufacturing sector has been growing at the rate of
about 5.9 per cent in the nineties. With a size of US $ 22 billion, the engineering sector exports stood at US $ 6.6 billion in 2001-02 and
imports at US$ 4.9 billion in the same year. The engineering manufacturing sector employs over 4 million skilled and semi-skilled
workers (direct and indirect).
The range of machinery produced in India
is wide and includes heavy electrical
machinery, textile machinery, machine
tools, earthmoving and construction
equipment including mining equipment,
material handling equipment, diesel
engines, electric motors, pumps,
instrumentation, oil & gas equipment,
sugar machinery, railway equipment,
metallurgical equipment etc. Many leading world class companies
such as GE, Ford, Caterpillar, Sony,
Honda, LG, Hyundai, Siemens, Philips,
Daimler Chrysler, Fiat, Lafarge, ABB,
Electrolux, Volvo have manufacturing
base in India.
49
MP: Gaining Momentum
•Located at the very heart of India, Madhya Pradesh is the second
largest and the most easily accessible states in the Country. The State
is blessed with natural wealth, and abundant supply of power and
people.
•The state has the largest plant of India’s leading engineering company,
Bharat Heavy Electricals Limited, (BHEL). The plant had recorded a
turnover of US$ 341 million in 2004-05. The profit before tax was also
high at around US$ 33.78 million
•An Engineering Cluster is proposed to be established at a cost of US$
15 million at Govindpura Industrial Estate near BHEL, Bhopal. This will
benefit about 445 industrial units in the Estate.
•A common facility and necessary infrastructure will be developed for
industries. Industries will have special facilities pertaining to engineering
works and power sector related specialization since the site will be in
the vicinity of Bharat Heavy Electricals Limited.
•The project will be developed with an estimated cost of US$ 1.53 billion
with Central government share of US$ 10.67 million. The project has
been given 'in principle' sanction. A company namely Bhopal Clusters of
Engineering Organization Pvt Ltd has been formed.
Some Of The Supporting Factors Assisting Your Business Would Be:
• Skilled Manpower
• Competitive Labour Cost
• English Speaking Population
• Managerial Excellence To Deliver Quality Goods On Time.
• Indigenous Availability Of Raw Materials
• Strategic Location Allowing Exports To Near And Far Countries
• Diversified Industrial Base With Supporting Ancillary Industries
• Established in the late 50’s, Bharat Heavy Electricals Limited ( BHEL ) is, the largest engineering and manufacturing enterprise in India, and one of the leading international companies.
•BHEL’s Bhopal plant is the company’s oldest unit with updated & state-of-the-art manufacturing facilities.
•The product range at Bhopal includes Hydro, Steam, Marine & Nuclear Turbines, Hydro & Turbo Generators, Transformers, Switchgears, Controlgears, Transportation Equipments, Capacitors, Bushings, Electrical Motors, Rectifiers,Oil Drilling Rig Equipments, Battery Powered Vehicles and Diesel Generating sets.
•This unit have been recommended for ISO-14001 certificate for its Environment Management System.
Bhopal
50
MP: An Investment Destination•Madhya Pradesh is emerging as a Engineering hub of India. There are many significant avenues and areas that can be tapped for setting up and scaling up your business operations.
•To further support your business endeavors Government of Madhya Pradesh has is developing specialized infrastructure in the form of SEZ Indore and Engineering Cluster.
•Being an industry of economic importance, the Government also provides special fiscal and non fiscal incentives to the units in the tate.
Value Proposition MP’s
Position
(2006)
Discussion
Labour Cost MP has one of the lowest labour costs
Talent Pool MP dominates the talent pool needed to support engineering and auto sector
Quality of Talent MP’s talent pool is capable of meeting global standards
Delivery Capabilities ITO helped develop delivery model and vendor base to support offshoring
Supply Base MP has a vibrant and expanding supply base to support offshoring
Local Market MP is one of the fastest growing market
Time to Market MP’s geographic position offers the possibility of 24-hour cycle
Growing Capacity MP offers an economic of scale for capacity
Productivity MP offers highly skilled labour pool
Support Customer Corporations are setting operations for offshoring, and local markets
Government
Incentives
Government of MP is working on incentives to attract FDI
MP’s Position Across Offshoring Value Drivers
MP’s
Position
(2010)
Strong
Weak
Chemicals
52
Evolving Landscape
Madhya Pradesh : The Land of Opportunity
M.P.: An Investment Destination
Sector Profile: Chemicals
53
The chemicals and petrochemicals industry is referred to as the "keystone" industry as the rest of the manufacturing sector
relies on it.
The global chemicals and petrochemicals market generated total revenues of USD 1.8 trillion in 2004, representing a
compound annual growth rate (CAGR) of 0.2% for the five-year period spanning 2000-2004.
The Indian chemicals and petrochemicals market grew by 10.1% in 2004 to reach a value of USD 32.4 billion
The industry is expected to continue its growth performance with a CAGR of 9.2% in the period of 2004-09, as against the
global projected CAGR of 3.4% for the same period
India has a robust base of chemicals and petrochemicals-driven businesses. Though the industry has undergone drastic
changes, Indian chemicals and petrochemicals share has been continuously increasing on a constant basis.
Indian chemical growth would be primarily driven by specialty chemicals and knowledge chemicals
Specialty Chemicals
Adhesive sealants
Catalyst
Industrial gasses
Plastic adhesives
Knowledge Chemicals
Agro-chemicals
Pharmaceuticals
Biotechnology
Source: Global Chemicals and Petrochemicals Industry Report, April 2006, Data monitor
Evolving Landscape
India ranks twelfth in the world for production of chemicals and petrochemicals by volume.
54
MP: Land of Opportunity
Being in the center of the Country MP form the heart of logistic
backbone of the Country, which makes it the most preferred location
for chemical business.
Madhya Pradesh has a made a significant progress in the last
couple of years and is paving way to be at the forefront of the
chemical industry.
The state currently produces around 350,000 MT of basic chemicals.
Chemicals is one of the principal industries in Madhya Pradesh in
term of net value addition with 14.1% share
The Potential growth of chemical industry in MP is envisaged at 5
billion in next 10 years.
The industry is likely to witness a surge in investment once US$ 2.5
billion Refinery is setup at Bina by Bharat Oman Refinery & The
Reliance Group.
With a plant capacity of 6 million tonnes, the project would enable
substantial growth of downstream chemical units.
The government is likely to improve the infrastructure facilities in the
area and is also likely to provided fiscal and non fiscal incentives in
order to promote the industry.
Industry Potential
Large and growing domestic market potential due to low per capita consumption of key petrochemical derivatives
3 kgs. against global average of 17 kgs. for plastics
4 kgs. against global average of 23 kgs. for polymers
Good R&D base with access to low-cost, high-quality human resources
Proven capability for chemical process development
Major raw materials are available within the Country or readily importable
SEZs have no import tariffs and provide income tax concessions
Strategic location: In the heart of the high-growth markets of India, Asia and the Middle East
Vibrant downstream industry and a large number of manufacturers provide options for joint ventures, alliances and acquisitions
Major opportunities lie in all segments: Basic, Specialty and Knowledge Chemicals
A strong global presence in the export of dyes, pharmaceuticals and agrochemicals
55
MP: An Investment Destination•Madhya Pradesh is poised to become the next Chemical
destination of India through its infrastructure development
strategy and government support to the investors. There are
many significant avenues and areas that can be tapped for
setting up and scaling up your business operations.
Some of the other supporting factors assisting your business:
• Central location
• Low set-up costs (Land, building etc)
• Specialized infrastructure
• Availability of skilled manpower
• Low operating cost
• Government support etc.
•To further support your business endeavors Government of
Madhya Pradesh has is developing specialized infrastructure
in the form of SEZ Indore. Being an industry of economic
importance, the Government also provides special fiscal and
non fiscal incentives to the units in the state.
•Growing investor confidence and down stream industries of
the Bina Refineries are likely to result in mushrooming of
chemical units in the state.
•In terms of technical manpower as well the state is well
placed with over 18,000 technical graduates and an overall
and an overall figure of 230,000 graduates add to the
workforce every year.
Tata Chemicals Limited is India's leading manufacturer of inorganic
chemicals. It also manufactures fertilizers and food additives. Incorporated
in 1939, the company has an annual turnover of over US$ 667 mn and is
part of the US$ 14.25 bn Tata Group, India's foremost business
conglomerate
TCL manufactures a wide range of high-quality and competitively priced
products, including soda ash, sodium bicarbonate, salt, caustic soda and
urea.
It has a 36,000 MPTA unit at Pithampur in Madhya Pradesh.
The company invested over US$ 69 million in the State and employs
over 200 people .
Nirma is one of the leading chemical company with sales of US$ 458
million in 2005-06. Nirma is among the few companies from India with
global scale manufacturing facilities.
The focus areas of the company includes soaps, detergents, soda ash
Alkyle Benzene etc.
Its Pithampur plant in Madhya Pradesh is the largest plant in the country
which controls 38% market share .
The company invested over US$ 94 million in the State and employs
over 600 people .
56
Connecting Further
Department of Industries www.mpindustry.org
Indore SEZ www.sezindore.com
Madhya Pradesh State Industrial Developmental Corporation www.mpsidc.com
Government of Madhya Pradesh www.mpgovt.nic.in
Madhya Pradesh State Electronics Development Corporation www.mpsedc.com