infrastructure - business opportunities in india ... india, is planning to invest another us$ 1...

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INFRASTRUCTURE

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Table of Content

Advantage India…………………..….……. 4

Market Overview and Trends………...…….6

Strategies adopted……………....…………17

Growth Drivers and Opportunities…...…...21

Industry Organisations…………......………32

Useful Information……….……….....…......34

Porters Five Forces Framework…….…….16

Executive Summary……………….….…….3

Case studies......………………..………….28


EXECUTIVE SUMMARY

Source: Media sources, DIPP, Aranca Research

FDI received in Construction Development sector (townships, housing, built up infrastructure and

construction development projects) from April 2000 to September 2017 stood at US$ 24.66 billion ; and in

Construction (Infrastructure) activities stood at US$ 10.70 billion.

Rising foreign direct

investment (FDI) in the

sector

In the Union Budget 2017-18, the Government of India has given a massive push to the infrastructure sector

by allocating US$ 61.92 billion for the sector.

High budgetary

allocation for

infrastructure

The infrastructure sector in India witnessed 33 deals in FY2016-17 involving US$ 3.49 billion as against

US$ 2.98 billion raised across 31 deals in FY2015-16, with the majority of deals led by the power, roads and

renewable sectors. Also, in April 2017, companies in Malaysia and India signed deals for infrastructure

projects worth US$ 3.86 to be implemented in India.

Rising infrastructure

deals

Private sector is emerging as a key player across various infrastructure segments, ranging from roads and

communications to power and airports

Increasing private

sector involvement

In 2016, India jumped 19 places in World Bank's Logistics Performance Index (LPI) 2016, to rank 35th

amongst 160 countries. Improvement in logistics

Infrastructure

ADVANTAGE INDIA


ADVANTAGE INDIA

India has a requirement of investment worth Rs 50 trillion (US$

777.73 billion) in infrastructure by 2022 to have sustainable

development in the country. Sectors like power transmission,

roads & highways and renewable energy will drive the

investments in the coming years.

Favourable valuation and earnings outlook makes this sector

an attractive opportunity.

Only 24 per cent of the National Highway network in India is

four-lane, therefore there is immense scope for improvement.

The Regional Connectivity Scheme (RCS) gives

opportunity for development of airports.

Increasing impetus to develop

infrastructure in the country is attracting

the major global players like China Harbour

Engineering and Mizuho Financial Group.

Construction Development sector and

Infrastructure activities sector received FDI

inflows amounting to US$ 24.66 billion and

US$ 10.70 billion, respectively from April 2000 to September

2017.

With initiatives like ‘Housing for All’ and

‘Smart Cities Mission’ the Government of

India is working on reducing bottlenecks

and impeding growth in the infrastructure

sector.

With the UDAY Scheme, that will help in financial

turnaround and revival of electricity distribution

companies of India, the power sector has been

registering strong growth.

100 per cent FDI is permitted under the automatic across

various infrastructure sectors.

ADVANTAGE

INDIA

Source: Media Sources, DIPP, Aranca Research, PricewaterhouseCoopers

Note: UDAY – Ujwal Discom Assurance Yojana

Infrastructure

MARKET OVERVIEW

AND TRENDS


INCREASING FDI INFLOWS INTO THE SECTOR

Note: FDI – Foreign Direct Investment

Source: DIPP, Media sources, Aranca research

Cumulative FDI inflows in the Construction Activities sector, which

includes infrastructure, reached US$ 10.70 billion between April

2000 – September 2017.

Cumulative FDI inflows in the Construction Development sector,

which includes townships, built-up infrastructure and construction-

development projects, reached US$ 24.66 billion between April 2000

– September 2017.

UAE-based firm, DP World, having previously invested US$ 1 billion

in India, is planning to invest another US$ 1 billion in India's

infrastructure sector along with logistics and container terminals

Squared Capital, a global infrastructure investment company, plans

to raise up to US$ 4 billion through its second infrastructure fund,

which will be invested in infrastructure assets in India and across the

globe.

Visakhapatnam port traffic (million tonnes) Cumulative FDI inflows from April 2000

2.0

9

2.5

8

3.4

3

7.9

6

9.8

2

10

.70

22.0

8

23.3

24.0

6

24.1

8

24.2

9

24.6

6

0

5

10

15

20

25

30

FY

13

FY

14

FY

15

FY

16

FY

17

Q2

FY

18

Construction activities (includes infrastructure)

Construction Development: Townships, housing, built-upinfrastructure and construction-development projects


SUMMARY OF INFRASTRUCTURE PROJECTS

COMPLETED DURING THE 12TH FIVE YEAR PLAN

Source: Ministry of Statistics and Programme Implementation (MoSPI)

Sector Number of Projects Cumulative Expenditure (US$)

Road Transport and Highways 91 8.7 billion

Power 73 16.63 billion

Petroleum 65 19.48 billion

Railways 33 3.81 billion

Steel 20 8.13 billion

Shipping and Ports 20 1.78 billion

Telecommunications 14 463.62 million

Coal 9 2.26 billion

Fertilisers 6 596.24 million

Civil Aviation 5 861.16 million

Urban Development 5 678.83 million

Atomic Energy 1 168.93 million


RECENT PPP PROJECTS IN INFRASTRUCTURE

Source: infrastructureIndia.gov.in, Aranca Research

Project Project

Authority

Project

Concessionaire Name Signing Date

Project Cost

(US$) Location

Period

(months)

Six laning of Handia-

Varanasi section in length

of 72.4 km NHAI

G R Infraprojects

Limited 31-Mar-2017 387.37 million

Uttar

Pradesh 180

Six laning of Chitradurga-

Davanagere section in

length of 72.7 km

NHAI

PNC Infratech Limited 31-Mar-2017 224.26 million Karnataka 180

Four laning of Singhara-

Binjabahal section in

length of 104.1 km

NHAI

Montecarlo Limited 29-Mar-2017 222.07 million Odisha 180

Four laning of Jhansi-

Khajuraho section in

length of 76.3 km

NHAI

PNC Infratech Limited

28-Mar-2017 220.51 million

Multi State/

Centre 180

Four laning of Waranga-

Mahagaon section in

length of 66.9 km

NHAI

Sadbhav Engineering

Limited 28-Mar-2017 166.90 million Maharashtra 180

Four/six laning of Bodare-

Dhule section in length of

62.8 km under NHDP-IV

NHAI

Sunil Hi-Tech

Engineers Private

Limited

23-Mar-2017 199.16 million

Andhra

Pradesh 180

Six laning of NH-8 in

length of 93.2 k m of

Shamlaji-Chiloda section

NHAI

Sabarkantha Annuity

Private Limited 25-Jan-2017 201.74 million

Gujarat 180

Note: NHAI : National Highway Authority of India


STRONG MOMENTUM IN EXPANSION OF ROADWAYS

6.9

6.8

8.3

8.6

8.6

11

13

.4

16

.10

19

.20

0

2

4

6

8

10

12

14

16

18

20

200

9

201

0

201

1

201

2

201

3

201

4

201

5E

201

6F

201

7F

Source: Business Monitor International (BMI), Ministry of External Affairs, Aranca Research

Note: CAGR - Compounded Annual Growth Rate, FY - Indian Financial Year (April - March), F - Forecast, NHDP - National Highway Development Project, SARDP-NE: Special Accelerated

Road Development Programme for the North Eastern Region and LWE - Left Wing Extremism Programme; Figures are as per latest data available

Value of total roads and bridges infrastructure in India is estimated to

have expanded at a CAGR of 13.6 per cent over FY09–17 to US$

19.2 billion

An outlay of Rs 6.92 trillion (US$ 107.64 billion) was approved by the

Government of India in October 2017 to build a road network of

83,677 km over the next five years. The outlay includes the

Bharatmala projects worth Rs 5.35 trillion (83.25 billion).

In January 2017, the government proposed to lay down cycle tracks

on all highways and major roads pan India, to promote the use of

electric cars and public transport.

Highway network in the country is expected to cover 50,0000 km by

2019. The National Highway Authority of India has created a new

highway operations division to focus on all non-commercial highway

operational activities like electronic toll collection, road safety,

incident management, and other modern amenities.

In December 2017, the National Highway Authority of India (NHAI)

created the National Highways Investment Promotion Cell (NHIPC)

to attract foreign and domestic investments towards highway projects

in India.

Visakhapatnam port traffic (million tonnes) Roads/ bridges infrastructure value in India (US$ billion)

CAGR 13.6%


STRONG REVENUE GROWTH FOR INDIAN RAILWAYS

8.6

8

9.8

7

10

.97

11

.97

12

.88

14

.31

17

.11

19

.09

21

.66

24

.49

24

.60

0.00

5.00

10.00

15.00

20.00

25.00

30.00

200

6-0

7

200

7-0

8

200

8-0

9

200

9-1

0

201

0-1

1

201

1-1

2

201

2-1

3

201

3-1

4

201

4-1

5

201

5-1

6

201

6-1

7

Source: Vision 2020, Ministry of Railways, Aranca Research

Note: CAGR – Compound Annual Growth Rate, E – Estimates, FY – Indian Financial Year (April–March)

Revenue growth has been strong over the years; during FY07–17,

revenues increased at a CAGR of 11 per cent to US$ 24.60 billion in

FY17.

Revenues from the sector are estimated to reach to US$ 44.5 billion

by the end of FY20

The Ministry of Railways is working on a plan to earn Rs 15,000

crore (US$ 1.56 billion) over the next 10-20 years through a rail

display network (RDN), enabling real-time information to

passengers.

Indian Railway sector aims to boost passenger amenities

In March 2017, Railways started a new segment of revenue

generation channel through auctioning for advertising and branding

contracts on 1000 trains. The front running brands are to sign this

contract for 5 years.

All Indian Railways trains will become electric by 2022, resulting in

annual savings of Rs 11,500 crore (US$ 1.79 billion).

The sundry earnings of Indian Railways reached Rs 1,775.78 crore

(US$ 276.21 million) in the first half of 2017-18.

Visakhapatnam port traffic (million tonnes) Gross revenue trends over the years (US$ billion)

CAGR 11%


POWER GENERATION CAPACITY HAS INCREASED AT

A HEALTHY PACE

13

2.3

14

3.1

14

8

15

9.4

17

3.6

19

9.9

22

3.3

23

7.7

27

2.5

28

0.3

32

6.8

0

50

100

150

200

250

300

350

FY

07

FY

08

FY

09

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15

FY

16

FY

17

Source: CEA (Central Electricity Authority), Aranca Research

Note: GW - Gigawatt, CAGR - Compound Annual Growth Rate; FY18* - data upto June 2017

Installed capacity increased steadily over the years, posting a CAGR

of 10.57 per cent in FY09–17 and stood at 326.84 (GW) by the end

of FY17.

As of November 2017, India had a power generation capacity of

330.86 GW.

As of June 2017, energy generation from conventional sources stood

at 307.7 billion units (BU).

Indian energy sector is expected to offer investment opportunities

worth US$ 300 billion over the next 10 years.

Visakhapatnam port traffic (million tonnes) Installed electricity generation capacity (GW)

CAGR 10.57%


PERFORMANCE OF EIGHT CORE INFRASTRUCTURE

INDUSTRIES

Source: Ministry of Commerce and Industry

12

1.8

94

.5

66

.5

11

9.7

10

6.6

13

3.1

12

2 1

41

.6

10

6.4

94

.8

69

.1

12

2.4

10

5.8

13

8.6

12

3.7

15

1.7

0

20

40

60

80

100

120

140

160

Coa

l

Cru

de O

il

Natu

ral G

as

Refin

ery

Pro

du

cts

Fe

rtili

se

rs

Ste

el

Cem

en

t

Ele

ctr

icity

2016-17 April'17 - Oct'17

Index of eight core Industries The eight core infrastructure industries include coal, crude oil, natural

gas, refinery products, fertilisers, steel, cement and electricity.

The overall index grew by 4.8 per cent during FY 2016-17.

The growth in the index was led by electricity (10 per cent), steel (9

per cent), refinery products (8.9 per cent), cement (5.8 per cent) and

fertilisers (3.3 per cent).

The cumulative growth of the index between April-October 2017 was

3.5 per cent.

The growth in the index was lead by steel (6 per cent), electricity (5.2

per cent), natural gas (4.7 per cent) and refinery products (2.9 per

cent).


GROWTH IN INFRASTRUCTURE RELATED ACTIVITIES

Source: Economic Survey 2017

Growth in infrastructure related activities between

April-September 2016

6.6

9.8

1.8

-3.9

5.3

10

.0

5.8

-6

-4

-2

0

2

4

6

8

10

12

Po

wer

Ge

nera

tion

Hig

hw

ay

con

str

uctio

n/

wid

en

ing

Rail

fre

igh

ttr

affic

Railw

ay

earn

ing

s

Carg

o a

tm

ajo

r p

ort

s

Expo

rt c

arg

o

Imp

ort

ca

rgo

Infrastructure related activities witnessed strong growth between

April-September 2016.

The activities that registered the highest growth include export cargo

(10 per cent), highway construction/widening (9.8 per cent), power

generation (6.6 per cent), import cargo (5.8 per cent) and cargo at

major ports (5.3 per cent).


KEY PRIVATE PLAYERS

Major projects: Mumbai–Pune BOT Project, Pune–Nashik BOT Project, Bharuch–Surat BOT Project,

Thane–Bhiwandi by-pass 4 Lane Project, Thane Ghodbunder BOT Project, Ahmedabad–Baroda NH-8, 6

laning of Agra - Etawah bypass

Major projects: North Karnataka Expressway, West Gujarat Expressway, Noida Toll Bridge, Ahmedabad -

Mehsana Toll Road, East Coast Road, Kotakatta Kurnool Road Project, East Coast Road, Hazaribagh

Ranchi Expressway Ltd, Karnataka Toll Bridges

Major projects: NH6 Dhankuni to Kharagpur, Sambalpur Baragarh, NH4 Belgaum Dharwad, NH-3

Pimpalgaon – Nashik – Gonde Road (JV with L&T), Jaora – Nayagaon Road, Chennai Outer Ring Road,

Modhul – Nippani Road, Indore Edalabad Road, Wainganga Bridge, Ahmednagar Aurangabad Road

Major projects: Bandra–Worli Sea Link, Badarpur Elevated Highway Project, Delhi Faridabad Elevated

Expressway, Breakwater construction for new port at Ennore, Chennai, New Railway Line Project from

Jiribam - Tupul

Major Projects: Hyderabad-Vijayawada Road Project, Sikkim’s Greenfield Airport, The Medanta (Medicity),

Bangalore Metro Rail Project, Upgradation of Belgaum-Maharashtra Border Section of NH-4, Elevated

Viaduct, Delhi Metro

Major Projects: Hyderabad Metro Rail, Construction of a 6-lane bridge over the Ganges river, Mechanise

Track Laying for India's first 626 km Dedicated Freight Corridor, Monorail in Mumbai, Railway

electrification works and Rigid Overhead Contact System for the Delhi Metro, Kakrapar nuclear power

project and Srinagar Hydel Power Project, Uttaranchal

Source: Company websites, Aranca Research


Porter’s Five Force Framework Analysis

Low – Bargaining power of suppliers is

low as the order quantity by buyers is in

bulk.

Bargaining Power of Suppliers

Low – Threat is low as there aren’t

substitutes for transport infrastructure

like roads and railways, for airports etc.

However, if technology like Hyper Loop

becomes functional, it can possess some

threat to traditional modes of transport.

Threat of Substitutes

Medium – In the past, competition in this

sector was high in terms of bidding for

Government projects.

However, in the more recent years,

bidding has rationalised and the

competition between players has become

stable.

Competitive Rivalry

Low - Threat is low due to the capital-

intensive nature of the industry; all the

capable players have already entered in

the sector. Also, there aren’t much

foreign players involved in infrastructure

projects in India.

Threat of New Entrants

High – Buyer here is the Government;

therefore there is high bargaining power,

as it is the Government that makes the

final decision about whom the tender for

a project goes to.

Bargaining Power of Buyers

Positive Impact

Neutral Impact

Negative Impact

Source: Aranca Research

Infrastructure

STRATEGIES

ADOPTED


The company selected countries and regions with the maximum congruence to its strengths and the most favourable

logistics. The Middle East and China have been identified as prime centres for expansion for manufacturing and projects

businesses. L&T seeks to ramp up its presence in these markets through a slew of new projects and business initiatives that

will add breadth and depth to the existing association with the industry and infrastructure of the GCC countries and other

states in the region. L&T is setting up a Modular Fabrication Yard in Oman that will build equipment for offshore applications

and for the hydrocarbon sector.

Global sourcing policy is another key area that has given a thrust to its international strategy. With a steady rise in material

costs, the company has placed sourcing teams in China, Europe and Russia.

To expand nuclear energy portfoilo, efforts to increase scope by offering products beyond conventional island in Nuclear

business are under way.

Considering the National Action Plan on Climate Change targeting 15% of electricity generation from renewables by 2020,

BHEL is looking towards expanding its capacity to manufacture photo voltaic modules and cells.

BHEL's collaborative initiatives to address the growing demand potential in Railway Transportation including Metro and

Suburban Railways include initiative with Indian Railways for setting up a greenfield Mainline Electrical Multiple Unit (MEMU)

Coach Factory in Rajasthan

STRATEGIES

Source: Company websites, Media sources, Aranca research

GMR Energy Limited (GEL), a subsidiary of GMR Infrastructure Ltd (GIL) and TNB Repair and Maintenance Sdn Bhd (TNB

Remaco) have signed an MoU to collaborate and set up an O&M joint venture. As per the three-year MOU, GEL and TNB

Remaco will identify business opportunities in the high-potential Indian market and provide operation and maintenance

services to the power plants. hrough this JV, GEL and TNB REMACO will extend their technical expertise to the several power

plants in India. The company is planning to expand its airport vertical and consolidate the energy business along with divesting

its highway projects.

Adani Ports and Special Economic Zone (APSEZ) Ltd aims to complete expansion of Adani International Container Terminal

Pvt. Ltd (AICTPL) at Mundra port by 2017 to create a transhipment hub for the Middle East, South Asia and India. Adani Ports

has also secured a contract from Tamil Nadu State Electricity Board for shipment of coal, adding muscle to its coastal shipping

plan.

Infrastructure

GROWTH DRIVERS

AND OPPORTUNITIES


GROWTH DRIVERS FOR INFRASTRUCTURE IN INDIA

Growth Drivers

Government

Initiatives

Public Private

Partnerships

International

Investment

Housing Development

Infrastructure

Needs


GOVERNMENT INITIATIVES DRIVING GROWTH IN THE

SECTOR

For 2017-18, the total capital and development expenditure

of Railways has been pegged at US$ 20.33 billion.

As per 2017-18 Budget, railway lines of 3,500 kms will be

commissioned in FY18.

Government expressed plans to announce a

new Metro Policy by FY18.

A new Metro Rail Policy was approved in

August 2017.

Budget allocation for road sector increased to US$ 10.07

billion in 2017-18 from US$ 8.99 billion in 2016-17.

2,000 kms of coastal connectivity roads have been identified

for construction and development .

Select airports in Tier 2 cities will be taken up

for operation and maintenance in the PPP

mode in the coming years.

Road projects worth Rs 6.92 trillion (US$

107.64 billion) approved in October 2017.

In 2017, government announced plans

to facilitate higher investment in

affordable housing.

The National Housing Bank will refinance

individual housing loans of about US$ 3.1

billion in 2017-18.

The National Steel Policy 2017 aims at higher spending on

infrastructure and construction through government

initiatives.

By the end of 2017-18, high speed

broadband connectivity on optical fibre

will be available in more than 1,50,000

gram panchayats.

In the second phase of Strategic Crude Oil

reserves, reserve capacity will be increased to

15.33 MT.

In the second phase of Solar Park Development an

additional capacity of 20,000 MW will be generated.

Total allocation for

infrastructure in

Budget of 2017-18

stands at US$ 61.48

billion.

Source: Union Budget 2017-18, Media sources, Aranca research


AFFORDABLE HOUSING

39

%

30

%

27

%

33

% 36

%

34

%

34

%

32

%

30

%

26

%

22

%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

Source: Bloomberg, Economic Times

In Budget 2017-18, affordable housing was given infrastructure

status.

As of June 2017, about 69 percent of the country’s 1.3 billion people

were in prime house-buying age -- 20 to 40 years, more than any

than any other nation.

Per capita income has grown at a compound annual growth rate of

10 percent for the past five years.

Prime Minister Narendra Modi broadened reforms in FY17 to foster

construction and home buying under his “Housing for All”

programme, launched in June 2015. That aims to build 20 million

urban homes and 30 million rural houses by 2022. Property has also

become the most affordable in two decades.

Approximately, 60 million new homes are expected to be built in

India between 2018 and 2024 with social and affordable housing

rising almost 70 percent to 10.5 million by 2024, exceeding the 33

percent increase in the premium market.

In November 2017, the Government of India increased the carpet

area for houses falling under the affordable housing scheme, giving

a boost to developers having large inventories.

Visakhapatnam port traffic (million tonnes) Trend in affordability of a US$ 45,000 house


INFRASTRUCTURE DEVELOPMENT IN NORTHEAST

INDIA

Source: Budget, Economic Times, Media sources, Aranca research

In December 2017, the North East Special Infrastructure Development Scheme (NESIDS) was approved by Government of India with 100 per cent

funding from the central government for infrastructure projects in the region.

In October 2017, the Government of India announced that highway projects worth Rs 1.45 trillion (US$ 22.6 billion) would be undertaken in the

north-east region of the country in the coming two to three years.

In August 2017, India-Japan Coordination Forum for Development of North East was formed to focus on major projects such as road and network

development, disaster management, connectivity, and electricity provision.

With an eye on China, India is working on a slew of road and bridge projects to improve connectivity with Bangladesh, Nepal and Myanmar.

India is also pulling out all stops to expedite the South Asian Sub-Regional Economic Cooperation (SASEC) road connectivity programme in the

backdrop of China’s ambitious One Belt One Road ( Obor).

Government announced plans to invest US$ 6.98 billion in Northeast States.

The North East-Agra transmission line, which is the biggest power transmission line to be built in the country in terms of capacity, is to be

inaugurated by the end of 2017. This means that cheap power from the hydro-rich North-East can now reach the central part of North India.

As of May 2017, road infrastructure was being created in the North-East at an investment of US$ 6.2 billion, nineteen major railway projects had

been started and the electricity infrastructure is also being improved. The whole region is being developed to give impetus to tourism.

Arunachal Pradesh was brought on the railway map of India with India’s longest rail-cum-road bridge — the 4.94-km long Bogibeel bridge over

Brahmaputra.

Government, has also, announced plans to convert all meter gauge tracks in the northeastern states to broad gauge tracks.

In May 2017, Mr Narendra Modi, Prime Minister of India, inaugurated India’s longest river bridge – the 9.15 kilometer long Dhola-Sadiya bridge over

the Brahmaputra river in Assam. The bridge will provide easy access to the people of Assam and Arunachal Pradesh and will improve its defence

requirements along the Sino-Indian border.


The AAI plans to spend US$ 1.3 billion on non-metro projects over the 5 years (2013–17); mainly focusing on

the modernisation and upgradation of airports; New airports at Itanagar, Kohima and Gangtok are also

planned.

The Government of Andhra Pradesh is to develop greenfield airports in six cities-Nizamabad, Nellore,

Kurnool, Ramagundam, Tadepalligudem and Kothagudem under the PPP model.

Upfront subsidy has been proposed through which non-metro airports would be funded by imposing 2 per

cent levy on both domestic and international airfares.

About 22 airports to get connected under regional connectivity scheme of AAI.

Over 30 airport development projects are under progress across various regions in Northeast India.

AAI plans to develop over 20 airports in tier II and III cities in next 5 years

Around 55 new airports are required in India by 2030 with an investment of US$ 36-45 billion.

The AAI aims to bring around 250 airports under operation across the country by 2020

The AAI has developed and upgraded over 23 metro airports in the last 5 years

AAI plans to develop city-side infrastructure at 13 regional airports across India, with help from private

players for building of hotels, car parks and other facilities, and thereby boost its non-aeronautical revenues.

Airport housing will also have height restrictions to avoid interference with flight paths. They will also have to

be far from the runway and 45m above a defined level of the airport, which will allow 4-5 floors to be built

The development of Navi Mumbai airport has been approved. The project will be developed on 74:26 per

cent partnership between MIAL and Cidco and airport’s phase 1 with annual handling capacity of 10 million

passengers each year rephrasing it from the origin

AIRPORTS INFRASTRUCTURE INVESTMENT

Metro airports

Non-metro airports

Source: Media sources, Aranca research


At least ten Indian cities are working on metro railway projects and the government initiated a plan in 2012 to

study the feasibility of such networks in all cities with a population of more than 2 million.

More than 500 billion rupees ($7.7 billion) worth of metro projects are underway in India and this pile will

probably grow.

Some 200 trains cover 70,000 km everyday on 190-km-long Metro corridors in Delhi. The numbers have

increase after another 140 km addition of lines in 2016.

A new Metro Rail Policy was announced in August 2017, which will give boost to private investments by

mandating public private partnership (PPP) component in new projects.

A new Metro Rail Act will be enacted by rationalising the existing laws. This will facilitate greater private

participation and investment in construction and operation.

Monorail has made its beginning in India with Mumbai being the first city in the country to have this transport

system in place.

It took more than six years from the date of inviting Request for Qualification for MMRDA (Mumbai

Metropolitan Region Development Authority) to complete a part of the project involving a stretch of 8.26

km.

Monorail Projects are being developed in Chennai, Pune, Thiruvananthpuram, Bengaluru, Thane, Delhi, Port

Blair, Dehradun, Chandigarh etc.

METRO RAIL AND MONORAIL INFRASTRUCTURE

INVESTMENT

Metro Rail

Monorail

Source: Media sources, Aranca research


KEY HIGHLIGHTS OF UNION BUDGET 2017-18

Source: Union Budget 2017-18

Affordable housing has been given infrastructure status.

National Housing Bank will refinance individual housing loans of about US$ 3.1 billion in 2017-18.

For transportation sector as a whole, including rail, roads, shipping provision of US$ 37.46 billion has been made in 2017-18.

For 2017-18, the total capital and development expenditure of Railways has been pegged at US$ 20.33 billion. This includes US$ 8.53 billion

provided by the Government.

Railway lines of 3,500 kms will be commissioned in 2017-18. During 2017-18, at least 25 stations are expected to be awarded for station

redevelopment.

500 stations will be made differently abled friendly by providing lifts and escalators. It is proposed to feed about 7,000 stations with solar power in

the medium term.

Budget allocation for road sector increased to US$ 10.07 billion in 2017-18 from US$ 8.99 billion in 2016-17.

Total length of roads, including those under PMGSY, built from 2014-15 till the current year is about 140,000 kms which is significantly higher

than previous three years. The Government has identified 2,000 kms of coastal connectivity roads for construction and development.

Select airports in Tier 2 cities will be taken up for operation and maintenance in the PPP mode.

By the end of 2017-18, high speed broadband connectivity on optical fibre will be available in more than 1,50,000 gram panchayats, under

BharatNet. A DigiGaon initiative will be launched to provide tele-medicine, education and skills through digital technology.

A provision of US$ 115.62 million has been made for in incentive schemes like M-SIPS and EDF in order to create an eco-system which will

make India a global hub for electronics manufacturing.

A new and restructured Central scheme with a focus on export infrastructure, namely, Trade Infrastructure for Export Scheme (TIES) will be

launched in 2017-18.

Note: PMGSY – Pradhan Mantri Gram Sadak Yojana


The Government is making an attempt to revive and give boost to Public Private Partnerships.

For creating an eco-system to make India a global hub for electronics manufacturing a provision of

US$115.62 million in 2017-18 in incentive schemes like M-SIPS and EDF.

Introduction of National Steel Policy in 2017 to aim at higher spending on infrastructure and construction

through government initiatives.

Total allocation for infrastructure in Budget of 2017-18 stands at US$ 61.48 billion.

In November 2017, logistics sector was given the status of infrastructure, to boost investments in the sector.

Japanese investment has played significant role in India’s growth story. Japan has pledged investments of

around US$35 billion for the period of 2014-19 to boost India’s manufacturing and infrastructure sectors.

The Japanese government is constantly looking for investment opportunities in India.

Asian Development Bank will provide US$ 275 million loan for a piped water supply project for rapidly

urbanising small towns, covering 3 lakh households, in Madhya Pradesh.

With every sixth urban person globally being an Indian, the real estate and construction sector holds

significant opportunity for both global and domestic companies engaged across the value chain.

India will need to construct 43,000 houses every day until 2022 to achieve the vision of Housing for All by

2022.Hundreds of new cities need to be developed over the next decade.

This has the potential for catapulting India to 3rd largest construction market globally. The sector is expected

to contribute 15 per cent to the Indian economy by 2030

The recent policy reforms such as the Real Estate Act, GST, REITs, steps to reduce approval delays etc. are

only going to strengthen the real estate and construction sector.

OPPORTUNITIES IN INFRASTRUCTURE

Government Initiatives

International

Associations

Urban Indian Real

Estate

Source: Media sources, Aranca research, Ministry of Finance

Infrastructure

CASE STUDIES


L&T INFRASTRUCTURE DEVELOPMENT PROJECTS

LIMITED (L&T IDPL)…(1/2)

Revenue (US$ million)

8.7

3

15

.42

15

.94

36

.38

24

9.4

1

15

2.7

0

85

.28

0

50

100

150

200

250

300

FY

11

FY

12

FY

13

FY

14

FY

15

FY

16

FY

17

L&T IDPL is the pioneer of the Public-Private-Partnership (PPP)

model in India.

It is a subsidiary of the Larsen and Toubro group and was set up in

1995.

The company has implemented major infrastructure projects across

roads, bridges, ports, airports water supply, hydel energy, metro

railway and urban infrastructure.

The company’s revenue has increased from US$ 9.12 million in FY

2010-11 to US$ 396.45 million in FY 2015-16.

During FY17, the company earned total revenue of Rs 572.11 crore

(US$ 85.28 million).

Source: Company website


L&T INFRASTRUCTURE DEVELOPMENT PROJECTS

LIMITED (L&T IDPL)… (2/2)

Coimbatore Bypass

Project

Narmada Bridge

Project

Jaipur-Kishangarh

Expressway Project

Second Vivekananda

Bridge Project in West

Bengal

Bangalore

International Airport

Panipat Elevated

Corridor Project

Jadcherla-Kothakota

Road Project

Palanpur-

Swaroopganj Road

Krishnagiri-Thopur

Toll Road Project

Vadodara-Bharuch

Tollway Project

Chennai-Tada toll

road project

Pimpalgaon - Nashik -

Gonde road project

Dharma Port Project

Gandhidham-

Samakhiali road

project

Krishnagiri-Walajapet

road project

Devihalli-Hassan road

project

Hyderabad Metro

project

Kacchigarh Port

Project

Beawar-Pali-Pindwara

Road project

Sangareddy –

Karnataka /

Maharashtra border

Road Project

Jalgaon to

Maharashtra-Gujarat

border (Maharashtra)

Road Project

Rajkot Jamnagar

Vadinar Road Project

Halol Godhra

Shamlaji Road Project

Pimpalgaon Nashik

Gonde road project –

India's first all women

toll plaza

1995-2005 2006-2009 2010-2011 2012-2013 2014-2016

Canada Pension Plan

Investment Board

invests in L&T IDPL

Sambalpur Rourkela

Road project

Kudgi Power

Transmission Line

project

L&T IDPL completes

development of the

longest four-lane road

project under the

Public Private

Partnership (PPP)

model

Source: Company website


YAMUNA EXPRESSWAY – A PPP SUCCESS STORY

Source: Jaypee, Yamunaexpressway, Aranca Research

Yamuna Expressway is a 165-km, 6-lane, controlled-access expressway stretching between Greater Noida and Agra

It is India’s longest controlled-access expressway, developed by Jaypee Group under Public Private Partnership (BOT model) for a total value of

US$ 2.3 billion

The expressway became operational in August 2012

Salient Feature

Length - 165.5 kms

Number of Lanes - 6 lanes extendable to 8

Design speed - 120 kms per hour

Speed Limit - 100 kms per hour for cars, 60 kms per hour for heavy

vehicles

Main Toll Plazas - 4

Minor Bridges - 41

Yamuna Expressway

Infrastructure

KEY INDUSTRY

ORGANISATIONS


INDUSTRY ORGANISATIONS

National Highways Authority of India (NHAI)

Address: Rajiv Gandhi Bhawan, Safdarjung Airport,

New Delhi - 110003

Tel: 91-11-24632950

Address: G 5 and 6, Sector 10, Dwarka

New Delhi – 110 075

Phone: 91-11-25074100, 25074200

Fax: 91-11-25093507, 25093514

Airports Authority of India (AAI)

Infrastructure Industry And Logistics Federation of India (ILFI)

Address: P-95, South Extension Part – II

New Delhi - 110049

Phone: 91-11-41007091

Fax: 91-11-41007093

Email: [email protected], [email protected]

Website: www.ilfi.in

mailto:[email protected]

mailto:[email protected]

http://www.ilfi.in/

Infrastructure

USEFUL

INFORMATION


GLOSSARY

FY: Indian Financial Year (April to March) – So FY11 implies April 2010 to March 2011

US$ : US Dollar– Conversion rate used: US$ 1= INR54.43

FDI: Foreign Direct Investment

CAGR: Compounded Annual Growth Rate

GOI: Government of India

R&D: Research and Development

JV: Joint Venture

SEZ: Special Economic Zone

BOT: Build-Operate-Transfer

IBEF: Indian Brand Equity Foundation

NHAI: National Highways Authority of India

PPP: Public-Private-Partnership

Wherever applicable, numbers have been rounded off to the nearest whole number


EXCHANGE RATES

Exchange Rates (Fiscal Year) Exchange Rates (Calendar Year)

Year INR Equivalent of one US$

2004–05 44.81

2005–06 44.14

2006–07 45.14

2007–08 40.27

2008–09 46.14

2009–10 47.42

2010–11 45.62

2011–12 46.88

2012–13 54.31

2013–14 60.28

2014-15 61.06

2015-16 65.46

2016-17 67.09

Q1 2017-18 64.46

Q2 2017-18 64.29

Year INR Equivalent of one US$

2005 43.98

2006 45.18

2007 41.34

2008 43.62

2009 48.42

2010 45.72

2011 46.85

2012 53.46

2013 58.44

2014 61.03

2015 64.15

2016 67.21

H1 2017 65.73

Source: Reserve bank of India, Average for the year


DISCLAIMER

India Brand Equity Foundation (IBEF) engaged Aranca to prepare this presentation and the same has been prepared by Aranca in consultation

with IBEF.

All rights reserved. All copyright in this presentation and related works is solely and exclusively owned by IBEF. The same may not be reproduced,

wholly or in part in any material form (including photocopying or storing it in any medium by electronic means and whether or not transiently or

incidentally to some other use of this presentation), modified or in any manner communicated to any third party except with the written approval

of IBEF.

This presentation is for information purposes only. While due care has been taken during the compilation of this presentation to ensure that the

information is accurate to the best of Aranca and IBEF’s knowledge and belief, the content is not to be construed in any manner whatsoever as a

substitute for professional advice.

Aranca and IBEF neither recommend nor endorse any specific products or services that may have been mentioned in this presentation and nor do

they assume any liability or responsibility for the outcome of decisions taken as a result of any reliance placed on this presentation.

Neither Aranca nor IBEF shall be liable for any direct or indirect damages that may arise due to any act or omission on the part of the user due to any

reliance placed or guidance taken from any portion of this presentation.

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