GES Construction & Engineering - GESINDIA · FY2016-17 with 4 PE deals worth US$ 666 million and 29...
Transcript of GES Construction & Engineering - GESINDIA · FY2016-17 with 4 PE deals worth US$ 666 million and 29...
SECTOR PROFILE
WHY INDIA?01
CHAMPION SECTORS02
PROFILE03
INVESTMENT OPPORTUNITIES04
BUSINESS & REGULATORYENVIRONMENT IN INDIA
05
WHY INDIA?01
ADVANTAGE INDIA
World’s largest democracy with
1.3 billionpeople
Expertise acrossa spectrum of
services
Largecompetitively-priced skilled
talent pool
Large andgrowing domestic
consumermarket
Demonstratedcapability to deliver
high-quality,cost-effective
solutions
Integrated taxstructure
Enablingbusiness
environment
Focus oninfrastructuredevelopment
Access totechnology
INDIA - A FAVORED INVESTMENT DESTINATION
Fastestgrowing major economy in the world in 2018 and 2019
6th largest economy in the world by nominal GDP and 3rd largest economy globally by PPP
1st rankglobally in inward greenfield FDI inflows in 2016
India ranks 8thin global services exports accounting for 3.4% ofworld trade incommercialservices
Services,
57%
Automobile, 5%
Pharma, 4%
Power, 4%
Others,
26%
Chemic %als, 4
Agriculture17%
Industry22%
Services61%
6.1
60.1Mauritius, 34%
Singapore, 17%
Japan, 8%
UK, 7%
USA, 6%
Netherlands, 6%
Others,22%
India’s GDP is likely to touch US$ 5 trillion by 2025
2.6
4.7
2017 2023
GDP in current prices (US$ Trillion) GVA share of sectors in FY18
43.2
163.1
27.8
95.7
2004-05 2016-17
Exports
Imports
Services Trade (US$ Billion)
14%
10%
1%
1%74%
Category-wise Services Export (2016-17, % share)
17%
15%
1%1%
66% Travel
Transport
Insurance
G.n.i.e
Miscellaneous*
Category-wise Services Import(2016-17, % share)
Gross Foreign Inflows-FDI (US$ Billion) Top FDI source countries (% share in inflows- Apr’00 to Mar’17)
G.n.i.e- Government not included elsewhere; * includes software, business, financial and communication services
20
04
-05
20
05
-06
20
06
-07
20
07
-08
20
08
-09
20
09
-10
20
10
-11
20
11
-12
20
12
-13
20
13
-14
20
14
-15
20
15
-16
20
16
-17
Sector-wise FDI inflows (% share in inflows-Apr ‘00 to Mar’17)
75
60
45
30
15
0
Source: IMF, FDi intelligence report 2017, RBI, WTO
GROWTH ENABLERS
Growing domestic consumer base Large, young human capital base
Rising disposable income and urbanization More than 800 million people under the age of 34 years
Urb
an p
op
ula
tio
n (%
of
tota
l)
Pe
r-c
ap
ita I
nc
om
e (
INR
)
18,523
61,855
27.8
31.270000
60000
50000
40000
30000
20000
10000
0
32.0
31.0
30.0
29.0
28.0
27.0
26.0
2001 2011
Urban Population and Per-capita Income
Per capita income Urban population
Per-capita Income data pertains to 2001-02 and 2011-12Source: Census 2011, MOSPI
Size of the workforce (millions)*
37
35
27
1400
1200
1000
800
600
400
200
0
Korea Thailand Japan US Europe China India
2015 2025 (Projected) 2050 (Projected)
49
47
36 77
71
55
213
217
235
492
466
405
1008
984
795 860
985
1145
* Population aged 15-64 yearsSource: United Nations population statistics
CHAMPIONSECTORS
02
Transport
& Logistics Healthcare Accounting
& Finance
Construction
& Related
Engineering
Services
Media &
Entertainment
Education
Services Financial
Services
Environmental
Services
Tourism
& Hospitality
IT & ITeS Legal
Services
Communication
Services
((( (((
INVESTMENT ANNOUNCEMENTS
Source: https://www.ibef.org/download/Infrastructure-Report-April-2018.pdf
In January 2018, the National Investment and Infrastructure Fund (NIIF) partnered with UAE-based DP World to create a platform that will mobilize investments worth US$ 3 billion into ports, terminals, transportation, and logistics businesses in India.
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.
Government announced plans to invest US$ 6.98 billion in Northeast States.
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.
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
The Airport Authority of India (AAI) plans to spend over Rs 21,000 crore (US$ 3.2 billion) between 2018-22 to build new terminal and expand capacity of existing ones.
The sector witnessed 33 deals worth US$ 3.49 billion during FY2016-17 with 4 PE deals worth US$ 666 million and 29 M&A deals worth US$ 2.82 billion.
In, April 2017, companies in Malaysia and India signed deals for infrastructure projects worth US$ 3.86 to be implemented in India.
About US$ 50 billion (Rs 3,28,000 crores) invested so far by Government and Private companies in building world class infrastructure (in 2017)
PROFILE:INFRA ANDCONSTRUCTION
03
GLOBAL SCENARIO & FUTURE OUTLOOK
Source: Oxford Economics, InfraIC - Global infrastructure outlook
US$ 4.2 trillion global Infrastructure market in 2020
Electricity and roads together account for more than two-thirds of global investment needs
Electricity and roads together account for more than two-thirds of global investment needs
40%
35%
30%
25%
20%
15%
10%
5%
0%
2007-2015
Sectoral share of global infrastructure investment, 2007-2040
2016-2040 (Current trends) 2016-2040 (Investment need)
Electricity Road Telecoms Rail Water Port Airport
60
50%
40%
30%
20%
10%
0%
%
Regional share of global infrastructure investment, 2007-2040
Asia Americas Europe Africa Oceania
2007-2015 2016-2040 (Current trends) 2016-2040 (Investment need)
Total forecast infrastructure gaps
>S200 billion
S150-S200 billion
S100-S150 billion
S50-S100 billion
S0-S50 billion
N/A
China and India and other emerging Asian countries have been driving much of the growth in infrastructure spending
INDIA: A LARGE MARKET FOR INFRASTRUCTURE & CONSTRUCTION MARKET
Ramped up activity in the roads, buildings, irrigation, urban infrastructure, railways, housing, smart cities and low cost housing
US$ 738.5 Billion, 2017
One Trillion
3rd largest
7-8% p.a
Indian Construction Market
Construction Sector Market Size in 2025
Market of the World by 2025
Fastest growing market in the World
th thInfrastructure spending during 11 and 12
Five-Year Plan (US$ Bln)
75
.7
69
.4
89
.5
1
01
.6
1
01
.9
15
7.4
18
1.2
1
73
.8
21
0.6
2
60
.2
th11 Five Year Plan
th12 Five Year Plan
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
Infrastructure spending as% of GDP
9%
7.2%
9.0%
8.4%
7.9%
7.6%
7.4%
8.4%
7.9%
7.5%
7.2%
6.4%
5.2%
12th Five Year Plan
11th Five Year Plan
FY17
FY16
FY15
FY14
FY13
FY12
FY11
FY10
FY09
FY08
10th Five Year Plan
Revenue (U
S$ B
illio
n)
India Infrastructure Market, 2015-2021 (US$ Bln)
2015 2016 2017 2018 2019 2020 2021
US$ 2552 billion market in FY21
1,365.6
2,552.4
Source: IBEF, Economic Survey, Business Wire, KPMG Infrastructure Report
Rising private investments for infrastructure development
80
70%
60%
50%
40%
30%
20%
10%
0%
% 75%
65%
53%
47%
35%
25%
10th plan 11th plan 12th plan
Public Private
EXPORTS - INDIAN COMPANIES HAVE ESTABLISHEDPRESENCE ACROSS THE WORLD
Source: EY, Making India Brick by Brick, company websites
EPC Player Geography of expansion Focus areas
Larsen & Tourbo Ltd. The UAE, Saudi Arabia, Kuwait, Oman, Qatar, Singapore, Malaysia, Indonesia, Kenya, Mozambique, Algeria, Russia, Bahrain, Sri Lanka, Bangladesh, Jordan, Thailand
Engineering and construction projects in power transmissions and distribution, metro rail, expressways and highways, railway infrastructure(civil and track, electrical and mechanical, signalling and telecom packages) as well as residential construction
Engineers India Ltd. The UK, the UAE, Saudi Arabia, Malaysia, China, Italy Oil and Gas, petrochemicals, solar power, water and waste management, fertilizer plants
Gammon India Ltd. The US, Canada, Malaysia, Oman, Bangladesh, Bhutan, Nepal, Libya, Iraq, the UAE, Nigeria and Sri Lanka
Water supply, power plants, highways, desalination plant, bridge and jetty construction
IVRCL Nepal, Sri Lanka, the Middle East, the UAE, Kenya and Africa Hydroelectric power plant, residential project, water reservoirs, canals and non-residential buildings
AFCONS Infrastructure Ltd. Mauritius, Oman, Indonesia, Kuwait, Qatar, Madagascar, Jordan, Liberia, Yemen, the UAE, Bahrain
Industrial EPC, chemical plants, cement plants, mining projects, highway construction
Tata Projects Ltd. South Africa, Mauritius, Kenya, Qatar, the UAE Third-party inspection services for power T&D projects, power transmission line, oil and gas terminals
Ramky Infrastructure Singapore, the UAE and Gabonese Republic Infrastructure development, waste management, environment and property development
Shapoorji Pallonji & Co. Ltd. The UAE, Kuwait, Ghana, Qatar, Saudi Arabia, Algeria, Gambia, Nigeria, Sri Lanka and Kenya
Contracting services for residential, commercial, industrial, hospitality, healthcare and mixed use buildings
Punj Lloyd Indonesia, Malaysia, Qatar, Kazakhstan, Oman, Turkey, Singapore Offshore platforms, gas field development, oil and gas pipelines, storage tanks and terminals
Essar Projects Ltd. Singapore, the UAE, Zimbabwe, the US, Papua New Guinea Marine facilities and storage terminals, industrial plants, pipelines, steel plant, roads, water and hydroelectric power and airport projects
IRCON International Limited
Malaysia, Nepal, Bangladesh, Ethiopia, Afghanistan, Alegria, Sri Lanka, Mozambique
Railways and highways construction, EHP sub-station and MRTS
NBCC (India) Limited Oman, Mauritius, Maldives, Yemen, Turkey, Botswana, Libya, Iraq, Nepal
Project Management Consultancy (Roads, Hospitals, Institutions, Offices, Airports, Bridges, Industrial & Environmental Structures, etc), Real Estate Development, EPC (Chimneys, Cooling Towers, various types of Power Plant Works)
22.08
FY13
23.30
FY14
24.06
FY15
24.18
FY16
24.29
FY17
24.67
FY18*
Cumulative FDI inflow in Construction activities (US$ billion)
US$ 24.67 billion cumulative FDI inflows in construction activities till Dec 2017
Construction activities sector includes infrastructure
US$ 12.36 billion cumulative FDI inflows in construction development sector till Dec 17
Construction Development sector includes townships, built-up infrastructure and construction- development projects
Cumulative FDI inflow in Construction development (US$ billion)
2.09
FY13
2.58
FY14
3.43
FY15
7.96
FY16
9.82
FY17
12.36
FY18*
NDSECTOR WITH 2 HIGHEST FDI INFLOW
2nd highest FDI receiving sector
100% FDI allowed in Infrastructure and construction sector
AGRICULTURE/ ANIMAL HUSBANDRY
MINING
PHARMACEUTICALS
AVIATION
MEDIA
Pisciculture, aquaculture and animal husbandry include on June 20: already existing in floriculture, horticulture
Coal, lignite, precious ores, coal processing, titanium
Extended to brownfieldprojects; 100 per cent FDI already in greenfield
Brownfield airports included. ground handling Service, non Scheduled air transport already open to full FDI
Cable, DTH, non-news uplinking technical-scientific magazine publishing
PETROLEUM
CONSTRUCTION DEVELOPMENTTownship, housing, built-up infrastructure, industrial parks
SATELLITES
FINANCIAL SERVICES
TELECOM
Exploration, pipeline, regasification infrastructure
Establishment and operation, subjects to ISRO and government guidelines
Asset reconstruction companies, NBFCs,ATM operations
All services, including telecom infrastructure providers
THE 100% CLUBSECTORS WHERE 100 PER CENT FOREIGN INVESTMENT WAS ALREADY PERMITTED
Source: IBEF 2018, EEPC, doing business in India 2017
Serv
ices
Co
nstr
uctio
n -
To
wnsh
ip,
Ho
usi
ng
, B
uilt
-
UP,
Infr
ast
ructu
re
Tele
co
mm
unic
atio
ns
Co
mp
ute
r S
oft
ware
&
Hard
ware
Auto
mo
bile
In
dust
ry
Dru
gs
&
Pharm
aceuticals
Trad
ing
Chem
icals
(O
thers
th
en F
ert
ilize
rs)
Po
wer
Meta
llurg
ical
Ind
ust
ries
18
16
14
12
10
8
6
4
2
0
18% share
8share
% 7share
% 7share
% 5share
% 4share
% 4share
% 4share
% 4share
% 3share
%
FDI & ACQUISITION ACTIVITIES IN THE SECTOR
33 deals in FY 2016-17 with US$ 3.49 billion investment in power, roads and renewable sectors
NIIF* with DP World(UAE): investment of US$ 3 billion into ports, terminals, transportation, and logistics businesses in Jan 2018
Squared Capital: US$ 4 billion invested in infrastructure assets in India and across the globe
US$ 2.39 billion investment in development of Navi Mumbai airport
US$ 453 million by Gamma Group (UAE) in the infrastructure, health & education sectors of Kerala
US$ 550 million joint investment by IL&FS and Lone Star
Renewable Energy
Source: Press Information Bureau (PIB), EEPC, doing business in India 2017*National Investment and Infrastructure Fund (NIIF)
Acquirer Portfolio size Approx. value
2016Welspun Renewables
Tata Power Renewable Energy
1,140 $1,380 mn
SunEdison India
Greenko Group
1,500-1,600 $400-500 mn
2017
KCT Renewable
ReNew Power
103MV $154mn
Inox Renewables
Leap Green
260MW NA
GLOBAL INTEREST IN INDIA
Region Sector Focus EPC Strategy
Europe · Highways
· Oil and gas
· Thermal power
· Power transmission
· Ports
· Airports
· Buildings
· Focused on civil contracting for highways and dredging
· Focused on design and project management in Oil and gas EPC
· Undertakes entire construction work including civil work for thermal power and solar power projects
· Strong presence in supply of power transmission and distribution equipment
· Expressed interest in participation in construction of greenfield airports
China/ Taiwan/ Hong Kong/ Singapore/ Malaysia
· Railways
· Thermal power
· Solar power
· Power transmission
· MRTS
· Waste water management
· Real Estate
· Undertake entire construction activity and O&M services for thermal power projects
· Key supplier of power equipment including BTG, solar modules and transmission equipment
· Focused on construction of metro station, tunnelling works and supply of metro coaches
· Considering to partner with Indian companies for development of high speed rail projects
· Waste water management - complete services from design, engineering, construction and installation of facilities
Middle East · Buildings
· Power
· Executing building contracts in partnership with Indian players
· Undertake entire construction work including civil, mechanical, electrical etc. for thermal power projects
Japan · Railways/ high-speed rail
· MRTS
· Thermal power
· Solar power
· Power transmission
· Undertakes entire construction works and O&M services for thermal power projects
· Operating through owned subsidiaries or formed a JV with Indian companies for supply of BTG and T&D related
equipment
· Railways-Engaged in electrification works, civil works, track works, signalling supply of railways and metro coaches
· Considering to participate in development of high-speed rail projects
Source: EY, making India Brick by Brick, http://www.ey.com/Publication/vwLUAssets/EY-making-india-brick-by-brick/$FILE/EY-making-india-brick-by-brick.pdf
EMPLOYMENT TREND
The construction sector has accounted for more than a third of new jobs post liberalisation
However, due to technology influx, the labour intensity is decreasing as compared to other sectors
Source: NCAER, RBI report, CRISIL
Sectors
Construction
Trade
Miscellaneous service(includes real estate brokerage)
Transport and storage
Education
Business services
Hotels and restaurants
Gems, jewellery andmisc. manufacturing
Food products,beverages and tobacco
Financial services
Health and social work
20.13
24.84
7.38
9.78
3.13
1.47
2.49
3.02
4.92
2.42
0.81
14.40
10.04
5.02
4.29
3.22
2.18
1.89
1.43
2.42
1.11
1.08
Sharein total
workforcein 2015-16
(in%)
1980-81and
1990-91(in %)
1990-1991and
2015-16(in %)
35.74
14.56
8.43
7.44
6.26
5.99
3.75
2.46
2.28
2.26
2.07
The fastest growing sectors are least labour intensive
25.0
20.0
15.0
10.0
5.0
0.0
Size of bubble represents labour intensity of the sector
Agriculture
Construction
TransportStorageCommunicationBroadcasting services
Manufacturing
Trade HotelsRestaurant
MiningUtilities
FinancialservicesReal estateProfessionalservices
Public administrationDefenceCommunity services
0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 11.0 12.0
Source: CRISIL Research Average % output growth FY15 to FY17%
share
of
secto
r in
to
tal o
utp
ut
35.26Other
3.77%Sales, shop, shopkeeper
4.04%Drivers
7.56%Other labourers 14.29%
Agri labour
35.08%Construction
Sector has highest share in employing immigrant low wage manpower
Source: Press Information Bureau (PIB)
GOVERNMENT FOCUS AREAS IN THIS SECTOR
100% FDI permitted across various infrastructure sectors.
Transportation: Roads, Railways, airports and ports
Affordable Housing: Target to build 5 crore homes over 5 years
24x7 Power: US$ 300 billion investment in the next 10 years
Urban Infra: Investment of US$ 31,650 billion has been proposed by 99 cities under their Smart City plans
Housing for All
Smart Cities Mission
Clean India
Clean Drinking Water
Rural Electrification
ENGINEERING SERVICES MARKET
Source: iBEF 2018, http://www.business-standard.com/article/companies/india-will-be-the-global-hub-for-engineering-services-going-ahead-113100800801_1.html
India’s outsourcing industry is
pegged at US$ 150 billion and
has been hailed as an engine
of job creation
The engineering research and
development (ER&D) industry to
touch US$ 40 billion by 2020 from
the current US$ 10-11 billion
Advantage India
India has natural and acquired advantage in terms of talent availability, and a destination for high-quality and competitive technology skills.
Growth of engineering services is linked to investments in other sectors such as power, infrastructure, automobile and auto components
FY17 2020F
24
45
50
40
30
20
10
0
Outsourcing due to cost reason
More backend work & minimum R&D
Outsourcing due to skills
More high-end technology work
Evolution of Indian Engineering Outsourcing Service
In 2000 In 2017
THE REAL ESTATE MARKET
Source: IBEF; EY
Indian Real estate sector in India is expected to reach a market size of US$ 180 billion by 2020.
0
50
100
150
200
2015 2020F
126
180
The government also launched 10 key policies for real estate sector in 2016, namely:
• Real Estate Regulatory Act
• Benami Transactions Act
• Boost to affordable housing construction
• Interest subsidy to home buyers
• Change in arbitration norms
• Service tax exemption
• Dividend Distribution Tax (DDT) exemption
• Goods and Services Tax
• Demonetisation
• PR for foreign investors
4th largest sector in terms of FDI inflows
FDI in the sector is estimated to grow to US$ 25 billion by Fy22
Government of India’s Housing for All initiative is expected to bring US$ 1.3 trillion investments in the housing sector by 2025.
By 2022, real estate and construction sector in India is expected to generate 75 million jobs and emerge as the largest employer in the country
Growth Drivers
• Urban Housing
• Tourism
• Retail/Commercial space
• Easier Finance
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
Fy2
011
FY
2012
FY
2013
FY
2014
FY
2015
FY
2016
FY
2017
FY
2018F
FY
2019F
Advanced Economies Emerging Economies
India China
Fy2
010
HOUSING DEVELOPMENT
* Pradhan Mantri Awas Yojana-Gramin/ UrbanSource: IBEF, 2018, Ministry of Rural Development, PMAY
West, 7%North East, 1%
Others, 0%
Central, 12%
South, 8%
North, 20%
East, 52%
Housing for All by 2022, the government’s flagship scheme PMAY-G/U* launched in June 2015 aims to build 20 million urban homes and 30 million rural houses by 2022
Approx. 60 million new homes are expected to be built in India between 2018 and 2024 with social and affordable housing rising almost 70% to 10.5 million by 2024
In March 2018, construction of additional 3,21,567 affordable houses was sanctioned under PMAY
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
(ho
use
s in
lakh
s)
60
40
20
0
(lakh
s )
ho
use
s
10.4 10.3 11.718
32
51 51
FY13 FY14 FY15 FY16 FY17 FY18E FY19E
Strong traction tocontinue in ruralhousing construction overnext 2 years
FY17A* FY18E FY19E FY20E FY21E FY22E
1.5
12
26 26
30 29.8
URBAN INFRASTRUCTURE DEVELOPMENT
Source: Ministry of Urban Development
US$ 1200 Billion Urban Investment requirement
US$ 1000 Billion O&M cost
BY Year 2030
Under Operation
Under Construction
Planned
311 Kms 532 Kms 386 Kms
9 Cities 13 Cities 11 Cities
METRO rail core focus in urban mobility infra development – planned expansion across 11 cities
50% India to be urban by Year 2050; currently above 31%
Key global partnership areas in Urban infra development
1951 1961 1971 1981 1991 2001 2011 2050
Census of IndiaSource:
The growingurban footprintUrbanization share (%)
>50.031.16
27.81
25.71
23.34
19.9117.97
17.29
Finance
Construction
Capacity Building
Technology
100 SMART CITIES
Source: Ministry of Urban Development, www.thehindubusinessline.com, www.smartcite, ourstory.coms, conomic Times-10-Apr-2018, Geospatial World (press release) (blog)-12-Apr-2018
Urban areas are expected to house 40% of India’s population and contribute 75 % of India’s GDP by 2030
Smart Cities Inviting International Interest
Russia’s Russoft Association of Software entered into a formal partnership with NASSCOM. Areas of collaboration would include smart cities and mega infrastructure
In 2017 India and Sweden agreed to further deepen their cooperation in the Smart Cities initiative, transport and energy sectors- including transit-oriented urban development, air pollution control, waste management, waste-to-energy, waste-water treatment, district cooling and circular economy.
A number of Chinese companies met the Industry representatives in Hyderabad to explore the possibility of working on projects in the upcoming smart cities projects in India.
Real Estate Sector Share in GDP Will increase from 6% to 10-12% due to the smart cities
The real estate sector contributes about 6% to India’s GDP
With the vision of building 100 smart cities, this share to increase to 10-12% by 2022
SMART CITIES FUELLING THE CONSTRUCTION SECTOR
Source: Ministry of Urban Development
Total Winning Proposals- 99 cities
Total cost of Projects- US$ 30 billion
Total Pan city solution cost- US$ 5.7 billion
Total Urban population impacted- 99 million
Total area based development cost- US$ 24.32 billion
E-Governance and Citizen Services
1. Public Information, Grievance Redressal
2. Electronic Service Delivery3. Citizen Engagement4. Citizens - City's Eyes and Ears5. Video Crime Monitoring
Waste Management
6. Waste to Energy & Fuel7. Waste to Compost8. Waste water to be Treated9. Recycling and Reduction of
C&D Waste
Water Management
10. Smart Meters and Management
11. Leakage Identification, Preventive Maint.
12. Water Quality Monitoring
Energy Management13. Smart Meters and Management14. Renewable Sources of Energy15. Energy Efficient & Green
Buildings
Urban Mobility
16. Smart Parking17. Intelligent Traffic Management18. Integrated Multi-Modal
Transport
Others
19. Tele-Medicine & Tele Education20. Incubation/ Trade Facilitation
Centres21. Skill Development Centers
POWER SECTOR FUELING CONSTRUCTION MARKET
Source: IBEF, 2018
Power generation capacity of 334.15 GW in Feb 2018
• 10.57% CAGR of Capacity from FY 09–17
• 326 GW by the end of FY17
• Annual growth rate of renewable energy at 27% and conventional energy at 18%
Indian energy sector is expected to offer investment opportunities worth US$ 300 billion over the next 10 years.
% Share of power sources in India
Renewable10.80%
Hydro - 20.76%
Nuclear 2.55%
Thermal - 66%
US$ 589 Mnto provide continuos powersupply to rural India
US$ 756 MnStrengthening of sub-transmission network in the urban areas
US$ 648 Mnwind power, solar powerand green energy corridor project
US$ 2.47 Bnfor last mile connectivity to rural households
132.3 143.1 148.0 159.4173.6
199.9223.3
237.7
272.5 280.3
326.8
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
Installed electricity generation capacity (GW)
GW - Gigawatt
CONSTRUCTION EQUIPMENT REVENUES ON AN UPTREND
Source: IBEF 2018
•
• 40% growth rate
• US$ 7 billion by FY20
US$ 4.2 billion value in FY17
Rising demand for construction equipment in accordance with Infrastructure investments spends & needs of the country
• Excavators• Backhoe• Loaders• Bull Dozers• Wheeled loading
shovels
Constructionprojects and
Mining activities
Construction- RealEstate, Infra.,
Irrigation projects
• Batching Plants• Transit Mixers• Concrete Pumps• Stone Crushers
Earth Moving Equipment
ConcreteEquipment
19%
13%3%
65%
Earth Moving Equipment
Concrete Equipment
Material Handling Equipment
Material Processing Equipment
Source: NBM & CW
Constructionand Industrial
sectors
• Cranes• Hoists• Conveyors• Fork Lifts• Feeders• Bucket Elevators
Material Handlingand processing
Equipment
Key Driving Sectors
Construction Equipment IndustryConstruction Equipment
Segment-wise MarketShare
3.7 3.94.3
4.64.2
5.1
3.9
6.5
2.9 3
4.2
5
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY20
Construction equipment industry revenue (US$ billion)
KEY PLAYERS IN THE SECTOR – PAN INDIA FOCUS
Source: PIB
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
North Karnataka Expressway
West Gujarat Expressway
Noida Toll Bridge,
Ahmedabad - Mehsana Toll Road
East Coast Road
Kotakata Kurnool Road Project
East Coast Road
Hazaribagh Ranchi Expressway Ltd Karnataka Toll Bridges
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,
Bandra–Worli Sea Link
Badarpur Elevated Highway Project,
Delhi Faridabad Elevated Expressway
Breakwater construction for new port at Ennore, Chennai,
Hyderabad-Vijayawada Road Project, Sikkim’s Greenfield Airport,
The Medanta (Medicity),
Bangalore Metro Rail Project,
Elevated Viaduct, Delhi Metro
Hyderabad Metro Rail, 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
SEGMENT WISE INDIAN AND INTERNATIONAL PLAYERS IN THE SECTOR
Source: EY, making India brick by Brick, http://www.ey.com/Publication/vwLUAssets/EY-making-india-brick-by-brick/$FILE/EY-making-india-brick-by-brick.pdf
Segment Major domestic players Major foreign players Insight
Infrastructure/ General Contracting Larsen & Toubro Ltd., Hindustan Construction Co. Ltd., Gammon India, IVRCL, Simplex Infrastructure Ltd., Gayatri Projects Ltd., Patel Engineering Ltd., Era Infra Engineering Ltd., Sadbhav Engineering Limited, Nagarjuna Construction Company Ltd.
Isolux Corsan, ITD Cementation India Limited. IJM (India) Infrastructure Limited, Leighton, ACS Construction Group Ltd., Vinci Construction, CEC
Increasing Opportunities in the infrastructure sector have attracted many new domestic as well as new entrants to this space
Building construction- Residential and Commercial Segments
Larsen & Toubro Ltd., Shapoorji Pallonji & Co. Ltd., Ahluwalia Contracts (India) Ltd., B L Kashyap & Sons Ltd., B.G. Shirke Construction Technology Private limited, B. E. Billimoria & Co. Ltd., BSEL Infrastructure Realty Limited, Consolidated Construction Consortium Ltd., Mackintosh Burn Ltd., Man Infraconstruction Limited, Supreme Infrastructure India Ltd., Unity Infraprojects Ltd., Vascon Engineers Ltd.
Arabian Construction Company, Leighton, Samsung Engineering
Space is organised in nature and is dominated primarily by local contractors
Oil & Gas EPC Larsen & Toubro Ltd., Punj Lloyd Ltd., Petron Engineering Construction Limited, Essar Projects (India) Limited, McNally Bharat Engineering Co. Ltd., Leighton, Engineers India Limited, Fabtech Projects & engineering Ltd., Jaihind Projects Ltd.
Aker Solutions, Leighton, Welspun Contractors Pvt. Ltd., Bechtel Corporation,Linde Engineering India Pvt. Ltd., Tecnimont ICB, Samsung Engineerin, Uhde India Limited
Significant competition from foreign participants, especially for offshore contracts; business model focused on project management rather than direct execution
INVESTMENTOPPORTUNITIES
04
Rising budget allocation of road sector
Growing private sector involvement
Recent investment & plans
GOI Budget allocation of US$ 10.97 billion in 2018-19 for National highways
Share of Road projects - 48.4% of total PPP projects in India
Investment of US$ 31 billion is expected in PPP by 2020 for national highways
Upgradation of 2 lane to 4 lane highways: US$ 65 billion allocated
Monetisation of 105 highway projects, worth US$ 21.57 billion
US$ 107.64 billion investment in road network of 83,677 km over the next five years
Total Winning Proposals
99 cities
Total cost of Projects
US$ 30 billion
US$ 1200 Billion Urban Investment requirement
US$ 1000 Billion O&M cost
BY
Year
2030
2032 (Estimated) 2017 (Total)
Passenger traffic: 11.81%
Freight traffic: 6.8%
Aircraft Movement: 5.77%
224MN
2.7MT
1.86MN
500MN
11.4MT
5.8MN
Domestic International
8% 6.1%
50% India to be urban by Year 2050; currently above 31%
1951 1961 1971 1981 1991 2001 2011 2050
Source: Census of India
The growingurban footprintUrbanization share (%)
>50.031.16
27.81
25.71
23.34
19.9117.97
17.29
WHY INVEST IN INDIA
DRIVERS FOR GROWTH
Source: PWC 2017
In recent years, India has emerged as one of the most attractive destinations for doing business and making investments; India ranks among the top 10 FDI destinations globally.
Public Private partnerships (PPP) in the infrastructure space have increased and are expected to grow even further.
Investment worth 60 billion US$ in urban infrastructure are estimated over the next 20 years
100 smart cities and 500 cities are likely to invite investments worth 2 trillion INR in the next 5 years.
Various Infrastructure projects are proposed for the development of highways, modernisation and development of railway lines, modernisation and setting up of ports, etc. - Many are proposed to be undertaken through PPP models.
INVESTMENT OPPORTUNITY IN INFRASTRUCTURE
Source: IBEF, 2018, PWC 2017
Urban Infrastructure
• 100 Smart Cities are to be developed as part of the Smart Cities Mission, which is aimed at sustainable and inclusive development.
• 100 smart cities and 500 towns are to be developed under PPP models. This is likely to invite an investment of 31 billion US$.
• 20 million houses across 4,041 towns are to be built by 2022 as part of the Housing for All Scheme, for which the government has approved 6.7 billion US$.
• 9.54 billion US$ is to be invested across 4,041 towns under the Clean India Campaign in urban areas.
• The National Investment and Infrastructure Fund(NIIF) was set up to maximise economic impact through infrastructure development.
100% FDI allowed in the construction development sector under the automatic route, subject to certain conditions. 100% tax deduction on profits to an undertaking in a housing project approved from June 2016 to March 2019 and completed in 3 years, subject to certain conditions.
Roads and highways
• In Union Budget 2017, the budget allocation for highways increased to 10 billion US$.
• As on 31 March 2016, there were 136 PPP projects underway.
• There were proposals to develop 63,591 km of national highways under various programmes.
• There exist investment opportunities in various expressway projects, highway projects and tunnel projects.
• The Bharatmala Project proposed a long-term development initiative for the development of 44,000 km of national highways at an estimated cost of 97.2 billion US$.
• Current length of national highways: 1,01,010 km
100% FDI allowed, subject to laws and regulations and certain conditions.
Airports
• Greenfield airports at Navi Mumbai and Goa are expected to have an investment opportunity of 3 billion US$
• Brownfield airports and 50 low-cost airports are to be developed across India
• The number of operational airports is to be increased from 125 as on 31 March 2016 to 250 by 2020
• Agartala, Imphal and Dibrugarh are to be developed as intraregional hubs, and Guwahati is to be developed as an interregional hub.
• The government plans to spend 3 billion US$ on modernisation and upgradation of existing airports.
• It also plans to develop new airports in Tier II and Tier III cities.
100% FDI allowed under the automatic route for greenfield airport projects and brownfield airport projects, subject to certain conditions.
Railways
• The Indian Railways is expected to have a prospective investment of 130.76 billion US$ in the next 5 years.
• It also aims to boost passenger amenities by involving PPP investments at all major stations
• Port connectivity to be taken up on Priority; SPVs floated under PPP models are to strengthen rail connectivity with various ports.
• International facilities are proposed to be developed at identified stations through PPP models
• To develop a network of freight terminals, the policy of Private Freight Terminals based on PPP models is being further refined
• Private Investment in railway logistics is being encouraged, and the set-up of logistics parks is being proposed.
• Mass Rapid Transit System (MRTS) projects have been planned under PPP models.
100% FDI allowed in the railway infrastructure segment, subject to certain conditions.
Technologies and solutions for the promotion of low cost and affordable housing
Green/ Energy efficient building material and technology
Sustainable and environmentally friendly building materials
Technologies for smart sustainable cities and integrated townships
1
2
3
4
GOVERNMENT INITIATIVES
Source: IBEF 2018*public private partnership
For 2018-19, the total capital expenditure of Railways will be US$ 22.55 billion
As per Union Budget 2018-19, capacity constraints in the railways network will be eliminated through doubling of 18,000 km of tracks, third and fourth lines and conversion of 5,000 km of tracks into broad gauge.
A new Metro Rail Policy was approved in August 2017 mandating PPP* component in new projects.
Railways &Metro Rail
Budget allocation for road sector increased to US$ 10.07 billion in 2017-18 from US$ 8.99 billion in 2016-17.
2 , 0 0 0 k m s o f c o a s t a l 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 US$ 107.64 billion approved in October 2017.
Roads &Airport
In 2017, government announced plans to faci l i tate higher inves tment in a f fo rdab le housing.
“Housing for All” programme, launched in June 2015 aims to build 20 million urban homes and 30 million rural houses by 2022.
In March 2018, construction of additional 3,21,567 affordable houses was sanctioned
60 million new homes are expected to be built in India between 2018 and 2024.
Housing
In December 2017, the North East Special Infrastructure D e v e l o p m e n t S c h e m e (NESIDS) was approved by GOI with 100% funding from the central government for infrastructure projects in the region.
Highway projects worth US$ 2 2 . 6 b i l l i o n w o u l d b e undertaken in north-east region of the country.
Region Development –North East
GOVERNMENT INITIATIVES
Source: IBEF 2018
The Airports Authority of India aims to bring 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.
Metro Airports
The AAI plans to spend over US$ 3.2 billion between 2018-22 to build new terminal and expand capacity of existing ones.
22 airports to get connected under regional connectivity scheme of AAI.
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.
Non-metroAirports
Planned investment by Government of India in 2018-19.
Infrastructure sector allocation: US$ 92.22 million.
National Highway: US$ 10.97 million
Road sector: US$ 18.69 billion
Railways: US$ 22.86 billion
Universal household electrification in the country: US$ 2.47 billion
Wind and solar power: US$ 648.75 billion
Budget 2018-19
INDUSTRY TESTIMONIALS
Source: PIB
All 11 road projects of
~1,000 km are revenue
generating. We are planning
to monetise the entire road
portfolio and the due
diligence process is in an
advanced stage.
Lalit Jalan
Acting CEO
Reliance Infrastructure
Affordable Housing space
offers plenty of
opportunities with the
government’s initiatives
such as Housing for All by
2022, Smart Cities, etc.
Deep Vadodaria
COO
Nila Infrastructure Ltd
The requirement for
renewable energy is going
to go up. The market is in
a nascent stage. With
government policies, the
growth will be tremendous.
Dhimant J Shah
Director
Veer Energy and Infrastructure Ltd
BUSINESS ®ULATORY ENVIRONMENTIN INDIA
05
REFORMS FOCUS
Fiscalprudence andaccountability
Integratedtax
regime
Enabling Ecosystem
Servicespush
Job creation and inclusive
growth
REGULATORY ENVIRONMENT - INDIA
Foreign Investment Framework
• Governed by Foreign Exchange Management Act, 1999
• Progressive liberalization in the policies
• Automatic route (No prior approval requirement) such as railway and road infrastructure
• Approval route (Prior government approval required before setup) such as multi brand retail trading
Foreign Direct Investment (FDI) in India
Evolution of foreign investment regulations
FDI INVESTMENT ROUTE
Under Automatic Route Prior Approval Route
No requirement of any prior regulatory approval
Filing an intimation with RBI in prescribed format within 30
days of investment
Filing particulars of issue of shares within 30 days of issue
of shares to foreign investors
Filing an intimation with RBI in prescribed format within 30
days of investment
Filing particulars of issue of shares within 30 days of issue
of shares to foreign investors
Required approval from Govt. of India – Considered by respective Administrative Ministry/Department.
BUSINESS PRESENCE IN INDIA - FORM OF ENTITIES
Establishes local presence
Operates as a foreign company
Foreign Company
Liaison Office Project Office Branch Office Joint Ventures Limited Liability Partnership
Wholly Owned Subsidiary
Key considerations for choosing
investment vehicles
• Commercial considerations
• Regulatory framework (prior approval requirements for Chinese companies)
• Tax considerations
• Cost of operations{
This Report has been prepared by CII.
IT & ITES