EPC Driving Growth Efficiently Report FINAL

Dear reader,

As the World Bank has recently asked the Roads Ministry to develop new models to expedite projects, Indias Planning Commission envisages a fresh policy on EPC in road projects. Under the new EPC model, the contractor will accept the risk and responsibility for both the design and the construction of work. So while EPC projects have existed, the emphasis on them is freshly brewing.

There is a crying need for more professional process in public procurement, better understanding of quality thresholds and technology among (especially) government and public sector developers. The government will soon have a new law in procurement and may introduce a Department of Procurement. This should come as good news to everyone who is aspiring to reach international quality standards and new technology. Most industry experts believe our contract systemnot procurement aloneneeds major reform. International developers and investors are demanding better processes and adherence to health, safety, environment norms.

As internationalization knocks on Indias doors, however, high attrition and lack of labourespecially skilled labourpersists. Thanks to governments in traditionally underserved but overpopulated regions such as Bihar, Orissa and Bengalfrom where labour typically migrates en masse to where the action isdevelopmental and infrastructure projects are coming up aggressively. The government-sponsored MGNREGA, which guarantees employment in rural areas, is another reason.

Delays in our development projects are forcing more developers to go the EPC way. The new emphasis on EPC is also, sadly, because investments are looking south. With a double-dip threat in the global economy, the worst industrial growth in eight quarters in India and projects down to a trickle, EPC is a stable option. But if the recent success of Indias largest-ever highway bid-out is any indication, some sectors are all set to change the trendeven as power projects remain suspect owing to poor health of the distribution companies.

Were proud to present a joint paper that outlines and analyses the trends in EPC,

Pratap Vijay Padode Editor-in-Chief, Infrastructure Today and Managing Director, ASAPP Media Information Group

Foreword

Ernst & Young

Dear reader,

Indias EPC market has come under the global scanner. The sector has witnessed consistent changes over the past few years, with increasing project sizes, scale and market maturity. Riding on Indias

INR40.9 trillion during the Twelfth Five Year Plan) the EPC sector is likely to make major advances. The order books of numerous players

are bulging, and the sector is attracting the increased interest of global majors, and Indian conglomerates as well as infrastructure developers.

The sector has become more dependent on infrastructure investments than ever before. This trend is further illustrated by the fact that projects awarded by the Indian Government are gradually shifting toward the Private Public Partnership (PPP) model. Some sectors, such as highways and power, have reached a mature stage, whereas others such as the railways and urban infrastructure are yet to develop through the PPP model. Today, EPC contractors have a healthy mix of government and private sector clients, as compared to their heavy dependence on government clients until few years ago. Therefore, companies have to adapt to such changing environments.

Over the past three years, some large EPC companies have seen a ~20% growth in their

!"#$&

!

'resource constraints (including that of skilled labor). In the present scenario, companies revenue growth.

Companies have been constantly exploring and innovating means of overcoming the challenges mentioned above. This report discusses the latest trends and the market direction, as well as the strategies adopted by various players to adapt to the ever *'insightful.

Sushi Shyamal Partner, Transaction Advisory Services Transportation Infrastructure and Construction Sector Leader, Ernst & Young India

Heading 1

Engineering, Procurement and Construction (EPC)/36

Engineering, Procurement and Construction (EPC)/3 7

Understanding EPCA decade ago, the EPC industry comprised a handful of large, complex projects and multitude small packages and subcontracts. Today, there is no dearth of high value and complex projects being executed by government and private players. The increasing size and complexity of projects has, however, led to a growing reliance on contractors capabilities and project management skills.

5contracts. Slowly but steadily, the onus of project management has shifted from the owner/developer to the contractor. Gradually, the risk of time and cost overruns has been transferred to the contractor, along with the responsibility of designing, procurement of materials and construction. Standard clauses and conditions prevailed, :;5!owner/developer and the contractor.

There are several types of construction contracts that are used. While some are item


Turnkey contract versus packaged-based contract

Criteria Turnkey contract Packaged-based contract

Price Guaranteed price for execution No guarantee on the price

Time Guaranteed timeline for completion No guarantee on the timeline

Procurement Undertaken solely by the contractor As per agreement between the two parties

Engineering/Design Responsibility of the contractor Responsibility of the owner/developer

Responsibility Contractor takes single point of responsibility 5

Point of contact Contractor is single point of contact for all matters for the project developer

Owner/developer has to coordinate with several participants along with the contractors

Level of Involvement Contractor is free to work with limited supervision -

Owner/developer to undertake a day to day supervision of most of the activities

Risk =

=H

The onus for successful project execution rests with various stakeholders with varying roles and responsibilities. In the initial stages, the project owner or developer appoints an in-house or external consultant to prepare the initial design and manage the tendering process. On the EPC contract being awarded, the contractor formulates a detailed design, and makes arrangements for procurement and execution, based on the approved design. The contractor may subcontract some $of such large projects continues to be a concern. Over time, institutionalization of a transparent and competitive bidding process is the only way to decide the fate of such large projects. Infrastructure linkages are also immensely important, since provision of adequate road, rail and water transport facilities will be critical for the success of large -scale airport development plans (such as the one planned in the Navi Mumbai area).

9 Defence Ministry told to speed up port project clearance The Economic Times, 7 October 2011.

10 Sector focus: airports and airlines, Indian Infrastructure, November 2010; India Infrastructure - PPP opportunity, May 11, Ernst & Young publications; Sector focus: civil aviation, Indian Infrastructure, August 2011.

Investments in ports (INR billion)

0

1000

Planned

Public

Private

1200

800

600

400

200

Tenth Plan Eleventh Plan Twelfth Plan

Source: Indian Infrastructure-Sector report, Religare, 24 June 2010, via Thomson Research; Planning Commission website Planned investment: Investment in Infrastructure during the Eleventh Five Year Plan, The Secretariat for Infrastructure, Planning Commission, www.infrastructure.gov.inPrivate and public share: Investment in Infrastructure during the Eleventh Five Year Plan as published by the Secretariat for Infrastructure Sep 2010


During the Twelfth Five Year Plan period, private sector participation is expected to rise to 65%. Major projects undertaken in the PPP format till now include that of the Hyderabad, Delhi, Bangalore and Mumbai airports. The Airports Authority of India is developing 18 new terminals at existing airports on an EPC basis.11

Power#!

Indias total installed power generation capacity (excluding its captive capacity) stood at 1,73,626 MW as of March 2011. Robust economic growth and enhanced industrial much as 12% peak hour power shortages. This makes a compelling case for further large scale investments in the sector. Between 2007 and 2010, 32,000 MW of generation capacity was added in the country. In the Twelfth Five Year Plan, total investment is estimated to be INR12,576 billion. Construction intensity in the power sector is around 38% at present and is expected to result in construction opportunity worth INR4,780 billion.

;with the announcement of 14 ultra mega power projects (UMPPs). Out of these, four (Sasan, Mundra, Krishna Patnam and Tilaiya ) have already been awarded to private players. What is most heartening about the power sector is the record growth in generation capacity addition and initiatives that have helped to create sound policies and regulatory frameworks, which have had a positive effect on promoting competition and investments in the sector.

11 /HHHH


+#,

Indias oil and gas sector continues to grow steadily, boosted by enhanced investments, "[[$;?`[[$;?petrochemicals capacity and 25.3 MMTPA of new LNG terminals. Total investment is estimated to be INR2,623 billion in the Twelfth Five Year Plan. Construction intensity in oil and gas is around 25%, which is expected to result in construction opportunities worth INR656 billion. Some of the major projects under way in the oil and gas segment _[[$;?"5"]^}billion) and a cracker unit of 5 MMTPA capacity by Reliance Industries Limited (RIL) in Jamnagar, which is estimated at INR158 billion.

13 Mid-term Appraisal Eleventh Five Year Plan (20072012), Planning Commission website

Investments in power (INR billion)

Planned

Public

Private

Tenth Plan Eleventh Plan Twelfth Plan0

2000

4000

6000

8000

10000

12000

14000

Source: Sector focus: power, Indian Infrastructure, August 2011; Indian Infrastructure-Sector report, Religare, 24 June 2010, via Thomson ResearchPlanned investment: Investment in Infrastructure during the Eleventh Five Year Plan, The Secretariat for Infrastructure, Planning Commission, www.infrastructure.gov.in Private and public share: Investment in Infrastructure during the Eleventh Five Year Plan as published by the Secretariat for Infrastructure Sep 2010

Investments in oil and gas (INR billion)

Planned

Public

Private

Tenth Plan Eleventh Plan Twelfth Plan0

500

1000

1500

2000

2500

3000

Source: Sector focus: oil and gas, Indian Infrastructure, August 2011Planned investment: Investment in Infrastructure during the Eleventh Five Year Plan, The Secretariat for Infrastructure, Planning Commission, www.infrastructure.gov.in Private and public share: Investment in Infrastructure during the Eleventh Five Year Plan as published by the Secretariat for Infrastructure Sep 2010


-.#/

India is witnessing a sharp change in its demographic composition. Factors including rapid economic growth and migration of the rural population to urban areas is leading to a never before seen growth in urbanization levels. Both government and independent '

>to lead to a structural shift in the Indian economy, which is likely to transition from primarily being an agrarian economy to a more service and manufacture-driven one.

Increased urbanization is expected to lead to the emergence of more megacities and bigger population clusters, which is likely to have a positive effect on the number of :;5'$'portion of the rural population, who migrate in search of job opportunities. Given the

!people at a time of economic growth is likely to lead several of these cities emerging as mega cities in coming years.

The importance of urban infrastructure as a component of Indias infrastructure story can be gauged from the fact that by 2030, Indian cities are expected to contribute up to 70% of the countrys GDP and around 85% of its taxes. This poses both a challenge and an opportunity. The magnitude of the challenge can be understood from the fact that our urban areas may be required to accommodate an additional 250300 million people in about two decades. These areas are already facing severe infrastructure constraints and this situation will only get worse if remedial action is not taken. Cities such as Mumbai and Delhi are cracking under the population pressure being exerted on them, which is leading to abysmally low levels of basic infrastructure facilities for water, sanitation, transportation, etc. The opportunity, however, lies in the fact that the Government estimates that its urban infrastructure investments will be around INR40 trillion over the next two decades.

14 Sector focus: urban infrastructure, Indian Infrastructure, August 2011

Source: Report on urban infrastructure and services by the high powered expert committee from national institute of urban affairs

Urban infrastructure investment requirement: 2012-31 (INR billion)

05000

Tota

l exp

endi

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Urb

an ro

ads

Urb

an tr

ansp

ort

Rene

wab

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ums

Wat

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erag

e

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m w

ater

dra

ins

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city

bui

ldin

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in

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Solid

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1000015000200002500030000350004000045000


!]]Renewal Mission (JNNURM) are estimated to involve investments of about INR605 billion, which translates to around INR400 billion worth of EPC works15. Under the JNNURM, a total of 533 projects have already been sanctioned as of June 2011. The Twelfth Five Year Plan envisages an investment of INR1.8 trillion on water supply "]^_

"]^_

!INR1 trillion on urban transport facilities including MRTS/ BRTS/monorails and water transport facilities.

Sector No of projects

Drainage/Stormwater drainage 70

Roads/Flyovers 97

Water supply 147

Sewerage 108

Urban renewal 11

Mass Rapid Transport System 21

Other urban 15

Solid waste management 41

Development of heritage areas 6

Preservation of water bodies 4

Parking 5

Others 8

Total 533

Out of the total 533 projects, 27.5% are water supply projects, 20.2% sewerage '_!'__``solid waste management. Among the states, Maharashtra has the maximum number of projects (78), which comprise 14.6% of the total 533 projects.

In terms of absolute spending, water, sewerage, and roads and transportation have taken up almost 84% of the funds spent under JNNURM.

15 Assuming construction intensity of 66% - based on construction intensity of water supply and irrigation

Source: Report on urban infrastructure and services by the high powered expert committee from national institute of urban affairs

JNNURM Spending by sector for UIG and UIDSSMT

Water supply

41%

19%

24%

12%

3% 1%

SewerageRoads andtransport

Drainage

Solid wastemanagement Urban renewal


Around 41% of the funds have been expended on water supply, and going forward, '


Today, while companies have recovered from FY09 levels, they are still trading at huge discounts. Current trading P/E multiples for large, mid and small-sized companies are in the range of 14.0, 12.8 and 4.3, respectively. It has been observed that small-sized companies are under the maximum stress in current market conditions.

*0.Construction majors have seen mixed fortunes since FY05. While their growth was strong until the onset of the recession, the period from FY08 onwards saw a drop in >?slowdown lasts, it is prudent for construction companies to preserve their capital by 'are competent to execute.

Mid companies: movement in valuation multiples

Source: Company annual reports; BSE

EV/EBITDA P/E Market Cap/Sales (secondary axis)

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

0

20

40

60

FY05 FY06 FY07 FY08 FY09 FY10 FY11

Small companies: movement in valuation multiples

Source: Company annual reports; BSE

EV/EBITDA P/E Market Cap/Sales (secondary axis)

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

0

20

40

60

FY05 FY06 FY07 FY08 FY09 FY10 FY11


$

&;?$}


$One of the key challenges for the sector in the backdrop of market turmoil, fears of a the execution of existing large order books. Today, most EPC companies are leveraged !

$

4Engineering, Procurement and Construction (EPC)/340


As is evident from the previous sections of this report, the EPC sector has evolved over $

economic growth. However, as is customary in any business, with changing times, the H>5a varied approach to overcome business challenges some have been discussed in this report.

;0Players traditionally developed skill-sets in their chosen infrastructure sub-sectors. While building a niche is important, it is equally necessary to have competence in other sub-sectors. It is a known fact that concentration in a particular sub-sector could lead to impediments to the future growth of organizations.

None of the sectors are insulated from the vagaries of time. These include the highways where there is stiff competition, irrigation where the project pipeline has been

and obtaining environmental clearance prevent project take-off, railways which are yet to freely explore privatization or airports which have yet to develop a critical mass for


@1J Explore sectors with future potential

J Explore wider geographies and expand client base

J Carefully select projects

J Avoid the rat race

D7*0The value chain generally encompasses multiple-functions and roles comprising developers, contractors and suppliers, along with other participants such as design '"have demonstrated an increasing trend and willingness to gain a presence across the value chain. Contractors are forming alliances with project management companies to handle complex projects and enter the arena of engineering, procurement, construction and management (EPCM). Contractors and developers interchangeably perform dual roles. Developers have been adopting strategies ranging from inorganic growth to in-house startups to play a greater role within the construction space. Suppliers and

The primary reasons leading to the emergence of new roles across the value chain in the engineering and construction industry are rising competition, the increasing complexity of projects, requirement of technical expertise and knowhow, and the selection criterion for bidding, including tender offer eligibility norms, and cost and time constraints.

EPC contrator's

inter-changing roles

Developer

Contractor

SupplierProjectmanager

Financer

Design consultant

Inter-changing roles


Recent trendsJ 5'viewed with long- term commitments, giving due consideration to risks that can span the life cycle of a project. Resource constraints in manpower, material, machinery and funds are a distasteful reality in the sector. Competition has to be defeated, not through reduction in pricing or margins, but by constant technical innovation and strategic tie-ups to gain an edge over ones peers. In certain highly competitive sectors, consolidation is inevitable. It is also a good idea to absorb multiple roles in the value chain to control the overall process along with related revenues and margins, of course!

Effective project management is increasingly being recognized as a large contributor While Indian contractors have mastered the art of planning, the need for regular supervision and monitoring is gaining prominence among them, to ensure that on- paper sketches reach their logical conclusion with the desired results if not better ones. Global players have adopted this approach; domestic players are in the process of doing so.

3'prudent to diversify into other sub-sectors and regions. The EPC market is promising, but with the buoyancy in political policies, the areas of infrastructure development could shift focus over the years within infrastructure sub-sectors. Diversity in skill-sets, being able to adapt and secure contracts based on the requirements of infrastructure development may be a long-term mitigant of the vagaries of time. Indian players are foraying into the international arena on an opportunistic basis. Moreover, regional players are also realizing the importance of having a pan-India presence in this competitive environment.

With the gargantuan size of projects on offer, the passion of domestic players 5this requirement is the deteriorating working capital requirements of companies. However, with rising interest costs and over- leveraged balance sheets, there is little scope for raising funds through this route. With FDI in infrastructure opening up, global funds have demonstrated their keenness to invest in the sector through =companies in the last few years. Some are also exploring the possibility of inorganic growth through the merger and acquisition route, in which complementing skill-sets are acquired to achieve quick growth.

!"#$& key to success.

Conclusion


Taxability, under the Indian direct tax laws, of foreign EPC companies undertaking projects in India has always been on the top of the mind; there are controversies on taxability of consortium, offshore supply etc. On indirect tax front, GST is likely to be introduced in near future to overcome the current myriad of multiple indirect taxes being levied at different stages.

QGiven the different ways (mentioned above) adopted by the players to execute EPC contracts in India, the taxability of the income steam is a relatively complex and fact-driven exercise. Some relevant direct tax implications for EPC contracts are elucidated below.

One of the integral and most crucial elements of an EPC contract is the supply of equipment, which often has been the domain of foreign companies (barring a few Indian :$?as the supply of equipment is to an EPC contract, so has been its taxation, and this has drawn existing and active foreign companies into prolonged tax litigation in Indian courts and with the tax authorities. Generally, offshore supply should not be taxable in the following cases:

J All the elements of the supply of equipment is concluded or undertaken outside India (title of goods, delivery, risk, etc.)

J The contract is on principal-to-principal basis.

While law and jurisprudence seem to be in favor of non-taxability of offshore supplies, the issue is far from settled, as is evident from the fact that several companies are still engaged in litigation with tax authorities. In view of the uncertainty of tax costs, more and more foreign companies are now approaching the Authority for Advance Ruling to seek certainty on tax costs on offshore supplies and avoid prolonged tax battles.

Historically, services rendered outside India in connection with Indian projects were taxed in India. However, the Supreme Court, in one of its rulings, interpreted the tax laws to mean that for taxes to be levied by the country, the offshore services should be rendered in India. This was followed by a series of judgments, and some of them disagreed with the Supreme Courts ruling.

The Government sought to clarify its position on taxability of offshore services by bringing about amendments in its tax laws. Pursuant to amendments in domestic tax law, offshore services have been brought within the tax net.

More often than not, large infrastructure projects witness the joint venture or partnership of two or more companies that form a consortium to bid for a project. The bid, if found technically and commercially competitive, is selected and the project owner awards the contract to the consortium. The consortium members, either under the contract with the project owner or through an inter-se agreement between the consortium members, agree on the respective scope of work and fees. The project owner generally insists on a single contract being signed, and at times, make payments in favor of a lead consortium member in India. Furthermore, the project owner insists on having joint and several liabilities on the consortium members.

Supplemental: Know your tax


The taxation of consortiums has in the recent past attracted the attention of the Indian Revenue Authorities (IRA). The IRA takes a cue from such acts of project owners, and more often than not seeks to tax a consortium as an Association of Persons (AOP) and disregards the independent tax status of the members of the consortium as taxable $?;of India, unless its control and management is situated wholly outside India. If the consortium is taxed as an AOP in India, its worldwide income may become taxable in the country. As a result, the income of a member of the consortium, which might otherwise have not been subjected to tax in India (in the hands of the members as independent taxable entities), it is likely to be taxed in the country if the consortium is treated as an AOP, e.g., income arising from offshore supply of goods by a foreign contractor.

Stability and consistency in the tax policies of the Government are much needed at this stage to sustain the growth of the infrastructure sector in India.

.'Foreign companies are often required to maintain an onshore presence (in India) to undertake or monitor the onshore scope of work. This often results in a continuation of their taxable presence in India popularly known as PE. The IRA has in the recent past aggressively sought to evaluate the role played by the PE of a foreign company constituted in India in the execution of the project, and attribute a large portion of the "$need for their presence in India as well as the role played by their PEs.

VUnder Indian direct tax laws, a project owner is required to withhold taxes on payments made to EPC contractors. This includes those made for offshore as well as onshore work. However, the rate at which the taxes require to be withheld depends on the fact pattern of each case.

Q.>>Q>>'India has entered the DTAA with various countries. This provides a mechanism for avoiding being levied taxes on income in the home country as well as in the source $3$???applicable for a tax resident of a country having a DTAA with India.

QQ'With current direct tax laws proposed to be replaced by the DTC, it is imperative to analyze its impact. While tax provisions under the DTC are broadly similar to current tax laws vis--vis the EPC sector, the following key changes proposed by DTC merit some discussion:

Offshore servicesThe DTC enumerates unambiguously that offshore services will be taxed in India, irrespective of where the services are rendered. Therefore, the controversy surrounding the taxability of offshore services seems to be put to rest. While this may add to the tax cost of foreign companies, and ultimately to that of projects, the certainty of tax costs will make it easier for foreign companies to take a decision on pursuing Indian contracts.


D0D'As discussed earlier, foreign companies may constitute a PE in India (for EPC contracts in the country) by virtue of the presence of its employees in the country or by setting up '"the DTC proposes to levy BPT at 15% on the income attributable (directly or indirectly) to the PE. The BPT will be in addition to the normal corporate tax rate of 30% (reduced from 42.024% under the Act). While the tax rate applicable to foreign companies has ;$

VUnder the Act, the taxes from such payments (for provision of drawings, designs rendering of technical services, etc.) to foreign companies are to be withheld as per the rates prescribed under the Act or the relevant tax treaty, whichever was more $10%-15% for royalty or fees for technical services, while the Act prescribed a rate of 10% (plus surcharge and cess) in the absence of a PE. However, under the proposed DTC, withholding tax rates on aforesaid payments have increased to 20%. While the ?


Typical indirect tax implications in respect of the various components of the EPC contract are outlined below:

+OImport or procurement of equipment from outside India attracts levy of custom duty, the

for customers may attract VAT or CST implications if the title to goods is passed in India. Importers may explore the possibility of effecting high sea sales or sales in the course of import to mitigate the VAT or CST exposure.

Offshore serviceProvision of offshore services may attract levy of Service tax in India under a reverse charge mechanism as import of services. In the case of import of services, the liability to pay service tax is of the recipient of the service. Availability of credit for erection, commissioning or construction services needs to be evaluated in detail since this may be restricted, depending on the nature of the output activity orservices undertaken by a EPC contractor.

+OProcurement of equipment within India may attract levy of Excise duty. The possibility of claiming input credit of excise duty paid to equipment vendors may be explored. Furthermore, supply of locally procured equipment to a customer will attract VAT/CST duty. EPC contractors may explore the possibility of effecting a sale- in- transit to mitigate their VAT/CST exposure. CST paid on purchases will not be available as input credit, and accordingly, this is a cost to the project owners.

Onshore services;"=$possibility of claiming Cenvat credit for Service tax paid may be explored to mitigate the overall reduction in the Indirect tax cost of a project.

+9EPC contractors may cover the entire scope of their work (supply of goods and services) under a single consolidated contract for a lumpsum price or may split this between civil works, supply and services components. Usually, the rationale for splitting an EPC contract is to limit the tax exposure and liabilities. A single consolidated contract for concerns, as listed below:

J 3

goods and services, which may result in a dispute with respect to the value on which Service tax or Sales tax is paid by an EPC contractor.

J Furthermore, authorities can levy tax on the value of goods being provided by the project owner to an EPC contractor for use in the execution of the contract.

J Service tax or Sales tax may also be levied on the value of services or goods provided free of cost.


Accordingly, while evaluating indirect tax implications on onshore civil works contract, it is imperative to identify the appropriate nature of a contract, i.e., whether it is a spilt or consolidated contract. Assuming that a onshore civil works contract is a spilt contract, the following typical indirect tax implications are highlighted:

Service tax is levied on consideration received for pure service portion of a contract. An EPC contractor may explore the option of paying Service tax at the rate of 4.12% under the composition scheme prescribed under Indias Service tax legislation. VAT/CST will be levied on consideration received for supply of goods. An EPC contractor may explore the ?$


Annexure: Indian EPC participants (listed players)

Large-sized Mid-sized Small-sized

ABB India Ahluwalia Contracts (India) Ltd. Atlanta Ltd.

Alstom Projects ARSS Infrastructure Projects Ltd. J Kumar Infraprojects Ltd.

Ashoka Buildcon Ltd. B.L. Kashyap Jaihind Projects

BGR Energy B.L. Kashyap KNR Constructions

BHEL BSEL Realty Marg Limited

Eicher India C & C Constructions Ltd. P B A Infrastructure Ltd.

Era Infra Engg. Ltd. CCCL Petron Engineering Construction Ltd.

Gammon India Ltd. Continental Construction Ltd. Roman Tarmat Ltd.

Genus Power Infrastructure Diamond Power Infrastrcutures Sujana Towers

HCC Engineering Projects Ltd Supreme Infrastructure Limited

I V R C L Infrastructures & Projects Ltd. Gayatri Projects Ltd. Tantia Constructions Ltd.

IL&FS Engineering I T D Cementation India Ltd. Transstroy (India) Ltd

IRB Infrastructure Ircon International Unity Infraprojects Ltd.

KEC International J M C Projects (India) Ltd. Valecha Engineering Ltd.

Lanco Infratech Jyoti Structures Ltd. Welspun Projects

Larsen & Toubro Ltd. Kalindee Rail Nirman (Engineers) Ltd.

Nagarjuna Construction Co. Ltd. Madhucon Projects Ltd.

Patel Engineering Ltd. Man Infraconstruction Ltd.

Punj Lloyd Ltd. MBL Infrastructure Ltd.

Simplex Infrastructure McNally Bharat Engineering Co.

Thermax Pratibha Industries Ltd.

Toyo Engineering Ramky Infrastructure Ltd.

Uhde India Sadbhav Engineering Ltd.

Shriram EPC

SPML

Unitech Power Transmission

Additionally, the market has over 100 unlisted promoter-driven companies that are active participants in the EPC space.


Notes

Ajit Krishnan

Tax Partner and Leader-Infrastructure and Real Estate

Kuljit Singh

Partner and Leader, Transaction Advisory Services-Infrastructure Practice

Sushi V Shyamal

Partner, Transaction Advisory Services

Transportation Infrastructure and Construction Sector Leader

Samir Kanabar

Tax Director

Sub- Sector Leader Ports and Shipping

Sushi V Shyamal

Partner, Transaction Advisory Services

Transportation Infrastructure and Construction Sector Leader

Saket Jalan

Associate Director, Transaction Advisory Services

Helly Ajmera

Associate Vice President, Transaction Advisory Services

Ernst & Young leadership team

Authors

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Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 152,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.

Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit www.ey.com.

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;Ahmedabad!="Near CN VidhyalayaAmbawadiAhmedabad - 380 015Tel: + 91 79 6608 3800Fax: + 91 79 6608 3900

BengaluruUB City, Canberra Block__!No.24 Vittal Mallya RoadBengaluru - 560 001Tel: + 91 80 4027 5000 + 91 80 6727 5000 / ___!

/ _}_!

Chennai$;!No. 3 Cenotaph RoadTeynampetChennai - 600 018Tel: + 91 44 6632 8400Fax: + 91 44 2431 1450

Hyderabad_5Hitech City, MadhapurHyderabad - 500081Tel: + 91 40 6736 2000Fax: + 91 40 6736 2200

Kochi9th Floor, ABAD NucleusNH-49, Maradu POKochi, Kerala 682304, IndiaTel: + 91 484 3044000 Fax: + 91 484 2705393

Kolkata22 Camac Street5#!Kolkata - 700 016Tel: + 91 33 6615 3400Fax: + 91 33 2281 7750

Mumbai!:$Nariman PointMumbai - 400 021Tel: + 91 22 6192 0000Fax: + 91 22 6192 2000

The Ruby14th Floor, The Ruby29 Senapati Bapat Marg,Dadar (W), Mumbai 400028Tel: + 91 022 6192 0000Fax: + 91 022 6192 0030

Block B-2, 5th FloorNirlon Knowledge ParkOff. Western Express HighwayGoregaon (E)Mumbai - 400 063, IndiaTel: + 91 22 6192 0000Fax: + 91 22 6192 3000

NCRGolf View Corporate Tower BNear DLF Golf CourseSector 42Gurgaon - 122002Tel: + 91 124 464 4000Fax: + 91 124 464 4050

!$18-20 Kasturba Gandhi Marg New Delhi - 110 001Tel: + 91 11 4363 3000 Fax: + 91 11 4363 3200

4th & 5th Floor, Plot No 2B, Tower 2, Sector 126, NOIDA 201 304 Gautam Budh Nagar, U.P. IndiaTel: + 91 120 671 7000 Fax: + 91 120 671 7171

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Ernst & Young Pvt. Ltd.

Assurance | Tax | Transactions | Advisory

About Ernst & YoungErnst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 152,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.

Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit www.ey.com.Ernst & Young Pvt. Ltd. is one of the Indian client serving member firms of EYGM Limited. For more information about our organization, please visit www.ey.com/india

Ernst & Young Pvt. Ltd. is a company registered under the Companies Act, 1956 having its registered office at 22 Camac Street, 3rd Floor, Block C, Kolkata - 700016

2011 Ernst & Young Pvt. Ltd. All Rights Reserved.

This publication contains information in summary form and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgment. Neither EYGM Limited nor any other member of the global Ernst & Young organization can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication. On any specific matter, reference should be made to the appropriate advisor.

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