INDIAN CONSTRUCTION MARKET ITS POTENTIAL

General Presentation

Constructing the F

uture

• The construction sector in India contributes to a growth of 6.9% at an estimated value of USD 80 Billion to be attained by 2010.

Constructing the F

uture

• 87 Key Players in India account for nearly one-third of growth, while the rest is distributed amongst the 25,000 small players, making the industry highly fragmented.

• Larsen & Toubro is the largest infrastructure company in India followed by Punj Lloyd, Reliance Infrastructure and IVRCL.

• DLF Universal is the largest property development company in India followed by Unitech and Omaxe.

• With huge order books these companies are having, the country is poised towards a better construction and infrastructure growth during the 11th Plan Period ending 2012.

• Apart from these companies, which are private, there are the public ones like BHEL, NTPC, ONGC, IOC and other petro, energy, power and hydro generation companies, having a great pipeline of projects in diverse fields.

Opportunities for G

rowth

Power• Additional power generation capacity of around 78,500 MWRoads & Highways• Six-laning 6,500 Km of Golden Quadrilateral and selected highways• Four-laning 6,736 Km on North-South and East-West Corridors• Four-laning 20,000 Km on National Highways• Widening 20,000 Km of National Highways to two lanes• Developing 1000 Km of expresswaysRailways• Constructing dedicated freight corridors between Mumbai-Delhi and

Ludhiana-Kolkata• 8,132 Km of new railway lines; gauge conversion of over 7,148 KmSeaports• Capacity addition of 485 million tonnes in major ports, 345 million

tonnes in minor portsAirports• Modernisation and redevelopment of 4 metro and 35 non-metro

airports• Constructing 7 Greenfield airports• Constructing 3 airports in North Eastern Region

Opportunities for G

rowth

Telecom• Achieving a telecom subscriber base of 600 million, with 200 million rural

telephone connections• Achieving a broadband coverage of 20 million and 40 million connectionsIrrigation• Developing 16 million hectares through major, medium and minor

irrigation works• 2.18 million hectares flood control

Source: Planning CommissionPhysical Targets for Infrastructure in the Eleventh Plan

Major P

layers’ Profile

• L&T’s order book likely to swell to INR 70,000 Crore (USD 15 Billion)

• Specialised in multi disciplinary construction ranging from roads, bridges, airports, Hydro Electric Power, IT Parks, Trade & Exhibition Centres, Ports, Water Supply Projects and Residential / Commercial Complex Projects in India and abroad.

• Major projects include the Delhi International Airport Ltd (DIAL), Bangalore International Airport Ltd (BIAL), L&T Infocity as JV with various partners, IT Park for TATA Consultancy Services, a 60 MW hydro electric power plant project, HITEX, Integrated Ship Complex project and many roads and bridges projects.

Major P

layers’ Profile

• Punj Lloyd ranks #107 among the top 225 Global Contractors for Y2008.

• Punj Lloyd’s order books are at INR 30,000 Crore (USD 6.5 Billion)

• Major projects include a resort development in Libya, Jubail Export Refinery project in KSA, MRT Station in Singapore, Bangalore Metro Rail Project. It has also got a great presence in the Middle East and Libya.

• Punj Lloyd recently has signed a MoU with Thorium Power Ltd, the leading developer of non-proliferative nuclear fuel technology and provider of comprehensive advisory services for the emerging nuclear programs.

Major P

layers’ Profile

• Reliance Infrastructure is the country’s largest private sector enterprise in power utility involved in generation, transmission, distribution & trading of electricity.

• Goldman Sachs reports that Reliance Infra has an order book of USD 3 Billion, which is expected to cross USD 7 Billion in the mid term with a high visibility of winning projects worth USD 4.2 Billion

• The order book is dominated by the power sector but Reliance Infra is building its expertise in urban infrastructure, cement, steel and airports.

Major P

layers’ Profile

• IVRCL operates on sectors like water & environment, transportation, buildings and power.

• The value of IVRCL Order Book stands at INR 16,000 Crore (USD 3 Billion).

• 65% of the order book value is in the water business. IVRCL is the preferred bidder for the Sion Panvel Project worth USD 324 Million and major National Highway projects all over country.

Major P

layers’ Profile

• CCCL India is an ISO Certified company, having presence all over India, with a recent opening of an office in the ME.

• CCCL India’s order book stands at INR 4000 Crore (USD 864 Million).

• CCCL India executes the Chennai Airport expansion project and the Trivandrum airport expansion project. Other projects include a factory for Apollo Tyres, Ascendas Property Management, Factory Building for Suzlon Infrastructure, Lemon Tree Hotels, Rain Tree Hotels etc.

• CCCL India has recently bagged order from Delhi Metro Rail Corporation, from the Union Government to set up a food processing SEZ in Tamilnadu, from ONGC to construct their office complex in New Delhi.

Some O

ther Key P

layers

Advantage – India

Characteristics of Indian market• Strong service sector; industrialisation

gradually picking up speed• Reliance on Public Private Partnerships

(PPP)• Urbanisation and redevelopment of slum

areas• Interstate bureaucracy and conservative

political mindset favoring incremental changes

Advantage - India

Infrastructure• Government targeting an investment of

USD 20.38 Billion over next 2 years• Scheme aims to take up projects under

PPP with minimal private investment• Infrastructure Investment Finance

Company Ltd (IIFCL) has been asked to put together a corpus of USD 8.15 Billion for this purpose

• Index for the six core industries – crude oil, petro and refinery products, coal, power, cement and finished steel has turned in a growth of 6.5% in June 2009

Advantage - India

Ports• 276 ports have been identified entailing

an investment of USD 12 Billion• Planning Commission states, “there is an

investment opportunity of USD 25 Billion by 2011-2012 in India’s shipping and ports sectors, as the country seeks to develop its ports capacity to 1500 million tonnes

• Of the USD 25 Billion investment, USD 13.75 Billion would be for ports and USD 11.25 Billion for shipping and inland waterways

Advantage - India

Airports• PPP mode to develop over 300 airports

and airstrips• Investment of USD 9 Billion to modernise

the existing airports by 2010• 35 Greenfield airports at an investment

of USD 35 Billion by 2012• “Investment in airport infrastructure was

over USD 5 Billion in 2008 and would go up by USD 9 Billion by 2013, of which close to USD 6.8 Billion is expected to come through the PPP model” – Frost & Sullivan

Advantage - India

Ultra Mega Power Plants – UMPP• Govt of India has envisaged a capacity

addition of 100,000 MW by 2012 and to meet the objective, large generating capacity power plants are being formed, termed as, UMPP

• UMPP will have a capacity of 4000 MW with features for future expansion as well

• The 5 UMPPs which have been identified under the first phase are at Sasan, Mundra, Akaltara, Karnataka and Maharashtra

Advantage - India

Other Major Projects (Nascent/Planning Stage)

Advantage - India

Other Major Projects (Nascent/Planning Stage)

Concluding R

emarks

“.. despite serious pitfalls, the Mumbai Makeover project is an ambitious USD 60 Billion refurbishing plan to support the transformation of the city into a global hub. This creates attractive niche construction opportunities, even during these times of economic hardships..”

- Bhaskar Raj, Senior Strategy ConsultantSolidiance

“…. A key factor which is responsible for the stupendous success of the Indian construction industry is the political will of the successive governments since 1991. India, with its abundant land mass and population, is a major market for infra and property development. Thus, the Indian Construction Industry is set to achieve its true potential of being a world beater, which clearly suggests the huge opportunity for various industry players…..”

References

• http://www.slideshare.net/dduhamel/construction-industry-china-india-2009

• http://www.pmrpublications.com/press_room/en_Immense-potential-in-the-Indian-construction-market.shtml

• http://www.dnb.co.in/Infrastructure2008/overview.asp

• http://economictimes.indiatimes.com/News/Economy/Infrastructure/Indias-top-infrastructure-players-thrive-despite-adversity/articleshow/4989155.cms

• http://www.financialexpress.com/news/l&ts-order-book-likely-to-swell-to-rs-70-000-crore/447379/

• http://steelguru.com/news/index/2009/09/18/MTEyMjM4/Reliance_Infrastructure_order_book_crosses_USD_7_billion_mark.html

• http://www.tubaah.com/details.php?video_id=100100

• http://buzzingstock.in/market-news/cccl-bags-order-worth-rs-431-cr-from-

• http://www.mydigitalfc.com/companies/cccl-bags-delhi-metro-order-739

• http://www.ibef.org/economy/infrastructure.aspx

• Other Company Websites