SUMMER TRAINING REPORT

on
INVESTMENT OPPORTUNITIES IN INDIAN INFRASTRUCTURE
SECTOR - 2017
RELIGARE CAPITAL MARKETS LIMITED

Submitted in partial fulfilment of the requirements of the two year

Post Graduate Programme (PGP).

Submitted by

Pranay Vashistha

Roll No: PG20095637

Batch: 2009-2011

Submitted to

S. Das

IILM Institute for Higher Education

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 DECLARATION FORM

I hereby declare that the Project work entitled, INVESTMENT OPPORTUNITIES IN

INDIAN INFRASTRUCTURE SECTOR - 2017 submitted by me for the partial

fulfillment of the Post Graduate Program (PGP) to IILM Institute for Higher

Education, is my own original work and has not been submitted earlier either to

IILM or to any other Institution for the fulfilment of the requirement for any course of

study. I also declare that no chapter of this manuscript in whole or in part is lifted

and incorporated in this report from any earlier / other work done by me or others.

Place : GURGAON

Date :

Signature of Student:

Name of Student: PRANAY VASHISTHA

Address: B – 58, Indira Vihar colony, seepat road,

SECL (HQ), Bilaspur (C.G.)

Pin: 495006

2
 CERTIFICATE

I hereby declare that the project entitled “INVESTMENT OPPORTUNITIES FOR INDIAN
INFRASTRUCTURE SECTOR - 2017” is the bonafide work carried out by PRANAY
VASHISTHA student of MBA (PGP 09-11), during the year 2010, in partial fulfillment of the
requirements for the award of the Diploma of MBA (Finance) and that the project has not formed
the basis for the award previously of any degree, diploma, associates ship, fellowship or any
other similar title.

Signature of the Guide:

Place:

Date:

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 ACKNOWLEDGEMENT

Sometimes words fall short to show gratitude, the same happened with me during this
project. The immense help and support received from Religare Securities Limited
overwhelmed me during the project.
I owe a great many thanks to a great many people who helped and supported me during this
project.
I am also thankful to the other staff members of Religare securities for their
continuous
Motivation throughout this program, which really helped me in completing
this project.

My deepest thanks to Lecturer, S. DAS the Guide of the project for guiding and correcting
various documents of mine with attention and care. He has taken pain to go through the project
and make necessary correction as and when needed.

I express my thanks to the Dean of, IILM INSTITUTE FOR HIGHER EDUCATION
GURGAON, for extending her support.

My deep sense of gratitude to SUNIL THAKUR (SR. VICE PRESIDENT), INVESTMENT

BANKING, RELIGARE CAPITAL MARKETS LIMITED (RCML) support and guidance.
Thanks and appreciation to the helpful people at RELIGARE CAPITAL MARKETS LIMITED
(RCML), for their support.

I would also like to thank my mentor at the company, VIKAS MALPANI for his continuous
guidance throughout the project work and all his valuable inputs and advices being given as and
when asked for.

I would also thank my Institution and my faculty members without whom this project would
have been a distant reality. I also extend my heartfelt thanks to my family and well wishers.

4
 ABSTRACT

This thesis provides an analysis of the Investment opportunities in the Indian Infrastructure
Sector for 2017. It also highlights the shortcomings and challenges India is facing because of
lack of legislation, policy failures, Infrastructure limitation, and operational deficiencies and
suggests measures for improving efficiency and operation. It gives a brief overview of the
country profile and its growth story. The thesis depicts the calibrated globalization process
through changing reforms. It also shows the decadal GDP growth pattern and Y – o – Y IIP
growth rates. It also shows the macro – economic stability of the country along with the
increasing trends of FDI inflows into the country. The presentation also highlights the positive
points about India that often attracts huge investments with cost competitiveness, large
intellectual capital base and natural factor endowment to name a few. Untapped market potential,
an outlook of the Indian economy and the trade scenario are also some of the eye-catching topics
discussed in the presentation. A detailed comparison with other nations regarding FDI inflows
into the sector is done. Comparison of investment inflows through various five year plans is
shown. PPP investments on infrastructure sector are given thrust upon. The demand, supply and
the gap between the two regarding infrastructure spending on four major sectors viz. Power,
Roads and Highways, Railways, Irrigation and Gas is being clearly depicted. A significant
interest from the private sector is clear from the presentation. Major infrastructure projects and
active participation of the government in these is also visible. Expected investments in the above
mentioned sectors till 2017 have also been covered by the thesis. Vision 2020 for Indian
Railways also included. Major Port profiles and their comparison with their counterparts in the
developed nations has also been glanced through. Ports traffic forecast, revenues, operating
expenses, investment opportunities, competitive position, recommended Organization structure,
vision, goals and strategy, Port planning, and SWOT analysis has been analyzed through. Lastly,
Indian economy by 2050 has also been discussed.

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 TABLE OF CONTENTS

DECLARATION ………………………………………………... 2

CERTIFICATE ………………………………………….............. 3

ACKNOWLEDGEMENT ………………………………………. 4

ABSTRACT ………………………………................................... 5

TABLE OF CONTENTS ………………………………………... 6

1. INTRODUCTION …………………………………….. 7

2. REVIEW OF LITERATURE ………………………... 13

3. OBJECTIVES ……………………………………….. 14

4. RESEARCH DESIGN/ METHODOLOGY ………… 15

5. DATA ANALYSIS & INTERPRETATION ………... 20

6. FINDINGS/ CONCLUSION ………………………... 86

7. REFERENCES ……………………………………… 87

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 1. INTRODUCTION

COMPANY PROFILE

ORGANIZATION HISTORY

RCML was incorporated on 9 February 2007 under the Companies Act 1956 of India and
received its certificate for the commencement of business on 14 March 2007. RCML engages in
the business of investment banking including merchant banking, transaction advisory services
and corporate finance, and in addition, REL is in the process of transferring the institutional
broking business which is currently carried out by Religare Securities Limited to RCML. RCML
is a subsidiary of REL, a company listed on the National Stock Exchange of India Limited and
the Bombay Stock Exchange Limited. The acquisition of Hichens is being done through Religare
Capital Markets International (UK) Limited which is a 100% subsidiary of Religare Capital
Markets International (Mauritius) Limited, which in turn is a 100% subsidiary of Religare
Capital Markets Limited.

Religare Capital Markets Limited (RCML), a wholly owned subsidiary of the Company acquired
Hichens and Harrisons & Co. Pic, United Kingdom. (Subsequently name changed to Religare
Hichens, Harrisons & Co. Pic.) Which was a listed entity on AIM, London, stock exchange. The
acquisition was made by way of an open offer by Religare Capital Markets International (UK)
Limited (RCML UK) a wholly owned SPV company formed for the purpose by Religare Capital
Markets International (Mauritius) Limited (RCML Mauritius) which became a wholly owned
subsidiary of RCML on April 9, 2008. The open offer given by RCML UK was declared
unconditional on May 23,2008 to all the existing shareholders of Hichens, Harrisons & Co. Pic.
Ltd @ GBP 2.85 per share amounting to a total consideration of approximate GBP 55.50
millions, equivalent to Rs 46,828.10 lacs (1 GBP= Rs 85.1422). As on March 31,2009, the
Company has acquired/paid for 100% of the issued capital of Religare Hichens, Harrisons & Co.
Pic. The name of company has changed to Religare Hichens Harrison, Pic

VISION & MISSION

The vision is to build Religare as a globally trusted brand in the financial services domain and
present it as the ‘Investment Gateway of India’. All employees of the group, currently more than
10,000 in number, ceaselessly strive to provide financial care driven by the core values of
diligence and transparency.

The mission of the company is to help their clients achieve their goals of maximizing return on
their investments.

STRUCTURE

7
Religare Capital Markets Limited (RCML), a wholly owned subsidiary of the Company acquired
Hichens and Harrisons & Co. Pic, United Kingdom. (Subsequently name changed to Religare
Hichens, Harrisons & Co. Pic.) Which was a listed entity on AIM, London, stock exchange. The
acquisition was made by way of an open offer by Religare Capital Markets International (UK)
Limited (RCML UK) a wholly owned SPV company formed for the purpose by Religare Capital
Markets International (Mauritius) Limited (RCML Mauritius) which became a wholly owned
subsidiary of RCML on April 9, 2008. The open offer given by RCML UK was declared
unconditional on May 23,2008 to all the existing shareholders of Hichens, Harrisons & Co. Pic.
Ltd @ GBP 2.85 per share amounting to a total consideration of approximate GBP 55.50
millions, equivalent to Rs 46,828.10 lacs (1 GBP= Rs 85.1422). As on March 31,2009, the
Company has acquired/paid for 100% of the issued capital of Religare Hichens, Harrisons & Co.
Pic. The name of company has changed to Religare Hichens Harrison, Pic

b. Pursuant to SEBI vide its letter number IMD/MS/145863/08 dated November 26, 2008
approving the acquisition oi controlling interest by Religare Securities Ltd (RSL), a subsidiary of
the Company has acquired 100%of the issued share capital of M/S Lotus India Asset
Management Company Private Limited and Lotus India Company Private Limited (now known
as Religare Asset Management Company Private Limited, "RAMCPL" and Religare Trustee
Company Private Limited, "RTCPL" respectively ) during the year. Consequently both the
companies have became wholly owned subsidiary of the company as on Dec 4, 2008 of Religare
Securities Limited.

c. Religare Arts Investment Management Limited (RAIML) incorporate as April 16, 2008 as a
subsidiary of Religare Arts Initiative Limited (RAIL), wholly owned subsidiary of the company,
RAIML shall be engaged in the business of organizing, operating and managing collective
investment schemes relating to the art, inter alia including paintings, sculptures, antiques, artistic
value or any other intrinsic value.

d. Subsequent to the Balance Sheet Date, Religare Venture Capital Limited, wholly owned
subsidiary of the company entered into a joint venture agreement with Milestone Fincap Services
Private Limited, through formation of a joint Venture company namely "Milestone Religare
Investment Advisors Private Limited" with equal equity participation of 50% by each JV
partners in the share capital of the JV entity for managing a Rs.600 crore Healthcare and
Education Fund to be raised domestically.

e. Subsequent to the Balance Sheet Date, Religare Enterprises Limited vide share purchase
agreement dated May 28, 2009 has agreed for acquisition of part holding from an existing share
holder and subscription to additional share capital in Maharishi Housing Development Finance
Corporation Limited ("MHDFC"), to the effect that total share holding of the company will
finally become 87.5 % of expanded equity capital of MHDFC and thereby MHDFC becomes
subsidiary of the company.

The Company has subscribed one equity share of VRCAL and also contributed Rs. 2,500,000
upto March 31, 2008 towards share application money (pending allotment) as on that date.
Further amount of Rs. 17,499,408 was contributed by the Company on April 10, 2008. For the

8
above contribution including share application money, the Company was allotted 96,152 number
of equity shares of Rs. 10 each at a premium of Rs. 198 per share on June 11, 2008 as per terms
of the agreement. Subsequent to the Balance Sheet Date, the company acquired 46,153 equity
shares of Rs.10 each representing 24% of the total paid up share capital of VRCAL from VEPL.
Consequently with effect from April 17, 2009, VRCAL became a subsidiary of the company; the
Company and VEPL are holding 74% and 26% of total paid up share capital VRCAL,
respectively.

i) The company and Aegon International N.V. ("Aegon") entered into a JV agreement on
December 28, 2008 to participate in the India Mutual Fund Asset Management Business through
a trustee company and an asset management company of a mutual fund. Pursuant to the terms of
the Aegon JV agreement, Religare Aegon Asset Management Company (P) Limited
("RAAMCPL") and Religare Aegon Trustee Company (P) Limited ("RATCPL") were
established as the asset management company and the trustee company respectively, Religare
Aegon Mutual Fund.

The JV agreement between our company and Aegon N.V. in relation to Religare Aegon Asset
Management Company was terminated pursuant to a sale and termination agreement (STA)
dated February 25, 2009. Pursuant to STA, RSL has agreed to sell, subject to receipt of necessary
approvals, its entire stake in RAAMCPL consisting of 25,000,000 equity shares of Rs.10 each, to
AEGON India Holding B.V. or its nominee at par value and to Hospitalia Eastern (P) Limited, in
an equal ratio. RSL has also agreed to sell its entire stake in RATCPL consisting of 25,000
equity shares of Rs.10 each to AEGON India Holding B.V. or its nominees at par value. At per
the STA, the aggregate consideration agreed by RSL for the transfer to Aegon India Holding
B.V. or its nominee is Rs.125, 250,000.

ii) Subsequent to the Balance Sheet Date, Religare Enterprises Limited ("Religare") and Swiss
Reinsurance Company ("Swiss Re") have signed a non-binding agreement for formation of a
Joint Venture health Insurance company in India. Whereby the company will hold 74% stake in
JV company.

LEADERSHIP

Religare provides the leadership to drive and build out further on rapidly growing Investment
Banking and Institutional Securities businesses in India. The experience and credentials that the
executives bring to Religare are in perfect alignment with its goals and ambitions. The addition
of top class executives to our team is a significant step in reaffirming our commitment towards
creating a market leading emerging markets focused global Investment Banking and Institutional
Securities platform.

CONSTITUENT UNITS/ DEPARTMENTS

Religare Capital is an investment bank offering services such as Capital Markets Transactions,
Private Equity Syndication, and Debt Syndication to corporate and retail investors. Religare
Capital has strong research capabilities and relationships which it leverages to close transactions
for its clients in aggressive time frames.With a strong Indian presence and global relationships,
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Religare Capital has been an investment bank of choice both for international investors and
companies who are scouting for business opportunities in India and Indian companies looking at
strategic initiatives in overseas markets.

ABOUT THE PROJECT

INTRODUCTION

Indian Economy

The best barometer of country’s economic standing is measured by its GDP. India, the second
most populated country of more than 1100 million has emerged as one of the fastest growing
economies. It is a republic with a federal structure and well-developed independent judiciary
with political consensus in reforms and stable democratic environment .In 2008-09 India’s
economy-GDP grew by 6.5% due to global recession. In the previous four years, economy grew
at 9%.The Indian economy is expected sustain a growth rate of 8% for the next three years up to
2012. With the expected average annual compounded growth rate of 8.5%, India's GDP is
expected to be USD 1.4 trillion by 2017 and USD 2.8 trillion by 2027. Service sector contribute
to 50% of India‘s GDP and the Industry and agriculture sector 25% each.
The robust current growth in GDP has exposed the grave inadequacies in the country’s
infrastructure sectors. The strong population growth in India and its booming economy are
generating enormous pressures to modernize and expand India’s infrastructure. The creation of
world class infrastructure would require large investments in addressing the deficit in quality and
quantity. More than USD 475 bn worth of investment is to flow into India’s infrastructure by
2012. No country in the world other than India needs and can absorb so many funds for the
infrastructure sector. With the above investments India’s infrastructure would be equal to the
best in the world by 2017.
In the next five years planned infrastructure investment in India in some key sectors are (at
current prices): Modernization of highways -US$ 75 billion, Development of civil aviation US$
12 billion, Development of Irrigation system- US$ 18 billion, Development of Ports-US$ 26
billion, Development of Railways- US$ 71 billion, Development of Telecom- US$ 32 billion,
Development of Power -US$ 232 billion. Thus in the eleventh five year plan ,investment in the
above sectors (Aviation infrastructure ,Construction infrastructure, Highway infrastructure
,Power infrastructure, Port infrastructure ,Telecom infrastructure ) will be US$ 384 billions(Rs
17,20,000 Cores) considering the huge infrastructure market potential in India. In addition to the
above, investments to the tune of US$ 91 billions have been planned in other infrastructure
sectors like Tourism infrastructure ,Urban infrastructure ,Rural infrastructure, SEZs ,and water
infrastructure and sanitation infrastructure thus making the total infrastructure investments in the
eleventh plan period 2007-08 to 2011-12 as US$475 billions. Domestic and global infrastructure
funds have exposure to Indian infrastructure sectors.
The creation of world class infrastructure would require large investments in addressing the
deficit in quality and quantity. , it is necessary to explore the scope for plugging this deficit
through Public Private Partnerships (PPPs) in all areas of infrastructure like roads, ports, energy,
etc. Given the risks involved in large projects the government has realized that only public sector
involvement with central government development assistance for infrastructure projects is not
adequate to meet the challenge. Recognizing the imponderable risks, which infrastructure

10
projects entail, with long gestation periods, high costs and budget constraints, the government
has proposed a flexible funding scheme, which will find support from budgetary allocation to
fund public-private-partnerships (PPPs) for infrastructure projects. The government has proposed
India Infrastructure Finance Company and formulated a scheme to support PPPs in
infrastructure. As part of this scheme, PPP opportunities are to be awarded through competitive
bidding in a transparent manner and for each project, performance is to be assessed against easily
measurable standards, based on unambiguously defined criteria, in order to inspire confidence
amonginvestors.
Recently, legal and regulatory changes have been made to enable PPPs in the infrastructure
sector, across power, transport, and urban infrastructure. For example, the Electricity Act
allowed for private sector participation in the Distribution of electricity in specified area(s) of the
distribution licensees under the role of a “franchisee”. The recognition of the franchisee role is a
significant step towards fostering PPP in the distribution of electricity. In some cases, the impact
of private sector involvement in terms of end-user benefits has been felt almost immediately. A
case in point is the initial Build-Operate-Transfer (BOT) experience at Jawaharlal Nehru Port,
where the Minimum Guaranteed Traffic requirement at the end of 15 years, identified as part of
the concession agreement, was met in just 2 years. The experiment is being replicated across
other major ports as well.
The Government of India has announced a pragmatic “SEZ” policy, which offers several
innovative fiscal and regulatory incentives to developers of the SEZs, as well as the units within
these zones. Each SEZ is treated as a foreign territory and units located in it are not subject to
either customs tariffs or domestic duties. Sales to Domestic Tariff Areas are permitted, subject to
payment of applicable customs duties and import policies in force. Inputs, whether imported or
sourced domestically, are free of any taxes. So are exports made from a SEZ. The only
requirement is that the SEZ and the units located within it are positive foreign exchange earners.
This offers foreign companies tremendous opportunities for taking full advantage of Indian
strengths in doing business in India. This could be either as the developer of the SEZ or as a unit
in a SEZ or both. Presently, the board of approvals for the SEZs granted formal approvals for
340 SEZs. These 339 SEZs today have lands for development. It is widely expected that the
Special Economic Zones approved for various parts of the country, once implemented, would
contribute substantially to India's exports and would help connecting the missing links in
manufacturing. These zones aim at providing an internationally competitive and hassle free
business environment for promotion of exports.

RATIONALE BEHIND CHOOSING THE PROJECT

The huge investments by the Government of India on development of infrastructure in the

country has resulted in a positive spillover effects on the economy by triggering growth in other
sectors like manufacturing and service sector and helped in sustaining India’s growth rate in
compared to rest of the world. The investment in infrastructure in India has increased from 4.9%
of the GDP in 2002 – 03 to 6% last fiscal. The Union Budget 2010 – 11 has allocated USD 37
billion for infrastructure up gradation in both rural and urban areas. This amounts to over 46% of
the total plan allocation for infrastructure development in the country. As per the Budget
Estimates, disbursements by the Indian Infrastructure Finance Company Ltd (IIFCL), established
by the government to extend long – term financial assistance to infrastructure projects, are
expected to touch Rs 9, 000 crore by end – March 2010 and Rs 20, 000 crore by March

11
2011.India’s Government is planning a US$ 354 billion investment in infrastructure sector by
2012, with another US$ 150 billion expected to come from the private sector, according to the
latest report by PwC projected investing under the 11th Five Year Plan (FY07 – 12) should see
the electricity (US$ 167 billion), rail (US$ 65 billion), roads & highways (US$ 92 billion), ports
(US$ 22 billion) and airports (US$ 8 billion) sectors receive a total of US$ 354 billion. India is
expected to expand at 8% in 2010, the fastest among major economies in the world, and 8.5% the
year after, matching China’s growth rate, according to the World Bank. An estimated US$ 500
billion is required by 2012 to upgrade India’s infrastructure.
With a growing economy and a two digit growth expected over the next four years, infrastructure
sector would require a lot of growth and the right amount of incentives. The Budget 2010 – 11
has addressed the infrastructure problems with number of allocations as per the various aspects
of the sector.

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 2. REVIEW OF LITERATURE

The report basically focuses on the key investment opportunities in the Indian infrastructure
sector. This includes the recent data collected from the Indian infrastructure monthly magazine
and from the websites on the internet. A detailed analysis of the data collected revealed an
enormous investment opportunity in the sector with participation from both the government and
private sectors. But, out of the two, the Private sector is found out to be bullish on the sector in
the near future. In all the project describes the research methodology used and sources for every
data collected is mentioned.

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 4. OBJECTIVES

The objective of the report is to explore a new world of investment opportunities in the Indian
Infrastructure sector which had been left untouched and unseen for millions of years. Some of
the developed nations like USA, Japan, UK etc. identified the great hidden potential in this sector
very early and invested intelligently through the infrastructure projects planned. The result of
such an exploration is in front of us today. These nations are called as developed nations and we
are still with the same tag of developing nation. Hence, the purpose of the project is attracting the
hungry investors to such a large, diversified and an unexplored opportunity.

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 4. RESEARCH DESIGN/ METHODOLOGY

RESEARCH PROCESS

RESEARCH OBJECTIVES

Rapid economic growth has increased the burden on India’s infrastructure, one of the countries
weak spots. An infrastructure deficit is widely considered to be one of the factors that could
severely impede India’s economic growth. In the past few years, policy makers have recognized
this and have made concreted efforts to accelerate infrastructure development. The main
objective of the research is to identify exactly the amount in US$ billion that will be required by
each of the mentioned infrastructure sectors covered in the project viz. Power, Railways, Roads
& Bridges, Ports & Shipping, Airports and Irrigation by 2017 and exactly depict the sum total of
the entire investment amount from addition of the amounts of each of the above sectors.
Much progress is evident in sectors like telecommunications, roads, airports & ports. But the
power sector continues to lag behind despite the introduction of progressive measures. Shortages,
tarrifs and the dependence on imported fuels are on the rise, while the poor health of distribution
continues to inhibit the inflow of investments. Unless this changes India’s economic growth will
be at risk.
The report discusses the challenges in implementing infrastructure projects in India and outlines
several steps that government, nodal agencies and infrastructure providers can take to accelerate
the delivery of world – class infrastructure.
Another objective of the report is to clearly identify inefficiencies in infrastructure that impedes
growth ie. If current trends continue over the 11th & 12th plan periods (2008 to 2017), Mckinsey
estimates suggest that India could suffer a GDP loss of USD 200 billion (around 10% of its
GDP) in fiscal year 2017. In terms of GDP growth rate, this would imply a loss of 1.1% points.
In addition, India’s economy could lose up to USD 160 billion in 2017, by forgoing the industrial
productivity impact of infrastructure. However there is no conclusive approach for estimating the
value of such productivity impact, and hence it is not included in the estimates of GDP loss,
which is pegged at USD 200 billion.

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 5. DATA ANALYSIS & INTERPRETATION
External Trade With Other Countries During 2007 – 08 and 2008 – 09
Exports (April - Feb) Imports (April - Feb)
Region
2007 – 08 2008 – 09(P) 2007 – 08(P) 2008 – 09(P)

1.. Europe 1, 33, 151 1, 65, 925 1, 75, 335 2, 23, 813

1.1 EU countries 27 1, 23, 219 1, 55, 266 1, 27, 315 1, 61, 593

1.2 Other WE countries 9, 553 10, 123 47, 881 62, 115

1.3 East Europe 379 536 138 106

2. Africa 38, 062 44, 922 51, 519 60, 151

2.1 Southern Africa 13, 058 12, 393 17, 868 29, 377

2.2 West Africa 12, 851 13, 204 35, 614 48, 514

2.3 Central Africa 934 1, 372 189 632

2.4 East Africa 15, 126 18, 687 1, 158 1, 158

3. America 98, 900 1, 14, 966 79, 780 1, 21, 381

3.1 North America 79, 880 89, 476 56, 281 80, 825

3.2 Latin America 10, 019 45, 490 23, 498 40, 556

4. Asia & Asean 2, 96, 287 3, 57, 982 5, 43, 551 7, 39, 622

4.1 East Asia 5, 070 6, 719 30, 783 40, 230

4.2 ASEAN 56, 663 75, 357 82, 289 1, 06, 418

4.3 WANA 1, 08, 920 1, 44, 039 2, 58, 645 3, 56, 716

4.4 NE Asia 92, 974 96, 848 1, 64, 030 2, 28, 746

4.5 South Asia 35, 020 7, 805 7, 513

32,659
5. CIS & Baltics 6, 101 7, 623 14, 238 28, 793

5.1 CARs Countries 826 1, 047 419 1, 157

5.2 Other CIS Countries 5, 275 6, 577 13, 818 27, 636

6. Unspecified Region 1, 482 4, 346 2, 666 4, 710

Total 5, 77, 889 6, 96, 498 8, 70, 399 11, 98, 360

Source: National Portal Content Management Team, Reviewed on: 21-04-2010

FDI Inflow in India

CUMULATIVE FDI EQUITY INFLOWS (equity capital components only):

Cumulative FDI Inflows
Period Cumulative FDI Inflows (USD million)
(Rs Crores)
April 2009 – Oct 2009 Rs. 85, 273 crore US$ 17, 644 million

April 2000 – Oct 2009 Rs. 4, 78, 399 crore US$ 1, 07, 484 million

16
 Aug 1991 – Oct 2009 Rs. 5, 39, 004 crore US $ 1, 24, 184 million

From the above figures it is clear that India has become a very attractive destination for FDI
inflows from the foreign investors and is continuously rising in their eyes. The year – wise FDI
Equity inflows in USD million is highest in 2008 – 09 and falls rapidly to 17, 644 level in the
following year because of the global economic slowdown that hit every country in the world
badly. India survived through the crisis very smoothly and has emerged out of the same strongly
in comparison to many other developed nations because of the intelligent economic policy being
implemented by the government.
The top investing countries investing heavily in India are Mauritius followed by Singapore then
USA, UK, Netherlands, Japan, Cyprus, Germany, France and UAE in decreasing order and the
decreasing order in which the sectors of India are attracting highest FDI Equity in USD million
are: Services Sector followed by Computer Software & Hardware then Telecommunications,
Housing & Real Estate, Construction Activities, Power, Automobile Industry, Metallurgical
Industries, Petroleum & Natural Gas and Chemicals.

The percentage contribution of the Petroleum & Natural Gas sector has decreased, Chemicals
sector for the same has decreased, Metallurgical Industries sector for the same has decreased,
Power sector for the same has increased, Automobile Industry for the same has increased,
Computer Software & Hardware sector for the same has decreased, Construction Activities
sector for the same has increased, Telecommunications sector for the same has increased,
Housing & Real Estate sector for the same has increased, Services sector for the same has
reduced and for Other sectors has also increased. This change is again because of the global
economic slowdown or recession that hit the world in FY2008. Many people were thrown out of
employment and hence the purchasing power of the consumers was reduced due to the fear of
recession.
During the start of FY97, the introduction of the policy liberalization in the Telecommunications,
Infrastructure & Insurance sectors caused the average annual inflows to double to US$ 4 billion
between 2000 & 2005.
From 2005 onwards, further liberalizations including
(i) The opening up of the Real Estate sector to FDI.
(ii) The raising of the Telecom Equity capital to 74%
and a variety of sectoral policy reforms triggered another upward shift in FDI flows. Inflows
rocketed to US$ 20 billion in 2006, further doubling to US$ 42 billion in 2008 that transformed
India into the world 13th largest host to FDI globally.
The contribution of Services sector to the entire pie during FY09 has increased by 44% in
comparison to the FY00 whereas the major contributor to the pie which was the manufacturing
sector lost its share by 18%, Primary sector (mainly Mining & Petroleum) gained its share in the
pie by 8% and the other sectors share also fell drastically by 34% in FY09 in comparison to the
same in FY00.

 Excluding Mauritius, Singapore is currently India’s largest inward foreign direct investor,
accounting for 17% (US$ 9 billion) of the cumulative post FY00 inflows.
 The United States of America (USA) follows with 14% (US$ 7.6 billion) and United
Kingdom (UK) with 10% (US$ 5.5 billion).

17
 Other key investors are the Netherlands, Japan, Germany, France and the United Arabian
Emirates (UAE). Singapore is also the largest host to the cumulative Indian outward FDI,
followed by Netherlands, the United States of America (USA), Mauritius and the United
Kingdom (UK).
 FDI liberalization in the Real Estate sector expanded the UAE inflows from US$ 0.75
million in FY00 to US$ 239 million in FY08.
 Similarly, Malaysian firms are now very active in Highway and Urban water projects.
 The Bilateral investment treaty projection and economic cooperation agreements have
also played a role.
 According to the government’s FDI data, Singapore’s investment stock tripled after its
Comprehensive Economic Cooperation Agreement (CECA) with India in 2005.
 One – third of the post – 2000 inflow is invested around Mumbai, a manufacturing hub,
and 1/5th around Delhi, a services hub. Ahmedabad, Bangalore, Chennai & Hyderabad
are other key destinations.
 80% of post – 2000 FDI inflows have been in the form of Greenfield investments
 The average investment size also quadrupled from US$ 9 million US$ 34 million over
this period.
 While the largest recent Greenfield investments & M&As focus on telecommunications ,
energy and pharmaceutics/healthcare
 In India, all except four sectors are open to FDI, and most investors no longer need to
seek investment approvals. Furthermore, current A/C transactions are now completely
convertible
 But, equity caps remain in strategic sectors such as telecommunications, insurance,
banking, airlines and media & broadcasting for national security reasons
 The CEOs have consistently ranked India as the world’s top 3-5 preferred investment
destinations in recent global surveys.
 Although the global crisis has slowed the rate of FDI growth into India in 2009, it has
reinforced India’s position in global investor perceptions.
 Most global firms found that their Indian & Chinese operations considerably
outperformed their developed market investments, they now accord even greater strategic
value to these two destinations.
 FDI is prohibited in multi – brand retailing, it is permitted upto 51% of equity in single –
brand retailing.
 Similarly, 100% FDI is allowed in horticulture, floriculture, animal husbandry,
pisciculture, and seed development, as also in tea plantations, on a case – by – case basis.
 In 2009, the 24% cap on FDI in small enterprises (with capital expenditure of up to US$
1 million) was also raised to 100%.
 Clearances are required for projects in which
 An industrial license is required.
 The foreign collaborator has an existing local joint venture in the same sector.
 The local joint venture is defunct, or “sick” as defined by Indian law.
 The investments are being made by a venture capital fund.
 There are still some restrictions on capital A/C transactions.

18
 FDI Inflows in India – Statistics (source: UNCTAD World Investment Report 2009)

India: Inward FDI Stock, 2000, 2008, 2009 (US$ billion)

Economy 2000 2008 2009
India 18 123 169
Memorandum: comparator countries
Brazil 122 288 -

China 193 378 -

Russia 32 214 -

Singapore 111 326 -

India: Inward FDI Flows in Comparison, 2000 – 2009 (US$ billion)

Economy 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
India 2.3 3.4 3.5 4.3 5.3 6.7 20.3 25.1 41.6 27.0
Memorandum: comparator countries
Brazil 32.8 22.5 16.6 10.1 18.2 15.1 18.8 34.6 45.1 22.8*
China 40.8 46.9 52.7 53.5 60.6 72.4 72.7 83.5 108.3 90.0*
Russia 2.7 2.5 3.5 8.0 11.7 12.8 29.7 55.1 70.3 41.4*
Singapore 12.5 11.0 5.8 9.3 16.1 15.0 27.7 31.6 22.7 18.3*

India: Inward FDI Flows, 1991 – 1999 (US$ billion)

Econ
1991 1992 1993 1994 1995 1996 1997 1998 1999
omy
India 0.2 0.3 0.6 1.0 2.1 2.5 3.6 3.4 2.4

Investment Opportunity in Indian Infrastructure

Indian Infrastructure > US$500 billion Opportunity

The Indian infrastructure investment has been planned at US$ 500 billion in the 11th five – year
plan which is about 136% increase over the 10th plan and this will continue in the 12th plan with
estimated expenditure of US$ 1000 billion.
The private sector is also expected to contribute around 41% of the total infrastructure planned.
Significant steps are being taken by the government to improve infrastructure with a major thrust
given on Power, Roads & Highways, Railways and Irrigation.

19
The factors that have made the need for improved infrastructure more apparent are:
(a.) Economic growth and associated rise in income and personal consumption.
(b.) Rising global integration of the Indian economy.
The major infrastructure investments (INR in billion) in the past are:

FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09
1, 230 1, 280 1, 450 1, 450 1, 440 1, 610 2, 040 2, 350 2, 700 3, 215

The segment Wise Infrastructure spending (INR in billion) planned during the 10th and 11th five
year plans are:

Electri Roads Teleco Railw Irrigati Water Ports Airpor Storag Gas
city & mmun ay on Suppl ts e
Bridge ication y
s
10th 2, 919 1, 449 1, 034 1, 197 1, 115 648 141 68 48 97
plan
11th 6, 665 3, 142 2, 584 2, 618 2, 533 1, 437 880 310 224 169
plan

From the above data it can be found that the infrastructure sector spending has been drastically
increased in multiples during the 11th five year plan (2008 – 12) in comparison to the 10th plan
(2003 – 07) in all major infrastructure sectors as mentioned above.

Indian Infrastructure > proposed spend on key segments

(a.) Power:

The Lion’s share of planned investment is at INR 6, 665 billion. Approximately 32.4% of the
11th plan expenditure and nearly 2.3 times the 10th plan amount has been allocated for investment
on Power sector during the 11th plan. The Private investment to make upto nearly 28% of the
total 11th plan expenditure. Power capacity addition of 78.7 GW is the target for the 11th plan.
The demand – supply gap and government thrust on the sector to drive the growth in the power
sector.

(b.) Roads and Highways:

An investment of INR 3, 142 billion is planned for this sector in the 11th plan. About 15.3% of
the total 11th plan spend is targeted for this sector and nearly 2.2 times the 10 th plan amount has
been planned for Roads & Highways. Of the above expenditures discussed nearly 66% would be
contributed by the Centre and states, 34% would be contributed by the Private Players. Certain
targets for the sector are:

20
 Targets for the Road & Bridges sector
(a.) 6 – laning of 6, 500 km in Golden Quadrilateral (GQ)
(b.) 4 – laning of 6, 736 km in North South East West (NS – EW) corridor
(c.) 4 – laning of 20, 000 km
(d.) 2 – laning of 20, 000 km
(e.) Building 1, 000 km of Expressways

(c.) Railways:

An investment of INR 2, 618 billion is planned for this sector in the 11th plan. About 12.7% of
the total 11th plan spend is targeted for this sector and nearly 2.2 times the 10th plan amount has
been planned for the Railways. Of the above expenditures discussed nearly 20% would be
contributed by the Private Players as against nil in the 10th plan. Certain targets for the sector are:

Targets for the Railways sector

(a.) Building 8, 132 km of a new railway track
(b.) 7, 148 km of gauge conversion is planned
(c.) Modernization of 22 railway stations is planned
(d.) Construction & Completion of the Dedicated Freight Corridors (DFC)

(d.) Irrigation:

An investment of INR 2, 533 billion is planned for the sector in the 11th plan. Around 12.7% of
the total 11th plan spend is targeted for this sector and nearly 2.3 times the 10th plan amount has
been planned for Irrigation. Of the above expenditure discussed nearly 90% would be
contributed by the Private Players. Government spending to continue in this segment mainly in
AP, Gujarat, Maharashtra, Karnataka, UP and MP. Certain targets for this sector are:

Targets for Irrigation sector

(a.) Develop 16 mha major and minor works
(b.) 10.25 mha Command Area Development (CAD)
(c.) 2.18 mha flood control

21
Indian Infrastructure > Significant interest from Private Sector

PPP Model – Significant driver in Infrastructure Investment

Growth in PPP projects in India picked up in recent years with roads and ports leading the way
1-Sep- 1-Feb- 1-Feb- 1-Feb- Sectors 1-Sep- 1-Feb-
Sectors (nos.) 1-Feb-09 1-Feb-10
07 08 09 10 (US$mn) 07 08
Airports 5 5 6 5 Airports 3,949 3,981 4,175 3,981
Energy - - 31 24 Energy - - 3,709 3,565
Ports 27 38 38 43 Ports 6,797 12,601 8,969 13,854
Roads 172 170 187 271 Roads 9,635 9,811 9,949 21,251
Urban Urban
5 5 35 73 431 391 1,295 3,185
development development
Railways & Railways &
3 3 3 34 210 210 210 867
Other Other
Total 212 221 300 450 Total 21,022 26,995 28,308 46,703

Private Equity Deal in Infrastructure Space

The PE investment is aggregating to US$ 10.6 billion. Looking at the Energy space we find that
the PE deals in this sector is highest in FY08, above US$ 1, 000 million and decreases further in
FY06, FY09 and lastly, FY07 in the specified order. Looking at the infrastructure segment it’s
found that the PE deals in the sector is highest in FY07 and decreases in order for FY06, FY08
and FY09. Throwing light on Telecom part we get that the PE deal in the sector is highest in
FY07 and decrease in order for FY08, FY06 and FY09 in the specified order. The PE deals in the
Utility sector (US$ in million) is the highest in FY08 and decreases in order for FY07, FY06 and
FY09. Looking at the Logistics sector it’s found that the PE deal in US$ million in the sector is
highest in FY08 and decreases in order for FY07, FY06 and FY09.

Huge Influx of FDI inflows in Infrastructure Space

FDI flow into infrastructure
Apr-Nov
US$ mn FY06 FY07 FY08 FY09
09
Power 87 158 968 985 1,238
Non-conventional energy - 2 43 85 67
Air transport 10 92 99 35 14
Sea transport 54 73 128 50 274
Ports 1 - 918 493 65
Railway related 15 26 12 18 25

Total 167 351 2,168 1,666 1,683

22
FDI inflows aggregating US$ 6 billion
The figures shown in the table above depicts that the FDI inflows into the infrastructure space is
Continuously increasing at an increasing rate over the years starting from FY06 to FY09 from
Apr – Nov. The FDI inflows into the Power sector are the highest among all other infrastructure
sectors viz. Non – conventional energy, Air transport, Sea transport, Ports and Railway related.

Indian Infrastructure > Thrust by Government across Segments

Power and Electricity

• 100% FDI under automatic route for generation of electricity.

• Statutory Acts - Electricity Act 2003; Electricity (Amendment) Act 2007; National
Electricity Policy 2006; Tariff Policy 2006; Rural Electrification Policy 2005, New
Hydro Policy 2008, Mega Power Projects 2008.
• Power Exchanges – Two power exchanges already operational; in-principle approval
already given for third exchange.
• Reorganization of State Electricity Boards – 14 states already reorganized their SEBs
under the Electricity Act 2003; remaining are in the process of reorganization.

Roads and Highways

• Public Private Partnership – 117 projects with investment of INR637bn already

awarded.
• 81 project of INR763bn have been approved and at different stages of bidding process.
• B K Chatruvedi Report - fillip to private sector interest, especially in Roads.
• Model Concession Agreements.
• Viability Gap Funding (VGF).
• Easing financing mechanism.

Railways, Airports and Ports

• PPP in container movement.

• Dedicated Freight Corridors (DFC) and Multi-Model Logistics Parks (MMLP).
• Model Concession Agreements.
• Railway Vision 2020.
• Airport Modernisation - 4 Metro airports under PPP mode; 35 non-metro airports
being developed upto world-class standards.
• Establishment of Airport Economic Regulatory Authority (AERA).
• PPP investment for development of 546 MMT in Ports capacity.
• 100% FDI under automatic route for port development.

Other Initiatives

23
 • Committee of Infrastructure.
• Cabinet Committee of Infrastructure.
• Public Private Partnership Appraisal.
Committee.
• Empowered Committee / Institution.
• IIFCL.
• Tax exemptions for Infrastructure Projects.
• Urban Infrastructure - Private Participation in development of water supply, sewerage,
solid waste management, urban transport, metro rail.

Major Infrastructure Projects

• AIRPORTS

 Hyderabad ph – I (EYoC: 2008), where EYoC is Estimated Year of

Completion.
 Mumbai ph – I (EYoC: 2010).
 Bangalore ph – I (EYoC: 2008).
 Delhi ph – I (EYoC: 2010).
 35 non – metros (EYoC: 2012).

• POWER

 Nearly 50% jump (66, 000 MW) in installed base in 5 years

(EYoC: 2012).

• SEZs

 Reliance 2012 – 15.

 Adani 2015 – 16.
 DLF 2010 – 15.
 Unitech 2010 – 15.

• ROADS

 Rural Roads (EYoC:2008).

 GQ 6 – laning (EYoC: 2009).
 NSEW Corridor (EYoC: 2009).
 NHDP – ph III (EYoC: 2012).

• PORTS

24
  Overall capacity to almost double to 800 MT in 6 years (EYoC:
2012).
 Further capacity increase planned at Major Ports (EYoC: 2013).

• RAIL

 Freight Corridors planned are Delhi – Mumbai, Delhi – Howrah

(EYoC: 2012).

• ENERGY

 KG Basin Phase – I (EYoC: 2009).

• OTHER EVENTS

 General Elections (EYoC: 2009).

 Commonwealth Games (EYoC: 2010).
 National VAT: Revolutionize Consumer Industry (EYoC: 2010).

Attractive Segments to Invest

Current Status, Growth & Expected Investments – Power

Infrastructure in India

Supply and Demand of Power in India during 2004 – 09 is as given below

Power Demand (billion KWh):

2004 – 05 2005 – 06 2006 – 07 2007 – 08 2008 – 09

591.4 631.6 690.6 737.1 777

Power Supply (billion KWh):

2004 – 05 2005 – 06 2006 – 07 2007 – 08 2008 – 09

518.1 578.8 624.5 664.7 691

An analysis of the above figures show that the demand – supply gap for
power is continuously increasing and some serious measures needs to be
taken to bridge the gap. For this purpose, a large-scale entry of the private
players into the sector is mandatory.
The planned capacity addition for 2017 is 80 GW, out of which 12.70 GW to
be completed by 2009 and 67.30 GW is to be completed by 2012.
The break – up of generation capacity to be added during FY 2007 – 12 is:

25
Centre Owned State Owned Private
42% 32% 26%

Of the total 80 GW capacity addition planned, majority of 42% would be

centre owned.
The investment expected in Power sector by 2014: Generation – 107 USD
billion, Transmission & Distribution – 60 USD billion.

Outlook for power capacity built – up in India

 While energy availability in India has increased by 32.7% in the past 5

– years, the increasing demand for energy across all segments has
resulted in significant demand – supply mismatch.
 Over the last 5 – years, gross power generation has increased by mere
5.8% p.a. as against a GDP growth of ~9% p.a.
 The National Electricity Policy, has thereby envisaged a ‘Power for all
by 2012’ program, which aims to meet the energy generation
requirement of 1, 038 BU and a peak load of 1, 52, 746 MW by end of
the XIth Five Year Plan.
 As against the actual capacity addition of 21.2 GW during the Xth Five
Year Plan, the National Electricity Policy has targeted 78.7 GW of
electricity capacity addition in the XIth Five Year Plan (2007 - 2012).
 Working group has targeted electricity capacity addition of ~100 GW
each in XIIth and XIIIth Five Year Plan.

Capacity addition in the coming period (MW):

Hydro Thermal Nuclear Total

XIth plan 15, 627 59, 693 3, 380 78, 700
XIIth plan 20, 000 76, 500 3, 400 1, 00, 000
XIIIth plan 24, 500 64, 000 11, 500 1, 00, 000

Segment – wise planned expenditure (Rs. Billion):

Generation Transmission Distribution R&M Total Outlay

XIth plan 4, 109 1, 400 2, 870 1, 937 10, 316
XIIth plan 4, 951 2, 400 3, 710 - 11, 000

Key Estimates

26
Role of Private Players: Expected private sector investment by 2014 is
USD 53 billion, Private – owned installed capacity by 2017 is 100 GW.

Investment on T&D by PGCIL (approx USD billion):

Allotment for 11th Invested by March Target for 2009 – 10 Investments during
plan 2009 2010 – 12
12.2 3.3 2.6 6.3

Power Generation Mix of India as on Dec 2009:

Coal Gas Oil Hydro Nuclear Renewable

Energy
Sources
(RES)
52% 11% 2% 24% 1% 10%

Renewable Energy Sources (RES) include small Hydro Project, Biomass,

Urban & Industrial Water Project, and Wind Energy. Thermal sources (Coal,
Gas & Oil) account for about 65% of generation mix.

Power Generation Mix

Addition of Wind Generation Capacity (2004 – 09) [MW]:

2004 - 05 2005 - 06 2006 - 07 2007 - 08 2008 - 09

1, 112 1, 716 1, 742 1, 662 1, 405

Addition of Hydro Power Generation Capacity (2004 – 09) [MW]:

2004 - 05 2005 - 06 2006 - 07 2007 - 08 2008 - 09

1, 041 1, 736 2, 364 2, 456 1, 000

Planned vis – a – vis achievement for plan VI to plan X (MW):

plan VI plan VII plan VIII plan IX plan X

Target 20, 000 25, 000 35, 000 40, 000 41, 000
Achievement 15, 000 24, 000 15, 000 20, 000 20, 000

The Future of Power Sector in India

27
Projected Trend

Primary Energy Percent Annual Growth –

2002 - 2022 2022 - 2032 2032 - 2042 2042 - 2052

4.6 4.5 4.5 3.9

Electricity Percent Annual Growth –

2002 - 2022 2022 - 2032 2032 - 2042 2042 - 2052

6.3 4.9 4.5 3.9

Funding Trends in the Power Sector

Bank credit Rs. (billion) –

2006 - 07 2007 - 08 2008 - 09 2011 - 12

126.59 219.09 293.8 918

External Commercial Borrowing ($ million) –

2006 - 07 2007 - 08 2008 - 09 2011 - 12

1, 346 865 1, 518 4, 765

Private Placement (only debt) Rs billion –

2006 - 07 2007 - 08 2008 - 09 2011 - 12

52.75 34.68 127.38 410

Public & Rights Issue (Rs billion) –

2006 – 07 2007 - 08 2008 - 09 2011 - 12

0.03 137.09 9.58 265

FDI –

2006 – 07 2007 - 08 2008 - 09 2011 - 12

28
157.5 968 984.8 1, 200

Total Energy Requirement Billion KWh

GDP Growth @ 8% -

2003 – 04 2006 - 07 2011 - 12 2016 - 17 2021 - 22 2026 - 27 2031 - 32

592 712 1, 026 1, 425 1, 980 2, 680 3, 628

GDP Growth @ 9% -

2003 - 04 2006 - 07 2011 - 12 2016 - 17 2021 - 22 2026 - 27 2031 - 32

592 724 1, 091 1, 577 2, 280 3, 201 4, 493

Projected Peak Demand (GW)

GDP Growth @ 8% -

2003 - 04 2006 - 07 2011 - 12 2016 - 17 2021 - 22 2026 - 27 2031 - 32

89 107 158 226 323 437 592

GDP Growth @ 9% -

2003 - 04 2006 - 07 2011 - 12 2016 - 17 2021 - 22 2026 - 27 2031 - 32

89 109 168 250 372 522 733

Installed Capacity Required (GW)

GDP Growth @ 8% -

2003 - 04 2006 - 07 2011 - 12 2016 - 17 2021 - 22 2026 - 27 2031 - 32

131 153 220 306 425 575 778

GDP Growth @ 9% -

2003 - 04 2006 - 07 2011 - 12 2016 - 17 2021 - 22 2026 - 27 2031 - 32

131 155 233 337 488 685 960

29
Hence, analyzing the data above, we can conclude that if India want to
sustain and grow at a high GDP growth rate of 8% or 9% then it is essential
to have at least the above mentioned installed capacity (GW) in order to
fulfill the total energy requirement (billion KWh) and the projected peak
demand (GW).

Renewable energy (Wind Energy): Source – Powerline Magazine Sept

2009

Total installed capacity (MW) – Top 10 countries:

US Germ Spain Chin India Italy Franc UK Den Portu Cana Rest Total
any a e mark gal da of the
Worl
d
20.8 19.8 13.9 10.1 8 3.1 2.8 2.7 2.6 2.4 - 13.8 1, 20,
798

New capacity (MW) – Top 10 countries:

US Germ Spain Chin India Italy Franc UK Den Portu Cana Rest Total
any a e mark gal da of the
Worl
d
30.9 6.2 5.9 23.3 6.7 3.7 3.5 3.1 - 2.6 1.9 12.2 27,
051

Thus from this data we find that India ranks 6th after China in Total installed
capacity (MW) in a ranking of top 10 countries. India ranks 4th after rest of
the world in New capacity (MW) in a ranking of top 10 countries. The
maximum share of the pie chart drawn for top installed capacity and new
capacity for the top 10 countries is of US followed by Germany and then that
of Spain.

Tentative shelf of projects for the Twelfth Plan

Coal Lignite Nuclear Hydro Total

Central 16, 470 2, 500 3, 400 7, 034 29, 404
Sector
State Sector 14, 057 - - 5, 539 19, 596
Private 81, 873 - - 7, 761 89, 634

30
Sector
Total 1, 24, 400 2, 500 3, 400 20, 334 1, 38, 634

Room for Productivity Improvement:

The plant load factor of thermal plants has risen from 72% in 2003 to over
77% in 2009.

Plant Load Factor: All – India:

The Plant Load Factor for the Private Sector is the highest and hence its
greater participation would easily allow Indian Power sector to
fulfill the desired targets.

Installed Generating Capacity (Utilities) MW

Oil based Gas based

Electricity Hydro Thermal Coal based Nuclear
Year thermal thermal
energy electricity electricity thermal electricity electricity
electricity electricity
1970
14, 709 6, 383 7, 906 7, 508 230 168 420
– 71
1975
20, 117 8, 464 11, 013 10, 579 226 208 640
– 76
1980
30, 214 11, 791 17, 562 17, 122 166 274 860
– 81
1985
46, 769 15, 472 29, 967 28, 809 180 979 1, 330
– 86
1990
66, 086 18, 753 45, 768 43, 004 212 2, 552 1, 565
– 91
1995
83, 294 20, 986 60, 083 53, 479 335 6, 268 2, 225
– 96
2000
1, 01, 626 25, 153 73, 613 61, 011 2, 141 10, 642 2, 860
– 01
2005
1, 24, 287 32, 326 82, 411 68, 519 1, 202* 12, 690 3, 360
– 06
2006
1, 32, 329 34, 654 86, 015 71, 121 1, 202* 13, 692 3, 900
– 07
Note: * Renewable energy sources excluded, but it is included in total
energy

PROFILE OF INDIAN POWER SECTOR

Transmission network has grown significantly

• Transmission lines have grown from 3,708 circuit kilometers (ckm) in 1950
to more than 220,794 ckm now; it is targeted to increase the network to
293,372 ckm by 2012.

31
• The country is divided into five regions for transmission systems: northern,
north- eastern, eastern, southern and western.
• Work is ongoing on creating a national grid.
• It is targeted to have 200,000 MW grid capacity and 37,000 MW inter-
regional transmission capacity by 2012.
• Current sub-station capacity is 302,615 mega volt-ampere (MVA); it is
planned to be increased by about 41 per cent to 428,000 MVA by 2012.

Per capita consumption has increased

• The per capita consumption of power in India has gone up significantly

since the 1990s.
• The targeted per capita consumption at the end of the current Five-
Year Plan (2011–12) is 1,000 kWh.

The demand – supply gap is growing

• Energy requirement during the year 2008–09 was 774,324 million units
(MU), while energy availability was 689,021 MU.
• As a result, an energy shortage of 11 per cent was recorded, as compared
to 9.9 per cent in 2007–08.
• The peak demand for energy during 2008–09 was 109,809 MW, while peak
demand met was 96,685 MW.
• The consequent peak shortage was 12 per cent, as compared to 16.6 per
cent in 2007– 08.

Trend in per capita consumption (Kwh):

Year 1950 1960 1970 1980 1990 2001 2004 2006 2008 2012(
P)
KWh 18 35 84 131 238 408 592 631 704 1, 000

So, it’s clear that per capita consumption of power is increasing at an

increasing rate over the years.

Demand, Availability & Gap in billion unit:

Plan VIth VIIth VIIIth IXth Xth XIth

Demand 168.1 266.4 447.3 559.4 620.9 774.3
Availabilit 156.8 245.4 395.9 517.4 559.4 689

32
y
Gap 11.3 21 51.4 42 61.5 85.3

PPP Projects in Central & State Sectors

Sl
. Projects under
Sector Completed Projects Projects in Pipeline Total
N Implementation
o.
Project
Project
No. of Project Cost No. of No. of Project Cost No. of Cost
Cost (Rs.
Projects (Rs. crore) Projects Projects (Rs. crore) Projects (Rs.
crore)
crore)
(A)
Central
Sector
National
1, 31,
1 Highwa 39 13, 698 64 41, 911 81 76, 341 184
950
ys
Major
2 23 5, 762 13 10, 509 29 18, 466 65 34, 737
Ports
3 Airports 3 5, 883 2 18, 777 5 24, 660
Railway
4 4 4, 717 50 90, 000 54 94, 717
s
Total 2, 86,
65 25, 343 83 75, 914 160 1, 84, 807 308
(A) 064
(B) State
Sector
1, 06,
1 Roads 96 6, 384 69 60, 865 86 39, 482 251
731
2 Ports 20 19, 704 37 51, 549 18 17, 436 75 88, 689
3 Airports 1 500 13 4, 120 14 4, 620
Railway
4 1 500 3 312 4 812
s
5 Power 7 8, 971 8 28, 392 34 62, 032 49 99, 395
Urban
6 Infrastru 51 6, 105 74 19, 738 67 45, 838 192 71, 681
cture
Other
7 2 120 19 3, 653 31 22, 534 52 26, 307
Sectors
Total 3, 98,
176 41, 284 209 1, 65, 197 252 1, 91, 754 637
(B) 235
(C) Grand
6, 84,
Total 241 66, 627 292 2, 41, 111 412 3, 76, 561 945
299
(A+B)

Key issues confronting the sector

• Socio-political influences – Some social and political causes may cause

hindrance in the development of the sector in the country.
• High level of network losses – Constrained power grid, inefficient power
sector reforms, poor metering, spatial development of load in the network

33
and lack of investment in the distribution networks are some of the
reasons for the increased losses.
• High level of financial losses – Due to power theft, high level of
receiveables, large process cycle time, presence of tamperable records,
higher levels of corruption, no performance monitoring system and below
standard customer service are a few reasons for high level of financial
losses.
• Demand-supply mismatch – A huge demand – supply mismatch is present
in the sector as discussed above.
• Poor quality of supply – Some relevant reasons for the same are prevalent
uncertainty in inflation and rapidly rising energy prices, Emergence of
alternative fuels and technologies. (in energy supply and end – use),
changes in lifestyles , institutional changes etc.

Power Market Structure

The stakeholder outlook in the Indian power sector has gradually been
improving.
For Generation:
Central generating stations, Mega power projects, Independent Power
Projects (IPP)/ Captive Power Projects (CPP), State Owned, Licensee Owned.
For Transmission:
Power Grid (Central Transmission Unit (CTU)), State Transmitting Unit (STU),
RPC (Regional Power Committees)/ RLDC (Regional Load Dispatch Centre).
RPC is a distribution committee which handles the distribution of the power
between CTUs and the STUs.

Improved policy and regulation regimes

Recent policy/regulatory actions: Electricity Act, 2003

• Non-discriminatory open access to transmission.

• Section 63: SERCs to follow competitive bidding process.
• Section 79 (2): CERC to advise Government of India on promoting competition.
• Section 60: Controlling abuse of market power.
The Market is evolving with a competitive structure and minimal regulatory micro-
management.
The new policy is facilitating open access leading to Section 63/ Section 79 (2)/ Section 60
promoting possible wholesale/ retail competition , supporting competitive bidding guidelines –
2004/05 leading to a contestable price discovery and lastly, introduction of the National Tariff
Policy – 2006 facilitating open access, supporting competitive bidding, separating wire
businesses and enforcing USO.

Competitive Bidding Guidelines – 2004/05

 Competitive acquisition of new generation contestability.

34
  Guidelines updated in 2009 to streamline the process.
 Required route for long-term power supply agreements between generation.
companies and distributors.

National Tariff Policy – 2006

 Promoting retail competition.

 Supporting power procurement through competitive bidding.
 Enabling choice.

Electricity Act, 2003 provides institutional framework

• Reduction in losses
• Regulated cost –
reflective tariff –
Electricity Act, 2003 intervention
phasing out
cross subsidies
Expected
• Competition in
generation and
Outcome retail supply
• Internal resource
generation
• Private sector
resource

A range of fiscal incentives have been introduced

Mega Power Project Policy

 Inter-state projects of 700 MW (thermal) and 350 MW (hydro) in Jammu

& Kashmir and in north-eastern states; 1,000 MW (thermal) and 500
MW (hydro) in other states.
 Zero customs duty on import of capital equipment.
 Increased external commercial borrowing (ECB) capital limits.
 State implementation support.
 Decreased import duty on fuel, i.e., coal and liquid fuel.
 Deemed export benefits to domestic bidders.
 Price preference to public sector unit (PSU) bidders.
 Tax holiday as per Section 80-IA.
 Purchasing state must have ERC; Must agree, in principle, to privatise
distribution in cities of >1 million population.
 100 per cent foreign direct investment (FDI) allowed in Indian power
sector (except nuclear).

35
Rapid, large-scale capacity addition through ultra mega power
projects
Ultra mega power projects (UMPPs)

 Nine projects targeted; each project size about 4,000 MW; total
estimated investment of Rs 16,000 crore.
 Projects to be completed on build-own-operate (BOO) basis.
 Power Finance Corporation (PFC) is the nodal agency for setting up the
special purpose vehicles (SPV) for the projects.
 Successful bidder finalised on tariff-based competitive bidding; takes
over SPV from PFC.
 Projects to use supercritical technology based on pithead (captive
block) or imported coal (coastal).
 Full exemption of central excise duty on goods procured under
supercritical technology.
 Five coastal sites identified; of these, Mundra in Gujarat awarded to
Tata Power and Krishnapatnam in Andhra Pradesh awarded to Reliance
Power.
 Four pithead sites identified; of these, Sasan in Madhya Pradesh and
Tilaiya in Jharkhand awarded to Reliance Energy.
 Further sites being identified for expanding the number of UMPPs.
 Power ministry to facilitate coordination with other ministries and state
governments for:-coal block allocation/coal linkage, environment and
forest clearances, water linkage, allocating power to different states,
facilitating power purchase agreements (PPAs) and securing the
payment mechanism at the state level.
 PFC responsible for facilitating:-bidding process, land acquisition,
clearances and approvals, and securing coal blocks, etc.
 First UMPP on course to be commissioned by 2012 in Mundra.

INDIAN POWER INDUSTRY

ULTRA MEGA POWER PROJECTS IN PROGRESS

Scheduled
date of
UMPP Developer Fuel linkage EPC contract
commissioni
ng
Two coal mines of
Awarded - Doosan Heavy
Mundra, Tata Power Indonesia's Bumi Resources, Two units by
Industries, Toshiba
Gujarat Company in which TPC has acquired 2012
Corporation
26 per cent stake
Moher, Moher-Amlohri Two units by
Sasan, extension and Chattrasal December
Reliance Awarded - Reliance
Madhya coal blocks at Singrauli 2011, all six
Power Limited Infrastructure Limited
Pradesh coalfields. The Chattrasal units by April
block is under development 2013
Krishnapatna Reliance Three Indonesian coal mines Talks on with Doosan September

36
 m, Andhra Heavy Industries, Toshiba 2013 -
Power Limited
Pradesh and Larsen & Toubro October 2015
Tilaiya, Reliance Kirandhari B and C coal Talks on with Reliance
By 2015
Jharkhand Power Limited blocks, North Karanpura Infrastructure Limited
EPC : Engineering, procurement and construction

UPCOMING ULTRA MEGA POWER PROJECTS

Proj
State Current status
ect
Kud
Karnataka Ministry of Power's approval received
gi
Mun
Maharashtra Project site finalised
ge
Che
Tamil Nadu Project site finalised
yyur
Bed
aba Orissa Land acquisition in process, coal blocks alloted
ha

Nuclear Power Sector

 India has a flourishing and largely indigenous nuclear power

programme and expects to have 20, 000 MWe nuclear capacity on line
by 2020.
 Nuclear Power Corporation of India Limited (NPCIL) has a monopoly in
the Indian nuclear power market.
 At present India has a nuclear capacity of 4, 120 mw from 17 nuclear
reactors.
 Prime Minister, Dr. Manmohan Singh has referred to the target to
provide 20 GWe by 2020, as "modest" and capable of being "doubled
with the opening up of international cooperation“.
 More recently on 30th September,2009, Dr. Manmohan Singh indicated
that using India’s unique three stage programme, our nuclear industry
could potentially yield 4,70,000 MW of power by 2050.

Opportunities in the Indian Power Sector

 Total electrification of households country-wide targeted by 2010;

about 44 per cent yet to be electrified.

Perspective Announced: 2012

 Per capita availability of 1,000 units –704 units in 2008.

 Target installed capacity over 200,000 MW –151,073 MW installed as
on July 31, 2009.
 Inter-regional transmission capacity of 37,000 MW –17,000 MW at the
end of Tenth Plan.

37
  Energy efficiency/conservation savings of about 15 per cent.
 Improving quality and reliability of power supply.

Sustained GDP growth will require similar growth in the power

sector

 An annual GDP growth rate of about 8 per cent would necessitate a 9

to 10 per cent growth rate in the Indian power sector.
 Though the growth rate of the economy was moderate in 2008–09, it is
likely to pick up as the global recession fades.
 The existing power deficit in the country, as well as increasing
demand, will necessitate large-scale addition in generation capacity.

Total
Projected Installed
Total energy energy Projected
peak capacity Installed capacity
Year required (billion required peak demand
demand required required (GW
kWh) (billion (GW)
(GW) (GW)
kWh
At GDP growth
At GDP growth rate of At GDP growth rate of
rate of
8% 9% 8.00% 9% 8% 9%
2011-
1, 097 1, 167 158 168 220 233
12
2016-
1, 524 1, 687 226 250 306 337
17
2021-
2, 118 2, 438 323 372 425 488
22
2026-
2, 866 3, 423 437 522 575 685
27
2031-
3, 880 4, 806 592 733 778 960
32

Incentives for ramping up investments Foreign investment:

 100 per cent FDI is allowed in all segments of the power sector,
including trading.
 There is no discrimination between domestic and foreign investors.

Fiscal incentives:

 There is zero customs duty on import of capital goods for mega power
projects.
 There is an income tax holiday for generating plants for10 years.

Required investment scale —ample scope for sector investments

38
  For a capacity addition programme of 100,000 MW, investments worth
US$ 100 billion are needed.
 An additional US$ 100 billion is needed for the augmentation of the
transmission, sub-transmission and distribution networks, and for rural
electrification.
 Therefore, a total over US$ 200 billion worth of investments are
required.
 20 per cent of the total requirement is expected to met by private
players.

Electricity Act, 2003 provides the enabling framework for attracting

increased. investments from both the public and private sectors.

Power sector development scenario - Steps implemented are:

 Regulatory commissions constituted in 22 states.

 Tariff orders, performance standards, terms and conditions for supply
and tariff notified.
 Unbundling of SEBs.
 Distribution reforms initiated.
 Mumbai, Orissa and Delhi distribution privatized.
 Recovery from SEBs regularised after securitization.
 Principles of multi-year-tariff (MYT) regime proposed for tariff
rationalization.
 Stability of past contracts (except Dabhol Power).
 Private franchise model introduced in Maharashtra for power
distribution.

Key policy measures encourage investments Enablers

 Generation de-licensed.
 Clear and transparent tariff setting principles.
 Competitive bidding for power procurement by licensees.
 Open access.
 Captive policy.
 Incentives for rural electrification.
 Evolution of power markets.
 New hydro and relief and rehabilitation(R&R) policies.
 Captive coal mining blocks.
 Second priority after fertiliser for gas allocations.
 Development of other infrastructure such as ports, roads and railways,
etc.

Emerging power sector scenario

39
Existing and new players increasing investments in the power sector

 Large capacity addition plans firmed up by Central PSUs and private

sector majors (Tata Power, Reliance, Torrent).
 Smaller players also have major expansion plans (GVK, GMR, Adani,
Lanco).
 Entry of fringe players (captive generators) in the independent power
producer (IPP) sector (Jindal, Essar, Sterlite).
 Entry of greater number of private players in distribution.
 System development plans initiated by discoms to meet SERC-
determined loss reduction targets in many states.

Opportunities across the power spectrum

Generation Transmission Distribution Equipment & services

• Participate • Participate in
• Investment in
in distribution
IPPs, captive
transmission franchisee
power plants • Generation, transmission,
bids. privatization.
(CPP). distribution equipment and
infrastructure support.
• Work with • Operate
• Across coal,
generation distribution in
gas, nuclear, • Operation and maintenance services.
companies special
hydro and
to evacuate economic zones
renewable •Technical consulting, IT systems, loss
power from (SEZ) and
energy. detection and reduction solutions, etc.
new industrial
projects. clusters.

Large generation opportunities exist

15, 000 MW to 20,000 MW need to be added every year, a large step up from
the current pace of capacity addition.

Opportunities Target markets

• IPP • Distribution licensees
• CPP • Industrial consumers
• Distributed generation • Rural areas

Transmission opportunities opening up Independent power

transmission companies

 Private players can construct, operate and maintain transmission lines.

 The first transmission line, through a joint venture between M/s Tata
Power and PGCIL, has been executed with the setting up of a
transmission system for the Tala hydro electric project (HEP) and East-
North inter-connector.

40
  Competitive bidding for multiple transmission projects is an ongoing
process.

Inter-regional link operations

 Private transmission facilities may either take the form of an
independent power transmission company or a joint venture with
state-owned transmission utilities.

Key domestic players

Generation

NTPC Ltd Tata Power Reliance Energy Ltd Torrent Power

1. India’s leading
• Torrent entered
integrated power
the power sector
• The company is • The Tata Group utility company in
by acquiring
the sixth-largest pioneered power the private sector, it
two, old Gujarat
thermal power generation in India has a significant
state-owned
producer in the nine decades ago. presence in
electricity
world and The group has a generation and
companies and
India’s largest presence in all transmission and
turned them into
power producer. segments — distribution in the
power utilities
The state-owned thermal, hydro, states of
comparable with
player operates solar, wind energy, Maharashtra, Goa
the best. It is
across the and transmission and Andhra Pradesh.
also engaged in
country and distribution It is executing three
power
UMPPs of about
distribution
4,000 MW each

Power equipment

Bharat Heavy Electricals Ltd (BHEL)

BHEL has 14 manufacturing plants.
• It has installed 90,000 MW equivalent power generation units for utilities, captive and industrial plants.
• The company has supplied over 225,000 MVA transformer capacity and other equipment for transmission
and distribution networks.
• Capacity being to augmented to 15,000 MW by end of 2009.
• BHEL has started manufacturing 800 MW and 660 MW super-critical boiler and turbines.
• It has an outstanding order book of Rs 117,400 crore to be executed in 2009–10 and beyond; 84 per cent of
its business is from the power sector.

Select foreign investors in the Indian power sector are AES Corporation,
Acciona Energy and CLP Group.

FDI outlook has been improving steadily

FDI inflows into the power sector have increased in the last couple
of years

41
  The power sector provides large-scale investment opportunities.
 However, given the scale of investment requirements, FDI inflows need
to increase multifold.
1. Asset-backed investment with reasonable returns is an attractive
proposition for international investors.

Increasing investment opportunities in Indian power companies

Growing opportunities to invest in Indian power companies

 Indian companies such as NHPC Ltd, Adani Power and India Bulls Power
are slated to be among the majors initial public offerings (IPOs) on
Indian bourses in 2009–10.
 Many more power companies are expected to raise capital through
public issues or private placements.

Power > US$ 1 trillion opportunity

India is one of the largest energy consuming countries

- 5th largest generation capacity in the world.

- Total installed capacity - 157 GW as at Jan 01, 2010.

• yet per capita consumption is among the lowest in the world at 704
units against world average of ~2700 units.
- Annual demand of 757 billion units; projected to increase @ 8% CAGR
till 2017.
- Capacity additions have fallen short of the targets since 1981 leading
to acute shortage of power;
• Capacity addition since 1993 have been ~50% of targets
- Ownership dominated by govt owned companies;
- 32% of the total spend in 11th Plan has been earmarked for Power

Still has low per capita energy consumption

Country USA Japan German Russia Brazil China Egypt India

y
KWh/ye 14, 240 8, 459 7, 442 6, 425 2, 340 1, 684 1, 465 704
ar

The world average is 2, 701 KWh/year. For India per capita energy
consumption is targeted to reach 1000 KWh/annum by 2012.

Severe Demand Supply Mismatch

Year 2004 - 05 2005 - 06 2006 - 07 2007 - 08 2008 - 09

42
Requirement 88 93 101 109 110
(GW)
Availability 78 82 87 91 97
(GW)
Shortage (%) 12 12 14 17 12

The demand – supply mismatch had increased from 12% in 2005 to 17% in
2008, but declined in the year 2009 due to recession that hit the world in
2008 – end.

Capacity additions have always lagged behind targets

Year 1981 -85 1986 - 90 1993 - 97 1998 - 02 2003 - 07 2008

-12(E)
Targeted 20 22 31 40 41 79
Addition
(GW)
Actual 14 21 16 20 21 45
Addition
(GW)
% achieved 70 95.45 51.61 50 51.22 56.96

The targeted addition has neared to the actual addition in the year 1986 – 90
nearing to 100% target.

Private Sector investment potential

- Actual capacity addition has been 138GW against a target of 233GW

- Projected capacity addition over next five years – 79GW (includes 3
years of 11th plan and 2 years thereafter).
• Aggregate investment opportunity – US$169bn over the period
FY10 to FY15.
• Potential investment envisaged by private sector - US$47bn
(~28%) of the total spend.

Projected Capacity Additions

43
 12
10
10 9
8
6 5 5 5
5
4 4
4 3 4 2 3 3 3 3 3
2 2 2
2 1

0
FY10E FY11E FY12E FY13E FY14E
Central State Private Captive

High Investment Potential

20
16
15
15 13
12 12
10 9
10 7 7 7 6
6 5 6 5 4
3 4 4
5 3 3 3 3 3
2

0
FY10E FY11E FY12E FY13E FY14E
Central State Private Captive T&D

INVESTMENT OPPORTUNITY IN POWER: ~ USD 169billion

Total Power Generation – A Comparison Installed

Capacity (MW) –
A Comparison

Pow er Generation (billion units)

44
723.6
2007-08 704.5 Centr
662.5
 Share of Installed Capacity Power Sources – A
Classification

InstalledCapacity(%)

Private Th
16%

Nu
State Private
51% Central
Central
State
33%

Renewa

Deficit levels are expected to continue (Source: CEA;

ICRAEstimates)
Shar e o f Pr ivate Se cto r in Capacity Add itio n is e s tim ate d
to in cr e as e going for w ar d
18%
16% 16%
30%
14%
100%
12% 12%
1930 11%
1090%
% 15043 25%
8 %
80%
Renewable6% 6245
energy: Bridging India’s Power Gap 6%
70% 57000 20%
Brief Overview
4% 26783
260%
%
 Large0 50%
%
and growing electricity shortages, as well as favorable natural 15%
40% make 2007-12 (Xith Plan Period) 2012-17 (XIIth Plan Period)
conditions, the future of renewable energy
Target in Capacity Addition
in India14400 very bright.
 Propelled 13005 economic
30% by accelerating growth,
Expected Capacity Addition India’s demand for power 10%
is likely
20%to soar from around Pe a120
k De GW
ficit @36874
anin
d o2008, to
f Plan Period between 315 and to
335 GW
Energy Deficit @and of Plan Period
by 2017 – 100 GW higher than most current estimates. 28600
10% 5%
 Capacity0%is likely to more than double. However, will remain
insufficient to meet demand.
X th Plan (A c tual; XI th Plan (Target: XIIth Plan (Target: 0%
 Shortfall for peak electricity generation, expected to increase from
close to 15% in 21000MW)
2007 to almost 20% 78000MW)
in 2017. 100,000MW)

45
Central State Priv ate
  Most capacity - building initiatives focus on coal plants: More than 80%
of the plants commissioned are coal – fired, as are 70% of plants
currently under construction.
 These power plants will provide much needed new capacity, but will
increase concerns about energy security and the environment – a
major drawback: making renewable energy an attractive and
increasingly economic alternative.

Renewables in India have significant natural potential

Renewables need to be an integral part of efforts to meet India’s power

needs

Estimated potential - Installed capacity, g

Installed Capacity, gigawatts (GW)

500
450
400
*Assuming a 50 megawatt per square kilometer (MW/km2) installed capacity for
photovoltaics (PV) and 2% of Rajasthan's desert 350 area covered (4000 sq km)
**Actual electricity generation (adjusting for respective plant load factors.

(2007 - 2012), Ministry of Power; Planning 300

Source: Center for Wind Energy Technology (C - WET); Eleventh five - year plan
Commission, Government of India;
Mckinsey analysis
250
Significant opportunities for renewable – energy players: To achieve a
200
Renewable Purchase Obligation (RPO) of 10% by 2017, India needs to add 50
gigawatts (GW) renewable capacity.
150
If India enforces a 10% renewable purchase Obligation (RPO) by 2017,
terawatt hours (TWh).
100
46
50
0
l
The additional renewable capacity includes 12 GW of biomass and 17 GW of
solar capacity.

Roads > US$ 80 billion opportunity

 Large Network: 3rd largest in the world with about 3.3 Mn km of road
network.
 Low penetration: ~ 3 km per 1,000 persons, significantly lower than
the world average of ~ 7 km per 1,000 person.
 Few Highways: 2% is accounted for by national highways and a very
minuscule part is accounted for by express highways.
 Poor Quality: ~ 80% of our roads are in a poor condition and majority
are single lane.
 High Dependence: Roads carry about 65% of the freight and 80% of
the passenger traffic.
 High Congestion: 300 km is the average daily distance covered by a
truck against world average of 600-700 km.

Road Traffic in India growing fast

14000 2100

12000 1800

10000 1500

8000 1200

6000 900

4000 600
–
GR
2000 300

CA 2 %
0
0 2 4 6 8 1 0 2 4
0
0 0 0 0 0 1 1 1
– -km(bn)
GR
Passengers Tonnes-km(bn)
CA %
14 47
INVESTMENT OPPORTUNITY IN ROADS: USD 80 Billion; out of which
~ USD 50 Billion to come from Private Sector

Phase-wise requirement of funds - NHAI

NHDP Program – Project details
assessment
Length in KMS INR in billion
Under Govt
Phase Tot Comp Balan Private sector
implementatio investmen Total
al lete ce investment
n t
7,49
Phase I 7,310 182 6 109 11 120
8
6,64
Phase II 4,351 1,687 609 331 255 586
7
12,1
Phase III 1,478 3,926 6,705 287 674 961
09
20,0 20,00
Phase IV - - 332 509 841
00 0
6,50
Phase V 163 1,068 5,269 38 606 644
0
1,00
Phase VI - - 1,000 101 146 247
0
Phase VII 700 - 41 659 63 104 167
Misc 191 142 49 - 96 25 122
54,6 13,44 34,24
Total 6,953 1,358 2,330 3,688
45 4 8

Roads > Policy Impetus

(a.) DRIVERS:

Indian Growth Story : India has emerged as one of the fastest-growing

economies in the world with growth averaging 7.2% p.a. in the last decade.

Political pressure / will : Road construction progress is being monitored at

the highest level in the government, since it is the most visible signs of
government work, both at the public as well as industry level.
Access to Funding: Opening of financial sector for foreign investment has
provided access to foreign capital which supplements the funds available in
the domestic market.

(b.) MECHANISM:

Changing Polices to attract private participation: Acceptance of

Chaturvedi committee following recommendations has given fillip to private
sector interest
• Returns: The concession agreement can be extended by 5
years if the concessionaire undertakes capacity augmentation.

• Conflict of interest: The limit for common shareholding

between various bidders has been raised from 5% to 25%,
48
 • Entry: The bidders’ technical capacity-related entry threshold
with respect to the size of the past has been reduced.

• Funds: The lenders are permitted to create a charge on the

escrow account lowering the lenders’ prov and capital ad
requirements.

• Exit: Promoters holding the majority shareholding can fully

divest two years after the project completion.

• Single bids: The NHAI can accept reasonable single bids.

Easing financing mechanism

• Takeout financing mechanism from IIFCL will increase funding

from banks.

• Opening of ECB route for newly designated Infrastructure NBFC

will increase funding sources and at competitive rates.

• Tax benefit status of Infrastructure bonds will enhance funding

sources for infrastructure projects.

Changing management and monitoring mechanism

• Decentralize NHAI by opening regional offices to award projects

directly and oversee.

• Setting up about 150 special land acquisition units across the

states which will address the problems like land acquisition and
environment clearances in cooperation with the states
concerned.

(c.) RESULT

• Formulated a 'work plan' for 2009-10 and 2010-11, aiming to award

projects for building about 12,000 km roads each year.

• NHAI awarded 45 projects of 4,750 km in last one year against only

eight projects in 2008.

• Improved participation from private developers – NHAI receiving 15-20

bids per bid.

• Target to award 50 projects by June 2010.

49
National Highways > Overcoming Challenges and Opportunities Ahead

NHDP
Length under different modes of delivery (in km)
Phase
BOT BOT
(Toll (Annui CC Total
) ty)
NHDP-I
(Balance 20 7 1, 711 1, 738
Work)
NHDP-II
1,
(Balance 930 4, 569 6, 736
237
Work)
10,
NHDP-III - - 10,000
000
5, 15,
NHDP-IV - 20, 000
000 000*
6,
NHDP-V - - 6, 500**
500
1,00
NHDP-VI - - 1,000
0
NHDP-VII ***
23, 15,
Total 6, 280 45, 974
757 937
*To be determined based on budgetary resources and the tolling policy for two-lane highways
** COI has approved six- laning of 6500 km instead of 5000 km mandated earlier
*** Length to be covered under NHDP-VII is not shown because specific sections are yet to be
identified

Phase-wise status of NHDP (28.02.2010)

Completed Under
Total
Serial 4 lane / 2 Implementation Balance for award
length
No. NHDP Component lane + PS Length No. of of civil works (km)
(km)
(km) (Km.) Projects
Phase - I : GQ, part of EW-NS
1 7498 7310 182 26 6
corridors, Port conn. & others
Phase - II : North South – East West
2 6647 4351 1687 111 609
Corridor
Phase - III : 4/6-laning links from
3 12109 1478 3926 59 6707
network to capital etc.
Phase - IV : 2 – laning with paved
4 20000* - - - 20000*
shoulders
Phase – V : 6 – laning of GQ and High
5 6500 163 1068 8 5466
density corridors
6 Phase – VI : Expressways 1000 - - - 1000
Phase – VII : Ring Roads, Bypasses
7 700 - 41 2 681
and flyovers and other structures
Miscellaneous Projects: ICTT Cochin
8 191 142 49 4 -
& SARDP-NE
* 5000 km approved under NHDP – IVA, 15, 000 km yet to be approved.

Overall status of NHDP (28.02.2010)

50
  Total length covered under NHDP: 54, 863* km.
 Length completed: 13, 444 km.
 Length under implementation: 6, 950 km.
 Total length yet to be awarded: 34, 469 km
Work Plan I & II formulated accordingly for
award of works during current and next FY.
 Work Plan I (2009 – 10) - 11, 618 km
 includes (122 projects)
 Work Plan II (2010 – 11) – 11, 854 km
 includes (86 projects)
• Including common length of 5846 km of GQ in
NHDP Phase – V : 6500 km; also including
15, 000 km length yet to be approved by the
Government under NHDP Phase – IVB.
 380 Kms of Port Connectivity (29% completed)
– Target Date – Dec’12.
46000 KM Length of Road Development- US $ 27Bn Project
in progress – Completion by Dec’12

Phase – wise Requirement of Funds for Construction – assessed by

NHAI

NHDP Govt. (NHAI) Investment Private Sector Investment

Total
Phases Requirement Requirement
NHDP – I 10, 858 1, 144 12, 002
NHDP – II 33, 140 25, 478 58, 618
NHDP – III 28, 711 67, 358 96, 070
NHDP – IV 33, 225 50, 883 84, 108
NHDP – V 3, 817 60, 629 64, 446
NHDP – VI 10, 139 14, 560 24, 699
NHDP –
6, 302 10, 378 16, 680
VII
SARDP –
695 2, 536 3, 231
NE
ICTT –
869 - 869
COCHIN
Other Costs 8, 055 - 8, 055
TOTAL 1, 35, 811 [30.2 Billion $] 2, 32, 966 [51.8 Billion $] 3, 68, 777 [82 Billion $]
The total amount of estimated requirement of funds for project
construction is
Rs. 3, 68, 777 crore. NHAI expenditure as a percentage of total
estimated expenditure is
Financing Plan of NHDP [Revised 2010]

Particulars Rs. (in cr.)

A. ESTIMATED EXPENDITURE
Project Construction 337, 959

51
 Payment of Annuity 207, 579
Interest on Borrowed Funds 78, 285
Repayment of Borrowing 188, 838
Total (A) 812, 661
B. SOURCES OF FUNDS
Cess funds 360, 631
External Assistance (Grant & Loan) 9, 782
Net Surplus from Toll Revenue 117, 418
Negative Grant 3, 318
Budgetary Support 1, 398
Additional Budgetary Support 39, 329
Share of Private Sector 211, 315
Borrowings 191, 148
Total (B) 9, 35, 139

Procurement procedure

 International competitive bidding.

 Investor friendly Concession Agreement.
 Two stage bidding process
 Stage I – RFQ based on Technical and Financial parameter.
 Stage II – RFP to be issued to short – listed bidders.
 All documents i.e. RFQ, RFP and MCA standardized.
 Toll Policy rationalized.

Major Challenges

 Capacity constraints of concessionaires/ contractors/ consultants.

 Delays in land acquisition.
 Delay in Forest & Environment clearances.
 Law & order problems in Naxal affected areas and some parts of North
– eastern states.

Recommendations of Shri B K Chaturvedi Committee Report > Part -

I

 Further amendments to RFQ and RFP by NHAI with concurrence of

MoRT&H.
 IMG to consider issues related to MCA.
 Capping limits fixed for each mode of delivery.
 < 5, 000 PCUs under NHDP IV – directly on EPC.
 Single bid to be accepted by NHAI board.
 Relaxation in termination provisions.
 Exit policy relaxed – Exit possible after 2 years from COD.
 Equity VGF 20% and O&M grant 20% merged as equity VGF of 40%.
 Equity VGF 20% and O&M grant 20% merged as equity VGF of 40%.

52
  Forfeiture of bid security for non-responsiveness limited to 5% of bid
security / performance security (100% earlier).
 Conflict of interest provisions in RFQ/RFP amended – common
shareholding threshold raised from 5% to 25%.
 Modification in RFQ/ RFP on certification of associate status.
 Criteria under RFQ- ’Threshold Technical capability’ and ‘Eligible
Projects’ relaxed.

Recommendations of Shri B K Chaturvedi Committee Report > Part-

II

 Dispute Resolution Mechanism

 Setting up of an Independent Expert Group (IEG).

 One time settlement of pending disputes for Category A cases
i.e. disputes of <Rs 10 Cr.
 Award of Arbitration Tribunal (AT) to be accepted in category B
cases i.e. disputes of Rs. 10- 100 Cr.
 Accountability of DRB to be test checked regularly.
 Time for DRB recommendation raised to 84 days & referring DRB
recommendation to AT 60 days.
 Cost associated with time extension to be quantified.
 General Conditions and COPA to be standardized.

 Fiscal and Taxation related issues clarified

 Grant of tax exemption on further dividend distribution for policy

mandated tier in Corporate.
 Scope of new infrastructure facilities to be clarified regarding
applicability of tax holiday.

 Fiscal and Taxation related issues clarified

 Grant of tax exemption on further dividend distribution for policy

mandated tier in Corporate.
 Scope of new infrastructure facilities to be clarified regarding
applicability of tax holiday.
 Moderation/ reduction in retention period for road construction
equipments in custom duty exemptions to be considered.

53
  Financial Issues

 Take out financing scheme to be operationalized at the earliest.

 MoF to take up issue of relaxation in minimum rating and
dividend payment history with IRDA.

Work Plan – I > Award Position

Length
Details No. of Projects
(in km)
Total for Work Plan – I 122 11618
Awarded 33 2835
Bids received 5 498
Bids invited 44 4145
Carried over to 2010 – 11 40 4143

Work Plan – II > Projects for 2010 – 11

Phases of NHDP No. of Project Length in (km)

Phase III 5 385
Phase IV 66 9, 401
Phase V 11 1, 786
SARDP – NE 4 282
Total 86 11, 854

Comparative Achievement

Average during last 3 Last 9 Months (From June,

Serial No. Activities
years 2009 onwards)
Award of Feasibility Studies /
1 2, 686 10, 000
DPR (Km)
Completion of Feasibility
2 1, 694 2, 088
Studies / DPR (Km)
3 PPPAC Approval (Km) 1, 475 3, 055
4 Award of Work (Km) 1, 230 2, 832
5 Physical Completion (Km) 1, 467 2, 074

Year wise Award & Completion Length

Awarded Length in
YEAR Completed Length in Km
Km
Before 2000 959 809
2000 – 01 262 895
2001 – 02 480 3476
2002 – 03 391 671
2003 – 04 1318 342
2004 – 05 2351 1305
2005 – 06 753 4740
2006 – 07 635 1734
2007 – 08 1682 1234

54
 2008 – 09 2205 643
3166 (498 bids received
2009 – 10 (up to Feb’10) 2405
+ 4145 bids invited)

Railways > US$63 billion Opportunity

 2nd largest network in the world covering ~64,000 km of route

length.
 7,030 stations accounting for 833mt (35%) of total freight movement
and 7bn (13%) of passenger movement.
 Planned investment under 11th Plan – US$65bn; Private sector to
contribute US$13bn (~19%).
 Key targets set for 11th Plan - ~8,132km of new railway track;
7,148km gauge conversion; modernization of stations and
development of dedicated freight corridors (DFC).
Traffic handled by Indian Railways
2004-05 2005-06 2006-07 2007-08 2008-09 CAGR
Freight
(mn 602 667 728 794 833 8.5%
tonnes)
Passenger
5,476 5,832 6,334 6,645 7,047 6.5%
s (mn)

Indian Railways – Vision 2020

India
nRa
ilwa
ys-B
roa dG oalsfor202
0
Short-termtarget Long-termtarget
S
ummaryofBroadGoals Total target
FY11-FY12 FY13-FY20
Doubling(inclDFC
s)(kms) 1
,00
0 1
1,0
00 1
2,0
00
GaugeC
onversion(kms) 2
,50
0 9
,50
0 1
2,0
00
NewLine(kms) 1
,00
0 2
4,0
00 2
5,0
00
Electricfication(kms) 2
,00
0 1
2,0
00 1
4,0
00
ProcurementofWag
ons 3
3,9
09 2
55,2
27 2
89,1
36
Procurementofdiesel locomotives 6
90 4
,64
4 5
,33
4
Procurementofelectriclocomotives 5
55 3
,72
6 4
,28
1
Procurementofpassangercoaches 6
,91
2 4
3,9
68 5
0,8
80
World-classstations 1
2 3
8 5
0
Hig
hSpeedCorridors - 2
,00
0 2
,00
0
 Total investment envisaged by Indian Railways – INR 14,000 billion
over next 10 years upto 2020.
 Significant investment by Government.
• However, increased participation expected through the PPP mode.

Railways > Role of private sector expected to go up

Areas identified for PPP - Indian Railways – Vision 2020

Construction of Dedicated Freight Corridors (DFCs) – construct 3400 kms at an

investment of USD10bn; private participation in construction, along with related
activities like logistics parks etc
World Class Railway Stations – 50 stations have been identified; feasibility studies

55
 for New Delhi, Mumbai and Patna already completed; bidding process expected to
commence in FY11
SPVs for manufacturing of locomotives, coaches and wagons – New units being
set up at five places through private participation; plans being made for establishing
five state of the art factories via private participation
High Speed Rail Corridors – Six corridors already identified to be developed under
PPP mode; pre-feasibility study under progress
Container trains and special freight trains – Concessions agreements already
signed with 16 private operators (incl CONCOR); these private operators have procured
96 rakes and commissioned six new container depots
Multi-model logistics Park (MLP) and Automobile / ancillary Hubs – Discussions
in progress with 11 states to set up MLP alongside DFC through joint participation of
Railways, State govt and private participant
Multi-functional complexes (MFC) and multi-parking complexes (MPC) –
Construction of MFC initiated at 67 stations providing a host of services; being extended
to include another 93 stations; pilot project for construction of MPC would shortly be
undertaken
Elevated sub-urban rail corridor in Mumbai - Feasibility study underway for
construction of 63km long elevated corridor; if found feasible, the project, likely to cost
INR 150bn would be executed via PPP mode
Liberalized Wagon investment Scheme- has been launched to encourage private
investment in high-capacity and special purpose wagons
Port and other connectivity works – Rail Vikas Nigam limited has been set up to
undertake capacity augmentation work and port connectivity projects; total investment
mobilised ~INR 13,000mn in five projects; projects in pipeline worth INR 22,000mn
Bottling plant for clean drinking water – Six bottling plant to be set up via PPP
mode
Super-speciality hospital, medical and nursing colleges - Establish 18 medical
colleges and 7 nursing colleges on railway land via PPP mode
Commercial utilization of Land – Rail Land Development Authority already set up to
commercially develop ~3700 acres of vacant land
Optic Fibre Cables – Plans in progress for laying OFC on 15000 kms viz PPP mode
Kisan Vision – Pilot project initiated at six location to construct/operate terminal
infrastructure for farm produce and perishable food-stuff

Dedicated Freight Corridor Project – Route Map

JNPT to Vadodara to Ahmedabad to Dadri to Khurja to Ludhiana and Khurja to
Son Nagar to Howarh.

METRO RAIL SYSTEMS

Government Keen On Transport Alternatives

 As huge upfront capital investment required for every metro project,

government is promoting joint venture and public private partnership
(PPP) routes for the metro projects.
 Bombardier Transportation estimates that the Investment
opportunities for greenfield metro rail projects and related equipment
(excluding locomotives) in India will be around USD3.5 billion by 2014.
 Further, it expects the annual demand for metro rail coaches in India to
reach 1,000 units by 2011.

56
India > A Favourite Investment Destination
Several Factors Make India a Favourite Investment Destination

Share of Top Sectors Attracting FDI Inflows from South Korea

% FDI Inflows from South

Rank Sector
Korea
1. Automobile Industry 18.07
2. Metallurgical Industries 15.18
3. Electronics 14.73
4. Housing & Real Estate 9.96
5. Industrial Machinery 7.41
Total Investment from Korea 1.6 Billion
Source – KCCI, 12 March 2010 (January 2000
to May 2009)
Comparison of major Indian Ports vis – a – vis International Ports

Indian Ports International Ports

Evacuation / Aggregation of cargo

Movement of cargo is predominantly done by road and Most of the international ports are quick in evacuation as
rail only connectivity is not an issue

57
 Level of mechanisation
The level of mechanisation is very high with the latest
The extent of mechanisation is less in Indian major ports
technologies applied in all fields
Location of port – based industries
Most manufacturing units are located within the ports; as a
Most manufacturing firms are located away from ports
result, evacuation is very fast
Availability of storage space
Indian ports face major space constraint; hence, International ports do not face space crunch and congestion
availability of space is a prime concern within as well as outside the port
Availability of Resources
There is no concept of pre – berthing detention as berths are
Dedicated terminals with less number of berths
waiting for ships and the have longer quay lengths
Information Exchange
EDI implementation is partial. Information exchange EDI networking is complete and total; hence, there is no
lacks due to innumerable human interfaces and manual manual exchange of documents. Human intervention is almost
exchange of documents nil. All payments are done electronically
Custom’s Regulations For Cargo Clearance
All customs formalities and clearances have to be taken Customs clearances need not take place at the port itself; it
place in the respective port itself may be done beyond the port premises
Work Processes
Work flow is manual and partially computerized. ERP The entire work process is computerized. ERP was
has been implemented recently implemented long ago

Current Scenario > Indian Ports

‘on the High Growth Path’

 5495 km of coastline .
 12 Major & 139 operable Non – Major Ports.
 Total Cargo Handled in 2009 – 2010
 Major Ports: 560.968 million Tonnes.
 Non – Major Ports:
 90% of total cargo transported by sea.
 Traffic Growth rate (2009 – 2010)
 Container - > 19%.
 Overall – 5.54% increase compared to average
yearly growth of 10 – 12% in the past.

58
  Main commodities handled: POL, Iron ore, coal,
containers and general cargo.
 Major policy initiatives in Port Privatization by GOI
 100% FDI.
 Permission for External Commercial Borrowings.
 10 year, 100% tax holiday.

 Capacity constraints

 Capacity augmentation necessary to meet

future demand: Present container handling
of Ports – 7.7 Mil TEU.
 Avg. turnaround time 1.67 day for container
Vessels.
 Investment of US $ 25 billion+ required to
meet capacity requirements by 2017.

 Containerization

 Draft restrictions at most Indian Ports,

prevent Mother vessels from being received.
 7,500 – 11,000 TEU Vessels can be received
at 1 or 2 ports, others being dredged.
 Ports of Colombo, Singapore and AI-Salalah
transshipment hubs for Indian container
cargo.
• High CAGR of 14%.
• Projected CAGR of 12% for next 10 years.
• Industry thinking – Could be much more.

Project Facilitators > Successful Public Private

Partnerships in India

‘Large investments from Private Sector’

 Private Container Ports in India:

 Mundra – P&O
 Pipavav – PSA, Maersk

 Other Private Sector Container Projects in Major Ports:

 Terminal at Visakhapatanam – Dubai Ports
 Terminal at JNPT on BOT basis
 Terminal at Kandla
 Terminal at Tuticorin & Chennai

59
  Terminal at Mumbai
 Terminal at Cochin (Valarpadam)

 Other Ports in India:

 Dhamra – International Seaports
 Kakinada – International Seaports, Precious Shipping Ltd, Larsen
& Toubro
 Gangavaram – DPA with local Group
 Bengal Port – P&O Ports (India)

Ports > Development Projects > On Going Projects

Estimated Cost (Rs. In Million) Capacity (MTPA)

Jawaharlal Nehru Port
Container Terminal, NSICT 6,000.00 13.20
BPCL Jetty 2,000.00 5.50
Third Container Terminal 9,000.00 15.60
Mumbai Port
Construction of two new off shore
container berths and Development of
14,600.00 9.60
container terminal on BOT basis in
Mumbai Harbour
Mormugao Port
Bulk Cargo Berths No. 5A & 6A 2500.00 5.00
Kandla Port
Fifth Oil Jetty (IFFCO) 215.00 2.00
Oil Jetty related facilities at Vadinar
7500.00 12.00
(ESSAR)
Oil Jetty awarded to M/s IOCL 207.00 2.00
Container Freight Station 410.70 3.00
Container Terminal (Phase I & II) 4465.40 7.20
Tuticorin Port
Container Terminal (Berth No. 7) 1000.00 5.00
Construction of Coal Berth at NVW for
490.00 6.30
NLC – TNEB
Visakhapatnam Port
Container Terminal, Outer Harbour 1080.00 1.60
Multipurpose Berths – EQ-8 & EQ-9 1960.00 6.00
Paradip Port

60
 Captive Fertilizer
261.70 4.00
Berth
Mechanisation of
Cargo Handling 373.20 2.00
Project – I
Mechanisation of
Cargo Handling 251.30 2.00
Project – II
Construction of
Single Point
5000.00 15.00
Mooring Captive
Berth
Chennai Port
Container
4690.00 8.00
Terminal
Development of
Second
4950.00 9.60
Container
Terminal
Ennore Port
Marine Liquid
2490.00 3.00
Terminal
Coal Terminal 3990.00 8.00
Iron Ore
4800.00 12
Terminal
Kolkata (HDC)
Multipurpose
1500.00 3.00
Berth No. 4A
Multipurpose
300.70 0.45
Berth No. 12
Mechnisation at
750.00 4.00
HDC berth no. 2
Mechnisation at
750.00 4.00
HDC berth no. 8
Cochin Port
Crude Oil
7200.00 7.5
handling facility
International
Container
21,180.00 36.00
Transshipment
Terminal (ICTT)
LNG Re-
gasification 31950.00 2.50
Terminal
New Manglaore Port
Construction of
Captive Jetty for
2300.00 3.00
handling Coal by
M/s NPCL

Ports > Development Projects > Recent & Emerging Opportunities

61
 Estimated Cost (Rs. In
Capacity (MTPA)
Million)
Kandla
Development of 13th to 16th multipurpose cargo
7550.00 8.00
berth (other than liquid & container cargo berth)
Creation of berthing allied facilities of Tekkra near
11366.30 12.00
Tuna (outside Kandla creek) – Phase – I
Setting up of Single Point Mooring (SPM) and allied
8300.00 9.00
facilities off Veera in Gulf of Kutch
Paradip
Construction of Deep Draft Iron Ore Berth 5910.00 10.00
Construction of Deep Draft Coal Berth 4790.00 10.00
Multipurpose Berth Project – I 3873.10 5.00
Mechanization of Central Quay – III Berth
400.00 4.00
* Single stage bidding
New Mangalore
Setting up of Mechanised Iron Ore handling
2771.70 6.62
facilities at Berth - 14
Development of Container Terminal 2758.20 4.24
Mormugao
Development of Berth No. – 7 for Handling Berth
2520.00 7.00
Cargo
Construction of two berths of Vasco Bay 1200.00 5.00
Development of Bulk Handling Terminal West of
7210.00 12.00
Breakwater WoB
Visakhapatnam
Estimated Cost (Rs. In
Capacity (MTPA)
Million)
Kandla
Development of 13th to 16th multipurpose cargo
7550.00 8.00
berth (other than liquid & container cargo berth)
Creation of berthing allied facilities of Tekkra near
11366.30 12.00
Tuna (outside Kandla creek) – Phase – I
Setting up of Single Point Mooring (SPM) and allied
8300.00 9.00
facilities off Veera in Gulf of Kutch
Paradip
Construction of Deep Draft Iron Ore Berth 5910.00 10.00
Construction of Deep Draft Coal Berth 4790.00 10.00
Multipurpose Berth Project – I 3873.10 5.00
Mechanization of Central Quay – III Berth
400.00 4.00
* Single stage bidding
New Mangalore
Setting up of Mechanised Iron Ore handling
2771.70 6.62
facilities at Berth - 14
Development of Container Terminal 2758.20 4.24
Mormugao
Development of Berth No. – 7 for Handling Berth
2520.00 7.00
Cargo
Construction of two berths of Vasco Bay 1200.00 5.00
Development of Bulk Handling Terminal West of
7210.00 12.00
Breakwater WoB
Visakhapatnam
Development of 1143.70 2.00

62
 Western quay
(WQ-6) in the
northern arm of
Inner Harbour of
VPT for
Handling Dry
Bulk Cargo
Development of
EQ-10 Berth in
Inner Harbour 553.80 1.85
for handling
Liquid Cargo
Installation of
Mechanised
handling
facilities for 2175.80 5.21
fertilizers at EQ-
7 in the inner
Harbour
Installation of
Mechanised
Handling 2088.70 4.60
Facilities at WQ-
8
Installation of
Mechanised
Handling 2138.70 4.50
Facilities at WQ-
7
Mechanised Coal
Handling
facilities at
General cum 4441.00 10.18
Cargo Berth
(GCB) in the
outer Harbour
Development of
EQ-I in East 2655.20 5.95
Dock
Development of
EQ-I-A in East 2697.10 6.70
Dock at Vizag
Ennore
Development of
Container 14070.00 15.00
Terminal
Tuticorin
Conversion of
berth no.-8 as
3122.30 6.00
Container
Terminal
Construction of
North Cargo 3321.60 5.00
Berth No.-II
Construction of 500.00 0.80

63
 shallow draught
Berth (3 Nos)
Mechanization
of Construction 200.00 5.00
of Berth 9
Chennai
Creation of Mega
Container 31250.00 48.00
Terminal
Jawaharlal Nehru
Development of
standalone
container
handling
6000.00 9.60
facilitywith a
quay length of
330m North of
NSICT Terminal
4th Container
67000.00 57.60
Terminal
Mumbai
Development &
operation of 2
berth at Indira 450.00 0.60
Dock as dry
Dock Terminal
Development &
operation of a
berth at Indira
300.00 0.60
dock – as
conventional
cargo terminal
Kolkata
Construction of 1
riverine jetty
470.00 1.50
downstream of
2nd oil jetty
Construction of 1
riverine jetty
990.00 2.50
downstream of
3nd oil jetty
Cochin
International
Bunkering
Terminal –
1842.00 4.50
Construction of
Multipurpose
Liquid Terminal
International
Cruise
550.00 -
Terminal/Public
Plaza

Ports > US$ 22 billion Opportunity

64
  12 major ports and 187 minor ports along India’s ~7,500 km of
long coastline; ~95% (by volume) and ~70% (by value) of India’s
international trade in FY09 was carried out through ports.
 100% FDI under automatic route has been allowed in port
development projects.
 Investment envisaged in 11th Plan on ports - US$22bn; private sector
to contribute 61% of the total spending.
 Total capacity addition expected to be 830 MMT for both major and
minor ports.

Targeted Capacity Addition – 11th Plan

 Growth in merchandise exports projected at over 13% p.a.

 Cargo Handling at Major Ports is projected to grow at 7.7% p.a. (CAGR)
till 2011-12.
 Containerized cargo is expected to grow at 15.5% (CAGR) over next
7 years.
 Required Investment of Rs. 57,452 crores to boost Major Ports
Infrastructure for 276 projects in the next 7 years, out of which 64% is
envisaged from private players.
 Required Investment Rs. 35,933 crores for improving Minor Ports, out of which 64%
is envisaged from private players.
1,200 18

15

R
800
CAG 12
– 9
%
400
8.5 6

0 – 0
R
04

06

08

14
00

02

10

12

G
Feight(mtonnes) CA .C5on%
tainers(mTEU)
9

Ports traffic data (Mn Tonnes)

M i n o r P o r t s MT r a a j fo f ir c P o r t s T r a f f i c

4 6 4 5 1 9 5 3 0
3 8 4 4 2 3
1 3 7 1 4 5 1 7 2 1 9 6 2 2 4

2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9
65
Port-Wise Capacity Addition Planned at Major ports (in Mn Tonnes)
in the 11th Five-Year Plan (2008 – 2012)
4 0 5 2 5 1 4 3 3 5 3 7 4 8 4 4 5 5
1 9 2 1 2 4 2 3

K o l k a Ht a a l d iP a a Vr ai sd h i pa k h aE pn an to nCr aeh me n Tn ua t i i c o Cr oi nNc he i wn M aM n o g ma l uoM gr aue om b Ja N i P T K a n d l a

State Wise Capacity Addition Planned at Non-Major ports (in Mn

Tonnes) in the 11th Five-Year Plan
8 4 5 6 8 5 2 9 2 6 1 3 2 8 1 2
4 8

A n d h Gr au j aM r a ht a T r a ms h i tl K r Na ra n d a u tO a r ki sa s aG o a K e r aW l ae s t P B o e n n d g i ac hl e r r y
P r a d e s h

Private sector will be a key player in port development

• All major international players including Maersk, Dubai Ports

International and Port of Singapore Authority already have a presence
in India.
• The total port capacity is targeted to increase from the current 736mt
to 1,574mt by FY2012.

Infrastructure Development at Ports

 Up - gradation of major ports through private sector involvement (13 projects are
operational & 4 under implementation).
Proposed financing of the major  Development of container terminals (in
ports in the 11th five year plan 6 ports of total 15 million TEUs
(FY2008-2012) capacity): Target Date: 2013 – 14.
Internal  Projects worth US$13.33 billion
resources proposed under National Maritime
25%
Development Programme (NMDP):
GBS Target Date: 2013 – 14.
5%  Additional port handling capacity of 530
External MMTA in major ports: Target Date:
borrowings
3%
Private 2013 – 14.
sector
67%

Ports > Projects: Investments in Fixed Assets

66
Investments in fixed assets financed by internal resources of the 12
Major Ports in Rs Crores

2012 - 2013 -
2007 - 08 2008 - 09 2009 - 10 2010 - 11 2011 - 12 Total Percentage
13 14
Kandla 84 132 167 71 74 30 42 600 4%
JNPT 421 1000 832 768 720 511 127 4,379 27%
Mumbai 277 767 673 439 359 223 159 2,897 18%
Mormug
284 140 90 10 10 10 10 554 3%
ao
New
Mangalor 60 93 88 48 28 25 25 367 2%
e
Cochin 75 201 280 - - - - 556 3%
Tuticorin 270 295 572 595 493 75 18 2,318 14%
Chennai 197 68 120 68 - - - 453 3%
Ennore 96 166 250 209 27 - - 748 5%
Visak 170 275 266 180 159 45 1 1,096 7%
Paradip 363 221 98 183 94 68 170 1,197 7%
Kolkata 83 365 175 128 104 20 19 894 6%
Total 2,380 3,723 3,611 2,699 2,068 1,007 571 16,059 100%
Percenta
15% 23% 22% 17% 13% 6% 4% 100%
ge

 The investments in fixed assets for the 12 Major Ports are expected to
be financed by the internal reserves of the Ports and amount to Rs
16,059 Crores for the period 2007-08 to 2013-14.
 The investments reach the highest level in the years 2008-09 and
2009-10, after these years the investments are declining to Rs 571
Crores in 2013-14.
 The highest level of investments for the individual ports was for JNPT,
Rs 4.378 Crores (which is 27% of the investments of all 12 Ports)
followed by Mumbai and Tuticorin.
 In Cochin, New Mangalore, Mormugao and Chennai the level of
investments from their own resources was relatively low. For each of
these ports it was 3% or less of the total of all 12 Ports.

Investments in fixed assets financed by private sector in Rs Crores

2007 - 2008 - 2009 - 2010 - 2011 - 2012 - 2013 -

Total Percentage
08 09 10 11 12 13 14
Kandla 180 404 3,984 - 65 390 - 5,023 19%
JNPT 2,678 981 2905 3879 - 279 - 10,722 41%
Mumba
250 250 734 162 96 142 - 1634 6%
i
Mormu
140 - - - - - - 140 1%
gao
New
Mangal 889 207 224 - - - - 1,320 5%
ore

67
 Cochin 91 55 319 - - - - 465 2%
Tuticori
109 50 30 30 30 30 39 318 1%
n
Chenna
- - - - - 45 - 45 0%
i
Ennore 538 1,090 650 - - - 298 2,576 10%
Visak 187 940 30 240 - - 270 1,667 6%
Paradip - 581 239 239 551 - 29 1,639 6%
Kolkata 158 - 345 105 - - - 608 2%
Total - - - - - - - 26,157 -

Ports > Major Forecasts

Traffic Forecasts

In 2013 the Major Ports already will handle twice as much cargo as will be
the case in Rotterdam.

Traffic forecast in the Major Ports and in Rotterdam in M tons

2006 2013 2026 2006-2026

Major Ports India 420 814 1,450 245%
Port of Rotterdam 380 430 595 60%

Investments in fixed assets

The enormous growth in cargo volumes is reflected in the investments


in fixed
Assets.
 In the next 7 years, the Major Ports in India will be investing 16.000
Crores. In
the same period the investments in Rotterdam will add up to 14.000
Crores (85%
of the Indian investments).
 The focus in India is on the first 3 years. The focus in Rotterdam is
somewhat
Broader.
 Large investments are not only planned in the first 3 years, but also in
the
last year of the projected period (and even beyond this period).
 Long term planning is important to anticipate on the traffic forecasts.

Revenues (in Rs Crores) Operating expenses (in

RsCrores)
2007-08 2013-14 Growth 2007-08 2013-14 Growth
Major Ports Major Ports
5,400 9,400 74% (12% pa) 3,700 4,400 19% (3% pa)
India 68 India
Port of Port of
2,800 3,600 29% (5% pa) 1,300 1,600 23% (4% pa)
Rotterdam Rotterdam
Comparison of Revenues Major Ports in India and Rotterdam in Rs
Crores

 The revenues of the Major ports are at this moment approximately

twice as
high as the revenues of the Port of Rotterdam.
 In the next 7 years the revenues of the Major Ports will almost double
while the revenues of the POR only will grow with 30%.

Comparison of Operating expenses Major Ports in India and

Rotterdam in Rs Crores

 The operating expenses of the Major Ports are approximately 3 times

higher than
in the Port of Rotterdam. The reason is that the Major Ports are service
ports and the Port of Rotterdam is a landlord port.
 The growth of the operating expenses at the Major Ports is moderate,
19% in the 7- year period. Most ports are downsizing the number
of employees in this period and new terminals are BOT contracts.
 The growth of operating expenses in the 7-year period at the Port of
Rotterdam is slightly higher, 23%, mainly because of increasing
maintenance costs.

Financial performance: Operating margin and PAT

OperatingmarginandPATinRsC
rores

5000

 Concentrating on the operating margin, 4000 which is revenue less

operating expenses, it can be30 concluded
00 that the operating
margin in the yearinR sC roresis
2007-08 approximately at the same
2000
level for the Major Port and the Port of Rotterdam.
 1
But in 7 years the growth of the revenues000 of the Major Ports is
enormous. In 0
Rotterdam the growth is much more modest. 200 7-0 8 2013-1 4
 The PAT in 2007-08 of the Major Ports is already much
(Op erahigher
ting than in
(Operating
Rotterdam. ma rg in) m arg in)
 The growth in the 7 year period for the Indian ports is also much TimePeri
higher.

69 M
ajorP
ortsIndia P
ortofR
otter
Ports > Major Forecasts (Financial position)

Operating margin in Rs Crores

2007 – 08 2013 – 14 Growth

Major Ports
1,700 4,900 188% (31% pa)
India
Port of
1,500 2,100 40% (7% pa)
Rotterdam

Profit after tax in Rs Crores

2007 – 08 2013 – 14 Growth

Major Ports
1,500 4,000 167% (28% pa)
India
Port of
300 470 57% (9% pa)
Rotterdam

 The exact figures show a growth of the operating margin at the Indian
ports of 188%, against 40% in Rotterdam.
 The PAT in the Major Indian Ports at the moment is 5 times higher than
in
Rotterdam. In 7 years time the PAT is 10 times higher than in
Rotterdam.
 When considering the growth in profit margin and PAT, which is much
higher
in India, it is good to take into account that the investments in fixed
assets in
the projected period don’t differ very much. Investments in India lead
to much
higher growth in profits than in Rotterdam.

Solvency Major Ports and Rotterdam

2008 – 2013 – 2025 –

09 14 26
Major
65% 75% 90%
Ports India
Port of
66% 48% 66%
Rotterdam

 In India and Rotterdam the level of fixed assets is growing, which is

caused
by the investments in the 7 year period.
 The absolute level in Rotterdam in 2013-14 is still slightly higher than
in the Major Ports but the growth in India is much faster.

70
  During the period of investments the level of available funds in the
Major Ports is increasing.
 In Rotterdam there are no available funds. This means that in periods
of high investments the Port of Rotterdam has to raise debt.
 The solvency ratio in the Major Ports is steadily rising. In Rotterdam the
solvency rate is decreasing from 66% to 48% in the next 7 years.

Port > Financial strategy

 The 12 Major Ports of India project to invest more then Rs 16.000

Crores from their own resources during the 7-year period.
 Over the same period the 12 major Ports expect the private sector to
invest some Rs 25.000 Crores via BOT contracts.
 At the end of the 7- year period the internal funds available for
investments in fixed assets have augmented to Rs 16.000 Crores.
 The own equity for the 12 Major Ports at the end of the 7-year period
amounted to more than Rs 38.000 Crores. The Advisor assumes a
normal debt equity ratio as 1 to 1 (in line with TAMP); which indicates a
borrowing capacity of Rs 38.000 Crores.
 At the end of the 7-year period the outstanding long term loans
amounted to Rs 2.605 Crores. The unused part of the borrowing
capacity is more than Rs 35.000 Crores.
 The financial strategy used by the Consultants and the Ports for the 7 –
year period resulted in an amount of over Rs 55.000 Crores of unused
funds. The Advisor concludes that this is not in line with the core
function of a public port.

Ports > Port Infrastructure > Worldwide Trends

 Port development takes place in deeper water due to the trend of

larger vessels applied.
 Economy of scale is applied with the focus to decrease the costs per
unit, which lead to larger projects.
 Industrial clusters are established to obtain synergy and achieve more
efficiency.
 Logistic clusters are established in or near ports, also to achieve more
efficiency.
 The role of the private sector is increasing.

Ports > Indian Port Sector > Present Characteristics

 The 12 Major Ports form nearly 75% of the market share.

 Due to scarcity of port facilities, the port sector is a demand market.

71
  The Port Trust has limited investments to make mostly dredging – but
in return receives high revenue shares from the private
sector.
 Performance or efficiency on the berths was not often taken into
account, while here the cheapest and fastest port capacity increase
could be achieved – decision to construct (an) extra berth(s) was
taken.
 Minor ports, public ports falling under the States, are sometimes
becoming a fierce competitor for the Major Ports.
 The biggest threat is the development of private ports, not hampered
by old infrastructure, bureaucratic procedures and inefficient cargo
handling systems.
 Fortunately the newest Major Ports like JNPT and Ennore, serve as an
example for the other Major Ports with respect to efficient cargo
handling operations. JNPT in fact already reached the goal of becoming
a world class facility. Ennore, still having much port area, has the
potential to become a world class facility, on the condition that careful
long term planning is taken into account.

Ports > SWOT Analysis > 12 Major Ports

Strengths  Weaknesses


 High growth  Old infrastructure

 High market share  Limited water depth
 Financial means available  Old and inefficient cargo handling
 Most ports located at strategic locations systems
 Poor hinterland connections
 Rigid institutional framework
 High tariffs
 Poor quality of services / business
attitude
 Over-staffing
 Lack of capacity
 Lack of extension possibilities

72
 Opportunities Threats

 Introduce competition
 Huge Indian market, and landlocked countries in  Private ports
the North  Minor ports
 Improve organisation: training, IT, downsizing  Bureaucracy
 Port reform – more autonomy  Time
 PPP other than BOT
 Invest in infrastructure, lower costs for port
users
 Invest in total transport chain

Irrigation > US$ 18 billion Opportunity

 India has 2.4% of the world’s total area but 16% of the population and
only 4% of the available fresh water.
 Financial health of the country as a whole is a serious concern, rapid
augmentation of its internal financial resources through rapid
actualization of its large hydroelectric potential is the only solution.
 Expansion of the present irrigation facilities atleast by 10.61 lakh
hectares through conservation, efficient utilization and development of
water resources.
 Rs. 15, 102.61 crores is targeted for the eleventh plan(2007-12) which
constitutes 21.64% of the total planned spending.
 Practices of creating protective irrigation and improving water
harvesting through micro-minor, improving ground water recharge
through water conservation campaign, construction of field ponds and
extension reforms through Agricultural Technology Management
Agency (ATMA) using institutional & capacity building using PPP model.

Targeted Capacity Addition – 11th Plan

 Aimed at doubling the annual growth rate in the sector to 4% in the

11th plan period that ends 2012.
 Hope to be able to add about 16 million hectares to the irrigated area
during the 11th Five – Year Plan, PM.
 Efficiencies of surface water systems to be improved from the present
level of 35 to 40%to about 60% and that of ground water systems from
65% to about 75%.
 Formulation of a National Water Mission, one of the 8 national missions
that are part of National Action Plan on Climate Change.
 The Bharat Nirman programme aims at addressing water quality
problems in all the quality affected habitations by 2009.

Ports traffic data (Mn Tonnes)

73
 In February, the major ports handled cargo of 45.8 million tonnes ,

1.3% higher than the 45.2 million tonnes in the corresponding month
in 2009.
 For the 11-month ended Feb 2010, ports recorded a cargo growth of
5.5% compared with the same period in the 2009 fiscal, source: Indian
Ports Association (IPA).
 Paradip saw the highest increase in cargo traffic during the period at
26%, Mormugao rose 15.3%, Tuticorin increased 12.2% while JNPT and
Chennai rose by 5% each. In cargo traffic, container tonnage increased
7% over the previous year, with iron-ore increasing 5.8%and coal
traffic rising 3.22%.
 Cargo growth of 5.5%(Y-o-Y) in April-Feb FY10 indicates that economic
activity is back on track.
The government expects infrastructure investment at 7.94% and 8.37% for
2010-11 and 2011-2012, respectively.

Infrastructure spending to remain strong even in XIIth plan

 Considering the overall slowdown in the economy in the last one year
and slippages based on past experience, investment in infrastructure
spending is likely to be to the tune of US$361.3 billion against the
government target of US$500 billion – Company, ICICIdirect.com
Research.
 Infrastructure investment expected at US$361 billion against US$500
billion, still 1.7x of the Xth Five Year Plan – Company, ICICIdirect.com
Research.
 Areas such as power, roads and water & irrigation are likely to be
major thrust areas for the government in the Eleventh and Twelfth Five
Year Plans.
 In the XIIth Plan, investment is likely to be US$667.6 billion indicating
sustainable opportunities for strong players – A clear indication for
construction companies, expected to sustain their growth trajectory
even at the end of the XIIth Five Year Plan.
 In terms of verticals, power, roads and water & irrigation are likely to
see higher allocation in the XIth Five Year Plan.
 Expect the topline to grow at a CAGR of 13.8% during FY09-FY12E on
the back of strong execution of the order book – Company,
ICICIdirect.com Research.

Infrastructure spending (top Source: Planning Commission, ICICIdirect.com

Research
down approach) * Exchange rate has been assumed at Rs
XIth plan XIIth plan
FY07
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
GDP (Rs trn) 41.5 45.2 48.3 51.7 55.6 60.1 65.2 70.7 76.7 83.2 90.3
GDP growth rate % - 9.1% 6.7% 7.2% 7.5% 8.0% 8.5% 8.5% 8.5% 8.5% 8.5%
GCF in Infrastructure as
5.0 6.0 7.2 7.0 7.3 7.5 7.8 8.0 8.3 8.5 9.0
% of GDP
GCF in Infrastructure
2.1 2.7 3.5 3.6 744.0 4.5 5.1 5.7 6.3 7.1 8.1
(Rs trn)
GCF in Infrastructure
  Different allocation to various segments offers varied investment
opportunity which infrastructure funds are expected to capture.

Future Plans & Funds Requirement

 India is building 20 km of road a day, which is 7,000 km a year and

represents $50 billion worth of work in progress.
 The country also has the largest PPP programme in the world, in which
it plans to invest $9 billion to improve airports, $12 billion to modernise
ports and $130 billion in the power sector including transmission and
distribution.
FUNDS
REQUIREMENT
Capacity to be Funds required for generation component
Plan
installed (MW) (Rs. Millions)
9th Plan 52, 820 2, 250, 000 *
10th Plan 45, 370 2, 500, 000 *
11th Plan 55, 593 1, 250, 000 @

ENERGY SAVINGS BY DEMAND SIDE

MANAGEMENT
Savings in installed capacity
requirement (MW)

Plan Peak &

energy
Peak decreased by 5%
decreased by
5%

9th Plan 7, 189 5, 955

10th Plan 9, 021 8, 521

11th Plan 24, 350 20, 690

POWER SECTOR – FISCAL INCENTIVES

 Normative parameters provides for 16% return on equity at 68.5% PLF

for thermal and 90% availability for hydro plants. In addition up to
0.7% return on each incremental 1% PLF.

75
  Generating companies operating coal based, gas based and hydro
projects can sell power on the basis of a suitably structure two part
tariff.
 A five year tax holiday and 30% deduction of profits in the following
five years has been allowed.
 Income tax exemption on all income of any fund dedicated to power
sector.
 The excise duty on large number of capital goods instruments has
been reduced.
 Greater flexibility is allowed for power projects for availing external
commercial borrowing (ECB).
 Domestic savings invested into debentures/shares offered by power
sector are eligible for tax rebates.

India to become the second Largest Economy by 2050

 With the expected average annual compounded growth rate of 8.5%,

India's GDP is expected to be USD 1.4 trillion by 2017 and USD 2.8
trillion by 2027.
 Service sector contribute to 50% of India‘s GDP and the Industry and
agriculture sector 25% each.
 More than USD 475 bn worth of investment is to flow into India’s
infrastructure by 2012.
 With the above investments India’s infrastructure would be equal to
the
best in the world by 2017.
 Thus in the eleventh five year plan ,investment in the above sectors
(Aviation infrastructure ,Construction infrastructure, Highway
infrastructure ,Power infrastructure, Port infrastructure ,Telecom
infrastructure ) will be US$ 384 billions(Rs 17,20,000 Crores)
considering the huge infrastructure market potential in India. In
addition to the above, investments to the tune of US$ 91 billions have
been planned in other infrastructure sectors like Tourism
infrastructure ,Urban infrastructure ,Rural infrastructure, SEZs ,and
water infrastructure and sanitation infrastructure thus making the total
infrastructure investments in the eleventh plan period 2007-08 to
2011-12 as US$475 billions.
 The estimated infrastructure investments in India over USD475 will
create demand for Power equipment , Construction equipment
,Material Handling equipment ,Electronic and IT systems ,Environment
technologies ,Transport equipment , EPC contracts, Infrastructure
companies in India ,Financial services ,Real estate ,Education and
training ,Design and Planning services , Infrastructure consultants ,
Advisory and professional services and provide opportunities for

76
 investors, contractors, o&m contractors, developers of infrastructure
projects ,foreign players.

6. FINDINGS/ CONCLUSION
Key Findings

 The government has pegged infrastructure investment for 2009–10 at

7.5% of the gross domestic product (GDP) and at 7.94% and 8.37% for
2010–11 and 2011–12, respectively.
 According to the government, the Indian economy is poised to grow at
7.2% in 2009–10, 8.5% in 2010–11 and 9% in 2011–12.
 For 2009–10, the total investment in infrastructure is estimated at
7.5% of GDP.
 The government aims to increase this to 7.94% and 8.37% in 2010–11
and 2011–12, respectively.
 Infrastructure development is expected to garner a total investment of
Rs20.5 trillion (revised estimates) over the 11th Five-Year Plan; of this,
approximately 36% (Rs7.4 trillion) is likely to come from private
participation, especially in the road and power sectors.
 This marks a change in composition of projected public-private
investment from 70:30 to 64:36. However, the gross investment target
remains largely unchanged.

77
  Investment in infrastructure during first three years of the 11th five
year plan stood at approximately Rs8,000 billion; of this, 45% was
financed through budgetary support and the balance through a
combination of debt (41%) and equity (14%), including foreign direct
investment.
 The targeted infrastructure investment for the 12th Plan is at Rs40,984
billion—assuming infrastructure gross capital formation (GCF) of 9.95%
of GDP—is nearly double that of the 11th Plan.
 Lehman Brother estimates INR34,385 billion (~USD860 billion) worth of
construction opportunity in India for the next five years, representing a
CAGR of 20% versus a CAGR of 14% for the past five years.
 Execution risk will be the biggest risk in the construction industry,
companies with established execution abilities and a more diversified
portfolio will be able to manage the risk better than others.
 Private sector can issue long-term infra bonds: FM.
 India will need to spend over USD 1 trillion in infrastructure
development during the 12th Five-Year Plan.
 2% to 3% returns expected on developed EQ including US & UK.
 50 – 60 $ billion of yearly investments on Indian infrastructure sector
mandatory for maintaining a GDP growth rate of 8 – 8.5 % annually,
which is higher than 7 – 8 % growth rate expected during the same
fiscal last year because of excellent policies & financial measures
adopted by the GOI.
With the global venture capital industry showing signs of recovery,
investment levels into India are expected to increase the most
compared to others in the Asia-Pacific region over next three years,
says a survey by Deloitte.

7. REFERENCES
BIBLOGRAPHY
WEBSITES:
 www.religare.in
 www.google.com
 www.nseindia.com
 www.bseindia.com
 www.moneycontrol.com
NEWSPAPERS:

78
 HINDUSTAN TIMES
 ECONOMIC TIMES
 MARKET EXPRESS
BOOKS:
 Indian Infrastructure magazine (September 2009 to June 2010)

79