GMR COMPANY

ANALYSIS

Submitted by: Group 9

Rashmi Ranjan Katha

Rajesh Kumar

Aman Anand

Apurv Sunil

Rahul Prakash Ghimiray

Rajeev Purvey
Contents

1.1 About the Industry & Subparts of the Industry

1.2 Growth Drivers & Sector Risk Factors

1.3. Major Indicators

1.4. Macroeconomic Factors which affect the Industry

1.5 Recent Developments in the Infrastructure Industry
1.6 Major Government Policies for the industry
1.7 Mojor costs heads in Infrastructure Industy
1.8 Major Players in Infrastructure Industry.
1.9 MAJOR GROWTH STRATEGIES ADOPTED BY THE COMPANIES
1.10. Financial Analysis of the Industry

1. Industry Analysis
1.1 About the Industry & Subparts of the Industry

Introduction

The Indian Government has identified infrastructure as one of the key drivers of economic
development in the country. India's infrastructure and transport sector contributes about 5% of its
GDP. The infrastructure industry in India is highly fragmented and hence difficult to gunge its exact size
and the jobs it generates each year in absolute terms. The infra sector continues to suffer with the high
concentration of poorly performing assets and lower-than-expected returns. Infrastructure sector
Breakup into

1. Transportation

2. Power

3. Ports

4. Airports

5. Urban Infrastructure

Infrastructure output in India grew by 4.9 percent year-on-year in November 2016, easing from a 6.6
percent rise in the previous month, as production expanded at a slower pace for: Steel (+5.6 percent
from +16.9 percent in October); refinery products (+2 percent from +15.1 percent); and cement (+0.5
percent from +6.2 percent). Meanwhile, output grew further for electricity (+10.2 percent from +2.8
percent in October) and fertilizers (+2.4 percent from +0.8 percent); and rebounded for coal (+6.4
percent from -1.6 percent). By contrast, output continued to contract for crude oil (-5.4 percent from
-3.2 percent in October) and natural gas (-1.7 percent from -1.4 percent). For the first eight months of
the current fiscal year, which ends in March 2017, the output growth rose to 4.9 percent compared
with 2.5 percent in the same period of the previous year. Construction Output in India averaged 5.02
percent from 2005 until 2016, reaching an all-time high of 11.66 percent in January of 2010 and a
record low of -1.30 percent in November of 2015.1

Infrastructure sector is a key driver for the Indian economy. The sector is highly responsible for
propelling India’s overall development and enjoys intense focus from Government for initiating policies
that would ensure time-bound creation of world class infrastructure in the country. Government has
announced the target of Rs 25 trillion (US$ 376.53 billion) investment in infrastructure over a period of
three years, which will include Rs 8 trillion (US$ 120.49 billion) for developing 27 industrial clusters and
an additional Rs 5 trillion (US$ 75.30 billion) for road, railway and port connectivity projects. 2

Infrastructure sector includes power, bridges, dams, roads and urban infrastructure development. In
August 2016, India jumped 19 places in World Bank's Logistics Performance Index (LPI) 2016, to rank
35th amongst 160 countries.

1
http://www.tradingeconomics.com/india/construction-output
2
http://www.ibef.org/industry/infrastructure-sector-india.aspx
Market Size
India needs Rs 31 trillion (US$ 454.83 billion) to be spent on infrastructure development over the next
five years, with 70 per cent of funds needed for power, roads and urban infrastructure segments.

The Indian power sector itself has an investment potential of US$ 250 billion in the next 4-5 years,
providing immense opportunities in power generation, distribution, transmission and equipment.

The Indian construction equipment industry is reviving after a gap of four years and is expected to grow
to US$ 5 billion by FY2019-20 from current size of US$ 2.8 billion, according to a report released by the
Indian Construction Equipment Manufacturers’ Association (ICEMA).

Foreign Direct Investment (FDI) received in construction development sector from April 2000 to March
2016 stood at US$ 24.19 billion, according to the Department of Industrial Policy and Promotion (DIPP).

Investments

India is witnessing significant interest from international investors in the infrastructure space. Many
Spanish companies are keen on collaborating with India on infrastructure, high speed trains, renewable
energy and developing smart cities.

 The Asian Development Bank (ADB) has approved US$ 631 million loan to develop the first
coastal corridor, namely the Vishakhapatnam-Chennai industrial corridor, which is expected to
bring manufacturing and export industries to the east coast.

 Silver Spring Capital Management, a Hong Kong-based equity hedge fund, plans to invest over
Rs 2,000 crore (US$ 306 million) in Hyderabad-based infrastructure developer Transstroy India
Ltd, for construction of highways in the country.

 Altico Capital, the non-banking finance company (NBFC) of Clearwater Capital Partners LLC,
plans to invest around US$150 million in the commercial office properties and infrastructure
sector over the next 12-18 months.

 Sovereign wealth funds and global pension funds plan to invest up to US$ 50 billion in Indian
infrastructure sector over the next five years##.

 Airports Authority of India (AAI) plans to develop city-side infrastructure at 13 regional airports
across India, with help from private players for building of hotels, car parks and other facilities,
and thereby boost its non-aeronautical revenues.

 The Asian Development Bank (ADB) and Government of India signed a loan agreement of US$
80 million, which is the third tranche of a US$ 200 million financing facility under the North
Eastern Region Capital Cities Development Investment Programme, and will be invested for
improving water supply, solid waste management and sanitation in the cities of Agartala and
Aizwal, the capital cities of Tripura and Mizoram respectively.

 Maharashtra State Government plans to launch infrastructure projects worth Rs 73,367 crore
(US$ 10.78 billion) in Mumbai and neighbouring areas in 2016, which include coastal road, Trans
harbour link, metro rail, airport and road projects.

 The Government of India has earmarked Rs 50,000 crore (US$ 7.34 billion) to develop 100 smart
cities across the country. The Government released its list of 98 cities for the smart cities project
in August 2015.
  BNP Paribas Lease Group, subsidiary of BNP Paribas Group, has acquired 5 per cent stake in Srei
Infrastructure Finance, by selling its entire 50 per cent stake in Srei Equipment Finance Limited
(SEFL) to Srei Infrastructure Finance, thus allowing them to play a larger role in the
infrastructure finance business.

 Private equity giant Carlyle Group is planning to invest Rs 500 crore (US$ 73.36 million) in
Feedback Infra, which could make the US firm a major shareholder in the Gurgaon-based
infrastructure services company.

 PTC India Financial Services (PFS) and India Infrastructure Finance Company Limited (IIFCL) have
signed a Memorandum of Understanding (MoU) to jointly provide funding for infrastructure
projects in India, particularly in the energy sector.

 France has announced a commitment of € 2 billion (US$ 2.17 billion) to convert Chandigarh,
Nagpur and Puducherry into smart cities.

Government Initiatives

The Government of India is taking every possible initiative to boost the infrastructure sector. Some of
the steps taken in the recent past are being discussed hereafter.

 The Government of India is planning to boost regional connectivity by setting up 50 new

airports over the next three years, out of which at least 10 would be operational in next year.

 The government plans to invest over Rs 7,000 crore (US$ 1.04 billion) in FY2016-17 to develop
its network in the north-eastern region for better connectivity.
 The Reserve Bank of India (RBI) has allowed companies in the infrastructure sector to raise
External Commercial Borrowings (ECB) with a minimum maturity of five years and with an
individual limit of US$ 750 million for borrowing under the automatic route.

 The Securities and Exchange Board of India (SEBI) has allowed Foreign Portfolio Investors (FPI)
to invest in units of real estate investment trusts (REITs), infrastructure investment trusts
(InvITs), category III alternative investment funds (AIFs), and also permitted them to acquire
corporate bonds under default.

 The NITI Aayog has instructed central public sector units to release 75 per cent of the amount
due to construction contractors and concessionaires of government projects, which is expected
to release over Rs 40,000 crore (US$ 6.02 billion) for projects that are under dispute.

 The Government of Japan, through Japan International Cooperation Agency (JICA), has
committed to provide a soft loan of JPY 19.064 billion (US$ 161.2 million) to Government of
India at an interest rate of 0.3 per cent per annum for the project of pollution abatement of
Mula-Mutha river in Pune, Maharashtra under the National River Conservation Plan.

 The Government of India plans to upgrade India’s airport infrastructure over a six-year period,
starting with exploring alternative airports like Juhu to ease the pressure on current metro
airports.

 Government of India plans to use the new hybrid-annuity model for allocating contracts under
the Public Private Partnership (PPP) projects in highways, Namami Gange and Railway Projects,
which will help overcome the challenges faced by private developers in the Build-Operate-
Transfer (BOT) Toll and BOT-Annuity models.

 Budgetary allocation for Roads and Railways in the Union Budget 2016 has been increased to Rs
218,000 crore (US$ 31.98 billion) with an aim to boost the private investment cycle.

 The Ministry of Road Transport and Highways plans to build five more greenfield expressways
across the country, which are expected to reduce travel time and propel economic growth.

 The Union Ministry of Urban Development has approved an investment of Rs 495 crore (US$ 72
million) under the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) for FY
2015-16 which will be used for water supply, sewerage networks and septage management,
storm water drains, urban transport and provision of green spaces in 13 cities spread over six
states.

 Prime Minister of India Mr Narendra Modi indicated that the government has rolled out stuck
projects worth Rs 4 lakh crore (US$ 58.69 billion) in the past six months (ending November
2015), while stating that infrastructure development is the government's top priority in order to
improve economic growth.

 The Union Cabinet has approved several reforms such as allowing National Highways Authority
of India (NHAI) to extend the concession period for current incomplete projects in build-
operate-transfer (BOT) mode.

 Government of India plans to launch the National Infrastructure Investment Fund (NIFF) with an
initial corpus of at least Rs 40,000 crore (US$ 5.87 billion).
  The Ministry of Urban Development has approved an investment of Rs 19,170 crore (US$ 2.81
billion) for improving basic urban infrastructure in 474 cities in 18 states and Union Territories
(UTs) under Atal Mission for Urban Rejuvenation and Transformation (AMRUT) for 2015-16.

 Department of Industrial Policy and Promotion (DIPP) has set up an online monitoring system
for on-going projects under the Industrial Infrastructure Upgradation Scheme (IIUS).

 The Ministry of Urban Development has decided to allow the use of construction & demolition
waste up to 20 per cent in construction of load bearing items and up to 100 per cent for non-
load bearing purposes. This provision is expected to significantly help in reuse of such waste, in
line with ongoing efforts under Swachh Bharat Mission (SBM).

 The central government has approved amendments to 'The National Waterways Bill, 2015'
which will provide for enacting a central legislation to declare 106 additional inland waterways,
as the national waterways.

 The Government of India plans to award 100 highway projects under the public-private
partnership (PPP) mode in 2016, with expectations that recent amendments in regulations
would revive investor sentiments in PPP projects in the infrastructure sector.

 The Reserve Bank of India (RBI) has notified 100 per cent foreign direct investment (FDI) under
automatic route in the construction development sector. The new limit came into effect in
December 2014.

 The Government of India has relaxed rules for FDI in the construction sector by reducing
minimum built-up area as well as capital requirement. It has also liberalised the exit norms. In
fact, the Cabinet has also approved the proposal to amend the FDI policy.

 In the Budget 2015-16, the capital outlays for roads, and railways have been increased by Rs
140.3 billion (US$ 2.05 billion) and Rs 100.5 billion (US$ 1.47 billion) respectively.

 Mr Nitin Gadkari, Union Minister of Road Transport & Highways and Shipping, has launched
various online platforms such as ePACE (project appraisals portal), INFRACON (portal for
infrastructure consultancy firms and personnel) and INAM PRO (web-based application for
infrastructure and material providers), while also inviting stakeholders in the infrastructure
sector to consciously use global best practices in road construction sector.

 The Securities and Exchange Board of India (SEBI) has announced norms for public issue of units
of infrastructure investment trusts (InvITs) in order to facilitate infrastructure developers raise
capital from public investors.

Road Ahead

The Government of India has made a record allocation Rs 221,246 crore (US$ 33.07 billion) for several
infrastructure projects in Union Budget 2016-17, which is expected to provide significant boost to
Indian infrastructure sector.

Indian port sector is poised to mark great progress in the years to come. It is forecasted that by the end
of 2017 port traffic will amount to 943.06 MT for India’s major ports and 815.20 MT for its minor ports.
Along with that, Indian aviation market is expected to become the third largest across the globe by
2020, according to industry estimates. The sector is projected to handle 336 million domestic and 85
million international passengers with projected investment to the tune of US$ 120 billion. Indian
Aviation Industry, which currently accounts for 1.5 per cent of the gross domestic product (GDP), has
been instrumental in the overall economic development of the country. Given the huge gap between
potential and current air travel penetration in India, the prospects and possibilities of growth of Indian
aviation market are enormous.

1.2 Growth Drivers & Sector Risk Factors

Growth Drivers

 SEBI to let foreign venture funds invest in infrastructure

The Securities and Exchange Board of India (SEBI), which regulates foreign investment into the country,
has recently closed gaps in norms that had prevented foreign venture-capital investors from directing
funds into the Indian infrastructure space. The move is expected to bring INR 68.8-81.4 billion (US$1.1-
1.3 billion) in investment into this space in the immediate future.

 Privatization to present opportunities for industry

To meet its fiscal-deficit target of 4.1 percent of GDP for FY2015, the Indian government has
announced a disinvestment program. Disinvestment of its 10 percent stake in Coal India has fetched
INR 225.3 billion (US$3.6 billion) for the government, making the most of the current stock-market
run.89 The government has also relaxed FDI norms to allow foreign players to invest in the Indian
infrastructure sector and further boost the country’s economic growth. For instance, 100 percent FDI is
now permitted in rail projects including high-speed trains, suburban service, dedicated freight
corridors, and freight and passenger terminals. Further, to encourage PPP projects, the government
also plans to develop new lines and double the number of existing freight lines. Similarly, to strengthen
road infrastructure, the government has set an objective to build 30 kilometres of road every day up to
2016. More than two-thirds of these projects (under programs such as the National Highway
Development Project) have yet to be awarded, thereby offering a massive opportunity to private
players. Meanwhile, India’s Ministry of Steel has proposed setting up special-purpose vehicles at the
state level. Such vehicles will acquire land and obtain the necessary environmental clearances for
greenfield and brownfield investments.

 Foreign governments to offer funding and technical cooperation

The Indian government seeks an INR 62.6 trillion (US$1 trillion) investment by 2017 to upgrade the
nation’s infrastructure. To that end, it has invited funding and technical collaboration from foreign
governments around the globe. Beginning this year, Japan has committed to investing INR 438 billion
(US$7 billion) each year, over five years, in infrastructure projects in India, including building of smart
cities, new roads and highways as well as renewal of heritage cities. Along similar lines, France has
proposed a credit line of INR 87.6 billion (US$1.4 billion) through the French development agency,
Fabius. The line will be available over three years to fund sustainable infrastructure and urban
development projects in India. To facilitate technical cooperation, India’s Railway Ministry has signed a
memorandum of understanding (MoU) with the Czech Republic and the Association of Czech Railway
Industry for a period of three years, extendable by a year thereafter. Potential cooperation areas under
this MoU include improving railway speeds to 200 kilometers per hour, developing new stations and
modernizing signalling.

 Funds and bonds to raise investment

The Indian government intends to set up the National Investment and Infrastructure Fund (NIIF) with
INR 200.3 billion (US$3.2 billion) to help infrastructure finance companies raise debt. Moreover, these
funds can be used to invest in equity of infrastructure finance companies such as the Indian Railway
Finance Corp. and National Housing Board. The companies can then leverage this extra equity in
manifold ways. The government also plans to introduce tax-free bonds for projects in railways, roads
and irrigation sectors.

Growth Inhibitors

Government may fall short of its infrastructure investment target

The RBI issued guidelines in July 2014 barring banks from investing in infrastructure bonds issued by
other banks, with the goal of preventing risks arising from circular trading (whereby lenders agree to
buy each other’s bonds). This move has made it highly unlikely that the government will meet its target
of raising INR 519.5-619.7 billion (US$8.3-9.9 billion) in infrastructure bonds in the current fiscal year.

High risk could limit private investment

Most private infrastructure players with the capacity to execute large-scale infrastructure projects are
carrying extensive debt and lack the financial strength to invest more. Moreover, having suffered a
slew of bad loans in the sector, banks are cautious about lending to infrastructure players. At the same
time, slow bureaucratic procedures and land-acquisition issues are discouraging private players from
investing in the sector. Even though the government has announced relief for private investors by
revisiting the PPP model and shouldering most of the risk, high debt levels may constrain private
investment in the sector in the coming year.

1.3. Major Indicators

Monitoring infrastructure performance

Some major indicators are:-

 The contribution to the GDP

 The number of people employed
 Expansion of business
 Increasing capacities
The indicators are categorised into six key areas:

 Capacity, access and availability

 Asset or capacity utilisation
 Service quality and reliability
 Asset condition
 Safety
 Efficiency.

Current performance indicators for UK infrastructure are not effective in terms of wider societal needs
and strategic planning, according to a recent report prepared jointly by the iBUILD Infrastructure
Research Centre and the International Centre for Infrastructure Futures. The report concludes that a
new approach to assessing the performance of the UK’s infrastructure is required, using a broader and
more sophisticated set of indicators.

Key findings

The current performance indicators are backwards-looking to the baseline year of 2005 for historical
comparison, and are not helpful in informing strategic decision-making for the future.

There is currently only a limited understanding of the performance of UK infrastructure, providing a

poor basis to retrospectively assess the change in performance from the planned £320 billion
infrastructure investment by 2021.

The purpose of the performance indicators is unclear, stemming from a lack of shared vision for
national infrastructure.

The performance indicators are largely disconnected from the wider societal needs served by
infrastructure, and do not provide information on delivering valued societal outcomes.

Indicators are only reported at national level, so local authorities and regions with underperforming
infrastructure that requires investment could be masked by those performing well.

Methods of aggregating data are focused on specific, narrow measurements, so variations in other
areas can be missed.

Comparisons in performance between different infrastructure systems are difficult to make using the
current indicators.

The indicators are measured within single infrastructure systems, but do not take account of the
interactions and knock-on effects between different systems.

Policy relevance and implications

Infrastructure performance monitoring is crucial to track effectiveness improvements following the

substantial public and private investments in UK infrastructure.
A long-term strategic vision for the UK’s infrastructure, based on stakeholder needs, should be
formulated, including clear articulation of outcomes to be achieved.

Performance monitoring should be explicitly aligned with this long-term strategic vision.

Local and regional infrastructure plans consistent with, and informing, the national infrastructure plan
should be developed as a matter of course.

Information on infrastructure performance of all sectors should be collated as part of local and national
infrastructure planning.

There is a need to review infrastructure systems and their interdependencies, to clarify the drivers of
any given performance indicator and ensure unintended effects and perverse incentives are avoided.

Performance indicators should be regularly reviewed to ensure they remain aligned with infrastructure
strategies and outcomes, and retain relevance in a changing societal context

1. The financial perspective reflects the organization’s stewardship responsibility for capital and
financial resources associated with the operation and preservation of physical assets. Financial
performance indicators are tracked to ensure that services are delivered in an efficient, cost-effective
manner. The financial perspective is linked to the other perspectives through the relationships between
costs and results in achieving the other scorecard objectives. The primary facilities management
competencies include:

• operations and maintenance,

• energy and utilities,

• planning, design, and construction, and

• administrative and support functions.

2. The internal process perspective addresses the key aspects of the organization’s processes for
the delivery of internal services. These processes may include handling of work orders, procurement,
billing, and relationships with suppliers. Measures should indicate that the processes for services are
efficient, systematic, and focused on customer needs. There is an emphasis on identifying internal
opportunities for improvements and measuring results.

3. The innovation and learning perspective addresses key practices directed to creating a high-
performance workplace and a learning organization. In a learning organization, people at all levels,
individually and collectively, are continually increasing their knowledge and capacity to produce the
best practices and best possible result. This perspective considers how the organization’s culture, work
environment, employee support climate, and systems enable and encourage employees to contribute
effectively. There is an emphasis on measuring results relating to employee well-being, satisfaction,
development, motivation, work systems performance, and effectiveness.

4. The customer service perspective addresses how the organization determines the
requirements, expectations, and preferences of customers to ensure the relevance of its services and
to develop new services.
1.4. Macroeconomic Factors which affect the Industry

Jobs And Infrastructure :-

The direct jobs created by the infrastructure investments themselves (e.g. the constructions of transport
infrastructures) are only the tip of the iceberg. There can also potentially be many jobs created through the
increased demand for the core inputs needed for the production of these investments (e.g, in the cement,
asphalt, steel, rolling stock industries. And finally, there is employment payoffs more directly associated with
growth. These include the jobs created by the farmers who can now rely on roads to deliver their products,
industries who can cut their costs by avoiding power outages and delivering their product though better
integrated transport infrastructures and workers in the service industry improving their productivity through
access to fast broadband connections, for instance. 1 This note represents the views of the authors and these
should not be attributed to any of the organizations we are affiliated with, nor to IFC, the World Bank or any of
its members countries or agencies. Any mistake or misinterpretation is ours and ours only. The main purpose of
this note is to assess the extent to which the infrastructure sector can contribute directly and indirectly to the
creation of jobs. It offers first a sense of the sort of jobs that can be created at the project level. Second, it offers
a quantitative assessment of the scope for aggregate job creation as a function of possible growth scenarios and
well as infrastructure specific jobs-- assuming no changes in labor market practices, meaning that past elasticities
of employment to growth drive the assessment of the scope for job creation. The note is organized as follows.
Section 2 provides some anecdotal evidence. Section 3 provides a rough macroeconomic assessment of the
potential for job creation. Section 4 concludes with some operational implications.

In the short run, it will increase inflation. In the long run, it will decrease inflation (or cause deflation), ceteris
paribus.

In the short run, when government spends heavily on infrastructure they will engage many private institutions
and state-owned companies to do the projects. Through multiplier effects, the income they receive as a result of
doing the projects, when they spend it it will be larger than the actual amount. Multiplier effects says that, for
example the infrastructure projects cause USD 1 Billion and 10 companies receive USD 100 million each as a
result of completing the projects. When they spend USD 100 million, amount spend could be higher, says USD
200 million instead of USD 100 million. Thus, multiplier coefficient is 2.In the long run, it will cause price level to
fall or deflation. Spending on infrastructure would make the economy more efficient (eg: higher private
investments, faster and cheaper transportation etc.) and thus, it will shit the Aggregate Supply curve to the right.
Hence, overall price level would fall while national output increases.

Evaluation: It depends on

 Bureacracy
 Amount of spending
 Multiplier effects

1.5 Recent Developments in the Infrastructure Industry

Infrastructure sector is a key driver for the Indian economy. The sector is highly responsible for
propelling India’s overall development and enjoys intense focus from Government for initiating policies
that would ensure time-bound creation of world class infrastructure in the country. Mr Nitin Gadkari,
Minister of Road Transport and Highways, and Shipping, has announced the government’s target of Rs
25 trillion (US$ 376.53 billion) investment in infrastructure over a period of three years, which will
include Rs 8 trillion (US$ 120.49 billion) for developing 27 industrial clusters and an additional Rs 5
trillion (US$ 75.30 billion) for road, railway and port connectivity projects.

Infrastructure sector includes power, bridges, dams, roads and urban infrastructure development. In
August 2016, India jumped 19 places in World Bank's Logistics Performance Index (LPI) 2016, to rank
35th amongst 160 countries.
India needs Rs 31 trillion (US$ 454.83 billion) to be spent on infrastructure development over the next
five years, with 70 per cent of funds needed for power, roads and urban infrastructure segments.

The Indian power sector itself has an investment potential of US$ 250 billion in the next 4-5 years,
providing immense opportunities in power generation, distribution, transmission and equipment,
according to Mr Piyush Goyal, Union minister of coal, power and renewable energy.
The Indian construction equipment industry is reviving after a gap of four years and is expected to grow
to US$ 5 billion by FY2019-20 from current size of US$ 2.8 billion, according to a report@ released by
the Indian Construction Equipment Manufacturers’ Association (ICEMA).
Foreign Direct Investment (FDI) received in construction development sector from April 2000 to March
2016 stood at US$ 24.19 billion, according to the Department of Industrial Policy and Promotion (DIPP).

India is witnessing significant interest from international investors in the infrastructure space. Many
Spanish companies are keen on collaborating with India on infrastructure, high speed trains, renewable
energy and developing smart cities.

 The Asian Development Bank (ADB) has approved US$ 631 million loan to develop the first
coastal corridor, namely the Vishakhapatnam-Chennai industrial corridor, which is expected to
bring manufacturing and export industries to the east coast.
 Silver Spring Capital Management, a Hong Kong-based equity hedge fund, plans to invest over
Rs 2,000 crore (US$ 306 million) in Hyderabad-based infrastructure developer Transstroy India
Ltd, for construction of highways in the country.
 Altico Capital, the non-banking finance company (NBFC) of Clearwater Capital Partners LLC,
plans to invest around US$150 million in the commercial office properties and infrastructure
sector over the next 12-18 months.
 Sovereign wealth funds and global pension funds plan to invest up to US$ 50 billion in Indian
infrastructure sector over the next five years##.
 Airports Authority of India (AAI) plans to develop city-side infrastructure at 13 regional airports
across India, with help from private players for building of hotels, car parks and other facilities,
and thereby boost its non-aeronautical revenues.
 The Asian Development Bank (ADB) and Government of India signed a loan agreement of US$
80 million, which is the third tranche of a US$ 200 million financing facility under the North
Eastern Region Capital Cities Development Investment Programme, and will be invested for
improving water supply, solid waste management and sanitation in the cities of Agartala and
Aizwal, the capital cities of Tripura and Mizoram respectively.
1.6 Major Government Policies for the industry

The Government of India is taking every possible initiative to boost the infrastructure sector. Some of
the steps taken in the recent past are being discussed hereafter.

 The Government of India is planning to boost regional connectivity by setting up 50 new

airports over the next three years, out of which at least 10 would be operational in next year.
 The government plans to invest over Rs 7,000 crore (US$ 1.04 billion) in FY2016-17 to develop
its network in the north-eastern region for better connectivity.
 The Reserve Bank of India (RBI) has allowed companies in the infrastructure sector to raise
External Commercial Borrowings (ECB) with a minimum maturity of five years and with an
individual limit of US$ 750 million for borrowing under the automatic route.
 The Securities and Exchange Board of India (SEBI) has allowed Foreign Portfolio Investors (FPI)
to invest in units of real estate investment trusts (REITs), infrastructure investment trusts
(InvITs), category III alternative investment funds (AIFs), and also permitted them to acquire
corporate bonds under default.
 The NITI Aayog has instructed central public sector units to release 75 per cent of the amount
due to construction contractors and concessionaires of government projects, which is expected
to release over Rs 40,000 crore (US$ 6.02 billion) for projects that are under dispute.
 The Government of Japan, through Japan International Cooperation Agency (JICA), has
committed to provide a soft loan of JPY 19.064 billion (US$ 161.2 million) to Government of
India at an interest rate of 0.3 per cent per annum for the project of pollution abatement of
Mula-Mutha river in Pune, Maharashtra under the National River Conservation Plan.
 The Government of India plans to upgrade India’s airport infrastructure over a six-year period,
starting with exploring alternative airports like Juhu to ease the pressure on current metro
airports.
 Government of India plans to use the new hybrid-annuity model for allocating contracts under
the Public Private Partnership (PPP) projects in highways, Namami Gange and Railway Projects,
which will help overcome the challenges faced by private developers in the Build-Operate-
Transfer (BOT) Toll and BOT-Annuity models.
 Budgetary allocation for Roads and Railways in the Union Budget 2016 has been increased to Rs
218,000 crore (US$ 31.98 billion) with an aim to boost the private investment cycle.
 The Ministry of Road Transport and Highways plans to build five more greenfield expressways
across the country, which are expected to reduce travel time and propel economic growth.
 The Union Ministry of Urban Development has approved an investment of Rs 495 crore (US$ 72
million) under the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) for FY
2015-16 which will be used for water supply, sewerage networks and septage management,
storm water drains, urban transport and provision of green spaces in 13 cities spread over six
states.
 Prime Minister of India Mr Narendra Modi indicated that the government has rolled out stuck
projects worth Rs 4 lakh crore (US$ 58.69 billion) in the past six months (ending November
2015), while stating that infrastructure development is the government's top priority in order to
improve economic growth.
  The Union Cabinet has approved several reforms such as allowing National Highways Authority
of India (NHAI) to extend the concession period for current incomplete projects in build-
operate-transfer (BOT) mode.
 Government of India plans to launch the National Infrastructure Investment Fund (NIFF) with an
initial corpus of at least Rs 40,000 crore (US$ 5.87 billion).
 The Ministry of Urban Development has approved an investment of Rs 19,170 crore (US$ 2.81
billion) for improving basic urban infrastructure in 474 cities in 18 states and Union Territories
(UTs) under Atal Mission for Urban Rejuvenation and Transformation (AMRUT) for 2015-16.
 Department of Industrial Policy and Promotion (DIPP) has set up an online monitoring system
for on-going projects under the Industrial Infrastructure Upgradation Scheme (IIUS).
 The Ministry of Urban Development has decided to allow the use of construction & demolition
waste up to 20 per cent in construction of load bearing items and up to 100 per cent for non-
load bearing purposes. This provision is expected to significantly help in reuse of such waste, in
line with ongoing efforts under Swachh Bharat Mission (SBM).

1.7 Mojor costs heads in Infrastructure Industy

Three types of expenditures are distinguished with regard to national toll-free road network:
•Capacity investment: These expenditures on infrastructure development concern new construction
and extension of capacity of existing infrastructure.
•Maintenance and operational expenditures. Five types of expenditures are distinguished:
•Rehabilitation and preventive maintenance
•Engineering works, split into:
•Expenditures for maintenance and rehabitation
•Expenditures for tunnel safety
•Safety provisions
•Expenditures by ‘local offices’ and winter clearance:
•Expenditures for plantation, foundation, traffic management systems, signalling etc.
•Expenditures for winter clearance
•Other maintenance and operational expenditures on buildings, modernisation of material, movement
of buildings etc)
•Other expenditures on staff, taxes, overhead expenses, general surveys, etc.

Concessionaires manage the toll motorways and are commercial companies that have to produce
general accounting. Concession contracts also ask concessionaires for some more detailed accounts to
describe the specificities of their activities (like financing plans).

These contracts lead to functional accounts showing the following aggregated expenditures:
•Investments:
•New investment: preliminary works (for example surveys, land acquiring, etcetera), building works
•Investments on operating networks: widening of the motorway, improving of standards improving,
new rest places, etc.
•Renewing of fixed assets: e.g. tolling equipment
•Major repairs: Renewal of roadways and structures of bridge and tunnels, mainly by periodic
maintenance
•Routine maintenance and operational expenses: local repairs, information of users on traffic
conditions, winter maintenance, cleaning rest-places, etcetera.
•Staff expenses
•Overhead expenses
•Taxes, fees, corporate tax
•Financing cost
•Profit margin
Despite exhaustive attempts no detailed information on this topic was received from Estonia
.

1.8 Major Players in Infrastructure Industry.

India’s infrastructure sector continues to be a key driver of the nation’s economic progress. Despite
battering through an ever growing gauntlet of challenges like rising interest rates, inflation, sluggish
order inflows and squeezed profitability, the infrastructure sector continues to perform convincingly
better, thanks to a number of companies who stood up the test of time and are creating a legacy for
others to emulate. Construction Week India takes this opportunity to acknowledge the top 30
performing companies in the infrastructure sector shaping the India of tomorrow, today. This story
presents a bright constellation of some of the top performing companies, analysing their growth story
on how they have managed to ride out of the sunset and are at the top, by a mile. It zooms in on
companies which are ahead of the lot, with impressive market capitalisation, order book standing and
diversity of projects on about a year’s horizon (April 2010 to June 2011).
Primarily, our quest was to delve into the performance of the infrastructure industry and hunt for
India’s most admired companies in this space and highlight the critical role played by these true nation
builders. The rationale behind the selection of companies was simple, but with a mix of evaluative
methodologies.

Construction Week India editorial team relied on the prowess of equity research reports, corporate
filings, market perceptions, to name a few to decide on the cream of the crop companies. Initially, 50
companies were picked out. Subsequently, we had to count out some of the companies as they did not
match up with our performance-based prerequisites. How did we do it? We collated information on
the 50 shortlisted companies. To this illustrious list, a filter was applied on the statistics, which was
culled out through in depth research and examination of company filings. The process threw light on
the strong point as well as the Achilles’ heel of every company. Subsequently, the information was
analysed and subjected to a formula in order to figure out which 30 infra companies were best
performing.
The final ranking of the ‘Top 30’ infrastructure companies was based on a comprehensive quantitative
and qualitative analysis of the overall business performance of every company.

No 1 :Larsen & Toubro

With well-capitalised balance sheet coupled with robust execution mechanism, a wide array of
capabilities, integrated operations, strong portfolio of assets and a colossal order book of over
Rs1,30,000 crore makes Larsen & Toubro a proxy to India’s infrastructure story and Construction
Week’s top pick in the sector.
The group continues to hold a unique place in the Indian E&C space as a diversified and leading
engineering player, with exposure in the areas of power, defense, nuclear and equipment.
During 1QFY2012, it posted decent numbers and stands tall on an order backlog of Rs1,36,172 crore. Its
order inflow for 1QFY2012 stood at Rs16,190 crore, up 3.6% year-on-year. Similarly, over 90% of its
order book came from the domestic sector, while Middle East barely accounted for 6%. The share of
the public sector orders in Q1FY12 order book compared to Q1FY11 declined from 47% to 38%, while
the private order backlog rose from 40% to
45%.
The recent order wins (excluded in the order book) by the group are from different sectors, such as oil
& gas, power, roads, etc. Some of the key orders won by the group include Rs3,500 crore gas-based
power plant EPC order from PPN Power, Rs1,400.5 crore GSPC contract for offshore process platform in
the KG Basin and Rs4,100 crore for buildings and factories IC.
During FY11, the group had registered an impressive performance on all important parameters. Its
order inflow witnessed a growth of 15%, and the order Book position stood at Rs 130,217 crore, which
was in excess of two years of backlog. According to reports, its order inflows were also marginally
affected due to holdups in the tendering process, which included environmental approvals, land
acquisition and political issues. The company is also witnessing good traction on the international front
and sees a huge pipeline.
The group expects to clock 25% revenue growth for FY2012 despite several headwinds which are
plaguing the sector. On the order inflow front, the company expects 15–20% growth which appears to
be achievable in view of its leadership position and project diversification.

No 2: Jaiprakash Associates

Jaiprakash Associates (JAL) reported a muted set of numbers for 1QFY2012. The company’s top line
was 0.8% year-on-year to Rs3,097 crore, thanks to the high interest cost, tax rate and persistent
pessimism surrounding the sector.
Its order book stands at Rs55,000 crore, including Rs30,000 crore of real estate, Rs25,000 billion of
Arunachal Pradesh hydro power projects. Its volumes would be well diversified as its operations in new
regions scale-up. Currently, its market mix is concentrated in North and Central India.
The company’s top line revenue declined by 1.1% year-on-year to Rs3,178 crore due to the decline in
construction and real estate revenue by 11.3% and 5.2%, respectively. Its bottom line came in at Rs107
crore.
According to reports, its cement division reported revenue growth of 6.0% to Rs1,527 crore. Further,
the increase in coal prices at the domestic and international level adversely affected the company’s
margin. Similarly, its construction division registered an 11.3% year-on-year decline in revenue to
Rs1,275 crore. The decline was due to problems faced by the Yamuna Expressway project and the
current slowdown in the real estate segment.
After a stunning performance since the last few quarters, its real estate division reported a 5.2% year-
on-year and 41.8% quarter-on-quarter decline to Rs347 crore.
The company has a plethora of big ticket projects in its kitty. It has two contracts worth Rs2,079 crore
to construct the 990MW Punatsangchhu II Hydro- Electric Project, Bhutan. This hydro-electric project
will be jointly implemented by the Royal Government of Bhutan and the Government of India. Its first
contract pertains to construction of diversion tunnel, dam intake and delisting arrangement including
hydro-mechanical works and highway tunnel for a contract value of Rs1,224 crore. The second project
involves construction of head race tunnel from surge shaft end, surge shaft, butterfly valve, chamber,
pressure shafts, power house and tailrace tunnel including hydro-mechanical works for a contract value
of Rs855 crore.

No 3: Lanco Infratech

The group has been on a growth trajectory having a total order book value of Rs 31,016 crore, of which
about 85-90% of its revenues sprouting from the captive business–thermal and solar power.
In Q1FY12, it won the EPC orders worth Rs365.3 crore from Akaz Power to develop 2 x 125 MW gas
based power plant in Al-Anbar province, Iraq. Currently, its power portfolio consists of an installed
capacity of 3,292 MW.
The construction and EPC division of the group has several orders in its kitty like the development of
around 440 km of National Highway on BOT basis and the recent mandate to be a mine developer and
operator (MDO) of Gare Pelma-II coal block of Maha Tamil Collieries Ltd (MTCL). The group’s
construction vertical bagged the first metro project for engineering, procurement and construction
from Chennai Metro Rail Limited.
Its solar vertical achieved the financial closures of the 30 MW PV project in Gujarat, the 5 MW PV and
the 100 MW Solar Thermal projects in Rajasthan. An 80 KW grid-connected solar photovoltaic power
plant built by Lanco Solar at the Indian parliament complex was recently inaugurated.

No 4: Reliance Infrastructure Limited

Reliance Infrastructure is one of India’s largest private sector infrastructure developers and part of the
Reliance Group with revenues of overall assets of Rs 26,050 crore
As of 1QFY2012, the group holds a consolidated net worth of Rs 24,000 crore and an EPC order book of
RS 28,000 crore.
It has in its kitty about 27 infrastructure projects with an overall investment outlay of Rs 45,000 crore.
The major projects are: The Reliance Delhi Airport Line, which is a 23 km line with six stations
connecting New Delhi Railway station via Connaught Place to Airport (T3) & extends to Dwarka;
Mumbai Metro I —a Mass Rapid Transit System(MRTS) project, which connects Versova-Andheri-
Ghatkopar corridor and expected to be completed in 2012; four road projects at Hosur-Krishnagiri,
Pune-Satara, Namakkal- Karur and Dindigul-Samynallore toll roads and distribute 5,000 MW power
which will cover 5.4 million customers in Mumbai & Delhi. The projects are expected to be executed
over the next 2-3 years.
Its power generation units at Dahanu, Samalkot, Goa and Kochi continue to demonstrate significant
improvements across major operational, environmental and safety performance parameters. The
group is developing five transmission projects worth about Rs 7,000 crore, making it the largest private
player in the transmission sector. It has completed two transmission lines of 440 ckt kms associated
with the Western Region System Strengthening Scheme-II with line length of 116 km. These are the
first set of 100 per cent privately owned extra high voltage transmission line in India to achieve
commercial operation.
The group also made substantial progress in the remaining transmission projects including the Parbati
Koldam 40 kV transmission line currently being executed by our joint venture company with Power
Grid Corporation of India Limited and in which it holds 74% equity stake.
Reliance Energy Trading Limited (RETL), the trading arm of the group has emerged as a favoured trader
for trading of power from captive/ independent power plants and has been ranked among the top five
trading licensees in terms of volume.

No 5: GMR Infrastructure

For 1QFY2012, the group posted net revenue growth of 51% to Rs2,082 crore with a total order book
size of Rs24,000 crore. Its EPC revenues stood at Rs168 crore, up 415%.
Similarly, its net revenue of Male International Airport, which was taken over in November2010 stood
at Rs 225 crore. It earned higher revenues from the energy sector, which stood at Rs103 crore, up 18%.
The quarter started on a strong note as its airport assets experienced a robust traffic growth and the
energy assets turned out quite healthy. The second tranche of USD 131 million was concluded in the
airports sector, thus concluding a total private equity investment of USD $331 million in the Airports
Holding Company.
It also embarked on a wide range of projects during the quarter–achieved financial closure of 800 MW
Island Power at Singapore and 25 MW solar project at Gujarat, started construction for the 1370 MW
Chhattisgarh thermal power project and 25 MW solar power project, commissioned 2.1 MW Gujarat
wind power project, achieved higher PLF than planned in the 388 MW Vemagiri plant and the 220 MW
barge-mounted Kakinada plants due to enhanced gas availability.

No 6: Punj Lloyd

For 1QFY2012, the group posted 30.5% year-on-year top-line growth to Rs2,263 crore. The group
received orders worth Rs5,627 crore as against Rs9,978 crore in FY2011 and its current order backlog
stood at Rs23,938 crore.
According to reports, the group’s order book is mainly dominated by the infrastructure (37.8%) and
pipeline (25.6%) segments. Geographically, South Asia contributes 49.7% to the company’s order book,
followed by Asia Pacific and Africa, which contributes 23.6% and 16.6%, respectively.
However, on the earnings front, it reported loss of Rs12.7 crore compared to the loss of Rs30.6 crore in
1QFY2011 due to high interest cost and tax.
Further, PL Engineering entered into an asset purchase agreement through its UK subsidiary, Simon
Carves Engineering Ltd. (SCEL), for the transfer of certain assets, contracts and employees of Simon
Carves to SCEL. On the pending arbitrations and auditor qualification on various projects, there was no
progress during the quarter.
Punj Lloyd inked pact with Qatar Solar Technologies to set up first Polysilicon plant worth US$1 billion
in the Ras Laffan Industrial city of Qatar. The project is expected to be commissioned by mid 2013.The
project involves manufacturing 8,000 MTPY of high purity of solar grade Polysilicon.
Punj Lloyd Group also won the thermal power contract worth Rs1,195 crore from the Haldia Energy
Limited, West Bengal. The project involves building the 2X300 MW capacity power plant.
No 7: IVRCL

IVRCL Infrastructure reported 6% year-on-year top-line growth to Rs1,124.3 crore, which is considered
quite disappointing its 1QFY2012 performance. On the operating margin front, the company also
posted a cheerless margin of 7.6% owing to commodity price pressures, high labour charges and
ineligibility to pass on escalations in water projects primarily in Tamil Nadu region.
Further, IVRCL reported a shocking 85.0% year-on-year decline on the earnings front to Rs4.2 crore
primarily on account of low margin and higher interest cost.
What is heartening is that the company’s order book stands at Rs21,550 crore including L1 projects
worth Rs3,300 crore. The projects are diversified across six segments. Additionally, the company has
not included Rs1,900 crore project from Saudi Arabia in its order book during the quarter as it was not
yielding results from some time. After adjusting for projects of Rs3,300 crore and Goa-Maharashtra
road project, the order book stands at Rs15,150 crore.
On the execution front, the growth seems to be marred by headwinds due to the slowdown in the
execution. This is because both IVRCL’s suppliers and the sub-contractors are facing funding issues. As
far as the top line growth is concerned, the company reported 1.6% growth year-on-year to Rs1,124.3
crore.

No 8: Hindustan Construction Company

Although HCC’s Q1FY12 net profit declined 89.87% in the quarter ended June 2011 on the back of the
higher debt level and increased interest rates, it has its in kitty order inflows worth Rs17,007 crore
excluding two L1 contracts worth Rs. 2,077 crore.
The order book consists of an assortment of projects, such as hydro (42%), transport (22%), water
(20%), nuclear and others (16%). Although, higher interest cost has made a dent into its bottom line,
the group registered top line of Rs1,0579 crore.
On the project front, HCC Infrastructure Company—a 100% subsidiary of the group planned to raise
Rs2.40 crore by diluting a 14.5% stake in its wholly owned subsidiary, HCC Concessions. The transaction
value of HCC Concessions Ltd stands at Rs1,650 crore and has Rs5,500 crore portfolio, which includes
six NHAI concessions comprising an annuity project and five toll roads.
The group in a joint venture with Alstom was awarded a contract worth Rs 18.43 billion from THDC
India (THDCIL) to construct Tehri Pumped Storage Plant in Tehri, Uttarakhand. It also received a letter
of acceptance- cum-work order from Sardar Sarovar Narmada Nigam, Gandhinagar, for construction of
canal earthwork, lining, structures and service roads of the distributaries and minors of Limbdi Branch
Canal at Limbdi, Gujarat.

No 9: NCC

The group posted a decent turnover of Rs1,612 crore during the 1st quarter of 2011-12 as against
Rs1,404.8 crore in the corresponding quarter of the previous year, registering a growth of 15% over the
previous period.
Despite reeling under pressures like increasing debt levels and delays in financial closure for its power
plant, its current orders aggregate at Rs1,359 crore and the overall order book stands at Rs16,189
crore. The projects are spread across nine verticals and the major contributors include building, water
and power segments. During the last fiscal, its order book stood at Rs17,000 crore.
The group won awards aggregating to Rs629 crore in various segments. The first order worth Rs399
crore was from the Water Resources Division Raigarh, Chhattisgarh for the construction of Saradih
Barrage with vertical lift gates. The second order worth Rs159 crore came from Maharashtra State
Electricity Distribution Co. Ltd (MSEDCL), Mumbai, which involved turnkey contracts for single phasing
scheme. The last order valued at Rs71 crore was from the Bharat Coking Coal Ltd, Dhanbad for removal
of over burden, extraction and transportation of coal.
According to reports, the group is also in the process of wining EPC orders worth Rs5,000 crore in FY12
from the Nelcast power project. Through its subsidiary, NCC Power Projects, it picked up a 55% equity
stake in the Nelcast Energy Corporation Ltd (NECL), which is developing a 1,320 MW thermal power
project at Krishnapatnam worth Rs7,000 crore.

No 10:Gammon India

The company which posted an impressive profit of 69.21% in the quarter ended March 2011 now
seems to be buffeted with some headwinds as its net profit declined 4.21% in the quarter ended June
2011.
Surprisingly, the company is reported to be weighed down with quite a few woes—low-margin legacy
orders, working capital needs which increased debt, depressed FY11 order intake and earnings.
However, the company seems to be confident to face all challenges, thanks its strong order book
position of around Rs 15,100 crore as on June 2011. The company also has a stimulating basket of
ongoing infrastructure projects worth Rs 95,369 crore in the road, port and the energy sectors.
Out of the eight projects in the road sector, three are toll based projects including new Mattancherry
bridge, which has been in operation since September 2001; Vadape-Gonde project under development;
Mumbai Nasik Expressway in operation partly since end May 2010 and has completed the entire
highway stretch from Vadape to Gonde by end May 2011 and Godavari Bridge project, which is
currently in the construction stage.
The three projects in the port sector are Visakhapatnam port project—development of two berths at
Visakhapatnam Port; Mumbai offshore container terminal, which is under development and Paradip
iron ore berth project which is development.
The three projects in the energy sector are 66 MW Rangit II hydroelectric power project, which is now
in the process of finalizing the construction contractor; 30 MW Pravara cogeneration power project
and 261 MW Youngthangkhab hydroelectric project.

No 11: Simplex Infrastructures Limited

During the quarter, the group’s revenue grew 7% to Rs1,260 core, from Rs1,174 crore in the same
quarter last year. Interestingly, its order book stood at Rs1,4348 crore, which is marginally lower than
its March 2011 position.
Similarly, its consolidated net sales were at Rs1,130.9 crore and its consolidated operating profit was
Rs1,16.1 crore, while the net profit stood at Rs28.4 crore.
Its order inflow during the quarter stood at Rs873 crore. Additionally, there is L1 position of Rs1,898
crore as of June, out of which, Rs936 crore was converted into orders during July 2001, which recorded
 inflow of Rs1,269 crore.
The largest pure play civil construction and engineering contractor successfully completed over 2,400
projects in India and abroad. It also has presence across various construction verticals, including piling,
industrial plants, power plants — thermal, nuclear, hydel, power transmission, urban infrastructures
and utilities —metro rails, airports, urban sewerage and water systems, buildings and housing, marine
ports, roads, railways, bridges, elevated road and rail corridors.
It recently completed the 11.5 KM longest elevated expressway road corridor at Hyderabad. It also won
several prestigious contracts comprising construction of 12 KM long flyover from Prince of Wales
Museum to Anik Panjarapole, Wadala and Lalbaug, in Mumbai, the 12.5 KM long largest flyover of India
in Chennai, Jatrabari -Gulsitan flyover in Bangladesh and similar projects in the Middle East countries
like Oman, Qatar and Dubai.

No 12: GVK Power & Infrastructure Limited

The group posted a net loss of Rs34 crore for the quarter ended June 30, 2011, as compared to net
profit of Rs9.73 crore for the quarter ended June 30, 2010.
Interestingly, the company which builds roads, airports and power plants has an order book of around
Rs 12,000 crore.
Last fiscal, its total income increased by 7% to Rs1,943.19 crore from Rs1,815.82 crore in the previous
year. Its power assets contributed an income of Rs1,712.93 crore (88.15% of the total income),
compared to Rs1,603.28 crore in the previous year. This was mainly attributable to the full year
operation of Jegurupadu Phase II and Gautami Power Plants in the current year. Its transportation asset
contributed an income of Rs189.16 crore (9.73% of total income) compared to Rs170.75 crore in the
previous year. Other segments contributed Rs41.10 crore (2.12% of the total income), compared to
Rs.41.79 crore in the previous year. the airport assets (Mumbai and Bangalore airports) contributed to
its net profit of Rs110.93 crore as compared to Rs51.68 crore in the previous year.

1.9 MAJOR GROWTH STRATEGIES ADOPTED BY THE COMPANIES

The infrastructure sector in India has evolved from purely Government funded projects to newer
business models involving partial or complete ownership of the private sector.

INDIAN CONSTRUCTION INDUSTRY GROWTH

 By FY20, construction equipment industry’s revenue is estimated to reach to US$ 5 billion.

 Revenues increased at a CAGR of 8.38 per cent during FY07- 14 and is further estimated to rise
at a CAGR of 2.34 per cent between FY07-20, owed to the rapid infrastructure development,
undertaken by the Government of India.
 In FY16, India construction equipment industry grew at a YoY of around 3.45 per cent over the
previous year.
Total infrastructure spending is expected to be about 10 per cent of Gross Domestic Product (GDP)
during the 12th Five-Year Plan (2012–17), up from 7.6 per cent during the previous plan (2007–12).

Increased impetus to develop infrastructure in the country is attracting both domestic and
international players. Private sector is emerging as a key player across various infrastructure segments,
ranging from roads and communications to power and airports.

In order to boost the construction of buildings in the country, the Government of India has decided to
come up with a single window clearance facility to accord speedy approval of construction projects.

Significant allocation to the infrastructure sector in the 12th Five-Year Plan, and investment
requirement of US$ 1 trillion is expected to create huge demand for construction equipment in India. In
the road’s sector, the government’s policy to increase private sector participation has proved to be a
boon for the infrastructure industry with a large number of private players entering the business
through the public-private partnership (PPP) model. During the next five years, investment through PPP
is expected to be US$ 31 billion.

Some of the key issues plaguing the sector are:

1. Land acquisition and environmental clearance
2. Lack of coordination between various Government agencies
3. Inappropriate structuring of the projects, particularly of demarcation of risks and rewards between
Government and private sector
4. Lack of a proper dispute resolution mechanism between private players and government agencies
5. Debt burden of infrastructure developers, as a consequence of execution delays and irrational
bidding

Future growth areas for the sector

The proposed investment over the next five years are ~ INR 56,00,000 Cr, with nearly half expected to
come from private players. While sectors like road and power are expected to attract a large share of
the proposed investments, newer opportunities are likely to appear over the next few years. One of the
examples of a large planned infrastructure development is the Delhi-Mumbai Industrial Corridor,
envisaged to accommodate large industrial zones, development of smart cities and creation of logistics
network. Opportunities are also expected to arise in the area of urban infrastructure development,
such as large urban transport and water supply projects in urban cities, driven by the rapid pace of
urbanization.
1.10. Financial Analysis of the Industry

INFRASTRUCTURE SECTOR 1

52Week High 52 Week Dividend

Company Name CMP EPS (TIM) PE Ratio CPS( TIM) PC Ratio Low Yield% Market cap
Gujarat Bitumen 28.75 0.03 958.33 0.03 958.33 37.20 18.70 0% 14.3

BEML 1232.75 8.18 151.07 20.94 58.87 1324.40 770.15 0.32% 5,133.73

Titagarh Wagons 124.80 1.09 114.50 1.95 84 186.40 84.00 0.84% 1,440.34

ABBlndla 1114.00 16.93 65.80 24.48 45.51 1432.70 950.00 0.33% 23,606.59

Sadbhavlnfra 101.30 1.55 65.35 1.55 85.35 120.40 68.30 0% 3,588.04

Abhishek Infra 33.45 0.84 52.27 0.84 52.27 64.50 10.00 0% 10.8

NBCC (lndla) 262.45 5.18 50.67 5.22 50.28 299.20 162.00 0.78% 15,747.00

Rel Ind Infra 394.80 7.89 60,04 18.06 24.8 639.76 322.10 0.89% 696.22

Texmaco Infra 44.70 0.92 48.59 1.12 39.91 46.85 27.50 0.45% 569.60

Taxmaco Rall 113.90 2.50 45.58 3.09 36.88 154.70 89.50 0.22% 2,395.71

Sadbhav Engg 271.15 7.88 34.41 12.83 21.13 389.95 198.45 0.28% 4,852.14

Tnermax 812.85 23.83 34.11 28.94 28.09 969.65 691.00 0.74% 9,685.62

Yuranus Infra 8.01 0.18 33.39 0.18 33.39 12.40 3.82 0% 2.1

Engineeralnd 148.15 4.54 32.63 4.91 30.17 169.90 71.63 2.7% 9,983.43

IRB Infra 212.15 6.74 31.48 6.74 31.48 269.30 177.50 1.89% 7,456.01

MEP Infra 41.40 1.48 28.38 1.89 24.5 62.80 34.00 0.48% 873.0

BGREnergy 133.55 5.38 24.82 8.54 15.64 143.60 89.40 0% 963.72

ILandFS Trans 110.90 4.91 22.59 5.38 20.89 124.80 64.00 1.8% 3,643.17

AdaniPortB 286.35 13.06 21.93 15.58 18.38 317.00 169.65 0.38% 59,301.70

Va Tech Wabag
491.95 22.50 21.86 24.71 19.91 734.00 409.30 0.81% 2,6114.16
Larsen 1393.50 71.70 19.44 82.41 18.91 1815..00 1016.60 1.31% 129,988.53

Hinduathan Urbe 811.00 45.96 17.65 136.30 5.95 1470.00 10.00 0% 117.0

Siemens 1159.50 81.11 14.30 87.47 13.26 1355.40 989.00 2.89% 41,292.14

Brahma Infra 28.o5 1.98 13.29 6.78 3.84 43.95 15.10 0% 75.5

Power Mech 442.60 49.63 B.92 76.08 5.82 701.00 423.00 0.23% 651.10

Arvlnd Smart 72.o5 8.77 8.22 9.07 7.94 125.20 62.00 0% 188.0

lehaan lnfrastr 25.50 0.00 0.00 0.00 0 25.50 10.00 0% 16.51

Era Infra Eng 1A3 -40.87 4.04 -34.75 4.04 4.87 1AO 0% 47.42

PunJ Lloyd 20.50 -36.30 4.56 -29.28 4.7 31.85 18.90 0% 680.8

Jaiprakash AlJso 9.99 -14.81 4.fi7 ·11.06 --0.9 13.75 5.30 0% 2,430

MMSlnfra 2.19 -2.17 -1.01 0.13 18.85 4.81 1.90 0% 1.92

Lanco lnfratech 3.80 -2.34 ·1.62 -1.93 -1.97 7.78 3.31 0% 1044.

GMR Infra 12.64 -3.88 -3.26 -3.86 -327 18.60 9.84 0% 7,629

Jaypeelnfra 8.03 -1.99 -4.04 -1.76 -4.59 13.73 5.34 0% 1,115