Madhya Pradesh – Destination Unveiled

Possibilities of development of tourism

project through PPP in MP

A Presentation By

IL&FS Infrastructure Development

Corporation Ltd.
May 2008
 In this presentation
1. Tourism in India

2. Tourism in Madhya Pradesh

3. Public Private Partnership ( PPP)

4. Project Development

5. About IL&FS

6. Project Development & Promotion Partnership

PDPP

7. Select Success Stories

8. Conclusion
Tourism in India – Some Facts & Figures
 Tourism in India

 JBIC ranked India as the fifth most attractive

investment destinations.
 Conde Nast Traveler, one of the world’s most
celebrated travel magazines ranked India amongst
the top tourist destinations of the world.
 Tourism is one of the third largest net earner of
foreign exchange for the country and also one of the
sectors, which employs the largest number of
manpower.
 India has significant potential for becoming a major
global tourist destination.
 Tourism in India – Figures

 0.8% share of world market

 Tourists (2006)
 4.6 million (International)
 382 million (domestic)

 Employment
 Direct - 10.7 million
 Indirect – 24.4 million

 Export earnings ~ US $ 9.6 bn 2006

 Contribution to GDP
 Direct 2%
 Overall 5.9%
FOREIGN EXCHANGE

Tourism is one of the third largest net earner of foreign

exchange for the country (2001-02):

- Gem & Jewelry US$ 7.40 Bn.

- Readymade Garments US$ 5.50 Bn.
- Tourism US$ 3.30 Bn.
EMPLOYMENT

Every Rs.1 million ($25,000) invested creates…

• Tourism (directly) 47.5 Jobs

• Tourism (indirectly) 89 Jobs
(sub-sector of hotels and restaurants, transportation etc.)
• Agriculture 44.6 Jobs
• Manufacturing 12.6 Jobs
 Tourism in India : Key Potential

•World class cultural and natural heritage tourism assets

•Multi-themed product development opportunities
•Strong global, regional and national tourism market growth prospects
•Strong potential to increase market share
•Potential to go beyond the 3 S’s of tourism – experience tourism
Tourism in India – Major concerns

 Approach & Connectivity

 Lack of Proper Infrastructure

 Lack of Information - Marketing

 Mismatch between demand and supply

 Poor availability of trained manpower (guides, hospitality)

. Regulatory issues – coordination between departments

Need – Make projects lucrative for private sector Investment

Tourism in Madhya Pradesh
 A Glimpse of Tourism in Madhya Pradesh

 Kanha is the largest Wildlife Sanctuary in Asia

 Kahjuraho has some of the most famous Sculptures in the world
 Bhimbeteka is the oldest Cave Paintings in the world
 Sanchi houses the oldest Buddhist Stupa in the world
 9 national parks and 25 game sanctuaries out of which four are major tiger reserves.

 Sacred rivers of Narmada, Tapti, Son and Kshipra have a string of religious places located
on their banks.

 Pachmarhi one of the most beautiful hill stations.

 Tourist festivals displaying variety of folk and performing arts at Khajuraho, Orchha,
Pachmarhi, Indore-Ujjain (Malwa) and Bhopal.

Khajuraho Kanha National Park Bhimbeteka Sanchi Pachmarhi

 Major Tourism Circuits
On the basis of the proximity of
destinations and linkages between
them, State Government has identified
4 major tourist circuits in the State:

 Gwalior - Shivpuri - Orchha - Khajuraho

 Indore - Ujjain - Maheshwar -
Omkareshware - Mandu
 Jabalpur - Bhedaghat - Mandla - Kanha -
Bandhavgarh
 Bhopal -Sanchi - Bhojpur - Bhimbetka -
Panchmarhi
 Attractions along key circuits

Heritage Tourism Gwalior, Orchha, Khajuraho,

Sanchi, Mandu,Datia, Burhanpur etc
Pilgrim Tourism Ujjain, Maheshwar, Omkareshwar, Chitrakoot, Amarkantak,
Sanchi, Orchha, Amarkantak etc.
Eco & Adventure Pachmarhi, Kanha, Bandhavgarh, Panna, Satpura, Pench
Tourism Valley National Parks, Tigra Lake (Gwalior), Upper Lake
(Bhopal), Gandhi Sagar (Mandsaur) etc
Leisure & Business Pachmarhi, Khajuraho, Bhopal, Gwalior, Indore, Mainpat,
Tourism Tamia, Jabalpur etc.
 Investment Requirements –
Tourism Perspective Plan & ADB Study
PERIOD INVESTMENT REQUIREMENTS (RS. CRORE)
Short Term (1-5 years) 308.30
Medium Term (6-10 years) 185.55

Long Term (11-20 years) 484.48

Total (Rs. Crore) 978.33 (Rs. Crore)

Source : Tourism Perspective Plan, MoT

Source : ADB India Tourism Infrastructure Study, 2007

 Initiatives Of Madhya Pradesh Tourism

• MP has numerous tourist attractions.

• Focus on positioning MP in the national &
International media .
• MP was awarded the National Tourism Award 2007-08.
• Some of its recent initiatives include:
– Heritage Meet for heritage property owners
– Carnival in ‘Tourist Hubs’
– Integrated national media campaign
Public Private Partnership ( PPP )
 PPP Approach

Goal  Attract private investments for infrastructure projects

Need  Leverage Budgetary Resources

 Need to improve efficiency in service delivery

PPP approach  Private Sector contribution for:

- Financial investments
- Management practices
- Efficiency in service delivery
 Public Sector contribution limited to:
- Financial gap funding
- Providing institutional commitment to project
Advantages  Attracts market investments
 Reduces cost to public sector
 Improves service delivery
Why Public Private Partnership ?
“ PPPs enable the public sector to benefit from commercial
dynamism, the ability to raise finances in an environment of
budgetary restrictions, innovation and efficiencies, harnessed
through the introduction of private sector investors who
contribute their own capital, skills and experience ”
 Advantages of PPP
 Acceleration of Infrastructure Provision
 Faster Implementation
 Value for Money
 Partnership Building
 Enhanced Public Management
 Genuine Risk Transfer
 Output Specification
 Asset Performance & Reduced Costs
 Performance-Related Reward
 Private Investment Promotion
 Improved Quality of Service
 In Short, The Key Objective:

Expanding the possibilities for efficient infrastructure provision

through ‘Public-Private Partnership’

Partnership Private
Government
Sector

Investments that are

economically & socially beneficial
Project Development – A step beyond consultancy
Challenge of PPP

Projects Capital

The Missing Link – Project Development

 Project Development: What it
is (1/2)

 Project concept
 Technical & Financial Evaluation
 Statutory & Regulatory Approvals
 Approvals for various grants & subsidies
 Development of various contracts
 Setting up of a Project Company (SPV)
 Project Development: What it is (2/2)

 Vendor Development
 Interaction with FIs
 Bid Documents & Bid Process
Management
 Selection of Operator
 Facilitation for financial closure
 Hand holding during implementation
Project Development: What it is not

 Construction and operation of a

project:
 That is to be done by the selected
bidder
 Mechanism leading to privatization
Project Development: Why
 To mitigate technical and financial risks
by association of expert bodies
 To manage bottlenecks related to
approvals
 To obtain best value of the project for the
state
 To minimize the implementation time for
a project
 To leverage resources of government:PPP
 PPP leads to building up of capacity of
local people
 Project Development: What it needs

 A project anchor like State Government

 A project development agency
 A project development fund
 1-3% of the project cost and
 To be recovered from the successful bidder
 Upfront finalization of legal agreements and
bidding criteria by the project anchor
Project Development and
Promotion Partnership (PDPP)
 PDPP Arrangement
 Key Features
 Partnership for development with State Governments
 Hands on mode of operations
 Sharing of Risks and Rewards (result-oriented)
 Mixture of Govt. approach & Private efficiency
 Key objectives
 Need assessment for development
 Integrated development
 Public Private Partnership
 Leveraging limited public resources with private
investments
 Bringing in private sector efficiency and management
skills
 PDPP Approach

 Identification of key development needs & potential

projects
 Integrated Development through Project Development
 Phased implementation
 Potential benefits to be staggered
 6-12 m, 1-3 years, more than 3 years
About IL&FS Infrastructure Development Corporation
 Genesis

 Mandate:
 Commercialization of infrastructure projects
 Value added financial services

 Initial JV format:
 Central Bank of India (CBI)
 Unit Trust of India (UTI)
 Housing Development Finance Company Limited (HDFC)

 IL&FS formally commenced business in 1988

Current Shareholding

Name %
Government Shareholding
-Life Insurance Corporation OF India 26.98
 Central Bank of India 9.18
 State Bank of India 7.68
 Abhu Dhabi Investment Authority 12.73
Sub-total 56.57

Private Shareholding
 Housing Development Finance Corporation 13.10
 ORIX Corporation, Japan 23.82
 IL&FS Employees Welfare Trust 6.51
Sub-total 43.43

TOTAL 100.00
 IL&FS Infrastructure Development.
Corp. Ltd. (IL&FS IDC)
 100% subsidiary of IL&FS

 Project Development Advisory arm

 More than 200 professionals

 Executing Project Development Mandates in ~ 20 states

 IL&FS / IIDC provides Complete Process and Programme

Management from the ‘Concept’ Stage to ‘Implementation’
We are ‘Project Developers’ & not just Consultants
 Sectoral Expertise

 Power Water Special Economic Zones

 Telecom Sanitation Solid Waste Mgt

 Ports Sewerage Environment

 Airports Urban Infrastructure Rehabilitation of Assets

 Roads & Bridges Health E Governance

 Tourism Education Municipal Finance

 In each sector, IL&FS has established specific replicable, stand alone,

prototypes
 Representative Government
Partnerships
 Government of India  Central Public Sector
(Ministries) Undertaking

 Commerce  ONGC
 Textiles  Coal India Limited
 Information Technology  MMTC

 State Governments

 Tripura Assam Nagaland

 Uttranchal Jharkhand Chattisgarh
 Tamil Nadu Andhra Pradesh Kerala
 Karnataka Orissa Madhya Pradesh
 Maharashtra Gujarat Rajasthan
 Geographical spread

Srinagar
Shimla
Chandigar
Dehradun
h
Delhi Kathmandu
Gangtok
Jaipur Guwahati
Kota Patna
Rajkot Agartala IL&FS IDC has offices at:
Ahmedabad Ranchi
Bhopal Kolkata Mahindra Towers, New Delhi
Vadodara Raipur
(corporate head office)
Bhubaneswar
Mumbai Front offices at:
Hyderabad Jaipur, Raipur, Patna, Guwahati,
Go Belgaum
Calcutta,Ahmedabad, Mumbai,
a
Bangalor Bhopal, Vadodara, Rajkot,
e Shimla, Ranchi, Tirupur,
Chennai
Bhubaneshwar, Banagalore,
Tirupur Hyderabad, Chennai, Chandigarh,
Thiruvananthapuram
Dehradun,Thiruvanthapuram, &
Kathmandu (Nepal)
 Select PDPP Arrangements
 Andhra Pradesh
 Assam
 Bodoland Territorial Council (BTC)
 Chhattisgarh
 Himachal Pradesh
 Jharkhand
 Kerala
 Orissa
 Punjab
 Tripura
 Uttaranchal
 Gujrat
 West Bengal
 Karnataka
 Strengths of IL&FS IDC

 Have several Success Stories to tell

 Experience in structuring projects in PPP formats
 Linkages with Major Private Sector Developers - Good
will in the market and confidence of industry in IL&FS
 Strong relationships with Central Government
 Associations with State Government clients
 Associations with Financial Institutions and multi
laterals
 Ability to draw upon diversified services from IL&FS
Group companies
 Ability to tie up and utilise local resources
Select Success Stories
Jal Mahal Integrated Tourism Project

 Project Scope:
Development of Jal Mahal
and Mansagar Lake area
into a sustainable, eco
friendly tourism
destination Including lake
restoration, monument
conservation and lake
precincts development
 Project Cost: Rs. 200
Crores
 Concession agreement
signed
 Development of Tijara Fort

 Project Scope:
Development of
tourism and hospitality
facilities within Tijara
Fort
 Project Cost: Rs. 25.0
crores
 Private Sector partner
selected
Albert Hall Museum: O&M

 The Project:
 restoration and conservation of the Museum

building and conservation and documentation of

the antiquities contained therein.
 PSP to co-finance the facilities and O&M

 Govt of Rajasthan would continue to hold the

museum inventory on its books.
 Lakes’ Restoration and Management

 GoR has identified 5

lakes for undertaking
Detailed studies:
 Nakki – Mt. Abu

 Fatehsagar, Pichola

– Udaipur
 Annasagar – Ajmer

 Sarovar - Pushkar
Conservation of Quila Nabha
 Quila is 18th century historical fort
located in the heart of the walled
city of Nabha, Punjab.
 Unsolicited Proposal received from
Nabha Foundation, a Trust
incorporated by Khemka Family
 Project structured on Swiss
Challenge
 Restoration and Conservation of
Quila Complex and Reuse as the
Business School
 Lease Period : 66 years
 Minimum Investment for
Restoration : Rs 15 Cr
Rajinder Kothi
 Redevelopment of Rajinder
Kothi at Patiala in Punjab as
Heritage Hotel
 Restoration and Conservation

of the Property
 Reuse of Property as
Heritage Hotel
 Lease Period : 30 years
 Nimrana Hotels Pvt Limited
selected as concessionaire
through competitive bidding
 Agartala Budget Hotel: Milestones

 Land Allotment from GoT

 Roots Corporation Limited set up
“Ginger” Hotel.
 Project Started Commercial
Operation from 21st August, 2007.
 NEC Grant of Rs. 9 million through
State Government as Viability Gap
Funding. Already released to Roots
Corporation.
1st hotel project promoted by reputed
Hospitality chain in the NER
Guwahati Budget Hotel: Milestones

 Land Identification & Allotment

 Roots Corporation agreed to set up
“Ginger” Hotel.
 Agreement signed with GoA in January
07.
 Project construction started –
foundation completed.
 Hotel to be commissioned by October
2009.
 Tezpur Budget Hotel: Milestones

 Feasibility Studies completed

 Land Identification & Allotment
 Sarovar Group agreed to set up three star
category hotel in Management Contract.
 Developer identified - Mentok RI Projects Pvt.
Ltd has tied up with Sarovar.
 Hotel to be commissioned in 24 months.
 Crowborrough Hotel: Milestones

 Mandate received from MTDC

 Feasibility Studies Completed
 Project Structuring – approved by
GoM/MTDC
 Bid Process Management completed
 Private Developer selected.
 However the 3rd highest
bidder went to court and presently the
matter is subjudice
 Budget Hotel at Dimapur

 GoN has given mandate for conversion of existing

Dimapur Tourist Lodge into a Hotel & Commercial
Complex.
 Feasibility Study Completed.
 Project Structuring in process
 Bid Documents approved by GoN.
 Awating clearace of part land with
Indian Airlines
 Solang Nala Ropeway Project

 Project Size: Rs 1200 mio

 Project links Solang to Manali
 Passenger Ropeway with provisions ski accessories
 Restaurants at Lower and Upper Terminal Points.

 Upgradation of existing Bar Lift

 Preparation of Ski slopes

 Establishment of Ski-centre

 Area Management including Environment

Management
IIDC partnered with Himachal Govt. to identify developer.
Agreements signed with Govt. realising higher share of revenues
from project compared to suo moto bid received initially
 International Convention Center, Hyderabad
 Hyderabad International Convention
Center Project developed by IL&FS IDC is
operational since January 2006
 Developer: Emaar Properties PJSC,
Dubai
Convention and Exhibition- 3,000+ pax
Business hotel- 300 room
A residential community encompassed
around a 18 hole world-class golf course
Implementation by 2 SPVs through a
Private Sector Developer
Project Cost : Rs. 308 Crore
Role of IL&FS IDC: Comprehensive
Project Development advisory to GoAP
 International Convention Center,
Thiruvananthapuram
 Status - At award stage: Preferred bidder has
been identified (July 2006)
 Project Structure
 Convention Center-1500 pax plenary, 500 pax hi-
tech hall, Exhibition spaces
 Hotel/Resort/Service Apartment- 150 rooms

 Retail space/Theme Park- upto 7000 sq.m.

 Implementation by a private sector led SPV with

equity holding by Government of Kerala
 Project Cost: Rs. 140 Crore
 Role of IIDC: Comprehensive Project Development
advisory services to GoK
Conclusion
 Conclusions

 Need to develop tourism infrastructure

 PPP is the best mode
 PDPP and Project Development are the tools
for converting projects from paper to ground
 Government’s role should be limited to
providing land, regulatory issues to avoid over
exposure and exploitation
 This approach has financial benefits as well as
improvement in the service sector