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Infrastructure Development in India: Current Status & Future Direction

Professor N. S. Govinda Rao Memorial Lecture


February 2009

Dr. A. Ramakrishna,
Former President & Deputy Managing Director, Larsen & Toubro Limited Director, International Infrastructure Consultants Pvt. Limited (IIC)

Issues to be discussed
1. 2. 3. 4.

Global Infrastructure outlook & India position Macro overview of Indian Economy Indian infrastructure & Construction Industry outlook Infrastructure Sectoral Outlook & Policy Initiatives: Transportation (Roads, Ports, Railways, Airports), Power, Real Estate & Townships Key Indian Construction Industry Players Key Success Factors driving Indian Construction Industry Strategies for Successful Entry for Foreign Companies International Infrastructure Consultants (IIC)

5. 6. 7. 8.

Global Trend in Infrastructure & India Position

Infrastructure Global Outlook


GDP= US$ 50 Trillion Infra. Spend as a % of GDP = 0.5% Infra. Spend pa = $500B United States

China

GDP= US$ 3.6 Trillion Infra. Spend as a % of GDP = 14% Infra. Spend pa = $500B

GDP= US$ 1.05 Trillion Infra. Spend as a % of GDP = 5% India Infra. Spend pa = $50B

Infrastructure Global Outlook


GDP= US$ 50 Trillion Infra. Spend as a % of GDP = 0.5% Infra. Spend pa = $500B United States

53,000 miles of Expressways

China

GDP= US$ 3.6 Trillion Infra. Spend as a % of GDP = 14% Infra. Spend pa = $500B

Growth in China Infra spend 20% pa for the last 30 years Much of Chinas recent stimulus Package of $600B will go towards Highways, Railroads, Airports 30,000 Miles of Expressways built In the last 10 years Another 25,000 Miles planned by 2020 GDP= US$ 1.05 Trillion Infra. Spend as a % of GDP = 5% India Infra. Spend pa = $50B Indias Expressways, current & Proposed are less than 1,000 KM

Infrastructure Global Outlook


GDP= US$ 50 Trillion Infra. Spend as a % of GDP = 0.5% Infra. Spend pa = $500B United States Est. Infra Spend over Next 3 Years $800 - $1,500 Billion China Middle East $400 Billion $225 Billion Brazil $325 Billion Russia $250 - $300 Billion India $65 Billion Turkey GDP= US$ 3.6 Trillion China Infra. Spend as a % of GDP = 14% Infra. Spend pa = $500B

53,000 miles of Expressways

Growth in China Infra spend 20% pa for the last 30 years Much of Chinas recent stimulus Package of $600B will go towards Highways, Railroads, Airports 30,000 Miles of Expressways built In the last 10 years Another 25,000 Miles planned by 2020 GDP= US$ 1.05 Trillion Infra. Spend as a % of GDP = 5% India Infra. Spend pa = $50B Indias Expressways, current & Proposed are than 1,000 KM

Certain Industries Thrive in Certain Countries! Why?


Country Possible Reasons Industry Japan Automobiles 8 top auto majors are from Japan Watch/ Fin. Svcs. Switzlnd. Swiss preference for precision Japanese preference for miniature Japan Camera Germany German preference for SUV Luxury Cars Americans liking movies & US Movie Making availability of talent Software Svcs India Abundant cheap qualified labor

National Competitiveness of Industries

Certain Industries Thrive in Certain Countries! Why? In case of Indian Infrastructure/ Construction, the following needs to happen in order Availability For the industry Of Trained Manpower To become competitive :
Demand for Infrastructure will Have to be High

National Competitiveness of Industries

Country Possible Reasons Industry Japan Automobiles 8 top auto majors are from Japan Watch/ Fin. Svcs. Switzlnd. Swiss preference for precision Japanese preference for miniature Japan Camera Germany German preference for SUV Luxury Cars American liking for movies US Movie Making Abundant cheap qualified labor Software Svcs India
Policy Framework & Gov. Support

In order to strengthen Indias Infrastructure/Construction Industry, India will have to:


- Work on its Policy Framework/nurture the industry - This will allow more and more companies to enter the industry & the existing companies to grow - Due to scale, these companies will become more efficient, thereby providing services at lowest cost - Construction Methods & Technology will diffuse - Demand conditions which is already high (due to economic growth) will improve further & industry 8 will thrive

Presence of Many Efficient Players

Develop the Indian Infrastructure/ Construction Industry


Is the Indian Government well positioned to strengthen Indias Infrastructure/ Construction Industry, more specifically to: - Work on its Policy Framework/ nurture the industry? - Facilitate flow of adequate resources in order to grow the industry? - Facilitate more companies to enter the industry & ensure the existing companies to grow in order for these companies to become more efficient? - Facilitate state of the art Construction Methods & Technology to diffuse? and thereby create and industry that caters to the growing infrastructure/ construction demand & thus achieve the countrys targeted high GDP growth rates?

Macro Overview of Indian Economy

10

Indias Chronology of Liberalization Initiatives


2000-2005
Indian companies allowed to invest abroad up to $100 million - Large scale acquisitions by Indian companies abroad Fiscal Responsibility & Budget Mgmt. Act VAT introduced FBT abolished Rationalization of Excise Duty Structure Visible Developments seen Increased investments into India - Foreign Reserves cross $100B for the first time

1991
An economic crisis was declared Structural Adjustment Program (SAP) Liberalization IMF Two loans amounting to $1.8 billion Visible Developments seen The Economy slowly started to Take-Off

1991-1995
New Industrial Policy & Reforms Opened up FDI in certain Industries Divestment of PSUs Comptroller of Capital Issues Abolished FERA to FEMA, Insider Trading Law Pvt. Sector - Banking, Telecom & Airline Service Tax Introduced SEBI Introduced Visible Developments seen More competition - Easier Credit Access Privatization of PSUs improved their productivity

1995-2000
Minimum Alternate Tax (MAT) Divestment Commission Established Health Insurance Privatized Foreign Institutional Investors allowed to invest in unlisted companies Visible Developments seen Many sectors started to open up More Competition The economy was now more Market Focused

Macro Overview of Indian Economy

Indian Economy, Twelfth largest in the world, Fourth largest in Asia


15.0%

GDP Growth: India Vs. Other Asian Economies


Source: ADB

GDP: US$ 1 Trillion; Man.28%, Svcs.55% 9.1% GDP Growth 2007-08; Second Fastest Growing Emerging Economy in the world A Robust growth of 9% pa expected over the next five years: Second fastest Growing Emerging Economy Infrastructure Growth averaged at 7% In spite of marginal slow down expected in 2008-09, forecast Infrastructure spending is expected to be robust

12.0% 9.0% 6.0% 3.0%


ina Ch e or ap ng i S S th ou re Ko a iw Ta an ng Ho ng Ko ia Ind

2,008

2009 Fcst

GDP Vs Infrastructure Growth Trend


Source: Dun & Bradstreet, Planning Commission

15.0% 12.0%

15.0%

9.4% 8.5% 5.6% 6.2% 3.8% 5.8% 7.5% 9.0% 8.6% 9.1% 6.2%

9.0% 6.0% 3.0%

FY03

FY04

FY05

FY06

FY07

FY08

GDP Growth

Infrastructure Growth

Indias Infrastructure Industry Outlook

India spends around 5% of GDP on infrastructure Need to accelerate Infrastructure spend to 8% of GDP by 2012 China spends 9% of GDP on Infrastructure Infrastructure Gap is Large, to be bridged in short to medium term Infrastructure Gap costs India 1.5% to 2% of GDP growth, every year Private sector contribution to infrastructure in India,1.5% of GDP; likely to go up to 3% of GDP by 2012

% Access to Electricity Network


Source: Dun & Bradstreet

85 65 45 25
a sh di de bo la m g n Ca Ba

a in Ch

a di In

a a si nk ne La o i d Sr In

m na et Vi

Electricity
% Access to improved Sanitation
Source: Dun & Bradstreet

90

70

50

30
a h di es bo lad m g n Ca Ba a in Ch a ia a m di nk es na In La et on i i d V Sr In

Sanitation

Growth Trends in Infrastructure Sector Output (2002-07)


Growth in Coal, Electricty & Rifinary Output Growth (%)
Source: Dunn & B radst reet

Growth in Airport Cargo & Pax.Traffic Growth (%)


Source: Dunn & B radst reet

13

24

12 10 8 6 4 2 2002-03 2003-04 2004-05


5 5 3 5 5 5 4 2 8 6 6 5 5 8

22 17 12
7 16

19 18

20

10 7

12 9

2005-06

2006-07

2002-03

2003-04

2004-05

2005-06

2006-07

Coal

Electricity

Refinery T/put

Cargo-Airports

Pax-Airports

Growth in Steel & Cement Output Growth (%)


Source: Dunn & B radst reet

Growth in Railway & Port Cargo Traffic Growth (%)


Source: Dunn & B radst reet

12

11
10

11
9 7 11 8 6 10 10 7
9

10

11 11

9 7 5

9
8

10

10 8

7
5

2002-03

2003-04

2004-05

2005-06

2006-07

2002-03

2003-04

2004-05

2005-06

2006-07

Steel

Cement

Railway Traffic

Cargo-Ports

The Indian Construction Industry Indian Construction Industry Spend (Rs. Billion)

2 ,5 9 2

2500
2 ,2 2 1

2200 1900
1,5 6 8 1,8 5 7

1600
1,3 5 2

1300

02-03

03-04

04-05

05-06

06-07
15

Source: CSO

Indian Construction & Infrastructure: Expected Infrastructure Spend

16

Growth in Infrastructure Spend: Tenth Plan Vs. Eleventh Plan


US$ Billion

494
500 400 300 200 100

215

2002-2007
Source: Planning Commission

2007-2012

Indian Infrastructure Sectors: A broad Taxonomy


Oil & Gas Telecom Real Estate/ Farms International Business Equipment Bank Irrigation

Water, Waste Water & Urban Renewal

Industrial Parks Industrial Buildings SEZs

Steel Fabrication/ Pre Engineered Buildings Townships Transmission Towers

Buildings
Shopping Malls

Building Products Manufacturing


Precast Concrete Products

Aluminum Claddings/ False Ceilings

Roads/ Bridges

Thermal Power

Transportation
Airports

Sea Ports Rail Facilities

Facilities Management

Power
Hydro Power 18

Sector-wise Investments Anticipated


Tenth Plan (2002-07) Spend
Total Spend: US$ 215 Billion
Roads/Bridges 16% Telecom 14% Railw ays 14%

Eleventh Plan (2007-12) Spend


Total Spend: US$ 494 Billion
Roads/Bridges 15% Telecom 13% Railw ays 13%

Irrigation 11% Electricity 33% Irrigation 13% Gas Storage Ports W.Sup/ Sanitation 7% 1% 1% Airports 0% 1% Electricity 30% Ports 4% W.Sup/ Sanitation 10%

Gas 1%

Storage Airports 1% 2%

Infrastructure Spend expected to more than double during the following years Sector-wise proportion more or less, same. More allocations to Ports & W/Sup. Electricity, Roads, Telecom, Railways, Irrigation, Water Supply & Sanitation take the bulk.

Sector-wise Investments Anticipated


Tenth Plan Sectors Rs. Crore US$ billion Electricity 291,850 71.18 Roads and Bridges 144,892 35.34 Telecommunications 123,411 30.10 Railways 119,658 29.18 Irrigation 111,503 27.20 Water supply and Sanitation 64,803 15.81 Ports 4,096 1.00 Airports 6,771 1.65 Storage 4,819 1.18 Gas 8,713 2.13 Total 880,516 214.76 Source : Planning Commission, Government of India Sectorsl(%) 33% 16% 14% 14% 13% 7% 0% 1% 1% 1% 100% Rs. Crore 616,526 311,816 267,001 258,001 223,131 199,127 73,941 34,748 22,378 20,500 2,027,169 Eleventh Plan US$ billion 150.37 76.05 65.12 62.93 54.42 48.57 18.03 8.48 5.46 5.00 494.43 Sectorsl(%) 30% 15% 13% 13% 11% 10% 4% 2% 1% 1% 100%

Investments split by Centre, State & Private (Rs.Crore)

State, 620,780, 31%

Centre, 804,429, 39%

Private, 601,959, 30%

Gross Capital Formation in Infrastructure

Rs.Crore GDP GDP Growth Rate (%) GCF-Infra as a % of GDP

2006-07 4,125,725 9.00 5.00

2007-08 4,497,040 9.00 5.75

2008-09 4,901,774 9.00 6.50

2009-10 5,342,934 9.00 7.25

2010-11 5,823,798 9.00 8.00

2011-12 6,347,939 9.00 9.00

Year wise XI Plan Infrastructure Spend


Total Investment = US$ 494 Billion
175 140
94 115 77 65

143

105 70 35 0

07-08

08-09

09-10

10-11

11-12

Infrastructure Spend
Source: Planning Commission

23

Government Support to Private Sector for Infrastructure Development

24

Infrastructure - Government facilitation still critical


JULY 2005 POLICY DOCUMENT OF GOVERNMENT OF INDIA ON PUBLIC PRIVATE PARTNERSHIP IN INFRASTRUCTURE

Government of India recognizes that there is a significant deficit in the availability of


physical infrastructure across different sectors and that this is hindering economic development

To attract private capital as well as the techno-managerial efficiencies associated


with it, the Government is committed to promoting Public Private Partnerships (PPPs) in infrastructure development

Due to the long gestation periods and limited financial returns Government support
is necessary to make them financially viable

Government of India has decided to put into effect a scheme for providing financial
support to bridge the viability gap of infrastructure projects undertaken through 25 Public Private Partnerships

Public Private Partnerships (PPP)


Over the past few years, PPP has been the most preferred mode of project
execution by the government

PPP projects involve


A Public Sector Agency A Private Sector Consortium, comprising contractor, maintenance companies, private investors & consulting firms Formats can vary; BOT, BOOT, OMST, Concession, Joint Venture Sharing Risks, and rewards, for development of world class infrastructure

Budgetary constraints & growing Private Sector strength have been the
drivers for the popularity of the PPP model
26

Public Private Partnerships (PPP)


PPP is still at a nascent stage in India; lack of experience at the Central as
well as the State level has been the concern

The awareness of concerns and issues related to PPPs success and failures

are not evenly spread across the different states; PPP cells have been setup across the States

Governments prominent initiatives for bridging the financial gap in long term
financing includes: International Infrastructure Finance Company Limited (IIFCL) Viability Gap Funding schemes

ADBs Technical Assistance (TA) Fund also facilitates capacity building at a


State Level
27

Public Private Partnerships (PPP) PPP Funding - % of Total Project Cost

11

80% 60%
89

55

40%
45

3 30

20% 0%

PPP AC

VGF

IIFC

Roads

Ports

Metro

Airports

Power
28

Some of the Iconic PPP Projects executed


Hyderabad International Airport; BOOT Format Bangalore International Airport; BOOT Format Kakinada Deep Water Port; OMST Format & Hassan Mangalore Rail Line Elevated Expressway to E-City in Karnataka Thiruvananthapuram City Road Improvement Project Vizhinjam International Container Transhipment project in Kerala Four-laning of Kalyani-Dum Dum Expressway in West Bengal
29

Transportation

30

Transportation Sector Artery to the Countrys Economy


Railways Sector
The Indian Railways Sector, is one of the largest and the busiest railway network in the country, Spanning across close to 64,000 Kms. Covering more than 15 Zones.

Roads Sector
Accounts for close to 5% of the countrys GDP, spanning across 3.3 million kilometers; only 2% of this are National Highways Leaving ample scope for future development

Sea Ports Sector Airports Sector


Airport Sector, and aviation, is one of the fastest growing sectors in the country. It contributes 1% in terms of volume & Around 30% in terms of value, to the countrys merchandise trade and shipping, pay a major role in the countrys merchandise trade, Constituting 95% in terms of volume & Around 70% in terms of value

31

Policy and Regulatory Framework


The Prime Minister has assured that: The government will ensure that there is a regulatory framework that is:

Transparent Independent of government Based on international best practice


32

Roads & Bridges

Existing Road Network in India

Road Category

Length (km) 200 65,600 1,37,700 7,25,425 24,62,100 33,91,025

Percentage (%) 2% 4% 21% 73% 100%

Expressways National Highways (NHs) State Highways (SHs) Major& other District Roads (MDRs/ODRs) Rural & other Roads TOTAL

Roads carry 85% of passengers & 61% of freight traffic Less than 2 % length of NHs carry 40% of traffic

Road Sector Opportunities


Projected Investments in Road Sector (2007-2012; XI Plan; Rs. Billion) National Highways 1,543 State Roads 1,160 Rural Roads 367 NE Roads 48 Total 3,118 Rural Roads Constructing 1,65,244 km of new rural roads Renewing and upgrading existing 1,92,464 km covering 78,304 rural habitations
National Highways Six-laning 6,500 km of Golden Quadrilateral and selected National Highways Four-laning 6,736 km on NorthSouth and East-West Corridors Four-laning 12,109 km of National Highways Widening 20,000 km of National Highways to two lanes Developing 1000 km of Expressways Constructing 8,737 km of roads, including 3,46 km of National Highways, in the North East

Major Initiatives for Highways Development

National Highways Authority of India (NHAI) created and


made functional

National Highways Development Project (NHDP) launched Requisite legislative and legal provisions made for
facilitating PPP in road sector

36

Evolution of Policy Framework in the Roads Sector


Annuity models launched Economy revives, interest rates plunge Projects gets restructured, revived NHDP Launched Model Concession Agreement in place Capital support introduced Investor interests picks up Aggressive bids - Negative Grants

PPP launched Fiscal Incentives to lure Private Sector Aggressive Revenue Models Project Specific concession agreements NHAI constituted, nodal agency Willingness to pay issues Slow down of Economy Revenue projections affected Indian economy opens up Investor optimism waned Beginning of Reforms Road Infrastructure as thrust area Increased demand, budget constraints

Policy shift; all projects on BOT-Toll . If no takers, bids to be reinvited on Annuity Projects offered on toll collection Viability issues New developers evolve, high growth in sector Wide variations in project perception Developer responsible for Clearances, State Support, Land Increasing interest rates New MCA - Concept of risk sharing Revenue sharing DBFO concept in the anvil

Evolution of PPP Enabling Environment


Early 1990s marked the beginning of introduction of PPP in India Early Attempts to create enabling environment included: Guaranteed returns 20% on Road Projects (Ahmedabad Mehasana, VadodaraHalol, Noida Toll bridge) Sweeteners : Land - Bangalore-Mysore Expressway , Bridge - Coimbatore Bypass Protection against FE fluctuation (SVBTC User fee linked to FE rate) VGF - For marginally viable projects Annuity Concept Assured revenue streams Recent Attempts include Sharing of Traffic Risk New MCA Introduction of New Toll Policy
38

Selection of PPP Mode All projects could be fitted in one or the other form of PPP with varying degree of PublicPrivate involvement
Sl No 1 2 3 4 Stand Alone Capital Support Annuity Regular construction contract with extended period of maintenance PPP Class Characteristic Projects with high revenue potential Marginally viable projects Projects with low traffic intensity Projects of economic/social importance

Selection of appropriate type for each project is key to the success of the project All projects on BOT May have to be reviewed Some can be on budgetary allocation
39

Project Packaging Due Diligence


Timing the Project Offers - 80 projects on BOT basis during 2008 Over-specification in PPP Projects at the cost of project viability Under-estimation of project cost by Project Proponent (Government) Due Diligence efforts to be improved : Land acquisition Shifting of utilities Preparation of Estimates and approval of the same MoEF Clearances and other statutory clearances for the project Setting higher benchmarks for project documentation and DPRs - Must Private sector includes the cost of perceived risks in the proposal A project well prepared and packaged would attract the most optimal proposal .
40

Project Size
Project sizes are progressively becoming larger Coimbatore Bypass- Rs 90 Cr to Eastern Peripheral Expressway Rs 2676Cr Metamorphosis of Contractors to Developers - Capacity of Indian Developers Recent pre-qualification process in NHAI delayed the bidding process Restriction on number of bidders Max SIX based on Tech.score Restriction on submission of bids along with Economic slow down / Hike in cost of funds - resulted in many projects having no bidders With many projects of various sizes in the market, FI and Bank sector exposure norms are getting squeezed Termination payments are now to be made by NHAI with Projects size getting larger- GoI guarantees for termination payments
41

Center State Synergies


State and Centre to work hand-in-hand Centre providing the interstate connectivity and the State complementing it with Feeder networks States create competing facilities along existing NH networks PPP project concessionaires left to fend for themselves Can Consider the right of first refusal for development of competing facility to the existing Concessionaire, asin the case of Navi Mumbai Airport Signing State Support Agreements - To be Condition Precedent Land acquisition through the State Government machinery States to align with Concession framework for PPP All state trying to float road projects on BOT basis Gujarat / MP / AP / Karnataka
42

Concession Agreement
Evolution of Concession Agreement Project specific agreements in early BOT Projects Standardization of CA first attempted in in 2002-03 with Jaipur-Kishangarh Project Inputs from various stake holders were sought and incorporated Standard MCA was used for up to 2007 Planning Commission brought about revisions in the MCA in 2007 Risk sharing more equitable in the new MCA Some issues which are not adequately addressed in the new MCA are presented for discussion

43

Sharing of Traffic Risk

Sharing of Traffic Risk by Concessionaire and NHAI Agreement on a certain level of traffic (target) based on Base Traffic, both decided upfront 2.5% reduction in target traffic, period increase by 1.5%, capped at 20% 2.5% increase in target traffic, period reduced by 0.75%, capped at 10%

44

Bid Criteria

Bid Criteria Least upfront Positive Grant or Highest % share of revenue (Premium) from an agreed date

Toll Collection Six Laning projects Tolling can commence from the Appointed Date with revenue sharing as Quoted for the Base year Revenue share will get increased by 1% over the Quoted %ge over the Concession Period
45

New MCA Provisions

Capacity Augmentation Provision to review after a period of 8 years from Appointed date - If required capacity augmentation in 12th year Safety Fund Toll Collections in excess of 120% of design capacity to be deposited to Safety Fund Safety Fund to be managed by NHAI and funds to be used for incorporating additional safety features during the operation period.

46

New MCA Provisions

Land Acquisition NHAI to assure 50-80% of land required for the project corridor within Appointed Date and the balance to be handed over on or before 90 days thereafter Penalties linked to late handing over of land Concessionaire excused of performance in case of non-availability of land Shifting of Utilities and Tree Cutting Concessionaire excused of performance in case of delays in permissions for shifting of utilities and tree cutting Some Projects, this is the responsibility of Concessionaire
47

New MCA Provisions


Permits and Approvals NHAI made responsible for Environmental Clearance for the project GAD Approval from Railways for ROB/RUB Responsibility of NHAI Termination on exceeding Design Capacity Design capacities fixed for various road configuration 4 lane 56000 pcu, . 6 lane 90000 pcu Concession to be terminated if the actual traffic exceeds design capacity for 4 continuous years Termination to be considered as an Indirect Political Event of Force Majuere

48

CA Issues- TPC
Definition of Total Project Cost with respect to Termination Payments Termination payments are limited to TPC TPC almost always is the NHAI estimated cost which is either dated or unrealistic Estimates of costs are based on Feasibility Studies and not DPR Provision for revision to TPC is required in case of any abnormal increase in costs Underestimation of TPC results in the projects being less bankable with less attractive financing possibilities

49

CA Issues Viability Gap Funding


Marginally viable Projects made attractive with Viability Gap Funding (VGF) from GoI Generally VGF is capped at 40% of TPC and for projects with better traffic potential (such as GQ), VGF is capped at 10-20% of TPC Equity Support grant during construction was restricted to 20% of TPC subject to a cap of equity O&M Support Balance disbursed during operations period In January 2009, NHAI has relaxed the cap on Equity Support and would release 100% of grant amount during construction for new Projects When TPC is underestimated, VGF not sufficient to make the project bankable

50

CA Issues Termination Payments


Termination payments are presently guaranteed by NHAI NHAIs financial strength to make termination payments especially for large project sizes Should NHAI guarantees for termination be backed by GOI guarantees, as in the case of Airport Projects?

51

Toll Policy
Sl No 1 Parameters Applicability of Toll Rates Old Toll Policy (June 2007) Varying for Public & Pvt. funded Projects New Toll Policy (December 2008) Uniform toll Rate for Public & Pvt. funded Project Specified rates for 2 lane & 4 lane 2 lane @ 60% of 4 lane Rate Higher toll in case of Bridges/Tunnels/Bypass > Rs 50 Cr in the strech All Passes based on trips 50 Trips ; Return Trip Passes Annual, 3% flat on Base Rate + 40% of WPI increase Local Passenger cars (Pvt) only eligible @ Rs 150 per month (20km radius) Commercial vehicles not eligible for local pass Toll Evasion can be checked within 10km from TP
52 Penal provision for overloading included

2 3 4

Base Rate Discounts Toll Revision

No. specific rate for 2 lane road Uniform rate for structures Monthly passes & daily passes Annual @ 100% WPI Local Passenger 10 km & 20 km radius RatesRs150 / Rs 200 per month (not revised for Concession Period) Commercial vehicles LCV/ 2A trucks eligible for local pass@ Rs 15/Rs 25 per Trips No Provision to check toll evasion No Provision

5 6 7

Local Passes Toll Compliance Overloading

CA Issues - New Toll Policy


New Toll Policy allows for higher toll rates for projects with Tunnels, Bridges or Bypasses each costing > Rs 50 Crores User acceptability is to be tested Neutralization of inflation Only 3% flat increase from Base rate + 40% of WPI increase allowed as annual toll increase which may not completely cover the effects of inflation Curbing overloading New Toll policy allows overloaded vehicles are to be charged toll of next higher category and excess weight to be off loaded Empowerment of the Concessionaire by Law to enforce overloading restrictions still not adequate.
53

Issues Competing Road


By definition Competing Road means a road connecting the two end points of the Project Highway and serving as an alternate route thereof or An existing paved road widened to more than 2m of paved road for >75% of the length after the date of Agreement or A new road connecting the end points of the Project Highway which is less than 1.2 times the length of project corridor The present MCA does not provide a safeguard against the possibility of development of a road which has a potential of drawing traffic from the Project corridor causing material reduction in the toll revenue. The same lacuna persist in the State Support Agreement and the Concessionaire is not protected or compensated
54

Suggestions for Contractual Framework


Equitable allocation of risks Bankable Contracts - Standardization of Contracts Uniform toll policy applicable State Government to standardize toll policy Contractual obligations to be honoured by the Parties dispassionately Design flexibility DBFOT : With performance based checks Role of (In)dependent Engineer - Real Independency must Provision for abnormal escalation of costs Atleast for Govt controlled materials Recognition of investment companies and allowing it to use parent credentials Exit options for concessionaires
55

Regulator Issues
Road Sector is regulated by Contract Need for an Empowered Road Regulatory Authority given the present policy on PPP Present Scenario NHAI has conflicting roles A party of the Concession and also a regulator Role of Regulator Tariff policy and enforcement of contracts/concessions Dispute resolution Monitor VGF disbursement for State Projects

56

Issues Sectional Treatment


Project Corridors becoming longer - comprise many sections, not necessary homogenous NHAI could consider allowing sectional COD as and when pre-determined sections are completed as per the specification Allowing for earlier commencement of revenue streams Incentive for early completion - reduce risk of localized issues delaying COD New MCA specifies a premature Termination process when design service volumes are exceeded In case of heterogeneous stretches, termination should not be effected due to traffic increase in a particular stretch Sectional Capacity augmentation can be considered instead of termination of the entire concession
57

Summary Roads Regulatory Regime


Governments have been continuously endeavoring to create an enabling environment Selecting an appropriate PPP Model for implementation is the first step to project success Enhanced Level of due diligence undertaken in preparation and packaging a project will lead to better results (both for Government and the Private Sector) Equitable risk allocation and standardization of concessions provide better clarity and ensure bankability. Larger project sizes call for GOI guarantees and tapping unexplored sources of funds Empowered Highway Regulator an Urgent Need to ensure smooth functioning of PPPs Centre and State to work in tandem to promote PPPs, else the efforts would be counter productive for both Government to provide Long Term funding to make the BOT concept successful Govt to have a mix of BOT / Budgetary allocation projects
58

NHDP Road Projects in Progress


Phase II: Upgrading / 4-6 laning of 825 km of NS-EW Corridor on BOT-Toll expected to be completed by 2009 end Phase III: Upgrading / 4-6 laning of 12,109 km on BOT-Toll to be completed by 2013 end Phase IV: 2-laning with Paved Shoulders of 20,000 km on BOT- Toll/ Annuity to be completed by 2015 end Phase V: 6-laning of 6,500 km of high density corridors on DBFO basis to be completed by 2012 end Phase VI: 1,000 km Expressways on DBFO basis by 2015 end Phase VII: 700 Kms of Ring Roads, Bypasses on BOT - Toll/Annuity by 2014 end
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59

Road Projects awarded & in Progress


National Highway Authority has already announced projects valued at close to Rs.1,10,000 crores - Mostly on BOT Andhra Pradesh Roads Projects already announced Rs.9,000 crores Mostly on BOT

Madhya Pradesh Road Transport Corporation & Other States has already announced Rs.16,000 crores Mostly on BOT

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60

How are Road Project Generally Financed?

Budget Normal Dedicated Fund (Cess on Petrol/Diesel) Lending from International Institutions World Bank ADB JBIC Public Private Partnership BOT (Toll) BOT (Annuity) Through setting up a Special Purpose Vehicle (SPV) with equity from NHAI Market Borrowings
61

Incentives for Private Sector Participation


Road Sector has been declared as an Industry. 100% tax exemption in any consecutive 10 years out of 20 years. Foreign Direct Investment (FDI) up to 100%. Provision of Capital Subsidy up to 40% of the project cost to make
projects viable.

Provision of encumbrance free site for work, i.e. Government bears


expenses for land and pre-construction activities.

Easier external commercial borrowing norms Exemption of Capital gains tax for the bonds issued by NHAI. Duty free import of high capacity and modern construction
62

Potential Advantages to the Government in PPP

Encourage private investment in the infrastructure sector. Reducing public direct spending. Public budget could be used in other priority areas and projects, such as education and social programmes. Risks are allocated to the party, which is best suited to handle it. Introduce innovation and increased efficiency from the private sector. Involvement of experienced and creditworthy sponsors and commercial lenders, guaranteeing project viability. Tapping of advanced technologies and expertise with possible capacity building of contractors and consultancy firms. Development of local capital market. Right sizing of public institutions.
63

BOT (Toll) Projects


Concessionaires Responsibilities: DBFO (Design, Engineering, Financing, Procurement, Construction, Operation & Maintenance) Concessionaires rights Demand, collect and appropriate the users fees (toll) Concessionaires Risk: Financing, Construction, Partial Traffic Risk, Operation & Maintenance.

64

BOT (Annuity) Project


Concessionaires Responsibilities:
Design, Engineering, Financing Maintenance Procurement, construction and

Concessionaires Risk:
Financing, Construction and Maintenance (No Traffic risk)

Award Criteria:
Minimum Annuity Payment over Fixed Period.

65

Highlights - Model Concession Agreement (MCA) In Roads Sector


Partial guarantee of traffic risk to the Concessionaire. Concessionaires interest protected in competing roads. Performance standards of the highways clearly spelt out. Provision for change in scope, if any, required during construction and operation period included. Utilities to be relocated by the Concessionaire but it will be excused from failure in case of delay by owning agencies. Focus on road Users safety Users fee charges, revision thereof and concession to local traffic clearly spelt out. NHAI has to provide land free from all encumbrances. NHAI to bear cost of all pre-construction activities. Risks are allocated to the party, which is best suited to handle it. (Contd.) 66

Highlights - Model Concession Agreement (MCA) In Roads Sector


Lowest subsidy/grant quoted by the bidders towards viability gap
funding or earliest premium quoted by the bidder is the basis for award.

Force Majeure conditions and relief to the party under such


conditions clearly spelt out.

Strong dispute resolution mechanisms. BOT bids are invited for 6 lane with 20 years concession period.
However, exist option exists for Concessionaire and the NHAI after 8 years if not interested for 6 laning. In such case, concession shall be terminated after four laning with 12 years concession period. .)

67

State Support Agreement for Roads/ Infrastructure


Provide applicable permits to the Concessionaire Assist access to infrastructure facilities and utilities Erect no barriers to interrupt free flow of traffic Assist in regulation of traffic. Police assistance in the form of
Highways Petrol Parties

Not to undertake any act which violates State to pay claims on any breach No competing facility within 8 years
68

Institutional Strengthening in PPP/ Roads Sector


Committee on Infrastructure (COI) headed by PM. Restructuring of NHAI to be a multidisciplinary body. Planning, standardization and quality assurance (PSC) cell Project appraisal Group/cell headed by Financial Analyst, and
supported by Transport Economist, Transport Planner.

Human Resource (HR) cell Monitoring cell Sensitization to PPP


69

Role of State Government in National Highways (BOT) Project


State Support Agreement - Pre-requisite for success of PPP Land Acquisition Utility Shifting Speedy action Forest Clearance NOC from State Pollution Control Board Development of 2-lane Highways and levy of user fee
70

Airports

71

Present Scenario
AAI manages 128 airports which includes: 15 International airports 8 Custom airports

25 Civil Enclaves 80 Domestic airports

72

Indian Airports Management


Background

Indian airports were managed by Civil Aviation


Department, Government of India, till the creation of International Airports Authority of India (IAAI) in 1972 and National Airports Authority (NAA) in 1986.

In 1995 Airports Authority of India (AAI) was established


by merging both IAAI and NAA by an Act of Parliament The Airports Authority of India Act in 1994 for better and efficient management of all airports in India by a single Authority.
73

Airport Sector Overview


Less than 2% of the population travels by air All airline companies in red due to low load factor, low operating efficiencies and increasing fuel prices Passenger traffic is projected to grow at a CAGR of 15% in next 5 years and reaching 100 million by 2010 Cargo traffic is projected to grow at a CAGR of over 20% in next 5 years and touching 3.3 million tonnes by 2010 Investment of around US $ 9 Billion is needed in next 5 years for the construction of greenfield airports, modernization and up gradation of Mumbai & Delhi international airports and 35 non metro airports
74

Passenger and Cargo Traffic Movement History


Passenger Passenger Traffic Traffic Movement Movement History History
YEAR 2003-04 2004-05 2005-06
(estimated)

International No.in %age million change 16.64 19.42 22.90 12.2 16.7 17.9

Domestic No.in %age million change 32.14 39.86 50.88 11.2 24.0 27.64

Total No.in million 48.78 59.28 73.78 %age change 11.6 21.5 24.45

Cargo Cargo Traffic Traffic Movement Movement History History


YEAR International %age Quantity change Domestic %age Quantity change Total
Quantity

%age change

2003-04 2004-05 2005-06


(estimated)

693.2 823.6 902.7

7.3 18.8 9.6

375.4 456.7 479.1

12.7 21.6 4.9

1068.6 1280.3 1381.8

9.1 19.8 7.93


75

High Level Statistics-Flights & Passenger Traffic


Flt.Movmnts.Growth (27%) Passenger Growth (around 29%)
47.41 36.88

600,000 500,000 400,000 300,000 200,000 100,000 0 Apr-Aug'06 409000

521000

Apr-Aug'07

50 45 40 35 30 25 20 15 10 5 0

Apr-Aug' 06
Domestic Growth around 33%, International Growth around 17%

Apr-Aug' 07

Domestic Growth around 40%, International Growth around 20%

High Level Statistics - Fleet


Current Fleet size (around 430)
15 15 37 90 22 76 197 120

On Order (around 512)


20 80

85

185

Jet Airways Air India/ Indian Indigo

KingFisher/ AirDeccan Spice Others

Jet Airways Air India/ Indian Indigo

KingFisher/ AirDeccan Spice Others

High Level Statistics Domestic Airline Market share


8% 8% 6%

29%

20% 29% Jet Airways Air India/ Indian Indigo KingFisher/ AirDeccan Spice Others

Private/ State Mix Fleet & Passengers


Number of Aircraft owned Number of passengers carried

18% 44% 50% 32%

20%

36%

Government Private-Lowcost Private-Regular

Government Private-Lowcost Private-Regular

Thus
Increased traffic and cargo growth has led to congestion/ saturation at different airports in India , e.g. Mumbai, Delhi, Bangalore, Hyderabad, Kolkata, Chennai etc. Hence, country requires New Airports Expansion of capacity at existing airports Induction of Technology for efficient handling of Passenger and cargo. Better Management Practices For all this additional funds to the tune of Rs. 40,000 crores + Rs. 454 crores for airports in North East are required The revenue surplus generated by AAI in 2005-06 was Rs. 812 crores. The annual requirement of funds in the future is expected to be much more than the AAI can generate.
80

Opportunities
Modernization of Chennai & Kolkata airports Greenfield airports in Goa, Pune, Navi Mumbai, Nagpur and Greater Noida Up gradation of 25 identified airports Development and modernization of 35 selected non metro airports City side will be developed through PPP mode and air side will be developed by AAI

Source: Ministry of civil aviation

81

Airport Development Fund Requirements


More than Rs.40,000 Crores
Particulars Restructuring/ Modernization for world class airports Green Field Airports Upgradation Modernization/ Improvement Total investment by 2010 Delh & Mumbai Chennai & Kolkatta Bangalore, Hyderabad, Goa, Pune, Navi Mumbai, Nagpur (Hub) and Greater Noida 25 selected airports 55 airports Airport Indicative Cost
Rs. In crores

15,000 5,000 10,000 7,000 3,000 40,000

Dev. Of airports in North East Region (excluding Green Field Airports Total

Terminal Building/Car PRK/Cargo etc. 225

Air Side

ATS Facility

Total
Rs. In crores

167

62

454
82

PPP in Indian Airports


Need for Private Participation in Airport Infrastructure realized long ago: One of the sectors to lead PPP formats in the country PPP created in Airports sector to achieve the following objectives: To build world-class airports with modern technology and efficient management practices. To make the airport user friendly and achieve higher level of customer satisfaction. To lay special emphasis on the development of infrastructure for remote and inaccessible areas. To provide airport capacity ahead of demand. To encourage greater efficiency in Airport Operations. To provide multi-modal linkages.
83

Legal & Regulatory framework facilitating PPP in Airports Sector


Airports Authority of India Act, 1994 was amended in 2003, which, inter-alia,
provides exclusion of Private Airports from the ambit of AAI Act

The Aircraft Rules, 1937, were also amended, which, inter-alia, provide

conditions for grant of licence, validity of licence, tariff fixation including levy of Passenger Service Fee and User Development Fee, Ground handling provisions etc.

Setting up of an independent Airport Economic Regulatory Authority is under consideration Scope of Regulation Setting aeronautical price cap Monitoring and assessing service quality performance standards set by the Government Review and assess aeronautical, operating and capital expenditure
84

Airport development Process has convincingly taken-off in the country


The process of development of airports through PPP in the country
began with CIAL

Two new Green field airports were thereafter approved and completed
for Bangalore and Hyderabad.

On 3rd May 2006 the Airports At Mumbai and Delhi were handed over to
Joint Venture Companies.

Of 35 non metro airports being taken up for modernization PPP has


been approved for the city side development of 10 airports. various State Govts.

Proposals for a number of green field airports have been received from
85

Greenfield Airport Cochin International Airport (CIAL)


The process for development of CIAL as a private airport began in
1993, airport was made operational on 10th June 1999

Investment Pattern Govt. of Kerala Central PSU (AI, BPCL) Commercial Banks Investor Directors and
Relatives Facility Providers (AI,BPCL,SBT) Public and NRIs

Rs. Crores 52.04 (35%) 10.25 ( 7%) 8.75 ( 6%) 55.37 (37%) 1.50 ( 1%) 21.00 (14%)

CIAL Board Constitution Chairman: Chief Minister of Kerala MD: Nominee of Gov. of Kerala Three Directors including Chief Sec. nominated by Gov. of Kerala, Five Investor Directors

86 Concessions given by GOI = Civil Enclave (Navy) at Cochin withdrawn

86

Green field Airport Bangalore (BIAL)


Build Own Operate and Transfer (BOOT); 30 years; Cost Rs. 1930 crores Equity KSIIDC 26% and AAI cap at Rs. 50 crores, Siemens, Germany,
Unique Zurich, Switzerland and - L&T India Limited 74%

Equity Rs.315 crores , State Support Rs.350 crores, Debt Rs.1265 crores
Concessions extended by the Govt. of Karnataka to BIAL
SSA Rs. 350 crore Interest free support repayable after 10 years in 20 half yearly installments Land lease Agreement Lease of land of 4000 acres at concessional rent of Rs. 1 till commencement of operations. Thereafter @3% p.a. for a period of 6 years and 6% p.a. subsequently with an annual increase of 3%. Property Tax exempted for a period of 5 years. Stamp Duty payable on land lease exempted. Local Fee payable to Bangalore Int. Airport Planning Authority (BIAPA) as betterment fee and road cess exempted. Entry Tax for goods for construction purposes exempted 87 Infrastructure like water, power etc. to be provided at site.

BANGALORE INTERNATIONAL AIRPORT (Master Plan & Terminal Bldg.)

The design consists of a transparent, ecological building with natural light filtering through sky lights in the roof The Passenger terminal building is modular, so as to accommodate the growing number of passengers The terminal building is designed to cater to the peak hour capacity of 1850 passengers per hour.
88

Perspective View

Bangalore International Airport

89

Precast element Bottom mould

Roof Element - Precast yard

Top shutter

Pre fab. Rebar cage

Bangalore International Airport

Erection Gantry

Precast Erection

Bangalore International Airport

PTB-Interior view

Bangalore International Airport

92

PTB-Interior view

Bangalore International Airport

93

PTB-Interior view

Bangalore International Airport

94

PTB

Bangalore International Airport

95

Bangalore International Airport

96

ROOF CONSTRUCTION - CASTING

Pre-cast Element

Gantry for Handling

Mould Shuttering in Progress

Pre-cast Yard showing Shuttering, Rebar fixing & casting Activities

S Shaped Mould

Top Shutter by Gantry 97

ROOF CONSTRUCTION - CASTING


Strong back

Mould Top Shuttering with Chute Reinforcement Cage with Strongback


Chute

Top Shutter 98

ROOF CONSTRUCTION DEMOULDING

Power Pack

Lifting in Progress De-Moulding/Lifting of element by Double acting jack


Hydraulic Jacks

99

ROOF CONSTRUCTION - SHIFTING


Pre-cast Element

Shifting Trolley

Jacking in Progress
S Shaped Mould

Side Shifting of element by high speed long stroke jack

Hydraulic Jacks 100

Green field Airport Hyderabad (HIAL)


Build Own Operate and Transfer (BOOT); 30 years; Cost Rs. 1930 crores Govt. of AP & AAI (cap Rs.50 crore) together hold 26% equity, GMR
(MAHB) hold 74%Project cost Rs.1,761 cores .

Equity Rs.379 crores , State Support Rs.107 crores, Debt Rs.1,275 crores
Concessions extended by the Govt. of AP to HIAL
SSA Rs.315 crore Interest free loan refundable in 5 equal installments commencing from 16th year. Land Lease Approx 5490 acres of land co-terminus with State Support Agreement. State Grant Rs. 107 crores. Stamp Duty / Registration Fee waived off on transfer of land as well as all project agreements. Sales Tax waived off on all construction material

101

Perspective views

Hyderabad International Airport

102

HYDERABAD INTERNATIONAL AIRPORT

Design of the airport includes Airside, Landside works with structures like Cargo building ( 28m span ) with handling capacity of 1,00,000 metric tons. Crash fire rescue station (main and satellite), Ground handling maintenance building, Security office and Gatehouse at strategic locations between airside and landside.
103

Passenger Terminal Building - Truss

Hyderabad International Airport

104

Passenger Terminal Building - Truss

Hyderabad International Airport

105

Passenger Terminal Building - Truss

Hyderabad International Airport

106

Passenger Terminal Building - Truss

Hyderabad International Airport

107

Passenger Terminal Building - Truss

Hyderabad International Airport

108

TECHNO INDICES Passenger Terminal Building ( Comparison between concrete and structural steel options )

ITEM
BUA Concrete Shuttering Reinforcement Structural Steel

UNIT
Sqm Cum/Sqm Sqm/Sqm Kg/Sqm Kg/Sqm

BIAL
(Precast Roofing)

HIAL
(Structural Steel Roofing)

74430 0.64 2.83 90.7 -

104500 0.54 1.65 81.6 35.1


109

Mumbai & Delhi Airport


Salient Features of JVCs; Objective is to create World Class Development and Expansion World Class Airport Management

Equity participation
Delhi 74 % Pvt. Consortium (GMR Group, Fraport AG, MAPL, IDF), 26 % AAI Mumbai 74% Pvt. Consortium ( GVK, ACSA,BSD), 26% AAI

Initial Capital
Mumbai Rs. 200 crores; Delhi Rs. 200 crores

Estimated Capital Investment for first 7 years


Delhi Rs. 3286 crs. (Funded as equity Rs. 551 crs, internal accrual Rs. 70 crs. Debt Rs. 2665 crs.) Mumbai Rs.5676 crs. (Funded as equity Rs. 626 crs. Internal accural Rs. 804 crs. Debt Rs. 4246 crs.)

110

Tasks to be performed by the JVC


Apart from Managing and running the airport the JVCs have to invest for the
mandatory and other capital works. Performance Standards The JVCs are to achieve a rating of 3.5 on the AETRA scale of 5 on completion of stage-I and improve to 3.75 by stage-II.

Payments to AAI Upfront payment of Rs. 300 crores(RS.150 crores from each JVC). Annual Revenue Share to AAI for a period of 30 years. Delhi Airport 45.99% of Gross Revenue Mumbai Airport 38.7% of Gross Revenue
AAI employees cost to be reimbursed by the JVCs
111

Mumbai & Delhi Airport: Salient's of the State Government Support Agreements
The SGSA has been executed by the respective State Governments with the JVCs in order to provide support to the projects. The agreement provides that the State Governments will make best efforts to provide support to the JVCs in matters relating to removal of encroachment or procurement of additional land for development of airport, removal of obstruction outside the airport boundary to ensure safe and efficient air traffic movement, best endeavor to improve the surface access to the airport and to provide all the utilities namely water, power etc. The SGSA provides for assistance in procuring various clearances. However, the agreements do not confer any right to JVCs for enforcement of any obligations of State Government or consequently for any damage or loss 112 incurred by JVCs or by any party.

Mumbai & Delhi Airport: Salient's of the State Government Support Agreements
The SSA, inter-alia, provides for GoIs support by way of establishing an independent Economic Regulatory Authority, Charging of Aeronautical Charges by the JVCs, Provision of Statutory Services namely Immigration, Customs, Health, Security etc. Right of First Refusal for MIAL in case a green field airport comes up at Navi Mumbai and for DIAL in case a green field airport comes up within 150 kms of the existing airport. GOI guarantee to the private partners in respect of obligation of AAI to make payments to the JVCs upon termination or expiry of OMDA, Step-inRights of AAI/GOI.
113

Development of Non-Metro Airports


Development of 35 Non-Metro Airports have been taken up in a phased manner :
These airports are:
Ahmedabad, Amritsar, Agatti, Aurangabad, Agartala, Agra, Baroda, Bhopal, Bhubaneshwar, Chandigarh, Coimbatore, Dehradun, Dimapur, Guwahati, Jaipur, Jammu, Khajuraho, Nagpur, Patna, Portblair, Pune, Rajkot, Ranchi,Raipur, Goa, Imphal, Indore, Lucknow, Madurai, Mangalore, Trichy, Trivandrum, Udaipur, Visakhapatnam and Varanasi,

Development Approach for first ten non-metro airports Terminal Building and Airside development by AAI. City side development through PPP or Land Lease and Revenue Sharing
(Airport wise in a single package)
114

Development of Greenfield Airports North East


PAYKONG AIRPORT Sikkim for 50 Seater Aircraft (ATR 72) Estimated cost Rs. 340 Crores (excluding land cost which will be provided by State Govt. free of cost). CHIETHU AIRPORT Nagaland for 50 Seater Aircraft (ATR 72) Estimated cost Rs. 150 Crores (excluding land cost which will be provided by State Govt. free of cost). Rs. 1 Crore has been paid by NEC to AAI for TechnoEconomic Feasibility Study. ITANAGAR for 50 Seater Aircraft (ATR 72) Estimated cost Rs. 120 Crores (excluding land cost which will be provided by State Govt. free of cost). Banderdeva site seems to be technically feasible. Site details awaited from State Govt. for further technical feasibility study. 115

Development of Greenfield Airports Proposal Received from State Governments



MOPA - GOA Gangtok Sikkim Navi Mumbai, Maharashtra Chakan, Pune, Maharashtra Kannur, Kerala Kohima Nagaland Hassan & Gulbarga Karnataka Halwara Punjab Itanagar- Arunachal Pradesh

SL. NO.

NAME OF THE AIRPORT / STATE WHERE DEMAND HAS BEEN MADE Raipur / Chhatisgarh Bhopal/M.P. Ahmedabad/Gujarat Aurangabad/ Maharashtra Bhavnagar / Gujarat Rajkot/Gujarat

STATES WHICH HAVE PROVIDED LAND Chhatisgarh Madhya Pradesh Gujarat Maharashtra Gujarat Negotiation with Western Railway Gujarat Rajasthan

AREA OF LAND

PURPOSE

1 2. 3. 4 6. 7.

300 Acres 366 Acres 67.89 Acres 13.9 Acres 29 Acres 14.7 Hectares

Land free of cost for extension of Runway Land yet to be handed over by State Govt. Land for extension of Runway. Land yet to be handed over by State Govt. Development of Airport. Land yet to be handed over by State Govt. Installation of CAT I approach light. Land yet to be handed over by State Govt. Extension of Runway. Land yet to be handed over by State Govt. For extension of runway. Development of Airport. Western Railway yet to hand over land to AAI. Development of Airport. Land yet to be handed over by State Govt. For extension of runway, widening of runway strip and construction of isolation bay.

8. 9

Surat/Gujarat Udaipur/Rajasthan

36 Hectares (85 acres) 42.53 Acres * Land admeasuring approx. 2 acres is yet to be handed over by State Govt. 2.5 Acres 120 Acres 1440 Acres 150 Acres

10. 11. 12. 13.

Trivandrum / Kerala - do Chennai / Tamil Nadu Indore / madhya Pradesh

- do - do Tamil Nadu Madhya Pradesh

For Runway End Safety Area, land yet to be handed over To be given free of cost by State Govt. for development purposes. 27.57 Acres handed over. To be given free of cost by State Govt. for development purposes (for construction of parallel runway). To be given free of cost by State Govt. for development purposes. ( extension of runway)

117

SL. NO.

NAME OF THE AIRPORT / STATE WHERE DEMAND HAS BEEN MADE

STATES WHICH HAVE PROVIDED LAND

AREA OF LAND

PURPOSE

14.

Bhunter / H.P.

Himachal Pradesh

5.91 Acres 60 Acres

For construction of new terminal building etc. Land will be acquired for extension of runway after diversion of river Beas. To be given free of cost by State Govt. for development purposes. To be given free of cost by State Govt. for development purposes. To be given free of cost by State Govt. for development purposes. Request is being placed.

15.

Hubli / Karnataka

Karnataka

390 Acres

16.

Belgaum/Karnataka

Karnataka

370 Acres

17. 18.

Tirupati /Andhra Pradesh Jammu/ Jammu & Kashmir

Andhra Pradesh J&K

405 Acres

118

Sea Ports

Capacity at Indian Sea Ports


Capacity at Indian Ports Million Tones 2,000
1900 1600 1300 1000 700 400

1,100 600
Present By 2011-2012 By 2016-17
120

(8% CAGR up to XI Plan & 12% CAGR for the XII Plan)

Port Sector Opportunities


Projected Investments in Road Sector (2007-2012; XI Plan; Rs. Crore) Sea Ports Total 73,941 73,941
Port Opportunities XI Five Year Plan envisages a capacity addition of around 500 million tones and the XII Plan, an additional 900 million Tones Construction of 2 multipurpose berths in Haldia port at a cost of approximately US $ 20mn Development of a LNG terminal and general cargo ports at Ennore port at an estimated cost of US $ 425mn Construction of offshore container terminal at Mumbai port costing around US $ 273mn 121

Construction of 4th container terminal at Jawaharlal Nehru port at a cost of US $ 976mn

Development of other minor ports through the private sector

Ports Sector Overview


Ports cater to approximately 95% volume & 70% value of the total foreign trade Cheapest mode of transport Only sector where capacity is matching demand During 1999-2005, traffic has grown at a CAGR of 5.9%, while the capacity additions by major ports have grown at 7.4% Higher turnaround time - 3.5 days as compared to 10 hours in Hong Kong National Maritime Board (NMMB) has forecast a large scale capacity addition of by 2012

Sea Port Projects under NMDP Phase-I & II


NMDP - No. of Projects

NMDP - Estimated Cost (Rs. Billion)


77
22

PHASEI PHASEI - 180 180 Projects/ Projects/ 320 320 Bn Bn


27 22 17 12 7
5 11 11 10 10 22 17 13 14 9 9 27

76

62 47 32
22 49 42 37 38

17

Cochin

JNPT

New

Tuticorin

Mormug

Kandala

Ennore

Haldia

Chennai

Kolkata

Paradip

Cochin

Visakha

Mumbai

Haldia

Kolkata

Ennore

JNPT
35

New

Tuticorin

Mormug

NMDP - No. of Projects

NMDP - Estimated Cost (Rs. Billion)


77

PHASEII PHASEII - 96 96 Projects/ Projects/ 238 238 Bn Bn


27 22 17 12 7
4 7 4 4 1 6 3 5 5 4 20 17 16

62 47

49 36

32 17
21 8 15 16 7 3

29

Co ch in

Hald ia

JNPT

New

T u tico rin

M o rm u g

Ch en n ai

Visakh a

Kolkata

Tuticorin

Mormug

Kandala

Chennai

Paradip

Visakha

Mumbai

Kan d ala

Ko lkata

Parad ip

En n o re

M u m b ai

Cochin

Ennore

Haldia

JNPT

New

Kandala
12

Chennai

Paradip

Visakha

Mumbai

11

16 9 6

123

Ports Sector in India


Major Ports (under Government of India) 12 Major Ports 259 berths account for about 75% of total traffic Cargo handled 423 MT (2005-06) Non-Major Ports (under State Governments) 187 non major ports (61 cargo handling); 97 berths account for about 25% of total traffic Total Cargo handled-568 MT (2005-06)
124

Why PPP in Ports?


Induct Additional Resources Bring in private sector efficiency Client-Port Symbiosis for Port development and diversification Strong Global networking New business opportunities

125

PPP Framework in Ports Sector


Private sector participation and Joint Ventures permitted under Major
Port Trusts Act 1963

Comprehensive guidelines 1996 Joint Venture Guidelines 1998 Model Bidding Documents 2000

126

Areas for Private Sector Participation in Ports Sector

Construction and Operation of : Container Terminals Bulk, Break-Bulk, Multipurpose and specialized cargo berths Warehousing, Container Freight Stations, Storage Facilities and Tank Farms, Dry Docking Facilities Ship Repair Facilities Leasing of equipment for port handling and floating crafts from private sector Auxiliary Port Services (like Pilotage, Tugging and Mooring) Captive facilities for port based industries
127

Regulatory Principles followed in the Port Sector


100% FDI Open Competitive bidding Lease Period of BOT upto 30 years No Government guarantees on ROI Discourage private monopoly Independent Tariff Regulatory Authority Protection of labor interest
128

Procedure for Ports Private Sector Participation


For Terminals and Berths Request for Qualification (RFQ) Request for Proposal (RFP) Draft Concession Agreement finalized in pre-bid meeting Approval of PPPAC Selection Criterion - Highest Revenue Share to Port
129

Present Status of Private Investment


Already Operational: 14 projects with investment of Rs.3,516
crores:

Container terminals Liquid cargo berths General cargo berths Container Freight Station(CFS)
Under Implementation: 4 projects with investment of Rs. 2,898
crores:
Container terminals Single Point Mooring (SPM)
130

Berth Construction Plan


2006-07 15 Berths to be awarded during 2006-07 Total Capacity Addition 94 MT Total Investment Rs.6497 crores

2007-08 13 Berths to be awarded during 2007-08 Total Capacity Addition - 107.65 MT Total Investment - Rs. 7664 crores

131

Berth Under Construction/ Completed


Construction of two off-shore container berths - Mumbai LNG Re-Gassification Terminal - Cochin International Bunkering Terminal - Cochin Construction of 4 cargo berths - Kandla Creation of Berthing & Allied facilities off Tekra - Kandla Construction of cruise-cum-container berth - Mormugao Construction of Deep Draft berth for handling iron-ore and coal - Paradip Construction of Bulk Coal Terminal - New Mangalore Development of existing 8th berth as Container Terminal - Tuticorin Marine Liquid Terminal - Ennore Coal Terminal - Ennore Iron-Ore-Terminal - Ennore Second Container Terminal - Chennai Construction of WQ-8 Berth - Vizag Construction of EQ-10 Jetty at Inner Harbour - Vizag 132

Berth Construction Plan 2007-08


Construction of 2nd berth for handling chemicals / specialized grade of POL Mumbai Extension of container berth by 330 m - JNPT International Container Transhipment Terminal Cochin International Cruise Terminal Cochin Development of one berth in East Docks Vizag Construction of berths at Vasco Bay - Mormugao Construction of berth for clean cargo - Paradip POL Berth in Oil Dock Arm - New Mangalore Construction of six berths - Tuticorin Construction of three Shallow Draught Berths Tuticorin Construction of Coal Berth - Tuticorin LNG Terminal - Ennore Container Terminal - Ennore
133

Dredging Plan
Completed/ Under Process 7 Capital Dredging Projects to be awarded during 2006-07 Paradip, JNPT, Mumbai, Tuticorin, Ennore & Vizag Total Investment - Rs. 2040 crores 2007-08 Expected 6 Capital Dredging Projects to be awarded during 2006-07 Kolkata, Mumbai, Chennai, Cochin, Vizag & Mormugao Total Investment - Rs. 1105 crores Target draft - 14 meters (in phases)
134

Port Connectivity Projects under Implementation


Road 9 connectivity projects (completion in 1 to 3 years) 286.12 kms Total cost of Rs.1661 crores Rail 8 connectivity projects(completion within 2 years) 961.56 kms Total cost of Rs.1780.68 crores
Dedicated High Axle Load Freight Corridor on Western and Eastern routes at an estimated cost of Rs.22,000 crore
135

Port Sector - Issues


Faster decision making Criterion for selection- Revenue share/MGT Mergers and Acquisitions Tariff Regulation Post selection alteration in scope of business Captive facilities Dispute Resolution Mechanism

136

Urban Infrastructure

137

Urban Infrastructure
Dharavi Redevelopment Project : RE Developers + Town planners of Singapore & China 26 Bids received from Consortiums/ 19 short listed Commencement 2008/09 57,000 families currently in Dharavi proposed to be relocated to 225 sq. ft. multistoried tenements, +maintenance for 15 years by the developer 30 million Sq. Ft. of space to be provided by the RE Developers in exchange for which they will be allowed to build 40 million home and office space for sale

138

Urban Mass Transport System

139

Urban Mass Transport System


Ministry of Urban Development (MoUD) - Urban Metropolitan Transport Authority in all cities with 1m+ population MRTS creation through 30p cess on petrol and diesel consumption; Corpus of Rs.5,000 crore National Transport Revolving Fund New Bus Fleet, Metro Rail, Mono Rail, Modernization of existing Transportation Systems 26 cities in the country require MRTS - PPP 5 years for construction 30 years for operations Bus Rapid Transport System (BRTS) principally approved in four cities Ahmadabad, Pune, Nagpur and Indore
140

Delhi Metro
Extension of existing Delhi Metro to Noida & Gurgaon 80% will come from Haryana and UP governments + 20% will come from the Delhi Metro Rail Corporation (DMRC) DMRC running feeder busses

33% of the DMRC comes from property development (Renting out shops, advertising, development of malls and housing, IT parks)

141

Mumbai Metro
First city to have a single fare structure First Line Andheri Versova Ghatkopar Second line Charkop Mankhurd; bids invited Third Line Colaba Mahim Estimated at Rs.12,000 crore (totally underground) VGF being increased to 30% (from 20%) to make it more attractive to the Private Players

142

Kolkata Metro
Howrah Salt Lake connectivity: Rs.5,000 crore project: Cleared by the West Bengal Government (incl. Tunnel under Ganges) Jointly with Japan Bank of International Cooperation

Hyderabad Metro

Hyderabad Metro Rail Limited Separate SPV established Project on BOT; Single bidder with the lowest VGF Quote Will have Sixty Three stations 5 Yrs Construction + 30 years operations
143

Power

144

Market Overview Electricity sector: Overview


India is the 6th largest power consuming and 11th largest power producing country Demand for power is growing significantly driven by economic growth
MW (in 000's) 170 150 130 110 90 70 50 30 1998 2000 2002 2004 2006 Today 2010 2012 58 58.4 67.9 72.7
14% Gap 21% Gap

157.1 165.0 143.2

Per capita power consumption is currently c.631 kWh and expected to reach c.1,000 kWh by 2012 (China: 2,160 kWh, US 14,050 kWh) Current installed capacity is c.141,000 MW (China: 650,000 MW, Germany: 1,22,000 MW). Only c.100,000 MW equivalent is generated Planned capacity addition over the next 5 years is c.100,000 MW. The reserve margin remains negative with a shortfall of c.19% and this is expected to continue as demand outstrips supply The industry is in transition with the government encouraging private participation and unbundling of the value chain

130.5 119.0 108.5 96.9 100.3103.4 86.7 124.4 115.8 107.7

90.1 84.6 87.9 78.0 78.4 81.5

80.6 75.1 77.7 69.2 71.5 67.9 63.7

Peak supply

Peak demand

Installed capacity & GDP (PPP basis)


MW (00,000's) / GDP US$ trillions

Per capita consumption of electricity


11.9

14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 India Mexico Japan US Brazil China Aus 2.7 3.5 5.6 7.9 8.9 9.2 9.3

Canada US Australia Japan Brazil China Mexico 2,246 2,160 2,108 631 0 5,000 10,000
kWh

18,329 14,057 11,446 8,212

Rus

India

On average about 60,000 to 90,000 MW is required for US$1 trillion of GDP, while India currently has only 27,000 MW for every US$1 trillion of GDP on a PPP basis

15,000

20,000

Source: UNDP, CLSA

145

Overview

Total energy shortage & peaking shortage are 8.3% & 12.5% respectively To maintain the GDP growth of 9%, the generation capacity should grow
by around 12-13% per annum

Highly dependent on Coal - 54% Huge shortfall in capacity addition - 23,250MW is expected to be
commissioned as against 41,110MW (10th plan estimates)

Proposed to add 62,00MW of generating capacity in the 11th plan (20072012) requiring an investment of around US $ 55bn
146

Indian Power Sector Demand Supply Gap

170 150 MW (000's) 130


11% Gap

157.1 143.2 130.5 119 108.5 98.9 78 78.4 81.5 84.6 87.9 90.1 86.7 93.2 124.4 115.8 107.7 100.2
21% Gap

110 90 70 50
65.4 67.9

72.7

58 58.4 63.7

77.7 80.6 75.1 71.5 67.9 69.2

1998

2000

2002

2004

2006

2008

2010

2012

Peak Supply (MW)

Peak Demand (MW)


147

Opportunities Presenting

Ultra mega projects


Minimum capacity of 4000MW.Awarded through a tariff based competitive bidding process Nine sites identified in the states of Chhattisgarh, Jharkhand, Madhya Pradesh, Orissa, Andhra Pradesh, Gujarat, Karnataka, Tamil Nadu & Maharashtra 2 projects in Chhattisgarh & Gujarat already awarded. 2 projects in Andhra Pradesh (Krishnapatnam) and Jharkhand (Tilaiya) are expected to be awarded in April & July 2007 respectively. Each project involves a cost of around Rs 16000-18000 Crs respectively

Tariff based competitive bidding is proposed in awarding of transmission


projects.
148

Opportunities Presenting(Cont.)

Merchant power plants (MPP)


Provides better incentives to private players as price is solely determined by market dynamics MPPs absorb the full market risk Helps in efficient generation & distribution of power MPPs up to capacities of 1000MW would be provided coal linkage and captive coal blocks will be made available for MPPs in the range of 500 -1000MW.
149

Indian Power Sector A Profile

Installed capacity 107,000 MW (Thermal-76%, Hydro-23%, Nuclear-1%) Peak Demand


82,000 MW

Transmission lines - 5 Million Ckt. Kms Regional Grids 5 National Grid under progress Growth Rate of energy 9% per annum
150

Regional Grids

151

Future Power Supply Scenario By Year 2012

Peak demand (expected) - 157,000 MW Capacity Addition envisaged - 100,000 MW over the next 10 years Goal Power for all by 2012

152

Need for National Grid

Uneven disposition of Natural resources Coal reserves concentrated in Eastern region Hydro potential mainly in North Eastern & Northern region Establishment of large sized pit head stations to achieve economy of
scale

Load Centers located at distant locations in Northern, Western &


Southern regions

Constraints on Right-of-Way (ROW) Flexible & high capacity transmission system required for power
transfer to different regions
153

M A J O R Major E N EEnergy R G Y Resources R E S O U R in C India E S IN

IN D IA

Ja m m u
2 3 ,0 0 0 M W

L u d h ia n a
S IK K IM 1 ,7 0 0 M W

5 3 ,0 0 0 M W

N R
R A P P J a ip u r

D e lh i

N E P A L
P a rta b p u r L u ckn o w P a tn a V in d h y a c h a l

B H U T A N
C H IC K E N N E C K

G a n d h in a g a r P ip a v a v In d o re B h o p a l K o rb a T a lc h e r /Ib V a lle y R a ip u r

K o lk a ta

W R
T a ra p u r M u m b a i

B hu ba ne sw ar

H y d e ra b a d

V iz a g S im h a d r i

L E G E N D
G e n e r a tio n C o a l L o a d -C e n tre

S R
K a ig a K o z h ik o d e M a n g a lo r e B a n g a lo r e K r is h n a p a tn a m E n n o re S o u th M a d ra s C he nn ai C u d d a lo r e K a y a m k u la m T h ir u v a n a n th a p u r a m

H y d ro L ig n ite C o a s ta l

K u d a n k u la m
C O LO M B O

S R I L A N K A

N u c le a r

MY

AN

E R

B A N G L A D E S H

MM

AR

N E R

G u w a h a ti

154

Plan for National Grid A Phased Development


Phase 1 Already completed Interconnection of Regional Grids through HVDC Back-to-Back links having cumulative capacity of 5000 MW Phase 2 Partly completed Hybrid system comprising of high capacity HVDC and HVAC lines (both 765 kV and 400 kV) 2000MW, 1400kms long HVDC bipole between Eastern and Southern regions completed 400kV synchronous interconnections between Eastern and Western regions resulting into synchronous operation of power system having 50,000MW capacity completed This will transfer operational surplus and would provide flexibility in interregional transfer of power Present cumulative capacity is 8000 MW On an average, 1500-2000 MW is being transferred and about 35 MU/day is being traded 155

Need for National Grid.(Cont.)


Phase 2 Most of transmission lines would be part of associated transmission system of large sized generation project. Cumulative inter-regional capacity would be 23,000 MW Phase 3 to be completed by 2012 Ring of 765 kV transmission lines inter-connecting ER, WR and NR Cumulative capacity would be 30,000 MW This would be utilized for transfer of short term as well as long term surplus Estimated Investment : US$ 20 billion Powergrids Investment : US$11 billion Private sector Investment : US$9 billion This will facilitate development of power market
156

Development Grid D E V of E National L O P M E N T

O F N A T IO N A L G R ID

P H A S E -I

N R
A U R A IY A

N E R
5 0 0 M W
50 0 M W
B O N G A IG A O N M A L D A S A S A R A M D E H R I B IR P A R A S A H U P U R I V IN D H Y A C H A L K O R B A

M A L A N P U R

B U D H IP A D A R

E R

C H A N D R A P U R

W R
K O L H A P U R

1 0 0 0 M W
B A L IM E L A

5 0 0 M W
U .S IL E R U G A Z U W A K A

E X IS T IN G
B E L G A U M

U N D E R C O N S T .

H V D C

b a c k -to -b a c k 4 0 0 kV

S R
DW EE P

2 2 0 kV
ANDAMA NICOBA

LA KS HA

N&

157

D E V E L Oof P National M E N T O Development Grid

F N A T IO N A L G R ID

U R I

W A G O O R A D U L H A S T I R A V I S A T LU J

Phase II & III


T E H R I

K IS H E N P U R

JU L L A N D H A R M O G A B A L L A B G A R H ( D E L H I R IN G ) H IS S A R A 'P U R M E E R U T B E A R IL L Y L U C K N O W G 'P U R A L L A H A B A D /U N N A O M A L A N P U R S IN G R A U L I M 'P U R V A R A N A S I 5 0 0 M W S A T N A V IN D H Y A C H A L P U R N E A S IL IG U R I/B IR P A R A B A R H K A H A L G A O N B 'S H A R I F M A IT H O N JA M S H E D P U R T E E S T A

C H IC K E N

N E C K

B H U T A N
T A L A R A N G A N A D I B O N G A IG A O N

D IH A N G

D A M W E

N R

M 'B A D J A IP U R B H IW A D I A G R A

K A T H A LG U R I M A R IA N I M IS A B A D A R P U R T IP A IM U K H

S H IR O H I
25 00 MW

Z E R D A

D E H G A M

N A G D A

L IM B D I JE T P U R P IP A V A V

A M R E LI

B O IS A R

D H A B O L K O Y N A

B IN A S IP A T G A N D H A R / S E O N I K A W A S C H E G A O N K O R B A V A P I B H A N D A R A R A IP U R T A R A P U R A K O LA W A R D A C H A N D R A P U R P A D G H EA M R A V A T I 1 0 0 0 M W P A R LI L O N IK A N D

N O R T H K A R A N P U R A

N E R
B A N G L A D E S H

H IR M A

E R

R O U R K E LA

W R

T A L C H E R JE Y P O R E

K A R A D

K O L H A P U R

S R
N A R E N D R A S IR S I

R A M A G U N D A M W M 00 20
M W

G A Z U W A K A

V IJ A Y A W A D A

K A IG A

20

00

P O N D A

K R IS H N A P A T N A M C H IT T O O R

M Y S O R E

B A N G A LO R E H O S U R S O U T H C H E N N A I L E G E N D X P L A N E X IS T IN G / IX P L A N 7 6 5 K V L IN E S 4 0 0 K V L IN E S H V D C H V D C B /B B IP O L E N A T IO N A L G R ID X I P LA N S IN G A R P E T P U G A LU R C U D D A LO R E S A L E M K A R A IK U D I K A Y A T H A R K U D A N K U LA M

K O Z H IK O D E

LA KS HA DW EE P

C O C H IN K A Y A M K U LA M T R IV A N D R U M

7 6 5 K V L IN E S IN X P L A N . T O B E C H A R G E D A T 4 0 0 K V IN IT IA L L Y T O B E C H A R G E D A T 7 6 5 K V U N D E R N A T IO N A L G R ID

158

Major Inter Regional Links 8,000 MW Capacity


Sahupuri
220kV

Dehri Sasaram

Birpara

220kV

Salakati

Northernn
Auraiya

Allahabad
500MW

North-eastern
Malda Bongaigaon
400kV

Gorakhpur Singrauli /Lucknow

220kV

500MWW 220 kV

Eastern
Budhipadar

Malanpur

Vindhyachal

Korba

Western
Kolhapur

Raipur Chandrapur

400kV

Rourkela Jeypore Talcher Balimela

1000MW 220kV

500MW

2500MW 220kV

Belgaum

Ramagundam

Gazuwaka

Kolar

Southern

Upper Sileru

159

Growth of Cumulative Capacity of Inter-Regional Linkages

35000
Cumulative Capacity (MW)

30000 23000

30000 25000 20000 15000 10000 5000 0 Plan


Present By 2006-07 By 2011- 12
160

8000

Key Issues

Uncertainty in Generation Addition Mobilization of Funds Recovery of Investment Proper Energy Accounting System needs to be evolved to take care
of unscheduled power transfer

Accounting of transmission losses in different conditions Wheeling charges to different owners


161

Recommendations

Special methodology need to be adopted for recovery of


transmission charges of Transmission highways

Creation of Transmission Highways from resource pockets to load


centers, without linking them to a particular generation project

Most important is that there should be long term commercial


agreement to enable huge investment in transmission sector

162

Railways

Indian Railway Freight Movement Freight Movement (Million Tones)

750 700
666

728

650
601

600 550 500


5 18

557

02-03

03-04

04-05

05-06

06-07

Source: Railway Year Book 2005-06 & CSO

164

Railways Sector - Overview


Second largest network in the world Transports about 630 million tonnes of freight and 14 million
passengers per annum

Freight traffic generates 2/3rd of revenues, out of which bulk traffic Railways has formulated Rs 240 billion integrated railway
modernization plan till year 2010

accounts for 95% ( mainly Coal); Only 28% of the network is electrified

Has got low productivity of assets because of low investments in


modernizing infrastructure
Source: Indian railways, Edelweiss Research

Indian Railways Proposed Investments Rs.Crores

7 6 ,4 6 6

73000 63000 53000 43000


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

33000

07-08

08-09

09-10

11-12

12-13

Source: Planning Commission

166

Indian Railways Future Opportunities


Dedicated rail freight corridor

9,000 Km across the golden quadrilateral Overall project cost is approximately US $ 15bn and is expected to be completed in 5-7 years Phase I linking Mumbai, Delhi & Kolkatta and costing around US $ 5bn is expected to start by this end Traffic comprises of Coal, Iron ore, Cement & Steel

Source: Indian railways, Edelweiss Research

Indian Railways Growth Drivers


High Growth Rate of Economy will generate Huge Transportation Demand Pressure on existing Rail Network calls for Expansion of Capacities Reducing cost of operation will require keeping pace with Technology Capacity generation and Modernization will require Mobilization of Huge
Funds

More than Rs. 47,000 Crores required, only to complete almost 240
sanctioned Projects
168

Indian Railways PPP Projects


Background

State Government offered Financial Participation


Navi Mumbai connectivity through CIDCO in 1986 Creation of Konkan Railway Corporation in 1990 with State initiatives Sub-urban Projects in Mumbai, Chennai and Kolkata

169

Indian Railways PPP


Participation of States through SPV for financing Projects

Karnataka K-RIDE HMRDC Maharashtra MRVC Gujarat Kutch Railway Company

170

Public Private Partnership in Rail Infrastructure Projects


Cost sharing in Rail Infrastructure Projects Jharkhand -6 projects Karnataka -3 Projects Maharashtra- 3 Projects Tamil Nadu- 3 Projects West Bengal-1Project Andhra Pradesh- 1 Project Haryana- 1 Project Surendranagar - Pipavav Gauge Conversion (PRCL) Pipavav Rail Corporation Limited Connectivity to Pipavav Port Gandhidham - Palanpur Gauge Conversion (KRC) Kutch Railway Company Improving Connectivity to Mundra & Kandla Port

171

Railway Projects Recent Initiatives to indus


Private parties to run container trains Wagon Investment Scheme Development of Rail-side Warehouses & Logistic Parks Strengthening Rail Port Connectivity Development of Dedicated Freight Corridors

172

Private Operators for Container Operations


Sector Opened in 2006 Licenses offered for various corridors (Exim. & Domestic) to 14
players

Rs.540 Crore generated as fees Generation of Terminal & Wagon Capacity Return of approximately 20% for investors

173

Wagon Investment Scheme


Launched in 2005-06 Wagon procurement Guaranteed supply of rakes for loading 10% rebate on freight charges Rs.250 crore generated from 25 Rakes

174

Development of Rail Side Warehousing


Door-to-Door service Land at nominal fees by Railways 5% minimum revenue to be shared with Railways Lease period 30 years Memorandum of Understanding (MoU) with CWC has been signed to
set up rail side warehouse at 22 locations. Agreement finalized for 10 locations
175

Development of Logistics Park


Objective: Complete logistics solution Reduction in Door Bridging Cost Development of multi-user/ multi-commodity rail handling and warehousing facilities State Government are invited to participate in the venture

176

Port Connectivity Works


Rail Connectivity provided to Mundra and Pipavav Port Connectivity Strengthened for Mundra , Kandla and
Mangalore Port

Strengthening / New Port Connectivity through SPV route


being explored for Paradip, Krishnapatnam, Dahej and Hazira Ports by RVNL

177

Dedicated Freight Corridor Projects


Capacity Augmentation considering growth in Container ,Coal, Iron
&Steel

2700 km Corridor on Eastern & Western Routes will cost Rs. 22,000
Crore

Incremental Traffic of 97 million tonne and 4 million TEU projected by


2021-22 on both corridors

178

Traffic Projections
Route 2004-05 (Million Tonnes) 56 (32Trains*) 17 5 (15Trains**) 2021-22 (Million Tonnes) 137 (89Trains) 33 46 (70Trains) Incremental (Million Tonnes) 81 (57Trains) 16 41 (55Trains)

Eastern Western Container on Western Route (Lakh TEUs)

*Trains indicated each way. **Trains on Western Corridor is inclusive of Bulk and Container
179

Amritsar

Nagal Dam Chandigarh

Dedicated Freight Corridor Ludhiana-Son Nagar with Extensions to Durgapur/Bokaro/Tatanagar

Ludhiana
Bhatinda

Dedicated Freight Corridor Ludhiana Son Nagar with Extensions to Durgapur/ Bokaro/ Tatanagar
Legend: Main Route Feeder Route

Ambla Saharanpur
Panipat

Meerut Hapur
Harduaganj

Khurja

Tundla Kanpur
Unchahar Paricha

Allahabad

Mughal Sarai Son Nagar


Gomoh Asansol

Katni

Durgapur Tata Nagar Bondamunda

PR O PO S E D

Dedicated Freight Corridor (Western)


L U D H IA N A

F R E IG H T

C O R R ID O R (W E S T E R N )

L E G E N D :M A IN R O U T E FEE D E R RO U TE H IS S A R D ELH I R EW A RI JA IPU R JO D H PU R L U N I PH U L ERA T U N D LA A G RA

M A R W A R JN .

G A N D H I D H A M M u n d ra P o rt K A N D LA P o rt R A JK O T H a z ir a P IP A V A V

P A LA N PU R M EH SA N A A H M ED A BA D V IR A M -G A M V A D O D A RA SU RA T V A LSA D

O K H A

V A SA I R O A D M U M BA I

D IV A T hal M u m b a i P o rt

Approximate State-Wise Length of Track and Cost of Dedicated Freight Corridor on Both Western & Eastern Routes
STATE Bihar Uttar Pradesh Haryana Punjab Delhi Maharashtra Gujarat Rajasthan West Bengal Jharkhand Kms. 91+139* 1031 213 109 45 192 527 557 229 * 180* Cost (in Rs. Crores) 782 8159 1473 602 346 1465 4025 4289 -

Kilometerage in States on account of extension of Eastern Corridor to Kolkata. No cost estimate has been made for the extension between Sonnagar-Kolkata.
182

Challenges Ahead
Massive Capacity Augmentation ahead of Demand Resource Mobilization Induction of appropriate technologies in Rolling Stock Reducing Unit Cost of Operation

183

Opportunities under PPP for State Governments


Rail Connectivity to SEZ Logistics Hubs Financing of remote area projects Warehousing/ ICDs ROB/RUBs Rail Connectivity to Minor Ports
184

Issues to be discussed
1. 2. 3.

Macro overview of Indian Economy Indian infrastructure industry outlook Infrastructure Sectoral Outlook & Policy Initiatives: Transportation (Roads, Ports, Railways, Airports), Power, Water & Waste Water, Irrigation, Buildings & Industrial Parks, Real Estate & Townships, Oil & Gas Indian Infrastructure Companies & Competitors Key Success Factors driving Indian Infrastructure Industry Strategies for Successful Entry for Foreign Companies Avenues of Collaboration & FDI International Infrastructure Consultants (IIC)
185

4. 5. 6. 7. 8.

Real Estate

186

Overview

Real Estate industry is estimated at US $12 billion* Potential Growth is estimated at 25-30% pa IT/ITES is well performing Requirement of 150 mm sq. ft over the next five years Requirement of 500-600 mm sq. ft over the next ten years

*- Source : India: Economics, Retailing & Real Estate, Merill Lynch, 30 May 2005

187

Compelling Macroeconomic Factors of Indian Real Estate Market


New FDI Regulations Favorable Regulatory Environment Lack of Development Capital Residential mortgage markets Upcoming REITs

$575B shortfall

O P P O R T U N I T I E S

23 million unit / yr residential demand Real Estate Shortage 200M sq. ft commercial space shortage in IT sector 60% Massive Urbanization 27% 2005 2025

Urbanization rate of 30% creating residential housing demand triple the amount of the entire Mexican residential market

Indian Urbanization Level Rising Income Levels Income growth at 12%, with emerging middle class (226M people, more than three-fourths of the entire US population) incomes growing at 16%

5th largest world economy growing 9% p.a. Strong GDP Growth Shift from agrarian to manufacturing and services economy

188

Strong Investment Fundamentals in Real Estate Industry

The average construction project in India returns 18%,


double that of the US (Source: McKinsey)

Indian real estate developers have been averaging 30%


annual returns (Source: Washington Post, 2/2005)

189

Residential Opportunities

Housing shortage of 20-40 million McKinsey/NCAER forecasts new housing demand to reach four-six
billion sq. ft by 2015

Annual revenue of $250 billion, forecast to grow 10% annually over


next few years

Retail and organized retail are growing annually at 5% and 25% - 30%,
respectively

Source: Ernst & Young, FICICI, Housing Committee, Kotak Institutional Equities, Knight Frank, Images-KSA Technopak

190

Indian Construction Industry Players

191

Indian Construction Companies

Traditionally, Indian Private Sector has been active in the

Construction, and to a certain extent Engineering and Procurement (EPC), phase of the infrastructure projects, as well.

Some of these Private Sector companies has, off-late, actively

entered the development phase of the infrastructure projects; L&T, NCCL, IVRCL, Ramky Infrastructure Limited the extent the Development Projects helps these companies to grow their Core EPC business exclusively entered the Infrastructure Project Development activity, which do not have a presence in the Construction Activity

Such companies, take marginal equity in Development Projects, to There are also companies like the GVKs and the GMRs that have
192

Indian Construction Companies

The Top Ten companies operating in the construction space

control a large part of the overall industry market share; say, more than 65% of the Industry

The rest of the industry are made up of second and third tier

companies that are growing rapidly to capture more market share

As compared to International Construction companies, Even the top

rung Indian companies are yet to gain a larger presence in the Operations & Maintenance segments of the Construction Value Chain
193

Indian Construction Companies

The Top Ten companies operating in the construction space

control a large part of the overall industry market share; say, more than 65% of the Industry

The rest of the industry are made up of second and third tier

companies that are growing rapidly to capture more market share

As compared to International Construction companies, Even the top

rung Indian companies are yet to gain a larger presence in the Operations & Maintenance segments of the Construction Value Chain
194

Identification of Infrastructure Projects

Financing & Development

Consulting

Engineering & Design

Infrastructure & Construction Industry Value Chain

Infrastructure Industry Value Chain


Procurement Construction Operations & Maintenance Management
195

Construction Industry Value Chain

Profile of Major Indian Construction Companies (2008)

Return on Capital Employed (ROCE)

High

L&T Simplex
Sales: Rs.2,812 Crore ROCE: 18%

Sales: Rs.25,225 Crore (incl. ECC) ROCE: 29%

IVRCL
Sales: Rs.3,660 Crore ROCE: 15%

NCCL
Patel Eng.
Sales: Rs.1,317 Crore ROCE: 12%

HCC

Sales: Rs.3,472 Crore ROCE: 12% Punj Lloyd Sales: Rs.4,542 Crore Jaiprakash ROCE: 8.5% Sales: Rs.4,273 Crore ROCE: 7%

Low

Gammon ROCE: 11% Sales: Rs.2,333 Crore ROCE: 10%

Sales: Rs.3,082 Crore

Low

Sales

High

196

Indian Construction Industry - Key Success Factors (KSF)

Ability to develop strategic alliances to Pre-Qualify Ability to deliver an end to end solution: Engineering & Design Procurement
Construction Operations & Maintenance

Ability to offer lower cost solutions and a more certain delivery Ability to deploy Technology Upgradation, Superior Construction Methods &

Mechanization Ability to offer Value add through innovation; staying on the fore front of scientific and technological advances Ability to Differentiate & move up the value chain, use partnering Ability to deploy and retain, well trained, cheap and productive labor Deep Pockets (Access to financing and competitive costs)

197

Strategies for successful entry for Foreign Companies into the Indian Construction Sector Given that the government is committed to speed up infrastructure creation,

opportunities for infrastructure & construction are immense Indian companies have reasonably good access to Capital, but, challenges they are currently facing are, in securing: Quality & trained Manpower Access to Technology, Engineering and Design, Sophisticated Construction Methods & Mechanization

Acceptable practices under Safety, Health & Environment Foreign Companies can work with Indian companies in securing the above It is important for Foreign companies to enter into a tie up with the right
Indian partner who can manage the environment, for a successful venture International Infrastructure Consultants (IIC), with their decades of experience in Construction & Infrastructure , will be in a position to appropriately structure an arrangement, with the right Indian partner, for the 198 Foreign companies

Contents Organization Overview Business Activities Track Record IIC Value addition to Clients

200

IIC is a full service advisory firm providing financial, managerial, and implementation advisory services to clients across the infrastructure sector
Core Values

Commitment to deliver superior value to our clients We aim to achieve this commitment through:

Teamwork Integrity Professional excellence An entrepreneurial spirit

People

Our greatest asset is our people and their overarching priority is to ensure that our clients receive the best possible advice Each engagement is headed by a management team member and staffed with professionals who are experts in their chosen sectors to customize our solutions to the needs of clients
201

Organization Overview

Vision
To be a full service advisory firm providing advice to domestic and international clients to create state of the art infrastructure that enhances quality of life.

Mission
To be a preferred world-class organization providing advisory services for the Infrastructure sector with particular focus on power, oil & gas, transportation, logistics and urban infrastructure

Values
To facilitate development of world class infrastructure by delivering superior value to clients through teamwork, integrity, professional excellence and entrepreneurial spirit.

202

Organization Overview IIC


Chairman Dr. G.V. Ramakrishna Directors Dr. A. Ramakrishna Mr. S. Chandrasekar Executive Directors Mr. A. Rajasekhar Mr. Philip Verghese Corporate Advisory Management Advisory Financial Advisory
203

Advisory Panel Members Dr. M.R. Srinivasan Mr. M.S. Ramachandran Mr. T.L. Sankar Mr. V.K. Mathur

Program Management

Information Technology

Board of Directors
Dr. G.V. Ramakrishna is Chairman of IIC. He was the first Chairman of SEBI and served as a member of the Planning Commission of India. His career spans over 5 decades of distinguished civil service in the Government of India. Dr. Ramakrishna was awarded the Padma Bhushan in 2005 for distinguished service of high order in civil service by the Government of India. IIC is the only company in which he has agreed to serve as Director. Dr. A. Ramakrishna is a founder-director of IIC. Prior to founding IIC, he was Deputy Managing Director & President and Member of the Board of Directors of Larsen & Toubro Limited. Under his leadership, revenues at ECC, the construction division of L&T, grew from Rs. 4 billion in 1991-92 to Rs. 69 billion in 2004-05.

Mr. S. Chandrasekar is a founder-director of IIC. Prior to founding IIC, he was head of Human Resource Development and Plant & Machinery in the Construction division of Larsen & Toubro Limited. He is the recipient of a National Award for his outstanding contribution in the field of HRD. He serves on the Board of Governors of National Academy of Human Resource. He is a professional member of Indian Society of Applied Behavioral Science and an alumni of the well known global institution, National Training Laboratory (NTL), USA, the birth place of Behavioral Science.
204

Board of Directors
Mr. A. Rajasekhar is an Executive Director of IIC. He is a trained lawyer and has held senior investment banking positions in the Singapore and Frankfurt offices of Dresdner Kleinwort. He has over 10 years experience in advising on transactions in various industry sectors including Power and Utilities, Oil & Gas and Transportation. He holds a Masters in Law degree from the University of Tuebingen, Germany and a Bachelor of Law degree from the University of Madras, India. Mr. Philip Verghese is an Executive Director of IIC. Previously, he was a Vice President with Dresdner Kleinworts (DrK) Asia Corporate Finance team. He has over 6 years experience in advising on M&A and debt transactions in various industry sectors including Power and Utilities, Oil & Gas and Transportation. Prior to DrK, Philip was a Senior Consultant with Coopers & Lybrand. He earned an MBA from the Wharton School, University of Pennsylvania and is a qualified Chartered Accountant.

205

Advisory Panel
Dr. M.R. Srinivasan was former Chairman, Atomic Energy Commission and a former member of the Planning Commission and has held a number of other senior positions in the Government of India. He is a pioneering nuclear scientist, who played a pivotal role in planning, designing, building and operating of nuclear power stations in India. His area of expertise includes: Atomic Energy, Nuclear Power, Reactor Engineering, Power sector studies and National Security. He is currently a member of the Atomic Energy Commission and is Chairman of the Higher Education Task Force, Karnataka. He was awarded the Padma Shri in 1984 for distinguished service in Science and Engineering. Mr. M.S. Ramachandran was until recently Chairman of the Indian Oil Corporation Ltd (IOC). He took over as Chairman of IOC during the crucial period when the Administered Price Mechanism was being dismantled in the oil sector by the Government of India. Mr. Ramachandran was also Executive Director, Oil Coordination Committee, and was a key driver of IOCs forays into foreign products market.

206

Advisory Panel
Mr. T.L. Sankar is an internationally recognized expert in energy and development. He has spent the last 35 years in Indias premier civil service the Indian Administrative Service. During his service, he occupied important positions in the State of Andhra Pradesh and Government of India (GOI), including Principal Secretary (Industries), Principal Secretary (Finance), Chairman of Andhra Pradesh State Electricity Board and Energy Advisor to GOI Planning Commission. He was awarded the Padma Bhushan in 2004 for distinguished service of high order in civil service by the Government of India. Mr. V.K. Mathur was Chairman and CEO of International Airports Authority of India. He was responsible for managing and developing Indias five international Airports which handle over 20 million passengers and 350,000 tonnes of air cargo annually. He also served as Director, Production and Projects and member of the Board of Directors of Maruti Udyog Limited and as Joint General Manager of the Industrial Reconstruction Bank of India. He currently serves on the Advisory Panel, Ministry of Civil Aviation and is a member of CII National Committee on Aviation.

207

Business Activities Financial Advisory

Advisory Services

Service Scope

Mergers, acquisitions, divestitures, issuance of equity or debt capital, or a combination of these

Identify opportunities Perform due diligence & valuations Facilitate negotiation & risk management Deal completion support Financing & Execution

208

Business Activities Financial Advisory

Recent engagements
POWER COMPANY FINANCIAL ADVISOR Financial advisory services to raise capital for development of 1500 MWs of power generating capacity LOGISTICS COMPANY PLACEMENT AGENT Placement of equity to raise growth capital for a large logistics company POWER COMPANY FINANCIAL ADVISOR Sell-side advisor to a large German utility company on sale of a significant equity stake in a power project in the Philippines
2007

PORT COMPANY FINANCIAL ADVISOR Sell-side advisor to an established port-owner operator on sale of a significant equity stake

2006

2007

Current

209

Business Activities Financial Advisory


Typical Scope of a Financial Advisory Engagement Phase I - Preparation

Phase II - Execution

Phase III - Completion


Coordinate and assist, as directed by the Company, in communication and negotiations between the Company, existing and potential partners and/or lenders in relation to the Transaction; Intelligence, research and analysis of domestic and foreign equity markets, as applicable; Valuation in order to work out its maximum value; assist the Company in compiling a list of potential purchasers which would include a pre-marketing and short listing exercise; Prepare, with the assistance of the Company and other advisers, the information memorandum which will form the basis for marketing the equity interest in the Transaction to potential purchasers; Assist the Company in identifying and contacting an agreed list of potential purchasers, dispatch the information memorandum to such purchasers and deal with questions arising;

Organize a data room (either virtual or physical) with relevant information necessary for the sale process; and Manage the preparation of presentations by the Company to potential purchasers; Advise, in conjunction with the other advisers, in relation to any offers received or approaches made in connection with the sale process; Assist, participate (if requested by the Company) and advise in conjunction with the other advisers, in discussions and negotiations with potential purchasers and their respective advisers; Establish continuous communication channels with potential equity investors. IIC will monitor closely the real interest expressed by each of the potential equity investors; Assistance in evaluation and selection of preferred bidders; Analysis and interpretation of proposals submitted by potential equity investors including aspects such as the sales price, risk hedging and other issues

Assist the Company in coordinating the production of necessary documentation relating to the transaction; Sale and Purchase Agreement Shareholder Agreement Liaise with relevant authorities and entities to hasten the approval and consent process to complete the sale

210

Business Activities Financial Advisory


IIC Value Addition to a mid sized logistics company in Bangalore
Client Need

Mid sized logistics company required capital to build infrastructure and grow in to a fully integrated third party logistics provider

IIC Role

Analyzed financing options Prepared company internally for financing Developed business plan and information package to attract inventors Shortlisted investors and facilitated due diligence Negotiated investment terms.

Result

Secured US $ 20 million from foreign financial investor to be applied towards developing physical infrastructure Company targets Rs. 500 crores of revenues by 2010

211

Business Activities Management Advisory

Advisory Services

Service Scope

Organizational development, organization structure, human resources management & systems, change management, corporate strategy, growth and a combination of these

Vision, mission & value creation Business portfolio & organizational structure review Facilitate organization development & change management aimed at sustainable growth Human resources management & systems

212

Business Activities Management Advisory

Recent engagements
LARGE CONSTRUCTION & INFRASTRUCTURE COMPANY MANAGEMENT ADVISOR Management & strategic advisory services for organizational development
2007

WATER & WASTE WATER, CONSTRUCTION & INFRASTRUCTURE COMPANY MANAGEMENT ADVISOR Management & strategic advisory services for organizational growth
Current

LARGE CONSTRUCTION & INFRASTRUCTURE COMPANY MANAGEMENT ADVISOR Facilitating market, competition & growth assessment

Current

213

Business Activities Management Advisory


Typical Scope of a Management Advisory Engagement
Revisit organization vision, mission and values

HR Related Interventions

Identification of critical issues Problem solving through group participation Developing a Strategic plan & Roadmap* Facilitate brand building exercise Team building exercise Recommendation phase Implementation and review phase Process review Organisation re-design

Role clarification workshop Leadership and Motivation workshop Creativity and Reward workshop

*Developing a Strategic Plan & Roadmap


Facilitate

indentifying Key Industry Success Factors, Industry attractiveness, Firm Competencies, Internal Strengths/ Weaknesses & Opportunities/ Threats Facilitating evaluation of Product/ Market Attractiveness & Facilitate Developing a Strategic Plan
214

Business Activities Management Advisory


IIC Value Addition to a Large Construction Company in Hyderabad
Client Need

Large construction & infrastructure company required organizational redesign, focused organizational structure and a robust strategic plan that will unleash the companys strengths and allow the company to scale to the next level and position itself as a medium to large size infrastructure operator

IIC Role

Organizational redesign Role Clarification workshop Problem solving through group participation Leadership and motivation workshop Developed Strategic Plan & Road Map

Result

A revised organogram was drawn up that allowed the client to operationally focus, exercise appropriate control and manage the operations through timely interventions A robust Human Resources Strategy was put in place The client had a strategic plan in place, such that the client was in a position to channelize the resources of the company into optimal product/ markets.

215

Business Activities Program Management

Advisory Services

Service Scope

Facilitate clients to manage and execute large projects, to achieve on time and at cost completion. Professional and technical expertise at managing all aspects of project planning and implementation, from engineering to procurement to construction and completion Setting up facility management systems for the operation and maintenance on completion

Advice on the compatibility, implementability, constructability and functionality of master plans, designs, schedules, financial & material resources plans, safety plans, and quality plans Advise on the physical and financial progress Coordination and trouble shooting during execution

216

Business Activities Program Management

Recent engagements
AIRPORT OPERATOR PROGRAM MANAGEMENT ADVISOR Assistance in project management & construction monitoring of a major airport project INTEGRATED TOWNSHIP DEVELOPER PROGRAM MANAGEMENT ADVISOR Program management advisory services for a portfolio of integrated township developments IT/ITES SEZ DEVELOPER PROGRAM MANAGEMENT ADVISOR Project management advisory services for an IT/ITES Special Economic Zone project

Current

Current

Current

217

Business Activities Program Management


Typical Scope of a Program Management Advisory Engagement
Advisory Services at the Planning Stage

Assembling a competent consultants, defining their responsibilities and negotiating the best term Vetting the aesthetics, constructability, functionality, compatibility and implementability of the master plan, site plan, architectural, structural and detailed drawings, external and internal services plans, bill of quantities, specifications,, master schedule and the financial and material resources plan Selecting/nominating contractors, tender documentation and award of contracts

Advisory Services at the Execution Stage Till Project Completion and Close Out

Coordinating the services of the consultants and contractors including troubleshooting to achieve timely completion with quality assurance, cost control and adherence to the health and environment safety plan Analyzing all physical and financial progress reports and advising on corrective measures, if required Examining variations, if any, and advising for acceptance or rejection thereof Specifying guidelines for structuring a Project Completion Report and its subsequent vetting on submission Advising on the scope and extent of facility management services to be provided, the selection of facility management service providers, issue, vetting and award of facility management contracts for both specialized and common services 218

Business Activities Program Management


IIC Value Addition to an Integrated township development company in Chennai
Client Need

Ability to concentrate on their core business and the overall aspects of the project without getting involved in day to day coordination and execution Completion of the project on-time, on-cost and to the prescribed quality Reduction in contractors potential for claims due to well coordinated contractorconsultantproject management interface Effective and efficient management of the facility for operations and maintenance on completion

IIC Role

Providing technical expertise and advice with specific focus on engineering and building systems Providing a greater control over budget drivers including design aspects of the building infrastructure and services, interface and coordination and deliverables Providing greater schedule control through pre-contract administration, independent post-contract trouble shooting and coordination during execution Ensuring a close interface between project planning, contract administration/execution, project management and facility management leading to smooth operations and maintenance on completion

Intended Result

Cost effective and timely development, execution and completion of the project with quality and safety Providing a specialists approach through advice and technical expertise on planning, engineering, design, contract administration, construction and project management, coordination, costing, scheduling, quality control, safety, accessibility to the physically challenged and facility management 219

Business Activities Information Technology


Advisory Services

Service Scope

We develop enterprise resource planning & information technology solutions for our clients by leveraging our superior knowledge of the infrastructure domain

Define architecture & design framework Build the application Roll out solution across the organization Provide continuous support for the solution

Recent engagements
LARGE CONSTRUCTION COMPANY IT SOLUTION PROVIDER Development and implementation of a company-wide ERP solution
Current

220

Business Activities Information Technology


Typical Scope of an Information Technology Advisory Services

Initially carry out the pre-deployment activities including studying the as-is processes and document flow in detail and documenting the same. Study the various Role based access control levels applicable at every stage and prepare a System Requirement Specification (SRS) document. On approval of SRS from the client, IIC will proceed to deploy its product, Online Management of the Networked Information (OMNI), to suit the clients requirements.

Modules part of the ERP system


The Job Status module is designed to manage jobs more profitably, more efficiently, and more effectively. Accounts Payable module allows client to distribute non-labor costs to the Job Status and General Ledger Modules. The Construction billing module calculates invoices accurately according to business rules you define, giving you the flexibility to meet the diverse terms and billing methods of contracts and service agreements. The Contract Management/Document Tracking (CM/DT) module logs and tracks documents, manages proposals and issue change order documents. The Equipment Management module is designed to handle all aspects of equipment management including equipment availability, actual usage & charging equipment cost to jobs. The General Ledger module is designed to summarize all the financial information about the clients business on a company-wide basis 221

Business Activities Information Technology


IIC Value Addition to a large construction and infrastructure company in Hyderabad
Client Need

Reduce construction time through collaboration. Simplify information and process integration. Lower total cost of ownership Near real-time decision making process with measurable key performance indicators All of this resulting in increased Productivity & Profitability

IIC Role

IIC to deploy the ERP product, Online Management of the Networked Information (OMNI) to suit the clients requirements.

Intended Result

Intended to collapse the construction time and simplify information and process integration Intended to improve project management through appropriate and timely decision making and trouble shooting on Projects Intended to improve productivity and profitability of the company

222

Thank You

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