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Second largest road
network
• India has the second largest road network in the world, spanning a total of 4.7 million
kilo...
• The engineering sector is delicensed;
100 per cent FDI is allowed in the
sector
• Due to policy support, there was
cumul...
Source: Ministry of Road, Transport and Highways
(MoRTH) – Annual Report 2012-13, Aranca Research
Roads
(Total length: 4.7...
India has the second largest road network in the world (4.7 million kilometres)
Roads bear about 85 per cent of the countr...
Roads/ bridges infrastructure value in India
(USD billion)
The value of total roads and bridges infrastructure in India is...
Lane composition of national highways (FY13)National highways account for 1.7 per cent of the total road
network in India
...
The National Highway Authority of India (NHAI) is a government agency responsible for construction, maintenance and
develo...
NHDP Phase Project description
Total length
(Kms)
Cost Development Model
Phase I
Development of Golden Quadrilateral, Nort...
NHDP Phase Project description
Total length
(Kms)
Cost Development Model
Phase V
Upgradation of four-lane highways to
six-...
The Special Accelerated Road Development Programme for the North Eastern region (SARDP-NE) is aimed at developing
road con...
Total length (Kms) Total cost (USD billion)
Approved 5,477 USD1.6
Awarded 5,049 USD1.5
Completed (By December 2012) 1,960 ...
During 2011, India had 758 PPP projects across various sectors, of which 405 are dedicated towards roads and highways
The ...
Awards won by BOT private playersRoad construction projects awarded to BOT companies
went up at a CAGR of 62 per cent over...
Source: Aranca Research
Notes: NH – National Highway
Until 2005, the road construction market was dominated by public sect...
Source: NHAI, MoRTH, Aranca Research
Notes: FDI - Foreign Direct Investment
Increasing private
sector participation
• Gove...
Source: Aranca Research
Policy support
Greater government
focus on
infrastructure
Standardised
processes for
bidding and t...
Higher individual discretionary spending has led to increasing spending on cars, motorbikes and scooters
Growing domestic ...
Trends in passenger vehicle sales (in million)
Total auto sales across categories are estimated to rise 6-8 per cent in FY...
Length of National Highway added in the various
Five-Year Plans (kilometres)
Road addition in the 3rd Five Year Plan was o...
Share of infrastructure in total bank fundingInfrastructure is a priority of the government’s economic
policy; funding for...
Combined fiscal deficit of the centre and state
governments (% of GDP)
The government has been eager to involve private se...
% of BOT share in different phases of NHDPPhase I and Phase II of NHDP were mostly developed by
public funds with the BOT ...
Source: Aranca Research,
Notes: FDI - Foreign Direct Investment, FII - Foreign Institutional Investors
Infrastructure is a...
Issue of tax-free
infrastructure bonds
• Infrastructure finance companies, such as India Infrastructure Finance Corporatio...
For updated information, please visit www.ibef.org
Project
Length
(kilometre)
Cost (USD
million)
Company
Four Laning of Co...
For updated information, please visit www.ibef.org
Outlay for roads under respective Union Budgets
(USD billion)
Roadways ...
Toll revenue: IRB Infrastructure Limited
(USD million)
IRB Infrastructure is one of India’s leading BOT operators
with a b...
Won three road
projects worth
USD411 million
Won first ultra-mega
NHAI road project
worth USD750 million
Acquired MVR
Infr...
Revenue trends: IL&FS Transportation
Networks Limited (USD million)
ITNL has the largest BOT road asset portfolio (in term...
Was awarded
order for 1,086 lane
kilometres for a
total value of
USD1.5 billion
Was awarded order
for 1,129 lane
kilometre...
Revenue trends: Noida Toll Bridge
(USD million)
Infrastructure Leasing and Financial Services Ltd (IL&FS)
promoted Nationa...
Projects to be awarded (in kilometres)
National Highway Authority of India (NHAI) aims to award 2500 kilometres of project...
PPP opportunity over the next five yearsDevelopment of national highways through Public-Private
Partnership (PPP) is expec...
Projected growth of vehiclesIn India, roads remain the most important means of
transport; it accounts for 85 per cent of p...
Summary of foreign contract awardsForeign contractors were awarded projects worth about
USD1.69 billion during 1999-2011; ...
Source: NHAI, MoRTH, Union Budget, Aranca Research
Notes: FDI - Foreign Direct Investment, FII - Foreign Institutional Inv...
Ministry of Roads Transport and Highways
Transport Bhavan
1, Parliament Street
New Delhi –110001
Phone: 91-11-23719097, 23...
BOT: Build Operate Transfer
CAGR: Compound Annual Growth Rate
EPC: Engineering, procurement and construction
FDI: Foreign ...
NHDP: National Highway Development Project
USD: US Dollar – Conversion rate used: USD1= INR54.43
Year INR equivalent of one US$
2004-05 44.95
2005-06 44.28
2006-07 45.28
2007-08 40.24
2008-09 45.91
2009-10 47.41
2010-11...
India Brand Equity Foundation (IBEF) engaged Aranca to prepare this presentation and the same has been prepared by
Aranca ...
India :Roads Sector Report_August 2013
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India :Roads Sector Report_August 2013

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India has the second largest road network in the world, spanning a total of 4.7 million kilometres. Roads in India bear about 85 per cent of the country's passenger traffic and 60 per cent of freight traffic.

The value of total roads and bridges infrastructure is expected to touch US$ 19.2 billion by 2017. The key factors responsible for driving demand in the sector have been the rise in two-wheeler and four-wheeler vehicles and increasing freight traffic. Rising per-capita incomes and a growing middle class coupled with easier access to finance and a wider price range of vehicles have boosted car sales. During 2007-14, the sales of passenger and commercial vehicles are expected to increase at a compounded annual growth rate (CAGR) of 15 and 13.5 per cent to touch 3.5 and 0.85 million respectively.

Infrastructure spending by the government is expected to touch US$ 1 trillion in the next Five-Year Plan (FY13-17). To promote the sector, the government has allowed 100 per cent foreign direct investment (FDI) under the automatic route. Development of national highways through Public-Private Partnership (PPP) is expected to remain the key focus area for the government. During the next five years, investments through PPP are expected to be over USD41 billion for national highways and around USD10 billion for state highways.

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India :Roads Sector Report_August 2013

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  2. 2. Second largest road network • India has the second largest road network in the world, spanning a total of 4.7 million kilometres. This is used to transport over 60 per cent of all goods in the country and 85 per cent of total passenger traffic Rising investments in road sector • The Planning Commission of India aims to spend nearly 20 per cent of the total investment of USD1 trillion during the 12th Five Year Plan (2012–17) to develop roads Growing private sector involvement • The private sector is emerging as a key player in the development of road infrastructure in India Rapid growth in national highways • National highways are expected to reach 85,000 kilometres by the end of the 12th Five Year Plan from 71,772 kilometres currently Source: Planning Commission, Aranca Research
  3. 3. • The engineering sector is delicensed; 100 per cent FDI is allowed in the sector • Due to policy support, there was cumulative FDI of USD14.0 billion into the sector over April 2000 – February 2012, making up 8.6 per cent of total FDI into the country in that period Growing demand Source: NHAI, MoRTH, Planning Commission, Business Monitor International, Aranca Research Notes: NHAI - National Highways Authority of India, MoRTH - Ministry of Road Transport and Highways Robust demand • Greater connectivity between different cities, towns and villages has led to increased road traffic over the years • Growth in automobiles and freight movement commands a better road network in India Attractive opportunities • Roads and bridge infrastructure industry to be worth USD21 billion by FY17 • Approximately 9,500 kilometres of projects are expected to be awarded by NHAI during 2012–13 Policy support • Road infrastructure is a key government priority; the sector has received strong budgetary support over the years • Financial institutions have received government approval to raise money through tax-free bonds Increasing investments • USD1 trillion worth of expenditure on infrastructure is estimated over FY13–17 • Government of India aims to develop a total of 66,117 kilometres of roads • Growing participation of private sector through Public-Private Partnership (PPP) 2009 Roads & bridges infrastructure value: USD6.9 billion FY17E Roads & bridges infrastructure value: USD19.2 billion Advantage India
  4. 4. Source: Ministry of Road, Transport and Highways (MoRTH) – Annual Report 2012-13, Aranca Research Roads (Total length: 4.7 million Kms) State Highways National Highways District and Rural Roads Total Length: 155,716 kilometres Share: 3.3 per cent of the total roads in India Total Length: 79,116 kilometres Share: 1.7 per cent of the total roads in India Total Length: 44,55,010 kilometres Share: 95.0 per cent of the total roads in India
  5. 5. India has the second largest road network in the world (4.7 million kilometres) Roads bear about 85 per cent of the country’s passenger traffic and 60 per cent of freight traffic Length of national highways (kilometres) Passenger vehicle sales (Million) NHDP toll collection (USD million) Highway projects awarded (kilometres) by NHAI Share of infrastructure in total bank funding (%) 2.3 677 64.5 0.71 58,112 14.4 6,491 435* 3.1 71,772 FY03 FY12 Source: National Highway Authority of India (NHAI), National Highway Builders Foundation, ICRA Ltd, Reserve Bank of India (RBI) Notes: FY - Indian Financial Year (April-March), NHDP - National Highway Development Project, Aranca Research; Note: * - Data for FY11
  6. 6. Roads/ bridges infrastructure value in India (USD billion) The value of total roads and bridges infrastructure in India is expected to grow at a CAGR of 17.4 per cent over FY12-17 to reach USD19 billion Currently, the Government of India aims to develop a total of 66,117 kilometres of roads under various programmes such as NHDP, SARDP-NE and LWE Of the total roads, 20,945 kilometres have been developed, while a major share of the remaining is estimated to be completed by the end of the 12th Five Year Plan Source: Business Monitor International (BMI), Aranca Research Note: CAGR - Compounded Annual Growth Rate, FY - Indian Financial Year (April - March), F - Stands for forecast, NHDP - National Highway Development Project, SARDP-NE: Special Accelerated Road Development Programme for the North Eastern Region and LWE - Left Wing Extremism Programme 6.9 6.8 8.3 8.6 8.6 11.0 13.4 16.1 19.2 FY09 FY10 FY11 FY12F FY13F FY14F FY15F FY16F FY17F CAGR: 13.6%
  7. 7. Lane composition of national highways (FY13)National highways account for 1.7 per cent of the total road network in India Under the 12th Five Year Plan (FY13–17), the government plans to develop 20 kilometres of national highways per day, which implies a total development of 7,300 kilometres per year Double-lane highways constitute the largest share of highways in India (40,658 kilometres) Double-lane highways are followed by single-lane (19,330 kilometres) and multi-lane (19,128 kilometres) highways National highways are expected to reach 85,000 kilometres by the end of the 12th Five Year Plan from 71,772 kilometres currently Source: MoRTH, Aranca Research 24.4% 51.4% 24.2% Single lane Double lane Four/ Six/ Eight Lane
  8. 8. The National Highway Authority of India (NHAI) is a government agency responsible for construction, maintenance and development of highways The Government of India has formulated a seven-phase programme known as ‘National Highway Development Project (NHDP)’, vested with NHAI, for the development of national highways in the country Porbandar Mumbai Kanyakumari Chennai Kolkata Silchar Delhi Srinagar North South – East West Corridor Golden Quadrilateral NHAI Golden Quadrilateral (GQ): It is the highway network that connects four major metropolises North South & East West Corridor (NS – EW NHDP Phase I and II): It connects the country’s extreme ends NHDP Phase III to VII: Construction and improvement of roads in the remaining urban and suburban regions Source: NHAI, Aranca Research
  9. 9. NHDP Phase Project description Total length (Kms) Cost Development Model Phase I Development of Golden Quadrilateral, North South & East West (NS-EW) corridor, port connectivity and other national highway 7,522 USD7.0 billion EPC (Engineering- Procurement and Construction) Phase II Development of North South & East West (NS-EW) corridor and other national highway 6,647 USD7.2 billion EPC Phase III Development of Four lane national highways 12,109 USD18.5 billion PPP (Build-Operate- Transfer) Phase IV Upgradation of single lane to two-lane 20,000 - PPP Source: NHAI, Aranca Research
  10. 10. NHDP Phase Project description Total length (Kms) Cost Development Model Phase V Upgradation of four-lane highways to six-lane and port connectivity 6,500 USD9.3 billion PPP Phase VI Development of Expressway 1,000 USD3.8 billion PPP-(Design-Build- Finance-Operate) Phase VII Development of ring roads, bypasses and flyovers 700 USD4.2 billion PPP (Build-Operate- Transfer) Source: NHAI, Aranca Research
  11. 11. The Special Accelerated Road Development Programme for the North Eastern region (SARDP-NE) is aimed at developing road connectivity between remote areas in the North Eastern region with state capitals and district headquarters SARDP-NE is vested with the development of double-/four-lane national highways of about 4798 kilometres and double- laning/improving about 5343 kilometres of state roads Implementation of the road development programme will facilitate connectivity of 88 district headquarters in North Eastern states to the nearest national highways The project will be undertaken in three phases: Phase Project description Total length (Kms) Date of Completion A Improvement of national highways 2,041 March 2015 Improvement of state roads 2,058 B Development of double-lane of national highways 1,285 Not Disclosed Double-laning and improvement of state roads 2,438 Arunachal Pradesh package of roads and highways Development of roads 2,319 March 2017 Source: NHAI, MoRTH, PPPinIndia, Aranca Research
  12. 12. Total length (Kms) Total cost (USD billion) Approved 5,477 USD1.6 Awarded 5,049 USD1.5 Completed (By December 2012) 1,960 USD0.5 The government has approved a Road Requirement Plan (RRP) for the development of 1126 kilometres of national highways and 4351 kilometres of state roads in Left Wing Extremism (LWE) affected districts The project has been implemented in the states of Andhra Pradesh, Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Maharashtra, Odisha and Uttar Pradesh for a total value of USD1.6 billion The project will be vested with the Ministry of Road Transport and Highways (MoRTH) and is scheduled to be completed by FY15 Source: NHAI, MoRTH, PPPinIndia, Aranca Research
  13. 13. During 2011, India had 758 PPP projects across various sectors, of which 405 are dedicated towards roads and highways The BOT model’s share in total highway projects has increased sharply over the years; it rose to 31 per cent in FY10 from 10 per cent in FY05 Total PPP projects in India (2011) Composition of total highway projects awarded 53% 47% Roads Others 8% 13% 15% 19% 22% 23% 9% 12% 12% 20% 20% 27% 4% 7% 9% 9% 17% 53% FY05 FY06 FY07 FY08 FY09 FY10 BOT SPV Public Funded Source: MoRTH, Aranca Research
  14. 14. Awards won by BOT private playersRoad construction projects awarded to BOT companies went up at a CAGR of 62 per cent over FY05-12 to about 6,067 kilometres In FY12, highway projects awarded to private companies rose to 6,067 kilometres 209 369 464 470 877 2,677 6,144 6,067 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 CAGR: 61.8% Source: NHAI, Aranca Research
  15. 15. Source: Aranca Research Notes: NH – National Highway Until 2005, the road construction market was dominated by public sector companies However, the emergence of private players over the last decade has made the road construction market fragmented and competitive; the players bidding for projects also vary by size Major private sector players Major projects: Mumbai–Pune BOT Project, Pune–Nashik BOT Project, Bharuch–Surat BOT Project, Thane–Bhiwandi by-pass Four-Lane Project Major projects: North Karnataka Expressway, West Gujarat Expressway, Noida Toll Bridge Major projects: NH6 Dhankuni to Kharagpur, Sambalpur Baragarh, NH4 Belgaum Dharwad Major projects: Bandra–Worli Sea Link, Badarpur Elevated Highway Project Major projects: Tuni–Ankapalli Highway, Tambaram–Tindivanam Highway, Ambala–Chandigarh Highway
  16. 16. Source: NHAI, MoRTH, Aranca Research Notes: FDI - Foreign Direct Investment Increasing private sector participation • Government policy to increase private sector participation has proved to be a boon to the infrastructure industry with a large number of private players entering the business through the Public Private Partnership (PPP) model • The type of PPP models used in road projects are Build Operate Transfer (BOT ) toll and BOT annuity Partnerships between Indian and foreign firms • With the Government of India permitting 100 per cent FDI in the road sector, most foreign companies have formed partnerships with Indian players to participate in the sector’s growth story India’s renewed focus on infrastructure • Infrastructure is the key to supporting double-digit GDP growth in India during the medium- to long-term • The government has hence made infrastructure development a key policy issue and plans to spend USD1.0 trillion during FY13-17 on the sector Success of India’s Five Year plans • Through Five-Year Plans, India has increased the length of national highways from 21,378 kilometres during the late 1940s to 71,772 kilometres by the end of the 11th Five-Year Plan (FY08-12) • The total length of national highways is expected to touch 85,000 kilometres by the end of 12th Five Year Plan
  17. 17. Source: Aranca Research Policy support Greater government focus on infrastructure Standardised processes for bidding and tolling; clear policy framework Tax sops, FDI, FII encouragement Rise in two-wheeler and four-wheeler vehicles Increasing investments NHAI implementing one of the largest road projects Rising private sector participation Strong projected demand making returns attractive Inviting Resulting in Increasing freight traffic Strong trade and tourist flows between states Growing demand
  18. 18. Higher individual discretionary spending has led to increasing spending on cars, motorbikes and scooters Growing domestic trade flows have led to rising commercial vehicles and freight movement Road’s traffic share of the total traffic in India has grown from 13.8 per cent to 65 per cent in freight traffic and from 15.4 per cent to 90 per cent in passenger traffic from 1951 to 2011 Higher road traffic Rising incomes leading to increasing number of vehicle owners Growing movement of goods within the country due to economic integration Better quality roads makes road travel cheaper and safer Increasing roadways leading to greater accessibility between different cities/towns/villages Growth in small and medium enterprises in India Source: MoRTH, World Bank, Aranca Research
  19. 19. Trends in passenger vehicle sales (in million) Total auto sales across categories are estimated to rise 6-8 per cent in FY14 Sales of passenger vehicles are expected to increase at a CAGR of 15.0 per cent to 3.5 million during FY07-14 Sales of commercial vehicles are expected to rise at a CAGR of 13.5 per cent to 8,52,000 during FY07-14 Rising per-capita income and growing middle class coupled with easier access to finance and a wider price range of vehicles have led boosted car sales Trends in commercial vehicle sales (in ’000) Source: SIAM, Aranca Research 1.3 1.6 1.8 2.4 3.0 3.1 3.2 3.5 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 CAGR: 15.0% 351 468 494 533 676 800 783 852 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 CAGR: 13.5%
  20. 20. Length of National Highway added in the various Five-Year Plans (kilometres) Road addition in the 3rd Five Year Plan was only 179 kilometres this increased to 10,228 kilometres in the 11th Plan The 12th Five Year Plan (FY13-17) is estimated to carry the momentum forward with projects to the tune of 36,500 kilometres - 1,514 179 4,819 158 2,867 1,902 609 23,814 9,008 10,228 36,500 1st 2nd 3rd 4th 5th 6th 7th 8th 9th 10th 11th 12th* Source: NHAI, MoRTH, Aranca Research Note: * - Estimated
  21. 21. Share of infrastructure in total bank fundingInfrastructure is a priority of the government’s economic policy; funding for the sector from both private and public sectors is set to increase sharply in the near term Infrastructure’s total share in bank funding rose from 2.3 per cent in 2002 to about 14.4 per cent in 2012 2.3% 3.5% 4.2% 6.9% 7.5% 7.3% 8.5% 9.5% 11.5% 14.0% 14.4% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012* Source: RBI, ICRA Limited, Aranca Research Note: 2012* - March 2012
  22. 22. Combined fiscal deficit of the centre and state governments (% of GDP) The government has been eager to involve private sector funding for infrastructure projects and thereby reduce strains on the budget The PPP model has emerged as the favoured one for private sector participation in roads projects Notes: PPP - Public Private Partnership, NHDP - National Highway Development Project, BOT - Build Operate Transfer 9.9% 9.6% 8.5% 7.2% 6.5% 5.4% 4.1% 8.5% 9.5% 7.3% 8.2% 7.1% FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12E FY13E Source: RBI, Morgan Stanley, Aranca Research E - Estimate
  23. 23. % of BOT share in different phases of NHDPPhase I and Phase II of NHDP were mostly developed by public funds with the BOT share at 14.8 per cent and 28.6 per cent respectively Public Private Partnership (PPP) model will be the favoured way of executing the remaining NHDP phases 14.8% 29.6% 95.9% 83.1% 100.0% 100.0% 100.0% Phase I Phase II Phase III Phase IV Phase V Phase VI Phase VII Source: NHAI, MoRTH, Aranca Research Note: NHDP - National Highway Development Phase, BOT - Build Operate Transfer
  24. 24. Source: Aranca Research, Notes: FDI - Foreign Direct Investment, FII - Foreign Institutional Investors Infrastructure is a key government priority • Infrastructure investment is a major focus area for the government • The Government targeted USD500 billion worth of spending on infrastructure in the 11th Five-Year Plan (FY08-12); the amount is set to double to USD1 trillion in the 12th Five Year Plan (FY13-17) Support from the Union Budget • The FII investment limit in infrastructure corporate bonds was raised from USD5 billion to USD25 billion in the Union Budget • An increase in road development fund was also announced • The Indian government plans to establish a Road Regulator Authority in FY14 to address financial issues, construction risk and contract management in the road sector Rural development • The Prime Minister’s Gram Sadak Yojana (PMGSY) is a scheme for development of rural roads in India • The Construction of Rural Roads Project (CRRP) is another initiative focused on rural development Taxes and other sops • Companies enjoy 100 per cent tax exemption in road projects for five years and 30 per cent relief for the next five years • The companies are also granted a capital of up to 40 per cent of the total project cost to enhance viability
  25. 25. Issue of tax-free infrastructure bonds • Infrastructure finance companies, such as India Infrastructure Finance Corporation (IIFCL), National Highways Authority of India (NHAI), Housing and Urban Development Corp (HUDCO), Power Finance Corporation (PFC) and India Railway Finance Corporation (IRFC), have been allowed to issue tax-free bonds for a total value of USD9.2 billion for FY14 • Institutions were allowed to raise tax-free bonds of about USD5.5 billion in FY12 and up to USD4.6 billion in FY13 Encouragement of Infrastructure Debt Funds (IDFs) • The Government of India has set up the India Infrastructure Finance Company (IIFCL) to provide long-term funding for infrastructure projects • Interest payments on borrowings for infrastructure are now subject to a lower withholding tax of 5 per cent vis-à-vis 20 per cent earlier • IDF income is exempt from income tax Central Road Fund (CRF) • The Central Road Fund (CRF) assists the state government and union territories in the development of state roads • For FY13, USD3.6 billion was allocated for the development of roads
  26. 26. For updated information, please visit www.ibef.org Project Length (kilometre) Cost (USD million) Company Four Laning of Coimbatore-Mettupalayam 67 123 Transstroy - OJSC Consortium Four Laning of Walayar -Vadakkancherry section 54 142 KNR Constructions Ltd Walajapet-Poonamalee 93 268 ESSEL Infra Projects Ltd 2-Laning with paved shoulder of Raebareli to Jaunpur 166 118 PNC Infratech Ltd Six- Laning of Anandapuram-Visakapatnam-Anakapalli 58 174 Transstroy (India) Ltd - OJSC Corporation Six-Laning of Gundugolanu Rajamundry 120 336 IVRCL Assests & Holding Limited Vijayawada-Gundugolanu Section 103.6 351 Gammon Infrastructure Proj Six Laning of Kishangarh – Udaipur Ahmedabad 556 1,122 GMR Infrastructure Ltd Etawah -Chakeri (Kanpur) 160 328 Oriental Structural Engineers Ltd Agra-Etawah Bypass 125 251 Ramky Infrastructure Ltd Four Laning of Kiratpur-Ner Chowk Section 84 400 IL & FS Transportation Networks Ltd Source: NHAI, MoRTH, Aranca Research Notes: BOT - Build Operate Transfer, UB - Union Budget
  27. 27. For updated information, please visit www.ibef.org Outlay for roads under respective Union Budgets (USD billion) Roadways has been a key focus area of budget allocations over the years For FY14, the Planning Commission has provided an outlay of USD6.9 billion for the road sector The budget outlay for road transport and highways increased at a robust CAGR of 19.4 per cent between FY09 and FY14 In FY14, the government plans to improve about 8,270 kilometers of the National Highways along with construction/rehabilitation of 100 bridges and four bypasses for an estimated cost of USD4.3 billion 2.8 3.5 3.2 5.6 6.4 6.9 FY09 FY10 FY11 FY12 FY13 FY14 Source: Respective Union Budgets, Aranca Research Note: CAGR - Cumulative Annual Growth Rate CAGR: 19.8%
  28. 28. Toll revenue: IRB Infrastructure Limited (USD million) IRB Infrastructure is one of India’s leading BOT operators with a built-length of around 8,000 lane kilometres So far, the company has undertaken BOT projects (completed/under execution) worth USD3.5 billion The company has 19 BOT projects currently, of which three are complete, nine operational, and seven under construction As on 31 December 2012, IRB Infrastructure’s order backlog stood at about USD1.7 billion Source: Company Annual Report, Aranca Research Notes: CAGR - Compounded Annual Growth Rate, BOT - Build Operate Transfer 77 96 176 201 256 FY08 FY09 FY10 FY11 FY12 CAGR: 35.0%
  29. 29. Won three road projects worth USD411 million Won first ultra-mega NHAI road project worth USD750 million Acquired MVR Infrastructure & Tollways Pvt Ltd2010 2011 2012 2013 Signed contract with NHAI for four-laning of NH-17 from Goa/ Karnataka to Kundapur Source: Company Annual Report, Aranca Research
  30. 30. Revenue trends: IL&FS Transportation Networks Limited (USD million) ITNL has the largest BOT road asset portfolio (in terms of lane kilometres) in India, with presence in 16 states The company has 11,859 lane kilometres under its road asset portfolio; this comprises 28 projects ITNL has 24 PPP projects currently, of which 11 are complete and 13 under construction Source: Company Annual Report, Aranca Research Notes: CAGR - Compounded Annual Growth Rate, BOT - Build Operate Transfer, Km - Kilometers 255 502 843 1,168 FY09 FY10 FY11 FY12 CAGR: 66.1%
  31. 31. Was awarded order for 1,086 lane kilometres for a total value of USD1.5 billion Was awarded order for 1,129 lane kilometres for a total value of USD1.5 billion Four-laning of Beawer- Gomti Road Project 2010 2011 2012 2013 Won USD312 million contract for six-laning Barwa-Adda- Panagarh sector of National Highway 2 Source: Company Annual Report, Aranca Research
  32. 32. Revenue trends: Noida Toll Bridge (USD million) Infrastructure Leasing and Financial Services Ltd (IL&FS) promoted National Toll Bridge Company Limited (NTBCL) as a special purpose vehicle (SPV) for the development of the 22-km Delhi-Noida Direct (DND) flyway on a Build Own Operate Transfer (BOOT) basis Incorporated in Uttar Pradesh, India in 1996, NTBCL is a publicly listed company and operates only in India Source: Company Annual Report, Aranca Research SALIENT FEATURES Eight-lane dual carriageway connecting Noida and Delhi One major and three minor bridges over Yamuna river Eight-lane approach road on embankment 31-lane, 200m-wide, fully computerised toll plaza Extensive tree planting and landscaping Noise barriers and river training works 10.4 16.6 17.2 17.9 18.9 19.9 FY07 FY08 FY09 FY10 FY11 FY12 CAGR: 13.9%
  33. 33. Projects to be awarded (in kilometres) National Highway Authority of India (NHAI) aims to award 2500 kilometres of projects in FY14 vis-à-vis 787 kilometres during the last fiscal Currently, around 23,120 kilometres of NHDP projects are in the pipeline, with the highest share for NHDP IV (16,632 kilometres) Projects to be awarded (in kilometres) by NHDP phases Source: NHAI, MoRTH, Aranca Research Note: NHDP stands for National Highways Development Project 6,491 787 2,500 3,899 FY12 FY13E FY14E FY15E 420 1,840 16,682 2,519 1,000 659 NS - EW Ph. I & II NHDP III NHDP IV NHDP V NHDP VI NHDP VII
  34. 34. PPP opportunity over the next five yearsDevelopment of national highways through Public-Private Partnership (PPP) is expected to remain the key focus area for the government During the next five years, investments through PPP are expected to be over USD41 billion for national highways and around USD10 billion for state highways Source: NHAI, MoRTH, Aranca Research USD 41.2 billion USD 9.9 billion National Highways State Highways
  35. 35. Projected growth of vehiclesIn India, roads remain the most important means of transport; it accounts for 85 per cent of passenger traffic and 65 per cent of freight traffic Passenger cars are expected to grow at a CAGR of 15 per cent to 677 millions in FY15 and LCV to grow at a CAGR of 21 per cent over FY10-15 to 3 million in FY15 Source: SIAM Report, Aranca Research Notes: PC - Passenger Cars, LCV - Light Commercial Vehicles, SIAM - Society of Indian Automobile Manufacturers 0 150 300 450 600 750 1 1.5 2 2.5 3 3.5 FY10 FY11E FY12E FY13E FY14E FY15E LCV units in 000s (right axis) PC units millions (left axis)
  36. 36. Summary of foreign contract awardsForeign contractors were awarded projects worth about USD1.69 billion during 1999-2011; Malaysian and Russian* contractors have topped the foreign contractors list About 55 per cent of all such contracts were funded via BOT, BOT-Annuity and BOT-SPV routes A joint venture between SVBTG Consortium (USA) and Stradcom Corp (Philippines) had won the largest contract during that period (project cost of USD134 million) Source: NHAI, MoRTH, Aranca Research Note: BOT - Build operate transfer, * - Russian joint venture with Indian firm 688 339 199 137 134 101 48 41 568 429 105 149 6 107 45 51 Malaysian Russia* China Russian USA Taiwan S.Korean Indonesian Project Cost (USD mn) Length (kms)
  37. 37. Source: NHAI, MoRTH, Union Budget, Aranca Research Notes: FDI - Foreign Direct Investment, FII - Foreign Institutional Investor; EPC - Engineering, Procurement and Construction; ECB - External Commercial Borrowings; WHT - Withholding Tax; DDT - Dividend Distribution Tax Significant potential for construction & EPC companies • About two-thirds of NHDP road projects (ex-phase IV) are yet to be awarded, thereby offering a huge opportunity for private players over the next five years. • For the 12th Five Year Plan, the government targets to develop National Highways at the rate of 20 km per day • India’s construction sector is expected to grow at about 35 per cent over FY09-13 Strong focus on infrastructure • Infrastructure spending is expected to touch USD1 trillion in the next Five-Year Plan (FY13-17) • Union Budget FY14 allows financial institutions to raise USD9.2 billion from tax-free bonds • The budget also proposed key steps such as relaxing ECB guidelines, removal of cascading effect of DDT and reductions in WHT Major government initiatives to boost private and foreign investment • Increased FII limit in infrastructure corporate bonds from USD5 billion to USD25 billion in FY12 is a step in the right direction • Cumulative FDI inflow for FY2000–13 (February) in construction development and infrastructure sector (including roads and highways) stood at USD24.1 billion
  38. 38. Ministry of Roads Transport and Highways Transport Bhavan 1, Parliament Street New Delhi –110001 Phone: 91-11-23719097, 23719955 E-mail: ifcmost@nic.in National Highway Authority of India G 5 and 6, Sector 10, Dwarka New Delhi – 110 075 Phone: 91-11-25074100, 25074200 Fax: 91-11-25093507, 25093514 Indian Roads Congress Sector 6, (Near RBI Quarters), RK Puram, New Delhi – 110022 Phone: 91-11-26185303 Secretariat: 91-11-26716778, 26183669, 26185273, 26185315, 26185319 Fax: 91-11-26183669 E-mail: secretarygen@irc.org.in
  39. 39. BOT: Build Operate Transfer CAGR: Compound Annual Growth Rate EPC: Engineering, procurement and construction FDI: Foreign Direct Investment FY: Indian Financial year (April to March) – So FY10 implies April 2009 to March 2010 GOI: Government of India INR: Indian Rupee LCV: Light Commercial Vehicles MoRTH: Ministry of Roads Transport and Highways NH: National Highway NHAI: National Highway Authority of India
  40. 40. NHDP: National Highway Development Project USD: US Dollar – Conversion rate used: USD1= INR54.43
  41. 41. Year INR equivalent of one US$ 2004-05 44.95 2005-06 44.28 2006-07 45.28 2007-08 40.24 2008-09 45.91 2009-10 47.41 2010-11 45.57 2011-12 47.94 2012-13 54.31 Exchange Rates (Fiscal Year) Year INR equivalent of one US$ 2005 45.55 2006 44.34 2007 39.45 2008 49.21 2009 46.76 2010 45.32 2011 45.64 2012 54.69 2013 54.45 Exchange Rates (Calendar Year) Average of the year
  42. 42. India Brand Equity Foundation (IBEF) engaged Aranca to prepare this presentation and the same has been prepared by Aranca in consultation with IBEF. All rights reserved. All copyright in this presentation and related works is solely and exclusively owned by IBEF. The same may not be reproduced, wholly or in part in any material form (including photocopying or storing it in any medium by electronic means and whether or not transiently or incidentally to some other use of this presentation), modified or in any manner communicated to any third party except with the written approval of IBEF. This presentation is for information purposes only. While due care has been taken during the compilation of this presentation to ensure that the information is accurate to the best of Aranca and IBEF’s knowledge and belief, the content is not to be construed in any manner whatsoever as a substitute for professional advice. Aranca and IBEF neither recommend nor endorse any specific products or services that may have been mentioned in this presentation and nor do they assume any liability or responsibility for the outcome of decisions taken as a result of any reliance placed on this presentation. Neither Aranca nor IBEF shall be liable for any direct or indirect damages that may arise due to any act or omission on the part of the user due to any reliance placed or guidance taken from any portion of this presentation.
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