Investment opportunities in Indian infrastructure sector

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Investment opportunities in Indian infrastructure sector

  1. 1. INVESTMENT IN INDIAN INFRASTRUCTURE SECTOR
  2. 2. AGENDA • • • • • • • • • • • • • • Introduction Major Issues and Implications PEST Analysis Competitor Analysis Investment Opportunities FDI and Regulatory Environment Government Policies and Initiatives Tax Environment Challenges for Foreign Player Business Strategy Financial Strategy Human Resource Strategy Building long term in India Conclusion
  3. 3. INTRODUCTION • MMS Consulting Firm consults in environment scanning, analysis and strategic guideline to invest in India • A Singapore Firm wants to invest in Indian Infrastructure market • Infrastructure Industry consist of – Roadways and Highways – Power – Ports and Airports – Rail – Electricity • Indian Economy is booming • Growing housing and commercial space requirement
  4. 4. INTRODUCTION • • • • • Rising household income Booming It and ITES sector 100% FDI in construction industry through automatic route Retail sector facilitating real estate growth Lucrative investment alternative
  5. 5. MAJOR ISSUES AND IMPLICATIONS • • • • • • • Contract Procedures Skilled Manpower Shortage Title clearance Procedural and legal vulnerability Urban Land monopoly Debatable Tax status under section 801 (A) Infrastructure bottlenecks
  6. 6. PEST ANALYSIS POLITICAL FACTOR • SEZ Act to boost infrastructural development • Cement prices reduced for state infrastructure projects • FDI Liberalization to Augment Industry growth • Introduction of REITS • Legal Framework to be followed – Building Commencement Certificate: – Occupation Certificate: – Brihan Mumbai Corporation [BMC] Developing Plans – CRZ(Coastal Recovery Zone Rule): – TDR (Transfer of Development Right): – National Building code
  7. 7. PEST ANALYSIS ECONOMICAL FACTORS • Growth in construction activity stimulating GDP growth • Rate Hikes Unlikely to slow down growth SOCIAL FACTORS • Rising Urbanization to boost Industrial growth • Green buildings in India TECHNOLOGICAL FACTORS • Low technology to Hinder growth • Construction as per Indian Requirements • Ready Mix concrete Being Experimented with • Pre-Structured Concrete Blocks • Mixture of Cement and Sand
  8. 8. COMPETITOR ANALYSIS • • • • • • • • • • • • Larsen & Toubro Jaiprakash Associates Lanco Infratech Reliance Infrastruture GMR Group Punj Lloyd Hindustan Construction Company Gammon India Simplex Infrastructure GVK Power and Infrastructure IRB Infrastrucutre Shriram EPC
  9. 9. INVESTMENT OPPORTUNITIES Projected spending from FY07-FY12 in selected infrastructure segments: • Electricity: US$167 billion • Railways: US$65 billion • Road and highways: US$92 billion • Ports: US$22 billion • Airports: US$8 billion • One of the world’s fastest growing economies – and growth expected to continue at 6-7% despite the global downturn • Few restrictions on foreign direct investment (FDI) for infrastructure projects • Tax holidays for developers of most types of infrastructure projects, some of which are of limited duration • Opening up of the infrastructure sector through PPPs
  10. 10. FDI AND REGULATORY ENVIRONMENT APPROVAL ROUTE – Permission Required • Existing Airports – beyond 74% • Atomic Minerals • In case of joint venture or technology collaboration agreement in the same field
  11. 11. FDI AND REGULATORY ENVIRONMENT AUTOMATIC ROUTE– Freely Permissible (100%) • Greenfield airports • Construction & maintenance of infrastructure like ports, harbors, roads and highways • Power generation, transmission and distribution and power trading (atomic energy not permitted) • Mass rapid transport systems • Townships, housing, built-up infrastructure and construction-development projects
  12. 12. GOVERNMENT POLICIES AND INITIATIVES • New Tenders to attract project implementators • Many projects started in various infrastrucure sections • Constantly simplifying the approval route process by setting several agencies to expedite FDI approval • Liberalisation • Improvising Legal system • Standardisation for all infrastructure projects
  13. 13. TAX ENVIRONMENT • Tax Holidays Exemptions • International Tax Considerations like – Entry and exit strategy – Cash and Profits repatriation – Holding the investmentss
  14. 14. CHALLENGES FOR FOREIGN PLAYER • Non-availbility of own infrastructure to execute projects – Skilled Manpower – Plant and Equipments – Construction Material • Risk Sharing with Indian partner • Cost Cutting and Competitiveness • Government guidelines for PP developers • Concerns of Indian Company will tie-ups
  15. 15. BUSINESS STRATEGY • • • • • • • • • • • Concentrate of Core competency Mergers and Aquisition Tie-up with various Indian Company in all Infrastructure Projects Joint Venture with potential partner (like Reliance Infra, etc) Competitive cost and cost cutting Efficient Utilisation of Indian Resource and Indian Partner Target major project in all part of the country Implement new technology from Singapore Setup manufacturing units and research labs Plan Organization Life Cycle Good Organization Structure (mix of Indian and Singapore Workforce)
  16. 16. FINANCIAL STRATEGY • • • • • • • • • • Budget Forecasting ROI Invest in Top Indian Infrastructure Companies Invest in manufacturing companies to reduce the cost and increase the quality Setup manufacturing and research units Influence other investor in Singapore to invest in your company Invest in stable of years Invest through FDI (No approval required) Invest in all infrastructure sections Follow rules and regulation
  17. 17. HUMAN RESOURCE STRATEGY • • • • • • • Good Organization Structure (mix of Indian and Singapore Workforce) Hiring , Training and Development Depot Human Resource from Singapore in each firms Depot Indian Human Resource to understand the working Implement mixture of Indian-Singapore Culture Good Compensation Transparency in workflow
  18. 18. BUILDING LONG TERM IN INDIA • Manage Uncertainty and challenges • Planned investment of funds • Sustain competition by – Appropriate pricing – Funding – Prioritisation frameworks • Have holistic approach • New infrastructure should support social and economic goals • Invest in fast moving and growing sections
  19. 19. CONCLUSION • Navigate through views and opinions expressed by various local stake holders • No.of contractors from Europe, Australia, China, Malaysia etc have already made their presence felt • Good Opportunities to develop significant business • Carefullly slect local business partner • Long-term and sustainable perspective planning • Maximize from FDI and Tax benfits
  20. 20. REFERENCE • • • • • • • • • • • http://www.indiacompanysetup.com http://www.oifc.in/sectors/infrastructure http://business.mapsofindia.com/finance/mergers-acquisitions/strategies.html http://business.mapsofindia.com/india-budget/infrastructure/companies-inindia.html http://www.constructionweekonline.in/article-7581top_30_infrastructure_companies/ http://www.pwc.com http://www.idfc.com http://www.india-briefing.com/news/fdi-opportunities-indias-infrastructuredevelopment-5508.html/ http://www.globaljurix.com/foreign-direct-investment-india-fdi.php http://www.oifc.in/sectors/infrastructure http://www.managementstudyguide.com/strategic-management.htm
  21. 21. THANK YOU

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