Roads Sector Report December 2017

For updated information, please visit www.ibef.org December 2017
ROADS

Table of Content
Executive Summary……………….….…….3
Advantage India…………………..….……..4
Market Overview …………………….……..6
Strategies Adopted………….….…..……..19
Growth Drivers…………………….............21
Opportunities…….……….......……………31
Industry Associations……………....……...38
Success Stories……………....……………34
Useful Information……….......…………….40

For updated information, please visit www.ibef.orgRoads3
EXECUTIVE SUMMARY
Source: MoRTH Annual Report 2015–16, NHAI, Make in India, Aranca Research
Second largest road network
Overseas Investment for
infrastructure development
 CPPIB (Canada Pension Plan Investment Board) plans to invest US$ 322 million for infrastructural development in India.
 The Government has received public sector undertakings from countries like Malaysia and Japan for funding the
upcoming highway projects in India – annuity model 60 per cent of the investment is borne by the private investors 40
per cent by NHAI in 5 equal instalments.
 As of November 2016, Union Government and Asian Development Bank signed US$ 500 million loan agreement to build
the longest bridge across river Ganga, in Bihar.
 In April 2017, the Government of India agreed to build world-class road infrastructure in the Jaffna region in Sri Lanka.
The 3 major stretches being built are Mannar-to-Vavuniya, Dambulla-to-Tricomalee and Jaffna-to-Mannar.
Rising budget allocation of
road sector
Growing private sector
involvement
Rapid growth in national
highways
 In FY17, India had the 2nd largest road network in the world, spanning over a total of 5.21 million kms. Over 64.5 per
cent of all goods in the country are transported through roads, while, 90 per cent of the total passenger traffic uses road
network to commute
 During FY17-18, Government of India allocated US$ 10.13 billion for development of national highways across the
country
 As on September 2017, 312 projects were recommended for development by the Public Private Partnership Appraisal
Committee (PPPAC)
 Investment of US$ 31 billion is expected in PPP by 2020 for national highways
 The Government of India plans to increase the length of National Highways from 115,435* kms to 200,000 kms.
 As of February 2017, national highways of 6604 kms in length were constructed, against a target of 15,000 kms, under
various road transport and highway projects
Notes: * - as on July 2017

ADVANTAGE INDIA
 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
 Rise in the number of 2 and 4 wheelers,
increasing traffic supports the growth
 The Central Government has fast tracked
at least 24 roads and highways projects
 Government is planning to offer a bonus
of 10 per cent of the total project cost to
firms that construct and deliver highway
projects before deadline
 The government has given a massive
push to infrastructure by allocating US$
61.8 billion for infrastructure in the
Union Budget 2017-18
 Growing participation of the private
sector through Public-Private
Partnership (PPP)
 Road infrastructure has been key
government priority; sector received
strong budgetary support over the
years
 Financial institutions received
government approval to raise money
through tax-free bonds
 100 per cent FDI is allowed under
automatic route subject to applicable
laws and regulations
ADVANTAGE
INDIA
Source: NHAI, Make in India, MoRTH, Business Monitor International, Aranca Research
Notes: NHAI - National Highways Authority of India, MoRTH - Ministry of Road Transport and Highways, E- Estimated

ROAD NETWORK IN INDIA IS SUB-DIVIDED INTO
THREE CATEGORIES
Source: Ministry of Road Transport and Highways (MoRTH) Annual Report 2016-17, Aranca Research, Note: 1- Data as of FY17
Roads1
(Total length: 5.47million Kms)
State highways
 Total length: 161,487 kms
 Share: 3 per cent of the total
roads in India
National Highways District and Rural roads
 Total length: 115,435 kms
roads in India
 Total length: 5,207,044 kms
roads in India
Notes: * - as on July 2017

STRONG MOMENTUM IN EXPANSION OF ROADWAYS
6.9 6.8
8.3 8.6 8.6
11
13.4
16.10
19.20
0
2
4
6
8
10
12
14
16
18
20
2009 2010 2011 2012 2013 2014 2015E 2016F 2017F
Source: Business Monitor International (BMI), Ministry of External Affairs, Aranca Research
Note: CAGR - Compounded Annual Growth Rate, FY - Indian Financial Year (April - March), F - Forecast, NHDP - National Highway Development Project, SARDP-NE: Special Accelerated
Road Development Programme for the North Eastern Region and LWE - Left Wing Extremism Programme; Figures are as per latest data available
 Value of total roads and bridges infrastructure in India is expected to
expand at a CAGR of 13.6 per cent over FY09–17 to US$ 19.2 billion
 In April 2017, the National Highways and Infrastructure Development
Corp. bagged a project to build 5 tunnels worth US$3.42 billion.
These tunnels, namely, Zojila tunnel at Zojila Pass (14 kms), Vailoo
Tunnel at Sinthan Pass (8-10 kms), Z-Morah tunnel (6.5 kms), Pir-Ki-
Gali Tunnel on National Highway-244 (8.5 kms) and Daranga Tunnel
at Shudh Mahadev (4.5 kms), will help in avoiding road accidents
because of avalanches
 Increasing industrial activity, increasing number of 2 and 4 wheelers
would support the growth in the road transport infrastructure projects
 In January 2017, the government proposed to lay down cycle tracks
on all highways and major roads pan India, to promote the use of
electric cars and public transport.
 In April 2017, Chenani-Nashri tunnels that links Kashmir valley with
Jammu was inaugurated. It is the longest road tunnel in the country
and US$371.86 million were invested in this project
 Targeted pace of road construction has been increased to 23 km a
day.
 The first phase of construction work of Mumbai's 29.2 km long
coastal road is expected to begin in April 2018, after bids are
finalised in March 2018.
Visakhapatnam port traffic (million tonnes)Roads/ bridges infrastructure value in India (US$ billion)
CAGR 13.6%

INDIAN CONSTRUCTION EQUIPMENT REVENUES ON
AN UPTREND
3.7
3.9
4.3
4.6
4.2
5.1
3.9
6.5
2.9 3.0
4.2
7.0
-0.5
0.5
1.5
2.5
3.5
4.5
5.5
6.5
7.5
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY20F
Source: The Boston Consulting Group, Mahindra Website
Note: CAGR - Compounded Annual Growth Rate, FY - Indian Financial Year (April-March), E – Estimate, YoY – Year on Year
 By FY20, construction equipment industry’s revenue is estimated to
reach to US$ 7 billion.
 In FY17, India construction equipment industry grew 40 per cent over
the previous year to reach US$ 4.2 billion.
Visakhapatnam port traffic (million tonnes)Construction equipment industry size (US$ billion)

CONSTRUCTION EQUIPMENT SALE ON AN UPTREND
52,500
49,700
42,600
35,900 36,800
52,100
42,710
-
10,000
20,000
30,000
40,000
50,000
60,000
2011 2012 2013 2014 2015 2016 2017*
Source: NBM & CW, Mahindra Website, Indian Construction Manufacturers’ Association
Note: CAGR - Compounded Annual Growth Rate, FY - Indian Financial Year (April-March), E – Estimate, YoY – Year on Year, * - January-September 2017
 With infrastructure investment set to go up, demand for construction
equipment will rise further.
 The number of construction equipment units sold increased 41.5 per
cent year-on-year in 2016 backed an increase in road projects and a
low base.
 Concrete Show India 2017 was held at Mumbai, Maharashtra, with
more than 100 Indian and global manufacturers & suppliers from
industries such as concrete, construction, construction equipment,
etc., participating in the event.
 Between January-September 2017, about 42,710 units of
construction equipment were sold in India, as against 37,346 units
between the same period in the previous year.
Visakhapatnam port traffic (million tonnes)Total number of construction equipment units sold

RISING DEVELOPMENT OF NATIONAL HIGHWAYS
 Double-lane highways constitute the largest share of highways in India (40658 kms). Double-lane highways are followed by single/intermediate-
lane (19330 kms) and 4/6/8-lane (19128 kms) highways
 The Government has proposed to upgrade 2 lane national highways into 4 lane national highways for which US$ 65 billion has been allocated.
This step is expected to reduce the passenger car units (PCU) to 10000 per day
 In the state of Telangana, the total accumulated length of National Highways including those sanctioned after formation of the state and before
bifurcation stands at 5,512-km as on April 2017.
 In January 2017, Government of Assam announced investment of US$2.23 billion for developing 1253 kms of roads in the state, into national
highways
 In response form institutional investors from Canada, Middle East and the US, in February 2017 NHAI floated bids to monetise 10 national
highway projects in the country.
 The National Democratic Alliance (NDA) decided to bring all future road projects such as economic corridors and coastal roads under its aegis,
with an aim to give a boost to its Bharatmala Plan. This flagship programme is estimated to cost around US$148.74 billion.
 Mr Narendra Modi, Prime Minister of India, has proposed an investment of Rs 30,000 crore (US$ 4.67 billion) for development of national
highways in the northeast under the Bharatmala Project.
 The government is planning to monetise 105 highway projects, worth US$21.57 billion as a part of new innovative models of financing.
 Mr Narendra Modi, inaugurated road and highway projects worth Rs 15,000 crore (US$ 2.34 billion) in Udaipur, Rajasthan on August 29, 2017.
 Road projects worth Rs 34,000 crore (US$ 5.32 billion) are being undertaken by the central government to decongest the road network connecting
the National Capital Territory of Delhi, according to Mr Harsh Vardhan, Minister of Environment, Forests and Climate Change, Government of
India.
 India’s national highway network is expected to cover 50,000 kilometres by 2019, with around 20,000 km of works scheduled for completion in the
next couple of years, according to the Ministry of Road Transport and Highways.
 As of October 2017, the land acquisition process and detailed project reports (DPR's) for the Bharatmala Pariyojana are underway and the first
project is expected to be awarded before the end of 2018
 The state government of Kerala plans to raise Rs 10,000 crore (US$ 1.54 billion) from non-resident Keralites (NRKs) to finance the development
of two highways in the state and support NRKs in the long-term.
Source: Media sources, Aranca Research

NHAI’S SUCCESSFUL IMPLEMENTATION OF
PROJECTS
NHDP phase/Year of Approval Project description Total length (Kms) Cost Development model
Phase I / December 2000
Development of Golden Quadrilateral, North
South and East West (NS-EW) corridor, port
connectivity and other National Highways
13,390 US$ 5.6 billion
Engineering-
Procurement and
Construction (EPC)
Phase II / December 2003
Development of North South and East West
(NS-EW) corridor and other National
Highways
7,142 US$ 6.3 billion EPC
Phase III /
April 2007
Development of 4-lane National Highways 12,109 US$ 18.5 billion
PPP
(Build-Operate-Transfer)
Phase IV / February 2012 Upgradation of single lane to 2-lane 20,000 US$ 12 billion PPP
Phase V /
October 2006
Upgradation of 4-lane highways to
6-lane and port connectivity
6,500 US$ 9.3 billion PPP
Phase VI /
November 2006
Development of expressway
The project is targeted to be completed by
December 2015
1,000 US$ 3.8 billion
PPP-(Design-Build-
Finance-Operate)
Phase VII /
December 2007
Development of ring roads, bypasses and
flyovers
700 US$ 4.2 billion
PPP (Build-Operate-
Transfer)
Source: NHAI, Aranca Research

SPECIAL ACCELERATED ROAD DEVELOPMENT
PROGRAMME FOR THE NORTH EAST REGION
Source: NHAI, MoRTH Annual Report 2015-16, PPP in India, Aranca Research
 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 East with state capitals and district headquarters
 SARDP-NE is vested with the development of double-/four-lane national highways of about 7,530 kms and double-laning improving about 2,611
kms of state roads, as on FY16
 Implementation of the road development programme would facilitate connectivity of 88 district headquarters in North Eastern states to the nearest
National Highways
 In December 2017, Mr Narendra Modi, Prime Minister of India, has announced investment of Rs 60,000 crore (US$ 9.33 billion) under SARDP
between 2018-2020.
 The project would be undertaken in following 3 phases:
Phase Project description Total length (Kms) Date of completion
A
Improvement of National Highways 3,014
March 2017
Improvement of state roads 1,085
B
Development of double-lane of National
Highways
2,392
Investment decision is yet to be taken
by government
Double-laning and improvement of state roads 1,331
Arunachal Pradesh package
of roads and highways
Development of roads 2,319 March 2017

LEFT WING EXTREMISM (LWE) PROGRAMME
Source: NHAI, MoRTH, PPP in India, Aranca Research, Media Sorces
 The government approved a Road Requirement Plan (RRP) for the development of 1,126 kms of National Highways and 4,351 kms of state roads
in Left Wing Extremism (LWE) affected districts
 The project would be vested with the Ministry of Road Transport and Highways (MoRTH).
 The project has been implemented in Andhra Pradesh, Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Maharashtra, Odisha and Uttar
Pradesh.
 In December 2016, the Cabinet Committee on Economic Affairs had given its go ahead for a US$ 1.72 billion road project across all 35 LWE
affected districts.
 As of June 2017, 1391-kms of roads had been constructed under the Road Requirement Plan Phase-I (RRP) in the most difficult areas. At the
same time, 5,412 kms of roads had been approved under RRP-II.
 The mobile tower project was started in 2014 to improve coverage in LWE areas. As of June 2017, 2,187 mobile towers have been set up and
2,882 towers are being set-up.
 As of November 2017, the Government of India has planned an expenditure of Rs 11,000 crore (US$ 1.71 billion) on a programme for connecting
LWE districts by March 2020.
Note: LWE – Left wing extremism

DECREASE IN PUBLIC PARTICIPATION IN THE
SECTOR … (1/2)
50%51% Roads and Bridges
Others
Source: MoRTH, Aranca Research
Visakhapatnam port traffic (million tonnes)Total PPP projects in India (May 2017) As of 15th May, 2017, there were 1,582 PPP projects in India, of
which 783 were related to roads and bridges accounting for a value
of US$ 74.63 billion
 Project awarded under BOT is 7.15 per cent of the total awarded
projects as of May 2017

DECREASE IN PUBLIC PARTICIPATION IN THE
SECTOR … (2/2)
369
464
470
877
2677
6144
6067
1116
742
873
422
0
1000
2000
3000
4000
5000
6000
7000
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY15 FY16 FY17
Source: NHAI, Crisil, ITNL Company Annual Reports, Aranca Research
Note: FY13 - Projects awarded by NHAI;
Visakhapatnam port traffic (million tonnes)Projects awarded to BOT private players (in Kms) Both NHAI and Ministry of Road Transport and Highways awarded
projects of around 6,397 kms in FY16.
 In 2015-16, 7 projects (20 per cent) of the total 4,368 kms of NHAI
projects awarded were allocated to BOT mode
 During FY17, projects of about 422.17 kms were awarded to BOT
players by NHAI.

PRIVATE PLAYERS GAINING TRACTION IN THE
ROADS SECTOR
Source: Aranca Research
Major
private
sector
players
 Until 2005, the road construction market was dominated by public sector companies
 With the emergence of private players over the last decade, the road construction market has become fragmented and competitive; players
bidding for projects also vary in terms of size
Notes: NH – National Highway
Major projects: Mumbai–Pune BOT Project, Pune–Nashik BOT Project, Bharuch–Surat BOT Project,
Thane–Bhiwandi by-pass 4 Lane Project, Thane Ghodbunder BOT Project, Ahmedabad–Baroda NH-
8, 6 laning of Agra - Etawah bypass
Major projects: North Karnataka Expressway, West Gujarat Expressway, Noida Toll Bridge,
Ahmedabad - Mehsana Toll Road, East Coast Road, Kotakatta Kurnool Road Project, East Coast
Road, Hazaribagh Ranchi Expressway Ltd, Karnataka Toll Bridges
Major projects: NH6 Dhankuni to Kharagpur, Sambalpur Baragarh, NH4 Belgaum Dharwad, NH-3
Pimpalgaon – Nashik – Gonde Road (JV with L&T), Jaora – Nayagaon Road, Chennai Outer Ring
Road, Modhul – Nippani Road, Indore Edalabad Road, Wainganga Bridge, Ahmednagar Aurangabad
Road
Major projects: Bandra–Worli Sea Link, Badarpur Elevated Highway Project, Delhi Faridabad
Elevated Expressway, Breakwater construction for new port at Ennore, Chennai, New Railway Line
Project from Jiribam - Tupul
Major projects: Tuni–Ankapalli Highway, Tambaram–Tindivanam Highway, Ambala–Chandigarh
Highway

NOTABLE TRENDS IN THE ROAD SECTOR
Source: NHAI, MoRTH, Aranca Research
Demand for urban transport
 The government’s policy to increase private sector participation has proved to be a boon for the infrastructure industry
with a large number of private players entering the business through the Public Private Partnership (PPP) model
 The type of PPP models used in road projects are Build Operate Transfer (BOT) toll and BOT annuity
 During the next 5 years, investment through PPP is expected to be US$ 31 billion
Electronic toll collection
International Investment
Success of India’s Five- Year
Plans
Infrastructure initiatives
 NHAI is taking revolutionary steps, like facilitating Online sale of FASTags and offline sale through Common Services
Centre (CSC) near toll plazas, to ensure availability of FASTags for Electronic Toll Collection.
 Paytm Payments Bank has launched Paytm FASTag to enable electronic toll-fee collection on highways across the
country.
 Infrastructure is the key to supporting double-digit GDP growth in India during the medium to long term
 Cumulative FDI inflows into the construction development sector, including roads and highways, stood at US$ 24.66
billion till September 2017.
 The total length of national highways is expected to reach 100,000 kilometres by the end of the12th Five-Year Plan
 In September 2015, government set a target of building national highways of 30 km per day
 By February 2017, government constructed 6,604 kms of national highways
 A total of 50,000 kms of state highways is to be taken up for up-gradation as National Highways.
 Programmes like “Bharat Nirman”, JNNURM are designed to pursue nation wide rural connectivity, linking all the
unconnected villages with fair weather roads
Notes: FDI - Foreign Direct Investment

Porter’s Five Forces Framework Analysis
 Bargaining power of suppliers is very
low
 Several small players exist in the
suppliers section that weaken their
power
Bargaining Power of Suppliers
 Threat of substitutes is low
 Even if government wants to renovate
rather than going for reconstruction, it
is highly likely to go to the same
players
Threat of Substitutes
 Competitive rivalry between big
players is quite intense as far as
winning projects is concerned due to
high price sensitivity
 Few large players have the expertise
for undertaking bigger projects;
hence, competition is higher in case
of large infrastructural projects
Competitive Rivalry
 With liberalisation, rules have been
eased for the entry
 Big players block the entry of new
players in the roads segment,
especially in large projects
Threat of New Entrants
 Bargaining power is strong due to
robust price sensitivity and low costs
 Buyers are government organisations
or major agencies that enhance their
buying power
Bargaining Power of Buyers
Positive Impact
Neutral Impact
Negative Impact

STRATEGIES ADOPTED
Diversification
 Most players are now opting for inorganic growth routes and are diversifying into other businesses (IIML, a subsidiary of
IL&FS is into private equity business with over US$ 3.2 billion under management)
 Many players are entering into technical partnerships with foreign players to match their R&D levels with MNCs
Training of labour
Promotion of R&D
Geographical expansion
 Companies are hiring and training staff to reduce the shortage of skilled manpower and focusing on policies to retain
labour
 Firms plan to increase minimum wages in the construction sector as well as women participation
 Companies are partnering with technical institutes and colleges such as CSTI (L&T and Govt. of Odisha)
 Roads Ministry will give grant of US$ 152,765 to private companies and state road transport corporations willing to set
up or upgrade driver training schools
 Companies are ramping up investment for better and cost effective ways of road construction
 Stepping up R&D to develop better roads in areas which suffer from congestion, delays and accidents, according to
world standards
 As of November 2016, three memorandum of understanding (MOUs) were signed between National Green Highways
Mission (NGHM) and ITC Ltd, Yes Bank Ltd and Teri for setting up a Centre for Innovations in Green Pathways in order
to enhance research and innovations in the field.
 Indian companies are increasing their footprints abroad, thus tapping outside market
 IL&FS won a road contract worth US$ 216.7 million in Botswana, through its subsidiary Elsamex SA

STRONG DEMAND AND POLICY SUPPORT DRIVING
INVESTMENTS
Source: Make in India, Aranca Research
Rise in 2 and 4 wheeler vehicles
Increasing freight traffic
Strong trade and tourist flows
between states
Growing demand
Greater government focus on
infrastructure
Standardised processes for
bidding and tolling; clear policy
framework
Tax sops, FDI, FII
encouragement
Policy support
NHAI implementing one of the
largest road projects
Rising private sector participation
Strong projected demand making
returns attractive
Increasing investments
Inviting
Resultingin

KEY CATALYSTS BEHIND INCREASING DEMAND FOR
ROADWAYS
Source: MoRTH, World Bank, Make in India, Aranca Research
Notes: 1Including rail and road transport
 Higher individual discretionary spending has led to increased spending on cars, motorbikes and scooters
 Growing domestic trade flows have led to a rise in commercial vehicles and freight movement
 Increasing financing on vehicle loans
 Road’s traffic share of the total traffic1 in India has grown from 13.8 per cent to 65 per cent in freight traffic and from 32 per cent to 90 per cent in
passenger traffic over 1951–2017
Rising income 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
Higher
road
traffic

RISING VEHICULAR TRAFFIC KEY FACTOR FOR
EXPANSION OF ROADWAYS
1.3 1.3
1.6
1.8
2.4
3 3.1 3.20 7.1 6.9
3.40
3.80
0.0
1.0
2.0
3.0
4.0
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
Source: SIAM, Aranca Research
 Sales of passenger vehicles increased at a CAGR of 10.24 per cent
during FY06-17 and reached 3.8 million in FY17
 Sales of commercial vehicles in the country increased at a CAGR of
5.21 per cent in FY10-17, with the number reaching 810,286 during
FY17
 Rising per capita income and growing middle class coupled with
easier access to finance and a wider price range of vehicles have
boosted car sales.
 Production of passenger vehicles increased at a CAGR of 10.24 per
cent to reach 3.8 million in FY17 from 1.3 million in FY06.
 Production of commercial vehicles increased at a CAGR of 5.21 per
cent to reach 810,280 in FY17 from 567,000 in FY10.
Visakhapatnam port traffic (million tonnes)Trends in passenger vehicle Production (in million)
CAGR 10.24%
Visakhapatnam port traffic (million tonnes)Trends in commercial vehicle Production (in ’000)
567.7
760.7
929.1
832.6
699
698.3
782.8
810.28
0
200
400
600
800
1000
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
CAGR 5.21%

PRIVATE FUNDING BEING ENCOURAGED TO REDUCE
FINANCE CONSTRAINTS … (1/2)
Source: DIPP, Aranca Research;
 Cumulative FDI inflows into the construction development sector,
including roads and highways, has increased at a CAGR of 17.07
per cent from US$ 8.06 billion in FY10 to US$ 24.29 billion till March
2017. Cumulative FDI stood at US$ 24.66 billion as on September
2017.
 A Memorandum of Understanding (MoU) has been approved by the
Union Cabinet between India and the UAE on bilateral cooperation in
road, transport and highways sector. The MoU includes collaboration
in planning administration and management of road infrastructure,
technology and standards for roads/highways construction and
maintenance.
Visakhapatnam port traffic (million tonnes)Cumulative FDI Inflows (US$ billion)
8.06
9.18
11.43
22.08
23.31
24.07
24.18
24.29
24.66
0
5
10
15
20
25
30
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18*
Note: * - Data till September 2017

PRIVATE FUNDING BEING ENCOURAGED TO REDUCE
FINANCE CONSTRAINTS … (2/2)
Note: NHDP - National Highway Development Phase, BOT - Build Operate Transfer, Year of Approvals for Phase I: December 2000, Phase II: December 2003, Phase III: April 2007,
Phase IV: February 2012, Phase V: October 2006, Phase VI: November 2006, Phase Vii: December 2007
 NHDP’s Phase I and Phase II were mostly developed by public funds
with BOT’s share at 14.8 per cent and 29.6 per cent, respectively
 The PPP model will be the favoured route for executing the
remaining phases of NHDP
 In May 2017, the Road Ministry signed 34 MoUs with investment
potential of around US$ 29.74 billion with private and public
companies such Adani Logistics, Ascendas, Chennai Port Trust, etc.,
to improve multi-modal logistics.
Visakhapatnam port traffic (million tonnes)% of BOT share in different phases of NHDP
14.80%
29.60%
95.90%
83.10%
100%
100%
100%
0.00%
20.00%
40.00%
60.00%
80.00%
100.00%
120.00%
Phase 1 Phase 2 Phase 3 Phase 4 Phase 5 Phase 6 Phase 7

POLICY INITIATIVES IN THE RIGHT DIRECTION … (1/2)
Source: Make in India, Union Budget 2016-17, Union Budget 2017-18, Aranca Research
Notes: FDI - Foreign Direct Investment, FII - Foreign Institutional Investors
Infrastructure – a key
government priority
 Infrastructure investment is a major focus area for the government
 The government has given a massive push to infrastructure by allocating US$ 61.8 billion for infrastructure in
the Union Budget 2017-18
Support from the Union
Budget
Rural Development
Taxes and other sops
 The planned outlay under the Union Budget 2017 -18 for development of road transport and highways is
US$14.67 billion
 Moreover, as per Union Budget 2017-18, the government has set targets to develop almost 2,000 kilometres
of coastal connectivity roads.
 The Prime Minister’s Gram Sadak Yojana (PMGSY) is a scheme for development of rural roads in India. The
Government of India has succeeded in providing road connectivity to 85 per cent of the 178,184 eligible rural
habitations in the country under the scheme
 Under the Union Budget 2017-18, Government of India allocated an investment of US$ 4.21 billion for the
Pradhan Mantri Gram Sadak Yojana (PMGSY)
 The Government of India will spend around Rs 1 lakh crore (US$ 15.26 billion) during FY18-20 to build roads
in the country under Pradhan Mantri Gram Sadak Yojana (PMGSY).
 Companies enjoy 100 per cent tax exemption in road projects for 5 years and 30 per cent relief over the next
5 years
 Companies have been granted a capital of up to 40 per cent of the total project cost to enhance viability
Value Engineering
Programme
 The Ministry of Road Transport and Highways, Government of India plans to implement 'Value Engineering
Programme' in order to promote use of new technologies and material in highway projects being executed in
India.

POLICY INITIATIVES IN THE RIGHT DIRECTION … (2/2)
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 permitted to issue tax-free bonds for a total value of US$ 3.27 billion for FY15;
promotion of infrastructure debt funds is the top agenda
Encouragement of
Infrastructure Debt Funds
(IDFs)
Central Road Fund (CRF)
Investment in roads and other
infrastructure
 Government of India has set up the India Infrastructure Finance Company (IIFCL) to provide long-term funding for
infrastructure projects
 Interest payments on External Commercial 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
 The Central Road Fund (CRF) assists the state government and union territories in the development of state roads
 For FY18, US$ 10.13 billion has been allocated specifically for the development for the national highways in the country.
 The Central Road Fund (Amendment) Bill, 2017 has been passed by the Lok Sabha, Government of India which would
result in revenues of Rs 2,300 crore (US$ 358.7 million) for national waterways in the country.
 Existing excise duty on petrol and diesel has been changed to road cess to the extent of INR 4 per litre to fund
investment in roads and other infrastructure.
 Out of US$ 33 billion, allocated for the progress of infrastructure, US$ 14.5 billion has been assigned for the construction
sector, including construction of roads and highways in India, as per Union Budget 2016-17. In Union Budget 2017–18,
the government provided an outlay of US$ 14.67 billion for the road sector.
Goods and Services Tax
(GST)
 The GST on construction equipment has been reduced to 18 per cent from 28 per cent, which is expected to give a
boost to infrastructure development in the country.

RECENT BOT PROJECTS AWARDED BY NHAI
Project Length (Km) Cost (US$ million) Year Company
C and C Constructions NA 447.87 2017 NA
4 laning of Buxar-Patna 25 NA 2017 NA
Patna Gaya Dhobi 126 167.95 2017 NA
Chardham Highway NA 1780 2017 NA
Jaipur - Ring Road 47 52.06 2017 NA
Kundli Manesar Paliwal 83 NA 2017 Easel Construction Ltd and HLS Ltd.
Gujarat – 8 highways 1200 1780 2017 NA
New Delhi – Bharat Mala Programme NA 5206 2017 Easel Construction Ltd and HLS Ltd.
4 Laning of Fagne - Mah-Guj Border ( PKG-3) 140.79 308.83 2015 M/s ILand FS Transportation Networks Ltd
8 Laning of Mukarba Chowk to Panipat 69.84 348.63 2015 M/s Essel Infraprojects Ltd
6 laning of Agra - Etawah bypass 124.5 NA 2015 M/s IRB Infrastructure Developers Ltd
4 Laning of Solapur - Bijapur 109.8 228.5 2015 Uniquest Infra Ventures Pvt Ltd
4 Laning of Guna to Biaora 93.5 168.03 2015 M/s Dilip Buildcon Ltd
4 laning of Biaora - Dewas 141.26 262.73 2015 M/s Oriental Structural Engineers Pvt Ltd
Notes: BOT - Build Operate Transfer, UB - Union Budget, Km – Kilometre

BUDGETARY OUTLAY FOR ROADS
Source: Respective Union Budgets, Aranca Research
Note: CAGR - Cumulative Annual Growth Rate, GOI – Government of India, NHAI – National Highway Authority of India
 Roadways has been the key focus area for budget allocations over
the years
 As per Union Budget 2017–18, the government provided an outlay of
US$ 14.67 billion for the road sector
 Between FY09 and FY18, budget outlay for road transport and
highways increased at a robust CAGR of 20.20 per cent
 Under Union Budget 2017-18, GOI is planning to develop 2,000
kilometres of coastal connectivity roads in India.
Visakhapatnam port traffic (million tonnes)
Outlay for roads under the respective Union Budgets
(US$ billion)
2.8
3.5
3.2
8
7.8
6.6
6.5
7.1
14.5
14.67
0
2
4
6
8
10
12
14
16
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18
CAGR 20.20%

FUTURE PROSPECTS REMAIN BRIGHT FOR THE
ROAD SECTOR … (1/2)
 National Highway Development Project (NHDP) is a 7 phase project
amounting to US$ 60 billion. The projects aims to widening, up-
gradation and rehabilitation of 47,054 kilometres of national
highways
 NHAI awarded 77 road projects covering 4,335 kilometres in FY
2016-17.
 The Government of India has decided to invest Rs 7 trillion (US$
107.82 billion) for construction of new roads and highways over the
next five years.
 The NHAI has invited bids for projects of 4,900 km as of November
2017 and is expected to invite bids for 3,500 km of projects by
December 2017 and has already awarded projects worth Rs 22,100
crore (US$ 3.43 billion) covering 1170 kms in its efforts to speed up
the construction of highways.
 The Ministry of Road Transport and Highways, intends to take the
total of projects awarded in FY2017-18 to 20,000 km and targets to
award projects of 25,000 km in FY 2018-19.
Visakhapatnam port traffic (million tonnes)Projects awarded (in kilometres)
Projects awarded (in kilometres) by NHDP as of
31st May 2017
6491
1165 1435
5000
6397
4335
0
1000
2000
3000
4000
5000
6000
7000
FY12 FY13 FY14 FY15 FY16 FY17
7142
11809
13203
6500
1000 700
0
2000
4000
6000
8000
10000
12000
14000
NS &EW
Ph I & II
NHDP III NHDP IV NHDP V NHDP VI NHDP VII
Notes: NHDP stands for National Highways Development Project

FUTURE PROSPECTS REMAIN BRIGHT FOR THE
ROAD SECTOR … (2/2)
 In India, roads remain the most important means of transport,
accounting for around 80 per cent of the passenger traffic and 65 per
cent of the freight traffic
 Number of total vehicles in India increased at a CAGR of 9 per cent
during the period of FY06-17, from 9.7 million to 25.3 million
 As of FY17, 2 wheelers accounted for 78.73 per cent of the total
number of vehicles in India
Visakhapatnam port traffic (million tonnes)Total vehicle’s growth (million units)
Visakhapatnam port traffic (million tonnes)Bifurcation of vehicles by category: FY17
10 11 11 11
14
18
21 21 7.1
6.9 24 25
0
5
10
15
20
25
30
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
CAGR 9%
78.73%
14.98%
3.20% 3.90%
Two wheelers
Passenger vehicles
Commercial vehicles
Three wheelers
Source: SIAM Report, Aranca Research
Notes: SIAM - Society of Indian Automobile Manufacturers

IRB INFRASTRUCTURE LIMITED … (1/2)
Source: Company Annual Report and Corporate Presentation, Aranca Research
Notes: CAGR - Compounded Annual Growth Rate, BOT – Build Operate Transfer
 IRB Infrastructure is one of the leading BOT operators in India, with a
built-length of around 9,846 lane kilometres
 IRB has 20 BOT projects, of which 14 are operational, as on March
2017
 As of 31 March 2017, IRB Infrastructure’s order book aggregated
US$ 1.55 billion
 The company has an 18.79 per cent share in the Golden
Quadrilateral project as of March 2017.
 During FY10-17, company’s revenue increased at a CAGR of 14.11
per cent
Revenue Trend: IRB Infrastructure Limited
(US$ million)
CAGR 14.11%
369.8
548.6
695 702.9
619.1
657.0
783.7
931.5
0
100
200
300
400
500
600
700
800
900
1000
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17

IRB INFRASTRUCTURE LIMITED … (2/2)
Source: Company Annual Report, News articles, Aranca Research
 Was awarded a
contract for 1,086 lane
kilometres for a total
consideration of US$
1.5 billion
 4 laning of Beawer-
Gomti Road Project
 Was awarded an order for 1,129
lane kilometres for a total value of
US$ 1.5 billion
 Won a US$ 312 million contract for
the 6 laning Barwa-Adda-Panagarh
sector of National Highway 2
 Won a road contract worth US$ 216.7 million in
Botswana, through its subsidiary Elsamex SA
 Commercial operation of Warora Chandrapur
Ballarpur Bamni Road Project has been started
 Won a project to widen roads of 127 km long
Patna-Gaya-Dobhi section of NH 83 in Bihar for a
consideration of US$ 205 million
 In FY17, company’s revenues stood at US$ 931.5
million
2011 2015-17
201420132012

NOIDA TOLL BRIDGE COMPANY LIMITED (NTBCL)
Source: Company Annual Report, Aranca Research; 1Data for April 2016 – September 2016
 Infrastructure Leasing and Financial Services Ltd (IL&FS) promoted
National Toll Bridge Company Ltd (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 the country
 Salient features
• Eight-lane dual carriageway connecting Noida and Delhi
• One major and 3 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
Revenue trends: Noida Toll Bridge
(US$ million)
17.2
17.9
18.9
19.9 19.8 19.4
20.4
19.7
13.4
0
5
10
15
20
25
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY 17

Roads
KEY INDUSTRY
ASSOCIATIONS

INDUSTRY ASSOCIATIONS
Transport Bhavan
1, Parliament Street
New Delhi –110001
Phone: 91-11-23719097, 23719955
E-mail: ifcmost@nic.in
Ministry of Roads Transport and Highways
G 5 and 6, Sector 10, Dwarka
New Delhi – 110 075
Phone: 91-11-25074100, 25074200
Fax: 91-11-25093507, 25093514
National Highway Authority of India
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
Indian Roads Congress

GLOSSARY
 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
 NHDP: National Highway Development Project
 US$ : US Dollar – Conversion rate used: US$ 1= INR54.43

EXCHANGE RATES
Exchange Rates (Fiscal Year) Exchange Rates (Calendar Year)
Year INR Equivalent of one US$
2004–05 44.81
2005–06 44.14
2006–07 45.14
2007–08 40.27
2008–09 46.14
2009–10 47.42
2010–11 45.62
2011–12 46.88
2012–13 54.31
2013–14 60.28
2014-15 61.06
2015-16 65.46
2016-17 67.09
Q1 2017-18 64.46
Q2 2017-18 64.29
Year INR Equivalent of one US$
2005 43.98
2006 45.18
2007 41.34
2008 43.62
2009 48.42
2010 45.72
2011 46.85
2012 53.46
2013 58.44
2014 61.03
2015 64.15
2016 67.21
H1 2017 65.73
Source: Reserve bank of India, Average for the year

DISCLAIMER
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.

Roads Sector Report December 2017

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Roads Sector Report December 2017