Gyan Research weekly newsletter on #infrastructure sector

1. © Gyan Research and Analytics Pvt. Ltd., 2015 1
Policy News
 Fresh notification on ESZ in Western Ghats
The Union Government has declared Eco-Sensitive Zones (ESZ) in the Western Ghats in a fresh draft
notification on September 4. This supersedes the earlier notification, issued on March 10,
2014. However, the size of the Ecologically Sensitive Areas (ESA) and the other provisions mentioned in
the earlier draft remain "unchanged”. Two out of the six states – Tamil Nadu and Maharashtra - are yet to
submit the physical verification report of the area allocation, due to which the finalization of proposals is
pending. The creation of these zones will not affect the lives of about 50 million people living in the
Western Ghats and will ensure their sustainable development.
 Jammu & Kashmir gets INR 200 crore package for sports infrastructure
The Union Sports Secretary has assured the Government of Jammu & Kashmir an INR 200 crore package
for the restoration of sports infrastructure in the state, which was affected by flood. This includes
building of indoor stadiums in 10 districts – five each in Jammu and Srinagar, along with the development
of the existing sports infrastructure in the state. The upgradation of the Bakshi Stadium in Srinagar and
the MA Stadium in Jammu, will involve an investment of INR 80 crore each. Further, 10 indoor stadiums
will be constructed at an estimated cost of INR 4 crore each. Special training will also be provided to local
sport coaches at the National Institute of Sports in Patiala to increase their skills.
 TN allots land for proposed Aerospace Park
The Tamil Nadu government has allocated land near Sriperumbudur for a proposed Aerospace Park to 12
companies. The Tamil Nadu Industrial Corporation (TIDCO) is implementing the plan. Apart from the
initial 30 companies in the first phase, three others have submitted applications and 15 more have
expressed interest to set up their units in the park. The investment from the 30 aerospace companies is
estimated at INR 3,000 crore, while the employment potential is about 5,000 persons. TIDCO is ensuring
that at least 40 companies would set up units in the park by mid-2016. The government has allocated 300
acres for the purpose.
Industry News
 Maharashtra, Japan sign MoC
The Maharashtra Government will be signing a Memorandum of Cooperation (MoC) with the Japanese
government for infrastructure and business environment development. Under the MoC, the Japan
External Trade Organization (JETRO) will support investment activities in the 1,000 acres area reserved
for an industrial park at Supa-Parner Industrial Estate, near Pune. A Project Facilitation Committee (PFC)
will be set up, comprising of JETRO officials, Japanese companies and the Maharashtra government. The
PFC will solve any difficulties faced by the Japanese companies. The collaboration will undertake
infrastructure projects such as the Mumbai Trans-Harbour Link (MTHL) and metro projects - Mumbai
metro Phase 2, Nagpur metro and Pune metro. It will also explore opportunities for smart city
development.
Infrastructure News
September 5, 2015 – September 11, 2015

2.  IVRCL retrenches to cut cost
Iragavarapu Venkata Reddy Construction Limited (IVRCL) has reduced its employee strength by 23
percent as a measure to cut cost, last fiscal. The number of permanent employees on March 31, 2015,
was 2,875 as against 3,737 in the previous fiscal. The measure was taken to combat economic slowdown
and delays in the execution of projects. The company plans to raise INR 500 crore through the Qualified
Institutional Placement (QIP) route, which will enable it to meet its working capital requirements.
 Japan keen to develop new Andhra Pradesh capital
A team of Japanese officials met the Chief Minister of Andhra Pradesh to demonstrate interest in funding
the development of the proposed state capital - Amaravathi. The Japanese officials intend to come up
with specific proposals for this purpose through the Japan Bank for International Co-operation (JBIC).
They also mentioned plans to finance the metro railway projects in Vijayawada and Visakhapatnam
through the Japan International Co-operation Agency (JICA).
Investment News
 Lenders tighten policy on inflated highway project costs
Banks and financial institutions will not accept the Total Project Cost (TPC) estimated by private
developers, in case it is over 20-25 percent of the government-estimated cost. The biggest problem for
financial institutions has been over-exposure to projects due to inflated project costs. Private builders on
the other hand take advantage of higher loans, which frequently helps them to avoid putting their share
of equity required to start the project. Highway developers need to infuse a minimum 30 percent equity,
while 70 percent of the TPC can be accessed through loans. The developers complain that the
government-estimated TPC is often conservative and the cost rises by the time the bidding takes place.
 Czech companies eye investment in defence, other sectors
Companies from the Czech Republic such as Skoda Power, Skoda Auto, Eldis and Bonatrans Group are
keen to invest heavily in sectors like energy, automobile, defence and infrastructure in India. Some Czech
companies are already engaged in the country’s automobile, infrastructure, energy and large industrial
projects, which are generating jobs in India. Bilateral trade between India and the Czech Republic stands
at USD 1.5 billion.
 ADB approves USD 200 million loanto Jharkhand roads development
The Asian Development Bank (ADB) intends to extend an USD 200 million loan to Jharkhand for the
upgradation of roads that will lead to the creation of new economic opportunities. The loan
will contribute toward the physical upgradation of 176 kilometers of roads; it will also assist in improving
the safety, design and maintenance of the network. Nearly 40 percent of the road network is in poor
condition, thereby hampering mobility between remote areas and the economic and industrial centers.
The project is likely to generate employment opportunities in five districts, especially for women, who
will get at least 20 percent of the total afforestation jobs along the upgraded roads. Further, the state
government will provide an assistance equivalent to USD 106.25 million for the project.
© Gyan Research and Analytics Pvt. Ltd., 2015 2
Infrastructure News
September 5, 2015 – September 11, 2015

3.  Piramal to scoop up IL&FS
Piramal Enterprises Limited (PEL) is on the verge of taking over Financial Services (IL&FS) – the country’s
largest unlisted infrastructure and financier. PEL will separate its financial services and merge it in an
allstock deal, to create an INR 15,000 crore company with a leverage ratio of 1:3. Through this merger,
Piramal will get access of 10 infrastructure utilities, which includes a ready-to-start 600 mw power plant
in Cuddalore, with expansion potential of up to 3,600 Mw, 30 operational toll road projects and India's
largest wind energy company generating 1,000 Mw. If the deal is sealed, Piramal will be the largest
shareholder and promoter of the merged company. Piramal will also gain control of Maytas
Infrastructure, IL&FS Financial Services and a private equity fund with USD 3 million under management
asset.
© Gyan Research and Analytics Pvt. Ltd., 2015 3
Infrastructure News
September 5, 2015 – September 11, 2015
Weekly Snapshot
Length of National Waterways
National Waterways (NW) Waterway Stretch Length in km
NW-1
The Ganga-Bhagirathi-Hooghly river system from Haldia to
Allahabad 1,620
NW-2 The Brahmaputra river from Dhubri to Sadiya 891
NW-3
The West Coast Canal from Kottapuram to Kollam
alongwith Udyogmandal and Champakara canals 205
NW-4
The Kakinda-Puducherry stretch of canals and the Kaluvelly
Tank, Bhadrachalam-Rajahmundry stretch of river
Godavari and wazirbad-Vijayawada stretch of river Krishna 1,078
NW-5
The Talcher-Dhamra stretch of river Brahmani-Kharsua-
dhamra river system, Geonkhali-Charbatia stretch of East
Coast Canal, Charbatia-Dhamra stretch of Matai river and
Mangalgadi-Paradip stretch of Mahanadi delta rivers 588
Source: Ministry of Shipping

4. © Gyan Research and Analytics Pvt. Ltd., 2015 4
Infrastructure News, September 5, 2015 – September 11, 2015
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