Abstract
Synopsis
Construction Industry - Building the order book on the foundation of infrastructure...
With the economic slowdown, the order inflow to construction companies had
slightly slowed down in FY09. Profitability margins of the construction
industry were under pressure as the prices of key raw materials like cement &
steel were hovering at peak levels. To bring back the economic growth on
track, the government had announced a few stimulus packages. The emphasis was
given mainly to ease the liquidity and liberalize the lending policies to
provide funding to the long-term infrastructure projects. Post elections in
early FY10, the government has been focusing on awarding projects under
different infrastructure segments. Moreover, with the recovery in the
macro-economic conditions and the industrial sector, the order inflow to
construction companies has gathered momentum in FY10.
The Government of India (GoI) has set an ambitious target of increasing the
proportion of the infrastructure investment to about 9% of Gross Domestic
Product (GDP) by the terminal year of the Eleventh Five Year Plan. For the GDP
to continue to grow at 9%, this proportion is targeted to increase further to
10.3% by the end of the Twelfth Five Year Plan. This will bring about a
massive investment to the tune of more than Rs. 40,000 bn in the
infrastructure sector.
The power and road sector are estimated to account for the major chunk of the
investment planned in the infrastructure. In order to achieve the mammoth
investment target, the GoI is seeking the support of the private sector
through Public Private Partnerships (PPP). It is estimated that almost 60% of
the power generation capacity addition in the Twelfth Five Year Plan will be
contributed by the private sector. To encourage the participation of private
companies in the road sector, the Ministry of Road has taken various
initiatives like relaxing the land acquisition norms, providing cost overruns
and increasing the concession period.
The construction industry is expected to witness strong momentum in the order
inflow as the awarding of projects in infrastructure and industrial space
progresses. From the power generation segment alone, construction orders worth
almost Rs. 1,370 bn are expected to flow to the construction sector in the
next 3-4 years. Under the road sector, more than 36,000 kms of roadways are
yet to be developed. This is likely to generate potential orders of worth
about Rs. 1,800 bn. Furthermore, the outstanding investment in the industrial
sector could
Table of Contents
Index
Executive Summary
CARE Research' s Outlook
CHAPTER I
Overview
- Infrastructure sector focus area in stimulus packages
- Industrial sector
- Recuperating from the slowdown
Infrastructure sector
- Overview
- Comparison Tenth & Eleventh Five Year Plan
- PPP and Five Year Plan
- Road
- NHDP
- Key road projects awarded in FY 10
- Investment & private participation in the road sector
- Power
- Plant Load Factor (PLF) & power deficit
- Power generation capacity addition
- Power Transmission & Distribution
- Investment & private participation in the power sector
- Port
- Cargo movement & bottlenecks at port
- NMDP
- Investment & private participation in the port sector
- Aviation
- Passenger & cargo traffic at airports
- Status ofMetro Airports
- Investment & private participation in the aviation sector
- Railways
- Freight & passenger traffic carried by railways
- Investment & private participation in the rail sector
- PPP in railways & Vision 2020
- Telecom
- Subscriber base in India
- Opportunity in the telecom market
- Investment & private participation in the telecom sector
- Urban Infrastructure
- Level of Urbanisation
- JNNURM
- Investment in water supply and sanitation
- Rural infrastructure
- Irrigation
- Investment in the irrigation sector
Cost Structure & Margins
- Overall cost structure
- Raw material cost
- Major raw materials
- Sub-contracting cost
- Aggregate income & profit margins
- Working capital to sales
Player Profile
- Hindustan Construction Company Ltd.
- Nagarjuna Construction Company Ltd.
- Larsen & Toubro Ltd.
- IVRCL
- Punj Lloyd Ltd.
- Simplex Infrastructure Ltd.
CHAPTER II
Construction Component
Industry Characteristics
- Linkages with economy
- Highly fragmented
- Labour intensive
- Highly customised projects
- Varied profitability
- Varied gestation periods of construction projects
- Rising joint ventures
- Working-capital intensive
Introduction to Contracts
- Different entities in a Contract
- Flowchart of Process of a Contract
- Prequalification of contractors
- Types of contracts
- Private participation
- Comparison of different types of contracts
- Risks in construction industry
SWOT Analysis & Porter' s Model
Table Index
CHAPTER I
Overview
- Allocation to critical Infrastructural projects/schemes
- Projects abandoned in different industrial sectors
- Increase in order backlog of construction companies
- Order backlog to sales multiple
Infrastructure sector
- Bifurcation of the investment envisaged from different sources
- Investment in infrastructure by public & private sectors
- Bifurcation of the types of roads in the country
- Phase-wise details of NHDP
- Status of NHDP
- Key road projects awarded in FY 10
- Bifurcation of the investment planned in the road sector
- Bifurcation of power generation capacity through different routes
- Target power generation capacity addition Eleventh Five Year Plan
- Capacity addition Target Vs Achieved
- Details of projects under NMDP
- Rail freight traffic in FY10
- Bifurcation of the investment for Railway' s Vision 2020
- City-wise bifurcation of the investment planned under JNNURM
- Projected investment in the rural infrastructure
Cost Structure & Margins
- Total production of long steel products
- Total consumption of long steel products
- Production and consumption of galvanised steel products
- Consumption pattern of steel products by construction industry
CHAPTER II
Industry Characteristics
- GDP and Construction at factor cost
- Herfindahl Index of Concentration (FY09)
- Gross profit margin in different sub-sectors of infrastructure
- Examples of some JVs in construction industry
- Trend of net working capital of construction companies
Introduction to Contracts
- Different entities involved in a Contract
Figure Index
CHAPTER I
Overview
- Trend of IIP & Income of construction companies
- Quarterly trend of aggregate order backlog
- Order backlog position of construction companies
- Order backlog bifurcation of top construction companies
Infrastructure Sector
- Trend of infrastructure investment as a percentage of GDP
- Trend of absolute investment in the infrastructure sector
- Infrastructure spending - Tenth Five Year Plan
- Investment planned in different sub-sectors of infrastructure sector
- Infrastructure Outlay - Eleventh Five Year Plan
- Yearly trend of projected investment in the Eleventh Five Year Plan
- Estimated investment by the private sector - Tenth Five Year Plan
- Tenth Five Year plan sector wise private investment
- Sector-wise bifurcation of infrastructure investment
- Road sector - Investment in the Tenth Five year plan
- Projected investment in the road sector
- Trend of power generation capacity
- Sector-wise bifurcation of power generation capacity
- Trend of PLF
- Per capita power consumption
- Trend of demand-supply gap in the energy requirement
- Monthly trend of power deficit
- Trend of Transmission & Distribution losses
- Power sector - Investment in the Tenth Five year plan
- Category-wise investment in the power sector
- FDI inflow in the power sector
- Projected investment in the power sector
- Trend of cargo handled at major ports
- Investment allocation for NMDP
- Port Sector - Investment in Tenth Five Year Plan
- Bifurcation of public and private investment envisaged in major and minor
ports
- Projected investment in the port sector
- Trend of air passenger traffic
- Trend of air cargo traffic
- Trend of growth in air passenger traffic in FY10
- Trend of growth in air cargo traffic in FY10
- Trend of air passenger traffic at two main airports
- Aviation sector - Investment in Tenth Five Year Plan
- Projected investment in the aviation sector
- Growth in rail freight traffic
- Commodity-wise bifurcation of rail freight traffic in FY09
- Growth in rail passenger traffic
- Rail sector - Investment in the Tenth Five Year Plan
- Projected investment in rail sector
- Growth of subscriber base in India
- Trend ofWireless Subscriber base
- Market share of top players in wireless segment in FY10
- Trend ofWire line Subscriber base
- Market share of top players in wire line segment in FY10
- Telecom sector - Investment in Tenth Five Year Plan
- Projected investment in the telecom sector
- Level of urbanisation in different countries across the globe
- Trend of growth in urbanisation in the country
- Segment-wise bifurcation of the investment planned in JNNURM
- Water infrastructure - Investment in Tenth Five Year Plan
- Projected investment in the water infrastructure
- Irrigation sector - Investment in Tenth Five Year Plan
- Projected investment in the irrigation sector
Cost Structure & Margins
- Trend of overall cost structure
- Trend of Raw material cost as percentage of total income
- Raw material cost of different players in FY09
- Trend of cement consumption
- Average yearly price trend of cement per bag
- Average monthly price trend of cement per bag
- Trend of steel consumption by construction industry
- Average yearly price trend of steel products
- Average monthly price trend of steel products
- Sub-contracting cost of different players in FY 09
- Trend of sub-contracting cost as percentage of total income
- Trend of aggregate income & profit margins
- Trend of net working capital as percentage of sales
- Trend of client advances as percentage of sales
CHAPTER II
Construction component
- Construction component of various infrastructure sectors
Industry Characteristics
- Growth rates - Construction Vs GDP
Introduction to Contracts
- Flowchart of Process of a Contract
- Comparison of different types of contracts
