INDIAN STATES Economy and Business

www.ibef.org Published by INDIAN STATES Economy and Business Madhya Pradesh

www.ibef.org

CONTENTS

Executive Summary 5

Economic Snapshot 7

The State Economy 9

Infrastructure 10 Social infrastructure10 Access infrastructure 10 Communications infrastructure 12 Industrial infrastructure 12

State Policy 13 Industrial policy 13 IT policy 13 Tourism policy 14 Biotech policy 14 SEZ policy 14 Infrastructure policy 14

Business Opportunities 16 Key industries 16 Exports 17 Investment 17 Potential hubs for investment 19

Key Players 20

Doing Business in Madhya Pradesh 23 Indicative list of approvals and clearances 23 Cost of setting up business 24 Contact for information 24

A report by PricewaterhouseCoopers Pvt Ltd for IBEF

MADHYA PRADESH PAGE 5

Executive Summary

Madhya Pradesh, in its present form, came into companies are investing in establishing/expanding existence on November 1, 2000, following its their production base in the state. bifurcation to create the new state of Chhattisgarh. With a Net State Domestic Product of The cost of basic infrastructure and skilled manpower US$ 9.8 billion, Madhya Pradesh is the ninth largest is relatively low in Madhya Pradesh.The state offers state economy in .The state’s central location one of the lowest ratios of labour cost to sales ratio gives it the unique advantage of being the hub in the country. in India’s national logistics network. The state government has developed a greenfield Key industry sectors in Madhya Pradesh are cement, Special Economic Zone at Indore. It has also textiles, mining and edible oils.The state is one successfully leveraged private investment in transport of the largest producers of cement in the country infrastructure.The state government has been taking and a leading producer of edible oils. steps to strengthen and reinforce a conducive investment climate for potential investors through Industries with potential for significant development progressive policies, simplification of procedures and in the state are automobiles and pharmaceuticals. investment incentives. A number of automobile and pharmaceutical Industrial Centres in Madhya Pradesh MADHYA PRADESH PAGE 7

An Economic Snapshot

Capital Area (sq km) 308,000 Population (2001) 60.3 million Literacy rate (%) 64.1 Human Development Index 0.394 (All India rank 12th) NSDP (US$ billion) 9.8 NSDP growth (%) (10 years) 2.6 Per capita income (US$) 254 Exports (US$ million) 667 National highways length (km) 4,664 Rail length (km) 5,992 Domestic airport Bhopal, Indore Key industries Cement Textiles Minerals Edible oil Industries with growth potential Automobiles Pharmaceuticals

Advantage Madhya Pradesh n Leading producer of cement, textiles and edible oils n First state to develop a greenfield Special Economic Zone n Track record of attracting private investment in transport infrastructure n Potential for developing automobile and pharmaceutical industries n Relatively low cost of labour and infrastructure n Rapid improvement in social development indices MADHYA PRADESH PAGE 9

The State Economy

Madhya Pradesh - Sectoral Contribution to GDP Between 1994 and 2003, the compounded annual growth rate of bifurcated Madhya Pradesh’s real NSDP was 2.6 per cent, increasing from US$ 7.5 billion to US$ 9.8 billion. 24%

Madhya Pradesh - NSDP growth 41%

12 10 8 35% 6

4

US $ billion 2 Services 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Agriculture Year Industry Source: Review of Madhya Pradesh Economy, CMIE,August 2004 Note: the figures are at 1993-94 prices for bifurcated Madhya Pradesh, Source: Department of Finance, Government of Madhya Pradesh During the past decade (1993-2003), the share of agriculture in Madhya Pradesh’s economy reduced During 1993-94 to 2002-03 Madhya Pradesh’s from 46 per cent to 24 per cent. In the same period, economy grew at average annual growth rate of 3.7 the share of industry and services increased per cent. In 2002-03, Madhya Pradesh’s per capita by 7 per cent and 5 per cent respectively, income stood at US$ 254. indicating a positive trend in the state’s economic development. INFRASTRUCTURE

Social infrastructure Institute of Forest Management, the Indian Institute of Hotel Management and International Institute In recent years, Madhya Pradesh has taken initiatives of Professional Studies at Indore. the social infrastructure of the state. It is ranked 12th on the Human Development Index. Its improved Madhya Pradesh’s network of health facilities ranking can be attributed to the thrust on social comprises 145 hospitals, 343 community health development through focus on rural development centres, 1,705 primary health centres. It also and self-employment schemes. has 34 Ayurvedic and 4 homoeopathic hospitals. The number of in-patient beds in Madhya Pradesh’s The state has a population of over 60.3 million hospitals is 20,839. (Census 2001), and is India’s seventh most populated state. Its population density is 196 persons per sq km. Access infrastructure The population growth rate in the state was 24.3 per cent between 1991-2001. Madhya Pradesh has an The total length of roads in Madhya Pradesh stands urban population of 16 million, representing over at over 160,000 km. 26 per cent of the total. Madhya Pradesh - Growth in road network

Literacy levels in the state have improved from Year 2000 2001 44.2 per cent in 1991 to the current level of over Total length (in km) 1,62,309 1,62,370 64.1 per cent. Surfaced length (in km) 79,135 79,575

Source: Review of Madhya Pradesh Economy, CMIE,August 2004 Madhya Pradesh - Growth in schools and enrolment

Year 2000-01 2001-02 Road density stands at 52.2 km per 100 sq km. Primary schools 81,942 87,620 The state has 18 national highways - a length Primary students of 4,664 km passing through it. Madhya Pradesh enrolment (thousand) 10,525 10,952 lies in and is a land locked state, Secondary schools 7,943 8,481 which is why the state needs a good road network. Secondary students Under the on-going National Highway Development enrolment (thousand) 1,359 1,516 Programme (NHDP), a length of 634 km is being

Source: Review of Madhya Pradesh Economy, CMIE,August 2004 converted into 4-6 lane carriage-ways.Two more projects to upgrade 100 km of national highways Madhya Pradesh’s education network consists through public private partnerships are being of 9 universities, over 250 colleges, along with planned. 87,000 primary and 8,500 secondary schools. Under the Madhya Pradesh State Road Sector The state has 45 engineering colleges, over Development Programme funded by the Asian 200 technical training institutes, 6 medical colleges Development Bank, 1750 km of state roads will and 43 management institutes including one of the also be rehabilitated and upgraded by 2006 six Indian Institutes of Management at Indore. Other at a cost of US$ 150 million. national institutes in the state include the Indian MADHYA PRADESH PAGE 11

The Madhya Pradesh government has accorded of Madhya Pradesh’s electricity generation capacity high priority to improve the road infrastructure is based on thermal energy with the remaining from in the state and has been successful in attracting hydel generation. private sector participation (PSP) in the development of highways. It has constructed 17 bridges and Madhya Pradesh - Electricity generation bypasses to four of its through PSP.Maintenance 3000 16000 of three state highways has been outsourced 2980 15500 to the private sector. Currently, IJM Corporation 2960 2940 15000 of Malaysia is implementing two state highway 2920 14500 MW projects aggregating 380 km with an investment 2900 14000

2880 Million Units of US$ 50 million. 13500 2860 2840 13000 2000 2001 2002 2003 Given the significant presence of mineral based industries in the state, availability of efficient railway Installed capacity (MW) links is critical to fully exploit the potential.The total Electricity generation (MU) length of the railway network in Madhya Pradesh Source: Review of Madhya Pradesh Economy, CMIE,August 2004 is 5992 km. Of this, almost 1,880 km is electrified track. Currently, railway upgradation projects in the state include adding 1,151 km of railway lines Industry and agriculture represent the largest at a cost of approximately US$ 460 million consumer categories, followed by domestic and implementing a major track modernisation consumers. programme to convert about 285 km of the existing metre gauge routes to broad gauge at an approximate Madhya Pradesh - Composition of electricity consumption cost of US$ 112 million.The completion of these projects will further strengthen the railway network 4% in the state.

Madhya Pradesh has two full-fledged domestic 30% 42% airports at Bhopal and Indore, it has smaller airports in Gwalior and Khajuraho - key tourist destinations, and 25 airstrips at a number of locations with regular services. 24% Madhya Pradesh - Growth in air traffic

Airport 2001-02 2002-03 2003-04 Industrial Bhopal 71294 87784 113,700 Domestic Indore 170,963 195,072 226,900 Agriculture Total 242,257 282,856 340,600 Others

Source: Review of Madhya Pradesh Economy, CMIE,August 2004 Source: Review of Madhya Pradesh Economy, CMIE,August 2004

Power On a per capita basis, electricity consumption The installed electricity generation capacity in Madhya Pradesh stands at 352 kWh per annum, of Madhya Pradesh is 3,008 MW. 95.66 per cent close to the national average of 355 kWh per annum. Various electricity projects under implementation (CONCOR).This is a well-developed dry port and in the state aggregate to 790 MW. is connected by rail and road transport to major destinations in India. Project Installed Capacity (MW) Hydel Power Projects (2004) Indore is also a potential destination for IT and ITES industries coming to the state. Ban Sagar IV 20

Madhikheda 60 Bhopal Thermal Power Projects (2007) Bhopal is the capital of Madhya Pradesh with Sanjay Gandhi, – Unit V 500 a population of approximately 1.4 million. Bhopal extension 210 is well connected to , Delhi and other Total 790 major cities across India.

Source: Madhya Pradesh State Electricity Board The three industrial growth centres located close Communications infrastructure to Bhopal are at Pilukhedi, Satlapur and Mandideep. Most of the units in these centres belong to the In 2003, Madhaya Pradesh had 1.23 million fixed line engineering, fabrication, herbal and agro sectors. telephone subscribers. In June 2004, the state had 490,000 mobile phone subscribers. Gwalior Gwalior is located in the north of Madhya Pradesh. Madhya Pradesh – Growth in fixed wire telephones It has a population of about 0.8 million. It is linked Year 2000 2001 2002 2003 well to Delhi and other major cities through rail and Fixed wire telephones road links. Gwalior has industrial growth centres (in ‘000) 1,096 1,263 1,146 1,235 located at Malanpur, Ghirongi and Banmore.The main Source: Review of Madhya Pradesh Economy, CMIE,August 2004 industries in these centres are solvent extraction units, leather, food processing and rubber. Industrial infrastructure Food Parks Indore To provide a fillip to agro and food processing Indore is a prominent business and industrial centre industry in the state, six food parks are being in Madhya Pradesh. Considered the commercial developed across the state.The main advantage capital of the state, it is well connected by rail, road of these parks lies in the availability of common and airways. Indore has a population of 1.8 million. facilities such as analytical and quality control laboratories, cold storages / modified atmosphere Indore also has a Special Economic Zone (SEZ) cold storages, warehousing facilities and spread over 1,038 hectares of land.The SEZ has supplementary pollution control facilities. attracted investment of over US$ 200 million so far. The state government has also provided concessions The industries located in the SEZ include textile, and subsidies to units locating in these parks. pharmaceuticals, automobile & auto ancillary, metallurgy and leather.

The SEZ also intends to act as a trading and logistics hub. It has a fully operational Internal Container Depot managed by Container Corporation of India

MADHYA PRADESH PAGE 13

STATE POLICY

The government of Madhya Pradesh recognises the exemption from stamp duty, registration charges, need for faster economic development in the state. entry tax, etc. for a specified period. Its strategy for encouraging investment and achieving higher levels of economic development hinges on the Simplification of the approval process following elements: The state government has established District Trade and Industry Centres to facilitate new industrial n Economic Development across all sectors investment in the districts.These centres will be n Balance in both economic and social spheres responsible for co-ordinating and following up with n Focus on physical connectivity, virtual connectivity other government agencies in the state for speedy and social connectivity approvals and clearances. n Focus on industries other than those where it can leverage its abundant natural resources The state government also proposes to simplify n Development of industrial infrastructure the approval process for setting up industrial units in the state in the state by empowering committees at district and state levels. With a view to attain a double digit economic growth the state government has implemented To promote a more conducive policy framework certain policy and regulatory measures. for various emerging sectors, Madhya Pradesh has formulated sector-specific government policies for Industrial policy information technology, tourism and biotechnology. Given below are some of the salient features To make Madhya Pradesh an attractive destination of these policies. for industrial investment, the state government has recently adopted the Industrial Promotion Policy IT policy 2004.The main thrust of the policy is: n Setting up of ‘Madhya Pradesh Agency for n Effective implementation of single window system Promotion of Information Technology’ to propel through establishment of a Madhya Pradesh Trade the growth of IT and Investment Facilitation Corporation n Promotion of infrastructure and investment n Promotion of different industrial clusters in the through IT cities and by formulating special state, in view of availability of raw material, skilled package for providing financial assistance to the labour and market IT industry, promoting hardware technology parks n Enhancement of infrastructure in the identified n Facilitate single window clearance system industrial clusters n Introduction of IT in all government departments n Revival of sick industrial units by granting n Manpower development in IT and setting special packages up of a virtual university n Setting up of an Industrial Infrastructure Development Fund IT initiatives Madhya Pradesh has taken steps to promote The policy also provides incentives through IT in various aspects of governance. It has set up an optical fibre backbone of 20,000 kms applications in agriculture, horticulture, livestock and to cover 313 development blocks across 45 districts poultry, fisheries and forestry and health sectors in the state. n Setting up integrated biotechnology parks with state-of-the-art facilities for manufacturing units The state government has prescribed various and research laboratories guidelines/principles and general conditions for n Establishing the State Biotechnology Council which allowing private participation and investment includes eminent biotechnologists, educationists, in e-Governance projects for citizen services. All industrialists and ex-officio members from various state treasuries and 86 per cent of the land records departments of state government in the state are digitised.The state government plans to computerise the departments of land registration, Special Economic Zone policy commercial taxes and state transport. The Madhya Pradesh Government has a policy The state has also started executing projects for developing Special Economic Zones (SEZ) in the to leverage IT to offer value added services to the state.The SEZs, earmarked as duty-free enclaves, common man at the rural level. aim at promoting rapid industrial development and employment generation.The approved policy As part of this initiative, information flows and regime includes: services like wholesale price, details of land records, registration of applications, public grievance n Exemption of all state and local taxes and levies redressal, etc. are made available online. for transactions with the SEZ and for supply from domestic tariff areas to the SEZ In another initiative, the government has signed n Exemption from stamp duty and registration fees a Memorandum of Understanding (MoU) with the n Grant of labour, energy, environment, industrial Reliance group for providing telecom connectivity health and safety related permits and approvals to 7,800 kiosks across the state. through a dedicated single window mechanism n Exemption from electricity duty, cess and any other The government has also initiated changes in labour tax or levy on sale of electricity for self generated laws to make them more favourable to IT industries. and purchased power n Expeditious process for land acquisition to set Tourism policy up SEZs n Improvement and creation of adequate basic Special Economic Zones: Key advantages infrastructure n Tax incentives n Special package of incentives for tourism industry n Faster approvals including exemption from luxury tax, sales tax n Single window zone administration and entertainment tax for new projects for n Superior infrastructure ten years n Designation of 25 tourist circuits for commercial tax exemption for tourist vehicles Infrastructure policy

Biotech policy To improve urban infrastructure and develop civic amenities, the state is implementing a US$ 330 million n Promotion of community-based biotechnology project at Indore, Bhopal, Gwalior, Ratlam,

MADHYA PRADESH PAGE 15

and Ujjain.This is being done with help from the Asian Development Bank.The project focuses on providing Madhya Pradesh Road Policy: Salient Features sustainable basic urban infrastructure and services n Encourage private sector participation rough to these six cities. It also supports comprehensive BOT contracts urban governance and institutional reform to enhance n Amendment of Indian Tolls (Madhya Pradesh) accountability in municipal management, resource Act, 1932 to facilitate private sector mobilisation and cost recovery. participation n Enabling legislation for regulation and The project covers improvement and expansion development of the sector through the of municipal infrastructure services viz. urban water proposed Madhya Pradesh Highway Bill supply, sewerage and sanitation, storm water drainage n Development of existing road network through and solid waste management. preparation of Master Plan, provide new links, focus on highway safety The state government has set up the Madhya Pradesh n Develop an efficient ‘Maintenance Management State Road Development Corporation (MPSRDC) System’ to make optimal use of the available to accelerate the development of transport resources infrastructure in the state.The state has achieved n Setting up of State Road Maintenance Fund significant success in implementing road projects n Incentives to ensure commercial viability through private sector participation. of road projects

Integrated Infrastructure Development Centres under the growth centres.They aim at facilitating Pursuant to policy measures for promoting and exports, promoting stronger linkages between strengthening clusters of small scale and tiny units, agriculture and industry, providing basic infrastructure Integrated Infrastructure Development Centres and common facilities and creating employment (IIDCs) are being promoted in the areas not covered opportunities.At present, eight IIDCs are under various stages of implementation.

BUSINESS OPPORTUNITIES

Key Industries The state’s key competitive advantage in the textile industry is the availability of raw material (cotton) The economy of Madhya Pradesh is largely natural and a skilled workforce. In 2002, the state produced resource driven, leveraging the state’s advantage 390,000 bales of cotton, representing 4 per cent in agriculture and mineral resources.The key of India’s cotton production.The production of cloth industries and sectors where Madhya Pradesh stood at 52 million metres in 2002-03. has competitive strength include cement, textiles, mining and food-processing. The phasing out of export quota is expected to provide a fillip to India’s textile industry.With the Cement global trade in textile and clothing expected to grow Cement production in Madhya Pradesh reached from US$ 356 billion at present to US$ 600 billion 15.1 million metric tonnes during 2003-04, by 2010, Madhya Pradesh has an opportunity accounting for 13 per cent of the national to leverage its existing strengths and capture a larger production.There are seven major cement plants share of textile market. in the state. The state government is taking steps to strengthen The cement industry in the country has seen the textile industry in the state by formulating significant growth in recent years.With the domestic a special package for the textile industry in the demand for cement expected to grow at 8-9 per cent Industrial Policy.The package includes establishing annually, cement production in India is projected to apparel parks and garment complexes in Indore and reach 160 million tonnes by 2007. Madhya Pradesh’s Jabalpur, and setting up an Apparel Training Institute key strength in cement industry is the presence and a national level institute of fashion technology. of large limestone reserves, estimated to be over 2 billion tonnes. Mahavir Spinning Mills plans to invest US$ 160 million in an integrated textile unit near Bhopal.The unit Prominent cement companies present in the state is to be developed in two phases in a span of five include ACC, Grasim Industries, Jaiprakash Associates, years.The unit will produce 50 million metric tonnes Century Textiles and Mysore Cements. of processed fabric.

Jaiprakash Associates is expanding the capacity of its Mining plant at Reva from 4.2 MTPA to 6.5 MTPA with an Madhya Pradesh is endowed with significant mineral investment of US$ 35 million.While Century Textiles resources.With 604,000 carats of proven diamond is expanding its capacity at Satna by 0.8 MTPA. reserves it accounts for 99 per cent of India’s total reserves. It is the sole producer of diamonds Textiles in the country. Madhya Pradesh produces 157,000 tonnes of spun yarn representing 6 per cent of India’s It also leads the country in the production total production and 38.6 million sq mt of fabric of copper ore, slate, pyrophillite, diaspore, (mill made) accounting for 4 per cent of all India and is second in production of rock phosphate, production. clay and laterite.

MADHYA PRADESH PAGE 17

The state has the country’s largest open cast copper The state government has taken steps to facilitate mine at Balaghat and the thickest coal seam of Asia further development of the food processing industry at coalfield in district. in the state.These include setting up Food Parks with private investment.At present, six Food Parks are The mining and quarrying sector contributed under implementation in various parts of the state. to 4.5 per cent of the state’s GSDP (at current prices) in 2002-03. Prominent investors in Madhya Pradesh’s edible oil industry are Ruchi Soya, MP Glychem and Vippi Madhya Pradesh - Production of key minerals, 2003-04 Industries. Ruchi Soya is expanding the capacity of its Unit Production % share edible oil refinery at Indore from 600 tonnes per day - All India to 1,000 tonnes per day. Prosoya Foods, a subsidiary Fuel Minerals of ProSoya Inc. Canada has set up a soya milk Coal ‘000 tonnes 45414 14 extraction plant in Madhya Pradesh. Metallic Minerals Exports Copper Ore ‘000 tonnes 2101 81 Manganese Ore tonnes 329265 21 Exports from Madhya mainly comprise agro-products Non-Metallic Minerals such as soyabean extraction, minerals, textiles, leather Barium Carbonate tonnes 142285 23 and cement. Diamonds carats 62071 100 Madhya Pradesh - Composition of exports Diaspore tonnes 7847 59 Fire Clay tonnes 58105 12 6% 8% Limestone ‘000 tonnes 21512 16 4% Other clays tonnes 164617 31 Pyrophylite tonnes 94351 63 45%

Source: Review of Madhya Pradesh Economy, CMIE,August 2004 35% To facilitate faster exploitation of its mineral wealth and promote mineral based industries, the state government has formulated a Mining Policy which provides the framework for granting mining rights Agro-products to private investors. Minerals Cement Prominent mining organisations operating in the Textiles & leather state include the National Mineral Development Others Source: Government of Madhya Pradesh, 2002-03 Corporation, Coal India and Hindustan Copper Ltd. Investment Edible oils Madhya Pradesh is among the leading producers Over the years, Madhya Pradesh has attracted of edible oils in India and the largest producer industrial investment in sectors such as non-metallic of oilseeds among the states. In 2002-03, the state minerals, textiles, food products and chemicals.These produced 3 million tonnes of oilseeds, representing four sectors represent almost half of the existing over 20 per cent of India’s production. industrial investment in Madhya Pradesh.

Principal industries in Madhya Pradesh Within manufacturing, key sectors include chemicals, Share of industries in net value addition machinery, transport equipment, non-metallic mineral products, metals and rubber.Among services, 8.8% transport and community services including hospitals and tourism have the dominant share of investment. 16.6% 42.3% Foreign Direct Investment Between 1996 and 2003, Madhya Pradesh attracted 14.1% over US$ 1,800 million of foreign direct investment.

12.2% 9.0% Madhya Pradesh - Cumulative FDI

2000 1800 Food Products & Beverages 1600 1400 Textiles 1200 1000 Chemicals & Chemical Products 800

US$ million 600 400 Other Non-Metallic Mineral Products 200 00 Rubber 1996 1997 1998 1999 2000 2001 2002 2003 Year Others Source: Annual Survey of Industries, 2002-03 Source: SIA reports In 2004, investment projects totalling over US$ 17 billion were in different stages of implementation The key sectors attracting FDI in the state are fuels, in the state.A sector-wise breakup of these projects metallurgical industries, textiles, among others. indicates a wide distribution of investment across infrastructure, manufacturing, mining and services. FDI - Sectoral break up Distribution of investment

2% 8% 15% 5% 23%

15% 5% 70% 38% 19%

Fuels Irrigation Metallurgical industries Manufacturing Textiles Electricity Electrical equipment including software Service & Utilities Others Mining Source: Projects Today database, June 2004 Source: SIA newsletter,Annual Issue 2002 MADHYA PRADESH PAGE 19

Potential Hubs for Investment to manufacture heavy and light commercial trucks in technical collaboration with Maschinenfabrik As a result of the state’s aggressive incentive policies, Augsburg-Nurnberg (MAN) of Germany a number of sectors are emerging with substantial at Pithampur; Kinetic Motors new production line potential for private investment and business.The for manufacturing the Italjet range of scooters most prominent among them are automobiles and at Pithampur and Hindustan Motors plan to invest auto ancillary products and pharmaceutical sectors. around US$ 16 million over a period of four years to manufacture and supply automobile engines and Automobiles & auto components transmission units to Ford India. Madhya Pradesh’s location at the centre of India has led to its emergence as an important destination Pharmaceuticals for automobile and auto component industry. By leveraging the existing manufacturing base, along The industrial belt around Indore has production with a low cost resource pool Madhya Pradesh has facilities for a number of automobile manufacturers. a potential to further develop the pharmaceutical A network of vendors supplying auto components industry in the state. to these plants is being established. Ranbaxy, India’s leading pharmaceuticals company, While Madhya Pradesh’s current share in India’s has a bulk drug and formulation plant at Dewas total automobile sector output is relatively small, in Madhya Pradesh. IPCA Laboratories plans to invest it is expected to witness a significant increase. US$ 22 million to expand its formulations capacity The projected growth rate for Indian automobile at Ratlam and invest US$ 14 million to set up a new market is over 10 per cent per annum; this presents export oriented formulations unit in Indore.The plant significant opportunity to the state. Prominent will come up in the SEZ and will be built according automobile and auto component players present to USFDA specifications. Nicolas Piramal is investing in Madhya Pradesh are Kinetic Motors, Eicher Motors, US$ 7 million to invest in its opthalmology products Bajaj Tempo and Hindustan Motors. facility at Pithampur. Biofill Pharma plans to invest US$ 25 million in Pithampur and Lupin Laboratories Some investment in the pipeline in this sector is expanding its manufacturing plant at Mandideep are Baja Tempo’s plans to invest US$ 80 million with an investment of US$ 4.5 million.

PROFILE OF KEY PLAYERS IN MADHYA PRADESH

ACC Ltd The company is setting up a captive power plant ACC is one of the largest cement manufacturing of 27 MW in Satna in Madhya Pradesh with companies in India, with a cement production an investment of US$ 42 million. It is also investing capacity of 16 million tonnes per annum. US$ 62 million for various capital expenditure In 2004-05,ACC revenues stood at US$ 1035 million. programmes across the country. ACC is a pioneer in cement and RMC, a leader in refractories and one of the pioneers in the Cadbury India Ltd area of advanced materials.The company has a Cadbury India is a subsidiary of Cadbury Schweppes, countrywide distribution network and manufactures the world’s largest confectionery and third largest all types of cement. In Madhya Pradesh,ACC has soft drinks company. Cadbury India had sales of over a 1.7 MTPA cement plant at Kymore.The company US$ 150 million in 2003.The company employs nearly plans to invest US$ 3.3 million to expand its 2000 people across India. Cadbury India has one of its manufacturing capacity of roofing products main production plants at Malanpur, near Gwalior. at Kymore.This will increase its production from 68,000 tonnes of asbestos roofing to 78,000 tonnes. Century Textiles and Industries Ltd Century Textiles and Industries Ltd is the flagship Bajaj Tempo Ltd company of the B K Birla Group. Century is involved Bajaj Tempo is a US$ 190 million manufacturer in diversified businesses including cotton textiles and of utility and light commercial vehicles, agricultural yarn, viscose filament yarn and rayon, tyre, industrial tractors and diesel engines. It has an automobile yarn, cement, paper and pulp. In 2004-05, it registered manufacturing plant at Pithampur near Indore. Bajaj sales were over US$ 500 million. Century has Tempo plans to invest US$ 80 million to manufacture presence in Madhya Pradesh through a cement plant heavy and light commercial trucks in technical at Satna.The company is expanding the production collaboration with Maschinenfabrik Augsburg- capacity of its cement plant at Satna by 0.8 million Nurnberg (MAN) of Germany at its existing site tonne per annum. It also has a 100 per cent export at Pithampur near Indore. oriented cotton yarn and denim production plant near Indore.The unit has an ISO-9002 certification. Birla Corporation Ltd Birla Corporation Ltd is the flagship company Coca Cola India of the MP Birla Group.The company’s main areas Coca-Cola India, one of the largest companies of business are jute, cement, synthetic yarn, calcium in the beverage market, has invested more than carbide, industrial gases, PVC coated fabrics, US$ 1 billion in India over the past decade. PVC floor coverings, auto trims, healthcare and Coca-Cola is one of top international investors education. Birla Corporation has joint ventures in India. In 2003, Coca-Cola India pledged to invest and collaborations with world leaders like DLW AG a further US$ 100 million in its operations. of Germany, Rhone Poulenc of France, Sweden-based In Madhya Pradesh, Coca-Cola has a plant Ericsson Cables & AB and ABB, GE,Toshiba and at Pilukhedi in Raisen district, near Bhopal. AEI Cables. In 2003-04, the company’s revenues was The company plans to invest US$ 6.7 million for US$ 276 million and profits over US$ 9 million. expanding the operations in its plant at Pilukhedi.

MADHYA PRADESH PAGE 21

Eicher Motors Ltd in the state by providing support infrastructure for Eicher Motors, part of the US$ 355 million Eicher marketing and distribution of their products. Group, is a significant player in the Indian automobile industry. Eicher Motors manufactures and markets HLL also has an alliance with Rallis India, a Tata group commercial vehicles with Gross Vehicle Weight company, for a contract farming of wheat in Madhya (GVW) ranging from 5 to 25 tonnes. It is one Pradesh.This is mainly intended to help farmers grow of the leading manufacturers of commercial vehicles and sell wheat and for making basmati rice for export in India.The company has a manufacturing facility in Madhya Pradesh. is Pithampur, Madhya Pradesh.This state-of-the-art plant has a total area of 72 acres with 18000 sq mt IPCA Laboratories Ltd as the covered area. It houses some top-of-the-line IPCA Laboratories is one of India’s leading equipments, a robust infrastructure and has an annual pharmaceutical companies with a strong thrust production capacity of 30,000 vehicles.The company on exports.The Group's principal activities are has a world-class R&D centre that has helped the manufacturing and distributing drugs and company successfully developed a wide range pharmaceuticals. Its products include tablets, capsules, of commercial vehicles including trucks and buses. basic drugs, orals, liquids and injectables.The company The company recently invested US$ 22 million for has a bulk drugs and formulation unit at Ratlam and manufacturing heavy commercial vehicles at its a bulk drug facility in Indore in Madhya Pradesh. IPCA Pithampur plant. Laboratories plans to invest US$ 22 million to expand its formulations capacity at Ratlam. It also plans Grasim Industries Ltd to invest US$ 14 million in the first phase to set Grasim Industries is the flagship of the AV Birla up a new export oriented formulations unit in Indore. Group, one of the most prominent Indian business houses.With the recent acquisition of cement Kinetic Motors business of L&T, Grasim has become the largest Kinetic Motor Company Ltd is part of the Kinetic producer of cement in India. Grasim is also the group of companies, a leading manufacturer of two largest producer of Viscose Staple Fibre (VSF) in India wheelers in India.The company has a state-of-the-art and one of the largest textile and yarn manufacturers. manufacturing facility at Pithampur, near Indore.The In Madhya Pradesh, Grasim has a presence through facility is ISO-9001 certified. Kinetic Motors is setting a cement plant at Jawad, a VSF plant at Nagda and up a production line for manufacturing the Italjet textile & fabric manufacturing plants near Gwalior. range of scooters at Pithampur in Madhya Pradesh.

Hindustan Lever Ltd (HLL) Nicholas Piramal India Ltd Hindustan Lever Ltd is India’s largest fast moving Nicholas Piramal India Ltd (NPIL) is one of India’s consumer goods company, with leadership in home leading pharmaceutical and healthcare companies & personal care products and foods & beverages. with sales of US$ 280 million. NPIL is ranked fourth Its parent company, Unilever a Fortune 500 in domestic formulations sales and second in total transnational holds 51 per cent of the equity. HLL domestic pharmaceuticals sales. Its Pithampur plant has a plant for synthetic detergents in Chindwara in Madhya Pradesh is accredited by reputed district of Madhya Pradesh. In 2002, HLL launched organisations like Allergan, Novartis, Solvay and the “Vindhya Valley” project in association with the IVAX, among others. Nicolas Piramal plans to invest Madhya Pradesh government to help increase the US$ 45 million to enhance its research and income of the farmers and small town entrepreneurs development activities besides strengthening its engaged in agro processing and cottage industries manufacturing facilities.

Procter & Gamble Procter & Gamble India is one of India’s fastest growing FMCG companies.The company has a turnover of over US$ 200 million.The company has a high technology detergent manufacturing plant in Raisen district in the state.

Ranbaxy Laboratories Ltd Ranbaxy Laboratories Ltd, India’s largest pharmaceutical company, manufactures and markets world-class generics, branded generic pharmaceuticals and active pharmaceutical ingredients. It is ranked amongst the top ten generic companies worldwide. Ranbaxy has joint ventures/subsidiaries across the globe and its products are sold in over 100 countries, it has manufacturing operations in 7 countries and ground presence in 44 countries. In 2004, the company’s global sales crossed US$ 1 billion. Ranbaxy has manufacturing facilities in seven countries (including India), most of which are USFDA approved. Ranbaxy is investing US$ 100 million for expanding production capacity of Indian, Brazilian and US manufacturing utilities. In Madhya Pradesh, the company has a bulk drug and formulation plant at Dewas.

Ruchi Soya Industries Ltd Ruchi Soya Industries Ltd is the largest edible oil company in India engaged in refining and trading of edible oils, soybean oil extraction, and export of soybean meal. It has an annual turnover of over US$ 550 million. In 2003, the company embarked on an expansion programme at its edible oil refinery at Indore.The plant capacity is being raised from 600 tonnes per day to 1000 tonnes per day.

MADHYA PRADESH PAGE 23

DOING BUSINESS IN MADHYA PRADESH

Obtaining approvals

An indicative list of approvals with timeframe for setting up business in Madhya Pradesh

Department Agency Timelines

Environment/Industries District Trade & Industries No objection certificate for identified Centre / Madhya Pradesh industries: Immediate Pollution Board Approval from Pollution Control Board: Immediate

Provisional Registration: Immediate Industries District Trade & Industries Permanent Registration: 7 days Centre Letter of Intent: Immediate Land Allotment (after necessary scrutiny): Immediate Processing of lease deed: 7 days Issue of Entry Tax/ Sales tax exemption certificate: Immediate Approval of capital subsidy: 30 days Approval of interest subsidy: 7 days

Industries/Electricity District Trade & Industries Approval for electricity connection: Centre Immediate

Industries/ Finance District Trade & Industries Approval of Bank loan: 30 days Centre

Source: PwC research Cost of setting up business Contact for information

An indicative table on cost of setting up business State Government Website in Madhya Pradesh www.mpgovt.nic.in/

Indicator Value (in US$) Madhya Pradesh State Industrial Development Corporation (MPSIDC) Industrial land (per sq mt) 4.8 - 28.7 Madhya Pradesh State Industrial Development Corporation is the nodal agency responsible for Office space rent development of industrial estates and investment (per sq ft per month) 0.48 - 0.96 promotion in Madhya Pradesh. MPSIDC has five subsidiary companies located in Bhopal, Indore, Residential rent (for a 2,000 Gwalior, Jabalpur and . Each of these subsidiaries sq ft house, per month) 268 - 335 develops and manages different industrial estates within their areas of jurisdiction. 5-star hotel room (per night) 76.6 - 95.7 Madhya Pradesh State Industrial Development Corporation Electricity (per kWh) 0.086 - 0.124 AVN Towers, 192 Zone-1 MP Nagar Water (per 1000 litres) 0.19 Bhopal 462 011 Tel +91 755 5270370 Fax +91 755 5270280 Source: PwC research Note: Exchange rate used is INR 47 per US$. Email [email protected] Web www.mpsidc.org

Confederation of Indian Industry (CII) Information on markets and opportunities for investment in Madhya Pradesh can also be obtained from Confederation of Indian Industry which works with the objective of creating a symbiotic interface between industry and government.

Confederation of Indian Industry State Office 17, Vaishali Nagar, Kotra Bhopal 462 003 INDIA Tel +91 755 5293792 Fax +91 755 2671461 Email [email protected] Web www.ciionline.org DISCLAIMER

This publication has been prepared for the India Brand Equity Foundation (“IBEF”). All rights reserved. All copyright in this publication and related works is 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 publication), modified or in any manner communicated to any third party except with the written approval of IBE F. This publication is for information purposes only. While due care has been taken during the compilation of this publication to ensure that the information is accurate to the best of IBEF’s knowledge and belief, the content is not to be construed in any manner whatsoever as a substitute for professional advice. IBEF neither recommends nor endorses any specific products or services that may have been mentioned in this publication and nor does it assume any liability or responsibility for the outcome of decisions taken as a result of any reliance placed on this publication. IBEF shall in no way, 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 publication. The India Brand Equity Foundation is a public-private partnership between the Ministry of Commerce & Industry, Government of India and the Confederation of Indian Industry.The Foundation’s primary objective is to build positive economic perceptions of India globally.

India Brand Equity Foundation c/o Confederation of Indian Industry 249-F Sector 18 Udyog Vihar Phase IV Gurgaon 122015 Haryana INDIA

Tel +91 124 501 4087, 4060 - 67 Fax +91 124 501 3873 Email [email protected] Web www.ibef.org