INDUSTRY REPORT Construction 2018 Compiled for Knowledge partner December, 2018 INDEX Overview of Construction Industry in India 3 Why Telangana & Andhra Pradesh? 4 Demand Drivers Large Infrastructure Projects in the region 11 Hyderabad’s growing market share in office market 12 Hyderabad’s has also witnessed a Real Estate boom 13 Investment for developing sector-specific Industrial parks 14 Infrastructure Projects in Andhra Pradesh 16 Growing of shopping mall 17 Presence of Blue-Chip and Multinational Companies 18 Initiatives and Policy Support by Government 19 Why Hyderabad as a Destination for Organizing Expos on Construction Industry 21 Overview of Construction Industry in India Share of Construction actives (%) Market Share (%) 8% 13% Infrastructure 12% 32% South Industrial North 48% 25% Residential West East Commercial 32% 30% Note: 1) Real Estate includes residential, commercial construction, retail, hospitality & industrial construction 2) Infrastructure Building includes roads & highways, railway, power, airports & ports Construction Industry in Telangana & Andhra Pradesh (refer as AP in report) Total estimated construction industry for FY 2017-18 is USD 11- 15 billion in Telangana & AP Growing with a CGAR of 10-12% Y-o-Y A flurry of infrastructure projects – Metro, SRDP, MMTS, ORR etc., it’s participation in the creation of aerospace SEZ, bio-parks, financial districts, pharma city, IT hubs & start up incubators are attracting PPP investments in the region Favorable Ecosystem Presence of large & medium infrastructure companies are 50+ Total number of civil contractors are 400+ Total number of builders are 1000 + Total number of cement plants are 50 + Total construction equipment Industry of Telangana and AP is US$ 75 Million Total ceramic Industry of Telangana and AP is INR 1,000 Crore Presence of more than 300+ TMT bar dealers Presence of leading institutions such as National Cement, Construction and Building Material (NCCBM), National Academy of Construction Sources: 1) Make my India Website – Construction Sector 2) Dun & Bradstreet research paper, NBMCW research paper Why Telangana & Andhra Pradesh? (1/7) 1. Construction Equipment Total market size of Construction Equipment in India for FY 2017-18 is US$ 3.3 Billion Of which South India has a market share of about 35% (US$ 1.15 Billion) Telangana & AP together contributes about 60-65% to South market It is expected to grow at a CGAR of 11-12% Y-o-Y by 2022 Presence of more than 100+ dealers or traders in the region Regional presence of other majors like L&T, Volvo, ACE, Universal, JCB, Doosan, Caterpiller, Mahindra, Sandvik etc. New Investment Kobelco Construction to expand capacity at Sri City facility At present the production capacity if 2,000 units, company is planning further enhance the production capacity by 50 % of Hydraulic Excavators It will invest INR 75 Crore for commissioning the new plant of 6,500 sq.m. area. Atlas Copco opens new unit in Hyderabad It will invest INR 80 Crore in doubling the capacity of the existing plant located in Cherlapally industrial area Sources: 1) Indian Construction Equipment Manufacturers’ Association 2) Website of NBM&CW, Construction equipment report by IBEF 3) The Hindu1, The Hindu2 Why Telangana & Andhra Pradesh? (2/7) 2. Major Infrastructure Companies Presence of top infrastructure companies in the region attracts more Exhibitors and potential visitors to Hyderabad New Investment Telangana government will be setting up the country's first dedicated construction and building materials manufacturing park spread over nearly 250 acres near Hyderabad with KEF Infra The park will come up close to Hyderabad either in Medchal or Ranga Reddy district and will have the potential to attract INR 5,000-6,000 Crore investments and generate around 10,000 direct jobs GMR Hyderabad International Airport is expanding its terminal building, airside infrastructure and allied infrastructure to achieve 34 million annual passenger Has appointed L&T for INR 3,028 Crore and Megawide Construction INR Rs 980 Crore for the project KKR acquired 60% stake in Hyderabad-based Ramky Enviro Engineer, for about INR 4,000 Crore SEW Infrastructure has bagged contract for Kaleshwaram Lift Irrigation Project worth of INR 14,154 Crore Sources: 1) Indian Construction Equipment Manufacturers’ Association 2) Website: GMR, Ramky, SEW 3) Online article: magibbricks, The Hindu, Economic Times Why Telangana & Andhra Pradesh? (3/7) Megha and its joint ventures hold nine, worth INR 22,989 Crore, for Kaleshwaram Lift Irrigation Project (which is 46.3% of the total value) Navayuga and its joint ventures come third, with five contracts worth INR 9,651 Crore Existing Players 3. Developers and Builders in Hyderabad Hyderabad has emerged as the top investment destination in the real estate sector, attracting $793 million, ahead of $ 694 million secured by Bengaluru - P Ravinder Rao, president, TREDA Hyderabad shall have a new launches of nearly 13,640 units in the first three quarters of 2018 Out of this, about 90% comprised of apartments while remaining were villas 13,650 units were sold during the same period The states will spend about INR 22, 784 Crore on several infrastructure projects in the forthcoming years Sources: 1) Telangana Developers Association, CREDAI, Andhra Pradesh Realtors Association 2) Builder’s Association of India Why Telangana & Andhra Pradesh? (4/7) 4. Steel Bar Industry Presence of more than 300+ TMT bar dealers in Telangana & Andhra Pradesh Andhra Pradesh to set up INR 15,000 crore steel plant in Rayalaseema The state government proposes to bear 100 percent of the investment through loans It will be based on PPP model New Investment Vizag Steel Plant plans to expand its capacity from 7.3 million tonne to about 12 million tonne per annum at an estimated cost of INR 20,000 Crore Viki Industries, the makers of isteel TMT bars, is planning to double production capacity in 18 months and has earmarked INR 30 crore for the purpose 5. Ceramics Industry Estimated market size of Ceramic Industry of Telangana and AP is INR 1,000 Crore and is expected shall be double by 2020 AP would soon become a ceramic hub for the ceramic industry which includes a 30 thousand crore ceramic market and a 4 thousand crore sanitary ware market New Investment LIXIL Asia Pacific, has acquired 45 acre land with state-of-the-art facility at Bhimadole Will serve as a central production base for the Indian market It has invested INR 400 Crore and will produce select ranges of ceramic ware Sources: 1) Indian Council of Ceramic Tiles and Sanitaryware 2)The Hindu1, The HIndu2, The Hansa Why Telangana & Andhra Pradesh? (5/7) Cera occupies a market share of 28% in Telangana sanitaryware market which is valued at over INR 450 Crore CERA plans to commission two units in next 3-4 months, and will invest over INR 100 crore cumulatively It has achieved a turnover of INR 158 Crore in Telangana and AP, accounting for 14% of INR 1,180 Crore turnover Telangana contributed to over INR 90 Crore sales, making it the largest market nationally Somany Ceramics first plant in south India near Tiruchirapali in Andhra Pradesh It will produce about 11,000 to 12,000 square meters of verified tiles per day HSIL is considering setting up a greenfield manufacturing plant in Andhra Pradesh with a total investment of INR 110 Crore To cater the demand of southern India, Kajaria Ceramics, will be setting up a new state-of-the-art manufacturing plant at Tirupati at an investment of INR 125 Crore Existing Players Sources: Indian Council of Ceramic Tiles and Sanitaryware Why Telangana & Andhra Pradesh? (6/7) 6. Cement Industry Cement industry sees about 10 to 18% in demand in Telangana and AP next two to three years Major reasons are - various heavy projects being undertaken by the respective governments There are around 50-60 players in the two states and they have a total capacity of 75 Million Tonnes (out of 150 million tones market in South), of which currently 70-75% is being utilized Cement industry in Andhra Pradesh is one of largest industries in India French cement giant Vicat group will invest INR 1,735 Crore in the Indian cement sector involving both brownfield expansions and Greenfield projects It also includes setting up a Greenfield cement manufactur- ing facility in Vizianagaram involving an investment of INR 510 Crore It will invest INR 1,225 Crore on brownfield expansion of the Karnataka Ramco plans to set up a new 3.15MT/Yr integrated plant Kurnool District The project has an investment of nearly US$210m Anjani Portland Cement plans to build a new clinker production line at its Chintalapalem plant, Telangana. It has a production capacity of 1.16MT/Yr and this will rise to 2.31MT/yr once the upgrade is complete. It is expected to cost US$61million It is scheduled to be completed by the end of 2019. Sources: 1) Cement Manufacturers of India 2)The Economics Times Why Telangana & Andhra Pradesh? (7/7) Orient Cement plans to upgrade its Devapur in Adilabad District, Telangana. It will invest INR 2,0000 Crore towards more than doubling the unit’s cement production. capacity to 7.5Mt/yr from 3Mt/yr Existing Players Demand Drivers (1/8) 1. Large Infrastructure Projects in the region Political stability, infrastructure development – commencement of the Hyderabad Metro line, elevated corridors & road development have given a major fillip to the property market of Hyderabad. Building underpass and flyovers for traffic decongestion Inauguration of Medchal Interchange Illumination of the ORR stretch from