Indian Construction Industry

Content

1. Introduction 1.1 Industry Definition The Indian construction industry encompasses establishments engaged in building residential, commercial, and civil engineering works. 1.2 Industry Segments This industry segment includes residential, farm, industrial, commercial, or other buildings constructed by general contractors and operative builders. 2. Market Dynamics 2.1 Market Overview The main industrial growth drivers are rising spending on infrastructure and increased non-residential development. 2.2 Trend Analysis Industry Moving Towards Consolidation Public-Private Partnership Increasing Demand for Housing Widening DemandSupply Gap Increased Foreign Participation 2.3 Key Drivers Rising Household Income Lucrative Investment Alternatives Changing Age Profile Booming IT&ITES Sector Surging Retail Demand 2.4 Major Issues & Implications Title Clearances Pending Land Reforms Procedural & Legal Vulnerability Urban Land Monopoly Manpower Shortage Debatable Tax Status under Section 80I (A) Infrastructure Bottlenecks 3. PEST Analysis 3.1 Political Factors SEZ Act to Boost Infrastructural Development Cement Prices Reduced for State Infrastructure Projects FDI Liberalization to Augment Industry Growth REITs to Positively Affect Real Estate Business 3.2 Economic Factors Growth in Construction Activity Stimulating GDP Growth Rate Hikes Unlikely To Slow Down Growth 3.3 Social Factors Shifting Consumption Pattern to Fuel Industry Growth Rising Urbanization to Boost Industrial Growth 3.4 Technological Factors Low Technology Adoption to Hinder Growth Construction as per Indian Requirements Ready-MixConcrete Being Experimented With 4. Michael Porters Five Forces Analysis 4.1 Buyer Power Low/ Moderate Bargaining Power of Buyers 4.2 Supplier Power Moderate/ High Bargaining Power of Suppliers 4.3 Intensity of Competition High 4.4 Threat of New Entrants Low barriers to entry 4.5 Threat of Substitute Products Low 5. Competitive Landscape Larsen & Toubro Limited Jaiprakash Associates Hindustan Construction Company Gammon India 5.1 Competitive Positioning 5.2 Competition Strategies Larsen & Toubro Limited Continued Focus on Resource Utilization Divestment Plans for its Non-core Business Jaiprakash Associates Expansion Plans Hindustan Construction Company (HCC) Increased Focus on Overseas Market Development of Sub-contractor Base to Cut-costs Gammon India Foraying into MRTS Segment Early Entry to Achieve Dominant Position 5.3 Financial Analysis 5.3.1 Income Statement Analysis 5.3.2 Balance Sheet Analysis 5.4 Stock Market Performance All the four players outperformed the Sensex between May 2005 and May 2006 (till May 17). 6. Industry Outlook The governments commitments to infrastructure development, especially in the power and road sectors, are likely to add further impetus to the industrys growth. Appendices Appendix 1 Conferences and Annual Meetings Appendix 2 Industry Associations and Organizations List of Tables/Figures Figure 2.1 Global Construction Spending Growth 2004-2005 Figure 2.2 Indian Real Estate Market 2003-2008E Figure 2.3 Hydropower Potential in India: Only 19.3% Developed January 31, 2006 Figure 2.4 Air Passengers 1996-2005 Figure 2.5 Aircraft & Freight Movement 1996-2005 Figure 2.6 Growth in Containerization 1994-2004 Figure 2.7 Public-Private Partnership Model Figure 2.8 Shortage in Housing 1961-2007E Figure 2.9 Total Home Loan Disbursements, 1998-99 to 2008-2009E Figure 2.10 FDI in Real Estate 2003-2005E Figure 2.11 % of Young Population (<25 yrs age) - 2004 Figure 2.12 Demand for Space in IT/ITES Sector 2003-2009E Figure 2.13 No. of People Employed in the IT/ITES sector 2003-2008E Figure 2.14 Demand for Retail Space in India 2003-2007E Figure 3.1 Performance of Construction Industry FY02-FY06 Figure 3.2 Changing Consumption Pattern 2003 & 2008E Figure 3.3 India's Urban Population 1951-2011E Figure 5.1 Revenue FY05 Figure 5.2 Profitability Ratios FY05 Figure 5.3 Liquidity Ratios FY05 Figure 5.4 Performance Ratios FY05 Figure 5.5 Stock Performance May 2005-May 2006 Table 2.1 Road Network in India February 22,2006 Table 2.2 NHDP Roadmap Table 2.3 Planned Power Sector Capacity Additions 2002-2007 & 2007-2012 Table 2.4 Classification of Earning Groups 2002 & 2010 Table 2.5 Indian Population Distribution by Age 1996-2013E Table 2.6 Future of Organized Retail Segment 2006-2007 Table 3.1 Fixed and Floating Rate 2005-06 Table 6.1 Sector Wise Infrastructure Investment (in US$ billion) 2004-05 and 2005-06E