Danish Companies in Indian Infrastructure

The Indian Infrastructure IndustryDIBD India 25. 9. 12

DIBD IndiaIntroduction to the Indian Infrastructure Industry• Current market situation• Key drivers• Government initiatives• Danish infrastructural companies• SWOT

DIBD IndiaCurrent Market Situation• India, as the second fastest growing marketin the world is in a profound need of muchmore efficient infrastructure in order tomeet the vast national and internationaldemand that India faces• Crumbling roads, jammed airports andpower blackouts are major problems thatIndia faces on a daily basis• Cars, trucks, buses, motorcycles, rickshaws,cows, dogs and pedestrians jostle for everyinch on the poorly maintained roads inevery big city in India• Today India has the third largest roadnetwork in the world after US and China,with at total of 3.32 million km. of road

DIBD IndiaCurrent Market Situation• These highways have not been maintainedadequately for many years, and they are notextensive enough to give the massive trafficoptimal and efficient conditions• India not only needs to improve their poorhighway network though, but also to develop:• Railways• Metro systems• Shipping infrastructure• Aviation infrastructure• Sanitation and water system• and other basic facilities and installationsneeded for a society to function optimally

DIBD IndiaCurrent Market Situation• The quality of the Indian infrastructure wasranked as number 86 in the world by theWorld Economic Forum in 2011/12.Inadequate supply of infrastructure ranked asthe most problematic factor for doingbusiness in the country• India’s infrastructure deficit acts as a brakethat knocks an estimated 2 percentage pointsoff growth and forms a constant unflatteringcomparison with China and its ability tocomplete the sorts of projects that made the2008 Beijing Olympics a showpiece• The New Delhi Commonwealth Games, havefaced worldwide critique due to poormanagement, corruption and disastrousinfrastructure. This clearly shows that Indiastill has a long way to go in order to become areal power threat to especially ChinaChina has the past decade executed vastinfrastructural projects that has led them to apowerful position in the world today

DIBD IndiaMain Segments in the Infrastructure Industry• Energy• Telecom• Ports & Shipping• Oil & Gas• Roads & Bridges• Aviation & Airports• Water and Sanitation• Railways

DIBD IndiaKey Drivers for Indian Infrastructural Improvements• India has underinvested in theinfrastructural sector for the past 60years, thus far behind in terms ofexploiting their full GDP potential• Population growth of around 20million a year (40,000 per day)• Growing urbanization – today morethan 40 cities have more than 1million inhabitants• Increasing FDI coming to the countrydemanding better infrastructuralconditions to enhance their businesslevel

DIBD IndiaKey Drivers for Indian Infrastructural Improvements• Water supply and sanitation facilities continue tobe a scarcity in India despite increasing effortsand investments from the Government over theyears• The level of investments in the area hasincreased during the 2000s and access hasimproved, albeit still very low compared tointernational standards. Thus, the water supplyand sanitation sectors are in need of immenseimprovements• India is today the third largest energy consumerafter the China and USA. However, thesecountries have the power generation capacity tomeet the demand for electricity in order toexploit the their optimal GDP level• India’s electricity sector needs to boostinvestment to cope with demand, which hasbeen growing at a significant pace, fuelled byrapid population growth and continued highlevels of economic growth

DIBD IndiaGovernment initiatives• The Indian government has projected thatinvestment in infrastructure will almost double toUSD $1025 bn in the 12th Plan, compared to USD$514 bn in the 11th Plan• Of the USD $1025 bn, 50 % is expected to come fromprivate sector, whose investment has been 36% inthe 11th Plan• Under the 12th Five-Year plan, India's airports areexpected to need approximately USD $13.86 bn ininvestment, nearly US$10.27bn of which is likely tobe from the private sector.• Under India's 12th Five-Year Plan, the RoadTransport Ministry is planning to release US$120bnworth of road-widening projects with a total lengthof 55,000km, with 65% of the investment from theprivate sector• The Government has prepared a “Vision 2015”stating their goals with a planned investment of USD$8.2 billion just within the railway infrastructure. TheIndian Railway System is the largest railway systemin the world operating more 11,000 trains everyday

DIBD IndiaDanish Companies in Indian Infrastructure• Telecom• Ramboll Telecom in India constructscommunication masts and developssoftware tools for project management inorder to improve the telecom infrastructurethat needs capacity expansion due to thegrowing demand on telecommunication• Heating & Cooling• LOGSTOR is a global energy companyspecialized within district heating anddistrict cooling, where they have developeda special pre-insulated pipe system thatprevent huge energy losses. This pipe systemare widely used in the oil and gas sector, themarine sector and industries that transportsgasses and liquids

DIBD IndiaDanish Companies in Indian Infrastructure• Power• Vestas is the largest wind energy companyglobally — with a market share of 36% —and is the second-largest in India, with a 27%market share. India is the third-largestmarket for Vestas, after the US andGermany.Interestingly, India is the world’s fourthlargestmarket for wind power with 5,200mw of installed capacity.• Airport and Aviation:• AXA POWER is a leading manufacturer ofpower supplies for aircrafts on ground withmore than 7000 units in operationworldwide.

DIBD IndiaDanish Companies in Indian Infrastructure• Water supply• Grundfos is one of the world's leading pumpmanufacturers. Circulator pumps for heatingand air-conditioning and other centrifugalpumps for industry, water supply, waste waterand dosing are the major products. Today,Grundfos is the world's largest manufacturer ofcirculator pumps, covering approximately 50per cent of the world market for these pumps.• Grundfos India began operations in 1998 with 4employees and 4 distributors. In 2005 GrundfosIndia had manpower of 90 and operated withabout 70 distributors. Grundfos India has seenimpressive growth from a small turnover of US$1.1 million in 1999, to a turnover of US$ 11.2million in 2004.

DIBD IndiaSWOT Analysis of the Indian Infrastructure IndustryStrengths•India is expiring great economic growth•The Indian government is keen to facilitateprivate sector participation in infrastructure•Proliferating domestic and offshore infrastructurefunds target the Indian infrastructure market•Immense demand for the better infrastructureWeaknesses•A high degree of bureaucracy delays theabsorption of funds and discourages projects•A lack of domestic expertise•Shortage of skilled labor•Limited use of modern technological equipment•Limited long-term borrowing capability on thedomestic banking sectorOpportunities•Population growth and a growing economy israising the demand for a better infrastructure•The government is looking to attract privatecompanies to invest in the infrastructure throughpublic-private partnersips•The 12th five-year plan is targeting US$1 trn ininvestment, with 50% to come from the privatesector•Opportunities for greenfield projects across allinfrastructure sub-sectorsThreats•India may prove to be unable to cope with theraising population, posing a threat to economy•Bureaucracy and lack of transparency can be athreat to the five-year plan implementation•Projects delays due to slow approval processesand an inadequate system for compensation

DIBD IndiaWant to know more...Want to get more hands-on knowledge about the growing market opportunities for Danishcompanies in the huge yet complex Indian market... DIBD offers two points-of-contacts:Anders KjøllerManager,DI CopenhagenE: adk@di.dkP: (+45) 33 77 37 72M: (+45) 26 20 45 60Kunal SinglaDirector,DI IndiaE: kusi@di.dkP: (+45) 33 77 45 25M: (+91) 99 30 56 27 61• Anders works as Manager with focus on Asian markets in DI. He has over 10 years ofproject experience from projects in Asia.• Anders has over 4 years of hands-on experience in the field from the Chinese marketgained as Director of DI’s office in Shanghai (2007-11).• Experience from several projects within the marine, food and utility industriesamongst others with business development, market studies, implementation ofmarket entry strategies as well as implementation of distributor management.• Anders has a M.Sc. Economics & M.A. East Asian Studies• As the director of DIBD’s office in Mumbai, Indian-Danish Kunal is the man on theground in India.• Kunal has substantial hands-on experience with various projects (includingpartnership searches etc.) and recruitment in India• Kunal also has previous experience from the Commercial Department at the RoyalDanish Embassy in New Delhi, and DI’s Business Law department in Copenhagen.• Kunal is fluent in Danish, English and the Indian national language Hindi, and has anextensive network in the Indian business community.• Kunal holds a M.Sc. in Business Administration and Commercial Law from CopenhagenBusiness School, and has studied in the United States and China.