Danish Companies in Indian Infrastructure
Danish Companies in Indian Infrastructure
Danish Companies in Indian Infrastructure
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The <strong>Indian</strong> <strong>Infrastructure</strong> IndustryDIBD India 25. 9. 12
DIBD IndiaIntroduction to the <strong>Indian</strong> <strong>Infrastructure</strong> Industry• Current market situation• Key drivers• Government <strong>in</strong>itiatives• <strong>Danish</strong> <strong>in</strong>frastructural companies• SWOT
DIBD IndiaCurrent Market Situation• India, as the second fastest grow<strong>in</strong>g market<strong>in</strong> the world is <strong>in</strong> a profound need of muchmore efficient <strong>in</strong>frastructure <strong>in</strong> order tomeet the vast national and <strong>in</strong>ternationaldemand that India faces• Crumbl<strong>in</strong>g 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 every<strong>in</strong>ch on the poorly ma<strong>in</strong>ta<strong>in</strong>ed roads <strong>in</strong>every big city <strong>in</strong> India• Today India has the third largest roadnetwork <strong>in</strong> the world after US and Ch<strong>in</strong>a,with at total of 3.32 million km. of road
DIBD IndiaCurrent Market Situation• These highways have not been ma<strong>in</strong>ta<strong>in</strong>edadequately 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• Shipp<strong>in</strong>g <strong>in</strong>frastructure• Aviation <strong>in</strong>frastructure• Sanitation and water system• and other basic facilities and <strong>in</strong>stallationsneeded for a society to function optimally
DIBD IndiaCurrent Market Situation• The quality of the <strong>Indian</strong> <strong>in</strong>frastructure wasranked as number 86 <strong>in</strong> the world by theWorld Economic Forum <strong>in</strong> 2011/12.Inadequate supply of <strong>in</strong>frastructure ranked asthe most problematic factor for do<strong>in</strong>gbus<strong>in</strong>ess <strong>in</strong> the country• India’s <strong>in</strong>frastructure deficit acts as a brakethat knocks an estimated 2 percentage po<strong>in</strong>tsoff growth and forms a constant unflatter<strong>in</strong>gcomparison with Ch<strong>in</strong>a and its ability tocomplete the sorts of projects that made the2008 Beij<strong>in</strong>g Olympics a showpiece• The New Delhi Commonwealth Games, havefaced worldwide critique due to poormanagement, corruption and disastrous<strong>in</strong>frastructure. This clearly shows that Indiastill has a long way to go <strong>in</strong> order to become areal power threat to especially Ch<strong>in</strong>aCh<strong>in</strong>a has the past decade executed vast<strong>in</strong>frastructural projects that has led them to apowerful position <strong>in</strong> the world today
DIBD IndiaMa<strong>in</strong> Segments <strong>in</strong> the <strong>Infrastructure</strong> Industry• Energy• Telecom• Ports & Shipp<strong>in</strong>g• Oil & Gas• Roads & Bridges• Aviation & Airports• Water and Sanitation• Railways
DIBD IndiaKey Drivers for <strong>Indian</strong> Infrastructural Improvements• India has under<strong>in</strong>vested <strong>in</strong> the<strong>in</strong>frastructural sector for the past 60years, thus far beh<strong>in</strong>d <strong>in</strong> terms ofexploit<strong>in</strong>g their full GDP potential• Population growth of around 20million a year (40,000 per day)• Grow<strong>in</strong>g urbanization – today morethan 40 cities have more than 1million <strong>in</strong>habitants• Increas<strong>in</strong>g FDI com<strong>in</strong>g to the countrydemand<strong>in</strong>g better <strong>in</strong>frastructuralconditions to enhance their bus<strong>in</strong>esslevel
DIBD IndiaKey Drivers for <strong>Indian</strong> Infrastructural Improvements• Water supply and sanitation facilities cont<strong>in</strong>ue tobe a scarcity <strong>in</strong> India despite <strong>in</strong>creas<strong>in</strong>g effortsand <strong>in</strong>vestments from the Government over theyears• The level of <strong>in</strong>vestments <strong>in</strong> the area has<strong>in</strong>creased dur<strong>in</strong>g the 2000s and access hasimproved, albeit still very low compared to<strong>in</strong>ternational standards. Thus, the water supplyand sanitation sectors are <strong>in</strong> need of immenseimprovements• India is today the third largest energy consumerafter the Ch<strong>in</strong>a and USA. However, thesecountries have the power generation capacity tomeet the demand for electricity <strong>in</strong> order toexploit the their optimal GDP level• India’s electricity sector needs to boost<strong>in</strong>vestment to cope with demand, which hasbeen grow<strong>in</strong>g at a significant pace, fuelled byrapid population growth and cont<strong>in</strong>ued highlevels of economic growth
DIBD IndiaGovernment <strong>in</strong>itiatives• The <strong>Indian</strong> government has projected that<strong>in</strong>vestment <strong>in</strong> <strong>in</strong>frastructure will almost double toUSD $1025 bn <strong>in</strong> the 12th Plan, compared to USD$514 bn <strong>in</strong> the 11th Plan• Of the USD $1025 bn, 50 % is expected to come fromprivate sector, whose <strong>in</strong>vestment has been 36% <strong>in</strong>the 11th Plan• Under the 12th Five-Year plan, India's airports areexpected to need approximately USD $13.86 bn <strong>in</strong><strong>in</strong>vestment, nearly US$10.27bn of which is likely tobe from the private sector.• Under India's 12th Five-Year Plan, the RoadTransport M<strong>in</strong>istry is plann<strong>in</strong>g to release US$120bnworth of road-widen<strong>in</strong>g projects with a total lengthof 55,000km, with 65% of the <strong>in</strong>vestment from theprivate sector• The Government has prepared a “Vision 2015”stat<strong>in</strong>g their goals with a planned <strong>in</strong>vestment of USD$8.2 billion just with<strong>in</strong> the railway <strong>in</strong>frastructure. The<strong>Indian</strong> Railway System is the largest railway system<strong>in</strong> the world operat<strong>in</strong>g more 11,000 tra<strong>in</strong>s everyday
DIBD India<strong>Danish</strong> <strong>Companies</strong> <strong>in</strong> <strong>Indian</strong> <strong>Infrastructure</strong>• Telecom• Ramboll Telecom <strong>in</strong> India constructscommunication masts and developssoftware tools for project management <strong>in</strong>order to improve the telecom <strong>in</strong>frastructurethat needs capacity expansion due to thegrow<strong>in</strong>g demand on telecommunication• Heat<strong>in</strong>g & Cool<strong>in</strong>g• LOGSTOR is a global energy companyspecialized with<strong>in</strong> district heat<strong>in</strong>g anddistrict cool<strong>in</strong>g, where they have developeda special pre-<strong>in</strong>sulated pipe system thatprevent huge energy losses. This pipe systemare widely used <strong>in</strong> the oil and gas sector, themar<strong>in</strong>e sector and <strong>in</strong>dustries that transportsgasses and liquids
DIBD India<strong>Danish</strong> <strong>Companies</strong> <strong>in</strong> <strong>Indian</strong> <strong>Infrastructure</strong>• Power• Vestas is the largest w<strong>in</strong>d energy companyglobally — with a market share of 36% —and is the second-largest <strong>in</strong> India, with a 27%market share. India is the third-largestmarket for Vestas, after the US andGermany.Interest<strong>in</strong>gly, India is the world’s fourthlargestmarket for w<strong>in</strong>d power with 5,200mw of <strong>in</strong>stalled capacity.• Airport and Aviation:• AXA POWER is a lead<strong>in</strong>g manufacturer ofpower supplies for aircrafts on ground withmore than 7000 units <strong>in</strong> operationworldwide.
DIBD India<strong>Danish</strong> <strong>Companies</strong> <strong>in</strong> <strong>Indian</strong> <strong>Infrastructure</strong>• Water supply• Grundfos is one of the world's lead<strong>in</strong>g pumpmanufacturers. Circulator pumps for heat<strong>in</strong>gand air-condition<strong>in</strong>g and other centrifugalpumps for <strong>in</strong>dustry, water supply, waste waterand dos<strong>in</strong>g are the major products. Today,Grundfos is the world's largest manufacturer ofcirculator pumps, cover<strong>in</strong>g approximately 50per cent of the world market for these pumps.• Grundfos India began operations <strong>in</strong> 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$1.1 million <strong>in</strong> 1999, to a turnover of US$ 11.2million <strong>in</strong> 2004.
DIBD IndiaSWOT Analysis of the <strong>Indian</strong> <strong>Infrastructure</strong> IndustryStrengths•India is expir<strong>in</strong>g great economic growth•The <strong>Indian</strong> government is keen to facilitateprivate sector participation <strong>in</strong> <strong>in</strong>frastructure•Proliferat<strong>in</strong>g domestic and offshore <strong>in</strong>frastructurefunds target the <strong>Indian</strong> <strong>in</strong>frastructure market•Immense demand for the better <strong>in</strong>frastructureWeaknesses•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 borrow<strong>in</strong>g capability on thedomestic bank<strong>in</strong>g sectorOpportunities•Population growth and a grow<strong>in</strong>g economy israis<strong>in</strong>g the demand for a better <strong>in</strong>frastructure•The government is look<strong>in</strong>g to attract privatecompanies to <strong>in</strong>vest <strong>in</strong> the <strong>in</strong>frastructure throughpublic-private partnersips•The 12th five-year plan is target<strong>in</strong>g US$1 trn <strong>in</strong><strong>in</strong>vestment, with 50% to come from the privatesector•Opportunities for greenfield projects across all<strong>in</strong>frastructure sub-sectorsThreats•India may prove to be unable to cope with therais<strong>in</strong>g population, pos<strong>in</strong>g 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 <strong>in</strong>adequate system for compensation
DIBD IndiaWant to know more...Want to get more hands-on knowledge about the grow<strong>in</strong>g market opportunities for <strong>Danish</strong>companies <strong>in</strong> the huge yet complex <strong>Indian</strong> market... DIBD offers two po<strong>in</strong>ts-of-contacts:Anders KjøllerManager,DI CopenhagenE: adk@di.dkP: (+45) 33 77 37 72M: (+45) 26 20 45 60Kunal S<strong>in</strong>glaDirector,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 <strong>in</strong> DI. He has over 10 years ofproject experience from projects <strong>in</strong> Asia.• Anders has over 4 years of hands-on experience <strong>in</strong> the field from the Ch<strong>in</strong>ese marketga<strong>in</strong>ed as Director of DI’s office <strong>in</strong> Shanghai (2007-11).• Experience from several projects with<strong>in</strong> the mar<strong>in</strong>e, food and utility <strong>in</strong>dustriesamongst others with bus<strong>in</strong>ess 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 <strong>in</strong> Mumbai, <strong>Indian</strong>-<strong>Danish</strong> Kunal is the man on theground <strong>in</strong> India.• Kunal has substantial hands-on experience with various projects (<strong>in</strong>clud<strong>in</strong>gpartnership searches etc.) and recruitment <strong>in</strong> India• Kunal also has previous experience from the Commercial Department at the Royal<strong>Danish</strong> Embassy <strong>in</strong> New Delhi, and DI’s Bus<strong>in</strong>ess Law department <strong>in</strong> Copenhagen.• Kunal is fluent <strong>in</strong> <strong>Danish</strong>, English and the <strong>Indian</strong> national language H<strong>in</strong>di, and has anextensive network <strong>in</strong> the <strong>Indian</strong> bus<strong>in</strong>ess community.• Kunal holds a M.Sc. <strong>in</strong> Bus<strong>in</strong>ess Adm<strong>in</strong>istration and Commercial Law from CopenhagenBus<strong>in</strong>ess School, and has studied <strong>in</strong> the United States and Ch<strong>in</strong>a.