HIGHWAY INFRASTRUCTURE MARKET IN INDIA

KEY FINDINGS

  1. Expressway development is the epicentre of highway infrastructure market in India. A network of 22 expressways totaling 3,000 kms are planned in next five years. Uttar Pradesh is the front runner with plans to establish 2,500 km expressways by 2022 
  2. Projects under HAM(Hybrid annuity model) have a major share in the total length of awarded projects with over 125 projects awarded under the model so far.More than 45 projects awarded under HAM post 2016 had received financial closure till Sep 2019
  3. Maharashtra is among the highly industrialized states of India but toll collections in FY 2019 was 25% less than Bihar(among least developed states in India).Three south Indian states like Karnataka, Tamil Nadu, Andhra Pradesh accounted for almost 25% of overall toll collection in India in FY 2019

 

INTRODUCTION

India has 5.5 Million km long road network across the country, among the longest in the world.

The NDA government after coming into power has put emphasis on improving highway connectivity across India.The total national highways length increased to 122,434 kms(2% of total road network) in FY18 from 92,851 kms in FY14.The total length of State Highways at present is about 166,000 km accounting for about 3% of the total road network.

About 23 kms of highways are built in India per day in 2019 as compared to 11km per day five years ago.In March 2019, National Highway projects worth Rs 1.1 Lac crore(~$15 Billion) were inaugurated.

 

GOVERNMENT INITIATIVES FOR PROMOTING HIGHWAY INFRASTRUCTURE GROWTH IN INDIA

  • The $1.4 Trillion infrastructure blueprint detailed by the Union government on 31st Dec 2019, about 19% funds(~$270 Billion) will be allocated to roads. The roads share was 18% in 2008-2019 period
  • State level spending on roads to increase at a CAGR of ~20% from $13 Billion in FY2019 to $20 Billion  by FY2021.The top 5 states are are Uttar Pradesh, Tamil Nadu, Maharashtra, Karnataka and Odisha, accounting for more than 50% of total aggregate spending 
  • NHAI(National Highway Authority of India) signed an MoU with the National Investment and Infrastructure Fund for creation of special purpose vehicles (SPVs) to execute the fund arrangement for  greenfield projects, which will be executed by NHAI in the future
  • NHAI has also directed the consultants to avoid road alignments passing through national parks and wildlife sanctuaries to avoid the need for multiple clearances, which have often resulted in stalled projects in the past
  • The mega projects like Bharatmala, Setu Bharatam, Char Dham Connectivity, and the development of economic corridors will be the biggest investment growth drivers in the country. A few projects under Bharatmala 2.0 to help states develop their road networks is already under planning

 

OPPORTUNITY IN HIGHWAY INFRASTRUCTURE MARKET IN INDIA

The Bharatmala Pariyojana is the largest road development programme to be undertaken by Central government. The estimated fund requirement for development of national highways under this programme is about ~$100 Billion, up to FY2022. Since, the govt alone cannot afford that much CAPEX, PPP/ HAM is the only way to achieve that goal.

 

USER TOLL COLLECTION BREAKUP BY STATES- FY 2019

Infographic: Highway infrastructure market size in India

 

Gujarat- a highly industrialized state was the second biggest contributor to toll revenue in FY 2019.Eastern  and less industrialized states like Bihar, West Bengal, Jharkhand and Odisha contributed to ~17% of overall collection.

MARKET SEGMENTATION

infographic: Highway infrastructure market in India

FUNDING CRUNCH IN THE INDIAN BANKING SECTOR

The Indian banking system is under severe stress right now and funding availability to non-govt entities is a ” real concern”. In certain highway projects , the contractor is asked to furnish up to  10% of the overall contract value as a collateral to the bank, which is a significant roadblock for executing the high ticket infra contracts.

RECENT HIGHWAY PROJECTS IN INDIA

YearProject descriptionTotal length

(Kms)

Cost

(US million)

Company
20184 laning on NH-161, Kandi to Ramsanpalle39.98 Km185.61GKC Projects
20184 laning of on NH-161 from Ramsanpalle village to Mangloor village46.60 Km189.42KNR Constructions
20184 laning on NH-161 from Mangloor village to Telangana /Maharashtra Border48.96 Km167.23Dilip Buildcon
20184 laning on NH-363 Repallewada to Telangana /Maharashtra Border52.60 km152.68GKC Projects Limited
20184 laning on Ramdas to Gurdaspur47.492 Km23.09Inderjit Mehta Constructions Pvt Ltd (JV)
2018Six laning of Bangalore-Nidagatta Section km. 18.000 to km. 74.20056.200km518.182M/s Dilip Buildcon Limited,
2018Six Laning of Nidagatta-Mysore Section, km 74.20 to km 135.30461.104 Km415.682M/s Dilip Buildcon Limited
20184 laning project43.3Km176.88Adani Group
2018Development of 8 lane Expressway NH-248 BB53.3Km161.72M/s Larsen and Tubro Ltd

 

 

COMPETITIVE LANDSCAPE

Bigger players like Essel Infraprojects, Hindustan Construction Company (HCC), and Reliance Infrastructure are now restructuring their existing portfolios to follow an asset-light strategy.In the corporate financing market segment, there is agrowing focus on listing assets under infrastructure investment trusts (InvITs). As of Sep 2019, IRB Infrastructure Developers Private Limited, L&T IDPL and Oriental Structural Engineers had listed their assets under InvITs.

 

 

COMPANY PROFILES

  1. Larsen & Toubro Infrastructure Development Projects Limited (L&T IDPL)
  2. Reliance Infrastructure Limited
  3. GMR Infrastructure Limited
  4. IRB Infrastructure Developers Limited
  5. Jaiprakash Associates Limited
  6. Nagarjuna Construction Company Limited
  7. Hindustan Construction Company
  8. GVK Power and Infrastructure Limited
  9. Lanco Infratech Limited
  10. Dilip Buildcon limited
  11. Essel Infraprojects
  12. Cube Highways and Infrastructure Private Limited
  13. National Highway Authority of India

 

 

THIS REPORT WILL ANSWER FOLLOWING QUESTIONS

  1. Opportunity for private investment, cement, steel manufacturers, construction equipment in highway infrastructure development in India
  2. Which project segments offer highest returns post completion, by region and financing model
  3. Detailed list of all projects under planning and executions stage
  4. Status of on-going and completed projects 
  5. Market share of major contractors in India

 

Sl noTopic
1Market Segmentation
2Scope of the report
3Abbreviations
4Research Methodology
5Executive Summary
6Introduction
7Insights from Industry stakeholders
8Cost breakdown of Product by sub-components and average profit margin
9Disruptive innovation in the Industry
10Technology trends in the Industry
11Consumer trends in the industry
12Recent Production Milestones
13Component Manufacturing in US, EU and China
14COVID-19 impact on overall market
15COVID-19 impact on Production of components
16COVID-19 impact on Point of sale
17Market Segmentation, Dynamics and Forecast by Geography, 2020-2025
18Market Segmentation, Dynamics and Forecast by Product Type, 2020-2025
19Market Segmentation, Dynamics and Forecast by Application, 2020-2025
20Market Segmentation, Dynamics and Forecast by End use, 2020-2025
21Product installation rate by OEM, 2020
22Incline/Decline in Average B-2-B selling price in past 5 years
23Competition from substitute products
24Gross margin and average profitability of suppliers
25New product development in past 12 months
26M&A in past 12 months
27Growth strategy of leading players
28Market share of vendors, 2020
29Company Profiles
30Unmet needs and opportunity for new suppliers
31Conclusion
32Appendix

 

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