HIGHWAY INFRASTRUCTURE MARKET IN INDIA
- 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
- 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
- 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
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
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.
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
|Year||Project description||Total length
|2018||4 laning on NH-161, Kandi to Ramsanpalle||39.98 Km||185.61||GKC Projects|
|2018||4 laning of on NH-161 from Ramsanpalle village to Mangloor village||46.60 Km||189.42||KNR Constructions|
|2018||4 laning on NH-161 from Mangloor village to Telangana /Maharashtra Border||48.96 Km||167.23||Dilip Buildcon|
|2018||4 laning on NH-363 Repallewada to Telangana /Maharashtra Border||52.60 km||152.68||GKC Projects Limited|
|2018||4 laning on Ramdas to Gurdaspur||47.492 Km||23.09||Inderjit Mehta Constructions Pvt Ltd (JV)|
|2018||Six laning of Bangalore-Nidagatta Section km. 18.000 to km. 74.200||56.200km||518.182||M/s Dilip Buildcon Limited,|
|2018||Six Laning of Nidagatta-Mysore Section, km 74.20 to km 135.304||61.104 Km||415.682||M/s Dilip Buildcon Limited|
|2018||4 laning project||43.3Km||176.88||Adani Group|
|2018||Development of 8 lane Expressway NH-248 BB||53.3Km||161.72||M/s Larsen and Tubro Ltd|
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.
- Larsen & Toubro Infrastructure Development Projects Limited (L&T IDPL)
- Reliance Infrastructure Limited
- GMR Infrastructure Limited
- IRB Infrastructure Developers Limited
- Jaiprakash Associates Limited
- Nagarjuna Construction Company Limited
- Hindustan Construction Company
- GVK Power and Infrastructure Limited
- Lanco Infratech Limited
- Dilip Buildcon limited
- Essel Infraprojects
- Cube Highways and Infrastructure Private Limited
- National Highway Authority of India
THIS REPORT WILL ANSWER FOLLOWING QUESTIONS
- Opportunity for private investment, cement, steel manufacturers, construction equipment in highway infrastructure development in India
- Which project segments offer highest returns post completion, by region and financing model
- Detailed list of all projects under planning and executions stage
- Status of on-going and completed projects
- Market share of major contractors in India