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Construction

Title: Construction
Product features: 172 pages
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CONTENTS: Construction

1. Introduction..…………………………………………………………………………..
India’s infrastructure is hardly up to the mark. Bad roads, crowded airports and power-cuts are common across the country. India’s spend on infrastructure was estimated at 5.1% in 2005-06, which is lower than the global norm of 8%. But the government and the private sector are now stepping up core spending, which spells boom for construction companies

2. Airports ……………………………………………………….…..
THE airport sector is finally getting the attention it deserves. With the government finally embarking on making airports in some of India’s top cities world class, private developers are now increasingly finding construction opportunities in the sector. Reports suggest that the government estimates an investment requirement of $8 billion over the next five years for airport modernization. 2004-2005

3. Ansals ………………………………………………………...…………...
ANSAL brothers have been at the forefront of real estate development in India. The three brothers have independent control of the three flagship companies -- Ansal Properties and Infrastructure, Ansal Housing and Construction and Ansal Buildwell.

4. Commercial Space …………………………………………………………….………………...
IT and ITeS continue to be one of the key sectors driving the growth in commercial real estate development, and account for almost 80-85% of the total demand for commercial space in the country. The amount of space being added every year is mind-boggling. From 8-10 million sq ft being added annually a couple of years ago, the figures have more than doubled to almost 20 million sq ft in the commercial space per annum. Most of the action is still concentrated in metros and Tier I cities. However, several Tier II cities are also now emerging as destinations for the IT industry./p>

5. Construction Technology …………………………………………………………………………….
The size of the construction industry in India is estimated at over $25bn and accounts for about 6% of the GDP. With the current growth in the construction sector coupled with the increased focus of the Indian government on infrastructure development, the construction equipment industry looks set for a boom

6. DLF Universal …………………………………………………………….…………..
DLF is the leading real estate developer in India, with total income amounting to Rs 1,259 crore during FY06 -- an increase of 100% over the last financial year. As in April ’06, the company had 117.7m sq feet of area under planned projects, with more than 80% under residential projects. Ever since the completion of its first residential project in 1949, DLF has developed over 8,800 acres of colonies and townships.

7. Concrete Dreams …………………………………………………………………
REAL Estate Investment Trusts (REITs) are rapidly evolving around the world. A favourable demand and supply situation is supporting this growth globally. On the supply side, governments are increasingly encouraging REIT structures to reduce budget deficits and provide appropriate savings vehicles, enabling investors to diversify with varying risk/return profiles. On the demand side, REITs are enjoying an increase in desired real estate allocations from ageing populations requiring higher levels of income, lower volatility, higher transparency and liquidity from pension allocations. The impact has resulted in a transfer of real estate assets from the direct to the listed markets.

8.Hindustan Construction Company ………………………………………………………...…
Hindustan Construction Company (HCC) was founded by Walchand Hirachand in 1926 as a tunnelling company. It is now amongst the top Indian construction companies with a turnover of almost Rs 2,000 crore and operates in diverse segments like power, transport and water. The company achieved a turnover of Rs 100 crore in 1981-82 and crossed the Rs 1,000 crore mark in 2003-04. Going forward, the big push for HCC is going to be in the real estate business.

9. Hydrocarbon ……………………………………………………………...……………
India’s oil demand is more than twice the domestic output. In order to increase utilisation of domestic resources, the government is taking steps to hike local capacity by helping the industry attract more foreign investment. This is likely to give a leg-up to companies engaged in exploration and production activities

10. Jaiprakash Associates ……………………………………………………………...……………
JAIPRAKASH Associates is the second largest construction company in India and is the leading player in the hydel power business. In addition to construction, the company has two other revenue streams – development of hydel projects and the cement division. Jaiprakash has chalked out ambitious expansion plans for the cement division which will put the company amongst the top producers in India. The company has already completed two hydel power projects adding up to 700 MW as a developer. It is also venturing into thermal power and is currently executing a 1,000 MW thermal power project, also as a developer. These projects place the company amongst the top power generators in the country. Jaiprakash has also expressed interest in the proposed ultra-mega thermal power projects of 4,000 MW.

11. Larsen & Toubro ……………………………………………………………...……………
LARSEN & TOUBRO is the largest engineering and construction company in India with a turnover of Rs 14,484 crore in FY06. It has additional interests in manufacturing, services and Information Technology. The company also has the largest spread in terms of the sectors and geographies where it operates. The overseas earnings have grown to 18% of total revenue now. L&T has two major businesses -- Engineering & Construction (E&C) and Electrical & Electronics. The E&C division, which accounts for almost 85% of the revenues, is further regrouped into three sub-divisions: ECC (Engineering, Construction & Contracts), E&C (Projects) and HED (Heavy Engineering Division). Most of its revenues come from the process, oil & gas, power and infrastructure sectors.

12. Mining ……………………………………………………………...……………
Investments in mining will be led by the growing demand for power and steel – for coal and iron ore mining respectively. Apart from current shortages, the increasing demand for power and steel will lead to increased demand for coal. Steel is also on an up-cycle leading to investments in steel manufacturing and consequently, iron ore mining.

13. Nagarjuna Construction Company ………………………………………………...……………
NAGARJUNA Construction Company (NCC) is part of the large group of construction firms based in Hyderabad, which have made it big over the past few years. The company was incorporated in 1990. Its major areas of operation are roads, irrigation, power transmission, water supply projects and industrial structures. Roads account for about 50% of the turnover, while irrigation and water supply projects have a share of little over 20%.

14. Patel Engineering ……………………………………………………………...……………
PATEL Engineering is one of the leading players in the domestic hydel power business, which accounts for about 40% of its sales. The company has worked on over 75 dams since its inception in 1949. Patel Engineering is also present in the irrigation and roads businesses. In addition to that, it has some land holdings in Mumbai, Delhi and Hyderabad; so it could potentially enter the real estate business as well. The company is also planning to foray into BOT projects as a developer. It had come out with a follow-on offer in May ’06 to raise capital to fund its BOT ventures and for other capital expenditure.

15. Ports ……………………………………………………………...……………
With increased globalization and opening up of the economy, the ports sector has gained immense significance. Apart from the increase in traffic, more investments are set to flow into the sector as the government encourages private sector participation

16. Power ……………………………………………………………...……………
The power sector’s all fired up as the government has lined up huge investments and is planning massive capacity additions in the sector. Moreover, private players are also entering the fray. All this certainly spells boom for construction companies

17. Punj Lloyd ……………………………………………………………...……………
PUNJ Lloyd (PLL) is one of the few Indian construction companies operating in the petroleum sector. It gets a substantial chunk of its revenues from abroad and probably has the widest geographical footprint among domestic construction companies. Recently, it completed the acquisition of a Singapore-based engineering company. Post-acquisition, Punj Lloyd will be the second-largest engineering company in India, after L&T. Moreover, in addition to oil & gas and roads, it will also be in a position to bid for projects in airports, petrochemicals, urban infrastructure and power.

18. Residential ……………………………………………………………...……………
With property and interest rates rising, owning a residential outfit is becoming a difficult proposition for average buyers in the metros and mini metros. But there’s plenty of scope for growth of the home finance industry, given the low loan to income ratio

19. Retail ……………………………………………………………...……………
The retail story’s getting bigger by the day as players line up massive expansion plans. And with the total operational retail space likely to touch 100m sq ft by ’08, the realty sector sure has reason to rejoice. In fact, the retail segment may account for up to 10% of the construction industry within 2-3 years

20. Roads ……………………………………………………………...……………
Gone are the days when only a few construction companies bid for and won road building projects. Today the scene is swarming with players, both big and small. The ongoing National Highway Development Programme has led to the setting up infrastructure holding companies whose overall order books boast of a huge number of road projects.

21. Simplex Infrastructure ……………………………………………………………...……………
SIMPLEX Infrastructure was incorporated in Kolkata (then Calcutta) in 1924 as a British-owned firm, Simplex Concrete Piles (India). The company was a pioneer in the introduction and development of the foundation engineering practices in India and South- East Asia. In 1947, the company was taken over by MD Mundhra.

22. Special Economic Zones ……………………………………………………………...……………
Lack of infrastructure is India’s biggest concern. But this problem is likely to be reduced to some extent through the creation of SEZs, which enjoy various tax breaks. The government expects investment of around Rs 100,000 crore in infrastructure for SEZs in the next three years.

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