December 23-29, 2013 1

VOLUME 2 l Issue No. 51 l December 23-29, 2013 l Price : Rs. 100An MMR, Braj Binani Group Publication

RBI SPRINGS A SURPRISE

Repo rate unchanged!On December 18 th is year,

the Reserve Bank of India (RBI) unexpectedly left the repo rate unchanged at 7.75 per cent. The central bank maintained status quo on the grounds that a sharp rise in inflation in recent months has largely been driven by a surge in the prices of fruits and vegetables. With an improvement in supply, food inflation is expected to fall in coming months. The move of maintaining the repo rate is largely unanticipated generating mixed opinion from the industry.

S i m o n R u b i n s o h n , C h i e f Economist, Rics, says, “The decision of the RBI to leave interest rates on hold alongside the commentary in the accompanying monetary policy review highlights the challenge the central bank currently faces in steering a course between the twin obstacles of rising inflation and a weakening growth environment. “

Whi le recogniz ing the r isks associated with the judgement to keep interest rates unchanged in the face of the surge in Consumer Price Index (CPI) inflation to 11.2 per cent, Rubinsohn explains that on the basis of this development, there is actually scope for inflation to slip back below 9 per cent by March next year and it could continue to drift lower through the course of 2014.

However, the country’s reliance on foreign capital means it remains particularly exposed to the risks

Rs 70,000-cr high-priority railway projects held over

Realty firms ask for high-ranksector tag for low-cost housing

expectations could be reined in. This would give more space to the central bank to move ahead to loosen the monetary policy and incentivize banks to take a relook at their interest rate structure,” added Kidwai.

The RBI’s current monetary policy decision has focused on the current inflation which surged on account of escalating food prices. Hence, the RBI has chosen to follow a wait-and-watch policy before determining the course of monetary policy as there are indications that vegetable prices may be turning down sharply, although trading mark-ups could impede the full pass-through in to retail inflation. In addition, it also takes into account disinflationary impact of recent exchange stability which should play out into prices. Hence, the RBI awaits for more data to reduce uncertainty instead of an overly reactive policy action.

In the near term condition under which the RBI may sustain inaction include significant decline in inflation (say 50-100bp) on expected decline in veg prices and decline in ex-food inflation. However, with the RBI reiterating the inevitability of tapering and its view that CPI inflation will remain high, notwithstanding the recent decline in wholesale prices of vegetables is a clear indication that the RBI is ready to raise rates at an appropriate time.

Weak growth fundamenta ls juxtaposed with sustained price pressures complicate the RBI’s decision making. Going forward, elevated inf lat ion and renewed currency volatility could imply rate hikes announcements by the RBI. Also, rate-t ightening cycle wi l l continue and 50bp hike in repo rate is expected in the next six months.

associated with the US Fed tapering of its bond purchase programme which could both increase volatility in financial markets and have adverse consequences for both consumer and business sentiment.

“This is a positive indicator in favour of growth. In coming days we can expect better demand on possible rate cuts as this will stabilize the home loan market and sustain growth in the sector. The RBI should

beating. This is clearly reflected in the negative industrial growth witnessed in the recent past. Not only that, a discernible slowdown has been witnessed in the services sector as well. At this juncture we

“Reflecting this, and the probability that the RBI will only look to ease monetary policy in a very gradual fashion once it is convinced that inflation is firmly in retreat, we suspect the economy is only likely to grow by a little over 5 per cent in 2014 compared with 4.7 per cent this year,” remarked Rubinsohn.

On the o ther hand, Creda i Chairman Lalit Kumar Jain welcomed the Reserve Bank of India’s decision not to hike the repo rate and CRR rates and keep them unchanged at 7.75 per cent and 4 per cent respectively.

Simon Rubinsohn, Chief Economist, Rics Lalit Kumar Jain, Chairman, CredaiNaina Lal Kidwai, President, Ficci

take steps to increase fund supply for the sector which will help increase housing stock and stabilize property prices. Though there has been no hike in rates it would be a welcome move if the RBI had to give a cut in the rates which would help in improving market sentiments,” added Jain.

Naina Lal Kidwai, President, Ficci, comments, “The RBI’s decision to keep the repo rate unchanged after two successive increases comes as a welcome breather. The Ficci has been urging the RBI as well as the government to bring the focus back on growth which has taken a serious

certainly need to push all buttons to safeguard growth and revive investor sentiment.”

“Keeping interest rates in check will also support the equity markets at a time when we need disinvestments to accelerate to help achieve a fiscal deficit of 4.8percent. While inflation understandably is a huge concern, the pressure is largely on account of stubbornly high food prices which cannot be dealt with by monetary policy alone.

“If the government can use the buffer stocks to bring down food grain prices, overall inflationary

Critical railway projects, worth over Rs 70,000 crore, that would improve defence mobility and commercial interests have been held over (some for over 15 years) due to a lack of adequate funds and government red tape.

Most of these projects, in the extremely sensitive North-East and J&K region, were categorized as national projects that would get separate funds from the Centre and identified as railway projects in border areas with ‘strategic importance’.

At the t ime when they were declared national projects, the aim was to connect the North-East with the railway network. But these projects have gained larger significance even in terms of India’s Look-East policy of connecting India with other South Asian countries to exploit trade and commerce activities.

However, the Rs 4,478 crore Jirbam-Imphal project is only 27 per cent complete since 2003-04 when it was sanctioned, and which the government intends to extend into Myanmar.

At present, there are 12 railway projects that have been declared

Real estate companies, after exporters, are demanding a priority sector tag for loans to the low-cost housing sector. “The RBI (Reserve Bank of India) should expand its scope of ‘priority lending’ to cover lending to developers involved in low-cost and affordable housing, as cheap funding is extremely critical for them to develop low-cost housing projects,” says a report by the Confederation of Real Estate Developers’ Associations of India (Credai) and Cushman & Wakefield.

The report, which comes ahead of the RBI’s mid-quarter monetary policy review, doesn’t specify what is meant by low-cost housing. Budget 2012-13 had provided interest subvention of 1 per cent on housing loans of up to Rs 15 lakh, provided the cost of the house didn’t exceed Rs 25 lakh.

Housing loans of up to Rs 15 lakh to individuals already come under priority sector. Real estate companies want this to be extended to loans availed by developers. These companies also want the RBI to declassify the real estate sector as high-risk.

This, the report said, would be possible if the sector was given

national projects – one of these, the 290-km Udhampur-Srinagar-Baramulla project, is in Jammu & Kashmir. The rest are in the North-East.

Together, they are worth over Rs 47,000 crore. However, as in the case of the Rs 19,565 crore J&K project which was sanctioned back in 1994-95, only 50 per cent has been completed and Rs 9,815 crore spent (anticipated expenditure) so far.

J P Batra, former Railway Board chairman, said, “These lines are strategic in more ways than one. The economy in the North-East needs a

infrastructure/core sector/industry status. “Housing should be recognized on a par with the infrastructure sector and should be given cheaper project finance. Also, the roll-over facilities should be on a par with those of other industries,” said the report.

Real estate companies say that at present the sector has a high risk weight of 1.25. Lowering of risk weights will result in lower interest rates on loans and increased availability of banking and financial institutional funds to developers, as well as individuals.

They said the persistently high inflation had hit individual buyers in many ways. Amid lower disposable incomes and savings, they were faced with increasing housing prices and the high interest rates on mortgages.

The report said the increasing population and urbanization, coupled with the housing shortage of 62.45 million units, was leading to huge stress on the economy. Currently, an estimated 65.5 million people reside in slums. While many countries had a correlation of housing to gross domestic product that exceeded 0.9, in India the correlation was estimated at 0.78, said the report.

push, and it is important in terms of cross-border mobility of goods and services as well as from the defence point of view. These lines are crucial for the defence but it is only now, after China’s investment in infrastructure along the border has come to the fore, that it has gained importance.”

Meanwhile, the over Rs 22,000 crore Bilaspur-Manali-Leh new railway line is yet to even be sanctioned. The line, once built, would connect Himachal and Ladakh, near the China border, and enable faster movement of defence personnel and equipment to the strategic military base, Leh.

December 23-29, 2013 2DOMESTIC

Dalmia Cement to ramp up cement business

‘Innovate and adapt technology

for urban rule’ Dalmia Cement, south India’s

second-largest cement maker, will ramp up its cement business by expanding 5 million tons in the next one year to reach a 22 mt capacity from the current 17 mt by building plants in Karnataka, West Bengal and Assam.

The US-based fund KKR, which invested $125 million in the cement company in 2010, helped Dalmia implement best practices derived from its global portfolio of companies and integrates acquisitions.

Dalmia Cement Bharat has roped in Mahendra Singhi as its Group CEO-Cement in its effort to

consolidate cement operations, professionalize top management and build efficiencies with the help of private equity investor KKR. Singhi joins the Dalmia group company from rival Shree Cement where he had spent 19 years, with his last position being that of executive director.

“Our growth is based on our belief that promoters and professionals can partner together to add a human touch and improve the way businesses are run,” says Puneet Dalmia, the third generation businessman from the Dalmia family. “We have always been professionally run, with regional CEOs running our cement business,

and are now consolidating this under one person to lead the entire cement business.”

The fund worked with the top management to ensure standardized management pract ices across sales teams, introduce new sales processes and develop performance tracking tools. These efforts have resulted in Dalmia growing its market share significantly — moving from 7 per cent in early 2010 to over 10 per cent in mid-2012 in south India. Dalmia Bharat reported a 27 per cent rise in compounded annual growth rate at Rs 2,750 crore in the last two years.

World Bank to soon release Indian power sector review report

When the country’s power sector is facing tough times, the World Bank will come out with an elaborate sectorial review report, listing out challenges as well as initiatives to improve current scenario.

The report would have extensive review of Electricity Act implementation, performance and governance of various power utilities, including distribution companies. Work on the report has been going for over two years and a panel of experts including those from government as well as the private sector was also constituted, according to the official.

The growth of Indian power sector

is crucial for the overall economic prosperity and the country is expected to see a generation capacity addition of more than 80,000 mw in the current Five Year Plan (2012-17).

Even though India’s current generation capacity is over 2,00,000 mw, many of the projects are struggling amid acute coal and gas shortages apart from poor financial health of distribution companies. In a span of three years, India has taken a significant step forward in implementing its green growth agenda by increasing its installed capacity of solar power from around 30 mw to more than 2,000 mw.

Plastics industry demands more govt support

Projects worth `34,647 cr put on fast track

The plastic industry in India has voiced its demand for more government support to sustain its growth momentum. There is a growing feeling that the present infrastructure may not be enough to sustain the growth momentum in near future and that government needs to take urgent steps at local, state and national levels.

With plastics rapidly replacing items like wood, steel, rubber, paper, jute, etc, it is estimated that India’s per capita consumption of plastics would zoom up to 20 kg by 2020 from its current level of approximately 8 kg per head. Set to grow at CAGR of 18 per cent over next five to seven years, the industry leaders are unanimous in their opinion that this will possible only with active government.

Raju Desai, Chairman of Plastivision

The Government has put projects worth Rs 34,647 crore on fast track in petroleum and natural gas and power sectors by approving a number of them and giving directions for urgent clearances to the rest.

The projects in the power sector are worth Rs 26,700 crore while in the petroleum and natural gas sector the ones cleared are to the tune of Rs 7,947 crore.

These projects, held up for want of various clearances, including environmental nod, have now been

India 2013, said, “The industry is trying all it can to sustain this growth rate. We are focused on innovative technologies, product development, marketing initiatives at global level, etc, among many other such steps.

“As mat te r o f fac t , we are addressing challenges of skilled manpower ourselves. We are in the process of setting a full scale world class university exclusively focused on plastic industry. At Plastvision India 2013, held in Mumbai from December 12 to 16, we had special pavilion called Jobs Fair to attract talent into the plastic industry.”

Desai added, “We need better infrastructure support from the government. The plastics industry needs dedicated plastic parks. We need consistency in policies across all states in the country. Also, since

put on the fast track by the Cabinet Committee on Investment (CCI) chaired by Prime Minister Manmohan Singh, sources said.

The projects c leared in the power sector include the Sagar super thermal power project in West Bengal and Hinduja National Power Corporation Ltd project in Visakhapatnam. About the Sagar power project, the environment ministry has been asked to decide the matter regarding environmental and CRZ clearance at the earliest.

Sudhir Krishna, Secretary, the Ministry of Urban Development, Government of India released a report prepared by Confederation of Indian Industry (CII) in partnership wi th Cisco on Smart Ci t ies in Indian perspective at the National Conference on Smart & Intelligent Cities – Integrated Solutions for Inclusive & Sustainable Communities on December 13, 2013 in New Delhi. The report talks of the definition of a Smart City in contemporary context.

Krishna emphasized on the need to enhance the role of technology in e-governance that would improve quality of life and stimulate inclusivity and at the same time also focus on continuous innovation and adaptation of the same.

A n o t h e r i m m i n e n t a r e a o f intervention he mentioned was revisiting the Model Agreements for PPP across Urban Infrastructure verticals – water supply, transportation and solid waste management, among others. Planned urbanization and integrated urban utilities, he said, were no longer optional or else the

nearly 90 per cent of players are SMEs, availability of working capital is a huge challenge for most of us. Another important task is to continuously upgrade technology. We would benefit if the government consider technology upgradation scheme for plastic industry also. With such support from government, the plastic industry is confident that it will be among the fastest growing segments in India.”

Plast iv is ion India 2013 was palpable. Besides thousands of small and medium scale manufacturers, there was participation from over 30 countries, foreign trade promotion bodies, cluster promotion bodies from Europe and Unido, policy makers and state government bodies. Everyone was unanimous that India is perhaps the biggest growth opportunity in plastics.

CCI clears purchase of Heidelberg’s Raigad unit F a i r t r a d e r e g u l a t o r, t h e

Competition Commission of India (CCI) has approved the acquisition of Heidelberg Cement India’s grinding facility at Raigad, Maharashtra, by JSW Steel. JSW Steel in October acquired Heidelberg Cement India’s 0.6 million tons per annum (mtpa) cement grinding facility in Raigad on a slump sale basis.

“Considering the facts on record and the details provided in the notice (under relevant Section of the Competition Act) the Commission

is of the opinion that the proposed combination is not likely to have appreciable adverse ef fect on competition in India and therefore, the Commission approves the proposed combination,” CCI said in its order. JSW Cement, which is a part of the JSW group and manufactures and sells different varieties of cement similar to Heidelberg Cement India Ltd, is a relatively new player in the cement industry.

cost we would end up paying would be too high.

T h e c o n f e r e n c e w a s a l s o addressed by Ajay S. Shriram, President Designate, CI I , who f o c u s e d u p o n t h e n e e d f o r sustainable urbanization; Anil Menon, Co- Chair, CII National Committee on Urbanisation & Future Cities and President, Globalization and Smart Connected Communities, CISCO Inc highlighted the relevance of ICT in planned urbanization; M Lakshminarayan, Co- Chair, CII National Committee on Urbanisation & Future Ci t ies and Managing Director & Country Manager, Harman International India Pvt Ltd argued that improved infrastructure could stimulate greater contribution of cities towards country’s GDP, and Nilaya Varma, Executive Partner - Accenture Management Consulting Limited, who in his keynote presentation set the theme of the conference by highlighting specific areas where government and industry can come together for designing Smart & Intelligent Cities in the country.

December 23-29, 2013 3IN PERSON

‘Banks should view real estate sector as potential market for asset creation’

Hebron Proper t ies Pvt L td , promoted by Koshys Group, is a name reckoned in the South. With a diverse portfolio in real estate they are developers of villas, residential and commercial property in Bengaluru. Focused on bui lding homes in strategic locations, the homes not only boast of architectural designs but also offer variable financing options and a variety of projects. Excerpts:

The rea l es ta te in Ind ia i s fragmented and capital-intensive in nature. Moreover, the sector has a close link with economy and therefore is highly cyclical in nature.

Given the fact of this fragmented c a p i t a l - i n t e n s i v e s e c t o r i s very sensit ive to the economic environment; its cyclical nature is indeed a critical key element. The demand-supply imbalances do put undue pressure on top and bottom lines of the realty sector players.

This scenario of uncertainty does impact decisions of launching high-end projects. The costs of funds are very sensitive to interest rate movements which in turn are a function of the economic environment.

The purchasing power of potential investors and the resulting propensity to invest are all factors closely correlated to volati le economic swings. The developers may end up taking undue business and financial risk.

G iven the s lugg ish marke t conditions and price elasticity of the realty sector products, developers could have the downside risk of accumulated stock in trade (unsold property) and reduced margins. Thus decision-making becomes a bottleneck.

A typical real estate project has a gestation period of three to four years, and any adverse change in macroeconomic factors in the interim period can affect cash flows of the developer. How do you cope with such crisis?

Most real estate projects in the country have a three to four year gestation period. Witnessing long cycles with periods of huge gains followed by long periods of stagnation, such projects are exposed to high volatility in performance consequent to adverse variations in macroeconomic factors.

The adverse impact on the associated cash flows will expose developers to liquidity crunch. Needs no emphasis that easy liquidity is a necessary condition for developers to sustain their construction activity and ensure delivery within the time frame fixed.

is not supportive of the industry players. It is true that the realty sector is very sensitive to changes in the macro-economic environment.

It is also true that the demand-supply curve of the real estate sector is skewed against developers. If loans were to be given by banks to deserving developers with a proven track record of integrity and performance, the risk of default is virtually low. Business risk is intrinsic to any industry and the real estate is no exception.

A lack of funds for the evergrowing realty sector is going to hurt the industry in the long run as was the case with the airlines industry. The realty sector is booming and despite the sluggish market conditions it needs to be nurtured.

The banks have to view the real estate sector as a potential market for funding and asset creation. A saving grace is the availability of funds from the non-banking financial sector and the tert iary funding sector, where the cost of finance is relatively higher and the margin to be brought in by the borrower is significantly higher. Non-availability of funds for this sector can cripple the industry on long term basis.

The Ministry of Housing & Urban Poverty Alleviation plans to ease the norms for FDI in real estate up to 100 per cent under the automatic route in townships, housing, built-up infrastructure, etc. Is it a boon for developers or otherwise?

The easing of norms will improve the scope and opportunities for many upcoming projects. With the liberalization for equity participation in the real ty sector by foreign investors, FDI funds could be an easy source of liquidity.

Greater investor participation can be expected to be an impetus of expansion for many leading players, but fresh entrants and mid-size players will still find it difficult to avail benefits emanating from easing of norms. Yet this can be expected to create huge employment opportunities and it might also mean a lot of money going into even tier-2 and -3 cities or smaller projects. It will eventually help a lot of money flowing into the real estate sector in the country.

What is your view on the real estate regulation and development bill which has been passed recently?

The real estate regulation and development bill will impact the sector but in a posit ive way, i t will enable a uniform regulatory platform in the sector which will in turn increase transparency in every dealing and encourage fair practices at every step.

This will go a long way in ensuring standardization and keeping in line with best international practices. Tak ing in to cons idera t ion the fraudulent practices in the industry, i t is of utmost importance that guidel ines and regulat ions are followed at key stages of property t ransact ions. The bi l l wi l l a lso ensure sale of properties in an efficient and transparent manner, help a particular consumer from unscrupulous developers, resulting in a more confident property buyer, which is good for developers and consumers alike.

Adverse impact of cash flows, besides jeopardizing construction plan, will also adversely impact the final margin vis a vis estimated profits. To avoid stagnation periods, it is important to have a financial plan in place that is dynamic and which is in line with the changing macroeconomic conditions that every industry faces.

There is a need for developers to maintain contingency reserves appropriated from surplus cash flows during periods of high inflows. There is a need for developers to resort to hedging and contingency back-up plans to augment working capital needs during the period of low demand.

Tell us about your developed projects and those in stages of completion in the commercial and residential sector. In all how much area are you developing?

We have a uniquely diverse multi-domain portfolio that covers villas, residential, commercial property development. Currently, we have two ongoing projects, Hebron Enclave, located off Old Madras Road, Bengaluru, which comprises 71 ultra-luxury high-end villas.

The property offers Aristocratic Class Vil la and Business Class Villa which are a blend of Australian architecture and Indian aesthetics. Aristocratic Villas come in 7,000 sq ft super built- up acres while Business Class offers 5,100 sq ft of luxury. This property is BDA-approved and has been pre-certificated on an IGBC Platinum Rated Project.

A r i s t o c r a t i c V i l l a s o f f e r a living-cum-dining, 5 bedrooms, a kitchenette, an in-house elevator, a swimming pool, a 240 degree balcony, barbeque deck, cabana, jacuzzi and so on.

The Business Class Villas come with a living-cum-dining, 5 bedrooms, and a kitchenette, an in-house elevator, a 240 degree balcony, barbeque deck and much more. Hebron Towers is a property of 1.08 acres on Old Madras Road, Bengaluru that offers a unique combination of 74 luxury apartments with 28,000 sq ft of modern commercial space.

In the residential and commercial segment what is the total area in completed projects, and those in planning stage?

Both the ongoing projects are high-end projects. They are, Hebron Enclave: A 16-acre property of which 11.5 acres of land has been developed under phase-1. This consists of 71 high-end villas. This property is due for handing over in November 2014.

Hebron Towers: A residential-cum-commercial complex on 1.08 acres of land. This property comprises 74 apartments with commercial space of 28,000 sq ft.

Our company has also completed its design for a project that may

consist of 244 villaments and row houses.

As a prime developer what is your take on the slow rate of approvals, recent regulatory changes in key micro market, inflation impacting cost structure, etc?

I t needs no emphas is tha t time is the essence of all property development activity. Being very price-sensitive, timelines have to be met. Delay in approvals has on many occasions resulted in real income given the intervening high inflationary trends.

Rising inflation dampens the demand for residential property causing huge losses to developers, notwithstanding the regulatory procedures being introduced in the realty sector, the extraneous economic factors can create a situation of helplessness amongst developers. There is a need to have some amount of stability in this sector which can only come about if there is a consensus amongst developers across India.

Banks have tightened lending to real estate companies, fearing possible defaults on repayments. Would it have any impact on your future development?

The reluctance of bankers to the real estate sector according to us

The real estate regulation and development bill will impact the sector, but in a positive way. It will enable a uniform regulatory platform in the sector which will in turn increase transparency in every dealing and encourage fair practices at every step, declares Preenand Premachandran, Chief Executive Officer, Hebron Properties Pvt Ltd in this interview with Remona Divekar

December 23-29, 2013 4 INFRASTRUCTURE

Essar Ports signs pact with Vizag Port Trust

Essar Ports announced that Essar Vizag Terminals, its wholly-owned subsidiary, has entered into a concession agreement with the Visakhapatnam Port Trust for development and operations of three iron ore berths.

The three berths -- to be developed at Visakhapatnam Port on BOT basis over a period of 30 years -- will have a combined capacity of 23 million tons per annum (mmtpa). The project will be developed at a cost of Rs 1,200 crore over a period of three years.

Essar Ports will take over the two outer harbor berths soon and operation and upgradation of the terminal will happen simultaneously. Vishakhapatnam Port handled 12.3 million tons of iron ore during FY’13 and this traffic is readily available for these berths from commencement.

“We will develop the terminal to create one of the most competitive, modernized, world class facilities. This project will significantly increase our third party cargo handl ing capacity and also boost our presence

in the east coast,” said Essar Ports Managing Director Rajiv Agarwal.

Iron ore export traffic at Vizag will increase substantially due to the competitiveness of this terminal which will facilitate industrial growth in the region, he added. This project wi l l increase Essar Ports’ total capacity for iron ore export on the east coast to 39 mmtpa with four highly mechanized iron ore berths three in Visakhapatnam Port and one in Paradip Port.

Centre stresses need for pacts for

PPP projects Urban development secretary

Sudhir Krishna stressed the need for revisiting the model concession agreements for PPP projects across urban infrastructure verticals. The PPP for urban projects should be formulated in such a way that they have an inbuilt flexibility to meet all future eventualities.

A slew of policy changes being mulled by the ministry, including flexibility in viability gap funding

(VGF), to make metro projects more attractive for private players.

Krishna said metro projects in India are the cheapest in the world due to availability of abundant manpower resources, “I discovered that our metro projects are the cheapest in the world. The next highest is something that is 20 per cent more than us but generally 40 per cent more than Indian metro projects,” he said.

CCI clears five projects worth `7,947 cr

Kaithal-Ambala NH to be 4-laned

Chhattisgarh, Chennai Petrochemical Corp Ltd’s (CPCL) Rs 126 crore pipeline to carry crude from Chennai port to its refinery at Manali, and Hindustan Petroleum Corp Ltd’s (HPCL) Rs 134 crore Awa-Salawas pipeline project.

The Cabinet Commit tee on Investment (CCI) directed the Ministry of Environment and Forest to grant requisite clearances expeditiously for the remaining two projects, CPCL crude oil pipeline and GSPC’s LNG terminal at Mundra.

Sur jewala sa id that for the development of Kaithal an 18-km-long separate bypass would be constructed. Also, a corridor from Kotputli to Ambala at a cost of Rs 1,300 crore would be setup which would open new business and employment opportunities for the residents of Kaithal, he added

Prime Minister Manmohan Singh-headed Cabinet Committee on Investment has approved Rs 7,947 crore worth projects, including ONGC’s Assam oil field revival plan and an LNG import terminal in Gujarat.

The CCI approved five delayed projects involving an investment of Rs 7,947 crore. The projects approved included Rs 2,379 crore Assam oilfield renewal projects of Oil and Natural Gas Corp (ONGC) which was pending for want of environmental clearance.

The project involves revamping and optimization of 21 surface installation

Kaithal-Ambala national highway would be four-lane at a cost of Rs 728 crore. Expressing gratitude towards Prime Minister Manmohan Singh and UPA Chairperson Sonia Gandhi for approval of the project, Haryana Public Works (Buildings and Roads) Minister Randeep Singh Surjewala said that this 90-km-long national highway would especially benefit

for 9 integrated complex, replacement of existing pipelines and laying of new 468 km pipeline.

Besides, Gujarat State Petroleum Corp’s (GSPC) Rs 5,200 crore projects to import liquefied natural gas (LNG) at Mundra in Gujarat have also been approved. The terminal will have a capacity to import 5 million tons of gas in its liquid form every year, with provision for expansion to 10 million tons.

Other projects cleared include Indian Oil Corp’s (IOC) Rs 108 crore depot at Bilaspur and Bisrampur in

three districts of Ambala, Kaithal and Kurukshetra.

He said separate bypasses would be constructed for the towns of Kaithal, Pehowa and Ismailabad which were situated between Kaithal and Ambala. With the approval of this project, the long-standing demand of the people of the area has been fulfilled, he said, in an official release here.

Andhra Pradesh will have two solar cities – one each in Telangana and coastal Andhra regions. They will be developed as part of the national plan unveiled by the Union Ministry of Renewable Energy.

The min is t ry has ident i f ied Vijayawada in coastal Andhra and Mahabubnagar in Telangana regions to be developed as solar cities. The MNRE has given in principle approval for 54 locations in the country to develop solar cities.

In 2011, it announced a national plan to develop 60 solar cities. The master plan of Vijayawada city has been prepared with an estimated

cost of Rs 256.50 crore for various projects on solar grid connected and off grid applications, waste to energy, bio-mechanization, solar water heating systems etc.

For Vijayawada solar city, an amount of Rs 12.20 lakh has been released for the preparation of master plan and setting up a solar city cell and promotional activities.

A solar c i ty a ims to reduce a minimum of 10 per cent of its projected demand of conventional energy through generation from renewable energy installations and energy efficiency measures.

AP to have two solar cities

Aranmula airport gets green signal from MoEF The Ministry of Environment &

Forests has given clearance to the private airport project at Aranmula in Kerala, promoted by KGS Group. The ministry released the order giving full environmental clearance to proposed Aranmula international airport.

KGS Aranmula International Airport Ltd proposes to set up the airport in 700 hectares with an investment of Rs 2,000 crore in the vicinity of the famous Aranmula Parthasarathy temple.

A major portion of the land required for the airport lies in the area’s paddy fields. Around 60 acres of paddy fields have already been acquired. A study by Kitco (formerly Kerala Industrial and Technical Consultancy Organization Ltd pointed out that the height of the flag post of the temple should be lowered and the main entrance

of the temple should be shifted as these would be hurdles to take off and landing of the planes.

The expert appraisal committee (EAC) for building construction, coastal regulation zone, infrastructure development and miscellaneous projects recommended the proposal for clearance with conditions.

An estimated 500 acres of paddy field has to be converted for the proposed airport, claimed to be the first private international Greenfield airport in India. While KGS Aranmula International Airport Ltd has informed the ministry that the project would be developed at a cost of Rs 81.18 crore in phase-1 and Rs 125.44 crore for phase-2, the plan was for an airport covering about 700 acres of land, to be built at a cost of Rs 2,000 crore.

December 23-29, 2013 5CONSTRUCTION

Worldwide demand for infrastructure grows In 2013, KPMG

interviewed executives from 165 engineering

and construction companies around the

world. The respondents’ annual revenue varied in size from turnovers

of $250 million to more than $5billion

(Part 1)

Survey catches the industry in a more upbeat mood after several years of falling backlogs and tight margins that felt like a hangover following the previous boom. Economic recovery is stimulating manufacturing, while growing urbanization is driving a continued demand for infrastructure in all forms.

Power and energy are essential forces behind such expansion, accelerating the need to extract and transport conventional and unconventional coal and gas, and build new installations for generating traditional and sustainable energy.

The scale and duration of large engineer ing and const ruct ion programs means that contractors – particularly the bigger, global players – require some time to prepare for market upswings. Having tightened their belts and rationalized following the recession, are they fully ready to catch the next big wave of mega-projects?

Stronger risk cultureRisk management remains high on

the agenda of senior executives across the sector, and this year’s survey asks why the significant investment in controls has not managed to halt large-scale project failures or damaging incidences of fraud and corruption.

Leading industry experts add author i ta t ive ins ight in to how to create a stronger risk culture, where key decision-makers carefully evaluate potential threats across the organization.

What makes our global survey unique is that each participant is personally interviewed face-to-face by a KPMG senior representative. This year a record 165 senior executives of leading engineering and construction companies from around the world took part in the survey.

Driving force Among those spoken to, 66 per

cent feel that national governments’ infrastructure plans are the single biggest driver of market growth. Economic growth, urbanization and population increases are also influential. Steady performance has led to optimism over future prospects.

A general upward trend in backlogs and margins between 2010 and 2013. 54 per cent of respondents

experienced a backlog increase of at least 5 per cent for 2012-2013. 80 per cent foresee stable or higher margins for 2012-13, a significant improvement over the prior period

Two-thirds of respondents expect their company’s revenue to grow by up to 25 per cent in 2013; 75 per cent feel it could take two to five years to see a real industry upswing; 71 per cent believe growth will be organic, rather than through M&A; 56 per cent say that effective mega-project management is crucial to future growth

Expansion targets Power is attracting more and more

interest of all the new sectors being considered, power and energy top the list by a significant distance. Other target sectors include water, rail, mining, roads and bridges.

47 per cent say that they plan to move into new geographies, with the most popular region being Africa. Much of the interest in this region is from firms in Europe and the Middle East. Americas firms are focused foremost on the Middle East.

Barriers to growth The industry is heavily reliant on

government spending on infrastructure – and is uncertain about alternative funding. 72 per cent say budget deficits and public funding is the biggest barrier to growth. Private sector financing is the next biggest worry, yet only 28 per cent feel public-private partnerships (PPPs) are an important driver

79 per cent of respondents believe their investments in risk management have paid off. However, 77 per cent also report underperforming projects, due to delays, poor estimating processes, and failed risk management processes.

As economies recover after a prolonged recession, more new projects are starting to emerge, with increased funding available to maintain and build infrastructure, and develop power and mining capabilities.

Positive moodKPMG’s 2013 Global Construction

Survey reflects the general positive mood of the industry. Over half of the respondents reported an increase in backlog of at least 5 per cent for 2012-2013, which is an improvement on 2011-12. Fewer than one in seven believe their backlog will decline in 2013.

Engineering and construction companies in Asia Pacific experienced a difficult time between 2011 and 2012, when almost four in 10 suffered a backlog fall of at least 5 per cent. These results were partly due to particularly difficult trading conditions in Australia. However, this appears to be a relatively short-lived phenomenon, and hopes are high for continued growth.

Interestingly, the smaller companies involved in the survey – those with a turnover of less than $1 billion – forecast the largest rise in backlogs.

These organizations tend to be more nimble and can staff up more quickly to meet fluctuating demand. Their larger colleagues, on the other hand, have shed positions in recent years and are a little reluctant to ramp up their resources, preferring to take a more cautious ‘wait-and-see’ approach.

Renewed confidenceMargins are not rising at the

same rate as backlogs, although four out of five respondents foresee stable or higher margins for 2012-13. This is a positive sign for the industry and indicates a significantly better performance than in 2011-12. The renewed confidence within the Americas is demonstrated by increasingly large margin growth year-on-year between 2010 and 2013 – an indication of greater efficiency and cost management.

Only a handful of executives from this region believe their businesses will see lower margins over the next 12 months. The same small companies that have managed to increase their backlogs are not achieving similar success with margins.

Margins downThree out of 10 respondents from

this segment anticipate margins to be down by at least 2 per cent in 2012-13. Having been particularly hard-hit by the recession, these firms may be prepared to price low in order to win new business.

According to an executive from an Asia Pacific contractor, “We are in danger of carrying recession type behaviours into the growing market. We need to start saying “no” to contracts instead of “yes” and being very selective; not getting locked into discounting prices as we move into a rising market.”

Mid-to-large players (with $1 billion-plus turnover) are enjoying more steady returns, with most benefiting from rising or static margins. Funding for large projects is still limited, so rather than take a big risk by employing a lot of new people, they have chosen to grow more steadily but also more profitably.

Looking forward, 23 per cent of respondents are pessimistic over future prospects and foresee either static or falling turnover in 2013. However, 14 per cent forecast revenue to grow by over 25 per cent, with the

average growth rate for the survey being 17 per cent.

Positive responseThe most positive responses come

from businesses in Central and South America and Africa, while Australia, the UK and the Middle East are the least hopeful. Such findings are largely consistent with the trading conditions in these regions, with high hopes for mining, oil and gas in certain parts of Africa and South America.

The industry’s largest players are the most optimistic about the next year, predicting revenue growth levels well above the sector average, and twice as high as the next tier down (those with annual turnover of $1-5 billion). Having rationalized and reorganized since the recession, these companies feel they are well placed to capitalize on the economic upturn.

When asked about their thoughts on the longer-term outlook for the industry, the respondents are largely enthusiastic, although a majority (75 per cent) believe they will have to wait between two and five years to see a real turnaround from the recession.

Marke t cond i t i ons , though improving, have still not reached the levels of 6 or 8 years ago, and with finite private and public sector investment capital, companies are naturally cautious about prospects.

It is therefore not surprising that, of all the potential barriers to progress, the biggest concern is over budget deficits and public funding. Seventy-two per cent view this as the number one worry, with private sector financing second and regulation in third place. One survey participant from the UK commented that: “Government debt is of major concern, since current levels leave little flexibility to provide a stimulus to the economy.”

Vital source This year’s survey results confirm

that engineering and construction firms are still heavily dependent upon national governments’ infrastructure plans for future growth, with two-thirds of respondents citing this as the single most important market driver.

Such reliance means any further public belt-tightening could potentially cut off a vital source of new projects; indeed, 72 per cent believe that budget deficits are the biggest threat to the sector.

Economic growth, urbanization and population increases are considered to be the next most influential factors, fuelled by the Brics (Brazil, Russia, India and China) and other growing economies.

A s m o r e p e o p l e m o v e t o cities, water, electricity, sewage, telecommunications and roads and bridges all need to be built or upgraded.

Less than one in three feel that new energy resources will be a prime driver, which is surprising, given that the rising demand for power is causing a boom in unconventional sources such as shale gas and oil, as well as renewables.

Interest ingly, publ ic pr ivate partnerships (PPPs) were cited as important by just 28 per cent of the survey participants, which suggests a degree of uncertainty about the future of such funding sources as they have proved controversial in some countries.

Struggle for fundingAs national governments struggle

to find funding, they may have little alternative than to turn to the private sector, a point emphasized by one executive from the US, “Relying on governments for our growth is risky, although PPPs can help.”

A further comment from a senior industry executive of a Turkish engineering and construction company reinforced the risk of becoming over-reliant on public sector programmes, “One of our projects signed in 2003 was recently cancelled, due to government funding problems.”

Most of those taking part in the survey agree that the full effects of growth will not be felt for at least two to five years. Such caution is perhaps understandable in a sector that over the past decade has ridden the waves of success before experiencing a serious wipe-out.

It seems that leaders of engineering and construction groups are seeking further evidence of a sustained commitment from governments and the private investment community, before committing to scaling up resources.

(Continued next week)

(Courtesy: KPMG International’s 2013 Global Construction Survey)

December 23-29, 2013 6

Adani Gr, GVK to gain from port works in Queensland

KEC bags orders worth `756 cr

Australia has given the green signal for port-related works in Queensland, a development that will benefit Indian companies GVK and Adani Group which are developing coal mines and related rail and port infrastructure in that country.

According to a statement issued by Australian Environment Minister Greg Hunt, the ministry has cleared Adani’s T0 project and capital dredging programme for the proposed terminals 0, 2 and 3 at the Port of Abbot Point. GVK owns T3 terminal while Adani Group is the owner of T0 terminal at Abbot Point port.

Adani is in the process of developing Carmichael Coal Mine and related rail and port infrastructure, while GVK is in the advanced stage of getting various clearances for its three coal projects and related infrastructure projects. Both the projects are located in Galilee Basin in Queensland.

“Some of the strictest conditions in Australian history have been placed on these projects to ensure that any impacts are avoided, mitigated or offset. Some of these include 150 per cent net benefit requirement for water quality. The result will be a long-term net reduction of fine sediments entering the Marine Park from land-based sources, well beyond the life of the

KEC International Ltd, which has strong presence in the engineering, procurement and construction space, has secured orders worth Rs 756 crore. The company has also entered the transmission EPC market in the Americas by bagging an order in Brazil. In its filings with the stock exchanges, KEC said the transmission segment secured international orders worth Rs 324 crore, water business

projects,” said Hunt in the statement. GVK said that the development is vital for the company as the dredging is a sensitive issue and forms part of the final approvals for the port.

“Achieving this final environmental approval from the Federal government is a significant milestone towards the development of GVK Hancock’s Terminal 3 (T3) port facilities and Galilee Basin coal assets including the Alpha, Alpha West and Kevin Corner Coal Projects along with the construction of a rail solution to Abbot Point port,” said GVK.

Adani’s proposed Carmichael Mine and Rail Project would consist of 300 km of standard gauge line with an operational capacity to transport 100 mtpa of coal and connect the Galilee Basin with the Port of Abbot Point.

Adani officials were not available for comments. Adani is planning to develop a 60 million ton per annum (mtpa) thermal coal mine in the north Galilee Basin in the Central Queensland.

All the coal will be railed via a privately-owned rail line connecting to the existing Aurizon rail infrastructure near Moranbah, and shipped through coal terminal facilities at the Port of Abbot Point and/or the Port of Hay Point (Dudgeon Point expansion), according to Adani Group.

PROJECTS UPDATE

$1.5 bn Japan aid for DMIC project with riders

Power projects worth `26,700 cr put on fast track

UP sees investment of `42,000 cr

Ministry of Highways awaits MoEF nod for four projects

The Japanese government has offered a special loan of $1.5 billion for Delhi-Mumbai Industrial Corridor (DMIC) project for a period of 40 years. “The Government of Japan has offered a special facility of $1.5 billion official development assistance (ODA) for DMIDC projects over and above the regular ODA,” said Minister of State for Finance Namo Narain Meena.

The special term loan by Japan includes certain conditions such as pre ference to a Japanese company for goods, services and consulting contracts. Also, as per

The Centre has put on the fast track projects worth Rs 34,647 crore in petroleum and natural gas and power sectors by approving a number of them and giving directions for urgent clearances to the rest.

The projects in the power sector are worth Rs 26,700 crore while in the petroleum and natural gas sector the ones cleared are to the tune of Rs 7,947 crore. These projects, held up for want of various clearances, including environmental nod, have now been put on the fast track by the Cabinet Committee on Investment (CCI) chaired by Prime Minister Manmohan Singh, according to sources.

Uttar Pradesh is likely to get investment worth Rs 42,000 crore unde r t he p roposed Eas te rn Dedicated Freight Corridor (EDFC). Almost 57 per cent of the EDFC measuring 1,049 km would traverse across 18 districts of UP, thus having immense potential benefits for the state.

UP Pr inc ipa l Sec re ta ry fo r Industry, Surya Pratap Singh, said the proposed alignment of 1,840 km EDFC, starting from Punjab, traverses UP via Khurja and ends at Dankuni in West Bengal.

He informed the state government had agreed for 5 per cent equity contribution for implementation of this ambitious project, while UP had also identified three integrated manufacturing zones along EDFC.

To develop Amritsar-Delhi-Kolkata Industrial Corridor (ADKIC) along EDFC on the lines of Delhi-Mumbai Industrial Corridor (DMIC) on Western

The Ministry of Road Transport and Highways is awaiting formal environment clearance for four highway projects only. “There are only four projects for which formal environment clearance are awaited. These have already been recommended by Expert Appraisal Committee (EAC) of the Ministry of Environment & Forests,” said Minister of State in the Ministry of Road Transport & Highways Sarvey Sathyanarayana.

There are total 16 projects for which forest clearances are at various levels of processing. There are some projects where developers have served termination notice to the NHAI (the National Highways Authority of India), he said.

The minister said that the Ministry of Environment & Forests has resolved most of the bottlenecks, like

the conditions, not less than 30 per cent of the total prices of contracts (excluding consulting services) shall be accounted for by either goods from Japan and services provided by a Japanese company or goods from Japan only, depending on the nature of the project.

“Four projects of DMICDC having a project cost of Rs 6,459.37 crore (about $1.04 billion) have already been included in the Special Rolling Plan for the $1.5 billion ODA facility and shared with the government of Japan,” said the minister. The government of Japan offers both

The projects c leared in the power sector include the Sagar super thermal power project in West Bengal and Hinduja National Power Corporation Ltd project in Visakhapatnam. About the Sagar power project, the Environment Ministry has been asked to decide the matter regarding environmental and CRZ clearance within two weeks.

With regard to the Hinduja project, the Power Ministry has informed that action for alleged CRZ violations by the project was being taken by the Andhra Pradesh government. The Environment Ministry has informed that the alleged violation attracts a

Dedicated Freight Corridor, the state government had provided a detailed concept note to the Centre.

The World Bank had identified three regional growth clusters on EDFC alignment and agreed to prepare structure plans of these clusters. The proposed regions are Auraiya-Kanpur including Kanpur Dehat, Allahabad-Varanasi including Kaushambi and Sant Ravidas Nagar and Agra-Aligarh including Mathura, Hathras and Firozabad.

M e a n w h i l e , w i t h p o t e n t i a l investment of about Rs 25,000 crore till 2040, DMIC is also expected to herald unprecedented industrial growth in UP, Singh said. After sanctioning Rs 1,000 crore worth of investment in two early bird projects of DMIC as equity, UP is now expediting these projects.

The Centre had sanctioned Rs 617 crore for integrated industrial township at Greater Noida and Rs 391 crore for

requirement of special exemption or No Objection Certificate under the Forest Rights Act in respect of strengthening and widening of the national highway projects.

It has also de-linked the grant of Environment Clearance from the Forest Clearance for linear projects and treated the strengthening and widening of nat ional highways infrastructure projects differently from the new projects.

The MoEF has also allowed the construction of the national highways in the non-forest areas in widening projects as expenditure does not become infructuous in such projects. Accordingly, the process for obtaining environment and forest clearances are relaxed significantly for all the existing and future road projects, he added.

untied and tied loans under its ODA. DMIDC is a Dedicated Freight Corridor between Delhi and Mumbai, covering an overall length of 1,483 km and passing through the states of Uttar Pradesh, National Capital Region (NCR) of Delhi, Haryana, Rajasthan, Gujarat and Maharashtra, with end terminals at Dadri in the NCR of Delhi and Jawaharlal Nehru Port near Mumbai.

The Dedicated Freight Corridor offers high-speed connectivity for high axle load wagons (25 tons) of double stacked container trains supported by high power locomotives.

penalty of Rs 1 lakh and the approval can be considered upon filing of the case in court, said the sources.

In this light, the CCI decided that a final decision regarding the CRZ clearance should be taken by the Environment Ministry within one week.

On the Rajwest Pithead Thermal Project in Rajasthan, they said the Environment Ministry has accorded clearance to the Kapurdi lignite mine for 25 per cent capacity enhancement. The ministries of mines and coal stated that they have no objection to the proposal for approving mine plan.

multimodal logistics hub at Dadri, the two early bird projects under Dadri-Noida-Ghaziabad investment region proposed under DMIC.

T h e U P S t a t e I n d u s t r i a l Development Corporation (UPSIDC) will give 600 acres of land and 1,500 acres in second phase as equity for this early bird project.

got orders worth Rs 245 crore for sewage treatment plants and canal construction, and power and cable system businesses got orders worth Rs 187 crore.

A m o n g t h e o r d e r s i n t h e t ransmiss ion segment , KEC’s group company SAE Towers, got a transmission line order worth Rs 44 crore in Brazil marking its foray into EPC space in the Americas.

December 23-29, 2013 7REAL ESTATE

Investor-friendly REIT The Reits enable investors to take

advantage of appreciation of real estate without the

hassle of buying and maintaining physical

properties themselves

The Reit or Real Estate Investment Trus t i s a poo led inves tment instrument, l ike a mutual fund. While mutual funds invest primarily in debt, equity and money markets, the Reits invest in real estate projects which are usually completed and are commercial in nature.

The market regulator, the Securities & Exchange Board of India (Sebi) has recently issued a consultation paper on the draft regulations for the Reits. The instrument that is popular in several global capital markets may soon start operating in India as well. This is a much-awaited move that is likely to be beneficial for real estate developers and investors alike.

Liquidity issuesThe Reits are going to prove to be

a boon for the real estate sector in India that is suffering from a liquidity crunch and poor sales. They will allow developers in commercial real estate space to unlock the value of their assets.

Several real estate developers are at present faced with liquidity issues as they have large amounts of

capital locked in commercial assets and are finding it difficult to sell these due to large-ticket sizes.

The Reits will ease this hassle. The move is also likely to bring in more regulations and globally-accepted real estate practices into the sector, thereby reviving the interest of both domestic and foreign players in this space.

Reduce risk exposureThere i s l i ke l y to be more

p ro fess iona l managemen t o f finances and investment in real estate of the country once the Reits are introduced. They will also reduce the risk exposure of banks which have invested large amounts of capital in under-construction commercial projects.

There are several other proposals in the paper by the Sebi which will all work towards ensuring more formalizat ion and clar i ty in the way the investment process in the sector works. For instance, it will be made mandatory for an Reit to have trustees, sponsors, managers and a principal valuer.

The trust will have to apply for registration with the Sebi and once the market regulator grants the approval, only then will the trust be able to offer units to the public and get the units listed.

Ensure transparencyTo ensure that the investment is as

safe as possible for investors, an Reit will be permitted to invest its entire corpus in one project only if the size of the asset is at least Rs 1,000 crore.

The Net Asset Value (Nav) of properties in which these instruments will invest will be examined twice a year by two independent valuations as per the consultative paper. This will ensure greater transparency and uniform valuation in this sector, enhancing the trust of potential buyers and investors.

The introduction of the Reits will also provide a boost to the subdued investor sentiment in the economy. The Reits enable investors to take advantage of appreciation of real estate without the hassle of buying and maintaining physical properties themselves.

Favourable ReitsInvestors are likely to take very

favourably to the Reits as these will also allow them to diversify their portfolio in a way that very few other options can. The low entry barrier, with a minimum unit size of Rs 1 lakh and minimum subscription size of Rs 2 lakh will be one of the main factors motivating investors.

As per the proposal, initially only wealthy individuals and institutions will be allowed to subscribe to the Reit unit offers, but this benchmark is expected to be lowered gradually allowing retail investors to participate as well.

Many investors, who lack deep pockets, often do not have the ability to partake in asset allocation and balance their investments across asset classes in the realty segment. The introduction of the Reits will allow them to do so.

Mitigated risksAnother advantage that the Reits

will offer is that of mitigated risks as these instruments will primarily invest in completed projects. Thus, the risk associated with completion of under-construction projects that an investor in real estate is most often exposed to gets reduced by a huge margin.

Another factor making the Reits attractive to investors is the return on investments that unit holders will receive. The returns will be derived mainly from rental income or capital gains from real estate.

The Sebi chief UK Sinha has also emphasized that he will ensure that these instruments are made tax-efficient, offering another added benefit to the investment sentiment of the country.

All the above factors will make the entry of the Reits into the capital market an advantageous move for both investors and the real estate sector. Investors will profit from the unique benefits that these instruments offer in terms of deriving value from appreciation of real estate and a diversified portfolio. The real estate sector will be given a boost in terms of capital inflows and a renewed investor confidence.

Gautam Thapar Director, Thapar Group

GSC to invest $1 bn in India over 3 yrs

Housing prices fall 1.7pc April-June

Centre open to modify Real Estate Regulatory Bill

A slowdown in the real estate space does not seem to have dampened US-based private equity firm Golden State Capital (GSC), which has decided to invest close to $1 billion in India over the next three years through its real estate investment trust (Reit). It also expects to get its Reit listed on the Singapore stock exchange next year.

“We will have an appetite of close to $1 billion in the next three years, if we get opportunities at appropriate valuations,” said GSC Chairman Sumit Nanda. The firm is looking at a Reit listing of above $500 million.

“We see Reit as a good platform to acquire high-quality office assets in c i t ies l ike Gurgaon, Noida, Bengaluru, Pune, Chennai, Mumbai and Hyderabad,” he added.

GSC recently launched Burman GSC, its real estate joint venture with the Burman family, the promoters of the Dabur group. Started in

Due to poor demand amid subdued economic condit ions, housing prices fell 1.7 per cent during the April-June quarter and there are no signs of recovery, said real estate consultancy Knight Frank. The prices fell 0.1 per cent in the January- June period, while they rose 5.9 per cent during the 12 months ended June, according to the Knight Frank Global House Price Index, which tracks mainstream residential prices in 53 countries.

Knight Frank India Chief Economist & Director-Research Samantak Das said, “While disguised price discounts in the form of 80:20, rent back, waivers on floor rise, stamp duty and registration were the flavor for almost four-six quarters, with a

Allaying fears of developers on the proposed law that aims to bring in transparency and protect home buyers, the government said it would modify the Real Estate Regulatory Bill if necessary. Addressing a meeting of realtors body Credai, Minister of Housing & Urban Poverty Alleviation Girija Vyas said she would take up

2000, GSC focuses on the US and Indian markets, with operational offices in these two countries and Singapore. It had first entered the Indian market in 2002, when i t started construction of leased assets

decline of 1.7 per cent in the latest reported quarter, price deceleration is becoming more profound. We are yet to see any green shoots of recovery in the residential market.”

Das attributed the fall in housing p r i ces to buye rs pos tpon ing purchases because of subdued economic condi t ions and low confidence in the market.

“Comparatively, India is st i l l affected by local factors of political and economic uncertainty. Only after these become clearer post-2014 will we see a resurgence in the Indian property market relative to the various other markets in the world,” said Mudassir Zaidi, National Director - Residential Agency, Knight Frank India.

by reconverting industrial buildings. In 2008, it entered into a joint venture with Ascendas (through a special-purpose vehicle) to develop a 62-acre IT Sez in Gurgaon.

various issues concerning the sector, such as taxation, delay in approval and scarcity of fund, with the Prime Minister and the Finance Minister.

“There is no reason for worry. The Real Estate Bill will be your friend. We don’t want to bring in inspector raj. The Real Estate Bill will be suitably modified, if necessary,” she said.

December 23-29, 2013 8REAL ESTATE

Managing dead malls

As a consequence of India’s retail transformation, the country has seen a substantial increase in mall space over the years. However, out of the hundreds of the shopping centres operational today, only a few can be counted as genuinely successful.

The success of a mall depends upon var ious factors such as location, accessibility, tenant mix and also optimal space utilisation. One of the prime factors for the less-than-successful malls in the country is poor mall design, with suboptimal utilisation of spaces. This results in ‘dead spaces’.

Considering the present market d y n a m i c s , d e a d m a l l s p a c e management has become a critical consideration when it comes to the optimisation of a shopping centre’s per square foot productivity.

Efficient space managementIn a rapidly evolving retail market

like India, adapting to the changing needs of consumers as well as retailers has become imperative. If the dead spaces in malls can be converted into productive and useful

Dead spaces are being eradiated by changing

the position of the anchor stores along the corners or ends of the

mall

Investment: Bungalows vs Flats

Regardless of location, the maintenance costs

and property taxes involved in a bungalow

are a lot higher than those of flats

Assuming that one has the financial wherewithal for this to be an option at all, the question of whether to invest in a bungalow or a flat is indeed pertinent. As always, location plays an important role. In an established area of a large city like Pune, a bungalow costs a lot more than a flat. This means that the rental market for such a property shrinks proportionately.

However, the income segment that remains can definitely afford to rent such a unit, so demand would remain more or less consistent. Moreover, bungalows in established locations have a high chance of attracting long-term corporate leases.

Bungalows Investing in a bungalow in an

upcoming location usually involves a lower ( though st i l l s izeable) capital investment. The rental yield is lower, but the size of the rental market for such a property increases proportionately.

Investment in a bungalow in such a location can make a lot of sense if the area, despite being non-prime, is still well-connected to some of the city’s major economic drivers, such the airport or employment hubs such as IT parks and manufacturing zones.

One major advantage of investing in a bungalow in an upcoming location is that it will gain steadily in value as the area’s profiling in terms

of social and civic infrastructure improves. However, regardless of location, the maintenance costs and property taxes involved in a bungalow are a lot higher than those of flats. This long-term financial implication must necessarily be factored whi le investment in a bungalow is considered.

Share of landIf we set the considerations of

location, ticket size and potential rental y ie ld aside, the pr imary

Arvind Jain Managing Director, Pride Group

advantage of investing in a bungalow rather than a flat is that one secures more land. In any location, it is the value of land which determines the value of built-up property.

Unlike a flat, a bungalow and its compound lock in a significant piece of tangible land. This fact gives a bungalow a higher value in real estate terms. Also, the investor must have a suitably long investment horizon and not be looking for short-term returns.

FlatsFlats offer a slightly different

value proposition than stand-alone units such as bungalows. In the first place, the share of land that is legally allotted to each flat in a project is much lower than that of a bungalow. The primary value of a flat lies in the space that it occupies, which is why larger configurations such as 3 and 4 BHK attract higher rents.

As before, location will dictate the ticket size as well as rental income. The rental market for flats is much larger than that of bungalows, so finding tenants is easier even if one factors in a certain degree of tenant churn. However, one must ensure that one is investing in a flat whose size dovetails with the median income profile of the location. The highest demand will always be from the locality itself, and from people working in offices and industries close to the area.

Buying a flat whose size puts it out of the largest local demand profile can be a self-defeating and costly mistake. Generally, the 1, 2 and 2.5 BHK configurations are the safest investment bet in any area, since the rental demand for them

opting for better design with a good circulation and visibility of such stores. There is now greater emphasis on directing footfall traffic along the mall’s entire floor scape, thereby providing parity and frontage to all stores.

Mall developers are also adapting their malls according to changing needs and t rends, tak ing into account the competition. In order to facilitate footfalls in the entire mall, dead spaces are being eradiated by changing the position of the anchor stores along the corners or ends of the mall.

Also, some mal l developers are introducing the novel first-time brands or attractions in the extreme eds in order to encourage shoppers to stroll through these areas.

Focus areaI n t he fu tu re , dead space

management is go ing to p lay a crucial role in achieving mall developers’ economic goals, as well as in rejuvenating mall space for the introduction of newer categories and brands. Moreover, the upcoming malls are increasingly being designed with a sharp focus on the tenant mix and the size requirements of various brands from the planning stage itself.

With the l iberalisation of FDI and entry of international brands in the country, the country’s retail real estate developments are going

to be increasingly transformed to match international standards of overall design, ambience and store format requirements. Improving space utilisation in malls to adapt them to international standards and norms is going to become a crucial focus area.

Under ideal circumstances, the requisite features are not introduced retrospectively but are, in fact, factored into the mall’s original design. However, there always needs to be a healthy margin of flexibility. In fact, even the best shopping centre design allows for constant adaptation to changing requirements. Indian shoppers are more discerning than ever, having been exposed to the retail trends of more developed countries.

This does not only mean that they know their brands – it also means that they are perfectly aware that dead spaces in a mall are indicative of something being out of whack. Since retail trends change and some solutions to eliminate dead spaces do not always pan out as expected, mall developers will have to examine and re-examine their options in this respect as a constant work-in-progress.

areas for leisure, entertainment and dining, then the mall would attract greater footfalls. In order to achieve efficient space management, the designing of shopping centres requires a holistic approach so as to optimise the leasable area for the mall developers.

Apar t f rom non-per fo rming malls, successful malls in India are also continuously working towards eliminating dead spaces so as to achieve better rental realisation. This can be achieved by:

Making structural design-oriented changes; implement ing sof ter parameters such as changing the positioning of anchor stores, or Introducing major attractions or newer retail categories in dead spaces.

Ongoing remediesIn India, some mall developers

have e l iminated the a l leys or narrow passages that the mall’s inherently poor design produced, and have merged them with existing stores. Such narrow alleys create a secondary circulation pattern with no central concentration zone in the mall, thereby leading to decreased footfalls in such areas. This also creates a dead space with lack of visibility and access for the stores towards the rear, thereby affecting the rental realisation of these stores.

In order to improve leasing feasibi l i ty, developers are now

is always the highest. With ultra-premium flats as a logical exception, maintenance and property tax for apartments is significantly lower than for bungalows.

Pertinent factorsIn terms of location, investors into

flats must consider all the pertinent factors carefully. Flats in established locations are costlier and involve a higher capital expense. They will attract rental interest from a segment of higher economic profile.

However, it must be borne in mind that capital appreciation of flats in centrally located projects is slower than in many upcoming areas. This is because high-end locations tend to hit an appreciation plateau, which can persist for long periods.

Upcoming locations appreciate faster because their market viability is being enhanced with increasing accessibility as well as social and civic infrastructure. They attract more people, since any city’s growing population tends to move into areas which are affordable. For that reason, emerging locations also tend to attract a lot of commercial establishments – which further boosts the residential segment.

To ensure that growth factors such as assured infrastructure and social amenities are indeed locked into place, investors into apartments should ensure that they choose projects that fall within the local municipal limits.

I f a project fal ls outside the city’s corporation limits, there is no guarantee that the location will receive proper infrastructure such as roads and regular water and electricity supply. Without such infrastructure, a location does not appreciate – thereby rendering it unsuitable for smart property investment.

Shubhranshu Pani Managing Director, Retail Services, JLL

December 23-29, 2013 9EqUIPMENT

AMCS ensures construction sites safety

Leading Indian contractor relies on Potain cranes at

landmark development

I n a cons t ruc t ion job-s i te , manoeuvring a tower crane is an extremely difficult task in order to avoid human and material damage, while satisfying the demands of efficiency and timeliness. France-based AMCS Technologies offers high-end electronic devices to bring ease in operation while delivering construction sites safety.

Understanding this need, AMCS developed an electronic system for the control and coordination of a tower crane’s movement therefore offering construction sites safety devices such as anti-collision systems, anemometers, warning obstruction lights, and cameras.

“DCS 60 assists the crane operator in his work in order to avoid collisions between the liftinghook and various other areas. It also allows the crane driver to be more efficient while handling his machine,” said Erwan Stephant, Sales Manager, AMCS Technologies

With the increase in high-rise construction projects across the country, driving of tower cranes safely and efficiently has become

One of India’s largest contractors is using three of its seven-strong fleet of Potain tower cranes to build Wave One – a landmark commercial development in Noida in north India. Leighton Welspun Contractors Pvt. Ltd. deployed the MC 125s at the job site in 2011 and they will continue to work 22 hours a day, every day at the project until 2014.

Leighton Welspun purchased its first 6 t capacity Potain MC 115 B in 2007. It didn’t take long for Potain’s impressive quality, combined with the professionalism of Manitowoc Crane Care’s support service, to prove itself, as Sanjeet Singh Malik, plant manager at Leighton Welspun, explains:

“Potain cranes are exceptional – they are easy to use, quick to erect and perform tirelessly on the job site to keep our projects moving,” he says. “We are responsible for several landmark developments across India, so we need cranes we can rely on and an expert support service to fall back on. Manitowoc gives us both of these things and we are very proud of our Potain fleet.”

Wave One is typical of the work that Leighton Welspun’s Potain cranes perform; a high-rise development in the heart of a city, surrounded by busy streets with a demanding schedule. The MC 125s are working almost

an important task. The safety aspect which was neglected over the years is in the centre of discussion for every project developer. Seeing this opportunity AMCS has appointed DCS Techno Services Pvt. Ltd. as its sole distributor in India for sales

constantly pouring concrete and lifting general construction materials to build two 41-storey towers at the project.

The Potain MC125s are external climbing units currently erected at heights of 68 m, 74 m and 80 m. All of the cranes will reach a final working height of approximately 140 m. Two are configured with 45 m jibs and one with a 50 m jib, to cover the entire 230,000 m2 job site.

Located near New Delhi, Wave One is a mixed-use commercial development comprised of high-end offices, retail space, cinemas and restaurants.

The four other Potain MC 125s in Leighton Welspun’s fleet are working at job sites across the country, including the Tritvam residential project in Kochi and the Ramanujam Information Technology Park in Chennai.

Potain’s MC 125 is a compact city crane that offers a maximum jib length of 60 m, at which it can lift 1.15 t. The crane uses Potain’s pin-connected mast sections for fast erection.

Established in 1998, Leighton Welspun employs more than 10,000 people who specialise in residential, commercial and retail construction across India. The company is part of Leighton Holdings Group, Australia’s leading construction, mining and project development company.

and services. Commenting on the company’s focus in Indian market, Erwan Stephant, Sales Manager, AMCSTechnologies said, “There is a growing need of construction sites safety solutions in the Indian market especially in cities like Mumbai,

Volvo set to acquire hauler business from Terex

In a move that will improve the company’s penetration in the core earthmoving segment and extend its presence in light mining, Volvo Construction Equipment has agreed to acquire the off-highway hauler business of the Terex Corporation for a purchase consideration of approx. $160 million (approx. SEK 1 billion) on a cash and debt free basis.

Volvo Construction Equipment (Volvo CE) has announced that it has agreed with the Terex Corporation to acquire the hauler manufacturer Terex Equipment Ltd including related assets and intellectual property. The deal, which is subject to regulatory approval, includes the main production facility in Motherwell, Scotland and two product ranges that offer both rigid and articulated haulers. It also includes the distribution of haulers in the U.S. as well as a 25.2 per cent holding in Inner Mongolia North Hauler Joint Stock Co (NHL), which manufactures and sells rigid haulers under the Terex brand in China. NHL is listed on the Shanghai Stock Exchange.

Commenting on the rationale of the deal Volvo CE’s President, Pat Olney said, “This is a strategic acquisition that offers Volvo CE considerable scope for growth. The addition of a well-respected range of rigid haulers extends the earthmoving options for customers involved in light mining applications.”

In 2012, the businesses in the acquisition (excluding NHL) had net sales of approximately $370 million (approx. SEK 2.5 billion) and an operating income of approximately $33 million (approx. SEK 220 million). In the first nine months of 2013 net sales amounted to approximately $172 million (approx. SEK 1.1 billion) and operating income was approximately $5.5 million (approx. SEK 35 million). The holding in NHL will likely be accounted for using the equity method in accordance with IAS 28 (one-line consolidation). The purchase consideration amounts to approx. $160 million (approx. SEK 1 billion) on a cash and debt free basis. The acquisition will increase the Volvo Group Industrial Operation’s net financial debt by SEK 1billion.

The acquisit ion includes five models of rigid haulers, with proven designs and payloads ranging from 32 to 91 tons. The introduction of rigid haulers will extend Volvo CE’s position in light mining; an industry area that is complementary to general construction, oil & gas, aggregates & quarrying and road building – segments that Volvo CE is already active in.

The deal also sees a fu r ther three models of

articulated haulers added to the Volvo portfolio, with payloads ranging from 25 to 38 tons. These machines support Volvo CE’s already established position in the articulated hauler segment, and offer an extensive field population and opportunities for considerable growth in emerging economies.

If approved, the acquisition adds some 500 employees to Volvo CE’s existing workforce. It also allows for the continued use of the Terex brand name on the relevant machines for a

transitional period.The t ransact ion is expected to be finalized

during the second quarter of 2014. For implementation, a p p r o v a l i s r e q u i r e d f rom re levan t authorities.

reason people look at DCS today as their provider of choice and the company they can trust. So far, we have established, administered and serviced over 800 companies and trusts across India.”

DCS, a 17 years old fast growing

company having headquartered in Hyderabad, has extended its foothold regionally.

AMCS at Excon: At Excon, AMCS displayed its

uniquely designed anti-collision device DCS 60. While highlighting the advantages of this system, said Stephant. “DCS 60 assists the crane operator in his work in order to avoid collisions between the lifting hook and various other areas. It also allows the crane driver to be more efficient while handling his machine.” The movements of cranes are monitored by strategically placed sensors that provide a precise detection of the lifting hook’s position in real time.

Universally designed: Anti-col l ision device DCS60,

manufactured by AMCS can be fitted to any brand make of cranes - static or travelling, relay or PLC controlled, with saddle or luffing jibs - to manage in 3D interferences between up to 125 machines (tower cranes and/or mobile cranes) on the same site. Apart from providing this solution, AMCS also provides site supervisors a complete range of anemometers, video cameras and aviat ion l ights beaconing. “By ensur ing an accurate r isk understanding AMCS proposes ta i lo r-made so lu t ions easy to implement and a follow-up with respect to the technical and safety requirements,” assured Stephant.

Bengaluru,Hyderabad, Delhi, and Kolkata.”

Rajeev Kumar, CEO - Crane Division, DCS Techno Services Pvt. Ltd. commented, “Being in construction and infrastructure industry since long, in today’s environment business needs are never static. This is the

Pat Olney, President, Volvo CE

Rajeev Kumar, CEO - Crane Division, DCS Techno Services Pvt. Ltd.

Potain MC125 working at Wave one project, Noida

December 23-29, 2013 10EqUIPMENT

Terex AC 700 crane at Panthéon, Paris

Boiler industry should find ways to

use solar power Dr E M S Natchaippan, Minister

of State for Commerce and Industry, while addressing the Inaugural Session of the Seminar on Boiler Industry organised with Central Boiler Board in New Delhi on December 11, 2013, challenged the boiler industry to find ways of using solar power as against other fuels.

He urged industry engage in advance research for increasing the utilization of solar power given the limitations and consequences of using thermal and nuclear energy; solar energy can be considered as an efficient alternative source without any wastage or impact on the environment.

He acknowledged the need to revisit the current IBR Act and regulations and updating of the same to keep pace with new and advance technology. He appreciated CII for providing the government and the industry in identifying requites steps and recommendations for modernizing and revising the IBR.

Madiha Kotb, President of American Society of Mechanical Engineers (ASME), expressed concerns over the challenges faced in globalizing the standards and regulat ions for Boilers. She emphasized that development of standards and technological development are the basic building blocks of the industry,

ensuring economic development and economic progress of any nation.

S Sundararajan, General Manager, Bhel, in his welcome asserted that the future growth of the industry can be achieved through better design, improved R&D and new innovations. He shared challenges faced by the Indian boiler industry, such as shortage of coal, under-utilization of renewable sources of energy, coal emission issues etc.

P r a v i n K a r v e , E x e c u t i v e Director, Thermax, spoke about the advancements in technology in the boiler industry which has enabled the use of variety of fuels such as biomass, various qualities of coals etc. He stated that a joint effort between the government and the industry is vital to enable the boiler industry to be globally competitive.

V Ramakrishnan, in his concluding remarks focused on use of biomass, paddy husk and recyc l ing o f municipal sol id wastes as new resources of energy.

The seminar saw participation from major boiler manufacturing companies such as Bhel, Gülde GmbH & Co, NTPC, ASME, L&T MHI, Rotork Controls, Lloyd Register, Bureau Veritas, Tata Steel, Bosch, ThyssenKrupp, Alstom, Veesons Energy Systems, Tata Projects, ANG Industries, Cumi, Jindal Power, etc.

New visual identity for Atlas Copco Road

Construction Equipment

Atlas Copco Road Construction Equipment has decided to align the visual identity of the Dynapac range of rollers and pavers to the design used by the other divisions in the Atlas Copco Construction Technique business area.

In the new design the Atlas Copco logotype will be clearly visible on the products together with the Dynapac name. The colour scheme will change to yellow and grey, which is already used for construction tools, portable compressors and generators.

“To the great men of this Country, in gratitude” states the inscription on the mass ive p l in th o f the Panthéon. In order to rejuvenate this most venerable monument, French construction group Ponticelli deployed its Terex AC 700 all-terrain crane to help raise a complex scaffolding structure.

Since 1791, the Panthéon is the secular temple of the French Republic, the resting place of citizens venerated by the Nation.

Buried within the Panthéon are writers: Rousseau, Voltaire, and Victor Hugo; scientists: Pierre and Marie Curie; and heroes like Jean Moul in among other i l lustr ious names. The last to be inhumed was Alexandre Dumas whose ashes were transferred there in 2002. Erected between 1758 and 1790 by the French architect Soufflot on the hill known as the Montagne Sainte-Geneviève, the neo-classical structure was meant to be a church dedicated to the patron saint of Paris. The onslaught of the French revolution in 1789 changed the course of history: Sainte-Geneviève lost her rel igious vocation and instead was transformed into the temple o f French secu lar ism. Over 700,000 visitors come to this emblematic bastion of national memory each year.

The ambition is to form a strong uniform identity towards construction customers in all parts of the world.

T h e a d d i t i o n o f t h e A t l a s Copco logotype on the Dynapac equipment is not only beneficial for the Construction Technique business area. In fact, the Atlas Copco Group will immediately benefit from having more brand carriers visible to the public.

The new visual identity was first showcased in India at the Excon trade fair in Bengaluru in November 2013.

With the passing of the years, the pressure on its arches, water seepage caused by leaky joints and the cor ros ion of swel l ing metal components which have cracked open surrounding stone has compromised the stability of the structure. That is why the Centre des Monuments Nationaux, the main caretaker for the national monument system, has now undertaken a massive restoration project. The first phase of this restoration work will last until 2015, starting with the upper part of the structure at

82 meters high (nearly 270 feet). There is one major challenge: the monument has to remain open to the public while restoration takes place.

The Panthéon is fragile, and in order to repair its upper structure without using the historical building itself as a support, the colonnaded drum support ing the dome wil l be completely covered by free-standing scaffolding. In order to raise 350 tonnes of scaffolding into the air, Paris Echafaudage designed a metallic structure shaped like a kitchen stool. It consists of a reinforced hoop tightened around the base of the drum and resting on four legs, each 37 meters high and anchored by micropilons. One of the legs will serve as the base for a 96 meter-high tower crane. In order to assemble the scaffolding, Ponticelli brought in its Terex AC 700 all terrain crane, equipped with a 42 meter luffing jib and 140 tonnes of counterweight.

“Obtaining the permits necessary to truck in and install this kind of equipment in the heart of Paris was no easy thing. But it turned out to be the best option for this type of project,” explained Stéphane Yorgui from Ponticelli’s engineering office.

Only four weeks were needed to lift the individual structures into their

building. A job demanding patience that left no room for error,” insisted Dejan Kostovski, the project manager for the scaffolding company Paris Charpente. “And this shows the skill level of the crane people in this difficult site. During work hours, the Panthéon would remain open to the public, a crowded site with people milling around,” he added.

Franck Mikaelian, the main crane operator, has worked with Terex cranes for over 10 years and he has logged four years of experience working with the AC 700. “I am crazy about this crane,” he stated. “I immediately felt comfortable with it. It’s comfortable, precise, and powerful.”

After several weeks of methodical planning and 4 weeks of precise execu t ion , the s t ruc tu re was assembled and ready to be used for the massive restoration project. “The work went smoothly. The crane operators are true professionals. Their advice was very useful to our team. We will likely work with them during the disassembly process too,” said Dejan Kostovski.

desired positions. The largest of these structural elements were 20 x 20 meters in size, weighed 42 tonnes, and had to be hoisted to a height of 40 meters. To cope with different lift profiles, the team at Ponticelli used the 42 m luffing jib and worked with varied main boom extensions and angles.

As the crane was working all around the Pantheon, the crane operator had to reposition it for every lift. This was a major consideration when choosing which crane configuration to use, as the time required to partially dismantle the crane for each reposition would have a big impact on the overall project schedule. With the chosen configuration, Ponticel l i ’s team needed to only remove 80 tons of counterweight to move the crane, as the AC 700 could be transported fully rigged within the jobsite.

Before each lift, the components of the enormous reinforced structure were laid out on the ground and rigged for the lifts. “These maneuvers demanded the highest level of precision, since the structure was assembled only a few centimetres away from the

PRODUCT PROFILE

Insulate with Supreme’s INSUflex

having a high water vapour resistance can prevent the flow of water vapour that tends to pass through the insulating material created in air-conditioning systems as a result of a difference in pressure between the pipe (low pressure) and the surrounding air temperature (high pressure). A high water vapour value corresponds to greater material resistance to water vapour penetration.

INSUflex is available in combinations of various wall thicknesses and diameters to suit G.I., copper and PVC pipes. The product is applied to the surface using an adhesive compound. A protective layer of glass cloth, in two layers with an adhesive compound is then applied before providing a weather barrier for outdoor application.

The advantage of INSUflex is that it provides good flexibility at low temperature. It is clean, dust free and the installation is fast and easy. It has a low toxicity index and becomes a minimal toxic fire hazard. Its unique closed cell structures provide an ideal vapour barrier resistance.

INSUflex, by Supreme Industries, is a CFC-free, black flexible elastomeric closed cell Nitrile Rubber thermal insulation that provides a highly efficient method of insulation and effectively controls condensation against both heat loss and heat gain. The material is particularly suitable for insulating pipe works for condensation control. It can be used on chilled water pipe lines, refrigerated pipe-works, hot & cold water services and on sheets or rolls in air-conditioning ductworks.

INSUflex, has a very high diffusion resistance factor to water vapour transmission ≥7000, a low thermal conductivity and an excellent fire safe performance. It is suitable for a temperature ranging from –55oC

to +105oC. The product does not depend on any additional outer thick skin or covering but is in built with the insulation and extends through the full thickness.

The INSUflex range is resistant to corrosion, fungal and mildew growth and is therefore very suitable for clean room applications. Insulation material with a low ‘K’ value equates to a high energy saving potential and thermal performance. Thermal conductivity is the main data used to technically calculate insulation thickness required to prevent condensation.

The main goal of a good insulation material should be that of preventing water vapour from spreading through insulation material as water is an optimal heat conductor. INSUflex,

December 23-29, 2013 11

Construction giants offer ideas to sort out

US highway

Aecom names next CEO

In total, 19 private-sector businesses -- including international giants Aecom, Bechtel, Fluor, Hochtief, Skanska and Vinci -- have offered recommendations for ways to improve the congested Interstate 66 in Virginia, USA.

The submissions are in response to the request for information (RFI) issued in late June. The RFI sought innovative and creative solutions to ease the congested I-66 corridor from Capital Beltway to Route 15 in Haymarket.

“ T h e R F I i s p a r t o f t h e Commonwealth’s plan to transform

Aecom’s board has elected President Michael Burke to succeed John Dionisio as CEO, as part of a planned succession process. Dionisio, who is 65, will become Executive Chairman of the board of directors when Burke, 50, succeeds him as CEO and joins the board of directors on 6 March 2014.

As president, and in his previous role as CFO, Mike has worked closely with me to shape and drive Aecom’s growth strategy, diversify our service

I-66 from a highly congested corridor to a multi-modal transportation facility that moves traffic and people more efficiently,” said Virginia governor Bob McDonnell.

Transportation secretary Sean T C o n n a u g h t o n a d d e d , T h e Commonwealth has asked for the best and brightest ideas from both the public and private sectors and that resulting synergy will provide the most effective solutions to ease congestion and improve travel on I-66.

offerings, expand our global footprint and deliver superior business results.

“This seamless transition is part of our planned succession process, which enables Aecom to continue to execute our enterprise strategy, while maintaining our commitment to delivering innovative solutions to our clients around the world.” Burke joined Aecom in 2005 and was named chief financial officer in 2006. He was appointed president of Aecom in October 2011.

INTERNATIONAL

Black & Veatch to build $500 m St Louis sewer project

A Black & Veatch-led team is to oversee construction of up to seven sewer tunnels in St Louis, USA. The Metropolitan St Louis Sewer District (MSD) selected the team to manage the construction of more than $500m (£307m) in future tunnel projects.

The tunnels are a significant

part of the MSD’s Project Clear – a long-term, multi-billion dollar effort to address sewer overflows and basement backups throughout the St Louis area.

Black & Veatch is responsible for construction management of up to seven different tunnels across

MSD’s service territory. The tunnels will range from 2.7m in diameter to more than 6m. The longest tunnel will be about 11km long. All tunnels will be approximately 45m to 76m below the surface. It will take approximately 15 to 20 years to complete all of the tunnels.

Arcadis highlights risks in ME construction boom

Habtoor Leighton land contract for 75-storey Dubai towers

Ghana sets out to build major dam

Jacobs completes $1.3 bn purchase of SKM

The Midd le East i s se t fo r unparalleled construction activity over the next two decades but must be prepared for the complex infrastructure challenges that come with major programme delivery, says Arcadis in a new study.

The study Middle East major construction programmes – mitigating the risk has found that in excess of 117 major programmes are planned for completion by 2030 at a cost of

Habtoor Leighton Group (HLG) has secured AED1.45bn (£240m) contract with Al Habtoor Group for the construction of residential towers in Dubai. The project is part of the landmark AED11bn Al Habtoor City development.

The Al Habtoor Residential Towers project is a mixed-use development located immediately adjacent to the proposed Business Bay creek extension and the Dubai Water Canal. It includes two 75-storey residential towers and one of 52 storeys together with a seven-storey podium including basement, ground floor and five floors of retail and parking.

more than $1 trillion (£613bn). Major programmes are defined as those totaling more than $1 billion and delivered in a relatively short period of time. However, the completion of these ambitious development plans comes with a number of risks that could result in programme failure for some.

A number of solutions to help mitigate such risks are outlined in the Arcadis report, which focuses on

Jacobs has completed its merger transaction with Sinclair Knight Merz (SKM), paying AU$1.3bn (£714m) cash for the 6,900-person professional services f i rm headquartered in Australia. SKM is an employee-owned company with broad consulting, planning, engineering, architecture, s c i e n t i f i c a n d c o n s t r u c t i o n management capabilities.

It has significant operations in Australia, Asia, South America, and the UK and serves clients in multiple industries, including mining and metals, building and infrastructure, water and environment, and power

planned major programmes across six Middle East countries forecasted for construction between 2014 to 2019. The countries covered are UAE, Qatar, Kingdom of Saudi Arabia, Oman, Kuwait and Iraq.

From 2014, there wi l l be an exponential growth in demand for plant, materials and equipment hire during the GCC development peak, estimated at nearly a trillion dollars. This will result in mass importation of key construction materials which may lead to heavily loaded distribution routes and bottlenecks in the supply chain.

Playing host to global events such as the FIFA World Cup 2022 in Qatar will see the GCC region committing almost two thirds of construction spend between 2013 and 2016 - with a peak of $144 billion in construction in 2016. In order to accommodate such mass development, a supporting infrastructure must be in place.

The Arcadis report highlights that countries that are proactive in the provision of enabling infrastructure that will stretch over a long period are at much less risk of programme slippage than countries with little supporting infrastructure.

and energy. Its UK projects have included the London 2012 Basketball Arena. SKM’s 2013 revenue was approximately AUS$1.3bn. The deal had been announced in September.

In making the announcement, Jacobs president and CEO Craig Martin said: “The combination of Jacobs and SKM further diversifies our geographic offerings and the end-markets we serve. We look forward to integrat ing the two companies and see many excellent opportunities ahead to support our clients, develop our people, and grow our business.”

On an adjacent site, HLG is currently constructing the AED1.9 b i l l i on A l Hab too r C i t y ho te l development, which is due for completion in 2016.

HLG CEO and managing director José Antonio López-Monís said that the contract continues a long and successful relationship with the Al Habtoor Group. “We’re delighted to be selected to build what will be one of Dubai’s most prestigious and recognizable developments,” he said. He added that the recent announcement that Dubai would host World Expo 2020 would provide a boost to the construction market.

Editor : Bina VermaEditorial Team: Dilip Phansalkar, Paresh Parmar, Remona Divekar Designer: Rajen Mistry

Business Team: Milind Joglekar (9833357005), Shantanu Baraskar (9820904795), Seema Kohli (9820904931)Email: contact@konstructionreview.com, editor@mmronline.com

No part of the contents of Construction Industry Review, in abridged or unabridged form, can be reproduced without the written permission of the Editor. CIR does not accept any

responsibility for statements and opinions expressed by the authors.

Construction of the Pwalugu Multipurpose Dam (PMD) will start in 2017 and be completed in 2022, the Ghana government has announced. The plan is to build the PMD along the White Volta River in the upper east and northern regions.

The project implementing agency is the Volta River Authority. Pre-feasibi l i ty studies have already started and the project is expected to generate 50 to 60 megawatts of electricity.

The draft environmental impact assessment is due for completion in August 2014. The tender preparation and contract award process is expected to take 12 months, starting

in September 2015. A recent scoping report by Mott

MacDonald and Environ Engineering & Management Consult said that the three objectives for the project are to provide hydropower generation, contribute to the development of irrigation, and prevent flooding in the project area.

T h e d a m ’ s c o n s t r u c t i o n and operat ion - and eventua l decommiss ion ing - have the potential to negatively impact upon the surrounding environment and community if not adequately assessed and managed. For this reason, a comprehensive assessment of the potential impacts is necessary.

“We have an optimistic view on the Dubai construction market and anticipate a significant increase in bu i ld ing and in f ras t ructure opportunit ies over the next few years,” he said.

HLG’s associated business, HSSG, is currently undertaking the enabling works for the project. The total value of construction, including consultant costs and pil ing but excluding interior f i t-out and furniture, is AED1.62bn. Construction will begin as soon as enabling works are completed and the main project will be completed 32 months later.

December 23-29, 2013 12

EVENTS

Registered with the Registrar of Newspapers for India under No. MAHENG/2012/41844 Posted at Mumbai Patrika Channel Sorting Office, Mumbai - 400001, on Monday Published on Monday, December 23, 2013

Regd. No. MH/MR/South-355/2012-14

NEwS

Indian valve industry crosses `10,000-cr turnover mark

Printed & published by Bina Verma on behalf of Asian Industry & Information Services Pvt. Ltd., and printed at Amruta Print Arts, 205, Tantia Industrial Estate, J. R. Boricha Marg, Opp. Kastruba Hospital, Mahalaxmi, Mumbai 400 011 and published at 1st Floor, Feltham House, 10, J. N. Heredia Marg, Ballard Estate, Mumbai 400 001. Tel.: 022-2266 0623. Editor: Bina Verma Annual Subscription : Rs. 5,000/-

The valve industry in India has been growing exponentially at over 20 per cent in the past decade with growth in exports being even higher at 100 per cent in the past three years.

The Confederat ion of Indian Industry’s (CII) annual f lagship ‘Valves Conference 2013’ with the theme ‘Indian Valves for the Global Market’ helped to take stock of the industry scenario and remove any bottlenecks for its future growth.

“The Government of India is investing Rs 1,000 crore for the enhancement of competitiveness

January 03-05, 2014Infratech YMCA Club, Ahmedabad This exhibition will give a unique opportunity to technical experts, professionals related to steel, cement, power and mining industries to become aware of modern market trends and latest business opportunities and strategies associated with these sectors which will help in the overall betterment of these sectors. Contact: Event Manager, 33 New Yourk trade Center, Nr. Thaltej Circle, SG-Highway, Ahmedabad Tel: +91-9099909825 Mob: +91-9227688026

February 13-16, 2014Constro 2014International Exhibition on Construction Machinery, Material Methods and Projects, Pune Contact : Sharad Bavadekar, Chairman, Constro-2014, Pune Construction Engineering Research Foundation (PCERF), 6 Shriniwas Building, Patwardhan Baug, Erandwane Co-Op Hsg. Society, Pune 411 004 Telefax: 91-20-2544 7356 / 2544 7748 infoconstro@gmail.com www.constroindia.org

February 21-23, 2014 PlumbexIndiaBombay Convention & Exhibition Centre, Mumbai This show will be an ideal platform for participants to showcase their latest products and services related to the building and construction sector. Contact: AIM Expositions Pvt. Ltd. AIM House, 78 Pankaj Society, Near Anjali Cross Roads, Bhatta Ahmedabad Tel: +(91)-(79)-40269999 Fax: +(91)-(79)-26620020 Contact person: Pooja Patel Tel: +91-79-26620020

February 26-28, 2014iBART EXPOGujarat University Exhibition Hall, AhmedabadOne of the leading trade fairs for the building construction industry in India, which will showcase the latest products and equipment in brick, roof and tile category. Contact: Gattaca Communications Communications House, 26 York Street, London, United Kingdom Tel: 044-2032-395572 Fax: 044-1538-398987

March 13-15, 2014Concrete Show – 2014Concrete Material & Machinery, Mumbai Contact: UBM India, Unit No. 1&2, B-Wing 5th floor, Times Square, Andheri-Kurla Rd, Marol, Andheri (E), Mumbai - 59. Phone: +91-22-61727272 Fax: +91-22-61727273 info.india@ubm.com www.ubmindia.in

March 20-22, 2014International Elevator & Escalator ExpoBombay Convention & Exhibition Centre, Mumbai The event provides an exclusive platform to get an insight into the market, trends and technologies that drive the elevator and escalator industry. The forum, apart from fostering thought leading insights from the stalwarts of the industry, also dwells extensively on leading edge technological advancements to the most contemporary design trends, safety standards, environment compliance codes and regulations. Contact: Virgo Communications & Exhibitions Pvt Ltd Virgo House, 250 Amarjyoti Layout, Domlur Extension, Bengaluru Tel: +(91)-(80)-25357028/41493996/41493997 Fax: +(91)-(80)-25357028 Contact person : G. Raghu Mob: +91-9845095803

of the Indian capital goods industry. T h i s a m o u n t w o u l d b e u s e d for creation of common facil ity, technology upgradation, product improvement, market creation and skill upgradation.

“This is a major input we are putting at the implementation level. It will take around three months to pass by the Cabinet after which we hope to implement it in the four major clusters. This will further stimulate growth of the valve industry,” said Ambuj Sharma, Additional Secretary, the Department of Heavy Industries, the Government of India.

Sharma highlighted the other industr ies that are receiv ing a major push from the industry and which in turn will help the valves industry. These include expansion of capacities in steel production, power-generat ion industry and electrical equipment, enhancement of other capital goods industry, etc.

Bes ides , he sa id tha t t he government could also help in acquiring technology and setting global OEMs in the country. He also informed of the Rs 1,200 crore the government would invest in R&D projects to develop advanced ultra-super critical technology for power generation along with other countries. This will invariably provide a huge impetus to the valve industry.

Pra is ing the va lve indust ry, Sharma added, “While the global trend has been a low single digit growth, the valves industry in India has grown by over 20 per cent in the past decade.

“Exports have grown faster

registering 100 per cent growth in the past three years. From a small size of just Rs 500 crore in 1990, it has reached a creditable Rs 10,000 crore in turnover and Rs 4,000 in exports.

“Hence, i t is necessary that opportunities present be captured. And there is a great opportunity because investment in industries like oil, gas, power, etc. has been

(L to R): I S Malhotra, Vice Chairman, CII Valves & Actuators Division; J P Nayak, Chairman, Machinery & Industrial Products Independent Co, L&T & Chairman L&T Valves; Ambuj Sharma, Addl Secy, the Dept of Heavy Industries (DHI), GoI; Arvind Goel, Chairman, CII Valves & Actuators Division; and Kaushlendra Sinha, Regional Director, CII(WR)

“A l l th is was ach ieved wi th minimal government support. It is a matter of pride for us that Indian valves are being used in virtually all countries and all types of process industries to control safety critical processes – be it a nuclear power plant, thermal power plant, oil refinery, water treatment and supply project or metal smelters.”

J P Nayak, Chairman, Machinery & Industrial Products Independent Company, Larsen & Toubro Ltd and Chairman, L&T Valves Ltd, said, “The valve industry has come of age. It is moving in a faster pace where it generates its own technology, understands market and gets product accepted all over the world.

“Another good indicator is also the number of international valve manufacturers waiting to set up operation in India and take advantage of infrastructure and talent pool available in the country. The nature of the industry is such that we will be in a position to make rapid progress.

increasing. The results are clearly visible in the number of Indian EPC companies getting business, some Indian value manufacturers setting up operations outside India, absorption of advances in technology and excellence in customization.”

Arvind K Goel, Chairman, CII Valves & Actuators Division, said, “India has emerged as a globally important place for manufacturing of valves despite a slowdown of demand in the domestic market. EEPC has identified valves as one of the four major thrust areas. We are also creating a value standardization committee, the idea being to change India’s position from just followers of standards to creating our own standards in the valve and actuator industry.”

I S Malhotra, Vice Chairman, CII Valves & Actuators Division, hoped that the strong gathering from both the users and manufactures of the valve industry will take home crucial growth pointers.