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1 Madhya Pradesh: Means Business Industries. 2 Overview  MP is the second largest State in the Country stretching over 308,000 sq kms.  The State is.

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Presentation on theme: "1 Madhya Pradesh: Means Business Industries. 2 Overview  MP is the second largest State in the Country stretching over 308,000 sq kms.  The State is."— Presentation transcript:

1 1 Madhya Pradesh: Means Business Industries

2 2 Overview  MP is the second largest State in the Country stretching over 308,000 sq kms.  The State is blessed with large mineral resources of coal, diamond, limestone, methane etc.  MP is among the top 4 states of the Country for industrial investments.  Per capita GSDP USD 369**  Manufacturing sector USD 8.5 bn** (Registered & Unregistered)  Gross state domestic product (GSDP) USD 23,983.63 Mn**  Average growth rate 5.5% per annum Advantage MP  Total electricity generation capacity 6,449.25 MW*  India’s first greenfield SEZ Indore SEZ  Industrial Centers 8  The State is centrally located  Investor friendly Government policies Madhya Pradesh has one of the upcoming industrial base in India Economic Snapshot Madhya Pradesh is emerging as a key growth center for the Country Madhya Pradesh (MP) – State that means business Overview  MP is rich in low grade coal suitable for power generation.  Potential of hydro-energy generation.  Installed power capacity (MP’s share) Hydel Power Generation: 852.7 MW* Thermal Power Generation: 2,147.5 MW* Power Electricity generation capacity at present is 6,449.25 MW and estimated to rise to a surplus in 2008-09 *Ministry of Power (powermin.nic.in)**Source: Indiastat.com (as on 23 Feb 2006)

3 3 ROAD NETWORK AIRPORTS RAILWAY NETWORK The State is well connected with the rest of India with almost 425 trains passing through the State on a daily basis. Of these 175 trains pass through the State capital Bhopal alone. The total length of roads spanning MP is 67,600 kms.** National highways of 5,200 kms run through the State.* 18 National highways including trunk routes of Delhi-Mumbai, Delhi-Chennai, Delhi-Bangalore, Delhi- Hyderabad. The total length of State highways in the State is 9,885 kms.** Convenient linkages to western ports i.e. Kandla Port, Jawahar Nehru Port Trust. 25 airstrips.** Convenient air links from key Indian cities like Delhi & Mumbai to Bhopal, Jabalpur, Gwalior, Indore and Khajuraho. 5 operational airports. Indore airport has the capability of handling international cargo. An international airport proposed in Bhopal. Enabling Infrastructure MP IS CENTRALLY LOCATED AND WELL CONNECTED WITH ALL MAJOR CITIES IN INDIA *Source: Department of Road Transport & Shipping (morth.nic.in)**Source: www.destinationmadhyapradesh.com INDORE BHOPAL JABALPUR GWALIOR KHAJURAHO

4 4 Third largest producer of cement in India* 12 blocks with reserves totalling 2,585 million tons of coal has been identified Largest producer of pulses and oilseeds in the Country (~75% of soyabean production) 31% of the State under forest cover with a largely unexploited species of rare, valuable medicinal- herbal plants Over 2,000 kms of roads being developed with Private Partnership (BOT) Over 18,000 technical graduates and 230,000 graduates add to workforce each year Over 144 BCM of coal bed methane reserves available Over 100 agricultural farms with an area of over 20,000 acres is available on lease to investor India’s 1st operational Greenfield SEZ at Indore Favourable climatic conditions for cotton and over 40,000 power- looms are driving the textile industry Availability of coal and natural gas (G.A.I.L pipeline) along with support from Government to make investment in Thermal Power Plants lucrative Offers diverse tourists destinations catering to various segments of tourism such as religious (Bhojpur), eco/ adventure (Panchmari), heritage (Sanchi, Khajuraho) tourism etc. Madhya Pradesh: A Preferred Investment Destination Various blocks available for power, cement, iron and steel units *Source: www.mpsidc.org & Brochure: MP Means Businesswww.mpsidc.org

5 5 Mumbai (780 Kms) (MPV - 1000) Pune (800 Kms) (MPV - 206.51) Bangalore (1400 Kms) (MPV - 254.52) Chennai (1430 Kms) (MPV - 362.84) Hyderabad (840 Kms) (MPV - 257.9) Delhi (740 Kms) (MPV - 789.5) Ahmedabad (570 Kms) (MPV - 220.63) Kolkata (1350 Kms) (MPV - 613.19) Key Markets (Distance From Bhopal) MPV – Market Potential Value Source: (Reference: RK Swamy) MP: The Right Place with the Right Environment MP is centrally located. The State is at an easy distance from all the key consumer markets in the Country. DESTINATION MADHYA PRADESH - Distances rounded off**Source: India Today (September ‘06 Issue) Fastest mover* in overall performance among the big States in the Country. Fastest mover in agriculture Fastest mover in infrastructure development. Ranks 2nd in terms of governance. Ranks 3rd in terms of law & order Cost of skilled labour is USD 2.4/day vis-a-vis USD 3.5 – USD 4.0/day in metros * Fastest mover is the State where the rate of improvement between 2003 & 2006 was greater than that between 1991 & 2003 Bhopal and Indore have substantial cost advantages, even when compared to other Tier III and IV cities. Savings in Office Space Rates (A comparison of rates in Central Business Districts) The cost of land is one of the lowest in the Country. Even central hubs such as Indore and Bhopal fare well against other cities in terms of low land cost. (Estimated Values for Multi- product SEZs) Savings in Land Cost

6 6 Industrial Policy: Catalyst for the Investments The Government of MP has devised an investor friendly industrial policy, which is aimed at achieving global competitiveness. The policy emphasizes on industrial growth in the state through adopting cluster approach, establishing specialized infrastructure and offering favourable incentives. The main thrust of this policy is: Establishment of a Madhya Pradesh Trade and Investment Facilitation Corporation which would take decisions about rationalization of taxes, facilities of mega projects and other related matters. Enacting an Industrial Facilitation Act and to change the rules of business with a view to make single window system decisive and result oriented. Developing infrastructure for supporting the identified industrial clusters Reviving closed down/ sick industrial units by granting special packages. Attractive incentive schemes. CLUSTER APPROACH Indore – Pharmaceutical, Textile, Food Processing, IT, Auto Components Bhopal – Engineering, Biotechnology, Herbal, IT, Food Processing Jabalpur – Garment, Mineral, Forest & Herbal, Food Processing Gwalior – Electronics, IT, FMCG, Engineering, Food Processing Rewa – Refractories, Lime Stone, Forest Based Sagar – Mineral Processing Special package for Mega Projects on project basis by apex level investment promotion empowered committee headed by the Chief Minister. Industrial investment promotion assistance – 50% to 75% of commercial tax for 3-10 years Concessional registration charges and stamp duty exemption for Term Loans. Interest subsidy on term loan for 5 – years @ 3% to 5%. For thrust sector industries, 25% capital subsidy would be provided limiting up to a maximum of USD 56,000 Land on 75% concessive rate for Mega Projects limited to USD 4.4 million. Entry tax exemption for 5 years. 5 years electricity duty exemption on captive power generation 15% capital subsidy to SSI up to USD 33,000 in backward areas Infrastructure grant up to USD 0.22 million crore for developing private sector industrial parks Partial reimbursement for Project report, ISO Certification, Patent and Technology Purchase cost SPECIAL INCENTIVES SPECIALIZED INFRASTRUCTURE Crystal IT ParkIndore Food Parks Mandsaur, Khargone, Chhindwara, Hoshagabad, Mandla and Bhind Stone ParkKatni Herbal ParkRewa Granite ParkChhatarpur Life Sciences ProjectBhopal Apparel ParkIndore (SEZ) Gems & Jewellery ParkIndore

7 7 Area Developed: 2,492 Hectares Allotted: 1431 Hectares Units established: 575 Major Groups: Tata, Ranbaxy, Eicher, Bridgestone, Hindustan Motors, Kinetic, SRF, S Kumars, Gajra, Nicholas Piramal, Indorama, IPCA, Bhilwara Special Infrastructure: SEZ, Crystal IT Park, Food Park, Apparel Park In a bid to build a competitive environment; industries and their ancillaries would be promoted in clusters based on the availability of raw materials, skilled labour and market potential. Under this Industrial Policy through Madhya Pradesh Audyogik Kendra Vikas Nigam Ltd (MPAKVNs) scheme, the State Government, has identified industrial clusters. Many of the industrial giants have their establishments in these areas, however 44% of developed area is still untapped and open for investment. Total developed area 7,147 Hectares Total allotted area 3,089 Hectares Total units established 1,360 Growth centres19 Doing Business Made Easy Through MPAKVN INDORE AKVN Area Developed: 1,330 Hectares Allotted: 618 Hectares Units established: 286 Major Groups:HEG, Crompton Greaves, P&G, Godrej, Lupin, IFB, Oswal, Nahar Special Infrastructure: ICD, Food Park Area Developed: 2,262 Hectares Allotted: 800 Hectares Units established: 326 Major Groups: JK, Surya Roshini, Godrej, Grasim, Cadbury, Hotline, Crompton Greaves Special Infrastructure: ICD, Food Park Area Developed: 273 Hectares Allotted: 115 Hectares Units established: 121 Major Groups: Birla, Jaypee Special Infrastructure: Integrated infrastructure development centres (IIDC) Area Developed: 790 Hectares Allotted: 125 Hectares Units established: 52 Major Groups: Raymond, Hindustan Petroleum, PBM, Ayur Special Infrastructure: Stone Park, Food Park BHOPAL AKVN GWALIOR AKVNJABALPUR AKVNREWA AKVN Pithampur, Kheda, Dewas, Maksi, Megh Nagar Malanpur, Malanpur Phase II, Banmore, Chainpura, Siddhgawan, Pratappura Rewa, Waidhan Borgaon, Maneri, Purena Mandideep, Pillukhedi, Mandideep Phase II Source: MPSIDC

8 Industries

9 9 MP: The Emerging Power Madhya Pradesh is an emerging industrial powerhouse of the country. The State houses around 1,800 companies and 19 industrial growth centers (located across 7147 Hectares.) that are close to major cities. This makes good social infrastructure accessible to industrial units. Further, there are around 171,000 small-scale industries that contribute significantly to the economy. MNCs like Cadbury, Bridgestone, Hindustan Lever, Coke and renowned Indian companies like Ranbaxy, Tata, Grasim, Hindustan Motors, Eicher, Kinetic, Hotline, Raymonds, Lupin, Crompton Greaves, Surya Roshni, Nahar Spinning, Anant Spinning, Godrej, HEG and several other big groups have presence in Madhya Pradesh. These companies not only meet local requirements, but also export a variety of products and services to both developed and developing countries.

10 10 MP: Attracting Investments MP offers an unparallel locational advantage to companies as they incur lower transportation cost for transferring goods to every corner of the country. Further, cost of basic requirement such as land, water, skilled manpower is less as compared to other states. State has peaceful & conducive atmosphere for industrialization, law and order situation in the state is under control. State also allows the industrial units to have captive power plants to produce power as per their requirement. The State Government desires to have a higher rate of economic development through rapid industrialization. Some of the key initiatives taken by government recently include: New Industrial Policy-2004 Madhya Pradesh Trade and Investment Facilitation Corporation (TRIFAC) Udyog Mitra Yojana- 2004 Industrial Facilitation Council Industrial Projects – SEZ, Indore, Food Park, Apparel Parks, etc Modernization of Roads and other infrastructure Power Sector Reforms CompanyLocationInvestments BORLBina 1,267 Bina ThermalBina 542 STI PowerChainpura 261 HEG Ltd.Mandideep 111 LG HotlineMalanpur 111 Biofill PharmaPithampur 24 Eicher GroupPithampur 24 EnbeePilukhedi 22 JK IndustryBanmore 22 Pratibha SyntexPithampur 19 Hindustan CopperBalaghat 18 EscortsMalanpur 9 Maral OverseasNimrani 7 Caparo EngineeringPithampur 7 Coca ColaPilukhedi 7 LupinMandideep 4 MOILBalaghat 4 HP Bottling PlantManeri 4 Few Large & Medium Projects Under Implementation In US$ Million

11 11 Enabling Infrastructure State Government is committed to support the investors & provide them a hassle free atmosphere in the Government machinery. The state has taken several initiatives to promote investments in the state by creating enabling infrastructure. Some of the key initiatives are highlighted below. A Special Economic Zone at Indore is being established in 1038 hectares of land with the investment of US$ 222 million, has become operational. 8 IIDs (Integrated Infrastructure Development Centre) are being setup at Nandantola, Nimrani, Jagga Khedi, Lamtara, Naogaon, Sindiya, Pratappura, Jaderua 165 Industrial Areas with basic infrastructure facilities are functional. Investment Highlights 217 proposals of foreign direct investment with an investment of US$ 1.3 billion are cleared by GOI for M.P. 207 letter of Intent with a proposed investment of US$ 804 million are cleared by GOI for M.P. 1978 Industrial Entrepreneurs Memorandum have been issued by GOI in favour of industrial groups who have shown interest to invest in M.P. with a proposed investment of US$ 14.43 billion. M.P.S.I.D.C. M.P. – SPECIALIZED INFRASTRUCTURE Growth Centres Integrated Infrastructure Development Centers Food Parks SEZ Indore Stone Park ESTABLISHED Crystal IT Park Apparel Parks Diamond Parks Agri Export Zones PROPOSED

12 12 Source: Ministry of Commerce and Industry, Department of Commerce FOR SEZ UNITS Income Tax Incentives  100% tax holiday for a period of any 10 consecutive years out of 15 years beginning from the year in which the SEZ is notified  Exempt from dividend distribution tax  Long-term capital gains arising on transfer of shares in developer company tax exempt  No minimum alternate tax (MAT) FOR DEVELOPERS OF SEZ S Income Tax Incentives  15 year corporate tax holiday on export profit – 100% for initial 5 years and 50% for the subsequent 5 years 50% of reinvested reserves for the balance 5 years Common Incentives Indirect Tax Incentives  Nil customs duty  Nil excise duty  Exemption from central sales tax  Exemption from service tax  Exemption from securities transaction tax Other Benefits  Duty free procurement of capital goods (including second hand capital goods), raw materials and consumable spares from domestic market  Full freedom for sub-contracting labour  Facility to realize and repatriate export proceeds within 12 months  Facility to retain 100% foreign exchange receipts in the export earners foreign currency account Other Benefits  Full freedom in allocation of developed plots to approved SEZ units on purely commercial basis  Full authority to provide services like water, electricity, security, restaurants and recreation centres on commercial lines  No net foreign exchange earning requirement imposed  SEZ units will be eligible to obtain clearances/ permissions from different departments under single agency clearance system  SEZ authority will ensure continuous and good quality of power supply  M.P. has liberal labor policy providing complete flexibility in SEZs  SEZ Development Committee monitors infrastructure development for each SEZ SEZ Advantage Madhya Pradesh Government has adopted the SEZ policy for developing Special Economic Zones in the state. The SEZs, earmarked as duty-free enclaves, aim at promoting rapid industrial development and employment generation. The approved policy regime includes: Exemption of all state and local taxes Exemption from stamp duty and registration fees Grant of labour, energy, environment, industrial health and safety related permits and approvals through a dedicated single window mechanism Exemption from electricity duty; cess and any other tax or levy on sale of electricity for self generated and purchased power. Expeditious process for land acquisition to set up SEZs

13 13 Thrust Areas Cement Auto & Auto Components Textiles & Apparels Pharmaceuticals Engineering & Electrical Equipment Chemicals Industry in Madhya Pradesh is largely resource driven, leveraging the state’s natural wealth in the form of limestone, coal, soya, cotton, bauxite, iron-ore, silica etc. Therefore the state has a strong industrial base in sectors like textile, cement, steel, soya processing and optical fibers. However, there have been a few exceptions to the resource driven industrialisation and the State as a result of its aggressive incentive policies and strong solicitation/facilitation is developing into a strong base in the Auto, auto ancillary and textile sectors. Substantial opportunity would emerge in following sectors.

14 Cement

15 15 Cement: Evolving Landscape MP: The Cement Production Powerhouse MP is Naturally Strong MP: A Preferred Investment Destination Exploring the Opportunities: Project Profiles Way Forward Sector Profile: Cement

16 16 Cement: Evolving Landscape India is the second largest producer of cement in the world after China. The Indian cement industry’s capacity as on March 2005 was around 160 mn tonnes (including the mini cement plants). It consists of over 54 cement players and more than 129 manufacturing plants and is highly fragmented and regional in nature. Its estimated market size in value terms is around US$ 8.89 billion and around 130 mn tonnes per annum (mtpa) in volume terms. It owes its regional nature to the concentration of cement plants near the clusters of limestone reserves, located only in few states. This has led to a surplus situation in some regions and shortages in others. India is one of the fastest growing markets for cement ~7.2% CAGR (2000-01 to 2004-05). The demand in the Country is riding high on the continuing growth in all the sectors especially in the IT/ITeS, Hospitality industries which in turn has driven the retail, real-estate and infrastructure boom. India: A Major Consumer of Cement 2004 Key Drivers of Growth Strong housing demand High level of commercial construction activity Increased government focus on infrastructure spending Higher investment in industrial projects The industry is not only looking for locations with availability of limestone for production of cement, but also for availability of coal for their captive power plants Even though industry has huge potential, it faces certain challenges, for instance, the high power and fuel costs and erratic power supply in most of the states is affecting the companies. Hence, most companies have opted to set up their own captive power units to get a regular supply of power and optimise costs.

17 17 MP: The Cement Production Powerhouse M.P. is the third largest producer of cement in the Country. It caters to 13% of the national demand. The State’s rich limestone reserves and the logistical advantages of these sites reduces the overall cement manufacturing & supply chain cost, helping the cement companies to get a higher Return on Investment (ROI). At present several major groups such as Birla Corporation, Vikram Cement, Prism Cement, J.P. Rewa, Diamond Cements, & ACC cement are present in Madhya Pradesh. Out of these units J.P. Rewa & ACC are in process of investing US$ 244 million for expanding their production capacities. The State also has the appropriate knowledge pool to operate the cement plants. With the expected demand projection and the inherent advantages, MP is likely to attract significant investment in the sector to become the Cement Production Powerhouse of the Country Being centrally located and in proximity to key cement consuming states such as Maharashtra, Uttar Pradesh, Gujarat, Andhra Pradesh etc, cement plants in MP can cater to different regions of the state. Apart from access to large market the centrally located plants benefit in terms of stable market demand. Further as a result of constant demands the state has one of the highest capacity utilisation rates in the Country (around 94%). It is estimated that India needs an additional capacity of around 70 MT to meet its domestic demand by 2009. With its inherent advantages in terms of availability of raw material and its cost competitiveness, MP is likely to continue as a leader in cement industry. 160 MT 220 MT 130 MT 187 MT 70 Mt of Capacity required to meet domestic demand alone Installed Capacity Requirements: India 20052009

18 18 Limestone Reserves Coal Reserves MP Is Naturally Strong Madhya Pradesh has a vast reserve of limestone. The total reserves of limestone is 3625.98 mn tonnes spread across the districts of Damoh, Hoshangabad, Mandsaur, Narsinghpur, Rewa, Satna, Panna, Katni, Sagar, Dhar, Khargone, Jhabua, Balaghat, Sidhi and Morena. Availability of high quality limestone for cement production and coal for captive power plants makes Madhya Pradesh an ideal location for cement production. Proportion of Own Power To Purchase (India) Likely To Increase Further In India, energy costs account for 35 per cent of the total production costs. Further, the power costs are high in India and are growing at a rapid rate. The industry is trying to insulate itself against this by setting up captive thermal power plants. The share of energy costs can be reduced to 16-20% if captive power plants are set-up. Madhya Pradesh has a several locations (marked in circle) that offer limestone and coal. This provides an excellent opportunity to set-up a captive power plant to ensure regular and cost competitive supply of power. The industry is expected to witness a significant boom as several project of similar profile are likely to mushroom near the limestone reserves of the State.

19 19 Nagpur (350 Kms) Lucknow (680 Kms) Kanpur (600 Kms) Mumbai (780 Kms) Pune (800 Kms) Bangalore (1400 Kms) Chennai (1430 Kms) Bhubaneshwar (1200 Kms) Hyderabad (840 Kms) Delhi (740 Kms) Jaipur (580 Kms) Ahmedabad (570 Kms) Kolkata (1350 Kms) Patna (910 Kms) Madhya Pradesh Has Access To Key Cement Markets Across The Country. Key Markets (Distance From Bhopal) Add-ons to Natural Advantage NorthSouthEastWestCentral North 21.50.23.4 South 29.90.75.90.2 East 0.1 16.80.31.3 West 0.20.70.317.31.1 Central2.52.50.114.4 Cement Movement Across The Country 2004-05 (MT) Source Destination With land rates being as low as US$ 2 per sq mt in the industrial belts of Rewa, MP has the lowest cost of land in the Country. The key cement markets are in close proximity to MP and are well connected through railway lines and roads. This ensures high and sustained demand of cement produced in these plants. MP also has a strategic locational advantage; as some of the key cement consuming centers like Kanpur, Nagpur, Patna, Nasik etc are in close proximity to its limestone reserves. Since, freight expenses form 16-22% of the operating costs the proximity to these markets would serve as an edge in the long run. Further, the largest cement consuming states of Maharashtra and Uttar Pradesh are deficient in cement as they have only 1.9% and 1% of the total limestone reserves of the country. Even today around 25% of the cement produced in the central India is exported in surrounding regions of North, East and West. With the rising industrial and infrastructural activity expected to happen both within the state and its surrounding regions, the state holds a huge potential for cement manufacturers

20 20 MP : A Preferred Investment Destination 2.2 Mn Tonnes 4.2 Mn Tonnes 1.55 Mn Tonnes 2 Mn Tonnes 3 Mn Tonnes (Vikram Cements Ltd.) 2 Mn Tonnes (Maihar Cements Ltd.) 1.02 Mn Tonnes (Diamond Cements Ltd.) Most of the leading cement manufacturers of the Country have presence in MP. Seven major Cement plants are operating in the State with the annual installed capacity of 15.97 million tonnes. Availability of raw material and investor friendly environment has facilitated several leading players in setting up their shops in the state. Eyeing the potential opportunity, the existing players are proposing to expand their operations in the State. For instance, JP Cements and ACC Ltd. have proposed expansion of around 1.3 mn tonnes each in annual capacity. Satna region of MP, has the most number of cement plants in the Country. Installed Capacity Presence of leading cement manufacturers and their expansion plans, are true reflection of investor confidence and the huge potential the State holds for the cement manufacturers.

21 21 Way Forward Proposed Projects LocationPlayerDescription SidhiJaiprakash Associates Ltd. Install Cement unit with installed capacity of 2 million tonnes SatnaJV (SAIL & JAL)Install Cement unit with installed capacity of 2.2 million tonnes SatnaM/s Rewati Investments Install Cement unit with installed capacity of 2 million tonnes New Limestone Area GrasimInstall a Cement plant with an investment commitment of US$ 111 million Considering the present scenario & the availability of raw material, there is a scope of further investment of $2.5 bn* in this sector in the state. M.P. State Industrial Development Corporation has prospected that Damoh-Panna area, and Bela-Pagra of Rewa have limestone deposits of 8 mn tonnes and 20 mn tonnes respectively. Besides these areas, the area around Raghurajnagar and Nagod Tehsil of Satna district also have deposits of limestone. Source: www.destinationmadhyapradesh.com

22 Auto & Auto Components

23 23 Evolving Landscape Madhya Pradesh : Auto Hub of India Advantage Madhya Pradesh M.P.: An Investment Destination Offering Specific Incentives Exploring the Opportunities: Project Profiles Sector Profile: Auto & Auto Components

24 24 Evolving Landscape The Indian automotive industry has flourished in the recent years. This extra- ordinary growth in the Indian automotive industry has been a result of the increase in the per-capita disposable incomes which has resulted in improvement in the living standards of the middle class. Car Companies in India have lined up more than US$ 6.67 Billion investments. Most automakers of the world either have active presence in the Country or they source components from Indian component manufacturers. The leading global players such as Hyundai, Ford, Mercedes, Toyota, Suzuki and GM have set up base in India. The growth of the industry is primarily driven by the cost advantage of manufacturing components in India, which is typically lower by about 30% as compared to developed countries. As the automobile industry has grown and matured, the Indian auto components industry has also grown tremendously, and is rapidly achieving global competitiveness both in terms of cost and quality. The Indian automotive component industry has grown at a staggering pace over the last few years. The US$ 8.7 billion industry has registered a 30% jump over last year. The exports have increased from US$ 1 billion in 2003-04 to US$ 1.4 billion in 2004-05. Industry observers believe that while Indian automobile market is likely to grow at a measured pace, the auto components industry is poised for a take-off and is one of the handful of industries where India has a distinct competitive advantage. US$ Million India’s Auto Ancillary Exports 4.75 27.57 17.65 7.67 20.58 April- August Full Throttle- Car Sales Have Soared This Year

25 25 MP: Auto Hub of India MP has been actively promoting the development of the engineering industry in the state. The state is one of the leaders in auto and auto ancillary industry with around 5 Original Equipment Manufacturers (OEMs) and over 100 auto component manufacturers. Madhya Pradesh has an auto component industry of around US$ 306 million.60% of the auto industry in Madhya Pradesh is controlled by Auto component players. The State has developed an industrial cluster at Prithampur which provides readily available infrastructure for companies willing to set up manufacturing facilities in the State. The estate is spread over an area of 5,000 hectares. The proposed multi product SEZ is in the vicinity of the industrial estate. The state is witnessing an upsurge in investments in the sector. The strategic location, Government cluster development initiatives, skilled workforce are some of the factors that are providing the state a competitive edge over other states. Pithampur Auto Cluster Development The Union government of India has sanctioned an auto cluster in the Pithampur industrial area. The Government of India will grant an amount of US$ 11 million for the purpose. Local industrialists have agreed to contribute US$ 3 million for the project. The cluster would be equipped with the world’s largest testing facility, with capabilities of testing various category of vehicles in different climatic conditions at different stages. The track would also issue certificates for vehicles produced in the Country and abroad. Madhya Pradesh: Competitiveness  Strategic location  Highly productive & disciplined workforce  Presence of large number of players across the value chain  Proactive and professional approach of State Government  Quality network of educational institutions Key Players

26 26 Automotive Proving Grounds - Pithampur Area of Land – 4,000 Acres Exemptions- Registration Fees & Stamp Duty Sales Tax Entry Tax, Octroi, Works Contract Tax Property Tax Other Local taxes Proposed Facilities- High Speed Test tracks Oval shaped test tracks at the outer boundary Two straights of 3500 meters & Curves of radius 100m each Maximum testing speed of 350 Km/ hr Dynamic Platforms Dynamic Area of 150 meters radius Two acceleration lanes of 1000m Testing speed more than 200 km/hr Straight Line Braking Four different braking surfaces Low with basalt tiles 250 m long Low with ceramic tiles 250 m long High (Asphalt): 200 m long Acceleration lane length of 1000 m Phase I: August 2009 Phase II: October 2010 Buildings General Roads Vehicle Dynamics Lab Power train lab Wet skid pad Sustainability track for trucks High speed circuit Gradient Test Tracks Braking test tracks External noise test track Accelerated fatigue Gravel track Off road track Dry Handling Track Comfort Track Project Implementation Schedule

27 27 Automotive Proving Grounds - Pithampur

28 28 Advantage MP Pithampur is an industrial estate spread over 5000 hectares of Madhya Pradesh, India. Pithampur is a hub for the automobile manufacturing industry and in addition to units such as Eicher Motors, Kinetic Honda, Hindustan Motors and Bajaj Tempo Ltd. With 5 OEMs ( plus 2 proposed) and over 100 component manufacturers, Pithampur is an ideal location for Auto and Auto component industry Pithampur- The Auto-Auto Component Hub of India Being centrally located and in close proximity to key Indian cities MP is the ideal location for Auto-Auto Ancillary industry. Specialised infrastructure in a cluster and government support have enabled MP to surge ahead of other states. Madhya Pradesh- Strategically Placed For Auto With cost reduction and precision engineering being the mantra for most OEMs India is all set-to become the Auto component supplier of the world. Following the Country’s WTO commitments, the Government announced the Auto Policy of 2002, aimed at developing India as a manufacturing and export base for small cars and auto ancillaries. India- The Emerging Power The global automotive parts industry has undergone a sea change over the past decade. Consolidation and restructuring have accelerated with the opening of new and increasingly important markets. The search for scale and scope economies by large manufacturers and the difficulty of smaller manufacturers to sustain themselves in the investment race have led to increased outsourcing to countries like India Suppliers are diversifying geographically, increasing research and development, and entering into joint ventures in an effort to seek more module contracts. The world is also witnessing mushrooming of OEMs in India, China, Thailand etc. World is looking at India

29 29 Offering Specific Incentives Commercial tax rates levied on automobile components industries and trade are being rationalized and will be brought at par with the rates prevalent in other competing states. Entry tax rates on raw material such as steel being used by automobile component industries shall be rationalized. Following the Country’s WTO commitments, the GoI announced the Auto Policy of 2002, aimed at developing India as a manufacturing and export base for small cars and auto ancillaries. Accordingly, the policy enumerated several measures to develop the automobile market, including: Removal of the clause on minimum foreign direct investment; Removal of earlier stipulations on indigenisation and import-balancing requirements; Permitting foreign automobile manufacturers to set up wholly-owned subsidiaries in India, without requiring approval from the Foreign Investment Promotion Board; Specific fiscal incentives for cars less than 3.8 meters in length, to enable India to emerge as the Asian base for the export of small cars and multi- utility vehicles; Incentives to manufacture automobiles using alternative fuel technology, such as CNG and electric batteries; Proposals to discourage the use of old vehicles by levying higher taxes on older vehicles; Proposal for a terminal life policy for commercial vehicles (CVs) along with incentives for the replacement of such vehicles. There are several trends w.r.t government legislations that are making Indian companies increasingly competitive: Safety norms to be brought on par with that of developed countries Emission norms and environmental standards in line with those in the developed world Fiscal duties have been significantly reduced over the years Gradual de-reservation of items for small-scale sector augurs well for the industry Value added tax (VAT), as a system of taxation, aimed to harmonise the tax structure across states Exports are virtually not subject to any taxes on account of the various advance license schemes, etc. National Policy State Support Regulatory Trends Government initiatives would act as a key driver for growth of your investments.

30 30 MP: A Strategic Location Mumbai (780) Vishakapatnam (1310) Kandla (933) Haldia (1350) Bhilai Nagpur (352) North (42%) West (28%) South (25%) East (5%) Jamshedpur (1220) Satara, Pune, Ahmednagar, and Raigad (800) The cluster at Pithampur also has significant locational advantages on following three aspects. 1)Proximity to steel plants of Bhilai, Nagpur etc is likely to result in reduction raw material costs. The cost of raw material is around 60% of the total production costs of which steel is the key component within the raw material. 2)Proximity to ports both in east coast and west coast provides a vital linkage to the international markets. Since, the auto industry is exports driven this linkage is critical to the development of the cluster. Further, water linkages to both sides provides better linkages to countries. 3)Proximity to Markets: Being centrally located and being well connected to major cities such as Delhi, Mumbai, Pune, Kolkatta etc. assists the companies to reduce logistic costs. Further, automobile manufacturers are spread across the country. Being centrally located the auto component manufacturers would have access to a larger client base in the country. Key Steel Plants (Distance from Bhopal) Key Ports (Distance from Bhopal) Region (Share of Passenger Car Market)

31 31 MP: A Preferred Investment Destination Some of the other supporting factors assisting your business would be: 1.Central location 2.Availability of skilled manpower 3.Low operating cost 4.Co-operative Labour Union etc. Madhya Pradesh is one of the leading states in the Country for the auto and auto ancillary industry in the Country. To its advantage several units are cluttered around a small stretch of land which would enable both forward and backward support to your business. The low set-up costs make business proposition one of the best in the world. For example, cost of developed land in Pithampur industrial area is only US$ 1.7- US$ 4 pr sq meter. The city of Indore also fairs well in terms of low cost of living index. Hence, the companies in Indore can expect manpower costs savings of upto 30% in comparison to companies in Chennai, Mumbai, Pune etc. Manpower costs are approximately 8-10% of the total costs. In terms of technical manpower as well the state is well placed with over 18,000 technical graduates and an overall and an overall figure of 230,000 graduates add to the workforce every year. Market Intensity Index Comparisons- A Reflection of Low Cost of Living Information Technology Based Designing & Testing – Leverage the Proving Grounds @ Pithampur - Leverage Embedded Software @ Bhopal Research & Development Center Manufacturing Hub For South-East Asia Auto- Component Manufacturing Facility Offshoring/ Outsourcing Auto Components Investment Opportunities in MP

32 Textiles & Apparel

33 33 Textile: Evolving Landscape Madhya Pradesh : Emerging Textile Hub of India Madhya Pradesh’s Inherent Advantages M.P.: An Investment Destination Offering Specific Incentives Exploring the Opportunities: Project Profiles Sector Profile: Textiles

34 34 India contributes to about 25% share in the world trade of cotton yarn. It is the world’s third-largest producer of cotton and second-largest producer of cotton yarns and textiles. Indian textile industry has about 22% to the world spindleage and about 6% to the world rotor capacity installed. It has second highest spindleage in the world after China with an installed capacity of 38.60 Million It has the highest loomage (including handlooms) in the world and contributes with a share of 61%. It contributes about 12% to the world production of textile fibers and yarns. India is one of the largest consumers of cotton in the world, ranking second to China in production of cotton yarn and fabrics and first in installed spinning and weaving capacity Through export friendly government policies and positive efforts by the exporters, textile exports have more than doubled from USD 7.55 billion in 1993-94 to USD 17 billion in 2005-06. The ready made garment sector is the biggest segment in the India’s textile export basket contributing over 46% of the total textile exports. Export of cotton based items continue to pre-dominate which is natural in view that India is the world’s third-largest producer of cotton Exports have grown at an average of 9.47% p.a over the last decade. Textile exports in 2005-06 has gone up to USD 17 billion which is 23% higher than previous year. The industry is poised to play an increasingly important role in global cotton and textile markets as a result of domestic and multilateral policy reform. Production Of Fibers(Mn Kgs) Raw cotton4122 Man-made fibre1023 Production Of Yarn Cotton yarn2272 Filament yarn1109 Indian Production Statistics (2005) About 4% of Gross Domestic Product About 14% of total industrial production Employs 20% of work force About 17% of gross export earnings Commodities(Million USD) Readymade garments6038.69 Cotton textiles3290.31 Man-made textiles1948.72 Wool & woolen textiles66.57 Silk textile406.82 Handicraft, Coir etc1314.13 Total13065.24 India’s export of textiles (2004-05) Contribution of Textile Sector Textile Evolving Landscape

35 35 MP: Emerging Textile Hub of India Spinning Units40 Spindles14,14,000 Export-Oriented Spinning Units12 Rotors14,348 Looms6,500 Exclusive Weaving Units8 Power Looms43,290 Power Loom Units17,524 Handlooms47,000 Composite Mills20 Infrastructure at a glance The industrial history of MP dates back to the later part of 19 th Century when in 1866, a cotton textile unit established by then Maharaja Holkar at Indore. Presently, the textile industry in the state is thriving in the southwest (Malwa) region. A large number of cotton textile mills are clustered around Indore, Ujjain, Burhapur etc. Easy availability of cotton, Ginning and Pressing units, skilled manpower, developed education system, entrepreneur skills etc are some of the reasons for rapid growth of the industry in the State. Presence of major textile players such as Bhilwaras, Indo-Rama, Bhaskar, Oswals, Parasrampuria, Maikal, S-Kumar’s etc and the proposed expansion plans indicate the high investor confidence in the State. The state is focussing on cluster development around sectors of strategic advantage by developing infrastructure in and around these clusters. Growth of export oriented spinning and large scale knitted garment units near Indore, and growth of Chanderi & Maheshwari products are excellent examples of cluster development. Bhaskar Industries Ltd.

36 36 MP Making Businesses Work ProcessRaw Material SpinningWeave/ KnitProcessing Stitching (Garment/ Apparel) Advantage Madhya Pradesh Market Climatic Conducive for cotton production with large varieties available within and surrounding States Being centrally located and well connected the raw material can also be brought on short notice from any part of the Country Over 40 spinning units Over 1.4 million spindles The manpower has on the job experience in latest technology Several units are available for procurement by investors Over 47000 handlooms are installed in MP Over 43,000 power looms Rich tradition of weaving and knitting Several export oriented processing units are present in the state which can be developed further. The state has a blend of both new age and traditional processing capabilities essential to promote Indian products internationally. MP is renowned for skills of its people in stitching garments. Manpower is well trained and is capable of producing world- class garments/ apparels. Further, the states strong leather industry is likely to complement the textile industry. Strategic central location to develop warehouse Well connected with the entire Country through railway network Proximity to ports in Maharashtra and Gujarat provide cost competitiveness both for exports and imports Madhya Pradesh Has Strengths Across The Value Chain Availability of skilled manpower at competitive costs Government initiatives in terms of proposed apparel parks, fiscal incentives etc would benefit the investors. Success Stories: S Kumars, Bhilwaras, Oswals, Maikal, Indo-Rama etc. Madhya Pradesh is poised to become the next destination for leading textile companies, who would find market environment conducive to park their investments. The state presents a tremendous opportunity by providing significant advantages across the value chain. The state has several units in a cluster, which could be acquired and refurbished to provide a quick start to your business. In terms of technical manpower as well the state is well placed with over 18,000 technical graduates and an overall and an overall figure of 230,000 graduates add to the workforce every year.

37 37 MP: A Preferred Investment Destination Textile Clusters in The State Availability of Raw Material Malwa Region Madhya Pradesh is poised to become one of the leading states in textile industry through its cluster development initiatives. To its advantage several powerloom/ handloom units are cluttered around a small stretch of land. To provide a kick start to your business there is a significant opportunity to target and acquire these units. The clusters also have significant locational advantages. For instance, Malwa region near Indore cluster is a leading cotton growing belt and a textile hub in the Country providing the competitive edge to your company. The material costs account for nearly 55-60% of the costs of production in India. Even a 10% of savings due to proximity to Malwa region could result in ~5% increase in operating margins. To further support your business endeavours Government of Madhya Pradesh has created specialised infrastructure in the form of Apparel parks. Being an industry with social importance, the Government also provides special fiscal and non fiscal incentives to the units in the state. Some of the other supporting factors assisting your business would be: 1.Central location 2.Low set-up costs (Land, building etc) 3.Availability of skilled manpower 4.Low operating cost 5.Co-operative Labour Unions (one of the best in the Country) 6.Government support etc. Handloom Clusters Power-loom Clusters Proposed Apparel Parks Malwa region is a leading cotton growing belt

38 38 Offering Specific Incentives Special Incentives to Readymade Garment, Powerlooms and Made-up Garment industries: Benefits under Government of India’s schemes such as Apparel Park Scheme, Textile Centre Infrastructure Development Scheme (TCIDS) Modernization of units of this sector through Technology Upgradation Fund Scheme (TUFS), Group Work Shed Scheme. Exempted from the binding of minimum wage fixation on a daily basis. An Apparel Training Institute would be set up with the assistance of Apparel Export Promotion Council in the State, so that maximum number of trained worker could get employment in the Ready-made Garment industry. Efforts to establish a national level fashion designing technology institute in the State in order to facilitate textile industry of the State regarding the information for design development and to provide forecasts. In order to accelerate the pace of modernization of the unorganized power-loom sector, modern power loom clusters would be developed at Burhanpur, Indore and Ujjain with financial assistance sought under Government of India’s Group Shed Scheme. Development of the process house through private participation by providing necessary facilities and if required their cases would be considered by the committee for Mega Projects. The provision related to labour laws declared for Special Economic Zone will be made applicable to the projects / special areas established such as Apparel Park, Garment Complex and unit established/being transferred under Group Work Shed Scheme. Cotton ginning and pressing units would be provided high quality cotton and they would be encouraged for modernization under centrally sponsored schemes with the help of their recognized associations. Construction of tar roads for smooth transportation to Cotton Mandi and construction of cement platform for storage of cotton, using Mandi Board's fund would be taken up on priority basis. Units purchasing yarn produced within the State, would be given a "set off" of 2% (Two percent) on Commercial Tax would be given. For ensuring maximum value addition in utilizing available resources and strengthening the different components of the Madhya Pradesh offers special incentives to units present in the state. This has further increased the competency of the units in the state and has made investments more lucrative. Highlights of Highlights of Special Incentives Given to Textile Industry

39 39 The Way Forward… Potential Projects Segment Investment Required (US$ Million) No. of UnitsOutputEmployment Quantity in Million Value (US$ Million) Spinning (1 mn Spindels) 48910131 Kgs 40816,000 Weaving (1000 looms) 17121117 Kgs 1042984 Processing 1024120 Kgs 2001,600 Circular Knitting (1000) 11133127 Kgs 3781,700 Garment Woven 254520130 pcs 722107,000 Knitwear 185333100 Pcs 38935,000 Total 1,313921 2,200164,240 With all the right ingredients in place, Madhya Pradesh has several locations which are suited for developing textile units. Investments are likely to flow in the next few years. The state is likely to witness the resurgence of textile industry, which would play a significant role even at national level. The improving infrastructure and rising standard of living are likely to infuse capital into the state. The state could attract investments of around US$ 1.3 billion thereby generating direct employment for over 0.16 million people. Further, with the mordenization initiatives undertaken by the Government the states competitiveness in the textile industry is likely to rise. MP also fairs well in terms of low cost of living index. Hence, the companies in Indore can expect manpower costs savings of 20-30% in comparison to companies in Chennai, Mumbai, Surat, Ahmedabad etc. The manpower costs in India typically form 8-10% of the total costs. Market Intensity Index Comparisons- A Reflection of Low Cost of Living Source: Madhya Pradesh Textile Report, MPSIDC

40 Pharmaceuticals

41 41 Evolving Landscape Madhya Pradesh : Gaining Momentum M.P.: An Investment Destination Sector Profile: Pharmaceuticals

42 42  The global pharmaceuticals market generated total revenues of USD 534.8 billion in 2005, representing a compound annual growth rate (CAGR) of 7.7% for the five year period spanning 2001-2005. Market size expected to reach USD 767.2 billion by the end of 2010.  With an estimated market value of USD 8.2 billion (at consumer prices, inclusive of exports) in 2004, India accounts for 2% of the world market for pharmaceuticals.  According to the global ranking estimates, India ranks as the 4th largest pharmaceutical market in volume terms and the 13th largest market in value terms.  The significant difference in the value and volume wise rankings of the Indian companies is largely attributed to the prices of drugs manufactured in the Country, which rank among the lowest in the world. With the quality being maintained at par with international standards, India exports drugs to more than 200 countries across the world.  With formulations contributing to 50% of the exports, India’s pharma exports were approximately USD 3.17 billion.  Projections of growth of Indian pharma market (exclusive of exports) range from USD 11.9 bn in 2009 to USD 25bn by 2010 Challenges faced by Global Companies Today  Reduced growth rate  Increasing cost of R&D  Shorter time span for exclusivity  Fewer block busters  Price pressure from Generics  Higher complexity through more number of smaller revenue drugs Evolving Landscape Potential  Low-cost, high-quality production  Large and growing US FDA approved plant capacity  Synthetic Chemistry talent for early stage compound development  Low cost of research and world-class testing facilities  Cost of a research scientist in India is only about 1/6th to 1/4th of that in USA  Contract Research and Manufacturing (CRAM)  IT enabled services including clinical/market data analysis  Clinical Trials: Revenues to grow from $70 million (2002) to $1-1.5 billion by 2010 driven by a 60% cost advantage and large gene pool for trials  Major opportunities in Biotechnology are in the areas of Bio- informatics, Bio-pharma etc.  Many international biotech companies like Chiron Corp, GSK and Sigma Aldrich Corp have expressed interest especially in Bio- manufacturinga

43 43 MP: Gaining Momentum  Ranbaxy is the largest Indian pharmaceutical company by sales. During 2005, its revenue was US$ 813 million while net profit stood at US$ 50 million. Ranbaxy has manufacturing facilities in seven countries (including India), most of which are USFDA approved.  Ranbaxy is investing US$ 100 million for expanding production capacity of Indian, Brazilian and US manufacturing utilities.  It has a bulk drug and formulation plant at Dewas in Madhya Pradesh. In the current year Ranbaxy is investing US$ 100 million for expanding production capacity of Indian, Brazilian and US manufacturing units.  IPCA Laboratories is one of India's leading pharmaceutical companies with a strong thrust on exports. The Group's principal activities comprise manufacture and distribution of drugs and pharmaceuticals. The products include tablets, capsules, basic drugs, orals, liquids and injectables.  It has a bulk drugs and formulation unit at Ratlam and a bulk drug facility in Indore in Madhya Pradesh.  IPCA Laboratories plans to invest US$ 22 million to expand its formulations capacity at Ratlam in Madhya Pradesh. It also plans to invest US$ 14 million in the first phase to set up a new export oriented formulations unit in Indore.  Nicholas Piramal India Limited (NPIL) is one of the leading pharmaceutical and healthcare company with sales of US$ 290 million in 2005-05. NPIL is ranked fourth in domestic formulations sales and second in total domestic pharmaceuticals sales.  Its Pithampur plant in Madhya Pradesh is accredited by reputed organisations like Allergan, Novartis, Solvay and IVAX, among others.  Nicolas Piramal is planning to invest US$ 45 million to enhance its research and development activities besides strengthening its manufacturing facilities  Located at the very heart of India, Madhya Pradesh is the second largest State and is easily accessible from every corner of the Country.  Madhya Pradesh has a made a lot of progress in the last couple of years and is paving way to be at the forefront of the Pharma industry.  Major players such as Ranbaxy and IPCA already have a foot hold in the State and are on the road to expansion under the favourable industrial policies and initiatives by the State Government.  Madhya Pradesh is envisaging a pharma cluster at Indore and has constituted a board for Biodiversity and life sciences under the chairmanship of the Chief Minister.  Efforts are also being made to establish national level training centres through support of large industrial houses of MP. This would ensure that the State will never be short of professional expertise. This is an added advantage to the investors looking to invest in the in the State as there would be a wide availability of qualified and skilled professionals at a relative low manpower investment cost.

44 44 MP: Offers The Right Blend  Albert David is one of India's leading pharmaceutical companies in the country with a strong thrust on exports. During the current fiscal year, the company has achieved an excellent annual sales turnover of US$ 19.55 million) and ranks 58th out of 22,000 plus companies competing in the Indian pharma market.  The Group's principal activities comprise manufacture and distribution of drugs and pharmaceuticals, Disposable Syringes, Oral solids etc.  It has a syringes unit at Mandideep and a bulk drug facility in Indore in Madhya Pradesh.  The company invested over US$ 222 million in the State and employs over 175 people.  Lupin Laboratories is one of the leading pharmaceutical and healthcare company with sales of US$ 290 million in 2005-06. Lupin is among the few companies from India with global scale manufacturing facilities that measure up to world's best quality standards.  The focus areas of the company includes anti-Tuberculosis, cephalosporins, cardiovascular, anti-asthma, Non-steroidal anti- inflammatory drugs  Its Mandideep plant in Madhya Pradesh manufactures cephalosporins, lisinopril etc..  The company invested over US$ 178 million in the State and employs over 300 people.  Lupin Laboratories is expanding its manufacturing plant at Mandideep with an investment of US$ 4.5 million.  By leveraging the existing manufacturing base, a strong health care system along with a low cost resource pool Madhya Pradesh has the potential to further develop the pharmaceutical industry in the State.  Madhya Pradesh’s network of health facilities comprises 145 hospitals, 343 community health centres, 1,705 primary health centres. It also has 34 Ayurvedic and 4 homoeopathic hospitals. The number of in-patient beds in Madhya Pradesh’s hospitals is 20,839.  MP has the right blend on freshers and laterals for the pharmaceutical industry. The institutes across the State are well equipped to provided to train manpower in each domain. There are 9 key pharmacy colleges in the state supported by 6 medical colleges and 43 management institutes (including one of the six Indian Institutes of Management at Indore). The laterals have experience of working in India’s leading pharmaceutical companies such as Ranbaxy, Lupin, NPIL, Albert David etc. B. R. Natha College of Pharmacy, Mandsaur College of Pharmacy, Indore Department of Pharmacy, Bhopal Dr. Harisingh Gour Viswavidyalaya, Sagar Institute of Pharmacy, Gwalior R.K.D.F. Institute of Sciences & Technology, Mandideep Shri G.S. Institute of Technology & Science, Indore V.N.S. Institute of Pharmacy, Bhopal Key Pharmacy Institutes Pass-out ~300 Students Each Year

45 45 MP: A Preferred Investment Destination Madhya Pradesh is all set to become the next pharma hub of India through its cluster development strategy and government support to the investors. There are many significant avenues and areas that can be tapped for setting up and scaling up your business operations. INDICATORVALUE (US $) Industrial land (per sq m)5-30 Office space rent (per sq ft per month)0.5 - 1 Residential rent (for a 2,000 sq ft house, per month) 280 - 350 5-star hotel room (per night)80-100 Electricity (per kWh)0.09 - 0.13 Water (per 1000 liters)0.2 COST INDICATORS FOR ESTABLISHING AND OPERATING BUSINESS IN MP To further support your business endeavors Government of Madhya Pradesh is developing specialized infrastructure in the form of SEZ Indore. Being an industry of economic importance, the Government also provides special fiscal and non fiscal incentives to the units in the state. Drug Research & Discovery Approval & Launch Pre-clinical Development Clinical Development Manufacturing Marketing/ Exports Availability of skilled manpower Low attrition rates Government support Madhya Pradesh has strengths across the value chain Central location Low cost of labour Specialized infrastructure (SEZ) Low operating cost Low set-up costs (Land, building etc) Specialized infrastructure (SEZ) Low operating cost Availability of skilled manpower Low attrition rates Government support Availability of large target population Target population with diverse genetic set-up Availability of skilled manpower Low attrition rates Low cost of labour Market Intensity Index Comparisons- A Reflection of Low Cost of Living

46 Engineering & Electrical Equipments

47 47 Evolving Landscape Madhya Pradesh : Gaining Momentum M.P.: An Investment Destination Sector Profile: Engineering & Electrical Equipments

48 48 Key developments observed during post liberalization period “Better profitability, spruced up manufacturing setups, aggressive implementation of quality initiatives marked by higher growth and better returns on capital employed…the hallmark of Industrial India – the engineering & capital goods sector is back with a bang” – ET 500 Exports  8% share in 1990s  14% share in 1999-2000  21% share in 2004-05 (USD 16.4 billion) Production  34.4% share in total industrial production  Up by 5% share during last decade Foreign Technology Agreements  51% of foreign technology collaborations were approved in the engineering industry FDI  36% of the total approvals went to the engineering industry (1991-2005) De-licensing  34% share in number of approvals and 40% share in investment Evolving Landscape  India has a strong engineering and capital goods base. The Indian engineering manufacturing sector has been growing at the rate of about 5.9 per cent in the nineties. With a size of US $ 22 billion, the engineering sector exports stood at US $ 6.6 billion in 2001-02 and imports at US$ 4.9 billion in the same year. The engineering manufacturing sector employs over 4 million skilled and semi-skilled workers (direct and indirect).  The range of machinery produced in India is wide and includes heavy electrical machinery, textile machinery, machine tools, earthmoving and construction equipment including mining equipment, material handling equipment, diesel engines, electric motors, pumps, instrumentation, oil & gas equipment, sugar machinery, railway equipment, metallurgical equipment etc.  Many leading world class companies such as GE, Ford, Caterpillar, Sony, Honda, LG, Hyundai, Siemens, Philips, Daimler Chrysler, Fiat, Lafarge, ABB, Electrolux, Volvo have manufacturing base in India.

49 49 MP: Gaining Momentum Located at the very heart of India, Madhya Pradesh is the second largest and the most easily accessible states in the Country. The State is blessed with natural wealth, and abundant supply of power and people. The state has the largest plant of India’s leading engineering company, Bharat Heavy Electricals Limited, (BHEL). The plant had recorded a turnover of US$ 341 million in 2004-05. The profit before tax was also high at around US$ 33.78 million An Engineering Cluster is proposed to be established at a cost of US$ 15 million at Govindpura Industrial Estate near BHEL, Bhopal. This will benefit about 445 industrial units in the Estate. A common facility and necessary infrastructure will be developed for industries. Industries will have special facilities pertaining to engineering works and power sector related specialization since the site will be in the vicinity of Bharat Heavy Electricals Limited. The project will be developed with an estimated cost of US$ 1.53 billion with Central government share of US$ 10.67 million. The project has been given 'in principle' sanction. A company namely Bhopal Clusters of Engineering Organization Pvt Ltd has been formed. Some Of The Supporting Factors Assisting Your Business Would Be: Skilled Manpower Competitive Labour Cost English Speaking Population Managerial Excellence To Deliver Quality Goods On Time. Indigenous Availability Of Raw Materials Strategic Location Allowing Exports To Near And Far Countries Diversified Industrial Base With Supporting Ancillary Industries Established in the late 50’s, Bharat Heavy Electricals Limited ( BHEL ) is, the largest engineering and manufacturing enterprise in India, and one of the leading international companies. BHEL’s Bhopal plant is the company’s oldest unit with updated & state-of-the-art manufacturing facilities. The product range at Bhopal includes Hydro, Steam, Marine & Nuclear Turbines, Hydro & Turbo Generators, Transformers, Switchgears, Controlgears, Transportation Equipments, Capacitors, Bushings, Electrical Motors, Rectifiers,Oil Drilling Rig Equipments, Battery Powered Vehicles and Diesel Generating sets. This unit have been recommended for ISO-14001 certificate for its Environment Management System. Bhopal

50 50 MP: An Investment Destination Madhya Pradesh is emerging as a Engineering hub of India. There are many significant avenues and areas that can be tapped for setting up and scaling up your business operations. To further support your business endeavors Government of Madhya Pradesh has is developing specialized infrastructure in the form of SEZ Indore and Engineering Cluster. Being an industry of economic importance, the Government also provides special fiscal and non fiscal incentives to the units in the tate. Value Proposition MP’s Position (2006) Discussion Labour CostMP has one of the lowest labour costs Talent PoolMP dominates the talent pool needed to support engineering and auto sector Quality of TalentMP’s talent pool is capable of meeting global standards Delivery CapabilitiesITO helped develop delivery model and vendor base to support offshoring Supply BaseMP has a vibrant and expanding supply base to support offshoring Local MarketMP is one of the fastest growing market Time to MarketMP’s geographic position offers the possibility of 24-hour cycle Growing CapacityMP offers an economic of scale for capacity ProductivityMP offers highly skilled labour pool Support CustomerCorporations are setting operations for offshoring, and local markets Government IncentivesGovernment of MP is working on incentives to attract FDI MP’s Position Across Offshoring Value Drivers MP’s Position (2010) Strong Weak

51 Chemicals

52 52 Evolving Landscape Madhya Pradesh : The Land of Opportunity M.P.: An Investment Destination Sector Profile: Chemicals

53 53  The chemicals and petrochemicals industry is referred to as the "keystone" industry as the rest of the manufacturing sector relies on it.  The global chemicals and petrochemicals market generated total revenues of USD 1.8 trillion in 2004, representing a compound annual growth rate (CAGR) of 0.2% for the five-year period spanning 2000-2004.  The Indian chemicals and petrochemicals market grew by 10.1% in 2004 to reach a value of USD 32.4 billion  The industry is expected to continue its growth performance with a CAGR of 9.2% in the period of 2004-09, as against the global projected CAGR of 3.4% for the same period  India has a robust base of chemicals and petrochemicals-driven businesses. Though the industry has undergone drastic changes, Indian chemicals and petrochemicals share has been continuously increasing on a constant basis.  Indian chemical growth would be primarily driven by specialty chemicals and knowledge chemicals  Specialty Chemicals  Adhesive sealants  Catalyst  Industrial gasses  Plastic adhesives  Knowledge Chemicals  Agro-chemicals  Pharmaceuticals  Biotechnology Source: Global Chemicals and Petrochemicals Industry Report, April 2006, Data monitor Evolving Landscape India ranks twelfth in the world for production of chemicals and petrochemicals by volume.

54 54 MP: Land of Opportunity  Being in the center of the Country MP form the heart of logistic backbone of the Country, which makes it the most preferred location for chemical business.  Madhya Pradesh has a made a significant progress in the last couple of years and is paving way to be at the forefront of the chemical industry.  The state currently produces around 350,000 MT of basic chemicals.  Chemicals is one of the principal industries in Madhya Pradesh in term of net value addition with 14.1% share  The Potential growth of chemical industry in MP is envisaged at 5 billion in next 10 years.  The industry is likely to witness a surge in investment once US$ 2.5 billion Refinery is setup at Bina by Bharat Oman Refinery & The Reliance Group.  With a plant capacity of 6 million tonnes, the project would enable substantial growth of downstream chemical units.  The government is likely to improve the infrastructure facilities in the area and is also likely to provided fiscal and non fiscal incentives in order to promote the industry. Industry Potential  Large and growing domestic market potential due to low per capita consumption of key petrochemical derivatives  3 kgs. against global average of 17 kgs. for plastics  4 kgs. against global average of 23 kgs. for polymers  Good R&D base with access to low-cost, high-quality human resources  Proven capability for chemical process development  Major raw materials are available within the Country or readily importable  SEZs have no import tariffs and provide income tax concessions  Strategic location: In the heart of the high-growth markets of India, Asia and the Middle East  Vibrant downstream industry and a large number of manufacturers provide options for joint ventures, alliances and acquisitions  Major opportunities lie in all segments: Basic, Specialty and Knowledge Chemicals  A strong global presence in the export of dyes, pharmaceuticals and agrochemicals

55 55 MP: An Investment Destination Madhya Pradesh is poised to become the next Chemical destination of India through its infrastructure development strategy and government support to the investors. There are many significant avenues and areas that can be tapped for setting up and scaling up your business operations. Some of the other supporting factors assisting your business: Central location Low set-up costs (Land, building etc) Specialized infrastructure Availability of skilled manpower Low operating cost Government support etc. To further support your business endeavors Government of Madhya Pradesh has is developing specialized infrastructure in the form of SEZ Indore. Being an industry of economic importance, the Government also provides special fiscal and non fiscal incentives to the units in the state. Growing investor confidence and down stream industries of the Bina Refineries are likely to result in mushrooming of chemical units in the state. In terms of technical manpower as well the state is well placed with over 18,000 technical graduates and an overall and an overall figure of 230,000 graduates add to the workforce every year.  Tata Chemicals Limited is India's leading manufacturer of inorganic chemicals. It also manufactures fertilizers and food additives. Incorporated in 1939, the company has an annual turnover of over US$ 667 mn and is part of the US$ 14.25 bn Tata Group, India's foremost business conglomerate  TCL manufactures a wide range of high-quality and competitively priced products, including soda ash, sodium bicarbonate, salt, caustic soda and urea.  It has a 36,000 MPTA unit at Pithampur in Madhya Pradesh.  The company invested over US$ 69 million in the State and employs over 200 people.  Nirma is one of the leading chemical company with sales of US$ 458 million in 2005-06. Nirma is among the few companies from India with global scale manufacturing facilities.  The focus areas of the company includes soaps, detergents, soda ash Alkyle Benzene etc.  Its Pithampur plant in Madhya Pradesh is the largest plant in the country which controls 38% market share.  The company invested over US$ 94 million in the State and employs over 600 people.

56 56 Connecting Further Department of Industrieswww.mpindustry.org Indore SEZwww.sezindore.com Madhya Pradesh State Industrial Developmental Corporationwww.mpsidc.com Government of Madhya Pradeshwww.mpgovt.nic.in Madhya Pradesh State Electronics Development Corporationwww.mpsedc.com


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