FEEDBACK VISION
Feedback Ventures is India’s leading provider of Advisory, Engineering Project Management and Capacity Building Services to Companies, Governments and Development Organisations in the Infrastructure Sector. Our teams of Engineers, MBAs, Planners and other Professionals work with the highest to deliver sustained business value to our Clients, which is why many of our existing clients come back to us to provide them with solutions to their challenging assignments. With the support of our Shareholders, L&T, IDFC and HDFC and from our 63 Offices through our 800 Employees, Feedback Ventures Office a range of service that give its Clients the ability the conceptualise, fund, execute and manage their infrastructure projects on time, on budget and with quality. Feedback Ventures is known for its innovative work, for completing Challenging Projects in difficult locations and for providing an integrated offer that uniquely combines Advisory, Engineering, Project Management and Capacity Building.
Feedback Ventures
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Feedback Field
Highways
India has one of the largest road networks in the world, aggregating to 3.34 million kilometers. The road network comprises 66,590 km of National Highways, 128,000 km of State Highways, 470,000 km of Major District roads and about 2.16 million km of other district and rural roads. National Highways account for only about 2 percent of the total length of roads, but carry about 40 percent of the total traffic across the length and breadth of the country. Considering the importance of the National Highways and the rapid increase in traffic, the Government has taken up the National Highways Development Project (NHDP) for connecting major cities and improving port connectivity. National Highways Authority of India (NHAI) is the implementing agency for NHDP and it has exploited a variety of contractual structures in moving towards PPP. In Phase I, only about 16 percent of the length of projects was awarded on BOT basis (annuity or toll basis). In Phase II, this proportion went upto 32 percent, while in the new phases (Phases IIIA, IIIB and V), 100 percent of the length is being awarded on BOT (build-operate-transfer) basis. The Government is providing the required viability gap funding to ensure success of such projects.
Highways in some states are also witnessing significant action—several states have cleared new legislative measures to facilitate private developers’ interest in state highway creation, upgradation and maintenance.
Government has recently cleared a Model Concession Agreement (MCA) for all BOT transactions. Discussions are ongoing on several of its contentious clauses and are expected to pave the way for a robust procedure in execution of BOT projects.
Airports
Airport traffic in India is growing at an annual rate of over 20
percent and is expected to continue at this rate due to the country’s vibrant economy. The explosion in air traffic volumes in recent years has caught the Airports Authority of India by surprise. Indian airports, especially in the metro cities, have been witnessing increasing chaos. Some airports, such as Bangalore, have resorted to drastic measures to curb air traffic volumes.
Railways
Indian railways—world’s second largest rail network under a single management, has been contributing to the development of the country’s industrial and economic landscape for over 150 years. Of the two main segments of the Indian railways— freight and passenger, the freight segment accounts for roughly two-thirds of revenues.
MRTS
Mass public transport solutions are an integral enabler for all large cities in India where population growth has created severe strain on prevailing transport infrastructure. Funding for such transport solutions has been the biggest roadblock so far. However, several Asian cities have proved that BOT—with some viability gap funding can be a successful model for implementation of large projects. India is experimenting with both the BOT (Build, Operate and Transfer) model, as well as ‘publicly owned asset’ model.
Logistics
The logistics segment in India is estimated to be around 14 percent of the country’s GDP, which is much higher than the global average. This could be due to inadequate infrastructure leading to periodic bottlenecks along the routes. Another major reason is the regulatory loopholes, which raise the cost of service and causes delays. However, the infrastructure will certainly see brisk development in the coming years, with the Government attaching high priority to this sector. The road sector alone will see investments of about Rs 1,52,000 crore between 2006 and 2012. Airports, which together handled a cargo of 1.4 million tonnes last fiscal, as against 0.65 million in 1995-96, will also see significant expansion and development. The logistics companies at present provide services from transportation to warehousing and inventory management. But in the near future, they will have to expand their products basket to include new value-added services, such as packaging, labeling and reverse logistics.
Transportation & Logistics
Transportation and Logistics in India, is a large and varied sector of the economy with diverse modes of transport. Historically, investments in Transportation and Logistics, particularly in the highways, were being made by the Government mainly because of the large volume of resources required, long gestation period, uncertain return and associated externalities. The galloping resource requirements and the concern for managerial efficiency and consumer responsiveness in recent times have led to an active involvement by the private sector also.
An investment of Rs.14,50,000 crore or about US$350 billion would be required in the infrastructure sector during the Eleventh Five Year Plan. These investments are to be achieved through a combination of public investment, public-private-partnerships and exclusive private investments, wherever feasible. Investment requirements by 2012 estimated by the committee on infrastructure, headed by the Prime Minister, in some of the key sectors are: Rs.220,000 crore for modernization and up gradation of highways, Rs.40,000 crore for civil aviation, Rs.50,000 crore for ports and Rs.300,000 crore (of which 40 per cent is expected to come from the private sector through PPP) for the Railways.
Energy
IntroductionEnergy is a critical infrastructure for economic development and for improving the quality of life. It is a matter of concern that the annual per capita consumption of India, at about 350 kWh is among the lowest in the world. People in a large number of villages have no access to electricity. Shortage of power and the lack of access continue to be a major constraint on economic growth. Yet, despite these problems, India’s energy sector offers huge potential for investors, operators and developers across generation, transmission and distribution.
Power Generation
Since independence, India has seen a significant growth in installed capacity and power generation. The total installed capacity as on April 30, 2007 is of the order of 132,110 MW—a considerable proportion of which is through thermal power generation. About 60 to 65 percent of this generation capacity is owned by State level utilities, with the balance generation coming from central utilities such as the National Thermal Power Corporation and the National Hydroelectric Power Corporation. Simultaneously there has been a growth in power consumption. Utility-based generation capacity is expected to rise by less than 30,000 MW in the 10th Plan but we should plan for an increase by 60,000 MW in the 11th Plan to move to a comfortable situation consistent with a growth rate between 8 to 9 percent. The per capita consumption of power has increased from around 349 units in 1998 to around 606 units in 2006 and is slated to reach a level of 1,000 units by 2012. To meet this growth in power consumption, significant capacity additions have been planned by both the State and the Central power sector utilities in the country.
Power Distribution
The Indian power distribution sector has been the most neglected sector in the past. The sector is characterized by inefficient practices which have resulted in high distribution losses in most Indian states.The power distribution sector has also suffered due to lack of adequate investments in the sector with most investments going towards the generation function. However, there has been a realization that in order to ensure that the power sector turns into a net generator of resources, significant and systemic improvements would be required in the power distribution function. Various programs like the Accelerated Power Development and Reform Program (APDRP) and the Rajiv Gandhi Grameen Vidyutikiran Yogana (RGVVY) have been initiated in order to ensure that there are improvements in the distribution sector as well as to ensure electricity access to all.
Power Regulation
The Indian Power sector is subject to both the State level and Central level regulation. The sector was initially governed by two key legislations—The Indian Electricity Act, 1910 and The Indian Electricity (Supply) Act, 1948. The Government of India announced a policy of liberalization in 1991 and the Electricity (Supply) Act, 1948 was suitably amended in order to open up the power sector and invite private sector participation and investment into the sector.Given the steadily deteriorating health of the State Electricity Boards (SEBs) owing to reasons such as social objective overriding the commercial objectives, consequent government intervention in tariff fixation, inability of the SEBs to function as commercial entities and to maintain financial prudence, and the inability of the State Governments to support the ever increasing financial deficits—it was only a matter of time before the Indian power sector thought of industry reforms. In light of the above, most State Governments were forced to initiate reform related measures in order to aim at affecting a turnaround of the deteriorating state of power sector in most Indian states. The Government of India announced various policy initiatives such as:
The Electricity Regulatory Commissions Act, 1998 was promulgated in order to set up independent regulatory bodies both at the Centre and the State level.
The Central Electricity Regulatory Commission was established to function as the national level regulatory authority for the power sector. This led to many states setting up the State Electricity Regulatory Commissions and also introducing State Level Reform Acts.
The Government introduced the Electricity Bill 2001 which after deliberations and amendments received presidential assent and the Electricity Act 2003 by came into force from June 10, 2003. The EA 2003 seeks to supersede the existing laws on electricity.
Power Trading
Trading of power is a multi-billion dollar business worldwide. However, in India, power trading is still in its infancy with the volume of exchanges being fairly low (about 2.5 percent of energy generation). However, given the liberalization of electricity under the Electricity Act 2003, power trading is now attracting a number of players with many private companies and government entities entering the arena. Trading is a licensed activity and companies need to apply for trading licenses. However, a distribution licensee does not require a separate trading license. Feedback provides advisory and capacity building services in power trading.
Power Transmission
Power Transmission is a key and vital ingredient of India’s power infrastructure that is characterized by generation capacities—which in many instances is distributed from consumption centers. The PowerGrid Corporation of India (PowerGrid) is the central level transmission utility vested with the responsibility of building a transmission network in the country. Currently inter-regional transmission lines are owned and operated by PowerGrid while the state transmission lines are owned by the state transmission utility. The Indian power transmission and distribution sector until recently was plagued with a low investment trend as most investments in the sector went towards power generation. However, the Central government has been looking at various initiatives to improve investment in the transmission and distribution sector.
Policy framework in place: That is possible because reforms in the Energy sector have been under way for several years and have now brought about several important institutional changes. These are making the energy sector efficient and more competitive and they include: the Electricity Act 2003 is in place, the National Electricity and Tariff policies envisaged in the Act have been notified, regulators are in place in the states and have issued a series of regulatory orders which are beginning to reduce the wide dispersion in electricity tariffs. Many states have unbundled their State Electricity Boards (SEBs) into generation, transmission and distribution companies for better transparency and accountability.
Buoyant outlookBased on the demand projections made in the 16th Electric Power Survey, over 100,000 MW additional generation capacity needs to be added by 2012 to bridge the gap between demand and supply of power. Formation of a strong national power grid has been recognized as a flagship endeavor to steer the development of the power system to cost-effective fulfillment of the objective of “Electricity to All” at affordable prices. A strong all-India grid would enable exploitation of unevenly distributed generation resources in the country to their optimum potential.
Coal
Traditionally, coal has been the key resource contributor and the primary source of supply for commercial energy in India. Coal has the largest domestic reserve base amongst Indian fuel sources like oil and natural gas and contributes to 55 percent of India’s total commercial needs.Coal resources can be classified into two different categories—coking coal and non-coking coal (thermal or steam coal). It is estimated that 87 percent of India’s reserves are of the non-coking or thermal coal variety. Indian thermal coal is of high ash, low sulphur and low calorific value that is largely used for thermal power generation. Coal reserves in the country are concentrated in the eastern region. While total reserves, as per the Geographical Survey of India (GSI) as on Jan 2006 were around 253.30 Billion Tonnes—the eastern region accounted for almost 65 percent of the total reserves, the central region accounted for around 16 percent, while the western and southern regions accounted for 11 percent and 7 percent of the reserves respectively.
The large coal reserves in the country provide a ready and economical resource and ensure energy security. The total demand for coal is projected to increase from 432 million tonnes in 2005-06 to 670 million tones in 2011-12. Coal will be the most important fuel for power generation till 2012 and beyond. Emphasis has been laid on setting up large pit head stations to avoid high costs associated with transportation of high ash bearing Indian coal and overstraining the already stretched rail network.
Oil & Gas
Consumption of petroleum products is likely to rise from 112 MT in 2005-06 to about 135 MT by the end of the 11th Plan with net crude oil imports reaching 110 MT. Gas consumption is forecast to rise to about 55 MTOE with imports reaching 20 MTOE (million ton of oil equivalent). This assumes that Naphtha based fertilizer production switches completely to gas by the end of the 11th Plan. The scope for transnational gas pipelines needs to be explored from a longer term perspective. The most important policy issue in this sector relates to pricing petroleum products. The recent increase in oil prices is now expected to persist for some years and although prices of some petroleum products have been raised, the increase still leaves a large uncovered gap. This gap is being borne partly by the oil companies and partly by the issue of bonds by the government to the companies, which is equivalent to a government subsidy. Other critical issues facing the oil and gas sector relate to:
Pricing of domestically produced natural gas and its allocation to the power and fertilizer industry.
Strengthening upstream regulation in the oil and gas sector.
Ensuring competition and open access in the proposed pipeline transportation and distribution grid.
The current method of determining prices for petroleum products needs reconsideration.
Water & Sanitation
The water and sanitation picture for the rural and urban poor in India is dismal and a lot needs to be done to achieve the millennium development goal of halving the number of people without access to clean water (1.2 billion) and sanitation (2.4 billion) by 2015. India's progress on ensuring water and sanitation for all its citizens is painfully slow indeed, the country now lags neighbours Pakistan and Bangladesh on this front and a long road still remains to be travelled.
Traditionally, the public sector in India was assigned a dominant role in planning, development and management of drinking water supply and sanitation projects. Now a more de-centralized demand-driven approach based on public-private partnership is coming up.
SEZ's
India over the past decade has progressively opened up its economy to face the challenges and opportunities of the 21st century. To instill confidence in investors and to signal the Government's commitment towards a stable SEZ policy regime—the Special Economic Zones Act, 2005 was passed by the Parliament in May, 2005. The Act came into effect on February 10, 2006.Out of the 234 formal SEZ approvals given till date, 80 approvals are for Textiles and Apparels, Leather Footwear, Automobile components, Engineering and other sector specific SEZs—which would involve labor intensive manufacturing. The employment projected in the 63 SEZs notified so far is over 1,575,452 additional jobs. SEZs are thus going to lead to creation of employment for large number of unemployed rural youth. Investment of the order of Rs. 100,000 crore including FDI of US $ 5 to 6 billion is expected by the end of December 2007. 500,000 direct jobs are expected to be created by December 2007.Information Technology (IT) Parks, on the other hand are an important tool of industrial development. Creation of IT Infrastructure is being given emphasis so that Industry can utilize this infrastructure for modernization to increase productivity. India has emerged as the 21st century’s information technology powerhouse, offering many advantages as a global sourcing hub, especially for IT enabled services (ITeS) and Business Process Outsourcing (BPO). State-of-the-art infrastructure in countrywide IT Parks, highly skilled manpower, low development costs and a time zone that allows round-the- clock operations establishes India as world’s preferred supplier of information technology services.Feedback Ventures provides a wide array of services to large and small SEZs and IT Parks across the country.
Industrial Infrastructure
Contrary to expectations, the Indian manufacturing sector is growing. The Indices of Industrial Production for the Manufacturing sector for the month of March 2007 stands at 305.0, with the corresponding growth rate of 14.1 percent as compared to March 2006. The cumulative growth during April-March, 2006-07 over the corresponding period of 2005-06 in manufacturing has been 12.3 percent, which moved the overall growth in the General Index to 11.3 percent. The consensus is that with this double digit growth rate—manufacturing is now growing almost as fast as India's vital services sector.
With the Government announcing tax breaks in industrialization and India’s 25 percent surge in exports getting a boost from manufacturing; more and more factories and industrial estates are being set up.
Feedback provides advisory, design and engineering, project management as well as capacity building services in this sector.
Factories
As per the 2006-07 Economic Survey, impressive growth in the industrial sector is propelled by growth in the manufacturing sector. Year-on-year industrial growth of 10.6 per cent in the first nine months of 2006-07 was the highest recorded since 1995-96, while the growth of the manufacturing sector was in double digits. India's vast domestic market and relatively low-cost workers with advanced technical skills will make it a manufacturing powerhouse within 5-10 years. More and more multinationals are setting up operations in India. All these operate in skill-intensive industries requiring advanced technical expertise--areas in which India is likely to become a primary sourcing and manufacturing base.
Feedback has been contributing to the manufacturing sector by providing project management services for setting up new factories across India.
Townships
Today, the peripheries of all metros like Mumbai, Delhi and Bangalore are dotted with townships that promise well-planned neighbourhoods, better community living and less stress. Township development has always been encouraged. Prior to 2005, the only realty segment that was allowed 100 percent foreign direct investment (FDI) was township development involving 40 hectares or more. Integrated townships got a further boost when in March 2005, the government further liberalized FDI norms. The new norms allowed 100 percent FDI investment for the development of serviced housing plots of at least 10 hectares, or a minimum built up area of 50,000 square meters.According to real estate experts, most cities have reached saturation point and have no space for the constantly expanding population. Planned, integrated townships on the outskirts or beyond the city have thus emerged as an alternative.
Industrial Estates
Industrial estates are today perceived as an integral part of development strategies of many countries worldwide. The environmental impacts from a concentration of large number of industries in a small area or an unplanned Industrial Estate, can pose a serious threat to both local and global sustainable development initiatives. The formation of ecologically balanced industrial systems can result in numerous environmental and economic benefits. Feedback examines the relevance of industrial symbiosis and carrying capacity concepts and proposes an integrated approach towards Industrial Estate planning in India.
Housing & Townships
The real estate sector in India is a significant contributor to the economy. As per the Tenth Five-Year Plan estimates, the housing sector contributes nearly 5 percent to the country’s GDP. Feedback estimates that the size of the real estate development industry in India is Rs. 2,75,000 crore per annum. Despite its large size, the sector offers huge potential for growth and the entry of new players.
The current housing shortage in the country has been estimated at 23 million units.
The urban housing shortfall is projected to increase from 6 million units currently to 12 million units by 2012.
An annual demand for 4 million additional housing units.
The sector is likely to see large demand growth, driven by underlying factors such as rapid growth in disposable income, improved access to credit, and the changing demographic profile of the home buyer.
On the supply side, real estate is amongst the most fragmented and unorganized sectors of the Indian economy. The industry is characterized by dominance of local (city level) players across key urban markets, which operate on the basis of large established positions in land banks. Developer presence is typically limited to single cities—however; the country’s largest developers are beginning to venture out beyond their home turf into other cities.The large prevailing demand-supply mismatch, combined with rapidly growing demand implies that the real estate sector in India will continue to offer interesting opportunities for developers and financial investors in future.
Commercial Infrastructure
India's property markets are growing, driven largely by the rapid expansion of its information technology industry and the simultaneous growth of its middle class. Thousands of commercial, retail, and residential projects are coming up across the country. In 2004, developers erected 1.6 million square meters of commercial buildings in India. In 2007, 2.1 million square meters of new space will come on the market, and by 2009 this number will rise to 4.64 million.
Urban
Estimates suggest that by 2025, more than 50 percent of the country’s population will live in cities and towns. Sectoral demands for water are growing rapidly in line with urbanization, population increases, rising incomes and industrial growth. As a result, per capita water availability has been falling.
On the urban front, out of 300 Class-1 cities, about 70 have partial sewerage systems and sewage treatment facilities. Of the total waste water generated in the metropolitan cities, barely 30 percent is treated before disposal. Thus, untreated water finds its way into water systems such as rivers, lakes, groundwater and coastal waters, causing serious water pollution. Solid waste management has become a major environmental issue in India.Feedback is working with the central and state governments to bring about institutional reforms to boost municipal capacity, commercialize Urban Water Supply and Sanitation (UWSS) providers, and involve the private sector.
Rural
More than 70 percent of India's over 1 billion people live in half a million rural villages where water-borne diseases are a major health problem. To reduce this problem, over the past two decades, India has implemented major investment programs in rural water supply and sanitation (RWSS). Feedback is assisting Central and State Governments in achieving community-led behavioral change and transformation through a wide array of services.
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