1 Madhya Pradesh: Means Business Industries. 2 Overview MP is the second largest State in the...

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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 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 businessOverview

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)

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RO

AD

NE

TW

OR

KA

IRP

OR

TS

RA

ILW

AY

NE

TW

OR

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• 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

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 Business

5

0

50

100

150Mumbai

Delhi

Bangalore

Chennai

PuneHyderabad

Indore

Bhopal

Ahemadabad

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

0%

20%

40%

60%

80%

100%Vishakapatnam

Chennai

Greater Noida

Chandigarh

Jaipur

Indore

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Industrial Policy: Catalyst for the InvestmentsThe 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

SP

EC

IALI

ZE

D I

NF

RA

ST

RU

CT

UR

E Crystal IT Park Indore

Food ParksMandsaur, Khargone, Chhindwara, Hoshagabad, Mandla and Bhind

Stone Park Katni

Herbal Park Rewa

Granite Park Chhatarpur

Life Sciences Project Bhopal

Apparel Park Indore (SEZ)

Gems & Jewellery Park Indore

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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 area3,089

Hectares

Total units established

1,360

Growth centres 19

Doing Business Made Easy Through MPAKVNIN

DO

RE

AK

VN




Major Groups:HEG, Crompton

Greaves, P&G, Godrej, Lupin, IFB,

Oswal, Nahar

Special Infrastructure: ICD, Food

Park




Major Groups: JK, Surya Roshini,

Godrej, Grasim, Cadbury, Hotline,

Crompton Greaves

Special Infrastructure: ICD, Food

Park

Area Developed: 273 Hectares



Major Groups: Birla, Jaypee

Special Infrastructure: Integrated

infrastructure development centres

(IIDC)

Area Developed: 790 Hectares



Major Groups: Raymond, Hindustan

Petroleum, PBM, Ayur

Special Infrastructure: Stone Park,

Food Park

BH

OP

AL

AK

VN

GW

AL

IOR

AK

VN

JAB

AL

PU

R A

KV

N

RE

WA

AK

VN

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

Industries

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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.

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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

Company Location Investments

BORL Bina 1,267

Bina Thermal Bina 542

STI Power Chainpura 261

HEG Ltd. Mandideep 111

LG Hotline Malanpur 111

Biofill Pharma Pithampur 24

Eicher Group Pithampur 24

Enbee Pilukhedi 22

JK Industry Banmore 22

Pratibha Syntex Pithampur 19

Hindustan Copper Balaghat 18

Escorts Malanpur 9

Maral Overseas Nimrani 7

Caparo Engineering Pithampur 7

Coca Cola Pilukhedi 7

Lupin Mandideep 4

MOIL Balaghat 4

HP Bottling Plant Maneri 4 F

ew

La

rge

& M

ed

ium

Pro

ject

s U

nd

er

Imp

lem

en

tatio

n

In US$ Million

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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 ES

TA

BL

ISH

ED

Crystal IT Park

Apparel Parks

Diamond Parks

Agri Export Zones

PR

OP

OS

ED

12Source: 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 taxOther 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

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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.

Cement

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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

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.

Korea, 3%

Russia, 2%Italy, 2%USA, 6%

Japan, 3%

India, 6%

China, 44%

Others, 37%

Spain, 2%

•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.

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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

2005 2009

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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.

Captive Plants43%

Electricity Boards

57%

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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

North South East West Central

North 21.5 0.2 3.4

South 29.9 0.7 5.9 0.2

East 0.1 0.1 16.8 0.3 1.3

West 0.2 0.7 0.3 17.3 1.1

Central 2.52.5 2.52.5 0.10.1 14.414.4

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

MP : A Preferred Investment Destination

2.2 Mn 2.2 Mn TonnesTonnes



2 Mn 2 Mn TonnesTonnes


(Vikram Cements Ltd.)


(Maihar Cements Ltd.)


(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 CapacityInstalled 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

Way Forward

Proposed Projects

Location Player Description

Sidhi Jaiprakash Associates Ltd.

Install Cement unit with installed capacity of 2 million tonnes

Satna JV (SAIL & JAL) Install Cement unit with installed capacity of 2.2 million tonnes

Satna M/s Rewati Investments

Install Cement unit with installed capacity of 2 million tonnes

New Limestone Area

Grasim Install 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

Auto & Auto Components

23

Evolving Landscape

Madhya Pradesh : Auto Hub of India

Advantage Madhya Pradesh

M.P.: An Investment Destination

Offering Specific Incentives


Sector Profile: Auto & Auto Components

24

333 350 407

602 616

780

1,027

1,386

1,771

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06

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

675,100707,200

902,100

1,061,5001,143,000

519,800

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07

4.75

27.57

17.657.67

20.58

April- August

Full Throttle- Car Sales Have Soared This Year

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

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

Automotive Proving Grounds - Pithampur

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


•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.

Na

tio

na

l P

oli

cy

Sta

te S

up

po

rt

Re

gu

lato

ry T

ren

ds

Government initiatives would act as a key driver for

growth of your investments.

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

132.9

149.18112.14

147.66

136.5112.65

102.88

0

50

100

150Delhi

Kolkatta

Mumbai

ChennaiHyderabad

Indore

Pune


•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

Textiles & Apparel

33

Textile: Evolving Landscape

Madhya Pradesh : Emerging Textile Hub of India

Madhya Pradesh’s Inherent Advantages




Sector Profile: Textiles

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 cotton 4122

Man-made fibre 1023

Production Of Yarn

Cotton yarn 2272

Filament yarn 1109

Ind

ian

Pro

du

ctio

n

Sta

tist

ics

(200

5)

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 garments 6038.69

Cotton textiles 3290.31

Man-made textiles 1948.72

Wool & woolen textiles 66.57

Silk textile 406.82

Handicraft , Coir etc 1314.13

Total 13065.24

Ind

ia’s

exp

ort

of

text

iles

(200

4-05

)C

on

trib

uti

on

of

Tex

tile

Sec

tor

Textile Evolving Landscape

35

MP: Emerging Textile Hub of India

Spinning Units 40

Spindles 14,14,000

Export-Oriented Spinning Units 12

Rotors 14,348

Looms 6,500

Exclusive Weaving Units 8

Power Looms 43,290

Power Loom Units 17,524

Handlooms 47,000

Composite Mills 20

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

MP Making Businesses Work

Process Raw Material Spinning Weave/ Knit ProcessingStitching

(Garment/ Apparel)

Ad

van

tag

e

Mad

hya

Pra

des

h

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 ChainMadhya 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


Tex

tile

Clu

ster

s in

Th

e S

tate

Ava

ilab

ility

of

Raw

Mat

eria

l

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


•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 ofHighlights of Special Incentives Given to Textile Industry

39

118

102.88 98.1

136.5

112.14

147.66

149.18

97.57

106.980

50

100

150Delhi

Kolkatta

Mumbai

Chennai

BhopalIndore

Ahemadabad

Surat

Jaipur

The Way Forward…

Potential ProjectsPotential Projects

Segment Investment Required (US$ Million)

No. of Units Output Employment

Quantity in Million Value (US$ Million)

Spinning (1 mn Spindels) 489 10 131 Kgs 408 16,000

Weaving (1000 looms) 171 21 117 Kgs 104 2984

Processing 102 4 120 Kgs 200 1,600

Circular Knitting (1000) 111 33 127 Kgs 378 1,700

Garment Woven 254 520 130 pcs 722 107,000

Knitwear 185 333 100 Pcs 389 35,000

Total 1,313 921 2,200 164,240

•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.


Source: Madhya Pradesh Textile Report, MPSIDC

Pharmaceuticals

41

Evolving Landscape

Madhya Pradesh : Gaining Momentum


Sector Profile: Pharmaceuticals

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

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

MP: Offers The Right BlendAlbert 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. .


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


• 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.

INDICATOR VALUE (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

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)




• Government support

• Availability of large target population

• Target population with diverse genetic set-up



• Low cost of labour


147.66

108.17 112.65102.88

132.9

0

20

40

60

80

100

120

140

160

Mumbai Bangalore Hyderabad Indore Pune

Engineering & Electrical Equipments

47

Evolving Landscape

Madhya Pradesh : Gaining Momentum


Sector Profile: Engineering & Electrical Equipments

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

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

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 Cost MP has one of the lowest labour costs

Talent Pool MP dominates the talent pool needed to support engineering and auto sector

Quality of Talent MP’s talent pool is capable of meeting global standards

Delivery Capabilities ITO helped develop delivery model and vendor base to support offshoring

Supply Base MP has a vibrant and expanding supply base to support offshoring

Local Market MP is one of the fastest growing market

Time to Market MP’s geographic position offers the possibility of 24-hour cycle

Growing Capacity MP offers an economic of scale for capacity

Productivity MP offers highly skilled labour pool

Support Customer Corporations are setting operations for offshoring, and local markets

Government

Incentives

Government of MP is working on incentives to attract FDI

MP’s Position Across Offshoring Value Drivers

MP’s

Position

(2010)

Strong

Weak

Chemicals

52

Evolving Landscape

Madhya Pradesh : The Land of Opportunity


Sector Profile: Chemicals

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

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

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



• 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.


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 .


over 600 people .

56

Connecting Further

Department of Industries www.mpindustry.org

Indore SEZ www.sezindore.com

Madhya Pradesh State Industrial Developmental Corporation www.mpsidc.com

Government of Madhya Pradesh www.mpgovt.nic.in

Madhya Pradesh State Electronics Development Corporation www.mpsedc.com

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