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AEROSAPCE INFRASTRUCTURE

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Airport. Delh & Mumbai . Chennai & Kolkatta. Green Field Airports. ... Pakyong,-Sikkim, Cheithu-Nagaland, Itanagar, Goa, Pune, Nagpur (Hub),Navi Mumbai, Halwara-Punjab . – PowerPoint PPT presentation

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Title: AEROSAPCE INFRASTRUCTURE


1
FICCI- INDO US SUMMIT
AEROSAPCE INFRASTRUCTURE -An Opportunity
Mapping
Infrastructure Financial Services Limited
Milind Patel- Executive Director ILFS Financial
Services Limited
30 Nov 2006
2

ILFS-an introduction
  • Incorporated in 1987 with mandates to
    commercialise infrastructure and develop
    financial services business
  • Over the years has developed both lines of
    business and each business is developed as
    separate profit centres

Successful Delivery of An Infrastructure Mandate
on a PPP basis
Project Development Project Sponsorship Project
Management Stakeholder Value Management
Project Design Sector Specialization
Environmental Social Management
Engineering Project Management
Legal Contractual Documentation
Management Technical Skills
Investment Banking Structured/Asset
Finance Corporate Advisory/MA Project Finance
Private Equity Venture Funds Infrastructure Funds
Distribution Broking Project Syndication Merchant
Banking
Financial Engineering Skills
3
(No Transcript)
4
INDIAN ECONOMY- The Takeoff Stage
5
Indian Economy A Snapshot
  • Overview
  • Indian economy The 4th largest 2nd fastest
    growing economy in the world
  • India GDP for FY 2006 was appx USD 570 bn at
    constant prices
  • 4th largest economy in the world in terms of
    purchasing power parity
  • A middle class customer base of over 300 million
    people
  • More than 7 GDP growth for four consecutive
    years
  • Infrastructure a key bottleneck

6
Infrastructure Challenge
  • INFRASTRUCTURE CAN BE A GROWTH CONSTRAINT
  • India Economic Growth triggered by economic
    reforms in 1991which led to a huge growth in
    services, manufacturing and global trade
  • The infrastructure development has not kept pace
    with the growth in manufacturing and services
    sector leading to a bottleneck
  • Huge Investment Requirement for physical
    infrastructure for power, roads, ports, airports
    and railways

  • INITIATIVES IN THE RIGHT DIRECTION
  • Strong political will and Improved policy
    environment Electricity Act, Draft Maritime
    Policy, Draft Civil Aviation policy, etc
  • Ring fencing of funds earmarked for
    infrastructure
  • Nomination of implementation authorities
  • Urgency to bring about commercial viability is
    apparent
  • Momentum of private participation picking up,
    with innovative financing concepts like Public
    Private Partnerships and Viability Gap Funding

7
INDIAN AVIATION Witnessing High Growth
8
Indian Aviation Industry- Liberalisation
  • 1953 Nationalization of Aircraft Industry
  • Consequently, assets of 9 existing companies
    transferred to two entities in the aviation
    sector controlled by the Government in
  • Indian Airlines, primarily serving domestic
    sectors
  • Air India, primarily serving the
    international sectors
  • Implication
  • Aviation became a preferred mode of transport for
    elite class
  • Restricted Growth of Aviation Industry
  • High Cost structure
  • Underdevelopment of infrastructure
  • 1986 Private Sector Players permitted as Air
  • taxi operators
  • Players including Jet, Air Sahara, NEPC,
  • East West, Modiluft,etc started
    service
  • 1994 Private Carriers permitted to operate
  • scheduled services
  • Six operators granted license however
  • only Jet and Air Sahara able to
    service
  • 2003 Entry of low cost carriers
  • Air Deccan, Spice Jet, Go Air, Indigo
  • Implication
  • Aviation has become affordable with check fares
    and discount schemes
  • Various Operators with different business model
  • Huge growth foreseen in the Aviation Industry

9
Industry Characteristics
  • HUGE POTENTIAL
  • Under penetrated Market
  • - Total Passenger Traffic only 50 mn as on 31st
    Dec 2005 amounting to only 0.05 trips per annum
    as compared to
  • developed Nations like United States have
    2.02 trips per annum
  • - High Level of potential demand with growth in
    Indian economy
  • Untapped Air Cargo Market
  • - Air Cargo has not yet been fully taped in the
    Indian markets and is expected that in the coming
    years
  • large no of players would have dedicated
    fleets
  • What this means
  • - Build up of capacity by existing players and
    entry of new players
  • CONSTRAINTS
  • Infrastructure Constraints
  • Shortage of airport facilities, parking bays,air
    traffic control facilities and takeoff and
    landing slots
  • - Continued growth might be hampered
  • Relatively Limited Reach
  • Only 454 airports with less than 100 airports
    having more than one daily service

10
High Growth in Passenger and Air Cargo Traffic
Passenger Traffic Trends

2010 (Projection) 105-115 million (69 mn
domestic 40 mn international)
Air Cargo Trends

2010 (Projection) 3,360 thousand tonnes
Source Ministry of Civil Aviation
11
Capacity Expansion and New Players
  • Huge Growth- Huge Plans
  • Fleet Acquisition
  • New Fleet Orders -More than 500
  • Fund Requirement- USD 50-55 bn approx
  • Order Book New Players
  • Indigo 100
  • Air India 68
  • Air Deccan 60
  • Kingfisher 50
  • Indian Airlines 43
  • Jet airways 40
  • Go Air 36
  • Spice Jet 20
  • Expected to grow to 125 from 7 by 2025

COMPETITIVE LANDSCAPE
Air Cargo Market
12
AIRPORT INFRASTRCUTURE-Huge Opportunity
13
Airport Infrastructure- Regulatory Authorities
Ministry of Civil Aviation Responsible for the
formulation of policy, development and
regulation of Civil Aviation. Its functions
also extend to overseeing airport facilities, air
traffic services and carriage of passengers and
goods by air

Other Attached/Autonomous Organisations
Directorate General of Civil Aviation
Promote safe and efficient Air Transportation
(DGCA) through regulation and
proactive safety oversight system Bureau
of Civil Aviation Security Regulatory
authority for civil aviation security in
(BCAS) India Airport Authority of India
(AAI) Accelerate the integrated
development, expansion and modernization of
the operational, terminal and cargo
facilities at the airports
14
India Airport Infrastructure Huge Growth
Potential
  • AAI manages Civil Airports
  • There are 454 airports / airstrips in the
    Country. This includes Operational, Non
    Operational, Abandoned and Disused Airports
  • Majority of Civil Airports managed by Airports
    Authority of India
  • AAI responsible for airport infrastructure
    development
  • Current Status
  • The increased passenger and cargo traffic has
  • posed new challenges in the area of providing
  • adequate infrastructure at airports
  • Imperatives
  • Expansion of capacity at existing airports
  • Up gradation / modernization of Metro and
    Non-metro airports
  • Development of new Greenfield Airports
  • Induction of modern technology for efficient
    handling of Aircraft, Passenger and Cargo at
    airports
  • Up gradation of CNS/ATM facilities
  • AAI manages 127 airports which includes
  • 13 International airports (excluding Delhi
    Mumbai and including 3 civil enclaves)
  • 7 Custom airports
  • 28 Civil Enclaves
  • 80 Domestic airports
  • 2 Joint Venture Airports (Delhi Mumbai)

15
Recent Regulatory Initiatives
  • STEPS HAVE BEEN TAKEN TO DEVELOP AIRPORT
    INFRASTRCTURE
  • Private investment encouraged both in Airlines
    as well as Airports
  • Airport Infrastructure Policy,1997 permits
    private equity participation for development of
    airports to bridge resource gap and to bring
    efficiency
  • Foreign Direct Investment has been allowed upto
    100 in airports, beyond 74 requiring Government
    approval
  • Foreign equity upto 40 and NRI/OCB investment
    upto100 is permissible in the domestic air
    transport services with prior GOI approval
  • Domestic Carriers permitted to operate
    international flights
  • Open Sky policy for cargo flights
  • Attractive fiscal incentives/concessions,
    moderate tax rates Tax holidays
  • Public-Private Partnership encouraged
  • Liberal Equipment Import regime
  • Comprehensive Civil Aviation Policy to be
    finalized very shortly
  • Airport Privatization
  • -Delhi GMR-Fraport consortium
  • -Mumbai GVK- South African Airports

16
AAI- Plans for Airport Infrastructure

Airport Authority Expenditure Plans
Source Ministry of Civil Aviation
  • IMPACT
  • Opens a huge market for companies operating in
    Aerospace and Allied Industries
  • Opportunity big for sophisticated and high end
    technology products like communication and
    security equipments
  • A large pie for foreign players as Indian players
    not equipped to cater to demand

17
Market Opportunity

Products
  • Opportunity Universe
  • Airport Operations
  • Cargo Facilities and Warehouses
  • Supply of components (to HAL, others)
  • Raw material - sheet metal, forgings, surface
    engineering
  • Aerospace Software - Systems
  • MRO facilities equipment
  • Simulation, training consultancy
  • Outsourcing/offshoring design development
    (offsetting)
  • Electronics/Avionics
  • Support services (sky-chefs)
  • Specialized Consulting (Traffic Study, Business
    Advisory)
  • Navigational aids,
  • Instrument landing systems (ILS)
  • Communications equipment
  • Weather equipment
  • Baggage handling and information systems
  • Aerobridges
  • Centrifuge,
  • Simulators
  • Smart Cards systems,
  • Baggage Screening systems,
  • Multi-zone Door Frame Metal Detectors
  • Airfield lighting systems
  • Radar systems,
  • Flight information systems

18
Market Size
USD Millions
Source UK Trade and Investment
Estimated that more than 50 of the above market
will be catered by foreign players
19
Entry Strategies for Foreign Companies
Sell existing products and services into growing
Indian market directly/indirectly (through OEMs)
Level 1
Level 2
Formulate strategic alliances, CRM bases, support
bases to sell into Indian market
Use maturing, low cost Indian platform for
Sourcing from India to sell into World Market
Level 3
Setup JVs in India to take advantage of the edge
given to domestic firms, sell into Indian and
Global Market
Level 4
20
Product Segments Possible Strategies
Electronics Components
Sell into Indian market through distributors
Airport Services Development
Be part of several consortiums to develop and
manage Indian airports or form partnerships with
existing consortiums in India
Maintenance/Repair/Overhaul
Establish own MRO facilities or sell to the
facilities that are going to be established
No professional aircraft finisher in India.
Immediate opportunity in India
Interior Funrshings
Ground Support Equipments
Sell Ground Support Equipments by forming
partnerships with Indian marketing arms to meet
the Indian demand
Training and Educational Institutions
Huge demand for pilots and cabin crew. Set up
facility in India
21
Summation
  • Indian Aviation has seen high growth on account
    of sustained Indian socio economic growth and
    liberalized Government initiatives
  • Airport Infrastructure needs to improve
    significantly to meet the current and future
    demand of the Indian Aviation Sector
  • Authorities have initiated various steps to
    implement modernization, reconstruction and
    development of airport infrastructure to
    implement infrastructure development plan
  • Provides a huge opportunity for private players
    operating in Aerospace and allied industries
  • Significant opportunity for foreign companies as
    Indian companies not technologically equipped to
    cater to requirements

22
  • THANK YOU

23
Growth Drivers
  • HUGE POTENTIAL MARKET
  • Huge potential market
  • Discount Fares/Low Cost Carriers fares
    competitive to premium railway fares
  • Ever increasing reach
  • DEMAND DRIVERS
  • GDP Growth has been more than 7 in the last 4
    years
  • The rising middle class of more than 300 mn is
    fuelling the growth
  • The Increase in Consumerism and Affordability of
    Air travel
  • Government Liberal Policy to allow private
    carriers and entry of Low Cost Carriers has lead
    to a increase in demand in passenger traffic
  • Domestic Tourism and International Business
    Travel and Tourism has also greatly fuelled the
    rise of Indian aviation sector

Indian Railways-Premium Passengers
24
Growth Drivers
  • International Air Traffic growing at CAGR _at_15
  • Growing Indian economy and globalized trade
  • Rise in international tourism

International Air Passengers
  • Tourism
  • Domestic Tourism growth CAGR _at_ 15
  • Boost with rising per capita income and increased
    consumerism
  • Foreign Tourist Arrivals growth _at_ 20 for 2004
    and 2005
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