andhra pradesh industrial infrastructure corporation limited dpr...

Andhra Pradesh Industrial Infrastructure Corporation Limited

DPR for Diversion of Forest Lands for

Establishment of Industrial Parks at Unguturu Forest Block in West Godavari District,

Andhra Pradesh

FINAL DETAILED PROJECT REPORT

August 2015

Prepared By

L&T INFRASTRUCTURE ENGINEERING LIMITED

B1152201

RP007, Rev.0

L&T Infrastructure Engineering Ltd. Client: Andhra Pradesh Industrial Infrastructure Corporation

Limited (APIIC) Parisramabhavanam, 5th Floor, Fateh Maidan Road, Hyderabad – 500 004

Project: DPR for Diversion of Forest Lands for Establishment of Industrial Parks in W.G District, AP

Project No.:

B1152201

Title: Final Detailed Project Report for Unguturu Forest Block

Document No.:

RP007

Rev.:

0

This document is the property of L&T Infrastructure Engineering Ltd. (formerly known as L&T-Rambøll Consulting Engineers Limited) and must not be

passed on to any person or body not authorised by us to receive it nor be copied or otherwise made use of either in full or in part by such person or body without our prior permission in writing.

File path: \\hydsvr\intranet\roads & airports\02-b jobs\b1152201-gbd roads n airports 2015-2016\dpr for eluru forest lands\003-final detailed project report\001-rp007-unguturu-final dpr\001-rp007-unguturu final dpr.doc

Notes:

1.

Revision Details:

0 14.08.2015 First Submission

LPN

SJV

KRM

TKSS KRM

Rev. Date Details Init. Sign. Init. Sign. Init. Sign.

Prepared Checked Approved

Table of Contents

DPR for Diversion of Forest Lands for Establishment of Industrial Parks in W.G District, AP B1152201 Final Detailed Project Report for Unguturu Forest Block RP007 rev. 0

Table of Contents Page i

TABLE OF CONTENTS

1 Introduction .....................................................................................................................................1

1.1 Preamble ...................................................................................................................................1 1.2 Data Collection ..........................................................................................................................2 1.3 Site Visit and Meetings .............................................................................................................2 1.4 Structure of the Report ..............................................................................................................2 1.5 Acknowledgement .....................................................................................................................2

2 Site Appreciation ............................................................................................................................3

2.1 Project Site ................................................................................................................................3 2.2 Details of Forest ........................................................................................................................3

2.2.1 Site Map ..........................................................................................................................3 2.2.2 Rehabilitation and Resettlement (R&R) Issues ..............................................................4 2.2.3 Flora and Fauna .............................................................................................................4

2.3 Existing Habitations around Project Site ...................................................................................5 2.4 Demographic Pattern ................................................................................................................5 2.5 Regional Connectivity ...............................................................................................................6

2.5.1 Road ...............................................................................................................................6 2.5.2 Rail ..................................................................................................................................6 2.5.3 Airport and Port Connectivity ..........................................................................................6

2.6 Topography ...............................................................................................................................7 2.7 Soil Profile .................................................................................................................................7 2.8 Climate and Rainfall ..................................................................................................................7 2.9 Infrastructure Availability ...........................................................................................................8

2.9.1 Water ..............................................................................................................................8 2.10 Environmental Considerations ..................................................................................................8

3 Market Study and Demand Assessment ......................................................................................9

3.1 Preamble ...................................................................................................................................9 3.2 Light Engineering Hub ..............................................................................................................9

3.2.1 Information sources ........................................................................................................9 3.2.2 Criteria of Assessing Opportunity/Activity Mix for Industrial Park ............................... 10 3.2.3 Location USP ............................................................................................................... 10 3.2.4 Industrial Park Competition ......................................................................................... 10 3.2.5 Activity Mix ................................................................................................................... 11 3.2.6 Evaluation of Target Sector(s) for Proposed Site ........................................................ 11 3.2.7 Focus Sectors and their Impact ................................................................................... 12

3.3 Logistic HUB .......................................................................................................................... 15 3.3.1 Information sources ..................................................................................................... 15 3.3.2 Overview of Logistics Sector in India ........................................................................... 15 3.3.3 Criteria of Assessing Opportunity/Activity Mix ............................................................. 19 3.3.4 Industrial Park Competition ......................................................................................... 21

3.4 Focus Sectors and Their Impact ............................................................................................ 23 3.4.2 Industry Growth Drivers growth in Organised Retail ................................................... 26 3.4.3 Government of India Initiatives .................................................................................... 26 3.4.4 Initiatives by Government of Andhra Pradesh ............................................................. 27 3.4.5 Anticipated Product Mix at Unguturu ........................................................................... 27 3.4.6 Projected Exports and Investment (2015-2030) in Focus Sectors .............................. 28

3.5 Estimated Demand for Space in Unguturu ............................................................................ 28 3.6 Estimated Revenue ................................................................................................................ 28

4 Site Master Plan ........................................................................................................................... 29

4.1 Preamble ................................................................................................................................ 29 4.2 Planning Concepts ................................................................................................................. 29

4.2.1 Consideration ............................................................................................................... 29 4.2.2 Product Mix .................................................................................................................. 29

4.3 Site Master Plan ..................................................................................................................... 30 4.4 Proposed Entry/Exit ............................................................................................................... 31

4.4.1 Site 1 ............................................................................................................................ 31


Table of Contents Page ii

4.4.2 Site 2 ............................................................................................................................ 32 4.4.3 Site 3 ............................................................................................................................ 33 4.4.4 Circulation and Road Hierarchy ................................................................................... 33 4.4.5 Green / Open Areas ..................................................................................................... 33 4.4.6 Infrastructure Utilities/ Common Amenities/ Industry Related Facilities ...................... 33

4.5 Housing .................................................................................................................................. 34

5 Infrastructure Assessment and Cost Estimation ..................................................................... 35

5.1 Infrastructure Demand Assessment ...................................................................................... 35 5.1.1 Internal Road Network ................................................................................................. 35 5.1.2 Power Supply ............................................................................................................... 35 5.1.3 Water Supply ............................................................................................................... 36 5.1.4 Wastewater Management ............................................................................................ 36 5.1.5 Solid Waste Management............................................................................................ 36 5.1.6 Storm Water Management........................................................................................... 36

5.2 Block Cost Estimates ............................................................................................................. 36

6 Cost Benefit Analysis .................................................................................................................. 38

6.1 Introduction ............................................................................................................................ 38 6.2 Overall Approach & Methodology .......................................................................................... 38 6.3 Revenue generation ............................................................................................................... 38 6.4 Cost incurred .......................................................................................................................... 38

6.4.1 Project Investment ....................................................................................................... 38 6.4.2 Land Cost: ................................................................................................................... 38 6.4.3 Cost on Afforestation ................................................................................................... 38 6.4.4 Foregone revenue from the forest land ....................................................................... 38 6.4.5 Interest ......................................................................................................................... 38 6.4.6 Depreciation: ................................................................................................................ 38

6.5 Details of Cost and Benefit .................................................................................................... 39 6.6 Conclusion ............................................................................................................................. 39

7 Financial Analysis ....................................................................................................................... 40

7.1 Introduction ............................................................................................................................ 40 7.2 Objective ................................................................................................................................ 40 7.3 Overall Approach & Methodology .......................................................................................... 40 7.4 Key Assumptions in Financial Modelling ............................................................................... 40 7.5 Flexibility in Financial Model .................................................................................................. 41 7.6 Construction Period and Project Life ..................................................................................... 41 7.7 Project Cost............................................................................................................................ 41 7.8 Financing Structure ................................................................................................................ 42

7.8.1 Funding Structure for the project ................................................................................. 43 7.8.2 Financial Instruments and Cost of Funding ................................................................. 43

7.9 Depreciation ........................................................................................................................... 44 7.10 Operating Expenses .............................................................................................................. 44

7.10.1 Operation and Maintenance Expenses ....................................................................... 45 7.10.2 Administrative Expenses ............................................................................................. 45 7.10.3 Insurance expenses ..................................................................................................... 45

7.11 Revenue Estimates ................................................................................................................ 45 7.12 Income Tax Calculations ........................................................................................................ 45 7.13 Financial Analysis - Base Case Scenario .............................................................................. 45

7.13.1 Key Parameters ........................................................................................................... 45 7.14 Conclusion ............................................................................................................................. 46

8 Conclusion ................................................................................................................................... 47


Table of Contents Page iii

LIST OF FIGURES

Figure 1-1: VCIC Location ........................................................................................................................1 Figure 2-1: Project Location .....................................................................................................................3 Figure 2-2: Location and Views of Project Site ........................................................................................4 Figure 2-3: Existing Settlements within 2 km from Project Site ...............................................................5 Figure 2-4: Road Rail Connectivity...........................................................................................................6 Figure 2-5: Seaports and Airports Distances from Project Site ...............................................................7 Figure 4-1: Planning Concepts .............................................................................................................. 29 Figure 4-2: Proposed Entry/ Exit Points for Site 1................................................................................. 32 Figure 4-3: Proposed Entry/ Exit Points for Site 2................................................................................. 32 Figure 4-4: Proposed Entry/ Exit Points for Site 3................................................................................. 33 Figure 5-1: Methodology for Infrastructure Assessment ....................................................................... 35

LIST OF TABLES

Table 2-1: Environmental Sensitivity around the Project .........................................................................8 Table 4-1: Proposed Land Use Break up for Industrial Parks at Unguturu Site 1 ................................ 30 Table 4-2: Proposed Land Use Break up for Industrial Parks at Unguture Site 2 ................................ 30 Table 4-3: Proposed Land Use Break up for Industrial Parks at Unguturu Site 3 ................................ 31 Table 5-1: Block Cost Estimates ........................................................................................................... 36 Table 7-1: Project Development Schedule ............................................................................................ 41 Table 7-2 : Capital Cost of the Project (2015 prices in Rs Mn) ............................................................. 42 Table 7-3 : Different phases of an infrastructure project ....................................................................... 43 Table 7-4 : Means of Finance ................................................................................................................ 43 Table 7-5 : Details on Debt .................................................................................................................... 44 Table 7-6 : Depreciation Rates .............................................................................................................. 44 Table 7-7: Revenue Details ................................................................................................................... 45 Table 7-8 : Key Input Parameters – Base Case Scenario .................................................................... 46 Table 7-9 : Key results – Base Case Scenario ..................................................................................... 46

LIST OF DRAWINGS

FD0201: Boundary of Unguturu Forest Blocks on 1:50,000 SOI Topo Sheet FD0401: Site Master Plan FD0402: Circulation Plan FD0403: Typical Cross Sections Rigid 45m & 30m RoWs FD0404: Typical Cross Sections Rigid 24m & 12m RoWs FD0405: Green Area and Green Belt Layout FD0406: Infrastructure Utilities / Common Amenities

LIST OF ANNEXURES

Annexure 1.1: Form A for seeking prior approval under section 2 of the proposals by the state governments and other authorities Annexure 6.1: Annual Benefit from the Project Annexure 7.1: Interest During Construction (IDC) Annexure 7.2: Debt Service Coverage Ratio (DSCR) Annexure 7.3: Profitability Statement Annexure 7.4: Cash Flow Statement Annexure 7.5: Balance Sheet Annexure 7.6: IRR Calculation


Table of Contents Page iv

LIST OF ABBREVIATION AND ACRONYMS

ADB : Asian Development Bank

APIIC : Andhra Pradesh Industrial Infrastructure Corporation Limited

APPCB : Andhra Pradesh Pollution Control Board

BAS : Building Automation System

CAGR : Compound Aggregate Growth Rate

CETP : Common Effluent Treatment Plant

DGPS : Differential Global Positioning System

FIRR : Financial Internal Rate of Return

GBPD : Green Building Performance Disclosure

GoAP : Government of Andhra Pradesh

HVAC : heating, ventilation, air-conditioning

IRR : Internal Rate of Return

KLD : Kilolitres per Day

km : Kilometre

Kmph : Kilometre per hour

L&TIEL : Larsen & Toubro Infrastructure Engineering Limited

MLD : Million Litres per Day

mm Millimetre

Mn : Million

MoEF : Ministry of Environment and Forests

NCAER : National Council of Applied Economic Research

NH : National Highway

NHAI : National Highway Authority of India

R&R : Rehabilitation and Resettlement

RoW : Right of Way

Sq. f : Square Feet

Sq. m : Square Meter

STP : Sewage Treatment Plant

TPD : Tonnes Per Day

VCIC : Vizag – Chennai Industrial Corridor

VK-PCPIR : Visakhapatnam Kakinada Petroleum Chemical Petro-chemical Investment

Region

WACC : Weighted Average Cost of Capital

1

Introduction


1 Introduction Page 1

1 Introduction

1.1 Preamble

Government of Andhra Pradesh (GoAP) has proposed to develop Vizag – Chennai Industrial

Corridor (VCIC) with the financial assistance of Asian Development Bank (ADB). VCIC is a

key segment of the East Coast Economic Corridor and also India’s first coastal economic

corridor. VCIC is aimed at fulfilling the objectives of the Government of India, Make in India

Policy which aimed to promote manufacturing activities. Following Figure 1-1 shows the

VCIC Location.

Figure 1-1: VCIC Location

The initial studies carried out for VCIC projected tremendous growth for Andhra Pradesh in

the next 20 years. Once VCIC becomes functional, the manufacturing output would reach Rs

3,000 billion by 2025 and Rs. 7,825 billion by 2035. The proposed corridor is likely to have a

strong influence on the industrial activities in all the 13 districts of Andhra Pradesh and

therefore there is a need for large tracts of industrial land to keep pace with the projected

industrialisation.

West Godavari, one of the key districts coming within the immediate influence of VCIC has

all the potential to become an industrial hub. GoAP has embarked on major initiative of

positioning West Godavari District as the central hub for various sunrise sectors in an

endeavour to attract investments from National and International Players across the globe.

The district is known as Rice Granary of India and therefore GoAP proposed to promote the

industrialisation in non agricultural lands. In this regard, GoAP identified around 16,258


1 Introduction Page 2

acres of Reserve Forest Lands located at Unguturu, Nallajerla, Dubacherla, IS Jagannadha

Puram, Bhogolu and Ramasingavaram within the district for the purpose of industrialisation.

In order to divert the identified forest lands for Industrial use, it is mandatory to seek approval

from Ministry of Environment and Forests (MoEF) by submitting an Application along with a

Detailed Project Report.

Andhra Pradesh Industrial Infrastructure Corporation Limited (APIIC), a wholly owned

subsidiary of Government of Andhra Pradesh (GoAP) been entrusted the task of pursuing

with MoEF to procure the forest lands and develop sector specific Industrial Parks as a part

of VCIC development.

APIIC has appointed L&T Infrastructure Engineering Limited (L&TIEL) as Consultants to

prepare the Detailed Project Report and also Application to MoEF for all the six sites

(prescribed Proforma included as Annexure 1.1).

1.2 Data Collection

The project area maps, DGPS survey details, flora and fauna, afforestation costs, details of

existing and proposed industries were collected from West Godavari Collectorate, Forest

Department and APIIC

1.3 Site Visit and Meetings

L&TIEL Team carried out a detailed visit of the Unguturu Reserved Forest Block on 21st May

2015. APIIC officials and DGPS survey agencies accompanied the team for the visit. Further

L&TIEL had also attended the weekly review meetings scheduled at the office of the District

Collector.

1.4 Structure of the Report

The present report, Final Detailed Project Report is prepared based on the information

collected from District Collectorate, APIIC, information available on public domain and

internet. Prior to this report, L&TIEL delivered two reports, Preliminary Report and Draft

Project Report and the suggestions given on the earlier reports were accordingly considered

in the present report. The report is structured in the following pattern.

Chapter 1 – Introduction

Chapter 2 – Site Appreciation

Chapter 3 – Market Study and Demand Assessment

Chapter 4 – Site Master Plan

Chapter 5 – Infrastructure Assessment and Cost Estimation

Chapter 6 – Cost Benefit Analysis

Chapter 7 – Financial Analysis

Chapter 8 – Conclusion

1.5 Acknowledgement

L&TIEL sincerely thanks the District Collector and Magistrate for all the courtesy extended to

the project team. L&TIEL also acknowledges the support provided by the officers of the

Forest Department, Industries Department and APIIC.

2

Site Appreciation


2 Site Appreciation Page 3

2 Site Appreciation

2.1 Project Site

The project site, covering an area of about 2,729 acres (as per the details provided by APIIC

and DGPS survey conducted by Geo Con Surveys) is located in Unguturu Mandal of West

Godavari District in Andhra Pradesh. The site is connected to NH-5 (AH-45) on the South,

SH-42 on the East, SH-6 on the West. The following Figure 2-1 shows the location of site.

Figure 2-1: Project Location

2.2 Details of Forest

2.2.1 Site Map

The proposed site comes under Unguturu Block as per the forest department. The Unguturu

block comprises of three sites each with an area of 1,209 acres, 1,009 acres and 511 acres.

Polavaram Right canal is passing through the northern portion of Site I which covers an area

of ~14 acres and an area of ~75 acres to the north to the canal. Hence it is proposed to limit

the project site boundary till the canal boundary and therefore the area of Site I is reduced

from 1,209 acres as mentioned in the DGPS survey map to 1,120 acres.

A map showing the Unguturu Blocks with boundaries is included as Figure FD0201. Pictorial

illustrations of the project site are given as Figure 2-2.

0.5 Km0 Km 1 Km

&T

In

fra

stru

ctu

re

E

ng

in

ee

rin

g

Ltd

.

L&

T-R

am

bo

ll

Co

ns

ultin

g E

ng

in

ee

rs

L

im

ite

d

L&T Infra Engineering



Figure 2-2: Location and Views of Project Site

2.2.2 Rehabilitation and Resettlement (R&R) Issues

The entire land is with the Department of Forest and as informed by the authorities, the land

is free from Rehabilitation and Resettlement issues.

2.2.3 Flora and Fauna

The Floristic composition of the Unguturu Block is as follows:

Memecylon edule (Alli)

Zizyphus xylopyrus (Gotti)

Carissa spinarum (Vaka)

Randia dumetorum (Manga chettu),

Mimusops hexandra (Pala)

Azadirachta indica (Vepa)

Dodonaea viscose (Bandedu)

Webera corymbosa (Papidi)

Diospyros sylvatica (Tellagatha)

Maba buxifolia (Tella Alli)

Erythroxylum monogynum (Devadaru)

As per the information from the department, there are no endangered flora and fauna

reported in Unguturu Block.



2.3 Existing Habitations around Project Site

The forest area is surrounded by plantations. The following figure shows the settlements

located within 2 km from the project site.

Figure 2-3: Existing Settlements within 2 km from Project Site

2.4 Demographic Pattern

The nearest urban centre to Unguturu are Tadepalligudem (10 km) and Eluru (30 km). Eluru

is the district head quarters.

As per provisional data of 2011 census, Eluru urban agglomeration has a population of

515,000, out of which males were 260,000 and females were 255,000. The literacy rate was

75.98%.

Tadepalligudem has a population of 103,577. The total population constitute 51,176 males

and 52,401 females. It is the agricultural commercial hub of West Godavari district which is

renowned as the "Annapurna of Andhra Pradesh”.

Eluru and Tadepalligudem are well developed and have all necessary social infrastructures.



2.5 Regional Connectivity

The proposed site is strategically placed in terms of connectivity (road, rail, air and sea) to

the hinterland markets. The regional connectivity in terms of Road and rail is shown in

Figure 2-4.

2.5.1 Road

The project site is well connected to the other parts of India through NH-5 (AH-45) which is

2km south of the site

2.5.2 Rail

Chennai - Kolkata Broad Gauge Line is located around 1.5km from southern boundary of the

Site. Unguturu is the nearest station.

Figure 2-4: Road Rail Connectivity

2.5.3 Airport and Port Connectivity

The regional connectivity in terms of Ports & Airports is shown in Figure 2-5.



Figure 2-5: Seaports and Airports Distances from Project Site

The site is located between Rajahmundry and Vijayawada Airports, almost midway. The

nearest operational port is Kakinada Port (88km). The site has also the advantages of the

proposed Narasapuram Port (65km) and Machilipatnam Port (74km) and both are almost

equidistant.

Considering its proximity to the existing and proposed ports, the site has all the advantages

of becoming a major multimodal major logistics hub within the VCIC.

2.6 Topography

The overall project site relatively slopes from west to east towards the coast. The site

appears to be plain.

2.7 Soil Profile

The Soils in the district are made up of Alluvial, Black Regur and Red Ferruginous besides a

small belt of arenaceous sandy soils along coastal belt.

2.8 Climate and Rainfall

The climate is moderate both in winter and summer seasons in delta area. The uplands

areas in the district witness severe summer. The normal maximum and minimum

temperatures recorded in the District are 48°C to 19°C respectively.



The District receives its rainfall predominantly from South West Monsoon (785.6mm) as well

and also from North East monsoon (254.6).

2.9 Infrastructure Availability

2.9.1 Water

Polavaram Right Bank canal is located in the close proximity and once operational can be

water source for the proposed industrial hub.

2.10 Environmental Considerations

Table 2-1: Environmental Sensitivity around the Project

S.

No Areas Name / Identity

Aerial Distance

(within 15 km)

1 Areas protected under international conventions,

national or local legislation for their ecological,

landscape, cultural or other related value

Nil Nil

2 Areas which are important or sensitive for

ecological reasons – wetlands, watercourses or

other water bodies, coastal zone, biospheres,

mountains, forests

Unguturu Block Yes

3 Areas used by protected, important or sensitive

species of flora or fauna for breeding, nesting,

foraging, resting, over wintering, migration

Nil Nil

4 State, National Highways NH-5 (AH-45), SH-

42 and SH-6

2 km, 7 km and

8 km

5 Defence installations Nil Nil

6 Routes or facilities used by the public for access

to recreation or other tourist, pilgrim areas

SH-42and SH-6 7km and 8km

7 Inland, coastal, marine or underground waters Polavaram Right

Canal

Within site

(north side of

Site 1)

8 Densely populated or built-up area Tadepalligudem 10 km, South

east

9 Areas occupied by sensitive man-made land

uses (hospitals, schools, places of worship,

community facilities)

Primary Health

Centre

PHCs in villages

The activities proposed in the IP are mostly green and orange category type of industries.

3

Market Study and Demand Assessment


3 Market Study and Demand Assessment Page 9

3 Market Study and Demand Assessment1

3.1 Preamble

West Godavari District with abundant natural,

mineral and agricultural resources and better

connectivity to the New Capital of Andhra

Pradesh would be positioned in the state of

Andhra Pradesh as “the happening district”.

With right initiatives coming from the

government, such as VCIC, the investment

climate will soon transform the District as one

of the key Destination in Andhra Pradesh.

There are five industrial estates in the district

with a total land area of 114.70 acres which

are owned by APIIC. The estates cater to

MSME type of industries. The district has

paper mills, sugar factories, breweries and chemicals .The district is rich in Ball Clay (126998

MT), Fire Clay (4815 MT), Lime Stone, Dolamite, Quartz (3086 MT), Road Metal (1039325

MT) and Building Stone (27735MT) Minerals. The total deposits of the Clay are found mostly

in Gopalapuram, Chintalapudi and Nallajerla. The white Clay available near Dwaraka

Tirumala and adjacent Villages is used for ceramic production. Except Clay, there is no

commercial exploitation of the other minerals.

Despite the availability of large deposits of mineral in the district and in the neighbouring

districts, the industrial activity did not get the required boost.

The proposed VCIC is expected to bring a major industrialisation for the district.

Considering the locational advantages, availability of raw materials, connectivity to

hinterland, proximity to three major ports and the land availability, an Engineering and

Logistics Hub seems to be ideal at Unguturu. The following sections will provide a brief

discussion on the proposed product mix at Unguturu.

3.2 Light Engineering Hub

3.2.1 Information sources

The sector has been evaluated based on the following reports available on the public domain

A Brief Report on Engineering Sector in India, 2015 - Corporte Catalyst (I) Pvt. Ltd.

Light Engineering - ICRA

Opportunities in India's Engineering Goods Market, 2012 - Gyan Research and Analytics

Pvt. Ltd.

The information provided in the above reports have been reviewed and produced in the

following sections.

1 Market study and demand assessment is based on available data on public domain.



3.2.2 Criteria of Assessing Opportunity/Activity Mix for Industrial Park

The proposed industrial park near Unguturu is conceived considering the following factors:

Creation of world class industrial infrastructure will be a prerequisite to attract industrial

investors both from across the country and abroad. As a result of bifurcation recently,

there has been a felt shortage of such infrastructure in the State.

Strategically, Government of Andhra Pradesh has been inviting foreign investors to set

up manufacturing bases in the State and has been assuring of world class industrial

infrastructure facilities. As a complement to the policy initiative it would be imperative to

create well planned best in the class infrastructure to cater to the needs of the intending

entrepreneurs.

Development of heavy industry in the state is concentrated around Chittoor-Nellore in the

south and Visakhapatnam in the north. Considering the environmental challenges

associated with over concentration in the existing industry clusters in the region, it would

be necessary to develop industrial infrastructure in alternative locations to pre-empt and

ease out the challenges associated with over concentration.

Furthermore, the cost of land around the existing clusters is very costly and projects

requiring large parcels of land cannot be viable at such high cost of land. It would

therefore warrant development of industrial infrastructure in new potential locations.

West Godavari and surrounding districts have a fairly well developed diverse industrial

base and the necessary entrepreneurial culture.

3.2.3 Location USP

The proposed Light Engineering Industry Hub near Unguturu is intended mainly to cater to

the fast emerging industrial infrastructure requirements of entrepreneurs in the region,

especially post-bifurcation of the erstwhile combined state of Andhra Pradesh. As a sequel to

the Government of India’s ‘make in India’ mission coupled with the investor friendly policies

of the Government of Andhra Pradesh, sizeable foreign direct investments are anticipated

into the engineering industry in the region which would result in increased demand for

industrial land.

The proposed location is vantageously situated adjacent to National Highway-5 in

equidistance from the major heavy industry clusters on the Chennai-Chittoor-Nellore-

Visakhapatnam industrial corridor. The proposed location will therefore be able to attract

some investments in the engineering sector envisaged from proposed VCIC .Besides, skilled

and technical manpower is abundantly available around the location given the presence of a

large number of technical educational institutions.

3.2.4 Industrial Park Competition

The proposed light engineering hub will be complementary to a steadily growing

manufacturing sector in the region. Further no dedicated industrial park for light engineering

industry exists at least within a 200km distance from the proposed location. As such the

proposed facility will be first of its kind in the region.



3.2.5 Activity Mix

The proposed industrial park for light engineering industry will have:

Large firms and SMEs who produce a wide range of light engineering products such as

machine tools, bearings, and pollution control equipment etc.

Common facilities with the state of the art technology for design development, product

testing, quality assurance, testing, inspection and certification.

Common effluent treatment facility for treatment and safe discharge of effluents.

3.2.6 Evaluation of Target Sector(s) for Proposed Site

Engineering Industry is a major constituent of India’s industrial economy and assumes

continued importance; inter alia an export earner and large scale employment provider to

both highly skilled and semi-skilled workforce. The key factors contributing favourably to the

global competitiveness of India’s engineering industry are:

Talent driven innovation enhancing production skills

Competitive labour and material costs

Presence of large and diversified supplier networks

Proactive Government policy environment

Improved economic systems

Quality standards of Indian engineering products have significantly improved as a result of

globalisation and Indian manufactures are increasingly known for their good quality.

Globalisation of supply chains offers vast opportunities to Indian engineering industry

considering the comparative advantage it gains in terms of a large pool of technically skilled

workforce, low wage costs and above all the presence of large domestic market and effective

demand for a wide variety of manufactures. India cannot afford to overlook the opportunities

as many global companies are looking at the country as partner in supply chain

development.

Engineering industry in India accounts for 3% of the country’s GDP and offers direct and

indirect employment to over 4 million skilled and semi-skilled workers. It is highly diverse in

its structure and composition, and can be broadly categorised into two sectors: Heavy

Engineering and Light Engineering.

Heavy engineering sector manufactures high value capital goods involving high end

technology. The requirement of huge capital and intricate technology act as major entry

barriers. Hence the sector is dominated by the presence of large scale manufacturers with

strong brand equity; presence of Small and Medium Enterprises (SME) is negligible. The

major end-user industries for heavy engineering goods are power, infrastructure, steel,

cement, petrochemicals, oil and gas, refineries, fertilisers, mining, railways, automobiles,

textiles etc.

On the contrary, light engineering sector uses medium to low-end technology. Since the

capital and technology requirements are low, entry barriers are minimal. As such, the sector

is predominated by the presence of a large number of SMEs who produce generally low

value added products. It is also characterised by low firm level capacities and high level of

competition. Light engineering goods are essentially used as inputs and intermediaries by

the heavy engineering industry.



3.2.7 Focus Sectors and their Impact

Light engineering segment has witnessed a steady growth in post-economic liberalization

phase since 2003 fuelled essentially by a strong domestic demand. The growth has been a

spin-off of the increased infrastructure outlays and flourishing manufacturing sector.

Investments in infrastructure drive the demand of heavy engineering goods, which in turn

drive the demand of light engineering industry. Government's focus on development of

infrastructure has led to an increase in demand in the light engineering sector.

Conferred with advantage of low production costs, exports of light engineering goods from

India have been steadily rising. However, in the liberalized external trade environment,

imports of light engineering goods, especially from China, have also been on the rise offering

stiff competition to the domestic producers.

The demand for light engineering products is expected to sustain on account of largely

favourable industrial and infrastructure growth. Considering the fact that India is in the offing

to emerge as a global manufacturing hub the demand for light engineering products is

expected to sustain primarily on account of the largely favourable industrial production and

the government’s focus on infrastructure development in the country, which is expected to

continue in the short-medium term perspective. The automobile companies continue to be

one of the largest end-user segments for light engineering products. Light engineering

segment will also piggy back on the favourable outlook for capital goods segment.

India is emerging as a preferred global outsourcing destination for design and manufacture of

heavy machinery and equipment on the back of its strength of having a large pool of skilled

labour force and low labour costs. Apart from adopting better technology, the engineering

companies have restructured their operations resulting in improved operational efficiency.

Many of the multinational companies are starting operations in India owing to its large market

size and export potential. The development of Special Economic Zones and incentives for

exports are expected to increase the flow of FDI into the sector and improve the export

performance.

The aggregate market for the Indian engineering industry has been estimated to be around

US $ 200 billion by 2020 which includes US $ 40 billion for outsourcing of engineering

services.

Government policy towards the development of the engineering industry would continue to

focus on 100% FDI through automatic route, easing customs duties on imports and adoption

of innovative and efficient technologies.

The focus segments of the light engineering industry considered for development in the park

are:

3.2.7.1 Machine Tools

Machine tools include cutting tools and accessories like lathes, shapers, grinders, besides

metal forming presses, forging presses, and other metal forming machinery. Over the past

few years there has been a shift from general-purpose machines to CNCs and other

specialised machines.



The demand for machine tools emanates largely from automobiles, auto components,

railways, defence, capital goods and earth-moving machinery. They are also required by

almost all of the large industrial units for production and maintenance purposes.

The total market size of machine tools is estimated to be in the range of Rs. 50-60 billion per

annum in terms of revenues. However, the presence of a large unorganised sector and

varying definition of machine tools make the estimation of market size very difficult.

The share of the light engineering sector is estimated around35% of the total domestic

market for machine tools. Imports of machine tools have been decreasing gradually owing to

adoption of better technology by domestic companies. Most of the automobile manufacturers

and a significant number of large industrial companies have captive machine tools divisions

producing generic as well as customised products as per their requirements.

3.2.7.2 Fasteners

Fasteners include production of nuts, bolts and screws. They are made from cold heating

steel and carbon steel. A significant proportion of raw materials have been imported,

however, the contribution of imports has been decreasing during the past few years.

Fasteners are broadly divided into consumer segments – automobile sector and industrial

sector. Industrial fasteners are used in varied applications like construction, railways and

manufacturing sector.

Demand for emanates largely from automotive and industrial sectors. Total market size of

the fastener industry is estimated at around Rs. 25 billion in revenues. Fasteners market can

be divided into mild steel (MS) and high tensile (HT) fasteners. Mild steel fasteners contribute

to about 30% of the market size and are mainly produced by the unorganised sector, while

high tensile fasteners are produced primarily by the organised sector. HT fasteners are

further classified into standard fastener and specialised fastener segments. Specialised

fasteners are mostly customised according to the specific requirements of a client.

Different automobile companies have divergent specifications while industrial fasteners have

numerous applications and requirements. It leads to a significant contribution from the

unorganised industry. It is estimated that the unorganised sector contributes to about half of

the fastener market size.

3.2.7.3 Bearings

Bearings are used to minimise friction between moving parts and find application in rotating

parts of virtually all machines and automobiles. Bearings are produced in various sizes and

shapes with the smallest bearing weighing only a few grams to the largest ones weighing a

few tonnes.

Automobile sector is the major demand driver for the bearing industry and contributes to

almost 50% of the total demand in value terms. The demand from the automobile sector is

almost equally divided between OEM demand and replacement demand.

The total size of the bearings market by revenues is estimated in the range of Rs. 25 - 30

billion. The bearings product group consists of bimetal bearings and anti-friction bearings.

The anti-friction bearings contribute to Rs. 15-20 billion of the bearings market and bimetal

bearings comprise the rest of the market. The anti-friction bearings can be further divided



into ball bearings and other types of bearings like roller, needle, taper, cylindrical, etc. The

ball bearings segment is the largest segment of the industry and contributes to approximately

half of the total market size in volume terms.

Imports contribute to approximately 25-30% of the total market. Imported bearings are mostly

of large dimensions and are not produced in the country due to relatively low demand for the

specialised segments.

3.2.7.4 Welding Equipment and Consumables

Traditionally, welding has been used as a means of fabrication. But, now welding is

effectively used for cladding, hard-surfacing, cutting and a number of other applications for

maintaining and reclaiming old machinery and equipment. The demand for the welding

equipment and consumables emanates largely from the automobile, steel and heavy

engineering sectors.

The size of the market in this product group is estimated at around Rs. 12-14 billion per

annum in terms of revenues. Welding consumables comprise about 75% of the total market

in value terms while welding equipment comprises the rest. Manual Metal Arc welding

equipment contributes to approximately80% of the equipment revenues, while the

semiautomatic and automatic welding equipment contributes to the rest.

The organised sector has a dominating presence in the automatic and semiautomatic

welding equipment and higher end electrodes while the unorganised sector serves mainly

manual metalarc welding equipment and low-end electrode segments. The unorganised

sector contributes to about half of the welding industry market. There are around 20 large

and medium scale companies in the organised sector and about 300-400 small-scale

companies in the unorganised sector. The automatic and semiautomatic welding equipment

are finding greater acceptance in the industry and the share of manual metal arc welding

equipment is expected to decline in the future.

3.2.7.5 Pollution Control Equipment

India is one of the largest and one of the fastest growing producers of green house gases. It

is estimated that 30-40% of industrial units in India produces sizeable quantities of pollutants.

There are an estimated number of about 3 million small-scale units in the country and most

of them are not using any pollution control equipment. Government has classified 17

industrial sectors as highly polluting.

The market size for pollution control equipment is estimated at around Rs. 25 billion per

annum in revenue terms. The segmentation of the market by end use with estimated market

shares of each segment is as follows:

Water Treatment and Disposal Systems 55%

Solid Waste Management Equipment 25%

Air Pollution Control Equipment 15%

Testing Equipment 5%

Biomedical waste management segment has been growing at a rate of 20% per annum due

to enforcement of the Bio-medical Waste (Management and Handling) Rules, 1998.

However, some of the advanced equipment required for treatment of biomedical waste are

not produced in India and are imported from developed countries.



Pollution control equipment industry is highly unorganised and is dominated by the small-

scale industry units that lack the resources to invest in research and development as well as

in marketing and servicing infrastructure. A few big Indian engineering companies like

Thermax Ltd., and Ion Exchange (India) Ltd. offer services and equipment as part of turnkey

consulting services. Many Indian companies have entered into joint ventures with Western

companies and some Western companies have also set up wholly owned subsidiaries.

These wholly owned subsidiaries include large multinationals such as Pentair Water India

Ltd., IRG Systems South Asia Ltd., and Tetratech India Ltd. There are many smaller firms

that specialise in sector-specific equipment such as wastewater treatment and air pollution

control.

3.2.7.6 Impact

The establishment of Engineering Hub is expected to:

Channelise estimated industrial investments to the tune of Rs. 600 crores by about 60

SMEs into manufacturing.

Contribute to strengthening engineering industry value and supply chains.

Provide sustainable employment to an estimated 2,000 skilled and semi-skilled persons

directly and 6,000 persons indirectly at full occupancy level.

Raise tax revenues to the local and State Governments.

Contribute positively to “make in India” mission.

3.3 Logistic HUB

3.3.1 Information sources

The sector has been evaluated based on the following reports available on the public domain

Report on Performance and Emerging Trends in Indian Logistics Industry , November

2013 prepared by Indian Brand Equity Foundation

Report on Overview of the Indian Transport and Logistics Industry prepared by European

Technology and Business centre

Report on current status of logistics industry prepared by Mr. Chander Agarwal, ED TCI

The information provided in the above reports have been reviewed and produced in the

following sections appropriately.

3.3.2 Overview of Logistics Sector in India

The Logistics Services Market in India 2015 is one of the fastest growing markets in India.

Logistics services can be described as courier services, freight forwarding, third party

logistics (3PL) and reverse logistics.

Growth in auto and auto components sector and retail sector are major factors which have

affected the growth of the 3PL market. Reverse logistics is primarily affected by the need for

quick turn around and crediting for returns management for retailers. The prevalence of on

line trading has enhanced shopper’s ability to purchase anytime which positively affects both

couriers and reverses logistics. Domestic freight market is expected to grow considerably

provided freight companies diversify their business to other logistic segments.

Railways as well as port sector initiatives and shift to GST regime have assisted in helping

address some of these challenges faced by the logistics industry. GPS, barcode technology

and RFID has improved logistics services in tracking of goods and smooth information flow



between monitoring unit and on duty delivery. The focus on skilled manpower, technology

adoption and competitive pricing are the key strategies to expect a sustainable growth

trajectory in the overall sector.

Transportation segment accounts for close to 62% of the total logistics market, reiterating the

fact that it is the most important logistics function for all industries.

Further, agricultural sector accounts for slightly over half of total logistics market in the

country, owing to extensive storage and transportation activities associated with agro-

products, the study said.

Industries such as FMCG, pharma and food processing apart from agriculture sector have

considerable requirements for integrated logistics parks owing to their higher need for

warehousing activity.

These industries are the leading contributors in the 26% share accounted by warehousing

segment within the total Indian logistics market.

Meanwhile, both manufacturers and logistics companies are hampered by the problem of

poor infrastructure connectivity in rural areas.

The hardest hit by the inadequate transport connectivity are likely to be the FMCG, food

processing, pharma and consumer durables industries, which have a huge potential

consumer base in these areas.

The FMCG and food processing industry are also affected on the sourcing side, since they

are highly dependent on the raw materials sourced from rural areas.

3.3.2.1 Third Party Logistics 3PL

The Third Party Logistics (3PL) market in the country is expected to touch Rs. 48,000 crore

by 2019, mostly fuelled by outsourcing especially in retail, pharmaceutical, according to a

survey.

"The Indian 3PL market is geared for a robust growth during 2014-2019. It is anticipated to

grow at a CAGR of 21% to touch Rs. 48,000 crore over the period 2014-2019.

Third-party logistics or 3PL is a business process followed by companies to outsource their

logistics and supply chain activities to a service provider specialized in handling different

logistics functions. 3PL service providers are specialized in handling different logistics

function such as transportation, warehousing, and freight and forwarding.

In addition, they provide various value-added services such as MIS in the supply chain. 3PL

is helpful for companies that cannot purchase their own fleet of vehicles. In addition, 3PL

services help companies to concentrate on their core business activity.

TechNavio's analysts forecast that the Third-party Logistics market in India will grow at a

CAGR of 21.16% over the period 2013-2018.

3.3.2.2 Cold Chains

The term cold chain logistics refers to the process of transporting and storing products and

commodities under temperature-controlled conditions. It involves the usage of temperature-

controlled warehouses for storage and refrigerated transport vehicles for distribution of

products. It is widely used to store and transport fruits, vegetables, drugs, and medicines.

Cold storage increases the shelf life and maintains the quality of products.



TechNavio's analysts forecast Cold Chain Logistics market in India to grow at a CAGR of 27

percent over the period 2014-2019.

The cold chain industry is emerging as a fast-growing business sector in India, with

developments in the food processing sector, organized retail and government initiatives

driving growth. To develop a world-class cold chain infrastructure, government and industry

bodies need to work in collaboration to encourage the adoption of better and more efficient

refrigeration technologies that can prolong the shelf life of food products and bring

commensurate economic returns to the farmers. India needs a more effective, efficient and

well-thought-out cold storage infrastructure.

The technology of construction has undergone a phenomenal change from conventional

brick wall construction to sandwich insulated panel and reinforced concrete (RCC) structures

to pre-engineered buildings (PEB) steel structures. Energy-efficient practices like energy

recovery systems, energy-efficient designs of refrigeration equipment and automation are

some of the innovative features.

Efforts need to be made in order to introduce the concept of green technology, as also the

use of renewable energy for the cold chain sector. Special emphasis needs to be laid on

development of reefer infrastructure in view of India’s exports thrust and potential. Besides,

to boost the investments, financial institutions should play a major role to encourage the

investment in cold chain industry in terms of term loan sanctioning, nominal interest rates

and disbursement.

3.3.2.3 Future Trends

There have been several key indicators to the future trend in the Indian logistics sector. The

demand for logistics services has been largely driven by the remarkable growth of the Indian

economy. Logistics spend in India is estimated to be around 13% of the GDP, which is

comparatively higher than other developed countries.

The air transport sector’s contribution has been around 0.2% of the country’s GDP, while the

transport sector’s contribution to the GDP has been growing over the last couple of years.

India’s air cargo is predicted to grow at over CAGR of 11.5% in the next few years.

The contribution of the marine transport sector has also been around 0.2% to the country’s

GDP. The sector’s contribution to the GDP has been increasing mostly because of the

growing economic developments in the country. The role of the shipping industry in the

growth of Indian economy has been very significant. Major ports in India together have

handled around 500 million tons of cargo in the past two years and this figure is growing

significantly.

The Indian railway has realized the necessity to improve the infrastructure to provide better

service. The plan to develop Logistics Parks or hubs has the potential to streamline and

optimize the supply chain and reduce the costs. Currently around 80% of the goods in India

move by road, the railways have to essentially devise plans to divert this traffic to the rail.

India’s logistics sector attracted huge investments, leaving behind some of the major sectors

including aviation, metals, and consumer durables. The growths in the retail and

manufacturing industry, commodity markets and development of SEZs have been key factors

in the growth of Indian logistics industry. Recent studies have indicated that the Indian

logistics industry is expected to grow annually at the rate of 15 to 25%. A number of

infrastructural projects involving warehouse and logistics parks are being undertaken are

expected to be operational in the next 2-3 years.



The setting up special economic zones (SEZs) has led to increased logistics activities around

them. Several logistics parks have come up at locations like Mumbai, Kolkata, Chennai and

because of their excellent port, rail, and road connectivity and they are witnessing significant

investment in infrastructure. Many of the large logistics players are in the process of setting

up warehouses, container freight stations (CFS), inland container depots(ICD), logistics

parks, distribution centers and other facilities to leverage the abundant opportunities.

Increase in foreign trade is expected to further accelerate the demand for logistics services.

The future of the Industry is very bright and is sure to witness exponential growth in the

coming years. The increased participation of both public and private sector is crucial for

developing logistics and improving supply chain management. Not only do the logistics

companies need to create efficient business to thrive in the logistics sector, but they also

need to explore ways for investing energy, costs and time to grow a strong logistics system.

3.3.2.4 Key challenges faced by logistics industry

Poor Infrastructure

One of the major critical challenges faced by companies today is of insufficient integration of

transport networks, information technology (IT), and warehousing and distribution facilities.

Trade Regulations

Regulations exist at a number of different tiers, imposed by national, regional and local

authorities. Regulations often differ from city to city, hindering the creation of national

networks.

Trained Manpower

Trained Manpower in both the third party logistics sector and the manufacturing and retailing

sectors is very weak at a practical level, i.e., IT, driving and warehouse as well as at a higher

strategic level.

Lack of Training Institutions

The disorganized nature of the logistics sector in India, its perception as a manpower-heavy

industry and lack of adequate training institutions has led to a shortfall in skilled management

and client service personnel.

Information and Communications Technology

There are a lack of IT standards and poor systems integration and equipment.

Poor Warehousing and Storage

Poor facilities and management are to blame for high levels of loss, damage and

deterioration of stock, especially in the perishables sector. Part of the problem is insufficient

specialist equipment, i.e. proper refrigerated storage and containers, but it is also partly down

to lack of training.

Lack of research and development (R&D) of the industry

Although both the practitioners and the academicians are increasingly aware of the

importance of logistics and supply chain, however the field is still under penetrated as far as

research is concerned. It is important to prioritize research and development so that various

weaknesses in the industry could be identified and improved.



3.3.2.5 Estimated Future Growth

The Indian logistics sector growth depends on the growth of its soft infrastructure like

education, training and policy framework as much as the hard infrastructure. To support

India’s fast paced economy growth of logistics industry is very essential. It is estimated that

the Indian logistics sector will continue to show robust growth of 10-15% annually, leading

the pace of growth of the economy at large.

Main demand drivers:

In 2014 the Global economic outlook and indeed that of India is expected to significantly

improve as India Inc begins to tackle the economic downturn. The biggest boost to the

growth of the industry is coming from the increasing consumer demand, particularly in the

Tier 2 and 3 sections of the country. This is being further fueled by the revolutionary growth

being seen in e-commerce which is leading to logistics companies responding with new

innovations in service since logistics is the most critical ingredient in the success of an online

business.

Currently the logistics has no industry status, being a fragmented industry , because of which

there are many fallouts because of Inability to raise funds from organized financial

institutions, Inadequate deployment of quality vehicles, Substandard Storage / Warehouses

and finally unable to think inclusively.

Some regulatory constraints like license to operate, the need for statutory compliance, like

certification for infrastructure, process, facility and quality, and benchmark performance

index, service levels, operation process, skills and resources need to be addressed.

There is Macro economic factors like Tax laws, transportation documentation and warehouse

rent considered to be house income.

Currently the key focus in the EXIM Cargo is on B2B movement like developing SEZ, FTWZ,

and ICD/CFS, Rail- EXIM Container traffic, Air cargo terminal and national highways.

3.3.3 Criteria of Assessing Opportunity/Activity Mix

3.3.3.1 Supply Chain Logistics Overview

Logistics is the backbone of the economy, providing the efficient, cost effective flow of goods

on which other commercial sectors depend. The logistics industry in India is evolving rapidly



and it is the interplay of infrastructure, technology and new types of service providers that will

define whether the industry is able to help its customers reduce their logistics costs and

provide effective services.

The purpose of logistics industry is to enable an effective transportation or timely movement

of goods from one place to another. This could be for the purpose of industrial transportation

or even private purposes

Despite weak economic sentiments, the logistics and warehousing, industry continued to

witness growth largely due to growth in retail, e-commerce and manufacturing sectors. The

Global Logistics sector is expected to grow at around 15-25% in the period 2015-2018. With

this forward looking attitude and a promise of growth and improvements, the service oriented

logistics industry is all set to expand beyond the horizons in the latter half of this decade,

utilizing this fiscal year as its launch pad.

3.3.3.2 Key players of the Logistics industry

Among the key players of the Indian logistics industry, there are certain international names

along with national companies that are not only world leaders in the field but are also part of

the Indian industry for a long time now.

DHL – a very commonly known name in the Indian logistics industry, DHL has been part

of the industry for a long time now.DHL has grown across 220 countries with over

300,000 employees. It has built a reputation over the years as a responsible logistics

support air, ocean, express freight and overland transport, contract logistics solutions.

TNT – this is an international brand that has been a part of the Indian market also.

Established at Netherlands, TNT is a reliable name in the arena of international

transportation and distribution business. Spread across 200 countries it has an estimated

revenue turnover of $ 3,500 billion US dollars.

AFL – this is one of well known international players in the logistics industry of India. The

main areas of service by the company are in the area of logistics and warehousing along

with Courier Company and custom consultant.

BLUE DART – this is one of the premier Indian companies in the field of logistics. The

company has a huge network linked with the most advanced communication systems.

Blue Dart handles large and oversized packages and stands for an overnight delivery of

such goods. It is now operated by DHL.

GATI – one of the pioneering companies in the field of logistics. This is one the

companies that have taken several initiatives to implement modernization in the area of

logistics.

DTDC – this company spreads over 3,700 locations within India and 240 international

places. The company is a leading name in low cost shipments along with timely delivery.

ASHOK LEYLAND – this is an established name in the manufacture of trailer trucks and

heavy vehicles in India. It has come up with a new venture in Ashley Transport Services

Ltd. in the area of information exchanges and the business of freight contractors along

with integrated logistics services.

FIRST FLIGHT – this is an Indian company that has domestic, international and many

other programs of multi tracking technologies.

AGARWAL PACKERS AND MOVERS – this is a popular name in the field of logistics

companies of India. Services like shifting, transport of cars, and all other forms of quality

packing and transportation this is a name that has over the years become synonymous

with quality and assurance.

All cargo Logistics: It is a multimodal logistic player



Gateway Distriparks: It develops logistic parks in India and Container Transportation.

Arshiya International : It mainly focuses on Container Transportation

CONCOR: Container Corporation of India Ltd, the largest logistic company in India and a

leading PSU.

3.3.3.3 Key features of the Location

Implementation of the VCIC will trigger the demand for a dedicated logistics hub and

Unguturu can be effectively positioned with its inherent locational advantages such as

proximity to three deepwater ports such as Kakinada (existing) and the proposed ports at

Narasapuram and Machilipatnam, proximity to Vijayawada and Rajahmundry airports

which are poised for capacity augmentation

The proximity to NH5 and airport at Rajahmundry and New Capital of Andhra Pradesh

and the port at Kakinada would augur well for the development of the hub

The implementation of VK-PCPIR would be the trigger for the growth of the business at

logistic hub. There is wide scope for the development of liquid and gas logistics with the

kick start of Visakhapatnam-Kakinada Petrochemicals and Petroleum Investment Region

being developed

Supply Chain Logistics plays an important and crucial role in the economy of the country

Countries like Singapore/Dubai have flourished mainly on the development of ports and

improving the logistics

West Godavari District would be well placed with development of warehouses, silos, cold

chains etc to store agricultural and horticulture produce

The New Capital Region which is located less than 100kms from the hub would be co-

terminus for the organised development of the state as a whole

Government of Andhra Pradesh has also big plans to develop its coastline into a mega

logistics hub to cater to the needs of the South East Asian countries. GoAP is promoting

Andhra Pradesh as Gateway to the East.

3.3.4 Industrial Park Competition

3.3.4.1 Multi-Modal Logistic Park at Vishakhapatnam

The first phase of the multi-modal logistics park being developed by Container Corporation

of India (Concor) at Viman Nagar opposite to the airport was inaugurated recently.



The park, the first of a series being developed by Concor all over the country, would come up

on 100 acres at Viman Nagar and the total investment is around INR 370 Crores.

It is a major infrastructure project taken up by Concor in Andhra Pradesh

The project would offer integrated logistical solutions to the trade, not only in Andhra

Pradesh, but also in the neighbouring states of Odisha and Chhattisgarh as they make use of

the Visakhapatnam port and Gangavaram port.

It will have a private freight terminal and container freight stations and facilities for empty

container storage and handling. Container repair facilities would be provided. There will be

open and covered warehouses. Covered warehouses with a space of 4.5 lakh square feet

would be built and there would also be quality control facilities. Value-addition to the cargo

would also be possible at the park.

The railways are building up multiple railway sidings in the park and other necessary

infrastructure. There would be facilities for handling reefer (refrigerated) containers

necessary for aqua and pharma sectors. The project would be completed by March, 2016,

and it will certainly give a shot in the arm to the Exim trade in the region.

3.3.4.2 Gateway Distriparks Limited

It’s the only logistics facilitator in the whole of India with three verticals which are synergetic

and capable of being interlinked – Container Freight Stations (CFS), Inland Container Depots

(ICD) with rail movement of containers to major maritime ports, and Cold Chain Storage and

Logistics.

GDL operates two Container Freight Stations at Navi Mumbai, one at Chennai and one at

Visakhapatnam with a total capacity of over 600,000 TEUs. A new CFS at Kochi is

operational. These CFSs offer transportation & storage, general and bonded warehousing,

empty handling and several value added services.

GDL's rail operations are handled by a subsidiary, Gateway Rail Freight Limited (Gateway

Rail) in which The Blackstone Group of USA has made a private equity investment through

Blackstone GPV Capital Partners (Mauritius) V-H Ltd.

Gateway Rail provides inter-modal logistics and operates its own Inland Container

Depots/Dry Ports. Gateway Rail operates rail linked facilities at Garhi-Harsaru (Gurgaon,

Haryana), Ludhiana (Punjab) and Kalamboli (Navi Mumbai).

Gateway Rail owns and operates a fleet of 21 trains and 235+ road trailers at its rail linked

terminals. Gateway Rail operates regular container train service from these ICDs/Dry Ports

to the maritime ports at Nhava Sheva, Mundra and Pipavav, transporting import and export

as well as domestic containers. All major shipping lines operate from these Gateway Rail

terminals for both export and import.

The third vertical consists of cold chain logistics solutions out of 19 locations in India through

the subsidiary, Snowman Logistics Limited in which Mitsubishi, Nicherei and IFC (World

Bank) are investors.

Snowman is a leading Logistics Services Provider and India's first cold supply chain

company with a nationwide network connecting more than 100 cities and more than 4,400

outlets. Snowman has a pan-India presence that offers comprehensive warehousing,

transportation and distribution services. Its extensive infrastructure includes 19 ISO-22000

certified warehouses and more than 100 owned and leased reefer vehicles and transport



assets. With its premium customer service and intricate distribution network, it is the trusted

market leader in food supply chain management today.

3.3.4.3 Mitsui & Company

The company has plans to set up an integrated logistics park in Haryana at an investment of

Rs.5,000 crore. The company has signed a memorandum of understanding (MoU) with

Haryana State Industrial & Infrastructure Development Corporation (HSIIDC) and IL&FS

Infrastructure Development Corporation for the park.

To be spread over 1,500 acres of land, the main components of the project would include

transportation, logistic infrastructure, industry and manufacturing support for high-end

manufacturing, information and services, utilities like power generation and energy

conservation.

The key benefits of these parks are that they are cost saving through economies of scale and

reduced transit time and processing time, optimal use of all modes of transport thus reducing

overall cost, easy access to value added logistics services, Improved service levels,

professionalism, reduction in inventory and damages.

3.4 Focus Sectors and Their Impact

3.4.1.1 Warehousing: India – Emergence of a global manufacturing hub

Warehousing has become one of the major segments contributing to a rapidly growing Indian

logistics industry. The growth in international trade and a rapid rise in containerization levels

have led to high demand for warehouses and a tremendous opportunity for the private

sector. The demand for specialized services is expected to further drive the growth in the

market.

There has already been a sizeable impact on the industry, in terms of market size, growth

and the infrastructural resources. The numerous investment options in the warehousing

market have heightened the interest of players entering the market, which is already evident

from the growing number of players in the warehousing market.

There is tremendous competition between major private and public players in the market.

The continued development of warehouse infrastructure will go a long way in providing the

necessary support to the logistics industry.

3.4.1.2 E-Commerce

The fast growing e-commerce sector will drive the $167-billion domestic logistics industry

and going forward and the introduction of the Goods & Services Tax which will unify the

markets, which will be the biggest push for the sector, says a report.

"The matrix of logistics sector is changing due to the increasing focus on e-commerce

logistics and express logistics. The domestic e-commerce industry is growing at 35- 40

percent CAGR which has resulted in large players introducing a dedicated e-commerce

logistics business," said by one the logistics leading player.

The domestic e-commerce sector was close to $20 billion in 2014, up from $3.8 billion in

2009. It's estimated that by 2030, the e-commerce space will be a $300 billion giant,

according to various industry reports.

Another enabler is the government focus on infrastructure such as the Golden Quadrilateral,

East-West and North-South corridors, apart from tax break for foreign investors in cold-



storage, agri-warehouse and free-trade warehousing zones, coupled with 100% FDI in

almost all logistics sub-segments, the report noted.

As per the information from public domain, it was known that one of the India’s Largest

online retailer Flipkart has shown interest in acquiring 1 Million square feet of space in a

upcoming 500 acres logistics park near Vishakhapatnam similar to the park developed in

Bhivandi, Maharashtra. Samsung is the Anchor client for Bhivandi Park. GoAP opines that

Flipkart may become an Anchor client.

3.4.1.3 Multi-modal Logistics

Logistics facilitates in getting products and services as and when they are needed and

desired to the customer. It also helps in economic transactions, serving as a major enabler of

growth of trade and commerce in an economy.

Multimodal Logistics can be viewed as “the chain that interconnects different links or modes

of transport – air, sea, and land into one complete process that ensures an efficient and cost-

effective door-to-door movement of goods under the responsibility of a single transport

operator, known as a Multimodal Transport Operator (MTO), on one transport document”.

Multimodal Logistics Park provide all types of transportation facilities at a palace for the end

user or defined as a rail, road based inter-modal traffic handling facilitation complex

comprising container terminals, bulk/break- bulk cargo terminals, warehouses, banking and

office space and facilities for mechanized handling, inter-modal transfers, sorting/grading,

cold chain, aggregation / desegregations etc. to handle freight traffic. The key components of

a Multimodal Logistics Park are warehousing, transport and value-added services. The

concept of multimodal logistics parks is relatively new in the country.

Proposed location has all the advantages of developing into a Multimodal logistics hub.

3.4.1.4 Cold Chains

Cold chains are essential for extending the shelf life, period of marketing, avoiding over

capacity, reducing transport bottlenecks during peak period of production and maintenance

of quality of produce. The development of cold chain industry has an important role to play in

reducing the wastages of the perishable commodities and thus providing remunerative prices

to the growers.

The cold chain involves the transportation of temperature sensitive products along a supply

chain through thermal and refrigerated packaging methods to protect the integrity of these

shipments. There are several means in which cold chain products can be transported,

including refrigerated trucks and railcars, refrigerated cargo ships as well as by air cargo.

India's integrated cold chain industry - a combination of surface storage and refrigerated

transport - has been growing at a CAGR of ~20 percent for the last three years. The cold

chain market in India is anticipated to reach Rs.624 Billion by 2017.

3.4.1.5 Third-Party Logistics (3PL)

In logistics, considerable quantities of materials are required to be transported and stored at

various locations. Raw materials and components are to be moved over long distances from

vendor supply points to production centres. These materials have to be stored for some time

as raw materials and later as finished goods. Finished goods need to be transported to the

point of consumption. With so much to be done, the critical reasons why companies

outsource logistics activities are:



Better focus on core competencies

Cost saving resulting from better management of supply chain

Cross pollination of better available practices

Wider and better geographical coverage by access to specialist world class capabilities

Improved re-engineering benefits and lesser internal resources

The third party logistics market is still in its nascent stages in India, facing issues such as

lack of infrastructure (viz, warehouses and cold storage chains), lack of economies of

scale due to unorganized private truck operators, and lack of efficient processes and

automated, technologically advanced monitoring systems.

3.4.1.6 Current Initiatives

Technologies and Green Logistics; “Green Logistics” refers to supply chain management

policies and strategies to reduce the environmental/ energy footprint of freight and focuses

on material handling, waste management, packaging and transport.

Intelligent Transport Systems (ITS) are advanced applications of Information and

Communication Technologies (ICT) in transport, to enable users to be safer, more

coordinated, better informed and make ‘smarter’ use of transport networks. ITS integrate

telecommunications, electronics and information technologies.

Applications of clean technologies in logistics can be an effective way to reduce carbon

footprint, help reduce dependency on fossil fuels and reduce air and noise pollution.

Information Management Systems — Cold Chain logistics — Freight Operation

Information System (FOIS) — Electronic Data Interchange (EDI), for information flow

between ports, Customs, shipping lines, and users

Green Cold Chain practices for energy savings — Efficient building design using eco-

friendly & recycled materials — Efficient thermal insulation — Energy efficient

refrigeration — Waste heat recovery — Use of renewable energy

Automated Container Transport System — Improved hinterland and intermodal

connectivity

Intelligent Transport Systems (ITS) — Real-time monitoring of trucks and trains (GPS),

smart ticketing (reservation, payment and invoicing systems) and management of

connections with other modes of transport (fleet and parking management)

Environmental design in rail including hybrid trains.

3.4.1.7 Inland containerisation

Across the globe 20 Million containers were handled in 1980 and in 2010 it handled 560

Million containers, and in 2020 it is expected to handle 1 billion Containers.

Hence having such an exponent growth in containers, global logistics has also seen such

exponential growth. The global logistics is expected to grow from 3.5 trillion to 6 trillion

dollars in 2020. This is a phenomenal growth, and Indian trade growth will have a severe

impact. As per the World Bank Rating, India stands at 47th rank in logistics performance

index rated on quality of service , timeliness, transactional cost and other factors and china is

at 27th rank.

At the Asian level, Singapore handled 28 million containers, Hongkong handled 24 million

containers while India handled only 9.4 million containers, compared to the developed and

developing nation who have 80% containerization, India is only at 20% containerization.



India has 130 Container freight stations (CFS) and 61 Inland container depots (ICD), there is

a big question whether they are sufficient enough with 10 Million TEUs, where as in China

150 million TEUs with 3000 ICDs and CFS.

In India, with only 20% containerization, there is lot of potential to develop logistics parks,

CFS and ICDs. South India container volume is growing in an exponential rate, it is 26% of

India’s total containerization and South India’s container volume is 2.4 million TEUs out of

India’s 9.4 Million TEUs. South India has around 50 CFS and 13 ICDs.

3.4.2 Industry Growth Drivers growth in Organised Retail

Over the last few years, organised retail and food service industries have emerged as new

segments of cold chain, mainly due to the changing consumption pattern. With the entry of

big corporate into retailing, the supply chain including cold chain for food and beverages

distribution is expected to get streamlined. India would be in need of over 33 million tons of

cold storage capacity to be added in the next four years, with investment requirement of

about Rs.3,000 crore per annum.

There is an increasing demand not only for capacity addition of cold storage facilities for a

set of highly perishable products, but also for a wide variety of vegetables, fruits and grains.

Growth in End user segments (food processing, horticulture): As of 2013, India ranks 5th in

the world in terms of the value of food processing. The industry is expected to grow to

Rs.126,840 crores by 2016, growing at 13% each year since 2012.

The industry is critical from the economic point of view and hence the government has its

focus on the development of this industry. With the growth in this end user segment, cold

chain infrastructure is expected to get a boost and help in reducing the wastage.

The Indian logistics Industry has been witnessing buoyant growth, and the demand for

logistic services has been largely fuelled by growth in economy, and key industries, such

automotive, engineering, pharmaceuticals and food processing.

The industry is expected to reach revenue of US$385 billion in 2014-15, according to

Cushman Wakefield Report. India’s logistics sector is poised for accelerated growth, led by

GDP revival, ramp up in transport infrastructure, e-commerce penetration, impending GST

implementation, and other initiatives like ‘Make in India.’ The Indian Logistics Industry is

expected to grow at 15%-20% YoY reaching revenues of US$ 500billion in the next five

years. The supportive infrastructure for the industry is expected to touch an investment of

US$ 850 billion by the end of XII five year plans.

This sector offers opportunities across the spectrum for companies in transportation, storage,

distribution, and allied services. Empirical evidence suggests the Indian logistics industry

grows at 1.5-2 times the GDP growth. Moreover, infrastructural bottlenecks that have stifled

sector’s growth and promoted inefficiency are being addressed by the government

3.4.3 Government of India Initiatives

The government is taking steps for the sector, such as schemes for capital investment

subsidy from the National Horticulture Board (NHB), the National Horticulture Mission (NHM)

and the Ministry of Food Processing Industries (MoFPI) for the agri investors to set up cold

chain infrastructure. Government has as well set up National Centre for Cold Chain

Development (NCCD) which would help in establishing building standards through

international benchmarking and to promote research and development activity in the cold



chain sector. The government has also established partnership with Indian Railways to set

up cold chain infrastructure.

The Department of Agriculture and Cooperation is endeavouring to strengthen the supply

chain infrastructure including cold chains through various schemes. Some of the most

prominent schemes are National Horticulture Mission (NHM) – a centrally sponsored

scheme, Horticulture Mission for North East and Himalayan States (HMNEH) – a central

sector scheme and National Horticultural Board (NHB) – central sector scheme.

National Horticulture Mission: The scheme would be covering following areas: (i)

Development of Commercial Horticulture through Production and Post-Harvest Management

of Horticulture Crops; (ii) Capital Investment Subsidy Scheme for construction/ expansion/

modernization of Cold Storages/Storages of Horticulture Produce (iii) Technology

Development and Transfer for promotion of horticulture; (iv) Market Information Service for

Horticulture Crops; and (v) Horticulture Promotion Service National Centre for Cold Chain

Development:

NCCD has been mandated to (i) Provide an enabling environment for the cold chain sector to

gain prominence and invite the much needed private sector involvement. (ii) To establish

standards and protocols related to cold chain testing, verification, certification and

accreditation as per international standards. (iii) To provide technical assistance to Financial

Institutions, Government Departments/ agencies, and industry for selection of cold chain

component such as refrigeration units, refrigerated transport equipment, display cabinets,

milk tanker etc. (iv) To offer HRD and technical advisory services to personnel engaged in

this sector.

The growth cannot happen without their support. The state government must make a step

towards subsidising the electrical tariffs, encouraging use of renewable energies, etc in order

to boost the development of cold chain infrastructure in India.

3.4.4 Initiatives by Government of Andhra Pradesh

GoAP is aiming to develop its 960 coastline as a Gateway for the vast hinterland of India,

Andhra Pradesh will unveil its marine policy in January. A marine board will also be set up to

explore the development possibilities on the coastal belt, in consultation with all the

stakeholders.

The government is hoping to bank on the proposed VCIC, Petroleum, Chemicals, Petro-

chemicals Investment Region (PCPIR) and other key projects to push forward its plan to set

up as many minor ports as possible to boost the logistics industry in the state.

GoAP is now in the process of developing new ports at Bhavanapadu, Nakkapalli,

Narsapuram, Machilipatnam, Ramayampatnam and Duggurajupatnam. In additional to this,

a private port by Kakinada SEZ is also coming up. With the new ports and the existing ports

at Gangavaram, Kakinada and Krishnapatnam, the state has all the potential to become the

logistics hub of India.

3.4.5 Anticipated Product Mix at Unguturu

The proposed logistics hub at Unguturu is strategically positioned with Kakinada,

Narasapuram, and Machilipatnam Ports. The location has also the advantage of being in

close proximity to Asian Highway 45 and Chennai – Kolkatta railway network. With this

advantage the Unguturu has all the qualities of becoming a multimodal logistics Hub and also

part of Andhra Pradesh endeavour to emerge as gateway to southeast economies.



Proposed Logistics Park can be developed as integrated facility which shall include

warehousing, cold chains, 3 Pl logistics, e commerce sectors etc. The logistics hub should

also have the facility of training and skill development as the same will be helpful in creating

the necessary skill set among the locals.

3.4.6 Projected Exports and Investment (2015-2030) in Focus Sectors

The Logistics sector otherwise called the Supply Chain Logistics is predominantly a service

sector and has exponential growth considering the thrust in the Manufacturing Sector. The

concepts of Make in India and Smart Cities offer extensive scope for investments and

potential employment generation.

The investment in the development of logistic hub at Unguturu, would be around Rs.750

crores to 1,500 crores, depending on the segments of the industry, which would generate a

revenue of Rs. 4,000 to 5,000 crores besides providing direct and indirect employment of

more than 15000 persons.

3.5 Estimated Demand for Space in Unguturu

With the VCIC in anvil, Unguturu block has all the qualities to become a major engineering

and logistics hub owing to strategic position. The proposed hub can be developed in various

phases commensurate with the development of VCIC. The Unguturu Block is spread out in

three sites each having an area of 1,209 acres, 1,009 acres and 511 acres.

The logistics hub can be developed in Site 1 (1,120 acres – Taking canal as the north

boundary) and engineering hub in Site 2 and Site 2 (1,009 and 511 acres) in a phased

manner as per the VCIC development. It should be ensured that proposed hub should be

developed into an integrated hub with support social infrastructure, research and

development facilities.

3.6 Estimated Revenue

S. NO Name of Forest

Block Type of industry

Revenue Per Acre

(Rs Crore)

1 Unguturu

Light Engineering Hub

20

Machine Tools

Fasteners

Bearings

Welding Equipment and Consumables

Pollution Control Equipment

Logistics Hub 0.35

4

Site Master Plan


4 Site Master Plan Page 29

4 Site Master Plan

4.1 Preamble

A state-of-the-art Master Planning incorporating holistic and sustainable industrial

development concepts shall include:

Long term vision with focus on international competence

Focus on integrated infrastructure

Optimal utilisation of available land and flexibility in plot division

Optimal use of natural resources including energy conservation measures

Traffic management

Integration of operation and management aspects

Such an approach shall ensure that various stake holders of the project as well as the

environment are benefited.

4.2 Planning Concepts

The planning concepts considered for the site master planning are presented in the following

Figure 4-1.

Figure 4-1: Planning Concepts

4.2.1 Consideration

The site boundary provided by APIIC is the base for preparation of the Site Master Plan

for the project site.

Surrounding land use and wind direction taken into consideration for the land use plan

proposed within the site

Existing connectivity to the site are NH-5 (AH-45), SH-42 and SH-6 at a distance of 2 km,

7 km and 8 km respectively

4.2.2 Product Mix

Based on the Market Study Assessment, product mix considered is Engineering and

Logistics Hub. Site 1 for logistics hub and Site 2 and 3 are for engineering.



4.3 Site Master Plan

Site Master plan has been prepared based on the demand arrived for industrial area from

market study and demand assessment.

There are three separate sites for Unguturu forest block. Polavaram Right canal is passing

through the northern portion of Site I which covers an area of ~14 acres and there is a

portion of land north to the canal falling the site boundary. Considering the environmental

aspects, it is proposed to limit the project site north boundary till the canal boundary leaving a

buffer. Hence the area of Site I is reduced from 1,209 acres as mentioned in the DGPS

survey map to 1,120 acres. Master Plan is prepared for 1,120 acres.

The following land uses are proposed in the Industrial Parks.

Industrial Use

Common Amenities (admin, training canters, QA, QC testing canters, Fire Station etc)

Infrastructure Utilities (Water Treatment Plant, Common Effluent Treatment Plant, Power

Stations, Landfill Site etc)

Green Areas and Green Belt

Logistics

Road Network

The area break up of all the proposed activities in the project site is shown in the following

Tables 4-1, 4-2 and 4-3.

Table 4-1: Proposed Land Use Break up for Industrial Parks at Unguturu Site 1

S. No Type of activity Area in Acres % to total area

1. Industrial 770 69

2. Common amenities 49 4

3. Infrastructure Utilities 49 4

4. Green Area 41 4

5. Green Belt 98 9

6. Roads 113 10

Total Area 1,120 100

The total industrial land proposed in the industrial park for Unguturu Site 1 covers 69% of the

total area. Green areas/green belt cover around 13% and the roads cover around 10%. The

balance land is proposed for the infrastructure utilities, common amenities, administrative

building, common parking space and industry related facilities which accounts to around

12%. Site master plan is provided as Figure FD0401.

Table 4-2: Proposed Land Use Break up for Industrial Parks at Unguture Site 2





4. Logistics 38 4

5. Green Area 64 6

SH 42

UNGUTURU R.S

CHEBROL R.S

UNIVERSITY AREA

GOPINATHAPATNAM

CHEBROLU

SINGARAJUPALEM

NARAYANAPURAM

18 Ac.

25 Ac.

36 Ac.

47 Ac.

NH 5 (AH 45)

TO T.P.GUDEM

7 Ac.

18 Ac.

30 Ac.

52 Ac.

52 Ac.

34 Ac.

80 Ac.

19 Ac.

35 Ac.12 Ac.

15 Ac.38 Ac.

285 Ac.

TO NALLAJERLA

9 Ac.

TO TADEPALLIGUDEM

TO ELURU

EMERGENCY

EMERGENCYENTRY / EXIT

ENTRY/EXIT

ENTRY / EXIT

17 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

11 Ac.

20 Ac.

20 Ac.

20 Ac.

25 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

3 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

7 Ac.

20 Ac.20 Ac.

20 Ac.

11 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

4 Ac.3 Ac.

25 Ac.

45 M WIDE ROW

45 M WIDE ROW

45 M

WID

E RO

W45

M W

IDE

ROW

45 M

WID

E RO

W

24 M

WID

E RO

W

24 M

WID

E RO

W

24 M

WID

E RO

W

24 M

WID

E RO

W

30 M WIDE ROW 30 M WIDE ROW

30 M

WID

E RO

W

30 M WIDE ROW

45 M

WID

E RO

W


4 Ac.

5 Ac.

20 Ac. 20 Ac.20 Ac.

20 Ac.

10 Ac.

16 Ac.9 Ac.

10 Ac.

10 Ac.

10 Ac.10 Ac.10 Ac.

10 Ac.10 Ac.10 Ac.

8 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.10 Ac.

10 Ac. 10 Ac. 10 Ac. 10 Ac.10 Ac.

22 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

15 Ac.

15 Ac.3 Ac.

6 Ac.

6 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

5 Ac.

3 Ac.

10 Ac.

10 Ac.

13 Ac.

10 Ac.10 Ac.

8 Ac.10 Ac.

10 Ac.10 Ac.

10 Ac.

10 Ac.42 Ac.45 M WIDE ROW

45 M W

IDE ROW 45 M WIDE ROW

45 M WIDE ROW30 M

WID

E RO

W

24 M WIDE ROW

24 M W

IDE ROW

24 M W

IDE ROW30

M WIDE ROW

30 M W

IDE ROW

30 M W

IDE ROW45

M WIDE ROW

30 M W

IDE ROW

30 M

WID

E RO

W

UNGUTURU SITE1 (1120 Ac.) AREA (Ac.) %INDUSTRIAL (LOGISTICS HUB) 770 69COMMON AMENITIES 49 4INFRASTRUCTURE UTILITIES 49 4GREEN AREA 41 4GREEN BELT 98 9ROADS 113 10

TOTAL 1120 100Road Lengths In Metres In km

45 M Row 6376 6.430 M Row 1602 1.624 M Row 3922 4.012 M Row (Periphery Road) 8968 9.0

UNGUTURU SITE2 (1009 Ac.) AREA (Ac.) %INDUSTRIAL (LIGHTENGINEERING) 605 60

COMMON AMENITIES 39 4INFRASTRUCTURE UTILITIES 57 6LOGISTICS 38 4GREEN AREA 64 6GREEN BELT 83 8ROADS 123 12

TOTAL 1009 100%Road Lengths In Metres In km


UNGUTURU SITE3 (511 Ac.) AREA (Ac.) %INDUSTRIAL (LIGHTENGINEERING) 284 55

COMMON AMENITIES 15 3INFRASTRUCTURE UTILITIES 30 6LOGISTICS 9 2GREEN AREA 18 4GREEN BELT 103 20ROADS 52 10

TOTAL 511 100%Road Lengths In Metres In km

30 M Row 2713 2.724 M Row 1325 1.312 M Row (Periphery Road) 11745 11.8

INFRASTRUCTURE UTILITIES

INDUSTRIAL

COMMON AMENITIES

LOGISTICS

GREEN AREAS

GREEN BELT

LEGEND

0.5 Km

SCALE IN KILO METRES

0 Km 1 Km

N

CANA

L

ENTRY / EXIT

SITE1

SITE2

SITE3

ENTRY / EXIT

&T

In

fra

stru

ctu

re

E

ng

in

ee

rin

g

Ltd

.

L&

T-R

am

bo

ll

Co

ns

ultin

g E

ng

in

ee

rs

L

im

ite

d





6. Green Belt 83 8

7. Roads 123 12

Total Area 1,009 100





10%.

Table 4-3: Proposed Land Use Break up for Industrial Parks at Unguturu Site 3





4. Logistics 9 2

5. Green Area 18 4

6. Green Belt 103 20

7. Roads 52 10

Total Area 511 100





11%.

4.4 Proposed Entry/Exit

4.4.1 Site 1

Proper planning of Entry / Exit is essential for effective functioning of the Industrial Park.

There is one entry / exit proposed in the logistics hub and is shown as Point 1. In future

dedicated road connectivity to AH45 and a rail siding can be developed depending on the

need.

Exclusive entry/exit is proposed and the location of emergency entry/exit is shown as Point 2

in Figure 4-2. In the case of emergency, the Industrial Park users can utilise the emergency

entry/exit which is linking to the existing SH-44 via proposed Gollagudem village road.



Po

int 2

Po

int 1

Figure 4-2: Proposed Entry/ Exit Points for Site 1

4.4.2 Site 2

Proper planning of Entry / Exit is essential for effective functioning of the Engineering Hub.

There is one entry / exit proposed and is shown as Point 1. Exclusive entry/exit is proposed

and the location of emergency entry/exit is shown as Point 2 in Figure 4-3. In the case of

emergency, the Industrial Park users can utilise the emergency entry/exit which is linking to

the existing SH-44 via proposed Venkataramannagudem village road.




4.4.3 Site 3

Proper planning of Entry/ Exit is essential for effective functioning of the Industrial Park.

There is one entry/ exit proposed in the Industrial Park area and the location of entry/exit is

shown as Point 1 in Figure 4-4.

Entry / Exit Point


4.4.4 Circulation and Road Hierarchy

The entire IP will have different hierarchy of roads, with the primary road of 45m and 30m

RoW. The secondary roads are of 24m and 12m RoW. The entire circulation plan is shown in

Figure FD0402.

Typical Cross sections of the RoW are provided in Figure FD0403 and Figure FD0404.

Green belt proposed along the boundary will have peripheral road for maintenance purpose.

The cross sections also include utility corridor (water, power, wastewater, telecom network,

etc) and foot path for pedestrian traffic.

4.4.5 Green / Open Areas

Green belt is proposed along the site boundary. Green areas are also proposed near the

infrastructure utilities to serve as recreational facilities and lung spaces. In addition to this, all

the industrial units shall develop green areas within their premises as per the prevailing

Andhra Pradesh Pollution Control Board (APPCB) provisions.

The green areas proposed are shown in Figure FD0405.

4.4.6 Infrastructure Utilities/ Common Amenities/ Industry Related Facilities

The following amenities are proposed in the site and proposed location is shown in Figure

FD0406.

Truck parking and dormitory

Administrative building

Fire station at prominent locations near the entrances

Community hall, recreational spaces, banks and ATMs, post office, restaurants,

cafeterias, fuel filling station, hotel, convention centre, etc at convenient locations

distributed so that it can be easily accessed

UNGUTURU SITE1 (1120 Ac.) AREA (Ac.) %ROADS 113 11

TOTAL 133Road Lengths In Metres In km


UNGUTURU SITE2 (1009 Ac.) AREA (Ac.) %LOGISTICS 38 4ROADS 123 12



UNGUTURU SITE3 (511 Ac.) AREA (Ac.) %LOGISTICS 9 2ROADS 52 10


30 M Row 2713 2.724 M Row 1325 1.312 M Row (Periphery Road) 11745 11.8

LEGEND

0.5 Km0 Km 1 Km

24 M WIDTH RoW

45 M WIDTH RoW

30 M WIDTH RoW

12 M PERIPHERAL ROAD

LOGISTICS

SH 42

UNGUTURU R.S

CHEBROL R.S

UNIVERSITY AREA

GOPINATHAPATNAM

CHEBROLU

SINGARAJUPALEM

NARAYANAPURAM

18 Ac.

25 Ac.

36 Ac.

47 Ac.

NH 5 (AH 45)

TO T.P.GUDEM

7 Ac.

18 Ac.

30 Ac.

52 Ac.

52 Ac.

34 Ac.

80 Ac.

19 Ac.

35 Ac.12 Ac.

15 Ac.38 Ac.

285 Ac.

TO NALLAJERLA

9 Ac.

TO TADEPALLIGUDEM

TO ELURU

EMERGENCY


ENTRY / EXIT

ENTRY/EXIT

ENTRY / EXIT

17 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

11 Ac.

20 Ac.

20 Ac.

20 Ac.

25 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

3 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

7 Ac.

20 Ac.20 Ac.

20 Ac.

11 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

4 Ac.3 Ac.

25 Ac.

45 M WIDE ROW

45 M WIDE ROW

45 M

WID

E RO

W45

M W

IDE

ROW

45 M

WID

E RO

W

24 M

WID

E RO

W

24 M

WID

E RO

W

24 M

WID

E RO

W

24 M

WID

E RO

W


30 M

WID

E RO

W

30 M WIDE ROW

45 M

WID

E RO

W


4 Ac.

5 Ac.

20 Ac. 20 Ac.20 Ac.

20 Ac.

10 Ac.

16 Ac.9 Ac.

10 Ac.

10 Ac.

10 Ac.10 Ac.10 Ac.

10 Ac.10 Ac.10 Ac.

8 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.10 Ac.

10 Ac. 10 Ac. 10 Ac. 10 Ac.10 Ac.

22 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

15 Ac.

15 Ac.3 Ac.

6 Ac.

6 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

5 Ac.

3 Ac.

10 Ac.

10 Ac.

13 Ac.

10 Ac.10 Ac.

8 Ac.10 Ac.

10 Ac.10 Ac.

10 Ac.


45 M W


45 M WIDE ROW30 M

WID

E RO

W

24 M WIDE ROW

24 M W

IDE ROW

24 M W

IDE ROW30

M WIDE ROW

30 M W

IDE ROW

30 M W

IDE ROW45

M WIDE ROW

30 M W

IDE ROW

30 M

WID

E RO

W

N

CANA

L

ENTRY / EXIT

SITE1

SITE2

SITE3

&T

In

fra

stru

ctu

re

E

ng

in

ee

rin

g

Ltd

.

L&

T-R

am

bo

ll

Co

ns

ultin

g E

ng

in

ee

rs

L

im

ite

d


&T

In

fra

stru

ctu

re

E

ng

in

ee

rin

g

Ltd

.

L&

T-R

am

bo

ll

Co

ns

ultin

g E

ng

in

ee

rs

L

im

ite

d


UNGUTURU SITE1 (1120 Ac.) AREA (Ac.) %GREEN AREA 41 4GREEN BELT 98 9

TOTAL 139


TOTAL 147


TOTAL 121

GREEN AREAS

GREEN BELT

LEGEND

0.5 Km


0 Km 1 Km

SH 42

UNGUTURU R.S

CHEBROL R.S

UNIVERSITY AREA

GOPINATHAPATNAM

CHEBROLU

SINGARAJUPALEM

NARAYANAPURAM

18 Ac.

25 Ac.

36 Ac.

47 Ac.

NH 5 (AH 45)

TO T.P.GUDEM

7 Ac.

18 Ac.

30 Ac.

52 Ac.

52 Ac.

34 Ac.

80 Ac.

19 Ac.

35 Ac.12 Ac.

15 Ac.38 Ac.

285 Ac.

TO NALLAJERLA

9 Ac.

TO TADEPALLIGUDEM

TO ELURU

EMERGENCY


ENTRY / EXIT

ENTRY/EXIT

ENTRY / EXIT

17 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

11 Ac.

20 Ac.

20 Ac.

20 Ac.

25 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

3 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

7 Ac.

20 Ac.20 Ac.

20 Ac.

11 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

4 Ac.3 Ac.

25 Ac.

45 M WIDE ROW

45 M WIDE ROW

45 M

WID

E RO

W45

M W

IDE

ROW

45 M

WID

E RO

W

24 M

WID

E RO

W

24 M

WID

E RO

W

24 M

WID

E RO

W

24 M

WID

E RO

W


30 M

WID

E RO

W

30 M WIDE ROW

45 M

WID

E RO

W


4 Ac.

5 Ac.

20 Ac. 20 Ac.20 Ac.

20 Ac.

10 Ac.

16 Ac.9 Ac.

10 Ac.

10 Ac.

10 Ac.10 Ac.10 Ac.

10 Ac.10 Ac.10 Ac.

8 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.10 Ac.

10 Ac. 10 Ac. 10 Ac. 10 Ac.10 Ac.

22 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

15 Ac.

15 Ac.3 Ac.

6 Ac.

6 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

5 Ac.

3 Ac.

10 Ac.

10 Ac.

13 Ac.

10 Ac.10 Ac.

8 Ac.10 Ac.

10 Ac.10 Ac.

10 Ac.


45 M W


45 M WIDE ROW30 M

WID

E RO

W

24 M WIDE ROW

24 M W

IDE ROW

24 M W

IDE ROW30

M WIDE ROW

30 M W

IDE ROW

30 M W

IDE ROW45

M WIDE ROW

30 M W

IDE ROW

30 M

WID

E RO

W

N

CANA

L

ENTRY / EXIT

SITE1

SITE2

SITE3

&T

In

fra

stru

ctu

re

E

ng

in

ee

rin

g

Ltd

.

L&

T-R

am

bo

ll

Co

ns

ultin

g E

ng

in

ee

rs

L

im

ite

d


UNGUTURU SITE1 (1120 Ac.) AREA (Ac.) %COMMON AMENITIES 49 4INFRASTRUCTURE UTILITIES 49 4



INFRASTRUCTURE UTILITIES

COMMON AMENITIES

LEGEND

0.5 Km


0 Km 1 Km

SH 42

UNGUTURU R.S

CHEBROL R.S

UNIVERSITY AREA

GOPINATHAPATNAM

CHEBROLU

SINGARAJUPALEM

NARAYANAPURAM

18 Ac.

25 Ac.

36 Ac.

47 Ac.

NH 5 (AH 45)

TO T.P.GUDEM

7 Ac.

18 Ac.

30 Ac.

52 Ac.

52 Ac.

34 Ac.

80 Ac.

19 Ac.

35 Ac.12 Ac.

15 Ac.38 Ac.

285 Ac.

TO NALLAJERLA

9 Ac.

TO TADEPALLIGUDEM

TO ELURU

EMERGENCY


ENTRY / EXIT

ENTRY/EXIT

ENTRY / EXIT

17 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

11 Ac.

20 Ac.

20 Ac.

20 Ac.

25 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

3 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

7 Ac.

20 Ac.20 Ac.

20 Ac.

11 Ac.

20 Ac.

20 Ac.

20 Ac.

20 Ac.

4 Ac.3 Ac.

25 Ac.

45 M WIDE ROW

45 M WIDE ROW

45 M

WID

E RO

W45

M W

IDE

ROW

45 M

WID

E RO

W

24 M

WID

E RO

W

24 M

WID

E RO

W

24 M

WID

E RO

W

24 M

WID

E RO

W


30 M

WID

E RO

W

30 M WIDE ROW

45 M

WID

E RO

W


4 Ac.

5 Ac.

20 Ac. 20 Ac.20 Ac.

20 Ac.

10 Ac.

16 Ac.9 Ac.

10 Ac.

10 Ac.

10 Ac.10 Ac.10 Ac.

10 Ac.10 Ac.10 Ac.

8 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.10 Ac.

10 Ac. 10 Ac. 10 Ac. 10 Ac.10 Ac.

22 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

15 Ac.

15 Ac.3 Ac.

6 Ac.

6 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

10 Ac.

5 Ac.

3 Ac.

10 Ac.

10 Ac.

13 Ac.

10 Ac.10 Ac.

8 Ac.10 Ac.

10 Ac.10 Ac.

10 Ac.


45 M W


45 M WIDE ROW30 M

WID

E RO

W

24 M WIDE ROW

24 M W

IDE ROW

24 M W

IDE ROW30

M WIDE ROW

30 M W

IDE ROW

30 M W

IDE ROW45

M WIDE ROW

30 M W

IDE ROW

30 M

WID

E RO

W

N

CANA

L

ENTRY / EXIT

SITE1

SITE2

SITE3

&T

In

fra

stru

ctu

re

E

ng

in

ee

rin

g

Ltd

.

L&

T-R

am

bo

ll

Co

ns

ultin

g E

ng

in

ee

rs

L

im

ite

d




Wastewater treatment plant (CETP)

Solid waste management

Hospital/ Clinic at convenient locations

Apart from the above common amenities, Industrial park will also include industry related

facilities like R&D centres, material testing centres, QC laboratories, training centres,

weigh bridge, exhibition cum business centre, etc.

4.5 Housing2

Proposed park will generate employment and it is proposed that the nearest urban centres

will be serving the housing needs of the employees.

2 This proposal on housing was based on the discussions on submission of the Preliminary Report and review

meeting on May 29, 2015 at Collector & District Magistrate Office, Eluru, W.G District, Andhra Pradesh.

5

Infrastructure Assessment and Cost Estimation


5 Infrastructure Assessment and Cost Estimation Page 35

5 Infrastructure Assessment and Cost Estimation

The following infrastructure is proposed for the Industrial park.

Road Network

Water supply

Wastewater management

Storm water management

Solid waste management

Power supply system

5.1 Infrastructure Demand Assessment

Infrastructure demand assessment for the site is carried out considering the proposed land

use, area break up. The following Figure 5-1 shows the methodology adopted for

infrastructure assessment of the site.

Figure 5-1: Methodology for Infrastructure Assessment

5.1.1 Internal Road Network

The master plan of project site is proposed such that it provides an efficient road network.

This network ensures that all parts of the site are effectively connected with each other with

efficient traffic movements. Proposed different RoW in project site are 45 m, 30 m and 24 m.

12 m wide road is used as peripheral road for service and also for emergency exit at the time

of fire hazard. The road cross-sections are proposed based on the RoW for various

categories of roads in the master plan.

5.1.2 Power Supply

The total power demand for the industries in the project site will be 124 MVA.



5.1.3 Water Supply

Total water demand for various uses in the industrial park includes process water, green belt

maintenance, fire demand, drinking, flushing, etc. The total water demand for the park is

estimated at 11 MLD.

5.1.4 Wastewater Management

Wastewater is generated from the industrial use, common amenities proposed in the project

site. It is broadly classified as industrial effluents and domestic wastewater. The total

wastewater estimated to be generated from the site is 8.8 MLD.

5.1.5 Solid Waste Management

The total solid waste generation from the project site is estimated at 31 TPD.

5.1.6 Storm Water Management

Storm water drains are proposed within the RoW of Roads.

5.2 Block Cost Estimates

Block cost estimates for the infrastructure development of the site is based on the

infrastructure demand and line estimates.

Site grading will costs around Rs.193 Crores

The total cost for development of road network in the industrial parks is estimated at Rs.

265 Crores.

Cost for development of streetlights is estimated at Rs.12 Crores

Total cost for development of water supply and distributions costs Rs.22 Crores

Drainage costs around Rs.88 Crores

Wastewater management costs about Rs.61 Crores

Cost for municipal solid waste management is estimated as Rs.4 Crores. Industrial

waste is proposed to be managed by contracted to be engaged by industry/APIIC

Cost for development of green belt, landscaping, admin and security cabin is estimated at

Rs.23 Crore

For power component, power will be supplied by the Government (APSPDCL) and the

industries for power will be charged based on the usage.

Table 5-1: Block Cost Estimates

S. No Item Cost (in Rs. Crores)

1. Site Grading 193

2. Road network and signages 265

3. Street lights 12

4. Water supply network including storage 22

5. Drainage 88

6. Wastewater Management 61

8. Solid Waste Management 4

9. Green belt, landscaping, admin and security cabin 23

Sub Total 667

Engineering and project management @ 2.5% 17



S. No Item Cost (in Rs. Crores)

Contingency @ 5% 33

TOTAL COST 717

6

Cost Benefit Analysis


6 Cost Benefit Analysis Page 38

6 Cost Benefit Analysis

6.1 Introduction

Government of Andhra Pradesh (GoAP) decides to utilise forest land for setting up of

industrial parks. As required by the GoI policy, the cost and benefit from the forest land

conversion has to be estimated prior to the conversion of forest land to industrial lands. This

Chapter covers the Cost Benefit analysis of Light Engineering and Logistics Hub in Unguturu,

Andhra Pradesh.

6.2 Overall Approach & Methodology

The cost benefit analysis has been carried out by analysis the benefit generated by the

business that will be established in the converted land against the expense / cost incurred in

the conversion process.

6.3 Revenue generation

The revenue from the converted land comes to Rs.69 Mn per Acre. The revenue generating

space in the project comes to 1500 acres with that the total revenue from the project is

estimated at Rs.1,03,500 Mn.

6.4 Cost incurred

The details of the cost incurred while converting the forest land to the industrial land are

given in the following paragraphs.

6.4.1 Project Investment

The capital outlay incurred for the development is estimated at Rs.14,672 Millions.

6.4.2 Land Cost:

APIIC has to pay Forest Department an amount of Rs.0.32 Mn per acre as the cost of forest

land.

6.4.3 Cost on Afforestation

APIIC has to carry out a compensatory afforestation effort for utilising the earmarked for the

development of Industrial Park. The capital expenditure for afforestation efforts comes to

about Rs 0.22 Mn per acre where as the maintenance expenses for the same comes to

around Rs 0.10 Mn per acre per annum.

6.4.4 Foregone revenue from the forest land

The foregone revenue from the forest land comes to around Rs 0.49 Mn per acre. Same has

been considered for the cost – benefit analysis.

6.4.5 Interest

The interest incurred in funding the project comes to 12% per annum. The interest expense

has been considered on the development cost estimated for the project.

6.4.6 Depreciation:

The details of the depreciation to be charged on the project assets are given in the following

table.


6 Cost Benefit Analysis Page 39

Depreciation Rate of Depreciation % w.r.t to capital cost

Civil 3.33% 55%

Electrical 7.42% 15%

Mechanical 7.42% 20%

Msc Assets 7.42% 10%

The total depreciated amount comes to Rs.759 Mn.

6.5 Details of Cost and Benefit

The Overall benefits from the project comes to Rs.1,03,500 Mn where as the expenses

incurred on converting forest land comes to Rs.20,271 Mn. The details of the analysis are

given in Annexure 6.1.

6.6 Conclusion

The revenue from the converted land justifies the cost incurred for the conversion exercise

as the overall B/C (Benefit / Cost) ratio comes to 5.11:1.

7

Financial Analysis


7 Financial Analysis Page 40

7 Financial Analysis

7.1 Introduction

Financial feasibility is a key determinant in a business oriented investment decision. A project

will attract investors and all other stakeholders only if the project generates sufficient

revenues, during the project life, to cover the initial and additional investment costs, if any,

plus a sufficient return on investment.

The viability study on financials include the key standard parameters like Post Tax Project

Internal Rate of Return (IRR), Equity IRR and Coverage ratios to ascertain the debt servicing

capability of the project.

This Chapter covers the financial viability for the Development of Light Engineering Hub and

Logistics Park at Unguturu, Andhra Pradesh.

7.2 Objective

The primary objectives of the financial analysis are to evaluate the financial viability of the

project and to ascertain whether the project shall be attractive for its various stake holders.

7.3 Overall Approach & Methodology

The overall approach to evaluate financial feasibility of the project involves determination of

Financial Internal Rate of Return (FIRR) for the Project and comparing it with the Weighted

Average Cost of Capital (WACC). This approach is preferred for infrastructure projects in

which tariffs/ user fees can be levied and recovered with a reasonable certainty. The

emphasis is on checking the adequacy of projected revenue streams to recover the capital

investment and desired returns. The steps followed under this approach are:

Project Phasing and estimation of Capital Expenditure

Means of Finance

Identifying revenue sources and estimating the project revenues

Estimation of capital costs, operating expenses and financing costs over the project horizon

Drawing up of profit & loss and cash flow statements for project

Estimation of net operating cash flows for the project

Calculation of IRR and ADSCR

7.4 Key Assumptions in Financial Modelling

The financial model takes inputs from the detailed technical studies done for the project &

other data sources for financial assumptions.

1. The financial analysis has been carried at nominal prices, as the nominal price method attempts to capture the effect of economic environment of the project.

2. The capital costs for all the project elements of Industrial park have been taken and same shall be escalated by 5% per annum on 2015 prices to derive the subsequent project development costs.

3. The project will developed in single phase.

4. Indigenous capital cost and operating cost escalation has been assumed at 5% p.a.



5. Economic assumptions have been derived from the values of base indicators for the Year 2015-2016.

6. Financing Assumptions and data relating to loans, interest rates, tenure etc. have been taken on the basis of prevailing market trends.

7. Depreciation rates, tax rates and concessions applicable to infrastructure projects have been taken as per the guidelines of Companies Act and Income Tax Act.

7.5 Flexibility in Financial Model

The financial analysis is based on the master plan. However, the model provides flexibility in

choosing and executing a different land absorption forecasts. The model also provides

flexibility in choosing financing mix for the project. The funds requirement in a particular year

can be met through various sources of debt and equity. The model incorporates the flexibility

of using different capital structures (D/E mix) for different phases.

7.6 Construction Period and Project Life

The project shall be developed in single phase in tandem with the land absorption projection

made for the project. As per the proposed schedule of implementation, the construction is

assumed to begin from April 2016. The construction period, including post construction

activities like commissioning, is assumed to be requiring 18 months for the development. The

COD may thus be assumed as 30 September, 2017. The details on major project milestones

are given in Table 7-1.

Table 7-1: Project Development Schedule

Construction Details- Phase I

Construction Start Period Apr-16

Construction period ( in months) 18

First FY during Construction 31-Mar-17

Completion of Construction 30-Sep-17

Fy after completion of Construction 31-Mar-18

No of Operating Months in the first year after COD 12

Period considered for viability study (in years) 30

Last Financial Year 31-Mar-46

Working months in the last F Year 12

7.7 Project Cost

The cost of the project is estimated at Rs.9,504.16 Million (at 2015 prices). This cost is

spread over a period between years 2016 and 2017. The cost includes civil development

cost, water supply and distribution network, external road connectivity, green belt

development, Equipment cost etc. The land cost is estimated at Rs.0.54 Mn per Acre, which



consist of Rs.0.32 Mn per acre to be paid to Forest department and the compensatory

afforestation cost of Rs.0.22 Mn per acre. The break-up of this cost (major heads) are given

in Table 7-2.

Table 7-2 : Capital Cost of the Project (2015 prices in Rs Mn)

Project Landing Cost in Rs Mn Amount in Rs Mn

Civil Cost 3,670

Electrical 1,001

Mechanical 1,334

Msc Assets 667

Block capital Cost 6,672

Land and Site Developments 1,484

Contingency @ 5% 334

Engineering and Project Management @ 2.5% 167

Preoperative expenses 115

Financing cost 70

Interest During Cost 662

Landing Project Cost 9,504

7.8 Financing Structure

The financing structure reflects the risk of the projects, the security requirements of the

lenders and financing requirements of the sponsors. The financing structure of a project also

depends on the stage in lifecycle of the project. Infrastructure projects have three distinct

phases with different risks. Both equity investors and lenders can be expected to seek

different rewards and expect different guarantees depending upon which phase they are

investing in. A typical Infrastructure project would involve the following phases as given in

Table 7-3.



Table 7-3 : Different phases of an infrastructure project

Phase Risks Financing

Development phase Very high risk Only equity, mainly from sponsors

Construction/start-up phase High risk Large volume of finance required. Mixture of equity & Senior debt is used under this phase.

Public utility/operation phase

Lower risk Refinancing with bonds or equity possible; high D/E ratios could be explored.

Also in the initial years of a project, greater equity participation may be more appropriate

mode of funding, since if debt is used, interest cost would mount substantially due to the lack

of any cash income in the development and construction phases of the project. But the

availability of equity is bound to pose problem due to the magnitude of risks involved.

The challenge for developers in structuring financing packages is to secure debt with

maturities long enough to match capital servicing cash flow requirements with the limited

inflows in the initial phases.

Financing has been exclusively based on loans from the commercial banks, bilateral

agencies and equity from the sponsors. Capital market sources have hardly been used in

these projects. Also, equity financing has contributed a relatively small share of the financing.

Infrastructure projects in developing countries usually have a financing pattern of 30-40%

equity and 60-70% debt.

7.8.1 Funding Structure for the project

It is considered that APIIC would raise sufficient fund in the form of Own fund and through

debt raised from multilateral agencies / commercial banks. The funding structure refers to the

mix of debt and equity components used as means of finance. We have considered a

conservative D/E ratio of 1.5:1 for funding the project. The means of finance for the project is

given in Table 7-4.

Table 7-4 : Means of Finance

Source of Fund Amount in Rs Mn Composition %

Equity 3713 39.1%

Debt 5571 58.6%

Non Refundable Deposit 220 2.3%

Total 9504 100%

7.8.2 Financial Instruments and Cost of Funding

The preferable financing sources/instruments, their tenure and dividend/interest on them are

given below:



Equity Structure

The equity contribution would be from the project promoter raised from own sources. The

Equity structure can either be consisting of a single member or may be of a consortium

formed by various equity contributors (state agencies) having interest in the same project.

Term Loan from Commercial Banks

The potential sources of rupee debt include Indian Term Lending Institutions, Scheduled

Commercial Banks, and Infrastructure Development Financing Agencies. These institutions

are generally lent to infrastructure projects at rupee term loan interest for a longer tenure of

upto 10 to 12 years. Commercial Banks loans would have a moratorium period of 1year.

The current prime lending rate of Commercial Banks is 11.50 to 13.50 % per annum. Most

infrastructure projects get term loans at PLR less 0.5 to 1.5%, depending upon the promoter

and the project revenue stream. In view of the continual decrease in prime lending rates over

the last few years, a rate of 12.00% is considered for the project. The details on debt are

given in Table 7-5.

Table 7-5 : Details on Debt

Details on Debt

Interest on Senior Debt 12.00%

Processing charges 0.75%

Tenor

Period under construction (in years) 1.5

Moratorium ( in years) 1

Repayment Period (in years) [Ballooned Repayment] 3

7.9 Depreciation

Depreciation rates have been taken based on the current statutory requirements of Income

Tax Act and Companies Act. The Written down Value Method has been used for the purpose

of Income Tax, and the Straight Line Method has been adopted for the Companies Act

purposes. The rates have been assumed based on the following categories of charges:

Table 7-6 : Depreciation Rates

Depreciation Rates Rate SLM (%) Rate WDV (%)

Civil Cost 3.34% 10.00%

Electrical 7.42% 15.00%

Mechanical 7.42% 15.00%

Msc Assets 7.42% 15.00%

7.10 Operating Expenses

Expenses are recurring in nature and would be incurred on day to day basis. These include

Operating and Maintenance expenses, administration expenses, insurance premium etc. The

expenses details are given in following paragraphs.



7.10.1 Operation and Maintenance Expenses

For the operation and maintenance of the park, a provision of 2.50% on the block cost has

been considered which will be escalated by 5% per annum.

7.10.2 Administrative Expenses

The administrative expenses for the project are estimated at 1% of the Block cost. The

expense will be escalated by 5% per annum.

7.10.3 Insurance expenses

Insurance shall be taken so as to mitigate any unforeseen events which may damage project

assets. It is assumed that the project will incur insurance fee, annually, which would be

equivalent to 0.75% on WDV of Fixed Assets.

7.11 Revenue Estimates

The Industrial Park (I.P) will have revenue streams in the form of an upfront premium and the

maintenance expenses collected from the occupants. The leasable space in the IP comes to

6070500 Sqm. The Upfront premium lease rent and the respective escalation factor

considered for the viability study are given in Table 7-7.

Table 7-7: Revenue Details

Revenue Sources Upfront Premium / Sqm In Rs

Annual Maintenance charge / Sqm In Rs

Annual Escalation

Industrial Area 1960 40 5%

The agreement with the occupant shall be made for a period of 30 years wherein 2% of the

initial premium shall be collected from the occupants as annual maintenance fee during the

term of the agreement. The annual maintenance fee shall be escalated by 5% per annum.

7.12 Income Tax Calculations

The Income Tax rate assumed for the project is 32.45%.

7.13 Financial Analysis - Base Case Scenario

7.13.1 Key Parameters

The key project parameters computed are Project IRR (pre-tax), Project IRR (post-tax) and

Equity IRR.

The Project IRR (pre-tax) has been calculated based on the project outflows in the form of

capital investment while the inflows have been considered based on the revenue net of

operating expenses (excluding interest and tax) i.e. Profit Before Tax Plus: Interest Plus:

Depreciation.

The Project IRR (post-tax) calculation is similar to Project IRR (pre-tax) except that in the

inflows, the tax payments have also been considered i.e. Profit After Tax Plus: Interest Plus:

Depreciation.

The equity IRR is based on the equity contribution being made by the investor as an outflow

and the inflow is the net cash available for payment of dividend i.e. Profit After Tax Plus:

Depreciation Less: Loan Repayment Obligation.



The DSCR has been calculated for the entire loan tenure. The details of Interest During

Construction (IDC) is provided in Annexure 7.1. Further, DSCR calculations, the projected

Profitability statement, Cashflow statement, Balance sheet, IRR calculations are given in

Annexure 7.2, Annexure 7.3, Annexure 7.4, Annexure 7.5 and Annexure 7.6,

respectively.

Based on the above analysis a base case scenario, with the following mix of key input

variables and base revenue estimates, has been prepared.

Table 7-8 : Key Input Parameters – Base Case Scenario

D/E ratio 1.5 :1

Cost of INR debt 12.00%

Term of INR debt Ballooned Repayment

Project Cost Sensitivity 100% of base case

Lease premium and Annual Maintenance expense

Sensitivity 100% of base case

Table 7-9 : Key results – Base Case Scenario

Sl. No Project Parameters Returns

1 Pre tax IRR 21.25%

2 Post Tax IRR 13.46%

3 Equity IRR 18.14%

4 Average Debt Service Coverage Ratio with DSR 1.58

Observations

Project IRR

The project has IRR (post tax) of 13.46%, considering the cashflow generated by the

business till 2046. No terminal value on the project assets has been considered for the

viability assessment. The Industrial Park development is a ‘Greenfield’ project and has a high

perceived commercial risk; however this level of return may be just sufficient to get nullify the

same.

7.14 Conclusion

It is concluded that the project is financially viable based on the assumptions considered by

the consultant on project cost, capital structuring, cost of capital, revenue and cost

assumptions etc.

8

Conclusion


8 Conclusion Page 47

8 Conclusion

Industrial development is proposed in the forest area for the following reasons.

Unguturu block comes under the influence of the proposed Vizag – Chennai Industrial

Corridor (VCIC). Initial studies projected tremendous growth for Andhra Pradesh in the

next 20 years. Once VCIC becomes functional, the manufacturing output would reach Rs

3,000 billion by 2025 and Rs. 7,825 billion by 2035. The proposed corridor is likely to

have a strong influence on the industrial activities in all 13 districts of Andhra Pradesh

and therefore there is a need for large tracts of industrial land to keep pace with the

projected industrialisation.

Unguturu Block is located between Kakinada and Gannavaram-Kankipadu Nodes in

West Godavari District. Most of the agricultural land in West Godavari District is three/two

crop. To meet the industrial demand it is proposed to avoid the agricultural land and

develop the industrial parks in the forest area. This will also help in preserving the

agricultural land getting converted into industrialisation and also improves food security

As a compensation it is proposed for forestry in Anantapur and Chittor districts to the

equal extend of area to be diverted for industrial area in West Godavari district

Considering the locational strengths Engineering and Logistics Hub has been proposed

at Unguturu.

Annexures

Annexure 1.1 Form A for seeking prior approval under

section 2 of the proposals by the state governments and other authorities

Annexure 6.1 Annual Benefit from the Project

DPR for Diversion of Forest Lands for Establishment of Industrial Parks in W.G District, AP

Final Detailed Project Report for Unguturu Forest Block

B1152201

RP007, Rev.0

Annexure 6.1

Unguturu -Light Engineering Hub and Logistics Park

Annual Benefit from the project

A Benefit from the industrial landRevenue (in

Rs Mn) / Acre

Area

earmarked

in acre

In Rs Mn

Revenue 69 1500

Annual benefit 1,03,500

B Investment required for the industrial development In Rs Mn 14,672

Infrastructure Cost

Solid waste Management 37.04

Water 216.33

Waste water 604.73

Roads 5464.62

Street lighting 118.92

Admin Green area etc 230.85

Sector wise investment 8000.00

C Land cost to Forest Department in Rs Mn per Acre 0.32

Area (in acres) 2728.98 884

D Cost incurred on afforestation (In Rs Mn per acre) 219830 600

Maintenance cost in Rs Mn per acre/annum 98800 270

E Foregone revenue from the forest land per Acre ( Rs Mn) 0.49

Total Revenue from the forest land ( Rs Mn) 1,326

F Interest Rate 12%

Interest on investment ( B*E) 1,761

G Depreciation % cost

Civil 3.33% 55% 269

Electrical 7.42% 15% 163

Mechanical 7.42% 20% 218

Msc Assets 7.42% 10% 109

H Total annual cost 20,271

I BC Ratio = Annual benefit/ Total Annual cost (A/H) 5.11

Page 1

Annexure 7.1 Interest During Construction (IDC)


Final Detailed Project Report for Unguturu Forest Block B1152201

RP007 rev. 0

Annexure 7.1 Interest During Construction (IDC)

In Rs Mn Fy Basis 31-Mar-17 31-Mar-18 31-Mar-19 31-Mar-20 31-Mar-21 31-Mar-22 31-Mar-23 31-Mar-24 31-Mar-25 31-Mar-26 31-Mar-27 31-Mar-28 31-Mar-29 31-Mar-30 31-Mar-31 31-Mar-32

Interest capitalised 352.51 309.54 - - - - - - - - - - - - - -

IDC in Quarterly Basis in Rs Mn

Quarters 30-Jun-16 30-Sep-16 31-Dec-16 31-Mar-17 30-Jun-17 30-Sep-17 31-Dec-17 31-Mar-18 30-Jun-18 30-Sep-18 31-Dec-18 31-Mar-19 30-Jun-19 30-Sep-19 31-Dec-19 31-Mar-20

Financial Charges from CF 55.86 82.54 99.63 114.48 142.40 167.14 167.14 167.14 167.14 167.14 163.79 160.45 153.77 147.08 137.05 127.02

Interest to be charge in P&L - - - - - - 167.14 167.14 167.14 167.14 163.79 160.45 153.77 147.08 137.05 127.02

IDC 55.86 82.54 99.63 114.48 142.40 167.14 - - - - - - - - - -

- - - - - - - -

IDC in Quarterly Basis in Rs Mn 30-Jun-20 30-Sep-20 31-Dec-20 31-Mar-21 30-Jun-21 30-Sep-21 31-Dec-21 31-Mar-22 30-Jun-22 30-Sep-22 31-Dec-22 31-Mar-23 30-Jun-23 30-Sep-23

Quarters 113.65 100.28 83.57 66.85 46.80 23.40 (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)

Financial Charges from CF 113.65 100.28 83.57 66.85 46.80 23.40 (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)

Interest to be charge in P&L - - - - - - - - - - - - - -

IDC

1

Annexure 7.2 Debt Service Coverage Ratio (DSCR)



RP007 rev. 0

Annexure 7.2 Debt Service Coverage Ratio

DSCR Calculation 31-Mar-17 31-Mar-18 31-Mar-19 31-Mar-20 31-Mar-21 31-Mar-22 31-Mar-23 31-Mar-24 31-Mar-25 31-Mar-26

PAT - 538.33 1,263.55 1,889.97 2,560.75 1,867.31 (11.41) (10.27) (9.01) (7.64)

Interst - 334.27 658.52 564.92 364.36 70.20 (0.00) (0.00) (0.00) (0.00)

Amortisation of expenses 26.04 237.75 407.15 386.64 367.44 349.46 332.62 316.84 302.06 288.20

Deferred Tax - 81.36 60.62 (24.38) (20.93) (17.95) (15.37) (13.15) (11.23) (9.57)

Total Cash flow 26.04 1,191.70 2,389.84 2,817.15 3,271.62 2,269.02 305.84 293.42 281.82 270.98

Debt Obligation

repayment - - 222.85 1,114.24 2,005.64 2,228.49 - - - -

interest - 334.27 658.52 564.92 364.36 70.20 (0.00) (0.00) (0.00) (0.00)

Total Debt Obligation - 334.27 881.37 1,679.17 2,370.00 2,298.69 (0.00) (0.00) (0.00) (0.00)

Overall DSCR 1.58 - - - - - - - - -

Min DSCR 0.99 - 3.57 2.71 1.68 1.38 0.99 ########### ########### - -

2

Annexure 7.3 Profitability Statement



RP007 rev. 0

Annexure 7.3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Profitability statement In Rs Millions

Revenues 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032

FY 31-Mar-17 31-Mar-18 31-Mar-19 31-Mar-20 31-Mar-21 31-Mar-22 31-Mar-23 31-Mar-24 31-Mar-25 31-Mar-26 31-Mar-27 31-Mar-28 31-Mar-29 31-Mar-30 31-Mar-31 31-Mar-32

No of Operating Months - - 6.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00

Non Refundable Deposits - - - - - - - - - - - - - - - - -

Processing Area - - 1,274.30 2,662.90 3,346.99 4,100.07 2,733.38 - - - - - - - - - -

Commercial Area - - - - - - - - - - - - - - - - -

Residential Area - - - - - - - - - - - - - - - - -

Maintenance charges - - - - - - - - - - - - - - - - -

Processing Area - - 10.52 59.23 128.39 214.06 302.16 329.47 345.94 363.24 381.40 400.47 420.50 441.52 463.60 486.78 511.12

Commercial Area - - - - - - - - - - - - - - - - -

Residential Area - - - - - - - - - - - - - - - - -

Total revenue - - 1,284.81 2,722.13 3,475.38 4,314.12 3,035.54 329.47 345.94 363.24 381.40 400.47 420.50 441.52 463.60 486.78 511.12

- - - - - - - - - - - - - - - - - -

- - - - - - - - - - - - - - - - - -

Expenses - - - - - - - - - - - - - - - - -

Administative expenses - - 35.91 74.48 78.21 82.12 86.22 90.54 95.06 99.82 104.81 110.05 115.55 121.33 127.39 133.76 140.45

Operation and Maintenance including marketing expenses- - 89.77 186.21 195.52 205.30 215.56 226.34 237.66 249.54 262.02 275.12 288.87 303.32 318.48 334.41 351.13

Insurance premium - - 27.93 52.82 49.03 45.55 42.33 39.37 36.64 34.12 31.80 29.65 27.66 25.82 24.11 22.53 21.07

Land lease rent to Sponsorer - - - - - - - - - - - - - - - - -

Total expenses - - 153.60 313.51 322.76 332.96 344.12 356.25 369.36 383.48 398.62 414.81 432.08 450.46 469.99 490.70 512.64

- - - - - - - - - - - - - - - - -

PBDIT - - 1,131.21 2,408.62 3,152.62 3,981.16 2,691.42 (26.78) (23.42) (20.24) (17.22) (14.34) (11.58) (8.94) (6.39) (3.92) (1.53)

Depreciation - - 185.67 355.08 334.56 315.36 297.38 280.54 264.76 249.98 236.12 223.12 210.93 199.49 188.75 178.67 169.19

Amortisation of Land Leasehold - - 26.04 52.08 52.08 52.08 52.08 52.08 52.08 52.08 52.08 52.08 52.08 52.08 52.08 52.08 52.08

PBIT - - 919.50 2,001.46 2,765.98 3,613.72 2,341.95 (359.40) (340.26) (322.29) (305.41) (289.54) (274.59) (260.50) (247.22) (234.67) (222.80)

Financial Charges - - 334.27 658.52 564.92 364.36 70.20 (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)

PBT - - 796.93 1,750.10 2,587.70 3,616.80 2,621.22 (26.78) (23.42) (20.24) (17.22) (14.34) (11.58) (8.94) (6.39) (3.92) (1.53)

Income Tax - - 177.25 425.93 722.11 1,076.98 771.86 - - - - - - - - - -

Deffered Tax - - 81.36 60.62 (24.38) (20.93) (17.95) (15.37) (13.15) (11.23) (9.57) (8.14) (6.91) 8.94 6.39 3.92 1.53

PAT - - 538.33 1,263.55 1,889.97 2,560.75 1,867.31 (11.41) (10.27) (9.01) (7.64) (6.19) (4.67) (17.87) (12.78) (7.85) (3.06)

2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047

FY 31-Mar-33 31-Mar-34 31-Mar-35 31-Mar-36 31-Mar-37 31-Mar-38 31-Mar-39 31-Mar-40 31-Mar-41 31-Mar-42 31-Mar-43 31-Mar-44 31-Mar-45 31-Mar-46 31-Mar-47

No of Operating Months 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 -

Sales Realisation - - - - - - - - - - - - - - -

Processing Area - - - - - - - - - - - - - - -

Commercial Area - - - - - - - - - - - - - - -

Residential Area - - - - - - - - - - - - - - -

Non Refundable Deposits - - - - - - - - - - - - - - -

Processing Area - - - - - - - - - - - - - - -

Commercial Area - - - - - - - - - - - - - - -


Maintenance charges - - - - - - - - - - - - - - -

Processing Area 536.67 563.50 591.68 621.26 652.33 684.94 719.19 755.15 792.91 832.55 874.18 917.89 963.78 1,011.97 -

Commercial Area - - - - - - - - - - - - - - -


Total revenue 536.67 563.50 591.68 621.26 652.33 684.94 719.19 755.15 792.91 832.55 874.18 917.89 963.78 1,011.97 -

Expenses - - - - - - - - - - - - - - -

Land amortised - - - - - - - - - - - - - - -

Construction cost - - - - - - - - - - - - - - -

Administative expenses 147.47 154.85 162.59 170.72 179.25 188.22 197.63 207.51 217.88 228.78 240.22 252.23 264.84 302.11 -

Operation and Maintenance including marketing expenses 368.68 387.12 406.47 426.80 448.13 470.54 494.07 518.77 544.71 571.95 600.54 630.57 662.10 755.28 -

Insurance premium 19.71 18.45 17.28 16.19 15.18 14.23 13.36 12.54 11.77 11.06 10.40 9.78 9.20 8.65 -

Land lease rent to Sponsorer - - - - - - - - - - - - - - -

Total expenses 535.87 560.41 586.34 613.70 642.56 672.99 705.05 738.82 774.37 811.79 851.16 892.57 936.13 1,066.05 -

PBDIT 0.81 3.09 5.34 7.56 9.76 11.95 14.14 16.33 18.54 20.77 23.02 25.32 27.65 (54.08) -

Depreciation 160.28 151.91 144.04 136.63 129.66 123.10 116.92 111.09 105.60 100.42 95.53 90.93 86.57 82.46 -

Amortisation of Land Leasehold 52.08 52.08 52.08 52.08 52.08 52.08 52.08 52.08 52.08 52.08 52.08 52.08 52.08 52.08 -

PBIT (211.56) (200.90) (190.78) (181.15) (171.98) (163.22) (154.85) (146.83) (139.13) (131.73) (124.59) (117.69) (111.00) (188.62) -

Financial Charges (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)

PBT 0.81 3.09 5.34 7.56 9.76 11.95 14.14 16.33 18.54 20.77 23.02 25.32 27.65 (54.08) 0.00

Income Tax 0.16 0.62 1.07 1.51 1.95 2.39 2.83 3.27 3.71 4.16 4.61 5.07 5.53 - 0.00

Deffered Tax (0.81) (3.09) (5.34) (7.56) (9.76) (11.95) (14.14) (16.33) (18.54) (20.77) (23.02) (25.32) (27.65) 54.08 (0.00)

PAT 1.45 5.57 9.61 13.61 17.57 21.51 25.45 29.40 33.37 37.38 41.44 45.57 49.77 (108.15) 0.00

3

Annexure 7.4 Cash Flow statement



RP007 rev. 0

Annexure 7.4 In Rs Mn

Cash Flow statement 31-Mar-17 31-Mar-18 31-Mar-19 31-Mar-20 31-Mar-21 31-Mar-22 31-Mar-23 31-Mar-24 31-Mar-25 31-Mar-26 31-Mar-27 31-Mar-28 31-Mar-29 31-Mar-30 31-Mar-31 31-Mar-32

Inflows - - - - - - - - - - - - - - - -

Promoter's contribution 2,522.82 1,190.33 - - - - - - - - - - - - - -

Un secured loan - - - - - - - - - - - - - - - -

Grant from GOI - - - - - - - - - - - - - - - -

Sales receipts gross - - - - - - - - - - - - - - - -

Non Refundable Deposit - 1,274.30 2,662.90 3,346.99 4,100.07 2,733.38 - - - - - - - - - -

Lease Deposit - - - - - - - - - - - - - - - -

Lease receipts - 10.52 59.23 128.39 214.06 302.16 329.47 345.94 363.24 381.40 400.47 420.50 441.52 463.60 486.78 511.12

Deferred Tax liability - 59.74 46.52 (20.73) (18.80) (15.55) (206.28) (191.03) (178.84) (169.82) (164.45) (163.80) 260.50 247.22 234.67 222.80

Total Inflow 2,522.82 2,534.88 2,768.65 3,454.65 4,295.32 3,019.98 123.18 154.92 184.40 211.58 236.02 256.69 702.02 710.81 721.45 733.92

Outflow - - - - - - - - - - - - - - - -

Land 1,484.26 - - - - - - - - - - - - - - -

Construction 4,451.79 2,800.77 - - - - - - - - - - - - - -

Administrative expenses 14.36 51.63 74.48 78.21 82.12 86.22 90.54 95.06 99.82 104.81 110.05 115.55 121.33 127.39 133.76 140.45

Operation and Maintenance + Marketing 35.91 129.07 186.21 195.52 205.30 215.56 226.34 237.66 249.54 262.02 275.12 288.87 303.32 318.48 334.41 351.13

Marketing Expenses - - - - - - - - - - - - - - - -

Insurance Premium - 27.93 52.82 49.03 45.55 42.33 39.37 36.64 34.12 31.80 29.65 27.66 25.82 24.11 22.53 21.07

Interest on term loan 352.51 643.81 658.52 564.92 364.36 70.20 (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)

Interest on unsec loans - - - - - - - - - - - - - - - -

Repayment of quasi equity - - - - - - - - - - - - - - - -

Income Tax - 130.16 326.84 614.21 967.57 696.37 - - - - - - - - - -

Land lease rent to Sponsorer - - - - - - - - - - - - - - - -

Total outflow 6,338.83 3,783.37 1,298.87 1,501.90 1,664.88 1,110.69 356.25 369.36 383.48 398.62 414.81 432.08 450.46 469.99 490.70 512.64

Bank Loan - - - - - - - - - - - - - - - -

Opening Balance - (0.00) 506.72 1,753.65 2,592.16 3,216.96 2,897.76 2,664.70 2,450.26 2,251.18 2,064.14 1,885.36 1,709.97 1,961.54 2,202.37 2,433.12

Monthly Surplus / (Deficit) (3,816.01) (1,248.49) 1,469.78 1,952.75 2,630.44 1,909.29 (233.06) (214.44) (199.08) (187.04) (178.78) (175.39) 251.56 240.83 230.75 221.27

Cumulative Cash (3,816.01) (1,248.49) 1,976.50 3,706.40 5,222.60 5,126.25 2,664.70 2,450.26 2,251.18 2,064.14 1,885.36 1,709.97 1,961.54 2,202.37 2,433.12 2,654.39

Loan from Bank 3,816.01 1,755.21 - - - - - - - - - - - - - -

Repayment of bank loan - - 222.85 1,114.24 2,005.64 2,228.49 - - - - - - - - - -

Cumulative loan 3,816.01 5,571.22 5,348.37 4,234.13 2,228.49 - - - - - - - - - - -

Closing Balance (0.00) 506.72 1,753.65 2,592.16 3,216.96 2,897.76 2,664.70 2,450.26 2,251.18 2,064.14 1,885.36 1,709.97 1,961.54 2,202.37 2,433.12 2,654.39


Inflows - - - - - - - - - - - - - - -

Promoter's contribution - - - - - - - - - - - - - - -

Un secured loan - - - - - - - - - - - - - - -

Grant from GOI - - - - - - - - - - - - - - -

Sales receipts gross - - - - - - - - - - - - - - -

Non Refundable Deposit - - - - - - - - - - - - - - -

Lease Deposit - - - - - - - - - - - - - - -

Lease receipts 536.67 563.50 591.68 621.26 652.33 684.94 719.19 755.15 792.91 832.55 874.18 917.89 963.78 1,011.97 -

Deferred Tax liability 211.56 200.90 190.78 181.15 171.98 163.22 154.85 146.83 139.13 131.73 124.59 117.69 111.00 188.62 -

Total Inflow 748.23 764.40 782.46 802.41 824.31 848.17 874.05 901.98 932.04 964.28 998.77 1,035.58 1,074.79 1,200.59 -

Outflow - - - - - - - - - - - - - - -

Land - - - - - - - - - - - - - - -

Construction - - - - - - - - - - - - - - -

Administrative expenses 147.47 154.85 162.59 170.72 179.25 188.22 197.63 207.51 217.88 228.78 240.22 252.23 264.84 302.11 -

Operation and Maintenance + Marketing 368.68 387.12 406.47 426.80 448.13 470.54 494.07 518.77 544.71 571.95 600.54 630.57 662.10 755.28 -

Marketing Expenses - - - - - - - - - - - - - - -

Insurance Premium 19.71 18.45 17.28 16.19 15.18 14.23 13.36 12.54 11.77 11.06 10.40 9.78 9.20 8.65 -

Interest on term loan (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)

Interest on unsec loans - - - - - - - - - - - - - - -

Repayment of quasi equity - - - - - - - - - - - - - - -

Income Tax - - - - - - - - - - - - - - 0.00

Land lease rent to Sponsorer - - - - - - - - - - - - - - -

Total outflow 535.87 560.41 586.34 613.70 642.56 672.99 705.05 738.82 774.37 811.79 851.16 892.57 936.13 1,066.05 (0.00)

Bank Loan - - - - - - - - - - - - - - -

Opening Balance 2,654.39 2,866.75 3,070.74 3,266.86 3,455.57 3,637.31 3,812.48 3,981.48 4,144.65 4,302.32 4,454.82 4,602.43 4,745.43 4,884.08 5,018.63

Monthly Surplus / (Deficit) 212.36 203.99 196.12 188.71 181.74 175.17 168.99 163.17 157.67 152.50 147.61 143.00 138.65 134.54 0.00

Cumulative Cash 2,866.75 3,070.74 3,266.86 3,455.57 3,637.31 3,812.48 3,981.48 4,144.65 4,302.32 4,454.82 4,602.43 4,745.43 4,884.08 5,018.63 5,018.63

Loan from Bank - - - - - - - - - - - - - - -

Repayment of bank loan - - - - - - - - - - - - - - -

Cumulative loan - - - - - - - - - - - - - - -

Closing Balance 2,866.75 3,070.74 3,266.86 3,455.57 3,637.31 3,812.48 3,981.48 4,144.65 4,302.32 4,454.82 4,602.43 4,745.43 4,884.08 5,018.63 5,018.63

4

Annexure 7.5 Balance Sheet



RP007 rev. 0

Annexure 7.5 In Rs Mn

Balance sheet 31-Mar-17 31-Mar-18 31-Mar-19 31-Mar-20 31-Mar-21 31-Mar-22 31-Mar-23 31-Mar-24 31-Mar-25 31-Mar-26 31-Mar-27 31-Mar-28 31-Mar-29 31-Mar-30 31-Mar-31 31-Mar-32

Liabilities - - - - - - - - - - - - - - - -

Equity 2,522.82 3,713.15 3,713.15 3,713.15 3,713.15 3,713.15 3,713.15 3,713.15 3,713.15 3,713.15 3,713.15 3,713.15 3,713.15 3,713.15 3,713.15 3,713.15

Reserves & Surplus - 455.07 1,471.17 3,058.02 5,339.82 6,915.20 6,555.81 6,215.55 5,893.25 5,587.84 5,298.30 5,023.71 4,763.21 4,515.99 4,281.32 4,058.52

Total Owners fund 2,522.82 4,168.21 5,184.32 6,771.17 9,052.97 10,628.35 10,268.95 9,928.69 9,606.40 9,300.99 9,011.45 8,736.86 8,476.36 8,229.14 7,994.47 7,771.67

Unsecured Loan - - - - - - - - - - - - - - - -

Grant from GOI - - - - - - - - - - - - - - - -

Secured Loan 3,816.01 5,571.22 5,348.37 4,234.13 2,228.49 - - - - - - - - - - -

Lease Deposits - - - - - - - - - - - - - - - -

Deferred Tax Liability - 59.74 106.26 85.53 66.73 51.17 (155.11) (346.14) (524.98) (694.80) (859.25) (1,023.05) (762.55) (515.33) (280.66) (57.86)

- - - - - - - - - - - - - - - - -

Total Liabilities 6,338.83 9,799.18 10,638.95 11,090.82 11,348.18 10,679.52 10,113.84 9,582.56 9,081.42 8,606.19 8,152.20 7,713.81 7,713.81 7,713.81 7,713.81 7,713.81

Assets - - - - - - - - - - - - - - - -

Gross Fixed Assets 6,338.83 9,504.16 9,504.16 9,504.16 9,504.16 9,504.16 9,504.16 9,504.16 9,504.16 9,504.16 9,504.16 9,504.16 9,504.16 9,504.16 9,504.16 9,504.16

Deletion - - - - - - - - - - - - - - - -

Depreciation - 211.71 618.86 1,005.50 1,372.94 1,722.40 2,055.02 2,371.86 2,673.92 2,962.12 3,237.32 3,500.33 3,751.89 3,992.72 4,223.47 4,444.74

Net Fixed Assets 6,338.83 9,292.46 8,885.30 8,498.66 8,131.22 7,781.76 7,449.14 7,132.30 6,830.24 6,542.05 6,266.84 6,003.84 5,752.27 5,511.44 5,280.69 5,059.42

- - - - - - - - - - - - - - - - -

Cash balance - 506.72 1,753.65 2,592.16 3,216.96 2,897.76 2,664.70 2,450.26 2,251.18 2,064.14 1,885.36 1,709.97 1,961.54 2,202.37 2,433.12 2,654.39

- - - - - - - - - - - - - - - - -

Total Assets 6,338.83 9,799.18 10,638.95 11,090.82 11,348.18 10,679.52 10,113.84 9,582.56 9,081.42 8,606.19 8,152.20 7,713.81 7,713.81 7,713.81 7,713.81 7,713.81


Liabilities - - - - - - - - - - - - - - -

Equity 3,713.15 3,713.15 3,713.15 3,713.15 3,713.15 3,713.15 3,713.15 3,713.15 3,713.15 3,713.15 3,713.15 3,713.15 3,713.15 3,713.15 3,713.15

Reserves & Surplus 3,846.96 3,646.07 3,455.29 3,274.14 3,102.16 2,938.94 2,784.08 2,637.25 2,498.12 2,366.39 2,241.80 2,124.11 2,013.11 1,824.49 1,824.49

Total Owners fund 7,560.11 7,359.21 7,168.44 6,987.29 6,815.31 6,652.09 6,497.23 6,350.40 6,211.26 6,079.53 5,954.95 5,837.26 5,726.26 5,537.64 5,537.64

Unsecured Loan - - - - - - - - - - - - - - -

Grant from GOI - - - - - - - - - - - - - - -

Secured Loan - - - - - - - - - - - - - - -

Lease Deposits - - - - - - - - - - - - - - -

Deferred Tax Liability 153.70 354.59 545.37 726.52 898.50 1,061.72 1,216.58 1,363.41 1,502.55 1,634.27 1,758.86 1,876.55 1,987.55 2,176.17 2,176.17

- - - - - - - - - - - - - - - -

Total Liabilities 7,713.81 7,713.81 7,713.81 7,713.81 7,713.81 7,713.81 7,713.81 7,713.81 7,713.81 7,713.81 7,713.81 7,713.81 7,713.81 7,713.81 7,713.81

Assets - - - - - - - - - - - - - - -

Gross Fixed Assets 9,504.16 9,504.16 9,504.16 9,504.16 9,504.16 9,504.16 9,504.16 9,504.16 9,504.16 9,504.16 9,504.16 9,504.16 9,504.16 9,504.16 9,504.16

Deletion - - - - - - - - - - - - - - -

Depreciation 4,657.11 4,861.09 5,057.21 5,245.92 5,427.66 5,602.84 5,771.83 5,935.00 6,092.67 6,245.17 6,392.78 6,535.79 6,674.44 6,808.98 6,808.98

Net Fixed Assets 4,847.06 4,643.07 4,446.95 4,258.24 4,076.50 3,901.32 3,732.33 3,569.16 3,411.49 3,258.99 3,111.38 2,968.38 2,829.72 2,695.18 2,695.18

- - - - - - - - - - - - - - -

Cash balance 2,866.75 3,070.74 3,266.86 3,455.57 3,637.31 3,812.48 3,981.48 4,144.65 4,302.32 4,454.82 4,602.43 4,745.43 4,884.08 5,018.63 5,018.63

- - - - - - - - - - - - - - - -

Total Assets 7,713.81 7,713.81 7,713.81 7,713.81 7,713.81 7,713.81 7,713.81 7,713.81 7,713.81 7,713.81 7,713.81 7,713.81 7,713.81 7,713.81 7,713.81

5

Annexure 7.6 IRR Calculation



RP007 rev. 0

Annexure 7.6

IRR Calculation (All figures in Rs Mn)

Period 31-Mar-17 31-Mar-18 31-Mar-19 31-Mar-20 31-Mar-21 31-Mar-22 31-Mar-23 31-Mar-24 31-Mar-25 31-Mar-26 31-Mar-27 31-Mar-28 31-Mar-29 31-Mar-30 31-Mar-31 31-Mar-32

Project IRR (Pre tax) - - - - - - - - - - - - - - - -

Capex (5,936.04) (2,800.77) - - - - - - - - - - - - - -

Inflows - - - - - - - - - - - - - - - -

PAT - 538.33 1,263.55 1,889.97 2,560.75 1,867.31 (11.41) (10.27) (9.01) (7.64) (6.19) (4.67) (17.87) (12.78) (7.85) (3.06)

depreciation+ Amortisation - 211.71 407.15 386.64 367.44 349.46 332.62 316.84 302.06 288.20 275.20 263.01 251.56 240.83 230.75 221.27

Interest and Tax benefit from Debt component - 225.80 444.83 381.60 246.12 47.42 (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)

Net inflow post tax (5,936.04) (1,824.94) 2,115.53 2,658.21 3,174.32 2,264.19 321.21 306.57 293.05 280.56 269.01 258.34 233.69 228.05 222.90 218.21

Tax - 258.61 486.55 697.73 1,056.05 753.91 (15.37) (13.15) (11.23) (9.57) (8.14) (6.91) 8.94 6.39 3.92 1.53

Pre tax Cash flow (5,936.04) (1,566.33) 2,602.08 3,355.94 4,230.37 3,018.10 305.84 293.42 281.82 270.98 260.87 251.43 242.63 234.44 226.82 219.74

Pre Tax IRR 21.25% - - - - - - - - - - - - - - - -

Post Tax IRR 13.46% - - - - - - - - - - - - - - - -

Period 31-Mar-33 31-Mar-34 31-Mar-35 31-Mar-36 31-Mar-37 31-Mar-38 31-Mar-39 31-Mar-40 31-Mar-41 31-Mar-42 31-Mar-43 31-Mar-44 31-Mar-45 31-Mar-46 31-Mar-47

Project IRR (Pre tax) - - - - - - - - - - - - - - -

Capex - - - - - - - - - - - - - - -

Inflows - - - - - - - - - - - - - - -

PAT 1.45 5.57 9.61 13.61 17.57 21.51 25.45 29.40 33.37 37.38 41.44 45.57 49.77 (108.15) 0.00

depreciation+ Amortisation 212.36 203.99 196.12 188.71 181.74 175.17 168.99 163.17 157.67 152.50 147.61 143.00 138.65 134.54 -

Interest and Tax benefit from Debt component (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)

Net inflow post tax 213.81 209.56 205.73 202.32 199.31 196.69 194.44 192.56 191.04 189.88 189.05 188.57 188.42 26.39 0.00

Tax (0.64) (2.47) (4.27) (6.05) (7.81) (9.56) (11.31) (13.06) (14.83) (16.61) (18.42) (20.25) (22.12) 54.08 (0.00)

213.17 207.08 201.46 196.27 191.50 187.13 183.13 179.50 176.21 173.26 170.63 168.32 166.30 80.47 0.00

- - - - - - - - - - - - - - -

- - - - - - - - - - - - - - -

Equity IRR

Period 31-Mar-17 31-Mar-18 31-Mar-19 31-Mar-20 31-Mar-21 31-Mar-22 31-Mar-23 31-Mar-24 31-Mar-25 31-Mar-26 31-Mar-27 31-Mar-28 31-Mar-29 31-Mar-30 31-Mar-31 31-Mar-32

- - - - - - - - - - - - - - - -

PAT - 538.33 1,263.55 1,889.97 2,560.75 1,867.31 (11.41) (10.27) (9.01) (7.64) (6.19) (4.67) (17.87) (12.78) (7.85) (3.06)

Add Depreciation+ Amortisation - 211.71 407.15 386.64 367.44 349.46 332.62 316.84 302.06 288.20 275.20 263.01 251.56 240.83 230.75 221.27

Add Deferred tax liability - 81.36 60.62 (24.38) (20.93) (17.95) (15.37) (13.15) (11.23) (9.57) (8.14) (6.91) 8.94 6.39 3.92 1.53

Less :Equity 2,522.82 1,190.33 - - - - - - - - - - - - - -

Less : Senior debt Repayment - - 222.85 1,114.24 2,005.64 2,228.49 - - - - - - - - - -

FCFE (Free Cashflow to Equity Holders) (2,522.82) (358.94) 1,508.48 1,137.99 901.63 (29.66) 305.84 293.42 281.82 270.98 260.87 251.43 242.63 234.44 226.82 219.74

Equity IRR 18.14%

Period 31-Mar-33 31-Mar-34 31-Mar-35 31-Mar-36 31-Mar-37 31-Mar-38 31-Mar-39 31-Mar-40 31-Mar-41 31-Mar-42 31-Mar-43 31-Mar-44 31-Mar-45 31-Mar-46 31-Mar-47

- - - - - - - - - - - - - - -

PAT 1.45 5.57 9.61 13.61 17.57 21.51 25.45 29.40 33.37 37.38 41.44 45.57 49.77 (108.15) 0.00

Add Depreciation+ Amortisation 212.36 203.99 196.12 188.71 181.74 175.17 168.99 163.17 157.67 152.50 147.61 143.00 138.65 134.54 -

Add Deferred tax liability (0.81) (3.09) (5.34) (7.56) (9.76) (11.95) (14.14) (16.33) (18.54) (20.77) (23.02) (25.32) (27.65) 54.08 (0.00)

Less :Equity - - - - - - - - - - - - - - -

Less : Senior debt Repayment - - - - - - - - - - - - - - -

FCFE (Free Cashflow to Equity Holders) 213.01 206.46 200.39 194.76 189.55 184.74 180.30 176.23 172.50 169.11 166.03 163.25 160.77 80.47 0.00

6

L&T INFRASTRUCTURE ENGINEERING LIMITED

(Formerly known as L&T-Ramboll Consulting Engineers Limited)

6-3-1192/1/1, 5th Floor, Block No.3

White House, Kundan Bagh, Begumpet, Hyderabad – 500 016

Ph: 91-040 – 40354444; Fax: 91-040-40354430, Web: www.lntiel.com

andhra pradesh industrial infrastructure corporation limited dpr...

Documents