Professional Documents
Culture Documents
Electricity Generation Solid Waste Mgmt Roads & Bridges Telecom Services Educational
Water Supply
Electricity T&D Ports Telecom Towers Hospitals
&Treatment
Bridges
Off Shore Oil and Gas Railways & Metro Tracks SEZ/Ind Parks
Channels Dams Tunnels
Tunnels
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Introduction – Afcons Infrastructure
Afcons which is a part of the Shapoorji Pallonji Group, has established itself as a dominant player in the
industrial construction industry
It is one of the fastest growing companies in the sector, and has successfully completed some of the most
complex and iconic projects across the globe
Profitability % Liquidity
14 3.5
3
12
2.5
10 2
8 1.5
1
6
0.5
4 0
2 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
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Business Model Canvas
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Internal & External Analysis
Strengths Weakness
Low
• PM & Quality • Long Gestation Industry rivalry is high Threat of (Economies of
Systems period of projects New
(Technical capabilities/ Cost scale/High Capital
• In House Engineering • Technological Entrants
Leadership) Req./Experience)
Design excellence dependence
• High Operational Eff • Pre-qualification
• Strong Financials req/exp for new
• Brand Name sectors
Bargaining Bargaining
Industry
Power of Power of
Rivalry
Suppliers Buyer’s
Opportunity Threats
• Infrastructure • Global Slow Down High Moderate
Explosion • Entry of Chinese (Fragmented supply chain (Less choice and mostly
• Unexplored Markets Companies in India and have issues with on driven with low cost in
• Change in Policies & time delivery) Threat of decision making)
• Increase in Govt
regulations Substitutes
Spending on Infra
• Cut throat
Competition
No perfect substitute
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External Analysis
Political Economic Social Technology Environmental Legal
• Inc in budget for • Slow Down of • Consumption • Shortage of Skilled • Environmental • Stringent
infra structure by global economy Pattern to Fuel Workforce Regulations for prequalification
20.9%, to INR6 • Decrease in GDP industry Growth • Increase use of sustainable criteria for large and
trillion growth rate • Perception of Indian advanced construction specialized jobs
• GOI Infra Schemes – • After shocks after players by the technologies, in • Underdeveloped
Bharat Mala, the IL&FS debacle developed world construction (digital contractual & Legal
UDAAN etc. • Rising Urbanization transformation) Systems
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Core Competence & Diversification
Brand Name Vertical R AW M AT E R I A L E X P E N S E A S % O F
SA L E S
Social Capital 60 44
42.8 42
Strategic Equipment 40 40
39.6
20 38 38
In-house design expertise 41.7 37.4 28.3 36
0 34
2016-17 2017-18 2018-19
Favorable Industry Env
Afcons Ind Avg (73+ companies)
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Existing Business Lines & New Options
Marine & Industrial Surface Transport Oil & Gas Hydro & UG Urban Infrastructure
• Ports • Roads • Pipe Line • Water supply • Metro
• Container Terminals • Bridges • Process Platforms • Tunnels • Stadiums
• LNG Jetty • Power Plants • Dams & Irrigation • Hospitals
• Water Treatment • Commercial Buildings
• Factories
• WTP • Residential Buildings
Transmission Building
Refineries Airport Infra Smart City
Towers Materials
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Selection Criterion
The selection for the new sector(s) is made on the basis of the following
Attractiveness of the sector – In terms of rate of return and quantum of work
Cost of Entry – Comparing the entry cost with future cash flows
Synergies with existing core competences
Railways The railways has also drawn up a 12-year plan entailing an investment of Rs.50 trillion
Refineries Ind to attract US $ 25 Bn investment in exploration & Production by 2022
Airport Infra India plans to open 100 additional airports by 2024, while China plan 450 by 2035
River Linking Estimate of linking 34 rivers is about US $ 120 Bn
Inland Waterways NW -1’s estimated cost Rs. 5369 Cr
Wind Energy GOI has targeted 60 GW installation by 2022
Transmission Towers CAGR of 5.5% YoY
Nuclear Power Plant Total installed capacity addition of 3.3 GW by 2022
Building Materials Rate of return in the cement manufacturing industry are lower
Smart City 100 Smart Cities are being envisaged
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Selection Criterion
ROCE
Option Synergies Cost of Entry Attractive
Company 2015 2016 2017 2018 2019 Average
5
Wind Energy Low - -
0
2015 2016 2017 2018 2019 Average
Transmission Towers Low - - -5
-10
Nuclear Power Plant* High High High
Ultra Tech RIL GMR Hyd Airport
Building Materials High High Moderate
Smart City Moderate - - *For nuclear power plants , synergies are with S&P group. Therefore not
considering
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Airport Infrastructure
India has witnessed phenomenal growth of 18 to 20% in the aviation sector in the last three years.
The Government has launched a new initiative of NABH Nirman (NextGen Airports for Bharat), wherein systems and processes are being
geared up to enhance airport capacity.
The Aviation Ministry has approved 100 new airports which will be built in the next 15 years at an estimated cost of ₹4 lakh crore.
Among them, 70 will be at new locations while the rest will involve upgrading and expansion of the existing airstrips.
India’s plans to expedite airport development still trails that of China’s, which has set a goal of having 450 commercial airports by 2035,
almost double the number at the end of 2018
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Recommendations
Considering the analysis, it is recommended that Afcons should enter into the airport infrastructure
sector.
Arenas
The first mover advantage is As the sector is opening up, JV with
already gone, but considering that a major global player would be
the Government is focusing on this Economic beneficial. Existing business model
Staging Vehicles
sector. It is important that at least Logic offers excellent leverage to venture
few projects are taken up as soon into the sector
as possible.
Differentiation
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Thank You
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