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07 September 2009


Legend has it that in 1928 a severe famine and drought hit the erstwhile princely state of Jodhpur. The then Maharaja Umaid Singh of Jodhpur was quite moved by the plight of the populace but did not think it a prudent policy to open the gates of the royal treasury. Instead the young Maharaja ordered construction of a Palace thus providing employment to thousands of subjects, ensuring free flow of liquidity, disposable income in the hands of the consumers and managing to pump start the economy.

Circa 1999 a similar action plan commenced with the Golden Quadrilateral at a cost of Rs 60,000 Cr. Since then, the infrastructure sector has not looked back, enabling it to remain the darling of the stock markets. Year 2008-09 the story remains the same, only the lead character has changed. Dominating the scene are power, irrigation, water management and other urban services. 

Industry Overview
The XI Five Year Plan envisages an investment of Rs 2,60,000 Cr in the seven sectors of power, roads, airport, oil & gas, ports, rail and urban infrastructure. 

Infrastructure construction grew 12% PA for the past five years. However due to the slowdown, this growth has fallen since the second half of 2008. Engineering and construction linked to real estate have been the worst affected. Irrigation, power, roads and water infrastructure being govt funded have been largely unaffected (at least in funds allocation!). 

These fund allocations include Rs 34,700 Cr for improvement of basic civic services like water supply, sewerage and storm water drainage in major cities. We have discussed the importance of these in a previous post (read here). For 5098 other towns, the govt has set aside Rs 12,300 Cr for improvement of civic services out of which Rs 7064 Cr is allocated for water services alone.

I am of course leading this discussion towards a specific company straddling most of tha dominant segments of the infrastructure sector. Watch this space for more.


sumi said...

Lovely style of writing. Maharajas and history is nice imagery amongst the hard core topic of finance and equities :)

Puneet said...

@ Sumi,
Thanks for the words of encouragement.

Anonymous said...
This comment has been removed by a blog administrator.
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Puneet said...

Thanks ! Appreciate it!!


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