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EPC Driving growth efficiently - EY - India

Engineering, Procurement and Construction: Driving growth efficiently

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This report discusses the latest trends, market direction and strategies adopted by various Engineering, Procurement and Construction (EPC) players to adapt to the changing needs of the sector.

India’s EPC market has come under the global scanner. The sector has witnessed consistent changes over the past few years, with increasing project sizes, scale and market maturity. Riding on India’s infrastructure requirements over the next five years, the EPC sector is likely to make major advances. The sector is also attracting an increased interest from global majors, Indian conglomerates, as well as infrastructure developers.

The EPC sector is expected to generate opportunities worth INR17.1 trillion during Twelfth Five Year Plan, says our report.

The key highlights of the Indian EPC sector are:

  • There is an increasing reliance on the private sector for the growth of the EPC sector.
  • Indian players have taken the inorganic route to venture into international markets, global construction giants are also increasingly attracted to India’s growth story.
  • Many EPC contractors are diversifying into the asset development business, while others are forging technical partnerships, especially with foreign players.
  • Power sector grabs the major share of the proposed infrastructure investments in Twelfth Five Year Plan (2012-17).
  • The urban infrastructure and telecommunications sectors are also expected to witness enhanced investment.
  • Reforms are awaited for the unbundling of the railways sector.

Key challenges faced by the Indian EPC sector:

  • Alleviating time and cost overruns pose a major challenge for majority of infrastructure projects:
    As on February 2011, out of a total of 559 ongoing infrastructure projects in India, 293 were delayed.
  • The EPC sector is also faced with shortage of manpower, machinery and material.
    Construction reports detail 40% shortage of skilled construction workers. Fluctuating steel and cement prices also give rise to cost overruns. Moreover, as companies procure and own assets, they risk decreasing efficiencies and idle resources.
  • Fund-raising is another key challenge faced:
    One of the key challenges for the sector in the backdrop of market turmoil and fears of a slowdown is the ability to raise adequate financing required to fund the execution of existing large order books.

Download this report for a comprehensive overview of this sector and the key developments expected.

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