INDIAN STATES Economy and Business. Madhya Pradesh.

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1 INDIAN STATES Economy and Business Madhya Pradesh

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3 INDIAN STATES Economy and Business Madhya Pradesh

4 CONTENTS Executive Summary 5 Economic Snapshot 7 The State Economy 9 Infrastructure 10 Social infrastructure 10 Access infrastructure 10 Communications infrastructure 12 Industrial infrastructure 12 State Policy 13 Industrial policy 13 IT policy 13 Tourism policy 14 Biotech policy 14 SEZ policy 14 Infrastructure policy 14 Business Opportunities 16 Key industries 16 Exports 17 Investment 17 Potential hubs for investment 19 Key Players 20 Doing Business in Madhya Pradesh 23 Indicative list of approvals and clearances 23 Cost of setting up business 24 Contact for information 24 A report by PricewaterhouseCoopers Pvt Ltd for IBEF

5 MADHYA PRADESH PAGE 5 Executive Summary Madhya Pradesh, in its present form, came into existence on November 1, 2000, following its bifurcation to create the new state of Chhattisgarh. With a Net State Domestic Product of US$ 9.8 billion, Madhya Pradesh is the ninth largest state economy in India.The state s central location gives it the unique advantage of being the hub in India s national logistics network. Key industry sectors in Madhya Pradesh are cement, textiles, mining and edible oils.the state is one of the largest producers of cement in the country and a leading producer of edible oils. Industries with potential for significant development in the state are automobiles and pharmaceuticals. A number of automobile and pharmaceutical companies are investing in establishing/expanding their production base in the state. The cost of basic infrastructure and skilled manpower is relatively low in Madhya Pradesh.The state offers one of the lowest ratios of labour cost to sales ratio in the country. The state government has developed a greenfield Special Economic Zone at Indore. It has also successfully leveraged private investment in transport infrastructure.the state government has been taking steps to strengthen and reinforce a conducive investment climate for potential investors through progressive policies, simplification of procedures and investment incentives.

6 Industrial Centres in Madhya Pradesh

7 MADHYA PRADESH PAGE 7 An Economic Snapshot Capital Bhopal Area (sq km) 308,000 Population (2001) Literacy rate (%) 64.1 Human Development Index NSDP (US$ billion) 9.8 NSDP growth (%) (10 years) 2.6 Per capita income (US$) 254 Exports (US$ million) 667 National highways length (km) 4,664 Rail length (km) 5,992 Domestic airport Key industries Industries with growth potential 60.3 million (All India rank 12th) Bhopal, Indore Cement Textiles Minerals Edible oil Automobiles Pharmaceuticals

8 Advantage Madhya Pradesh Leading producer of cement, textiles and edible oils First state to develop a greenfield Special Economic Zone Track record of attracting private investment in transport infrastructure Potential for developing automobile and pharmaceutical industries Relatively low cost of labour and infrastructure Rapid improvement in social development indices

9 MADHYA PRADESH PAGE 9 The State Economy Between 1994 and 2003, the compounded annual growth rate of bifurcated Madhya Pradesh s real NSDP was 2.6 per cent, increasing from US$ 7.5 billion to US$ 9.8 billion. Madhya Pradesh - NSDP growth Madhya Pradesh - Sectoral Contribution to GDP 41% 24% 12 US $ billion Year Note: the figures are at prices for bifurcated Madhya Pradesh, Source: Department of Finance, Government of Madhya Pradesh During to Madhya Pradesh s economy grew at average annual growth rate of 3.7 per cent. In , Madhya Pradesh s per capita income stood at US$ 254. Services Agriculture Industry 35% Source: Review of Madhya Pradesh Economy, CMIE, August 2004 During the past decade ( ), the share of agriculture in Madhya Pradesh s economy reduced from 46 per cent to 24 per cent. In the same period, the share of industry and services increased by 7 per cent and 5 per cent respectively, indicating a positive trend in the state s economic development.

10 INFRASTRUCTURE Social infrastructure In recent years, Madhya Pradesh has taken initiatives the social infrastructure of the state. It is ranked 12th on the Human Development Index. Its improved ranking can be attributed to the thrust on social development through focus on rural development and self-employment schemes. The state has a population of over 60.3 million (Census 2001), and is India s seventh most populated state. Its population density is 196 persons per sq km. The population growth rate in the state was 24.3 per cent between Madhya Pradesh has an urban population of 16 million, representing over 26 per cent of the total. Literacy levels in the state have improved from 44.2 per cent in 1991 to the current level of over 64.1 per cent. Madhya Pradesh - Growth in schools and enrolment Year Primary schools 81,942 87,620 Primary students enrolment (thousand) 10,525 10,952 Secondary schools 7,943 8,481 Secondary students enrolment (thousand) 1,359 1,516 Source: Review of Madhya Pradesh Economy, CMIE,August 2004 Madhya Pradesh s education network consists of 9 universities, over 250 colleges, along with 87,000 primary and 8,500 secondary schools. The state has 45 engineering colleges, over 200 technical training institutes, 6 medical colleges and 43 management institutes including one of the six Indian Institutes of Management at Indore. Other national institutes in the state include the Indian Institute of Forest Management, the Indian Institute of Hotel Management and International Institute of Professional Studies at Indore. Madhya Pradesh s network of health facilities comprises 145 hospitals, 343 community health centres, 1,705 primary health centres. It also has 34 Ayurvedic and 4 homoeopathic hospitals. The number of in-patient beds in Madhya Pradesh s hospitals is 20,839. Access infrastructure The total length of roads in Madhya Pradesh stands at over 160,000 km. Madhya Pradesh - Growth in road network Year Total length (in km) 1,62,309 1,62,370 Surfaced length (in km) 79,135 79,575 Source: Review of Madhya Pradesh Economy, CMIE,August 2004 Road density stands at 52.2 km per 100 sq km. The state has 18 national highways - a length of 4,664 km passing through it. Madhya Pradesh lies in central India and is a land locked state, which is why the state needs a good road network. Under the on-going National Highway Development Programme (NHDP), a length of 634 km is being converted into 4-6 lane carriage-ways.two more projects to upgrade 100 km of national highways through public private partnerships are being planned. Under the Madhya Pradesh State Road Sector Development Programme funded by the Asian Development Bank, 1750 km of state roads will also be rehabilitated and upgraded by 2006 at a cost of US$ 150 million.

11 MADHYA PRADESH PAGE 11 The Madhya Pradesh government has accorded high priority to improve the road infrastructure in the state and has been successful in attracting private sector participation (PSP) in the development of highways. It has constructed 17 bridges and bypasses to four of its cities through PSP. Maintenance of three state highways has been outsourced to the private sector. Currently, IJM Corporation of Malaysia is implementing two state highway projects aggregating 380 km with an investment of US$ 50 million. Given the significant presence of mineral based industries in the state, availability of efficient railway links is critical to fully exploit the potential.the total length of the railway network in Madhya Pradesh is 5992 km. Of this, almost 1,880 km is electrified track. Currently, railway upgradation projects in the state include adding 1,151 km of railway lines at a cost of approximately US$ 460 million and implementing a major track modernisation programme to convert about 285 km of the existing metre gauge routes to broad gauge at an approximate cost of US$ 112 million.the completion of these projects will further strengthen the railway network in the state. of Madhya Pradesh s electricity generation capacity is based on thermal energy with the remaining from hydel generation. MW Madhya Pradesh - Electricity generation Installed capacity (MW) Electricity generation (MU) Industry and agriculture represent the largest consumer categories, followed by domestic consumers. Madhya Pradesh - Composition of electricity consumption 4% Million Units Source: Review of Madhya Pradesh Economy, CMIE,August 2004 Madhya Pradesh has two full-fledged domestic airports at Bhopal and Indore, it has smaller airports in Gwalior and Khajuraho - key tourist destinations, and 25 airstrips at a number of locations with regular services. 30% 24% 42% Madhya Pradesh - Growth in air traffic Airport Industrial Bhopal ,700 Domestic Indore 170, , ,900 Agriculture Total 242, , ,600 Others Source: Review of Madhya Pradesh Economy, CMIE,August 2004 Source: Review of Madhya Pradesh Economy, CMIE,August 2004 Power The installed electricity generation capacity of Madhya Pradesh is 3,008 MW per cent On a per capita basis, electricity consumption in Madhya Pradesh stands at 352 kwh per annum, close to the national average of 355 kwh per annum.

12 Various electricity projects under implementation in the state aggregate to 790 MW. Project Hydel Power Projects (2004) Installed Capacity (MW) Ban Sagar IV 20 Madhikheda 60 Thermal Power Projects (2007) Sanjay Gandhi, Birsinghpur Unit V 500 Amarkantak extension 210 Total 790 Source: Madhya Pradesh State Electricity Board Communications infrastructure In 2003, Madhaya Pradesh had 1.23 million fixed line telephone subscribers. In June 2004, the state had 490,000 mobile phone subscribers. Madhya Pradesh Growth in fixed wire telephones Year Fixed wire telephones (in 000) 1,096 1,263 1,146 1,235 Industrial infrastructure Source: Review of Madhya Pradesh Economy, CMIE,August 2004 Indore Indore is a prominent business and industrial centre in Madhya Pradesh. Considered the commercial capital of the state, it is well connected by rail, road and airways. Indore has a population of 1.8 million. Indore also has a Special Economic Zone (SEZ) spread over 1,038 hectares of land.the SEZ has attracted investment of over US$ 200 million so far. The industries located in the SEZ include textile, pharmaceuticals, automobile & auto ancillary, metallurgy and leather. (CONCOR).This is a well-developed dry port and is connected by rail and road transport to major destinations in India. Indore is also a potential destination for IT and ITES industries coming to the state. Bhopal Bhopal is the capital of Madhya Pradesh with a population of approximately 1.4 million. Bhopal is well connected to Mumbai, Delhi and other major cities across India. The three industrial growth centres located close to Bhopal are at Pilukhedi, Satlapur and Mandideep. Most of the units in these centres belong to the engineering, fabrication, herbal and agro sectors. Gwalior Gwalior is located in the north of Madhya Pradesh. It has a population of about 0.8 million. It is linked well to Delhi and other major cities through rail and road links. Gwalior has industrial growth centres located at Malanpur, Ghirongi and Banmore.The main industries in these centres are solvent extraction units, leather, food processing and rubber. Food Parks To provide a fillip to agro and food processing industry in the state, six food parks are being developed across the state.the main advantage of these parks lies in the availability of common facilities such as analytical and quality control laboratories, cold storages / modified atmosphere cold storages, warehousing facilities and supplementary pollution control facilities. The state government has also provided concessions and subsidies to units locating in these parks. The SEZ also intends to act as a trading and logistics hub. It has a fully operational Internal Container Depot managed by Container Corporation of India

13 MADHYA PRADESH PAGE 13 STATE POLICY The government of Madhya Pradesh recognises the need for faster economic development in the state. Its strategy for encouraging investment and achieving higher levels of economic development hinges on the following elements: Economic Development across all sectors Balance in both economic and social spheres Focus on physical connectivity, virtual connectivity and social connectivity Focus on industries other than those where it can leverage its abundant natural resources Development of industrial infrastructure in the state With a view to attain a double digit economic growth the state government has implemented certain policy and regulatory measures. Industrial policy To make Madhya Pradesh an attractive destination for industrial investment, the state government has recently adopted the Industrial Promotion Policy 2004.The main thrust of the policy is: Effective implementation of single window system through establishment of a Madhya Pradesh Trade and Investment Facilitation Corporation Promotion of different industrial clusters in the state, in view of availability of raw material, skilled labour and market Enhancement of infrastructure in the identified industrial clusters Revival of sick industrial units by granting special packages Setting up of an Industrial Infrastructure Development Fund The policy also provides incentives through exemption from stamp duty, registration charges, entry tax, etc. for a specified period. Simplification of the approval process The state government has established District Trade and Industry Centres to facilitate new industrial investment in the districts.these centres will be responsible for co-ordinating and following up with other government agencies in the state for speedy approvals and clearances. The state government also proposes to simplify the approval process for setting up industrial units in the state by empowering committees at district and state levels. To promote a more conducive policy framework for various emerging sectors, Madhya Pradesh has formulated sector-specific government policies for information technology, tourism and biotechnology. Given below are some of the salient features of these policies. IT policy Setting up of Madhya Pradesh Agency for Promotion of Information Technology to propel the growth of IT Promotion of infrastructure and investment through IT cities and by formulating special package for providing financial assistance to the IT industry, promoting hardware technology parks Facilitate single window clearance system Introduction of IT in all government departments Manpower development in IT and setting up of a virtual university IT initiatives Madhya Pradesh has taken steps to promote IT in various aspects of governance. It has set

14 up an optical fibre backbone of 20,000 kms to cover 313 development blocks across 45 districts in the state. The state government has prescribed various guidelines/principles and general conditions for allowing private participation and investment in e-governance projects for citizen services. All state treasuries and 86 per cent of the land records in the state are digitised.the state government plans to computerise the departments of land registration, commercial taxes and state transport. The state has also started executing projects to leverage IT to offer value added services to the common man at the rural level. As part of this initiative, information flows and services like wholesale price, details of land records, registration of applications, public grievance redressal, etc. are made available online. In another initiative, the government has signed a Memorandum of Understanding (MoU) with the Reliance group for providing telecom connectivity to 7,800 kiosks across the state. The government has also initiated changes in labour laws to make them more favourable to IT industries. Tourism policy applications in agriculture, horticulture, livestock and poultry, fisheries and forestry and health sectors Setting up integrated biotechnology parks with state-of-the-art facilities for manufacturing units and research laboratories Establishing the State Biotechnology Council which includes eminent biotechnologists, educationists, industrialists and ex-officio members from various departments of state government Special Economic Zone policy The Madhya Pradesh Government has a policy for developing Special Economic Zones (SEZ) in the state.the SEZs, earmarked as duty-free enclaves, aim at promoting rapid industrial development and employment generation.the approved policy regime includes: Exemption of all state and local taxes and levies for transactions with the SEZ and for supply from domestic tariff areas to the SEZ Exemption from stamp duty and registration fees Grant of labour, energy, environment, industrial health and safety related permits and approvals through a dedicated single window mechanism Exemption from electricity duty, cess and any other tax or levy on sale of electricity for self generated and purchased power Expeditious process for land acquisition to set up SEZs Improvement and creation of adequate basic infrastructure Special package of incentives for tourism industry including exemption from luxury tax, sales tax and entertainment tax for new projects for ten years Designation of 25 tourist circuits for commercial tax exemption for tourist vehicles Biotech policy Promotion of community-based biotechnology Special Economic Zones: Key advantages Tax incentives Faster approvals Single window zone administration Superior infrastructure Infrastructure policy To improve urban infrastructure and develop civic amenities, the state is implementing a US$ 330 million project at Indore, Bhopal, Gwalior, Ratlam, Jabalpur

15 MADHYA PRADESH PAGE 15 and Ujjain.This is being done with help from the Asian Development Bank.The project focuses on providing sustainable basic urban infrastructure and services to these six cities. It also supports comprehensive urban governance and institutional reform to enhance accountability in municipal management, resource mobilisation and cost recovery. The project covers improvement and expansion of municipal infrastructure services viz. urban water supply, sewerage and sanitation, storm water drainage and solid waste management. The state government has set up the Madhya Pradesh State Road Development Corporation (MPSRDC) to accelerate the development of transport infrastructure in the state.the state has achieved significant success in implementing road projects through private sector participation. Madhya Pradesh Road Policy: Salient Features Encourage private sector participation rough BOT contracts Amendment of Indian Tolls (Madhya Pradesh) Act, 1932 to facilitate private sector participation Enabling legislation for regulation and development of the sector through the proposed Madhya Pradesh Highway Bill Development of existing road network through preparation of Master Plan, provide new links, focus on highway safety Develop an efficient Maintenance Management System to make optimal use of the available resources Setting up of State Road Maintenance Fund Incentives to ensure commercial viability of road projects Integrated Infrastructure Development Centres Pursuant to policy measures for promoting and strengthening clusters of small scale and tiny units, Integrated Infrastructure Development Centres (IIDCs) are being promoted in the areas not covered under the growth centres.they aim at facilitating exports, promoting stronger linkages between agriculture and industry, providing basic infrastructure and common facilities and creating employment opportunities. At present, eight IIDCs are under various stages of implementation.

16 BUSINESS OPPORTUNITIES Key Industries The economy of Madhya Pradesh is largely natural resource driven, leveraging the state s advantage in agriculture and mineral resources.the key industries and sectors where Madhya Pradesh has competitive strength include cement, textiles, mining and food-processing. Cement Cement production in Madhya Pradesh reached 15.1 million metric tonnes during , accounting for 13 per cent of the national production.there are seven major cement plants in the state. The cement industry in the country has seen significant growth in recent years.with the domestic demand for cement expected to grow at 8-9 per cent annually, cement production in India is projected to reach 160 million tonnes by Madhya Pradesh s key strength in cement industry is the presence of large limestone reserves, estimated to be over 2 billion tonnes. Prominent cement companies present in the state include ACC, Grasim Industries, Jaiprakash Associates, Century Textiles and Mysore Cements. Jaiprakash Associates is expanding the capacity of its plant at Reva from 4.2 MTPA to 6.5 MTPA with an investment of US$ 35 million.while Century Textiles is expanding its capacity at Satna by 0.8 MTPA. Textiles Madhya Pradesh produces 157,000 tonnes of spun yarn representing 6 per cent of India s total production and 38.6 million sq mt of fabric (mill made) accounting for 4 per cent of all India production. The state s key competitive advantage in the textile industry is the availability of raw material (cotton) and a skilled workforce. In 2002, the state produced 390,000 bales of cotton, representing 4 per cent of India s cotton production.the production of cloth stood at 52 million metres in The phasing out of export quota is expected to provide a fillip to India s textile industry.with the global trade in textile and clothing expected to grow from US$ 356 billion at present to US$ 600 billion by 2010, Madhya Pradesh has an opportunity to leverage its existing strengths and capture a larger share of textile market. The state government is taking steps to strengthen the textile industry in the state by formulating a special package for the textile industry in the Industrial Policy.The package includes establishing apparel parks and garment complexes in Indore and Jabalpur, and setting up an Apparel Training Institute and a national level institute of fashion technology. Mahavir Spinning Mills plans to invest US$ 160 million in an integrated textile unit near Bhopal.The unit is to be developed in two phases in a span of five years.the unit will produce 50 million metric tonnes of processed fabric. Mining Madhya Pradesh is endowed with significant mineral resources.with 604,000 carats of proven diamond reserves it accounts for 99 per cent of India s total reserves. It is the sole producer of diamonds in the country. It also leads the country in the production of copper ore, slate, pyrophillite, diaspore, and is second in production of rock phosphate, clay and laterite.

17 MADHYA PRADESH PAGE 17 The state has the country s largest open cast copper mine at Balaghat and the thickest coal seam of Asia at Singrauli coalfield in Sidhi district. The mining and quarrying sector contributed to 4.5 per cent of the state s GSDP (at current prices) in Madhya Pradesh - Production of key minerals, Fuel Minerals Unit Production % share - All India Coal 000 tonnes Metallic Minerals Copper Ore 000 tonnes Manganese Ore tonnes Non-Metallic Minerals Barium Carbonate tonnes Diamonds carats Diaspore tonnes Fire Clay tonnes Limestone 000 tonnes Other clays tonnes Pyrophylite tonnes The state government has taken steps to facilitate further development of the food processing industry in the state.these include setting up Food Parks with private investment. At present, six Food Parks are under implementation in various parts of the state. Prominent investors in Madhya Pradesh s edible oil industry are Ruchi Soya, MP Glychem and Vippi Industries. Ruchi Soya is expanding the capacity of its edible oil refinery at Indore from 600 tonnes per day to 1,000 tonnes per day. Prosoya Foods, a subsidiary of ProSoya Inc. Canada has set up a soya milk extraction plant in Madhya Pradesh. Exports Exports from Madhya mainly comprise agro-products such as soyabean extraction, minerals, textiles, leather and cement. Madhya Pradesh - Composition of exports 4% 8% 6% 45% Source: Review of Madhya Pradesh Economy, CMIE,August 2004 To facilitate faster exploitation of its mineral wealth and promote mineral based industries, the state government has formulated a Mining Policy which provides the framework for granting mining rights to private investors. Prominent mining organisations operating in the state include the National Mineral Development Corporation, Coal India and Hindustan Copper Ltd. Edible oils Madhya Pradesh is among the leading producers of edible oils in India and the largest producer of oilseeds among the states. In , the state produced 3 million tonnes of oilseeds, representing over 20 per cent of India s production. Agro-products Minerals Cement Textiles & leather Others Investment 35% Source: Government of Madhya Pradesh, Over the years, Madhya Pradesh has attracted industrial investment in sectors such as non-metallic minerals, textiles, food products and chemicals.these four sectors represent almost half of the existing industrial investment in Madhya Pradesh.

18 Principal industries in Madhya Pradesh Share of industries in net value addition 42.3% 8.8% 16.6% 14.1% Within manufacturing, key sectors include chemicals, machinery, transport equipment, non-metallic mineral products, metals and rubber. Among services, transport and community services including hospitals and tourism have the dominant share of investment. Foreign Direct Investment Between 1996 and 2003, Madhya Pradesh attracted over US$ 1,800 million of foreign direct investment. 9.0% 12.2% Madhya Pradesh - Cumulative FDI Food Products & Beverages Textiles Chemicals & Chemical Products Other Non-Metallic Mineral Products Rubber Others Source: Annual Survey of Industries, US$ million Year Source: SIA reports In 2004, investment projects totalling over US$ 17 billion were in different stages of implementation in the state. A sector-wise breakup of these projects indicates a wide distribution of investment across infrastructure, manufacturing, mining and services. Distribution of investment The key sectors attracting FDI in the state are fuels, metallurgical industries, textiles, among others. FDI - Sectoral break up 2% 8% 23% 15% 5% 15% 5% 38% 70% 19% Irrigation Manufacturing Electricity Service & Utilities Mining Source: Projects Today database, June 2004 Fuels Metallurgical industries Textiles Electrical equipment including software Others Source: SIA newsletter, Annual Issue 2002

19 MADHYA PRADESH PAGE 19 Potential Hubs for Investment As a result of the state s aggressive incentive policies, a number of sectors are emerging with substantial potential for private investment and business.the most prominent among them are automobiles and auto ancillary products and pharmaceutical sectors. Automobiles & auto components Madhya Pradesh s location at the centre of India has led to its emergence as an important destination for automobile and auto component industry. The industrial belt around Indore has production facilities for a number of automobile manufacturers. A network of vendors supplying auto components to these plants is being established. While Madhya Pradesh s current share in India s total automobile sector output is relatively small, it is expected to witness a significant increase. The projected growth rate for Indian automobile market is over 10 per cent per annum; this presents significant opportunity to the state. Prominent automobile and auto component players present in Madhya Pradesh are Kinetic Motors, Eicher Motors, Bajaj Tempo and Hindustan Motors. Some investment in the pipeline in this sector are Baja Tempo s plans to invest US$ 80 million to manufacture heavy and light commercial trucks in technical collaboration with Maschinenfabrik Augsburg-Nurnberg (MAN) of Germany at Pithampur; Kinetic Motors new production line for manufacturing the Italjet range of scooters at Pithampur and Hindustan Motors plan to invest around US$ 16 million over a period of four years to manufacture and supply automobile engines and transmission units to Ford India. Pharmaceuticals By leveraging the existing manufacturing base, along with a low cost resource pool Madhya Pradesh has a potential to further develop the pharmaceutical industry in the state. Ranbaxy, India s leading pharmaceuticals company, has a bulk drug and formulation plant at Dewas in Madhya Pradesh. IPCA Laboratories plans to invest US$ 22 million to expand its formulations capacity at Ratlam and invest US$ 14 million to set up a new export oriented formulations unit in Indore.The plant will come up in the SEZ and will be built according to USFDA specifications. Nicolas Piramal is investing US$ 7 million to invest in its opthalmology products facility at Pithampur. Biofill Pharma plans to invest US$ 25 million in Pithampur and Lupin Laboratories is expanding its manufacturing plant at Mandideep with an investment of US$ 4.5 million.

20 PROFILE OF KEY PLAYERS IN MADHYA PRADESH ACC Ltd ACC is one of the largest cement manufacturing companies in India, with a cement production capacity of 16 million tonnes per annum. In , ACC revenues stood at US$ 1035 million. ACC is a pioneer in cement and RMC, a leader in refractories and one of the pioneers in the area of advanced materials.the company has a countrywide distribution network and manufactures all types of cement. In Madhya Pradesh,ACC has a 1.7 MTPA cement plant at Kymore.The company plans to invest US$ 3.3 million to expand its manufacturing capacity of roofing products at Kymore.This will increase its production from 68,000 tonnes of asbestos roofing to 78,000 tonnes. Bajaj Tempo Ltd Bajaj Tempo is a US$ 190 million manufacturer of utility and light commercial vehicles, agricultural tractors and diesel engines. It has an automobile manufacturing plant at Pithampur near Indore. Bajaj Tempo plans to invest US$ 80 million to manufacture heavy and light commercial trucks in technical collaboration with Maschinenfabrik Augsburg- Nurnberg (MAN) of Germany at its existing site at Pithampur near Indore. Birla Corporation Ltd Birla Corporation Ltd is the flagship company of the MP Birla Group.The company s main areas of business are jute, cement, synthetic yarn, calcium carbide, industrial gases, PVC coated fabrics, PVC floor coverings, auto trims, healthcare and education. Birla Corporation has joint ventures and collaborations with world leaders like DLW AG of Germany, Rhone Poulenc of France, Sweden-based Ericsson Cables & AB and ABB, GE,Toshiba and AEI Cables. In , the company s revenues was US$ 276 million and profits over US$ 9 million. The company is setting up a captive power plant of 27 MW in Satna in Madhya Pradesh with an investment of US$ 42 million. It is also investing US$ 62 million for various capital expenditure programmes across the country. Cadbury India Ltd Cadbury India is a subsidiary of Cadbury Schweppes, the world s largest confectionery and third largest soft drinks company. Cadbury India had sales of over US$ 150 million in 2003.The company employs nearly 2000 people across India. Cadbury India has one of its main production plants at Malanpur, near Gwalior. Century Textiles and Industries Ltd Century Textiles and Industries Ltd is the flagship company of the B K Birla Group. Century is involved in diversified businesses including cotton textiles and yarn, viscose filament yarn and rayon, tyre, industrial yarn, cement, paper and pulp. In , it registered sales were over US$ 500 million. Century has presence in Madhya Pradesh through a cement plant at Satna.The company is expanding the production capacity of its cement plant at Satna by 0.8 million tonne per annum. It also has a 100 per cent export oriented cotton yarn and denim production plant near Indore.The unit has an ISO-9002 certification. Coca Cola India Coca-Cola India, one of the largest companies in the beverage market, has invested more than US$ 1 billion in India over the past decade. Coca-Cola is one of top international investors in India. In 2003, Coca-Cola India pledged to invest a further US$ 100 million in its operations. In Madhya Pradesh, Coca-Cola has a plant at Pilukhedi in Raisen district, near Bhopal. The company plans to invest US$ 6.7 million for expanding the operations in its plant at Pilukhedi.

21 MADHYA PRADESH PAGE 21 Eicher Motors Ltd Eicher Motors, part of the US$ 355 million Eicher Group, is a significant player in the Indian automobile industry. Eicher Motors manufactures and markets commercial vehicles with Gross Vehicle Weight (GVW) ranging from 5 to 25 tonnes. It is one of the leading manufacturers of commercial vehicles in India.The company has a manufacturing facility is Pithampur, Madhya Pradesh.This state-of-the-art plant has a total area of 72 acres with sq mt as the covered area. It houses some top-of-the-line equipments, a robust infrastructure and has an annual production capacity of 30,000 vehicles.the company has a world-class R&D centre that has helped the company successfully developed a wide range of commercial vehicles including trucks and buses. The company recently invested US$ 22 million for manufacturing heavy commercial vehicles at its Pithampur plant. Grasim Industries Ltd Grasim Industries is the flagship of the AV Birla Group, one of the most prominent Indian business houses.with the recent acquisition of cement business of L&T, Grasim has become the largest producer of cement in India. Grasim is also the largest producer of Viscose Staple Fibre (VSF) in India and one of the largest textile and yarn manufacturers. In Madhya Pradesh, Grasim has a presence through a cement plant at Jawad, a VSF plant at Nagda and textile & fabric manufacturing plants near Gwalior. Hindustan Lever Ltd (HLL) Hindustan Lever Ltd is India s largest fast moving consumer goods company, with leadership in home & personal care products and foods & beverages. Its parent company, Unilever a Fortune 500 transnational holds 51 per cent of the equity. HLL has a plant for synthetic detergents in Chindwara district of Madhya Pradesh. In 2002, HLL launched the Vindhya Valley project in association with the Madhya Pradesh government to help increase the income of the farmers and small town entrepreneurs engaged in agro processing and cottage industries in the state by providing support infrastructure for marketing and distribution of their products. HLL also has an alliance with Rallis India, a Tata group company, for a contract farming of wheat in Madhya Pradesh.This is mainly intended to help farmers grow and sell wheat and for making basmati rice for export in Madhya Pradesh. IPCA Laboratories Ltd IPCA Laboratories is one of India s leading pharmaceutical companies with a strong thrust on exports.the Group's principal activities are manufacturing and distributing drugs and pharmaceuticals. Its products include tablets, capsules, basic drugs, orals, liquids and injectables.the company has a bulk drugs and formulation unit at Ratlam and a bulk drug facility in Indore in Madhya Pradesh. IPCA Laboratories plans to invest US$ 22 million to expand its formulations capacity at Ratlam. It also plans to invest US$ 14 million in the first phase to set up a new export oriented formulations unit in Indore. Kinetic Motors Kinetic Motor Company Ltd is part of the Kinetic group of companies, a leading manufacturer of two wheelers in India.The company has a state-of-the-art manufacturing facility at Pithampur, near Indore.The facility is ISO-9001 certified. Kinetic Motors is setting up a production line for manufacturing the Italjet range of scooters at Pithampur in Madhya Pradesh. Nicholas Piramal India Ltd Nicholas Piramal India Ltd (NPIL) is one of India s leading pharmaceutical and healthcare companies with sales of US$ 280 million. NPIL is ranked fourth in domestic formulations sales and second in total domestic pharmaceuticals sales. Its Pithampur plant in Madhya Pradesh is accredited by reputed organisations like Allergan, Novartis, Solvay and IVAX, among others. Nicolas Piramal plans to invest US$ 45 million to enhance its research and development activities besides strengthening its manufacturing facilities.

22 Procter & Gamble Procter & Gamble India is one of India s fastest growing FMCG companies.the company has a turnover of over US$ 200 million.the company has a high technology detergent manufacturing plant in Raisen district in the state. Ranbaxy Laboratories Ltd Ranbaxy Laboratories Ltd, India s largest pharmaceutical company, manufactures and markets world-class generics, branded generic pharmaceuticals and active pharmaceutical ingredients. It is ranked amongst the top ten generic companies worldwide. Ranbaxy has joint ventures/subsidiaries across the globe and its products are sold in over 100 countries, it has manufacturing operations in 7 countries and ground presence in 44 countries. In 2004, the company s global sales crossed US$ 1 billion. Ranbaxy has manufacturing facilities in seven countries (including India), most of which are USFDA approved. Ranbaxy is investing US$ 100 million for expanding production capacity of Indian, Brazilian and US manufacturing utilities. In Madhya Pradesh, the company has a bulk drug and formulation plant at Dewas. Ruchi Soya Industries Ltd Ruchi Soya Industries Ltd is the largest edible oil company in India engaged in refining and trading of edible oils, soybean oil extraction, and export of soybean meal. It has an annual turnover of over US$ 550 million. In 2003, the company embarked on an expansion programme at its edible oil refinery at Indore.The plant capacity is being raised from 600 tonnes per day to 1000 tonnes per day.

23 MADHYA PRADESH PAGE 23 DOING BUSINESS IN MADHYA PRADESH Obtaining approvals An indicative list of approvals with timeframe for setting up business in Madhya Pradesh Department Agency Timelines Environment/Industries District Trade & Industries Centre / Madhya Pradesh Pollution Board No objection certificate for identified industries: Immediate Approval from Pollution Control Board: Immediate Industries District Trade & Industries Centre Provisional Registration: Immediate Permanent Registration: 7 days Letter of Intent: Immediate Land Allotment (after necessary scrutiny): Immediate Processing of lease deed: 7 days Issue of Entry Tax/ Sales tax exemption certificate: Immediate Approval of capital subsidy: 30 days Approval of interest subsidy: 7 days Industries/Electricity District Trade & Industries Centre Approval for electricity connection: Immediate Industries/ Finance District Trade & Industries Centre Approval of Bank loan: 30 days Source: PwC research

24 Cost of setting up business An indicative table on cost of setting up business in Madhya Pradesh Indicator Value (in US$) Industrial land (per sq mt) Office space rent (per sq ft per month) Residential rent (for a 2,000 sq ft house, per month) star hotel room (per night) Electricity (per kwh) Water (per 1000 litres) 0.19 Source: PwC research Note: Exchange rate used is INR 47 per US$. Contact for information State Government Website Madhya Pradesh State Industrial Development Corporation (MPSIDC) Madhya Pradesh State Industrial Development Corporation is the nodal agency responsible for development of industrial estates and investment promotion in Madhya Pradesh. MPSIDC has five subsidiary companies located in Bhopal, Indore, Gwalior, Jabalpur and Rewa. Each of these subsidiaries develops and manages different industrial estates within their areas of jurisdiction. Madhya Pradesh State Industrial Development Corporation AVN Towers, 192 Zone-1 MP Nagar Bhopal Tel Fax mpsidc@sancharnet.in Web Confederation of Indian Industry (CII) Information on markets and opportunities for investment in Madhya Pradesh can also be obtained from Confederation of Indian Industry which works with the objective of creating a symbiotic interface between industry and government. Confederation of Indian Industry State Office 17, Vaishali Nagar, Kotra Bhopal INDIA Tel Fax ciimp@ciionline.org Web

25 DISCLAIMER This publication has been prepared for the India Brand Equity Foundation ( IBEF ). All rights reserved. All copyright in this publication and related works is owned by IBEF. The same may not be reproduced, wholly or in part in any material form (including photocopying or storing it in any medium by electronic means and whether or not transiently or incidentally to some other use of this publication), modified or in any manner communicated to any third party except with the written approval of IBE F. This publication is for information purposes only. While due care has been taken during the compilation of this publication to ensure that the information is accurate to the best of IBEF s knowledge and belief, the content is not to be construed in any manner whatsoever as a substitute for professional advice. IBEF neither recommends nor endorses any specific products or services that may have been mentioned in this publication and nor does it assume any liability or responsibility for the outcome of decisions taken as a result of any reliance placed on this publication. IBEF shall in no way, be liable for any direct or indirect damages that may arise due to any act or omission on the part of the user due to any reliance placed or guidance taken from any portion of this publication.

26 The India Brand Equity Foundation is a public-private partnership between the Ministry of Commerce & Industry, Government of India and the Confederation of Indian Industry.The Foundation s primary objective is to build positive economic perceptions of India globally. India Brand Equity Foundation c/o Confederation of Indian Industry 249-F Sector 18 Udyog Vihar Phase IV Gurgaon Haryana INDIA Tel , Fax ajay.khanna@ciionline.org Web