fin 444 - india final presentation

8/15/2019 FIN 444 - India Final Presentation

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Namrata GurungBrian DaltonKris Kohtz

Rachel OleniaczSuresh Lee Krishnamoorthy

FIN 444Final Presentation

April 4, 2007

Delhi

Mumbai

Calcutta

BangaloreChennai

INDIA


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India - Introduction

History

Indias Economic Reform

Foreign Direct Investment

Centralized v. Market Based Economy


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DELHI

Namrata Gurung


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Delhi

Capital of India

Parliament of India,

District Administrationof Delhi, FinancialInstitutions situated inDelhi

Center of SupervisoryPower


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Urbanization of Delhi

Four Satellite Suburbs

Gurgaon is the most developed Hub for outsourcing and off-

shoring business Increase workforce and

businesses Increasing middle-class

families. Increase in Net domestic

Product - Delhi


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Delhi Policies Indias economic growth by 10% this year.

State Bank of India raised the prime-lending rate from11.5% to 12.25% 2nd time in two months

Central bank raised the interest rate by a quarter-point to7.5%

control the rapid credit expansion Help stem inflation

*Tightening the Money supply


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Delhi Politics Decision-making

Congress is the largest party in the coalition but other leftleaning parties and the Communist party play a vital role

The decision of raising the futures price of wheat and rice primary sustenance of the poor farmers

The government was forced to freeze the futures price

Affects the farmers as well as the NCDEX


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Delhi Politics cont

Recently Congress Party lost 2 local elections

Chances of ruling coalition to become unstable Policies remain undecided E.g. 1999 Parliament election


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MUMBAI, Economy, Financial

Brian Dalton


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Mumbai Formerly known as Bombay Most populous city in India (over

25 million people) Financial and entertainment

capital of India National Stock Exchange of

India (NSE) Bombay Stock Exchange (BSE) Reserve Bank of India (RBI)

Bollywood


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Indian Economy: Introduction In terms of PPP, India is

the fourth largesteconomy in the world

Economy has beengrowing at around 8% per year for the past four years

2007 growth is estimatedat ~ 9%

Total nominal GDP isexpected to surpass $1trillion USD in 2008

Rapid growth has beenleading to concerns over inflation


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Indian Economy: Introduction

But with over a billionpeople, it is no wonder thatthe World Bank stillclassifies India as a LowIncome country

Nevertheless, it is stillremarkable how far Indiahas come over the pastfew decades


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Indian Economy: Brief History Pre-1757: India ruled by various warlords, clans,

and empires. Rich in exotic goods desired by Europeans Extensive world trade In 1700, it is estimated that the amount of world income

controlled by India was nearly as great as all of Europe 1757 1947: Colonial Era The great wealth and natural resources entices

Britain to colonize much of India Britain exploits the countrys resources

Britain makes some positive contributions to India,however. The develop roads, institute standardcurrency, property rights, capital markets,transportation and communication networks. Theyalso emphasize education.


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Indian Economy: Brief History 1947 Present:

Independence 1947- 1970s: Isolation and

Socialism leads to extremepoverty and stagnation

Beginning in the 1980s andthrough the 90s India began toliberalize its economy, and startthe move towards a morecapitalist-type economy

Today India is the second fastestgrowing larger economy and thefourth largest economy in theworld.


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Indian Economy: Industries,Exports and Trading Partners

Most Indians still work in agriculture-related jobs, but services are becomingand increasing important sector

Unlike countries like China, India is not so well known for its manufacturingexports.

Exports include textiles, natural resources like tea and cotton And of course the cultural exports like food and Bollywood India has recently become associated with its service exports (outsourcing),

and this is becoming a very important part of the economy India is a net importer Main trading partners include: US, China, EU, Russia and Japan
http://upload.wikimedia.org/wikipedia/commons/7/77/Tiffin_wallah_lunch.jpg


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Banking System Reserve Bank of India

(RBI): The Central Bank Controls currency (Rupee) Manages foreign exchange

Supervises and regulates thefinancial system Promotes economic

development Bank of the central

government Headquarters in Mumbai, and

22 regional branches


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The Rupee The Rupee is relatively confined

to India, and is not usedextensively in any other country

Later years of British colonialrule: Pegged to gold standardb/w of British Pound

1966: de-pegged from the Britishpound; pegged to the US dollar

1971: de-pegged from US dollar (b/c USD was tanking)

Today, the RBI conducts amanaged float on the INR/USDexchange rate; INR/EUR andINR/JPY are market determined


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Financial Markets The Securities and Exchange

Board of India regulates Indias 22financial exchanges

The largest financial exchanges inIndia are: The National Stock Exchange of India

(NSE) The Calcutta Stock Exchange (CSE) The Bombay Stock Exchange (BSE) The Delhi Stock Exchange (DSE)

The two most importantexchanges to foreign investors arethe NSE and BSE, both located inMumbai

SEBI Mumbai Offices


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National Stock Exchange of India(NSE)

The third largest stockexchange in the world(number of transactions/day)

Traditionally, the firstexchange to introduce newtechnology and tradingadvancements First to create a clearing

corporation First to begin internet trading First to trade ETFs


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Bombay Stock Exchange (BSE) Oldest stock exchange in

Asia Smaller than the NSE,

but to foreigners, oftenthe more importantexchange

BSE Sensex indexclosely followed byinternational investors

Many of the largestIndian companies list onthe BSE (Wipro, Infosys,Tata Group)
http://upload.wikimedia.org/wikipedia/commons/9/99/Bombay-Stock-Exchange.jpg


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Forex Indian forex market tightly

regulated by the RBI RBI often directly intervenes

in INR/USD trade to stabilize

the rupee Forex market is small, but

growing rapidly Currency derivatives market

is larger than the spot market Most of the trade is in

INR/USD


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Bonds Government bonds

T-bills (91-day and 364-day) sold by RBI Many investors dont like them because they offer no tax benefits Foreigners are allowed to purchase Government market is growing as a result of increased liquidity

in Indian market Corporate bonds

Regulated by the SEBI Corporate debt placements have increased by over 40% in the

past two years

Companies are required to be rated as investment quality toissue public debt Debt market primarily limited to wholesale orders No market for junk bonds, but probably will be developed in the

near future


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Bollywood Indias Hollywood

Largest film industry in theworld

Puts out more than 1000films/year (most are crap,but some are worthwhilekinda like Hollywood)

Many films funded by foreigninvestors, Indian banks, andMumbais criminalunderground

Important part of the Mumbaieconomy and Indian culture


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Bengalru

Kris Kohtz


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Strengths

Business ProcessOutsourcing (BPO) Comparative

Advantages Software exports Information

Technology


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Challenges

Infrastructure Regulations Expansion into China


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CHENNAIAlso known as Madras

Rachel Oleniacz


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Demographics

City of 6,400,000 Fourth largest metropolitan

Second largest exporter of IT & services Connected by the Golden Quadrilateral

Project


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Culture & Roots

Tamil Nadu ~ TheProvince

Tamil ~ The

Language Bharatanatyam

Kalakshetra

Carnatic music Music Season Hindu Temples


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Nomenclature & History

The city with two names Madras Patnam by The East India Company Chennaipuri by the locals

Foreigners role in the then town Port and trade


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Commerce & Trade

Chennai port General industrial (containers) Automobiles Shift to green & clean

Ennore port Coal Ore Bulk cargo


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Automobiles

Detroit of South Asia Potential as one of top three automobile

giants in the world Ford, Hyundai, Mitsubishi, TVS, Ashok

Leyland, & BMW


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CALCUTTA

Suresh Lee Krishnamoorthy


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CALCUTTA-14 million inhabitants-Manufacturing centered

-Faced major productivity crisis-Political instability


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RECOVERY AVENUES

Major growth in the IT sector

Calcutta Stock Exchange


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QUESTION?

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