indian economy oppurtunties unlimted

8/3/2019 Indian Economy Oppurtunties Unlimted

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SUBJECT- ECONOMICS


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Indian EconomyOpportunities Unlimited

Indian EconomyOpportunities Unlimited


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India: Fastest Growing Free Market Democracy


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India: Among the Top-15 Countries in terms of GDP at constant prices

205 223319 347

103 91

116117

104 109

155168

0

100

200

300

400

500

600

700

1999-00 2002-03 2005-06 2006-07

USD

Billion

Services Agriculture Industry

The Indian economy has witnessed an unprecedented growth. Booming Indian services and

industry sector are providing the required impetus to the economic growth

The soundperformance of each

industry segment isleading to the

overall robustperformance of the

Indian economy

Indian economy is

the 4th largest in

terms of PPP USD4.1 trillion in 2006

Indias GDP

witnessed highgrowth and was thesecond fastest

growing GDP afterChina

Growth in sectors (2006-07):

Industry: 10.9%

Services: 11%

Agriculture: 2.7%

Fastest GDP growth of 9.4percent in 2006-07, since last 18

years

Contribution of

Services -

increased from

49 percent to

55 percent

Contribution of

Services -

increased from

49 percent to

55 percent

India's GDP: 2002-07

424484

534590 631

0

100

200

300

400

500

600

700

2002-03 2003-04 2004-05 2005-06 2006-07

USD

Billion

GDP at Constant Prices

4%

8.5% 7.5%

8.4%9.4%


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India: Robust Economic Platform

India's Forex Reserves: 2001-07 (Till 22 June 2007)

5475

112

141152

199

213

0

50

100

150

200

250

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

(Till 22June)

USD

Billion

External Debt-to-GDP Ratio

21.120.4

17.817.3

15.8

16.4

10

13

16

19

22

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07

Ratio

Indias enhancedeconomic

performance hasbeen the major

contributor towardsincreased Forex

reserves

Steadily increasingForex reserves offer

adequate securityagainst any possible

currency crisis ormonetary instability

Falling Dollar inflatesthe Indias external debt

Increasedconfidence of

investors in Indiancompanies have led

to a surge in crossborder borrowing by

the corporatehouses

Forex reserveswitnessed an

increase of 200percent for the

period 1990-2007

at present level of Forexreserves, the country has

adequate cover for 12 months ofimports

Indias Forexreserves are in

excess ofexternal debt

the decreasing external debt toGDP ratio indicates that India has

a sound economic platform


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India: Surging Exports

India's Import: 2002-07 (till February 2007)

61.5278.28

111.89

149.65162.30

0

20

4060

80

100

120140

160

180

2002-03 2003-04 2004-05 2005-06 2006-07

(upto Feb.

07)

U

SD

Billion

India's Exports: 2002-07 (till February 2007)

52.8163.95

83.81103.42

112.40

0

20

40

60

80

100

120

2002-03 2003-04 2004-05 2005-06 2006-07

(upto Feb.

07)

USDBillion

Petroleum products are the majorcontributors towards Indias growing

imports

Quality and cost advantage are the two

important parameters leveraged by the

Indian producers to increasingly

market their products and services

Services sector has

been a majorcontributor toincreased exports

from India

Imports of productsby India mainly

includes petroleumproducts and

minerals

Indian companieshave chalked out

extensive plans toincrease their

presence abroad

Acceptance ofIndian products

along with the costadvantage has

provided an edge toIndian companies


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7India: Attractive Investment Destination

Net FII into India: 2001-07

1.80

0.60

10.00 10.209.40

6.72

0

2

4

6

8

10

12

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07

USD

Billion

India is ranked

second in ATKearney FDIconfidence index

Telecom andElectronics topped

the list of inward FDI

FDI inflow for theperiod 2006-07

witnessed a growthof 180 percent over

the same period lastyear

Mauritius has beenthe largest

contributor towardsFDI into India..

Return on the Investments in India (2006 Q1)

Market PE Ratio P/B Ratio RoE (%)

India 16.1 4.53 22

China 10.62 2.06 17

Indonesia 10.26 3.09 NA

Korea 9.85 1.84 16

Malaysia 13.21 1.82 16

Taiwan 12.17 2 11

Thailand 9.84 2.32 23

EM Asia 11.19 2.12 15

Latin America 9.35 2.46 18

EM Europe 10.9 2.39 15

With improved performance on PE ratio and ROE, Indian markets have attracted

large investmentsFDI Inflow - India: 2001-07

4,222

3,134 2,634

3,755

5,546

15,730

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07

USDM

illion 180 percent

Increase


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8India: Vibrant Capital Market

India is among themajor destinations

across the globe forinflow of US Dollar

i.e. FIIs

Sensex risen 15times in the period

1990-2007

Sensex The Bombay stock exchange index has risen 15 times from 1990s to

reach 15,000 mark in July 2007

FIIs augmented

support by infusing

large investments

in Indian stock

market

Exorbitant

industry

performance

Increased local

investors

confidence

Emergence ofindustry and

confidence of localinvestors along with

the FIIs has led toincreased movement

of sensex-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

7/1/1997 7/1/1998 7/1/1999 7/1/2000 7/1/2001 7/1/2002 7/1/2003 7/1/2004 7/1/2005 7/1/2006 7/1/2007

IN

R

7/9/2007Crossed

15,000mark

Crossed 14,000 mark

Crossed 10,000 mark

Crossed 5,000 mark

12/30/1999

2/7/2006

1/12/2007


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9India: Vibrant Economy Driving M&A Activities

SECTORUSD(Mn)

SECTORUSD(Mn)

Automotive 518 Manufacturing 933

Banking and Financial 1,375 Media 630

Chemicals andPlastics

1,133 Oil & Gas 384

Electrical andElectronics

896 Pharma &biotech

2,520

Energy 1,484 Telecom 2,198

FMCG, Food andBeverages

1,327 Others 4,006

IT and ITES 2,903 Total 20,305

Growth Drivers:

Globalisationofcompetition

Concentration of

companies toachieve

economies ofscale

Lower interest

rates and vibrantglobal markets

Cash Reserveswith Corporates

Number of Deals and Values

12.3

18.3

28.2

306

467

782

0

5

10

15

20

25

30

2004 2005 2006

USDB

illion

0

100

200

300

400

500

600

700

800

900

Numberofdeals

Deal Values No. of Deals

Contribution of private

equity deals to total

number of deals have

increased from nearly 9

percent in 2004 to 28

percent in 2006

In 2006, there were a

total of 480 M&A deals

and 302 private equity

deals

Average deal size close to

USD 36 million

Trends:

Ratio of the Size ofacquisition to the

size of acquirerhas grown from 10

percent in 2004 to25 percent in 2006.

Cross-border

deals are growingfaster than

domestic deals

Private Equity (PE)houses have

funded projects aswell as made a few

acquisitions inIndia


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10Major M&A Deals Undertaken Abroad by India Inc.

USD 12.1 billionUSD 12.1 billionTata Steel buys Corus PlcTata Steel buys Corus Plc

USD 6 billionUSD 6 billionHindalco acquired Novelis Inc.Hindalco acquired Novelis Inc.

USD 1.58 billionUSD 1.58 billionEssar Steel acquired Algoma SteelEssar Steel acquired Algoma Steel

USD 730 millionUSD 730 millionVideocon Industries acquired Daewoo

Electronics Corporation Limited

Videocon Industries acquired Daewoo

Electronics Corporation Limited

USD 1.6 billionUSD 1.6 billionSuzlon Energy Ltd. acquires REpowerSuzlon Energy Ltd. acquires REpower


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11Major M&A and Investments Announcements in India

USD 11 billionUSD 11 billionVodafone buys HutchVodafone buys Hutch

USD 0.98 billionUSD 0.98 billionAditya Birla Group increased its stake in Idea

Cellular by acquiring 48.14-percent stake

Aditya Birla Group increased its stake in Idea

Cellular by acquiring 48.14-percent stake

USD 1 billionUSD 1 billionPlans investment in private equity, real estate,and private wealth management

Plans investment in private equity, real estate,and private wealth management

USD 1.7 billionUSD 1.7 billionPlans to spend on its development operations

in India over the next four years

Plans to spend on its development operations

in India over the next four years

USD 0.905 billionUSD 0.905 billion

Renault, Nissan and Mahindra & Mahindra

has initiated a Greenfield automobile plant

project in Chennai.

Renault, Nissan and Mahindra & Mahindra

has initiated a Greenfield automobile plant

project in Chennai.

Mylan Laboratories acquired a majority stake

in Matrix Laboratories

Mylan Laboratories acquired a majority stake

in Matrix LaboratoriesUSD 0.74 billionUSD 0.74 billion


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12India: Pacing Ahead to Emerge as a Major Economy in the World

Projected GDP Growth Rates for Select Upcoming Economies

0

2

4

6

8

2005-10 2010-15 2015-20 2020-25 2025-30 2030-35 2035-40 2040-45 2045-50

GDPGrow

thR

ate(%)

Brazil Ch ina India Russia

0

20

40

60

80

100

India Russia VietnamUkraine China Ch ile Latvia

GRDIScore

2007 Global Retail Development Index (GRDI)2007 Global Services Location Index

3.3

2.6

3.2

2.8

2.9

3.2

1.5

1.8

1.2

1.3

2.3

2.3

1.1

1.5

1.6

2

1.4

1.4

Indonesia

Brazil

Thailand

Malaysia

China

India

Financial structure People and skill availablity

Business environment

India has been

ranked superior toother majorcountries by many

prominent surveys

AT Kearney placedIndia among the top

three in its FDI

confidence index

the retail marketalong with the

services sector hasbeen attracting the

interest of majorplayers

India is expected to

outperform its rivalsin the BRIC, in termsof GDP growth rates,

from 2015onwards


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13India: Astounding Demographics

Per Capita Income

393

461519

583

651

0

100

200

300

400

500

600

700

2002-03 2003-04 2004-05 2005-06 2006-07

USD

2

9

48

221

726

9

17

74

285

710

20

33

120

404

613

2001-02 2005-06 2009-10(E)

Rich (Above 115,000)

High Income (57,000 115,000)

Consuming class (23,000 57,000)

Working class (10,200 23,000)

Needy (Below 10,200)

Annual Household Income

(in USD)

* In PPP terms

Population(million)

Increasing per capita incomecoupled with an emerging middle

class has provided the necessaryimpetus to consumerism in India

Growth in the higher

income categoriesof Indias populationhas created an

affluent section ofsociety, which has

significant level ofpurchasing power

Increasing per capitaincome and large

population movinginto middle class

has led to high levelof consumerism in

India

DEMOGRAPHIC TRANSFORMATION OF INDIA


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Countries worldwide are anticipating a shortage of working population in the future. India is expected to emerge as a

clear winner, and by 2050, it will have the largest working age population.

India: Increasing Working Population

-3

0

10

17

31

33

44

64

71

314

-5 45 95 145 195 245 295 345

Stock Position 2005

South East Asia 362

Southern Asia 132

India 691

Africa 500

China 934

Latin America 359

USA 200

Europe 497

Japan 85

World 4,168

In Million

Addition to Working Age Population by 2010

Growth in Global Working Age Population (15-64)


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GDP USD 590 billion

GDP growth rate 9 %

Services contribution 54 %

FDI limit not 100 percent in majorindustry sectors such as Telecom,Semiconductors, Automobiles, etc.

Balance of Trade USD (-)46.2billion

Investment goal USD 250 billion

20062006

GDP USD 750 billion

GDP growth rate 9.5%

Services contribution 60 %

FDI limit is expected to be close to100 percent in major industrysectors such as Telecom,Semiconductors, Automobiles, etc.

Balance of Trade Shouldincrease with surging exports ascompared with imports


20082008

GDP USD 900 billion

GDP growth rate 9%

Services contribution 60-65 %

FDI limit is expected to be 100percent in major industry sectorssuch as Telecom,Semiconductors, Automobiles, etc.

Balance of Trade Should be

positive with increased level ofexports as compared with imports


20102010

Growth Expected in India

To sustain the GDP growth ofmore than 8 percent, India requires an investmentofUSD 1.5 trillion

in the nextfive years


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India has among the

highest returns on

foreign investment.

- Dan Scheinman, Cisco System Inc. as told

to Business Week, August 2005

We came to India for the

costs, stayed for the

quality and are now

investing for innovation.

A T Kearney

FDI Confidence Index 2005

India is among the

three most attractiveFDI destinations in the

world.

Jack Welch

General Electric

India is a developed

country as far as

intellectual capital is

concerned.

USDepartment of

Commerce

By 2032, India will be

among the three

largest economies inthe world.

BRIC Report, Goldman Sachs

Why India? Quote Unquote

Travyn Rhall,

ACNielsen

The Indian market has two

core advantages - an

increasing presence of

multinationals and an upswing

in the IT exports.

Craig Barrett

Intel Corporation

India has evolved into

one of the world's

leading technologycenters.


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DISCLAIMER

This presentation has been prepared jointly by the India Brand Equity Foundation (IBEF) andEvalueserve.comPvt. Ltd., EVALUESERVE (Authors).

All rights reserved. All copyright in this presentation and related works is owned by IBEF and the Authors. Thesame may not be reproduced, wholly or in part in any material form (including photocopying or storing it in anymedium by electronic means and whether or not transiently or incidentally to some other use of thispresentation), modified or in any manner communicated to any third party except with the written approval ofIBEF.

This presentation is for information purposes only. While due care has been taken during the compilation of thispresentation to ensure that the information is accurate to the best of the Authors and IBEFs knowledge andbelief, the content is not to be construed in any manner whatsoever as a substitute for professional advice.

The Author and IBEF neither recommend or endorse any specific products or services that may have beenmentioned in this presentation and nor do they assume any liability or responsibil ity for the outcome ofdecisions taken as a result of any reliance placed in this presentation.

Neither the Author nor IBEF shall 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 thispresentation.


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indian economy oppurtunties unlimted

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