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  • 1. Indian Economy Opportunities Unlimited
  • 2. India: Fastest Growing Free Market Democracy 2
  • 3. India: Among the Top-15 Countries in terms of GDP at constant prices 3 The Indian economy has witnessed an unprecedented growth…. Booming Indian services and industry sector are providing the required impetus to the economic growthIndia’s GDPwitnessed high Indias GDP: 2002-07 9.4%growth and was the 8.4% 700second fastest 8.5% 7.5%growing GDP after 600 Fastest GDP growth of 9.4China percent in 2006-07, since last 18 500 USD Billion years 400 4% 631 300 590 484 534 200 424Indian economy isthe 4th largest in 100terms of PPP – USD4.1 trillion in 2006 0 2002-03 2003-04 2004-05 2005-06 2006-07 GDP at Constant Prices Contribution ofThe sound Services -performance of each increased fromindustry segment is 700 49 percent toleading to the 55 percentoverall robust 600performance of the 168 500 155Indian economy Growth in sectors (2006-07): USD Billion 400 117 Industry: 10.9% 104 109 116 Services: 11% 300 103 91 Agriculture: 2.7% 200 319 347 100 205 223 0 1999-00 2002-03 2005-06 2006-07 Services Agriculture Industry
  • 4. India: Robust Economic Platform 4 Indias Forex Reserves: 2001-07 (Till 22 June 2007)India’s enhanced 250economic 213 199performance has 200been the major USD Billion 141 152 …at present level of Forexcontributor towards 150 reserves, the country hasincreased Forex 112 adequate cover for 12 months ofreserves 100 75 imports 54 50Steadily increasingForex reserves offer 0adequate security 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08against any possible (Till 22currency crisis or June)monetary instability India’s Forex External Debt-to-GDP Ratio reserves are in 22 excess of 21.1Forex reserves 20.4 Falling Dollar inflates external debt…witnessed an the India’s external debtincrease of 200 19percent for the 17.8 17.3period 1990-2007 16.4 15.8 Ratio 16Increasedconfidence of 13 …the decreasing external debt toinvestors in Indian GDP ratio indicates that India hascompanies have led a sound economic platformto a surge in crossborder borrowing by 10the corporate 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07houses
  • 5. India: Surging Exports 5 Indias Exports: 2002-07 (till February 2007)Services sector has 112.40 120 103.42been a majorcontributor to 100 83.81increased exports USD Billion 80 63.95from India 60 52.81 Quality and cost advantage are the two 40 important parameters leveraged by the 20 Indian producers to increasinglyAcceptance of 0 market their products and servicesIndian products 2002-03 2003-04 2004-05 2005-06 2006-07along with the cost (upto Feb.advantage has 07)provided an edge toIndian companiesIndian companies Indias Import: 2002-07 (till February 2007)have chalked out 180 162.30extensive plans to 149.65 160increase their 140 USD Billionpresence abroad 111.89 120 100 78.28 80 61.52 60 Petroleum products are the major 40 contributors towards India’s growingImports of productsby India mainly 20 imports 0includes petroleum 2002-03 2003-04 2004-05 2005-06 2006-07products and (upto Feb.minerals 07)
  • 6. India: Attractive Investment Destination 6 With improved performance on PE ratio and ROE, Indian markets have attractedIndia is rankedsecond in AT large investmentsKearney FDIconfidence index FDI Inflow - India: 2001-07 18,000 15,730 16,000 14,000 180 percent USD MillionTelecom and 12,000 IncreaseElectronics topped 10,000 Return on the Investments in India (2006 Q1)the list of inward FDI 8,000 Market PE Ratio P/B Ratio RoE (%) 5,546 6,000 4,222 3,755 India 16.1 4.53 22 4,000 3,134 2,634 China 10.62 2.06 17 2,000FDI inflow for the 0period 2006-07 Indonesia 10.26 3.09 NA 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07witnessed a growth Korea 9.85 1.84 16of 180 percent overthe same period last Malaysia 13.21 1.82 16year Net FII into India: 2001-07 Taiwan 12.17 2 11 12 Thailand 9.84 2.32 23 10.00 10.20 10 9.40 EM Asia 11.19 2.12 15 USD BillionMauritius has been 8 6.72 Latin America 9.35 2.46 18the largestcontributor towards EM Europe 10.9 2.39 15 6FDI into India….. 4 1.80 2 0.60 0 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
  • 7. India: Vibrant Capital Market 7 Sensex – The Bombay stock exchange index has risen 15 times from 1990s toIndia is among the reach 15,000 mark in July 2007major destinationsacross the globe forinflow of US Dollari.e. FIIs 7/9/2007 Crossed 15,000 mark FIIs augmented 1/12/2007 support by infusing 16,000 Crossed 14,000 mark large investmentsSensex risen 15 in Indian stocktimes in the period market1990-2007 14,000 2/7/2006 12,000 Crossed 10,000 mark 10,000 INR 12/30/1999 Exorbitant 8,000 industry Crossed 5,000 markEmergence of performanceindustry and 6,000confidence of localinvestors along with 4,000the FIIs has led toincreased movement 2,000 Increased localof sensex investors’ - confidence 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
  • 8. India: Vibrant Economy Driving M&A Activities 8 USD USDGrowth Drivers: Number of Deals and Values SECTOR SECTOR 28.2 (Mn) (Mn) 30 900 Globalisation of 782 800 Automotive 518 Manufacturing 933 competition 25 Number of deals 700 Concentration of 18.3 Banking and Financial 1,375 Media 630 20 600 companies to USD Billion 467 500 Chemicals and 1,133 Oil & Gas 384 achieve 15 12.3 Plastics 400 economies of 10 306 300 Electrical and 896 Pharma & 2,520 scale Electronics biotech 200 Lower interest 5 Energy 1,484 Telecom 2,198 100 rates and vibrant 0 0 FMCG, Food and 1,327 Others 4,006 global markets 2004 2005 2006 Beverages Cash Reserves Deal Values No. of Deals with Corporates IT and ITES 2,903 Total 20,305Trends: In 2006, there were a Ratio of the Size of acquisition to the total of 480 M&A deals size of acquirer and 302 private equity has grown from 10 deals… percent in 2004 to 25 percent in 2006. … Average deal size close to Cross-border deals are growing USD 36 million… faster than domestic deals …Contribution of private Private Equity (PE) equity deals to total houses have number of deals have funded projects as well as made a few increased from nearly 9 acquisitions in percent in 2004 to 28 India percent in 2006
  • 9. Major M&A Deals Undertaken Abroad by India Inc. 9 Tata Steel buys Corus Plc USD 12.1 billion Hindalco acquired Novelis Inc. USD 6 billion Essar Steel acquired Algoma Steel USD 1.58 billion Suzlon Energy Ltd. acquires REpower USD 1.6 billion Videocon Industries acquired Daewoo USD 730 million Electronics Corporation Limited
  • 10. Major M&A and Investments Announcements in India 10 Vodafone buys Hutch USD 11 billion Plans to spend on its development operations USD 1.7 billion in India over the next four years Plans investment in private equity, real USD 1 billion estate, and private wealth management Aditya Birla Group increased its stake in Idea USD 0.98 billion Cellular by acquiring 48.14-percent stake Renault, Nissan and Mahindra & Mahindra has initiated a Greenfield automobile plant USD 0.905 billion project in Chennai. Mylan Laboratories acquired a majority stake USD 0.74 billion in Matrix Laboratories
  • 11. India: Pacing Ahead to Emerge as a Major Economy in the World 11 2007 Global Retail Development Index (GRDI) 2007 Global Services Location IndexIndia has been 100ranked superior to India 3.2 2.3 1.4other major 80countries by many China 2.9 2.3 1.4prominent surveys… GRDI Score 60 Malaysia 2.8 1.3 2 Thailand 3.2 1.2 1.6 40AT Kearney placed Brazil 2.6 1.8 1.5India among the top 20three in its FDI Indonesia 3.3 1.5 1.1confidence index… 0 Financial structure People and skill availablity India Russia Vietnam Ukraine China Chile Latvia Business environment… the retail marketalong with theservices sector has Projected GDP Growth Rates for Select Upcoming Economies 8been attracting theinterest of majorplayers GDP Growth Rate (%) 6India is expected tooutperform its rivals 4in the BRIC, in termsof GDP growthrates, from 2015 2onwards… 0 2005-10 2010-15 2015-20 2020-25 2025-30 2030-35 2035-40 2040-45 2045-50 Brazil China India Russia
  • 12. India: Astounding Demographics 12 DEMOGRAPHIC TRANSFORMATION OF INDIAGrowth in the higherincome categories Annual Household Incomeof India’s population (in USD)has created an 2 9 20 Rich (Above 115,000)affluent section of Population (million)society, which has 9 17 33 High Income (57,000 – 115,000)significant level ofpurchasing power 48 74 120 Consuming class (23,000 – 57,000) 221 285 404 Working class (10,200 – 23,000) 726 710 613 Needy (Below 10,200) 2001-02 2005-06 2009-10(E) * In PPP terms Per Capita Income 700 651Increasing per capita 583income and large 600 519 Increasing per capita incomepopulation moving 461 500 coupled with an emerging middleinto middle class 393 class has provided the necessaryhas led to high level 400 USD impetus to consumerism in Indiaof consumerism in 300India 200 100 0 2002-03 2003-04 2004-05 2005-06 2006-07
  • 13. India: Increasing Working Population 13 Growth in Global Working Age Population (15-64) Stock Position 2005 Addition to Working Age Population by 2010 314 World 4,168 71 India 691 64 Africa 500 44 China 934 33 South East Asia 362 31 Latin America 359 17 Southern Asia 132 USA 200 10 Europe 497 0 Japan 85 -3 -5 45 95 145 195 245 295 345 In MillionCountries worldwide are anticipating a shortage of working population in the future. India is expected to emerge as aclear winner, and by 2050, it will have the largest working age population.
  • 14. Growth Expected in India 14To sustain the GDP growth of more than 8 percent, India requires an investment of USD 1.5 trillionin the next five years 2010  GDP – USD 900 billion  GDP growth rate – 9% 2008  Services contribution – 60-65 %  GDP – USD 750 billion  FDI limit is expected to be 100 percent in major industry sectors  GDP growth rate – 9.5% such as 2006  Services contribution – 60 % Telecom, Semiconductors, Automo biles, etc.  GDP – USD 590 billion  FDI limit is expected to be close to 100 percent in major industry  Balance of Trade – Should be  GDP growth rate – 9 % sectors such as positive with increased level of  Services contribution – 54 % Telecom, Semiconductors, Automo exports as compared with imports biles, etc.  Investment goal – USD 370 billion  FDI limit not 100 percent in major industry sectors such as  Balance of Trade – Should Telecom, Semiconductors, Automo increase with surging exports as biles, etc. compared with imports  Balance of Trade – USD (-)46.2  Investment goal – USD 305 billion billion  Investment goal – USD 250 billion
  • 15. Why India? – Quote Unquote 15 “India has evolved into India is among the one of the worlds three most attractive leading technology India has among the FDI destinations in the centers“. highest returns on world. foreign investment. Craig Barrett Intel Corporation A T Kearney FDI Confidence Index 2005 By 2032, India will be US Department of among the three Commerce largest economies in the world. “The Indian market has two BRIC Report, Goldman Sachs core advantages - an increasing presence of “We came to India for the multinationals and an upswing costs, stayed for the in the IT exports”. quality and are now investing for innovation”. “India is a developed country as far as Travyn Rhall, ACNielsen intellectual capital is concerned”.- Dan Scheinman, Cisco System Inc. as toldto Business Week, August 2005 Jack Welch General Electric
  • 16. 16DISCLAIMERThis presentation has been prepared jointly by the India Brand Equity Foundation (“IBEF”) andEvalueserve.com Pvt. 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 Author’s and IBEF’s 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 responsibility 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 oromission on the part of the user due to any reliance placed or guidance taken from any portion of thispresentation.