A quick and dirty presentation given at BarCamp Delhi on the financial crisis and it's potential impact on India

1. The Financial Crisis and
India
BarCamp Delhi October 11th-12th, 2008
Sunday, March 31, 13

2. Intro to the Financial Crisis
The worst crisis since the Great Depression
Sub-Prime Mortgages
Loans extended to people and business with less than
stellar credit worthiness
Value of assets dropping quickly leaving negative equity
Credit
Scare of loan losses spreads beyond sub-prime mortgages
Sunday, March 31, 13

3. Timeline
Fed ignores pleas for investigating sub-prime lending – 2001
to 2004
HSBC's Mortgage chief resigns after losses hit $10.5 Billion –
Feb. 2007
Bernanke says the housing sector "is a concern, but at this
point we don't see it as being a broad financial concern or a
major factor in assessing the course of the economy." - Feb.
2007
Sunday, March 31, 13

4. Timeline
UBS shuts sub-prime lending unit and GMAC announces huge
mortgage related losses – May 2007
Countrywide Financial (largest US mortgage lender) avoids
bankruptcy by taking $11.5 Billion loan
Freddie Mac posts $2 Billion Loss – Nov. 2007
Sunday, March 31, 13

5. 2008
Banks face losses of $900 Billion
Jobs lost across the board across many industries
Collapse of major Wall Street firms begins with Bear Stearns
and continues thru to Lehman Brothers. Others?
Global liquidity issues know no boundaries
Credit? What's that?
Oil and commodities go thru the roof and then crater
Sunday, March 31, 13

6. Some Stats
$16 Billion outflow from India in 2008
Inflation at 12%
$291 Billion – Indian FX reserves as of 03 Oct.
IndianOil Corp costs to rise 70% to $45 Billion
Industrial growth plummets to 1.3% in August
Sensex down ~50% in 2008
Sensex up ~50% from 2004
Sunday, March 31, 13

7. Why Should I Care?
Unprecedented growth from 2003 to 2007
Where did the growth come from?
Credit!
Foreign Investors (Wall St., Street firms, Hedge Funds,
Banks, PE Funds, VC Funds)
Increased buying power of consumers
SENSEX goes from under 5,000 in early 2004 to a peak just
above 21,000 in Jan. 2008 to 10,400 on Oct. 10th, 2008
Sunday, March 31, 13

8. Indian Real Estate
10x growth in metro real-estate prices in 5 years
Flipping!
Affordability for the average person?
Can you get a (home|auto|personal) loan?
Affordability for the more privileged person?
Can you get a (home|auto|personal) loan?
Standard Charter and Citibank Refuse Loans to RE Developers
– 09 Oct. 2008
Sunday, March 31, 13

9. Retail Growth
Big bets made on retail growth
Malls! Malls! Malls!
Who's buying at the malls?
What's selling now?
High End Luxury Items
Where to make (conservative) bets now?
Where to get Rs. for expansion?
Are further expansions warranted with slow retail growth?
Sunday, March 31, 13

10. Startup Funding
Indian Investors are getting even more skittish
VC game is a long-term play
Can VCs continue to provide returns attractive to their
investors
Can investors wait for the next exit window?
VCs are advising portfolio companies to come up with
revenues quickly and be prepared for a major dry spell
Many VCs will quit and move to angel funding
Sunday, March 31, 13

11. Discussion
Sunday, March 31, 13

12. (Re)Sources
BusinessWeek, What will the crisis mean for venture capital?,
Sarah Lacy, 09 Oct. 2008 http://bit.ly/3A43xX
Yahoo Finance Charts and Historical data
Meltdown 2008, TerranceDC, Oct. 2008, http://bit.ly/4gRiwh
Sequoia Capital Presentation to Portfolio Companies - http://
bit.ly/16F8WK
Google
RBI Website
My Blog http://blog.pjain.me
Sunday, March 31, 13

13. PANKAJ JAIN | @PJAIN
PJAIN [AT] TEKNATUS [DOT] COM
The Financial Crisis and
India
BarCamp Delhi October 11th-12th, 2008
Sunday, March 31, 13