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Understanding Brexit and Its Impacts On Indian & Global Economy

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  1. 1. Presented By: Utsav Patel Submitted to: RVM Finishing Schoo Pvt Ltd
  2. 2. As the word Suggest BREXIT= “Britain” and “Exit”. Withdrawal of the United Kingdom from the European Union. The UK electorate will address the question again on June 23, 2016, in a referendum on the country's membership. Meaning
  3. 3. Impact On India If they Exit  Sensex and Nifty will tumble in the short-run.  India is presently the second biggest source of FDI (Foreign Direct Investment) for Great Britain. But, if Britain exits the EU, it will not be as attractive a destination for Indian FDI as before.  UK has always acted as a gate pass for Indian companies to access the European companies, The total trade stood at $14.02 billion in FY16, out of which $8.83 billion was in exports and $5.19 was in imports.
  4. 4.  So on the event of Brexit, the pound rate might fall against the dollar and thus, the rupee.  the companies which have income from UK and Europe are going to be hit, at least for shorter term.  Indian pharma industry which has more exposure towards Europe, will also be affected. Contd..
  5. 5. 24% 8% 6% 6% 5% 5% 5% 4% 3% 34% 0% 5% 10% 15% 20% 25% 30% 35% 40% Textiles Machinery Jems & Jwells Auto Footwares Pharma Electric Appliances Iron & steel Lether Products Others UK EXPORTS AS % OF TOTAL INDIAN EXPORTS % Contribution Source:Capitalmind
  6. 6. Indian Firms to look out for on the event of Brexit. Company Impact of Brexit Tata Steel Has turnover more than GBP 2 billion from UK Steel Plants. Has 12 production plants spread across UK. Tata Motors (Jaguar &Land Rover) Jaguar and land Rover are UK based and are UK’s largest automotive manufacturers Motherson Sumi Have major Automotive Clients in Europe and derives more than half of its income from Europe Kitex Garments Kitex Garments client Mothercare derives 20% of revenue from UK Tata Consultancy Services For FY16, its Europe operation grew by 12.9% and UK by 8.23%. Europe and UK together are major contributors to its revenue. Bharat Forge Caters European automotive clients, Has 3 plants in Germany and 1 in UK Tech Mahindra Has Banking and Financial Clients from UK, and acquired UK based firm Fintech Bharat Airtel Has been rated by Grant Thornton as fastest growing Indian company in UK Marksans Pharma UK and Europe market account for 60% of their revenue. Emcure Pharma Has acquired UK based Tillomed Laboratories and still expanding
  7. 7. Impact On Global Economy If they Exit  Global financial market volatility can be readily expected. Markets across the world will tank.  The pound will depreciate against most major economies.  Brexit could reduce economic growth by up to 5.6 percent over the next three years
  8. 8. What If…. Britain Exits Or Stays  If Britain remain with EU Real GDP growth of 2.3% per annum over the period to 2030.  If Britain leave Stock market falls, Debt interest rate rise.  Brexit could cost UK economy 100 billion Euro which is equivalent to 5% of GDP by 2020.  9,50,000 Job losses and Unemployment would increase by around 5,00,000.
  9. 9. Disclaimer:  The presentation is for Educational Purpose Only and is submitted as a part OF FATP( Financial Analyst Training Program)  The report published should not be used for any financial decision making or as a tool for advisory  The vies of student “Utsav Patel” is personal and is from research done by him, only for Educational Purpose and does not fall into copyright space  For any details, you can write to us