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Growth: Non-financial: PAT Net of P&E

Year Growth: Non-financial: PAT Net of P&E Jan-92 21.1 Jan-93 20.1 Dec-93 5.5 Dec-94 84.6 Dec-95 57.8 Dec-96 16.2 Dec-97 -25.3 Dec-98 -7.9 Dec-99 -17.3 Dec-00 9.9 Dec-01 7.8 Growth: Non-financial: PAT Net of P&E Dec-02 -21.5 Dec-03 139.3 Dec-04 82 Dec-05 61.2 Dec-06 21.8 Dec-07 41.7 Dec-08 21.3 Dec-09 -30.4 Dec-10 34.9 Dec-11 6.5 Average 25.2

Insights The substantial rise in Net Profit Margin in early days of Economic Policy Reform.

1 Technology has become key driving factor of the Industry

2 Correlation between Net profit margines with investment is positive (0.204) & gross sale (0.265) where as negative correlation with real interest rate (-0.163) & Inflation (0.183).

Percentage
160 140 120 100 80 60 40 20 0 -20 -40 Dec-94 Dec-99

AT Net of P&E

Aug-01

Apr-93

Apr-98

May-95

May-00

Mar-96

Mar-01

Nov-92

Aug-96

Nov-97

Reasons Delicensing of Import Policies such as reduction in import tariffs and decanalisation of imports boost the inflow of high technology based capital goods and cheaper raw materials, which catalysed the industrial growth. Continuous reduction in Corporate tax rates from 51.75 per cent in 1991-92 to 43.00 per cent in 1996-97 and further to 40 per cent in 1997-98 to increase investment in Indian corporate sector & industry output.

Source http://www.iariw.org/papers/2010/3Indrajit.pdf http://www0.gsb.columbia.edu/faculty/akhandelwal /papers/productivity_21.pdf http://books.google.co.in/books?id=kgDAAAAMBAJ&pg=PT73&lpg=PT73&dq=Import+delic ensing,+reduction+in+import+tariffs+%26+decanalisa http://www.sba.muohio.edu/ABAS/1998/BUDANEW. pdf http://www.iegindia.org/workpap/wp300.pdf

Nov-02

Sep-93

Feb-94

Sep-98

Feb-99

Apr-03

Jun-92

Jun-97

Oct-95

Oct-00

Jun-02

Jan-92

Jan-97

Jan-02

Jul-94

Jul-99

The growth rate of interest payment declined due to long term domestic borrowings at comparatively row rate & the availability of short term financial instrument at lower interest rates like commercial papers. Price based competition has moved to technology based competition which leads to improved machinery, new product development, reduction in costs and improvements in productivity. Import export policy reforms removed restrictions on the technology import.

http://www.sba.muohio.edu/ABAS/1998/BUDANEW. pdf http://www.imf.org/external/pubs/ft/wp/2011/wp1 108.pdf

http://www.sba.muohio.edu/ABAS/1998/BUDANEW. pdf http://www.currentconcerns.ch/index.php?id=1827

http://www.unido.org/fileadmin/user_media/Public ations/Pub_free/Indian_manufacturing_industry_tec hnology_status_and_prospects.pdf http://iegindia.org/workpap/wp219.pdf http://www.arts.cornell.edu/econ/indiaconf/singh% 20paper.pdf http://www.wipo.int/aboutip/en/studies/pdf/wipo_unu_07_india.pdf http://www.sba.muohio.edu/ABAS/1998/BUDANEW. pdf http://databank.worldbank.org/ddp/home.do?Step= 2&id=4&hActiveDimensionId=WDI_Time

Impact of intellectual capital on Industry performamce.

Increase in real interest rates become a problem for net profits since it leads to increase in household savings to increase thus consumption growth slows down results in drop in profit.

Impact of foreign and domestic investment http://drnarendrajadhav.info/drnjadhav_web_files/s on Growth of Indian Industry. peeches/Global%20Economic%20Dynamics%20%20Indian%20Industry.pdf http://databank.worldbank.org/ddp/home.do?Step= 2&id=4&hActiveDimensionId=WDI_Time The increase in purchasing power of indian http://www.sba.muohio.edu/ABAS/1998/BUDANEW. consumers driving the growth in industry pdf sales. http://depot.gdnet.org/cms/conference/papers/ach arya_plenary1.pdf

Apr-03 Sep-03 Feb-04 Jul-04 Dec-04 May-05 Oct-05 Mar-06 Aug-06 Jan-07 Jun-07 Nov-07 Apr-08 Sep-08 Feb-09 Jul-09 Dec-09 May-10 Oct-10 Mar-11 Aug-11

Growth: Non-financial: Gross Fixed Assets (Net of Reval)


Year Growth: Non-financial: Gross Fixed Assets (Net of Reval) Jan-92 15.5 Jan-93 20 Dec-93 16.2 Dec-94 17 Dec-95 29.1 Dec-96 20 Dec-97 15.1 Dec-98 16.8 Dec-99 13.9 Dec-00 9.1 Dec-01 10.9 Growth: Non-financial: Gross Fixed Assets (Net of Reval) Dec-02 10.3 Dec-03 8.9 Dec-04 9.2 Dec-05 11.3 Dec-06 12.7 Dec-07 15.7 Dec-08 15.5 Dec-09 19.2 Dec-10 18.6 Dec-11 11.7 Average 15.08

Insights The annual average share of production catalysts such as gross and net fixed assets, plant and machinery, inventories, sundry debtors in total assets have declined appreciably during the second decade i.e. 2001-10 as compared to the first decade.

decade.

1 Service sector driven Economy

Increasing trends in financialisation of corporate activities

Percentage
35 30 25 20 15 10 5 0 Dec-94 May-95 Dec-99 Apr-93 Apr-98 May-00 Jun-92 Jun-97 Oct-95 Mar-96 Oct-00 Mar-01 Aug-96 Nov-92 Nov-97 Aug-01 Sep-93 Feb-94 Sep-98 Feb-99 Jun-02 Jan-92 Jan-97 Jan-02 Jul-94 Jul-99

oss Fixed Assets (Net of Reval)

Reasons Post Liberalization indian corporates spent increasingly higher amounts on new fixed asset purchases improving its production capacity as well as competitiveness in the process.

Source http://articles.economictimes.indiatimes.com/200211-04/news/27337538_1_assets-productioncapacity-tata-steel http://www.thehindubusinessline.com/industry-andeconomy/banking/article3009700.ece?ref=wl_indust ry-and-economy Higher cost of capital (long term loans) http://www.deloitte.com/assets/Dcomhas a significant negative impact in asset Global/Local%20Assets/Documents/dtt_sensex_part creation results in drop in fixed asset from 1(2).pdf 2000 http://www.thehindubusinessline.com/industry-andeconomy/banking/article3009700.ece?ref=wl_indust ry-and-economy

Foreign Investment & Joint ventures with http://www.google.co.in/url?sa=t&rct=j&q=&esrc=s Indian Incs after Policy Reform in india and &source=web&cd=19&ved=0CHUQFjAIOAo&url=http abroad %3A%2F%2Fplanningcommission.nic.in%2Faboutus% 2Fspeech%2Fspemsa%2Fmsa018.doc&ei=_7YgUI3Q H43LrQehr4DYAw&usg=AFQjCNGYrAenYqeUydxwXIf rAHQAXnuk8Q&sig2=8vU7vgnLA_coeZyvnpqddA http://india-reports.in/future-growth-globaltransitions/economy-in-transition/indian-autoindustry-%E2%80%93-joint-ventures/ http://www.scribd.com/doc/89320507/93/Indianjoint-Venture%E2%80%99s-Abroad http://www.indiastat.com/table/industries/18/secto rwiseforeigndirectinvestment/449572/333498/data. aspx Imerging asset light Service sector http://www.financialexpress.com/news/gmr-takesasset-light-road-to-infra/927632/4 http://www.indemblao.nic.in/economy_india.htm http://india.mapsofindia.com/indian-economy/majoreconomic-sectors.html

Knowledge as asset

The services sector has been a major and vital force consistently driving growth in the Indian economy.

http://www.arts.cornell.edu/econ/indiaconf/singh% 20paper.pdf http://www.investmentguruindia.com/Industry_Bala nce_Sheet.aspx?ReportType=BalanceSheet&id=1&In dustryCode=319 http://www.wipo.int/aboutip/en/studies/pdf/wipo_unu_07_india.pdf http://indiabudget.nic.in/es2011-12/echap-10.pdf http://www.investmentguruindia.com/Industry_Bala nce_Sheet.aspx?ReportType=BalanceSheet&id=1&In dustryCode=319 http://defenceforumindia.com/forum/economyinfrastructure/5788-indias-service-sector-vsmanufacturing-sector.html http://www.financialexpress.com/news/gmr-takesasset-light-road-to-infra/927632/4 http://india.mapsofindia.com/indian-economy/majoreconomic-sectors.html

Funds raised through share market was placed in liquid assets such as shares and bonds than in capital expenditure.

http://rupeindia.wordpress.com/2012/03/31/thefinancialisation-of-indias-corporate-sector-growingrentier-speculative-and-mercantile-activities/ http://shodhganga.inflibnet.ac.in/bitstream/10603/3 38/8/08_chapter2.pdf

Investors confidence is declining so they http://www.thehindubusinessline.com/industry-andbecome more short-term,cash focused and economy/banking/article3009700.ece?ref=wl_indust safety oriented. ry-and-economy Risk associated with investment in sectors that are asset-heavy

Jun-02 Nov-02 Apr-03 Sep-03 Feb-04 Jul-04 Dec-04

May-05 Oct-05
Mar-06 Aug-06 Jan-07 Jun-07 Nov-07 Apr-08 Sep-08 Feb-09 Jul-09 Dec-09 May-10 Oct-10 Mar-11 Aug-11

Growth: Non-financial: Gross Fixed Assets (Net of Reval)


Year Growth: Non-financial: Gross Fixed Assets (Net of Reval) Jan-92 15.5 Jan-93 20 Dec-93 16.2 Dec-94 17 Dec-95 29.1 Dec-96 20 Dec-97 15.1 Dec-98 16.8 Dec-99 13.9 Dec-00 9.1 Dec-01 10.9 Growth: Non-financial: Gross Fixed Assets (Net of Reval) Dec-02 10.3 Dec-03 8.9 Dec-04 9.2 Dec-05 11.3 Dec-06 12.7 Dec-07 15.7 Dec-08 15.5 Dec-09 19.2 Dec-10 18.6 Dec-11 11.7 Average 15.08

Insights The annual average share of production catalysts such as gross and net fixed assets, plant and machinery, inventories, sundry debtors in total assets have declined appreciably during the second decade i.e. 2001-10 as compared to the first decade.

decade.

1 Service sector driven Economy

Increasing trends in financialisation of corporate activities

Percentage
35 30 25 20 15 10 5 0 Dec-94 May-95 Dec-99 Apr-93 Apr-98 May-00 Jun-92 Jun-97 Oct-95 Mar-96 Oct-00 Mar-01 Aug-96 Nov-92 Nov-97 Aug-01 Sep-93 Feb-94 Sep-98 Feb-99 Jun-02 Jan-92 Jan-97 Jan-02 Jul-94 Jul-99

oss Fixed Assets (Net of Reval)

Reasons Post Liberalization indian corporates spent increasingly higher amounts on new fixed asset purchases improving its production capacity as well as competitiveness in the process.

Source http://articles.economictimes.indiatimes.com/200211-04/news/27337538_1_assets-productioncapacity-tata-steel http://www.thehindubusinessline.com/industry-andeconomy/banking/article3009700.ece?ref=wl_indust ry-and-economy Higher cost of capital (long term loans) http://www.deloitte.com/assets/Dcomhas a significant negative impact in asset Global/Local%20Assets/Documents/dtt_sensex_part creation results in drop in fixed asset from 1(2).pdf 2000 http://www.thehindubusinessline.com/industry-andeconomy/banking/article3009700.ece?ref=wl_indust ry-and-economy

Foreign Investment & Joint ventures with http://www.google.co.in/url?sa=t&rct=j&q=&esrc=s Indian Incs after Policy Reform in india and &source=web&cd=19&ved=0CHUQFjAIOAo&url=http abroad %3A%2F%2Fplanningcommission.nic.in%2Faboutus% 2Fspeech%2Fspemsa%2Fmsa018.doc&ei=_7YgUI3Q H43LrQehr4DYAw&usg=AFQjCNGYrAenYqeUydxwXIf rAHQAXnuk8Q&sig2=8vU7vgnLA_coeZyvnpqddA http://india-reports.in/future-growth-globaltransitions/economy-in-transition/indian-autoindustry-%E2%80%93-joint-ventures/ http://www.scribd.com/doc/89320507/93/Indianjoint-Venture%E2%80%99s-Abroad http://www.indiastat.com/table/industries/18/secto rwiseforeigndirectinvestment/449572/333498/data. aspx Imerging asset light Service sector http://www.financialexpress.com/news/gmr-takesasset-light-road-to-infra/927632/4 http://www.indemblao.nic.in/economy_india.htm http://india.mapsofindia.com/indian-economy/majoreconomic-sectors.html

Knowledge as asset

The services sector has been a major and vital force consistently driving growth in the Indian economy.

http://www.arts.cornell.edu/econ/indiaconf/singh% 20paper.pdf http://www.investmentguruindia.com/Industry_Bala nce_Sheet.aspx?ReportType=BalanceSheet&id=1&In dustryCode=319 http://www.wipo.int/aboutip/en/studies/pdf/wipo_unu_07_india.pdf http://indiabudget.nic.in/es2011-12/echap-10.pdf http://www.investmentguruindia.com/Industry_Bala nce_Sheet.aspx?ReportType=BalanceSheet&id=1&In dustryCode=319 http://defenceforumindia.com/forum/economyinfrastructure/5788-indias-service-sector-vsmanufacturing-sector.html http://www.financialexpress.com/news/gmr-takesasset-light-road-to-infra/927632/4 http://india.mapsofindia.com/indian-economy/majoreconomic-sectors.html

Funds raised through share market was placed in liquid assets such as shares and bonds than in capital expenditure.

http://rupeindia.wordpress.com/2012/03/31/thefinancialisation-of-indias-corporate-sector-growingrentier-speculative-and-mercantile-activities/ http://shodhganga.inflibnet.ac.in/bitstream/10603/3 38/8/08_chapter2.pdf

Investors confidence is declining so they http://www.thehindubusinessline.com/industry-andbecome more short-term,cash focused and economy/banking/article3009700.ece?ref=wl_indust safety oriented. ry-and-economy Risk associated with investment in sectors that are asset-heavy

Jun-02 Nov-02 Apr-03 Sep-03 Feb-04 Jul-04 Dec-04

May-05 Oct-05
Mar-06 Aug-06 Jan-07 Jun-07 Nov-07 Apr-08 Sep-08 Feb-09 Jul-09 Dec-09 May-10 Oct-10 Mar-11 Aug-11