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Indian Economy Opportunities Unlimited

India: Fastest Growing Free Market Democracy

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


Indias GDP witnessed high growth and was the second fastest growing GDP after China

The Indian economy has witnessed an unprecedented growth. Booming Indian services and industry sector are providing the required impetus to the economic growth
8.4% 8.5% 7.5% 9.4%

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

4%

Indian economy is the 4th largest in terms of PPP USD 4.1 trillion in 2006

The sound performance of each industry segment is leading to the overall robust performance of the Indian economy

Contribution of Services increased from 49 percent to 55 percent

Growth in sectors (2006-07): Industry: 10.9% Services: 11% Agriculture: 2.7%

India: Robust Economic Platform


Indias enhanced economic performance has been the major contributor towards increased Forex reserves

at present level of Forex reserves, the country has adequate cover for 12 months of imports

Steadily increasing Forex reserves offer adequate security against any possible currency crisis or monetary instability Indias Forex reserves are in excess of external debt

Forex reserves witnessed an increase of 200 percent for the period 1990-2007

Falling Dollar inflates the Indias external debt

Increased confidence of investors in Indian companies have led to a surge in cross border borrowing by the corporate houses

the decreasing external debt to GDP ratio indicates that India has a sound economic platform

India: Surging Exports


Services sector has been a major contributor to increased exports from India

Acceptance of Indian products along with the cost advantage has provided an edge to Indian companies

Quality and cost advantage are the two important parameters leveraged by the Indian producers to increasingly market their products and services

Indian companies have chalked out extensive plans to increase their presence abroad

Imports of products by India mainly includes petroleum products and minerals

Petroleum products are the major contributors towards Indias growing imports

India: Attractive Investment Destination


India is ranked second in AT Kearney FDI confidence index

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

Telecom and Electronics topped the list of inward FDI

180 percent Increase

Return on the Investments in India (2006 Q1)


Market India PE Ratio 16.1 10.62 10.26 9.85 13.21 12.17 9.84 11.19 9.35 10.9 P/B Ratio 4.53 2.06 3.09 1.84 1.82 2 2.32 2.12 2.46 2.39 22 17 NA 16 16 11 23 15 18 15 RoE (%)

FDI inflow for the period 2006-07 witnessed a growth of 180 percent over the same period last year

China Indonesia Korea Malaysia Taiwan Thailand EM Asia

Mauritius has been the largest contributor towards FDI into India..

Latin America EM Europe

India: Vibrant Capital Market


Sensex The Bombay stock exchange index has risen 15 times from 1990s to reach 15,000 mark in July 2007

India is among the major destinations across the globe for inflow of US Dollar i.e. FIIs

7/9/2007 Crossed 15,000 mark


1/12/2007 Crossed 14,000 mark

Sensex risen 15 times in the period 1990-2007

FIIs augmented support by infusing large investments in Indian stock market

2/7/2006 Crossed 10,000 mark

Emergence of industry and confidence of local investors along with the FIIs has led to increased movement of sensex

12/30/1999 Crossed 5,000 mark

Exorbitant industry performance

Increased local investors confidence

India: Vibrant Economy Driving M&A Activities


Growth Drivers: Globalisation of competition Concentration of companies to achieve economies of scale Lower interest rates and vibrant global markets Cash Reserves with Corporates Trends: Ratio of the Size of acquisition to the size of acquirer has grown from 10 percent in 2004 to 25 percent in 2006. Cross-border deals are growing faster than domestic deals Private Equity (PE) houses have funded projects as well as made a few acquisitions in India SECTOR
Automotive Banking and Financial Chemicals and Plastics Electrical and Electronics Energy FMCG, Food and Beverages IT and ITES

USD (Mn)
518 1,375 1,133 896 1,484 1,327

SECTOR
Manufacturing Media Oil & Gas Pharma & biotech Telecom Others

USD (Mn)
933 630 384 2,520 2,198 4,006

2,903

Total

20,305

In 2006, there were a total of 480 M&A deals and 302 private equity deals Average deal size close to USD 36 million Contribution of private equity deals to total number of deals have increased from nearly 9 percent in 2004 to 28 percent in 2006

Major M&A Deals Undertaken Abroad by India Inc.

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 Electronics Corporation Limited

USD 730 million

Major M&A and Investments Announcements in India


Vodafone buys Hutch
USD 11 billion

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Plans to spend on its development operations in India over the next four years

USD 1.7 billion

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

USD 1 billion

Aditya Birla Group increased its stake in Idea Cellular by acquiring 48.14-percent stake

USD 0.98 billion

Renault, Nissan and Mahindra & Mahindra has initiated a Greenfield automobile plant project in Chennai.

USD 0.905 billion

Mylan Laboratories acquired a majority stake in Matrix Laboratories

USD 0.74 billion

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


2007 Global Retail Development Index (GRDI)

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India has been ranked superior to other major countries by many prominent surveys

AT Kearney placed India among the top three in its FDI confidence index

the retail market along with the services sector has been attracting the interest of major players

India is expected to outperform its rivals in the BRIC, in terms of GDP growth rates, from 2015 onwards

India: Astounding Demographics


Growth in the higher income categories of Indias population has created an affluent section of society, which has significant level of purchasing power

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DEMOGRAPHIC TRANSFORMATION OF INDIA


Annual Household Income (in USD) 2 9 17 74 285 710

Population (million)

20 33 120 404 613

Rich (Above 115,000)


High Income (57,000 115,000) Consuming class (23,000 57,000) Working class (10,200 23,000)

9 48 221 726

Needy (Below 10,200)

2001-02

2005-06

2009-10(E)
* In PPP terms

Increasing per capita income and large population moving into middle class has led to high level of consumerism in India

Increasing per capita income coupled with an emerging middle class has provided the necessary impetus to consumerism in India

India: Increasing Working Population


Growth in Global Working Age Population (15-64)
Stock Position 2005 World India Africa China South East Asia Latin America Southern Asia USA Europe Japan 4,168 691 500 934 362 359 132 200 497 85
In Million

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Addition to Working Age Population by 2010

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.

Growth Expected in India


To sustain the GDP growth of more than 8 percent, India requires an investment of USD 1.5 trillion in the next five years

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2010
GDP USD 900 billion GDP growth rate 9%

2008
GDP USD 750 billion GDP growth rate 9.5%

Services contribution 60-65 % FDI limit is expected to be 100 percent in major industry sectors such as Telecom, Semiconductors, Automobiles, etc. Balance of Trade Should be positive with increased level of exports as compared with imports Investment goal USD 370 billion

2006
GDP USD 590 billion GDP growth rate 9 % Services contribution 54 % FDI limit not 100 percent in major industry sectors such as Telecom, Semiconductors, Automobiles, etc. Balance of Trade USD (-)46.2 billion Investment goal USD 250 billion

Services contribution 60 % FDI limit is expected to be close to 100 percent in major industry sectors such as Telecom, Semiconductors, Automobiles, etc. Balance of Trade Should increase with surging exports as compared with imports Investment goal USD 305 billion

Why India? Quote Unquote


India is among the three most attractive FDI destinations in the world. India has evolved into one of the world's leading technology centers.
Craig Barrett Intel Corporation A T Kearney FDI Confidence Index 2005

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India has among the highest returns on foreign investment.

By 2032, India will be among the three largest economies in the world.

US Department of Commerce

BRIC Report, Goldman Sachs

We came to India for the costs, stayed for the quality and are now investing for innovation.

The Indian market has two core advantages - an increasing presence of multinationals and an upswing in the IT exports.
Travyn Rhall, ACNielsen

India is a developed country as far as intellectual capital is concerned.

- Dan Scheinman, Cisco System Inc. as told to Business Week, August 2005 Jack Welch General Electric

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