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Indian Economy Opportunities Unlimited

India: Fastest Growing Free Market Democracy 2 .

9% Services: 11% Agriculture: 2.5% 7. Booming Indian services and industry sector are providing the required impetus to the economic growth India's GDP: 2002-07 700 600 500 400 4% 300 USD Billion 424 200 100 0 2002-03 2003-04 2004-05 2005-06 2006-07 GDP at Constant Prices Contribution of Services increased from 49 percent to 55 percent 8. since last 18 years 590 631 484 534 Indian economy is the 4th largest in terms of PPP – USD 4.4 percent in 2006-07.4% 9.7% 347 1999-00 2002-03 2005-06 Services Agriculture Industry 2006-07 .1 trillion in 2006 The sound performance of each industry segment is leading to the overall robust performance of the Indian economy 700 600 500 400 300 USD Billion 200 100 0 104 103 155 109 91 319 205 223 116 168 117 Growth in sectors (2006-07): Industry: 10.India: Among the Top-15 Countries in terms of GDP at constant prices India’s GDP witnessed high growth and was the second fastest growing GDP after China 3 The Indian economy has witnessed an unprecedented growth….4% 8.5% Fastest GDP growth of 9.

4 Falling Dollar inflates the India’s external debt 17.4 India’s Forex reserves are in excess of external debt… 19 16 Ratio Increased confidence of investors in Indian companies have led to a surge in cross border borrowing by the corporate houses 13 …the decreasing external debt to GDP ratio indicates that India has a sound economic platform 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 10 .8 16.8 17. the country has adequate cover for 12 months of imports External Debt-to-GDP Ratio 22 Forex reserves witnessed an increase of 200 percent for the period 1990-2007 21.India: Robust Economic Platform India’s enhanced economic performance has been the major contributor towards increased Forex reserves Steadily increasing Forex reserves offer adequate security against any possible currency crisis or monetary instability India's Forex Reserves: 2001-07 (Till 22 June 2007) 250 200 150 100 USD Billion 54 50 0 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 (Till 22 June) 75 141 112 152 199 213 4 …at present level of Forex reserves.3 15.1 20.

30 Imports of products by India mainly includes petroleum products and minerals Petroleum products are the major contributors towards India’s growing imports 2003-04 2004-05 2005-06 2006-07 (upto Feb.89 78.40 5 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 India's Import: 2002-07 (till February 2007) 180 160 140 120 100 80 61.81 103.42 112.95 83. 07) 52.28 162.65 111.India: Surging Exports Services sector has been a major contributor to increased exports from India India's Exports: 2002-07 (till February 2007) 120 100 80 60 40 USD Billion 20 0 2002-03 2003-04 2004-05 2005-06 2006-07 (upto Feb.52 60 USD Billion 40 20 0 2002-03 149. 07) .81 63.

53 2.000 USD Million4.. Indian markets have attracted large investments 18.India: 2001-07 15.82 2 2.19 9.546 3.000 12.000 4.12 2.755 China FDI inflow for the period 2006-07 witnessed a growth of 180 percent over the same period last year Indonesia Korea Malaysia Taiwan Thailand EM Asia 2002-03 2003-04 2004-05 2005-06 2006-07 Net FII into India: 2001-07 12 10 8 6 USD Billion 4 2 0 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 1.39 22 17 NA 16 16 11 23 15 18 15 RoE (%) 10.80 0.222 6.21 12.634 3.1 10.000 16.06 3.000 14.84 1.72 Mauritius has been the largest contributor towards FDI into India….09 1.00 10.134 2.26 9.India: Attractive Investment Destination India is ranked second in AT Kearney FDI confidence index 6 With improved performance on PE ratio and ROE.40 6.85 13.17 9.000 0 2001-02 5.62 10.20 9.000 2.000 180 percent Increase FDI Inflow .35 10.60 10.84 11.000 8.46 2.32 2.730 Telecom and Electronics topped the list of inward FDI India Return on the Investments in India (2006 Q1) Market PE Ratio 16.9 P/B Ratio 4. Latin America EM Europe .

000 4.000 2.000 mark 1/12/2007 Crossed 14.000 12.e.000 mark FIIs augmented support by infusing large investments in Indian stock market 2/7/2006 Crossed 10.000 8.000 IN R 12/30/1999 Crossed 5.000 7 / 1 /1 9 9 7 / 1 / 1 9 9 8 /1 / 1 9 9 9 / 1 / 2 0 0 0 / 1 / 2 0 0 7 / 1 /2 0 0 2 /1 / 2 0 0 3 / 1 / 2 0 0 4 / 1 / 2 0 0 5 /1 / 2 0 0 6 /1 / 2 0 0 7 7 7 7 1 7 7 7 7 7 Exorbitant industry performance Increased local investors’ confidence . FIIs 7 Sensex – The Bombay stock exchange index has risen 15 times from 1990s to reach 15.000 mark 7/9/2007 Crossed 15.000 10.000 mark in July 2007 Sensex risen 15 times in the period 1990-2007 16.000 mark Emergence of industry and confidence of local investors along with the FIIs has led to increased movement of sensex 6.000 14.India: Vibrant Capital Market India is among the major destinations across the globe for inflow of US Dollar i.

520 2. 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 .305 Electrical and Electronics 896 Number of deals Energy FMCG.903 In 2006.006 20.484 1.3 306 18.133 Manufacturing Media Oil & Gas Pharma & biotech Telecom Others Total USD (Mn) 933 630 384 2.2 782 900 800 700 600 500 400 300 200 100 0 Automotive Banking and Financial Chemicals and Plastics 8 USD (Mn) SECTOR 518 1.  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 Number of Deals and Values 30 25 20 15 10 USD Billion 5 0 2004 2005 Deal Values 2006 No.198 4. of Deals 12.327 2.3 467 28.India: Vibrant Economy Driving M&A Activities SECTOR 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. Food and Beverages IT and ITES 1.375 1.

acquires REpower USD 1. Hindalco acquired Novelis Inc.6 billion Videocon Industries acquired Daewoo Videocon Industries acquired Daewoo Electronics Corporation Limited Electronics Corporation Limited USD 730 million . acquires REpower Suzlon Energy Ltd.Major M&A Deals Undertaken Abroad by India Inc. 9 Tata Steel buys Corus Plc Tata Steel buys Corus Plc USD 12. USD 6 billion Essar Steel acquired Algoma Steel Essar Steel acquired Algoma Steel USD 1.1 billion Hindalco acquired Novelis Inc.58 billion Suzlon Energy Ltd.

real estate. and private wealth management and private wealth management USD 1 billion Aditya Birla Group increased its stake in Idea Aditya Birla Group increased its stake in Idea Cellular by acquiring 48.905 billion USD 0.7 billion Plans investment in private equity. real estate.14-percent stake Renault. Nissan and Mahindra & Mahindra has initiated aaGreenfield automobile plant has initiated Greenfield automobile plant project in Chennai. Nissan and Mahindra & Mahindra Renault.14-percent stake Cellular by acquiring 48. Mylan Laboratories acquired a majority stake Mylan Laboratories acquired a majority stake in Matrix Laboratories in Matrix Laboratories USD 0.74 billion . project in Chennai. Plans investment in private equity.Major M&A and Investments Announcements in India Vodafone buys Hutch Vodafone buys Hutch USD 11 billion 10 Plans to spend on its development operations Plans to spend on its development operations in India over the next four years in India over the next four years USD 1.98 billion USD 0.

3 1. in terms of GDP growth rates. from 2015 onwards… 4 2 GDP Growth Rate (%) 0 2005-10 2010-15 2015-20 Brazil 2020-25 China 2025-30 2030-35 India 2035-40 Russia 2040-45 2045-50 .3 1.2 2.India: Pacing Ahead to Emerge as a Major Economy in the 11 World 2007 Global Retail Development Index (GRDI) India has been ranked superior to other major countries by many prominent surveys… 2007 Global Services Location Index India 3.2 2.2 1.4 1.5 2.9 2.6 3.8 3.6 1.4 100 80 60 40 GRDI Score 20 0 India Russia Vietnam Ukraine China Chile Latvia China Malaysia Thailand Brazil Indonesia AT Kearney placed India among the top three in its FDI confidence index… Financial structure Business environment People and skill availablity … the retail market along with the services sector has been attracting the interest of major players 8 Projected GDP Growth Rates for Select Upcoming Economies 6 India is expected to outperform its rivals in the BRIC.1 1.5 1.3 2.8 1.3 2 1.

200 – 23.000) Working class (10.000) Needy (Below 10.000 – 57.India: Astounding Demographics Growth in the higher income categories of India’s population has created an affluent section of society.000 – 115.000) Consuming class (23.000) High Income (57.200) Population (million) 9 48 221 726 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 700 600 500 400 USD 300 200 100 0 2002-03 393 Per Capita Income 583 519 461 651 Increasing per capita income coupled with an emerging middle class has provided the necessary impetus to consumerism in India 2003-04 2004-05 2005-06 2006-07 . which has significant level of purchasing power 12 DEMOGRAPHIC TRANSFORMATION OF INDIA Annual Household Income (in USD) 2 9 17 74 285 710 20 33 120 404 613 Rich (Above 115.

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. and by 2050. India is expected to emerge as a clear winner.168 691 500 934 362 359 132 200 497 85 -3 -5 45 95 145 In Million 195 245 295 0 10 17 33 31 44 64 71 13 Addition to Working Age Population by 2010 314 345 Countries worldwide are anticipating a shortage of working population in the future. it will have the largest working age population. .

5%  Services contribution – 60-65 %  FDI limit is expected to be 100 percent in major industry sectors such as Telecom. Semiconductors. Automobiles.  Balance of Trade – Should increase with surging exports as compared with imports  Investment goal – USD 305 billion .  Balance of Trade – Should be positive with increased level of exports as compared with imports  Investment goal – USD 370 billion 2006 2006  GDP – USD 590 billion  GDP growth rate – 9 %  Services contribution – 54 %  FDI limit not 100 percent in major industry sectors such as Telecom.  Balance of Trade – USD (-)46. etc. Automobiles. etc. Semiconductors. India requires an investment of USD 1. Semiconductors.Growth Expected in India To sustain the GDP growth of more than 8 percent.5 trillion in the next five years 14 2010 2010  GDP – USD 900 billion  GDP growth rate – 9% 2008 2008  GDP – USD 750 billion  GDP growth rate – 9. etc.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. Automobiles.

Jack Welch General Electric . Cisco System Inc. August 2005 “India is a developed country as far as intellectual capital is concerned”.an increasing presence of multinationals and an upswing in the IT exports”. “The Indian market has two core advantages . as told to Business Week.Dan Scheinman. stayed for the quality and are now investing for innovation”. Craig Barrett Intel Corporation A T Kearney FDI Confidence Index 2005 15 India has among the highest returns on foreign investment. Goldman Sachs “We came to India for the costs.Why India? – Quote Unquote India is among the three most attractive FDI destinations in the world. ACNielsen . US Department of Commerce BRIC Report. India will be among the three largest economies in the world. Travyn Rhall. By 2032. “India has evolved into one of the world's leading technology centers“.

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