Presentation On

FactoIndian Economy

DEEPAK KUMAR
B.B.A. : 2Sem
India: Fastest Growing Free Market Democracy
 India: Among the Top-15 Countries in terms of GDP at
constant prices
T h e In d ia n e co n o m y h a s w itn e sse d a n u n p re ce d e n te d g ro w th …. B o o m in g In d ia n se rvice s a n d
in d u stry se cto r a re p ro vid in g th e re q u ire d im p e tu s to th e e co n o m ic g ro w th
India’s GDP
witnessed high
growth and was the 9.4%
second fastest 8.4%
growing GDP after 8 . 5% 7.5%
China 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 Contribution of Services - increased from 49 percent to 55 percent
industry segment is
leading to the
overall robust
performance of the
Indian economy
Growth in sectors (2006-07):
Industry: 10.9%
Services: 11%
Agriculture: 2.7%
 India: Robust Economic Platform

India’s enhanced
economic
performance has
been the major
contributor towards
increased Forex …at present level of Forex
reserves 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

India’s Forex reserves are in excess of exter

Forex reserves Falling Dollar inflates
witnessed an the India’s external
increase of 200 debt
percent for the
period 1990-2007

Increased
confidence of
investors in Indian …the decreasing external debt
companies have led to GDP ratio indicates that
to a surge in cross India has a sound economic
border borrowing by platform
the corporate
houses
 India: Surging Exports

Services sector has

been a major
contributor to
increased exports
from India Quality and cost advantage are the
two important parameters leveraged by
the Indian producers to increasingly
market their products and services
Acceptance of
Indian products
along with the cost
advantage has
provided an edge to
Indian companies

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

Petroleum products are the major

contributors towards India’s growing
Imports of products imports
by India mainly
includes petroleum
products and
minerals
 India: Attractive Investment Destination

With improved performance on PE ratio and ROE, Indian markets have attracted
India is ranked
second in AT large investments
Kearney FDI
confidence index

Telecom and 180 percent

Increase
Electronics topped
the list of inward Return on the Investments in India (2006 Q1)
FDI Market PE Ratio P/B Ratio RoE (%)

India 16.1 4.53 22

China 10.62 2.06 17

FDI inflow for the
period 2006-07 Indonesia 10.26 3.09 NA
witnessed a growth
of 180 percent over Korea 9.85 1.84 16
the same period
last year Malaysia 13.21 1.82 16

Taiwan 12.17 2 11

Thailand 9.84 2.32 23

EM Asia 11.19 2.12 15

Mauritius has been Latin America 9.35 2.46 18
the largest
contributor towards EM Europe 10.9 2.39 15
FDI into India…..
 India: Vibrant Capital Market

Sensex – The Bombay stock exchange index has risen 15 times from 1990s to
India is among the reach 15,000 mark in July 2007
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
FIIs augmented support by infusing large investments
Sensex risen 15
times in the period
1990-2007
2/7/2006
Crossed 10,000 mark

12/30/1999
Crossed 5,000 mark Exorbitant industry performance
Emergence of
industry and
confidence of local
investors along
with the FIIs has
led to increased
movement of sensex
Increased local investors’ confiden
 India: Vibrant Economy Driving M&A Activities
SECTOR USD (Mn) SECTOR USD
Growth Drivers: (Mn)
qGlobalisation of
competition Automotive 518 Manufacturing 933
qConcentration of Banking and Financial 1,375 Media 630
companies to
achieve economies Chemicals and Plastics 1,133 Oil & Gas 384
of scale
qLower interest Electrical and Electronics 896 Pharma & biotech 2,520
rates and vibrant
global markets Energy 1,484 Telecom 2,198
qCash Reserves with FMCG, Food and 1,327 Others 4,006
Corporates Beverages

IT and ITES 2,903 Total 20,305

Trends: In 2006, there were a

qRatio of the Size
of acquisition to total of 480 M&A deals
the size of and 302 private equity
acquirer has grown deals…
from 10 percent in
2004 to 25 percent
in 2006.
qCross-border deals
… Average deal size close
are growing faster to USD 36 million…
than domestic
deals …Contribution of
qPrivate Equity (PE)
houses have funded private equity deals to
projects as well total number of deals
as made a few have increased from
acquisitions in
India nearly 9 percent in
2004 to 28 percent in
2006
Major M&A Deals Undertaken Abroad by India Inc.

Tata
Tata Steel
Steel buys
buys Corus
Corus Plc
Plc
USD 12.1 billion

Hindalco
Hindalco acquired
acquired Novelis
Novelis Inc
Inc. .
USD 6 billion

Essar
Essar Steel
Steel acquired
acquired Algoma
Algoma Steel
Steel
USD 1.58 billion

Suzlon
Suzlon Energy
Energy Ltd
Ltd. . acquires
acquires REpower
REpower
USD 1.6 billion

Videocon
Videocon Industries
Industries acquired
acquired Daewoo
Daewoo Electronics
Electronics Corporation
Corporation Limited
Limited
USD 730 million
 Major M&A and Investments Announcements in India

Vodafone
Vodafone buys
buys Hutch
Hutch
USD 11 billion

Plans
Plans to
to spend
spend on
on its
its development
development operations
operations in
in India
India over
over the
the next
next four
four years
USD 1.7
years
billion

Plans
Plans investment
investment in
in private
private equity
equity, , real
real estate
estate, , and
and private
private wealth
wealth management
USD
management
1 billion

tya
tya Birla
Birla Group
Group increased
increased its
its stake
stake in
in Idea
Idea Cellular
Cellular by
by acquiring
acquiring 48
48.14
.14-percent
-percent stake
USD 0.98 billion
stake

san and
ssan and Mahindra
Mahindra && Mahindra
Mahindra has
has initiated
initiated aa Greenfield
Greenfield automobile
automobile plant
plant project
project in in Chennai
USD 0.905 billion
Chennai. .

Mylan
Mylan Laboratories
Laboratories acquired
acquired aa majority
majority stake
stake in
in Matrix
Matrix Laboratories
Laboratories
USD 0.74 billion
 India: Pacing Ahead to Emerge as a Major Economy in the
World
2007 Global Retail Development Index (GRDI)
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

DEMOGRAPHIC TRANSFORMATION OF INDIA

Growth in the
higher income
categories of Annual Household Income
India’s population (in USD)
has created an 2 9 20 Rich (Above 115,000)
affluent section of
Population (million)
society, which has 9 17 33
significant level High Income (57,000 – 115,000)
of purchasing power
48 74 120 Consuming class (23,000 – 57,000)

221 285 404 Working class (10,200 – 23,000)

726 710 613 Needy (Below 10,200)

2001-02 2005-06 2009-10(E)

* In PPP terms

Increasing per
capita income and
large population Increasing per capita income
moving into middle coupled with an emerging middle
class has led to class has provided the
high level of necessary impetus to
consumerism in consumerism in India
India
 India: Increasing Working Population

Growth in Global Working Age Population (15-64)

Stock Position 2005 Addition to Working Age Population by 2010

World 4,168

India 691

Africa
500
China
934
South East Asia
362
Latin America
359
Southern Asia
132
USA
200
Europe
497
Japan
85

In
Million

g a shortage of working population in the future. India is expected to emerge as a clear winner, and by 2050, it will have
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
2006
2006
qGDP – USD 590 billion
qGDP growth rate – 9 %
qServices contribution – 54 %
qFDI limit not 100 percent in
major industry sectors such as
Telecom, Semiconductors,
Automobiles, etc.
qBalance of Trade – USD (-)46.2
billion
qInvestment goal – USD 250
billion
2008
2008
qGDP – USD 750 billion
qGDP growth rate – 9.5%
qServices contribution – 60 %
qFDI limit is expected to be
close to 100 percent in major
industry sectors such as
Telecom, Semiconductors,
Automobiles, etc.
qBalance of Trade – Should
increase with surging exports
as compared with imports
qInvestment goal – USD 305
billion
2010
2010
qGDP – USD 900 billion
qGDP growth rate – 9%
qServices contribution – 60-65 %
qFDI limit is expected to be 100
percent in major industry
sectors such as Telecom,
Semiconductors, Automobiles,
etc.
qBalance of Trade – Should be
positive with increased level
of exports as compared with
imports
qInvestment goal – USD 370
billion
 Why India? – Quote Unquote

“India has evolved into one of the world's leading technology centers“.
e three most attractive FDI destinations in the world.
India has among the highest returns on forei

Craig Barrett
Intel
Corporation
A T Kearney
FDI Confidence Index 2005 US Department of
Commerce
By 2032, India will be among the three largest economies in the world.

BRIC Report, Goldman Sachs

“The Indian market has two core advantages - an increasing presence of multinatio

osts, stayed for the quality and are now investing for innovation”.

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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 DEEPAK KUMAR


Thank you !