ibef presentation on indian economy opportunities

8/3/2019 IBEF Presentation on Indian Economy Opportunities

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Indian Economy

Opportunities Unlimited


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India: Fastest Growing Free Market Democracy

GDP Growth Forex FII Flow 93 FDI Per Capita Inflation

1990 4.9 percent < USD 1 billion USD 1 million USD 97 million USD 390 9 percent

2007 9.4 percent USD 246 billion USD 15 billion USD 16 Billion USD 720 3.4 percent

Source: Times of India
http://epaper.timesofindia.com/Daily/skins/TOI/navigator.asp?Daily=CAP&login=defaulthttp://epaper.timesofindia.com/Daily/skins/TOI/navigator.asp?Daily=CAP&login=default


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105 105 135 145

103 125204 231

191237

398453

0

100

200

300

400

500

600700

800

900

1999-00 2002-03 2005-06 2006-07

U S D B i l l i o n

Agriculture Industry Services

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

The Indian economy has witnessed unprecedented growth. Booming services and industry sectorsare providing the required impetus to economic growth

The soundperformance of eachindustry segment isleading to theoverall robustperformance of theIndian economy

Indian economy isexpected to be 3 rd largest in terms ofPPP USD 4.5trillion by the end of2007

Indias GDP haswitnessed high

growth, and was thesecond fastestgrowing GDP afterChina in 2006-07

Fastest GDP growth of 9.4percent in 2006-07, since last 18years (at constant prices)

Contribution ofServices -

increased from48 percent to

55 percent

India's GDP at Current Prices: 2002-07

469556 638

737 830

237

0100200300400500600700800900

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08(Q1)

U S D B i l l i o n

Growth in sectors at CurrentPrices (2006-07):Industry: 16.2%Services: 16.3%Agriculture: 10.2%

Source: MOSPI Statistics

Estimated growth rate in various GDPsectors for Q1 (2007-08) is: Industry 15.9percent, Agriculture 11.4 percent andServices 15.7 percent
http://mospi.nic.in/t1_31august07.htmhttp://mospi.nic.in/t1_31august07.htm


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India: Robust Economic Platform

India's Forex Reserves: 2001-07 (Till 28 September 2007)

5475

112141 152

199

248

0

50

100

150

200

250

300

2 0 0 1 - 0

2

2 0 0 2 - 0

3

2 0 0 3 - 0

4

2 0 0 4 - 0

5

2 0 0 5 - 0

6

2 0 0 6 - 0

7

2 0 0 7 - 0

8

( T i l l 2 8

S e p

t e m

b e r )

U S D B i l l i o n

External Debt-to-GDP Ratio

21.120.4

17.817.3

15.816.4

10

13

16

19

22

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07

R a t i o

Indias strongeconomicperformance hasbeen the majorcontributor towardsincreased Forexreserves

Steadily increasingForex reserves offeradequate securityagainst any possible

currency crisis ormonetary instability

Falling Dollar inflatesthe Indias external debt

Increasedconfidence ofinvestors in Indiancompanies has ledto a surge in crossborder borrowing bycorporate houses

Forex reserveswitnessed anincrease of 200percent for theperiod 1990-2007

at present level of Forexreserves, the country hasadequate cover for 12 months ofimports

Indias Forexreserves are in

excess ofexternal debt

t he decreasing external debt toGDP ratio indicates that India hasa sound economic platform

Source: RBI Statistics
http://www.rbi.org.in/scripts/Statistics.aspxhttp://www.rbi.org.in/scripts/Statistics.aspxhttp://www.rbi.org.in/scripts/Statistics.aspxhttp://www.rbi.org.in/scripts/Statistics.aspx


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5

India: Surging Exports

India's Imports: 2002-08

61.5278.28

111.89

149.65

190.50

72.40

0

50

100

150

200

250

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08(April-July)*

U

S D B i l l i o n

India's Exports: 2002-0 8

52.8163.95

83.81103.42

126.33

46.80

020406080

100120140

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08(April-July)*

U S D B i l l i o n

Petroleum products are the majorcontributors towards Indias growingimports

Quality and cost advantage are the twoimportant parameters leveraged by theIndian producers to increasinglymarket products and services

Services sector hasbeen a major

contributor toincreased exportsfrom India

Product imports byIndia mainly includepetroleum productsand minerals

Indian companieshave chalked outextensive plans toincrease theirpresence abroad

Acceptance ofIndian productsalong with the costadvantage hasprovided an edge to

Indian companies * - 2007-08 provisional data for period of April to July only

* - 2007-08 provisional data for period of April to July only

Source: Ministry of Finance (August Report)
http://finmin.nic.in/stats_data/monthly_economic_report/index.htmlhttp://finmin.nic.in/stats_data/monthly_economic_report/index.htmlhttp://finmin.nic.in/stats_data/monthly_economic_report/index.htmlhttp://finmin.nic.in/stats_data/monthly_economic_report/index.html


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India: Attractive Investment Destination

India is ranked

second in AT

Kearneys FDI

confidence index

FDI inflow for the

period 2006-07

witnessed a growth

of 180 percent over

the same period last

year

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

FDI Inflow - India: 2001-07

4,2223,134 2,634

3,7555,546

15,730

4,909

02,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08(till June)

U S D M i l l i o n 180 percent

Increase

Net FII into India: 2001-07

1.800.60

10.00 10.20 9.40

6.71

16.60

02468

1012141618

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08(till 12

October)

U S D B i l l i o n

Source: DIPP (June Report) , SEBI

Electronic equipment,manufacturing and telecomhave witnessed significant

FDI inflow

Large FII activity in India hasled to an upsurge in theSensex
http://dipp.nic.in/fdi_statistics/india_fdi_index.htmhttp://www.sebi.gov.in/Index.jsp?contentDisp=FIITrendshttp://www.sebi.gov.in/Index.jsp?contentDisp=FIITrendshttp://dipp.nic.in/fdi_statistics/india_fdi_index.htm


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7India: Vibrant Capital Market

India is among themajor destinationsacross the globe forinflow of US Dollari.e. FIIs

Sensex has risen18 times in theperiod 1990-2007

Sensex The Bombay Stock Exchange index has risen 18 times from 1990s toreach 18,000 mark in October 2007.

FIIs have infusedlarge investmentsinto the Indianstock market

Encouragingindustry

performance

Increased localinvestorsconfidence

Emergence ofindustry andconfidence of localinvestors along with

the FIIs has led toincreased movementof the Sensex

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

12-Oct-97 12-Oct-98 12-Oct-99 12-Oct-00 12-Oct-01 12-Oct-02 12-Oct-03 12-Oct-04 12-Oct-05 12-Oct-06 12-Oct-07

10/9/2007Crossed18,000mark

30 December 1999Crossed 5,000 mark

07 February 2006

Crossed 10,000 mark

09 July 2007Crossed 15,000 mark


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8India: Vibrant Economy Driving M&A Activities

SECTOR USD(Mn) SECTORUSD(Mn)

Automotive 518 Manufacturing 933

Banking and Financial 1,375 Media 630

Chemicals andPlastics

1,133 Oil & Gas 384

Electrical andElectronics

896 Pharma &Biotech

2,520

Energy 1,484 Telecom 2,198

FMCG, Food andBeverages

1,327 Others 4,006

IT and ITES 2,903 Total 20,305

Growth Drivers:Globalisation and

increasedcompetitionConcentration ofcompanies toachieveeconomies ofscaleLower interestrates and vibrantglobal markets

Cash Reserveswith corporates

Number of Deals and Value

12.3

18.3

28.2

306

467

782

0

5

10

15

20

25

30

2004 2005 2006

U S D B i l l i o n

0100200300400500600700800900

N u m

b e r o

f d e a

l s

Deal Value No. of Dea ls

Average private equityinvestment deal sizeincreased to USD 26.02million in 2006 from USD16.4 million in 2005

In 2006, there were atotal of 480 M&A dealsand 302 private equitydeals

Average deal size close to

USD 36 million

Trends:Ratio of the Size ofacquisition to thesize of acquirerhas grown from 10percent in 2004 to25 percent in 2006.Cross-borderdeals are growingfaster thandomestic dealsPrivate Equity (PE)houses havefunded projects aswell as made a fewacquisitions inIndia

Source: Dealtracker Grant Thornton , Economic Times

Indian companies have clocked M&Adeals approximately worth USD 31billion during the first eight months in2007
http://www.gt-india.com/html/http://www.gt-india.com/html/http://economictimes.indiatimes.com/News/Economy/Finance/Corporate_India_logs_over_48_bn_MA_deals_in_07/rssarticleshow/2406124.cmshttp://economictimes.indiatimes.com/News/Economy/Finance/Corporate_India_logs_over_48_bn_MA_deals_in_07/rssarticleshow/2406124.cmshttp://www.gt-india.com/html/


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9Major M&A Deals Undertaken Abroad by India Inc.

USD 12.1 billionTata Steel buys Corus Plc

USD 6 billionHindalco acquired Novelis Inc.

USD 1.58 billionEssar Steel acquired Algoma Steel

USD 1.6 billionSuzlon Energy Ltd. acquires REpower

USD 1.1 billionUnited Spirits Ltd. acquired Whyte &Mackay
http://images.google.com/imgres?imgurl=http://www.avenuevine.com/movabletype/archives/UBGroupLOGO-w.jpg&imgrefurl=http://www.avenuevine.com/archives/001747.html&h=227&w=225&sz=10&hl=en&start=1&um=1&tbnid=ZdZLuVxxM79CoM:&tbnh=108&tbnw=107&prev=/images%3Fq%3Dunited%2Bspirits%2B%26svnum%3D10%26um%3D1%26hl%3Den%26rls%3DGGLJ,GGLJ:2006-34,GGLJ:en


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10Major M&A and Investments Announcements in India

USD 11 billionVodafone buys Hutch

USD 0.98 billionAditya Birla Group increased its stake in IdeaCellular by acquiring 48.14-percent stake

USD 1 billionPlans investment in private equity, real estate,

and private wealth management

USD 1.7 billionPlans to spend on its development operationsin India over the next four years

USD 0.905 billionRenault, Nissan and Mahindra & Mahindrahave initiated a Greenfield automobile plantproject in Chennai.

Mylan Laboratories acquired a majority stakein Matrix Laboratories

USD 0.74 billion
http://www.mylan.com/http://en.wikipedia.org/wiki/Image:Nissan_logo.pnghttp://en.wikipedia.org/wiki/Image:Microsoft_logo.pnghttp://en.wikipedia.org/wiki/Image:VodafoneNewLogo.jpg


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11India: Pacing Ahead to Emerge as a Major Economy in the World

Projected GDP Growth Rates for Select Upcoming Economies

0

2

4

6

8

2005-10 2010-15 2015-20 2020-25 2025 -30 2030-35 2035-40 2040-45 2045-50

G D P G r o w

t h R a

t e ( % )

Brazil China India Russia

0

20

40

60

80

100

India Russia VietnamUkraine China Chile Latvia

G R D I S c o r e

2007 Global Retail Development Index (GRDI) 2007 Global Services Location Index

3.3

2.6

3.2

2.8

2.9

3.2

1.5

1.8

1.2

1.3

2.3

2.3

1.1

1.5

1.6

2

1.4

1.4

Indonesia

Brazil

Thailand

Malaysia

China

India

Financial structure People and skill availabli tyBusiness environment

AT Kearney hasplaced India as themost preferabledestination forServices sector

the retail marketalong with the

services sector hasbeen attractinginterest of majorglobal players

India is expected tooutperform its rivalsin the BRIC, in termsof GDP growth rate,from 2015onwards

Source: AT Kearney , BRIC Report

India is the topdestination in the ATKearney GlobalRetail DevelopmentIndex (2007)
http://www.atkearney.com/main.taf?p=5,3http://www2.goldmansachs.com/insight/research/reports/report6.htmlhttp://www.atkearney.com/main.taf?p=5,3http://www2.goldmansachs.com/insight/research/reports/report6.htmlhttp://www2.goldmansachs.com/insight/research/reports/report6.htmlhttp://www.atkearney.com/main.taf?p=5,3


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12India: Astounding Demographics

Per Capita Income

393461

519583

651

0

100

200

300

400

500

600

700

2002-03 2003-04 2004-05 2005-06 2006-07

U S D

2

9

48

221

726

9

17

74

285

710

20

33

120

404

613

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

Rich (Above 115,000)

High Income (57,000 115,000)

Consuming class (23,000 57,000)

Working class (10,200 23,000)

Needy (Below 10,200)

Annual Household Income

(in USD)

* In PPP terms

P o p u

l a t i o n

( m i l l i o n

)

Increasing per capita incomecoupled with an emerging middle

class has provided the necessaryimpetus to consumerism in India

Growth in the higher

income categoriesof Indias populationis creating anaffluent section withhigh purchasingpower

Increasing per capitaincome and agrowing middleclass is driving ahigh level ofconsumerism inIndia

DEMOGRAPHIC TRANSFORMATION OF INDIA

Source: RBI Statistics
http://www.rbi.org.in/scripts/Statistics.aspxhttp://www.rbi.org.in/scripts/Statistics.aspx


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Countries worldwide are anticipating a shortage of working population in the future. India is expected to emerge as aclear winner, and by 2050, it will have the largest working age population.

India: Increasing Working Population

-3

0

10

17

31

33

44

64

71

314

-5 45 95 145 195 245 295 345

Stock Position 2005

South East Asia 362

Southern Asia 132

India 691

Africa 500

China 934

Latin America 359

USA 200

Europe 497

Japan 85

World 4,168

In Million

Addition to Working Age Population by 2010

Growth in Global Working Age Population (15-64)

Source: Its Hendersons
http://www.itshenderson.com/content/itshenderson/restricted/documents/research/2007-05-02_newsletter.pdfhttp://www.itshenderson.com/content/itshenderson/restricted/documents/research/2007-05-02_newsletter.pdf


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BRIC Report,Goldman Sachs

I have never seenIndia so dynamic,vibrant and full of

businessopportunities.

- Dan Scheinman, Cisco System Inc. as told to Business Week,August 2005

We came to India for thecosts, stayed for thequality and are now

investing for innovation.

John Redwood Economic Competitiveness Policy Group, UK

India is now truly aland of opportunity.

Jack Welch General Electric

India is adeveloped country

as far as intellectualcapital is

concerned.

Peter Loescher President and Chief Executive Siemens

By 2032, India will beamong the three

largest economies inthe world.

Why India? Quote Unquote

Travyn Rhall,ACNielsen

The Indian market has twocore advantages - an

increasing presence ofmultinationals and an upswing

in the IT exports.

Craig Barrett Intel Corporation

India has evolved intoone of the world's

leading technologycenters.

Mr Paul de Voijs

Managing Director Volvo Car India

India is a very excitingmarket and the luxury

car segment is growingexponentially here.


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ibef presentation on indian economy opportunities

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