imlp c3 final (2)
TRANSCRIPT
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INDIA THEINDIA THE
INVESTMENT HUBINVESTMENT HUB
Team c3
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IntroductionIntroduction Foreign Direct Investment(FDI)
Foreign direct investment (FDI) or foreign investment
refers to long term participation by other countries into
India.
It usually involves participation in management, joint-
venture, transfer of technology and expertise.
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India is the second most important FDIdestination (after China) for transnationalcorporations during 2010-2012.
FDI for 2009-10 was at $ 25.88 billion.
Mauritius, Singapore, US and the UK wereamong the leading sources of FDI.
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Foreign Institutional Investment(FII)
Foreign institutional investor means an entity
established or incorporated outside India which
proposes to make investment in the financial markets
of India.
Investors must register with the SEBI to participate in
the market.
Placing limits on FII ownership in Indian companies.
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Positive Indian economy, fast-growing market has made
India an attractive destination for FII.
Institutional investors include Hedge funds, Insurance
companies, Pension funds and Mutual funds.
Hot money- The money coming through FII, this money
can be taken out at any time from the market
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Role Play
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BADAN 11
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INDIA - AN INVESTMENT
HUB
TOPIC OF THE DAY
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SOFTWARE INDUSTRYSOFTWARE INDUSTRY
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INVESTMENT POLICY
Automatic route for foreign equity up to 100 percent
100 percent foreign investment permitted in units set upexclusively for exports.
Tax holiday to R&D up to 10 years with 125% concession
Simplification and liberalization on export and importpolicy.
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OPPORTUNITIES
IT-BPO industry is reached US$ 73.1 billion in 2009-10witnessing a growth of over 5 per cent.
India has the second largest English-speaking workforce inthe world.
Job Creation: 1million direct and 2-3 million indirect.
High quality standards with CMM level 5 companies and250 fortune 500 clients.
Joint software development in super computing applications.
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FUTURE PROSPECTS
India is growing @ 9% every year.55% of thegrowth is contributed by Services sector.
As per NASSCOM, the Indian IT exports areanticipated to attain US$ 175 billion by 2020out of which the domestic sector will accountfor US$ 50 billion in earnings.
NASSCOM said that the domestic IT-BPO is
expected to grow by 25-27 per cent duringFY12
Huge inflows of foreign direct investments .
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GROWTH OF IT
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PHARMACEUTICAL SECTORPHARMACEUTICAL SECTOR
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Low cost of production. Large pool of installed capacities
Efficient technologies for large number ofGenerics.
Large pool of skilled technical manpower.
Increasing liberalization of governmentpolicies.
STRENGTHS
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OPPORTUNITIES
Aging of the world population. Growing incomes.
Growing attention for health.
New diagnoses and new social diseases.
Spreading prophylactic approaches. Saturation point of market is far away
New delivery systems.
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Current Scenario
Pharma industry turnover is of about US$ 12billion
Pharma export value reached about US$ 4.7billion
About 2.91% of total FDI into the country
Drugs and pharmaceuticals sector is at 8thrank in India's top 10 FDI attracting sectors.
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Future Scenario
US$ 8 billion market for MNCs selling expensive drugsby 2015
Domestic pharma market is likely to reach US$ 20billion by 2015
US$ 6.31 billion will be invested in the domesticpharmaceutical sector
Dr Reddy's Laboratories has tied up withGlaxoSmithKline
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AUTOMOTIVEAUTOMOTIVE
INDUSTRYINDUSTRY
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The Automotive Industry in India -FACTS
9th largest automobile industry .
2nd largest two and three-wheeler market.
4th largest in Heavy Trucks.
Largest tractor manufacturer.
Annual production of over 2.6 million units. The monthly sales of passenger cars in India exceed 1 lac units.
The automobile industry received FDI worth US$ 436 million in2010.
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Passenger Vehicles
Commercial Vehicles
Three Wheelers
Two Wheelers
. %76 49
.%
1596 . %3 60
. %3 95
SEGMENTATION F AUTOMOBILEINDUSTRY
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Future prospect of IndianAutomotive Sector :
Nissan Motors plans to export 250,000 vehiclesmanufactured in its India plant by 2011.
General Motors announced its plans to export about50,000 cars manufactured in India by 2011.
Maruti Udyog has set up the second car with aninvestment of Rs 6,500 crore.
Hyundai will bring in more than Rs 3,800 crore to India.
Tata Motors will be investing Rs 2,000 crore in its smallcar project.
General Motors will be investing Rs 100 crore and Fordabout Rs 350 crore.
By 2016,industry is expected to grow by 13%, to reach amark of US$ 120-159 billion.
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ENERGY SECTORENERGY SECTOR
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RENEWABLES IN INDIARENEWABLES IN INDIA
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Renewables in India: Potential & ProspectRenewables in India: Potential & Prospect
India is the 4th largest country.
Wind, Hydro, Biomass and Solar are main renewable energy
sources.
Ideal investment destination for renewable energy equipment
manufacturers and service providers.
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The country has an estimated renewable energy potential of
around 85,000 MW from commercially exploitable sources:
Wind - 45,000 MW; small hydro - 15,000 MW and
biomass/bioenergy - 25,000 MW.
India has outlined ambitious capacity expansion and investment
plans for the eleventh five year plan period (FY 2007- FY
2012).
It has proposed an addition of 15,000 MW of Renewable Energy
generation capacities during the period.
EREC 2050 69% . New renewables 40%.
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FOREIGN INVESTMENT POLICYFOREIGN INVESTMENT POLICY
Foreign investors - joint venture - for setting up of
renewable energy-based power generation projects.
Build-own-operate basis.
Foreign investors can also set up a liaison office in India.
Liberalized foreign investment approval regime to facilitate
foreign investment and transfer of technology through
joint ventures.
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Proposals for up to 74% foreign equity participation in a
joint venture qualify for automatic approval.
100% foreign investment as equity is permissible with the
approval of Foreign Investment Promotion Board (FIPB).
Various chambers of commerce and industry associations in
India can be approached for providing guidance to the
investors in finding appropriate partners .
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FMCGFMCG
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Shares of FMCG are considered defensive rather
and fluctuating with the market.
Shares are priced high.
Shares of HUL are priced at a price Earning
multiple of 30, ITC at 29 and Nestle at over 50.
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Does it make sense to invest in FMCG stocks?
Historical Perspective:
Merit in investing in defensive stocks.
Between Jan 2008 and Mar 2009, sensex fell around 60%, but
drop in FMCG was restricted to 30%.
Stable earnings and not earnings growth decides the valuation.
Free cash generation capacity.
Return on equity.
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Should you buy?
Beyond a certain level, stocks of even strong companies
become unattractive.
Today most stocks are above their respective historical
averages.
Britannia Industries current earning multiple of 75, against the
past average of 27, GlaxoSmithKline is at 35 compared to
the average of 20, Nestle and HUL at 50 and 30
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Compared to past averages of 30 and 35.
The obvious culprit is liquidity. Rather thanbehaving like defensive stocks, FMCGs havemoved along with the market
Company Price (Mar-10) PE
Colgate-Palmolive
870.40 26.13
Dabur 94.45 38.24
ITC 173.10 29.68Nestle 3774.45 50.43
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In recent times, FMCGs have moved up with the market,
contrary to conventional wisdom that they are
defensive. They may or may not fall. So invest your
money selectively.
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GROWTH OF GDP
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Modern BankingTechnology
- Dr. Firdos T. Shroff
Scenarios for RiskManagement and
Global InvestmentStrategies
- Rachel Ziemba,William T. Ziemba
The future of foreigninvestment in
Southeast Asia - Nick J. Freeman,
Frank L. Bartels
Capital Market
Dalal Street
indiarealestatemonitor.com/.../what-makes-india-a-good-investment-hub
www.vibrantgujarat.com/do
cuments/news/Newsletter-Issue-05.pdf
www.moneycontrol.com/.../indias-image-as-investment-hub-to-be-
hit-experts_368555.html
REFERNCES