Indian Economy An Opportunity Unlimited www.ibef.org India: Fastest Growing Free Market Democracy GDP Growth Forex FII Flow FDI Per Capita Inflation 1990 4.9 percent < USD 1 billion USD 1 million (1993) USD 97 million USD 390 9 percent 2008* 8.7 percent USD 309 billion as on Mar 28, 2008 USD 16.1 billion in 2007-08 USD 12.7 billion in 2007-08 till December (USD 16 billion in 2006-07) USD 740 7.4 percent as on March 29, 2008 2 * Annualized data used to show comparison with 1990 Source: Times of India, RBI, DIPP, Indian Budget, Rediff www.ibef.org India: Among the Top-15 Countries in terms of GDP at constant prices The Indian economy has witnessed unprecedented growth…. Booming services and industry sectors are providing the required impetus to economic growth India's GDP at Current Prices: 2002-07 1200 Fastest GDP growth of 9.4 percent in 2006-07, since last 18 years (at constant prices) India’s GDP has witnessed high growth, and was the second fastest growing GDP after China in 2006-07 The sound performance of each industry segment is leading to the overall robust performance of the Indian economy 800 600 400 200 469 556 638 737 830 1006 0 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 (AE) Contribution of Services increased from 48 percent to 55 percent AE - Advance Estimates 1,200 1,000 Growth in sectors at Current Prices (2007-08): Industry: 10.7% Services: 8.9% Agriculture: 2.6% USD Billion USD Billion 1000 800 561 600 398 400 191 200 0 Source: MOSPI Statistics 103 105 453 237 125 105 1999-00 2002-03 Agriculture 204 231 135 145 2005-06 Industry 2006-07 Services 270 176 2007-08 3 www.ibef.org India: Robust Economic Platform India's Forex Reserves: 2001-08 (Till 28 March 2008) 350 309 USD Billion 300 Steadily increasing Forex reserves offer adequate security against any possible currency crisis or monetary instability 250 150 100 In 2007-08 (till 28 March), Forex reserves witnessed a growth of approximately 55 percent over 2006-07. 199 200 141 152 2004-05 2005-06 112 54 75 50 0 2001-02 2002-03 2003-04 2006-07 2007-08 (Till 28 March) External Debt-to-GDP Ratio 22 21.1 Falling Dollar inflates the India’s external debt 20.4 Increased confidence of investors in Indian companies has led to a surge in cross border borrowing by corporate houses Ratio 19 17.8 India’s Forex reserves are in excess of external debt… 17.3 15.8 16 16.4 …the decreasing external debt to GDP ratio indicates that India has a sound economic platform 13 10 2001-02 2002-03 2003-04 Source: RBI Statistics 2004-05 2005-06 2006-07 4 www.ibef.org India: Surging Exports Services sector has been a major contributor to increased exports from India USD Billion India's Exports: 2002-08 126 140 120 100 80 60 40 20 0 103 84 53 2002-03 Acceptance of Indian products along with the cost advantage has provided an edge to Indian companies 124 64 Quality and cost advantage are the two important parameters leveraged by the Indian producers to increasingly market products and services 2003-04 2004-05 2005-06 2006-07 2007-08 (A prilDecember)* * - 2007-08 provisional data for period of April to December only India's Imports: 2002-08 250 191 USD Billion 200 Product imports by India mainly include petroleum products and minerals 192 150 150 100 112 62 Petroleum products are the major contributors towards India’s growing imports 78 50 0 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 (A prilDecember)* * - 2007-08 provisional data for period of April to December only Source: Ministry of Finance (November Report) 5 www.ibef.org India: Attractive Investment Destination With improved performance on PE ratio and ROE, Indian markets have attracted large investments FDI Inflow - India: 2001-08 India is ranked 18,000 15,730 second in AT Kearney’s FDI (2007) 13,500 USD Million confidence index 185 percent Increase 12,699 Electronic equipment, manufacturing and telecom have witnessed significant FDI inflow 9,000 5,546 4,222 4,500 3,134 2,634 3,755 0 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 Net FII into India: 2001-07 FDI inflow for the 18 period 2006-07 16 of 185 percent over the same period last Large FII activity in India has led to an upsurge in the Sensex year 149 percent Increase 16.1 14 USD Billion witnessed a growth 2007-08 (till December) 12 10.0 10.2 10 8 9.4 6.7 6 4 2 1.8 0.6 0 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 * FII growth momentum was restricted because of Sub Prime Crisis in 2007-08 Source: DIPP (October Report), SEBI 6 www.ibef.org India: Vibrant Capital Market Sensex – The Bombay Stock Exchange index rise 20 times from 1990s to reach 20,000 mark in November 2007. India is among the major destinations across the globe for inflow of US Dollar 25000 11 December 2007 Crossed 20,000 mark 20000 Sensex has risen 20 times in the period 1990-2007 15000 30 December 1999 Crossed 5,000 mark 07 February 2006 Crossed 10,000 mark 10000 5000 0 1Ju 1- l -97 Ja n 1- -98 Ju 1- l -9 Ja 8 n 1- -99 Ju 1- l -99 Ja n 1- -00 Ju 1- l -0 Ja 0 n 1- -01 Ju 1- l -01 Ja n 1- -02 Ju 1- l -02 Ja n 1- -03 Ju 1- l -03 Ja n 1- -04 Ju 1- l -04 Ja n 1- -05 Ju 1- l -05 Ja n 1- -06 Ju 1- l -06 Ja n 1- -07 Ju 1- l -07 Ja n08 Emergence of industry and confidence of local investors along with the FIIs has led to upsurge of the Sensex FIIs have infused large investments into the Indian stock market Encouraging industry performance Increased local investors’ confidence 7 www.ibef.org India: Vibrant Economy Driving M&A Activities Number of Deals and Value USD Billion 70 60 70 782 50 40 30 20 10 467 28.2 306 1,200 1,000 800 600 400 18.3 In 2007, there were a total of 676 M&A deals and 405 private equity deals… Number of deals 1,081 80 200 12.3 0 In 2007, the total value of M&A and PE deals was USD 70 billion… 0 2004 2005 Deal Value 2006 2007 No. of Deals … Total M&A deal value was close to USD 51 billion… Growth Drivers: Globalisation and increased competition Concentration of companies to achieve economies of scale Cash Reserves with corporate Private equity deals value increased to USD 19 billion Trends: 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 Source: Deal Tracker Grant Thornton, Economic Times 8 www.ibef.org 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 Tata buys Jaguar and Land Rover USD 2.3 billion Essar Steel acquired Algoma Steel USD 1.58 billion Suzlon Energy Ltd. acquires REpower USD 1.6 billion 9 www.ibef.org Major M&A and Investments Announcements in India (1/2) POSCO to invest in building steel manufacturing plants and facilities in India by 2016 USD 12 billion Vodafone buys Hutch USD 11 billion Plans to establish three manufacturing plants to produce photo-voltaic units USD 2 billion Plans to spend on its development operations in India over the next four years USD 1.7 billion 10 www.ibef.org Major M&A and Investments Announcements in India (2/2) Plans investment in private equity in Indian markets USD 1 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 Mylan Laboratories acquired a majority stake in Matrix Laboratories USD 0.74 billion 11 www.ibef.org India: Pacing Ahead to Emerge as a Major Economy in the World 2007 Global Retail Development Index (GRDI) India 80 Services sector attracted interest of major global players and large investments are pumped in it India is expected to outperform its rivals in the BRIC, in terms of GDP growth rate, from 2015 onwards… 60 2.9 Malaysia 2.8 Brazil Indonesia 0 India Russia Vietnam Ukraine China Chile 3.2 China Thailand 40 20 2.3 2.3 1.3 3.2 2.6 1.6 1.8 3.3 1.4 2 1.2 1.5 1.5 Financial structure Business environment Latvia 1.4 1.1 People and skill availablity Projected GDP Growth Rates for Select Upcoming Economies 8 GDP Growth Rate (%) AT Kearney has placed India as the most preferable destination for Services sector (2007)… 2007 Global Services Location Index 100 GRDI Score … India is the top destination in the AT Kearney Global Retail Development Index (2007) 6 4 2 0 2005-10 2010-15 2015-20 2020-25 Brazil Source: AT Kearney, BRIC Report 2025-30 China 2030-35 India 2035-40 2040-45 2045-50 Russia 12 www.ibef.org Why India? – Quote Unquote “India has evolved into one of the world's leading technology centers“. “India is now truly a land of opportunity”. John Redwood Economic Competitiveness Policy Group, UK By 2032, India will be among the three largest economies in the world. “We came to India for the costs, stayed for the quality and are now investing for innovation”. - Dan Scheinman, Cisco System Inc. as told to Business Week, August 2005 BRIC Report, Goldman Sachs “India is a developed country as far as intellectual capital is concerned”. Jack Welch General Electric “I have never seen India so dynamic, vibrant and full of business opportunities”. Craig Barrett Intel Corporation Peter Loescher President and Chief Executive Siemens “The Indian market has two core advantages - an increasing presence of multinationals and an upswing in the IT exports”. “India is a very exciting market and the luxury car segment is growing exponentially here”. Mr Paul de Voijs Managing Director Volvo Car India Travyn Rhall, ACNielsen 13 www.ibef.org DISCLAIMER This presentation has been prepared jointly by the India Brand Equity Foundation (“IBEF”) and Evalueserve.com Pvt. Ltd., EVALUESERVE (“Authors”). All rights reserved. All copyright in this presentation and related works is owned by IBEF and the Authors. The same may not be reproduced, wholly or in part in any material form (including photocopying or storing it in any medium by electronic means and whether or not transiently or incidentally to some other use of this presentation), modified or in any manner communicated to any third party except with the written approval of IBEF. This presentation is for information purposes only. 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