effectofrecessionppt 120102152522 phpapp01 copy copy
TRANSCRIPT
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
1/60
AFFECT OF RECESSION ON INDIAN
BUSINESS
BY: Sec Q (PGDIB)
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
2/60
RECESSION- MEANING
A RECESSION is a decline in a country's gross
domestic product (GDP) growth for two or
more consecutive quarters of a year.
A RECESSION is also preceded by several
quarters of slowing down.
RECESSION is the result of reduction in the
demand of products in the global market.
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
3/60
National Bureau of Economic Research
(NBER)
National Bureau of Economic Research (NBER)
is the official agency in charge of declaring
that the economy is in a state of recession.
They define recession as : significant decline
in economic activity lasting more than a few
months, which is normally visible in real GDP,
real income, employment, industrialproduction, and wholesale-retail sales
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
4/60
Business Cycle
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
5/60
DIFFERENCE BETWEEN RECESSION
AND DEPRESSION
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
6/60
CAUSES OF RECESSION
Currency crisis
Energy crisis
War Under consumption
Overproduction
Financial crisis Price of Fuels
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
7/60
EFFECTS OF RECESSION
Bankruptcies
Credit crunches
Deflation (or disinflation) Foreclosures
Unemployment
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
8/60
GLOBAL RECESSION
It is rightly said that, when US sneezes the worldcatches the cold
Economists at the International Monetary Fund(IMF) state that a global recession would take aslowdown in global growth to three percent orless.
The IMF estimates that global recessions seem tooccur over a cycle lasting between 8 and 10years.
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
9/60
World Recession
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
10/60
Recession
Name
Recession
Year
Time Taken Cause & Impact
Great
Depression
1929-1939 10 years Stock markets crashed worldwide,
and a banking collapse took place
in the United states. This sparked
a global downturn, including a
second, more minor recession in
the United states, the Recession
of 1937.
1937 Oil
Recession
1973-1975 2 years A quadrupling of oil prices by
OPEC coupled with high
Government spending due to the
Vietnam war lead to stagflation inthe United States.
Early 1980s
Recession
1980-1982 2 Years The Indian Revolution sharply
increased the price of oil around
the world in 1979, causing the
1979 energy crisis.Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
11/60
Recession Name Recession Year Time Taken Cause & Impact
Early 1990s
Recession
1990-1991 1 year Industrial production and
Manufacturing trade sales
decreased in early 1991.
Early 2000s
Recession
2001-2003 2 years The collapse of the dot-com
bubble, the September 11 attacks
and accounting.
Early 2008s
Recession
2008-so on continuing The collapse of US economy and
other related countriec.
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
12/60
Recession in India
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
13/60
Causes of Recession in India
Indian companies have major outsourcing
deals from the US
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
14/60
Affects of recession on Indian business
The sectors least affected (directly) by theslowdown are Pharmaceuticals, Oil & Gas,FMCG, Media & Entertainment
Those which will feel a moderate impact ofthe global crises are Power, Automobiles,Retail, Hospitality and Tourism
The sectors most severely affected are Banks,Financial Services, Real Estate, Infrastructureand Information Technology
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
15/60
Major sectors affected by Recession
Indian Stock Market
IT and BPO
Banking
Real State
Aviation
Textile
Automobile
Hospitality
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
16/60
TEXTILE
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
17/60
Textile
'cottage industry' to the state of supremacy
second largest employer in India, next to
agriculture
generates employment opportunities for
approximately 33.17 million workers directly,
and 54.85 million workers indirectly
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
18/60
60% of the total garments manufactured in India
are exported to foreign markets like EU, US, and
Japan, generating revenue of upto US$ 52 billion
Economic slowdown in the US and EU hasaffected the textile business in India, resulting in
a drastic decline in the country's garment exports
almost 8, 00,000 garment and textile employeeshad lost their jobs
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
19/60
October 2008:Othe total output of the textile
sector came down by 10%
Punjab generating employment for 4,00,000
jobs has suffered a 50% loss in sales
Majority of the layoffs target the daily-wagers
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
20/60
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
21/60
INDIAN BANKING SECTOR
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
22/60
BANKING
banks are like backbone for industries
They provide loans and capital to the
business, industry, agriculture etc.
Loss of profit and Capital of these banks bring
serious threat to the economic development
of that country
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
23/60
The present world recession has its roots in
sub- prime crises
The global banks and brokerages have had to
write off estimated $ 512 billion in sub-prime
losses
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
24/60
the banking system in India had no direct
exposure to the subprime assets that
triggered the crisis in the advanced economies
the Reserve Bank had taken a number of
measures which contributed to strengthening
the resilience in the Indian banking system
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
25/60
Banks have suffered losses, including some
public sector banks like Punjab National Bank,
Bank of India, State Bank of India and Bank of
Baroda as they had an exposure to theinstruments issued by Lehman and Merrill
Lynch.
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
26/60
Reason for non failure of Indian
banking system during recession
Traditional working of Indian Banks
Strong base of nationalized bank
Effective control of RBI Role of Finance Ministry
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
27/60
INDIAN AVIATION INDUSTRY
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
28/60
Indian Aviation Industry
The First Phase the Pioneering Years
The Second Phase Public Sector Era
The third Phase the Liberalization Era The Fourth Phase The Era of Growth and . .
Recession (Fare Setting, Fare War and their
Consequences)
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
29/60
Aviation before recession
India aviation industry was expanding
There were new budget airlines and private
players
The number of job opportunities in the
industry was going up
Students started signing up for courses like
airline pilot's, flight attendant's, ground crew
etc.
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
30/60
Challenges after Recession
High Aviation Turbine Fuel (ATF) prices
Rising labor costs
Shortage of skilled labor Excess capacity
Huge debt burden
Intense price competition
Job losses
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
31/60
Indian Stock Market
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
32/60
Biggest falls in Indian stock
market history
Worst hit stock
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
33/60
Economic Growth in Advance nation had close to zero
We take you through the BIGGEST falls in
the Indian stock market history.
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
34/60
January 21, 2008January 22, 2008
February 11, 2008
March 3, 2008March 17, 2008
10 October 2008
October 24, 2008
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
35/60
Bloodbath in Indian Stock Markets
Investors in Indian markets lost more than 16
trillion Rupees in just 2 days !
The ICUs of almost all city hospitals were full
o The first lesson
o The other big lesson
o
other learning which I hope will play out in thefuture
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
36/60
AUTOMOBILE INDUSTRY
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
37/60
Indian Automobile Industries
India is the world's largest two wheelermanufacturer.
India is the world's second largest tractor
manufacturer. India has the fourth largest car market in Asia.
India has the world's largest three wheeler
market. India is fourth largest Automobile exporter in
the world.
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
38/60
Effect On Automobile Company
TATA MOTORS
MARUTI SUZUKI
MAHINDRA & MAHINDRA
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
39/60
Effect Of Recession
Uncertain exchange rate and a sudden increase in dollar value
against Indian Rupee
Delayed Payments from the OEMs (Original Equipment
Manufacturer)
Alloy and steel prices have also not shown any reduction in
their prices
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
40/60
Post Recession
The Indian automobile industry is expected to grow to US$ 40
billion by 2015 from the current level of US$ 7 billion in
2008.
Challenge of Chinese Automobile Industry.
Market Strength of Indian Automobile Industry.
New Innovation
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
41/60
Real Estate
Rashmi Verma
http://managementfunda.com/wp-content/uploads/2010/05/Management-Funda.JPG -
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
42/60
Contribution towards the Economy
Contribution to GDP of about 7%
Second largest employment generator in the
country
Real estate growth gives boost to steel and
cement sectors
Real estate is a growth engine for
development of over 269 allied industries
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
43/60
Causes Of Recession On Real Estate
Uniformity of land laws, slowdown andapproval delays, the developers missed tocomplete their projects within the boom
period. Withdrawing of money from Real Estate
sector.
Many companies has given pink slips to theiremployees
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
44/60
Major Player In Real Estate
DLF
UNITECH GROUP
ANSALS
PARSAVNATH DEVLOPERS
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
45/60
Impact on Real Estate Sector
Increase in prices of inputs due to inflation effecting all areas ofeconomy like cement, steel, etc.
Increase in home loan interest rates resulting into additional EMIburden on the borrowers.
Reduction in salaries and layoffs resulting into reduced demand for
Real estate Demand-supply imbalance
Forced correction in prices
Reduction in Commercial Rentals
Projects stagnancy
Slow down in infrastructure projects Difficulties to raise fund (Failure of Emaar IPO)
Loss of Jobs
Shortage of skill workers
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
46/60
Effect on Finance
DLF 79 % decline in profits & 57 % slide in sales
Unitech 63 % decline in profits & 50 % slide in
sales.
Parsavanath, India bulls, HDIL, Akruti, Shobha,Purvankara have reported decline in profits upto
95 %.
Overall 76 % dip in profits & 57 % fall in sales inFirst Quarter of FY 09-10 over First Quarter of FY
08-09.
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
47/60
FUTURE PREDICTIONS
Close to $7 billion to $8 billion of venture capital
expected to flow into Indian real estate market.
A significant increase in project execution throughPublic- Private-Partnerships.
More demand for office and industrial space.
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
48/60
INDIAN BPO AND IT INDUSTRY
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
49/60
BPO CONTRIBUTION IN INDIA
India has revenues of 10.9 billion USD
30 billion USD from IT and total BPO
5-6% share of the total BPO Industry
Employs more than 700,000 people 35 percent of the BPO market worldwide.
Eastern Europe, Philippines, Morocco, Egypt and
South Africa have emerged to take a share of themarket
market share of the offshore piece
is expected to decline.Rashmi Verma
I BPO I d
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
50/60
Impact on BPO Industry
Indian IT and BPO companies to reduce their
dependency to US
start marketing their services to other
countries like APAC
Tier II IT and BPO companies wil merge with
larger IT and BPO companies
Indian outsource vendors will reduce hiring
new employees
Rashmi Verma
Wh t it t I di
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
51/60
What it means to India
Cost efficiencies and business transformation incompanies will likely gain greater precedencethan ever
The resilient vendors can build new and
differentiated offerings for companies India may benefit due to higher experience and
maturity in these areas.
Cash-starved companies may look to monetise
their investments in captive operations HR outsourcing will provide remediation to some
of the staff post
Rashmi Verma
Global Sourcing in Banking Capital
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
52/60
Global Sourcing in Banking, Capital
Markets and Insurance.
The largest untapped opportunities in banking are specialization intransaction processing, account servicing and credit card fraudmanagement
Well-served functions in the capital markets sector that will continue todrive growth include business acquisitions, account servicing, investmentoperations, registrar and transfer functions and fund Accounting
The largest untapped opportunities in the insurance sector include policyservicing, customer service, finance and accounting, new businessacquisition and claims processing
Most financial services companies are now sourcing BPO through captiveunits in India and the Philippines, however, third-party sourcing also isrising
Financial services buyers are constantly innovating and restructuringdelivery models, the latest being a hybrid model where the back-endprocesses are migrated to third-party suppliers while complex, judgment-intensive functions are retained within the captive
To date, UK insurers are largest adopters of offshore BPO, suggestingsignificant growth opportunities exist for the U.S. insurance market that is
three times the size of the UK market.Rashmi Verma
CONCLUSION OF THE STUDY OF
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
53/60
CONCLUSION OF THE STUDY OF
RECESSION & BPO
Existing contracts will continue
Growth in the hard-hit will be limited
sectors (especially BFSI).
Sectors, not seeing much slowdown
competition for the few available outsourcing
contracts will be strong.
Rashmi Verma
I t th I di
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
54/60
Impact on the Indian
IT industry
Asia / Pacific is experiencing a deferred impactdue to the domino effectof the current crisis.
43% of Western companies are cutting back theirIT spend and nearly 30% are scrutinizing ITprojects for better returns.
The slowing U.S. economy has seen 70% of firmsnegotiating lower rates with suppliers and nearly60% cutting back on contractors.
The IT services and outsourcing market iscurrently undergoing a structural transformationthat will have a profound effect on how IT serviceproviders will have to conduct their business
Rashmi Verma
CONCLUSION OF IT SECTOR AND
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
55/60
CONCLUSION OF IT SECTOR AND
RECESSION
Some opportunities for managing the bottom
line
The macroeconomic environment is
depressing
The environment looks weakest in a long
while,and yet there remain pockets of
opportunity.
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
56/60
Hospitality Industry
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
57/60
Overview
Recession took its toll onhospitality industry.
Effect on travelers.
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
58/60
State of Indian hospitality industry
Foreign exchange losses.
The biggest drop.
Things changed during recession.
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
59/60
Facts and Figures
The bottom line was severely hit
by 65%.
Rise and fall due to recession.
Rashmi Verma
-
7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy
60/60
Recovery Cycle
Increased supply of rooms.
Rise in the NCR region.
Road to recovery.