indian economy – opportunities unlimited
TRANSCRIPT
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Indian Economy Opportunities Unlimited
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Fastest Growing Free Market Democracy
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India: Ranks Among the Top-15 Countries in terms of GDP atconstant prices
204.90 223.40
319.30
103.1 90.9
116.05104.4 109.4
154.7
0
100
200
300
400
500
600
700
1999-00 2002-03 2005-06
U S D B i l l i o n
S er vi ces Agr ic ul tur e M anufac turi ng
Indian economy haswitnessed anunprecedentedgrowth.
C o n t r i b u t i o n
o f S e r v i c e
s -
i n c r e a s e d
f r o m 4 9 t o 5 4
p e r c e n t
Sound performance of eachindustry segment is leading tothe overall robust performanceof Indian economy
Indian economy isthe 4 th largest interms of PPP USD3.9 trillion in 2006
Registered highestsecond quarter growth since 2001-02 i.e. 9.2 percent
Booming Indianmarkets providingimpetus to theeconomic growth
India's GDP: 2002-06 (Till Q2)
423.73484.4
534590
286
0
100
200
300
400
500
600
700
2002-03 2003-04 2004-05 2005-06 2006-07 (TillQ2)
U S D B i l l i o n
GDP at Constant Prices
4%
8.50%7.50%
8.40%9.05%
Indian GDP has registered oneof the fastest growth ratesacross the globe
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India: Robust Economic Platform
India's Forex Reserves: 2001-07 (Till February 2007)
55.5
74.8
106.8
138.2153.3
182.8
0
20
40
60
80
100
120
140
160
180
200
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 (Till 16Feb 07)
U S D B i l l i o n
External Debt-to-GDP Ratio
21.120.4
17.8 17.3
15.8
10
13
16
19
22
2001-02 2002-03 2003-04 2004-05 2005-06
R a t i o
Indias enhanced economicperformance has been major contributor towards increasedForex reserves
Ever rising Forexreserves providingadequate cushionagainst anypossibility of currency crisis or monetary instability
External debt-to-GDP ratio hasshown remarkable
improvement..
Indias Forexreserves are inexcess of externaldebt
..at present levelof Forex reserves,the country hasadequate cover for 12 months of imports
The decreasing external debt toGDP ratio indicates that India hasa sound economic platform
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India: Attractive Investment Destination
Net FII into India: 2001-07 (Till February 20
1.80
0.60
10.00 10.209.40
6.80
0
2
4
6
8
10
12
2 001 -0 2 2 00 2- 03 2 00 3- 04 20 04 -0 5 2 005 -0 6 20 06 -0 7 ( Till 1 6Feb 07)
U S D B i l l i o n
FDI Inflow - India: 2001-
4,2223,134 2,634
3,755
5,546
16,000
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
2 00 1- 02 2 00 2- 03 2 00 3- 04 2 00 4- 05 2 00 5- 06 2 00 6- 07
U S D M i l l i o n
India is rankedsecond in ATKearney FDIconfidence index
Telecom andElectronics toppedthe list of inward FDI
FDI inflow for theperiod April December 2006witnessed a growthof 151 percent over the same last year
Mauritius has beenthe largestcontributor towardsFDI into India..
Return on the Investments in India (2006 Q1)
MARKET PE Ratio P/B Ratio RoE (%)
India 16.1 4.53 22
China 10.62 2.06 17
Indonesia 10.26 3.09 NA
Korea 9.85 1.84 16
Malaysia 13.21 1.82 16
Taiwan 12.17 2 11
Thailand 9.84 2.32 23
EM Asia 11.19 2.12 15
Latin America 9.35 2.46 18
EM Europe 10.9 2.39 15
With the better performance on PE ratio and ROE, Indian markets have attractedlarge investments
200 percentIncrease
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India: Surging Exports
I n d i a 's I m p o r t :
6 1 .5
7 8 .2
1 1 1 .
1 4 9 .
1 8 1 .
0
2 0
4 0
6 0
8 0
1 0 0
1 2 0
1 4 0
1 6 0
1 8 0
2 0 0
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
o n
Im p o rts
In d ia ' s E x p o r ts
5 2 .8
6 3 .9
8 3 .8
1 0 3 .
1 2 4 .
0
2 0
4 0
6 0
8 0
1 0 0
1 2 0
1 4 0
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
o n
E x p o rts
Petroleum products are the
contributor towards the growingimports by India
The quality and cost advantage
are the two important parametersleveraged by the Indianproducers to increasingly markettheir products and services
Services sector hasbeen a major contributor toincreased exportsfrom India.
Imports of productsby India mainlyincludes petroleumproducts andminerals
The Indiancompanies havechalked outextensive plans toincrease their presence abroad
The acceptance of Indian productsalong with the costadvantage hasprovided an edge toIndian companies.
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India: Pacing Ahead to Emerge as the Major Economy in theGlobe
Projected GDP Growth Rates for Select UpcomingEconomies
0
2
4
6
8
2 0 0 5
- 1 0
2 0 1 0
- 1 5
2 0 1 5
- 2 0
2 0 2 0
- 2 5
2 0 2 5
- 3 0
2 0 3 0
- 3 5
2 0 3 5
- 4 0
2 0 4 0
- 4 5
2 0 4 5
- 5 0
G D P G r o w
t h R a
t e ( % )
Brazil
China
IndiaRussia
0
20
40
60
80
100
India Russia Vietnam Ukraine China Chile Latvia
G R D I S c o r e
2006 Global Retail Development Index(GRDI)
2005 Global Services Location Inde
3.27
1.62
3.56
2.95
3.21
3.47
1.51
2.67
1.06
2
1.17
1.26
0.94
1.44
1.16
1.12
1.76
2.14
Thailand
Singapore
Philippines
Malaysia
China
India
Financial structure Business environment People and skill availablity
India has beenranked superior toother major countries by manyprominent surveys
AT Kearney placedIndia among the topthree in its FDIconfidence index
retail marketalong with servicessector has beenattracting lot of interest from themajor players
India is expected tooutperform its rivalsin the BRIC, in termsof GDP growth ratesfrom 2015onwards
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India: Vibrant Economy Driving M&A Activities
SECTOR USD(Mn)
SECTOR USD(Mn)
Automotive 518 Manufacturing 933
Banking and Financial 1375 Media 630
Chemicals & Plastics 1133 Oil & Gas 384
Electrical &Electronics
896 Pharma & biotech 2520
Energy 1484 Telecom 2198
FMCG, Food andBeverages
1327 Others 4006
IT & ITES 2903 Total 20305
Growth Drivers:Globalization of competitionConcentration of companies toachieveeconomies of scaleLower interestrates and vibrantglobal marketsCash Reserveswith Corporate
Trends:Ratio of Size of acquisition tothe size of acquirer hasgrown from 10percent in 2004to 25 percent in2006.Cross-border deals aregrowing faster
than domesticPrivate Equityhouses havefunded projectsas well as donesomeacquisitions inIndia.
Number of deals and values
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
0
100
200
300
400
500
600
700
800
900
N u m
b e r o
f d e a
l s
Deal Values No. of Deals
Contribution of private equitydeals to total number of deals have increased fromnearly 9 percent in 2004 to28 percent in 2006
In 2006, there were a total of 480 M&A deals and 302private equity ones
Average deal size close toUSD 36 million
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USD 12.1 billionTata Steel buys Corus Plc.
Major M&A Deals Undertaken Abroad by India Inc.
Essar Steel acquired Algoma SteelUSD 1.58 billion
Tata Tea has acquired 30-percent stake in the USbased Energy Brands Inc. USD 677 million
Videocon Industries acquired Daewoo ElectronicsCorporation Limited USD 730 million
Hindalco acquired Novelis Inc.USD 6 billion
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USD 11 billionVodafone buys Hutch
Major M&A and Investments Announcements in India
Mylan Laboratories acquired a majority stake inMatrix Laboratories USD 0.74 billion
Aditya Birla Group increased its stake in IdeaCellular by buying 48.14-percent stake USD 0.98 billion
USD 1.7 billion
USD 0.905 billion
USD 1 billionPlans investment in private equity, real estate,and private wealth management
Plans to spend on its development operationsin India over the next four years
Renault, Nissan and Mahindra & Mahindra to set
up Greenfield automobile plant in Chennai.
http://en.wikipedia.org/wiki/Image:Nissan_logo.pnghttp://en.wikipedia.org/wiki/Image:Microsoft_logo.pnghttp://www.mylan.com/http://en.wikipedia.org/wiki/Image:VodafoneNewLogo.jpg -
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India: Astounding Demographics
Growth in the
higher income
categories of
Indias
population, has
lead to a
burgeoning
affluent section
of society, which
has significant
level of purchasing
power
By 2009, India will
have 1.1 million
individuals with a
wealth of USD100,000
Per Capita Income
393461
519583
638
0
100200
300
400
500
600
700
2002-03 2003-04 2004-05 2005-06 2006-07 E
2
9
48
221
726
9
17
74
285
710
20
33
120
404
613
2001-02 2005-06 2009-10(E)
Rich (Above 115000)
High Income (57000 - 115000)
Consuming class (23000 - 57000)
Working class (10200 - 23000)
Needy (Below 10200)
Annual Household Income
(in USD)
DEMOGRAPHIC TRANSFORMATION OF INDIA
* In PPP terms
( M i l l i o n
Population)
Increasing per-capitaincome coupled withemerging middle class hasprovided necessaryimpetus to theconsumerism in India
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India: Increasing Working Population
-3
0
10
17
31
33
44
64
71
314
-5 45 95 145 195 245 295 345
Stock Position2005
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
Growth in Global Working Age Population (15-64)
In Million
Countries worldwide are anticipating a shortage of working populationin the future. India is expected to emerge as a clear winner and by 2050it will have the largest working age population.
Addition to working age population by 2010
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Indias Sunrise Sectors
Infrastructure1
Automobile2
Telecom3
Semiconductor 4
Aviation5
Defense6
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Government has identified infrastructure as a priority sector to sustain the momentum of theGDP growth rate. The investment goal for infrastructure sector are:
Power USD 140 billion by 2010
Roads USD 25 to 30 billion by 2010
Ports USD 8 to 10 billion by 2010
Civil Aviation USD 15 to 17 billion by 2010
Telecom USD 22 billion by 2010
India to Gain in terms of Economic Prosperity due to ContinuedGovernment Initiatives in Infrastructure Sector
Railways hasinitiated process todevelop dedicatedfreight corridor
Increase in traffic isexpected to amountto 12-15 percent for passenger trafficand 15-18 percentfor cargo traffic
Government of India spendsapproximately USD 4billion annually onroad development
There is increasingcompetition betweenfull services carriersand low costcarriers..
The government has initiated theprocess of up-gradation andmodernisation of national airportsworth USD 9 billion by 2010.
It has also initiated process of modernisation of other non-metroairports (more than 40 cities)
Golden Quadrilateral, North-South andEast-West corridors are the major roadinfrastructure being undertaken by thegovernment. 96 percent work of Golden
Quadrilateral has been completed
Project Sethusamundram, whichinvolves dredging of the Palk Strait to
facilitate maritime trade through it Project Sagarmala a USD 22 billion
project for the modernisation of major andminor ports
Private sector can set up coal, gas or liquid based thermal projects, hydelprojects and wind or solar projects of anysize. Mega power projects permitted inIndia.
Foreign equity participation upto 100percent is allowed in the power sector through automatic route.
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Largest twowheeler manufacturer.
Fifth largestCV manufacturer inthe world
Domesticproduction of autocomponents hasincreased to USD10 billion in 2005-06, a jump of 17percent
Exports havegrown by 30percent to USD 1.8billion
Indias Sunrise Sector: Automobile
Total Commercial VehiclesCAGR for production : 24.5
CAGR for sales : 24.3%
50
150
250
350
450
2001-02 2002-03 2003-04 2004-05 2005-06
U n
i t s ( t h o u s a n
d s )
Domestic SalesProduction
Total Two WheelersCAGR for production : 15.1%
CAGR for sales : 13.8%
500
2,500
4,500
6,500
8,500
2001-02 2002-03 2003-04 2004-05 2005-06
U n i
t s ( t h o u s a n
d s )
The Indian automobile sector generates a revenue of USD 34 billion per year. Itscontribution to GDP is around 3-4 percent.
Production and domestic salesfigures for commercial vehiclesare growing at a rate of approximately 24 percent.
Production and domestic sales of two wheelers are growing at arate of approximately 15 and 14percent respectively.
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Tele-Density
4 57
9
13
17
0
4
8
12
16
20
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07(Q3)
T e
l e - D e n s i
t y ( % )
Internet Subscribers
3 45
6
7
9
0
2
4
6
8
10
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07(Q3)
S u
b s c r i b e r s
( i n
M n
Telecom Subscribers (Wireline & Wireless)
44 53
7698
140
190
0
40
80
120
160
200
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07(Q3)
S u
b s c r i
b e r s
( i n
M
The Indian mobile market is witnessing strong growth and is slated to become thethird largest in the world behind US and China in the next two to three years
Indias Sunrise Sector: Telecom
India ranks amongthe top 10 countries
of the world withregards to itstelecom network.
India has 40.3million wirelinesubscribers and149.6 millionwireless (mobile
and WLL-F)subscribers.
Tele-density hasmore than doubledin the last 3 years.
Mobile communication andinternet penetration are
adding to the momentum of telecommunication sector
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Semiconductor Design M arket and its C omponents:
78%18%
4%
VLSI Design Hardware Design Embedded Softwar
Semiconductor Design M arket: 2004-06
2.43.2
4.6
0
2
4
6
8
10
2004 2005 2006
U S D B i l l i o n
Indias Sunrise Sector: Semiconductor
Indian companies have chalkedout plans to establish fabrication
units thus catering to the overalldemand from designing tomanufacturing phase
India has developedstrong competence
in design side of semiconductor industry.
India hasapproximately 125companiesoperating in thesemiconductor domain
Captivesemiconductor units in Indiacontribute 62
percent to the totalrevenues beinggenerated by theindustry.
Many international players suchas Intel, AMD, etc haveestablished their R&D centres inIndia, which assists them todevelop novel products at fastpace
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Investment Opportunities in Indian Aviation Industry
Activities in the Indian Aviation Industry
Carrier Proposed Requirement
Air India 50 Aircrafts
Indian Airlines 43 Aircrafts
Jet Airways 30 Aircrafts
Air Deccan 60 Aircrafts
Kingfisher 48 AircraftsSpicejet 20 Aircrafts
Indigo 100 Aircrafts
GoAir 15 Aircrafts
Paramount 5 Aircrafts
Magic Air 10 Aircrafts
Global aviation major Boeing plans to invest approximately USD 280million to establish airplane maintenance facility and a pilot trainingcentre. The company estimates that Indian market will require 470airplanes worth USD 35 billion by 2025.
GMR has undertaken project for modernisation of Delhi airport. Theproject worth is USD 1.94 billion.
Airbus plans to invest USD 1 billion over a period of 10 years toestablish training centres, maintenance, repair and overhauling(MRO) centre, and engineering and design centre in India.
EADS plans to invest USD 2.57 billion over a period of next 15 yearsto establish technology centre in India.
Indian carriers have placed orders for approximately 480 aircrafts tobe delivered by 2012. State operated carriers Indian airlines andAir India have placed orders worth USD 8 billion for approximately100 aircrafts to modernise its fleet.
The demand for corporate jets has increased and it is estimated thatnumber of corporate jets in India will be 300 in next 18 months.
Canadian avionic firm CAE plans to expand its operations in India.It plans to aggressively market its simulation and modellingtechnologies to civil and military aviation customers.
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India has among thehighest returns on
foreign investment
- Dan Scheinman, Cisco SystemInc. as told to Business Week,August 2005
We came to India for thecosts, stayed for thequality and are now
investing for innovation.
A T KearneyFDI Confidence Index 2005
India is among thethree most attractive
FDI destinations inthe world
Jack WelchGeneral Electric
India is a developedcountry as far as
intellectual capital isconcerned.
US Department of Commerce
By 2032, India will beamong the three largesteconomies in the world
BRIC ReportGoldman Sachs, October 2003
Why India? Quote Unquote
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For detailed information on India, visit the IBEF website: www.ibef.orgContact IBEF at [email protected]
http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/ -
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