www.ibef.org indian economy an opportunity unlimited indian economy an opportunity unlimited
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www.ibef.org
Indian Economy
An Opportunity Unlimited
Indian Economy
An Opportunity Unlimited
2www.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
2007* 9.4 percent
(8.9 percent for Q2 2007-08)
USD 246 billion
(USD 276 billion in 2007-08 till December)
USD 15 billion
(USD 18 billion in 2007-08 till 14th Jan)
USD 16 Billion
(USD 9.2 billion in 2007-08 till October)
USD 797 3.4 percent
Source: Times of India
* Annualized data used to show comparison with 1990
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India's GDP at Current Prices: 2002-07
469556 638
737830
477
0
100200
300
400500
600
700800
900
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08(H1)
US
D B
illio
n
105 105 135 145
103 125204 231
191237
398453
0
100
200
300
400
500
600
700
800
900
1999-00 2002-03 2005-06 2006-07
US
D B
illio
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 sectors are providing the required impetus to economic growth
The sound performance of each industry segment is leading to the overall robust performance of the Indian economy
India’s GDP has witnessed high growth, and was the second fastest growing GDP after China in 2006-07
Fastest GDP growth of 9.4 percent in 2006-07, since last 18 years (at constant prices)
Fastest GDP growth of 9.4 percent in 2006-07, since last 18 years (at constant prices)
Contribution of Services -
increased from 48
percent to 55 percent
Contribution of Services -
increased from 48
percent to 55 percent
Growth in sectors at Current Prices (2006-07):Industry: 16.2%Services: 16.3%Agriculture: 10.2%
Growth in sectors at Current Prices (2006-07):Industry: 16.2%Services: 16.3%Agriculture: 10.2%
Source: MOSPI Statistics
Estimated contribution to GDP by various sectors for H1 (2007-08) are: Industry – 138.5 billion, Agriculture – 73.8 billion and Services – 268.8 billion
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India: Robust Economic Platform
India's Forex Reserves: 2001-08 (Till 28 December 2007)
5475
112141 152
199
276
0
50
100
150
200
250
300
20
01
-02
20
02
-03
20
03
-04
20
04
-05
20
05
-06
20
06
-07
20
07
-08
(Till
28
De
cem
be
r)
US
D B
illio
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
Ra
tio
Steadily increasing Forex reserves offer adequate security against any possible currency crisis or monetary instability
Falling Dollar inflates the India’s external debt
Falling Dollar inflates the India’s external debt
Increased confidence of investors in Indian companies has led to a surge in cross border borrowing by corporate houses
In 2007-08 (till 28 December), Forex reserves witnessed a growth of approximately 39 percent over 2006-07.
In 2007-08 (till 28 December), Forex reserves witnessed a growth of approximately 39 percent over 2006-07.
India’s Forex reserves are in
excess of external debt…
…the decreasing external debt to GDP ratio indicates that India has a sound economic platform
…the decreasing external debt to GDP ratio indicates that India has a sound economic platform
Source: RBI Statistics
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India: Surging Exports
India's Imports: 2002-08
6278
112
150
191
130
0
50
100
150
200
250
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08(April-
October)*
US
D B
illio
n
India's Exports: 2002-08
5364
84103
126
86
020406080
100120140
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08(April-
October)*
US
D B
illio
n
Petroleum products are the major contributors towards India’s growing imports
Petroleum products are the major contributors towards India’s growing imports
Quality and cost advantage are the two important parameters leveraged by the Indian producers to increasingly market products and services
Quality and cost advantage are the two important parameters leveraged by the Indian producers to increasingly market products and services
Services sector has been a major contributor to increased exports from India
Product imports by India mainly include petroleum products and minerals
Acceptance of Indian products along with the cost advantage has provided an edge to Indian companies
* - 2007-08 provisional data for period of April to October only
* - 2007-08 provisional data for period of April to October only
Source: Ministry of Finance (November Report)
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Net FII into India: 2001-07
1.80.6
10.0 10.2 9.4
6.7
18.0
02468
101214161820
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08(till 14
January)
US
D B
illio
n
170 percent Increase
India: Attractive Investment Destination
India is ranked
second in AT
Kearney’s FDI
confidence index
(2007)
FDI inflow for the
period 2006-07
witnessed a growth
of 185 percent over
the same period last
year
With improved performance on PE ratio and ROE, Indian markets have attracted large investments
FDI Inflow - India: 2001-07
4,2223,134 2,634
3,7555,546
15,730
9,277
0
4,500
9,000
13,500
18,000
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08(till
October)
US
D M
illio
n185 percent Increase
Source: DIPP (October Report), SEBI
Electronic equipment, manufacturing and telecom have witnessed significant
FDI inflow
Electronic equipment, manufacturing and telecom have witnessed significant
FDI inflow
Large FII activity in India has led to an upsurge in the Sensex
Large FII activity in India has led to an upsurge in the Sensex
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0
5000
10000
15000
20000
25000
1-Jul-97
1-Feb-98
1-Sep-98
1-Apr-99
1-Nov-99
1-Jun-00
1-Jan-01
1-Aug-01
1-Mar-02
1-Oct-02
1-May-
03
1-Dec-03
1-Jul-04
1-Feb-05
1-Sep-05
1-Apr-06
1-Nov-06
1-Jun-07
1-Jan-08
11/12/2007 Crossed 20,000 mark
30 December 1999Crossed 5,000 mark
07 February 2006Crossed 10,000 mark
09 July 2007Crossed 15,000 mark
India: Vibrant Capital Market
India is among the major destinations across the globe for inflow of US Dollar
Sensex has risen 20 times in the period 1990-2007
Sensex – The Bombay Stock Exchange index has risen 20 times from 1990s to reach 20,000 mark in November 2007.
FIIs have infused large investments
into the Indian stock market
Encouraging industry
performance
Increased local investors’ confidence
Emergence of industry and confidence of local investors along with the FIIs has led to upsurge of the Sensex
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India: Vibrant Economy Driving M&A Activities
Growth Drivers: Globalisation and increased competition Concentration of companies to achieve economies of
scale Cash Reserves with corporate
Number of Deals and Value
28.2
70
18.3
12.3
782
1,081
467
306
0
10
20
30
40
50
60
70
80
2004 2005 2006 2007
US
D B
illio
n
0
200
400
600
800
1,000
1,200
Nu
mb
er
of d
ea
ls
Deal Value No. of Deals
Private equity deals value increased to USD 19 billion
In 2007, there were a total of 676 M&A deals and 405 private equity deals…
… Total M&A deal value was close to USD 51 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
In 2007, the total value of M&A and PE deals was USD 70 billion…
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Major M&A Deals Undertaken Abroad by India Inc.
USD 12.1 billion USD 12.1 billion Tata Steel buys Corus PlcTata Steel buys Corus Plc
USD 6 billion USD 6 billion Hindalco acquired Novelis Inc.Hindalco acquired Novelis Inc.
USD 1.58 billion USD 1.58 billion Essar Steel acquired Algoma Steel Essar Steel acquired Algoma Steel
USD 1.6 billion USD 1.6 billion Suzlon Energy Ltd. acquires REpower Suzlon Energy Ltd. acquires REpower
USD 1.1 billion USD 1.1 billion United Spirits Ltd. acquired Whyte & Mackay
United Spirits Ltd. acquired Whyte & Mackay
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Major M&A and Investments Announcements in India (1/2)
USD 11 billion USD 11 billion Vodafone buys HutchVodafone buys Hutch
USD 1.7 billionUSD 1.7 billionPlans to spend on its development operations in India over the next four years
Plans to spend on its development operations in India over the next four years
USD 2 billion USD 2 billion Plans to establish three manufacturing plants to produce photo-voltaic units
Plans to establish three manufacturing plants to produce photo-voltaic units
USD 12 billion USD 12 billion POSCO to invest in building steel
manufacturing plants and facilities in India by 2016
POSCO to invest in building steel manufacturing plants and facilities in India by
2016
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USD 0.98 billion USD 0.98 billion Aditya Birla Group increased its stake in Idea Cellular by acquiring 48.14-percent stake
Aditya Birla Group increased its stake in Idea Cellular by acquiring 48.14-percent stake
USD 1 billionUSD 1 billionPlans investment in private equity, real estate, and private wealth management
Plans investment in private equity, real estate, and private wealth management
Mylan Laboratories acquired a majority stake in Matrix Laboratories
Mylan Laboratories acquired a majority stake in Matrix Laboratories
USD 0.74 billionUSD 0.74 billion
Major M&A and Investments Announcements in India (2/2)
USD 1 billionUSD 1 billionPlans investment in private equity in Indian markets
Plans investment in private equity in Indian markets
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India: 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
GD
P G
row
th R
ate
(%
)
Brazil China India Russia
0
20
40
60
80
100
India Russia Vietnam Ukraine China Chile Latvia
GR
DI S
core
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 availablityBusiness environment
AT Kearney has placed India as the most preferable destination for Services sector (2007)…
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…
Source: AT Kearney, BRIC Report
… India is the top destination in the AT Kearney Global Retail Development Index (2007)
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BRIC Report, Goldman Sachs
BRIC Report, Goldman Sachs
“I have never seen India so dynamic, vibrant and full of
business opportunities”.
- Dan Scheinman, Cisco System Inc. as told to
Business Week, August 2005
- Dan Scheinman, Cisco System Inc. as told to
Business Week, August 2005
“We came to India for the costs, stayed for the
quality and are now investing for innovation”.
John RedwoodEconomic
Competitiveness Policy Group, UK
John RedwoodEconomic
Competitiveness Policy Group, UK
“India is now truly a land of opportunity”.
Jack WelchGeneral Electric
Jack WelchGeneral Electric
“India is a developed country
as far as intellectual capital is
concerned”.
Peter Loescher President and
Chief Executive Siemens
Peter Loescher President and
Chief Executive Siemens
By 2032, India will be among the three
largest economies in the world.
Why India? – Quote Unquote
Travyn Rhall,
ACNielsen
Travyn Rhall,
ACNielsen
“The Indian market has two core advantages - an
increasing presence of multinationals and an upswing
in the IT exports”.
Craig BarrettIntel
Corporation
Craig BarrettIntel
Corporation
“India has evolved into one of the world's leading technology
centers“.
Mr Paul de Voijs Managing Director
Volvo Car India
Mr Paul de Voijs Managing Director
Volvo Car India
“India is a very exciting market and the luxury
car segment is growing exponentially here”.
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