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Presentation OnPresentation OnFactoIndian EconomyFactoIndian Economy

DEEPAK KUMARB.B.A. : 2Sem

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:India Fastest Growing Free Market Democracy

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: -India Among the Top 15 Countries in terms of GDP atconstant prices

.Th e Ind ian econ om y ha s w itne ssed an un prece de nted grow th B oo m ing Ind ian services andin d u stry se cto r a re p rov id in g th e re q u ire d im p e tu s to th e e co n o m ic g ro w th

The soundperformance of each

industry segment isleading to theoverall robust

performance of the

Indian economy

Indian economy isthe 4thlargest in

terms of PPP USD

.4 1 trillion in 2006

India s GDPwitnessed high

growth and was thesecond fastestgrowing GDP after

China

( - ):Growth in sectors 2006 07: . %Industry 10 9: %Services 11

: . %Agriculture 2 7

.

Fastest GDP growth of 9 4- ,percent in 2006 07 since last

18 years

Contribution of -Services increased from 49 percent to 55 percent

%4

. %8 5 . %7 5. %8 4

. %9 4

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:India Robust Economic Platform

India s enhancedeconomic

performance has

been the major

contributor towardsincreased Forex

reserves

Steadily increasingForex reservesoffer adequate

security againstany possible

currency crisis ormonetaryinstability

Falling Dollar inflatesthe India s external

debt

Increasedconfidence of

investors in Indiancompanies have led

to a surge in crossborder borrowing by

the corporatehouses

Forex reserveswitnessed an

increase of 200percent for the

-period 1990 2007

at present level of Forex,reserves the country hasadequate cover for 12 months of

imports

India s Forex reserves are in excess of exter

t he decreasing external debtto GDP ratio indicates that

India has a sound economicplatform

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:India Surging Exports

Petroleum products are the major

contributors towards India s growingimports

Quality and cost advantage are thetwo important parameters leveraged bythe Indian producers to increasingly

market their products and services

Services sector hasbeen a major

contributor to

increased exportsfrom India

Imports of productsby India mainly

includes petroleumproducts and

minerals

Indian companieshave chalked out

extensive plans toincrease theirpresence abroad

Acceptance ofIndian productsalong with the cost

advantage hasprovided an edge to

Indian companies

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:India Attractive Investment Destination

India is rankedsecond in ATKearney FDI

confidence index

Telecom andElectronics topped

the list of inwardFDI

FDI inflow for the-period 2006 07

witnessed a growthof 180 percent overthe same periodlast year

Mauritius has beenthe largestcontributor towards

..FDI 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 improved performance on PE ratio and ROE Indian markets have attractedlarge investments

180 percentIncrease

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:India Vibrant Capital Market

India is among themajor destinations

across the globefor inflow of US. .Dollar i e FIIs

Sensex risen 15times in the period

-1990 2007

Sensex The Bombay stock exchange index has risen 15 times from 1990s to,reach 15 000 mark in July 2007

FIIs augmented support by infusing large investments

Exorbitant industry performanc

Increased local investors confide

Emergence ofindustry and

confidence of localinvestors along

with the FIIs has

led to increasedmovement of sensex

/ /7 9 2007,Crossed 15 000 mark

,Crossed 14 000 mark

,Crossed 10 000 mark

,Crossed 5 000 mark/ /12 30 1999

/ /2 7 2006

/ /1 12 2007

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: &India Vibrant Economy Driving M A Activities

SECTOR USD (Mn) SECTOR USD(Mn)

Automotive 518 Manufacturing 933

Banking and Financial 1,375 Media 630

Chemicals and Plastics 1,133 Oil & Gas 384

Electrical and Electronics 896 Pharma & biotech 2,520

Energy 1,484 Telecom 2,198

FMCG, Food andBeverages

1,327 Others 4,006

IT and ITES 2,903 Total 20,305

:Growth DriversqGlobalisationof

competition

q Concentration ofcompanies to

achieve economiesof scale

q Lower interestrates and vibrantglobal markets

q Cash Reserves withCorporates

Contribution ofprivate equity deals to

total number of dealshave increased from

nearly 9 percent in2004 to 28 percent in

2006

,In 2006 there were a&total of 480 M A deals

and 302 private equitydeals

Average deal size closeto USD 36 million

:Trendsq Ratio of the Size

of acquisition tothe size of

acquirer has grownfrom 10 percent in2004 to 25 percent

.in 2006q -Cross border deals

are growing fasterthan domestic

deals

q ( )Private Equity PEhouses have funded

projects as wellas made a few

acquisitions inIndia

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& .Major M A Deals Undertaken Abroad by India Inc

.USD 12 1 billionTata Steel buys Corus PlcTata Steel buys Corus Plc

USD 6 billion.Hindalco acquired Novelis Inc.Hindalco acquired Novelis Inc

.USD 1 58 billionEssar Steel acquired Algoma SteelEssar Steel acquired Algoma Steel

USD 730 millionVideocon Industries acquired Daewoo Electronics Corporation LimitedVideocon Industries acquired Daewoo Electronics Corporation Limited

.USD 1 6 billion.Suzlon Energy Ltd acquires REpower.Suzlon Energy Ltd acquires REpower

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&Major M A and Investments Announcements in India

USD 11 billionVodafone buys HutchVodafone buys Hutch

.USD 0 98 billion. -ya Birla Group increased its stake in Idea Cellular by acquiring 48 14 percent stake. -ya Birla Group increased its stake in Idea Cellular by acquiring 48 14 percent stake

USD 1 billion, ,Plans investment in private equity real estate and private wealth management, ,Plans investment in private equity real estate and private wealth management

.USD 1 7 billionPlans to spend on its development operations in India over the next four yearsPlans to spend on its development operations in India over the next four years

.USD 0 905 billion& .san and Mahindra Mahindra has initiated a Greenfield automobile plant project in Chennai& .san and Mahindra Mahindra has initiated a Greenfield automobile plant project in Chennai

Mylan Laboratories acquired a majority stake in Matrix LaboratoriesMylan Laboratories acquired a majority stake in Matrix Laboratories. USD 0 74 billion

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:India Pacing Ahead to Emerge as a Major Economy in theWorld

( )2007 Global Retail Development Index GRDI

India has beenranked superior toother major

countries by manyprominent surveys

AT Kearney placedIndia among the topthree in its FDI

confidence index

the retailmarket along with

the services sectorhas been attractingthe interest of

major players

India is expectedto outperform its

,rivals in the BRICin terms of GDP,growth rates from2015 onwards

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:India Astounding Demographics

2

9

48

221

726

9

17

74

285

710

20

33

120

404

613

-2001 02 -2005 06 - ( )2009 10 E

( , )Rich Above 115 000

( , , )High Income 57 000 115 000

( , , )Consuming class 23 000 57 000

( , , )Working class 10 200 23 000

( , )Needy Below 10 200

Annual Household Income

( )in USD

*In PPP terms

(

)

Population

million

Increasing per capita incomecoupled with an emerging middle

class has provided the

necessary impetus toconsumerism in India

Growth in thehigher income

categories of

India s populationhas created anaffluent section of,society which has

significant levelof purchasing power

Increasing percapita income andlarge populationmoving into middleclass has led to

high level ofconsumerism in

India

DEMOGRAPHIC TRANSFORMATION OF INDIA

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. , ,a shortage of working population in the future India is expected to emerge as a clear winner and by 2050 it will have

:India Increasing Working Population

Stock Position 2005

South East Asia 362

Southern Asia 132

India 691

Africa 500

China934

Latin America 359

USA200

Europe497

Japan 85

,World 4 168

InMillion

Addition to Working Age Population by 2010

( - )Growth in Global Working Age Population 15 64

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q GDP USD 590 billion

q %GDP growth rate 9

q %Services contribution 54

q FDI limit not 100 percent inmajor industry sectors such as

, ,Telecom Semiconductors, .Automobiles etc

q (-) .Balance of Trade USD 46 2billion

q Investment goal USD 250billion

20062006

q GDP USD 750 billion

q . %GDP growth rate 9 5

q %Services contribution 60

qFDI limit is expected to beclose to 100 percent in major

industry sectors such as, ,Telecom Semiconductors

, .Automobiles etc

q Balance of Trade Shouldincrease with surging exports

as compared with imports

q Investment goal USD 305billion

20082008

q GDP USD 900 billion

q %GDP growth rate 9

q - %Services contribution 60 65

qFDI limit is expected to be 100

percent in major industry,sectors such as Telecom, ,Semiconductors Automobiles

.etc

q Balance of Trade Should bepositive with increased level

of exports as compared withimports

q Investment goal USD 370billion

20102010

Growth Expected in India

, .To sustain the GDP growth of more than 8 percent India requires an investment of USD 1 5trillion in the next five years

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India has among the highest returns on fore

- , .Dan Scheinman Cisco System Inc as,told to Business Week August 2005

, .sts stayed for the quality and are now investing for innovation

A T KearneyFDI Confidence Index 2005

.three most attractive FDI destinations in the world

Jack Welch

General Electric

.India is a developed country as far as intellectual capital is concerned

US Department ofCommerce

, .By 2032 India will be among the three largest economies in the world

,BRIC Report Goldman Sachs

Why India? Quote Unquote

,Travyn RhallACNielsen

-The Indian market has two core advantages an increasing presence of multinati

Craig BarrettIntel

Corporation

.India has evolved into one of the world's leading technology centers

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DEEPAK KUMAR

Thank you !