Indian Economy – Opportunities Unlimited

8/14/2019 Indian Economy Opportunities Unlimited

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Indian Economy Opportunities Unlimited


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Fastest Growing Free Market Democracy


3/22

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


4/22

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


5/22

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


6/22

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.


7/22

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


8/22

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


9/22

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
http://www.videoconworld.com/index.php


10/22

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


11/22

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


12/22

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


13/22


14/22

Indias Sunrise Sectors

Infrastructure1

Automobile2

Telecom3

Semiconductor 4

Aviation5

Defense6


15/22

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.


16/22

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.


17/22

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


18/22

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


19/22

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.


20/22

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


21/22

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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Indian Economy – Opportunities Unlimited

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