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Indian EconomyOpportunities Unlimited
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2
India: Fastest Growing Free Market Democracy
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3
India: Among the Top-15 Countries in terms of GDP atconstant prices
205 223319 347
103 91
116117
104 109
155 168
0
100
200
300
400
500
600
700
1999-00 2002-03 2005-06 2006-07
USDBillion
Services Agriculture Industry
The Indian economy has witnessed an unprecedented growth. Booming Indian services and industry sector
are providing the required impetus to the economic growth
The sound
performance of each
industry segment is
leading to the overall
robust performance of
the Indian economy
Indian economy is the
4th largest in terms of
PPP USD 4.1 trillion
in 2006
Indias GDP witnessed
high growth and was
the second 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
Contributionof Services -
increased
from 49
percent to 55
percent
India's GDP: -22222
222444
222444
222
2
222
222
222
222
222
222
222
-222222 -222222 -222222 -222222 -222222
USDBillion
GDP at Constant Prices
4%
8.5% 7.5%
8.4%9.4%
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4
India: Robust Economic Platform
India's Forex Reserves: 2001-07 (Till 22 June 2007)
5475
112
141152
199213
0
50
100
150
200
250
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
(Till 22
June)
USDBillion
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
Ratio
Indias enhanced
economic performance
has been the major
contributor towardsincreased Forex
reserves
Steadily increasing
Forex reserves offer
adequate security
against any possible
currency crisis ormonetary instability
Falling Dollar inflates the
Indias external debt
Increased confidence
of investors in Indian
companies have led to
a surge in cross border
borrowing by the
corporate houses
Forex reserves
witnessed an increase
of 200 percent for the
period 1990-2007
at present level of Forex reserves,
the country has adequate cover for
12 months of imports
Indias Forex
reserves are in
excess of external
debt
the decreasing external debt to
GDP ratio indicates that India has a
sound economic platform
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5
India: Surging Exports
India's Import: 2002-07 (till February 2007)
61.5278.28
111.89
149.65162.30
0
20
4060
80
100
120140
160
180
2002-03 2003-04 2004-05 2005-06 2006 -07
(upto Feb.
07)
U
SDBillion
India's Exports: 2002-07 (till February 2007)
52.8163.95
83.81
103.42112.40
0
20
40
60
80
100
120
2002-03 2003-04 2004-05 2005-06 2006-07
(upto Feb.
07)
USDBillion
Petroleum products are the major
contributors towards Indias growing
imports
Quality and cost advantage are the two
important parameters leveraged by the
Indian producers to increasingly market
their products and services
Services sector has
been a major
contributor toincreased exports from
India
Imports of products by
India mainly includes
petroleum products
and minerals
Indian companies
have chalked out
extensive plans to
increase their
presence abroad
Acceptance of Indian
products along with
the cost advantage
has provided an edge
to Indian companies
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6
India: Attractive Investment Destination
Net FII into India: 2001-07
1.80
0.60
10.00 10.209.40
6.72
0
2
4
6
8
10
12
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
USDBillion
India is ranked second
in AT Kearney FDI
confidence index
Telecom and
Electronics topped the
list of inward FDI
FDI inflow for the
period 2006-07
witnessed a growth of
180 percent over the
same period last year
Mauritius has been thelargest contributor
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 attracted large
investments
FDI Inflow - India: 2001-07
4,2223,134
2,6343,755
5,546
15,730
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
USDMillion 180 percent
Increase
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7India: Vibrant Capital Market
India is among the
major destinations
across the globe forinflow of US Dollar i.e.
FIIs
Sensex risen 15 times
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 in
Indian stock market
Exorbitant industry
performance
Increased local
investors confidence
Emergence of industry
and confidence of local
investors along with
the FIIs has led to
increased movementof sensex
-
2 ,0 0 0
4 ,0 0 0
6 ,0 0 0
8 ,0 0 0
1 0,0 00
1 2,0 00
1 4,0 00
1 6,0 00
7/1/1997 7/1/1998 7/1/1999 7/1/2000 7/1/2001 7/ 1/2002 7/1/2003 7/1/2004 7/1/2005 7/1/2006 7/1/2007
INR
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
di ib i i &
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8India: Vibrant Economy Driving M&AActivities
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 Drivers:
Globalisation of
competition Concentration of
companies to
achieve economies
of scale
Lower interest rates
and vibrant global
markets
Cash Reserves with
Corporates
Number of Deals and Values
12.3
18.3
28.2
306
467
782
0
5
10
15
20
25
30
2004 2005 2006
USD
Billion
0
100
200
300
400
500
600
700
800
900
Numberofdeals
Deal Values No. of Deals
Contribution of private
equity deals to total number
of deals have increased
from nearly 9 percent in
2004 to 28 percent in 2006
In 2006, there were a total
of 480 M&A deals and 302
private equity deals
Average deal size close to
USD 36 million
Trends:
Ratio of the Size of
acquisition to the
size of acquirer has
grown from 10
percent in 2004 to
25 percent in 2006.
Cross-border deals
are growing fasterthan domestic deals
Private Equity (PE)
houses have funded
projects as well as
made a few
acquisitions in India
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9Major M&A Deals Undertaken Abroad by India Inc.
USD 12.1 billionTata Steel buys Corus PlcTata Steel buys Corus Plc
USD 6 billionHindalco 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 Limited
Videocon Industries acquired Daewoo
Electronics Corporation Limited
USD 1.6 billionSuzlon Energy Ltd. acquires REpowerSuzlon Energy Ltd. acquires REpower
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10Major M&A and Investments Announcements in India
USD 11 billionVodafone buys HutchVodafone buys Hutch
USD 0.98 billionAditya 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 billionPlans 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 years
Plans to spend on its development operations
in India over the next four years
USD 0.905 billionRenault, Nissan and Mahindra & Mahindra has
initiated a Greenfield automobile plant project
in Chennai.
Renault, Nissan and Mahindra & Mahindra has
initiated a Greenfield automobile plant project
in Chennai.
Mylan Laboratories acquired a majority stake in
Matrix Laboratories
Mylan Laboratories acquired a majority stake in
Matrix LaboratoriesUSD 0.74 billion
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11India: Pacing Ahead to Emerge as a Major Economy in theWorld
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
GDPGro
wthRate(%)
Brazil China India Russia
0
20
40
60
80
100
India Russia Vietnam Ukraine China Chile Latvia
GRDIScore
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 ski ll availabli ty
Business environment
India has been ranked
superior to other major
countries by manyprominent surveys
AT Kearney placed
India among the top
three in its FDI
confidence index
the retail market
along with the services
sector has been
attracting the interest
of major players
India is expected to
outperform its rivals in
the BRIC, in terms of
GDP growth rates,
from 2015 onwards
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12India: Astounding Demographics
Per Capita Income
393
461519
583
651
0
100
200
300
400
500
600
700
2002-03 2003-04 2004-05 2005-06 2006-07
USD
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 income
coupled with an emerging middle
class has provided the necessaryimpetus to consumerism in India
Growth in the higher
income categories of
Indias population hascreated an affluent
section of society,
which has significant
level of purchasing
power
Increasing per capita
income and large
population moving into
middle class has led to
high level ofconsumerism in India
DEMOGRAPHIC TRANSFORMATION OF INDIA
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13
Countries worldwide are anticipating a shortage of working population in the future. India is expected to emerge as a clear
winner, and by 2050, it will have the largest working age population.
India: Increasing Working Population
-2
2
22
44
22
22
22
22
22
222
-2 22 22 222 222 222 222 222
Stock Position 2005
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
In Million
Addition to Working Age Population by 2010
Growth in Global Working Age Population (15-64)
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15
India has among thehighest returns on
foreign investment.
- Dan Scheinman, Cisco System Inc. as told
to Business Week, August 2005
We came to India for the
costs, stayed for thequality and are now
investing for innovation.
A T Kearney
FDI Confidence Index 2005
India is among the
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 of
CommerceBy 2032, India will be
among the three
largest economies inthe world.
BRIC Report, Goldman Sachs
Why India? Quote Unquote
Travyn Rhall,
ACNielsen
The Indian market has two
core advantages - an
increasing presence of
multinationals and an upswing
in the IT exports.
Craig Barrett
Intel Corporation
India has evolved into
one of the world's
leading technologycenters.
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