evs indian economy opportunities 123

7/31/2019 EVS Indian Economy Opportunities 123

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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


5/16

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


7/16

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 &


8/16

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


9/16

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


10/16

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


12/16

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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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)


14/16


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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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evs indian economy opportunities 123

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