Indian Economy

An Opportunity Unlimited

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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

2008*

8.7 percent

USD 309 billion as on

Mar 28, 2008

USD 16.1 billion in

2007-08

USD 12.7 billion in

2007-08 till
December (USD 16
billion in 2006-07)

USD 740

7.4 percent as
on March 29,
2008

2
* Annualized data used to show comparison with 1990

Source: Times of India, RBI, DIPP, Indian Budget, Rediff

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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

Fastest GDP growth of 9.4 percent in 2006-07, since

last 18 years (at constant prices)

Indias GDP has witnessed high growth, and was the

second fastest growing GDP after China in 2006-07

The sound performance of each industry segment is

leading to the overall robust performance of the Indian
economy
Contribution
Contribution
of
of Services
Services -increased
increased
from
from 48
48
percent
percent to
to 55
55
percent
percent

AE - Advance Estimates

Growth
Growthininsectors
sectorsatatCurrent
CurrentPrices
Prices(2007-08):
(2007-08):
Industry:
Industry:10.7%
10.7%
Services:
Services:8.9%
8.9%
Agriculture:
Agriculture:2.6%
2.6%

Source: MOSPI Statistics

3
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India: Robust Economic Platform

Steadily increasing
Forex reserves offer
adequate security
against any possible
currency crisis or
monetary instability

In 2007-08 (till 28 March), Forex

In 2007-08 (till 28 March), Forex
reserves witnessed a growth of
reserves witnessed a growth of
approximately 55 percent over
approximately 55 percent over
2006-07.
2006-07.

Falling Dollar inflates

Falling Dollar inflates
the Indias external debt
the Indias external debt

Increased
confidence of
investors in Indian
companies has led
to a surge in cross
border borrowing by
corporate houses

Indias Forex
reserves are in
excess of
external debt

the decreasing external debt to

the decreasing external debt to
GDP ratio indicates that India has
GDP ratio indicates that India has
a sound economic platform
a sound economic platform

Source: RBI Statistics

4
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India: Surging Exports

Services sector has

been a major
contributor to
increased exports
from India

Acceptance of
Indian products
along with the cost
advantage has
provided an edge to
Indian companies

Quality
Qualityand
andcost
cost advantage
advantage are
are the
the two
two
important
parameters
leveraged
by
the
important parameters leveraged by the
Indian
Indianproducers
producers to
toincreasingly
increasingly
market
products
and
market products andservices
services
* - 2007-08 provisional data for period of April to December only

Petroleum
Petroleumproducts
productsare
are the
the major
major
contributors
towards
Indias
contributors towards Indiasgrowing
growing
imports
imports

Product imports by
India mainly include
petroleum products
and minerals

* - 2007-08 provisional data for period of April to December only

Source: Ministry of Finance (November Report)

5
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India: Attractive Investment Destination

With improved performance on PE ratio and ROE, Indian markets have attracted large
investments
India is ranked
second in AT
Kearneys FDI

185 percent
Increase

confidence index

Electronic
Electronicequipment,
equipment,
manufacturing
manufacturingand
andtelecom
telecom
have
witnessed
significant
have witnessed significant
FDI
FDIinflow
inflow

(2007)

FDI inflow for the

period 2006-07
witnessed a growth
of 185 percent over
the same period last

Large
LargeFII
FIIactivity
activityin
inIndia
Indiahas
has
led
to
an
upsurge
in
the
led to an upsurge in the
Sensex
Sensex

149 percent
Increase

year

* FII growth momentum was restricted because of Sub Prime Crisis in 2007-08
Source: DIPP (October Report), SEBI

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India: Vibrant Capital Market

Sensex The Bombay Stock Exchange index rise 20 times from 1990s to reach
20,000 mark in November 2007.
India is among the
major destinations
across the globe for
inflow of US Dollar

Sensex has risen

20 times in the
period 1990-2007

Emergence of
industry and
confidence of local
investors along with
the FIIs has led to
upsurge of the
Sensex

FIIs have infused

large investments
into the Indian
stock market

Encouraging
industry
performance

Increased local
investors
confidence

7
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India: Vibrant Economy Driving M&A Activities

In 2007, there were a total of

676 M&A deals and 405 private
equity deals

In 2007, the total value of M&A and

PE deals was USD 70 billion

Total M&A deal value was

close to USD 51 billion

Growth Drivers:
Globalisation and increased competition
Concentration of companies to achieve economies of
scale
Cash Reserves with corporate

Private equity deals

value increased to USD
19 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

8
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Major M&A Deals Undertaken Abroad by India Inc.

Tata
TataSteel
Steelbuys
buysCorus
CorusPlc
Plc

USD
USD 12.1
12.1 billion
billion

Hindalco
Hindalcoacquired
acquiredNovelis
NovelisInc.
Inc.

USD
USD 66 billion
billion

Tata
Tatabuys
buysJaguar
Jaguarand
andLand
LandRover
Rover

USD
USD 2.3
2.3 billion
billion

Essar
EssarSteel
Steelacquired
acquiredAlgoma
AlgomaSteel
Steel

USD
USD 1.58
1.58 billion
billion

Suzlon
SuzlonEnergy
EnergyLtd.
Ltd.acquires
acquiresREpower
REpower

USD
USD 1.6
1.6 billion
billion

9
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Major M&A and Investments Announcements in India

(1/2)
POSCO
POSCOtotoinvest
investininbuilding
buildingsteel
steel
manufacturing
plants
and
facilities
in
manufacturing plants and facilities inIndia
Indiaby
by
2016
2016

Vodafone
Vodafonebuys
buysHutch
Hutch

Plans
Planstotoestablish
establishthree
threemanufacturing
manufacturingplants
plants
totoproduce
photo-voltaic
units
produce photo-voltaic units

Plans
Planstotospend
spendon
onits
itsdevelopment
developmentoperations
operations
ininIndia
over
the
next
four
years
India over the next four years

USD
USD 12
12 billion
billion

USD
USD 11
11 billion
billion

USD
USD 22 billion
billion

USD
USD 1.7 billion

10
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Major M&A and Investments Announcements in India

(2/2)
Plans
Plansinvestment
investmentininprivate
privateequity
equityininIndian
Indian
markets
markets

Plans
Plansinvestment
investmentininprivate
privateequity,
equity,real
realestate,
estate,
and
private
wealth
management
and private wealth management

Aditya
AdityaBirla
BirlaGroup
Groupincreased
increasedits
itsstake
stakeininIdea
Idea
Cellular
by
acquiring
48.14-percent
stake
Cellular by acquiring 48.14-percent stake

Mylan
MylanLaboratories
Laboratoriesacquired
acquiredaamajority
majoritystake
stake
ininMatrix
Laboratories
Matrix Laboratories

USD
USD 11 billion
billion

USD
USD 11 billion
billion

USD
USD 0.98
0.98 billion
billion

USD
USD 0.74
0.74 billion
billion

11
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India: Pacing Ahead to Emerge as a Major Economy in

the World
2007 Global Retail Development Index (GRDI)

India is the top

destination in the AT
Kearney Global
Retail Development
Index (2007)

Services sector
attracted interest of
major global players
and large
investments are
pumped in it

AT Kearney has
placed India as the
most preferable
destination for
Services sector
(2007)

India is expected to
outperform its rivals
in the BRIC, in terms
of GDP growth rate,
from 2015
onwards

Source: AT Kearney, BRIC Report

12
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Why India? Quote Unquote

India is now truly a

land of opportunity.

John
JohnRedwood
Redwood
Economic
Economic
Competitiveness
CompetitivenessPolicy
Policy
Group,
Group,UK
UK

We came to India for

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

--Dan
DanScheinman,
Scheinman,Cisco
Cisco
System
SystemInc.
Inc.as
astold
toldto
to
Business
BusinessWeek,
Week,August
August
2005
2005

India has evolved into

one of the world's
leading technology
centers.

By 2032, India will be

among the three
largest economies in
the world.

BRIC
BRICReport,
Report,
Goldman
GoldmanSachs
Sachs

India is a
developed country
as far as intellectual
capital is
concerned.
Jack
JackWelch
Welch
General
GeneralElectric
Electric

Craig
CraigBarrett
Barrett
Intel
Intel
Corporation
Corporation

I have never seen

India so dynamic,
vibrant and full of
business
opportunities.
Peter
PeterLoescher
Loescher
President
Presidentand
and
Chief
ChiefExecutive
Executive
Siemens
Siemens

The Indian market has two

core advantages - an
increasing presence of
multinationals and an upswing
in the IT exports.

India is a very exciting

market and the luxury
car segment is growing
exponentially here.
Mr
MrPaul
Paulde
deVoijs
Voijs
Managing
ManagingDirector
Director
Volvo
VolvoCar
CarIndia
India

Travyn
Travyn
Rhall,
Rhall,
ACNielsen
ACNielsen

13
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DISCLAIMER
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Evalueserve.com Pvt. Ltd., EVALUESERVE (Authors).
All rights reserved. All copyright in this presentation and related works is owned by IBEF and the Authors. The
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This presentation is for information purposes only. While due care has been taken during the compilation of
this presentation to ensure that the information is accurate to the best of the Authors and IBEFs knowledge
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The Author and IBEF neither recommend or endorse any specific products or services that may have been
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14
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