ROMANIA

IT’S TIME TO INVEST

FAS M1 & M2
Agenda
01 DETAILED COUNTRY PROFILE

02 BILATERAL TRADE RELATIONS

03 INVESTMENT PROPOSAL

04 ANALYSIS OF DYNAMIC ENVIRONMENT

05
 DETAILED
COUNTRY PROFILE
 MACROECONOMIC PERFORMANCE
Key Points

7.1%
• 2017 – A massive growth
• Government strategy – Wage led growth 4%
• Twin deficit

• 2018 - Economic growth slowed down but robust

• Fall in net exports
• Softening of private consumption
• Concept of tight labour market
• Increase in private sector & EU led investments (GFCF)

• 2019 – Q3 growth rate at 3%

• External sector (other than consumer spending) main
reason for downfall
 FUNDING PRIORITIES – NEW INDUSTRIAL POLICIES
Key Points
• Developing modern infrastructure for growth & jobs

“We believe that Romania must invest heavily on infrastructure & new plants” (Government Program
2017-2020) - GFCF growing at 7% QoQ
https://tradingeconomics.com/romania/gross-fixed-capital-formation

• Innovation & Digitalisation

Main challenge for this country was its low competitiveness, weak research & innovation system

• Modernisation and reinforcement of the national administration and of the judiciary

Romania is known for its weak administration & public governance

• Improving human capital through higher employment and better social inclusion and
educational policies
 CULTURE

HIERARCHICAL TRUST BUREAUCRATIC BIZ ETIQUETTE

SOCIETY
They are fiercely private Personal relationships are Punctuality is held high
People with more & do not trust strangers. critical in getting work regard. Meetings are
experience are viewed as They are generally shy & done through the red tape formal & follow strict
wiser. quiet. They value Bribery & corruption a protocol. Strong gift
Age & position are HUMILTY & MODESTY common outlook giving culture
respected
https://businessculture.org/eastern-europe/romania/business-etiquette/
 BILATERAL
TRADE RELATIONS
 AGREEMENTS
PEACEFUL NUCLEAR ACTIVITIES
Agreement of cooperation for exchange of information and re
gulation was signed between AERB board of India and that of
01 Romania

PHARMACEUTICAL LICENSING - MOU

02 MoU was signed with India pharma companies in 2015 by the then
health minister of Romania.

CULTURAL AGREEMENT
03 March 2011, cultural exchange program was signed from 2011-2015
in Bucharest which has led to the exchange of culture, art and
literature between nations. Ex. “Namaste India” festival in Bucharest
04
TOURISM – MOU
Tourism sector received a major boost with MoU signed between the two
countries in this sector
 IMPORT – EXPORT TRENDS
Iron & steel (18.52%), Electrical equipment's (15.56%),
Pharmaceutical products (10.44%), Plastic & rubber materials, Textiles (3.02%)
F&B & tobacco (2.11%)

Bilateral trade has risen to $810 million in 2017-18,

a 40 per cent increase over last year
($575 million)

Automotive parts (25.05%) , Dried leguminous vegetables (13.19%)

Vehicles (cars), Organic chemicals
 FDI
Service Industry - WIPRO, Genpact, Prodigy and Tharkal IT Group
Pharma – DR. Reddy’s, Sun Pharma, Sunwave Pharma
Textiles - UCO Raymonds
Steel - Arcelor Mittal group

Arcelor Mittal group invest 400 Million euros

till date

Parts – SAIRA seats, URB group

Service Industry - Omnia Professional SRL
Pharma - Hanna Instruments Romania SRL
 Our Proposal

In Europe, Parle has its Average per capita

presence only in United Kingdom consumption - 66.9 kg
With the UK leaving the European
Union, the chances of distribution Per person revenue of
through UK are doubtful Biscuits - $121

Availability of Low cost labor,

Revenue in the Bread & Bakery
lowest among the European
US$2,347 million union. Overall cost of doing
CAGR 2.7% 2019-2023 business in Romania is
much less relatively.
 Culture Administration Geography Economy
GDP per capita – India
Religion - Eastern Democratic rule in both the Temperate continental
$2,010 , Romania $12,270
Orthodox (87%) in countries. climate in Romania, while
Expenditure as % of GDP -
Romania while Romania ranks 61 while India has tropical
India (26.18%)
Hinduism (79.8%) in India ranks 78 in corruption monsoon climate. No
Romania (35.20%)
India. Hierarchical index common border between
S&P rating (BBB-) for both
society, people believe Warm and friendly bilateral India and Romania
the countries
in building social political relations. Ease of doing business
networks. Both part of IMF and UN. India (77°), Romania (52°)
ENTRY MODE
GREENFIELD INVESTMENT
Organization Policies
“We want to grow organically rather than
through acquisitions” – Mayank Shah, Head Product – Parle
This maintains the vision, culture and the tradition of the parent co
mpany intact.

Intellectual Property - Protection

Complete control, Parle having a legacy 80+ years needs to
realize its Experience economies. With control, this also heps in
protecting IPs and technology

No acquisition opportunity
There is no attractive companies in Romania
which has high synergy with Parle. Also the local
competition is not stiff in FMCG.
 Value Chain
Developing logistics Industry
LPI – 2.99 (India – 3.18 &
Big Domestic Market Germany – 4.2)

Low Cost level – Unirea Agro-Food house –

Set up cost, Labor Cost State Entity

Entry into EU Lowest in raw material

(food) prices – 34.6%
Short logistical delivery times
Romania lacks short supply chain
- Parle can leverage this
 Macro-economical Trends

Conservative in Air pollution and water

Bilateral agreement – Easier to set up Ease of legal policies for
Service & downtown and manufacturing facilities pollution caused by
Boost FDI FDI
Manufacturing Industry Open, liberal & tolerant existing Industries
in uptown
Uncertainty in Flourishes in Manufactu Has extreme occurrence
Romanian PPP forecasted to reac Decreasing ring and IT Equal and fair treatment s of Tornados, Floods
Government h $30,686 by year 2021 unemployment rate mandatory for host and desertification
by IMF since 2013 Leader in Europe and country nationals
Ranks 60th in 6th in the world with IT Romania started
Global least High Levels of Social specialists investing in renewable
Slow and declining Government Interference
corruption Index concern and source of clean energies
GDP growth rate has to be minimal in FDI
societal Awareness Availability of Skilled
resulting in
Access to markets price fluctuations Integrators who can Has high biodiversity so
outside Romania Automate and digitize Provide opportunities to companies need to take
Poor attitude towards local employees with
through EU trade Government Debt is at several processes in care they don’t harm the
Savings wages as per Labour law
Agreements 28% of GDP Manufacturing Flora and Fauna
Private Consumption – Falling
Growth rate taken a dip in 2019.
Major Economic Indicators
Not expected to accelerate back to same
levels soon Indicators 2016 2017 2018 2019 (e )

Unemployment Rate – Falling GDP Growth % 4.8 7.3 4.1 3.4

Scarcity of labour possible, anticipating a Inflation Yearly
rise in wage rate by 8% -1.1 1.1 4.6 3.6
Average %
Budget Balance
Twin Deficits – Increasing -2.9 -2.9 -3.4 -3.4
(%GDP)
Wage led growth, Fall in exports has
increased CAD and fiscal deficit, this is Current Account
-1.7 -3.1 -4.5 -4.1
anticipated to increase further. balance (%GDP)

External environment Public Debt (%GDP) 37.3 35.1 35 36.2

Trade wars between major economies
affecting Romania.
 ROAD AHEAD FOR PARLE

Consumption Taxation Competition Consumer Pref.

Increase in VAT on baked Competition is expected Growing interest in
household consumption goods has reduced to intensify. Mondelez health and wellness.
from 24% to 9%. International is about to This will most impact the
Per capita consumption expand its reach in the FMCG industry in
Likely to fall further
lowest among western country Romania.
Europe counterparts –
huge Potential
CAGR 3.7% till 2023
APPENDIX
TIMELINE
1945-1989 - Romania was under the Socialist rule. Development of heavy industries
like steel, metal, chemical was the primary objective.
1990s - Government embarks economic reforms and Privatisation begins.
2007 - Romania and Bulgaria join the European Union
2008-2011 - 22% of the manufacturing enterprises disappeared because of the
financial crisis.
2012 - Economic growth resumed mainly because of the two reasons: Expansion of
the industrial output and Rise in the domestic demand because of the government
relief measures
2017 - Social Democrats form government after winning December 2016 elections.
2017 - People protested over government attempts to water down corruption measures
, in largest demonstrations since fall of Communist regime in 1989.
2019 - Centrist Ludovic Orban becomes prime minister after Social Democrats lose
vote of confidence.