India: Fastest Growing Free Market Democracy

India: Among the Top-15 Countries in terms of GDP at constant prices

Indias GDP witnessed high growth and was the second fastest growing GDP after China

The Indian economy has witnessed an unprecedented growth. Booming Indian services and industry sector are providing the required impetus to the economic growth

Fastest GDP growth of 9.4 percent in 2006-07, since last 18 years

Indian economy is the 4th largest in terms of PPP USD 4.1 trillion in 2006

The sound performance of each industry segment is leading to the overall robust performance of the Indian economy

India: Robust Economic Platform

Indias enhanced economic performance has been the major contributor towards increased Forex reserves

at present level of Forex reserves, the country has adequate cover for 12 months of imports

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

Indias Forex reserves are in excess of external debt

Forex reserves witnessed an increase of 200 percent for the period 1990-2007

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

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

India: Surging Exports

Services sector has been a major contributor to increased exports from India

Quality and cost advantage are the two important parameters leveraged by the Indian producers to increasingly market their products and services

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

Indian companies have chalked out extensive plans to increase their presence abroad

Imports of products by India mainly includes petroleum products and minerals

Petroleum products are the major contributors towards Indias growing imports

India: Attractive Investment Destination

India is ranked second in AT Kearney FDI confidence index

With improved performance on PE ratio and ROE, Indian markets have attracted large investments

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 the largest contributor towards FDI into India..

India: Vibrant Capital Market

Sensex The Bombay stock exchange index has risen 15 times from 1990s to reach 15,000 mark in July 2007

India is among the major destinations across the globe for inflow of US Dollar i.e. FIIs

7/9/2007 Crossed 15,000 mark

Sensex risen 15 times in the period 1990-2007

16,000 14,000 12,000 10,000

INR

1/12/2007 Crossed 14,000 mark

FIIs augmented support by infusing large investments in Indian stock market

2/7/2006 Crossed 10,000 mark

8,000 6,000 4,000 2,000 -

Emergence of industry and confidence of local investors along with the FIIs has led to increased movement of sensex

12/30/1999 Crossed 5,000 mark

Exorbitant industry performance

Increased local investors confidence

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

India: Vibrant Economy Driving M&A Activities

Growth Drivers: Globalisation of competition Concentration of companies to achieve economies of scale Lower interest rates and vibrant global markets Cash Reserves with Corporates 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 faster than domestic deals Private Equity (PE) houses have funded projects as well as made a few acquisitions in India
Number of Deals and Values 30 25 20 18.3 12.3 306 467 28.2 782 900 800 700 600 500 400 300 200 100 0

USD Billion

15 10 5 0

Number of deals

SECTOR
Automotive
Banking and Financial Chemicals and Plastics Electrical and Electronics Energy

USD (Mn)
518
1,375 1,133 896 1,484 1,327 2,903

SECTO R
Manufactur ing
Media Oil & Gas Pharma & biotech Telecom Others Total

US D (M n)
933
630 384 2,52 0 2,19 8 4,00 6 20,3

2004 2005 Deal Values

2006 No. of Deals

In 2006, there were a total of 480 M&A deals and 302 private equity deals

FMCG, Average deal size close to Food USD 36 million and Beverages IT and ITES

Contribution of private 05 equity deals to total number of deals have increased from nearly 9 percent in 2004 to 28 percent in 2006

Major M&A Deals Undertaken Abroad by India Inc.

Tata Steel buys Corus Plc

USD 12.1 billion

Hindalco acquired Novelis Inc.

USD 6 billion

Essar Steel acquired Algoma Steel

USD 1.58 billion

Suzlon Energy Ltd. acquires REpower

USD 1.6 billion

Videocon Industries acquired Daewoo Electronics Corporation Limited

USD 730 million

Major M&A and Investments Announcements in India

Vodafone buys Hutch
USD 11 billion

Plans to spend on its development operations in India over the next four years

USD 1.7 billion

Plans investment in private equity, real estate, and private wealth management

USD 1 billion

Aditya Birla Group increased its stake in Idea Cellular by acquiring 48.14-percent stake

USD 0.98 billion

Renault, Nissan and Mahindra & Mahindra has initiated a Greenfield automobile plant project in Chennai.

USD 0.905 billion

Mylan Laboratories acquired a majority stake in Matrix Laboratories

USD 0.74 billion

India: Pacing Ahead to Emerge as a Major Economy in the World

2007 Global Retail Development Index (GRDI)

GRDI Score

India has been ranked superior to other major countries by many prominent surveys

2007 Global Services Location Index India 3.2 2.9 2.8 3.2 2.6 3.3 1.3 1.2 1.8 1.5 2.3 2.3 2 1.6 1.5 1.1 1.4 1.4

100 80 60 40 20 0 India Russia Vietnam Ukraine China Chile Latvia

China Malaysia Thailand Brazil Indonesia

AT Kearney placed India among the top three in its FDI confidence index

Financial structure Business environment

People and skill availablity

GDP Growth Rate (%)

the retail market along with the services sector has been attracting the interest of major players

Projected GDP Growth Rates for Select Upcoming Economies

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

0 2005-10 2010-15 2015-20 Brazil 2020-25 2025-30 China 2030-35 India 2035-40 Russia 2040-45 2045-50

India: Astounding Demographics

Growth in the higher income categories of Indias population has created an affluent section of society, which has significant level of purchasing power

DEMOGRAPHIC TRANSFORMATION OF INDIA

Annual Household Income (in USD) 2 9 17 74 285 710

Population (million)

20 33 120 404 613

Rich (Above 115,000)

High Income (57,000 115,000) Consuming class (23,000 57,000) Working class (10,200 23,000)

9 48 221 726

Needy (Below 10,200)

2001-02

2005-06

2009-10(E)
* In PPP terms

Increasing per capita income and large population moving into middle class has led to high level of consumerism in India

700 600 500

Per Capita Income 583 519 461 393

651

USD

400 300 200 100 0

Increasing per capita income coupled with an emerging middle class has provided the necessary impetus to consumerism in India

2002-03

2003-04

2004-05

2005-06

2006-07

India: Increasing Working Population

Growth in Global Working Age Population (15-64)
Stock Position 2005 World India Africa China South East Asia Latin America Southern Asia USA Europe Japan 4,168 691 500 934 362 359 132 200 497 85 -3
-5 45 95 145
In Million

Addition to Working Age Population by 2010

314 71 64 44 33 31 17 10 0

195

245

295

345

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.

Growth Expected in India

To sustain the GDP growth of more than 8 percent, India requires an investment of USD 1.5 trillion in the next five years

2010
GDP USD 900 billion GDP growth rate 9%

2008
GDP USD 750 billion GDP growth rate 9.5%

Services contribution 60-65 % FDI limit is expected to be 100 percent in major industry sectors such as Telecom, Semiconductors, Automobiles, etc. Balance of Trade Should be positive with increased level of exports as compared with imports Investment goal USD 370 billion

2006
GDP USD 590 billion GDP growth rate 9 % Services contribution 54 % FDI limit not 100 percent in major industry sectors such as Telecom, Semiconductors, Automobiles, etc. Balance of Trade USD (-)46.2 billion Investment goal USD 250 billion

Services contribution 60 % FDI limit is expected to be close to 100 percent in major industry sectors such as Telecom, Semiconductors, Automobiles, etc. Balance of Trade Should increase with surging exports as compared with imports Investment goal USD 305 billion