Indian Economy Opportunities Unlimited

India: Robust Economic Platform

Indias enhanced economic performance has been the major contributor towards increased Forex reserves
India's Forex Reserves: 2001-07 (Till 22 June 2007) 250 199 200 213

USD Billion

150 112 100 54 50 75

141

152

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

0 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 (Till 22 June)

External Debt-to-GDP Ratio 22 21.1 20.4 19

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

Falling Dollar inflates the Indias external debt

17.8 17.3 15.8 16.4

Indias Forex reserves are in excess of external debt

16

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

13

the decreasing external debt to GDP ratio indicates that India has a sound economic platform
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07

10

India: Surging Exports

Services sector has been a major contributor to increased exports from India
India's Exports: 2002-07 (till February 2007) 120 100
USD Billion

103.42 83.81 52.81 63.95

112.40

80 60 40 20 0 2002-03

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

Quality and cost advantage are the two important parameters leveraged by the Indian producers to increasingly market their products and services
2004-05 2005-06 2006-07 (upto Feb. 07)

2003-04

USD Billion

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

India's Import: 2002-07 (till February 2007) 180 160 140 120 100 80 60 40 20 0 149.65 111.89 78.28 61.52 162.30

Imports of products by India mainly includes petroleum products and minerals

Petroleum products are the major contributors towards Indias growing imports
2003-04 2004-05 2005-06 2006-07 (upto Feb. 07)

2002-03

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
FDI Inflow - India: 2001-07 18,000 16,000 14,000
180 percent Increase

15,730

USD Million

Telecom and Electronics topped the list of inward FDI

12,000 10,000 8,000 6,000 4,000

Return on the Investments in India (2006 Q1)

Market India China Indonesi a Korea PE Ratio 16.1 10.62 10.26 9.85 13.21 12.17 9.84 11.19 9.35 10.9 P/B Ratio 4.53 2.06 3.09 1.84 1.82 2 2.32 2.12 2.46 2.39 RoE (%) 22 17 NA 16 16 11 23 15 18 15

5,546 4,222 3,134 2,634 3,755

FDI inflow for the period 2006-07 witnessed a growth of 180 percent over the same period last year

2,000 0 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07

Net FII into India: 2001-07 12 10.00 10 10.20 9.40 6.72

USD Billion

Mauritius has been the largest contributor towards FDI into India..

8 6 4 2 0 2001-02 2002-03 2003-04 2004-05 2005-06 1.80 0.60

Malaysia Taiwan Thailand EM Asia Latin America EM Europe

2006-07

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

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: 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

Why India? Quote Unquote

India is among the three most attractive FDI destinations in the world. India has evolved into one of the world's leading technology centers.
Craig Barrett Intel Corporation A T Kearney FDI Confidence Index 2005

India has among the highest returns on foreign investment.

By 2032, India will be among the three largest economies in the world.

US Department of Commerce

BRIC Report, Goldman Sachs

We came to India for the costs, stayed for the quality and are now investing for innovation.

The Indian market has two core advantages - an increasing presence of multinationals and an upswing in the IT exports.
Travyn Rhall, ACNielsen

India is a developed country as far as intellectual capital is concerned.

- Dan Scheinman, Cisco System Inc. as told to Business Week, August 2005 Jack Welch General Electric