Indian Economy Opportunities Unlimited Indian Economy Opportunities Unlimited

2 India: Fastest Growing Free Market Democracy GDP GrowthForexFII Flow ‘93FDIPer CapitaInflation percent< USD 1 billionUSD 1 millionUSD 97 millionUSD 3909 percent percentUSD 246 billionUSD 15 billionUSD 16 BillionUSD percent Source: Times of IndiaTimes of India

3 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 The sound performance of each industry segment is leading to the overall robust performance of the Indian economy Indian economy is expected to be 3 rd largest in terms of PPP – USD 4.5 trillion by the end of 2007 India’s GDP has witnessed high growth, and was the second fastest growing GDP after China in Fastest GDP growth of 9.4 percent in , since last 18 years (at constant prices) Contribution of Services - increased from 48 percent to 55 percent Growth in sectors at Current Prices ( ): Industry: 16.2% Services: 16.3% Agriculture: 10.2% Growth in sectors at Current Prices ( ): Industry: 16.2% Services: 16.3% Agriculture: 10.2% Source: MOSPI StatisticsMOSPI Statistics Estimated growth rate in various GDP sectors for Q1 ( ) is: Industry – 15.9 percent, Agriculture – 11.4 percent and Services – 15.7 percent

4 India: Robust Economic Platform India’s strong economic performance has been the major contributor towards increased Forex reserves Steadily increasing Forex reserves offer adequate security against any possible currency crisis or monetary instability Falling Dollar inflates the India’s external debt Increased confidence of investors in Indian companies has led to a surge in cross border borrowing by corporate houses Forex reserves witnessed an increase of 200 percent for the period …at present level of Forex reserves, the country has adequate cover for 12 months of imports India’s Forex reserves are in excess of external debt… …the decreasing external debt to GDP ratio indicates that India has a sound economic platform Source: RBI StatisticsRBI Statistics

5 India: Surging Exports Petroleum products are the major contributors towards India’s growing imports Quality and cost advantage are the two important parameters leveraged by the Indian producers to increasingly market products and services Services sector has been a major contributor to increased exports from India Product imports by India mainly include 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 * provisional data for period of April to July only Source: Ministry of Finance (August Report)Ministry of Finance (August Report)

6 India: Attractive Investment Destination India is ranked second in AT Kearney’s FDI confidence index FDI inflow for the period witnessed a growth of 180 percent over the same period last year With improved performance on PE ratio and ROE, Indian markets have attracted large investments 180 percent Increase Source: DIPP (June Report), SEBIDIPP (June Report)SEBI Electronic equipment, manufacturing and telecom have witnessed significant FDI inflow Large FII activity in India has led to an upsurge in the Sensex

7 India: Vibrant Capital Market India is among the major destinations across the globe for inflow of US Dollar i.e. FIIs Sensex has risen 18 times in the period Sensex – The Bombay Stock Exchange index has risen 18 times from 1990s to reach 18,000 mark in October FIIs have infused large investments into the Indian stock market Encouraging industry performance Increased local investors’ confidence Emergence of industry and confidence of local investors along with the FIIs has led to increased movement of the Sensex 10/9/2007 Crossed 18,000 mark 30 December 1999 Crossed 5,000 mark 07 February 2006 Crossed 10,000 mark 09 July 2007 Crossed 15,000 mark

8 India: Vibrant Economy Driving M&A Activities SECTOR USD (Mn) SECTOR USD (Mn) Automotive518Manufacturing933 Banking and Financial1,375Media630 Chemicals and Plastics 1,133Oil & Gas384 Electrical and Electronics 896Pharma & Biotech 2,520 Energy1,484Telecom2,198 FMCG, Food and Beverages 1,327Others4,006 IT and ITES2,903Total20,305 Growth Drivers:  Globalisation and increased competition  Concentration of companies to achieve economies of scale  Lower interest rates and vibrant global markets  Cash Reserves with corporates …Average private equity investment deal size increased to USD million in 2006 from USD 16.4 million in 2005 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  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: Dealtracker Grant Thornton, Economic TimesDealtracker Grant ThorntonEconomic Times Indian companies have clocked M&A deals approximately worth USD 31 billion during the first eight months in 2007

9 Major M&A Deals Undertaken Abroad by India Inc. USD 12.1 billion Tata Steel buys Corus Plc USD 6 billion Hindalco acquired Novelis Inc. USD 1.58 billion Essar Steel acquired Algoma Steel USD 1.6 billion Suzlon Energy Ltd. acquires REpower USD 1.1 billion United Spirits Ltd. acquired Whyte & Mackay

10 Major M&A and Investments Announcements in India USD 11 billion Vodafone buys Hutch USD 0.98 billion Aditya Birla Group increased its stake in Idea Cellular by acquiring percent stake USD 1 billion Plans investment in private equity, real estate, and private wealth management USD 1.7 billion Plans to spend on its development operations in India over the next four years USD billion Renault, Nissan and Mahindra & Mahindra have initiated a Greenfield automobile plant project in Chennai. Mylan Laboratories acquired a majority stake in Matrix Laboratories USD 0.74 billion

11 India: Pacing Ahead to Emerge as a Major Economy in the World 2007 Global Retail Development Index (GRDI) AT Kearney has placed India as the most preferable destination for Services sector… … the retail market along with the services sector has been attracting interest of major global players India is expected to outperform its rivals in the BRIC, in terms of GDP growth rate, from 2015 onwards… Source: AT Kearney, BRIC ReportAT KearneyBRIC Report … India is the top destination in the AT Kearney Global Retail Development Index (2007)

12 India: Astounding Demographics (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 necessary impetus to consumerism in India Growth in the higher income categories of India’s population is creating an affluent section with high purchasing power Increasing per capita income and a growing middle class is driving a high level of consumerism in India DEMOGRAPHIC TRANSFORMATION OF INDIA Source: RBI StatisticsRBI Statistics

13 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 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) Source: Its HendersonsIts Hendersons

14  GDP (at constant prices) – USD 590 billion  GDP growth rate – 9 %  Services contribution – 54 %  FDI limit less than 100 per cent in major industry sectors such as Telecom, Semiconductors, Automobiles, etc.  Balance of Trade – USD (-)46.2 billion  Investment target – USD 250 billion 2006  GDP (at constant prices) – USD 750 billion  GDP growth rate – 9.5%  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 – To improve with surging exports  Investment target – USD 305 billion 2008  GDP (at constant prices) – USD 900 billion  GDP growth rate – 9%  Services contribution – %  Investment target – USD 370 billion 2010 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

15 BRIC Report, Goldman Sachs “I have never seen India so dynamic, vibrant and full of business opportunities”. - Dan Scheinman, Cisco System Inc. as told to Business Week, August 2005 “We came to India for the costs, stayed for the quality and are now investing for innovation”. John Redwood Economic Competitiveness Policy Group, UK “India is now truly a land of opportunity”. Jack Welch General Electric “India is a developed country as far as intellectual capital is concerned”. Peter Loescher President and Chief Executive Siemens By 2032, India will be among the three largest economies in the world. 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 technology centers“. Mr Paul de Voijs Managing Director Volvo Car India “India is a very exciting market and the luxury car segment is growing exponentially here”.

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