India - Right Time Right Place

8/14/2019 India - Right Time Right Place

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INDIANDIATHE RIGHT PLACEHE RIGHT PLACETHE RIGHT TIMEHE RIGHT TIME


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Roadmap.. ang ng ace o n a

Political Factors conom c ac ors

Demographics and Life Style

Savings and Investment

Changing Face of Financial Services

Banking

Mutual Funds

Insurance

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Our Achievement..

Year GDPGrowth

FIIInflow

FDI PerCa ita

Inflation

1990 4.9% USD 1

Million

USD 97

Million

USD 390 9%

2007 9.4% USD 15 USD 16 USD 797 3.4%(8.9% for Q2

2007-8)Billion Billion

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GDP and Per Capita Income

One of the

Fastest

Growing Free

Market

Democrac .

Consumption

Expenditureorm ng 78% o

GDP

Economic

Reforms well

on Course.

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Growing Service Sector

800

900Contribution of

Services -increased from

Contribution ofServices -

increased from

398 453

400

500600

SD

Billion

percent

percent

105 105 135 145

103 125

204 231191

100

200

300U

Key Service Sector Drivers

1999-00 2002-03 2005-06 2006-07

Agriculture Industry Services

Software and ITES Entertainment

Education

Financial Services

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Infrastructure Development

US$ 494 billion ofinvestment is

Eleventh PlanPeriod (2007-12)

Govt Opened Gates for Private Players to operate in Infra Development

Already Telecom, Construction and Power together has attracted FDI ofUS$6.8 billion till Aug 2007

Funds raised through Infra Schemes by MF are likely to exceed US$5.7

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. .


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GUJARATUJARATKNOW YOUR STATE WELLu arat : e conom c

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Facts..

Dahej Indias only chemical handling port.

Sardar Sarovar Pro ect : Indias Lar est h dro ro ect

Jamnagar : The Largest Industrial Estate in World. WorldsLargest grassroots refinery.

Kandla : Asias first and India's largest multiproduct

special economic zone.

'

production.

Gujarats Gems and Jewellary industry processes 80% of

diamond in the country. Gujarat is the first state in the country to develop port

sector.

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.

Indias most industrial state. Accounts for 20% of India's

manufacturing output

Ranks 3rd in terms of number of factories Indias first LNG terminal has been commissioned at Dahej

or an a gas p pe ne gr s un er cons ruc on

Gujarat is home of Asias Leading Business School

1.8million hectares with water for domestic and industrial

use in about 8215 villages and 135 townships

Single Window Clearance (iNDEXTb) on an average clearsinvestment approvals in 30 days.

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,

Industrial Production.

Ahmedabad has the lowest labor cost among all

Only State in Country to allow exit option to

.

One of the largest gas production region of the

With 33 SEZ, Gujarat has one of the highest

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Roadmap..

ang ng ace o n aPolitical Factors



Broking and Distribution

Mutual Funds

Insurance

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Working Age Population

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Growing Need of Manpower

ver m on sc ent c an

technical manpower.

Over 0.6 million S&T post graduates

Over 0.7 million graduate engineers

every year

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Estimates.. o ware ar e : on y :

needs more than 2.2 million people

IT Enabled Service recruiting 400 peopleever da .

Indias Factories needs 73 million workers

3200 additional pilots required today.

Telecom and Retail segment will create 2

million obs in next two ears.

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Shifting Pattern on Campus.

exposure, building network and learning.

Degree Fixation loosens up. Shift on vocational courses

and skill building.

Presentation Skills

Negotiation and Leadership Skills

Subject : Not as important.

Campus : Old Body, New Heart.

Mobiles

ress ng que es

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Life Style Changes

Life Style / Attitude Early 1990s 2007

Conveyance Bike Car

Eating Out Fortnightly, Chinese,Mughlai Tri Weekly, Thai, Italian,Lebanese

Shopping Discount Stores Brand

Apartment Rented Own

Health Conscious No Yes

Marriage Later, Mostly Arranged Romances

Social Responsibility Less Responsible Aware

Work Habits Nine to Five Carrying work at home

Loyalty To Employers To self

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Standard Of Living - Indians

Source : Mckinsey

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Roadmap..

ang ng ace o n aPolitical Factors




Mutual Funds

Insurance

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Gross Domestic Savings

Source : World Bank Report 2006

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Distribution of Household Savings

Provident and

Pension Funds,

urrency ..Insurance Funds:

Life Insurance,

Postal & State

14.20%

Bank Deposits

47.40%

Government -

small savings

14.70%

Debentures,

4.90%

[email protected] Source: RBI Aug 2006


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Capital Market..

25000

11/12/2007Crossed20,000

India is among themajor destinationsacross the globe for

Sensex The Bombay Stock Exchange index has risen 20 times from1990s to reach 20,000 mark in November 2007.

20000

mar

09 July 2007Crossed 15,000 mark

15000

30 December 1999Crossed 5,000 mark

07 February 2006Crossed 10,000 mark

5000

Emergence ofindustry andconfidence of localinvestors along with

01-

Jul-

97

1-

Feb-

98

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Sep-

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Apr-

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Nov-

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Jan-

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Mar-

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Oct-

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May-

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Dec-

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Sep-

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Apr-

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Nov-

06

1-

Jun-

07

1-

Jan-

08

e s as e o

upsurge of theSensex

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FIIs have infused

large investmentsinto the Indianstock market

Encouraging

industryperformance

Increased local

investorsconfidence


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Roadmap..

Political Factors

Demographics and Life StyleSavin s and Investment



Mutual Funds

Insurance

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Factors for Financial Service Boom

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Indian Financial Sector

Management, Private Banking, Credit Cards,

War Game : Acquire and Retain Customers

, ,

PMS competing with Traditional Banking

Products.

Low Non Performing Assets and prudential

accountin standards

2nd Phase of Reforms On way to acquire global

size.

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Roadmap..

Political Factors




Mutual Funds

Insurance

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Banking

84 Commercial Banks Accounts for 81%

of Financial Sector. Over 3000 Co-o

Banks a/c 11%, 133 RRBs having 3%

share Operating with 68,681 Branches

Largest Network in the World.

Total Size : Rs 36,105 Billion

India will be the third largest banking hub

.

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o a omes c re n n a cross ng

$400 Billion compared to chinas $2.8

Trillion

Debt to Income Ratio in India is 5%

compared to 27% in south east Asia and

Retail Banking A New Buzzword.

No of Millioners crossed 1 Lac MarkAvg Salary Raise is 13 14%

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Untapped Potential

Banking Services India Thailand Malaysia Taiwan Korea

Consumer Loans 8.0% 12.0% 26.0% 36.0% 58.0%

Mort a es 4.0% 9.0% 13.0% 17.0% 37.0%

Credit Cards 0.4% 2.8% 9.8% 82.4% 121.9%

. . . . .

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Road Beyond 2009 (Banking)

Foreign Banks allowed to set up fully

owned subsidiaries.

Foreign banks to be treated on par with

.

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Roadmap..

Political Factors




Mutual Funds

Insurance

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Why to Invest in

qu ty ar et

J t I i


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Just Imagine..

just investing Rs.10,000 initially in any of

Let us look at the real example

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If you have subscribed in 100 shares of _____ ___ com pany with a face value of Rs. 100 in 1980

In 1981 company declared 1:1 bonus = you have 200 shares

In 1985 company declared 1:1 bonus = you have 400 shares

In 1986 company split the share to Rs. 10 = you have 4,000 shares

In 1987 company declared 1:1 bonus = you have 8,000 shares

In 1989 com an declared 1:1 bonus = ou have 16,000 shares



n company ec are : onus = you ave , , s ares

In 1999 company split the share to Rs. 2 = you have 9,60,000

shares

In 2004 company declared 1:2 bonus = you have 28,80,000 shares In 2005 company declared 1:1 bonus = you have 57,60,000 shares

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At the end of 2005 ou ave , , s ares o e

company

An uess about the com an ?(Hint : Its an Indian company)

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The result of Power of Comp ounding

our presen va ua on s a ou

. .

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Other such examples

CIPLAInvestment of Rs. 10,000 in 1979 will fetch Rs. 95 cr.+

INFOSYSInvestment of Rs. 10,000 in 1992 will fetch Rs. 1.5 cr.+

Investment of Rs. 1000 in 1980 will fetch Rs. 1.9 cr.+

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Wh do e uities ive hi her returns ?

Because e uities re resent ortionof business (profit) which is

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What returns to expect from equities in thelon run ?

Equity returns = Earnings growth + dividends

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Why this happens..

When short term is good, market is overoptimistic - assets get overvalued

January - March 2000

When short term is bad, market is overpessimistic - assets become cheap

Presently

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Moreover, in the last 20 years,

weve seen .

Two warsAt least three major financial scandals

Assassination of 2 prime ministers

At least 3 recessionary periods10 different governments and

An unfair share of natural disasters,

Yet GDP has grown by 15.6% p.a. and theSensex by 19% p.a.

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Equities are unique assets that investors ng g e

prices andselling at lower prices

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Primary Market


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Primary Market

Domestic Equity Raised Rs 630 Bn in last three years, which is twice theamount raised during proceeding decade (Rs 364 bn).

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Primary Market


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Primary Market

Ninth Largest IPO Market in the

.

Global Market Share : 3%

India stands 2nd

position withrespect to IPO proceeds

registering 166% growth YTD.

$18.65 [email protected]

Secondary Market


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Secondary Market

NSE ranks 3rd in the world in terms of the number of trades in the equity cashmarket- Traded volume during FY06 exceeded $350 bn with average daily volume of $1.4 bn

NSE ranks no.1 globally in terms of number of contracts traded in equity stock

futures and ranked 3rd for equity index futures

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Volatility to remain high

Annualised Volatility of International Indices (2005

06)

%)

Annualised Volatality of BSE SENSEX

35

20.1

17.6 17 16.3

10.2 9.5 9.3

27.3

15

20

25

Volat

ility(i

1916.4

28

2025

30

in

%

0

5

u

ssia

CR

TX

hina

COMP

.Korea

O

SPI

Ja

pan

N

KY

ia

BSE

ensex

SADJ

apore

ST

I

F

TSE

10

0Annualise

0

5

10

SS

IndS

Sin U2003-04 2005-06 2006-07 2009-10(E)

Source: SEBI annual report, Cygnus estimates

2003-04 Lower Base Small Free Float

2007-08 & beyond Integration with World Economy

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Political Instability RBI policy

conomy row n very as GDP growth slumps in

Developed World

Roadmap


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Roadmap..

Political Factors




Mutual Funds

Insurance

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MF Asset Under Management


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MF Asset Under Management

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Growth Path..


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Growth Path..

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Classification of Funds


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Classification of Funds

The Risk Return Trade offEquity Funds

Growth FundsDebt Funds

Debt

Sectoral FundsAggressive, Va ue, Growt

Balanced Funds

Gilt & Bond Funds

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Low Medium High

Risk


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Why time the market ? Leave it to the FundManagers

Date BSE SensexHDFC

Equity

HDFC

Prudence

HDFC Top

200

Franklin

India

Bluechip

Franklin

India Prima

Fund

Reliance

Growth

Reliance

Vision

6-Aug-97 4523.07 7.75 10.65 13.45 14.54 11.26 13.73 13.57

22-Feb-00 5883.33 29.32 22.30 29.02 30.50 42.12 47.23 29.88

26-Feb-02 3712.74 22.07 22.09 16.16 23.86 27.15 24.12 19.23

25-Jul-03 3726.51 31.33 32.34 22.77 28.69 42.49 42.44 36.68

- ep- . . . . . . . .

24-Dec-03 5641.92 50.22 44.82 38.73 48.98 77.96 76.66 65.38

10-Jun-04 4832.68 45.95 43.21 35.91 46.66 69.52 69.54 55.35

t s t e t me t at s not t e

One Common ThemeOne Common Theme

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u or earu or earLook at Diversified Equity Funds

Roadmap..


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oad ap

Political Factors




Mutual Funds

Insurance

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Wallet Share..


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Life insurance share in household financial savingsimproved to 14.6% in 2006-07 from 11.2% in 1999-2000

Financial Assets (Gross) 1999-2000 2006-07

Currency 8.8 8.6

Deposits 36.3 55.7

Share and debenture 7.7 6.3Claims on Government 12.3 5.2

Life Insurance Funds 11.2 14.6

Postal & State Insurance 0.9 0.4Provident & Pension Funds 22.8 9.2

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Source : RBI

As Economic Driver


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Financial

Savings Insurance

Capital

Formation

Investment inGrowth of

Direct

EmploymentHigher Income

Greater Savings

.

Securities,

Infrastructure

Pro ects

Employment Generation

Financial prosperity

economy

results into

increase in

Capital MarketsIndirect

Employment

Infrastructure

DevelopmentEconomic

Develo ment

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Better infrastructure

results into growth of

economy

Life Insurance..


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Financial Assets (Gross) FY 00 FY 07

No. of Players 1 16

NB Premium (Rs. Cr) 8,299 75,400

NB Policies (No. Cr) 1.69 3.82

. , ,

Penetration as % of GDP 1.2% 4.1%

Insurance Premium per capita (Rs.) 280 1,510

Capital deployed (Rs. Cr) 5 9,485

[email protected]: IRDA, Swiss Re

Penetration and Density


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Life insurance penetration & per capita (2006)

5140

13.1%

5000

6000

(USD

)

10.0%

12.0%

14.0%

tion

2829

.7.9%

4.0% 4.1%

3000

4000

e

percapit

6.0%

8.0%

n

ce

penetr

189333473

14801790

1.3%1.7%

.

0

1000

Insuranc

0.0%

2.0%

4.0%

Insur

UK Japan US Korea M alaysia Brazil China India

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population of 400 mn is insured

Source: IRDA, Swiss Re

Strong Customer Focus..


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Traditional Products Market Linked Plans

Life Insurance Life + Health

Group SuperannuationIndividual & GroupPensions

Standard Benefits Cafeteria Approach

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perceived as such, due to

resources

One of the fastest growing


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,is an excellent country for any

.

Kensaku Konishi

OfficerCanon India


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India is the fastest growing and highest-

in the Asia-Pacific region.

Randall Stephenson

AT&T


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Feel Proud as an


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India - Right Time Right Place

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