Sme In Indian Market
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SME Opportunity in Indian Markets
Agenda Overview – ICICI Bank Emergence of Indian Economy SME Opportunity - India
2
Agenda Overview – ICICI Bank Emergence of Indian Economy SME Opportunity - India
3
ICICI Bank – New face of Indian Private Sector Banking
Assets of US $ 56.3 bn
Largest Private sector Bank in India
4
Second largest Bank in India Technology Leader
Globally held (ADR, FII & NRI's own 73.9% stake )
First Indian Bank to be listed on NYSE
Our international franchise Canada
UK USA
Russia Antwer p1
China UAE
Bangladesh
India Bahrai OBU n Sri Lanka
Hong Kong
Singapore
Thailan Malaysi d a Indonesia Branch Subsidiar y Representative Office
1. Branch of ICICI Bank UK 5
South Africa
ICICI Bank - growth horizons …with continuing focus on the corporate banking and building SME franchise International banking Retail & SME banking
6
Rural banking
Some accolades in 2005 -06 “Bank of the Year Award for India” by The Banker “Best Bank in India” by Euromoney
“Best Integrated Consumer Bank Site in Asia” by Global Finance “Best Corporate / Institutional Internet Bank” by Global Finance “Best Consumer Internet Bank” in India by Global Finance Listed on Forbes' Asia's Fab 50
7
Agenda Overview – ICICI Bank Emergence of Indian Economy SME Opportunity - India
8
Emergence of Indian Economy - I Mid Mid-90's -90'seconomic economic liberalisation liberalisation PrePre-90's 90's landscape landscape
Opening up of the economy and reduction in trade barriers Inward oriented and licensing regime Regulatory and financial sector reforms Capitalising on domestic demand Directed lending and baking for urbanRestructuring to achieve world class efficiency rich only
9
Emergence of Indian Economy - II Early Early2000's 2000's belt tightening belt tightening phase phase
Post Post2003 2003 Integration Integrationwith with global economy global economy
Articulation of international competitiveness Indian economy gearing up for post GATT / WTO scenario Accessing global markets for funds raising and exports Improving quality standards India's recognition in i.e. intellectual capital, skilled labour and raw materials
10
Exposure to global forces Increasing deployment of technology Indian SMEs were re-aligning and looking for pro-active support for its financing needs.
Key economic growth drivers
Upward migration of incomes
Continued expansion of services sector Sustaining GDP growth rate of above 8%
Resurgent industrial sector
Demographic forces …growing …growing international international linkages linkages giving giving impetus impetus to to all all sectors sectors of of the the economy economy
11
Buoyant investment & financial markets Equity Markets Among best performing markets in the world NSE and BSE ranked 3rd and 5th in no. of transactions globally*
Foreign Institutional Investor Increased by 281% from from FY2000 levels to US$ 11.53 bn in FY2006#
Investmen t led growth
Foreign Direct Investment Increased by 178% from from FY2000 levels to US$ 5.97 bn in FY2006#
Bank Credit Bank credit grew by 35% in FY2006 *NSE (National Stock Exchange) and BSE (Bombay Stock Exchange) 12
Agenda Overview – ICICI Bank Emergence of Indian Economy SME Opportunity - India Play film
13
Indian SME Opportunity 95% 95%of ofall allindustrial industrialunits units 40% 40%of ofindustrial industrialoutput output
SME SME Sector Sector in in India India accounts accounts for for
70% 70%of ofindustrial industrialemployment employment 35 35% %of ofexports exports Prime Primedriver driverof ofnew new employment employment
SME sector is vital to the Indian economy Source: SIDBI Report 14
Growth opportunities in India
15
Auto Ancillaries
Infrastructure
Pharmaceuticals
Textiles
Retail trade
Engineering
Logistics
Software & IT services
Travel & Tourism
Indian Auto ancillaries industry opportunity Global auto ancillaries market estimated at US$ 1600 bn plus Indian Industry is US$ 10 bn with 20% exports.
Auto Autoancillaries ancillaries Industry Industry
India serves just 0.6% in global auto-comp market. Indian pie in world to become 3% by FY15 Last 3 years observed Domestic growth of 23% CAGR & export growth of 35% CAGR. 100% FDI allowed through the automatic route
More on Auto ancillaries 16
Indian Gems & Jewellery industry opportunity Global Gems and Jewellery market estimated at US$ 85 bn Indian Gems and Jewellery industry share in global markets is US$ 14.2 bn
Gems Gems &&Jewellery Jewellery Industry Industry
India has the largest cutting and polishing industry Growth opportunities : Manufacturing of Polish Diamonds and Diamond Jewellery Low Cost base and design skills is the competitive edge
17
Indian IT / ITES industry opportunity Global IT / ITES market estimated at US$ 1029 bn Indian IT / ITES industry share in global markets is US$ 29.6 bn
IT IT//ITES ITES Industry Industry
Industry expected to grow at a CAGR of 50% per annum and to reach US$65 bn by 2009 (Mckinsey study) Growth opportunities : Software services and product development, IT Consulting, Hardware manufacturing Constant supply of highly qualified pool of skilled English speaking software engineers
18
Indian Pharmaceutical Industry opportunity
Global Pharmaceutical market estimated at US$ 600 bn plus Indian Pharmaceutical industry share in global markets is just 1.8%
Pharmaceuticals Pharmaceuticals Industry Industry
In terms of market ranking India ranks 4th in Volume terms, 13th in Value terms & 8th in Manufacturing capabilities terms in the world Growth opportunities : CRAMS (Contract Research and Manufacturing Services) and Clinical Research & Generics Business Segments : Biotechnology, Formulations, Bulk Drugs & CRO’s
19
Indian Biotechnology opportunity Global Biotechnology market estimated at US$ 46 bn plus Indian Biotechnology industry share in global markets is just 1.5%
Biotechnology Biotechnology Industry Industry
In terms of no. of Biotechnology companies India ranks 11th in the World and 3rd in Asia pacific Growth opportunities : Contract R&D, Contract Manufacturing, Technology Transfer and Clinical Trails Business Segments : Biopharmaceuticals, Bioagriculture, Bioinformatics, Bioscience and Bioindustry
20
Indian Textile Industry opportunity Global Textile and apparel trade is estimated to be US $ 450 bn Indian industry estimated at US$ 46 bn with exports of US$ 16 bn
Textile Textile Industry Industry
Indian textile industry is growing at 20% and accounts for 4% of India’s GDP
India is the third largest producer of cotton`
Major player in the home textile segment
21
www.sme.icicibank.com 22
Safe Harbour Except for the historical information contained herein, statements in this Release which contain words or phrases such as 'will', 'would', ‘indicating’, ‘expected to’ etc., and similar expressions or variations of such expressions may constitute 'forward-looking statements'. These forward-looking statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those suggested by the forward-looking statements. These risks and uncertainties include, but are not limited to our ability to successfully implement our strategy, future levels of non-performing loans, our growth and expansion in business, the adequacy of our allowance for credit losses, technological implementation and changes, the actual growth in demand for banking products and services, investment income, cash flow projections, our exposure to market risks as well as other risks detailed in the reports filed by us with the United States Securities and Exchange Commission. ICICI Bank undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date thereof.
23
Thank you… For any further queries, you can reach me on: Mobile - +919870101780 Email – [email protected]
24
Structural shift in economy with renewed growth across all sectors FY1991 (%)
FY2006 (%)
Sectoral share of GDP (%)
GDP Growth in 2006 (%)
43
60
Services
10.3
25
19
Industry
7.6
32
21
Agriculture
3.9
GDP
8.4
Sublimating India’s knowledge capital to create economic value Agriculture Agriculture
Source: RBI,CSO 25
Industry Industry
Service Service
Services sector driving momentum Accounts for over 60% of GDP Software exports of US$ 23.6 bn in FY2006 International IT services hub Global back office
Knowledge sectors earnings of US$12.9bn: Pharmaceuticals, Biotechnology, Engineering design Growth in financial services, travel & hospitality
Leveraging rich pool of human capital Quality educational institutions Large English speaking population
Back 26
Resurgence of industrial sector Buoyancy in credit demand from industrial and infrastructure sector across large corporate as well as SME space Expansion of Indian industry to global markets Growing export orientation – 25% growth in FY2006 Setting up international marketing and distribution networks Acquiring/ creating production capacities overseas Potential for acquisition/ project financing and trade finance Back 27
Demographic advantage - BRIC (Age group )
>60
35-59
Russi China a (percentage of
India
Brazil
population) 7
10
23
30
15-34
35
0-14
35
8
23
36
35
25
26
16
26
37
29
58% of the population is in the age group of 15-59 years. By 2015 most of the countries will witness gradual shift in labour arbitrage except India due to continuous addition of young skilled work force.
Back 28
Upward migration of incomes (households in million)
FY1996
FY2002
Middle income
33
50
FY2010 Estimat e 98
High income
1
3
10
Rising affluence and growth of the consuming class NCAER data for top 24 cities in India shows migration to higher income levels growing at over 40% per annum Back Middle income US$ 2000 - 11000 per household p.a. High income > US$ 11000 per household p.a. 29
Indian Auto ancillaries industry opportunity India's Strengths •Strong Engineering Skills •Emerging Culture of Cost competitiveness
Auto Autoancillaries ancillaries Industry Industry
•Technically Skilled Manpower leading to labour price arbitrage
“US based Auto Vendors can potentially increase ROS by 3%-6% by shifting manufacturing to India” Mckinsey Report
30
Indian Auto ancillaries industry opportunity Who's Outsourcing to Indian SME? Large OEMs… •GM,US-global purchase team •Volvo-Global buying Team
Auto Autoancillaries ancillaries Industry Industry
•Ford – full fledged sourcing team •Honda •Toyota-hub for transmissions •Caterpillar – global purchase team •John Deere •Piaggio
Next 31
Agenda Overview – ICICI Bank Emergence of Indian Economy SME Opportunity - India
2
Agenda Overview – ICICI Bank Emergence of Indian Economy SME Opportunity - India
3
ICICI Bank – New face of Indian Private Sector Banking
Assets of US $ 56.3 bn
Largest Private sector Bank in India
4
Second largest Bank in India Technology Leader
Globally held (ADR, FII & NRI's own 73.9% stake )
First Indian Bank to be listed on NYSE
Our international franchise Canada
UK USA
Russia Antwer p1
China UAE
Bangladesh
India Bahrai OBU n Sri Lanka
Hong Kong
Singapore
Thailan Malaysi d a Indonesia Branch Subsidiar y Representative Office
1. Branch of ICICI Bank UK 5
South Africa
ICICI Bank - growth horizons …with continuing focus on the corporate banking and building SME franchise International banking Retail & SME banking
6
Rural banking
Some accolades in 2005 -06 “Bank of the Year Award for India” by The Banker “Best Bank in India” by Euromoney
“Best Integrated Consumer Bank Site in Asia” by Global Finance “Best Corporate / Institutional Internet Bank” by Global Finance “Best Consumer Internet Bank” in India by Global Finance Listed on Forbes' Asia's Fab 50
7
Agenda Overview – ICICI Bank Emergence of Indian Economy SME Opportunity - India
8
Emergence of Indian Economy - I Mid Mid-90's -90'seconomic economic liberalisation liberalisation PrePre-90's 90's landscape landscape
Opening up of the economy and reduction in trade barriers Inward oriented and licensing regime Regulatory and financial sector reforms Capitalising on domestic demand Directed lending and baking for urbanRestructuring to achieve world class efficiency rich only
9
Emergence of Indian Economy - II Early Early2000's 2000's belt tightening belt tightening phase phase
Post Post2003 2003 Integration Integrationwith with global economy global economy
Articulation of international competitiveness Indian economy gearing up for post GATT / WTO scenario Accessing global markets for funds raising and exports Improving quality standards India's recognition in i.e. intellectual capital, skilled labour and raw materials
10
Exposure to global forces Increasing deployment of technology Indian SMEs were re-aligning and looking for pro-active support for its financing needs.
Key economic growth drivers
Upward migration of incomes
Continued expansion of services sector Sustaining GDP growth rate of above 8%
Resurgent industrial sector
Demographic forces …growing …growing international international linkages linkages giving giving impetus impetus to to all all sectors sectors of of the the economy economy
11
Buoyant investment & financial markets Equity Markets Among best performing markets in the world NSE and BSE ranked 3rd and 5th in no. of transactions globally*
Foreign Institutional Investor Increased by 281% from from FY2000 levels to US$ 11.53 bn in FY2006#
Investmen t led growth
Foreign Direct Investment Increased by 178% from from FY2000 levels to US$ 5.97 bn in FY2006#
Bank Credit Bank credit grew by 35% in FY2006 *NSE (National Stock Exchange) and BSE (Bombay Stock Exchange) 12
Agenda Overview – ICICI Bank Emergence of Indian Economy SME Opportunity - India Play film
13
Indian SME Opportunity 95% 95%of ofall allindustrial industrialunits units 40% 40%of ofindustrial industrialoutput output
SME SME Sector Sector in in India India accounts accounts for for
70% 70%of ofindustrial industrialemployment employment 35 35% %of ofexports exports Prime Primedriver driverof ofnew new employment employment
SME sector is vital to the Indian economy Source: SIDBI Report 14
Growth opportunities in India
15
Auto Ancillaries
Infrastructure
Pharmaceuticals
Textiles
Retail trade
Engineering
Logistics
Software & IT services
Travel & Tourism
Indian Auto ancillaries industry opportunity Global auto ancillaries market estimated at US$ 1600 bn plus Indian Industry is US$ 10 bn with 20% exports.
Auto Autoancillaries ancillaries Industry Industry
India serves just 0.6% in global auto-comp market. Indian pie in world to become 3% by FY15 Last 3 years observed Domestic growth of 23% CAGR & export growth of 35% CAGR. 100% FDI allowed through the automatic route
More on Auto ancillaries 16
Indian Gems & Jewellery industry opportunity Global Gems and Jewellery market estimated at US$ 85 bn Indian Gems and Jewellery industry share in global markets is US$ 14.2 bn
Gems Gems &&Jewellery Jewellery Industry Industry
India has the largest cutting and polishing industry Growth opportunities : Manufacturing of Polish Diamonds and Diamond Jewellery Low Cost base and design skills is the competitive edge
17
Indian IT / ITES industry opportunity Global IT / ITES market estimated at US$ 1029 bn Indian IT / ITES industry share in global markets is US$ 29.6 bn
IT IT//ITES ITES Industry Industry
Industry expected to grow at a CAGR of 50% per annum and to reach US$65 bn by 2009 (Mckinsey study) Growth opportunities : Software services and product development, IT Consulting, Hardware manufacturing Constant supply of highly qualified pool of skilled English speaking software engineers
18
Indian Pharmaceutical Industry opportunity
Global Pharmaceutical market estimated at US$ 600 bn plus Indian Pharmaceutical industry share in global markets is just 1.8%
Pharmaceuticals Pharmaceuticals Industry Industry
In terms of market ranking India ranks 4th in Volume terms, 13th in Value terms & 8th in Manufacturing capabilities terms in the world Growth opportunities : CRAMS (Contract Research and Manufacturing Services) and Clinical Research & Generics Business Segments : Biotechnology, Formulations, Bulk Drugs & CRO’s
19
Indian Biotechnology opportunity Global Biotechnology market estimated at US$ 46 bn plus Indian Biotechnology industry share in global markets is just 1.5%
Biotechnology Biotechnology Industry Industry
In terms of no. of Biotechnology companies India ranks 11th in the World and 3rd in Asia pacific Growth opportunities : Contract R&D, Contract Manufacturing, Technology Transfer and Clinical Trails Business Segments : Biopharmaceuticals, Bioagriculture, Bioinformatics, Bioscience and Bioindustry
20
Indian Textile Industry opportunity Global Textile and apparel trade is estimated to be US $ 450 bn Indian industry estimated at US$ 46 bn with exports of US$ 16 bn
Textile Textile Industry Industry
Indian textile industry is growing at 20% and accounts for 4% of India’s GDP
India is the third largest producer of cotton`
Major player in the home textile segment
21
www.sme.icicibank.com 22
Safe Harbour Except for the historical information contained herein, statements in this Release which contain words or phrases such as 'will', 'would', ‘indicating’, ‘expected to’ etc., and similar expressions or variations of such expressions may constitute 'forward-looking statements'. These forward-looking statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those suggested by the forward-looking statements. These risks and uncertainties include, but are not limited to our ability to successfully implement our strategy, future levels of non-performing loans, our growth and expansion in business, the adequacy of our allowance for credit losses, technological implementation and changes, the actual growth in demand for banking products and services, investment income, cash flow projections, our exposure to market risks as well as other risks detailed in the reports filed by us with the United States Securities and Exchange Commission. ICICI Bank undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date thereof.
23
Thank you… For any further queries, you can reach me on: Mobile - +919870101780 Email – [email protected]
24
Structural shift in economy with renewed growth across all sectors FY1991 (%)
FY2006 (%)
Sectoral share of GDP (%)
GDP Growth in 2006 (%)
43
60
Services
10.3
25
19
Industry
7.6
32
21
Agriculture
3.9
GDP
8.4
Sublimating India’s knowledge capital to create economic value Agriculture Agriculture
Source: RBI,CSO 25
Industry Industry
Service Service
Services sector driving momentum Accounts for over 60% of GDP Software exports of US$ 23.6 bn in FY2006 International IT services hub Global back office
Knowledge sectors earnings of US$12.9bn: Pharmaceuticals, Biotechnology, Engineering design Growth in financial services, travel & hospitality
Leveraging rich pool of human capital Quality educational institutions Large English speaking population
Back 26
Resurgence of industrial sector Buoyancy in credit demand from industrial and infrastructure sector across large corporate as well as SME space Expansion of Indian industry to global markets Growing export orientation – 25% growth in FY2006 Setting up international marketing and distribution networks Acquiring/ creating production capacities overseas Potential for acquisition/ project financing and trade finance Back 27
Demographic advantage - BRIC (Age group )
>60
35-59
Russi China a (percentage of
India
Brazil
population) 7
10
23
30
15-34
35
0-14
35
8
23
36
35
25
26
16
26
37
29
58% of the population is in the age group of 15-59 years. By 2015 most of the countries will witness gradual shift in labour arbitrage except India due to continuous addition of young skilled work force.
Back 28
Upward migration of incomes (households in million)
FY1996
FY2002
Middle income
33
50
FY2010 Estimat e 98
High income
1
3
10
Rising affluence and growth of the consuming class NCAER data for top 24 cities in India shows migration to higher income levels growing at over 40% per annum Back Middle income US$ 2000 - 11000 per household p.a. High income > US$ 11000 per household p.a. 29
Indian Auto ancillaries industry opportunity India's Strengths •Strong Engineering Skills •Emerging Culture of Cost competitiveness
Auto Autoancillaries ancillaries Industry Industry
•Technically Skilled Manpower leading to labour price arbitrage
“US based Auto Vendors can potentially increase ROS by 3%-6% by shifting manufacturing to India” Mckinsey Report
30
Indian Auto ancillaries industry opportunity Who's Outsourcing to Indian SME? Large OEMs… •GM,US-global purchase team •Volvo-Global buying Team
Auto Autoancillaries ancillaries Industry Industry
•Ford – full fledged sourcing team •Honda •Toyota-hub for transmissions •Caterpillar – global purchase team •John Deere •Piaggio
Next 31
