India

1. India Your Next Investment and Business Destination (A Macroeconomic Perspective)

2. Agenda • Motives of Global expansion • The Indian Dimension • India- Past & Present • India- Land of opportunities • Market overview and approach • India competitiveness • India’s Macro economic indicators • Indo-US collaboration • The India advantage • Top growing sectors • Other leading sectors • Key challenges • Tecnova

3. Growth Imperative Better Profit Realization Efficiency Imperative Spreading Risk Accessing Technology To be Present in the Lead Market Learning & Innovation Preempting Competition - Strategic Positioning Defending the Home Market (Cross Parry) Following the Competitor Following the Customers Bandwagon Effect Motives of Global Expansion “Business transformation through services globalization is one of the most important levers that global companies can no longer afford to ignore”

4. The Indian Dimension • Area : 3.29 million sq. km • Population : 1.09 billion • Urban:300 million • Rural : 700 million • Capital : New Delhi • States : 28 • Languages : Multilingual society with 14 • principal languages. National language is Hindi Major Cities: Delhi, Mumbai, Chennai, Calcutta, Bangalore, Hyderabad, Pune

5. India- Past & Present The 70’s, 80’s and early 90’s India post 1995 and counting • Dominance of Public Sector across industry • Sellers market with limited competition. • Closed Economy with negligible presence of multinationals. • GDP growth below 4% (Hindu rate of growth) primarily agriculture based. • 100% FDI in most sectors has seen Pepsi, Coke, Shell, Ford, GM, Suzuki., Toyota, Amex, Citibank, GE, Microsoft, Pfizer, Novartis, GSK, Merck operation in India (availability of world class products) • A new India is transiting from a third world country status to a league of developed nations • India has transformed from a land of snake charmers, elephants and an inward looking • society to a progressive and forward looking nation of 1 Billion has the second largest • community of science and technology professionals • The world’s third-largest repository for foreign direct investment (FDI), after China and • America. • India is one of the three countries that makes supercomputers, one of the six countries • that builds and launches satellites.

6. Second Largest Emerging Market India – Land of Opportunities Largest democracy – political stability & consensus on reforms Fourth largest Economy (PPP) - A safe place to do business Largest reservoir of skilled/semi-skilled manpower Liberal & transparent investment policies Highest returns on investment; India 19.33%, China 14.25%, Thailand 13.3% Long-term sustainable Competitive advantage - High growth rate economy “Developing an International presence is the key strategy for business growth”

7. Market overview and Approach Market Overview • Population of 1.09 Billion • 12th largest economy in the world in 2005 by GDP and 4th largest by PPP • 170-200 million people with growing purchasing power • 7-8% GDP growth rate • Over 45% of the Indian population is under the age of 20 Key factors for success • Reliable local partners • Good planning • Due diligence and follow-up • Patience and commitment • Indian consumers are price-conscious • Adapt products for local conditions • Have an efficient distribution network • Consider a local/regional approach • Don’t underestimate local competition

8. Immense labour pool High on qualification/capabilities Low on cost Language skills Work ethics WTO accession & commitments Mature financial market IP Protection Laws Favourable labour laws Capitalist work ethic Mature management talent Breadth and scalability of services Location Attractiveness Infrastructure Communications International connectivity Ever improving highways and ports infrastructure Communications Low Country Risks/ FDIIncentives Stable political environment Independent judiciary Low entry barriers Attractive Incentives India Competitiveness India is emerging as the preferred global destination due to a number of significant advantages over other countries

9. India’s Robust Macro Economic Indicators talk … GDP – US$ 850 Bn (growing at 8%); India is all set to surpass Italy, France & Germany in US$GDP by 2020 and Japan by 2030 Sustained economic growth – over 7% in next 50 years (Goldman Sachs) • You are setting your eyes on the fourth largest economy in the world (in terms of purchasing power parity)

10. Indo US Collaboration • U.S.- India political and economic relations are strong and growing • Shift in U.S. –India relationship: from sanctions to civil nuclear cooperation • Indian market has many opportunities for the right products and services • Total bilateral trade in 2005: $26.8 billion • US merchandise exports to India in 2005: $7.9 billion – a 30% increase over previous year

11. The India Advantage • Potential of huge domestic market provided by the country's 1bn-plus population • Manufacturing Industry in India is growing by 9.4% • Cost of employing engineers – essential to manufacturing services – is one-third to one-fifth lower in India than in industrialized nations such as the UK and the US • India has an edge in the service aspects of manufacturing, these areas including design, development, links with suppliers and the ability to customize output to meet changes in demand patterns • High level of technology combined with Service that ensures India is in a good position to develop a new source of products that mix innovation with low costs • Better control of intellectual property unlike China • Foreign companies can broaden access to a supply of technical people beyond that which is available in their home country

12. Fastest growing sectors • Automotive • The Indian automobile sector currently generates revenues of $34 billion a year; Auto sector could grow to $145 billion by 2016 • India has gradually become a sourcing hub for auto companies worldwide. Among the companies outsourcing from India are General Motors, Ford, Daimler Chrysler, Hyundai, Fiat, Toyota, Delphi, Navistar, Visteon, Cummins and Caterpillar. • The size of the auto component industry has grown from US$ 2.4 billion in 1997 to US$ 12 billion in 2005-2006 • India has emerged as a significant exporter of auto parts. From US$ 578 million in 2001-02, overseas sales of Indian companies have jumped to US$ 2.2 billion in 2005-06 Drivers for growth • The Indian automobile industry is likely to attract an investment of US$ 6.7 billion by 2007 • India produces 8.46 Mn vehicles annually with exports of 0.62 Mn units • Production has been growing at 12% CAGR • Mercedes, BMW, Porsche, Audi, Bentley and Rolls Royce are already in India. Now, the Italian marquee Lamborghini is also planning to enter the country • Apart from Ford and Hyundai, other international players like BMW, Toyota, Daimler Chrysler are set to open up their manufacturing units in India

13. Continued… • Healthcare & Pharma • India’s Pharma market ranks 4th in the world in volume and 13th in domestic consumption value • India has the highest number of USFDA certified manufacturing facilities outside the United States • Indian pharma market estimated at US$ 3.8 billion ranks 12th in value terms and accounts for around 1% of the global market • Expected to grow at 12-14% p.a., as against the global average of 6-8% • At the current pace of growth, medical tourism, currently pegged at US$ 350 million, has the potential to grow into a US$ 2 billion industry by 2012. • With the expected increase in the pharmaceutical market, the total healthcare market could rise from US$ 22.2 billion currently (5.2 per cent of GDP) to US$ 50 billion - US$ 69 billion (6.2-8.5 per cent of GDP) by 2012 Drivers for growth • Highly fragmented market with over 20,000 companies with top 250 companies controlling around 70% of the market. • Sourcing of active pharmaceutical ingredients (APIs) and contract manufacturing • Conducting early-stage research and development (R&D). • Highly skilled human capital and technology expertise. • Leverage India’s low cost structure

14. Continued… • Construction • The Indian construction industry grew by 5.5 % to reach a value of $35 billion in 2006 • The sector will continue to grow at a CAGR of 6.5% to reach $38 billion by 2009 representing an increase of 35.4 % since 2004 • India accounts for 4.7% of the Asia-Pacific construction and engineering market • The Indian construction and engineering industry is expected to grow in the region of 75% between 2000 and 2009, behind only China in the Asia-Pacific region Drivers for growth • The country's commercial and residential real estate market is valued at about $50 billion now, and is expected to grow 25% annually • A report on real estate trends by Merrill Lynch said that the number of malls in major metropolitan cities across India is expected to grow to about 250 by 2010 as against 40 now. In terms of total area, there was 12.40 million square feet (mn sq ft) of mall space available in these cities • Gurgaon (National Capital Region, New Delhi) is set to get the biggest mall of the world — a large US$ 89.78 sq ft sprawling property that is being developed by DLF Universal. It will be known as Mall of India

15. Continued... • Retail • Indian retail industry ranked second most attractive retail destination by AT Kearney • The total domestic retail market is currently estimated to be over US$ 330 billion and is growing at a rate of 4-6 % in real terms • Organized sector accounts for just 2 % of the market (i.e. US$ 4 billion)- expected to grow four-fold to US$ 15 billion by 2010 • There are 12 million retail outlets in India out of which 9 lakh are in the organized sector. Retail will grow by 40% by 2008 Drivers for growth • Retail sales in India's consumer goods market are expected to grow to $400 billion by 2010, making it one of the world's five biggest • India's emerging middle class is driving this rapid growth, and companies must target that segment if they aspire to make the country a key market • By 2007 there would be as many as 350 malls built in India with a mall area of over 87.7 million square feet • Major construction of malls taking place both in the Tier- I and Tier- II cities of India

16. Continued… • Telecommunication • One of the fastest growing sectors in the country • The telecom sector has witnessed the presence of many leading foreign companies including US companies: AT&T, Motorola, Nynex, US West, Hughes, Harris, Qualcomm, Sprint, Telstra, NTT, Singapore Telecom, Philippine Telecom, Bezeq, Siemens, Ericsson, Nokia, Fujitsu, Alcatel, and Bell Canada among others • 2 million Cellular phones added every month - Among the lowest mobile tariff in the world Drivers for growth • India offers an unprecedented opportunity for telecom service operators, infrastructure vendors, manufacturers and associated services companies • Nortel, North America's biggest telecommunications equipment provider, has signed a five-year deal to provide call centre services for Bharti, which has a more than 22 per cent market share of the mobile phone market in India • Investment Opportunities • Setting up manufacturing facilities • Supply of hand sets and equipments • Telecom & Value added service

17. Other leading sectors for US exports and Investment in India • Airport and Ground Handling • Computers and Peripherals • Electric Power Generation, Distribution, and Transmission Equipment • Food Processing & Cold Storage Equipment • Machine Tools • Medical Equipment • Mining and Mineral Processing Equipment • Pollution Control Equipment • Safety and Security Equipment • Oil & Gas/ Energy • Textile Machinery • Water

18. Key Challenges The key challenges that companies under-estimate while contemplating doing business in India and where Tecnova can play a role are- • Estimation of business risks • Correct estimation of market and business potential • Market differences from the West • Under-estimating local competition • Government regulations • Intellectual property right and infringements • Partnerships and Acquisitions • Proper due diligence • Cultural issues

19. TECNOVA Your virtual business partner in India

20. About Tecnova “22 years of operation, over 200 clients (from 18 countries) with 130 Fortune 1000 companies” • TECNOVA- a Consulting firm specializing in providing workable strategy solutions and implementation assistance to foreign companies for leveraging the “India advantage” • Help foreign companies investigate opportunities, understand markets, start-up business, compete more effectively, and expand in India • Advised more than 200 companies and have implemented the start up operations for 125 of them to leverage India advantage • 70 people based in New Delhi; Over1 million man-hours of consulting work across entire spectrum of Indian business • Assist foreign organizations in developing customized solutions based on in-depth understanding of their corporate goals and global strategy Our Mission is to make our clients successful in the Indian market place

21. Tecnova’s value adds • Minimize the knowledge gap to make our clients succeed in India (including research on market & competition and regulatory) • Identify key success factors • Develop Strategy to leverage India advantage to capture market shares • Recommend a modular and flexible India structure and strategy • Minimize business & cultural gaps • Minimize risk of start up failures • Advise on strategic alliances • Prepare business plan including detailed location analysis • Help in selection of start up leadership team (executive search) Work as virtual partners for India Strategy implementation and incubation till profits are made in India

22. Service Offerings PHASE-I Market Research India Visit Outline Business Plan Strategy PHASE-II Location Analysis Cost benchmark Detailed Business Plan Implementation (Indian Entity) PHASE-III Sales Ramp up services Risk Mitigation Regulatory Compliance Assistance to leverage India advantage

23. Danaher Group, USA Valmont Industries, USA Mondi Group,USA (Frantaschach Packaging) Johns Manville USA (Warren Buffet Company) Presstek, USA Novus, USA Goss International, USA MSA, USA International Paper, USA Roquette, France SICK, Germany ISS, Denmark Chr.Hansen,Denmark Findlay Industries, USA Michelin, France Jost Werke, Germany Surtec, Germany Caran Design, Sweden Alteams, Finland Partial list of clients- Sector wise Healthcare/ Pharma Consumer Durables B2B • Gillette, USA • Haworth, USA • Kohler, USA • Sunbeam (Jarden Consumer Group), USA • Mary Kay, USA • Elkay Manufacturing, USA • L’Oreal, France • Arc International, France • Sennheiser, Germany • Miele, Germany • Perfetti, Italy • Teuco, Italy • Barr Labs, USA • Nektar Therapeutic, USA • Genezyme, USA • Patheon, USA • Cephlon, USA • Cytyc, USA • BioMerieux, France • SCA Hygiene,Sweden Auto

24. Thank You