South Asia Monitor: India update

11 October 2019

Key data
Government responds to slowing economic
NIFTY 50
Current 11,239.00 growth
1 month -1.82%
6 month 3.18%
 2019 GDP growth downgraded to 5.8% - 6.2% (RBI reduces its forecast to 6.1%);
YTD -2.93%
12 month -8.94%
 Crisis in banking and automotive sectors has negative impact on consumer
confidence
S&P SENSEX
 Government announces substantial corporate tax cuts to stimulate investment
Current 37,909.00
1 month -1.69%
and growth;
6 month 1.84%  RBI cuts key benchmark repo rate by 0.25% to 5.15%;
YTD -4.37%
 Relaxation of foreign investment rules in key sectors
12 month -10.31%

USD/INR  Economic downturn. Downturn in the Indian economy is deepening with many economic
Current
71.0500
agencies reducing their GDP growth forecasts for 2019 from over 7% to ~6.2%. Household
1 month 1.17% confidence is fragile as can be seen by the precipitous decline in automotive sales. The
6 month -2.68% ADB reduced its GDP forecast to 6.5% (2019) and 7.2% (2020). S&P Global Ratings reduced
YTD -2.25%
its 2019 GDP forecast from 7.1% to 6.3%.

12 month 4.22%

Date: 9/10/2019

 Banking crisis. The effective collapse of Punjab & Maharashtra Cooperative Bank (PMCB)
in Maharashtra has raised significant concerns about the quality of oversight and
regulation in the Indian banking sector. PMCB’s exposure to the real estate firm, Housing
& Development Infrastructure Ltd (HDIL) amounted to over 70% of its total loan book

 Automotive sales. The automotive sector continues to experience substantial declines in

all areas (passenger cars, 2 and 3 wheelers and commercial vehicles). The largest vehicle
manufacturer reported a 24.4% y-o-y decline in September, though heavy discounting
appears to have stabilised the market. The commercial vehicles manufacturer, Ashok
Leyland experienced a 57% y-o-y decline in September sales.
South Asia Monitor: India update

Key developments

 Reduction in corporate tax rate. Basic corporate tax rate reduced to 22% from 30% (effective rate of ~25%);
For new manufacturing ventures, rate will be 15% from 25% (effective rate of 17%). Government estimates
loss of USD20 bn in revenues – therefore likely to require some spending cuts.

 Reduction in benchmark repo rate by 0.25% to 5.15%. Reserve Bank of India cuts its benchmark repo rate
by 0.25% to 5.15%; the rate is a key to the rates at which banks lend to each other. It is the fifth rate cut in
2019; the rate in February was 6.25%. The RBI has also downgraded its GDP forecasts from 7.4% to 6.1%.

 Prohibition of electronic cigarette products. Indian government issued an executive order banning e-
cigarettes and vaping devices. The government claims that the high adoption rate of such products among
young people is a significant health issue – however, established thinking is that vaping products are less
damaging than traditional tobacco. The government’s motives may also include concern about the impact of
e-cigarettes on sales of tobacco products (the Indian government has a substantial stake in ITC).

 Relaxation of FDI rules in key areas. Government has relaxed foreign investment rules in a number of key
areas of the economy. These include: foreign direct investment of 100% allowed in coal mining industry; FDI
in single brand retail trade permitted up to 100% ; FDI limit (with government approval) of 26% for
uploading/streaming of news and current affairs;

 Automotive: Ford rumoured to be reducing its exposure to the Indian market. Ford is in negotiation to
transfer its assets in India to a joint venture with the Indian automotive group, Mahindra & Mahindra.
Indications are that Ford will retain a minority stake in the joint venture.

 Rail: Government considering allowing foreign companies to set up rail manufacturing units in India.
Current rail manufacturers in India (SAIL and Jindal Steel) are unlikely to be able to meet existing domestic
demand (shortfall of 300,000 tonnes).

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NIFTY 50 Performance

Company Market symbol Sector Symbol % change (1 mth) % change (12 mth) 52 wk range

Adani Ports ADANIPORTS.NS Infrastructure ADANIPORTS 8.5% 25.7% 292.1 - 430.6

Asian Paints Ltd ASIANPAINT.NS Consumer Goods ASIANPAINT 15.3% 47.8% 1118 - 1820
Axis Bank AXISBANK.NS Banking AXISBANK 0.5% 22.1% 534.55 - 827.75
Bajaj Auto BAJAJ-AUTO.NS Automobile BAJAJ-AUTO 2.9% 13.7% 2420 - 3149.95
Bajaj Finserv BAJAJFINSV.NS Financial Services BAJAJFINSV 12.0% 51.1% 4955 - 8668.8
Bajaj Finance BAJFINANCE.NS Financial Services BAJFINANCE 15.0% 91.8% 1947.65 - 4111.75
Bharti Airtel BHARTIARTL.NS Telecommunication BHARTIARTL 5.2% 29.8% 253.99 - 385
BPCL BPCL.NS Energy - Oil & Gas BPCL 28.1% 90.3% 255.2 - 545
Britannia Industries BRITANNIA.NS Consumer Goods HINDUNILVR 13.2% -44.9% 2300 - 3583.75
Cipla CIPLA.NS Pharmaceuticals BRITANNIA -11.0% -33.9% 402.7 - 651.65
Coal India COALINDIA.NS Energy & Mining CIPLA -7.4% -32.6% 177.7 - 289.2
Dr Reddy Lab DRREDDY.NS Pharmaceuticals COALINDIA -3.7% 7.9% 1872.95 - 2964
Eicher Motors EICHERMOT.NS Automobile DRREDDY 11.6% -14.3% 15200 - 25350
GAIL GAIL.NS Energy - Oil & Gas EICHERMOT -3.7% -61.8% 119.5 - 191
Grasim Industries GRASIM.NS Cement GAIL -1.5% -23.0% 633.6 - 959.8
HCL Technologies HCLTECH.NS Information Technology GRASIM -1.9% -0.4% 920 - 1187.6
HDFC HDFC.NS Financial Services HCLTECH -3.7% 16.0% 1644.5 - 2357.85
HDFC Bank HDFCBANK.NS Banking HDFC -46.5% -38.0% 942.5 - 1282.7
Hero MotoCorp HEROMOTOCO.NS Automobile HDFCBANK -3.4% -10.1% 2225.6 - 3380
Hindalco Industries HINDALCO.NS Metals HEROMOTOCO -3.5% -18.6% 171.1 - 245.3
Hindustan Unilever HINDUNILVR.NcbbS Consumer Goods HINDALCO 8.0% 30.9% 1477.2 - 2100.65
ICICI Bank ICICIBANK.NS Banking ICICIBANK 7.4% 38.6% 303 - 458.65
IndusInd Bank INDUSINDBK.NS Banking INDUSINDBK -7.9% -23.5% 1188.05 - 1834.4
Bharti Infratel Ltd. INFRATEL.NS Telecommunication INFRATEL 1.7% -3.5% 238.7 - 335
Infosys INFY.NS Information Technology INFY -5.6% 9.0% 599.85 - 847
IOC IOC.NS Energy - Oil & Gas IOC 16.9% 20.8% 116.25 - 170.75
ITC Limited ITC.NS Consumer Goods ITC -1.0% -9.5% 234.05 - 310
JSW Steel JSWSTEEL.NS Metals JSWSTEEL -3.0% -42.7% 201.75 - 385.2
Kotak Mahindra Bank KOTAKBANK.NS Banking KOTAKBANK 7.9% 43.3% 1085.5 - 1683.95
Larsen & Toubro LT.NS Construction LT 5.1% 16.8% 1182.5 - 1607
Mahindra & Mahindra M&M.NS Automobile M&M 6.4% -25.9% 502.55 - 814
Maruti Suzuki MARUTI.NS Automobile MARUTI 4.6% -1.1% 5446.05 - 7949.75
Nestle India Ltd NESTLEIND.NS Food Processing NESTLEIND 7.8% 45.8% 9047.05 - 14144
NTPC Limited NTPC.NS Energy - Power NTPC -7.2% -27.5% 106.67 - 145.85
ONGC ONGC.NS Energy - Oil & Gas ONGC -2.8% -14.3% 115.55 - 178.9
PowerGrid Corporation of India POWERGRID.NS Energy - Power POWERGRID -1.8% 6.8% 172.5 - 216.25
Reliance Industries RELIANCE.NS Energy - Oil & Gas RELIANCE 11.3% 24.8% 1016.4 - 1417.5
State Bank of India SBIN.NS Banking SBIN -8.6% -3.4% 244.35 - 373.8
Sun Pharmaceutical SUNPHARMA.NS Pharmaceuticals SUNPHARMA -10.0% -36.7% 344.55 - 619.5
Tata Motors TATAMOTORS.NS Automobile TATAMOTORS -4.2% -36.6% 106 - 239.35
Tata Steel TATASTEEL.NS Metals TATASTEEL -6.9% -42.5% 320.35 - 610.6
Tata Consultancy Services TCS.NS Information Technology TCS -8.3% -4.3% 1784.35 - 2296.2
Tech Mahindra TECHM.NS Information Technology TECHM -0.5% 1.9% 607.15 - 846.5
Titan Company TITAN.NS Consumer Goods TITAN 13.8% 65.2% 732.3 - 1345
UltraTech Cement ULTRACEMCO.NS Cement ULTRACEMCO 1.8% 5.2% 3260.45 - 4904.95
United Phosphorus Limited UPL.NS Chemicals UPL -0.9% -3.7% 390 - 709.05
Vedanta VEDL.NS Metals VEDL -0.2% -33.5% 125.3 - 227.75
Wipro WIPRO.NS Information Technology WIPRO -6.7% -25.9% 222.01 - 301.6
Yes Bank YESBANK.NS Banking YESBANK -35.2% -81.8% 29 - 286
Zee Entertainment Enterprises ZEEL.NS Media & Entertainment ZEEL -32.5% -43.4% 199.15 - 506.9
Source: NSE India, close 9/10/2019

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Recent investments

Sector Deal type Date* Investee Investor (s) Value Notes

Lightbox Ventures et al. Blacksoil Jewellery retailer. USD 2 mn of debt; USD 12 mn in equity
E-commerce Investment 09/10/19 Melorra USD 14 mn
Capital (Series C)
Technology Investment 09/10/19 GeoIQ IP Ventures Location intelligence platform
Leisure Investment 07/10/19 Oyo Hotels Softbank, Ritesh Agarwal USD 1.5 bn Raises Agarwal's stake to 30%
Green energy Investment 05/10/19 Orb Energy Shell India Acquired 20% stake; rooftop solar power systems
Accel, Chiratae Ventures, Dream
Healthcare Investment 27/09/19 Onco.com USD 7 mn Digital platform for oncology information and services
Incubator
Human Endiya Partners, Lightspeed India
Investment 26/09/19 Darwinbox USD 4 mn Cloud-based HR services
Resources Partners and 3one4 Capital
Finance Investment 26/09/19 Dvara KGFS Nordic Microfinance Initiative INR 700 mn Microfinance services
Fintech Investment 25/09/19 Finception Rainmatter incubator INR 40 mn Stock trading platform
Technology Investment 25/09/19 Nostragamus Vereeni Investments (Malta) India-based fantasy sports platform
Part of USD 125
Technology Investment 23/09/19 Rebel Foods City Storage Systems Cloud Kitchen company
mn
Finance Investment 20/09/19 Upstox Tiger Global USD 25 mn Online trading
Ribbit Capital, Sequoia India, Y
Finance Investment 19/09/19 Groww USD 21.4 mn Wealth management
Combinator
Real estate Investment 11/09/19 Qdesq JLL VC N/A Co-working and workspace platform
Twitter, TrustBridge Partners,
Shunwei Capital, Lightspeed
Technology Investment 01/09/19 ShareChat Venture Partners, SAIF Cap, India USD 100 mn Local language social media app
Quotient, Morningside Venture
Capital
Punjab Renewable
Green energy Investment 29/08/19 Shell India USD 7.7 mn Biomass
Energy
Technology Investment 01/08/19 InGage TNQ Technologies USD 2 mn Augmented reality and VR
Technology Investment 01/08/19 OSLabs Samsung VIC developed Indus OS
Technology Investment 01/08/19 Gnani.ai Samsung VIC Speech technology
Technology Investment 01/08/19 Silvan Innovation Labs Samsung VIC IoT solutions
Visa, Recruit Strategic Partners (VC
Finance Investment 22/07/19 PayMate Arm of Recruit of Japan), Brand
Capital, Mayfair 101

E-commerce Investment 01/07/19 Meesho Facebook USD 25 mn Online startup platform for social commerce

Finance Investment 13/05/19 Global PayEx JP Morgan B2B cloud-based invoice processing platform, Freepay
M&A, Exits and Joint ventures

Sector Deal type Date* Investee Investor (s) Value Stake Notes
Fintech Acquisition 10/10/19 Priority Vendor C2FO Early payment platform
Automotive Joint venture 01/10/19 Ford India Mahindra 51% Joint venture to market Ford in India

Automotive Acquisition 09/10/19 Delvis Gmbh (Germany) Minda Industries Auto lamps design & testing

Reliance Nippon Life

Insurance Acquisition 30/09/19 Nippon Life Increased stake to 75%
Asset Management

Entertainment Acquisition 30/09/19 All Things Small Rainshine Entertainment Non-fiction content production
Entertainment Acquisition 30/09/19 FirstAction Rainshine Entertainment Content & Film production
Leisure Divestment 25/09/19 Lemon Tree Hotels Warburg Pincus
Entertainment Acquisition 25/09/19 Entco Believe Live music and events
Travel Acquisition 25/09/19 Ebix Cox & King's business travel operations only
Virtuous Retail South Asia (JV of
Real estate Acquisition 25/09/19 Three shopping malls USD 500 mn Shopping malls
Xander Group, APG)
FUture Supply Chain
Logistics Acquisition 24/09/19 Nippon Express USD 90.4 mn 22% 3PL and express logistics
Solutions (FSC)
Chennai-based research and
Pharma Acquisition 24/09/19 Biocon Pfizer Healthcare India
development (R&D) facility
Technology Acquisition 24/09/19 Buzzo.ai Haptik (Reliance Industries) Social media commerce
Advanced Construction Technology
Engineering Acquisition 24/09/19 CQRA 51% Construction technology
Services
Durocrete Engineering Advanced Construction Technology
Engineering Acquisition 24/09/19 Road testing services
Services Services
Real estate Acquisition 19/09/19 Synergy Colliers 80% Construction project mgmt
Marketing
Acquisition 18/09/19 Langoor Havas Group Digital agency
services
INR 75
Technology Acquisition 17/09/19 Sports Unity Nazaro Technologies multi-player game, Umami
mn
CG Power and Industrial
Power Acquisition 17/09/19 KKR 10%
Solutions

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South Asia Monitor: India update

Sector Deal type Date* Investee Investor (s) Value Stake Notes

Telecoms Acquisition 12/09/19 Nischint Technologies Prabhat Telecoms 16% Telecom software

Education Acquisition 05/09/19 EuroKids International KKR INR 14.75 bn 90% Education services (preschool & K12)

Technology Acquisition 04/09/19 Yanolja eZee Technosys hotel bookings platform

Leisure Acquisition 04/09/19 TGI Fidays (India) Universal Success Enterprises
Engineering Acquisition 03/09/19 Intercode Armor Acquired thermal transfer business
Technology Acquisition 02/09/19 Oyo Danamica USD 10 mn Dynamic pricing of rental properties.
Investment Acquisition 30/08/19 Aspada LGT Bank Switzerland Impact investment fund

Note: *Date is date deal was reported in the media.

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About Cornhill Strategy
Cornhill Strategy is a UK-based strategic advisory and corporate intelligence firm, with significant
experience of undertaking advisory and research assignments across the South Asia region. We work
with clients in areas such as market entry strategy, acquisition search, commercial due diligence and
competitor intelligence. We complement our tailored advice with a rigorous, analytical approach to our
client’s requirements. Learn more at cornhillstrategy.com and follow us on twitter @cornhillstrat .

Key contact:

Harjinder Singh-Heer (harjinder@cornhillstrategy.com)