SME Opportunity in Indian Markets

Agenda

Overview – ICICI Bank

Emergence of Indian Economy

SME Opportunity - India

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 Agenda

Overview – ICICI Bank

Emergence of Indian Economy

SME Opportunity - India

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 ICICI Bank – New face of Indian Private Sector
Banking

Globally held
Assets of US $ (ADR, FII &
56.3 bn NRI's own 73.9%
Second largest
stake )
Bank in India -
Technology
Leader
Largest Private First Indian Bank
sector Bank in to be listed on
India NYSE

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 Our international franchise
Russia
UK
Canada Antwerp1 China
USA

UAE Bangladesh
Hong
India OBU Singapore Kong
Bahrain
Sri Lanka
Thailand
Malaysia
Indonesia

South Africa
Branch
Subsidiary
Representative Office

1. Branch of ICICI Bank UK

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 ICICI Bank - growth horizons
…with continuing focus on the
corporate banking and building
SME franchise Rural banking

International
banking
Retail & SME
banking

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 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

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 Agenda

Overview – ICICI Bank

Emergence of Indian Economy

SME Opportunity - India

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 Emergence of Indian Economy - I
Mid
Mid-90's
-90'seconomic
economic
liberalisation
liberalisation
Pre-
Pre-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  Restructuring to achieve world class

 Directed lending and baking for urban rich only efficiency

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 Emergence of Indian Economy - II
Post
Post2003
2003Integration
Integration
with
withglobal
globaleconomy
economy
Early
Early2000's
2000'sbelt
belt
tightening phase
tightening phase
 Articulation of international
competitiveness

 Exposure to global forces

 Indian economy gearing up for post GATT /
WTO scenario
 Increasing deployment of technology
 Accessing global markets for funds raising and
exports  Indian SMEs were re-aligning and
looking for pro-active support for its
 Improving quality standards
financing needs.
 India's recognition in i.e. intellectual capital,
skilled labour and raw materials

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 Key economic growth drivers
Continued
expansion of
services sector

Sustaining
Upward migration GDP growth Resurgent
of incomes rate of above industrial sector
8%

Demographic
forces

…growing
…growinginternational
internationallinkages
linkagesgiving
givingimpetus
impetustotoall
allsectors
sectorsof
ofthe
the
economy
economy

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 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
Foreign Direct Investment
Investor Investment
Increased by 178% from from
Increased by 281% from from led growth FY2000 levels to US$ 5.97 bn in
FY2000 levels to US$ 11.53 bn in FY2006#
FY2006#

Bank Credit
Bank credit grew by 35% in FY2006

*NSE (National Stock Exchange) and BSE (Bombay Stock

Exchange)

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 Agenda

Overview – ICICI Bank

Emergence of Indian Economy

SME Opportunity - India

Play film

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 Indian SME Opportunity
95%
95%ofofall
allindustrial
industrialunits
units

40%
40%of
ofindustrial
industrialoutput
output

SME
SMESector
Sectorin
inIndia
India 70%
70%ofofindustrial
industrialemployment
employment
accounts
accountsfor
for
35
35%%ofofexports
exports

Prime
Primedriver
driverofofnew
new
employment
employment

SME sector is vital to

the Indian economy
Source: SIDBI Report

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 Growth opportunities in India

Auto Ancillaries Infrastructure Pharmaceuticals

Textiles Retail trade Engineering

Logistics Software & IT services Travel & Tourism

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 Indian Auto ancillaries industry opportunity
Global auto ancillaries market estimated at US$ 1600 bn
plus

Indian Industry is US$ 10 bn with 20% exports.

India serves just 0.6% in global auto-comp market. Indian

Auto
Autoancillaries
ancillaries pie in world to become 3% by FY15
Industry
Industry
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

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 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 India has the largest cutting and polishing industry
&&Jewellery
Jewellery
Industry
Industry
Growth opportunities : Manufacturing of Polish
Diamonds and Diamond Jewellery

Low Cost base and design skills is the competitive edge

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 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

Industry expected to grow at a CAGR of 50% per annum

IT
IT//ITES
ITES and to reach US$65 bn by 2009 (Mckinsey study)
Industry
Industry
Growth opportunities : Software services and product
development, IT Consulting, Hardware manufacturing

Constant supply of highly qualified pool of skilled

English speaking software engineers

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 Indian Pharmaceutical Industry opportunity
Global Pharmaceutical market estimated at US$ 600 bn
plus

Indian Pharmaceutical industry share in global markets is

just 1.8%

In terms of market ranking India ranks 4th in Volume

Pharmaceuticals
Pharmaceuticals terms, 13th in Value terms & 8th in Manufacturing
Industry capabilities terms in the world
Industry
Growth opportunities : CRAMS (Contract Research and
Manufacturing Services) and Clinical Research &
Generics

Business Segments : Biotechnology, Formulations, Bulk

Drugs & CRO’s

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 Indian Biotechnology opportunity
Global Biotechnology market estimated at US$ 46 bn
plus

Indian Biotechnology industry share in global markets is

just 1.5%

Biotechnology In terms of no. of Biotechnology companies India ranks

Biotechnology
11th in the World and 3rd in Asia pacific
Industry
Industry

Growth opportunities : Contract R&D, Contract

Manufacturing, Technology Transfer and Clinical Trails

Business Segments : Biopharmaceuticals, Bioagriculture,

Bioinformatics, Bioscience and Bioindustry

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 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 Indian textile industry is growing at 20% and accounts for

Textile
4% of India’s GDP
Industry
Industry

India is the third largest producer of cotton`

Major player in the home textile segment

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 www.sme.icicibank.com

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 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.

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 Thank you…

For any further queries, you can reach me on:

Mobile - +919870101780
Email – sanjeev.matri@icicibank.com

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 Structural shift in economy with renewed
growth across all sectors
FY1991 FY2006 Sectoral share of GDP Growth in
(%) (%) GDP (%) 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 Industry
Industry Service
Service

Source: RBI,CSO
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 Services sector driving momentum

Accounts for over 60% of GDP

Software exports of US$ 23.6 Knowledge sectors earnings of

bn in FY2006 US$12.9bn: Pharmaceuticals,
International IT services hub Biotechnology, Engineering design
 Growth in financial services, travel &
Global back office
hospitality

Leveraging rich pool of human capital

 Quality educational institutions
 Large English speaking population

Back

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 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

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 Demographic advantage - BRIC
India China Russia Brazil
(Age (percentage of population)
group)
>60 7 10 8
23

35-59 23 30 26
36

15-34 35 35 37
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0-14 35 25 29
16

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

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 Upward migration of incomes
(households in million)
FY2010
FY1996 FY2002
Estimate

Middle income 33 50 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.

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 Indian Auto ancillaries industry opportunity

India's Strengths
•Strong Engineering Skills
•Emerging Culture of Cost competitiveness
•Technically Skilled Manpower leading to labour price
arbitrage
Auto
Autoancillaries
ancillaries
Industry
Industry

“US based Auto Vendors can potentially increase ROS by

3%-6% by shifting manufacturing to India” Mckinsey
Report

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 Indian Auto ancillaries industry opportunity

Who's Outsourcing to Indian SME?

Large OEMs…
•GM,US-global purchase team
•Volvo-Global buying Team

Auto •Ford – full fledged sourcing team

Autoancillaries
ancillaries
Industry
Industry •Honda
•Toyota-hub for transmissions
•Caterpillar – global purchase team
•John Deere
•Piaggio

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