Effectofrecessionppt 120102152522 Phpapp01 Copy Copy

7/28/2019 Effectofrecessionppt 120102152522 Phpapp01 Copy Copy

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AFFECT OF RECESSION ON INDIAN

BUSINESS

BY: Sec Q (PGDIB)

Rashmi Verma


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RECESSION- MEANING

A RECESSION is a decline in a country's gross

domestic product (GDP) growth for two or

more consecutive quarters of a year.

A RECESSION is also preceded by several

quarters of slowing down.

RECESSION is the result of reduction in the

demand of products in the global market.

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National Bureau of Economic Research

(NBER)

National Bureau of Economic Research (NBER)

is the official agency in charge of declaring

that the economy is in a state of recession.

They define recession as : significant decline

in economic activity lasting more than a few

months, which is normally visible in real GDP,

real income, employment, industrialproduction, and wholesale-retail sales

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Business Cycle

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DIFFERENCE BETWEEN RECESSION

AND DEPRESSION

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CAUSES OF RECESSION

Currency crisis

Energy crisis

War Under consumption

Overproduction

Financial crisis Price of Fuels

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EFFECTS OF RECESSION

Bankruptcies

Credit crunches

Deflation (or disinflation) Foreclosures

Unemployment

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GLOBAL RECESSION

It is rightly said that, when US sneezes the worldcatches the cold

Economists at the International Monetary Fund(IMF) state that a global recession would take aslowdown in global growth to three percent orless.

The IMF estimates that global recessions seem tooccur over a cycle lasting between 8 and 10years.

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World Recession

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Recession

Name

Recession

Year

Time Taken Cause & Impact

Great

Depression

1929-1939 10 years Stock markets crashed worldwide,

and a banking collapse took place

in the United states. This sparked

a global downturn, including a

second, more minor recession in

the United states, the Recession

of 1937.

1937 Oil

Recession

1973-1975 2 years A quadrupling of oil prices by

OPEC coupled with high

Government spending due to the

Vietnam war lead to stagflation inthe United States.

Early 1980s

Recession

1980-1982 2 Years The Indian Revolution sharply

increased the price of oil around

the world in 1979, causing the

1979 energy crisis.Rashmi Verma


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Recession Name Recession Year Time Taken Cause & Impact

Early 1990s

Recession

1990-1991 1 year Industrial production and

Manufacturing trade sales

decreased in early 1991.

Early 2000s

Recession

2001-2003 2 years The collapse of the dot-com

bubble, the September 11 attacks

and accounting.

Early 2008s

Recession

2008-so on continuing The collapse of US economy and

other related countriec.

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Recession in India

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Causes of Recession in India

Indian companies have major outsourcing

deals from the US

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Affects of recession on Indian business

The sectors least affected (directly) by theslowdown are Pharmaceuticals, Oil & Gas,FMCG, Media & Entertainment

Those which will feel a moderate impact ofthe global crises are Power, Automobiles,Retail, Hospitality and Tourism

The sectors most severely affected are Banks,Financial Services, Real Estate, Infrastructureand Information Technology

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Major sectors affected by Recession

Indian Stock Market

IT and BPO

Banking

Real State

Aviation

Textile

Automobile

Hospitality

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TEXTILE

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Textile

'cottage industry' to the state of supremacy

second largest employer in India, next to

agriculture

generates employment opportunities for

approximately 33.17 million workers directly,

and 54.85 million workers indirectly

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60% of the total garments manufactured in India

are exported to foreign markets like EU, US, and

Japan, generating revenue of upto US$ 52 billion

Economic slowdown in the US and EU hasaffected the textile business in India, resulting in

a drastic decline in the country's garment exports

almost 8, 00,000 garment and textile employeeshad lost their jobs

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October 2008:Othe total output of the textile

sector came down by 10%

Punjab generating employment for 4,00,000

jobs has suffered a 50% loss in sales

Majority of the layoffs target the daily-wagers

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INDIAN BANKING SECTOR

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BANKING

banks are like backbone for industries

They provide loans and capital to the

business, industry, agriculture etc.

Loss of profit and Capital of these banks bring

serious threat to the economic development

of that country

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The present world recession has its roots in

subprime crises

The global banks and brokerages have had to

write off estimated $ 512 billion in sub-prime

losses

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the banking system in India had no direct

exposure to the subprime assets that

triggered the crisis in the advanced economies

the Reserve Bank had taken a number of

measures which contributed to strengthening

the resilience in the Indian banking system

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Banks have suffered losses, including some

public sector banks like Punjab National Bank,

Bank of India, State Bank of India and Bank of

Baroda as they had an exposure to theinstruments issued by Lehman and Merrill

Lynch.

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Reason for non failure of Indian

banking system during recession

Traditional working of Indian Banks

Strong base of nationalized bank

Effective control of RBI Role of Finance Ministry

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INDIAN AVIATION INDUSTRY

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Indian Aviation Industry

The First Phase the Pioneering Years

The Second Phase Public Sector Era

The third Phase the Liberalization Era The Fourth Phase The Era of Growth and . .

Recession (Fare Setting, Fare War and their

Consequences)

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Aviation before recession

India aviation industry was expanding

There were new budget airlines and private

players

The number of job opportunities in the

industry was going up

Students started signing up for courses like

airline pilot's, flight attendant's, ground crew

etc.

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Challenges after Recession

High Aviation Turbine Fuel (ATF) prices

Rising labor costs

Shortage of skilled labor Excess capacity

Huge debt burden

Intense price competition

Job losses

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Indian Stock Market

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Biggest falls in Indian stock

market history

Worst hit stock

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Economic Growth in Advance nation had close to zero

We take you through the BIGGEST falls in

the Indian stock market history.

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January 21, 2008January 22, 2008

February 11, 2008

March 3, 2008March 17, 2008

10 October 2008

October 24, 2008

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Bloodbath in Indian Stock Markets

Investors in Indian markets lost more than 16

trillion Rupees in just 2 days !

The ICUs of almost all city hospitals were full

o The first lesson

o The other big lesson

o

other learning which I hope will play out in thefuture

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AUTOMOBILE INDUSTRY

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Indian Automobile Industries

India is the world's largest two wheelermanufacturer.

India is the world's second largest tractor

manufacturer. India has the fourth largest car market in Asia.

India has the world's largest three wheeler

market. India is fourth largest Automobile exporter in

the world.

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Effect On Automobile Company

TATA MOTORS

MARUTI SUZUKI

MAHINDRA & MAHINDRA

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Effect Of Recession

Uncertain exchange rate and a sudden increase in dollar value

against Indian Rupee

Delayed Payments from the OEMs (Original Equipment

Manufacturer)

Alloy and steel prices have also not shown any reduction in

their prices

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Post Recession

The Indian automobile industry is expected to grow to US$ 40

billion by 2015 from the current level of US$ 7 billion in

2008.

Challenge of Chinese Automobile Industry.

Market Strength of Indian Automobile Industry.

New Innovation

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Real Estate

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http://managementfunda.com/wp-content/uploads/2010/05/Management-Funda.JPG


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Contribution towards the Economy

Contribution to GDP of about 7%

Second largest employment generator in the

country

Real estate growth gives boost to steel and

cement sectors

Real estate is a growth engine for

development of over 269 allied industries

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Causes Of Recession On Real Estate

Uniformity of land laws, slowdown andapproval delays, the developers missed tocomplete their projects within the boom

period. Withdrawing of money from Real Estate

sector.

Many companies has given pink slips to theiremployees

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Major Player In Real Estate

DLF

UNITECH GROUP

ANSALS

PARSAVNATH DEVLOPERS

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Impact on Real Estate Sector

Increase in prices of inputs due to inflation effecting all areas ofeconomy like cement, steel, etc.

Increase in home loan interest rates resulting into additional EMIburden on the borrowers.

Reduction in salaries and layoffs resulting into reduced demand for

Real estate Demand-supply imbalance

Forced correction in prices

Reduction in Commercial Rentals

Projects stagnancy

Slow down in infrastructure projects Difficulties to raise fund (Failure of Emaar IPO)

Loss of Jobs

Shortage of skill workers

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Effect on Finance

DLF 79 % decline in profits & 57 % slide in sales

Unitech 63 % decline in profits & 50 % slide in

sales.

Parsavanath, India bulls, HDIL, Akruti, Shobha,Purvankara have reported decline in profits upto

95 %.

Overall 76 % dip in profits & 57 % fall in sales inFirst Quarter of FY 09-10 over First Quarter of FY

08-09.

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FUTURE PREDICTIONS

Close to $7 billion to $8 billion of venture capital

expected to flow into Indian real estate market.

A significant increase in project execution throughPublic- Private-Partnerships.

More demand for office and industrial space.

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INDIAN BPO AND IT INDUSTRY

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BPO CONTRIBUTION IN INDIA

India has revenues of 10.9 billion USD

30 billion USD from IT and total BPO

5-6% share of the total BPO Industry

Employs more than 700,000 people 35 percent of the BPO market worldwide.

Eastern Europe, Philippines, Morocco, Egypt and

South Africa have emerged to take a share of themarket

market share of the offshore piece

is expected to decline.Rashmi Verma

I BPO I d


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Impact on BPO Industry

Indian IT and BPO companies to reduce their

dependency to US

start marketing their services to other

countries like APAC

Tier II IT and BPO companies wil merge with

larger IT and BPO companies

Indian outsource vendors will reduce hiring

new employees

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Wh t it t I di


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What it means to India

Cost efficiencies and business transformation incompanies will likely gain greater precedencethan ever

The resilient vendors can build new and

differentiated offerings for companies India may benefit due to higher experience and

maturity in these areas.

Cash-starved companies may look to monetise

their investments in captive operations HR outsourcing will provide remediation to some

of the staff post

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Global Sourcing in Banking Capital


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Global Sourcing in Banking, Capital

Markets and Insurance.

The largest untapped opportunities in banking are specialization intransaction processing, account servicing and credit card fraudmanagement

Well-served functions in the capital markets sector that will continue todrive growth include business acquisitions, account servicing, investmentoperations, registrar and transfer functions and fund Accounting

The largest untapped opportunities in the insurance sector include policyservicing, customer service, finance and accounting, new businessacquisition and claims processing

Most financial services companies are now sourcing BPO through captiveunits in India and the Philippines, however, third-party sourcing also isrising

Financial services buyers are constantly innovating and restructuringdelivery models, the latest being a hybrid model where the back-endprocesses are migrated to third-party suppliers while complex, judgment-intensive functions are retained within the captive

To date, UK insurers are largest adopters of offshore BPO, suggestingsignificant growth opportunities exist for the U.S. insurance market that is

three times the size of the UK market.Rashmi Verma

CONCLUSION OF THE STUDY OF


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CONCLUSION OF THE STUDY OF

RECESSION & BPO

Existing contracts will continue

Growth in the hard-hit will be limited

sectors (especially BFSI).

Sectors, not seeing much slowdown

competition for the few available outsourcing

contracts will be strong.

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I t th I di


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Impact on the Indian

IT industry

Asia / Pacific is experiencing a deferred impactdue to the domino effectof the current crisis.

43% of Western companies are cutting back theirIT spend and nearly 30% are scrutinizing ITprojects for better returns.

The slowing U.S. economy has seen 70% of firmsnegotiating lower rates with suppliers and nearly60% cutting back on contractors.

The IT services and outsourcing market iscurrently undergoing a structural transformationthat will have a profound effect on how IT serviceproviders will have to conduct their business

Rashmi Verma

CONCLUSION OF IT SECTOR AND


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CONCLUSION OF IT SECTOR AND

RECESSION

Some opportunities for managing the bottom

line

The macroeconomic environment is

depressing

The environment looks weakest in a long

while,and yet there remain pockets of

opportunity.

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Hospitality Industry

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Overview

Recession took its toll onhospitality industry.

Effect on travelers.

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State of Indian hospitality industry

Foreign exchange losses.

The biggest drop.

Things changed during recession.

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Facts and Figures

The bottom line was severely hit

by 65%.

Rise and fall due to recession.

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Recovery Cycle

Increased supply of rooms.

Rise in the NCR region.

Road to recovery.

Documents

Effectofrecessionppt 120102152522 Phpapp01 Copy Copy