Title: Investing in India
1Investing in India
- David Velikonja
- Kasi Rao
- Pierre Daillie
2International Investing
- David Velikonja, MBA
- RBC Dominion Securities
3Why Equities?
4Returns 30 Years
1975-2004
530 Year Returns - After Inflation
630 Year Returns - After Taxes
7Compounding Impact
1,744k
875k
100k
8Asset Allocation
Intl 20-35
9International
- Europe
- Australia
- Far east
- India
- China
10Kasi Rao
- Management Consultant, India
11Chindia
12Economics Politics
13Investment Mission
14Emerging Titan
15Foreign Investment
16Economic Growth
17Technology
18Manufacturing
19Hard Soft Infrastructure
20Chindia Twins
21Oil
22Number 3
23Rich Man, Poor Man
24Isolation Issues
25USACanada
26Pierre Daillie
27India The Awakening Giant
28Agenda
- Why INDIA?
- Unmatched Demographics
- Democratic, educated, and English speaking
- Burgeoning middle class - Consumption Boom
- Economic Growth
- Indian Equity Market
- Superior Earnings Growth
- Attractive valuations
- Low correlation
- Key Risks
- Why Excel India Fund?
- Efficiently Structured
- Outstanding Portfolio Manager
- High Quality Portfolio Performance
29Future of India
- Indian economy will be the fastest growing
economy over the next 3 5 decades. Growth
expected to be approx. 6 for the next 3 5
decades. - In terms, Indian economy will be one of the
largest in the globe. US27 trillion by 2050. - Indias per capita income in terms will grow by
35 times in the next 47 years (i.e. 2050) - Indian rupee is likely to appreciate by
approximately 2 per annum total appreciation
of nearly 300 over next 3 5 decades. - India is the research hub to the world.
- Source Goldman Sachs, Global Report No. 99
30Demographics
- Population 1.085 billion
- Middle class 450 million (est.)
- (growing at 30-40 million/year)
- 550 million Indians under age 25
- 350 million under age 15
Source IBEF 2006
31Economic Liberalization
1991 Dr. Manmohan Singh, Finance Minister
(architect of Indias liberalization) Fiscal
crisis collapse of Soviet Union End of the
Licence Raj India opened to Multi-Nationals
2005 Dr. Manmohan Singh, Prime Minister 2nd
fastest growing at 8.5 4th largest economy at
3.7tn (PPP)
32Reservoir of Intellectual Capital
- A meritocratic education system with a special
focus on English, Science Maths - Success rate for admission to the top technology
institutes - IITs is 2 at 10 - 250 universities, 1,500 research institutions,
10,000 higher education institutes. 3 million new
BAs per year - Pool of 23m professionals (graduates/post-grads)
doctors, accountants, IT engineers, engineers - of Post-Graduates increasing by nearly half a
million every year - Historically India has been a net exporter of
talent Indians makeup a significant proportion
of Microsoft, IBMs development teams or Intels
scientist pool.
33IT and Technology
- Technology the enabler
- Indian IT firms are becoming the worlds leading
players - Western IT firms are making India their home
- Technology has brought India next door
- Is it New York or New Delhi?
- Is it Montreal or Mumbai?
34Infrastructure Boom
New Subways
New Deep Sea Ports
New Toll Highways
35Indias Western Institutions
- Fully democratic society
- Parliamentary government
- Rule of Law
- Strong independent judiciary
- English speaking (lingua franca)
India's Parliament House The President of India
545 directly elected members of the Lok Sabha
(House of the People) and 250 indirectly elected
members of the Rajya Sabha Council of States)
constitute this supreme legislative body.
36Indias Western Institutions
- 675 million voters took part in last elections
(2004)
37Indias Western Institutions
- Solid banking system
- 2nd largest stock market in the world
- Debt market
- Entrepreneurial spirit
- Educational system (high standard)
38Globalization
- 240 Multinationals have business in India
- Over 100 Fortune 500 cos. have operations in
India - All Major governments have India strategy
- Unequalled labour arbitrage
- Indian companies expanding operations globally
- Indian companies acquiring foreign companies
4
39India Urban Centres
Mumbai
Bangalore
40Disposable Incomes Rising / Middle Class Expanding
41Consumption Led Boom
Brigade Road, Bangalore
Forum Mall, Bangalore
Bangalore BMW Dealership
42India 1 for Global Retail Expansion A.T
Kearney
43Consumption Led Boom
99 of new shopping centres under construction
in India (280 Shopping Centres are in the
planning stages for 2006-7)
44Retailing Expansion Boom
Gurgaon, India (New Delhi)
45Demand for Real Estate (Mortgages)
There is a net shortage of 23 million residential
properties arising from demand
46Strength in Engineering and Manufacturing
- 1.2 million cars per year and accelerating
- Domestic auto component sector on the fast track
- 34 per cent growth in the past three years.
47Consumers are Under Leveraged
48India on China Timeline
49Consumption Led Boom
- Luxury goods market now US14 billion
- 91 million cell phones (March 06)
During 2005, Cell phone subscriptions grew from
40 million to 75 million. There were an
additional 5 million added in January.
50India on China Timeline
51India Ten Year Outlook
- GDP to grow at 7
- Real GDP est. 2005 - 800bn
- Real GDP est. 2015 1,600 bn
- Market Cap to grow to 1.0X to 1.5X GDP
- 2005 Market Cap - 550 bn
- 2015 Market Cap 1.0X GDP - 1,600 bn (est.)
52Economic Size India Moves into the Big Three
The Largest Economies in 2050
BRICs Have a Larger USGDP Than the G6
GDP
in Less Than 40 Years
GDP
(2003 USbn)
(2003 USbn)
50000
100,000
45000
By 2040
BRICs
90,000
BRICS
40000
G6
80,000
overtake
2025 BRICs
35000
the G6
India 27 Trillion by 2050
economies
70,000
over half as
30000
60,000
large as the G6
25000
50,000
20000
40,000
15000
30,000
10000
20,000
10,000
5000
0
0
2000
2010
2020
2030
2040
2050
Ch
US
In
Jpn
Br
Russ
UK
Ger
Fr
It
Goldman Sachs Model Projections.
Goldman Sachs Model Projections.
Source Goldman Sachs
53Risks
- High crude oil prices, inflation
- Managing fiscal deficit
- Geo-political risk
- Infrastructure
- Interest rates
54Birla Sun Life Asset Management Co. Ltd.
Birla Sun Life AMC Ltd.
- Joint venture between Sun Life Financial of
Canada and the Aditya Birla Group in India - 3.5 billion AUM (US)
- 50 owned by Sun Life
- Based in Mumbai, India
- Rated as Indias best Many Awards
- One of the largest team of research analysts in
the industry - Bottom Up investment strategy, Value based
- Strong Fundamental
55Excel Funds - Performance As of March 31, 2006
Past performance is no assurance or indicator of
future returns. These rates of return are
historical annual simple total returns they
include changes in net asset value and
reinvestment of all distributions, but do not
take into account any sales, redemption, or other
charges payable by an investor, which would
reduce returns. PLEASE READ a Fund's simplified
prospectus carefully and consult your advisor
before investing. Mutual funds are not
guaranteed their values change frequently.
Investors may experience a gain or loss when they
sell their units in any mutual fund.
56Infosys Exemplary
The Infosys War Room (above) Infosys Control
Centre (below)
57Top 10 Holdings of Excel India Fund As of March
31, 2006
58Summary Why INDIA?
- Economic Liberalization
- Indias Institutions Rule of Law, Education
System, Parliamentary Government - Huge Youth Population
- Middle Class Expanding
- Surge in Consumption and Exports
- Earnings Growth
- Valuations Attractive
- Currency Appreciation
- Risks
- Low Correlation to North American Markets
59Disclaimer
- Any information contained in this presentation
does not constitute and shall be deemed not to
constitute an advice, an offer to sell/ purchase
or as an invitation or solicitation to do so for
any entity and further, Excel Funds Management,
Birla Sun Life Mutual Fund / its affiliates/
sponsors/employees, directors shall not be liable
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displayed in this presentation from time to time.
Recipients of the information contained herein
should exercise due care and caution and read the
offer document (including if necessary, obtaining
the advice of tax/legal/accounting/financial
/other professionals) prior to taking of any
decision, acting or omitting to act, on the basis
of the information contained herein. - Opinions expressed in the presentation are not
necessarily those of Birla Sun Life Mutual Fund
or any of their officers, employees, personnel,
directors and Excel Funds Management Inc. does
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