Investing in India David Velikonja

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Investing in India

David VelikonjaKasi Rao

Pierre Daillie

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International Investing

David Velikonja, MBARBC Dominion Securities

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Why Equities?

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Returns – 30 Years

0%2%4%6%8%

10%12%14%16%

CPI Cash Bond GIC Cdn EAFE USA S/M

1975-2004

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30 Year Returns - After Inflation

0%2%4%6%8%

10%12%14%16%

CPI Cash Bond GIC Cdn EAFE USA USS/M

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30 Year Returns - After Taxes

0%2%4%6%8%

10%12%14%16%

CPI Cash Bond GIC Cdn EAFE USA USS/M

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Compounding Impact

0200400600800

100012001400160018002000

7.50%10%$875k

$1,744k

$100k

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Asset Allocation

InternationalLarge CapSmall Cap

Int’l 20-35%

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International• Europe• Australia• Far east• India• China

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Kasi Rao

Management Consultant, India

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Chindia• China• India

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Economics & Politics

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Investment Mission

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Emerging Titan

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Foreign Investment

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Economic Growth

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Technology

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Manufacturing

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Hard & Soft Infrastructure

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Chindia Twins

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Oil

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Number 3

• China• USA• India

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Rich Man, Poor Man

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Isolation Issues

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USACanada

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Pierre Daillie

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India:The Awakening Giant

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Agenda

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

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Future 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.* US$27 trillion by 2050.India’s 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

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Demographics

• 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

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Economic Liberalization

1991Dr. Manmohan Singh, Finance Minister

(architect of India’s liberalization)

Fiscal crisis – collapse of Soviet UnionEnd of the “Licence Raj”

India – opened to Multi-Nationals

2005Dr. Manmohan Singh, Prime Minister

2nd fastest growing at 8.5%

4th largest economy at $3.7tn (PPP)

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Reservoir 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 BA’s 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, IBM’s development teams or Intel’s scientist pool.

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IT and Technology

Technology – the “enabler”• Indian IT firms are becoming the world’s 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?

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Infrastructure Boom

New Toll Highways

New Subways

New Deep Sea Ports

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India’s 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.

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India’s Western Institutions

• 675 million voters took part in last elections (2004)

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India’s Western Institutions

• Solid banking system

• 2nd largest stock market in the world

• Debt market

• Entrepreneurial spirit

• Educational system (high standard)

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Globalization

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• 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

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India – Urban Centres

BangaloreMumbai

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Disposable Incomes Rising / Middle Class Expanding

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Bangalore BMW Dealership

Consumption Led Boom

Brigade Road, Bangalore

Forum Mall, Bangalore

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India: #1 for Global Retail Expansion – A.T Kearney

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Consumption Led Boom

99# of new shopping centres under construction in India

(280 Shopping Centres are in the planning stages for 2006-7)

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Retailing Expansion Boom

Gurgaon, India (New Delhi)

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Demand for Real Estate (Mortgages)

There is a net shortage of 23 million residential properties arising from demand

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Strength 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.

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Consumers are Under Leveraged

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India on China Timeline

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India on China Timeline

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• 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.)

India: Ten Year Outlook

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0

10,00020,000

30,00040,000

50,000

60,00070,000

80,00090,000

100,000

2000 2010 2020 2030 2040 2050

BRICsG6

2025: BRICs economies over half as

large as the G6

By 2040: BRICS

overtake the G6

BRICs Have a Larger US$GDP Than the G6 in Less Than 40 YearsGDP

(2003 US$bn)

Goldman Sachs Model Projections.

The Largest Economies in 2050

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

Ch US In Jpn Br Russ UK Ger Fr It

GDP (2003 US$bn)

Goldman Sachs Model Projections.

Source: Goldman Sachs

India $27 Trillion by 2050

Economic Size: India Moves into the Big Three

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Risks

High crude oil prices, inflationManaging fiscal deficitGeo-political riskInfrastructureInterest rates

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Birla Sun Life Asset Management Co. 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 India’s best – Many Awards• One of the largest team of research analysts in the

industry• ‘Bottom Up’ investment strategy, Value based• Strong Fundamental

Birla Sun Life AMC Ltd.

55Past 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.

Excel Funds - PerformanceAs of March 31, 2006

Globefund Rating ExcelIndia Fund

Excel India China

Fund

Excel China Fund

6 months 27.32% 28.3% 24.8%

1 Year 51.74% 25.9% 38.7%

3 Years 58.77% -- --

5 Years 26.36% -- --

7 years 18.61% -- --

Since Inception 19.60% (04/98) 17.4% (06/03) 25.7% (12/04)

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The Infosys “War Room” (above)

Infosys Control Centre (below)

Infosys: Exemplary

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Top 10 Holdings of Excel India FundAs of March 31, 2006

Holding Weightage (%)

P/EFY07

Earnings Growth

STATE BANK OF INDIAIndia’s largest bank 5.27 9.4 16%

INFOSYS TECHNOLOGIES LTD.India’s second largest and most respected software company 4.44 24.8 32%

MCDOWELL & COMPANY LTD.India’s largest spirits company 4.40 42.1 201%

BHARTI TELEVENTURES LTD.India’s largest cellular services provider 4.33 23.6 40%

BHARAT HEAVY ELECTRICALS LTD.India’s largest producer of power and industrial machinery 3.95 25.0 35%

SATYAM COMPUTERS LTD.India’s fourth largest software company 3.57 21.2 32%

SIEMENS (INDIA) LTD.Siemens India subsidiary 3.23 29.9 30%

ACC LTD.India’s largest cement company with pan India presence 3.18 18.2 110%

TAJ GVK HOTELS LTD.Associate of Indian hotels having strong presence in south India 3.16 26.1 39%

HERO HONDA MOTORS LTD.Largest two-wheeler company in the world 2.92 15.9 17%

Weighted PEG Ratio 42.0%

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Summary: Why INDIA?

Economic Liberalization India’s 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

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Disclaimer

• 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 for any loss, damage, liability whatsoever for any direct or indirect loss arising from the use or access of any information that may be 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.

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