Recovery Fund

This product is suitable for investors who are seeking*

Long term wealth creation solution A close ended equity fund that aims to provide capital

appreciation by investing in equity and equity related securities

that are likely to benefit from recovery in the Indian economy.

*Investors should consult their financial advisers if in doubt about whether the product is suitable for them

HIGH RISK (BROWN)

Note - Risk may be represented as:

(BLUE) investors understand that

their principal will be at low risk

(YELLOW) investors understand that

their principal will be at medium risk

(BROWN) investors understand that

their principal will be at high risk

NFO Period: 9th

March to 23rd

March 2015

Economic Recovery and Markets

Current trend on recovery trajectory

Opportunities in the Current Market

India lagging An opportunity

ICICI Prudential India Recovery Fund Series 1

01

2

3

4

5

6

7

8

9

300

400

500

600

700

800

900

1,000

1,100

1,200

1991 1992 1993 1994 1995 1996 1997

CNX Nifty GDP Growth


GDP Growth and CNX Nifty - 1992-97

"Industry" (led by manufacturing), and "services" (led by trade, transport and communication) were driving the growth, while agriculture was mixed.

Source: UBS Securities

Nifty GDP% Year

Real

GDP

AFF Ind Mgf Ser THTC FIRB

1993 5.3 6.7 3.2 3.1 5.7 5.6 5.4

1994 5.7 3.3 5.5 8.6 7.4 6.9 11.2

1995 6.4 4.7 9.2 11 5.8 9.9 3.9

1996 7.4 -0.7 11 16 10 13.4 8.1

1997 7.8 9.9 6.4 9.5 7.5 8.1 6.2

in % terms

AFF

Ind

Mgf

Ser

THTC

FIRBFinancing, Insurance, Real Estate and Business

Services

Agriculture, Forestry & Fishing

Industry

Manufacturing

Services

Trade, Hotels, Transport and Communication

Nifty Returns - 188% on

absolute basis


In the 2003-08, "industry" did well led by manufacturing, while services growth improvement was led more by financing and real estate.

GDP Growth and CNX Nifty 2003-08


Nifty GDP%

0

2

4

6

8

10

12

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2002 2003 2004 2005 2006 2007

CNX Nifty

Year

Real

GDP

AFF Ind Mgf Ser THTC FIRB

2003 3.9 -6.6 7.2 6.9 6.7 8.3 7.2

2004 8 9 7.3 6.3 7.9 11.2 5.3

2005 7.1 0.2 9.8 7.4 8.3 9.5 7.7

2006 9.5 5.1 9.7 10 11 12 12.6

2007 9.6 4.2 12 14 10 11.6 14

2008 9.3 5.8 9.7 10 10 10.9 12

in % terms

AFF

Ind

Mgf

Ser

THTC

FIRBFinancing, Insurance, Real Estate and Business

Services

Agriculture, Forestry & Fishing

Industry

Manufacturing

Services

Trade, Hotels, Transport and Communication

Nifty Returns - 319% on

absolute basis

Current trend on recovery trajectory

Current trend on recovery

trajectory

Higher

Inflation

Higher

Interest

Rates

Depressed

Demand

Lower

Capacity

Utilization

No further

Investment

Supply

Constraints

Lower

Inflation

Lower Interest

Rates

Higher

Demand

Better

Capacity

Utilization

Higher

Investment

Better Supply

Response

We believe that India is moving from a vicious to a virtuous economic cycle

Current trend on recovery

trajectory

Economic

Indicators Reforms

Business

sentiment

improvement

Investment

Recovery

Economic Indicators

Indicator November

2012

November

2013

Now

WPI (%) 7.2 7.5 -0.39

CPI (%) 9.9 11.6 5.11

CAD as % of GDP -4.7 -1.7 -1.7 to 2

Fiscal Deficit as % of GDP 4.9 4.6 4.1 (E)*

Oil Prices ($/bbl) 110 112 60

G-Sec Yield (%) 8.22 8.74 7.70

Credit Growth (%) 14 14 11

GDP (%) Old 4.6 5.2 5.3

GDP (%) - Rebased -- 7.5 7.8

Index of Industrial Production. (%) -1.01 -1.30 1.70

Source: Bloomberg; CAD Current Account Deficit; GDP Gross Domestic Product; WPI Wholesale Price Index; CPI Consumer Price Index; * Estimate as per Union Budget 2015; Now refers to as per latest available data as on 31st January 2015

Source: Motilal Oswal Securities * Refer Appendix for details on reforms undertaken by Government

The five Defence Acquisition Council meetings since August 2014 have cleared INR1.4trillion of projects.

Defence

Dedicated Freight Corridor promises to be a game changer for improving the competitiveness of Indian manufacturing.

Railways

Plans to create port capacity of around 3200 Million Metric Tonnes by 2020.

Ports

Several large sized projects earlier reserved for Buy Global category have been shifted to Make and Buy Indian category

Make in India

Introduced in parliament in December; political consensus exists

Goods and Sales Tax

Reforms undertaken by the

Government

Vibrant Gujarat investment commitments cross $400 bn. Bengal Global Business Summit - $38bn in investment proposals.

China made $20 billion investment commitments over five years across various sectors.

Japan pledges to invest $35 billion in India in next 5 years.

US plans for $4 billion investment in India.

Investment Commitments


Business sentiment

improvement

The purchasing managers' index (PMI), has been above 50 (denoting expansion), driven

more by manufacturing recently, though the services index has also been robust.

Purchasing Managers Index RBI industrial outlook

40

45

50

55

60

65

Dec-06

May-0

7

Oct-07

Mar-08

Au

g-08

Jan

-09

Ju

n-09

No

v-09

Ap

r-10

Sep

-10

Feb

-11

Ju

l-11

Dec-11

May-1

2

Oct-12

Mar-13

Au

g-13

Jan

-14

Ju

n-14

No

v-14

PMI - composite PMI - manufacturing PMI - services

5

10

15

20

25

30

35

40

45

50

55

Dec-06

May-07

Oct-07

Mar-08

Au

g-08

Jan

-09

Ju

n-09

No

v-09

Ap

r-10

Sep

-10

Feb

-11

Ju

l-11

Dec-11

May-12

Oct-12

Mar-13

Au

g-13

Jan

-14

Ju

n-14

No

v-14

Overall Business Situation Financial Situation

Production


Index Index

Policy

announcements

Pipeline build up

Infra ordering

pickup, DFC

Non linear drivers Defence, High speed rails

Renewable, metro

Smart cities

River cleaning

Short cycle

Industrial capex

T&D pickup

Policy implementation phase

Railway, mining capex

Infrastructure capex

acceleration

2014 2015E 2016E 2017E 2018E 2019E

Stage 1 Stage 2 Stage 3

Power BTG

Investment Recovery

Source: Barclays; The above graph depicts a 3 stage bottom-up cyclical model

DFC - Dedicated Freight Corridor; BTG - Boiler-Turbine-Generator, T&D Transmission and Distribution

Investment Recovery

0

1

2

3

4

5

6

7

8

9

Dec 05 Jun 07 Dec 08 Jun 10 Dec 11 Jun 13 Dec 14

New Investment Projects (Rs tn)

0

10

20

30

40

50

60

70

80

90

Dec 05 Jun 07 Dec 08 Jun 10 Dec 11 Jun 13 Dec 14

Project completion rate (%)

New Capex announcement is up 3 times on year on year basis and is at a 5 year high.

Project completion rate has started seeing some uptick.

Early signs of Capex Revival

Source: Jefferies

Investment Recovery

The Cabinet Committee on Investments (CCI) has cleared a lot of stuck projects 190+ projects, worth Rs6.5 trillion (over 5% of GDP), out of the 491 accepted for consideration.

Projects cleared by CCI

No. of projects Pending Cleared Total

Chemicals & Fertilizers - Chemicals/Petrochemicals 1 0 1

Chemicals and Fertilizers - Fertilizers 3 0 3

Civil Aviation 0 2 2

Coal 50 29 79

Commerce and Industry - Commerce 6 2 8

Commerce and Industry-DIPP 16 4 20

Mines 5 3 8

Petroleum and Natural Gas 32 17 49

Pow er 86 99 185

Railw ays 16 9 25

Road Transport and Highw ays 24 13 37

Shipping 11 8 19

Steel 45 6 51

Textiles 0 1 1

Urban Development 3 0 3

Grand Total 298 193 491


Opportunities in the Current Market

Opportunities in the Current

Market

Planned capex by Public Sector Units over next 2-3 years (Rs. bn)

Companies FY15 FY16 FY17

Power Grid Corporation of India 210 210

NTPC Ltd 1107

Coal India 50 50

Steel Authority of India 150

Oil and Natural Gas Corporation 313 315 351

Oil India 10 22 16

GAIL 24 35 35

Bharat Petroleum Corporation Limited 80 55 30

Indian Oil Corporation 150 150 44

Hindustan Petroleum Corporation Limited 61 75 30

Petronet LNG Ltd 15 13 8

Aggregate cash balance in India corporates (ex financials) is Rs4.7trillion

With huge capex plans and cash balance, Indian corporates are likely to go through

the expansion phase over the coming years.

Source: UBS Securities; The slide is to demonstrate the Capital expenditure and expansion planned by some of the Public Sector

Undertakings. This data has been obtained from independent source. The data is to illustrate the growth opportunities available.

Stocks/Companies may be part of the portfolio of schemes of ICICI Prudential Mutual Fund. All or any schemes may or may not

invest in the stocks stated. It is necessary to undertake research and consult financial advisor before investing.


Market

Capital Goods sector performance and Repo rate have correlation.

Rate easing is in general positive for the sector as it helps boost returns for

asset companies.

0

1

2

3

4

5

6

7

8

9

10

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

120%

140%N

ov-00

No

v-01

No

v-02

No

v-03

No

v-04

No

v-05

No

v-06

No

v-07

No

v-08

No

v-09

No

v-10

No

v-11

No

v-12

No

v-13

No

v-14

Sector performance yoy Repo rate (RHS %)

Post election rally

Source: Barclays

Capital Goods


Market

Recovery in the economy can fuel the credit growth of the banking sector

which may lead to increase in NIMs. Between 2004-08, credit growth of banking sector was way above the GDP

growth.

Source: Motilal Oswal; NIMs Net Interest Margins

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

FY0

0

FY0

1

FY0

2

FY0

3

FY0

4

FY0

5

FY0

6

FY0

7

FY0

8

FY0

9

FY1

0

FY1

1

FY1

2

FY1

3

FY1

4

Credit Growth (%) Nominal GDP Growth (%) - RHSBanks

India lagging An opportunity

Population with no access to

electricity

0.6

0.6

0.7

10.3

33.7

35.5

0 5 10 15 20 25 30 35 40

China

Malaysia

Thailand

Philippines

India

Indonesia

(%)

Source: CLSA

Around 34% of India's population have no access to electricity

Power requirement in India is expected to increase in the future, which is likely to

boost margins of power generation companies

121

170

180

493

851

901

1,607

1,744

1,785

1,810

1,946

2,454

0 500 1,000 1,500 2,000 2,500

Indonesia

Philippines

India

Thailand

China

Malaysia

Korea

Taiwan

China

Japan

Singapore

Australia

(W per capita)

Power generation capacity per

capita

Indias power generation per capita is at 180 w per capita as compared to 2454 w per capita for Australia.

Source: CLSA; w per capita watt per capita

Population without access to

safe water

0.4

2.2

2.2

35.0

37.0

37.0

40.0

68.0

0 10 20 30 40 50 60 70 80

Malaysia

Korea

Taiwan

China

Thailand

Indonesia

Philippines

India

(%)

Source: CLSA

68% of Indias population do not have access to safe water With rural growth expected to increase, companies engaged in water management

and purification may see their margins expand

Population with no access to

sanitation facilities

Source: CLSA

4.0

4.0

26.0

36.0

46.0

66.0

0 10 20 30 40 50 60 70

Malaysia

Thailand

Philippines

China

Indonesia

India

(%)

With government's thrust on housing for all by 2022, companies engaged in sanitation related product manufacturing are likely to benefit.

Roads that are paved

Source: CLSA

30.3

44.6

50.8

57

60.2

79.7

80.4

80.6

94.9

98.5

100

100

0 10 20 30 40 50 60 70 80 90 100

Philippines

Australia

India

Indonesia

China

South

Malaysia

Japan

Taiwan

Thailand

China

Singapore

(%)

26

ICICI Prudential India Recovery Fund Series 1

About the Fund

A 3.5 years close ended equity fund that aims to provide capital

appreciation by :

Investing in high conviction stocks.

Investing across market cap

Being sector agnostic.

Declaring commensurate dividends*.

*Dividends will be declared subject to availability of distributable surplus and approval

from Trustees.

Scheme Features

Type of scheme A Close ended equity scheme

Investment Objective The investment objective of the Scheme is to provide capital appreciation by investing in equity and equity related securities that are likely to benefit from recovery in the Indian economy. However, there can be no assurance that the investment objective of the Scheme will be realized.

Options Direct Plan Dividend payout Option Regular Plan Dividend payout Option

Minimum Application

Amt.

Rs.5,000 (plus in multiple of Rs.10)

Entry & Exit Load Not Applicable

Benchmark Index S&P BSE 500 Index

Fund Manager* Mrinal Singh and Rajat Chandak

*Mr. Shalya Shah for investment in ADR/GDR/ Foreign securities

Appendix

Policy Details Manifesto/Promises

Resource Allocation

Re-auction of coal blocks;

All other mineral allocation will follow this methodology from

now

Decision and Policy Paralysis;

Economic Revival

Subsidy Reforms

Diesel Deregulation - Will help bring down Government's Oil

subsidy bill.

LPG subsidy likely to be under direct cash transfer

Fiscal discipline; Economic

Revival

Direct cash transfer

Direct benefit Transfers - 75mn accounts under Jan Dhan

Yojana;

Provided 700mn Aadhar cards till date.

Government plans to link benefit transfers to these account

Controlling corruption; Fiscal

Discipline

Food

Reforms on food sector.

Work on to cut wastage and inefficiency in the food

distribution system

Control inflation

Power

Power subsidy - wastage likely to be cut through feeder

separation scheme; 7 states already working on it;

GOI has announced a scheme to roll out across entire

country; likely investment of $10bn towards this, likely to cut

losses by $4-5bn per annum

Controlling corruption; Fiscal

Discipline

Source: Jefferies; GOI- Government of India

Policy Details Manifesto/Promises

Restructuring of PSUs Appointment of PSU banks managers; shutting down of smaller

PSUs which make huge losses

Fiscal discipline; Economic

Revival; Controlling

corruption

FDI in Defence 49% FDI through approval route Strengthen defence sector

FDI in Railways 100% FDI in Railways infrastructure Develop Railways

FDI in Construction 100% FDI in construction Smart cities

Gas price hike Increased to $5.6 from $4.2 Decision and Policy Paralysis

Smart Cities Develop 100 smart cities to cater to growing urban population

in India

Urban development - Smart

Cities

REITs REITS will allow easy pooling of investments in real estate and

infrastructure spaces.

Housing development and

Improving Physical

infrastructure

Clean Ganga Initiative With 25% of Indian population living on Ganga banks, benefits

from a clean Ganga river could be multi-pronged. Environment

GST Introduced in parliament in December; political consensus

exists Tax reforms

Source: Jefferies; GST Goods and Sales Tax; FDI Foreign Direct Investment; REIT Real Estate Investment Trusts

Appendix

Mutual Fund investments are subject to market risks, read all scheme related documents carefully. In the preparation of the material contained in this document, the AMC has used information that is publicly available, including information developed in-house. Some of the material used in the document may have been obtained from members/persons other than the AMC and/or its affiliates and which may have been made available to the AMC and/or to its affiliates. Information gathered and material used in this document is believed to be from reliable sources. The AMC however does not warrant the accuracy, reasonableness and / or completeness of any information. We have included statements in this document, which contain words, or phrases such as will, expect, should, believe and similar expressions or variations of such expressions, that are forward looking statements. Actual results may differ materially from those suggested by the forward looking statements due to risk or uncertainties associated with our expectations with respect to, but not limited to, exposure to market risks, general economic and political conditions in India and other countries globally, which have an impact on our services and / or investments, the monetary and interest policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices etc.

The AMC (including its affiliates), the Mutual Fund, the trust and any of its officers, directors, personnel and employees, shall not liable for any loss, damage of any nature, including but not limited to direct, indirect, punitive, special, exemplary, consequential, as also any loss of profit in any way arising from the use of this material in any manner. Further, the information contained herein should not be construed as forecast or promise. The recipient alone shall be fully responsible/are liable for any decision taken on this material.

Investors are advised to consult their own legal, tax and financial advisors to determine possible tax, legal and other financial implication or consequence of subscribing to the units of ICICI Prudential Mutual Fund.

The sector(s)/ mentioned do not constitute any recommendation/opinion of the same and ICICI Prudential Mutual Fund may or may not have any future position in these sector(s). Past performance may or may not be sustained in the future. The portfolio of the scheme is subject to changes within the provisions of the Scheme Information document of the scheme. Please refer to the SID for investment pattern, strategy and risk factors

Recovery Fund

Documents