Celebrating

5 y ears of
Focus on Opportunity

MOSt
NEXT
Trillion Dollar
Opportunity Strategy
October 2013
2 CONTENTS

India’s Next Trillion Dollar Opportunity (NTDOP)

Small and Mid Cap (SMID) Market Opportunity
Why MOAMC - PMS?
Strategy Details
3 The Next Trillion Dollar Opportunity (NTDOP)

Trillion Dollar GDP

Rising Discretionary Spending
 TRILLION DOLLAR GDP

India has joined the club of countries with a Third US$ Trillion

2719
CAGR of 7.61 % in 60 yrs
CAGRof 10.25% in 4 Yrs
Trillion Dollar GDP in FY08 1951-2011

2427
Second US$ Trillion

2167
CAGR of 8.23% in 5 Yrs
The journey from US$100bn GDP to

1935
1840
US$1trillion took 30 years but is expected to

1782
1,711
First US$ Trillion
take only 7 years for US$2 trillion CAGR of 19 % in 5 Yrs

1,366
1,239
1,226
Overall business environment enabled by

948
strong GDP growth

834
721
618
523
Service sector driven by rapid productivity

492
475
451
293
improvement is expected to lead future GDP

150
57
33
21
growth

FY14E
FY15E
FY16E
FY17E
FY51
FY60
FY70
FY80
FY90
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11

FY13
FY12
Due to sustained growth in consumer
Source: Motilal Oswal Securities Ltd. (Data as on 31/07/2013)
income, Manufacturing sector to be a key
growth driver Contributors In FY77 FY87 FY97 FY11 FY13E
GDP
Dependency on Agriculture is expected to
Agriculture 37% 31% 26% 14% 14%
reduce as witnessed in developed countries
Manufacturing 25% 26% 28% 28% 27%
Higher contribution of service sector in GDP
would reduce the volatility in GDP growth Services 36% 42% 46% 57% 60%
Source: Motilal Oswal Securities Ltd (Data as on 31/07/2013

Above forward-looking statements are based on external current views and assumptions and
involve known and unknown risks and uncertainties that could cause actual results.
 RISING DISCRETIONARY SPENDING

Discretionary spending is expected to increase Discretionary spend will rise from 52%
disproportionately going forward in 2005 to 70% in 2025

DISCRETIONARY ITEMS Necessities

Per Capita GDP Share of Avg. Household consumption
Discretionary Items
% thousand, INR
90,000
4 7
3 9 13 Health Care
80,000 GR 1 5
CA 11 2 6
70,000 .6% 3 9 Education & Recreation
13 4 17
2 6 Communication
Per Capita Income

19
(In Rs. Thousand)

60,000
14
8 Transportation
20
50,000 3
9.82% CAGR 5 9
12 3 Personal Products &
40,000
11 Services
6 12
30,000 3
5 10
13.6% CAGR Housing & Utilities
20,000 56 5
10,000 42
34 Food, beverages &
25
0 Tobacco
FY91
FY92
FY93
FY94
FY95
FY96
FY97
FY98
FY99
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13

1995 2005 2015 E 2025 E

Per Capita GDP has grown to Rs. 82,339 in 2013 from Rs. 38,277 in 2007
Higher Per Capita GDP to increase Disposable Income
Source: Motilal Oswal Securities Ltd (Data as on 31/07/2013)

Above forward-looking statements are based on external current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results.
 THE SMALL AND MID CAP OPPORTUNITY

Companies with Net Sales above Rs. 5000 Business Growth

Crs. have increased by ~3 times from 2005 Cos with Net sales betwn 1000 Cr to 5000 Cr Cos with Net sales above 5000 Cr

to 2012 450

No. of Companies
400 377
Companies with Net Sales of Rs. 1000 Crs. to 350
300
Rs. 5000 Crs. have doubled from 2005 to 250
200
2012 200
150
142

100
52
50
0
2005 2012

Source: Capitaline Data as on 31/03/12

Small & Mid Cap companies of 2005 have No. of Companies

transformed into today’s Large Cap Market Capitalisation 2005 2012
companies < 1000 Cr 2103 2503

1000 Cr- 5000 Cr 199 290

No. of Large Cap companies (> Rs. 10000
Crs.) have virtually tripled since 2005 5000 Cr to 10000 Cr 39 70

> 10000 Cr 45 123

Total 2386 2986

Source: Capitaline Data as on 31/12/12
 CHARACTERISTICS OF MID CAP MARKET

Larger Stock Universe

Under Owned and Under-researched Companies
Fewer Business Lines and Focussed businesses
Attractive Valuation as compared to Large caps
 WHY MOTILAL OSWAL PMS?

India’s leading PMS Service Providers, with Assets under Management of approx Rs.1100 Crores.

Our NTDOP Strategy has consistently outperformed the benchmark across market cycles over last 5
year period.

Our Flagship “Value Strategy” has consistently outperformed the benchmark across market cycles
over a 10 year period.

Motilal Oswal PMS has one of the largest active accounts (more than 3700) on PMS Platform.

MOAMC - PMS has active clients in 138 different cities right from Agra to Vijaywada; a testimony of
strong acceptance of our PMS across the length & breadth of the country.

Data as on 30th September 2013

Investments in Securities are subject to market and other risks and there is no assurance or guarantee that the objectives of any of the strategies of the Portfolio Management Services
(PMS) will be achieved. Investors in the PMS Product are not being offered any guaranteed/assured returns. Past performance of the portfolio manager does not indicate the future
performance for any of the strategies. The names of the portfolios do not in any manner indicate their prospects or return. The investments may not be suited to all categories of
investors. Neither Motilal Oswal Asset Management Company Ltd. (MOAMC), nor any person connected with it, accepts any liability arising from the use of this material. The
portfolio manager is not responsible for any loss or shortfall resulting from the operation of the strategy. Recipient shall understand that the aforementioned statements cannot
disclose all the risks and characteristics. Performance data mentioned above as of Model Client.
9 NEXT TRILLION DOLLAR OPPORTUNITY STRATEGY

Strategy Objective
Investment Philosophy & Strategy
Strategy Construct
Some Focus Themes
Stock Selection Process
Wealth Creators
Investment Style and Timing
Portfolio Holding
Performance Snapshot
 STRATEGY OBJECTIVE

10

The Strategy aims to deliver superior returns by investing in

focused themes which are part of the Next Trillion Dollar
GDP growth opportunity.
It aims to predominantly invest in Small & Mid Cap stocks
with a focus on Identifying Emerging Stocks/Sectors
 INVESTMENT PHILOSOPHY & STRATEGY

11

High Growth Stories Reasonable Valuation

Sectors and Invest in high growth
companies for higher companies at
than average growth reasonable price / value

Emerging Themes Buy and Hold Strategy

Focus on Identifying The Portfolio shall focus on
Emerging Stocks / above philosophies and
Sectors hold positions till value
crystallization
 STRATEGY CONSTRUCT

12

Investment Universe
•Focus on Non-Nifty Allocation Limit
companies •Individual Stock Stock
•Market Cap distribution Allocation Limit: 10%^ Portfolio
Concentration for Midcaps & 5% for •20 to 25 stock
•> Rs 2500 Crores-largest Small Caps. •Benchmark:
market cap constituent •Sector Allocation Limit: CNX Midcap
35% or as per Index
of CNX Mid Cap* - 75-100%
benchmark
•< Rs 2500 Crores - 0-25%

*As on Feb 28, 2013,, highest Market Capitalization in CNX Mid Cap is 48,485 Cr.
This will be subject to change as per market movements. (source: NSE India),
^Not more than 10% for new stock introduced in the strategy.
 SOME FOCUS THEMES

13

Consumption Banking and Infrastructure &

Financial Services Related Services
• Increasing consumer • Beneficiary of high • Benefit from
spending GDP growth and Government
• Retailing savings rate Spending
• Consumer durables • Banks • Power
• Passenger Vehicles • Broking • Cement
• Utility Services • Insurance • Capital Goods
• Financial Services • Construction
• Real Estate
• Engineering
The above themes can change based on the outlook of the portfolio manager.
 STOCK SELECTION PROCESS

14

Meeting with Company Management

to Understand Business Dynamics

Visit companies & worksites to evaluate

Manufacturing Process, Quality of Fixed
Assets, Ascertain Entry Barriers

Greater Emphasis on Corporate

Governance, Management Track Record,
Capabilities for Scale

Prudent research procedure

With an eye on risk involved Look out for Turnaround Stories and
Emerging Sectors Product Innovations
 WEALTH CREATORS

15

Much success can be attributed to inactivity. Most investors cannot resist the temptation to constantly buy and sell.
“We don’t get paid for activity, just for being right. As to how long we’ll wait, we’ll wait indefinitely.” - Warren Buffett
It was never my thinking that made the big money. It was always my sitting. Men who can both be right and sit tight
are uncommon- Jesse Livermore

Adjusted Purchase Current Market

Stock Purchase Date Price * Price 30-Sep-13 % Growth
Page Industries Limited Dec-07 456.4 4400.00 864.1
Bosch Limited Dec-07 4864.0 8994.25 84.9
ING Vysys Bank Jun-10 320.1 536.00 67.4
Eicher Motors Limited Aug-10 1173.6 3543.70 202.0
Bajaj Finance Limited Aug-10 625.3 1169.25 87.0
GlaxoSmithkline Consumer Feb-11 2104.6 4331.55 105.8
Healthcare Limited
Source: MOAMC

Please Note: The above returns are of a Model Client. Returns of Individual clients may differ depending on factors such as time of entry / exit / additional
inflows in the strategy. Past performance may or may not sustained in future.* Adjusted for any corporate action during the period.
 INVESTMENT STYLE & TIMING

16

Buy undervalued stock and sell overvalued stock, irrespective of Index movements.
- The below mentioned table gives the performance of the Stocks after exiting from the Strategy.

Scrip Name Buy Date Adjusted Sell Date Adjusted Current Scrip NTDOP CNX
Buy Price Sell Price Market Returns Returns MIDCAP
Price* post post Returns
selling selling post selling
Ahluwalia Contracts India Limited 14-Dec-07 341.12 03-Jun-11 119.47 17.60 -56% 14% -6%
Bharat Electronics Limited 03-Jul-08 972.91 19-Aug-10 1,729.46 1,074.70 -14% 9% -7%
Birla Corporation Limited 08-Jul-09 234.06 05-Feb-10 347.60 203.95 -14% 14% 0%
Blue Star Limited 05-Aug-08 382.14 20-Sep-10 511.06 144.55 -34% 7% -9%
Jindal Steel & Power Limited 05-Mar-10 691.40 27-Apr-11 691.27 235.45 -36% 13% -7%
All returns are annualized Data* as 30th September 2013

Please Note: The above data is of model client. Past performance may or may not be sustained in future. The strategy may or may not have any present or future
position in these stocks. The companies mentioned above are only for the purpose of explaining the concept and should not be construed as recommendations from
MOAMC.
 PORTFOLIO HOLDING

17

Sector Allocations Top Holdings

Restaurants Scrip Name (%) of Holding

1.20%
Plantation Tea &
Coffee Page Industries Limited 16.15
4.24%
Chemicals
Pharmaceuticals 5.23% Eicher Motors Limited 10.23
5.40% FMCG
29.12%
Glaxo Smithkline Consumer 8.77
Diversified Healthcare Limited
6.88%

Bosch Limited 8.38

J&k Bank 6.61

Engineering &
Banking & Finance lpca Lab Limited 5.40
Electricals
20.63%
7.12%
Bajaj Finance Limited 5.29

Pidilite Industries Limited 5.23

Auto & Auto
Logistic Services Ancillaries
1.56% 18.61% Cummins India Limited 5.02

Data as on 30th September 2013

Data as on 30th September 2013

 PERFORMANCE SNAPSHOT

18

In last 1 year NTDOP has delivered 9.75% vs. CNX Midcap returns of -10.75%, delivering an alpha of
20.50%.
Since Inception NTDOP has delivered an annualized alpha of 12.52%.
Next Trillion Dollar Opportunity Strategy CNX MIDCAP
All Figures in %
45.00%
40.00%
35.00%
30.00%
25.00% 22.01%
% of returns

20.00% 16.25% 14.79%

15.00%
9.75% 8.89%
10.00% 7.38% 7.42%
5.00% 1.04%
0.00%
-5.00% -0.68%
-3.63%
-10.00% -8.59%
-15.00% -10.75%
1 Year 2 Year 3 Year 4 Year 5 Year Since Inception

Period
Data as on 30th September 2013
Strategy Inception Date: 11/12/2007. Please Note: The Above strategy returns are of a Model Client who is a part of existing Next Trillion Dollar Opportunity Strategy. Returns of
individual clients may differ depending on time of entry in the Strategy. Past performance may or may not be sustained in future and should not be used as a basis for comparison with
other investments. Returns below 1 year are absolute and above 1 year are annualized. Strategy returns shown above are post fees & expenses.
 PERFORMANCE SINCE INCEPTION

19

The chart below illustrates Rs.1 crore invested in NTDOP Strategy in December 2007 is worth Rs.
1.64 crores as on 30th September 2013. For the same period Rs.1 crore invested in CNX Midcap is
now worth Rs. 0.80 crores.

NTDOP Strategy CNX MIDCAP

190.00
180.00
170.00
160.00
150.00
140.00 164.02
130.00
120.00
110.00
Portfolio Value

100.00
90.00
80.00
70.00 80.69
60.00 CNX MIDCAP @ 9360
50.00
40.00
30.00
20.00 CNX MIDCAP @ 3175
Sep-08

Sep-09

Sep-10

Sep-11

Sep-12

Sep-13
Jan-08

Jan-09

Jan-10

Jan-11

Jan-12

Jan-13
May-08

May-09

May-10

May-11

May-12

May-13
Strategy Inception Date: 11/12/2007.
Please Note: The Above strategy returns are of a Model Client who is a part of existing NTDOP Strategy. Returns of individual clients may differ depending on time of entry in the
strategy. Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments.Strategy returns are shown above are post
fees & expenses.
 KEY HOLDINGS - PAGE INDUSTRIES

20

Exclusive franchisee of Jockey International in Page Ind CNX Midcap

India. Strong play on the rapidly growing
branded innerwear industry. To benefit from 120.00
9.67 times
shifting consumer preferences driven by 100.00

rising income levels and urbanization. 80.00

60.00
Robust entry barriers with strong brand
40.00
recall, well-oiled distribution and integrated 0.82 Times

20.00
manufacturing.
0.00

Mar-11
Jun-11
Sep-11
Dec-11

Mar-13
Jun-13
Sep-13
Mar-12
Jun-12
Sep-12
Dec-12
Dec-07

Jun-09

Dec-09
Mar-10
Jun-10
Sep-10
Dec-10
Mar-08
Jun-08

Mar-09
Sep-08
Dec-08

Sep-09
Expected to grow at 25-30%. High dividend
payouts and strong profitability to sustain
premium valuations.
Source Bloomberg/MOAMC, ^ Indexed to 10. Data as on 30/09/2013
In 2011 added Speedo swimwear and
accessories as a brand to market and
manufacture in India
 KEY HOLDINGS- EICHER MOTORS

21

Eicher Motors Ltd (EML) is present in Eicher Motors CNX Midcap

commercial vehicles, two wheelers and
related components. It’s a leader in Cruise
34.00
bikes in India and No.2 player in Medium 32.00
30.00
28.00
Commercial Vehicles. 26.00

Price^
24.00 3.03 Times
22.00
20.00
Royal Enfield - Touted as the Indian Harley 18.00
16.00
14.00
Davidson, It is the biggest beneficiary of this 12.00 0.86 Times
10.00
emerging leisure biking trend in India. 8.00
6.00

Mar-11

Jun-11

Sep-11

Dec-11

Mar-13

Jun-13
Mar-12

Jun-12

Sep-13
Sep-12

Dec-12
Dec-10
Volvo Eicher alliance (VECV) can be a game
changer for Eicher in the form of outsourcing
opportunity in engines an expanding Eicher’s
footprint in heavy-duty CVs. Source Bloomberg/MOAMC, ^ Indexed to 10. Data as on 30/09/2013

VECV has exclusive rights for all Volvo’s

(current and future) CV related projects/
products in India.
 KEY HOLDINGS - BOSCH LIMITED

22

Motor Industries Company (BOSCH), the Bosch CNX Midcap

flagship company of the Bosch group in India, is
the country’s largest manufacturer of diesel fuel
injection equipment. 22.00
20.00
18.00
BOSCH is a preferred supplier to most OEMs, 16.00

Price^
14.00 1.85 times
currently enjoying around 65% market share in 12.00
10.00
spark plugs and more than 85% market share in 8.00
6.00
diesel fuel injection pumps. 4.00 0.82 times
2.00
0.00
With a Rise in petrol prices in India, Penetration of

Mar-09

Mar-10

Mar-11

Mar-12

Mar-13
Dec-08

Dec-09

Dec-10

Dec-11

Dec-12
Sep-09

Sep-10

Sep-11

Sep-12

Sep-13
Jun-09

Jun-10

Jun-11

Jun-12

Jun-13
diesel engines in the passenger car segment has
increased in the last couple of years.
Further, greater visibility on newer growth
Source Bloomberg/MOAMC, ^ Indexed to 10. Data as on 30/09/2013
opportunities is emerging for the company,
following its investments in new and innovative
technologies such as CRS and gasoline systems.
 MR. RAAMDEO AGRAWAL - CHAIRMAN OF THE INVESTMENT COMMITTEE

23

Mr. Raamdeo Agrawal is a Co-founder and Joint Managing Director of

Motilal Oswal Financial Services Ltd.
Mr. Agrawal is also a Director on the Board of Motilal Oswal Asset
Management Co. Ltd.
He is the key driving force behind strong research capability as well as a
renowned Value investor, and has also been instrumental in setting up
the investment management philosophy of the firm.
He has an extensive experience of more than 25 years in Financial Service
Sector.
Mr. Agrawal is an Associate of Institute of Chartered Accountant of
India.
One of India’s foremost Value Investors and author of the ‘Wealth
Creation Study since its inception in 1996.
In 1986, he wrote the book Corporate Numbers Game, along with co-
author Mr. Ram K Piparia.
 FUND MANAGER

24

Mr. Manish Sonthalia has 17 Years Experience in Equity Research, Fund

Management & Equity Sales.
Qualifications – FCA, ICWAI, CS, MBA
Past Experience : He has been Sr. Vice President – Equity Strategy for
Motilal Oswal Securities Ltd and is now Fund Manager with Motilal
Oswal AMC for the PMS Strategies.
 FUND STRUCTURE

25

Mode of payment By Fund Transfer/Cheque and/or Stock Transfer

Investment Horizon Medium to Long Term (3 Years +)
Benchmark CNX Mid Cap
Account Activation Next business day of Clearance of funds
Portfolio Valuation Closing NSE market prices of the previous day
• Investments managed on individual basis
Operations
• Third party Custodian for funds and securities
• Monthly Performance Statement
Reporting • Transaction, Holding & Corporate Action Reports
• Annual CA certified statement of the Account
• Dedicated Relationship Manager
Servicing
• Web access for portfolio tracking
Call: 1800-200-6626 MOSt
E-mail: pms@motilaloswal.com Asset Management Portfolios
Website: www.motilaloswal.com/assetmanagement Make the MOSt of our expertise
27
Service Providers Portfolio Manager Details

Custodian IL&FS Securities Services Ltd Motilal Oswal Asset

Portfolio Manager Management Company Ltd.
Auditor M. P. Chitale & Co. (MOAMC),

SEBI Registration No.

Depository Central Depositary Services Ltd INP 000000670
as Portfolio Manager

Portfolio Management Services Department

Registered Office:
Motilal Oswal Asset Management Company Limited Palm Spring Centre, 2nd Floor, Link Road, Malad (West), Mumbai - 400 064

Risk Disclosure and Disclaimer

Disclaimer: This presentation has been prepared and issued on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this document is for general
purposes only and not a complete disclosure of every material fact and terms and conditions.The information / data herein alone is not sufficient and shouldn’t be used for the development or implementation of an
investment strategy. It should not be construed as investment advice to any party. All opinions, figures, charts/graphs, estimates and data included in this presentation are as on date and are subject to change without
notice. While utmost care has been exercised while preparing this document, Motilal Oswal Asset Management Company Limited does not warrant the completeness or accuracy of the information and disclaims all
liabilities, losses and damages arising out of the use of this information. The statements contained herein may include statements of future expectations and other forward-looking statements that are based on our
current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements.
Readers shall be fully responsible / liable for any decision taken on the basis of this presentation. No part of this document may be duplicated in whole or in part in any form and/or redistributed without prior written
consent of the Motilal Oswal Asset Management Company Limited. Readers should before investing in the Scheme make their own investigation and seek appropriate professional advice. • Investments in Securities are
subject to market and other risks and there is no assurance or guarantee that the objectives of any of the strategies of the Portfolio Management Services will be achieved. • Clients under Portfolio Management Services are
not being offered any guaranteed/assured returns. • Past performance of the Portfolio Manager does not indicate the future performance of any of the strategies. • The name of the Strategies do not in any manner
indicate their prospects or return. • The investments may not be suited to all categories of investors. • The material is based upon information that we consider reliable, but we do not represent that it is accurate or
complete, and it should not be relied upon as such. • Neither Motilal Oswal Asset Management Company Ltd. (MOAMC), nor any person connected with it, accepts any liability arising from the use of this material. The
recipient of this material should rely on their investigations and take their own professional advice. • Opinions, if any, expressed are our opinions as of the date of appearing on this material only. While we endeavor to
update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. • The Portfolio Manager is not responsible for any loss or
shortfall resulting from the operation of the strategy. • Recipient shall understand that the aforementioned statements cannot disclose all the risks and characteristics. The recipient is requested to take into consideration
all the risk factors including their financial condition, suitability to risk return, etc. and take professional advice before investing. As with any investment in securities, the Value of the portfolio under management may go

CDL00081_60712_006
up or down depending on the various factors and forces affecting the capital market. Disclosure Document shall be obtained and read carefully before executing the PMS agreement. • Prospective investors and others are
cautioned that any forward - looking statements are not predictions and may be subject to change without notice. • For tax consequences, each investor is advised to consult his / her own professional tax advisor. • This
document is not for public distribution and has been furnished solely for information and must not be reproduced or redistributed to any other person. Persons into whose possession this document may come are required
to observe these restrictions. No part of this material may be duplicated in any form and/or redistributed without’ MOAMCs prior written consent. • Distribution Restrictions – This material should not be circulated in
countries where restrictions exist on soliciting business from potential clients residing in such countries. Recipients of this material should inform themselves about and observe any such restrictions. Recipients shall be
solely liable for any liability incurred by them in this regard and will indemnify MOAMC for any liability it may incur in this respect. The PMS business has been transferred from MOSL to MOAMC and the certificate of
registration has been endorsed by SEBI to MOAMC w.e.f. October 21, 2010