Sanjay Sinha l t

7/31/2019 Sanjay Sinha l t

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L&T MUTUAL FUND

Built on Strong Foundation


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s

India Demographics


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Indian : Key Drivers Changing Demographics

This slide is for 2007 if

data not readily avlbl pl

drop

India's working-age population pool is the largest in the world, and is expected to increase significantlyover the next four decades.

Source DATAMONITOR DEC-2010


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The domestic market is expected to expand significantly over the next 20 years.

In 2005, people with a disposable income of $10,940 or more contributed just $79 billion in aggregate

disposable income. This is expected to increase exponentially by 2025 to $932 billion.

Aggregate disposable income for households with an income between $4,380 and $10,980 per annum is

also expected to grow exponentially to reach $670 billion by 2025.

Source DATAMONITOR DEC-2010

Disposable Income and Improving Penetration


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SOURCE: CEIC; Haver Analytics; McKinsey Global Economic Growth Database; World Development , Indicators of the World Bank; McKinsey Global Institute

Investment Rate - India & China Leading in World


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SOURCE: CEIC; Haver Analytics; McKinsey Global Economic Growth Database; World Development , Indicatorsof the World Bank; McKinsey Global Institute

Break up of total gross savings rate sector wise % of GDP for 2009


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Break up of total gross savings as % of GDP Trend


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MF Industry Facts & Trends


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Source Karvy Indian Wealth Report Sept 2010

Asset Wise Break up of Individual Wealth In India


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Location Wise Break up of Transactions in 3 Asset Classes

for Top 10 Locations April 2011

Karvy Computershare April 2011

Equity Income Cash

Mumbai 46.10% 43.42% 84.38%

Delhi 17.63% 21.24% 6.79%

Kolkata 17.02% 3.70% 2.20%

Chennai 5.49% 5.21% 1.59%

Bangalore 4.93% 5.36% 1.60%

Hyderabad 1.71% 2.76% 0.35%

Pune 3.81% 2.07% 2.58%

Ahmadabad 1.61% 15.98% 0.48%

Chandigarh 0.82% 0.10% 0.01%

Cochin 0.87% 0.16% 0.02%

Total 100.00% 100.00% 100.00%


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USA

As markets mature , the shares of mutual fund in total assetsonly keeps on increasing.

In 1982, US households had 67% of their assets into cash andbank deposits, which is the present situation in the Indianmarkets.

By 2002, the same fell to 44% as managed assets moved upfrom 22.8% to 42.5% during the same period.

The Boston Consulting Group expects India to follow the USpattern.

Growth trend in Asset Management Business


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41 Fund houses managing AAUM USD 155 Billion

(INR 700538 Crs. As on 31-March-2011)

Annual savings in India USD 533.93 billion (2010)

( roughly 4.5 times 2011 March Closing AAUM still a big scope )

March 10 with with 38 AMCS Closing AAUM USD 171 Billion

March 09 with 25 AMCs Closing AAAUM USD 110. Billion

Mutual Fund Industry - India


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AUM in India is around 12% of GDP as on 2011 (AAUM USD 155 bln V/S Indian

GDP USD $ 1296 ) significantly lower than other market. As markets mature, the

shares of mutual fund in total assets only keeps on increasing.

Awareness of Mutual Fund products are increasing day by day. More

sophisticated products to come in.

Global flavors like ETF gaining currency in Indian mutual funds now. Seen as

next driver of growth.

Long term equity returns are higher than other investment assets

Growth Drivers


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India has 50% savings in Cash & bank deposits (60% in non-urban areas),

significantly higher than 20% in Asia pacific and global average of 13%.

Indian HNIs growing at a faster rate of 13.3% - HNIs invest 31% in equities

Under penetration - 10 cities account for around 80% of total industry AUMs.

Expansion to smaller cities & towns already started

Institutional investors accounts for 65% of AUM. Retail investors yet to be

tapped

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Growth Drivers.Growth Drivers


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I Phase 1964-87

1963 :Unit Trust of India (UTI) established

1964 :First scheme launched by UTI

1988 :UTI had Rs.6,700 crores of assets under

management.

II Phase 1987-1993

(Entry of Public Sector Funds)

June 1987:SBI Mutual Fund first non- UTIMutual Fund established in followed by others.

End of 1993:Mutual fund industry had assets

under management of Rs.47,004 crores.

III Phase 1993-2003

(Entry of Private Sector Funds)

1993 :First Mutual Fund Regulations came intobeing

1996:Substitued by comprehensive and revised

Mutual Fund Regulations

January 2003:33 mutual funds with total assets

of Rs. 1,21,805 crores

IV Phase since February 2003Aug 2009

2003:UTI bifurcated into two separate

entities

July 2009: 34 funds, managing Rs 5,40,000

crores

V Phase- since Aug 2009After the abolition of entry load

Paradigm change in distribution

Current size: Rs 6,45,000 crs (Dec 10)

41 Mutual Funds

History


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Three waves of growth in the MF Industry

The 1992 -93 wave

The 2000- 2001 wave

The 2006 2008 wave

Whats different now ?

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Three pillars that will define the future

Product will prevail

Paperless

Evolution of the Agent to an Advisor

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Products

Performance

Properly benchmarked

Peer group comparison

Portfolio

Honest to its investment strategy

Transparency and disclosure

Positioning

Processes

Robust Capable of capturing the beta and the alpha

People

s


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Paperless

Is it very complicated?

Key to the success will be the adoption by Investors as well

as the Advisor

will be encouraged if it adds value to him

Has to be a win win

Applications have to be found which reduce the threat perception forwider usage.

Cost of servicing clients

Releases time for more value added services

Is the Stock exchange platform a threat ?

Convenience to the investor Gives scale and more choices

Improved logistic

24 X 7

s


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Agent to an Advisor

Impact of ban on no load? Short term impact: Shrinkage of business

Long term impact: Huge improvement of credibility

Wide publicity to this event has made Investor aware that

IFA remuneration is now linked to client and not MFs

Therefore seen to be acting in the interest of the client

Financial products are a business of Trust

Why else do AAA rated companies raise money at lower

rates than AA or B+?

The same analogy applies to financial advise

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Agent to an Advisor..contd..1

Service that is provided by IFA extends beyond collection of

application

Information at the beck and call of clients

Investment advise

Regular services SOA, Redemptions, Nominations etc

Updates on Dividend declaration

SIP Renewal

Financial Planning

Asset Allocation

Rebalancing

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Disclaimers & Risk FactorsThis document have been prepared by L&T Investment Management Limited (LTIML) for

information purposes only and should not be construed as an offer or solicitation of an offer forpurchase of any securities/ instruments or any of the Funds of L&T Mutual Fund. Market views

expressed herein are for general information only and do not have regards to specific investment

objectives, financial situation and the particular needs of any specific person who may have

receive this information. Investments in mutual funds and securities markets inherently involve

risks including possible loss of capital and recipient should consult their legal, tax and financial

advisors before investing. Recipient of this document should understand that statements made

herein regarding future prospects may not be realized. He/ She should also understand that any

reference to the securities/ instruments/ sectors in this document is only for illustration purpose.The views expressed are of LTIML, neither this document nor the units of L&T Mutual Fund have

been registered in any jurisdiction. The distribution of this document in certain jurisdictions may

be restricted or totally prohibited and accordingly, persons who come into possession of this

document are required to inform themselves about, and to observe, any such restrictions.


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Thank You

Sanjay Sinha l t

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