Millennium India Acquisition Company (SMCG)

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Millennium India Acquisition Company (SMCG)
Investor Presentation 2008
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Table of Contents
I. Company Overview II. Investment
Thesis III. Opportunity in India IV.
Millenniums Initial Investment V. Expertise
in Indian Markets VI. Financials
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Company Overview

• Millennium India Acquisition Company Inc. (
  NASDAQ SMCG ) is a closed-end investment fund
• Focused on industries and companies benefitting
  from Indias rising middle-class financial
  services, retail, healthcare and infrastructure
• Principal asset is a 14.4 equity stake in SMC
  Group, a privately-held company that is one of
  the largest and fastest growing retail financial
  services companies in India
• Led by a management team with deep Indian
  experience and a rigorous investment selection
  process

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Investment Highlights

• Rigorous investment process, supported by
  managements extensive in-market experience and
  personal networks, allows Millennium to identify
  fast-growing private companies that cater to
  Indias exploding middle-class
• Initial industry focus Financial Services is
  among Indias fastest-growing, and due to a
  tighter regulatory environment and cultural
  preference toward savings vs. credit, presents a
  potentially lower risk alternative to US
  Financials
• Initial investment SMC Group is a rapidly
  expanding, well-managed retail financial services
  company, serving 500,000 customers through
  1,300 offices in 300 cities in India
• Access based on current Indian laws, foreign
  investments by US investors into Indian companies
  such as SMC is restricted Millenniums
  innovative structure is a quick way U.S.
  investors can gain access
• Growth given the recessionary business
  conditions in developed nations, countries like
  India, still exhibiting GDP growth of over 7,
  remains an attractive investment destination for
  growth-oriented investors

5
Investment Opportunity in India
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Macro-Economic Drivers in India

• Despite global turmoil, in October 2008, IMF
  reiterated its forecast for Indian GDP growth
  of around 8 for 2008, and 7 for 2009
• Economic prosperity is spurring the rise of
  Indias middle class of 300 million expected
  to double in size over the next decade
• Rising consumer spending a 08 McKinsey study
  found that in two decades, India will surpass
  Germany as the worlds fifth largest consumer
  market
• Mature political economy with development as its
  core agenda sound legal framework

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Indias Financial Services Sector

• Indias financial services sector is one of the
  fastest-growing areas in India, driven by rising
  personal incomes, corporate growth, and financial
  sector liberalization
• Less than 3 of Indias 1.2 BN population are
  invested in the markets today
• Youngest educated workforce in the world 50 of
  the population is under 25
• Savings rates amongst the highest in the world
  (180 BN in savings accounts)
• 5 of household savings invested in the markets,
  vs 55 in the US
• Pension funds are just being allowed to invest
  their assets in the equities markets
• A new culture of equity ownership is being
  created, like the US in the 80s
• Move towards full capital account convertibility
  
• Tarapore Commission Report being implemented in
  stages from 2008-12, for full convertibility of
  the Indian rupee
• Greater control by foreign firms to invest into
  India, and vice versa, driving volumes further

2008
2007
544.1 B
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Indias Financial Services Sector (contd)

• According to the Wall Street Journal, trading
  volumes are expected to increase about 50 a
  year for the next 2 to 3 years
• Cash/Derivatives were 1.678 trillion in 2005-06
  compared to 544.1 billion in 2000-01
• Less than 20 of the insurable population is
  covered insurance represents an 80 billion
  untapped market
• Boston Consulting Group has projected that
  managed assets will grow from 170 billion to
  1 trillion by 2015

2008
1 trillion
Cash/Derivatives in India
Projected Growth AUM in India
2007
300 Growth
1.68 T
Assets Under Management
544.1 B
170 B
2007
2015
2000 - 01
2005 - 06
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Millenniums Initial Investment SMC Group
10
Millenniums First Investment SMC Group

• Millennium India Acquisition Company owns a
  14.4 equity stake in SMC Group
• Millenniums current stake is the largest
  foreign shareholder position in SMC Group
• Both CEO Jacob Cherian and CFO Suhel Kanuga
  have board seats on SMC with veto power

• 4th largest financial brokerage firm in India
• Privately held
• One of the largest distribution networks
  serving over 525,000 clients
• Expanding internationally, initial focus in
  the Gulf region
• Pan-India footprint exceeds 1,300 locations
• Diversified revenue base and strong balance
  sheet
• Member of leading domestic and international
  exchanges

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Innovative Structure
Millenniums innovative structure allows U.S.
investors access to a high-growth, privately-held
Indian financial through an investment holding
company listed on NASDAQ

• 7,500 financial advisors / 1,300 locations /
  525,000 customers
• 250 billion in customer transactions (FY08)
• 254,000 transactions per day (FY08)

• India-Based Shareholders
• 85.25 ownership
• 90 insider ownership
• Required to own 50 of SMC

• 14.44 ownership
• Public Currency (NASDAQ)
• 2 Board Seats held by Millennium CEO CFO
• Affirmative rights Veto Power
• Active in strategic direction operations of
  SMC
• Largest foreign stake in SMC

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SMC Group Management
Subhash Chand Aggarwal, Co-Founder, Chairman CEO
Mahesh C. Gupta, Co-Founder and President
D.K. Aggarwal, Chief Operating Officer

• Over 20 years of experience in the securities
  and commodities markets
• Responsible for day-to-day operation
  including managing, controlling and
  supervising a substantial part of arbitrage
  business in equities and commodities
• Chairman of legal technical guidance
  committee association of NSE members of
  India
• A Chartered Accountant a Fellow Member of
  the Institute of Chartered Accountants of
  India

• Over 25 years of experience in Capital
• Chairman Managing Director of SMC Comtrade
  Ltd., a Member of National Commodity and
  Derivative Exchange Limited (NCDEX) and
  Multi Commodity Exchange of India Limited
  (MCX).
• Specialization in risk management and
  surveillance
• A Chartered Accountant a Fellow Member of the
  Institute of Chartered Accountants of India (ICAI)

• Over 25 years of experience in Capital
  Markets
• Chartered Accountant A Fellow Member of the
  Institute of Chartered Accountants of India
  (ICAI)
• Active in the business and industry
  leadership circles in India
• Invited to join Prime Minister of India on
  recent business visit to Japan, as key member of
  the financial markets team
• Serves as Member of the Managing Committee of
  the Associated Chamber of Commerce and Industry
  (ASSOCHAM), as well as Co-Chairman of the Capital
  Market Expert Committee

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SMC Group Overview

• Wide range of investment products and services
  under one roof
• Ranked 4th largest in India in terms of number of
  trading terminals, by Dun Bradstreet (June
  2007)
• One of the largest retail distribution networks
  in India, currently serving the investing needs
  of over 525,000 clients
• State-of-the-art trading platform handled
  fast-growing trading turnover of over 100
  billion in Fy2007, and over 250 billion in
  FY2008
• Untapped market less than 3 of Indias billion
  population is invested in the markets
• Member of leading domestic and international
  exchanges
• Coveted set of licenses and regulatory approvals
  in place, providing a diversified revenue base
  and high barriers to entry
• Expanding internationally Initial focus is the
  Gulf region, accessing a large number of
  overseas-settled Indian nationals
• Diversified revenue base, customer base, strong
  balance sheet with no debt

SMC Group

• Transaction Businesses
• - Equities
• - Commodities
• Derivatives
• - DGCX International
• E-Trading
• Arbitrage

• Advisory Businesses
• Investment
• Banking
• Investment
• Advisory
• Research

• Financial Products
• Distribution
• Businesses
• - Mutual Funds
• IPOs
• Insurance

• Services Businesses
• - Depository
• Clearing
• Wealth
• Management
• Services

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SMC Growth Strategy
SMC and Millennium are partnering to implement a
two-pronged strategy First to grow the number
of customers we serve and second, to offer more
products and services

• Grow the number of customers
• Increase the number of employees, including
  brokers, from 2,000 to 4,000 by the end of FY
  2010
• Increase the number of financial advisors from
  7,500 to 9,000 by the end of FY2010
• Expand our footprint to 2,000 locations
  (currently 1,300) by the end of FY2010

• Aggressively grow service offerings and
  cross-selling opportunities
• Continue to build state-of-the-art trading
  platform technology
• Add new offerings in the wealth management space
• Use a non-bank finance company to jump start our
  margin funding business for high-net worth
  individuals
• Leverage alliances and joint ventures where
  appropriate

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New Business Segments

• Insurance
• SMC group holds a valuable license for insurance
  broking distribution of life and non-life
  insurance products of all major carriers in India
• Plan to hire 400-600 commission based sales staff
  to accelerate growth
• Branch network allows us to tap into Tier 1/2/3
  cities India has one of the lowest insurance
  penetration rates in the world
• SMC competitors such as India Infoline have
  experienced exponential growth, testifying to the
  market potential

• Wealth Management
• Offers wealth management products to
  high-net-worth individuals and families through
  an existing customer base of over 500,000
  investors and a branch network in over 300 cities
  in India
• Signed Joint Venture with Sanlam Group in Sep
  2008 (Second-largest listed financial services
  company in South Africa with over 77 BN AUM) to
  establish an asset management and wealth
  management business in India
• Awaiting final regulatory approvals for launching
  an asset management business

• Online Trading
• Invested in a state-of-the-art online trading
  portal, capable of offering investors diverse set
  of products and services including equity,
  commodity, mutual fund, IPOs and research
• Signed MoU with Punjab National Bank (Oct 08),
  second largest bank in India with over 35 million
  accounts, to provide online investment and
  trading services through SMCs infrastructure

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Competitive Advantage Distribution Footprint

• SMC Group has built one of the largest
  nationwide retail distribution networks in India
• Currently over 1,300 locations in over 360
  cities in India

• Awarded Fastest Growing Retail Network
  2008 in India, by BusinessSphere
• Targeted opportunities to cross-sell a wide
  range of complimentary products and services
  across the network
• Physical distribution supplemented by internet
  capabilities through a state-of-the-art online
  trading portal
• International expansion opportunities
• One of the first Indian firms to expand into
  Dubai to service non-resident Indians

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Significant Barriers to Entry

• SMC is a member of the leading exchanges and has
  secured the necessary licenses to provide
  services in virtually all the sectors of the
  Financial Services Industry
• Management estimates it would take over two years
  to secure all the licenses and memberships SMC
  has obtained

• Member of the largest equity exchanges in India
  
• National Stock Exchange (NSE) and Bombay Stock
  Exchange (BSE)

• Member of the largest commodities exchanges in
  India and Dubai
• Multi-Commodity Exchange (MCX) and National
  Commodity Derivative Exchange (NCDEX)
• Dubai Gold Commodities Exchange (DGCX) one
  of the fastest growing exchanges in Asia

• AMFI license for Mutual Fund Distribution
• Registration with leading Asset Management
  Companies for distribution of fund products in
  India, including Franklin Templeton and Fidelity

• IRDA license for Insurance Brokerage
• CDSL Depository
• Clearing Member of NSE FO, BSE FO and DGCX
• SEBI license for Merchant Banking and
  Underwriting
• SEBI license for Portfolio Management Services

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SMC Financial Highlights

• Millenniums FY08 revenue was 8.24 million
• Millenniums FY08 net income was 2.24 million
• Millenniums FY08 EPS was 0.27

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Millenniums Expertise in Indian Markets
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Millenniums Management Team
Jacob Cherian, Chairman CEO
Suhel Kanuga, President CFO

• Over 16 years of experience in the financial
  services industry with companies such as Computer
  Sciences Corp, KPMG, and JP Morgan
• Led or Co-led numerous global multimillion
  dollar business transactions in business
  restructuring, turnaround, growth, cost reduction
  and off-shoring strategies
• Evaluated undervalued assets and business
  divisions, significantly increased revenues to
  clients and optimized business performance
• Significant background and business experience
  in both India and Wall Street
• Formerly, Adjunct Professor of International
  Finance at St. Johns University

• Previously a principal of CSCs financial
  services division and has worked for KPMG LLP
  and U.S. West
• Responsible for identifying and building
  business value, restructuring and transforming
  businesses by implementing strategic growth
  initiatives
• Significant international management
  experience, having led transactions with
  businesses across the U.S., Europe and Asia
• Significant background and business experience
  in India and Wall Street
• Expertise in derivatives, capital allocation,
  international expansion, merger integration and
  business restructuring

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In-Market Management Investment Experience

• Management team background deeply rooted in
  India
• Unparalleled market insight and access to Indian
  business leaders and industry thought
  leaders
• Distinguished Board, comprised of senior
  industrialists with decades of experience
• building businesses in India, as well as Wall
  Street investment management experience
• State-to-state regional familiarity
• Strong track-record leading numerous global
  multimillion dollar business transactions in
  business restructuring, turnaround, growth and
  cost reduction

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Investment Selection Process

• Millennium focuses on high-growth sectors, such
  as the financial services industry catering to
  Indias rising middle class
• Middle-market leadership, innovative business
  model, quality products and services,
  strong/proven financials, reputable management
  team are all qualities of investments Millennium
  actively seeks

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Millennium Financials
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Financial Snapshot of Millennium
Symbol NASDAQ Fiscal Year End 52-Week Range
Current Price Shares Outstanding Market
Cap Revenue (3/31/08) Net Income (3/31/08) EPS
(3/31/08) Insider Ownership
SMCG March 31st (SMC) 1.17 - 8.10 1.49 8.21
million 11.84 million 8.24 million 2.24
million 0.27 12.7
Data As of Oct 9, 2008
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Contact Information
Corporate Headquarters Millennium India
Acquisition Co. 330 East 38th Street Suite
30F New York, NY 10016 Website
www.milcapital.com