Title: Mannheim
1 Mannheim February 2006
2Introduction
KC Reddy the Manager
- Kommera Chakradhar (KC) Reddy CFA
- Previously with Thames River - UK
- Credit Agricole Hong Kong
- Peregrine - India
- MBA, Indian Institute of Management (associated
with MITs Sloan School)
10 years experience investing in India
3Introduction
KC Reddy - historic track record
1997 1998 1999 2000
The Himalaya Fund -13.50 -11.06 110.98 21.34
MSCI India Index -12.35 -22.89 84.67 17.59
Source JP Morgan Fleming country fund research
End Oct 1997 - end Dec 1997 End Dec 1999 end
March 2000
4Introduction
The Magna fund range
Magna Umbrella Fund plc
Magna Greater China 30.5m
Magna Russia 61.7m
Magna Eastern European 399.1m
Magna Latin America 45.0m
Magna Turkey 69.8m
Magna India 21.1m
Magna EMEA 36.3m
Magna Global Emerging Markets 212.7m
Comprehensive emerging markets offering
Source Charlemagne Capital end December 2005
5India
Broad market opportunities
- Convincing macroeconomic case
- Diversified market bottom-up opportunities
- Our process aims to find these
Positive outlook
6India
Macroeconomic summary
Year to March 2004 2005e 2006e
Real GDP growth 8.6 6.9 7.1
Inflation 5.5 6.5 3.9
General govt. debt ( GDP) 65.9 57.3 55.1
Foreign debt ( GDP) 20.4 19.1 18.0
Central Bank net FX reserves (bn) 102.0 130.6 138.1
Improving economic fundamentals
Source CSFB Sept 2005
7India
Reform-minded administration
- UPA election win in 2004 Manmohan Singh (Prime
Minister) and P. Chidambaram (Finance Minister)
both widely respected reformers - Liberalisation of key areas (telecommunications,
construction, infrastructure) - Improved relations with Pakistan
Improved political outlook
8India
Young population, vibrant economy
India
- Favourable demographics
75 of population under 40 - Middle income and higher to rise from
18 of total to 41 1995-2007
Favourable demographic income trends
Source UBS Nov 2005
9India
The last great underleveraged economy
A credit boom waiting to happen
Source Citigroup Nov 2005
10India
A stock pickers paradise
- Over 5,000 listed companies
- No industry group exceeds 20 of market cap
- Massive improvement in corporate balance sheets
FY96 FY98 FY00 FY02 FY04 FY06e
Net debt to equity () 42.2 40.7 34.6 26.4 14.8 1.9
Broad market, good fundamentals
Source Citigroup Nov 2005
11India
The investment process
The Market
IN
OUT
Charlemagne Capital Universe Selected opportunity
set Company visits Special situations Liquidity
test
IN
OUT
Portfolio Focused Low volatility Based on client
objectives
Aiming for superior risk-adjusted returns
12India
Qualitative screen checklist
Management Top line growth Bottom line growth Cash flow Balance sheet Shareholder / governance focus Track record and strategy
Management Top line growth Bottom line growth Cash flow Balance sheet Market leadership Innovative products
Management Top line growth Bottom line growth Cash flow Balance sheet Cost management Consistent growth
Management Top line growth Bottom line growth Cash flow Balance sheet Sufficient internally generated CF
Management Top line growth Bottom line growth Cash flow Balance sheet Access to finance Solvency risk
Valuation (relative absolute)
Disciplined bottom-up research
Price target
13India
Magna India Fund our top ideas
Stock name Model weighting Index weighting Load
Infosys Technologies 0.00 13.80 -13.80
Satyam Computers 9.69 3.80 5.89
Tata Motors 7.86 2.78 5.08
Tanla Solutions 5.00 0.00 5.00
Housing Dev. Finance 0.00 4.75 -4.75
Large loads active management
MSCI India Index Source Charlemagne Capital /
MSCI 30 Dec 05
14India
Magna India Fund active management
e.g. property
Large loads active management
MSCI India Index Source Charlemagne Capital /
MSCI 30 December 2005
15India
Summary
- India a market for stock pickers
- Our process seeks these opportunities
- Magna India Fund our best ideas
Good outlook for this changing market
16The Disclaimer
This document is issued by Charlemagne Capital
(UK) Limited which is authorised and regulated by
the Financial Services Authority (FSA). Magna
Umbrella Fund plc is an open ended investment
company authorised by the Financial Regulator as
a UCITS, recognised by the FSA under section 264
of the Financial Services and Markets Act 2000
for marketing to persons in the UK, registered
for public distribution in Germany and
Luxembourg, authorised for public distribution in
Austria, registered by the Autoriteit Financiële
Markten in The Netherlands and authorised for
public offering and solicitation in and from
Switzerland by the Swiss Federal Banking
Commission (the Fund is not subject to
supervisions by the Swiss Federal Banking
Commission or other Swiss public authority).
This document must not be relied on for the
purposes of making any investment decisions.
Before investing in any fund(s) recipients who
are not professional investors should contact
their independent financial adviser and should
read all documents relating to the particular
fund(s) such as any report and accounts and
offering memorandum/prospectus, which specifies
the particular risks associated with the fund(s),
together with any specific restrictions applying
and the basis of dealing. The value of any
investments and any income generated may go down
as well as up and is not guaranteed. Past
performance will not necessarily be repeated.
Changes in rates of exchange may have an adverse
effect on the value, price or income of an
investment. There are additional risks
associated with investments (made directly or
through investment vehicles which invest) in
emerging or developing markets. The information
in this document does not constitute investment,
tax, legal or other advice and is not a
recommendation or an offer to sell nor a
solicitation of an offer to buy shares in the
fund(s), which may only be made on the basis of
the funds prospectus/ offering memorandum which
can be obtained from the address below. An
investor in the United Kingdom who enters into an
investment agreement to acquire an interest in
the fund will not have the right to cancel the
agreement under any cancellation rules made by
the FSA. Charlemagne Capital (UK) Limited
reasonably believes that the information
contained herein is accurate as at the date of
publication but no warranty or guarantee (express
or implied) is given as to accuracy or
completeness. The information and any opinions
expressed herein may change at any time. This
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investment and investors may lose a substantial
portion or even all of the money they invest in
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