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A Reliance Capital
Table of Contents
Equity Markets
India Infrastructure
Funding Options
Investment Opportunities
Reliance Infrastructure Fund
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Indian Equity Markets – Visible Change
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Equity Markets – Our View
The Catapult
incumbent Government
However……
Source: Internal - RMF Research
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Infrastructure – Miles To Go
World Bank’s “ Global Competitiveness Report 2007-08”
‘Inadequate supply of infrastructure’
- Most problematic factor for doing business in India
India ranked 48th out of 131 counties in the Global Competitive Index 2007
- Ranked 67th on the quality of infrastructure
India lags behind in infrastructure facility usage compared to US & China
Our growth potential will be realized only if we can Infrastructure development is essential to sustain high
ensure that our infrastructure does not become a growth rates in future
severe handicap
Dy. Chairman – India Planning Commission Chairman – Tata Sons – Ratan Tata
Montek Singh Ahluwalia
We have a large deficit in almost every infrastructure
One of the critical constraints which holds back our sector whether airports, power, roads, etc. This is an
growth rate is really the quality of infrastructure area that needs large amounts of investment.
India has achieved excellence in human capital, but Indian industry would expect significant initiatives in
the country’s shabby infrastructure is proving to be a the area of resource mobilization for infrastructure
major stumbling block for the country’s development projects
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Factors Driving Demand For Better Infrastructure
Economic Demographic Global
Factors Factors Integration
Growing economy Rising population Rising international
Rising disposable incomes Increasing urbanization trade and travel
States with focus on higher development expenditure has proved to be a boon for the Ruling Party
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Manifestos Unanimous On Infrastructure
- Commits to an agenda for change guided by three goals:
BJP Good Governance, Development & Security
- Investing heavily in infrastructure projects are at the top of our agenda
Strongest Government platform in India over the last 2 decades..& the opportunities could be substantial
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Intentions Evident In Interim Budget 2009
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The Size Of Opportunity
Year when
India China
Particulars China
(2008) (2007)
Achieved
Expressways (Km) 200 1989 53,000
Air Passenger Traffic (Mn) 120 2006 186
Cargo Traffic (Major Ports) (Mn Tons) 519 1991 3,882
Power Generation Capacity (GW) 143 1992 720
Finished Steel (Mn Tons) 58 1991 465
Cement (Mn Tons) 218 1989 1,500
Source: India Infoline Research, Department of shipping India, National Bureau of statistics China
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XIth FYP – Infrastructure Investment
th
Sector 2007-08 2008-09 2009-10 2010-11 2011-12 Total XI FYP
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Much Bigger Outlay In The XIIth FYP
The projected investment in infrastructure sector in the XIIth FYP would be USD
1,128 Billion
Projected GCFI (XIIth Plan)
2011E-12E 2012E-13E 2013E-14E 2014E-15E 2015E-16E 2016E-17E
GDP at Market Prices 6,347,900 6,919,300 7,542,000 8,220,800 8,960,600 9,767,100
Rate of growth of GDP (%) 9.00% 9.00% 9.00% 9.00% 9.00% 9.00%
GCF in Infrastructure as a % of GDP 9.00% 9.25% 9.50% 9.75% 10.00% 10.25%
GCF in Infrastructure (Rs. Crore) 571,311 640,035 716,490 801,528 896,060 1,001,128
Total GCFI (Rs. Crore) 4,626,552
Total GCFI (USD Billion) 1,128
Rs. Crore(At 2006-07 prices), Exchange Rate of Rs.41/$ (2006-07)
Source: Planning Commission of India
Estimates: GDP to grow at 9% per year, GCFI as % of GDP to increase from 9% in 2011-12 to 10.25% in 2016-17
- PPP
- Foreign investments
3 G Auctions Rs Crore
Bids at reserve price 8,590 Expected revenue from 3G
Bids at 2x reserve price 17,180
spectrum auction
Bids at 3x reserve price 25,770
Source: Internal - RMF Research
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Divestment…
Name Mcap Govt.
(Rs. Cr) Holding (%)
Oil & Natural Gas Corp Ltd 212,026 74
NTPC Ltd 171,794 90 Divestment of minority stake in listed PSUs
MMTC Ltd 118,137 99
NMDC Ltd 110,219 98 to reduce fiscal burden
Bharat Heavy Electricals Ltd 99,884 68
Steel Authority Of India Ltd 68,276 86
Indian Oil Corp Ltd 56,049 80
Power Grid Corp of India Ltd 49,791 86
GAIL India Ltd 38,955 57 Divestment of profitable unlisted PSUs like
Power Finance Corp Ltd 24,591 90
National Aluminium Co Ltd
Neyveli Lignite Corp Ltd
23,517
19,923
87
94
BSNL, DVC etc
Rural Electrification Corp Ltd 12,446 82
Container Corp Of India 12,016 63
Mahanagar Telephone Nigam 5,572 56
Shipping Corp Of India Ltd 5,164 80 Sale of residual minority stake in privatised
Engineers India Ltd 4,320 90
Rashtriya Chemicals & Fert 3,603 93
Total 1,036,282
PSUs like VSNL(26%), Balco(49%) &
Divestment can give
Hindustan Zinc(29%)
5% Divestment 51,814
10% Divestment 103,628
Source: Bloomberg
Note: The name of the companies mentioned above are for illustration purposes only
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Cash – Rich PSUs
- Others like BSNL, AAI, DVC also have enough cash to fund their projects
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Funding Pattern - XIth FYP
Funding of XI FYP
X Plan XI Plan
Sectors Centre State Private Total Centre State Private Total
Electricity 102,463 97,553 91,834 291,850 255,316 225,697 185,512 666,525
Roads & Bridges 71,534 66,354 7,004 144,892 107,359 100,000 106,792 314,151
Telecommunication 49,013 - 54,352 103,365 80,753 - 177,686 258,439
Railways 108,950 10,402 307 119,659 201,453 10,000 50,354 261,807
Irrigation 13,617 97,886 - 111,503 24,759 228,543 - 253,302
WSS 42,316 21,465 1,022 64,803 42,003 96,306 5,421 143,730
Ports 2,185 1,530 10,356 14,071 29,889 3,627 54,479 87,995
Airports 3,823 12 2,936 6,771 9,288 50 21,630 30,968
Storage 577 866 3,377 4,820 4,476 6,713 11,189 22,378
Gas 8,713 - 1,000 9,713 10,327 - 6,528 16,855
Total 403,191 296,068 172,188 871,447 765,623 670,936 619,591 2,056,150
Rs. Crore(At 2006-07 prices)
Source: Planning Commission of India
Mundra Port
Potential to invest huge sums of money given India’s need for infrastructure
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FDI – India Can Attract Much More
Sector 2005-06 2006-07 2007-08 2008-09 Cumulative % Of Total
Rs. Crore (Apr-Mar) (Apr-Mar) (Apr-Dec) (Apr-Feb) (Apr00-Feb 09) Inflows
Services Sector 2,399 21,047 26,589 24,074 79,771 22.00%
Telecommunications 2,776 2,155 5,103 11,155 27,902 8.00%
Construction Activities 667 4,424 6,989 8,287 21,672 6.00%
Housing & Real Estate 171 2,121 8,749 11,316 22,477 6.00%
Power 386 713 3875 4268 13,898 4.00%
Total FDI in India(2000-09)(Rs. Cr) 24,613 70,630 98,664 112,896 382,996
Total FDI in India(2000-09)(USD Billion) 5.5 15.7 24.6 25.4 87.9
compared to India
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Private Equity – An Important Source Of Funding
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Infrastructure Fund – Why Now ?
2008 Now
Global scenario –very scary and Some stability. Investors will move
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Valuations: Reasonable given growth
prospects
Source: Bloomberg
Note: The name of the companies mentioned above are for illustration purposes only
We do not recommend any action based on the above illustration
% Change in price from 2007-08 high is compared to prices as on 22nd May 09
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Introducing
Reliance Infrastructure Fund
A Reliance Capital
Investment Strategy
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Scheme Features
The primary investment objective of the scheme is to generate long term
capital appreciation by investing predominantly in equity & equity related
instruments of companies engaged in infrastructure & infrastructure
Investment Objective related sectors & which are incorporated or have their area of primary
activity, in India & the secondary objective is to generate consistent
returns by investing in debt & money market securities
New Fund Offer Price: Rs.10/- per unit plus applicable load
** including securitised debt up to 30%
#An overall limit of 100% of the portfolio value has been introduced for the purpose of equity derivatives in the scheme. The margin money requirement for the purpose of derivative exposure will be as per the SEBI Regulations. The derivate
exposure will be restricted to such limit so that the scheme does not leverage upon margin requirements
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Scheme Features
Load Structure : During New Fund Offer &
Choice of Plans/Options Continuous Offer including SIP Installments
Retail & Institutional Plan For Retail Plan:
Growth Plan:
Growth & Bonus Option Entry Load:
Dividend Plan :
Dividend Payout Option • For subscription below Rs. 2 Crs – 2.25%
Dividend Reinvestment Option • For subscription of Rs.2 Crs & above & below Rs.5 Crs – 1.25%
• For subscription of Rs.5 Crs & above - Nil
Minimum Application Amount Exit Load:
For Retail Plan : Rs.5000/- For subscriptions of less than Rs 5 Crs per purchase transactions
For Institutional Plan: Rs.5 Crs • 1% If redeemed/ switched on or before completion of 1 year from
the date of allotment
SIP • Nil If redeemed/ switched after completion of 1 year from the date
of allotment
Available : Retail Plan For subscriptions of more than Rs. 5 Crs : Nil
Mode of Payment :
Only through Direct Electronic Debit to the For Institutional Plan:
investor’s bank account. This facility is offered
only to the investors having bank accounts in Entry Load : Nil
HDFC Bank, Axis Bank Exit Load : Nil
Waiver of Load for Direct Applications : As per SEBI Circular no. SEBI/MD/CIR no. 10/112153/07 dated December 31, 2007, no entry load shall be charged for direct applications received
by the Asset Management Company (AMC) i.e. applications received through internet, submitted to AMC or collection centre/Investor Service Centre that are not routed through any
distributor/agent/broker
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Risk Factors
The views expressed herein are the personal views of the Fund Managers. The views constitute only the opinions and do not constitute any guidelines or
recommendation on the course of the action to be followed. Readers are strongly advised to verify the contents before taking any investment decision based on this
opinion. The above is meant for general reading purpose only and is not meant to serve as a professional guide for the readers. The readers should exercise due
caution and/or seek independent professional advice before making any investment decision or entering into any financial obligation based on information, statement or
opinion which is expressed herein. These are not necessarily the views of Reliance Capital Asset Management Ltd. Neither the AMC, the trustees, the Fund nor any of
their affiliates or representatives assume any responsibility/liability for the accuracy, completeness, adequacy and reliability of information provided herein. The
information contained herein has been obtained from sources published by third parties. While such publications are believed to be reliable and we have made best
efforts to avoid any errors or omissions, however, neither the AMC, the Trustees, the Fund nor any of their affiliates or representatives assume any responsibility for the
accuracy, completeness, adequacy and reliability of such information.
Sponsor: Reliance Capital Limited. Trustee: Reliance Capital Trustee Co. Limited. Investment Manager: Reliance Capital Asset Management Limited. Statutory Details:
The Sponsor, the Trustee and the Investment Manager are incorporated under the Companies Act 1956.
Scheme Specific Risk Factors: Portfolio Turnover : Given the nature of the scheme, the portfolio turnover ratio may be very high and the AMC may change the portfolio
according to the asset allocation commensurate with the investment objective of the scheme. The effect of high portfolio turnover could be higher brokerage and
transaction costs. Due to these factors the NAV of scheme might be impacted. Terms of Issue: The Units are available at Rs. 10/- per unit plus applicable load during
the New Fund Offer Period and thereafter at applicable NAV based prices. The AMC will calculate and disclose the first NAV not later than 30 days from the closure of
the New Fund Offer Period. Subsequently, the NAV will be calculated and disclosed at the close of every working day which shall be published in at least in two daily
newspapers and also uploaded on AMFI site i.e. www.amfiindia.com and Reliance Mutual Fund website i.e. www.reliancemutual.com. General Risk Factors: Mutual
Funds and securities investments are subject to market risks and there is no assurance or guarantee that the objectives of the Scheme will be achieved. As with any
investment in securities, the NAV of the Units issued under the Scheme can go up or down depending on the factors and forces affecting the capital markets. Past
performance of the Sponsor/AMC/Mutual Fund is not indicative of the future performance of the Scheme. Reliance Infrastructure Fund is only the name of the Scheme
and does not in any manner indicate either the quality of the Scheme; it's future prospects or returns. The Sponsor is not responsible or liable for any loss resulting from
the operation of the Scheme beyond their initial contribution of Rs.1 lakh towards the setting up of the Mutual Fund and such other accretions and additions to the
corpus. The Mutual Fund is not guaranteeing or assuring any dividend. The Mutual Fund is also not assuring that it will make periodical dividend distributions, though it
has every intention of doing so. All dividend distributions are subject to the availability of the distributable surplus in the Scheme. For details of scheme features apart
from those mentioned above and scheme specific risk factors, please refer to the provisions of the scheme information document. Scheme information document and
KIM cum application form is available at all the DISCs/ Distributors of RMF/www.reliancemutual.com. Please read the scheme information document carefully before
investing. The information contained herein has been obtained from sources published by third parties.
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Thank you
A Reliance Capital