Mirae Asset India-China
Consumption Fund
An open ended equity oriented scheme
NFO Opens on : 9th March, 2011
NFO Closes on: 23rd March, 2011
Scheme re-opens for continuous sale & repurchase on
or before 5th April, 2011.
For professional investors only. Not for distribution to the public.
The case for India-China
consumer theme & sectors
For professional investors only. Not for distribution to the public.
Why India - China Consumer Theme?
 Take advantage of the structural growth trend in both India and China, which will leads to the domestic
consumption boom caused by improving economic condition.
 Demographic profiles of these two countries points to long term opportunity in consumer related products
ranging from FMCG and high-end products to indirect play on consumer products in healthcare, financial,
and tourism.
By 2020 China GDP is forecast to be over US$12tn
China & Indian population – Below 25 years as %
of total
and India at US$3.4tn
60
India
China
Chindia as % of US (RHS)
50
12
60
10
50
8
40
6
30
4
20
2
10
0
0
1990
1995
2000
2005
2010
2015
2020
Percentage (%)
70
Percentage (%)
GDP (trillion)
14
40
2005
30
2020
20
10
0
Europe
USA
China
World
Source: CLSA Asia-Pacific Markets, 2010
Source: CLSA Asia-Pacific Markets., 2010
For professional investors only. Not for distribution to the public.
India
The case for Indo-China consumer
Rise of Asian Middle Class
Just over 60% of the region’s middle class is in China, and 10% is in India
China will account for two-thirds of those entering the Asia ex-Japan middle class, growing its middleclass members to 600m, with India’s total reaching 140m.
India and China lead growth in the size of middle class and in discretionary spending within the region
which drives consumerism
Composition of the middle class in Asia exJapan
3%
1%
3% 4%
1%
China
India
HongKong
Indonesia
9%
5%
Korea
Malaysia
1%
10%
63%
Philippines
Singapore
Thailand
Taiwan
Source:CLSA, 2010
Middle-class population and spending CAGR,
2009-2014
Hong Kong
Singapore
Korea
Taiwan
Malaysia
Thailand
Phillipines
Asia ex…
Indonesia
China
India
0
5
10
15
Percentage (%)
Growth in discretionary-spending power
Growth in middle class Population
20
Source:CLSA, 2010, CAGR – Compounded Annualised Growth rate
For professional investors only. Not for distribution to the public.
The case for Indo-China consumer
Large Populations & Rising Incomes
India & China have the largest populations in Asia and we expect their disposable incomes to grow at the
fastest rates in the region.
For developing countries like India & China, higher incomes are the biggest driver of consumption growth
Disposable income per capita versus population growth, 2009
1400
8
800
6
600
4
400
Percentage (%)
China
1328.0
10.4
11.1
India
1173.8
7.6
18.6
Indonesia
230.0
7.4
14.6
Thailand
64.7
7.4
8.1
23.0
5.7
0.3
Philipines
92.1
5.1
11.2
Singapore
4.7
4.9
1.0
Hong Kong
7.1
4.2
0.8
Malaysia
28.1
4.2
5.8
Source:CLSA, 2010
China
Taiwan
India
0
Indonesia
0
Thailand
0.3
Taiwan
5.7
Korea
48.7
Philipines
Korea
Singapore
2
Malaysia
200
Hong Kong
Population (1000 Million)
10
Growth in disposable income per capita
growth
1000
Middle
Growth in
Class
disposable
Growth
Population income per capita 2009-14
(million)
(%)
(%)
12
Population (LHS)
1200
Population, disposable income growth versus
middle-class growth
Source:CLSA, 2010
For professional investors only. Not for distribution to the public.
The case for Indo-China consumer
A look at their demographic profiles
 In 2010, 945m Chinese (68% of population) are in the key consuming 15-59
age bracket.
 In India, the corresponding figures are 725m or 63% of population.
China’s demographic profile - 2010
60+
India’s demographic profile – 2010
60+
196 (14%)
55-59
55-59
70 (5%)
35-44
259 (19%)
25-34
219 (16%)
86 (6%)
15-19
101 (7%)
5-14
173 (13%)
0-4
100
115 (10%)
35-44
161 (13%)
25-34
190 (16%)
20-24
105 (10%)
15-19
111 (10%)
5-14
59 (4%)
0
43 (4%)
45-54
210 (15%)
Age Group
Age Group
45-54
20-24
96 (8%)
235 (19%)
0-4
200
300
119 (10%)
0
100
Population (million)
200
Population (million)
For professional investors only. Not for distribution to the public.
Source: Statistical Outline of India; China Statistical Yearbook., 2010
Source: Asian Demographics, 2010
300
Consumption Driver 4: Urbanization
 Better economic prospects and living standards are key drivers for people to
move to urban areas.
Under-Urbanization n China and India
Urbanization rates in China and India
Percentage(%)
Singapore
Argentina
UK
Brazil
Taiwan
Korea
USA
France
Mexico
Germany
Russia
Hungary
Japan
Phillipines
Malaysia
Poland
Indonesia
China
Pakistan
Thailand
India
Vietnam
Sri Lanka
Urbanisation Rate (2009)
0%
20%
40%
60%
80%
Percentage(%)
Source: United Nations and CLSA, Oct 10
For professional investors only. Not for distribution to the public.
Source: Morgan Stanley, Oct 10
100%
120%
Our Investment Proposition
Urbanization
Auto
Rising Middle
Class
Consumer
Non
Durables
Retail
India & China
Consumer Stocks
GDP Per Capita
Income Growth
Consumption
J Curve
Household
Appliances
Media
Declining
Dependency Ratio
Utilitities
A Combination of factors like Urbanization, Growth in Middle Class, Declining Dependency Ratio provide
fillip to the Consumption J Curve in a wide range of consumption and related sectors in the long run
For professional investors only. Not for distribution to the public.
Why India - China consumer sectors?
India - China consumer – a rising force
 Different Consumption & Consumption related sectors have out-performed broader indices at various
points of time: Past Performance may or may not be sustained in the future
 Key here is picking the right sector.
MSCI India Gross Index Performance (local) % - Best performing sectors marked in Orange
MSCI India Calender
MSCI India Consumer
MSCI India MSCI India Year
BSE Sensex Consumer Staples
Discretionary
Telecom
Utilities
2005
44.08
55.61
45.13
18.60
14.50
2006
47.88
12.50
40.75
54.51
3.97
2007
47.15
12.59
1.97
58.38
177.33
2008
(52.48)
(8.79)
(48.67)
(67.23)
(51.70)
2009
81.03
29.91
171.15
(24.44)
59.05
2010
17.43
30.33
29.92
(12.94)
(9.24)
MSCI China Gross Index Performance (local) % - Best performing sectors marked in Orange
Calender
Year
2005
2006
2007
2008
2009
2010
MSCI China MSCI China Consumer Staples
19.47
3.01
83.43
91.21
66.66
48.89
(51.12)
(39.85)
62.71
116.98
5.10
2.84
Source: Factset as on 31st Dec 10
MSCI China Consumer
Discretionary
(7.36)
42.29
76.90
(63.28)
149.60
(5.32)
MSCI China Telecom
34.35
82.04
100.39
(43.37)
(0.37)
11.73
For professional investors only. Not for distribution to the public.
MSCI China Utilities
(2.75)
54.63
62.50
(38.11)
0.14
(8.83)
MSCI India Financials
50.31
48.15
87.93
(61.69)
80.21
22.58
MSCI China Financials
21.58
139.77
35.71
(44.93)
72.06
(0.55)
Why India - China consumer sectors?
Auto
 India’s car sales lags China by 6 years. India &
China have similar car sales p.a at a given per
capita income (PCI) in PPP terms. Going by this
trend, India’s car consumption could hit 10 mn p.a
by FY 16E
India & China: Direct relationship between
Car sales and PCI
PCI in PPP
$
1500
2400
6000
 China: J curve trajectory commenced in 2000 at
USD 1000 PCI
Year achieved
India
China
1995
2000
2000
2006
2009
2016E
Car sales
China
India
0.53
0.69
1.22
1.38
10.32
10.00
Source: Enam Research, Dec 10
 India: J curve trajectory may commence in 2012 at
USD 1200 PCI
The Tipping Point for Accelerated Car Sales
across regions
China
India
Indonesia
Malaysia
Thailand
Brazil
UK
Japan
US
Total
0.2
0.2
0.2
0.2
0.3
N.A
2.0
4.3
8.6
15.9
2000
1.2
0.7
0.3
0.3
0.1
1.2
2.3
4.9
17.3
28.2
2005
3.5
1.1
0.5
0.4
0.2
1.7
2.4
5.3
17
32.2
Source: Enam Research & Bloomberg, Dec 10.
2009
10.3
1.9
0.6
0.4
0.2
3.1
2.0
4.3
10.4
33.4
1990-00 2000-05 2005-09
CAGR(%) CAGR(%) CAGR(%)
21
14
1
6
-13
0
2
1
7
6
24
11
14
6
19
8
1
2
0
3
31
14
6
1
4
16
-5
-5
-11
1
1
15000
India
0.8
12000
China
0.6
0.4
9000
PCI=$1000
PCI=$1200
0.2
6000
3000
0
0
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
1990
Car Sales Growth %
(mn)
units
Source: Enam Research, Dec 10
For professional investors only. Not for distribution to the public.
Per Capita Income
India & China Head Global Passenger Car Sales
Why India - China consumer sectors?
Household Appliances
 India’s Household appliances industry ( TV, washing machine, refrigerator & air conditioner )
stood at USD 5 bn in 2009
 Chinese domestic demand of AC is 17x and washing machine is 11x that of India.
 While India passenger car penetration lags by 6 years to China, for consumer durables it is
around 12 years
50
45
40
35
30
25
20
15
10
5
0
China 1995 & 2010 Penetration
5.5x
43
2x
18
2.5x
6x
9
0.5
Refrigerator
8
3
A/C
2.3x
100
2.5x
80
70
59
60
40
Television
30
38
3
0
For professional investors only. Not for distribution to the public.
China-2000
Television
China-1995
Washing
Machine
India-2010
51
23
20
Washing
Machine
18x
A/C
Source: Enam Research, Crisil, NBSC, 2010
3
115
120
Refrigerator
India-1995
8
3x
140
% of Households
% of Households
India 1995 & 2010 Penetration
Why India - China consumer sectors?
Consumer Non Durables
 Chindia’s GDP growth has improved in the past decade. However, per capital consumption of
various consumer products in China and India is still significantly lower than in many
developing economies due to the lower income levels.
 The low penetration levels suggest high potential for growth in the consumer products space
in the form of FMCG.
How big will India’s FMCG market be in 2020?
How big will China’s FMCG market be in 2020?
India
India
Per-capita
market size market size consumption
2005(US$m) 2020(US$m) growth(% cagr)
China
China
Per-capita
market size market size consumption
2005(US$m) 2020(US$m) growth(% cagr)
Bath and shower products
1,374
4.670
7.0
Bath and shower products
1,073
2,439
5.0
Laundry care
1.540
6.018
8.0
Laundry care
2,786
7,304
6.0
Oral hygiene
554
3.736
12.0
Oral hygiene
1,596
6,358
9.0
Hair care
897
7.892
14.0
Hair care
2,171
11,364
11.0
Color cosmetics
111
2,103
20.0
Color cosmetics
1,033
11,912
17.0
Skin care
355
6.729
20.0
Skin care
3,584
60,401
20.0
Packaged food
9,795
98,181
15.0
Packaged food
55,786
381,657
13.0
Beer
1,086
7,322
12.0
Beer
11,850
54,150
10.0
Wine
33
1,164
25.0
Wine
2,734
46,073
20.0
7,457
38,372
10.0
Spirits
13,368
61,083
10.0
Spirits
Source: CLSA Asia Pacific Markets, 2010.
For professional investors only. Not for distribution to the public.
Source: CLSA Asia Pacific Markets., 2010
Why India - China consumer sectors?
India - China consumer – a rising force
Summary
 China and India are one of the fastest growing regions in the world. (Source: IMF,2010)
 Spending power set to rise as industrialization spurs greater urbanization. This fuels demand for
higher margin branded consumer products.
 We are already seeing more urban population growth in China and India
 Expert stock picks can yield gains irrespective of consumer cycle.
 From a macro perspective in the long term, China and India are expected to continue to see secular
consumer boom.
Risks
 Consumer sector valuations look stretched. However recent correction in India & Chinese markets
could help correct this .
 Policy tightening in India & China
 Rising commodity prices coupled with limited pricing power creates downside risk on earnings.
 Any re-emergence of Sovereign Default Risks could lead to decline in financial markets across the
globe
For professional investors only. Not for distribution to the public.
Mirae Asset India-China
Consumption Fund
For professional investors only. Not for distribution to the public.
Fund Features
Investment Objective
The investment objective of the scheme is to generate long term capital appreciation through an
actively managed portfolio investing in equity and equity related securities of companies that are likely
to benefit either directly or indirectly from consumption led demand in India/China. The Scheme does
not guarantee or assure any returns.
Fund Type
An Open ended equity oriented scheme
Asset Allocation
Indian Equities and Equity Related Securities of companies that are likely to benefit either directly or
indirectly from consumption led demand - 65 - 90%
Chinese Equities and Equity Related Securities of companies that are likely to benefit either directly or
indirectly from consumption led demand -10 - 35%
Money market instruments (including CBLO) / debt securities Instruments - 0 - 25%
Plans & Options
The Scheme shall have Regular Plan and offers two options viz., Growth and Dividend. Dividend Plan
will offer Payout & Reinvestment facility
Entry Load
N.A. In accordance with SEBI circular no. SEBI/IMD/CIR No. 4/168230/09 dated June 30, 2009, no
entry load will be charged by the Scheme to the investor. Similarly, no entry load will be charged with
respect to applications for registrations under Systematic Investment Plan (SIP) / Systematic Transfer
Plan (STP) accepted by the Mutual Fund with effect from August, 1, 2009. The upfront commission
shall be paid by the investor directly to the distributor, based on his assessment of various factors
including the service rendered by the distributor.
Exit load
Regular Plan
: 1% If redeemed within 1 year (365 days) from the date of allotment
SIP
: 1% If redeemed within 1 year (365 days) from the date of allotment
NIL: If redeemed after 1 year (365 days) from the date of allotment
Management & Administration Fees
Maximum of 1.25% (with varied slabs) – Management Fees
Total Recurring Expenses – Upto 2.50% with varied slabs (Inclusive of Management Fees)
Minimum Application Amount & Minimum
Additional Application Amount
Investors can invest under the Scheme with a minimum investment of Rs.5,000/- and in multiples of Re.
1/- thereafter. Additional investments in an existing folio can be made for Rs.1,000/- and in multiples of
Re.1/- thereafter.
Benchmark
15
MSCI India Consumption Index (65%) + MSCI China Consumption Index (35%)
For professional
rebalancing)
(Price investors
in INR). only. Not for distribution to the public.
(with quarterly
Fund Investment Universe
 The fund seeks to invest in a basket of Consumer Stocks benefiting either directly or indirectly
from consumption led demand in India/China
 An illustrative list of these sectors include Consumer Discretionary, Consumer Staples, Autos,
Realty, Healthcare, Education, Media & Entertainment, Banks & Financial Services, Telecom,
Transportation, Food and Tourism & Hospitality but not limited to the specified ones
Consumer
Staples
Telecom
Companies engaged
in consumer business Consumer
Discretionary
Mirae Asset India
– China
Consumption
Fund
Utilities
16
Financials
For professional investors only. Not for distribution to the public.
Performance at a glance..
 Rs 10000 invested on 31st Dec 2005 is today worth
 Rs 21091 (MSCI India Consumption Index (65%) + MSCI China Consumption Index (35%))
 Rs 19502 (BSE Sensex)
 On a CAGR basis, the customised Consumption Index has returned 15.79% ; whereas the BSE
Sensex has returned 14.02% over this time frame. (CAGR – Compounded Annualised Growth Rate)Rs 21091
Amount Invested (Rs)
25000
20000
15000
Rs 19502
10000
0
Dec-05
Jan-06
Feb-06
Mar-06
Apr-06
May-06
Jun-06
Jul-06
Aug-06
Sep-06
Oct-06
Nov-06
Dec-06
Jan-07
Feb-07
Mar-07
Apr-07
May-07
Jun-07
Jul-07
Aug-07
Sep-07
Oct-07
Nov-07
Dec-07
Jan-08
Feb-08
Mar-08
Apr-08
May-08
Jun-08
Jul-08
Aug-08
Sep-08
Oct-08
Nov-08
Dec-08
Jan-09
Feb-09
Mar-09
Apr-09
May-09
Jun-09
Jul-09
Aug-09
Sep-09
Oct-09
Nov-09
Dec-09
Jan-10
Feb-10
Mar-10
Apr-10
May-10
Jun-10
Jul-10
Aug-10
Sep-10
Oct-10
Nov-10
Dec-10
Jan-11
5000
MSCI India Consumption Index (65%) + MSCI China Consumption Index (35%)
BSE Sensex
Past and historic performance of the above indices may or may not be sustained nor does it guarantee similar or consistent
performance of the indices and the proposed
new fund, in future as well.
For professional investors only. Not for distribution to the public.
Source: Factset & ACEMF as on 31st Jan 11.
Fund Investment Strategy
Quality over Quantity
•
Our investment strategy focuses on companies with the following characteristics:
Benefit from macroeconomic, industry and sectoral trends
Derived through our bottom-up approach to stock picking
Attractive Valuation
Atrractive relative valuation with the consideration of liquidity and volatility
Reliable Management
Capable and accountable management who care for shareholders’ values
Corporate Goverance Norms
Managements with good corporate governance track record
18
For professional investors only. Not for distribution to the public.
Fund Manager(s)
Mr. Gopal Agrawal – Head of Equity & Dy. CIO
Mr. Gopal Agrawal is responsible for spearheading the equity investment management initiatives for the
India operations. Mr. Agrawal is instrumental in developing investment philosophies for the domestic equity
funds and building key investor relationship for the organization. Schemes being co-managed by Mr
Surana are Mirae Asset India Opportunities Fund, Mirae Asset Global Commodity Stocks Fund, Mirae
Asset China Advantage Fund and Mirae Asset Emerging Bluechip Fund. Aged 36, Mr. Agarwal is a
Chemical Engineer by qualification and graduated from MBM at VGSOM, IIT Kharagpur. He has a rich
work experience of over 13 years, out which 7 years has been with the Indian fund management industry.
Mr. Neelesh Surana – Senior Fund Manager (Equity)
Mr. Surana has professional experience of more than 10 years and is responsible for Portfolio construction
& monitoring. Prior to this assignment, Neelesh was associated with ASK Investment Managers Pvt Ltd
where he was responsible for tracking sectors like Metals, FMCG and Pharma. Schemes being comanaged by Mr Surana are Mirae Asset India Opportunities Fund, Mirae Asset Global Commodity Stocks
Fund, Mirae Asset China Advantage Fund and Mirae Asset Emerging Bluechip Fund. Aged 40, Mr. Surana
is a Mechanical Engineer by qualification and has done his Masters in Business Administration (Finance).
Mr. Basavraj Shetty – Fund Manager (Overseas Investments)
Mr. Shetty has 7.5 years experience in Equity Research Analysis role and is responsible for Investment
Analysis, Advisory & Fund Management. His last assignment was with Centrum Broking Pvt. Ltd., as an
Equity Research Analyst. Prior to that, he was with J P Morgan India Pvt. Ltd as an Investment Banking –
Associate. Mr. Shetty has also worked with Middle East Brokerage Company, Oman & First Global Stock
Broking Pvt. Ltd. as an equity research analyst. Aged 36, Mr. Shetty is a B. Tech by qualification and has
done his Masters in Business Administration (Finance).
19
For professional investors only. Not for distribution to the public.
Mirae Asset: The Group
 Building on principles
Mirae Asset Financial Group is an independent financial organization engaged in many fields of finance
which include asset management, investment banking, and life insurance. range of services and
products. Based on our full range of services and products, we aim to become a true leader in the world’s
capital market through the jurisdiction in which we always operate: by “Building on principles”.
20
For professional investors only. Not for distribution to the public.
Emerging Market Experts
 One of the world’s largest investors in emerging market equities
We have been recognized as one the leaders in emerging market equities via various publications and
surveys. In IPE’s (Investments Pensions Europe) “Investing in Emerging Market Equities” Survey, Mirae
Asset marked no.1 (2008) and no.2 (2009, 2010) in terms of size of assets invested into emerging market
equities.
21
For professional investors only. Not for distribution to the public.
Disclaimer
Statutory Details: Trustee: Mirae Asset Trustee Company Private Limited; Investment Manager: Mirae Asset Global Investments (India) Private Limited
(AMC); Sponsor: Mirae Asset Global Investments Company Limited.
Mirae Asset India-China Consumption Fund (An Open ended Equity Oriented Scheme) - Investment Objective: The investment objective of the scheme
is to generate long term capital appreciation through an actively managed portfolio investing in equity and equity related securities of companies that are likely
to benefit either directly or indirectly from consumption led demand in India/China. The Scheme does not guarantee or assure any returns. Load Structure:
Entry Load: Nil. In terms of SEBI circular no. SEBI/IMD/CIR No.4/ 168230/09 dated June 30, 2009, no entry load will be charged by the Scheme to the
investor effective August 1, 2009. Upfront commission shall be paid directly by the investor to the AMFI registered Distributors based on the investors'
assessment of various factors including the service rendered by the distributor. Exit Load: Redemption within 1 year (365 days) from the date of allotment
(Including SIP/STP/SWP) - 1.00%. Redemption after 1 year (365 days) from the date of allotment - NIL. Asset Allocation: (1) Indian Equities and Equity
Related Securities of companies that are likely to benefit either directly or indirectly from consumption led demand: 65%-90% (2) Chinese Equities and Equity
Related Securities of companies that are likely to benefit either directly or indirectly from consumption led demand: 0%-35%; Money market instruments / debt
securities Instruments and/or units of debt/liquid schemes of domestic Mutual Funds : 0%-25%.Terms of Issue: The units are available at the face value of
Rs.10/- per unit during the New Fund Offer Period. The AMC will calculate and disclose the first NAV not later than 10 days from the closure of New Fund
Offer Period. Subsequently, the NAV will be calculated at the close of every working day and shall be published in two daily newspapers and on the
AMC/AMFI website. Risk Factors: Mutual fund 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 Net Asset Value (NAV) of the units issued under the Schemes can go up or down
depending on the factors and forces affecting the capital markets. Investments in mutual funds are prone to risks of fluctuation in NAVs, uncertainty
of dividend distributions etc. Past performance of the Sponsor / AMC / Mutual Fund / Trustee does not guarantee the future performance of the
Schemes of Mirae Asset Mutual Fund. The sponsors are not liable or responsible for any loss resulting from the operation of the fund beyond the initial
contribution made by them of an aggregate amount of Rupees One Lakh towards setting up of the fund. The Scheme should have a minimum of 20 investors
and no single investor should account for more than 25% of the corpus of such scheme/plan(s). In case of non-fulfillment with either of the above two
conditions in a three months time period or the end of succeeding calendar quarter, whichever is earlier, from the close of the New Fund Offer (NFO) or on an
ongoing basis for each calendar quarter, the schemes /plans shall follow the necessary guidelines as prescribed by SEBI in this regard. Mirae Asset IndiaChina Consumption Fund is only the name of the scheme and does not in any manner indicate either the quality of the scheme or its future prospects
or returns. Investors in the scheme are not being offered any guaranteed / indicative/ assured returns. Please see "Risk Factors", "Scheme Specific Risk Factors
and Special Consideration" and "Right to limit redemptions" in the Scheme Information Document (SID). Please read the Scheme Information Document
(SID) & Statement of Additional Information (SAI) carefully before investing. A copy of SAI / SID/ Key Information Memorandum cum Application form
will be available at AMC offices/AMC web-site www.miraeassetmf.co.in / Investor Service Centre / Distributors on request.
For professional investors only. Not for distribution to the public.