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Premium member Presentation Transcript Slide 1: L&T Infrastructure Fund (An Open Ended Equity Scheme) May 2011 1Slide 2: L&T Infrastructure Fund An Open Ended Equity Scheme 2Slide 3: Size Of Infrastructure Sector In India The revised XI th Five year plan (2007-2012) has projected Rs.20.5 trillion spend for Infrastructure development in India, a growth of around 127% over the comparative X th plan period Investment in the infrastructure sector during the XII th Plan expected to be Rs. 41 trillion, a growth of 100% over the XI th five year plan Infrastructure spending for the XI th plan amounts to 7.6% of GDP over the plan period. The spending for the XII th plan is expected substantially higher at close to 10% over the plan period Source Source -Infrastructure.gov.in 3 L&T Infrastructure Fund An Open Ended Equity SchemeSlide 4: L&T Infrastructure Fund An Open Ended Equity Scheme Size Of Infrastructure Sector In India Around 85% of the planned expenditure for the XI th plan is On Electricity, Road and Bridges, Telecommunication, Railways And Irrigation The private sector contribution is expected to be 36% of the spend for the XI t h plan as against 30% planned originally and 25% for the Xth plan. 4 Source Source -infrastructure.gov.inSlide 5: L&T Infrastructure Fund An Open Ended Equity Scheme Infrastructure sector has not participated in recent rally 5 Source -NSE , BSE as on 30 TH NOV 10Slide 6: L&T Infrastructure Fund An Open Ended Equity Scheme An analysis of why the Infrastructure Sector did not perform in line with market Deferment of capital expenditure by the corporate sector due to global financial crisis has impacted the performance Economic downturn resulted in lack of availability of capital required for implementation of projects Hurdles in implementation such as land availability for roads, adverse bidding mechanism, etc. resulted in low interest in bidding for contracts set out by the NHDP Lack of equipment availability, delay in environmental and forest clearances for setting up power plants, lack of availability of water, etc. resulted in slower implementation. Lower bankability for merchant power based business model for power plants as against the widely accepted PPA model further added to the delay in financial closure. Political issues such as Telengana hampered the implementation of projects in Andhra Pradesh, especially irrigation projects Slowdown of infrastructure capital expenditure in the overseas markets particularly Middle east and South East Asia 6Slide 7: L&T Infrastructure Fund An Open Ended Equity Scheme Why Infrastructure Push Now ? The revised XI th Five year plan (2007-2012) has projected Rs.20.5 trillion spend for Infrastructure development in India, a growth of around 127% over the comparative X th plan period The World Bank is exploring to invest in an $11 billion debt fund the Indian government will roll out by next year as part of a massive push to its infrastructure sector. There is at least $50 billion to $60 billion untapped investor potential in water and sewage treatment projects in India , according to latest World bank estimates Foreign investors are likely to fund up to 30 percent of India's $18 billion road projects in the current fiscal year, a figure expected to only grow exponentially in coming years .(Reuters) Indian Government has set target of 30,000 mw of power from renewable energy including 20,000 mw from solar power by 2022, and invited German companies to collaborate in these areas. Source -Business world & Reuters. 7Slide 8: L&T Infrastructure Fund An Open Ended Equity Scheme Infrastructure sector has delivered returns in long term 8 Source -NSE , BSE as on 30 th Nov 10Slide 9: L&T Infrastructure Fund An Open Ended Equity Scheme 9Slide 10: Figures for projected spend on XI th Plan L&T Infrastructure Fund An Open Ended Equity Scheme 10 Source Source infrastructure.gov.in Accelerated spending on Infrastructure in the 11 th Plan has added over Rs 4 trillion to the trend outlaySlide 11: Figures for Revised spend on XI & estimated XII plan 11 Source infrastructure.gov.in Accelerated spending on Infrastructure in the 12 th Plan proposes to add almost Rs 7 trillion more to the trend outlay L&T Infrastructure Fund An Open Ended Equity SchemeSlide 12: L&T Infrastructure Fund An Open Ended Equity Scheme Source infrastructure.gov.in 12Slide 13: L&T Infrastructure Fund An Open Ended Equity Scheme Key features of the mid term appraisal of XI th 5 year plan Revised spending for the XI t h plan remains approximately at the same level as that planned originally at Rs.20.5 trillion Telecom sector to have i ncrease of 34% over XI th plan – Robust growth in subscriber base led to better than expected spending by the private sector Airports sector to have increase of 17% over XI th plan – Both public and private investments in airports are likely to increase compared to the investment projected at the beginning of the Eleventh Plan 13 Source Source -infrastructure.gov.inSlide 14: Initial target for capacity addition during XIth Plan was 79 GW which was revised to 62GW & expected target for capacity addition for XII Plan is 100 GW. 80% of this to be coal-based thermal plants ( NTPC, R-Power, Adani will account for ~61GW capacity over this period ) A major initiative in addition to power generation capacity is the programme of Ultra Mega Power Projects (UMPPs). So far, 4 UMPPs of 4,000 MW each have been awarded on the basis of competitive tariff based bidding Revision of targets by Government to INR 2.78 Trillion – from INR 3.14 Trillion originally planned NHAI plans more than 37,000 km over the 5 year period from 2010 to 2014 For the remaining part of the XI th plan period the Government targets to build 20 km of highways per day, a 3X step up in road construction activity from the 7.3 km / day achieved in FY2010 For FY 2011 the expenditure planned stands at Rs.35,680 Crore against Rs.29,934 Crore for FY 2010, growth of 19% L&T Infrastructure Fund An Open Ended Equity Scheme Opportunities In Key Sectors In Brief Power – Shortages keep returns buoyant Roads – Significant project awarding ahead Source www.planningcommission.nic.in 14 Sectors mentioned are not recommendations from the AMC or its associates. Particulars Capacity (MW) Capacity as on 31 st March 07 124569 XI Plan revised target 62374 Likely installed capacity as on 31 st March 2012 186,943Slide 15: Total investment of Rs.2 trillion for the XI th plan is twice the anticipated 10th plan expenditure Some of the targets set by the ministry for 2011 include 1019 km of new lines 944 MT of freight against 888 MT achieved in 2010. Spend on MRTS project targeted at Rs.1002 Crore against Rs.581 Crore for 2010 Procurement of 18000 wagons against 13500 wagons targeted for FY 2010 Opportunities for the private sector exist in freight corridor ,railway station modernization and privatization, development of logistic parks& MRTS projects Major companies operating in this segment include - L&T, Texmaco, BEML, Kalindee Rail, Reliance Infrastructure. L&T Infrastructure Fund An Open Ended Equity Scheme Railways – Insufficient capacity to trigger investments 15 Sectors mentioned are not recommendations from the AMC or its associates. Source www.Planningcommision.nic.inSlide 16: The government Targets 140 million Hectares as against current status of 87.2 million Hectares by the end of the XIth plan period as area under irrigation Total investment during the plan period amounts to Rs.2533 billion (at 2006-2007 prices) Andhra Pradesh to remain the irrigation hub of India with its massive irrigation development drive. Close to 50% budgetary allocation towards irrigation development The state government’s spend on irrigation has increased at a CAGR of ~40% over FY05 Y09 For FY10. AP Government has set aside Rs 178 billion for irrigation works for FY10. Under Jalayagnam, the AP government’s flagship programme for the irrigation sector, 86 projects have been approved since 2004 with a total cost of Rs 1,760 billion . Major companies in this segment include- IVRCL, Patel Engg, HCC , etc . Irrigation – State finances to determine the spend L&T Infrastructure Fund An Open Ended Equity Scheme 16 Sectors mentioned are not recommendations from the AMC or its associates. Source www.Planningcommision.nic.inSlide 17: L&T Infrastructure Fund An Open Ended Equity Scheme Telecommunication India has the second largest Telecommunication market in the world with over 706 million telephone connections at the end of August 2010 The spend on the telecom sector has been revised upwards for the XIth plan period by 34% to Rs.3.5 trillion. Most of the targets set for the XIth plan period has been achieved already such as reaching 600 million subscriber base. As against target of 100 million rural telephone connections by 2010, 175 million have been already achieved Provide broadband connection on demand across the country by 2012.Total number of Broadband connections has already reached close to 8 million 17 Sectors mentioned are not recommendations from the AMC or its associates. Source www.Planningcommision.nic.inSlide 18: L&T Infrastructure Fund An Open Ended Equity Scheme Now Private sector’s also coming to infrastructure building The private sector contribution in the infrastructure spending during the revised XIth 5 year plan stands at 36% against the earlier estimated 30% and 25% contribution reported during the X th 5 year plan The private sector contribution during the XII th 5 year plan is estimated to be 50% of the total infrastructure spending i.e. over Rs. 20 trillion Total of 937 projects involving an investment of Rs. 7.2 trillion are at various stages of award and implementation. Out of these, 241 projects with an investment of Rs. 66,512 Crore have been completed and 292 projects with an investment of Rs. 2.4 trillion are under implementation. Another 404 projects involving an investment of Rs. 3.8 trillion are in the pipeline 18 Source www.Planningcommision.nic.inSlide 19: Various areas in which PPP model has been applicable include the following National Highways State Highways Operation & Maintenance of Highways National Highways (Six Laning) Urban Rail Transit Systems Non-Metro Airports Re-development of Railway Stations Procurement-cum-Maintenance Agreement for Locomotives Transmission of Electricity L&T Infrastructure Fund An Open Ended Equity Scheme Now Private sector’s also coming to infrastructure building .. 19 Sectors mentioned are not recommendations from the AMC or its associates.Slide 20: L&T Infrastructure Fund An Open Ended Equity Scheme 20 Source www.Planningcommision.nic.inSlide 21: L&T Infrastructure Fund An Open Ended Equity Scheme Source infrastructure.gov.in 21Slide 22: Increase of private sector share in spending to double from 25% to 50 % * Source Motilal Oswal Report sept 2010 22 L&T Infrastructure Fund An Open Ended Equity SchemeSlide 23: Investment Objective The scheme seeks to generate capital appreciation by investing predominantly in equity and equity related instruments of companies in the infrastructure sector Asset Allocation 23 Type of Security Maximum Allocation to the Corpus (%) Minimum Allocation to the Corpus (%) Risk Profile Equity and equity related instruments (including equity derivative instruments) 100 65 Medium to High Debt and Money Market Instruments* 35 0 Low to medium *Investment in Securitized debt, if undertaken, would not exceed 35% of the net assets of the scheme. L&T Infrastructure Fund An Open Ended Equity SchemeSlide 24: Investment Strategy A top down view will be formed to identify sectors within the infrastructure space which present the most attractive investment opportunity Within each sector, individual stocks would be identified based on their present status and future earnings potential to provide investors with an optimum risk adjusted long term return The fund will not have any market capitalization bias. L&T Infrastructure Fund An Open Ended Equity Scheme 24Slide 25: Open Ended Fund w.e.f. September 27, 2010 Minimum Investment – Rs. 5000 and in multiples of Rs. 1 Dividend and Growth options available Dividends will be completely tax-free. Long term capital gains to be completely tax-free. Short term capital gains to be taxed at 15% (plus applicable surcharge and cess) Entry load – NIL Exit Load – 1 % if redeemed before 1 year of investment. SIP/SWP/ STP facilities available – Min SIP amount Rs 1000. Benchmark – S&P CNX Nifty Index Scheme Key Features 25 L&T Infrastructure Fund An Open Ended Equity SchemeSlide 26: L&T Infrastructure fund Portfolio % Allocation As on April 30 , 2011 26 L&T Infrastructure Fund An Open Ended Equity SchemeSlide 27: Legacy of L&T Mutual Fund Legacy f L&T Mutual Fund L&T Finance took over DBS Chola Mutual Fund in January 2010 The Fund got rechristened as L&T Mutual Fund on February 16, 2010 after completing all statutory processes The entire management team was retained The team includes a 12 member investment team and total staff strength of over 294 members (Feb 28,2011) The AMC is head quartered in Mumbai since 2000 The Fund House has a suite of Debt and Equity products for different investor requirements. Some funds have a track record built over last 14 years. (L&T Triple Ace Fund) Houses the first ever launched AAA rated debt fund – LTMF Triple Ace Fund and Multi Cap Equity Fund in the industry 27Legacy of L&T Mutual Fund: Legacy of L&T Mutual Fund Contd.. Over 112 Man Years of Investment Management experience Has won many Awards and Ratings over the years for performance of schemes Led by Sanjay Sinha, CEO – one of the respected Fund Managers in the country Past Performance is no guarantee of future results. For Risk factors , scheme related information please refer page 35. For information purposes only & should not be construed as offer for purchase of schemes of L&T mutual fund. 28Slide 29: “Provide long term gains to investors through strong research based stock selection and active portfolio management ” Investment Philosophy Investment Philosophy 29Slide 30: Investment Process 30Slide 31: Research Flow Research Flow 31Slide 32: Analysts propose action on a stock/sector Investment team evaluates the proposal based on risk return score for individual stock/sector for its inclusion/exclusion. Fund manager decides on stock weight age (overweight/underweight/neutral) in the portfolio Investment committee meets on fortnightly basis to review the sector/stock performance vis a vis the markets and decides on future course of action Decision Making Process Decision Making Process 32Disclaimers: Disclaimers The presentation (including market views expressed herein) is for general information only and does not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive this information. Investments in mutual funds and secondary markets inherently involve risks and recipient should consult their legal, tax and financial advisors before investing. Recipient of this presentation/ information should understand that statements made herein regarding future prospects may not be realized. He/ She should also understand that any reference to the securities/ sectors in the document is only for illustration purpose and are NOT stock recommendations from the Author or the AMC or any of its associates. Any performance information shown refers to the past should not be seen as an indication of future returns. The value of investments and any income from them can go down as well as up. Statutory Details: L&T Mutual Fund has been established as a trust under the Indian Trust Act, 1882 by L&T Finance Limited, Sponsor/ Settlor (liability restricted to the seed corpus of Rs. 1 lakh) with L&T Mutual Fund Trustee Limited as the Trustee Company and L&T Investment Management Limited as the Investment Manager. Risk Factors: All investments in mutual funds and securities are subject to market risks and the NAV of the Schemes of the Fund may go up or down depending upon the factors and forces affecting the securities market. Investment in mutual fund units involves investment risks such as trading volumes, settlement risk, liquidity risk, default risk including the possible loss of principal. Past performance of the Sponsor/AMC/Mutual Fund does not guarantee future performance of the Schemes. The Sponsor is not responsible or liable for any loss resulting from the operation of the Schemes beyond the initial contribution of Rs. 1 lakh made by it towards setting up the Fund. The names of the Schemes/Plans/Mutual Fund do not in any manner indicate either the quality of the Schemes or its future prospects and returns; and are only the names of the Schemes/Plans. There can be no assurance that the objectives of the Schemes/Plans/Mutual Fund will be achieved. Schemes specific risk factors: Investment in the Schemes shall be subject to various risks including but not limited to risk associated with: Investment in Equity and Equity related Instruments & Fixed Income Securities such as Performance Risk, Credit Risk, Reinvestment Risk, Interest Rate Risk, Investment in Derivatives, Securitised Debt, etc. For L&T Monthly Income Plan - Monthly Income is not assured and is subject to distributable surplus. Please read the Scheme Information Document and Statement of Additional Information carefully before investing. Investment objective and classification : L&T Infrastructure Fund (an open ended equity scheme): To generate capital appreciation by investing predominantly in equity and equity related instruments of companies in the infrastructure sector. Load Structure : Entry Load – Nil. Exit Load - 1% if redeemed ≤ 1 year; Nil - if redeemed > 1 year. Terms of Issue: Units of the Scheme are being offered at NAV based prices, subject to the prevailing loads. The AMC calculates and publishes NAV and offers for sale, redemption and switch outs, units of the Scheme on all Business Days, at the Applicable NAV of the Scheme. Scheme Information Document, Statement of Additional Information, Key Information Memorandum and Application Forms are available at Mutual Fund Branches / Mutual Fund website at www.lntmf.com or at Investor Service Centres/ Distributors. L&T Finance Holdings Limited (indirect Holding Company of L&T Investment Management Limited) is proposing, subject to market conditions and other considerations, to make a public issue of securities and has filed a Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI). The DRHP is available on the website of SEBI at www.sebi.gov.in and the respective websites of the Book Running Lead Managers at www.jmfinancial.in , http://www.online.citibank.co.in/rhtm/citigroupglobalscreen1.htm , http://www.hsbc.co.in/1/2/corporate/equities-global-investment-banking , http://www.barclayswealth.com/india-offerdocuments.htm , http://www.credit-suisse.com/in/ipo/ and www.equirus.com . Investors should note that investment in equity shares involves a high degree of risk and for details relating to the same, see ‘Risk Factors’ in the aforementioned DRHP. 33Slide 34: THANK YOU 34 You do not have the permission to view this presentation. In order to view it, please contact the author of the presentation.