A Close-Ended Equity Fund (1400 days) 1 Indian Policy Update - PowerPoint PPT Presentation

Axis Emerging Opportunities Fund – Series 1 A Close-Ended Equity Fund (1400 days) 1

Indian Policy Update Demonetisation & GST 1 2

Government policy changes – Get ready for structurally higher tax to GDP Demonetisation GST 2 3

Low tax collections hurting fiscal, government’s ability to spend 12 Centre’s Tax Revenues (% of GDP) Direct taxes - Central government tax to GDP ratio Indirect taxes 10 Total tax revenues has been consistently coming down 8 post the GFC 6 - Shadow economy estimated to be 4 significant fraction of the reported economy 2 0 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 45% India’s tax collection on the lower side as compared Source: CLSA, RBI. Note that tax revenues are net of state government’s share. 40% to peers 35% Tax to GDP % 30% 25% 20% 15% 10% 5% 0% Indonesia India Thailand Mexico Korea Austrailia Turkey Brazil Euro Zone Source: CMIE, World Bank, India’s tax collection is for centre and states combined 3 GFC - Global Financial Crisis. Past performance may or may not be sustained in future. 4

Demonetisation : Long term growth unlikely to be affected Area of Impact View • Anecdotal evidence suggests consumer demand has taken a hit. • Discretionary spends likely to be hit more than staples • However impact likely to be short term in nature should normalize over 1-2 quarters • Timing of recovery will depend on how quickly liquidity gets normalized Economic Growth • Long term growth unlikely to be affected • Huge jump in banking system liquidity part of it temporary but part likely sustainable • It is leading to a sharp drop in yields in the short term • Yields are also reacting to the fears of a sharp slowdown in economic activity Liquidity & Interest which may lead to more aggressive rate cuts by the RBI Rates • Tax to GDP expected to get a boost over the medium term, to help government finances • Government likely to carry out some fiscal stimulus to tide over the short term growth impact of the move Fiscal Situation 4 5

Demonetisation seems popular with people despite execution challenges What is your overall opinion of Is the inconvenience worth the effort? ‘Yes’ Demonetisation? Bad step which is poorly 86% 86% implemented; 5% Good step but poorly implemented; 81% Good step 27% and equally well implemented; 66% Don’t know; 2% Rural Semi-urban Urban Source: CLSA, C-Voter (Report : Demonetisation Source: CLSA, C-Voter, Huff Post Reset) 5 6

GST in final stages; Consensus on the rate slabs/cess - Consensus on the rate slabs/cess is a big step forward GST Council has finalized GST rate slabs – exempt, 0%, 5%, 12%, 18% and 28% - - Technical committee comprising central government and state government officials to finalize the allocation of items into different rate categories Taxes subsumed under GST GST Central Govt. State Govt. Local Bodies -Excise Duty -Value Added Tax (VAT) -Countervailing -Octroi / Entry Tax Duty -Excise Duty -Service Tax -Central Sales -Local Body Tax Tax -Surcharges Others -Cesses Source of data: CLSA, Citi Research 6 7

Organized players to gain post GST 80 % of unorganised players in the select categories 70 60 50 40 30 20 10 0 Biscuits Paints Tea & Footwear Watches Air Plywood Electric Electric Hair Oil Coffee coolers Lightning cables 7 8 Source: CLSA

Consumption landscape – Impact of Demonetisation/GST 8 Source: CLSA 9

Indian Economy Key drivers 9 10

India’s macro conditions vastly improved – not getting impacted by the global post Trump sell-off Post Global Taper crisis Current recession (2013) (Nov-16) (2010) GDP* 8.5% 5.1% 7.1% CPI Inflation 9.4% 9.5% 4.2% FX Reserves ($bn) 297.3 275.5 365.5 Current Account -3.3% -4.7% 0.1% Deficit Fiscal deficit Target -6.5% -4.8% -3.5% Crude Oil $94 $116 $46.6 (per barrel) Source of data: ACEMF, Bloomberg, RBI, BIS 2010 refers to Dec 31 st 2010, 2013 refers to 31st Aug 2013 and current refers to latest data available as on November 28 th , 2016 10 * GDP New Series . Figure for annual GDP growth

Foreign Flows have been strong – although recent months have seen some FII selling In Bn$ FII Flows FDI Flows In Bn$ 8 50 45 6 40 35 4 30 25 2 20 15 10 0 Nov-14 May-15 Nov-15 May-16 Nov-16 5 0 -2 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Rolling 3 month flows Rolling 12 month flows -4 11 Source: Bloomberg. Past performance may or may not be sustained in future.

India resilient against the global risk-off trade Currency performance Change in 10 yr yields Currency v/s US Dollar (3m change) 3 months - Change in Yield (bps) 132 0% 102 87 52 50 -2% -2% 34 -3% 27 -3% 18 -4% -5% -6% (18) -9% (87) -13% Turkey Indonesia Malaysia Russia Singapore Thailand Taiwan China Brazil India Russia Indonesia India Thailand China Singapore Brazil Philippines Malaysia Turkey Source of data: Bloomberg. Data as on 29 th Nov 2016. Past performance may or may not be sustained in future. 12

India, fastest riser on Global Competiveness Index Country Global Rank* Switzerland 1 Singapore 2 United States 3 Netherlands 4 Germany 5 Sweden 6 Fastest riser , United Kingdom 7 Moved from Japan 8 Rank 55 Hong Kong SAR 9 (in 2015-2016) Finland 10 India 39 Source: World Economic Forum, Global Competiveness Report 2016-2017. Rank out of 138 economies 13

Rural incomes to be helped by record farm production Rural agri incomes expected to rise on the back of higher kharif production 50% 40% Rural income, Kharif, YoY, % --> 30% 20% 10% 0% -10% -20% -30% 14 Source: CMIE, Bloomberg, Antique 15

Valuations broadly reasonable Nifty 50 Index Forward P/E Nifty 50 Index Forward P/B 6 23 Nifty Best P/E Average 21 Nifty Best P/B Average 19 4 17 15 13 2 11 9 7 0 Nov-06 Nov-08 Nov-10 Nov-12 Nov-14 Nov-16 Nov-06 Nov-08 Nov-10 Nov-12 Nov-14 Nov-16 15 Source of data: Bloomberg, P/E – Price to Earnings Ratio P/B – Price to Book Ratio . Past performance may or may not be sustained in future.

Market downturns are often followed by improved returns S&P BSE Sensex yearly returns 1997 2010 1994 1989 1986 2004 1996 2013 1992 1981 1985 2000 2015 1984 1990 1988 1991 1995 1987 1983 2014 2007 2009 1998 1982 1993 2006 2003 2011 2001 2012 2008 2002 2005 1999 -20 and less -20 to 0 0 to 20 20 to 40 40 to 60 60+ Less than -20% annual returns Years following the worst 16 Source of data: Bloomberg. Sensex yearly returns. Past performance may or may not be sustained in future.

Why close ended equity? 17

Why Close-ended Equity? • Long term orientation for both investors and fund manager • No liquidity pressure on the portfolio • Works ideally for a buy and hold type strategy • Long term investment in true sense with potential of wealth creation 18

Intermediate corrections – Good to remove froth Sensex Bull Run 2005 - 08 Sensex Bull Run 2014 - 15 Rally Apr 05 to Oct 05 Rally Feb 14 to Nov 14 41.7% 42% 6157  8724 20209  28694 Sensex Sensex Correction Oct 05 to Oct 05 Correction Nov 14 to Dec 14 11.9% 6.9% 8724  7686 28694  26710 Sensex Sensex Rally Oct 05 to May 06 Rally Dec 14 to Jan 15 64.1% 11.1% 7686  12612 26710  29682 Sensex Sensex Correction May 06 to Jun 06 Correction Apr 15 to May 15 29.2% 8.4% 12612  8929 29044  26599 Sensex Sensex Rally Jun 06 to Feb 07 64.1% 8929  14652 Sensex For a long term investment, interim Correction Feb 07 to Mar 07 14.1% volatility in the market can be beneficial 14652  12580 Sensex in terms of removing the unviable Rally Mar 07 to Jul 07 25.4% companies and hence helping quality 12580  15776 Sensex companies gain market share in their Correction Jul 07 to Aug 07 10.2% respective segment. 15776  14164 Sensex Rally Aug 07 to Jan 08 47% 14164  20827 Sensex Bull Run Ends 19 Source of data: MFI Explorer, ET , Past performance may or may not be sustained in future.

Our experience in similar structures Axis Small Cap Fund - Growth Axis Long Term Equity Fund - Growth* Nifty Freefloat Smallcap Index 100 Index S&P BSE 200 23,020 33,070 10,000 20,252 10,000 17,108 29 th Dec 30 th Sep 29 th Nov 30 th Sep 2009 2016 2013 2016 Past performance may or may not be sustained in future . Calculations are based on Growth Option NAV. Since Inception returns are calculated on Rs.10 invested at inception. * Open ended equity linked savings scheme with a 3 yr lock-in. Axis Long Term Equity Fund is managed by Jinesh Gopani. He manages 3 funds. Please refer annexure for the performance of schemes managed by Jinesh Gopani. Current value of investment if Rs. 10,000 was invested on inception date – Rs. 33,070, S&P BSE 200 Rs. 17,108 Nifty Rs. 16,598. Axis Small Cap Fund is managed by Anupam Tiwari. He manages 2 schems. Please refer for performance of schemes managed by Anupam Tiwari. Current value of investment if Rs. 10,000 was invested on inception date – Rs. 23,020, Nifty Free Float Small Cap 100 Index Rs. 20,252 & Nifty Rs. 13,986. Performance of schemes managed by Mr. Anupam Tiwari & Mr. Jinesh Gopani in SEBI format Is given at the end of the 20 presentation for reference of investors

Axis Emerging Opportunities Fund – Series 1 (1400 days) 21