alchemy feb 2011 update

7/29/2019 Alchemy Feb 2011 Update

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F e b r u a r y 2 0 1 1F e b r u a r y 2 0 1 1


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Eq u i t y O u t l o o k FRO M C IO s D eSk

EQUITY OUTLOOK FROM CIOS DESK

Markets after the cur rent fall

The Fall: Equity markets have been unusually volatile at the start of 2011, with Sensex in J anuaryfalling by close to 13%. We call this movement unusual as other global markets are fairlystable/positive like the US, EU and some Asian markets; in fact, markets like Greece and Spain,which are facing significant headwinds in terms of the possibility of sovereign defaults, are up >12%as seen inthe tablebelow:

Within the market fall, the mid-cap segment has taken the maximum brunt of the fall with BSE 500falling by 12.76%, CNX Mid-Cap Index falling by 12.85% and BSE Small Cap Index falling by14.63%. FIIs have netsold $1.2bn duringthe month and DIIs have boughtnet $919mn.

The Concerns: Indian markets have been affected over the past two to three months by concernsabout issues whichweexplain indetail below:

Political Standoff We have seen, over the past three months, intensive debates/agitation betweentheruling UPA party and the opposition BJ P party, on various issues, ledbycorruptionscandals like

the2G spectrum. This has resulted in the governmentnotbeing able to functioneffectively, includingthe winter session of Parliamentnot conducting anybusiness. This has taken a toll on governmentdecision making and thereby on government spending in the economy, temporarily. The resultanteffect has been that liquidity in the system has dried up significantly and government budgets havenotyetbeenused to the fullestextent.

Also, there is a sense of unease in terms of whether the current government will survive its full five-year termorwhether there is any chance of a freshgeneral election including the replacement of thecurrentPrime Minister,Dr Manmohan Singh.

Name of the Market/Country Index Returns (Jan 2011) US$Developed Markets

Greece +15.30%Spain +12.14%

France +7.70%

Germany +4.73%

US +2.72%

UK +1.93%

Hong Kong +1.47%

Taiwan +2.84%

Emerging MarketsSouth Korea +1.34%

China -0.44%

Indonesia -8.49%

India -12.97%


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Our View The March quarter is typically the strongest quarter in terms of government spendingand we are seeing some slackness in government spending over the past two to three months, dueto lack of decision making from the government side. Cash balances with the RBI have gone up toas high as Rs1 lac cr, which, in turn, has adversely affected the liquidity situation in the economy.We think this is a temporaryphenomenon andgradually, spending has started, especially frommid-

J anuary 2011 and will accelerate, going ahead, until March.

We are now close to the Budget session of Parliament and are of the opinion that this session isunlikely to be affected by political differences between various opposition parties. Already, the Left

Fronthas publicly stated that theywould want the budgetsession to gosmoothly and there are newsreports of the government looking to accepta J PC probe into the telecom spectrumscam.In terms of the survival of the government for its full five-year term or the resignation of the currentprime minister, Dr Manmohan Singh, we are of the opinion that none of the parties supporting theUPA government are in a position to remove its support; in fact, we believe that the two majorsupporting parties, i.e. the TMC and the DMK, are, themselves, busy preparing for their own stateelections, which are going to happen in 2011 and can ill-afford to face both state elections andgeneral elections at the same time.

High Current Account Deficit India today faces a high current accountdeficit of3.5%. Followingthe financial meltdown in 2008-2009, the Indianeconomy has bouncedback verystrongly in spite ofthe growth of developed economies like the US and EU being below average. Indian imports have

gone up sharply in line with Indias GDP growth; however; due to lower growth in the developedmarkets, Indian exports have not yet recovered fully, which has meant that today, we run a largetrade deficit, whichin turn affects our currentaccount towards deficit.A highcurrent account deficitmeans that theneed for foreign funds to meetour importrequirements,whichare servicedbya mixofremittances fromIndians abroad, FII flows and FDI flows, is veryhigh.Remittances and FDI flows are more stable, and should be the preferred mix of funding for thecurrent account deficit. However, lack of reforms, and FDI limits in India on various sectors are notallowing FDI to grow properly and hence, our funding mix is skewed towards the more volatile FIIflows, which, in turn, makes it difficult for the RBI to manage its monetary policy in the desiredfashionand increases the volatility of thecurrency.

Our View India todayimports more than 70%of its cruderequirements and therise of crude prices

can have a very large impacton the importgrowth numbers and the current account deficit. Exports,on the other hand, are dependent on global economic growth and Indian competitiveness with othercountries in the world. Since India is a rapidly growing country, in fact, one of the fastest growingcountries in the world, with domestic consumption as the primary driver of growth, imports are likelyto grow ata faster rate than exports and hence, India is likely to face a high current account deficit,whichshould not be seen as a big concern. However, the government needs to work proactively onreforms to raise the level of FDI flows into the country. There have been various steps taken by thegovernment to ensure larger FDI flows, e.g. the power sector companies whichwant to supply supercritical boilers/turbines are being asked to set up indigenous manufacturing facilities so that importsare brought down, while, at the same time, technology is shared within the country. However, a lotstillneeds to bedone, like increasing the FDI limitin the retail, insurance, bankingsectors.


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Inflation/Interest Rates Flip side to high growth and increasing standard of living inaneconomyis high inflation. India today is growing at a sustainable 8%+growth rates with rising standard ofliving and per capita income crossing $1000. In such a scenario some amount of inflation is a givenand should not be of any concern. However, in the past 1 year inflation has been extremely high at>10%levels for a prolonged periodof time and atthis point in time concerns are being expressed onthe inability of the government/RBI to bring down inflation to a reasonable level of 4-5%. Also, crudecloser to $90 per barrel is a matter of concern for the economy and inflation. RBI on its part hasraised interest rates by 350 bps from the start of 2010 to tackle inflation or bring down expectationsof high inflation. Higher interest rates can have a meaningful impact on GDP growth going ahead iftightening bythe RBI is ona veryaggressive side.

Our View Inflation can be broken down into two parts Food inflationand Manufacturing inflation.If one analyses the data for inflation for the past 12 months it is observed that high WPI inflation isprimarily being driven by food inflation and manufacturing inflation continues to be at reasonablelevels of between4-6%.

FY2011has been unusual in terms ofweather patterns globally including in India which has affectedcrop patterns and hence shortages got built for a temporary period specially in fruits and vegetableswhich resultedinprices going up bymore than100%incertain cases like Onion, Tomatoes etc. Thistrend we think is not a sustainable one for prolonged period of time and should get correctedautomatically as farmers react to high prices with higher produce during the next crop cycle.However, the government also needs to take various long term steps in incentivizing farmers to

produce more including loans atattractive rates of interest, setting upa proper supplychain for farmproduce to avoid wastages and allowing private companies to deal with farmers directly instead ofthe current practice of all farm produce compulsorily being sold through the Mandi. Commodityprices like Steel, Aluminum, Copperetc have recentlystartedmoving up and are closer to their highswhich at some point in time will start resulting into manufacturing inflation creeping higher. Alreadysome signs are visible to this effect for example over the past 6 months we have witnessed pricehikes to the tune of between 5-6% by all Auto OEMs to pass on the raw material price increasesbeingfeltbythem.

To cool down the expectations of higher manufacturing inflation RBI is likely to continue to raiseinterestrates going ahead. RBI over thepast 12months havebeenverymeasuredin raising interestrates and they have expressed that they would not want to affect the growth momentum of the

economyand would keep a balance between growthand countering inflation.

We think that RBI over the next 6-12 months would continue to gradually raise interest rates by 75-100 bps. However, we think this hike by RBI should not have a large impact on the economyincrementallyas the systemrates in the economy (lending and deposit rates of banks) have alreadygone up significantly over the past3 months. A 1 yr deposit is already quoting at close to 9.5% andworking capital loans for corporates have already reached 11-12%. Incrementally we do not thinklending rates will goup bymore than 50bps going ahead and hence think thatmostof the bad newsin terms of rising inflation/interest rates is already in the price and going ahead we will see betternews flowonaccount of inflation due to high base effectof lastyear and bettercropoutput.


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Corporate Earnings Concerns are being raised because of higher interest rates, highcommodity prices and the resultant impact on future corporate earnings growth. Market consensusexpectations are for the Nifty earnings to grow ata CAGR of 15-18% for FY11and FY12, with FY11EPS at375 and FY12 EPS at430.

Our View Globally, whenever an economy reaches a per-capita GDP of >$1000, GDP growthstarts increasing exponentially as the standard of living of its population improves dramatically anddomestic consumptionbooms, withdemandgrowthoutpacing the supply situation.India today is faced with a similar situation, with a per-capita GDP of >$1200, demand growth isoutpacing supplyandcorporates are facing bottlenecks as they attemptto match therobustdemandsituation. In such a scenario, we are witnessing an earnings cycle in which corporates are finding iteasier to pass on, in some cases with a lag, the full impact of raw-material price increases andhence, weare of thefirmview thatcorporate earnings growthwill notbemateriallyaffected becauseof higher commodity prices/higher interest rates and Nifty earnings growth of 15% in FY12 isachievable. At current Nifty levels of 5500, the market today is trading at reasonable valuations of13-14 times 1-year forward earnings. Q3FY11 earnings numbers are underway, currently, and todate, earnings growth for Sensex/Nifty companies is closer to 20%+, which is largely in line withexpectations. In terms of our portfolio companies, weare seeing robust growth in profits in excess of30%, for example Sintex Industries has reported a profit growth of 55%, Bajaj Auto Finance 181%,Deepak Fertilisers 31%, Redington India 20%, ING Vysya Bank 27%, VIP Industries 20%, TTKPrestige 100% and Corporation Bank 25%.

Opportunity in a correction: if we look at the historical perspective of market correction (see tablebelow).


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In the past 30 years there have been26 instances of Indianmarkets correcting bymore than 10%ina month, whichmeans that such falls inour markets happenalmosteveryyear. However, 10 monthsoutof the26happened during thebearmarkets of1992-93 and 2008.

The interesting observation in this is thatthreemonths subsequent to sucha sharpcorrection, Indianmarkets have provideda verygood opportunity forinvestors to make double-digit returns, quickly.

Overall, we are positive onthe IndianGDP growth story and theresultant corporate earnings growthcycle in future. There are certain short-termtemporaryheadwinds as mentioned above, whichwill beresolved over the next three to six months and atthe current valuationof 13-14times 1-year forwardearnings, markets are tradingatattractive valuations and therisk reward is clearly in our favour. Mid-cap stocks are trading atattractive valuations and thegap betweenlargecap and mid-capvaluationshas widened to a high of 450bps, which is higher than the average of the last 10 years (see graphbelow).

At current valuations of 13-14 times, we think itmakes sense to add to our exposure to equities andwould recommend you to take advantage of the current market fall by doing a gradual systematicinvestmentover the nextthree to four months.

We continue to be positive on the domestic consumption story and infra theme. We are confidentthat markets will make new life-time highs in 2011, despite some near-term macro and politicalheadwinds. We continue to advocate bottom-upstockpicking.

Hiren Ved

Chief Investment OfficerAlchemy Capital Managem ent Pvt . Ltd

-10

-8

-6

-4

-2

0

2

4

6

8

n n

01-Jan-05

n n n n n

CNX Midcap P/E (discount)/premium to Nifty Average


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PORTFOLIO UPDATE

Portfolio Performance The current market fall has taken a toll on our portfolio performance,especially since November 2010. We continued to performbetter in terms portfolio performance upto early November 2010, but we have seen an unusual fall in the mid-cap segment in spite of astrong fundamental performance. Our set of companies as mentioned above has continued todeliver a strong setof numbers and are on track to deliver a 25-30% growth in earnings, at leastforthenext12months. In sucha scenario, weexpectour performanceto revertto normal, going ahead.

Below, we explain in detail our views on the stocks which have not performed in line with themarkets in the past:

Bombay Dyeing - the real estate sector has taken a sharp beating over the past three months onconcerns of high leverage in various companies and the impact it could have on profitability.However, we think Bombay Dyeing is about to see a significant change in its fundamentalperformance on the back of its 1.5-2mn sq. ft (msf) residential project launch in Wadala, by March2011. Based oncurrent a realisation of Rs 15,000+per sq. ft(psf) we estimate thatthe company willbe able to earn close to 2,000 cr of profits over the next three to four years. The company has a totaldevelopablearea ofmore than8 msf inWadala and Worli, Mumbai which itplans to developand sellover the next seven to eight years, which can create large shareholder value in the long term. Interms of valuations, the company is, today, trading at an enterprise value of Rs3,250 cr. We believeitwill develop close to 8 msf over the next seven to eightyears, which means that the market todayis valuing the land bank at an EV of Rs4,000 psf. However, we expect the company to earn morethanRs10,000psf as profits on the land bank it owns. Thecompany also has two other businesses,

i.e. Textiles and PSF, the value of which would be additional. We think the company is trading atdeep value and value unlocking should start reflecting in the market return over the next 6-12months.

IVRCL Assets & Holdings IVR is an infrastructure developer and owns 10 large assets worth12,000 cr including seven roads, one water desalination plant, one oil storage plant and one sewagetreatment plant. The company has taken a beating in the markets since our investments, due to itsneed to raise fresh capital of close to Rs250 cr and the general negative view of the market on theoverall infrastructure sector. The companytoday is trading at0.5 times its FY10 price to book, whichis extremely low for assets which will deliver an ROE of between 15-18%. We are reviewing thiscompany and our position on a regular basis and if equity raising continues to be difficult, then wewillnot hesitate inbooking losses on thestock.

Apt ech Lt d The company is the largest IT and multimedia training company in India and a fewglobal markets like China, Vietnam, Pakistan, Bangladesh, Russia, etc. We expect the company todeliver strong growth in profitability as it expands the scope of business in global markets anddiversifies into new verticals of education in India, like K-12 schools. We expect the companyto useits zero debt balance sheet to invest in newer verticals, which can drive future profit growthsubstantially, going ahead. In terms of current business, we expect the company to report strongprofitgrowth of>40% CAGR with positive cash flows. In addition to the base business, the companyholds a 22% stake in the largest education company in China. The company intends to exploit thevalue of this stake bypartially selling in the eventofan IPO on the markets.


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PORTFOLIO UPDATE

BF Utilities This company is a play on Bangalore real estate. The Karnataka government signedan agreement with the company in 1998 to develop the Bangalore-Mysore Infrastructure Corridor,consisting of a six-lane highway connecting Bangalore and Mysore and, in lieu of this roaddevelopment, the government provided 20,000 acres of land to be developed by the company. Thecompanyhas dividedthewhole projectinto five phases, whichit intends to develop over thenext10-15 years. Since then, companyhas completedtheroadprojectand startedcollecting thetoll, and thedaily toll collection has increased to Rs30 lac per day. Apart from this, it has started exploiting theland bank which it owns in and around Bangalore, for residential/commercial use and has signedthree to four joint-development agreements with various reputed builders. We think FY12 should bethe first year the company will earn profits from real-estate development. It has also sold a minor

stake in Phase I (consists of 6,173 acres land out of the total 20,000 acres) of the project to a PEplayer for Rs500 cr, which puts the value of just phase I of the total project atmore than the currentmarketcapof the company.

We think thatonce thecompanystarts showingprofits fromthe real-estate development inFY12, themarketwillstartrewarding its shareholders.

Portfolio Strategy: The average equity holding in portfolios today is between 85-90%. We intend touse the current correction to add to our exposure to the banking and finance stocks and certainselect IT and infra stocks. Our bias is towards companies which are leaders in their respectivedomains, witha competentmanagement teamand a strong balance sheet.

In the short to medium term, our weighting towards large cap stocks may be higher to takeadvantage of the expected move-up in the markets, post-which we will buy back select mid-capstocks for the longterm.


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Investment Strategy: The strategy aims at generating long-term returns by investing in equitiesacross market capitalizations but with a strong mid cap bias

Fund Manager: Mr Chandraprakash Padiyar is a portfolio manager with over 10 years of research andinvesting experience. He is an MBA and CFA by qualification. He started his career in equity research

and analysis at UTI Mutual Fund and later graduated to portfolio manager, managing assets acrossvarious equity schemes totalling Rs. 2,500 crores. He has been a portfolio manager with Alchemy since

April 2007.

Strategy at a glanceCategory: Equity DiversifiedFund Style: Multi-cap GrowthType: Open EndedLaunch Date: 8th May, 2002Benchmark: BSE 500Min investment: Rs. 50 lacs

PMS PRODUCT PERFORMANCE

Bright Prospects for a Bright Future

Alchemy High Growth

Portfolio Action: Start of 2011 was an unusually volatile month for the Indian markets with BSE 500

correcting by 10.5% led by FIIs selling to the tune of $1.4 bn while domestic institutions buying $131 mn.Indianmarkets are among very few globally, which fell sharply during the month of J anuary in fact majorityof globalmarkets were up strongly duringthe month. Events over the past 2-3months, more on the politicalfront on account of various corruption scandals has led to decision makingfrom the government come to astandstill affectingliquidityin the systemtherebyaffectingsentimentin the markets negatively.

Q3FY11earnings growth till date is comingout to be a strong quarter with broader market earnings growthcoming at closer to 22%+, select companies out of this have reported growth in excess of 50%. Wecontinue to expect corporate earnings growth of 18% for FY11 and between 15-18% growth in FY12. Atcurrent nifty levels of 5500, the market is trading at reasonable valuations of 13-14 times FY12 earnings.Mid cap stocks due to the poor sentiment and sharp correction seen during the month are trading at asignificant discount to the Nifty companies. CNX Mid Cap Index is trading at a 450 bps discount to Niftyvaluations currentlycomparedto last 10years average discountof 200-250 bps. We believe this gap should

narrowgoingahead basedonour earnings growthexpectations ona sustainable basis.

During the month our portfolios have taken a beating on the back of a large correction in the markets.However, we would like to highlight that our set of companies have reported strong earnings growth of>30% for Q3FY11 till date. We expect our performance to rebound going ahead as we do not see anyfundamental reason for a correction and valuation for our portfolio companies have become even moreattractive. We have builta portfolio todaywhich we believe candeliver anearnings growth in excess of 25%over the next 2 years and where risk reward is favourable. Overall, we are optimistic on the risk reward forequity investmentona longtermbasis.


10/15


Alchemy High GrowthBright Prospects for a Bright Future

* From inception of product (8-May-2002)

Note: The above returns are for model portfolio and investors actual portfolio may differ.

* CAGR as on 31 January, 2011

-80.0%

-40.0%

0.0%

40.0%

80.0%

120.0%

160.0%

CY 2002* CY 2003 CY 2004 CY 2005 CY 2006 CY 2007 CY 2008 CY 2009 CY 2010 YTD 2011

4.8%

134.9%

26.1%

96.5%

40.8%

77.9%

-56.1%

58.7%

17.3%

-12.4%-2.4%

101.1%

17.5%

36.6% 38.9%

63.0%

-58.1%

90.2%

16.4%

-10.5%

Alchemy High Growth BSE 500

0.00

40.00

80.00

120.00

160.00

May-02 May-03 May-04 May-05 May-06 May-07 May-08 May-09 May-10

Alchemy High Growth BSE 500

CAGR: 31.5%

CAGR: 22.6%


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Alchemy High GrowthBright Prospects for a Bright Future

SCRIPHolding

(%)

BAJAJ AUTO FINANCE LTD 6.8

SINTEX INDUSTRIES LTD 6.0

MAYTAS INFRA LTD 4.9

PTC INDIA 4.4

BOMBAY DYEING MFG.CO.LTD 3.7

DEEPAK FERTILISERS &PETROCHEMICALS

3.5

STRIDES ARCOLAB 3.5

VOLTAS LTD 3.4

MAHINDRA & MAHINDRA LTD 3.2

APTECH LTD 3.1

TOP 10 HOLDINGS TOP SECTORS

ParameterAlchemy High

Growth(since inception)

Benchmark(since

inception)

Std. Dev. 24.5% 26.6%

Sharpe 1.09 0.65

Beta 0.76 1

RATIO ANALYSIS MARKET CAP ALLOCATION

As on 31 January, 2011

29.9%

16.5%

14.7%

6.3%

5.2%

5.1%

3.6%

2.1%

1.7%

1.7%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0%

Industrial

Financials

Consumer Discretionary

Consumer Staples

Healthcare

Materials

Information Technology

Utilities

Energy

Health Care

31.1%

49.6%

6.2%

13.1%

> 50 00 cr 5 00 cr - 500 0 cr < 5 00 cr Cash & Equivalents


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Investment Strategy: The strategy aims at generating long-term returns by investing in Large-Capequities

Fund Manager: Mr Chandraprakash Padiyar is a portfolio manager with over 10 years of research andinvesting experience. He is an MBA and CFA by qualification. He started his career in equity researchand analysis at UTI Mutual Fund and later graduated to portfolio manager, managing assets acrossvarious equity schemes totaling Rs. 2,500 crores. He has been a portfolio manager with Alchemy sinceApril 2007.

Strategy at a glanceCategory: Equity DiversifiedFund Style: Large-cap GrowthType: Open EndedLaunch Date: 21st Dec, 2006Benchmark: S&P CNX NiftyMin investment: Rs. 50 lacs


Quest for the Best

Alchemy Leaders

Portfolio Action: Startof 2011 was an unusuallyvolatilemonth for the Indianmarkets with Nifty correcting

by 10.2%led byFIIs selling to the tune of $1.4 bn while domestic institutions buying$131mn. Indianmarketsare among very few globally which fell sharply during the month of J anuary infact majority of global marketswere up strongly during the month. Events over the past 2-3 months, more onthe political front on account ofvarious corruption scandals has led to decision making from the government come to a standstill affectingliquidityin the systemtherebyaffectingsentimentin the markets negatively.

40 companies out of the Nifty have reported their Q3FY11 results till date. On an average reported earningsgrowth stands at a strong 20%+. 65% of companies have reported better than expected results, 30% havereported inline with estimates and 5% of the companies have reported lower than estimated results. Theremaining companies yet to report are also expected to reporta profit growth in excess of 20%. We continueto expect corporate earnings growth of 18% for FY11 and between 15-18% growth in FY12. At current niftylevels of 5500, themarketis tradingatreasonable valuationsof 13-14timesFY12earnings.

During the month our portfolios have taken a beating on the back of a large correction in the markets.However, we would like to highlight that our set of companies have reported strong earnings growth of >30%for Q3FY11 till date. We expect our performance to rebound going ahead as we do not see any fundamentalreason for a correction and valuationfor our portfolio companies have become evenmore attractive. We havebuilt a portfolio todaywhich we believe can deliver anearnings growth in excess of 20%over thenext 2 yearsand where risk reward is favourable. Overall, we are optimistic on the risk reward for equity investment on alongtermbasis.


13/15


Quest for the Best

Alchemy Leaders

Note: The above returns are for model portfolio and investors actual portfolio may differ.

* From inception of product (21-Dec-2006)

* CAGR as on 31 January, 2011

6.00

8.00

10.00

12.00

14.00

16.00

18.00

20.00

Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10

A lchemy Leaders Nifty

CAGR: 9.8%

CAGR: 9.2%

-60.0%

-40.0%

-20.0%

0.0%

20.0%

40.0%

60.0%

80.0%

CY 2006* CY 2007 CY 2008 CY 2009 CY 2010 YTD 2011

2.9%

76.9%

-51.3%

63.6%

15.6%

-12.3%

3.5%

54.8%

-51.8%

75.8%

17.9%

-10.2%

Alchemy Leaders Nifty


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Quest for the Best

Alchemy Leaders

TOP 10 HOLDINGS TOP SECTORS

RATIO ANALYSIS MARKET CAP ALLOCATION

SCRIP Holding (%)

RELIANCE INDUSTRIES LTD 7.9

SINTEX INDUSTRIES LTD 7.0

BAJAJ-AUTO LTD 6.3

CORPORATION BANK 5.6

MAHINDRA & MAHINDRA LTD 5.5

ENGINEERS INDIA LTD 5.0

CROMPTON GREAVES LTD 5.0

ICICI BANK LTD 4.8

VOLTAS LTD 4.7

UNITED PHOSPHORUS LTD 4.6

ParameterAlchemy Leaders(since inception)

Benchmark(since

inception)

Std. Dev. 22.4% 31.5%

Sharpe 0.29 0.16

Beta 0.62 1

As on 31 January, 2011

0.0% 10.0% 20.0% 30.0%

Industrial

Financials

Consumer Discretionary

Information Technology

Energy

Consumer Staples

Healthcare

Health Care

28.7%

20.1%

11.7%

8.0%

7.7%

4.7%

2.4%

2.0%

78.9%

7.2%

13.9%

> 50 00 cr 50 0 c r - 500 0 c r Cash & Equi vale nts


15/15

DISCLAIMER

General Risk factors

All investment products attract various kinds of risks. Please read the relevant Disclosure Document/ Investment Agreementcarefullybefore investing.

General Disclaimers

The information and opinions contained in this report/ presentation have been obtained from sources believed to be reliable, but norepresentation or warranty, express or implied, is made that such information is accurate or complete.

Information and opinions contained in the report/ presentation are disseminated for the information of authorized recipients only, and

are not to be relied upon as advisory or authoritative or taken in substitution for the exercise of due diligence and judgement by anyrecipient.

The information and opinions are not, and shouldnot be construed as, an offer or solicitation to buy orsell anysecurities or make anyinvestments.

Nothing contained herein, including past performance, shall constitute any representation or warranty as to future performance.

The services related to Mutual funds, Insurance, Real Estate, Art, Commodity etc. may merely be a referral / advisory services innature. Such third party investment products or services do attract the general and specific risk factors unique to those respectiveproducts or services, which would be mentioned by the manufactures of those products in the respective product documentation. Theprospective investors in such third party products are advised to read and understand those risk factors & disclaimers, in addition towhat has been stated herein. Alchemy Capital Management Pvt. Ltd., its Group or affiliates have not verified and do not take anyresponsibility for any statements, numbers or claims made, omitted to be made or implied in any documentation, presentations etc.which have been created by the manufacturers of such third party products or services.

The client is solely responsible for consulting his/her/its own independent advisors as to the legal, tax, accounting and related mattersconcerning investments and nothing in this document or in any communication shall constitutes such advice.

The client is expected to understand the risk factors associated with investment & act on the information solely on his/her/its own risk.As a condition for providing this information, theclientagrees that Alchemy Capital ManagementPvt. Ltd., its Group or affiliates makesno representation and shall have no liability in any way arising to them or any other entity for any loss or damage, direct or indirect,arising from the use of this information.

This document and its contents are proprietary information of Alchemy Capital Management Pvt. Ltd and may not be reproduced orotherwise disseminated in whole or in part without the written consent.

Edited by: Rupesh Nagda (Ph: +91-22-66171785), Ambrish Jamodkar (Ph: +91-22-66171772) Copy editor: Lucy BharadwajAlchemy Capital Management Pvt. Ltd., B-4, Amerchand Mansion, 16 Madame Cama Road, Mumbai 400 001. Ph: +91-22-66171700

alchemy feb 2011 update

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