stage set for a multi -year recovery
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ACCESS MORE Ashburton India Equity Opportunities Fund
Stage set for a multi-year recovery
– How technology is transforming INDIA
2
Technology, the driving force for change in India
Digital Empowerment of citizens
Digital Infrastructure as a Core Utility to
every citizen
Governance and Services on Demand
1. Where we are - Formalisation and the digitalisation of the economy with a young population
2. The tools of change - Universal biometric identification system (Aadhaar)- Financial inclusion (Jan Dhan)- Tax reform (GST)- The pipe – electricity, mobile penetration and cost- The India stack
3. What is the likely impact - The economy and markets
The India template is unique for its ambition, scale and potential reach of a public digital infrastructure built centrally to deliver financial and basic services…
3 Source: UIDAI
Aadhaar (biometric identity scheme) – 12-digit random number
Demographic information Name, DoB or age, gender, address, mobile number and email
Biometric information 10 fingerprints, 2 iris scans and facial photo
Enrolment1,208,849,661Authentication18,686,938,446
eKYC5,254,366,238 0
1
2
3
4
5
6
May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18
Monthly eKYC transactions (bn)Since launch to 20th April 2018
The tools of change
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The tools of change
Source: Bernstein, PMJDY
Financial inclusion – near 700m Indians remain underbanked, as does 90% of small businesses
Country Account with a FI
Money borrowed from
FI
Money saved at FI
Mobile banking
China 79 10 41 19
South Africa 69 12 33 29
Brazil 68 12 12 5
Turkey 57 20 9 9
India 53 6 14 6
Indonesia 36 13 27 4
Financial inclusion in 2014 (% of pop aged 15+)
-
100
200
300
400
500
600
700
800
900
-
50
100
150
200
250
300
350 (Rs bn)(m)
Mill
ions
Total Accounts Opened (LHS) Total Balance (Rs bn)
PMJDY bank accounts (no frills)
5
The tools of change
Source: Bloomberg, Ashburton Investments, CCI
Indirect tax reform – GST implemented July 2017
Pre GST –Tax system archaic, complicated, paper based…Cost of doing business high, due to logistics etc
Post GST implementation –Tax system unified, digitisedMassive productivity boost
START
Delivering goods from Punjab to Kerala:
PRE GST= 21 DAYSPOST GST= 9 DAYS
FINISHING
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The tools of change
Source: NASA, Axis Capital, Bernstein, Reliance Jio, GoI
The pipe – data and electricity for all
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The tools of change
Source: NASA, Axis Capital, Bernstein, Reliance Jio, GoI
The pipe – data and electricity for all
0
20
40
60
80
100
2011 2012 2013 2014 2015 2016 2017 2018 2019
Bharatnet aims to rollout service-ready broadband to all of India’s 250k small towns by March 2019 – progress in % terms
And the mobile data plans…
Jio (Dec 2017) IPL offers (April 2018)
• Prepaid Rs199 ($3) a month
• Rs248 ($3.70) for 51 days
• Data 1.2GB limit per day• Free local voice and text
• 153 GB of data plus free live streaming of IPL matches!
Electrification scheme having some success
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A collection of open Application Programming Interfaces (APIs) which belong to various public entities in the country.
Allows governments, businesses, startups and developers to utilise the digital Infrastructure to solve India’s hard problems towards presence-less, paperless, and cashless service delivery.
Core APIs: 1. Aadhaar Authentication (Essentially this turns an Aadhaar number into the person's
financial address)2. Aadhaar e-KYC3. eSign (a digital signature)4. Digital Locker 5. Unified Payment Interface (UPI) (makes sending money as easy as sending a text)6. Digital User Consent - still work in progress
Created by iSpirit, a volunteer driven, not for profit think tank, committed to transforming India.
The India Stack
Source: Indiastack.org, Cashlessindia.gov.in
The tools for change have been bought together into a single Eco-SystemTh
e In
dia
Stac
k
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Government
Improved tax compliance
Higher tax revenue to GDP
Lower public debt to GDP
Source: Axis Capital, Ashburton Investments
The impact…
JAMDigital IndiaGST
Corporates
Improved credit access
Greater productivity / efficiency
Higher profit share in GDP
Households
Improved credit access
Higher per capita income and consumption
Higher financial saving
Boost to India’s GDP Boost to India’s Market Cap
10 Source: Morgan Stanley, Ashburton Investments
So where will India be in 4 years time?
Macro metrics FY17 FY22 (E) CAGR %US$/INR 67 68 0.4GDP (US$ tn) 2.3 3.9 11.7GDP per capita 1,742 2,842 10.3Pvt Consumption (US$ tn) 1.3 2.4 12.4% GDP 59% 61%Gross Domestic Savings (US$ bn)
699 1,132 10.1
Market metrics FY17 FY22 (E) CAGR %GDP (US$ bn) 2,263 3,929 12Mcap (US$ bn) 2,404 4,911 20Sensex 34,503 70,484 20Sensex EPS (Rs) 1,427 3,294 18Trailing Sensex PE (x) 24 21Income pyramid (mn Indian households) 2017 2022 (E)
Population (mn)
Rich (>US$95k) 3 7 33Middle class (>US$20k to US$95K) 32 44 219Aspirers (>US$8k to US$20K) 74 100 499Deprived (<US$8K) 141 133 667
0
40
80
120
160
2017 2022
Indian households (mn) – the bulging middleRich
Middle Class
Aspirers
Deprived
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Fund performance
Source: Ashburton Investments, Morningstar 30 April 2018. Past performance is not necessarily an indication of future performance
The investment performance is for illustrative purposes only. Calculated on a bid to bid basis and does not take any initial fees into account. Income is reinvested on the ex-dividend date. Actual performance will differ based on the initial fees applicable, the actual investment date and the date of reinvestment of income. Past performance is not necessarily an indication of future performance. “Performance is based on the Ashburton India Equity Opportunities Fund, which transferred to Ashburton Investments SICAV on 07/01/2014. The “ Institutional” share class was launched on 08/01/2014 on the same fee basis. Past performance is not necessarily an indication of future performance.
YTD 1 month 6 months 1 year 2 years 3 years 5 years Since launch
Ashburton India Equity Opportunities Fund (I) USD -5.8% 4.9% 2.0% 9.9% 39.4% 27.8% 99.6% 129.5%
MSCI India GR USD -3.1% 4.1% 0.9% 12.6% 35.2% 26.3% 45.9% 66.5%
6080
100120140160180200220240260
Ashburton India Equity Opportunities Fund (I) Fund USD MSCI India GR USD
Ashburton Investments | A part of the FirstRand Group12
Disclaimer
Source: Ashburton Investments
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