Jasmine India Fund

About Us

Jasmine India Fund is incorporated as a public company limited by shares under laws of Mauritius and holds a Category 1 Global Business Licence. The Fund is structured as a collective investment scheme.

The investment objective of the Fund is to principally invest in publicly traded Indian securities. The Fund seeks to maximize investor capital growth whilst allowing a margin of safety through:

Investment in high quality, free cash flow generating businesses at reasonable prices;

Investment in securities trading at values materially lower than their fair values.

The objective is to achieve high absolute rates of return while minimizing risk of permanent capital loss.

The Fund may invest a part of its portfolio in physical gold, not exceeding 20% of its assets.

Promoters - Chetan Jitendra Parikh

Chetan Jitendra Parikh

Chetan Parikh is a co-promoter of Jeetay Investments Private Limited, a portfolio management firm registered with SEBI. He is also a co-promoter and director of Jasmine India Fund, a Mauritius based India dedicated Fund

He holds an MBA in Finance from the Wharton School of Business (where he graduated with distinction in the top 2% of the class) and a BSc in Statistics & Economics from University of Bombay (Economics record holder in Bombay University). He also serves as visiting faculty at Jamnalal Bajaj Institute of Management Studies (University of Bombay) for the MBA course

His writings have been published in Business Standard, Business World, The Economic Times and Business India. His work can also be read at www.capitalideasonline.com

As a director of Jasmine India Fund, he acts as a guide to the team on business issues with his terrific insight into businesses as a value investor. Chetan was rated amongst India’s best investors by Business India magazine. He is also the co-promoter of capitalideasonline.com, a well-regarded investment website

Promoters - Warden Baker

Warden Baker

Warden Baker is an investment management and investment banking firm offering sophisticated and bespoke wealth management and corporate finance services.

With funds and investment platforms spread across the globe, Warden Baker manages assets of approximately US$ 600 million.

In corporate finance services, Warden Baker is focussed on fund raising and distressed assets.

Established in 2009, Warden Baker and its associate firms have a presence in London, Dubai, Cyprus, Mauritius, Cayman Islands and Bermuda.

Its clients include leading financial institutions, insurance companies, family offices and high networth individuals

Directors – Chetan Jitendra Parikh

Chetan Jitendra Parikh

Chetan Parikh is a co-promoter of Jeetay Investments Private Limited, a portfolio management firm registered with SEBI. He is also a co-promoter and director of Jasmine India Fund, a Mauritius based India dedicated Fund

He holds an MBA in Finance from the Wharton School of Business (where he graduated with distinction in the top 2% of the class) and a BSc in Statistics & Economics from University of Bombay (Economics record holder in Bombay University). He also serves as visiting faculty at Jamnalal Bajaj Institute of Management Studies (University of Bombay) for the MBA course

His writings have been published in Business Standard, Business World, The Economic Times and Business India. His work can also be read at www.capitalideasonline.com

As a director of Jasmine India Fund, he acts as a guide to the team on business issues with his terrific insight into businesses as a value investor. Chetan was rated amongst India’s best investors by Business India magazine. He is also the co-promoter of capitalideasonline.com, a well-regarded investment website

Directors – Ushmah Ramphul

Ushmah Ramphul

Ushmah holds a degree in BSc (Hons) Accounting with Information Systems from the University of Mauritius and is partly qualified ACCA. Ushmah has over 6 years’ experience in the offshore sector in Mauritius, gained from her previous roles.

She joined Trident Trust Company (Mauritius) Ltd. in 2009 and also worked in the Fund department at Cim Fund Services Ltd for 3 years. Ushmah also held the post of Accounts Manager in the offshore sector.

She is well versed with the reporting of Financial Statements in compliance with the regulatory framework and has knowledge on Funds’ valuations. Ushmah is currently working as the Fund Accountant at Hypnos Advisers and Managers Limited.

Jolene Asset Management

The management shares of Jasmine India Fund are held by Jolene Asset Management, a company which is licensed and regulated by the Financial Services Commission (FSC)

Jolene Asset Management is also licensed as a CIS Manager and as an Investment Adviser (Restricted) under the Securities Act 2005, in complying with the provisions of the Act and ensuing relevant Regulations

Some Preliminary Thoughts

We view investment activity as an attempt to harness the efficiency of a “compounding engine.”

A “compounding engine” works most efficiently when there are no “permanent losses of capital.”

The arithmetic in the investment activity is stacked against deep and long draw downs(Rs 100 becoming Rs.50 is a 50% decline in value; to get back to the initial Rs.100, you need a 100% appreciation).

Given this characteristic of the “compounding engine”, the accent is on “risk control.”

While investing, if one controls the downside, the upside inevitably takes care of itself.

Downside control : - High quality companies - Bought at prices which afford a “margin of safety”

We conceive of investment activity as the prudent deployment of wealth that maintains and enhances returns in the long term.

“Long term” is emphasized; gains from the investment activity are “back ended” in absolute terms.

Consider investing Rs 100 at 15% pa for a period of 30 years. - In the first 5 years, the Rs 100 appreciates to Rs 200, a gain in absolute terms of Rs.100 over the 5 year period, or Rs 20 per year. - In last 5 year period, Rs.3300 appreciates to Rs. 6600, a gain of Rs 660 per year.

As is apparent from the foregoing, in this conception of the investment activity, what is important is patience, and the earning of modest returns over extended periods of time rather than attempting to have multi-baggers with the attendant risk of permanent loss of capital.

Some Preliminary Thoughts

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India Opportunity

Harnessing growth potential of an “unsaturated” emerging economy

Long standing tradition of trade and commerce

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Catalysed By

A pro business Government led by Mr. Narendra Modi, who brings a superior track record of economic development as the former Chief Minister of Gujarat (one of India’s most progressive states).

Mr. Modi’s Government now enjoys a clear majority in the lower house of Parliament.

This is in sharp contrast to the political landscape of the last two decades which has seen coalition governments with the concomitant compromises in policy to accommodate disparate views of coalition partners.

India Opportunity

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Jeetay Investments Private Limited

Sebi registered Portfolio Manager

Engaged in PMS activities since 2004

Promoted by Chetan Parikh and Vinay Parikh

Have a combined experience of over 50 years in the investment management industry

Chetan Parikh

Chetan Parikh is a promoter of Jeetay Investments Private Limited. He is also associated with www.capitalideasonline.com, a website dedicated to investor education.

He had obtained his MBA from the Wharton School. He had written for ‘Investment Week’ which was a popular weekly financial publication in India and had developed a statistical model for them.

His writings have been published in Business Standard, Business World, Economic Times and Business India.

He has been rated as amongst one of India’s best investors by Business India. He is a visiting faculty member of Jamnalal Bajaj Institute of Management Studies, Mumbai.

Vinay Parikh

Vinay Parikh is a director, co-founder and Portfolio Manager of Jeetay Investments Private Limited.

He holds an MBA from the Wharton School and a BSc in Statistics and Economics from the University of Bombay.

He has been investing in the Indian Capital Markets for over 25 years.

Vinay has also advised leading business houses on financial strategy/ investor relations.

Chetan Parikh and his investment philosophy

Recently, Chetan’s name was mentioned in the book “The World's 99 greatest investors: The secret of success”, by Magnus Angenfelt.

He has been selected among one of the 99 investors. The book portrays the most successful investors in the world who generously share their insights with the next generation of investors. For every investor there is a summary that describes the investment philosophy and style of the investors.

Chetan is a long term stock market value investor. He puts no effort into forecasting the macro economy or stock market sentiments. He believes purely in buying securities trading at significant discounts to their intrinsic value. True value for him is the present value of the future cash flow.

His primary aim is to ensure safety of capital.

He recommends meditation as a means of self improvement in investing.

Jeetay Investments Private Limited

“The world's 99 greatest investors : The secret of success”, by Magnus Angenfelt

Investment Philosophy

Valuation Driven

Bottom-up Investing

But against a backdrop of market valuation and cycle study: to determine asset allocation

Accent on risk control Cash / Equity Allocation - Position Sizing - Purchase with MOS

Investment Process

Determination of

Universe Market valuation Company valuation Investment Thesis

• High Quality liquid companies, preferably with free cash flow generating characteristics

• 80% of portfolio to be generated from this universe, bought at fair prices

• The remainder of the portfolio to opportunistically come from mid cap companies trading at steep discounts to our appraisal of their “intrinsic worth”

• Asset allocation between cash and equity

• Range of fair value estimates for the business

• A document that spells out the rationale for investment as well as the prices for entry and exit together with position sizing

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Index Valuation

Index Valuation

Historical Valuation

Trend Analysis

P/E Analysis

Historical Valuation

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016E 2017E

Sensex level at high 5,921 6,617 9,443 14,035 20,498 21,207 17,531 21,109 20,665 19,612 21,484 28,822 30,025 Ratio

Sensex Level at low 2,904 4,228 6,069 8,799 12,316 7,697 8,047 15,652 15,136 15,358 17,449 19,963 24,834 Used

Dividend Yield at High 1.8% 1.8% 1.4% 1.2% 0.8% 0.8% 1.1% 1.0% 1.2% 1.5% 1.4% 1.2% 1.2% 31,864 35,879 1.3%

Dividend Yield at Low 3.6% 2.8% 2.2% 1.9% 1.4% 2.3% 2.4% 1.3% 1.7% 2.0% 1.7% 1.7% 1.4% 19,852 22,354 2.0%

P/E at High 19.1 17.1 18.7 23.2 28.0 27.2 22.4 24.2 21.9 17.7 18.4 19.7 22.8 31,826 35,646 21.6

P/E at Low 9.4 10.9 12.0 14.5 16.8 9.9 10.3 18.0 16.1 13.9 15.0 13.6 18.9 20,333 22,773 13.8

Normalised PE at High 18.8 19.7 23.7 27.6 35.3 29.6 22.0 20.6 21.8 15.6 14.0 16.3 17.4 39,488 44,780 21.7

Normalised PE at Low 9.2 12.6 15.2 17.3 21.2 10.7 10.1 15.3 16.0 12.2 11.4 11.3 14.4 24,740 28,056 13.6

P/B at high 3.6 3.8 4.5 5.3 6.8 5.7 4.2 4.0 4.2 3.0 2.7 3.1 3.3 42,567 48,271 4.2

P/B at Low 1.8 2.4 2.9 3.3 4.1 2.1 1.9 2.9 3.1 2.3 2.2 2.2 2.8 26,669 30,243 2.6

36,436 41,144

22,899 25,856

Volatility 103.9% 56.5% 55.6% 59.5% 66.4% 175.5% 117.9% 34.9% 36.5% 27.7% 23.1% 44.4% 20.9%

CAGR

EPS 310 387 505 606 733 781 781 871 942 1,108 1,166 1,464 1,317 1,475 1,652 12.8%

growth (%) 34.2% 24.9% 30.6% 20.0% 21.0% 6.5% 0.1% 11.4% 8.2% 17.7% 5.2% 25.5% -10.0% 12.0% 12.0%

Normalised EPS 316 336 399 508 580 717 798 1,025 947 1,255 1,533 1,765 1,728 1,818 2,061 15.2%

Book Value 1,645 1,751 2,079 2,646 3,023 3,739 4,158 5,341 4,938 6,541 7,989 9,197 9,006 10,213 11,581 15.2%

Dividend 104 118 136 167 168 178 190 209 252 303 303 338 358 403 454 10.9%

Average

RONW 18.8% 22.1% 24.3% 22.9% 24.3% 20.9% 18.8% 16.3% 19.1% 16.9% 14.6% 15.9% 14.6% 14.5% 14.4% 19.2%

DIVIDEND PAYOUT 33.6% 30.4% 27.0% 27.5% 23.0% 22.7% 24.4% 24.0% 26.7% 27.3% 26.0% 23.1% 27.2% 27.2% 27.2% 26.4%

Sensex Trend Analysis

CAGR of trend line = 14.2%

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P/E Analysis of the Sensex

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P/E (TTM) Average P/E Avg+1sd Avg+2sd Avg-1sd Avg-2sd

Company Valuation

Company Valuation

Attempt to estimate a range of “fair values” within which the “intrinsic value of a business” resides.

Industry and business characteristic determine valuation methodology used.

Asset based Valuation Earning based Valuation

In case where sustainability of earning is either absent or not ascertainable

Only in cases where there is identifiable sustainability of earnings (generally referred to as moats):

• Network effects

• Switching Costs

• Cost Advantage incl. economy of scale

• Regulatory or supply constraints e.g. Patents, Mining Rights

*Source: The little book which beats the markets

Earning Based Valuation

Use of earning multiples are nothing but abbreviated Discounted Cash Flow

Where, P0 = price of security at base period

E0 = earnings in base period

G = growth in earning without any further capital infusion, and

K = cost of capital (discount rate) used for Present Value calculation

Asset Based Valuation

Commodity businesses tend to earn cost of capital over an industry cycle; although in between they have high and poor returns.

The major growth driver in commodities business is capacity expansion, requiring more capital infusion. Thus cashless growth is negligible over a cycle.

Thus earning (E) = KA [Cost of Capital (K)* Assets (A)] Discounting (E) for infinity gives P = KA / K P = A

Case Studies - Wabco India Limited

75% subsidiary of Wabco Holding

Revenue ~ INR 11 billion

Erstwhile JV between TVS and Wabco Holdings under Sundaram Clayton Limited

Demerged during FY 2008 from Sundaram Clayton, with mutual agreement

Globally, there is oligopoly in vehicle control technologies for CVs

Wabco and Knorr-Bremse control close to 85% market share divided almost equally between them

Third largest player Haldex based in Europe has less then 10% market share

Wabco in India is a clear leader with 85-90% market share with OEMs and ~75% market share in aftermarket sales in Braking System Components in CVs

Wabco is far ahead of indigenization of components and raw materials than Knorr-Bremse, giving it cost advantages in Indian market

All major OEMs are customers of the company

Largest customer is Tata Motors. Tata Motors established a JV with Knorr in 2002, which was not successful and was abandoned a few years ago.

Knorr is more focused on the Railway market in India

Growing Moats

Cost economies: Indigenized rapidly due to forty years in the Indian market

Difficult to set up distribution network without significant OEM volumes, which would depend primarily on cost and availability of spare parts – a chicken and egg situation for its competitors

Export location for parent: further economies of scale due to “best cost” status in certain products of the Wabco Group. Combines European systems expertise with frugal engineering costs in India

Regulatory environment: Push towards mandatory installation of sophisticated braking systems for commercial vehicles

Increase in population of CV’s

Increased content per vehicle

Thus a play on “economies of scope” and “economies of scale”

What could go wrong?

Increase in royalty payments to Wabco Inc.

Prolonged downturn in commercial vehicle sector

Delay in regulatory requirements to increase vehicle safety

Rapid indigenization and cost competitiveness of Knor-Bremse

Case Studies - Wabco India Limited

Case Studies - Wabco India Limited

Jeetay Purchases: - June – Sep 2011 between Rs.1000 and Rs.1300 - July 2012 - Sept 2013, Between Rs.1500 – Rs.1600 In 2011, at time of purchase, Jeetay’s conservative estimation of share price in FY 18 was Rs.5000

Case Studies - Wabco India Limited

Disclaimer

This is an Internal Document and not meant for unlimited public circulation. The investor shall at all times keep such information / data and material provided by Jeetay Investments Private Limited strictly confidential and will not use, share or disclose such information to any third party.

This document has been solely prepared for illustrative purposes only. The information contained herein does

not constitute any guidelines or recommendations on any course of action to be followed by an investor. The information is prepared on the basis of publicly available information, internally developed data and other

sources believed to be reliable. Jeetay Investments Private Limited does not solicit any course of action based on the information provided by it and the investor is advised to exercise independent judgment and act upon the same based on its/his/her sole discretion based on their own investigations and risk-reward preferences.

This information is not intended to be an offer or solicitation for the purchase or sale of any security or financial

product. It is stated that, as permitted by SEBI Regulations, Jeetay Investments Private Limited and/or its associates,

affiliates and/or individuals thereof may have positions in securities referred to in the information provided by it and may make purchases or sale thereof while the information is in circulation.

Continued…

Investing in securities including equities involves certain risks and considerations associated generally with making investments in securities. The value of the portfolio investments may be affected generally by factors affecting financial markets, such as price and volume, volatility in interest rates, currency exchange rates, changes in regulatory and administrative policies of the Government or any other appropriate authority (including tax laws) or other political and economic developments. Consequently, there can be no assurance that the objective of the Portfolio would achieve. The value of the portfolios may fluctuate and can go up or down. Prospective investors are advised to carefully review the Disclosure Document, Client Agreement, and other related documents carefully and in its entirety and consult their legal, tax and financial advisors to determine possible legal, tax and financial or any other consequences of investing under this Portfolio, before making an investment decision. The Stock(s)/Sector(s) mentioned in this material do not constitute any recommendation of the same and the portfolios may or may not have any future positions in these Stock(s)/Sector(s). Individual returns of Clients for a particular portfolio may vary significantly from the performance of the other portfolios. This is due to factors such as timing of entry and exit, timing of additional flows and redemptions, individual client mandates, specific portfolio construction characteristics or structural parameters, which may have a bearing on individual portfolio performance. No claims may be made or entertained for any variances between the performance depictions and individual portfolio performance. Neither the Portfolio Manager nor its Directors or Employees shall be in any way liable for any variations noticed in the returns of individual portfolios.

In the preparation of this material the Portfolio Manager has used information that is publicly available, including information developed in-house. Some of the material used herein may have been obtained from members/persons other than the Portfolio Manager and/or its affiliates and which may have been made available to the Portfolio Manager and/or to its affiliates. Information gathered and material used herein is believed to be from reliable sources. The Portfolio Manager however does not warrant the accuracy, reasonableness and/or completeness of any information. For data reference to any third party in this material no such party will assume any liability for the same.

Disclaimer

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