Birla Real Estate Investor Presentation[1]

Birla Sun Life Asset Management Company Ltd.

Copyright: Birla Sun Life Asset Management Company Ltd. 2009

Real(i)ty - Indian Real Estate, back on track


Birla Sun Life Asset Management Company Ltd. 2

High liquidity at

low rates

Highest levels

of land buying

recorded

The REAL ESTATE journey

Real Estate – Emerging steadily from the slump

Glory Despair Recovery

2006-07 2007 -08

Rise in

mortgage rates

Rise in prices

due to over

supply

2008 -09

Depressed

demand, low

sales

Lack of trust

about pricing

and delivery of

projects

2009 -10

Enough signs of easing

liquidity

Increase in off take with

stability appearing in prices

After a course correction, Back on track



Current property prices present a great opportunity to investors. A peak is expected in the next 3~5

years making real estate an attractive investment option.

The residential segment will lead the sector’s recovery:

New players are expected to enter the market with properties designed keeping in mind

current economic conditions and consumer preferences

Focus of real estate developers is the affordable housing segment which makes up 50% of

the total market currently.

Estimated Real estate market size – 2009-2014

Real estate growth –

expected at a CAGR of 26% till 2014

0% 20% 40% 60% 80% 100%

Office

Retail

Residential

Hospitality

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2009 2010 2011 2012 2013

7.5 million units

Sector wise demand projections – 2009-2013

>43 million sq. feet

> 196 million sq. feet

6,90,000 room nights

Cushman and Weikfeild 2009 reportResearch and markets

Business Standard



• Evident signs of increasing investment activity in

the real estate sector

• USD 15 billion, the sum raised by real estate firms

in the past six months through QIP’s.

• 20 -25, the expected number of IPO’s from real

estate firms in the forthcoming six months.

• Emmar, Godrej properties, DB realty together plan

to raise USD 1.8 billion through IPO’s.

• Unitech and DLF, the top two of the ten firms

receiving maximum FII in the Q2 2009.

The best time to invest in this asset class

FDI Inflow

(USD million)2006-07 2007-08 2008-09 2009 -10 (E)

Cumulative

(2006 – 2009)

Housing and real estate 467 2179 2801 1181 6628

India tops the BRIC nations Real Estate Transparency Index says Jones Lang LaSalle as per

their 2008 report. Investors looking at India as a long term investment destination can be confident

Indian Real Estate Index – 2009

Source: BSE India Website

Source: Cushman and Wakefield 2009 report



Residential realty – The juicy bit



* September 2009 report

Source: Cushman and Wakefield, September 2009

• Demand for residential realty to reach 7.5

million units by 2013*.

• Highest cumulative demand will be seen by

Mumbai (1.6 million units). Bangalore and

Hyderabad to witness highest CAGR at 14%.

• Urbanization, development of city suburbs,

increasing nuclear families and rising income

levels to be the key demand drivers

• Prize rationalization, reduced costs of

borrowing, government sops etc. and,

increasing focus on affordable housing all

contributing to renewed demand. Most

developers are increasing their portfolio to

include affordable housing

Residential realty demand pegged at

7.5 million homes by 2013

Residential Real Estate Demand - in units

(2009-13)



Your best bet to Gain – The ADITYA BIRLA group



Your Partner in Value Creation –

The Aditya Birla Group

Fortune 500

Company

Presence in 25

Countries

Global Turnover of

USD 28 billion

One of India’s

Oldest Business

Houses

Employs More

Than 100,000

People

Awarded India’s

Best Employer

Leadership across

businesses

Has a Dedicated

Financial Services

Group

Presence in

Insurance, Asset

Mgt., MFs

Joint Venture with

Sun Life



Birla Sun Life Asset Management Co.

A JV between two stalwarts

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Birla Sun

Life Asset

Management

Company

A Joint Venture between the

Aditya Birla Group and

Sun Life Financial

Services Inc. of Canada

Investment manager of one

of the India's leading

Mutual Funds - Birla Sun

Life Mutual Fund

An amalgam of Aditya Birla

Group’s strengths in

the Indian Market and, Sun

Life's global experience



One of the best teams in the industry (1/2)

Alumnus of one of India’s leading B-schools

Experience of 18 years in Business; 10 years in

Indian Realty and related businesses

Founder member of India REIT as Chief

Investment Officer (Ajay Piramal group RE Fund)

Has successfully completed an investment cycle –

Fund raising – Deployment – Exit

Managed funds – Domestic: INR 10 billion;

Offshore: INR 25 billion

Headed Real Estate expansion at Shoppers Stop

and related business at Landmark, India REIT and

now, Birla Sun Life AMC

Shashi Kumar,Head Real Estate

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One of the best teams in the industry (2/2)

Chartered Accountant with 20 years

experience

15 years in Lupin Group in Corporate

Finance, Projects, Mergers and

Acquisitions with global exposure,

reporting to Head Finance

Deputed to group’s Real Estate

business for 6 years, heading Finance

and Legal functions with exposure to

evaluation and negotiation

Wide experience in deal structuring,

due diligence, closing and post

closing compliance and integration

Jagannath Shetty, CFOShekhar Rangaraj, Head

Business Development

More than 20 years of experience in

Business Development and Channel

Management

10 years of international exposure of

dealing with luxury brands

Instrumental in launching the Indian

sojourn of renowned luxury brands

and enlightening them on the Indian

consumer psyche

Well exposed to dealing with HNI’s

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Primary focus: Mitigating risk exposure and…

Guidelines for

Investments

Caps on Exposure to Limit Risks:

Single Project: 15%

Overall exposure in a single group: 30%

Single City (Metros): 50%

Non metros: 30%

Yield based investments: 15%

Above caps to be reviewed periodically by Investment Committee

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Principles for Investments

Investment focus on residential realty, the

most attractive segment

Invest in mid-tier developers’ top-grade

projects

To maximise value for investors, investments to

be milestone/target oriented



…spreading our investments evenly.

Location Focus on the highest potential geographies

High potential cities such

as Mumbai Bangalore,

Chennai, Hyderabad and

Pune

Primary

Focus

Secondary focus will be on

cities such as NCR region

and Kolkata

Investment Strategy: Focus on Residential Realty

Secondary

Focus

Developers are looking

for alternative sources

of funds, as funds from

banks have dried up,

leading to an increase

in opportunity

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Has long-term demand potential as evidenced earlier

Is the safest investment domain in the realty

Demand is picking up steadily and, consolidating

Government support for the sector is most evident in

public sector banks leading with low cost of housing

finance in addition to a slew of other measures

Has shorter cycle time and hence quicker completion

of projects

Early returns on investments a distinct possibility

Residential

Realty



…and creating value for our customers…

Delivering significant Value

Advantages of Associating with us

Benefit of the

values and

commitment of

India’s leading

conglomerate

Assurance of

expertise from a

team having a

successful track

record in this

sector

A hurdle of 10%

Profit sharing of

80:20

An expected IRR

of 20%

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The Investments will be made after conducting an exhaustive assessment/evaluation of all critical criteria

The appraisal and decision making processes of the team will not only be prompt but also clearly communicated

Once a decision to invest is reached, it will be

followed by putting forward clear terms, including

approval on key decisions



...through a strong process driven approach to

investments

Step 1: Filtration Sector evaluation

Pre-feasibility studies

Step 2: Due Diligence and

Valuation

Engaging 3rd party experts

Conducting due-diligence

Low cash out

Downward protection

‘Early stage’ entry

Well-defined exits

Step 3: Entry strategy

Clear land title

Established sanction feasibility

Multi-tier Investment Committee approval

Definitive agreements with in-built veto & monitoring rights

Step 4: Validation and Legal

Compliance

Step 5: Financial Close Tax-efficient structuring

Optimal debt planning

Step 6: Project Execution

Value-addition in planning, construction, marketing

Periodic monitoring and reporting mechanisms

Milestone driven disbursements

Tracking of market conditions

Strategic equity sale

IPOs /REITs/REMFs

Self-liquidating SPVs/Pre-sales

Step 7: Exit

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Now, The Product

Summary of Key Terms

Fund Name Aditya Birla Real Estate Fund

Fund Size INR. 750 crores with a green shoe option of INR 250 crores

Fund Tenure 6 years with two 1 year extensions

Minimum Commitment Individual Investor – INR 2,500,000; Institutional Investor – INR 100,000,000

Initial Draw-down Amount 20% of the total commitment

Draw-down Notice Period 15 business days

Initial Closing Minimum corpus of INR 500 crores

Investment Term 3 years from date of Initial Closing

Hurdle 10% p.a. calculated in INR

Carry 80:20 [80% to investor] with catch-up

Management Fees

2% p.a. of the total commitment amount during investment period and 2% p.a. of

the residual capital commitment thereafter (Total draw downs less cost of

investments sold) . One time set up fee of 3% of capital commitment

Auditor/Custodian Deutsche Bank/Ernst & Young

Counsel Nishith Desai Associates

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Distribution of Proceeds - Details

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Disbursement Schedule - Details of payout

First Payout 100% of Paid-up Capital Commitment

Second Payout 100% of Hurdle @ 10%

Third Payout Catch up to Investment Manager

Final Payout Balance Distribution:

80% to Investor

20% to Investment Manager

For better understanding of the above, illustration is given below (for a one year horizon)

Capital Commitment 100

Fund Realization 200

Disbursement Schedule

First Payout 100% of Paid-up Capital Commitment 100

Second Payout 100% of Hurdle @ 10% 10

Third Payout Catch up to Investment Manager 2.5

Final Payout Balance Distribution:

80% to Investor 70

20% to Investment Manager 17.5



What makes us and our product unique?

REAL ESTATE - A sector poised to take a huge step forward,

an opportunity in waiting

THE BRAND - Aditya Birla Group, one of the must trusted names in India

THE TEAM – Has extensive real estate experience and a proven track

record

The PRODUCT – Focussed on the most attractive, potential segment,

RESIDENTIAL realty

Product Highlight - Designed for maximum downside protection, flexibility

and easy exits

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DisclaimerThis document is being furnished to you by BIRLA SUNLIFE Asset Management Co. on behalf of Aditya Birla Real

Estate Fund strictly on a confidential basis. This document is for informational purposes only and does not

constitute an offer for participating in the proposed Fund. This information profile has been provided to its recipient

upon the express understanding that the information contained herein, or made available in connection with any

further investigation, is strictly confidential and is intended for the exclusive use of its recipient. It shall not be

photocopied, reproduced or distributed to others at any time without prior written consent. This document is neither

a prospectus nor an invitation to subscribe to units. Prospective Contributors and/or investors should carefully

review the underlying Constituent documents of the Fund before making a decision to invest. In general, investment

in the shares of the Fund will involve significant risks. Nothing in this document is intended to constitute legal, tax,

securities or investment advice, or opinion regarding the appropriateness of any investment, or a solicitation for any

product or service. The use of any information set out in this document is entirely at the recipient’s own risk.

Contributors are advised to seek independent professional advice to understand all attendant risks attached to

investments in the Fund. Also, Contributors should have the financial ability and willingness to accept the risks and

lack of liquidity, which are characteristics of the investments described herein. In making an investment decision,

investors must rely on their own examination of the documents and the terms of the Offering to be set out in detail in

a separate document, including the merits and risks involved.

While reasonable care has been taken to ensure that the information contained herein is not untrue or misleading at

the time of publication, BIRLA SUNLIFE Asset Management Co. makes no representation as to its accuracy or

completeness. The information herein is subject to change without notice. Neither BIRLA SUNLIFE Asset

Management Co. nor any of its officers or employees accept any liability whatsoever for any direct or consequential

loss arising from any use of this publication or its contents.

The facts and figures used in this presentation reflect the latest available information and have been sourced from

various reports in leading newspapers, IBEF, Reserve Bank of India, Deutsche Bank Research, Report on Indian Real

estate and, BIRLA SUNLIFE research and other sources that are in public domain.

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Birla Real Estate Investor Presentation[1]

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