Birla Sun Life Pure Value Fund A 3

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Birla Sun Life Pure Value Fund (A 3 -year Closed-end Equity Scheme with an Birla Sun Life Pure Value Fund (A 3 -year Closed-end Equity Scheme with an Automatic Conversion into an Open-Ended Scheme upon Maturity)

Value investing • A timeless principal • Focused on the fundamentals • Low volatility Value investing • A timeless principal • Focused on the fundamentals • Low volatility & stable returns • The value investors believes that markets are inefficient and looks to turn this to their advantage • A disciplined value focus allows you to invest wisely, avoiding the excesses and profiting from collapses Investing in Ignored Ideas & Opportunities

Value vs. Glamour Value Growth* In the business world, the rearview mirror is always Value vs. Glamour Value Growth* In the business world, the rearview mirror is always clearer than the windshield - Warren Buffet * Growth style of investing has been perceived as glamour investing

Few quotes… We simply attempt to be fearful when others are greedy and to Few quotes… We simply attempt to be fearful when others are greedy and to be greedy when others are fearful. Price is what you pay, value is what you get. By Warren Buffet I am more concerned about the return of my money than the return on my money. By Will Rogers Value Investing is solely concerned with getting the most profit at the lowest cost. Anonymous

Why value gets created & How value gets rewarded Why value gets created & How value gets rewarded

Creation of value • Markets can be short-sighted • May ignore long term value Creation of value • Markets can be short-sighted • May ignore long term value creation • Otherwise, How do you explain sharp movements in prices based on quarterly results • External issues negatively influencing may be considered permanent • Fertilizer policy if unchanged for 5 years, makes us believe it will not change ever • RBI does not cut rate, markets react as if it will never cut rate • Internal negatives may get overly highlighted • A shutdown for 5 days will have a reaction which is meaningless considered the long life cycle of an organization • Company could be in a matured stage, leading to nominal growth

You don’t need to wait for eternity • Value picks may get rewarded much You don’t need to wait for eternity • Value picks may get rewarded much sooner than you expect • You don’t have to wait for substantial surprises • Stocks available at bargain prices, just need a positive “Nudge” • Changes in the external environment • Disappearance of internal issues • Business plans of the companies to chart a higher growth path • Diversification in business activities • There are innumerable instance in the past that should give confidence on the investment style

When value got rewarded When value got rewarded

Reliance Energy • For most part 2006 & 2007 stock under performed the market Reliance Energy • For most part 2006 & 2007 stock under performed the market • Stock was a strong Value pick as cash on book was to the extent of 50 to 60% of market cap • Huge cash helped the company bid for infra & power projects leading to significant re-rating Source – Bloomberg; BSLMF Internal Research; Stocks referred above are illustrative and are not recommended by Birla Sun Life Mutual Fund / Birla Sun Life Asset Management Company Ltd. The Fund may or may not have any present or future positions in these stocks.

Neyveli Lignite • As most of the power stocks Neyveli Lignite also under performed Neyveli Lignite • As most of the power stocks Neyveli Lignite also under performed the market for most part of 2006 - 2007 • Stock was a strong Value pick as was trading close to its book value • Once the sector got re-rated in later part of 2007, Neyveli was among the top performers Source – Bloomberg; BSLMF Internal Research; Stocks referred above are illustrative and are not recommended by Birla Sun Life Mutual Fund / Birla Sun Life Asset Management Company Ltd. The Fund may or may not have any present or future positions in these stocks.

SAIL • During steel’s down cycle of 2005 & 06, SAIL was a strong SAIL • During steel’s down cycle of 2005 & 06, SAIL was a strong Value buy on account of captive iron ore mines & coal facilities • Once up cycle for the sector started, stock was among the top performers Source – Bloomberg; BSLMF Internal Research; Stocks referred above are illustrative and are not recommended by Birla Sun Life Mutual Fund / Birla Sun Life Asset Management Company Ltd. The Fund may or may not have any present or future positions in these stocks.

Chennai Petroleum • Chennai Petro is fundamentally among the most attractive oil refining companies Chennai Petroleum • Chennai Petro is fundamentally among the most attractive oil refining companies • During large part of 2006 -07, with PE of 4 -5 stock was trading at significant discount to peers & market • Due to rising crude oil prices Gross Refinery Margins saw a significant upturn leading to significant re-rating of the stock Source – Bloomberg; BSLMF Internal Research; Stocks referred above are illustrative and are not recommended by Birla Sun Life Mutual Fund / Birla Sun Life Asset Management Company Ltd. The Fund may or may not have any present or future positions in these stocks.

Investment process for identifying value Would be a blend of… ü Stocks available at Investment process for identifying value Would be a blend of… ü Stocks available at discount to intrinsic value ü Attractive Price to Book Value Ratio ü Lower PE Multiple but with a reasonable growth track record ü Lower market cap than the Replacement Cost ü Companies having high level of Cash & Liquid Investments compared to market cap ü Companies that reward investors with high & regular dividends

Sectors & Companies With Substantial VALUE currently Sectors & Companies With Substantial VALUE currently

Fertilizer Sector Current Scenario • ZERO domestic capacity addition since last one decade • Fertilizer Sector Current Scenario • ZERO domestic capacity addition since last one decade • Demand supply imbalance leading to increasing imports • Spiraling prices leading to higher subsidy burden • High replacement cost • 1 Million ton of Greenfield fertilizer capacity costs more than USD 1 billion • Stable cash flow aiding diversification into other sectors leading to earnings stability • Chemicals for vertical & horizontal integration • Other growing sectors like shipping, real estate etc. Source – Bloomberg; BSLMF Internal Research

Valuations of Fertilizer Companies Significant Discount to Replacement Cost Source – Bloomberg; BSLMF Internal Valuations of Fertilizer Companies Significant Discount to Replacement Cost Source – Bloomberg; BSLMF Internal Research; The stocks indicated above are illustrative & may or may not form part of portfolio. Stocks Available at Attractive Price Multiples Source – Bloomberg; BSLMF Internal Research; The stocks indicated above are illustrative & may or may not form part of portfolio.

Why sector may unlock value … • Positive Changes in the Fertilizer Policy have Why sector may unlock value … • Positive Changes in the Fertilizer Policy have improved profitability of the companies in the sector over last 9 months. • Improved Gas Availability scenario may reduce the dependence on high cost imported feedstock. • Policy for Fertilizers under cabinet consideration to decide : • Policy for Greenfield/Brownfield Expansion • Pricing Policy refinements • Further Issuance of Fertilizer Bonds Source – Bloomberg; BSLMF Internal Research

Oil & Gas (Oil Marketing Companies) Current Scenario • Oil marketing companies are loosing Oil & Gas (Oil Marketing Companies) Current Scenario • Oil marketing companies are loosing money due price regulations by government. • Refineries are enjoying healthy Gross Refining Margins (GRM) on the back of rising crude oil prices • Global refining capacity is growing inline with global demand is expected to do so for next five years • Capacity addition in Asia Pacific to account for 37% of the global capacity addition • India’s capacity addition would be the highest and would account for nearly 29% of the capacity in Asia Pacific region Source – Bloomberg; BSLMF Internal Research

Valuations of oil marketing companies Significant Discount to Replacement Cost * CDU represents Crude Valuations of oil marketing companies Significant Discount to Replacement Cost * CDU represents Crude Distillate Unit I. e. refining capacities Source – Bloomberg; BSLMF Internal Research; The stocks indicated above are illustrative & may or may not form part of portfolio. Indian refineries are trading at a discount to their replacement cost on account of their losses in marketing activities.

Why sector may unlock value … • Capacity addition in Asia Pacific to account Why sector may unlock value … • Capacity addition in Asia Pacific to account for 37% of the global capacity addition • India’s capacity addition would be the highest and would account for nearly 29% of the capacity in Asia Pacific region • With mounting marketing losses, we expect the government to take corrective actions in order to reduce these losses • Indian oil marketing companies have a good mix of refining & marketing assets and they are aggressively expanding refining capacities • On back of rising crude oil prices & rising GRMs this would act as the main trigger for value unlocking Source – Bloomberg; BSLMF Internal Research

Paper Sector Current Scenario • Low per capita consumption of paper = Tremendous growth Paper Sector Current Scenario • Low per capita consumption of paper = Tremendous growth opportunity • Rising literacy levels will further push the demand up • India imports around 0. 70 million tons of paper year • Provides tremendous growth opportunity for domestic companies • High replacement cost • 1 Million ton of Greenfield integrated paper capacity costs more than USD 900 million • Stable earnings growth & margin due to: • Capacity improvements • Source – Bloomberg; BSLMF Internal Research Process improvement leading to cost efficiencies

Valuations of Paper Companies Significant Discount to Global Peers Despite Higher Margins & Returns Valuations of Paper Companies Significant Discount to Global Peers Despite Higher Margins & Returns Ratios Source – Bloomberg; BSLMF Internal Research; The stocks indicated above are illustrative & may or may not form part of portfolio. Significant Discount to Replacement Cost Source – Bloomberg; BSLMF Internal Research; The stocks indicated above are illustrative & may or may not form part of portfolio.

Why sector may unlock value … • Paper sector growth in a new trajectory Why sector may unlock value … • Paper sector growth in a new trajectory given the projected GDP growth of above 10% for Indian Economy. • Paper being proxy to GDP growth rates. • Huge Capex finally paying off as evident in financial results. • Industry looking for international acquisition and exposure. • Valuation Discount against global peers quite significant now. • New deals like BILT PE deal may change the valuations for the sector. Source – Bloomberg; BSLMF Internal Research

Shipping Sector Current Scenario • Huge potential for trade growth • Asia accounts for Shipping Sector Current Scenario • Huge potential for trade growth • Asia accounts for 59% dry bulk imports with India being among the major consumer • Demand for oil, gas & coal for energy requirements will drive the shipping logistics in the Indian market • Industry is on a capacity addition spree • Freight rates have corrected sharply & may start moving upwards in near future • Asset prices of the ships have improved or remained firm despite the weak freight rates displaying buoyant long term outlook Source – Bloomberg; BSLMF Internal Research

Valuations of Shipping Companies Significant Discount to NAV per Share Source – Bloomberg; BSLMF Valuations of Shipping Companies Significant Discount to NAV per Share Source – Bloomberg; BSLMF Internal Research; The stocks indicated above are illustrative & may or may not form part of portfolio. Why sector may unlock value now… • Indian Shipping Sector in process of being re-rated along the line of global peers. • India and China have increased their dominance on the international trade as against developed countries. • Recent downturn in shipping cycle beckons another upswing in the shipping cycle leading to increase in stock prices. Source – Bloomberg; BSLMF Internal Research

Cement Sector Current Scenario • Significant slow down in growth of cement consumption • Cement Sector Current Scenario • Significant slow down in growth of cement consumption • Currently the growth rate is below the 3 Month Moving Average • High base has caught up with cement demand growth • Profitability hit due to rising fuel costs despite high cement prices • International coal prices have increased from USD 40 per ton in Jan 06 to over USD 100 per ton in Jan 08, an increase of over 150% • During the same period cement prices have moved from Rs. 165 per bag to Rs. 225 per bag, an increase of 36% Source – Bloomberg; BSLMF Internal Research

Valuations of Cement Companies Source – Bloomberg; BSLMF Internal Research; The stocks indicated above Valuations of Cement Companies Source – Bloomberg; BSLMF Internal Research; The stocks indicated above are illustrative & may or may not form part of portfolio. Anticipated supply has resulted in stocks being quoted below current Replacement Cost

Why sector may unlock value … • USD 500 billion worth of infrastructure spending Why sector may unlock value … • USD 500 billion worth of infrastructure spending envisaged in XIth five year plan could spur cement demand growth beyond supply increase. • Captive power plants / tie up of coal sources can protect margins • Low valuations could trigger consolidation and M&A drive within the industry particularly when large MNCs looking to enter the 2 nd largest (India) cement market in the world. • Sustained profitability could result in significant free cash flow generation. Source – Bloomberg; BSLMF Internal Research

Sugar Sector Current Scenario • Sugar exports were banned by the Government for nearly Sugar Sector Current Scenario • Sugar exports were banned by the Government for nearly six months from July’ 07, due to which supply in the domestic markets increased • As a result, sugar prices fell from the high of nearly Rs. 18/kg to Rs. 14/kg and below during the same period. • Companies especially in U. P. suffered more on account of higher sugarcane prices. Source – Bloomberg; BSLMF Internal Research • Major sugar companies are trading almost at par with their replacement cost, thus providing attractive valuation opportunities Source – Bloomberg; BSLMF Internal Research; The stocks indicated above are illustrative & may or may not form part of portfolio.

Why sector may unlock value … • Sugar cycle expected to turn profitable, as Why sector may unlock value … • Sugar cycle expected to turn profitable, as the cane supplies for the sugar season of Oct-08 to Mar-09 is expected to decline. • With the exports ban being removed we expect higher exports in Financial Year 08 -09, thus an improvement in domestic sugar prices. • Any reduction in sugar cane prices for Uttar Pradesh based companies would drive their profitability. • Diversification into ethanol and power would help in improving the overall performance of the companies. Source – Bloomberg; BSLMF Internal Research

MNC Pharma Companies • More than 20% of market cap is represented by cash MNC Pharma Companies • More than 20% of market cap is represented by cash / liquid investments • Consistent dividend payouts • Attractive valuations of around 10 x FY 08 Vs Market PE of around 20 x FY 08 E earnings Source – Bloomberg; BSLMF Internal Research; The stocks indicated above are illustrative & may or may not form part of portfolio. • Introduction of patented products to be key stock driver Source – Bloomberg; BSLMF Internal Research

Even simple stats tell the same story • A simulation was carried out on Even simple stats tell the same story • A simulation was carried out on BSE 200 index. • Fundamental criteria’s considered: • Price to Book Value (P/BV) and • Price to Earnings (P/E). • We evaluated stocks based on various parameters: • One with low P/E stocks, • Second with Low P/BV Stocks & • Stocks with low P/E & low P/BV. • Investment portfolio consists of top 30 stocks. • Costs have not been taken into consideration. Source – Cline; BSLMF Internal Research.

Rear View Glimpse Source – Cline; BSLMF Internal Research. Value portfolio outperforms the Benchmark Rear View Glimpse Source – Cline; BSLMF Internal Research. Value portfolio outperforms the Benchmark Index.

Model Portfolio • We have created a model portfolio of 30 stocks. • Not Model Portfolio • We have created a model portfolio of 30 stocks. • Not more than 7% to be allocated to each stock. • Fundamental Traits: • An Return on capital employed (ROCE) of 16. • Return on Equity (ROE) of 24. • Price to Equity (P/E) of 10. • Price to Book Value (P/BV) of 1. 50. • EV/EBIDTA of 9. 70 Value for an investor…. Source – Bloomberg; BSLMF Internal Research.

A dose of “Value” can ensure health • If your pre-dominantly high growth portfolio A dose of “Value” can ensure health • If your pre-dominantly high growth portfolio has an average PE of 18 - 20 • Even a 20% allocation to value portfolio (assuming avg. PE of 10) can reduce the overall PE substantially • Will help you compliment your existing portfolio • Portfolio with strong fundamentals • Can act as a shock absorber in your high growth portfolio • Portfolio with low volatility Value has to get unlocked in good quality companies The only question is when? Leave that to us

Proof of our investment expertise Benchmark – BSE 200 Benchmark – CNX Midcap Benchmark Proof of our investment expertise Benchmark – BSE 200 Benchmark – CNX Midcap Benchmark – BSE 200 Performance has been calculated on NAV of growth plans. The returns for less than a year are in absolute terms & for more than a year its CAGR. Past performance is no guarantee of future performance. Sales load not considered for computation of returns.

Scheme features * Refer to the offer document for further details Scheme features * Refer to the offer document for further details

Statutory Details & Disclaimers Statutory Details: Constitution: Birla Sun Life Mutual Fund has been Statutory Details & Disclaimers Statutory Details: Constitution: Birla Sun Life Mutual Fund has been set up as a Trust under the Indian Trust Act, 1882. Sponsors: Aditya Birla Nuvo Limited & Sun Life (India) AMC Investments Inc [liability restricted to seed corpus of Rs. 1 Lac]. Trustee: Birla Sun Life Trustee Company Pvt. Ltd. Investment Manager: Birla Sun Life Asset Management Company Ltd. Objective: To generate consistent long-term capital appreciation by investing predominantly in equity and equity related securities by following value investing strategy. Asset Allocation Pattern: Equity and Equity linked Instruments: 85%-100% and Fixed Income Securities (Including money market instruments): 0%-15%. Terms of issue: Rs. 10 per unit during the NFO period. Liquidity: The scheme will offer for redemption/switch-out of units at Monthly Intervals only during the specified redemption period i. e. first five business days of each month after the date of allotment at NAV based prices. The NAVs of the scheme will be announced on a weekly basis and on all business days during the specified redemption period. Entry Load: N. A. . Exit Load: Nil (all redemptions/switch-outs made during the specified redemption period until the scheme remains closed-end will be charged balance proportionate unamortized issue expenses on the applicable NAV. ) Risk Factors: Mutual Funds & securities investments are subject to market risks & there can be no assurance or guarantee that the objectives of the Scheme will be achieved. As with any investment in securities, the NAV of the Units issued under the Scheme may go up or down depending on the various factors & forces affecting capital markets & money markets. Past performance of the Sponsor / Investment Manager / Mutual Fund does not indicate the future performance of the Scheme & may not necessarily provide a basis of comparison with other investments. Birla Sun Life Pure Value Fund is only the name of the Scheme & does not, in any manner, indicate either the quality of the Scheme or its future prospects or returns. Scheme Specific Risk Factors: The Scheme should have a minimum of 20 investors & no single investor should account for more than 25% of its corpus at the time of allotment as per SEBI guidelines. The Scheme is subject to market risks, investment style risk, risks due to changes in political and economic environment. For further Scheme Specific Risk Factors & other details please read the Offer Document carefully before investing. This document is meant for private circulation only and should not at any point of time be construed to be an invitation to the public for subscribing to the units of Birla Sun Life Mutual Fund does not solicit any action based on the information contained in the document and does not recommend any action based on the same. The information/graphs/charts contained in this document are based on certain assumptions and have been compiled from sources, which Birla Sun Life Asset Management Company Limited (BSLAMC) believes to be reliable, but cannot guarantee its accuracy or completeness. Opinions expressed and facts referred to in this document are subject to change without notice and BSLAMC is under no obligation to update the same. Please read the offer document carefully for scheme specific risk factors and other details before investing.

Other schemes details Birla Sun Life Frontline Equity Fund Birla Sun Life Equity Fund Other schemes details Birla Sun Life Frontline Equity Fund Birla Sun Life Equity Fund Investment Objective: An open-end growth scheme with the objective of long term growth of capital, through a portfolio with a target allocation of 100% equity by aiming at being as diversified across various industries and or sectors as its chosen benchmark index, BSE 200. Investment Objective: An open-end growth scheme with the objective of long term growth of capital, through a portfolio with a target allocation of 90% equity and 10% debt and money market securities. Load Structure (Incl. for SIP): Entry Load* : < Rs. 5 crores - 2. 25% >= Rs. 5 crores - Nil Exit Load : < Rs. 5 crores - 0. 50% if redeemed / switched out within 6 months >= Rs. 5 crores – Nil * Nil for direct investments Birla Mid. Cap Fund Birla Sun Life Tax Relief '96 Investment Objective: An Open-ended growth scheme with the objective to achieve long-term growth of capital at controlled level of risk by primarily investing in midcap stocks. An Open-ended Equity Linked Savings Scheme (ELSS) with a lock-in of 3 years Investment Objective: An open-end equity linked savings scheme (ELSS) with the objective of long term growth of capital through a portfolio with a target allocation of 80% equity, 20% debt and money market securities Load Structure (Incl. for SIP): Entry Load* : < Rs. 5 crores - 2. 25% >= Rs. 5 crores - Nil Exit Load : NIL Load Structure (Incl. for SIP): Entry Load* : < Rs. 5 crores - 2. 25% >= Rs. 5 crores - Nil Exit Load : < Rs. 5 crores - 0. 50% if redeemed / switched out within 6 months >= Rs. 5 crores – Nil * Nil for direct investments

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