Franklin India High Growth Companies Fund - Investing in India's Fastest Growing Companies

1. Franklin India High Growth Companies Fund An equity fund with a high growth focus

2. Agenda • The India Story • Why focus on Growth ? • Franklin India High Growth Companies Fund • Why Franklin Templeton ?

3. India : Economy Past Share of World GDP (%) India China Europe US India and China starting to pick up Source : Source: Angus Maddison, The World Economy: Historical Statistics, OECD 2003.

4. India : Economy Present GDP & Real GDP growth One of the fastest growing economies Source: CSO, RBI, Ministry of Finance, Citigroup estimates (March end)

5. India : Economy Economic Power of the future • India to be among the biggest economies Source: Economist

6. India : EconomyRelatively insulated to global upheavals Share of Exports as a % of GDP Source: Citigroup Low export to GDP ratio compared to other Asian markets, but high forex reserves Source: CRIS INFAC

7. Macro driversIncreasing affluence leads to higher consumption Source: Mckinsey Global Institute

8. Macro Drivers Potential ‘Services Capital’ of the world • Services are tradable: India has cost and skill set advantages • India has the 2nd largest pool of scientists and engineers in the world • Gap in price of labor between India and the rest of the world plus a young population are the main drivers Source: Citigroup

9. Macro Drivers Infrastructure spending on the rise • Driven by - • Government Infrastructure spending especially in the rural areas • Port/airport modernization/expansion • Cross-country road corridors • Upstream/midstream investments • Significant capacity additions driven by rising demand and utilization • Rising telecom demand driven by lower handset prices and newer technologies * Source : CLSA - expected investments in 10th/11th plans GDP growth could be 2-3% higher with proper infrastructure backbone Source: CRIS INFAC

10. Capex phase in the late nineties sets foundation for value creation Macro Drivers Corporate India is a value creator Source: CLSA

11. LiquidityIndia dedicated funds • Sharp rise in assets and number of India funds - $34 billion Source: Bloomberg, Apr 07

12. LiquidityDomestic savings Vast pool of untapped household savings can provide support to equity markets: • Financial savings accounting for 16.8% of GDP : $ 148.03 bln * • Available savings pool if household accumulations are assumed at 6-7 years’ savings : $888 - $1036 bln Equity inflows at different levels of allocation *Source: RBI data-FY06, 1 USD = Rs.45.25

13. Why High Growth ?

14. Economy and investment styles • Different styles are pertinent for the various stages of the economic/business cycle • Source: MSCI (Compounded & Annualised returns as on April 30, 2007 and in US$ terms)

15. What is Growth Style?MSCI measures • Growth investment style characteristics • Long-term forward earnings per share growth rate • Short-term forward EPS growth rate • Current Internal Growth Rate • Long-term historical EPS growth trend • Long-term historical sales per share growth trend Companies with above average revenue growth/potential and ROE • Value investment style characteristics • Book value to price ratio • 12-month forward earnings to price ratio • Dividend yield Out-of-favour stocks/sectors with good fundamentals, turn-around opportunities and undervalued

16. CHANGING LIFESTYLES DEMOGRAPHICS INVESTMENTS OUTSOURCING NEW TECHNOLOGIES • Luxury Goods • Specialty Retail • Tour Operators • Fashion Apparel • Mail Order • Games • New Media • Financial Services • Insurance Products • Asset Management • Retail chains • Housing • Capital Goods • Infrastructure • Construction • Power • Telecom • Utilities • IT/ IT Enabled services • Auto Components • Engineering goods • Pharmaceuticals • Financial Research • Risk Management • Training & Development • Biopharmaceuticals • Specialized Software • Videoconferencing • Testing Equipment • Networking Products • Smart / SIM Cards • Consumer Electronics • Flat Panel Components • Cell Phone Components Growth Drivers • India is undergoing a paradigm shift due to changing lifestyles and dynamics • Industry-specific investment themes are used to identify sectors/companies with above-average market growth

17. High Growth Companies • Companies expanding sales as well as earnings at a much higher rate than that of the general economy. • Because these companies tend to grow earnings at a fast pace, they will typically have higher valuations (P/E) • Enjoy competitive advantages • Proprietary intellectual property • Strong management • Distribution/cost advantages • Entry barriers specific to the respective sector

18. High Growth strategy • How the strategy would have worked with a focus on “high growth companies” • Source: Citigroup investment research (compounded and annualised as on April 30, 2007). Quintile-I being the top 20% and Quintile-V the bottom 20% of the group. • $The table denotes Annualised Compounded returns over the specified period on a portfolio of companies constructed based on the following two parameters. Earnings Revision Ratio (ERR) = the number of upward revisions (of estimates of company's earnings by analysts) over the past month minus the number of downward revisions over the past month divided by the total number of estimates. Long Term Price / Earnings to Growth (PEG) Ratio = Trailing P/E ratio divided by Annualised Mean Earnings Growth Rate over the company's Next Business Cycle, usually 3 to 5 yrs. Annualised Mean Earnings Growth Rate is the Mean value of Growth forecasts of all contributing analysts. The companies considered are forming part of the S&P Emerging markets global indices.

19. High Growth Companies • Some well known examples from the last decade - . • For illustrative purposes only. Source: DB Research. Compounded and annualised returns as on April 30, 2007. Please note that this should not be construed as an investment advice.

20. High Growth CompaniesInfosys Rs. in Crs Industry : IT Services Opportunity : To deliver software services in a cost effective manner remotely. US & Europe became target markets Macro drivers : Global offshoring trend and friendly regulatory environment Competitive Advantages : Strong team, flexibility to reinvent itself along with market opportunities, Ability to build long-term drivers of cost efficiency, brand name, High quality of services, Corporate Governance Management Quality/Execution : Built capable & stable management; attracted new and skilled talent with strong retention policies, delivered de-risked growth without dilution in profitability, followed shareholder friendly practices

21. High Growth CompaniesBharti Airtel Industry : Telecom Services Opportunity : New market for mobile telephony with evolving regulatory environment Macro drivers : Changing lifestyles and aspirations helped in rapid growth for the sector Competitive Advantages : Spearheaded a unique business model which competitors took time to catch up with, Presence in wider geographic segment providing scale benefits, Innovative service packages, Brand equity Management Quality/Execution : Entrepreneurial and highly innovative, exhibited ability to generate consistently high growth rates, trend-setting financial management and leadership

22. High Growth CompaniesABB Rs. in Crs Industry : Engineering capital goods Opportunity : Huge demand for Power & Urban infrastructure Macro drivers : Infrastructure spending and capex Competitive Advantages : World class product and services, Higher-end technology, Dependable execution, Strong support of the parent Management Quality/Execution : High quality management with strong track record, sound financial management, consistent ability to introduce new products and deliver growth.

23. High Growth CompaniesHDFC Rs. in Crs Industry : Home Loan Mortgages Opportunity : Rising middle-income households and their need for affordable housing Macro drivers : Strong economic growth and rising income levels Competitive Advantages : Strong brand name, competitive pricing, customer-friendly practices, Reliability and stability, Efficient management of balance sheet, Low cost structure & Focus Management Quality/Execution : Stable management team with strong corporate philosophy, Shows consistent ability to understand the environment well, willingness to forego unprofitable growth, Minimal dilution to fund growth.

24. High Growth CompaniesKotak Bank Rs. in Crs Industry : Financial Services Opportunity : Growing affluent middle class with high savings and need for comprehensive financial services Macro drivers : Changing financial landscape Competitive Advantages : Complete range of services under one brand, Customer-focused approach, competitive pricing, Unique business model, Brand Equity Management Quality/Execution : Strong and aggressive team, Highly entrepreneurial, Stable and confident top management, Have shown ability to build a large retail franchise without dilution of quality

25. Franklin India High Growth Companies Fund Benefit from the fastest growing companies in India

26. Franklin India High Growth Companies Fund • An open end diversified equity fund that seeks to achieve capital appreciation through investments in Indian companies/sectors with high growth rates or potential Investment style is ‘growth’ & Blend of top-down and bottom-up approach of investing Asset Allocation: # including investments in foreign securities as may be permitted by SEBI/RBI up to 35% of the net assets of the scheme, exposure in derivatives up to a maximum of 50%. * including securitised debt upto 30%

27. Investment Style • Primary focus will be to identify ‘high growth’ companies, especially in sectors witnessing above-average growth. • Blend of top-down (macro analysis to identify sectors) and bottom-up approach (micro analysis to pick stocks within these sectors) • The top-down considerations will include an analysis of – • Domestic and global economic drivers • Macro factors such as interest rates, inflation, regulatory environment, political environment and global market dynamics • Identification of sectors based on the above and relative valuations & liquidity

28. Investment Process • Identify key trends based on various economic drivers • Analyze and ascertain the nature, certainty and predictability of such growth trends • List companies that provide exposure to these growth themes • Research further for • Management quality, business strengths, competitive advantages, financial strength • Value these businesses through appropriate measures

29. High Growth – High returns • The impact of an extra 5% on an initial investment of Rs.1 lakh • (Please note that this is for illustrative purpose only and the actual returns would depend on the market conditions and the performance of the fund)

30. Longer the horizon, higher the potential • Volatility is part & parcel of stock market investing. Staying invested for a longer period reduces the risks Simulation for Bluechip Fund • Past performance may or may not be sustained in future. Annualised compounded returns based on growth plan NAV; Period - Inception date (1.12.1993) to 30.4.2007; Sales load has not been taken into consideration. Dividends are assumed to be reinvested and bonus is adjusted. BSE Sensex rolling returns for the same period: Maximum returns, Minimum returns, Average returns, Possibility of making money, Possibility of losing money: 1 Year, 101.7%, -41.3%, 13.8%, 57.8%, 42.2%; 3 Year, 62.2%, -18.5%, 9.9%, 64.1%, 34.9%; 5 Year, 36.4%, -7.8%, 7.1%, 71.1%, 28.9%; 7 Year, 20.4%, -7.6%, 5.8%, 71.5%, 28.5%; 9 Year, 17.9%, -2.9%, 7.2%, 82.1%, 17.9%. Sales load has not been taken into consideration. Dividend/Bonus are adjusted. • As the investment time horizon increases, the numbers change in favour of investors... the possibility of losing money reduces and so do the minimum returns.

31. Equity investing is attractive • No long term capital gains tax for investments over a 1-year period* • Short term capital gains are only 10%* • Dividends are totally tax-free in the hands of the investors and no dividend distribution tax is required to be paid by the Fund * However investors are liable to pay securities transaction tax (STT). As per current tax laws

32. Why Franklin Templeton ?

33. Franklin Templeton Worldwide • More than 50 years of experience in global investing • Extensive international presence and breadth of product line with offices in 29 countries, supported by over 450 investment professionals • Over US$ 601.1 billion assets under management#; over 17.1 million billable investor accounts world-wide • Offers more than 200 investment solutions under the Franklin, Templeton, Mutual Series, Bissett, Fiduciary Trust and Darby names globally # As on April 30, 2007

34. Franklin Templeton in India • Established office in 1996 and currently one of the leading fund houses in India. Manages Rs.24,510 crores# for over 21 lakh shareholder accounts • One of the largest equity assets in India* Assets Under Management & Asset Mix (in Rs. Crs) 24510 23060 18492 17435 13403 8193 *# Source: AMFI Website (as on April 30, 2007)

35. Rich Experience & Product innovation • Manages 4 equity funds with a track record of over 10 years • Manages 3 of the 15 largest equity funds* in the country • First to launch an open end private sector fund – Prima Fund • First to launch a value fund - Templeton India Growth Fund • India’s first Infotech/Pharma Fund • India’s first fund of funds – FT India Dynamic PE Ratio Fund of Funds • Category starters – Franklin India Flexi Cap Fund, Franklin India Smaller Companies Fund • First Capital Protection Fund • Templeton India Equity Income Fund * Source: AMFI Website (April 30, 2007)

36. Equity team - Key strengths • People: Continuity and depth of experience of the team. • Contacts and Presence:Constant company visits and frequent meetings with industry people help in forming independent views. • Local and Global:Team focused on local needs, at the same time, tuned in to global trends. • Discipline :Consistent adherence to investment objectives and philosophy. • Global standards :Disclosure and compliance with independent dealing desk.Constant interaction with risk management team to gauge risk-adjusted performance. • Long Term:The longevity of the team has led to combined experience of market cycles which has inculcated a long term perspective and the ability to take out emotions out of investing

37. 2 4 5 3 1 STEP STEP STEP STEP STEP • Business Analysis Investment process Portfolio and Risk Management • Portfolio Construction • Stock Recommendations • Idea Generation

38. Fund Facts New Fund Offer : May 31, 2007 to June 29, 2007 Minimum Investment Amount: Rs.5000/1 New Fund Offer Price: Rs.10 plus applicable load Load Structure - Entry: <Rs.5 Crs: 2.25%, =>Rs.5 Crs: Nil; Exit Load : <Rs.5 Crs: 0.5% (for redemption within 6 months of allotment), =>Rs.5 Crs: 1% (for redemption within 1 year of allotment) Options: Growth & Dividend Plan (Payout & Reinvestment options) Fund Managers: Sivasubramanian K.N & Anand Radhakrishnan Systematic Investment Plan: Rs.1000 or more for atleast 12 months & all installments should be for the same amount (Only through ECS/Direct debit)

39. Summing up… Participate in India’s robust economic growth Access the potential of India’s fastest growing companies in terms of revenue and earnings Benefit from FT’s rich investment experience in the Indian equity markets for over a decade You can do all of this with a single investment in Franklin India High Growth Companies Fund

40. Thank You

41. *The information contained in this commentary is not a complete presentation of every material fact regarding any industry, security or the fund and is neither an offer for units nor an invitation to invest. This communication is meant for use by the recipient and not for circulation/reproduction without prior approval. The views expressed by the portfolio managers are based on current market conditions and information available to them and do not constitute investment advice. Scheme classification and investment objective: Franklin India Bluechip Fund (FIBCF) is an open end growth scheme with an objective to primarily provide medium to long term capital appreciation. Entry Load: 2.25%, Exit Load: Nil. FIHGCF is an open-end diversified equity fund that seeks to achieve capital appreciation through investments in Indian companies/sectors with high growth rates or potential. Asset allocation: Equity and Equity Linked Instruments#: 70% - 100%, Debt securities* and Money Market Instruments: 0% - 30%. #including investments in Foreign Securities as may be permitted by SEBI/RBI up to 35% of the net assets of the scheme, exposure in derivatives up to a maximum of 50% * including securitised debt up to 30%. Terms of the offer: The Units are being offered at Rs.10 per unit plus applicable load during the NFO and NAV based prices upon reopening. Risk Factor: All investments in mutual funds and securities are subject to market risks and the NAV of the scheme may go up or down depending upon the factors and forces affecting the securities market. There can be no assurance that the schemes investment objectives will be achieved. The past performance of the mutual fund managed by the Franklin Templeton Group and its affiliates is not necessarily indicative of future performance of the schemes. The above is only the name of the scheme and does not in any manner indicate the quality of the scheme, its future prospects or returns. The Mutual Fund is not guaranteeing or assuring any dividend under the scheme and the payment of the dividend is subject to availability of distributable surplus. The investments made by the schemes are subject to external risks. Please read the offer document carefully before investing. Offer Documents / Application Form are available free of cost at any of the Investor Service Centres or distributors or from the website www.franklintempletonindia.com. Statutory Details: Franklin Templeton Mutual Fund in India has been set up as a trust by Templeton International Inc. (liability restricted to the seed corpus of Rs.1 lac) with Franklin Templeton Trustee Services Pvt. Ltd. as the Trustee (Trustee under the Indian Trusts Act, 1882) and Franklin Templeton Asset Management (India) Pvt. Ltd. as the Investment Manager.

42. Product Positioning

43. Product Positioning