Franklin India High Growth Companies FundAn equity fund with a high growth focus

Agenda

The India Story

Why focus on Growth ?

Franklin India High Growth Companies Fund

Why Franklin Templeton ?

India : Economy Past

Source : Source: Angus Maddison, The World Economy: Historical Statistics, OECD 2003.

0

10

20

30

40

1 1000 1500 1600 1700 1820 1870 1913 1950 1973 2001

China India Europe United States

Share of World GDP (%)India

China

Europe

US

India and China starting to pick up

India : Economy Present

Source: CSO, RBI, Ministry of Finance, Citigroup estimates (March end)

1059

929

805

603695

509475460

4.4%

5.8%

8.5%

7.5%

9.0% 9.2% 9.3%

3.8%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

FY01 FY02 FY03 FY04 FY05 FY06 FY07E FY08E

0

200

400

600

800

1000

1200

1400

1600

GDP (US$ bn) Real GDP growth (%)

GDP & Real GDP growth

One of the fastest growing economies

India : Economy Economic Power of the future

Source: Economist

India to be among the biggest economies

India : Economy Relatively insulated to global upheavals

Source: CRIS INFAC Low export to GDP ratio compared to other Asian markets, but high forex reserves

Share of Exports as a % of GDP

205.6

162.8

107.9

63.0 62.2

41.1 35.727.6

18.5

0

50

100

150

200

250

Sin

ga

po

re HK

Ma

lay

sia

Ta

iwa

n

Th

aila

nd

Ph

illip

ine

s

Ch

ina

Ind

on

es

ia

Ind

ia

Source: Citigroup

Source: Mckinsey Global Institute

Macro drivers Increasing affluence leads to higher consumption

Macro Drivers Potential ‘Services Capital’ of the world

Services are tradable: India has cost and skill set advantagesIndia has the 2nd largest pool of scientists and engineers in the worldGap in price of labor between India and the rest of the world plus a young population are the main drivers

Source: Citigroup

6.27.7

9.612.8

17.7

23.4

65

0

10

20

30

40

50

60

70

FY01 FY02 FY03 FY04 FY05 FY06E FY10E

CAGR 26-27%

US$bn

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: CRIS INFAC GDP growth could be 2-3% higher with proper infrastructure backbone

  Rs in bn FY03-07 FY 08-12 %

Roads 1,020

2,150

110.8

Ports 125

560

348.0

Railways 606

2,340

286.1

Power 1,800

3,720

106.7

Total 3,551

8,770

147.0

* Source : CLSA - expected investments in 10th/11th plans

Macro Drivers Corporate India is a value creator

Source: CLSA

Capex phase in the late nineties sets foundation for value creation

10

12

14

16

18

20

22

24

26

28

FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07CL FY08CL

(% )

Value created

Cost of Equity

Return on equity

Current cost of equity

LiquidityIndia dedicated funds

Source: Bloomberg, Apr 07

Sharp rise in assets and number of India funds - $34 billion

Fund Domicile Launch Assets (US Mln)

HSBC GIF-Indian Equity-Ad Luxembourg 23-Jan-96 6115

JPMorgan F-India Fund-A$ Luxembourg 31-Aug-95 3970

Fidelity Fund-India Focus-AGBP Luxembourg 23-Aug-04 3370

India Fund Inc USA 23-Feb-94 1913

PCA India Equity Open Japan 30-Sep-04 1293

Aberdeen Gl-India Opportu-A2 Honk Kong 28-Mar-06 1269

HSBC India Open Japan 30-Nov-04 1268

Eaton Vance Greater India-B USA 02-May-94 1082

Nomura Indian Stock Fund Japan 22-Jun-05 1055

Blackrock India Stock Fund Japan 13-Dec-05 1022

 

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

Allocation USD Bln Rs. Crores

2% 17.76 – 20.72 82,567 – 95,849

5% 44.41 – 51.81 205,392 – 239,624

10% 88.82 – 103.60 410,783 - 479,247

*Source: RBI data-FY06, 1 USD = Rs.45.25

Why High Growth ?

Economy and investment styles

1 year 10 years

Developed Economy

MSCI USA Growth 9.84% 5.31%

MSCI USA Value 16.23% 6.51%

Emerging Economy

MSCI India Growth 29.04% 16.03%

MSCI India Value 27.20% 9.82%

Source: MSCI (Compounded & Annualised returns as on April 30, 2007 and in US$ terms)

Different styles are pertinent for the various stages of the economic/business cycle

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

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

• 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

CHANGING LIFESTYLES

DEMOGRAPHICS INVESTMENTS OUTSOURCINGNEW

TECHNOLOGIES

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

High Growth strategy

How the strategy would have worked with a focus on “high growth companies”

May 02 – Apr 07$ Q1 Q II Q III Q IV Q V

Earnings Revision Ratio

51.9% 51.0% 39.4% 35.1% 23.5%

Long Term PEG Ratio

54.2% 45.0% 50.1% 29.0% 26.3%

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.

High Growth Companies

Some well known examples from the last decade - .

1 year 3 years 5 years 7 years 10 years

Infosys 29.0 47.1 34.7 10.6 56.9Bharti Airtel 99.1 68.5 87.4 - -ABB 31.3 73.5 72.6 58.3 20.3HDFC 26.5 40.8 38.5 32.1 26.4Kotak Mahindra Bank

74.7 90.3 72.0 68.0 49.9

BSE Sensex 17.1 34.8 32.9 16.9 13.7

CNX Midcap 4.5 31.3 N.A N.A N.A

S&P CNX 500 12.1 30.9 34.3 17.8 17.0

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.

High Growth Companies Infosys

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

1996 2006 CAGR

Sales 89 9028 58.8%

PBIDT 34 3146 57.2%

PAT 21 2421 60.8%

Market Cap 359 81830 72.1%

RONW (%) 29.53 39.89

Rs. in Crs

High Growth Companies Bharti 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

High Growth Companies ABB

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.

1999 2006 CAGR

Sales 776 4274 27.6%

PBIDT 75 560 33.2%

PAT 37 340 37.2%

Market Cap 1036 15729 47.5%

RONW (%) 9.16 32.88

Rs. in Crs

High Growth Companies HDFC

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.

1996 2006 CAGR

Sales 970 4208 15.8%

PBIDT 931 4074 15.9%

PAT 196 1257 20.4%

Market Cap 3859 33342 24.1%

RONW (%) 16.52 30.11

Rs. in Crs

High Growth Companies Kotak Bank

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

2002 2006 CAGR

Sales 122 694 54.4%

PBIDT 134 542 41.8%

PAT 55 118 21.4%

Market Cap

845 8598 78.6%

RONW (%) 10.90 14.75

Rs. in Crs

Franklin India High Growth Companies FundBenefit from the fastest growing companies in India

Franklin India High Growth Companies Fund

Investment style is ‘growth’ & Blend of top-down and bottom-up approach of investing

An open end diversified equity fund that seeks to achieve capital appreciation through investments in Indian companies/sectors with high growth rates or potential

Type of instruments Normal Allocation#

Equity & Equity Linked Instruments 70% - 100%

Debt securities* and Money Market Instruments 0% - 30%

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%

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

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

High Growth – High returns

The impact of an extra 5% on an initial investment of Rs.1 lakh

% returns 1 year 3 years 5 years 7 years 10 years

10% 1.10 1.33 1.61 1.95 2.59 15% 1.15 1.52 2.01 2.66 4.0520% 1.20 1.73 2.49 3.58 6.19 25% 1.25 1.95 3.05 4.77 9.31

(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)

Longer the horizon, higher the potential

Volatility is part & parcel of stock market investing. Staying invested for a longer period reduces the risks

Maximum returns

Minimum returns

Average of rolling returns

Possibility of making money

Possibility of losing money

1 Year 199.4% -36.4% 34.9% 75.6% 24.4%3 Year 81.0% -9.6% 29.7% 86.3% 13.7%5 Year 50.9% 14.0% 28.2% 100.0% 0.0%7 Year 41.1% 9.5% 27.2% 100.0% 0.0%9 Year 40.9% 16.0% 28.4% 100.0% 0.0%

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.

Simulation for Bluechip Fund

Equity investing is attractive

* However investors are liable to pay securities transaction tax (STT). As per current tax laws

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

Why Franklin Templeton ?

Franklin Templeton Worldwide

# As on April 30, 2007

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

20%

57%

23%

23%

49%

28%

26%

41%

33%

46%

21%

33%

58%

15%

27%

58%

22%

20%

Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Apr-07

Equity Debt Cash

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*

Franklin Templeton in India

*# Source: AMFI Website (as on April 30, 2007)

Assets Under Management & Asset Mix (in Rs. Crs)

8193

13403

18492 17435

2306024510

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)

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

Investment process

4STE P Portfolio Construction

5STE P Portfolio and Risk Management

3STE P Stock Recommendations

1STE P Idea Generation

2STE P Business Analysis

Fund Facts

Minimum Investment Amount: Rs.5000/1

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)

Fund Managers: Sivasubramanian K.N & Anand Radhakrishnan

Options: Growth & Dividend Plan (Payout & Reinvestment options)

Systematic Investment Plan: Rs.1000 or more for atleast 12 months & all installments should be for the same amount (Only through ECS/Direct debit)

New Fund Offer : May 31, 2007 to June 29, 2007

New Fund Offer Price: Rs.10 plus applicable load

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

Thank You

*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.

Product Positioning

Product Positioning Investment Style

Franklin India Bluechip Fund Invests in large cap stocks Blend, bottom up

Franklin India Prima Fund Invests in mid and small cap stocks

Blend, bottom up

Franklin India Prima Plus Primarily large cap fund, with a marginal small/mid cap exposure

Blend, bottom up

Franklin India Opportunities Fund*

Takes concentrated stock exposure based on four themes

Blend, bottom up

Franklin India Flexi Cap Fund Invests in companies across market caps

Blend, bottom up

Templeton India Growth Fund Value fund, investing predominantly in large cap stocks

Value, bottom up

Templeton India Equity Income Fund

Focuses on Indian/overseas stocks that are attractive from a

dividend yield perspective

Value, bottom up

Franklin India High Growth Companies Fund (FIHGCF)

Invests in high growth companies across market caps

Growth, mix of top-down (macro analysis to identify

sectors) and bottom-up approach (micro analysis to

pick stocks within these sectors)

Product Positioning