Carnelian Capital Shift Strategy

Shift Strategy (PMS)

• Strategy designed to capture structural decadal shifts presenting large opportunity in
• Manufacturing led by conducive regulatory and global environment
• Tech evolution empowered by digitalization globally
• Concentrated QGARP (quality growth companies at a reasonable price) portfolio
• Blend of mid & small cap listed companies having
• niche core competence & large opportunity size
• Proven track record
• impeccable management capabilities
• Stock holding : 20-25 ; Benchmark against BSE 500 TRI
• Subjected to stringent Carnelian filters & forensic checks (CLEAR framework)

Pandemic accelerated 2 structural shifts

India on the cusp of manufacturing boom on account of

Govt. Reforms

• Focus on Atmanirbhar Bharat
• Manufacturing boost by production linked incentive schemes
• Tariff & non-tariff barriers
• State labour reforms

Cost Competitiveness

• Labour: 1/2-1/3x China
• Logistics & power costs = China
• Lowest tax rates globally @ 17%
• China’s cost advantages have significantly narrowed down

China + 1 Shift

• Led by anti China sentiments
• Over dependence on China to create huge opportunity for China +1

Strong Domestic Markets

• Domestic markets + exports/ imports = economies of scale

Government initiatives and reforms

Further impetus through tariff & non-tariff barriers

India hardly used non-trade tariff barriers like China/other countries which is set to change;

• No global tenders less than INR 200 cr
• No automatic FDI approval to 200 countries sharing borders
• Special registration required for participating in contracts with neighboring countries

Aided by cost competitiveness

China+1 shift will create big opportunities

Which sectors will benefit

Who will benefit – characteristics of companies

• Core competence/ niche capability
• Proven track record / platform
• Strong balance sheet
• Strong Governance
• Existing presence (market share)

Technology

Key emerging tech shifts accelerated post pandemic:

• Digitalisation
• Cloud Migration
• Software as a service
• IT services
• Tech enabled platform businesses

Technology – IT Services

• Covid has prompted companies worldwide to rethink & shift; Indian IT Tech companies an important clog in the wheel
• Demand for digital spending is “global” & supply is only “local”
• IT services exports industry to grow from USD 225bn in 2022 to USD 350bn by 2026
• 50% of the revenue getting spent as salaries/wages in the economy as first order effect which will boost consumption. Second and third order effect yet to follow.

Performance

Faster, Stronger, Cheaper

Holdings