Karma Fund,

L.P. - Series B

Fund Investment Objectives

Karma Select Strategy (Long Only) -- The Karma Funds are USD based long-biased private investment funds that focus on emerging markets equities in India [Series B only participates on the long side of the strategy]. Karma's strategy draws upon proprietary research, an understanding of industry and market forces, and extensive buy and sell-side, local and global contacts. We are assured a flow of ideas from our relationships with private equity fund managers and industry leaders and local brokers. The investment decision process is based largely on bottom-up stock selection: finding under-valued or over-valued ideas and determining reasons for re-rating or de-rating. The investment manager uses proprietary research to generate original fundamental long and short ideas. The focus is on finding an "edge", finding stocks with asymmetric risk-reward characteristics, and arbitraging valuation anomalies. Often researching and identifying stocks that are relatively under-followed create this edge. Long ideas in the portfolio are screened on the basis of their attractive growth characteristics, dividend discount models, dividend yield, and sum-of-the-parts valuation. They could also be turnaround Situations. Long ideas in the portfolio could also result from certain themes identified by the fund manager over-laid with a projected macro scenario. In each case, whether value or growth, we apply the valuation methodology based on the way the stock has previously been priced. We then ask ourselves why the valuation discrepancy exists and what factors would cause it to change. Second, we analyze the fundamentals of the company and the ability of its management team to deliver our estimated scenario. We collaborate with a number of industry and market sources to derive the level of confidence we need to make a call on the stock. We believe that our ability to gain, analyze and process information, ahead of our competitors, gives us an advantage. We also believe that the greater the number of inputs and data-points, the greater our ability to withstand market induced volatility. We strive to balance the above and stay nimble and opportunistic. We expect to take positions in small-cap and mid-caps stocks, which may be under-researched and relatively illiquid but have the potential to deliver "super-normal" returns. It has been our experience that liquidity in our markets tends to be elastic and stocks tend to trade more once "discovered" by the market.