Annual Report - India Infoline - 2008-2009

INDIA INFOLINE LIMITED

ANNUAL REPORT 2008-2009

DIRECTOR'S REPORT

To
The Members

Your Directors have pleasure in presenting the 14th Annual Report along
with the audited statements of accounts of your Company for the financial
year ended March 31, 2009.

I. Financial results:

A snapshot of the financial performance of your Company and its major
subsidiaries for the financial year 2008-09 is as under:

(Rs. mn)

Revenues Profit before Profit after
interest, tax
depreciation
and tax

India Infoline Limited 5,716.0 1,848.8 1,058.2

India Infoline Investment
Services Limited 1,574.0 1,042.0 630.2

India Infoline Marketing
Services Limited 880.4 49.6 (7.8)

Moneyline Credit Limited 803.6 256.4 59.9

India Infoline Insurance
Services Limited 416.1 72.7 9.2

India Infoline Commodities
Limited 228.5 23.7 18.3

IIFL Wealth Management
Limited 144.4 (37.3) (21.8)

India Infoline Insurance
Brokers Limited 75.3 8.6 5.5

IIFL Inc 23.0 (20.3) (20.4)

IIFL (Asia) Pte Limited 23.0 (105.6) (107.9)

India Infoline Media and
Research Services Limited 17.2 0.4 0.1

IIFL Realty Limited 5.7 4.2 (1.3)

India Infoline Housing
Finance Limited 5.2 3.3 0.8

India Infoline
Distribution Company Limited 0.7 0.6 0.2

IIFL Capital Limited - 0.0 0.0

IIFL Ventures Limited - (0.6) (0.6)

India Infoline Commodities
DMCC - (7.9) (8.3)

Inter-company adjustments (282.2) (216) (40.9)

Aggregate 9,630.9 2,922.6 1,573.4

A snapshot of the stand-alone financial performance of India Infoline
Limited is as under:

(Rs. mn)

2008-2009 2007-2008

Gross total income 5,716.0 6,724.4

Profit before interest, depreciation
and taxation 1,848.8 2,772.5

Interest and financial charges 78.5 211.6

Depreciation 255.6 194.4

Profit before tax 1,514.7 2,366.5

Taxation - Current 480.8 793.4

- Deferred (12.3) (20.3)

- Fringe benefit tax 10.3 10.9

- Short or excess provision of income tax (22.3) 5.3

Net profit for the year 1,058.2 1,577.2

Less: Extraordinary items (net of tax) - (290.4)

Less: Appropriations:

Interim dividend 794.5 -

Final dividend - 342.6

Dividend distribution tax 135.0 58.2

Transfer to general reserve 105.8 131.0

Add: Balance brought forward from the
previous year 1,229.1 474.1

Balance to be carried forward 1,252.0 1,229.1

A snapshot of the consolidated financial performance is as under:

(Rs. mn)

2008-2009 2007-2008

Gross Total Income 9,630.9 10,235.9

Profit Before Interest, Depreciation
and Taxation 2,922.7 4,022.2

Interest and Financial Charges 331.8 912.6

Depreciation 396.0 282.0

Profit Before Tax 2,194.9 2,827.6

Taxation - Current 653.7 948.3

- Deferred (30.9) (82.3)

- Fringe Benefit Tax 27.9 25.1

- Short or excess provision of Income-Tax (29.2) 6.9

Net Profit for the year 1,573.4 1,929.6

Less: Extraordinary items (Net of tax) - (290.4)

Net profit before minority interest 1,573.4 1,639.2

Less : Minority Interest (125.2) (40.4)

Less: Appropriations:

Interim dividend 794.5 -

Proposed final dividend - 342.6

Dividend distribution tax 135.0 58.2

Transfer to general reserve 105.8 131.0

Transfer to special reserve 139.0 63.2

Add: Balance brought forward from
previous year 1,813.3 809.5

Balance to be carried forward 2,087.2 1,813.3

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II. Review of operations:

Last year, sub-prime crisis in USA caused the global economy to decelerate.
This impacted Indian economy as well and capital markets in India witnessed
unprecedented volatility. Your Company has been able to contain the impact
of the negative environment and has emerged as a leading player in the
Indian financial services sector. On a consolidated basis, your Company's
income fell marginally by 5.9 per cent to Rs 9,630.8 mn and profit after
tax before extra ordinary items fell 4.0 per cent to Rs 1573.4 mn. This
performance is satisfactory given the unfavourable operating environment.

During the year, income from the core business of equities broking fell by
9.5 per cent to Rs 5,333.9 mn whereas income from financing and investment
activities registered a healthy growth of 37.0 per cent at Rs 2,654.1 mn.
Income from online and other media fell by 9.0 per cent to Rs 712.7 mn
whereas income from Life Insurance distribution fell by 54.8 percent to
Rs.481.5 mn. Income from merchant banking activities fell by 85.5 per cent
to Rs 23.3 mn and from wealth and mutual funds advisory fell by 4.0 per
cent to Rs 183.4 mn. Also, Commodities broking income registered a healthy
growth of 30.9 percent to Rs 217.8 mn.

During the year 2008-09, your Company received the prestigious Best
broker-India' award from Finance Asia and was also named the 'Most improved
broker-India' by Asiamoney. Dun & Bradstreet too, conferred upon your
Company the Fastest growing large broking house' award.

Your Company continued strengthening its distribution network and by the
end of the year had 1,361 business locations spread across 428 cities and
towns. The total employee strength of your Company and its subsidiaries was
8,015 as on March 31, 2009.

III. Key Initiatives:

Your Company took several new initiatives towards employees' skill
upgradation, cost optimisation, productivity improvement and brand
positioning. The content, methodology and delivery of the training modules
were improved. A financial advisory module was developed to train staff
across various businesses and channels. A pan-India quality initiative was
undertaken to standardise the look and feel of branches.

A state-of-the-art facility was commissioned in Chennai for back office
operations. Already, a significant portion of back office, MIS and call
center operations have been migrated to the Chennai facility. In the long
term, this migration is expected to result in sizeable cost savings.

Your Company launched a new advertisement campaign, captioned Things Beyond
Money, putting in perspective your Company's tag line -'Its all about
money, honey!' There are many things in life more important than money
including daughter's marriage, children's education, holidays, among others
- all of them need money to accomplish and one needs to be careful about
how to manage and grow money. Your Company has proven expertise in managing
money, leveraging its core strength of research.

Your Company's institutional and retail research products were appreciated
by their respective target audiences. In-depth and thematic printed reports
on politics, rural India, infrastructure, soft commodities, utilities and
India warming were well received by the clients. The retail research team
launched a comprehensive daily report named Market Mantra, which has become
a must for customers. The international research team launched its first
product on India and China captioned 'INCH - two bright spots in a gloomy
world'.

Your Company's wealth management team made significant progress by
launching 'Family Office' and other products. The personal loans and
mortgages business was deliberately put on hold from September 2008 in view
of adverse conditions in the credit market. While the personal loans
business is still suspended, the mortgages business has been restarted.
Your Company's investment banking business faced significant headwinds as
the IPO market completely dried up in the face of adverse market
conditions.

Your Company now has offices in New York, Singapore and Dubai representing
an increasing international footprint.

Your Company received an in-principle approval dated October 22, 2008 from
the Securities Exchange Board of India (SEBI) to register the proposed
mutual fund company. The subsequent process has been initiated and
requisite documents have been furnished to the SEBI Further, India Infoline
Insurance Brokers Limited, a step down subsidiary company of India Infoline
Limited, received the license dated November 27, 2008, from the Insurance
Regulatory Development Authority (IRDA) to act as a direct broker.
Accordingly, the step down subsidiary pursuing the business of a corporate
agency, surrendered the Corporate Agency license to IRDA. Also, India
Infoline Housing Finance Limited, the step down subsidiary of India
Infoline Limited, received the registration from the National Housing Bank
(NHB) during the year under review and the same was intimated to the
Exchanges on February 17, 2009.

IV. Buy back:

The Board of Directors in their meeting held on November 29, 2008, approved
the proposal to buy back the equity shares of your Company. The Board
decided to buy back maximum of 10 per cent of the total paid-up equity
share capital for an amount not exceeding Rs 989.1 mn, subject to a buy
back of minimum 5,000,000 equity shares and maximum of 60,000,000 equity
shares at a price not exceeding Rs 43.20 per share. As on March 31, 2009,
2,557,915 equity shares were bought back at an average price of Rs 42.17
per share.

V. Dividend on Equity Shares:

Your Company declared an interim dividend of Rs 2.8 per share of Rs 2
(previous year nil) per share on January 21, 2009 and the same has been
duly paid. The same is considered final. The total dividend paid in the
previous year was Rs 1.2 per share. The total outflow on account of
dividend payout (including dividend distribution tax and surcharge) was
Rs.929.2 mn (previous year Rs 400.8 mn).

VI. Changes in Equity Capital:

During the current year, the following changes were effected in the equity
capital of your Company a) Your Company allotted 443,250 equity shares
pursuant to exercising of options by the employees under the Employees
Stock Option Plan (ESOP) 2005.

b) Your Company sub-divided the face value of its shares from Rs 10 to
Rs.2. Your Company obtained the approval of the shareholders in the Annual
General Meeting of the Company held on July 7, 2008. The same was effected
on August 18, 2008.

c) 11,000,000 equity warrants were issued on preferential basis to seven
identified persons including promoters and others on July 4, 2007 and
7,500,000 equity warrants issued on preferential basis to India Infoline
employee welfare trust on November 1, 2007, lapsed during the year due to
surrender/non-exercise of warrants.

VII. Deposits:

During the period under review, your Company has not accepted/renewed any
deposits within the meaning of Section 58 A of the Companies Act, 1956 and
the rules thereunder and as such, no amount of principal or interest was
outstanding as on the balance sheet date.

VIII. Subsidiary Companies:

As on March 31, 2009, your Company's subsidiaries and step down
subsidiaries are as follows:

Name of the Company

1. India Infoline Investment Services Limited
2. Moneyline Credit Limited
3. India Infoline Distribution Company Limited
4. India Infoline Housing Finance Limited
5. India Infoline Marketing Services Limited
6. India Infoline Insurance Services Limited
7. India Infoline Insurance Brokers Limited
8. India Infoline Commodities Limited
9. India Infoline Media and Research Services Limited
10. IIFL Realty Limited
11. IIFL Wealth Management Limited
12. IIFL Ventures Limited
13. IIFL Capital Limited
14. India Infoline Commodities DMCC
15. IIFL (Asia) Pte Limited
16. IIFL Capital Pte Limited
17. IIFL Securities Pte Limited
18. IIFL Inc

Pursuant to the approval of the central government under Section 212(8) of
the Companies Act, 1956, copies of the balance sheet, profit and loss
account, report of the Board of Directors and Report of the Auditors of
each of the subsidiary Companies have not been attached to the accounts of
your Company for financial year 2008-09. Your Company will make these
documents/details available upon request by any member of your Company.
These documents/details will also be available for inspection by any member
of your Company at its registered office and also at the registered offices
of the concerned subsidiaries. As required by Accounting Standard-21 (AS-
21), issued by the Institute of Chartered Accountants of India, your
Company's consolidated financial statements included in this Annual Report
incorporates the accounts of its subsidiaries. A summary of key financials
of your Company's subsidiaries is also included in this Annual Report.

IX. Management's discussion and analysis The Management's discussion and
analysis report for the year under review as required under Clause 49 of
the Listing Agreement, is given as a separate statement in the Annual
Report.

X. Disclosure of Employee Stock Options Besides the existing Employees
Stock Option Scheme 2005 (ESOP 2005) and Employees Stock Options Scheme
2007 (ESOP 2007), providing for 12.5 mn and 7.5 mn stock options
respectively, your Company also implemented an Employees Stock Option
Scheme 2008 (ESOP 2008), under the SEBI (Employee Stock Option Scheme and
Employee Stock Purchase Scheme) guidelines, 1999, as approved by
shareholders on December 15, 2008. The ESOP 2008 provides for 50 mn stock
options.

During the year, your Company granted 49,100,000 stock options (1,655,000
stock options granted in the previous year) to the employees under its ESOP
2007 and ESOP 2008 out of the ESOP pool consisting of un-issued and lapsed
options.

Following are the disclosures in terms of Clause 12 of the SEBI (Employee
Stack Option Scheme and Employee Stack Purchase Scheme) Guidelines, 1999:

Particulars ESOP 2000 ESOP 2005

Options outstanding as at the 10,000 11,512,500
beginning of the year

a. Options granted during - -
the year

b. Pricing Formula Rs. 2 The exercise price
may be decided by the
compensation committee
in accordance with the
Securities and
Exchange Board of
India (Employee Stock
Option Scheme and
Employee Stock
Purchase Scheme)
guidelines and any
amendments thereto,
subject to a maximum
discount of 35 per
cent on the market
price as on the date
of grant or the
reprising, as may be
decided by the
compensation
committee.

c. Options Vested - 1,877,300

d. Options Exercised - 443,250

e. Total no. of shares arising
as result of exercise of - 443,250
Options

f. Options lapsed * - 3,321,750

g. Variation in terms of Options - -

h. Money realised by exercise
of options (in Mn) - Rs 13.3 mn

i. Total number of options in 10,000 7,747,500
force

Particulars ESOP 2007 ESOP 2008

Options outstanding as at the 3,220,000 -
beginning of the year

a. Options granted during 4,100,000 45,000,000
the year

b. Pricing Formula The exercise The exercise price
price may be may be decided by the
decided by the compensation committee
compensation in accordance with the
committee in Securities and Exchange
accordance with Board of India
the Securities (Employee Stock Option
and Exchange Scheme and Employee
Board of India Stock Purchase Scheme)
(Employee Stock guidelines and any
Option Scheme amendments thereto,
and Employee subject to a maximum
Stock Purchase discount of 35 per cent
Scheme) on the market price
guidelines and as on the date of
any amendments grant or reprising,
thereto, subject as may be decided by
to a maximum the compensation
discount of 35 committee.
per cent on the
market price as
on the date of
grant or
reprising, as
may be decided
by the
compensation
committee.

c. Options Vested 10,000 -

d. Options Exercised - -

e. Total no. of shares arising
as result of exercise of - -
Options

f. Options lapsed * 3,220,000 -

g. Variation in terms of Options - -

h. Money realised by exercise
of options (in Mn) - -

i. Total number of options in 4,100,000 45,000,000
force

* Lapsed options include options surrendered and cancelled/lapsed

j. Employee wise details of options granted to:

Senior Management Mr. Kranti Sinha, Independent Director 65,000

Mr. A.K. Purwar, Independent Director 65,000

Mr. Nilesh Vikamsey, Independent Director 65,000

Mr. Bharat Parajia 10,000,000

Mr. H. Nemkumar 10,000,000

Mr. Vasudev Jagannath 8,000,000

Mr. Aniruddha Dange 8,000,000

- any other - -
employee who
receives a grant
in any one year
of option
amounting to 5
per cent or more
of option
granted during
that year

- employees who Mr. Bharat Parajia 10,000,000
were granted
option, during Mr. H. Nemkumar 10,000,000
any one year,
equal to or Mr. Vasudev Jagannath 8,000,000
exceeding 1
per cent of Mr. Aniruddha Dange 8,000,000
the issued
capital
(excluding
warrants and
conversions)
of the Company
at the time of
grant

k. Diluted earnings per share pursuant to issue of shares on exercise of
options calculated in accordance with AS 20 earnings per share':

I. Proforma adjusted net income and earning per share:

Particulars (Rs. Mn)

Net income as reported 1,058.3

Add: intrinsic value compensation cost (less - reversal) 65.1
Less: Fair value compensation cost 197.6
Adjusted proforma net income 925.8
Earning per share: Basic
As reported 3.71
Adjusted proforma 3.24
Earning per share: Diluted
As reported 3.48
Adjusted proforma 3.04

m. Weighted average exercise price of ESOP 2007 ESOP 2008
options granted during the year whose

(a) Exercise price equals market price 50.01 45.86

(b) Exercise price is greater than market NA NA
price

(c) Exercise price is less than market price NA NA

Weighted average fair value of options
granted during the year whose:

(a) Exercise price equals market price 25.53 24.37

(b) Exercise price is greater than market NA NA
price

(c) Exercise price is less than market NA NA
price

n. Description of method and : The fair value of the options
significant assumptions used to granted has been estimated using
estimate the fair value of options the Black-Scholes option pricing
model. Each tranche of vesting was
considered as a separate grant far
the purpose of valuation. The
assumptions used in the estimation
of the same have been detailed
below.

Weighted average values far options granted during the year:

Variables ESOP 2007 ESOP 2008

Stock price 54.55 53.11

Volatility 80.45% 80.88%

Risk-free rate 5.66% 5.55%

Exercise price 50.01 45.86

Time to maturity 3.75 3.15

Dividend yield 6.11% 6.11%

Stock Price:

Closing price on NSE as on the date of grant has been considered for
valuing the grants.


Volatility:

We have considered the historical volatility of the stock from the date of
listing of the shares of the Company on NSE till the date of grant to
calculate the fair value.

Risk-free rate of return:

The risk-free interest rate being considered for the calculation is the
interest rate applicable for a maturity equal to the expected life of the
options based on the zero-coupon yield curve for government securities.

Exercise Price:

The exercise price may be decided by the compensation committee in
accordance with the Securities and Exchange Board of India (Employee Stock
Option Scheme and Employee Stock Purchase Scheme) guidelines and any
amendments thereto, subject to a maximum discount of 25 per cent on the
market price.

Time to Maturity:

Time to maturity/expected life of options is the period far which the
Company expects the options to be live. The minimum life of a stock option
is the minimum period before which the options cannot be exercised and the
maximum life is the maximum period after which the options cannot be
exercised.

Expected dividend yield:

Expected dividend yield was calculated as an average of dividend yields for
the four financial years from 2005-06 to 2008-09.

XI. Directors:

Appointment of Mr. A.K. Purwar, who was appointed as an Additional Director
of your Company in March 2008, was confirmed in the Annual General Meeting
of the members of your Company held on July 7, 2008.

In accordance with Sections 255 and 256 of the Companies Act, 1956, read
with Article 137 of the Articles of Association of the Company, Mr. Sat Pal
Khaftar, retires by rotation and being eligible, offers himself for re-
appointment at the ensuing Annual General Meeting of your Company.

Mr. Nirmal Jain, Chairman and Managing Director and Mr. R. Venkataraman,
Executive Director, whose term shall expire on April 22, 2010, the Board of
Directors in their meeting held on April 28, 2009, have decided to re-
appoint them for another term of five years subject to the approval of the
shareholders in the forthcoming Annual General Meeting scheduled in July
17, 2009.

Brief profiles of the Directors proposed to be appointed / re-appointed,
qualification, experience and the names of the Companies in which they hold
directorship, membership of the Board committees, as stipulated in the
Clause 49 of the Listing Agreement are provided as an annexure to the
notice convening the Annual General Meeting.

XII. Directors' Responsibility Statement As required by Section 217 (2AA)
of the Companies Act, 1956, your Directors confirm that:

(a) In the preparation of the annual accounts, the applicable accounting
standards have been followed.

(b) Appropriate accounting policies have been selected and applied
consistently and that judgments and estimates made are reasonable and
prudent so as to give a true and fair view of the state of affairs of your
Company as on March 31, 2009, and of its profit for the year ended on that
date.

(c) Proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, far safeguarding the assets of your Company and for
preventing and detecting fraud and other irregularities.

The annual accounts have been prepared on an ongoing concern basis.

XIII. Conservation of energy, technology absorption, foreign exchange
earnings and outgo The additional information required in accordance with
sub-section (1) (e) of Section 217 of the Companies Act, 1956, read with
the Companies (disclosure of particulars in the report of the Board of
Directors) Rules, 1988, is appended to and forms part of this report.

XIV. Corporate Governance Report The Securities and Exchange Board of India
(SEBI) prescribed Corporate Governance standards. Your Directors reaffirm
their commitment to these standards and this Annual Report carries a
section on Corporate Governance.

A certificate from the statutory auditors, M/s Sharp & Tannan Associates,
Chartered Accountants, regarding compliance with the conditions of
Corporate Governance as stipulated under clause 49 of the listing agreement
is annexed herewith.

XV. Particulars of Employees:

In accordance with the provisions of Section 217(2A) of the Companies Act,
1956, and the rules framed thereunder, the names and other particulars of
employees are set out in the annexure to the Directors' Report. In terms of
the provisions of Section 219 (1) (b) (iv) of the Companies Act, 1956, the
Directors' Report is being sent to all the shareholders of your Company
excluding the aforesaid information. The annexure is available for
inspection at the registered office of your Company. Any shareholder
interested in the said information may write to the Company Secretary at
the registered office of your Company.

XVI. Statutory Auditors:

M/s. Sharp & Tannan Associates, Chartered Accountants, Mumbai, retire at
the ensuing Annual General Meeting and being eligible, offer themselves for
re-appointment. M/s Sharp & Tannan Associates have sought reappointment and
confirmed that their reappointment shall be within the limits of Section
224 (1 B) of the Companies Act, 1956. The necessary eligibility certificate
under Section 224(1 B) of the Companies Act, 1956, was received from them.
The Audit Committee and Board of Directors recommend the appointment of M/s
Sharp & Tannan Associates, Chartered Accountants, as the auditors of your
Company.

The notes to the accounts referred to in Auditors Report are self-
explanatory and therefore do not call far any further comments.

XVII. Appreciation:

Your Directors place on record their sincere appreciation far the
assistance and guidance provided by the government, regulators, stack
exchanges, other statutory bodies and your Company's bankers for the
assistance, co-operation and encouragement extended to your Company.

Your Company's employees are instrumental in your Company scaling new
heights, year after year. Their commitment and contribution is deeply
acknowledged. Your involvement as shareholders is also greatly valued. Your
Directors look forward to your continuing support.

On behalf of the board

Nirmal Jain
Chairman and Managing Director

Dated : April 28, 2009

Registered Office:

75, Nirlon Complex,
Off Western Express Highway,
Goregaon (East), Mumbai-400 063.

Information related to conservation of energy, technology absorption and
innovation and foreign exchange earnings/outgo forming part of the
Directors' Report in terms of Section 217(1)(e) of the Companies Act, 1956.

(a) Conservation of Energy:

Your Company is engaged in providing financial services and as such its
operations do not account for substantial energy consumption. However, your
Company is taking all possible measures to conserve energy. Several
environment friendly measures have been adopted by your Company such as:

* Installation of capacitors to save power.

* Installation of TFT monitors to save power.

* Automatic power shutdown of idle monitors.

* Creating environmental awareness by way of distributing relevant
information in electronic form.

* Minimising usage of air-conditioning.

* Shutting off the lights when not in use.

* Education and awareness programs for employees.

The management frequently puts circulars on the corporate intranet, TWIN,
for the employees, educating them on ways and means to conserve electricity
and other natural resources and ensures strict compliance with the same.

(b) Technology absorption and innovation The management understands the
importance of technology in the business segments it operates and lays
utmost emphasis on the systems development and the use of cutting-edge
technology available in the industry. The management keeps itself abreast
with technological advancements in the industry and ensures continued and
sustained efforts towards absorption of technology, adaptation as well as
development of the same to meet business needs and objectives.

Software:

Your Company has developed and deployed the Trader Terminal, its
proprietary trading platform, which is more user-friendly and has features
that are superior to the other trading platforms available in the market. A
browser-based trading platform using NET technology which consumes very
less bandwidth and at the same time provides its users a rich experience,
has been developed. Back office software was developed in-house, also on
.NET technology that gives your Company more operational flexibility and
advantages. We successfully migrated few back office operations to remote
locations with in-house developed software. The management believes in
making the best use of technology and available resources.

Network:

Your Company invested considerable resources in deploying the latest
technologies in areas of wide-area networking using Multi Protocol Label
Switching (MPLS) video communications, Voice over Internet Protocol (VolP),
automated diallers and other Customer Relationship Management (CRM) tools
and software. Storage consolidation using EMC products helped us meet the
ever growing demand on performance and better manageability. Your Company
could successfully consolidate its core network using CISCO high-end
switching and routing that resulted in zero downtime and better
performance.

(c) Foreign Exchange Earnings/Outgo:

a) The foreign exchange earnings of your Company were Rs 0.6 mn.

b) The foreign exchange expenditure was Rs 41.6 mn.

(d) Research and Development (R&D):

Your Company is engaged in financial services and so there are no
activities in the nature of research and development involved in the
business.

Amount of expenditure incurred on Research and Development:

Particulars Mar 31, 2009 Mar 31, 2008

Capital NIL NIL
Revenue NIL NIL

Management's discussion and analysis of financial condition and results of
operations (as per consolidated Indian GAAP):

In this section, the discussion pertains to the consolidated financials of
India Infoline Limited along with all its subsidiaries (as depicted in the
chart below). As a significant part of your Company's business is conducted
through its subsidiaries, your Directors believe that the consolidated
accounts provide a more accurate representation of the performance of your
Company and hence we have used it in the management's discussion and
analysis.

India Infoline Ltd (IIL):

India Infoline Investment Services Ltd. 100.00%

Moneyline Credit Ltd. 76.74%
India Infoline Housing Finance Ltd. 76.74%
India Infoline Distribution Co. Ltd. 76.74%

India Infoline Marketing Services Ltd. 88.73%

India Infoline Insurence Services Ltd. 88.73%
India Infoline Insurance Brokeers Ltd. 88.73%

India Infoline Commodities Ltd. 100.00%
India Infoline Media & Research Services Ltd. 100.00%
IIFL Capital Ltd. 100.00%
IIFL Reality Ltd. 100.00%
IIFL [Asia] Pte Ltd. 100.00%
IIFL Wealth Management Ltd. 90.00%
IIFL Ventures Ltd. 100.00%
IIFL Inc. 100.00%
India Infoline Commodities, DMCC. 100.00%

Figures in per cent indicate extent of ownership of IIL in the subsidiary.

Sources of funds:

Share capital:

Your Company's share capital diminished from Rs 571.0 mn in 200708 to
Rs.566.8 mn during the year under review, as a net result of:

* Increase in the share capital due to the exercise and allotment of
443,250 equity shares of Rs 2 each to employees under Employee Stock
Options Scheme 2005.

* Decrease in the share capital due to buy back of 2,557,915 shares of Rs 2
each at an average price of Rs 42.23. Your Company utilised Rs 108.0 mn for
the buy-back.

As on March 31 2009 2008

Equity Rs. mn Equity Rs. mn
shares no. shares no.

Share capital - 285,514,665 571.0 250,835,990 501.7
beginning of the year

OCB-DSPML - - 2,941,175 5.9

Promoter warrants - - 13,000,000 26.0

ESOP 2005 plan 443,250 0.9 237,500 0.4

Preferential
allotment - Orient
Global - - 18,500,000 37.0

Buyback (2,557,915) (5.1) - -

Share capital -
end of the year 283,400,000 566.8 285,514,665 571.0

Reserves and surplus:

Your Company's net worth (excluding minority interest) grew from
Rs.14,891.8 mn in 2007-08 to Rs 15,447.2 mn in 2008-09.

Your Company's book value per share rose from Rs 52.16 per share to
Rs.54.51 per share (excluding minority interest). Summary of reserves and
surplus and share premium account is provided in the table below:

(Rs. mn)

Balance as Additions Deductions/ Balance as
on March adjustments on March
31, 2008 31, 2009

Securities premium account 11,530.6 146.8 117.5 11,559.9

General reserve 214.0 105.8 - 319.8

Capital reserve - 484.0 - 484.0

Capital redemption reserve - 5.1 - 5.1

Special reserves 81.7 139.0 - 220.7

Employee stack options
outstanding 70.9 - 48.5 22.4

Foreign exchange
fluctuation reserve 12.6 55.0 - 67.6

Profit and loss account 1,813.3 273.8 - 2,087.1

13,723.1 1,209.5 166.0 14,766.6

Share premium: (Rs. mn)

As on March 31 2009 2008

Balance - beginning of year 11,530.6 1,783.7

Add : Premium an OCB conversion by DSP ML - 94.1

Add : Premium on Promoter Warrants - 416.0

Add : Premium an ESOP Exercise 12.4 6.7

Add : Premium on Preferential allotment
to Orient Global - 5,513.0

Add : Proceeds from issuance of minority
share capital 134.4 3,717.1

Less : Buy Back (102.9) -

Less : Transfer to Capital Redemption
Reserve (5.1) -

Less : Share Issue Expenses (9.5) -

Balance - end of year 11,559.9 11,530.6

Loans:

Rs 1.0 Ion of secured loans outstanding as on March 31, 2008, were repaid
during the year. Secured loans of Rs 17.0 mn outstanding as on March 31,
2009, were from equipment suppliers.

Your Company's unsecured loans were also largely repaid to a large extent
and were significantly lowered from Rs 5,650.0 mn as on March 31, 2008, to
Rs 501.0 mn as on March 31, 2009.

The repayment was mostly made out of the surplus cash and cash equivalents
available with your Company.

Application of funds:

Fixed assets:

During the year, your Company's gross black rose by 138.1 per cent to
Rs.3,509.3 mn from Rs 1,473.6 mn. The increase in gross black is on account
of commissioning of central processing unit and call center at Chennai
which is your Company's own property. Other additions were due to
investments in new office properties in Pune, Rajkot and Ahmedabad,
investments made in technology and for up-gradation of existing offices.
The total additions to land and buildings were Rs 1,381.4 mn during the
year.

A statement of movement in fixed assets is given below:

Fixed assets: (Rs. mn)

As on March 31 2009 2008 Growth

Computers 517.3 508.8 2%

Electrical Equipment 167.6 98.5 70%

Furniture & Fixture 865.6 493.2 76%

Office Equipment
(Air Conditioners, etc.) 455.7 272.4 67%

Premises 1,233.0 14.2 8583%

Land 162.6 -

Vehicles - 0.8 100%

Software 80.1 58.3 37%

Non Compete Fees 27.4 27.4 0%

Gross Block 3,509.3 1,473.6 138%

Less : accumulated
depreciation 728.9 495.7 47%

Net Block 2,780.4 977.9 184%

Add : capital work in
progress 71.1 1,214.1 -94%

Net fixed assets 2,851.5 2,192.0 30%

Depreciation:

as % of revenue 4.1% 2.8%

as % of average gross block 15.9% 23.6%

Accumulated depreciation:

as % of gross black 20.77% 33.6%

Investments:

Your Company had investments of Rs 3,149.7 mn as of March 31, 2009 as
against Rs 9,908.5 mn in March 31, 2008. As on March 31, 2009, Rs 3,032.7
mn was deployed in fixed income schemes of various mutual funds, Rs 100.2
mn in a private equity investment and Rs 16.8 mn in 130,000 shares of
Bombay Stock Exchange Ltd.

A detailed table of cash and cash equivalents given below:

Cash and cash equivalents:

(Rs. mn)

As on March 31 2009 2008

Cash balance 3.3 7.9

Bank balances in India

Current accounts 3,920.9 1,349.3

Deposit accounts 1,761.8 1,921.5

Unclaimed dividend account 3.5 0.7

Bank balances held by subsidiaries
outside India Current accounts 71.4 14.9

Deposit accounts 508.4 270.5

Total cash and bank balances 6,269.3 3,564.8

Deposits (reported under 'loans and
advances') 295.9 228.2

Investment in fixed income schemes
of mutual funds 4,348.5 5,884.3
(reported under 'investments/stack
in trade')

Investment in certificate of deposits
(reported under 'investments') - 3,660.0

Total cash and cash equivalents 10,913.7 13,337.3

Cash and equivalents/total assets 38.3% 41.2%

Cash and equivalents/revenues 113.3% 130.3%

Deferred tax assets and liabilities:

We calculated our deferred tax assets and liabilities as per the provisions
of the Income Tax Act, 1961.

Working capital:

Your Company's working capital stood at Rs 12,211.8 mn in 2007-08 and
Rs.12,967.8 mn in 2008-09. There was a significant increase in available
cash balance largely due to reduction in receivables. Cash and bank balance
stood at Rs 3,564.8 mn in 2007-08 and Rs 6,269.2 mn in 2008-09. Sundry
debtors registered a decline due to lower activity in equity broking
business. Stock in hand includes cash stocks, which are mostly hedged. This
position shows the functioning of our arbitrage desk. Loans and advances of
Rs 13,618.3 mn mainly comprises personal loans and mortgages, margin
funding and loans against shares/debentures of Rs 9,560.4 mn, Rs 2,229.3 mn
as advance tax payments and tax deducted at source and the balance on
account of deposits, additional capital deposited with exchanges among
others.

Current liabilities as on March 31, 2008, were Rs 6,014.3 mn and Rs.7,429.9
mn on March 31, 2009. Provisions stood at Rs 1920.0 run in 2007-08 and Rs
1968.7 mn in 200809. Provisions for gratuity and leave encashment were made
in line with valuation done by relevant experts. There was no final
dividend payment for the financial year 2008-09 and therefore no provision
for final dividend or dividend distribution tax.

The stand-alone financial results of India Infoline Limited (as per Indian
GAAP):

(Rs. mn)

2008-2009 2007-2008

Income:

Equity brokerage and related income 5,311.6 5,896.6
Wealth and mutual fund advisory 87.8 190.4
Merchant banking income 23.3 74.1
Other income 293.4 563.3
Total income 5,716.1 6,724.4

Expenditure:

Direct cost 1,478.3 1,666.2
Employee cost 1,434.2 1,347.9
Administration and other expenses 954.7 937.8
Interest expenses 78.5 211.6
Depreciation and amortisation 255.6 194.4
Total expenditure 4,201.3 4,357.9

Income (as per the Consolidated Indian GAAP):

The following table sets forth the contribution of the different components
of our consolidated revenue.

(Rs. mn)

Particulars 2008-2009 2007-2008

Equities brokerage and related 5,333.9 5,896.6
Financing and investment 2,654.1 1,937.5
Life insurance distribution 481.5 1,065.5
Marketing and online media 712.7 782.9
Commodities brokerage and related 217.8 166.4
Wealth and mutual fund advisory 183.4 190.9
Merchant banking 23.3 161.4
Others 24.2 34.7
Total income 9,630.9 10,235.9

Equities brokerage and related income:

It comprises income generated from broking activities in the cash and
derivatives segments of both the exchanges, BSE and NSE. During the year,
your Company's revenue from this stream registered a decline of 9.5 per
cent over the previous year to Rs 5,333.9 mn, in line with market
conditions. However, your Company's market share on the National Stock
Exchange rose from 3.40 per cent to 3.76 per cent due to continued focus on
customer acquisition and delivery of superior product to the customers.
During the year, your Company's client base increased from 0.44 run in
2007-08 to 0.60 mn. As on March 31, 2009, your Company had 1,361 business
locations spread over 428 cities and towns across India.

Financing and investing income The income from financing and investment
stood at Rs 2,654.1 mn during the year, up 37 per cent y-o-y over 2007-08
constituting 27.6 per cent of total income. Your Company's product
offerings include loan against shares, loan to promoters and loan against
commercial and residential property as collaterals. Your Company
temporarily suspended its personal loans, business loans as well as retail
mortgages in September 2008 in view of adverse credit market conditions.
Your Company's portfolio stood at Rs 9.6 bn as on March 31, 2009 comprising
Rs 1.1 bn loan against shares, Rs 5.5 bn of mortgages/loan against
property, Rs 1.8 bn of personal loan/business loan and Rs 1.2 bn towards
margin funding. Your Company has also provided Rs 102.1 mn of mark to
market loss on its portfolio of income mutual funds, which suffered
significant erosion in NAV in the last quarter due to increase in yield on
government securities and PSU bonds.

Life insurance distribution income This income is generated from the sale
of life insurance policies as corporate agent/broker of insurance
companies. India Infoline Insurance Brokers Limited, a step down Subsidiary
Company of India Infoline Limited received the license dated November 27,
2008 from Insurance Regulatory Development Authority (IRDA) to act as a
Direct Broker. Accordingly, the step down subsidiary pursuing the business
of a Corporate Agent of I RDA, surrendered the Corporate Agency license.
Since then, your Company started the process of training its people for
multiple insurance companies. Your Company also entered into marketing and
distribution arrangement with the leading insurance companies. During the
year, your Company's income from life insurance distribution was Rs 481.5
mn, a decline of 55 per cent y-o-y. The decline was in line with the
adverse market conditions. Private sector insurance companies witnessed a
significant slowdown in the sale of their unit-linked premium plans as well
as other insurance products. Your Company's business activity also suffered
due to the transition from agency to broking and its consequent requirement
of changes in the infrastructure set up and training of people.

Online and other media:

Income is generated from the sale of space on our web property
www.Indiainfoline.com and related marketing and promotional activities
undertaken through you Company's vast distribution network. This also
includes revenues generated by way of sponsorship and sale of research
reports and customised assignments. Your Company's website is very popular
for life insurance companies as well as mutual funds and their online
advertisement campaigns. Your Company's online and media income was
Rs.712.7 mn, a decline of 9.0 per cent y-o-y. It formed 7.4 per cent of
total income during the year under review.

Wealth management and mutual fund distribution income Income generated by
way of distribution of wealth management and mutual fund products stood at
Rs 183.4 mn, a decline of 4.0 per cent y-o-y in line with the adverse
market conditions. Your Company received the SEBI's in principle approval
for sponsoring a mutual fund and took necessary steps to form an asset
management company, a trustee company and get the license for setting up
its own AMC. Your Company's wealth management business witnessed good
traction during the year.

Commodities broking income:

This income comprises brokerage and other related income generated from
executing client trades on two commodity exchanges MCX and NCDEX. During
the year, your Company's revenue from this stream registered a growth of
30.8 per cent over the previous year to Rs 217.8 mn. Your Company's client
base for commodities broking increased from 23,355 in 2007-08 to 36,085 in
2008-09. The overall market share on both exchanges increased from 1.41 per
cent in 2007-08 to 1.70 per cent in 2008-09.

Merchant banking income:

Your Company's merchant banking income significantly declined by 85.6 per
cent from Rs 161.5 mn in 2007-08 to Rs 23.3 mn in 2008-09. This fall was
due to the adverse capital market conditions and virtual drying up of deal
flow of merchant banking division.

Expenditure:

The following table sets forth your Company's expenditure incurred under
various heads:

Expenditure (as per the Consolidated Indian GAAP) (Rs. mn)

Year ended March 31, 2009 March 31, 2008

Direct cost 2,067.6 2,169.8
Employee cost 2,737.0 2,425.7
Administration and other expenses 1,903.6 1,615.3
Finance cost 331.8 912.6
Depreciation 396.0 282.0
Preliminary expenses - 3.0
Total expenses 7,436.0 7,408.4

Direct cost:

Direct cost comprises brokerage related charges, exchange and statutory
charges, marketing and commissions and investment and financing related
income. Direct cost during the year was Rs 2067.6 mn, and has declined in
line with the decline in overall income and the business activities.

Employee cost:

This is the single largest expense head for your Company at Rs 2,737.0 mn
for the year 2008-09, an increase of 12.8 per cent over the previous year.
During the year, we faced marginal decline in our top line but we still
continued to invest in our people in the long-term interests of your
Company.

Administrative cost:

Our administrative expenses comprise rent, electricity, tele-communication,
technology, printing and stationery, travel, courier, advertisement, office
expenses, legal and professional expenses, among others. Administrative
expenses during the year 2008-09 stood at Rs 1,903.6 mn. There were
inflationary increases, particularly in rental expenses and a significant
increase in electricity, telephone and other costs. Your Company continued
to invest in its brand and therefore advertisement expenses grew by 92.1
percent y-o-y. Following infrastructure scale-up, your Company's
electricity expenses grew by 59.3 per cent y-o-y, whereas rental expenses
increased by 33.8 per cent y-o-y.

Depreciation expenses:

Depreciation expenses during the year 2008-09 stood at Rs 396.0 mn. This
increase is due to investments in new office facilities, technology and
infrastructure to improve your Company's competitive position from the long
term point of view. Your Company depreciates hardware and software and
technology on a straight line basis over three years and furniture on a
straight line basis over five years.

Human resources:

The nature of your Company's business requires trained and skilled
professionals. Your Company has been extremely successful in attracting and
retaining highly qualified professionals, with impeccable professional
track record, by offering them a challenging work environment, coupled with
competitive compensation including stock ownership.

'Owner mindset' is the basic tenet which drives your Company's human
resource policy and all your Company's employees behave and work like
owners and this enables them to unleash their inner entrepreneurial energy
without compromising on team work and ethics.

Financial services is a knowledge intensive sector where employee skills
form a critical aspect in service delivery. Your Company has developed
comprehensive in-house training modules to make sure that all employees
understand your Company's vision, purpose and imbibe the ethos of the
organisation. Emphasis is laid on 'on the job' trainings where an
experienced and senior person mentors the junior executives.

A human resources enterprise resource planning software is being
implemented, that will enable tracking of employee level productivity as
well as create a scientific basis for performance appraisals. The total
employee strength of your Company and its subsidiaries was 8,015 as on
March 31, 2009.

Risk management:

Your Company operates in the financial services sector, which is affected
by variety of factors linked to economic development in India and globally
which in turn also affect global fund flows. Any economic event across the
globe can have a direct or indirect impact on your Company. To mitigate
this, your Company has diversified its revenue stream across multiple
product lines. Your Company's risk management system is a comprehensive and
integrated framework comprising prudential norms, structured reporting and
stringent controls. This approach ensures that the risk management
discipline is centrally and strategically initiated by the senior
management but prudently decentralised thereafter, helping managers at
various organisational levels mitigate risks at the transactional level.

Technology is an integral part of your Company's business operations and
hence to mitigate the risk of technology failure, your Company has taken up
steps like having multiple options for internet bandwidth and internet
connectivity besides having sophisticated firewalls to protect the IT
infrastructure against external attacks. Your Company has also invested in
disaster recovery centers. Client level risk in broking operations is
managed through the internally developed credit algorithms deployed on
automated risk management software. The other initiatives your Company took
included enriching the features of the Trader Terminal platform to enhance
client experience wherein a single log-in can provide all client
information related to accounts and balances, among others, while the
newly-added live chat' feature with technical and research teams
facilitates immediate query redressal. Your Company also developed the
software for faster back-end operations for other business verticals,
namely commodities trading. A recovery mechanism was created for all its
existing infrastructure that could seamlessly assume operations from the
normal hardware without the client noticing the switch. Your Company's
broking, demat and software development services have received the coveted
ISO 27001:2005 international certification. They are fully compliant with
all the prescribed management systems which ensure security of information
assets therein.

Your Company works in a highly regulated environment and needs to abide by
the policies and laws of regulatory authorities domestic and international.
Your Company created a full-fledged compliance cell manned by experienced
professionals. It institutionalised multiple audits of its operations,
systems and processes to ensure that all the prevalent regulations were
adhered completely. The audits were conducted by an internal auditor, a
statutory internal auditor (external to the Company), multiple system teams
(department functioning audit) and systems experts (workflow audit), among
others. The regulatory cell made available periodically updated compliance
manuals across all departments and functions for a complete compliance with
all regulatory changes.

Internal controls:

Your Company's internal audit team comprises professionals at the head
office in Mumbai, supported by regional teams at zonal offices. Regular
audits of operational functions are conducted and a focussed branch audit
and quality team has been created for reviewing all the branches and sub-
brokers on a regular basis. This is supported by a team of external
auditors whose reports are reviewed by the top management at regular
intervals.

Your Company has invested in adequate internal audit and control systems.
Operationally speaking, all key functions have an in-built maker checker
concept. External concurrent auditors are utilised to make sure that a
proper system of checks and balances exist.

The financial services business is compliance intensive. Your Company has a
full-fledged compliance department headed by a Chief Compliance Officer.
Your Company is a SEBI registered category I merchant banker. It is also
governed by the SEBI's stock brokers and sub-brokers, depository
participants and portfolio management regulations. India Infoline
Investment Services is a NBFC registered by the Reserve Bank of India. Your
Company's commodities broking subsidiary is governed by Forwards Contract
Regulation Act, 1952 and the insurance broking subsidiary is registered
with Insurance Regulatory and Development Authority.

Outlook:

Calendar year 2008 was a year of multiple black swan events which resulted
in strong head winds in the world of finance. The entire global banking
industry has been brought to knees by over-leveraging. This resulted in
slowing down of foreign financial investor inflows into capital markets and
mutual funds. As a result, trading volumes came down and so did
mobilisation of insurance and mutual fund assets. Although the world
governments, led by the USA, have acted fast to mitigate the systematic
risk, it is still too early to predict whether the global financial
services sector has come out of the woods.

In the recently conducted elections, the Indian electorate has given a
decisive mandate in favour of the United Progressive Alliance. A stable
government no longer looking over its shoulders to mollify demanding allies
can provide a dose of purposeful governance. The spectre of political
instability would cease to be a factor in investment decisions.

The stock markets have responded positively to the coming to power of a
stable government at the centre and we have also witnessed increased
confidence amongst Foreign Institutional Investors about India as an
investment destination of choice. We remain sanguine about the prospects of
India in general in the medium to long term. Your Company with a one-stop
financial services shop' positioning and multiple delivery channels is well
positioned to capture the complete value chain in financial services right
from advice to execution. Your Company has also invested in technology and
research to make sure that we have the best quality advice at the least
delivery cost.

Cautionary statement:

The statements made in this report describe the Company's objectives and
projections that may be forward looking statements within the meaning of
applicable securities laws and regulations. The actual results may differ
materially from those expressed or implied depending on the economic
conditions, government policies and other incidental factors which are
beyond the control of the Company.

Business Segment 1:

Broking:

Revenue Rs. 5,575.0 mn
Contribution to total revenue 57.9 per cent
Clientele 0.6 mn

Highlights, 2008-09:

* This business segment, comprising retail and institutional equities,
commodities broking and investment banking, retained its position as the
Company's principal growth driver and revenue earner, accounting for 57.9
per cent of the total income in 2008-09.

* Overall market share in equities (retail as well as institutional, cash
and derivatives segments combined) on the NSE increased from 3.40 per cent
in 2007-08 to 3.76 per cent in 2008-09.

* Average daily turnover in equities declined by 8 per cent y-o-y from
Rs.24.3 bn in 2007-08 to Rs 22.3 bn despite an almost 20 per cent fall in
the volumes on the National Stock Exchange.

* Average daily turnover in commodities increased by 46 per cent y-o-y from
Rs.1.8 bn in 2007-08 to Rs 2.6 bn.

Overview:

* The customer base for retail equities increased 35.8 per cent y-o-y from
0.44 min in 2007-08 to 0.60 min.

* Launched 'Market Mantra', an exhaustive daily morning product that arms
retail investors with all the information needed, well before the opening
bell.

* A number of thematic, sector-specific and stock-specific reports were
published on Indian politics, rural India, infrastructure, soft
commodities, utilities and India warming. We were the first to
comprehensively cover the emergence of rural India.

* The international research desk published its first international
research report titled INCH (India and China).

* The investment banking business was impacted adversely by drying up of
the IPO market.

Key strengths:

* The combination of a wide and deep nationwide network and feature-rich
offerings resulted in a business edge in the competitive retail broking
business.

* Trader Terminal, the proprietary trading platform, developed through a
prudent leverage of resident intellectual capital, positioned the Company
as a preferred business partner.

* A multi-channel delivery model (internet, phone or at branches) and
multi-trading options (BSE and NSE, cash and derivatives), coupled with
world-class research, increased the preference of the India Infoline brand
amongst retail investors.

* Research continued to be the key differentiator for the institutional
equities business. The team identified sunrise trends and advised
institutional clients on investment strategies across different stocks and
sectors.

Industry optimism:

Cylical but rising equities trading volumes:

(Rs. mn)

Year Average daily volumes (Rs. mn)

FY 96 2,7160
FY 97 11,760
FY 98 15,200
FY 99 16,510
FY 00 33,030
FY 01 53,370
FY 02 20,780
FY 03 24,620
FY 04 43,280
FY 05 45,060
FY 06 62,530
FY 07 78,120
FY 08 141,480
FY 09 113,250

Source : NSE

Business Segment 2:

Credit and Finance:

Revenue Rs. 2,654.1 mn
Contribution to total revenue 27.6 per cent
Portfolio Size Rs. 9.6 bn

Highlights, 2008-09:

* Received an approval from the National Housing Bank for our housing
finance subsidiary.

* Following adverse credit market conditions, personal loans business was
suspended in September 2008; mortgages business, suspended simultaneously,
has subsequently been restarted.

* Achieved less than 1 per cent NPA on our portfolio.

Overview:

India Infoline Investment Services Ltd, with its subsidiaries Moneyline
Credit Ltd and India Infoline Distribution Co. Ltd, offer secured products
(mortgage loans, margin funding and loans against shares) and unsecured
products (personal and business loans) to self-employed individuals and
SMEs under the Moneyline' brand.

Key strengths:

* Access to the Group's vast distribution network facilitates a pan India
reach.

* Leveraging the Group's client base facilitates faster and cheaper
(compared with industry average) business expansion.

* Multiple loan application checks and a strong collection system ensure
minimal delinquency.

* Sizeable business volumes from referrals reflects quality assets.

Industry optimism:

Mortgages as per cent of GDP for various countries:

Denmark 93
UK 86
US 80
Germany 48
Hong Kong 41
Taiwan 39
Singapore 32
Malaysia 29
Korea 26
China 12
India 7

source : HDFC

Loan portfolio (Rs. mn):

2008-09 2007-08

Mortgage loans 5,443 2,465
Loan against shares 1,121 1,652
Margin funding 1,207 4,417
Personal loans/Business loans 1,788 832

Received an approval from the National Housing Bank for our housing finance
subsidiary.

Business Segment 3:

Insurance:

Revenue Rs. 481.5 mn
Contribution to total revenue 5.0 Per cent
Lives Covered 115,996

Highlights, 2008-09:

* Transitioned from a corporate agency to an insurance broker post receipt
of the insurance broking license from IRDA.

* Forged alliances with major insurance companies for the distribution of
life and non-life insurance products

Overview:

India Infoline entered the insurance distribution business in 2000, as a
corporate agent of ICICI Prudential. Subsequently, in 2008 it obtained I
RDA approval for insurance broking and it now distributes products of major
insurance companies through its subsidiary India Infoline insurance Brokers
Ltd.

Key strengths:

* The transition to an insurance broker from a corporate agency will enable
the Company to offer the customer a much wider suite of products from
multiple insurance companies.

* The Company is an established pan-India distributor in the insurance
sector.

* The Company's multiple business lines offers a wide choice to the captive
client base; its established pan-India distribution network is an added
asset.

Industry optimism:

Life Insurance (Rs bn):

First Year Premium Total Life Insurance Premium

FY 06 388 1,059
FY 07 756 1,561
FY 08 937 2,014
FY 09E 871 2,310

Source IRDA

Business Segment 4:

Wealth and Asset Management:

Revenue Rs. 183.4 mn
Contribution to total revenue 1.9 per cent
Presence in Geographies India, New York, Singapore and Dubai

Highlights, 2008-09:

Wealth management:

* Mobilised Rs 1.8 bn in the largest single-day debenture listing of its
kind.

* Built relationships with many reputed families across India and the
globe.

Asset management:

* Received the in-principle approval from SEBI to sponsor a mutual fund.

* IFL Securities Pte Ltd received approval from the Monetary Authority of
Singapore to carry out corporate advisory and dealing in securities. The
Singapore arm can now offer braking, asset management and investment
banking services.

* IIFL Inc received an FII license, thereby facilitating the investment of
dedicated funds in India.

* Setup a team of experienced professionals for the offshore asset
management business.

Overview:

Wealth management:

IIFL Wealth Management Ltd, the wholly-owned subsidiary of India Infoline,
undertakes wealth management services under the 'IIFL Wealth' brand.

* The team advises high networth individuals and corporates.

* IIFL Wealth pioneered the 'Family Office' platform, targeting wealthy
families.

* Raised around Rs 4 bn across structured notes and Rs 2 bn of high
yielding bonds.

* Acts as an integrated financial advisor providing a platform far
investments across all financial products, including succession planning
services.

* Launched structured products with 'capital guarantee' features,
strengthening client confidence.

* Presence in New York, Singapore and Dubai enables access to non-resident
Indians.

Asset management:

India Infoline is a leading pan-India mutual fund distributing financial
intermediary associated with leading asset management companies. It
operates primarily in the retail segment, leveraging its existing
distribution network to reach prospective clients. It has received the in-
principle approval from the SEBI to set up a mutual fund.

The Group recently commenced its offshore asset management business under
the 'IIFL Capital' brand. With offices in New York, Singapore and Dubai,
IIFL Capital aims to offer India focused equity products, fund management
and advisory services far offshore and domestic wealth management
customers.

Key strengths:

* IIFL Wealth's asset-level fee structure ensures that investment decisions
are not based on commissions, facilitating a focus on genuine advisory
service.

* IIFL Wealth maintains an open architecture model of products where the
Company safeguards the client's assets and offers unbiased advice,
strengthening trust.

* Substantially owned by the employees, facilitating the members to take a
long-term call on the organisation and clients.

* India Infoline has proven credentials in mobilising mutual fund assets,
emerging as one of the largest pan India distributors for leading asset
management companies.

Industry optimism:

HNWI Wealth (Rs bn):

CAGR 23 percent

2006 290
2007 350
2008 440

HNWI population (000s):

CAGR 21 percent

2006 83
2007 100
2008 123

Source: Capgemini; Merrill Lynch

IIFL Securities Pte Ltd received approval from the Monetary Authority of
Singapore to carry out corporate advisory and dealing in securities from
the Singapore unit.