Annual Report - Motilal Oswal - 2009-2010

MOTILAL OSWAL FINANCIAL SERVICES LIMITED

ANNUAL REPORT 2009-2010

DIRECTOR'S REPORT

To
The Members

Your Directors have pleasure in presenting their 5th Report together with
the audited Accounts of your Company for the year ended 31st March, 2010.



Financial Highlights

Summary of Financial results for the year is as under:

Motilal Oswal Financial Services Limited (Standalone)

Rs. in million

Year ended Year ended
31st March, 2010 31st March, 2009

Income 642.59 722.36

Profit before Interest
and Taxation 601.56 683.33

Interest (28.46) (73.18)

Profit before Taxation 573.10 610.15

Less: Provision for Taxation

Current Tax 137.43 156.76

Deferred Tax 11.71 0.05

Fringe Benefit Tax - 0.22

Profit for the year 423.96 453.12

Balance brought forward from
previous year 224.13 16.60

Profit Available for
appropriation 648.09 469.72

Less: Appropriations

Transfer to Statutory Reserve 84.79 90.62

Proposed dividend 171.81 113.62

Dividend Distribution Tax 6.27 5.10

Transfer to General Reserve 33.92 36.25

Balance of Profit carried forward 351.30 224.13

Summary of Consolidated Financial results of the Company and its
subsidiaries for the year is as under:

Rs. in million

Year ended Year ended
31st March, 2010 31st March, 2009

Income 6,453.25 4,661.23

Profit before Interest,
Depreciation and Taxation
and Exceptional Items 2,769.85 1,806.91

Interest (96.24) (178.40)

Depreciation (141.89) (202.71)

Profit before Taxation and
Exceptional Items 2,531.72 1,425.80

Exceptional Items (Expenses)/Income 0.57 (30.00)

Profit before Taxation 2,532.28 1,395.80

Less: Provision for Taxation
Current Tax 801.87 479.58


Deferred Tax Expenditure/(Income) (17.90) (25.09)

Fringe Benefit Tax - 11.42

Wealth Tax 0.19 0.26

Tax for the prior year 3.92 (4.68)

Profit after tax before
Minority Interest 1,744.21 934.31

Minority Interest in profits (39.74) (38.35)

Profit after tax and Minority
Interest 1,704.47 895.96

Profit brought forward from
previous year 2,820.90* 2046.25

Minority share in dividend and
others for previous financial year - 45.44

Dividend from subsidiary company
for the previous financial year - 113.63

Profit available for the
Appropriations 4,525.36 3101.28

Less: Appropriations

Transfer to Statutory Reserve
& Capital Redemption Reserve 84.79 90.62

Pre acquisition (Profits)/Loss (5.12) 1.68

Proposed Dividend 171.81 113.62

Distribution tax on proposed
Dividend 28.53 19.30

Transfer to General Reserve 55.58 51.19

Balance of Profit carried to
Balance Sheet 4,189.77 2824.87

* Includes opening balance of reserves (Rs. 3.97 million) of subsidiaries
acquired during the year

Dividend

Keeping in view the overall performance during the year, your Directors are
pleased to recommend a dividend of Rs. 1.20 per Equity Share on the face
value of Re. 1 each, being 120% dividend, payable to those members whose
names appear in the Register of Members as on the Book Closure Date. The
Dividend and dividend distribution tax will absorb a sum of Rs. 178.08
million.

Results of Operations (MOFSL Standalone)

The Revenue for the year decreased by 11.04% from Rs. 722.36 million to
Rs.642.59 million. The Profit before interest and taxation registered a
decrease of 11.97% and were down from Rs. 683.33 million to Rs. 601.56
million. The Company's net profit for the year is Rs. 423.96 million down
from Rs. 453.12 million in the previous year, a decrease of 6.44% over the
previous financial year.

The detailed results of operations of the Company are given in the
Management Discussion & Analysis forming part of this Report.

Subsidiary Companies and Consolidated Results of Operations

The subsidiary companies of your Company are moving on from strength to
strength and contributing to the overall growth of your Company. These
subsidiaries have created a niche for themselves with their excellent
performance and are continuing to add to the shareholders' value.

The Consolidated Group Profit for the year after exceptional items, prior
period adjustments and tax and after deducting minority interests is
Rs.1,704.47 million as against Rs. 895.96 million earned last year - a
growth of 90.24%. During the year under review, Motilal Oswal Securities
Limited (MOSL), the 'Material Non-listed Subsidiary' of the Company earned
the revenues of Rs. 5, 158.99 million and PAT of Rs. 1191.41 million.
During the year under review, the market share of MOSL was 3.2% as against
4.2% in the previous financial year.

During the year under review, Motilal Oswal Insurance Brokers Private
Limited became a subsidiary of the Company and Motilal Oswal Asset
Management Company Limited and Motilal Oswal Trustee Company Limited became
the subsidiary of MOSL and in turn of the Company. The Statement pursuant
to section 2 12 of the Companies Act, 1956, containing details of the
Company's Subsidiaries is attached.

The Consolidated Financial Statements of your Company and its subsidiaries
prepared in accordance with Accounting Standard - 21' prescribed by The
Institute of Chartered Accountants of India, form part of the Annual Report
and the Accounts. In terms of approval granted by the Central Government
under section 212(8) of the Companies Act, 1956, copy of the Balance Sheet,
Profit and Loss Account, Reports of the Board of Directors and Auditors of
the subsidiaries have not been attached with the Balance Sheet of the
Company. The Company Secretary & Compliance Officer will make these
documents available upon receipt of request from any Member of the Company
interested in obtaining the same. However, as directed by the Central
Government, the financial data of the subsidiaries have been separately
furnished forming part of the Annual Report. These documents will also be
available for inspection at the Registered Office of the Company and the
concerned subsidiary companies, during 2 p.m. to 5 p.m. on all working days
upto the date of the Annual General Meeting.

The detailed results of operations of the Company and its subsidiaries are
given in the Management Discussion & Analysis forming part of this report.

Credit Rating

The Company continued to enjoy the highest rating of PI+' assigned by
CRISIL Limited to the Short-term Debt Programme of Rs. 4 billion of your
Company. The rating indicates the highest degree of safety with regard to
timely payment of interest and principal on the instrument.

CRISIL Limited also reaffirmed the rating of 'P I +' to the Short-term Debt
Programme of Rs. 4 billion of Motilal Oswal Securities Limited, a
subsidiary of the Company.

Finance

During the year under review, to meet the working capital requirements, the
Company has issued Commercial Papers and Unsecured Nonconvertible
Debentures.

Employees' Stock Option Schemes (ESOS)

Details required to be provided under the Securities and Exchange Board of
India (Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999 are set out in Annexure to this Report.

Directors

Mr. Raamdeo Agrawal was appointed as the joint Managing Director of the
Company by the Board of Directors, for a period of 5 years, with effect
from 14th October, 2009, without any remuneration, subject to the approval
of the Members in the ensuing Annual General Meeting of the Company. Mr.
Agrawal is also the joint Managing Director in Motilal Oswal Securities
Limited, a material unlisted subsidiary of the Company.

Mr. Navin Agarwal and Mr. Balkumar Agarwal retire by rotation at the
forthcoming Annual General Meeting and, being eligible, offer themselves
for re-appointment.

Directors' Responsibility Statement

Pursuant to section 217(2AA) of the Companies Act, 1956, your Directors
confirm that:

(i) In the preparation of the annual accounts, the applicable accounting
standards have been followed;

(ii) They have, in the selection of the accounting policies, consulted the
Statutory Auditors and these have been applied consistently and reasonable
and prudent judgments and estimates have been made so as to give a true and
fair view of the state of affairs of the Company as at 31st March, 2010 and
of the Profit of the Company for the year ended on that date;

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

(iv) The annual accounts have been prepared on a going concern basis.

Audit Committee

The Audit Committee presently comprises of Mr. Balkumar Agarwal (Chairman
of the Committee), Mr. Ramesh Agarwal, Mr. Madhav Bhatkuly and Mr. Raamdeo
Agrawal.

Remuneration/Compensation Committee

The Remuneration/Compensation Committee of the Board of Directors presently
comprises of Mr. Ramesh Agarwal (Chairman of the Committee), Mr. Balkumar
Agarwal and Mr. Motilal Oswal.

Shareholders/Investors' Grievance Committee

The Shareholders/Investors Grievance Committee of the Board of Directors
presently comprises of Mr. Balkumar Agarwal (Chairman of the Committee),
Mr. Motilal Oswal and Mr. Raamdeo Agrawal.

Nomination Committee

The Nomination Committee of the Board of Directors presently comprises of
Mr. Motilal Oswal and Mr. Raamdeo Agrawal.

Risk Management Committee

The Risk Management Committee of the Board of Directors presently comprises
of Mr. Motilal Oswal and Mr. Navin Agarwal.

Corporate Governance

A report on the Corporate Governance along with a certificate from the
Auditors of the Company regarding the compliance of conditions of Corporate
Governance as also the Management Discussion and Analysis Report as
stipulated under Clause 49 of the Listing Agreement are annexed to this
Report.

Auditors

Messrs Haribhakti & Co., Chartered Accountants, retire as the Statutory
Auditors of the Company at the forthcoming Annual General Meeting and have
given their consent for re-appointment. The members will be required to
appoint the Statutory Auditors for the current year and fix their
remuneration.

Fixed Deposits and Loans/Advances

The Company has not accepted any deposits from the public or employees
during the year under review.

The particulars of loans/advances and investment in its own shares by
listed companies, their subsidiaries, associates, etc., required to be
disclosed in the annual accounts of the Company pursuant to Clause 32 of
the Listing Agreement with the Company, are furnished separately.

Conservation of Energy and Technology Absorption and Foreign Exchange
Earnings and Outgo

In view of the nature of activities which are being carried on by the
Company, Rules 2A and 2B of the Companies (Disclosure of Particulars in the
Report of Board of Directors) Rules, 1988 concerning conservation of energy
and technology absorption respectively are not applicable to the Company.

There was no inflow of foreign exchange during the year under review.
Details of the foreign exchange outflow are given in the notes to Accounts.

Particulars of employees as required under section 217(2A) of the Companies
Act, 1956 and Rules framed thereunder

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 the Company
excluding the aforesaid Annexure. The Annexure is available for inspection
at the Registered Office of the Company. Any shareholder interested in
obtaining a copy of the said Annexure may write to the Company Secretary &
Compliance Officer at the Registered Office of the Company.

Acknowledgements

Your Directors take this opportunity to thank the Authorities, Bankers of
the Company, Shareholders and the Customers for their continued support to
the Company. The Directors also place on record their sincere appreciation
of the contributions made by every member of the MOFSL family for their
dedicated efforts that made these results achievable.

For and on behalf of the Board

Motilal Oswal
Chairman & Managing Director

Place: Mumbai,
Date : 19th June, 2010

Annexur to the Directors' Report

Particulars of loans/advances and investment in its own shares by listed
companies, their subsidiaries, associates, etc., required to be disclosed
in the annual accounts of the Company pursuant to Clause 32 of the Listing
Agreement with the parent company, Motilal Oswal Financial Services Limited

Loans and advances in the nature of loans to subsidiaries:

(In Rs. million)

Name of the Company Balance as on Maximum outstanding
31st March, 2010 during the year

Motilal Oswal Commodities
Broker Private Limited Nil 20.00

Motilal Oswal Private Equity
Advisors Private Limited 0.004 6.03

Motilal Oswal Investment
Advisors Private Limited 0.06 20.78

Motilal Oswal Capital Markets
Private Limited 43.38 47.38

Motilal Oswal Securities Limited Nil 300.57

Motilal Oswal Insurance Brokers
Private Limited Nil 0.10

Motilal Oswal Asset Management
Company Limited Nil 2.50

Except as indicated above, the Company has not made any loans and advances
in the nature of loans to associates or loans and advances in the nature of
loans where there is no repayment schedule or repayment beyond seven years
or no interest or interest below Section 372A of the Companies Act, 1956.

Investment by the loanee in the shares of the Company and the subsidiary
companies when the Company has made loans or advances in the nature of
loans: Nil


Information disclosed under the Securities and Exchange Board of India
(Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999 as at 31st March, 2010:

Particulars Motilal Oswal Financial Motilal Oswal
Services Limited Financial Services
Employees' Stock Limited Employees'
Option Scheme - III Stock Option Scheme-
PESOS - III) IV PESOS - IV)

a) Options granted 12,61,500 2,00,000

b) The pricing formula Price at which shares Price arrived at
issued to Private Equity reference to the
with Investor i.e.at expected Issue Price
the Rate of i.e. at Rs. 775 per
Rs. 518.90 per share. share

c) Options vested 9,35,175 2,500
d) Options exercised 5,64,075 2,500

e) The total number of 11,28,150 12,500
shares arising as a
result of exercise of
option

f) Options lapsed
(as at 31.03.10) 5,72,750 1,90,000

g) Variation of terms
of options N.A. N.A.

h) Money realised by Rs. 11,70,79,407 Rs. 19,37,500
exercise of options

i) Total number of 1,24,675 7,500
options in force
(as at 3 1.03. 10)

j) Employee-wise details
of options granted to:

(i) Senior managerial N.A. N.A.
personnel

(ii) Any other employee who N.A. N.A.
receives a grant in any one
year of option amounting to
5% or more of option
granted during that year

(iii) Identified employees N.A. N.A.
who were granted option,
during any one year, equal
to or exceeding 1% of the
issued capital (excluding
outstanding warrants and
conversions) of the company
at the time of grant

k) Diluted Earnings Per Rs. 2.97 Rs. 2.97
Share (EPS) pursuant to
issue of shares on exercise
of option calculated in
accordance with Accounting
Standard (AS) 20 'Earnings
per Share'

l) Where the Company has Nil Nil
calculated the employee
compensation cost using
the intrinsic value of
the stock options, the
difference between cost
so computed and the
employee compensation
cost that shall have been
recognised if it had used
the fair value of the
options, shall be
disclosed. The impact
of this difference on
profits and on EPS of
the Company shall also
be disclosed.

m) Weighted-average exercise N.A. N.A.
prices and weighted average
fair values of options shall
be disclosed separately for
options whose exercise price
either equals or exceeds or
is less than the market
price of the stock.

n) A description of the N.A. N.A.
method and significant
assumptions used during
the year to estimate the
fair values of options,
including the following
weighted-average
information:-

(i) risk-free interest rate N.A. N.A.

(ii) expected life N.A. N.A.

(iii) expected volatility N.A. N.A.

(iv) expected dividends N.A. N.A.

(v) the price of the The Company was an The Company was an
underlying share in unlisted company at the unlisted company at
market at the time time of grant, However, the Options were
of option grant. the Options were granted granted at the price
at the price at which which was determined
Shares were issued to with reference
Private Equity Investor to the expected
i.e. Rs. 518.90 per Issue Price.
share.

Particulars Motilal Oswal Financial Motilal Oswal
Services Limited Financial Services
Employees' Stock Limited Employees'
Option Scheme - V Stock Option Scheme-
PESOS - V) VI PESOS - VI)

a) Options granted 55,42,500 33,15,000

b) The pricing formula The closing price of the The closing price of
Company's Equity Shares the Company's Equity
quoted on the Bombay Shares prior to the
Stock Exchange Limited date of grant of the
immediately preceding Options, on the
the date of Grant of the Stock Exchanges
Stock Options, which for where the highest
this purpose shall be trading volume is
the date on which the recorded, discounted
Committee grant /increased by such
the Stock Options, percentage as may be
discounted by such determined by the
percentage as may be Committee
determined by the
Committee in the best
interest of the various
stakeholders in the
prevailing market
conditions.


c) Options vested Nil Nil

d) Options exercised Nil Nil

e) The total number of Nil Nil
shares arising as a
result of exercise of
option

f) Options lapsed
(as at 31.03.10) 30,42,500 60,000

g) Variation of terms
of options N.A. N.A.

h) Money realised by Nil Nil
exercise of options

i) Total number of 25,00,000 32,55,000
options in force
(as at 3 1.03. 10)

j) Employee-wise details
of options granted to:

(i) Senior managerial (i) Mr. Sameer Kamath N.A.
personnel 50,000 Options

(ii) Mr. Sudhir Dhar
40,000 Options

(ii) Any other employee who N.A. N.A.
receives a grant in any one
year of option amounting to
5% or more of option
granted during that year

(iii) Identified employees N.A. N.A.
who were granted option,
during any one year, equal
to or exceeding 1% of the
issued capital (excluding
outstanding warrants and
conversions) of the company
at the time of grant

k) Diluted Earnings Per Rs. 2.97 Rs. 2.97
Share (EPS) pursuant to
issue of shares on exercise
of option calculated in
accordance with Accounting
Standard (AS) 20 'Earnings
per Share'

l) Where the Company has The Company has calculated the employee
calculated the employee compensation cost using the intrinsic value
compensation cost using of stock options. Had the fair value method
the intrinsic value of been used, in respect of stock options
the stock options, the granted under ESOS - V and ESOS - VI, the
difference between cost employee compensation cost would have been
so computed and the higher by the employee compensation
employee compensation Rs. 82960572, Profit after tax lower by
cost that shall have been Rs. 82960572 and the basic earnings per
recognised if it had used share would have been lower by Re. 0.58.
the fair value of the
options, shall be
disclosed. The impact
of this difference on
profits and on EPS of
the Company shall also
be disclosed.

m) Weighted-average exercise i) Option Grant Date: I. Option granted on
prices and weighted averag 14th October, 2009 13th July, 2009
fair values of options shall for 542500 options i) No. of Options
be disclosed separately for ii) Exercise Price granted : 7,10,000
options whose exercise price Rs. 172.85 per option ii) Exercise Price:
either equals or exceeds or iii) Fair Value: Rs. 165 per option
is less than the market Rs.65.45 per option iii) Fair Value:
price of the stock. Rs. 52.39 per option
II. Option granted
on 14th October,
2009
i) No. of Options
granted : 4,95,000
ii) Exercise Price:
Rs. 172.85 per
option
iii) Fair Value:
Rs. 65.45 per option

n) A description of the The fair-value of the The fair-value of
method and significant stock options granted the stock options
assumptions used during on 14th October, 2009 granted on 13th
the year to estimate the have been calculated July, 2009 and 14th
fair values of options, using Black Scholes October, 2009 have
including the following Options pricing been calculated
weighted-average Formula and the using Black Scholes
information:- significant assumptions Options pricing
made in this regard Formula and the
are as follows: significant
assumptions made in
this regard are as
follows:

(i) risk-free interest rate 6% 6%

(ii) expected life 3 years 3 years

(iii) expected volatility 50% 50%

(iv) expected dividends 0.70% 0.70%

(v) the price of the Rs. 172.85 per share i) Rs. 139.70 per
underlying share in share for grant date
market at the time 13.07.09 grant date
of option grant. 14.10.09

MANAGEMENT DISCUSSION AND ANALYSIS

Company Secretary Opportunities for financial services in the NTD era

The NTD Era

It took India over 60 years since independence to create its first US$ 1
trillion of GDP in FY08. However, growing nominally @ 12-15% per annum and
at current US$/INR rates, India will add the next trillion dollar (NTD) of
GDP in 5-6 years.

The NTD Era will be marked by sustained boom in discretionary spend,
savings and investment.

Comparisons with China

China achieved its first trillion dollar GDP in 1998. It took about six
years to add the second trillion in 2005. However, the third trillion took
just 3 years, and all of the fourth came in just one year, 2008, when
China's GDP hit US$ 4 trillion.

India is hopefully on its way to mimicking the Chinese experience. Whether
we will do it somewhat slower or faster is just a matter of time.

Savings is on the rise

In the last 6 years to FY09, India's Gross Domestic Savings has been on the
rise, clocking a CAGR of 17%. In 5-6 years' time, India's GDP may touch US$
2.5 trillion. At then 40% of GDP, India's savings would almost equal

current GDP. Gross Fixed Capital Formation has grown even stronger - from
25% of GDP to 33% of GDP, a CAGR of 22%.

Equity ownership as an asset class is low in India

Recent report released by FICCI / Mckinsey indicates that total household
holdings into equities both directly and indirectly is ~19% which is much
lower than comparatives with developed countries like US and UK.

Retail penetration is low in India

Low Equity Ownership is further accentuated by the low level of equity
penetration in India (~1% of population has demat accounts) as compared to
~10% in other Asian countries like China and Korea

Country Demat Population Penetration
Accounts %

China 152 1,325 11

Korea 4.6 47 10

India 16 1,190 1

Low participation beyond top 10 cities

Top 10 cities (Tier 1) contribute 90% of the total trading volume and 78%
of mutual fund ownership but account for only 37% of the total urban income
pool. This indicates the immense potential offered by Tier 2 and Tier 3
cities.

Although disposal household income in these cities is less that in Tier 1
cities, owing to a lower share of HNI individuals and affluent segment,
there is huge opportunity to be tapped.

Opportunity for Financial intermediation

India's rising savings and income levels holds enormous potential for the
development of the Financial Services sector. Data from the rich countries
suggests that nearly 40% of total wealth is held in financial instruments
while nearly 20% of household financial assets are held in equity. In India
only 5% of household savings are channeled into equity suggesting that
there is a huge scope for growth on this front.

As India's per capita income and savings rises, estimates suggest that the
quantum of household savings going into the Indian stock market will
increase nine fold in the next 20 years

Intensifying competition driving industry consolidation but at a slow pace

India has over 9,000 registered brokerages. Past trends suggest that
consolidation within the industry follows market downturns. Effects of this
were very visible post the bear phase of 2000. However, considerable
consolidation has been witnessed even during the bull run of 2003-2008.
During this period, competition has intensified with the entry of several
new players with large brands and well capitalized balance sheets. Smaller
players would face the heat of this intensifying competition resulting in
large players further gaining market share. The bigger challenge for large
players is to achieve sustained and consistent returns on their
investments, while managing their growth trajectory.

Coming to the point of market cycle accelerating consolidation, unlike in
2003, the 2009 market downturn has not resulted in consolidation within the
industry.

Our Business Streams and Outlook:

Your Company, Motilal Oswal Financial Services Limited (MOFSL), is a non-
banking financial company (NBFC), registered under the Reserve Bank of
India Act, 1934. Your company's standalone operations have two critical
elements:

(i) Build on a financing infrastructure that can best customize risk
adjusted products, have simple and compliant documentation, and prompt loan
approval procedures; and

(ii) A strong structure in place that can most efficiently source funds and
manage resources.

We have a clearly defined set of procedures for evaluating the
creditworthiness of customers that extends from initial evaluation to loan
approval. Funds are advanced after due process of evaluation and upon
providing the necessary documentation. A lot of emphasis is placed on
tailoring finance to customer needs. MOFSL's objective is to ensure
appraisal and disbursement within the shortest possible time, without
compromising on asset quality.

We also raise resources through short-term borrowings. During FY10, CRISIL
Limited assigned a rating of 'P1+' the highest rating, for your company's
short-term borrowing programme of Rs. 4 billion. CRISIL Limited also
assigned the rating of 'P1+' to MOSL's short-term borrowing programme of
Rs.4 billion.

Besides the financing business directly carried out through MOFSL, we offer
a range of financial products and services such as Broking and
Distribution, Institutional Equities, Investment Banking, Asset Management,
Private Equity and Wealth Management business through various subsidiaries:

# Name of the Company Business MOFSL's
Shareholding

1. Motilal Oswal Securities Stock Broking 99.95%
Limited (MOSL) (Institutional &
Retail) and
Wealth Management


2. Motilal Oswal Investment Investment Banking 81.25%
Advisors Private Limited
(MOIA)

3. Motilal Oswal Private Private Equity Management 85.00%
Equity Advisors Private and Advisory
Limited (MOPE)

4. Motilal Oswal Asset Asset Management 99.95%*
Management Company
Limited (MOAMC)
(a subsidiary of MOSL)

5. Motilal Oswal Commodities
Broker Private Limited (MOCB) Commodities Broking 97.55%

6. Motilal Oswal Capital
Markets Private Limited Stock Broking
(a subsidiary of MOSL) (membership of NSE) 99.95%*

7. Motilal Oswal Insurance Insurance Brokers 99.00%
Brokers Private Limited (MOIB) (has made application
IRDA for Insurance
Broker Licence)

8. Antop Traders Private Limited Lease Rental 99.95%*
(a subsidiary of MOSL)

9. Motilal Oswal Trustee Company Trustee to Mutual Fund 99.95%*
Limited (MOTC) (a subsidiary of
MOSL)

* Through MOSL

Our business streams

Business Stream Primary products and services

Broking & Distribution * Equity (cash and derivatives)
Wealth Management and Commodity broking
* Distribution of financial
products like Mutual Funds,
PMS, IPO and Insurance
* Financing
* Depository services

Institutional Broking * Equity (cash and derivatives) broking
* Advisory

Investment Banking * Capital raising
* M&A Advisory
* Domestic IPOs
* Private Equity placements
* Corporate Finance Advisory
* Restructuring
* FCCBs and GDRs
Private Equity * Private Equity investment
management and advisory

Asset Management * Portfolio Management Services
* Mutual Funds
* Offshore Funds

Broking Business

Industry Facts

Equity markets have delivered the highest returns in three decades

The BSE Sensex saw an exceptional up-swing in FY10 - from 9,901 in April
2009 to 17,582 in March 2010 returning ~80% - the best annual performance
by Indian equities in three decades. Market capitalization of Indian
bourses doubled from $ 0.63 trillion in Mar 09 to $ 1.35 trillion in March
2010.

Our Broking Business

Backed by strong research and advisory capabilities, our broking business
covers the entire spectrum of participants in the capital markets ranging
from FIIs to Domestic Institutions, HNIs to mass retail. This large base is
addressed through distinctly positioned business units - Retail Broking &
Distribution and Institutional Equities business.

Retail Segment

Our services under the Broking and Distribution business include Equities,
Derivatives, Commodities, Depository services; Distribution of Portfolio
Management services, Mutual Funds, Primary Equity Offerings and Insurance
products.

As at 31st March, 2010, we had over 620,000 registered customers, whom we
serve through this business. This includes over 550,000 broking clients
with over 460,000 having depository accounts with us.

We serve our clients through strong branches and franchisee network spread
widely across India. This extensive distribution network provides us
further opportunities to cross-sell products and services as we diversify
into new business streams. In addition to our aforementioned physical
network, we have a strong online platform helping our clients to use our
services at their convenient location.

We also have strategic alliances with State Bank of India to offer online
brokerage services to their retail banking clients.

With an aim to provide best research and advisory, a core focus and
strength of our company, our clients are advised by the centralized
advisory and dealing desk based in Mumbai, situated in 26,500 sq.ft. of
area. Extensive use of technology and the benefit of synergized operations
under one roof have helped us deliver enhanced value to our clients which
have been well received.

With Knowledge First as our guiding philosophy, we have actively conducted
over 100 investor education and financial awareness seminars across the
country covering various aspects of investing.

Our widest distribution network and our core strength of providing
excellent research and advisory will continue to help us in capturing the
increasing penetration of equities in the country. Cross-selling of
products and leveraging on established technology and network will help us
in gaining further momentum for this business.

Institutional Segment

We offer Institutional Broking services in cash and derivatives segment to
a large institutional clientele in India and abroad. These clients include
mutual funds, banks, financial institutions, insurance companies, and FIIs.
As at 31st March, 2010, we were empanelled with over 300 institutional
clients including over 200 FIIs. Our Institutional Team comprises staff
from Sales and Dealing, Research and Corporate Access.

Our research team of 27 research analysts covers over 236 companies in 27
sectors and 23 commodities.

The Research team provides a complete bouquet covering Thematic, Sectoral,
Company updates, Periodicals, Expert speak and Ground reality.

Highly Rated Research

We won 10 awards, highest for any Broking House, across various categories
in the Starmine Analyst Awards 2009. MOSL was also highly ranked across
several categories in Asia Money Polls 2009.

Strong Corporate Access

Corporate access activities were carried out throughout the year with
dedicated Investor conferences being held across all leading geographies -
Mumbai, US, UK & South East Asia.

India continues to lead as one of the favoured investment destinations for
global funds. Our strong clientele base spread across the globe and our
constant endeavour to provide best in-class research, advice, corporate
access and execution support will also help us to tap these emerging
opportunities and gain higher market share across all the institutional
client segments.

Investment Banking

Industry Facts

CY09 saw a further decline in total deal activity in terms of volume and
value of deals. During CY09 the average deal size was US$ 35 million across
330 deals compared to US$ 69 million across 454 deals in CY08. Corporate
finance activity slowed down during 2009 on account of the global financial
crisis and companies' need to conserve capital. This later picked up as
globally companies started consolidating and high growth rates in China and
India continued to create a demand for commodities and capital.

Capital raising picked up in India following a stable government coming
back with a decisive mandate, overall risk appetite improving buoyed by
inherent growth potential in Indian market and ability of Indian financial
market to withstand global financial stresses. On the capital markets
front, QIP route was preferred by listed Indian Corporates for fund raising
on the backdrop of muted retail participation in equity markets. Companies
with robust business plans were able to attract private equity. Improvement
in business outlook and capital availability for Indian Companies led them
to look for attractive assets to build their global footprint.

Our team comprises multi-disciplinary professionals with extensive
collective banking and corporate finance advisory experience. An extensive
understanding of different sectors within the Investment Banking team
underpinned by the strong research pedigree of the Group enables us to
provide customized financial solutions to our clients across industries.

Since inception in 2006, the investment banking unit has executed milestone
transactions relating to capital raising and financial advisory, thereby
establishing a solid track record in the investment banking space.

Our established track record, strong corporate relationships, experienced
team and synergies within the group sets the right impetus to capture the
opportunities emerging from Corporate India as it heads into the Next
Trillion Dollar era; helping us build a strong and profitable franchisee in
this business.

Asset Management

Industry Facts

Mutual funds had assets under management of Rs. 6.14 trillion as on 31st
March, 2010, compared to Rs. 4.17 trillion on 31st March, 2009 and Rs. 5.05
trillion on 31st March, 2008. The equity funds - growth funds, balanced
funds and equity-linked savings schemes (ELSS) - constituted 35% of the
total AUM as at March, 2010, i.e. Rs. 2.15 trillion.

Retail & HNI investors constitute 46% of total mutual fund AUM but account
for 87% of equity AUM. Retail participation in Debt funds is very low at
~6%. Corporates contribute over 50% of total mutual fund AUM which is
largely concentrated into Liquid / money market funds (~80%)

Total AUM for mutual funds in India is ~6% of GDP which is much lower than
developed countries like US, UK or Australia. As financial awareness
increases, demand for better inflation protection instruments like mutual
funds will see significant demand.

SEBI's move to allow Stock Exchanges to offer trading platform for Mutual
Fund has opened out a complete new segment of intermediation and extend
reach to 1,500+ locations from the current concentration in 80 cities.

Our Asset Management Business

Our PMS business continued to attract significant investor interest with
the total AUM reaching Rs. 9.8 bn as of 31st March, 2010.

Both the existing as well as new schemes met with significant investor
confidence and resulting inflows. PMS products are distributed through
captive distribution channels within the Group as well as other national
distributors and private banks.

Another milestone in our endeavour to build the asset management business
was the final approval received from SEBI to commence Mutual Fund business.
The first scheme offer document has been filed with SEBI for approval. A
highly skilled and experienced Fund management and distribution team is
already on board. It will be our endeavour to build a differentiated mutual
fund business in the country.

Our proven track record in fund management and our constant focus to bring
innovative products suited to client needs gives us the confidence of
building a successful asset management business.

Private Equity

Industry Facts

Private Equity investment had slowed down in FY10 on the backdrop of high
valuations and delay in growth plans by companies on account of economic
slowdown in FY09.

The trend has significantly improved in Q4 FY10 when PE firms invested ~US
$ 2 billion in 56 deals. This is the highest investment in the last six
quarters. This is 19% higher than Q3 FY10 figure when PE firms invested US
$ 1.68 billion across 102 deals.

Our Private Equity Business

Our private equity subsidiary, MOPE currently manages and advices funds in
the growth capital and the real estate space.

MOPE is an investment manager and advisor to a private equity fund, India
Business Excellence Fund, which has commitments of US$ 125 million from
investors in India and overseas. The fund is aimed at providing growth
capital to small and medium enterprises in India, with investments
typically in the range of US$ 5 million to US$ 15 million. The fund has
already made investments in ten companies till 31st March, 2010 committing
around 61% of the funds.

MOPE was appointed as Investment Manager to India Realty Excellence Fund
(IREF), a domestic real estate fund, in FY09. IREF had its final closing in
December 2009 at Rs. 1.64 billion. The fund has already made investments
across 2 deals till 31st March, 2010, committing 16% of total funds under
management. MOPE has been able to build a strong deal pipeline for IREF and
is evaluating several investment opportunities.

Severe correction in stock prices resulting into expectation mismatches
between promoters and fund houses on valuations and delay in growth plans
by several companies on account of economic uncertainty resulted in
significant slowdown in private equity deal activity throughout the
industry in FY10. A need for maintaining 'Margin of safety' and rigorous
due diligence at deal evaluation stage took precedence over euphoric
valuations based on macro themes.

The strong investment culture within the Group of identifying companies
with sustainable business models and strong management teams has helped
MOPE identify companies which we believe can deliver good returns for our
stakeholders. The track record established through successful advisory
mandates of these two funds gives us the confidence to grow the private
equity business to much bigger scale in the coming years.

Wealth Management

Industry Facts

India's HNWI population shrank 31.6% to 84,000, the second largest
percentage decline in the world, after posting the fastest rate of growth
(22.7%) in 2007. At the end of 2008, HNWI wealth was down 29.0% to US$ 310
billion, with the largest losses among those in the $ 1m - $ 5m wealth band
(-31.8%).

However despite the loss of wealth due to sharp corrections in the markets
in 2008, strong GDP growth rate and high savings pool is likely to fuel the
growth of the HNWI base in India. India is pitted to stimulate Asia Pacific
Region's HNWI Wealth markedly by 2018.

Our Wealth Management Business

Our Wealth Management platform caters to High Networth and mass affluent
clients through a separate offering called 'Purple' providing a complete
range of financial products best suited to client needs using an advisory
model and an asset allocation approach.

A study done by Celent estimates that the players in the unorganized market
have approximately 1.5 times the assets under management of the organized
sector. This presents both a challenge and an opportunity. With customer
needs for products and services getting more sophisticated with growing
income levels organized players will drive the consolidation within this
industry.

With assets under management of Rs. 8 billion and current presence across
four cities - Mumbai, Kolkata, Pune and Ahmedabad we believe that our
holistic wealth management offering and strong relationship management
skills will enable us build a scalable and profitable wealth management
business.

Opportunities and Threats

Opportunities

* Economy is growing at healthy rate leading to investment / capital
requirement.

* Growing Financial Services industry's share of wallet for disposable
income.

* Huge market opportunity for wealth management service providers as Indian
wealth management business is transforming from mere wealth safeguarding to
growing wealth.

* Regulatory reforms would aid greater participation by all class of
investors.

* Leveraging technology to enable best practices and processes.

* Corporates looking at consolidation / acquisitions / restructuring opens
out opportunities for the corporate advisory business.

Threats

* Execution risk

* Slowdown in global liquidity flows

* Increased intensity of competition from local and global players

* Unfavourable economic conditions

Our Strengths

Strong Brand name

'Motilal Oswal' is a well-established brand in the Financial Services
space. We believe that our brand is associated with high quality research
and advice as well as our corporate values like integrity and excellence in
execution. We have been able to leverage our brand awareness to grow our
businesses, build relationships and attract and retain talented
individuals.

Experienced top management

The promoters are qualified chartered accountants with over two decades of
experience each in the financial services industry. All businesses are
headed by independent CEOs who are qualified and experienced professionals
having demonstrated track record in the businesses they lead. We believe
that our management's entrepreneurial spirit, strong technical expertise,
leadership skills, insight into the market and customer needs provide us
with a competitive strength, which will help us implement our business
strategies.

Integrated financial services provider

Our broad range of offerings under Broking and Distribution, Institutional
Equities, Asset Management, Wealth Management, Investment Banking, and
Private Equity, helps us to foresee client requirements and provide full-
fledged services under single platform. The production and distribution of
all financial products and services helps our advisors and clients to
attain client's financial objectives with best in class in-house services.

Strong Financial Performance

Our knowledge of market cycles have enabled us build a business model that
is capable of capturing market opportunities as they arise and yet protect
the margins during market downturns. This has been evidenced in FY09 where
the EBIDTA and PAT margins of the company remained fairly stable despite
over 30% drop in revenues. Further, the Company is rightly capitalized
resulting in a return on average networth of 20% in FY10, which is one of
the highest amongst industry peers.

Independent and insightful research

We believe that our understanding of equity as an asset class and business
fundamentals drives the quality of our research and differentiates us from
our competitors. Our research teams are focused on equities, derivatives
and commodities. MOSL won 10 awards, highest for any Broking House, across
several categories in the Starmine Analyst Awards 2009. MOSL was also
highly ranked across various categories in Asia Money Polls 2009.

One of the largest distribution network - 1,397 outlets across 584 cities

Our financial products and services are distributed through a pan-India
network. Our business has grown from a single location to a nationwide
network spread across 1,397 business locations operated by our business
associates or directly by us in 584 cities and towns. Our extensive
distribution network provides us with opportunities to cross sell products
and services, particularly as we diversify into new business streams. In
addition to our geographical spread, we offer an online channel to service
our customers. MOSL has strategic alliance with State Bank of India (SBI)
to offer online brokerage services to their retail banking clients.

Strong investment culture

We have a successfully track record of managing assets under Portfolio
management services business. Strong focus on research and demonstrated
ability of picking stocks based on deep understanding of company
fundamentals have helped us deliver superior returns for our investors. The
strong investment culture within the Group will help build the various
other elements of asset management like private equity and mutual fund
business.

Strong HR practices

All businesses we operate are driven by intellectual capital and people are
the key drivers of building a successful franchise. Over the years we have
developed strong HR practices aimed at ensuring that our employees are
provided with an enabling environment for growth and higher levels of
contribution.

Strong risk management

We monitor and control risk exposure through a variety of separate but
complementary financial, credit, operational, compliance and legal
reporting systems. Risk management department analyses this data in
conjunction with our risk management policies and takes appropriate action
where necessary to minimize risk.

Financial prudence

The Company has a low gearing ratio as at 31 March, 2010 which augers well
to manage market volatilities. During FY10, the CRISIL Limited reaffirmed
the rating of 'P1+' the highest rating, for MOFSL short term borrowing
programme of Rs. 4 billion. CRISIL Limited has also reaffirmed the rating
of 'P1+' to MOSL's short term borrowing programme of Rs. 4 billion. This
facility provides MOFSL the flexibility to avail funds at competitive rates
when business opportunities arise.

Risks and concerns

We are primarily exposed to credit risk, interest rate risk, liquidity risk
and operational risks. Internally, we have constituted Asset Liability
Management Committee to manage these risks. This team identifies, assesses
and monitors all of our principal risks in accordance with defined policies
and procedures. The committee is headed by Chairman & Managing Director.

Our Board level Committees viz. Audit Committee and Risk Management
Committee oversee risk management policies and procedures. It reviews
credit and operational risks while the Asset Liability Management Committee
reviews policies in relation to investment strategy and other risks like
interest rate risk and liquidity risk.

Internal control systems and their adequacy

Our internal control systems are adequate and provide, among other things,
reasonable assurance of recording transactions of operations in all
material respects and of providing protection against significant misuse or
loss of company assets.

Internal audit is conducted by M/s. Pricewaterhouse, to assess the adequacy
of our internal controls procedures and processes, and their reports are
reviewed by the Audit Committee of the Board. Policy and process
corrections are undertaken based on inputs from the internal auditors.

Financial and operational performance

The financial statements have been prepared in compliance with the
requirements of the Companies Act, 1956, and Generally Accepted Accounting
Principles (GAAP) in India.

Table 1: Abridged profit and loss account (Rs. million unless indicated
otherwise) - Standalone

Particulars 2009-2010 % to 2008-2009 % to Total Increase/
Total income (Decrease)
income %

Revenue

Income from
operations 510.94 79.51 557.05 77.12 (8.28)

Other income 131.65 20.49 165.31 22.88 (20.36)

TOTAL 642.59 100.00 722.36 100.00 (11.04)

Expenditure

Financial
Expenses 28.46 4.43 73.18 10.13 (61.11)

Employee cost 15.27 2.38 12.74 1.76 19.86

Other Expenses 25.75 4.01 26.29 3.64 (2.04)

TOTAL 69.49 10.81 112.21 15.53 (38.08)

Profit Before Tax 573.10 89.19 610.15 84.47 (6.07)

Tax - Current
Tax & Deferred 149.14 23.21 157.03 21.74 (5.02)

PAT 423.96 65.98 453.12 62.73 (6.44)

Earnings per
share (Basic) Rs. 2.97 3.19 (6.87)

Earnings per
share
(diluted) Rs. 2.97 3.19 (6.97)

Though the financial position of MOFSL continues to remain strong, during
the year under review, there was a marginal fall in revenues by 11.04% from
Rs. 722.36 million in 2008-09 to Rs. 642.59 million in 2009-10. This has
been due to the overall fall in the interest rates in the markets in the
year. Your company continues to hold its product portfolio in respect of
its products such as loans against shares, corporate financing, arbitrage
etc. The yields on the margin funding book and the arbitrage business in
the current year compared to the previous year have also been relatively
lesser. Also, the yields on surplus treasury funds invested have decreased
compared to the previous year.

The decrease in income was partly balanced by a decrease in finance costs.
During the year finance cost decreased from Rs. 73.18 million in 2008-09 to
Rs. 28.46 million in 2009-10 primarily on account of decrease in interest
rates and capitalization of finance cost to the extent related/ attributed
to the acquisition/construction of Building Project. Other costs decreased
marginally by 2.04% from Rs. 26.29 million in 2008-09 to Rs. 25.75 million
in 2009-10.

Profit before tax (PBT) was down by 6.07% from Rs. 610.15 million in 2008-
09 to Rs. 573.10 million in 2009-10. Profit after tax (PAT) was down by
6.44%, from Rs. 453.12 million in 2008-09 to Rs. 423.96 million in 2009-10.
Consequently, basic earnings per share (face value Re. 1) decreased from
Rs. 3.19 in 2008-09 to Rs. 2.97 in 2009-2010.

As at March 31, 2010, investments principally consisted of long-term
investments, totalling Rs. 582.36 million. Investments have increased by
Rs. 268.85 million from March 31, 2009, primarily on account of higher
deployment in other investments based on commitments given and acquisition
of further stake in subsidiary Company MOIAPL.

Current assets mainly comprised of stock in trade, cash and bank balances
and other current assets. As at March 31, 2010, cash and bank balances were
Rs. 250.61 million, of which Rs. 5 million was in fixed deposits with
banks.

Loans and Advances increase from Rs. 2,066.50 million as at March 31, 2009
to Rs. 2,966.90 million as at March 31, 2010, on account of increase in
loans and funds deployed in arbitrage business as at the year end.

Current liabilities and Provisions principally consist of liability in
respect of provision for expenses & tax deduction at source. It increased
from Rs. 385.96 million as at March 31, 2009 to Rs. 571.10 million as at
March 31, 2010, predominantly due to provision for taxes.

Table 2: Abridged profit and loss account (Rs. million unless indicated
otherwise) - Consolidated

Particulars 2009-2010 % to 2008-2009 % to Total Increase/
Total income (Decrease)
income %


Revenue

Income from
operations 6,250.10 96.85 4,592.76 98.53 36.09

Other income 203.14 3.15 68.47 1.47 196.68

TOTAL 6,453.25 100.00 4,661.23 100.00 38.45

Expenditure
Operating Exp. 1,629.65 25.25 970.48 20.82 67.92

Financial
Expenses 96.24 1.49 178.40 3.83 (46.05)

Employee cost 1,366.57 21.18 1,203.13 25.81 13.59

Depreciation 141.89 2.20 202.71 4.35 (30.01)

Administrative
& other
Expenses 687.18 10.65 680.72 14.60 0.95

TOTAL 3,921.53 60.77 3,235.43 69.41 21.21

Profit Before
Tax, Exceptional
Items 2,531.72 39.23 1,425.80 30.59 77.57

Exceptional
Items-Income/
(Exp.) 0.57 0.01 (30.00) (0.64) (101.89)

Profit Before
Tax 2,532.28 39.24 1,395.80 29.94 81.42

Current Tax 802.06 12.43 491.26 10.54 63.27

Deferred Tax
(Income)/Exp (17.90) (0.28) (25.09) (0.54) (28.65)

Tax - Earlier
years 3.92 0.06 (4.68) (0.10) (183.60)

Profit After Tax 1,744.21 27.03 934.31 20.04 86.68

Earnings per
share (Basic)
Rs. 11.91 6.31 88.80

Earnings per
share (diluted)
Rs. 11.90 6.31 88.61

Due to improved market conditions, the consolidated financial profitability
of MOFSL has increased substantially. During 2009-10, MOFSL recorded 38.45%
jump in total revenues from Rs. 4,661.23 million in 2008-09 to Rs. 6453.25
million in 2009-10. The increase in income was partly offset by an increase
in operating expenditure from 20.82% of total revenues in 2008-09 to 25.25%
of the total revenues in 2009-10.

Borrowing during the year have increased compared to last year. Total
borrowings outstanding increased from Rs. 0.52 million as on 31 March,
2009 to Rs. 1083.16 million as on 31 March, 2010. However during the year
finance cost decreased from Rs. 178.40 million in 2001-09 to Rs. 96.24
million in 2009-10 primarily on account of decrease in interest rates and
capitalisation of finance cost to the extent related / attributed to the
acquisition / construction of Building Project.

Employee costs increased 13.59% from Rs. 1203.13 million in 2008-09 to
Rs.1366.57 million in 2009-10 mainly on account of general increase in
salaries and benefits. While in absolute terms this looks high, as a
percentage of total income, there was a decrease from 25.81% in 2008-09 to
21.18% in 2009-10.

The Company recorded 81.42% growth in profit before tax (PBT), which grew
from Rs. 1,395.80 million in 2008-09 to Rs. 2532.28 million in 2009-10.
Profit after tax (PAT) grew 86.68% from Rs. 934.31 million in 2008-09 to
Rs. 1744.21 million in 2009-10. Consequently, basic earnings per share
increased from Rs. 6.31 during 2008-09 to Rs. 11.91 during 2009-2010.

As at March 31, 2010, investments principally consisted of Long-term
investments, totalling Rs. 514.09. million. Investments have increased by
Rs. 21.67 million from March 31, 2009, primarily on account of higher
deployment in other investments.

Current assets mainly comprised Sundry Debtors, Stock-in-trade, Cash and
bank balances, and other Current assets. As at March 31, 2010, cash and
bank balances were Rs. 4333.49 million, of which Rs. 3085.04 million was in
fixed deposits.

Loans and Advances increased from Rs. 4,124.09 million as at March 31, 2009
to Rs. 4,933.26 million as at March 31, 2010, mainly on account of increase
in loans and funds deployed in arbitrage business as at the year end.

Current liabilities principally consist of current liabilities in
connection with margin monies deposited by customers to facilitate trading
on their behalf and amounts payable to customers on whose behalf we
undertake trades as well as amounts payable to exchanges. It increased
from 4,255.25 million to 5396.06 million as at 31st March, 2010.
Provisions include provisions for provision for taxation and provision for
proposed dividend which increased from 1,899.00 million to 2400.88
million.

Table 3:

Performance of subsidiaries (Rs. in million unless indicated otherwise)

Motilal Oswal Securities Limited (MOSL)

Particulars FY10 FY09 Growth (YoY)
Rs. million As on As on
March 31, 2010 March 31, 2009

Total Revenues 5,159 3,551 45%

EBIDTA 1,927 977 97%

PBT before
Exceptional Item 1,722 675 155%

PAT before
Exceptional Item 1,192 454 162%

Motilal Oswal Private Equity Advisors Pvt. Ltd. (MOPEAPL)

Particulars FY10 FY09 Growth (YoY)
Rs. million As on As on
March 31, 2010 March 31, 2009

Total Revenues 154 107 45%

EBIDTA 39 23 72%

PBT 37 21 80%

PAT 25 13 91%

Motilal Oswal Investment Advisors Pvt. Ltd. (MOIAPL)

Particulars FY10 FY09 Growth (YoY)
Rs. million As on As on
March 31, 2010 March 31, 2009

Total Revenues 655 468 40%

EBIDTA 328 221 48%

PBT 326 220 48%

PAT 217 149 45%

Motilal Oswal Commodities Broker Pvt. Limited (MOCBPL)

Particulars FY10 FY09 Growth (YoY)
Rs. million As on As on
March 31, 2010 March 31, 2009

Total Revenues 64 50 29%

EBIDTA 19 14 34%

PBT 17 11 60%

PAT 13 7 100%

Segment Wise Performance

The Company's operations predominantly relate to equity broking and related
activities, financing and investment banking. Below table shows performance
of equity broking and related activities, financing & investment banking

(Rs. Million)

Particulars Year Ended
31.03.2010 31.03.2009

1. Segment Revenue

(a) Equity Broking & Other
related activities 5,012.99 3,517.43

(b) Financing and Other
activities 558.96 608.74

(c) Investment Banking 650.28 452.32

(d) Unallocated 379.75 213.37

TOTAL 6,601.98 4,791.86

Less: Inter Segment Revenue 148.73 130.63

Income From Operations, Other
Operating Income and Other Income 6,454.25 4,661.23

2. Segment Results Profit/(Loss)
before tax and interest from Each
segment)

(a) Equity Broking & Other
related activities 1,645.03 746.32

(b) Financing and Other activities 489.48 496.53

(c) Investment Banking 321.68 204.39

(d) Unallocated 147.21 88.09

TOTAL 2,603.40 1,535.33

Less: Interest 71.68 109.51

Profit/Loss from Ordinary
Activities before Tax 2,531.72 1,425.82

3. Capital Employed (Segment
assets - Segment Liabilities)

(a) Equity Broking & Other
related activities 4,787.87 3,161.18

(b) Financing and Other activities 4,941.67 4,465.17

(c) Investment Banking 79.92 227.72

(d) Unallocated (308.66) 125.08

TOTAL 9,500.79 7,979.15

Human Resources

A wide variety of initiatives were launched during the year to strengthen
connect with employees. Employee health camps were organized Pan India
where blood tests, BP and BMI tests, health talks were conducted. Yoga
sessions were started in the office premises, twice a week. Team bonding
events such as cricket, table tennis and carom tournaments were organized
on a large scale. Further all major occasions like Holi, Diwali and
Christmas were celebrated across the Group. Our employee newsletter 'The
Insider' covering organizational news, individual employee achievements,
travelogues, fun sections, etc. enables employees keep abreast with the
developments within the Group.

An important initiative undertaken during the year was the addition of
counselling services for our Pan India employees through partnership with
ICAS India for an Employee Assistance Programme called Wellness and
Wellbeing. The service aims at addressing the employees' emotional needs
and assists them to stay emotionally and mentally stress-free and healthy.

As part of our continuous effort to reward superior employee performance,
employee awards are given out across various categories during our
Foundation Day function. The process of choice of employee is well evolved
and democratic one that gives each department a platform to recognize high
performers in other teams too.

We conducted over 263 trainings sessions covering over 3,800 participants
on various subjects like effective communication skills, advanced excel,
basics of stock market, green belt trainings etc.

Setting a goal is the first step to achieving it. We ensured that a
detailed goal setting exercise was conducted well before the start of the
next appraisal cycle and almost 95% of employees completed their goal
setting process through the online HR portal. Comprehensive performance
management training was conducted across the company to ensure that a
standardized and structured performance appraisal was conducted.

The entire team for the newly set up asset management business was built
during the year with infusion of new talent from well established
companies. We believe that the trust and strong brand name of the Group
will enable us position ourselves as employer of choice for attracting new
talent.

Cautionary statement

Certain statements in the Management Discussion and Analysis describing the
company's objectives, predictions may be 'forward-looking statements'
within the meaning of applicable laws and regulations. Actual results may
vary significantly from the forward-looking statements contained in this
document due to various risks and uncertainties. These risks and
uncertainties include the effect of economic and political conditions in
India, volatility in interest rates, new regulations and government
policies that may impact the company's business as well as its ability to
implement the strategy. The Company does not undertake to update these
statements.