Edelweis-F-2008-2009

ANNUAL REPORT 2008-09

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PE R F O R M A N C E AT A G L A N C E

Consolidated Financial Performance of Edelweiss Capital Limited and its Subsidiaries

(In Rs. million except per share data)

Year Ended March 31, 2009 2008 2007 2006 2005 2004

Total Income 9,005 10,888 3,718 1,533 727 281

Total Expenditure 5,715 6,421 1,971 898 383 175

Profit Before tax 3,290 4,467 1,747 636 345 106

Tax Expenses 1,199 1,540 646 218 107 28

Net Profit (after Tax and Minority Interest) 1,864 2,732 1,099 417 237 78

Paid-Up Equity Share Capital 375 375 45 38 29 28

Networth* 25,137 23,274 7,222 1,787 539 302

Diluted Earning Per Share (FV Rs. 5) (In Rupees)# 24.28 39.99 20.76 9.34 6.43 2.42

Book Value Per Share (FV Rs. 5) (In Rupees)# 282.13 246.49 93.58 39.33 15.83 9.16

(*) Includes minority interest | (#) Adjusted for corporate actions

10,888

0% 9% 2,732 10 R 8 GR AG CA C 9,005

1,864

1,099 3,718

1,533 417 727 237 281 78

2004 2005 2006 2007 2008 2009 2004 2005 2006 2007 2008 2009

Total Income | (Rs. million) Net Profit | (Rs. million)

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EDELWEISS ANNUAL REPORT 2008-09

56%

25,137 2% 14 23,274 GR CA 39%

34%

30% 28%

7,222

1,787 302 539

2004 2005 2006 2007 2008 2009 2004 2005 2006 2007 2008 2009

Net Worth | (Rs. million) Return on Equity | (%) Based on average equity for the year

282.13

8% 9% R 9 5 AG 246.49 GR 39.99 C CA

24.28

20.76 93.58

9.34

6.43 39.33

2.42 15.83 9.16

2004 2005 2006 2007 2008 2009 2004 2005 2006 2007 2008 2009

Diluted Earnings Per Share - FV Rs. 5 | (Rs.) Book Value Per Share - FV Rs. 5 | (Rs.)

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A COURSE WELL CHARTED

OUR ROBUST NAVIGATIONAL SYSTEM

Investments in New Businesses

Diversified Revenue Streams

Strong and Liquid Balance Sheet

Risk Management

Flexibility

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EDELWEISS ANNUAL REPORT 2008-09

IDEAS CONTINUE TO CREATE. VALUES CONTINUE TO PROTECT.

At Edelweiss, we continue to create a strong

and robust organisation. We revisit our goals

constantly; not to alter them but to change the

way we go about achieving them.

The environment we operate in will not always

be ideal nor will it remain the same at all times.

Staying alert and flexible in our approach to

doing business ensures we adapt to every

new market cycle. We continue to invest in new

businesses and new ideas; diversifying our

revenue streams. We take appropriate measures

to ensure adequate liquidity of the balance sheet.

Guided by our Business Principles, we continue to

create ideas that create wealth.

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STAYING HUNGRY. AT ALL TIMES.

Edelweiss has always been a growth hungry

organisation. We always look at opportunities to

diversify into adjacent businesses. Our experience

and learning from existing businesses help us

establish the new businesses faster and more

effectively. Our commitment to invest in new ideas

and new businesses will never change.

• Investing in long-term growth initiatives in alternative asset management and domestic asset management. Seeding the business model for Retail Broking and Distribution to ensure visible and relevant differentiation.

• Scaling up the Corporate Debt Desk. Mobilised Rs. 397.6 billion in 256 short-term debt placement deals in less than a year segment with a 21.7% market share in FY09*.

• Setting up the Institutional Client Group to foster long-term relationships with corporates and financial sponsors - providing them unique financial solutions for their diverse needs and concerns.

*Source: Prime Database

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EDELWEISS ANNUAL REPORT 2008-09

RESPECTING RISK. STAYING BALANCED.

Managing Risk is an integral part of every function

at Edelweiss. Our balanced approach to business

stems from an organisation-wide belief that

growth is not all about managing revenues but

equally about managing risks. While growth is

imperative, every scale up is governed by long-

term perspective, prudence and opportunity for

innovation.

• A Risk Group responsible for the entire spectrum of risk management throughout the organisation.

• Leveraging technology, mathematical modelling, and exception reporting to keep a vigil on risks across the organisation.

• A well-defined Business Continuity Plan (BCP) that drills emergency procedures and action-plans across the organisation.

• A Risk Oversight Committee headed by an Independent Director of the Board oversees periodic risk analyses on operational, strategic and financial parameters.

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MANAGING COST. BEING FLEXIBLE. BEING ALERT.

Maintaining healthy cash flows, building flexibility

in our cost structure and being quick in response

to the needs of fast changing businesses and

its priorities is the key to our approach. We focus

on maintaining the strength of our balance sheet

by ensuring adequate liquidity.

• FY09 manpower and pre-STT operating costs are down 20% from FY08.

• Successful implementation of cost control measures has helped maintain FY09 pre-tax margins at 36.5%.

• Debt to Equity ratio was down to 0.3*, while maintaining a significant liquidity cushion.

*as on March 31, 2009

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EDELWEISS ANNUAL REPORT 2008-09

INVESTING IN CULTURE. NURTURING GROWTH.

In the world of Financial Services brands, the

skill levels and executional capabilities of

employees are key factors that influence brand

choice for clients. Our employees are the best

ambassadors for the brand. The commitment

towards organisational objectives and the spirit

to go the extra mile is their hallmark. At Edelweiss,

investing in high quality talent and retaining it

is fundamental to our strategy for ensuring long-

term profitable growth. Our focus has been on

nurturing and motivating a Leadership Group • Fountainhead Leadership Centre, Alibag, our training within the Organisation and readying them to take institute is expected to be ready by Q3FY10. on higher responsibilities. • The Edelweiss Leadership Summit - a forum for senior management and the leadership groups to provide strategic direction for strengthening the future - organised in September 2008.

• Over 4000 training man days for Edelites in FY09.

• Continuing investments in empowering the underprivileged and building sustenance for them through EdelGive Foundation - our not-for-profit subsidiary. Employees are encouraged to volunteer their time and skill sets to NGOs/projects guided by EdelGive Foundation, on capacity and capability planning. Volunteering Edelites receive one week full paid leave to pursue these opportunities.

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BAD TIMES DO NOT LAST. GOOD STRATEGIES DO.

An ability to utilise experiences across market cycles.

A research-backed approach that brings clarity in

thought and action. Flawless execution of strategies.

At Edelweiss, we bring together these strengths to

tide over uncertainties.

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EDELWEISS ANNUAL REPORT 2008-09 L E T T E R F R O M T H E C H A I R M A N

Dear Shareholders, A look at the FY09 numbers of your company show total revenue of Rs. 9 billion (FY08 Rs 10.89 billion), We can safely say that the last year was a cataclysmic a drop of 17% y-o-y and a PAT of Rs. 1.86 billion year with unparalleled wealth destruction throughout (FY08 Rs. 2.73 billion), a drop of 32% y-o-y. the world. However, we are now seeing an optimistic slant in the world view as well as a certain weariness The year has also seen a stable PBT margin of 36.5% towards the 'gloom and doom' of the last 14 months. (FY08 41%). A significant cause for the drop in the Today, economic indicators the world over and PBT margin is attributed to the Securities Transaction especially in India, have begun to see the 'green Tax (STT) where we've paid Rs. 720 million STT for shoots' of a revival that is heartening. FY09, accounting for about 8% of the PBT margin. At some level, Edelweiss is stronger for having As a capital market facing firm, we were directly experienced the uncertainty and tumult of that period. impacted by the downturn in the market where we These events ensured we continue to focus on the are correlated with capital market activity and not fundamentals and understand and swiftly act upon as much with direction. In the case of FY09, we the velocity of the problems as they arise. witnessed both a southward direction in the markets as well as negligible capital market activity in the We believe this orientation is part of the Edelweiss form of capital raising, advisory and withdrawal of DNA and will protect your company whatever be the market cycle and however the global winds may blow. FII interest and moneys. However, though market We are humbled by the knowledge that while we did values fell by half, we have had a 17% fall in revenues not or could not anticipate the world changing events and we believe that we have managed the year of the past year, we were able to respond swiftly to reasonably well. I have listed below, the factors that ensure the organisation and all that are associated differentiate and protect your company. with it were sheltered from the worst of it. We have always consciously focused on ensuring Some part of our actions were already instilled – our diversified revenue streams, product segments and ability to ensure capital conservation, analytical and client type and base so that we are not pole axed objective risk assessment, high degree of variability in when one of the pillars runs low. our cost structure and the means to act swiftly The ability to shrink or expand infrastructure, capital unburdened by large capex or fixed costs. Mostly, expenditure, investments, growth strategies and it has been the intrapreneurial’ spirit and high levels manpower, across different verticals allows us a of emotional energy of the people of your company, flexibility that is core to our organisation. Edelweiss, that continues to ensure business is run To give you an example, while the equity markets as usual. remained dull, we moved rapidly and scaled our Some of the businesses were scaled down while corporate debt business that has done well. In just others were scaled up – both these steps helped over a year this business has been ranked 2nd in us better respond to the volatility of the market and commercial paper placements. Similarly, while our changing consumer needs. While the former meant Equity Capital Markets (ECM) business was negatively certain realignment of priorities and postponements of impacted due to negligible capital raising activity, revenues, the latter placed before us opportunities to the Advisory side saw renewed interest. Again, our seize without compromising on the quality of the Financing business stepped in during the severe business or the diligence with which we would pursue credit crunch experienced in the third quarter of FY09, the same. disbursing loans to good quality companies. Our While most of this is explained in depth in the diligent risk management processes ensured preceding pages as well as the MDA Report, I thought adequate collateral cover in the loan portfolio. it important to pen some words on what we believe Your company has worked hard to ensure that all will allow us to respond both to a downturn as well as revenue streams contribute equally, even if it means the expected return to growth. sacrificing short term gains that detract from our long- Edelweiss has a simple approach to running and term goal of limited dependence on any single managing our various businesses. This approach has business, asset class, product or client. worked both in good times and bad as has been Balance sheet liquidity and flexibility allows us demonstrated by the extremes of FY08 and FY09. capability to scale, invest and expand in spaces that

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are relevant to the times. While our networth, At Edelweiss we approach things differently. Your including minority interest, stands over Rs. 25 billion, company has always had an aspiration and a plan. our balance sheet size is Rs. 33 billion, which The plan is for the next 18 months but the aspiration effectively means a gearing of as low as 0.3 times. We is for the next 18-20 years. Therefore while some have also placed almost Rs. 13 billion in bank FDs actions may seem conservative in the short run, we that are short term in nature. will always adopt a long-term approach when we All of this provides us with a large liquidity cushion commence any operation. ensuring business is run as usual. So during the credit We are happy to experiment and remain low-key till crunch of Q2 and Q3 of FY09, we strengthened our the time we are confident that our offering is balance sheet, while today we are back to reviewing differentiated and relevant to the segment we are and evaluating opportunities that fit in with our targeting. However, the need to balance all decisions business goals. is the key to our success. Further, maintaining an In an industry where the market size can shrink and objective, analytical and all round risk aware approach expand very rapidly, it is imperative that our costs are will help us keep accidents at bay. flexible and we are not leveraged with long-term On the Financing side, we have brought down our assets that build stress into the system. risks significantly with a current collateral cover of Cost control measures helped bring down the costs 2.8x. Our Risk Group has significant controls and is by 11% y-o-y (with STT taken out, costs are down by completely empowered to independently take 20%). Our compensation has largely been variable in decisions that protect the company. nature and so also our operating costs, both of which The ability to focus on cost, risk, liquidity and people can be retracted or expanded depending on the while continuing the emphasis on growth has been an market environment. ongoing approach. This consistency has helped us Your company has always been a growth-hungry in FY08 when we saw almost everything going right; organisation and our ability to seek out adjacent it has also helped us in FY09 which was just the opportunities remains constant. Through the past reverse. fiscal we have continued to invest in opportunities that India – a long term perspective are synergistic to our long-term vision. We have Given the current backdrop with India largely having consciously seeded our retail brokerage and financial withstood global recession, I see the next decade to products distribution businesses, alternative asset be a golden age for the financial sector. The kind of management – distressed assets and the corporate growth and retail penetration witnessed by the bond business. As we ready to change gears once telecom sector over the past decade will probably be again in FY10, we are well prepared and staffed replicated in the financial sector. to scale up businesses - in fact almost 25% of our Banking, insurance and capital markets form the current employees are already engaged in new backbone of the financial sector and with each businesses that are yet to contribute to the current of them reporting robust growth well-aided by year's revenue. technology augurs well for an India strongly poised At Edelweiss we believe that a strong culture is the for expansion. bulwark of the organisation. Be it in strengthening the Just a quick look at some numbers is encouraging. present management, the Senior Leadership Group The Indian BFSI that is considered to be more (SLG) or endorsing the second line of the Leadership insulated than those in developed and emerging Group (LG), the culture of empowerment is a visible economies is also one of the least penetrated. Of an and encouraged outcome. estimated population size of 1.17 billion people (63% I have maintained that to build a strong business, we between 15-64 years, 5.5% above 65 years) about need to make our employees own the business 400 million are said to hold a bank account. If we whether in the form of a belief in the value of were to account for multiple accounts this number Edelweiss through ESOPs or initiatives on new would be lower by at least half – approximately 200 business ideas. We continue to be single minded in million accounts or about 18% of our population. On a our message that Edelweiss will always be home to comparative note, 94% of UK's populace has either a employees with the right attitude and ability. savings or a current bank account.

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EDELWEISS ANNUAL REPORT 2008-09

The Indian banking industry still has a long way to go unprecedented. It was also a period of shock and and large grounds to reap benefits from; even it mourning for many who had lost their near and dear means lower deposits and slightly higher transactional ones. Like most organisations, Edelweiss was also costs initially. affected by the events as they unfolded on the A similar story unfolds in the capital markets with evening of 26th November 2008. Our Business approximately 14.7 million demat accounts in both Continuity Plan (BCP) ensured trading operations ran the depositories – NSDL and CDSL as of May 2009 – fully on 28th November 2008, when trading resumed. together accounting for a bare 1% of the populace. On the economic front, FY09 will go down in history Interestingly, over 180,000 demat accounts were for leaving a lasting impact on the existence and opened in the last 14 months despite the bearish fortunes of organisations. While some companies market sentiment and volatility. have structurally changed, there are others that have When we at Edelweiss are asked on our plans to tap become even more resilient. At Edelweiss, we are the global market, I can only point at these statistics satisfied with our role in the industry and our ability to to refer to the sheer size and value of the potential have come through stronger. that exists today in India – a potential that is We immensely value the faith that you have reposed in deceptively at a non-discretionary stage of Edelweiss and would like to thank you for your consumption and largely young. Capital markets, with continued support. all its allure, would be the natural bastion for these large numbers of Indians who will begin to consume and invest in the next 3-6 year horizon. The outlook for the future seems positive with an advantage for India and other emerging economies. Rashesh Shah While there have been deep rooted changes globally Chairman and developed countries continue to struggle, it seems that the worst may now be over. This will bode well for Asia as a region and emerging countries in particular in terms of unprecedented growth opportunities. India is well poised to take advantage of the renewed interest and will move in a linear upward direction. A number of factors over the recent months have further contributed to cementing India's importance in the recovery of the world economy. A stable government at the center is expected to bring clear direction to economic boosters such as disinvestment, infrastructure building and progressive reforms that will bolster consumption. India's large savings pool and non-discretionary consumption also adds value to the potential in the domestic growth story. Your company should be able to make the best of this dynamic situation and aspires to do so. Sadly, FY09 also witnessed the tragedy and horror of the 26/11 terror attacks that was condemned world over. While the nation's security was undermined, it also had far-reaching and wide ranging impact in the Government as well as on the citizens, particularly of Mumbai. The spontaneous show of solidarity that had hundreds of thousands of 'Mumbaikars' gathering at the Gateway of India a week after the event was

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E D E LW E I S S B U S I N E S S E S

Investment Banking • Broad range of offerings on asset allocation including products like Structured Products, • Offering a full range of services and transaction Portfolio Management, Mutual Funds, Derivatives expertise, including private placements of equity, Strategies, Direct Equity, Real Estate Funds, capital raising services in public markets, Art and Funding Products. mezzanine and convertible debt, mergers and acquisition advisory services. • Dedicated to provide corporations, entrepreneurs Asset Management and investors, the highest quality independent • Alternative Asset Management focusing on financial advice and transaction execution. management/advisory expertise for Private Equity • A track record of successfully closing more than Funds, Real Estate Funds and India-focused Multi- 150 transactions to date over multiple advisory Strategy Fund. platforms. • Edelweiss Mutual Fund, launched in September • Awarded the Best Merchant Banker by Outlook 2008. Multiple products across debt and equity, Money NDTV Profit for 2008. notable amongst them are E.D.G.E (Edelweiss Diversified Growth Equity) Fund, ELSS, Liquid Fund, Short Term Bond Fund and Interval Fund. Brokerage Services Innovative schemes that draw from the group’s expertise are being planned. Institutional Equities • One of the leading brokerages and amongst the top derivatives desk in India. Loans • One of the largest equity research desks in India; • Providing relationship-based customised funding with additional sectoral overview. solutions for client empowerment. • Intense servicing, seamless execution and • Focus on capital markets led loan products: innovative research products building strong Promoter funding, Loan against shares, Loan relationships with over 300 institutional investors, against ESOPs, IPO financing, etc. including FIIs and domestic institutional investors. • Balance of expertise and experience helps in • Asia Money Brokers Poll 2008. financing short-term and long-term facility, risk - Ranked # 3 in the ‘Best Local Brokerage’ category. analysis, transfer and assessment, besides a broad spectrum of services providing path-breaking - Ranked # 4 in the ‘Overall Sales Service’ and solutions. ‘Best Sales Trading’ categories. • Team of professionals ensures deeper understanding of clients' liquidity requirements. Private Client Brokerage and Wealth Management • Brokerage services to high networth individuals, with a strong emphasis on building long-term relationships with clients. • Primary focus on understanding each client's profile including risk appetite, growth expectation, current financial position and income requirements; to create comprehensive and tailored investment strategies, execute these strategies and control real time risk on them. Customised research and customised execution being the mantra.

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EDELWEISS ANNUAL REPORT 2008-09 THE EDELWEISS BUSINESS PRINCIPLES

We will be a Thinking Organisation. We will take care of our We will operate as a Partnership, We will constantly bring ‘thought’ People seriously. Our policies internally and externally. Though to everything we do. Our clients’ – in spirit and in letter – will individuals are very often brilliant, and our own success depends on ensure transparency and equal we believe teamwork and our ability to use greater ideation opportunity for all. We will go collaboration will always ensure and more imagination in our beyond the normal goals of a better and more balanced approach. attracting, recruiting, retaining organisation. We will also treat and rewarding fine talent. We will our clients as partners and show ensure that every individual in them the same respect and We will be Fair to our clients, our Edelweiss has an opportunity to consideration that we would employees and all stake holders. achieve their fullest potential. toward our internal team We want our clients and our members. employees to be ‘richer’ for their relationship with us.

THE GUIDING LIGHT.

At Edelweiss, business principles define everything we do. They guide us on what can be done and what should not be done. They have become increasingly valuable to our organisation as we have grown. They define, direct and underline every step we take and every decision we make.

We will focus on the Long-Term. Our Reputation and Image is We will focus on Growth for Though the world will change a more important than any financial our clients, employees and lot in the coming years and our reward. Reputation is hard to shareholders. assumptions for the future may build and even harder to rebuild. not hold up, we will reflect on Reputation will be impacted by Our Financial Capital is a critical the long-term implications of our our ability to think for our clients, resource for growth. We will actions. Even when making short- maintain confidentiality and by our endeavour to grow, protect, and term decisions we will be aware adherence to our value system. use our financial capital wisely. of the long-term implications.

We will Obey and Comply with We will respect Risk. Our the rules of the land. We will business is going to be a maintain the highest standard constant challenge of balancing of integrity and honesty. When risk and reward. Our ability to we are unclear we will seek constantly keep one eye on risk clarifications. will guide us through this fine balance.

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C O M PA N Y D E TA I L S

Board of Directors of Edelweiss Capital Limited Rashesh Shah Venkat Ramaswamy Kunnasagaran Chinniah Narendra Jhaveri P. N. Venkatachalam Ramanan Raghavendran Sanjay Santhanam Sunil Wadhwani Navtej S. Nandra (appointed w.e.f. May 22, 2009) Company Secretary B. Renganathan Statutory Auditors B S R & Associates Internal Auditors M. P. Chitale & Co. Bankers Axis Bank Limited Citibank N.A. HDFC Bank Limited HSBC Limited ICICI Bank Limited IDBI Limited Standard Chartered Bank State Bank of India Registrars and Share Transfer Agent Link Intime India Pvt. Ltd. C-13, Pannalal Silk Mills Compound, L.B.S. Marg, Bhandup, Mumbai - 400 078. Tel : 022-2596 3838 Fax: 022-2594 6969 Email : [email protected] Registered Office 14th Floor, Express Towers, Nariman Point, Mumbai 400 021. Tel: + 91 22 2286 4400 Fax: +91 22 4086 3618 Website: www.edelcap.com Locations of Edelweiss Capital Limited and its subsidiaries Ahmedabad Hyderabad Ludhiana Dubai Bangalore Hubli Mumbai Mauritius Chennai Indore Nashik New York Cochin Jaipur New Delhi Singapore Gurgaon Jodhpur Pune Himatnagar Kolkata Surat

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EDELWEISS ANNUAL REPORT 2008-09

A M O V E M E N T T O E M P O W E R .

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E D E L G I V E F O U N D AT I O N

EdelGive Foundation is Edelweiss' not-for-profit The 1st Kubera-Edelweiss Social subsidiary, focussed on strategic philanthropy. Innovation Honours (KESIH) This approach involves not just making grants, but KESIH is a joint Corporate Social Responsibility rigorously analysing the outcomes of philanthropic initiative of Kubera Partners and Edelweiss. For the investments and providing the capacity building first year. KESIH awarded total prize money of USD support in planning, review and management that 72,000 to three non-governmental organisations non-profits require to scale and sustain their work. (NGOs) and six runners-up who are working to EdelGive Foundation focuses on the twin areas of improve the status of the girl child in the areas of education and livelihoods and leverages Edelweiss' health, education and employability. intellectual capital by encouraging Edelites to 118 non-profits from across India underwent a four- volunteer and use their skills to support non-profits in stage evaluation process, supported by Ernst and developing MIS systems, reviewing their accounting Young as process advisors and official tabulators, and and reporting systems and building five-year strategic field visits by TISS. The finalists were short-listed by and financial plans. an eminent jury drawn from the social sector, human rights, media and government. In addition to a dedicated six-member team, Edelweiss has sanctioned one week's paid leave for The three winning NGOs all Edelites who are actively engaged with EdelGive Anjali (Kolkata), Azad Foundation (Delhi) and Samata Foundation. (Andhra Pradesh) were declared winners for their outstanding and innovative work to improve the status of the girl child.

Enabling the enablers.

A strategic initiative that focuses on sustainable social development.

Our Milestones Trust-atDta Foundation for one of EdelGive's partners - Light of Life Trust. August 2008 February 2009 Field visits to three NGOs in and outside Mumbai by Kubera-Edelweiss Social Innovation Honours 2009 Edelweiss employees. awarded to three NGOs - Anjali, Azad Foundation and September 2008 Samata. Total prize money awarded was USD 72,000. Blood Donation Drive for Edelweiss employees along May 2009 with KEM hospital. 150 employees participated. Three-day workshop on Building Skills for Effective October 2008 Leadership held for EdelGive fundees. Diwali and Christmas sales organised with Sandhi Successfully raised 20,000 GBP for Mumbai Mobile Foundation which helps small artisans access broader Creches, EdelGive's partner for the last three years, from markets through market advice and product strategies. the British Asian Trust, based in London. November 2008 Edelweiss rated among the top 5% of companies in Successfully raised 40,000 Swiss Francs from Swiss terms of CSR by Karmayog.com

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D I R E C T O R S ' R E P O R T

To the Members of Edelweiss Capital Limited, The Directors hereby present the fourteenth Annual Report on the business and operations of the Company together with the audited statement of accounts for the year ended March 31, 2009.

Financial Highlights

I) Consolidated Financial Information of Edelweiss Capital Limited and its Subsidiaries: (In Rs. million) 2008-09 2007-08 Total Income 9,004.96 10,888.54 Total Expenditure 5,714.57 6,421.56 Profit Before Tax 3,290.39 4,466.98 Provision for Tax (Including Deferred Tax and Fringe Benefit Tax) 1,199.12 1,540.22 Profit After Tax 2,091.27 2,926.76 Less: Share of Minority Interest 226.83 194.36 Profit 1,864.44 2,732.40 Earnings Per Equity Share (Face Value - Rs.5/-) Basic (Rs.) 24.88 42.29 Diluted (Rs.) 24.28 39.99

II) Standalone Financial Information of Edelweiss Capital Limited: (In Rs. million) 2008-09 2007-08 Total Income 1,917.39 1,876.67 Total Expenditure 1,606.58 1,483.56 Profit Before Tax 310.81 393.11 Provision for Tax (Including Deferred Tax and Fringe Benefit Tax) 47.11 105.36 Profit/(Loss) After Tax 263.70 287.75 Add: Surplus brought forward from previous year 553.56 499.07 Profit available for appropriation 817.26 786.82 Appropriation 266.37 233.26 Surplus carried to Balance Sheet 550.89 553.56

Dividend 2009, both days inclusive. The Annual General Your Directors recommend a dividend of Rs. 3/- per Meeting of the Company is scheduled to be held share on 74,933,155 equity shares of the face value on July 31, 2009. of Rs. 5/- each, aggregating Rs. 224,799,465/- for Share Capital the year ended March 31, 2009. During the year under review, the Company had The register of members and the share transfer books redeemed 520,000, 12% redeemable preference will remain closed from July 24, 2009 to July 31, shares of Rs. 5/- each.

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EDELWEISS ANNUAL REPORT 2008-09

Disclosures required as per SEBI (Employee Stock 13. EC International Limited, Mauritius Option Scheme & Employee Stock Purchase Scheme) During the year under review, Edelweiss Asset Guidelines, 1999 are given as annexure to this Report. Reconstruction Company Limited, ceased to be a Information on the status of affairs of subsidiary and is now an associate of the Company. the Company The total number of subsidiaries as on March 31, Information on the operational and financial 2009 stood at 28. performance, etc. is given in the Management The following subsidiaries were incorporated after Discussion and Analysis Report which is annexed March 31, 2009: to this Report and has been prepared in accordance Aster Commodities DMCC, ECap International with Clause 49 of the Listing Agreement. Limited and EGAAA LLC. Finance The Company has been granted exemption by the During the year under review, the shareholders of Ministry of Corporate Affairs, from attaching with the Company had approved borrowing upto an its accounts, the individual accounts of its subsidiary aggregate amount of Rs. 7,500 crores, under section companies. However, the consolidated financial 293(1)(d) of the Companies Act, 1956. statement prepared in accordance with the Your Company had raised an aggregate amount of Accounting Standard 21 - Consolidated Financial Rs. 96.76 crores from time to time through the issue Statements prescribed by the Companies (Accounting of long-term secured non-convertible debentures and Standards) Rules, 2006, forms part of this Annual Rs. 895 crores through issue of Commercial Papers. Report and are reflected in the consolidated accounts of the Company. Your Company has obtained credit ratings of “P1+” from CRISIL for an amount of Rs. 1,500 crores with Further, as directed by the Ministry of Corporate respect to short term debt programme and “LAA-” Affairs, the financial data of the subsidiaries have been from ICRA for an amount of Rs. 350 crores with furnished under “Summary of Financial information of respect to long term debt programme. Subsidiary Companies” and forms part of this Annual Report. Public Deposits The Annual Accounts of the subsidiaries would Your Company did not accept public deposits during be made available for inspection by the members. the year under review. A statement pursuant to Section 212 of the Subsidiaries Companies Act, 1956 is set out as an annexure to The Company had 16 subsidiaries at the beginning this Annual Report. of the year. Directors The following thirteen subsidiaries were incorporated In accordance with the requirements of the during the year: Companies Act, 1956, Mr. Sanjay Santhanam, 1. Edelweiss Alternative Asset Advisors Limited Mr. Narendra Jhaveri and Mr. P. N. Venkatachalam, 2. EdelGive Foundation Directors of the Company retire by rotation at the ensuing Annual General Meeting and being eligible 3. Edelweiss Property Advisors Private Limited have offered themselves for re-appointment. 4. Edelweiss Housing Finance Limited Mr. Navtej S. Nandra was appointed as an additional 5. EC Commodity Limited director of the Company with effect from 6. Edel Commodities Limited May 22, 2009. He holds office up to the ensuing 7. Edel Land Limited Annual General Meeting. The approval of the members for appointing him as a Director of the 8. Edelweiss Primary Dealership Limited Company is sought vide the requisite resolution in the 9. Edelweiss Capital (Singapore) Pte. Ltd. accompanying Notice dated May 22, 2009, 10. Edelweiss International (Singapore) Pte. Ltd. convening the Annual General Meeting. The Directors 11. Edelweiss Securities (Singapore) Pte. Ltd. commend the resolution for the approval of the members. 12. Edelweiss Galleon Alternative Asset Advisors Pte. Ltd.

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Particulars of Employees Directors' Responsibility Statement The information required under Section 217(2A) of Pursuant to Section 217(2AA) of the Companies Act, the Companies Act, 1956 read with the Companies 1956, the Directors confirm that: (Particulars of Employees) Rules, 1975, forms part of (i) The Company has, in the preparation of the this report. In terms of the provisions of Section annual accounts, followed the applicable 219(1)(b)(iv) of the Companies Act, 1956, the Report accounting standards along with proper and Accounts are being sent to the members of explanations relating to material departures, if any; the Company excluding the aforesaid information. (ii) The Directors had selected such accounting Any member interested in obtaining a copy of this policies and applied them consistently and made information under section 217(2A) of the Companies judgments and estimates that are reasonable and Act, 1956, may write to the Company Secretary, at prudent so as to give a true and fair view of the the Registered Office of the Company. state of affairs of the Company as at March 31, Conservation of Energy, Technology 2009 and of the profit of the Company for the year ended March 31, 2009; Absorption and Foreign Exchange (iii) The Directors had taken proper and sufficient care Earnings/Outgo for the maintenance of adequate accounting The provisions of Section 217 (1) (e) of the Companies records in accordance with the provisions of the Act, 1956 read with the Companies (Disclosure of Companies Act, 1956 for safeguarding the assets the Particulars in the Report of the Board of Directors) of the Company and for preventing and detecting Rules, 1988 relating to conservation of energy fraud and other irregularities; or technology absorption is not applicable to (iv) The Directors have prepared the annual accounts the Company. for the financial year ended March 31, 2009 on a Foreign exchange earnings and outgo (including going concern basis. dividend) during the year under review were Rs. 63.34 million (Previous year Rs. 51.73 million) and Acknowledgement Rs. 298.46 million (Previous year Rs. 261.45 million) The Board of Directors wishes to place on record respectively. appreciation for the continued support and co-operation extended by Banks, Securities and Auditors Exchange Board of India, the Reserve Bank of India, B S R & Associates, Chartered Accountants, who are the Stock Exchanges, other government authorities the auditors of the Company, hold office until the and other stakeholders. Your Directors would also conclusion of the ensuing Annual General Meeting like to take this opportunity to express their and are eligible for re-appointment. The members are appreciation for the dedicated efforts of the requested to consider their re-appointment for the employees of the Company. financial year 2009-10 and authorise the Board of Directors to fix their remuneration. The retiring auditors have, under Section 224 (1B) of the Companies Act, 1956, furnished certificate of their eligibility for the re-appointment. Corporate Governance Pursuant to Clause 49 of the Listing Agreement, the report on Corporate Governance together with the Auditor's Certificate on compliance in this regard forms a part of this Annual Report.

For and on behalf of the Board of Directors

Place: Mumbai Rashesh Shah Date: May 22, 2009 Chairman & Managing Director

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Notes: -

1. Person wise details of options granted during the fiscal 2009 to:

Particulars Details of ESOP Scheme (a) Directors and key managerial personnel 2008 (I) 2008 (III) Mr. Narendra Jhaveri 2,500 2,500 Mr. P. N. Venkatachalam 2,500 2,500 Mr. Sunil Wadhwani 2,500 2,500 Mr. Ramanan Raghavendran 2,500 2,500 Mr. Kunnasagaran Chinniah 2,500 2,500 Mr. Sanjay Santhanam 2,500 2,500 Mr. Deepak Mittal 12,500 12,500 Mr. Sarju Simaria 3,000 3,000 Mr. B. Renganathan 500 500 (b) Any other employee who received a grant in any one year of options amounting to 5% or more of the options granted during the year (includes ex-employees and group company employees) Mr. Ravi Bubna 37,500 37,500 Mr. Mohan Natarajan 37,500 37,500 (c) Identified employees who are granted options, during any one year equal to exceeding 1% of the issued capital (excluding outstanding warrants and Nil conversions) of the Company at the time of grant

2. : Pricing Formula

a) ESOP 2002 (Scheme D)

Exercise price of options Rs. 5 to 79.17*

b) ESOP 2002 (Scheme E)

Exercise price of options Rs. 10.42*

c) ESOP 2004

Exercise price of options Rs. 10.42 to 166.67*

d) ESOP 2006

Exercise price of options Rs. 79.17 to 166.67*

*Exercise price of grants has been computed after adjusting for splits, bonuses and consolidation since institution of the employee stock option plans.

ESOP 2007 (I) Period during which From the date of vesting From 1 October 2008 to From 1 October 2009 to From 1 October 2010 to vested options are to 30 September 2008 30 September 2009 September 30 2010 30 September 2011 exercised Exercise price payable In case shares are listed, In case shares are Rs. 583 Rs. 217 for such vested options 10 % discount to Market listed, 25 % discount to Price or Rs. 1,167; Market Price or Rs. 833; whichever is higher; whichever is higher; Otherwise Rs. 1,167 Otherwise Rs. 833

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ESOP 2007 (II) Period during which From the date of From 1 July 2008 to From 1 July 2009 to From 1 July 2010 to From 1 July 2011 to vested options are vesting to 30 June 2009 30 June 2010 30 June 2011 30 June 2012 exercised 30 June 2008 Exercise price In case shares are In case shares are In case shares are Rs. 500 Rs. 333 payable for such listed, 10% Discount listed, 25% Discount listed, 50% Discount vested options to Market Price or Rs. to Market Price or to Market Price or 1,167; whichever is Rs. 833; whichever is Rs. 667; whichever is higher; Otherwise higher; Otherwise higher; Otherwise Rs. 1,167 Rs. 833 Rs. 667 ESOP 2007 (III) Period during which From the date of vesting From 1 January 2008 From 1 January 2009 From 1 January 2010 vested options are to 31 December 2007 to 31 December 2008 to 31 December 2009 to 31 December 2010 exercised Exercise price payable Rs. 1167 In case shares are In case shares are Rs. 517 for such vested options listed, 25% discount to listed, 50% discount to Market Price or Rs. 833; Market Price or Rs. 667; whichever is higher; whichever is higher; Otherwise Rs. 833 Otherwise Rs. 667 f) ESOP 2008 (I) Period during which vested From the vesting date to From 1 January 2011 to options are exercised 31 December 2010 31 December 2011 Exercise price payable for Higher of price after 10% discount to Market Price after 10% discount to the Reference such vested options Price as on the exercise date or Rs. 1,200 price ESOP 2008 (II) Period during which vested From the vesting date to From January 1, 2012 to options are exercised 31 December 2011 31 December 2012 Exercise price payable for such vested Higher of price after 10% discount to Market Price after 10% discount to the Reference options Price as on the exercise date or Rs. 1,200 price ESOP 2008 (III) Period during which vested From the vesting date From 1 January 2013 options are exercised to 31 December 2012 to 31 December 2013 Exercise price payable for such vested Higher of price after 10% discount to Market Price after 10% discount to the Reference options Price as on the exercise date or Rs. 1,200 price ESOP 2008 (IV) Period during which vested From the vesting date From January 1, 2014 options are exercised to 31 Decembe, 2013 to 31 Decembe, 2014 Exercise price payable for such vested Higher of price after 10% discount to Market Price after 10% discount to the Reference options Price as on the exercise date or Rs. 1,200 price g) ESOP 2009 The Exercise price of the Vested Option will be higher of the closing market price of the shares on the date of the Grant or Book Value of the shares as per the last audited balance sheet as on the date of the Grant

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3. The following information has been computed after taking into account the effect in aggregate of the options granted under all the Plans described above: Diluted EPS for Fiscal 2009 Rs. 3.43 per Equity Share Impact on profits and EPS of the last three years Fiscal 2006 Profit would be lower by Rs. 11.06 million Fiscal 2007 Profit would be lower by Rs. 11.17 million Fiscal 2008 Profit would be lower by Rs. 16.00 million Fiscal 2009 Profit would be lower by Rs. 38.31 million * EPS has been calculated using restated net profit for the year ended March 31, 2006 divided by the total number of Equity Shares outstanding as of March 31, 2006 and options outstanding as of March 31, 2007.

4. Difference, if any, between employee compensation cost (calculated using the intrinsic value of stock options) and the employee compensation (calculated on the basis of fair value of options) Period Impact on Profit (Rs. in millions) 2004 0.88 2005 (1.15) 2006 30.85 2007 25.50 2008 16.00 2009 38.31 5. Impact on the profits and EPS if the Issuer had followed the accounting policies specified in Clause 13 of the ESOP Guidelines. Period Impact on Profit (Rs. In millions) Impact on Basic EPS Impact on dilutive EPS 2004 (0.88) (0.03) (0.03) 2005 1.15 0.04 0.04 2006 (30.85) (0.95) (0.83) 2007 (25.50) (0.62) (0.58) 2008 (16.00) (0.25) (0.24) 2009 (38.31) (0.52) (0.50) Risk-free interest rate 6.50% - 7.75% Expected volatility 16.29% - 46.30% Expected life 3.19 – 9 years Expected dividend yield 0.4% - 1.5%

The following statement summarises the information about stock options outstanding as at 31 March 2009: Plan ESOP ESOP ESOP ESOP ESOP ESOP ESOP ESOP 2002 2004 2006 2007 2007 2007 2008 2008 Scheme D Scheme F Scheme G Scheme I Scheme II Scheme III Scheme I Scheme III As at 31 March 2009 - Range of exercise price Rs. 5.00 to Rs. Rs. Pricing Pricing Pricing Pricing Pricing Rs. 79.17 10.42 to 79.17 to formula formula formula formula formula Rs.166.67 Rs.166.67 - Number of shares arising out of 3,000 800,555 1,794,600 408,000 788,300 1,755,200 419,200 419,200 options - Weighted average life of outstanding 2.50 5.86 6.92 2.50 3.25 1.75 2.75 4.75 options (in years) Weighted average exercise prices of stock options - outstanding at the beginning of 42.08 83.28 90.74 217.00 333.00 517.00 N.A. N.A. the year - granted during the year N.A. N.A. N.A. N.A. N.A. N.A. 463.03 348.15 - forfeited/cancelled during the year N.A. 79.17 79.17 217.00 333.00 517.00 463.03 348.15 - exercised during the year N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. - outstanding at the end of the year 42.08 83.07 90.87 217.00 333.00 517.00 463.03 348.15 - exercisable at the end of the year N.A. 64.88 79.17 217.00 333.00 517.00 463.03 348.15 The weighted average market share price for stock options exercised during the year is Rs. Nil ( Previous Year Rs. 1,192).

For Edelweiss Capital Limited

Mumbai Rashesh Shah May 22, 2009 Chairman & Managing Director

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EDELWEISS ANNUAL REPORT 2008-09 M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A LY S I S R E P O R T Macroeconomic Environment Overview Economy: Review And Outlook significantly in 2009-10 despite shrinkage in exports. The comfortable reserve position provides an The year 2008-09 has been an unprecedented year additional cushion for India. Further, mandated priority with extremely difficult economic conditions across sector lending, the farm loan waiver package, the hike the globe. Growth momentum dipped significantly for in minimum support prices (MSPs) provided to the economies across the world over the past few farmers, largely favourable weather conditions during quarters. Most developed countries are experiencing the last four years, and expanding social safety-net the deepest recession since World War II. programmes including the flagship rural employment According to estimates released by IMF in March '09, guarantee programme are also likely to impart the world's advanced economies will contract by as additional dimensions of resilience to India's vast rural much as 3.5% on average this year, with a 2.8% economy. decline in the US and a 6.2% drop in Japan. India continues to face numerous challenges at the Governments and regulators across the globe have moment like a slowdown in the industrial production responded swiftly and are trying to arrest the in some sectors; the increasing government deficits slowdown and to steer their economies back on and its resulting adverse impact on the interest rates. growth path. These measures have started bearing The government is expected to take adequate the desired results by restoring stability and measures to tackle these challenges by increasing public investments, maintaining adequate liquidity in confidence in the markets.

OPPORTUNITIES EXIST. ALWAYS.

Changes in the market conditions across the world have forced a change in outlook. But opportunities still exist and we are confident of capitalising on them.

Growth prospects for India appear relatively positive the financial system without compromising on the compared with most peers. We believe that its growth quality of credit. With a likely stable Central rate may stick to mid-single digits despite the turmoil Government now in place, investment spending, across the globe. particularly infrastructure creation, is expected to This stems from the fact that India largely reflects (a) a continue. The Indian economy is, therefore, likely to large and predominantly domestic-focused economy grow at a reasonable pace, earlier than others. with a large services sector; (b) a large market for strong non-leveraged and non-discretionary domestic Capital Markets consumption; (c) relatively low dependence on The Indian financial sector has weathered the credit exports; and (d) stable and sound financial system crisis better than in most other economies. It has which remains healthy, well capitalised and prudently benefitted from the prudence of its policy makers. regulated. The rapid fall in inflation, and the strong Reforms and continuous strengthening of the and sharp monetary easing adopted by the Reserve regulatory environment have greatly improved the Bank of India carry promises for support to the efficiency and transparency in the capital markets. domestic economy over the medium term. The fall in Over the years the financial services industry has commodity prices from the earlier peaks is likely to become more vibrant with the development of new reduce India's trade and current account deficit products and services to meet the varying needs of a growing mass of clientele. Indian capital markets have

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grown significantly with a proliferation of number of 2,269 deals worth Rs. 2,109 billion in intermediaries such as investment banks and FY08. securities firms in addition to the banks that provide a The corporates as yet do not seem to view the debt host of services in the sector. markets as a credible alternative to equity capital Equity Markets markets in raising capital. The impact of the credit crisis on the global equity But as the government and regulators seem inclined markets was felt in January 2008, reached its peak in to taking steps to develop the corporate bond market October 2008 with a spate of failures of some of the in India with an objective of reducing the cost of biggest financial institutions in the developed world. raising debt capital, we believe this segment will grow Capital became scarce as risk aversion peaked. faster than other segments in the future and gradually Business environment worsened with a liquidity become a major source of capital required by crunch and emerging markets bore the brunt of this. corporates, supplementing traditional bank credit. Indian equity markets took a severe beating as foreign Edelweiss Overview institutional investors (FIIs) pulled money out of India. While the net FII inflows during the fiscal year FY08 An Integrated Financial Services was around USD 12 billion, an almost equal amount Company was withdrawn by them during FY09. The investment Edelweiss Capital Limited (the Company), since its climate was also affected by lack of primary activity. inception in 1995, has grown from a boutique The equity capital markets had witnessed high levels investment bank into an integrated Indian financial of activity including some large IPOs in FY08. services company. The Company conducts its However, the volatility and the gloomy outlook led to operations along with its subsidiaries and associates an almost complete halt to equity capital raising (together hereinafter referred to as 'Edelweiss'). activity. FY09 saw only 51 deals involving an amount Edelweiss is organised around two business lines - of Rs. 163 billion. Agency and Capital businesses. The agency This was just about 10% of the amount raised in FY08 businesses include investment banking, brokerage which had witnessed 230 public equity deals raising services - institutional and individual, asset capital of Rs. 1,602 billion. management and financial product distribution. The capital businesses include loans and treasury The Benchmark BSE Sensex, which had crossed the operations. 21,000 level in January 2008, saw a steep fall to close at 15,644 as on 31st March 2008 and continued the Long term track record of growth southward journey for the most part of the following and profitability year to close at 9,708 as on 31st March 2009, a While Edelweiss has delivered strong operating and decline of 38% in FY09 and a decline of 53% from its financial performance over the period FY04 to FY08, peak. However, with the Indian electorate giving a the unprecedented global developments leading to clear mandate in favour of stability and growth, we uncertainty, volatility and lower activity resulted in the have already witnessed a sharp upward momentum, lower performance for FY09. including the unprecedented imposition of circuit Enhanced risk management and maintenance of breakers twice on the upswing on 17th May 2009. adequate liquidity formed a significant part of our If the equity markets hurt us all beyond expectations primary response to these challenges. We have been last year, they may well surprise us on the other side successful in protecting the balance sheet and once we start noticing more definite signs of maintaining margins on revenues. economic recovery, globally and in India. As a consequence of the market slowdown during the Debt Markets year, our revenues have declined 17% in FY09 over Growth in the corporate debt markets was stunted FY08 and Profit after Tax and Minority Interest during the second half of FY09 by a severe liquidity recorded a 32% fall over the same period. crunch, higher interest rates and counter party fears. The comparison appears to be highly skewed as while However, 2,177 deals with a volume of Rs. 2,617 the FY09 performance bore the brunt of economic billion during FY09 compares well with the total slowdown, FY08 was a year for the capital markets

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EDELWEISS ANNUAL REPORT 2008-09

with record level or near-record level business in Business Income Highlights various activities. However, taking a long term view, Agency: Fee and Commission Revenues for FY09 of our revenues have grown at a 5-year CAGR of 100 % Rs. 2,441 million (Rs. 4,438 million for FY08). while our net profits have increased at a 5-year CAGR of 89 % at the end of FY09. Capital: Treasury, Arbitrage and Trading Revenues for Even on a shorter time frame, as compared to FY07 FY09 of Rs. 2,512 million (Rs. 3,493 million for FY08) our revenues and profits have grown at an annual and Interest Revenues for FY09 of Rs. 3,315 million compounded rate of 56% and 30% respectively. (Rs. 2,171 million for FY08). Adverse market conditions and the change in Agency Businesses treatment of STT (from being available as an offset for tax credit in FY08) impacted the revenues for FY09. Investment Banking Our investment banking business includes Equity At the same time, we have implemented a number of expense control measures to deliver a reasonable Capital Markets (ECM) business and Advisory pre-tax operating margin of 36.5% for the year services. While ECM provides a broad range of compared to 41% for FY08. services, including IPO transaction execution,

CHANGE IS DYNAMIC. SO ARE WE. We do not sacrifice long-term stability for short- term gains, however attractive they may seem. This has kept us in good stead over the years and well poised to take advantage of the opportunities as and when the market revives.

Networth of the Edelweiss Group has shown Advisory services offer mergers and acquisitions sustained growth and stood at Rs. 21.1 billion advisory, capital raising advisory and transaction (excluding minority interest) as on 31st March 2009. execution relating to structured finance, real estate Our achieved performance, in the given adverse and infrastructure. environment, is reflective of the resilience of our Equity Capital Markets business model, characterised by diversification Primary equity capital market activity was almost at a of our revenue streams and the flexibility of our standstill with barely a few IPOs during the year. The cost structure. Despite the challenging business total amount mobilised in IPOs during the year environment of FY09, we are positive about the future. was just one-tenth of that mobilised in FY08. These While maintaining a focus on cost control, we have adverse market conditions also impacted the flow continued to invest in new businesses - Retail of our ECM business. distribution and broking, alternate asset and domestic asset management for long term growth. Mergers & Acquisitions Advisory Our Mergers and Acquisitions (M&A) team provides Consolidated Financial Highlights clients strategic and financial advice, aiding them • Revenues of Rs. 9,005 million in achieving their objectives through mergers, (Rs. 10,888 million for FY08) acquisitions, takeovers, tender offers, divestments, • Profit after Tax of Rs. 1,864 million spin-offs, restructuring, joint ventures and strategic (Rs. 2,732 million for FY08) alliances and de-mergers. • Diluted EPS of Rs. 24.28 Our services encompass strategy formulation, (Rs. 39.99 in FY08) identification of buyers or targets, valuation,

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negotiations and bidding, capital structuring, Corporate Debt Syndication transaction structuring and execution. This activity Our Debt Syndication Desk has gained a strong too, like other capital market activities, suffered from foothold and visibility in the market. lower level of activity in the Indian markets. With primary equity capital markets seeing a much Capital Raising Advisory lower level of activity, Indian corporate increasingly Among other capital raising activities, Edelweiss has a looked to debt as a preferred route to raising capital. very strong private equity capability which was also We acted as sole arrangers for the placement of a the genesis of the firm's foundation. Our private equity NCD issue for AB Nuovo, a flagship company of the advisory group arranges capital from private equity Aditya Birla group. We also acted as sole arrangers funds for companies across sectors. for Reliance Industry Limited bonds. The structured finance team arranges a wide range of During the year under review, we also expanded innovative structured solutions, including acquisition coverage of our debt segment research by publishing financing and sponsor financing. new reports. Some of these reports include However, with the FII interest in India waning during • Bond Vector the year, this activity also was on a low key. As a result • Trade Mirror of this, while the fiscal year ended March '08 had • Statistical Supplement • Post Policy Pulse

ENGINEERING SOLUTIONS. FUELLING GROWTH.

We continue to invest in our existing line of businesses. At the same time, we keep exploring new frontiers to incubate adjacent businesses. This has seen us evolve from a boutique investment bank to a complete financial solution provider.

seen 461 private equity deals amounting to raising Our achievements capital of Rs. 583 billion, FY09 saw subdued activity • Ranked # 2 as per Prime Database in Short Term in the form of only 292 deals involving an amount of Debt Placement for FY09. We mobilised Rs. 397.6 Rs. 340 billion. While the number of deals in pipeline billion in 256 deals in <1 year segment with a continues to be strong, deal closures are getting 21.7% market share. delayed on the consensus on the valuation of firms. • Ranked # 2 as per the Prime Database in CP We closed 9 investment banking deals successfully placement for FY09, raising Rs. 69.8 billion from during the year compared to 31 deals in the past year. 129 deals with a 15.3% market share. Some of our notable transactions include: • Also ranked # 11 by Bloomberg in Indian Domestic Bonds Market League Table for FY09. We • Book running lead managers in a large IPO of mobilised Rs. 39.2 billion in >1 year paper across Rs. 8.3 billion by KSK Energy Ventures Ltd. 52 deals in this period. • Acquisition of PeopleSupport, Inc. by Aegis BPO Services Limited for USD 250 million. Institutional Clients Group We have recently formed an Institutional Clients Group • Private equity placement for SKS Micro Finance (ICG) to focus on adding value and strengthen for USD 75 million. relationships with corporates, business groups and Edelweiss was adjudged winner in the Best Merchant financial sponsors. It provides fresh perspectives to Banker category in the Outlook Money NDTV Profit our clients while offering customised solutions to Awards 2008. address their diverse needs and concerns.

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EDELWEISS ANNUAL REPORT 2008-09

Brokerage Services for the conference series in New York and London in Our Brokerage services include equity and debt the coming months. broking for institutional and HNI clients and are Equities Research supported by a strong research platform. Edelweiss has been a pioneer amongst Indian The brokerage industry continues to be highly financial companies in building a robust equities fragmented in India. The market share of the top five research platform to provide professional insights and brokers on the NSE in cash segment is under 14% in perspectives on investing ideas and strategies. 2008-09 even though it has increased from 10% in The quality and depth of our research has helped our the year 2002-03. Similarly the market share of the institutional equities business grow stronger, year-on- top ten brokers on the NSE in cash segment stands year. Now we provide cutting edge research online to at about 24% in 2008-09 up from approximately 16% our clients as well. Our research portal significantly in 2002-03. ups the ante on research access, sorting of The average daily market volumes in current year information, analysis and archiving. declined from Rs. 763 billion in FY08 to Rs. 591 In addition, our fundamental research continues to billion. It is significant that the drop in volumes was extensively cover more than 125 companies which more pronounced in the second half of FY09, it was represent approximately 65% of the market about 44% lower than that in the corresponding capitalisation of all companies listed on the BSE as on period of Fy08. March 31st 2009. Institutional Equities Our alternative research utilises conventional and Our institutional equities business comprises proprietary analytical techniques and models to institutional equity sales and research. This business identify short and medium-term capital markets is operated by our wholly owned subsidiary, investment opportunities. Edelweiss Securities Limited. Our research platform offers the following products: We provide equity and equity-derivatives sales and • Relative Strength Comparison and Earnings trading services to a large and diversified base of Strength Comparison institutional investors, including FIIs and domestic • Pair Strategy institutional investors. • Edelweiss Market Scan Equity Sales • Analysis Beyond Consensus Research Our institutional sales group provides equity and • Master Moves equity-derivatives sales services to institutional investors and also supports our equity capital markets • Edelweiss Style Analysis and Edelweiss Value business. We also seek to develop long-term Scanner relationships with fund managers founded on intense • Sector Fact Sheets servicing, efficient execution and the strength of the We also provide customised services to our products from our research department. We also institutional clients by performing independent provide dedicated support to our institutional clients research to understand the dynamics that drive their by facilitating block trades. respective sectors and the companies they cover. In Institutional Investor Conferences are one of the addition, our research analysts periodically publish popular platforms we provide. In FY09, we hosted comprehensive 'white-paper' of a particular industry several India and International conferences (New York, or a long-term investment theme. London and APAC regions of Singapore and Hong Our differentiated research combines 'top-down' Kong). Our flagship India conference – 'Edelweiss macro research to spot themes and 'bottom-up' India Conference 2009' Mumbai, held in March 2009 research to identify stock ideas and quantitative was successful with participation from over 60 top analytics. Indian corporates and over 100 institutional investors. The conference facilitated over 2000 meetings and we are seeing the increased investor interest in the participating companies. Currently, we are preparing

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HNI Businesses initiating changes in norms of a few products. We are Our high networth individuals (HNI) businesses offer evolving a differentiated strategy for this business and wealth management advisory and private client propose to launch niche schemes to build a stable broking services. Our approach is to provide advisory- retail customer base. based services with a strong emphasis on research, Alternative Asset Management and to offer individual clients value-added services. The effect of the global trend of large redemptions by Our service offerings include providing HNIs with investors was also felt in the alternative asset asset allocation advisory, customised, comprehensive management business of Edelweiss where the investment advisory and asset deployment advice. AUMs/AUAs of this business now stand at more than Even though FY09 presented lower opportunities for USD 380 million equivalent as on 31st March 2009. HNI businesses, given India's potential for economic India Diversified Fund, a fund that we advise, was growth and its demographics, we are likely to witness recently adjudged the “Asian Investor Best India significant wealth creation in the domestic economy Fund” for 2008. and growth in number of HNIs. The India Diversified Fund has been one of the best Financial Products Distribution operating India funds since its inception. It had also won the Eureka Hedge and Hedge Funds World's Third Party Financial Products Distribution business “Best Asian Arbitrage Fund” award in May 2008. gained some traction during the year with new tie-ups These awards validate the Edelweiss approach for distribution of insurance products for leading towards asset management. insurance companies and with over 10 banks for distribution of financial products to their clients. We Capital Businesses continue to build this business as a part of our retail Our capital business line comprises our loans strategy. business and treasury operations. Asset Management Loans Our Asset Management business includes domestic Volatile market conditions and a rise in the borrowing asset management (AMC) and alternative asset costs during the second half of the year made management businesses. collateral management the focus for the business. The global financial crisis led to asset management We proactively reduced the loan book in consonance companies all around the world suffering erosion in with prudent risk management. their AUMs – both due to a steep fall in their NAVs Business was also affected by the drying up of IPO and due to massive redemptions from investors. funding and ESOP funding opportunities since Indian asset management companies were no January '08. exception with liquid funds and FMPs coming under severe liquidity pressures. The outstanding loan book stands at Rs. 6.3 billion at the end of FY09 compared to Rs. 9.1 billion in the As a result of this turmoil, the mutual fund industry in previous year. We strengthened collateral cover and India, which had experienced considerable growth in the average collateral cover on our loan book was the last few years with average AUMs increasing to 2.8 times as at 31st March 2009. We provide a Rs. 5,315 billion as of March 31, 2008, suffered a General Loan Loss Provision on Standard Assets at decline in FY09 with its AUMs falling to Rs. 4,940 50 bps on our loan book. billion as on 31st March 2009. However, the mutual We, along with most of the existing investors in our fund industry AUMs as a proportion of bank deposits subsidiary ECL Finance Limited, infused additional in India are still at very low levels and have a high capital in this company during the year taking its potential to grow in the long run. networth to over Rs. 10 billion. Domestic Asset Management A well capitalised NBFC is crucial to our long term Edelweiss launched its initial offering of Liquid strategy of expanding our footprint in capital based Schemes in September 2008 followed by an equity businesses. Going forward, we expect this business scheme during the year. The business model of the to remain poised to participate in the financing industry has come in for a review with regulators opportunities that remain robust.

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Corporate Governance Report | Consolidated Financial Statements | EDEL StWEISandaS loANNUneAL Fi REPORTnancia 2008-09l Statements

EDELWEISS ANNUAL REPORT 2008-09

Treasury Operations down our leverage to 0.3 times. Our Group networth Our treasury operations manage the surplus liquidity now stands at Rs. 21.1 billion excluding Minority of the group on a short-term basis. We follow a multi- Interest (Rs. 25.1 billion including Minority Interest). strategy approach with an aim to achieve absolute The strength of our Balance Sheet has been tested returns and optimise our yields while laying adequate and proven during times of severe stress in the emphasis on preserving and maintaining the safety of second half of the year. our capital. Our treasury investments are structured to maintain Outlook sufficient liquidity in our portfolio to support the capital Despite the drop in our GDP growth rate, the long- needs of our other businesses. term India story and the opportunities that it will offer across sectors remains intact. In fact India has already During the year, the arbitrage opportunities reduced distinguished itself with a positive GDP growth due to low market volumes. We also witnessed higher whereas major nations are grappling with negative borrowing costs in the second half of the year. economic growth or recession. Our flexible approach to managing liquidity allowed us With a likely stable government in place, India is to swiftly shift a part of treasury assets to cash or expected to resume its journey to higher growth cash equivalents to impart higher liquidity to the sooner than later. balance sheet. As a result, the treasury income for

STRONGER THE CHALLENGE. STRONGER OUR RESOLVE. Financial Markets are fraught with challenges. We understand. Challenges inspire us to devise methods to face, avert and overcome them for the better.

the fiscal year was Rs. 2,512 million compared to The financial services sector is expected to grow as Rs. 3,493 million in the previous year. This was partly the conditions stabilise and start improving, early offset by increase in interest income. signs of which are already visible. Meanwhile, though We continue to have a strong focus on risk the equity markets operated in a lacklustre way management and deploy various proprietary risk with some hope of a revival as seen in first quarter of the current year, the debt markets hold exciting measurement and monitoring tools to effectively opportunities as they will become the more dominant manage our risk exposures. source of capital for corporates planning for Balance Sheet expansion in the future. The regulators also continue to implement various measures to activate this market In the backdrop of a difficult business environment and we should start seeing encouraging results in during a major part of the year, we continued to focus short to medium term. on maintaining a quality balance sheet which is strong, liquid and de-levered. We believe our approach towards business that focuses on four key areas – cost flexibility, balance The amount of our cash or cash equivalents on the sheet flexibility, constant focus on risk and growth in Balance Sheet as at the end of the year was over adjacent markets has kept us in good stead and will 50% of our total assets at the end of the year with continue to do so. We will be ready to capitalise on bank fixed deposits over Rs. 13 billion. opportunities for business growth as the growth As a part of a conscious strategy, we have brought comes back.

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Human Resources A significant amount of our management effort is targeted at establishing the risk context for our Edelweiss believes that people are an important products, functions or asset class exposures. On the reason for our success. Recruiting top talent, organisational front, we have created a Risk Group developing them and retaining them is fundamental that is responsible for the entire spectrum of risk to our strategy. response – articulation, measurement, reporting and The recent turbulent times pushed organisations management of risk. to face unique and complex talent management At the Board level, the risk policies are laid out by a challenges. Effective manpower planning and internal Risk Committee which is headed by a non-executive re-allocation helped us in retaining good talent. Director. The group strength was about 1300 employees at the Edelweiss also believes in building a sophisticated end of the FY09 as against over 1600 last year. information technology platform to meet not only We increased the visibility and accessibility of the the business needs but also minimise operational senior management to address potential and latent risks. We have put in place a well-defined Business employee concerns towards job security and Continuity Plan (BCP) that drills emergency organisation's plan to face market environment. procedures and action-plans across the organisation. Open house and town hall meetings were held by the Its effectiveness is not only periodically tested in top management to this end. We also organised a mock drills but was actually demonstrated on number of employee engagement activities reinforcing 28th November 2008 following the terror attacks in a sense of togetherness across the organisation. Mumbai. The company also maintains adequate Training is one of the key focus areas for us. This year insurances both from a compliance and from a about 4100 person hours of training were held for the prudence point of view. employees. Leadership development within the organization was driven through the formulation of Internal Control Systems Senior Leadership Group (SLG) and a Leadership Edelweiss Capital Limited is a SEBI registered Category I Merchant banker and is governed by SEBI Group (LG). The Leadership groups met at a summit (Merchant Banking) Regulations, 1992. Edelweiss to discuss strategic directions for strengthening the conducts the business of stock broking through its future plans of the organisation. subsidiary Edelweiss Securities Limited (ESL) and The year also saw successful implementation of a fully Edelweiss Broking Limited (EBL) which is governed by automated 360 degree feedback process involving SEBI (Stock Brokers and Sub Brokers) Regulations, this group. 1992. The 225 seater Fountainhead Leadership Center at ESL is also a SEBI registered Depository Participant Alibaug is in final stages of completion and affirms our with CDSL. The non banking financing activities are focus on employee development. being carried through the subsidiaries namely, ECL Finance Limited and Crossborder Investments Private Risk Management Limited. These entities are registered with the Reserve We believe in protecting our capital and safeguarding Bank of India as Non Banking Financial Companies the health of our balance sheet at all times. not accepting public deposits. We practice an analytically driven approach to Another subsidiary, Edelweiss Commodities Limited assessing, measuring and managing risk. (formerly ECAL Advisors Limited) and EC Commodity It is this culture of risk awareness and respecting risk Limited carries on the business of commodities that has enabled us to build businesses on a strong broking and trading and is governed by Forward foundation and manage the volatility in the year that Contracts (Regulation) Act, 1952. The business of has gone by. We have demonstrated our commitment insurance advisory is carried through the subsidiary, to prudent risk management during FY09 wherein we Edelweiss Insurance Brokers Limited. have consciously chosen to shift a larger portion of Edelweiss has an adequate internal audit and control assets to cash or cash equivalents to maintain higher system across its businesses. Towards this endeavour levels of liquidity across the firm and reduce balance we have an experienced internal team supported by sheet leverage. reputed external auditors.

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EDELWEISS ANNUAL REPORT 2008-09

All operational activities are subject to internal audits Edelweiss, its employees, its clients and associates. at frequent intervals. The existing audit and inspection EdelGive Foundation, whose primary focus is on procedures are reviewed periodically to enhance their creating educational, employment and sustainable effectiveness, usefulness and timeliness. livelihood opportunities for underprivileged youth, Edelweiss has a centralised Compliance Department brings an “investment banking and venture capital” which ensures compliance with all the applicable rationale and thinking to the social sector. laws. In addition, it provides advice on general Edelweiss leverages its strength - the ability and regulatory matters including formulating policies on expertise to act as a bridge between providers and prevention of Insider Trading etc. consumers of capital - to achieve the objective of addressing the primary needs of the social sector. ISO 9001:2000 Certification Edelweiss has been certified as ISO 9001:2000 compliant during this year. This is an organisation- wide certification which covers all Lines of Businesses and Support Functions. It ensures that Quality Management System (QMS) of Edelweiss complies with International Standards. Credit Ratings Edelweiss Capital Limited and some of its subsidiaries enjoy the highest short term credit rating of either P1+ from Crisil or A1+ from ICRA, which have been reaffirmed recently in March '09 by Crisil and in April '09 by ICRA. Edelweiss Capital Limited also has a Long Term Rating of LAA- from ICRA. Investor Relations We view Investor Relations as an important bridge between the firm and the investing community. We continue to enhance our disclosure levels and provide our investors, analysts and other stakeholders with information on our performance, strategies and prospects. We hold quarterly conference calls with investors and analysts. We also distribute and upload on our website a quarterly investor presentation and other useful information after declaration of each quarterly result. We are committed to adopting best in class IR practices to further enhance communication with the investing community so that we are perceived as a responsive and transparent organisation. EdelGive Foundation EdelGive Foundation - our not-for-profit subsidiary was formally registered as a Section 25 company in May 2008. EdelGive Foundation has been formed to create an effective institutional platform to provide structure and direction to the philanthropic activities of

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Regulatory Changes Posing Challenges and Opportunities We are constantly aware of regulatory changes and related challenges and opportunities that impact our business environment. We are also proactive in aligning ourselves both in terms of adherence to compliance requirements and also to opportunities arising there from. Some of the key regulatory changes that were introduced are narrated below:

Regulator Change introduced Implication

NSE/BSE/SEBI Cross Margining across Extension of cross margining to all investors which Exchange traded Equity (Cash) will result in savings of paying margin twice. and Exchange traded Equity This may lower margin payment for traders and cut Derivatives (Derivatives) working capital cost for brokers. segments

NSE/BSE/ Internal Audit of Stock Brokers Half yearly Internal Audit has been mandated for MCX-SX / Trading Members / Clearing broking operations. First such report has to be Members submitted to exchanges for the period from October 1, 2008 to March 31, 2009. Comprehensive coverage of scope for internal audit has been introduced and this will emphasize focus on operations and risk management.

RBI Increase in CRAR-Extension In August, 2008 the Reserve Bank of India (RBI) had of time advised every systemically important non-deposit taking non-banking financial company to increase the capital to risk weighted asset ratio (CRAR) from 10% to 12% by March 31, 2009. However, considering the difficulty in raising equity capital in the current economic environment, RBI has decided to defer the implementation of CRAR of 12% to March 31, 2010. Thereafter these companies will have to raise their CRAR to 15% by March 31, 2011.

SEBI SEBI (Substantial Acquisition of Promoters of a company now need to disclose the Shares and Takeovers) pledged shares and invocation of the pledge to the (Amendment) Regulations, 2009 company within seven working days.

SEBI SEBI (Mutual Fund) Mutual Funds Schemes shall not invest more than Regulation 1996 30% of its net assets in money market instruments of a single issuer thus reducing the risk related to concentration of asset allocation.

Ministry of Promulgation of “The Limited LLP is an alternative corporate business form that Corporate Liability Partnership Act, 2008”, gives the benefit of limited liability of a company and Affairs (LLP) the flexibility of a partnership. Cautionary Statement Statements made in this Management's Discussion and Analysis contain certain forward looking statements based on various assumptions on the Company’s present and future business strategies and the environment in which it operates. Actual results may differ substantially or materially from those expressed or implied due to risk and uncertainties. These risks and uncertainties include the effect of economic and political conditions in India and abroad, volatility in interest rates and in the securities market, new regulations and Government policies that may impact the company’s businesses as well as the ability to implement its strategies. The information contained herein is as of the date referenced and Edelweiss does not undertake any obligation to update these statements. Edelweiss has obtained all market data and other information from sources believed to be reliable or its internal estimates, although its accuracy or completeness cannot be guaranteed.

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EDELWEISS ANNUAL REPORT 2008-09

Edelweiss Capital Limited

Corporate Governance Report

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EDELWEISS ANNUAL REPORT 2008-09

Corporate Governance Report

1. COMPANY’S PHILOSOPHY ON CORPORATE GOVERNANCE

Corporate Governance is about promoting fairness, transparency, accountability and integrity of the management. Edelweiss believes that adhering to the standards of best Corporate Governance practice is essential to enhance shareholders’ value and achieve long term corporate goals. Corporate Governance revolves around commitment to values and ethical business conduct. It is therefore not just a coincidence that the two core beliefs of Edelweiss include “Values Protect” besides “Ideas Create”. The Company’s philosophy on Corporate Governance stresses the importance of transparency, integrity, fairness, accountability, responsibility and protec tion of all the stakeholders’ interests.

2. BOARD OF DIRECTORS

The Board of Directors provide strategic direction and thrust to the operations of the Company, thereby enhancing the value of the stakeholders.

Composition

The Board of Directors of the Company has an optimum combination of executive and non-executive directors and is in conformity with Clause 49 of the listing agreement, in which the Company’s equity shares are listed. The composition of the Board as on March 31, 2009 was as under:

2 Promoter, Executive Directors (including the Chairman)

2 Non-Independent, Non-Executive Directors

4 Independent, Non-Executive Directors

None of the Directors on the Board is a member of more than 10 Committees and Chairman of more than five Committees (as per Clause 49(I)(C)(ii)) across all the companies in which he is a Director. All the Directors have made the requisite disclosures regarding Committee positions held by them in other companies.

The Board met four times on the following dates during the financial year 2008-09:

May 16, 2008, July 11, 2008, October 23, 2008 and January 23, 2009.

The last Annual General Meeting of the Company was held on July 11, 2008.

Board Procedure

The annual calendar of Board Meetings is agreed upon at the beginning of the year. The Agenda is circulated in advance to the Board Members. The items in the Agenda are backed by comprehensive background information to enable the Board to take appropriate decisions.

Code of Conduct for Directors and Senior Management

The Company has adopted a Code of Conduct (Code) for Directors and Senior Management personnel one level below the Executive Directors including all Functional Heads, which is in compliance with the requirements of Clause 49 of the Listing Agreement entered into with the Stock Exchanges. The Code has been posted on the Company’s website.

Further, all the Board members and senior management personnel have affirmed compliance with the Code. A declaration to this effect signed by the Chairman and Managing Director forms part of this report.

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Category and attendance of Directors

The names and categories of the Directors on the Board, their attendance at Board Meetings held during the financial year 2008-09 and at the last Annual General Meeting (AGM), as also the number of directorships and committee positions held by them in other public limited companies as on March 31, 2009 are as under:

Name Category Relationship No. of Whether No. of Committee Position*** with other Board attended directorships directors Meetings last AGM in other attended* public limited companies** Member Chairman Rashesh Shah Executive None 4 Yes 6 1 – Chairman & Managing Director Venkat Ramaswamy Executive None 4 Yes 4 – – Whole-time Director Narendra Jhaveri Independent, None 4 Yes 12 4 4 Non Executive P. N. Venkatachalam Independent, None 4 Yes 3 1 – Non Executive Sunil Wadhwani Independent, None 2 No 2 – – Non Executive Ramanan Independent, None 2 Yes 4 – – Raghavendran Non Executive Kunnasagaran Non Independent, None 3 No 2 – 1 Chinniah Non Executive Sanjay Santhanam Non Independent, None 4 Yes – – – Non Executive

* The Directors also participate in Board meetings through tele-conferencing. ** Excludes Directorships in Private Limited Companies, Foreign companies and Government Bodies. *** Only Audit Committee and Shareholders’/Investors’ Grievance Committee have been considered for the Committee positions.

Mr. Sanjay Santhanam, Mr. Narendra Jhaveri and Mr. P. N. Venkatachalam retire by rotation and being eligible seek re-appointme nt at the ensuing Annual General Meeting (AGM). A brief resume of these Directors along with the nature of their expertise and details of other directorships, committee positions held by them and the number of shares held by them in the Company have been disclosed and forms part of the Notice convening the Annual General Meeting (AGM) dated May 22, 2009.

3. AUDIT COMMITTEE

Composition as on March 31, 2009

Mr. Narendra Jhaveri -- Chairman Mr. P. N. Venkatachalam -- Member Mr. Ramanan Raghavendran -- Member Mr. Sunil Wadhwani -- Member

All the members of the Committee have financial management expertise. The constitution and terms of reference of the Committee are in compliance with the requirements of Section 292A of the Companies Act, 1956 and clause 49(II)(A) of the Listing Agreement.

Brief Description of the Terms of Reference

1. Oversight of the Company’s financial reporting process, review of internal control system and the disclosure of its financial information to ensure that the financial statements are correct, sufficient and credible.

2. Reviewing with the management, the annual financial statements before submission to the Board for approval.

3. Reviewing with the management, the quarterly financial statements before submission to the Board for approval.

4. Discussion with the internal / statutory auditors on any significant finding and follow-up there on.

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Executive Directors

The details of the remuneration paid to the Executive Directors during the year is as under:

Mr. Rashesh Shah, Chairman & Managing Director Mr. Venkat Ramaswamy, Executive Director Salary & Allowances 5,179,837 4,846,401 Rent Perquisites 1,038,241 677,600 Performance Bonus 23,000,000 20,000,000 (FY 2007-08) Total 29,218,078 25,524,001 Service contract 3 years from April 1, 2008 3 years from April 1, 2008 Notice period N.A. N.A. Severance fee N.A. N.A. The shareholding of the Directors as on March 31, 2009 is as under:

Directors No. of shares % of the paid up capital Mr. Rashesh Shah 13,022,673 17.38 Mr. Venkat Ramaswamy 5,302,656 7.08 Mr. Narendra Jhaveri 7,800 0.01 Mr. P. N. Venkatachalam 2,000 0.00 Mr. Sunil Wadhwani 264,000 0.35 Mr. Ramanan Raghavendran 7,800 0.01 5. SHAREHOLDERS/INVESTOR GRIEVANCE COMMITTEE The Shareholders/Investor Grievance Committee comprises three members viz: Mr. Sanjay Santhanam, Mr. Kunnasagaran Chinniah and Mr. Venkat Ramaswamy. Mr. Sanjay Santhanam generally chairs the meetings. Meetings held During the financial year 2008-09, three meetings were held on May 15, 2008, July 11, 2008 and October 23, 2008 Attendance:

Name of the Member No. of meetings attended Mr. Sanjay Santhanam 3 Mr. Kunnasagaran Chinniah 2 Mr. Venkat Ramaswamy 3 Mr. B. Renganathan, Company Secretary is the Compliance Officer. Based on the report received from the Company’s Registrar & Share Transfer Agent, the Company had received 618 requests/ complaints which were satisfactorily resolved/replied to. There were no investors’ complaints pending as on March 31, 2009. 6. GENERAL BODY MEETINGS The date, time and venue of the last three Annual General Meetings are given below:

Financial Year Date Time Venue No. of special resolutions passed 2007-08 July 11, 2008 2.30 p.m. Y.B. Chavan Auditorium, Yashwantrao Chavan 3 Pratishthan, General Jaganath Bhosale Marg, Nariman Point, Mumbai 400 021 2006-07 September 12, 2007 10:30 a.m. 14th Floor, Express Towers, Nariman Point, Mumbai 11 400 021 2005-06 September 22, 2006 5:30 p.m. 14th Floor, Express Towers, Nariman Point, Mumbai 3 400 021

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Meetings held

During the financial year 2008-09, four meetings were held on May 15, 2008; July 11, 2008; October 23, 2008 and January 23, 2009.

Attendance:

Name of the Member No. of meetings attended Mr. Narendra Jhaveri 4 Mr. P. N. Venkatachalam 4 Mr. Sunil Wadhwani 2 Mr. Ramanan Raghavendran 2

The Statutory Auditors, Internal Auditors, Chief Financial Officer, Senior V.P. (Finance & Accounts) and V.P. (Finance & Accou nts) are invited to attend the meetings of the Committee. The Company Secretary of the Company acts as the Secretary to the Committee.

Mr. Narendra Jhaveri was present at the last Annual General Meeting held on July 11, 2008.

4. REMUNERATION COMMITTEE

The Remuneration Committee comprises of three non–executive Directors as members viz: Mr. Kunnasagaran Chinniah, Mr. Ramanan Raghavendran and Mr. Sanjay Santhanam.

Meetings held

During the financial year 2008-09, two meetings were held on May 15, 2008 and July 11, 2008.

Attendance:

Name of the Member No. of meetings attended Mr. Kunnasagaran Chinniah 1 Mr. Sanjay Santhanam 2 Mr. Ramanan Raghavendran 2

The terms of reference of the Remuneration Committee include formulating policies on specific remuneration packages for all the directors and designing and implementation of performance appraisal systems and discretionary performance bonus payments for them and such other functions as may be delegated to it by the Board of Directors.

Remuneration to Directors

Non-Executive Directors

The Company pays Rs.20,000/- per meeting towards sitting fees only to the Independent Directors for attending every Board and Committee meeting. During the financial year 2008-09 ESOPs were also granted to the Non-Executive Directors. The sitting fees paid and ESOPs granted to the Directors for the year ended March 31, 2009 are as follows:

Name of the Director Sitting fees (Rs.) No. of Options under ESOP 2008 Mr. Narendra Jhaveri 280,000 5,000 Mr. P. N. Venkatachalam 240,000 5,000 Mr. Sunil Wadhwani 80,000 5,000 Mr. Ramanan Raghavendran 120,000 5,000 Mr. Kunnasagaran Chinniah – 5,000 Mr. Sanjay Santhanam – 5,000

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Postal Ballot A. Resolutions passed through Postal Ballot on July 28, 2008

A special resolution was passed on July 28, 2008 through postal ballot, pursuant to Section 192A of the Companies Act, 1956 read with the Companies (Passing of Resolution by Postal Ballot) Rules, 2001, for making inter corporate loans, giving guarantees and/ or making investments in excess of the limit prescribed under Section 372A of the Companies Act, 1956.

Mr. P.K. Pandya was appointed as the Scrutinizer to conduct the Postal Ballot process.

The Notice dated May 30, 2008 was sent to the members and the last date for receipt of postal ballot forms was July 18, 2008. Till that date, 960 forms were received. According to the Scrutinizer’s report the Resolution was passed by majority of 99.13%. The result of the postal ballot was declared on July 28, 2008 and published on July 29, 2008 in one English daily and one Marathi daily for the information of members.

B. Resolutions passed through Postal Ballot on March 30, 2009

Three special resolutions and one ordinary resolution were passed on March 30, 2009 through postal ballot, pursuant to Section 192A of the Companies Act, 1956 read with the Companies (Passing of Resolution by Postal Ballot) Rules, 2001, in respect of the following item of business: 1. Special resolution for issue of shares under Edelweiss Employee Stock Incentive Plan 2009, pursuant to Section 81(1A) of the Companies Act, 1956. 2. Special resolution for issue of shares to the employees & directors of the subsidiaries of the Company under the Edelweiss Employee Stock Incentive Plan 2009. 3. Special resolution for alteration in the main objects clause of the Memorandum of Association of the Company pursuant to Section 17 of the Companies Act, 1956. 4. Ordinary resolution under Section 61 of the Companies Act, 1956 for the variation in the terms of a contract referred to in the Prospectus and/or Red Herring prospects issued by the Company. Dr. K.R. Chandratre was appointed as the Scrutinizer to conduct the Postal Ballot Process.

The notice dated February 11, 2009 was sent to the members and the last date for receipt of postal ballot forms was March 25, 2009. Till that date, 2,485 forms were received. According to the Scrutinizer’s report the Resolutions were passed by a majority of more than 99%. The result of the postal ballot was declared on March 30, 2009 and published on March 31, 2009 in one English daily and one Marathi daily for the information of members.

Resolutions required to be passed through postal ballot will be taken up as and when necessary.

7. DISCLOSURES

i. The Company did not have any material significant related party transaction having a potential conflict with the interest of the Company at large. Transactions with related parties are disclosed in the Notes to the accounts forming part of the Annual Report.

ii. The financial statements have been prepared in accordance with the accounting standards and policies generally accepted in India.

iii. There were no instance of non-compliance by the Company on any matter related to the capital markets, resulting in disciplinary action against the Company by the Stock Exchanges or SEBI or any other statutory authority, during the last three years.

iv. The Company has implemented the mandatory requirements of Corporate Governance as set out in the Listing Agreement. In respect of compliance with the non-mandatory requirements, the Company has constituted a Remuneration Committee, the details whereof are given under the heading “Remuneration Committee”. The quarterly and half-yearly financial results are displayed on the Company’s website and are being published in English and Marathi newspapers.

v. The Company has a Risk Management Policy Framework for risk identification, assessment and control to effectively manage risks associated with the business of the Company.

vi. Proceeds from Public Issue

The Company has made necessary disclosures relating to utilisation of proceeds from the initial Public Issue in the Financial Statements under Notes to Accounts.

vii. CEO/CFO Certification

As required by Clause 49(V) of the Listing Agreement, the CEO and CFO have given their certificate to the Board.

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viii. Compliance Certificate

As required by Clause 49 of the Listing Agreement, a certificate from a Practising Company Secretary, certifying the compliance by the Company with the provisions of Corporate Governance of the Listing Agreement is given as an Annexure to this Report.

8. MEANS OF COMMUNICATION

i. The quarterly/annual financial results are regularly submitted to the Stock Exchanges in accordance with the Listing Agreement and published in one English daily, and one Marathi daily. The quarterly/annual results are also uploaded on the website of the Company www.edelcap.com soon after the declaration.

ii. The Management Discussion and Analysis Report, in compliance with the requirements of Clause 49 of the Listing Agreement is annexed to the Directors’ Report and forms part of this Annual Report being sent to all the members of the Company.

iii. The consolidated financial statements of the Company and its subsidiaries form part of this Annual Report.

9. GENERAL SHAREHOLDER INFORMATION

i. AGM: Date, time and venue : July 31, 2009 at 2:30 p.m. at Y.B. Chavan Auditorium, Yashwantrao Chavan Pratishthan, General Jaganath Bhosale Marg, Nariman Point, Mumbai – 400 021. ii. Financial Year : April to March iii. Date of Book Closure : July 24, 2009 to July 31, 2009 iv. Dividend payment date : On or after July 31, 2009

v. Listing of equity shares on Stock Exchanges:

The equity shares of the Company are listed at Bombay Stock Exchange Ltd. (BSE) and National Stock Exchange of India Ltd. (NSE). The Company has paid listing fees, as applicable to the respective Stock Exchanges for the financial years 2007- 08, 2008- 09 and 2009-10.

vi. Stock Codes:

Trading Symbol Bombay Stock Exchange Limited 532922 National Stock Exchange of India Limited EDELWEISS ISIN with NSDL and CDSL Equity shares INE532F01047

vii. Market Price Data: High/Low of daily closing market price of the Company’s shares traded at NSE and BSE during each month during the financial year ended March 31, 2009 are as under:

Share Price & Volume Month BSE NSE High (Rs.) Low (Rs.) Trade Quantity High (Rs.) Low (Rs.) Trade Quantity Apr-08 841.10 760.15 975910 841.80 759.10 2191609 May-08 859.05 715.70 924519 859.70 716.75 1901906 Jun-08 699.60 585.25 363612 701.95 584.50 820725 Jul-08 605.00 452.05 542465 607.40 444.30 1436109 Aug-08 635.20 520.10 319847 636.20 517.75 481593 Sep-08 556.80 414.65 156382 557.95 413.15 283905 Oct-08 411.05 262.65 288648 410.10 265.55 495859 Nov-08 362.80 254.65 164729 367.05 253.05 431067 Dec-08 303.80 242.85 156173 305.75 241.25 356034 Jan-09 312.80 235.15 214792 313.50 233.05 485596 Feb-09 290.40 243.15 82512 292.10 243.90 282153 Mar-09 258.25 230.55 463672 258.10 231.60 777507

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viii. Performance of share price in comparison with the broad–based indices viz., NSE Nifty & BSE Sensex:

ix. Registrar and Transfer Agent: Link Intime India Private Limited, C-13, Pannalal Silk Mills Compound, LBS Marg, Bhandup (W), Mumbai 400 078, India. x. Share Transfer System: The Company’s shares are traded on the Stock Exchanges in compulsory demat mode. Physical shares, which are lodged for transfer with the Share Transfer Agent, are processed and returned to the shareholders within a period of 30 days. xi. Distribution of shareholding as on March 31, 2009:

No. of Equity Shares No. of Shareholders % of Shareholder Total No. of shares held % of Shares held 1 - 500 173403 99.72 2202243 2.94 501 - 1000 189 0.11 136499 0.18 1001 - 2000 89 0.05 128590 0.17 2001 - 3000 31 0.02 76278 0.10 3001 - 4000 23 0.01 84522 0.11 4001 - 5000 15 0.01 71529 0.10 5001 -10000 27 0.02 202203 0.27 10001 and above 111 0.06 72031291 96.13 Total 173888 100.00 74933155 100.00 Shareholding Pattern as on March 31, 2009 Sr. No. Category No. of Shares % of Holding 1. Promoters & Persons acting in Concert 28571569 38.13 2. Mutual finds/FIs / Banks/Insurance Companies 515627 0.69 3. FII’s 4534328 6.05 4. NRIs/Foreign Nationals/Foreign Bodies Corporate 28026335 37.40 5. Public and Others 13285296 17.73 Total 74933155 100.00 xii. Dematerialisation of shares: As on March 31, 2009, 82.80% of the Company’s total shares, i.e. 62,046,684 shares were held in dematerialised form and 17.20% comprising 12,886,471 shares were held in physical form. A Practicing Company Secretary conducts the secretarial audit at the end of each quarter of the financial year, to reconcile the total issued capital, listed capital and capital held by depositories in dematerialised form.

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xiii. Outstanding GDRs/ADRs/Warrants or any convertible instruments, conversion date and likely impact on equity: Nil

xiv. Plant locations: Not Applicable

xv. Address for correspondence : For any assistance, request or instruction regarding transfer or transmission of shares and debentures, dematerialisation of shares, change of address, non receipt of annual report, interest/dividend warrant and any other query relating to the shares and debentures of the Company, the investors may please write to the following address:

Link Intime India Private Limited The Company Secretary C-13, Pannalal Silk Mills Compound Edelweiss Capital Limited LBS Marg, Bhandup (W), 14th Floor, Express Towers Mumbai 400 078, India Nariman Point, Mumbai – 400 021, India Tel: +91 22 2596 3838 Tel: +91 22 2286 4400, Fax: +91 22 2594 6979 Fax: +91 22 4086 3618 e-mail: [email protected] E-mail: [email protected] Website: www.linkintime.co.in xvi. For queries relating to the financial statements and investor information, other than those relating to shares/dividend, please write to:

Shailendra Maru, Vice President – Investor Relations Edelweiss Capital Limited, 14th Floor, Express Towers, Nariman Point, Mumbai 400 021, India Phone: +91-22-4019 4873 E-mail: [email protected]

Declaration by the CEO under Clause 49 of the Listing Agreement regarding adherence to the Edelweiss Code of Conduct

In accordance with Clause 49 (I) (D) of the Listing Agreement, I hereby declare that all the Directors and Senior Management Personnel of the Company have affirmed compliance with the Edelweiss Code of Conduct applicable to all the Directors and Senior Management, for the year ended March 31, 2009.

For Edelweiss Capital Limited Mumbai Rashesh Shah May 22, 2009 Chairman & Managing Director

Certificate on compliance of Corporate Governance as stipulated in Clause 49 of the Listing Agreement

To the members of Edelweiss Capital Limited,

We have examined the compliance of conditions of corporate governance by Edelweiss Capital Limited (“the Company”), for the year ended on March 31, 2009, as stipulated in clause 49 of the Listing Agreement of the said Company with the stock exchanges.

The compliance of conditions of corporate governance is the responsibility of the management. Our examination was limited to the procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of the corporate governance. It is neither an audit nor an expression of opinion on the financial statement of the Company.

In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with the conditions of corporate governance as stipulated in the above mentioned Listing Agreement.

We further state that such compliance is neither an assurance as to the further viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company.

For P. K. Pandya & Co. Practising Company Secretary Prakash K. Pandya Mumbai Proprietor May 22, 2009 Membership No. FCS 3901

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ANNUAL REPORT 2008-09

Edelweiss Capital Limited

Consolidated Financial Statements for the year ended 31 March 2009 together with Auditors’ Report

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ANNUAL REPORT 2008-09

Auditors’ Report on the Consolidated Financial Statements

To the Board of Directors of Edelweiss Capital Limited

1. We have audited the attached consolidated balance sheet of Edelweiss Capital Limited (‘the Company’) and its subsidiaries and associates (collectively referred to as ‘the Group’) as at 31 March 2009 and the consolidated profit and loss account and the consolidated cash flow statement for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Company’s management and have been prepared by the management on the basis of separate financial statements and other financial information regarding components. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. We did not audit the financial statements and other financial information of certain subsidiaries whose financial statements reflect total assets of Rs. 7,791 million as at 31 March 2009, total revenues of Rs. 1,675 million and total cash inflows of Rs. 367 million for the year then ended. These financial statements and other financial information have been audited by other auditors whose reports have been furnished to us, and in our opinion, in so far as it relates to the amounts included in respect of these subsidiaries, are based solely on the report of the other auditors.

4. We report that the consolidated financial statements have been prepared by the Group in accordance with the requirements of Accounting Standard (‘AS’) 21, Consolidated Financial Statements and Accounting Standard (‘AS’) 23, Accounting for Investments in Associates in Consolidated Financial Statements as prescribed under the Companies (Accounting Standards), Rules, 2006.

5. Based on our audit and on consideration of reports of other auditors on separate financial statements and on the other financial information of the components, and to the best of our information and according to the explanations given to us, we are of the opinion that the attached consolidated financial statements give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) In the case of the consolidated balance sheet, of the state of affairs of the Group as at 31 March 2009;

(ii) In the case of the consolidated profit and loss account, of the profit of the Group for the year ended 31 March 2009; and

(iii) In case of the consolidated cash flow statement, of the cash flows of the Group for the year ended on that date.

For B S R & Associates Chartered Accountants

Akeel Master Mumbai Partner 22 May 2009 Membership No.: 046768

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Consolidated Balance Sheet as at 31 March 2009

(Currency: Indian rupees in millions) Schedule 31 March 2009 31 March 2008 SOURCES OF FUNDS Shareholders’ funds Share capital 2 374.67 377.27 Stock options outstanding account 12.79 5.99 Reserves and surplus 3 20,766.23 18,092.65 21,153.69 18,475.91 Loan funds Secured loans 4 2,439.33 1,304.74 Unsecured loans 5 5,184.42 14,390.32 7,623.75 15,695.06

Minority interest 6 3,983.08 4,798.20

TOTAL 32,760.52 38,969.17

APPLICATION OF FUNDS Fixed assets 7 Gross block 657.07 500.13 Less: Accumulated depreciation 278.16 145.15 Net block 378.91 354.98 Capital work-in-progress 148.55 79.18 527.46 434.16

Investments 8 2,697.63 7,601.25

Deferred tax asset 25.4 542.32 167.80

Current assets, loans and advances Stock-in-trade 9 4,641.76 9,678.84 Sundry debtors 10 435.24 1,780.78 Cash and bank balances 11 17,213.00 19,441.43 Other current assets 12 710.00 389.44 Receivable from financing business 13 6,295.10 9,148.62 Loans and advances 14 4,873.89 2,976.51 34,168.99 43,415.62 Less: Current liabilities and provisions Current liabilities 15 4,161.87 11,722.50 Provisions 16 1,014.01 927.16 5,175.88 12,649.66

Net current assets 28,993.11 30,765.96 TOTAL 32,760.52 38,969.17

Significant accounting policies 1 Notes to the accounts 25 The Schedules referred to above form an integral part of the Balance Sheet. As per our report attached. For B S R & Associates For and on behalf of the Board of Directors Chartered Accountants Rashesh Shah Chairman & Managing Director Akeel Master Venkat Ramaswamy Executive Director Partner Membership No.: 046768 B Renganathan V. P. & Company Secretary

Mumbai | 22 May 2009

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ANNUAL REPORT 2008-09

Consolidated Profit and Loss Account for the year ended 31 March 2009

(Currency : Indian rupees in millions) Schedule 31 March 2009 31 March 2008 INCOME Fee and commission income 17 2,441.21 4,438.03 Income from arbitrage and trading in securities, commodities and derivatives 18 2,511.66 3,492.58 Income from investments and dividend 19 697.39 766.29 Interest income 20 3,314.64 2,170.88 Other income 21 40.06 20.76 9,004.96 10,888.54 EXPENDITURE Employee costs 22 1,659.35 2,057.23 Operating and other expenses 23 2,541.66 2,279.75 Financial expenses 24 1,336.95 2,011.49 Depreciation 7 176.61 73.09 5,714.57 6,421.56

PROFIT BEFORE TAXATION AND BEFORE MINORITY INTEREST 3,290.39 4,466.98 Provision for taxation - Income tax (includes short provision for earlier years of Rs. 195.76 million; 1,557.20 1,685.42 Previous year: Rs. 148.35 million) - Deferred tax benefit (374.52) (156.57) - Fringe benefit tax 16.44 11.37 PROFIT AFTER TAXATION AND BEFORE MINORITY INTEREST 2,091.27 2,926.76 Share of minority interest in profit for the year 226.83 194.36 PROFIT FOR THE YEAR AFTER MINORITY INTEREST 1,864.44 2,732.40 Profit and loss account balance brought forward 3,955.62 1,687.94 PROFIT AVAILABLE FOR APPROPRIATION 5,820.06 4,420.34

APPROPRIATIONS Transfer to Statutory Reserve under section 45-IC of 195.04 307.79 the Reserve Bank of India Act, 1934 Proposed dividend 224.80 150.18 Dividend on preference shares 0.25 – Dividend distribution tax 38.25 25.52 Transfer to general reserve 74.71 57.56 Transfer to capital redemption reserve 2.60 – Transfer (from)/to debenture redemption reserve – (76.33) Profit and loss account balance carried to balance sheet 5,284.41 3,955.62 5,820.06 4,420.34

Basic earnings per share (Rs.) (Face value Rs. 5 each) 25.3 24.88 42.29 Diluted earnings per share (Rs.) (Face value Rs. 5 each) 25.3 24.28 39.99

Significant accounting policies 1 Notes to the accounts 25 The Schedules referred to above form an integral part of the Profit & Loss Account.

As per our report attached. For B S R & Associates For and on behalf of the Board of Directors Chartered Accountants Rashesh Shah Chairman & Managing Director Akeel Master Venkat Ramaswamy Executive Director Partner Membership No.: 046768 B Renganathan V. P. & Company Secretary

Mumbai | 22 May 2009

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Consolidated Cash Flow Statement for the year ended 31 March 2009

(Currency: Indian rupees in millions) 31 March 2009 31 March 2008

A CASH FLOW FROM OPERATING ACTIVITIES

Profit before taxation and before minority interest 3,290.39 4,466.98

Adjustments for Depreciation/amortisation 176.61 73.09 Stock options outstanding 6.80 3.50 Provision for doubtful debts and advances 49.83 54.00 Provision on non-performing assets 14.10 – Provision on standard assets 12.69 45.51 Loss on sale of fixed assets 0.24 0.96 Profit on sale of investment (315.29) (265.97) Mark-to-market loss on current investments – 17.75 Provision for diminution in value of long term investments 18.30 – Diminution in the value of long-term investments written back (1.25) (1.43) Dividend on current investment (152.81) (321.99) Dividend on long-term investments (48.17) (17.04) Interest income (1,682.92) (819.70) Interest expense 1,336.95 2,011.49 Operating cash flow before working capital changes 2,705.47 5,247.15

Adjustments for Decrease/(increase) in sundry debtors 1,295.71 (1,240.67) Decrease/(increase) in stock in trade 5,037.08 (3,922.41) Increase in loans and advances (2,249.54) (1,252.37) Decrease/(increase) in receivables from financing business 2,839.42 (8,266.43) (Decrease)/increase in current liabilities (7,587.74) 10,905.84 Cash generated from operations 2,040.40 1,471.11

Income taxes paid 1,227.85 1,812.87

Net cash generated from/(used in) operating activities – A 812.55 (341.76)

B CASH FLOW FROM INVESTING ACTIVITIES Purchase of fixed assets (277.18) (338.30) Sale of fixed assets 6.98 0.20 Sale/(purchase) of investments (net) (Refer Note 2) 5,202.46 (6,537.22) Dividend on investment 202.76 313.45 Interest received 1,366.99 502.63 Net cash generated from/(used in) investing activities – B 6,502.01 (6,059.24)

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ANNUAL REPORT 2008-09

Consolidated Cash Flow Statement for the year ended 31 March 2009 (Continued)

(Currency : Indian rupees in millions) 31 March 2009 31 March 2008

C CASH FLOW FROM FINANCING ACTIVITIES Proceeds from issue of share capital including securities premium 24.23 10,091.11 Receipts from settlor/sponsors towards fund 0.01 0.10 Change in minority interest (143.43) 3,205.05 Proceeds from secured loans (net) (Refer Note 2) 1,134.59 1,237.19 Dividend and dividend distribution tax paid (201.99) – (Repayment of)/proceeds from unsecured loans (net) (Refer Note 2) (9,205.90) 10,588.04 Interest paid on loans (1,296.98) (1,931.29) Net cash (used in)/generated from financing activities – C (9,689.47) 23,190.20

Change in foreign exchange translation reserve – D 146.48 1.31

Net (decrease)/increase in cash and cash equivalents (A+B+C+D) (2,228.43) 16,790.51

Cash and cash equivalent as at the beginning of the year 19,441.43 2,650.92 Cash and cash equivalent as at the end of the year (Refer Note 1) 17,213.00 19,441.43

Notes: 1 Cash and cash equivalents represent cash, balances with banks in current account and fixed deposits placed with banks (Refer schedule 11 to the financial statements).

2 Net figures have been reported on account of volume of transactions.

Mumbai | 22 May 2009

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Schedules to the consolidated financial statements for the year ended 31 March 2009 (Currency:Indian rupees in millions)

1 SIGNIFICANT ACCOUNTING POLICIES

1.1 Basis of preparation of consolidated financial statements

The accompanying consolidated financial statements are prepared and presented under the historical cost convention, on the accrual basis of accounting and comply with the Accounting Standards prescribed by the Companies (Accounting Standards) Rules, 2006, the relevant provisions of the Companies Act, 1956 and the guidelines issued by the Reserve Bank of India from time to time. The financial statements are presented in Indian rupees in millions.

1.2 Principles of consolidation

a) The consolidated financial statements relate to Edelweiss Capital Limited (‘the Company’) and its subsidiaries and associates (together ‘the Group’). The consolidated financial statements have been prepared on the following basis:

• In respect of subsidiary enterprises, the financial statements have been consolidated on a line-by-line basis by adding together the book values of like items of assets, liabilities, income and expenses, after as far as possible eliminating intra-group balances and intra-group transactions resulting in unrealised profits or losses in accordance with Accounting Standard 21 – Consolidated Financial Statements prescribed by Companies (Accounting Standards) Rules, 2006.

• In case of Associate Enterprises, the financial statements have been consolidated as per Accounting Standard 23 – Accounting for Investment in Associates prescribed by Companies (Accounting Standards) Rules, 2006.

• Investments in subsidiaries where control is intended to be temporary or where the objective of control over the subsidiary is not to obtain economic benefits therefrom, have not been consolidated.

• Assets and liabilities of the foreign subsidiaries are translated into Indian Rupees at the rate of exchange prevailing as at the balance sheet date. Revenue and expense are translated into Indian Rupees at the average exchange rate prevailing during the year and the resulting net translation adjustment has been disclosed as foreign exchange translation reserve in reserves and surplus.

• The excess of cost over the Company’s investments in the subsidiary company is recognised in the consolidated financial statements as goodwill. The excess of Company’s share in equity and reserves of the subsidiary company over the cost of acquisition is treated as Capital Reserve.

• The share of minority interest in the net profit of subsidiaries for the year is identified and adjusted against the income of the Group to arrive at the net income attributable to the Group.

• The share of minority interest in net assets of subsidiaries is identified and presented in the consolidated financial statements separate from liabilities and the equity of the Group.

• The consolidated financial statements are prepared using uniform accounting policies for like transactions and other events in similar circumstances and are presented in the same manner as the Company’s separate financial statements.

b) Investments other than in subsidiaries and associates have been accounted as per Accounting Standard 13 on Accounting for Investments prescribed by the Companies (Accounting Standard) Rules, 2006.

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EDELWEISS ANNUAL REPORT 2008-09

Schedules to the consolidated financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees in millions)

1 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 1.2 Principles of consolidation (Continued) c) The subsidiaries and associates considered in the consolidated financial statements:

Sr. No. Name of the Entity Country of Proportion of Incorporation ownership interest as at 31 March 2009 1. Edelweiss Securities Limited India 100.00% 2. Crossborder Investments Private Limited India 100.00% 3. Edelweiss Commodities Limited India 100.00% (formerly ECAL Advisors Limited) 4. ECL Finance Limited India 79.29% 5. Edelweiss Financial Products and Solutions Limited India 100.00% (formerly IRIS Distribuition Company Limited) 6. EC Global Limited * Mauritius 100.00% 7. Edelweiss Insurance Brokers Limited India 71.91% 8. Edelweiss Trustee Services Limited India 100.00% (formerly Edelweiss Trustee Services Private Limited) 9. Edelcap Securities and Transaction Services Limited * India 100.00% (formerly Edelcap Securities and Transaction Services Private Limited) 10. Edelcap Securities Limited India 100.00% 11. Edelweiss Capital USA, LLC U.S.A. 100.00% 12. Edelweiss Asset Management Limited India 100.00% 13. ECap Equities Limited India 100.00% 14. Edelweiss Broking Limited India 100.00% (formerly Edelweiss Investment and Advisory Services Limited) 15. Edelweiss Trusteeship Company Limited India 100.00% 16. Edelweiss Alternative Asset Advisors Limited India 100.00% 17. Edelweiss Housing Finance Limited India 100.00% 18. Edelweiss Property Advisors Private Limited India 100.00% 19. EC Commodity Limited India 100.00% 20. Edel Commodities Limited India 100.00% 21. Edel Land Limited India 100.00% 22. Edelweiss Primary Dealership Limited India 100.00% 23. EC International Limited Mauritius 100.00% 24. Edelweiss Capital (Singapore) Pte. Limited Singapore 100.00% 25. Edelweiss Galleon Alternative Asset Advisors Pte. Limited ## Singapore 100.00% 26. Edelweiss International (Singapore) Pte. Limited ## Singapore 100.00% 27. Edelweiss Securities (Singapore) Pte. Limited ## Singapore 100.00% 28. Edelweiss Asset Reconstruction Company Limited # India 49.00% (ceased to be subsidiary w.e.f. 12 December 2008) 29. Edelweiss Real Estate Advisors Private Limited India 40.00% 30. Blue River Capital Management Company I, LLC ** Mauritius 40.00% 31. Blue River Capital Advisors (India) Private Limited India 40.00% * held through Crossborder Investments Private Limited ** held through EC Global Limited # held through Edelweiss Alternative Asset Advisors Limited ## held through Edelweiss Capital (Singapore) Pte. Limited d) During the year ended 31 March 2009, the Company has raised its interest in ECL Finance Limited from 62.57% to 79.29%. e) During the year ended 31 March 2009, the Company has diluted its interest in Edelweiss Asset Reconstruction Company Limited (‘ARC’) from 100% to 49%. (The entire interest in ARC was sold by the Company to its wholly owned subsidiary Edelweiss Alternative Asset Advisors Limited (‘EAAA’) on 13 August 2008, thereby still retaining 100% interest. Subsequently EAAA diluted its interest from 100% to 49% on 12 December 2008 by issuance of fresh equity to third parties). Until 12 December 2008 the interest in ARC has been consolidated as a 100% subsidiary and subsequent to 12 December 2008, the investment in ARC has been accounted in accordance with Accounting Standard 23 – Accounting for Investment in Associates.

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Schedules to the consolidated financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees in millions)

1 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

1.3 Use of estimates The preparation of the financial statements in conformity with the generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenues and expenses and disclosure of contingent liabilities as at the date of the financial statements. Actual results could differ from the estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.

1.4 Revenue recognition a) Fee income is accounted for on an accrual basis in accordance with the terms and contracts entered into between the Group and the counterparty.

b) Brokerage income on securities and commodities broking business is recognised as per contracted rates at the execution of transactions on behalf of the customers on the trade date and is inclusive of service tax. Brokerage income on insurance broking business is recognised on accrual basis at the inception of the insurance policy based on the terms agreed with the insurance companies and is exclusive of service tax.

c) Income from arbitrage and trading in securities and derivatives comprises profit/loss on sale of securities (including debt instruments) and commodities, unrealised loss on securities and commodities held as stock-in-trade and profit/loss on equity/ commodity derivative instruments. Profit/loss on sale of securities and commodities is determined based on the weighted average cost of the securities/commodities sold. Profit/loss on exchange traded equity/commodity derivative transactions is accounted for based on the ‘Guidance Note on Accounting for Equity Index and Equity Stock Futures and Options’ issued by the Institute of Chartered Accountants of India which is more fully explained in Sections 1.5 to 1.7 below. Realised profit/loss on currency futures which are traded on the exchange is determined based on the movements in foreign exchange rates on the respective exchanges.

d) The Company enters into securitisation transactions and assets are derecognised upon sale only if the Company surrenders control over the contractual rights that comprise in the financial assets.

Gain on securitisation of assets is recognised on the difference between the book value of the securitised asset and consideration received on the assets derecognised from the books. The same is amortised over the life of the securities issued by the Special Purpose Vehicle (‘SPV’) in accordance with the guidelines issued by the Reserve Bank of India. Losses, if any, are recognied immediately.

e) Portfolio management fees are accounted on accrual basis as follows:

• In case of percentage based fees, as a percentage of the unaudited Net Asset Value at the end of each financial quarter, on a quarterly basis. • In case of return based fee, as a percentage of the annual profit, on an annual basis.

f) Interest income is recognised on accrual basis except in case of non-performing assets, which is recognised on receipt basis, as per The Reserve Bank of India (‘RBI’) guidelines.

g) Investment management fees are recognised net of service tax on an accrual basis in accordance with the Investment Management Agreement with Edelweiss Mutual Fund (‘the mutual fund’) and complies with the Securities and Exchange Board of India (Mutual Funds) Regulations based on average Assets Under Management (‘AUM’) confirmed by the mutual fund.

h) Income from marketing and distribution services is recognised on accrual basis.

i) Research services fee income is accounted for on an accrual basis.

j) Dividend income is recognised when the right to receive payment is established.

k) Revenue from fund management services earned is recognised in accordance with the terms and conditions of the Investment Management Agreement between the Company and the fund. The amount recognised as revenue is exclusive of service tax.

l) Revenue from rendering of trustee services earned is recognised in accordance with the terms and conditions of the Compensation Agreement between trustee company and the fund. The amount recognised as revenue is exclusive of service tax.

m) Profit/loss on error trades are included in “Income from arbitrage and trading in securities, commodities and derivatives” based on nature of underlying trade.

n) Profit/loss earned on sale of investments is recognised on trade date basis. Profit/loss on sale of investments is determinde based on the weighted average cost of the investments sold.

<< Back Next >> ANNUAL REPORT 2008-09

EDELWEISS ANNUAL REPORT 2008-09

Schedules to the consolidated financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees in millions)

1 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

1.5 Equity Index/Stock – Futures

a) Equity Index/Stock Futures are marked-to-market on a daily basis. Debit or credit balance disclosed under loans and advances or current liabilities, respectively, in the “Mark-to-Market Margin – Equity Index/Stock Futures Account”, represents the net amount paid or received on the basis of movement in the prices of Index/Stock Futures till the balance sheet date.

b) As on the balance sheet date, the profit/loss on open positions in Index/Stock Futures are accounted for as follows:

• Credit balance in the “Mark-to-Market Margin – Equity Index/Stock Futures Account”, being anticipated profit, is ignored and no credit is taken in the profit and loss account.

• Debit balance in the “Mark-to-Market Margin – Equity Index/Stock Futures Account”, being anticipated loss, is recognised in the profit and loss account.

c) On final settlement or squaring-up of contracts for Equity Index/Stock Futures, the profit or loss is calculated as differecne between settlement/squaring-up price and contract price. Accordingly, debit or credit balance pertaining to the settled/squared-up contract in “Mark-to-Market Margin – Equity Index/Stock Futures Account” is recognised in the profit and loss account upon expiry of the contracts. When more than one contract in respect of the relevant series of Equity Index/Stock Futures contract to which the squared-up contract pertains is outstanding at the time of the squaring-up of the contract, the contract price of the contract so squared-up is determined using weighted average method for calculating profit/loss on squaring-up.

d) “Initial Margin – Equity Index/Stock Futures Account”, representing initial margin paid, and “Margin Deposits”, representing additional margin over and above initial margin, for entering into contracts for Equity Index/Stock Futures, which are released on final settlement/squaring-up of underlying contracts, are disclosed under loans and advances.

1.6 Equity Index/Stock – Options

a) “Equity Index/Stock option premium account” represents premium paid or received for buying or selling the options, respectively.

b) As at the balance sheet date, in the case of long positions, provision is made for the amount by which the premium paid for those options exceeds the premium prevailing on the balance sheet date, and in the case of short positions, for the amount by which premium prevailing on the balance sheet date exceeds the premium received for those options, and reflected in “Provision for Loss on Equity Index/Stock Option Account”.

c) When the option contracts are squared-up before expiry of the options, the premium prevailing on that date is recognised in profit and loss account. If more than one option contract in respect of the same index/stock with the same strike price and expiry date to which the squared-up contract pertains is outstanding at the time of squaring-up of the contract, weighted average method is followed for determining profit or loss. On expiry of the contracts and on exercising the options, the difference between final settlement price and the strike price is transferred to the profit and loss account. In both the above cases, premium paid or received for buying or selling the option, as the case may be, is recognised in the profit and loss account for all squared-up/settled contracts.

d) “Equity Index/Stock options margin account”, representing initial margin paid and “Margin Deposit”, representing additional margin paid over and above initial margin, for entering into contracts for Equity Index/Stock options, which are released on final settlement/ squaring-up of underlying contracts, are disclosed under loans and adv ances.

1.7 Commodities Stock – Futures

a) Commodities futures are marked-to-market on a daily basis. Debit or credit balance disclosed under loans and advances or current liabilities respectively, in the “Mark-to-Market Margin-Commodities Stock Futures Account”, represents the net amount paid or received on the basis of movement in the prices of commodities futures till the balance sheet date.

b) As on the balance sheet date, profit/loss on open positions in commodities futures are accounted for as follows:

• Credit balance in the “Mark-to-Market Margin – Commodities Stock Futures Account”, being anticipated profit, is ignored and no credit for the same is taken in the profit and loss account.

• Debit balance in the “Mark-to-Market Margin – Commodities Stock Futures Account”, being anticipated loss, is adjusted in the profit and loss account.

c) On final settlement or squaring-up of contracts for commodities futures, the profit or loss is calculated as the difference between settlement/squaring-up price and contract price. Accordingly, debit or credit balance pertaining to the settled/squared-up contract

<< Back Next >> ANNUAL REPORT 2008-09

Schedules to the consolidated financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees in millions)

1 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

1.7 Commodities Stock – Futures (Continued) in “Mark-to-Market Margin – Commodities Stock Futures Account” is recognised in the profit and loss Account. When more than one contract in respect of the relevant series of commodity futures contract to which the squared-up contract pertains is outstanding at the time of the squaring-up of the contract, the contract price of the contract so squared-up is determined using weighted average method for calculating profit/loss on squaring-up. d) “Initial Margin – Commodities Stock Futures Account”, representing initial margin paid, and “Margin Deposits – Commodities Stock Futures Account”, representing additional margin over and above initial margin, for entering into contracts for commodities futures, which are released on final settlement/squaring-up of underlying contracts, are disclosed under Loans and Advances. 1.8 Fixed assets and depreciation Fixed assets are stated at cost less accumulated depreciation. The cost of fixed assets comprises purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Depreciation is provided on a written down value basis from the date the asset is ready to use or put to use whichever is earlier. In respect of assets sold, depreciation is provided upto the date of disposal. Depreciation is charged at the rates prescribed in the Schedule XIV to the Companies Act, 1956 as given below:

Class of asset Rate of depreciation Flat 5.00% Vessel 20.00%

Office equipments 13.91% Computers 40.00% Vehicles 25.89% Electrical fittings 13.91% Furniture and fixtures 18.10% Leasehold improvements are amortised on a straightline basis over the estimated useful lives of the assets or the period of lease whichever is shorter. All fixed assets individually costing less than Rs. 5,000 are fully depreciated in the year of acquisition. Software expense includes expenditure by way of licence for various office applications which have been written off in the year of purchase on a prudent basis. 1.9 Impairment of assets The Group assesses at each balance sheet date whether there is any indication that an asset may be impaired based on internal/ external factors. If any such indication exists, the Group estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs, is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the profit and loss account. If at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of the depreciable historical cost. 1.10 Interest rate swaps The Company has entered into interest rate swaps during the year with the objective of managing the interest rate risk on its assets and liabilities. The outstanding swap trades at the reporting date are disclosed at the notional value. These swaps are accounted on an accrual basis; these transactions are not marked to market. 1.11 Stock-in-trade a) The securities acquired with the intention of short-term holding and trading positions are considered as stock-in-trade and disclosed as current assets. b) The securities including from error trades held as stock-in-trade under current assets are valued at lower of weighted avergae cost or market value. In case of units of mutual funds, net asset value is considered as market value. c) Inventories in the form of commodities (including bullion) are valued at cost or net realisable value, whichever is lower. d) Debt instruments are valued at cost or fair value whichever is lower. Fair value is taken as last traded price for the listed instruments and for other as declared by Fixed Income Money Market and Derivative Association of India (FIMMDA) jointly with Primary Dealers Association of India (PDAI) or else are valued at the lowest of the quotes as on valuation date as provided by market intermediaries.

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Schedules to the consolidated financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees in millions)

1 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 1.12 Investments

Investments are classified into long term investments and current investments. Investments which are intended to be held for one year or more are classified as long term investments and investments which are intended to be held for less than one year are classified as current investments.

Long-term investments are carried at cost less diminution in value which is other than temporary, determined separately for each investment.

Current investments are carried at lower of cost or fair value. The comparison of cost and fair value is done separately in respect of each category of investment. In case of investments in mutual funds, the net asset value of units declared by the mutual funds is considered as the fair value.

1.13 Foreign currency transactions

Foreign currency transactions are recorded at the rates of exchange prevailing on the date of the transaction. Exchange differences, if any arising out of transactions settled during the year are recognised in the profit and loss account of the year.

Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated at the closing exchange rates on that date. The exchange differences, if any, are recognised in the profit and loss account and related assets and liabilities are accordingly restated in the balance sheet.

1.14 Retirement benefits

Provident Fund

The Group contributes to a recognised provident fund which is a defined contribution scheme. The contributions are accounted for on an accrual basis and recognised in the profit and loss account.

Gratuity

The Group’s gratuity scheme is a defined benefit plan. The Company’s net obligation in respect of the gratuity benefit is calculated by estimating the amount of future benefit that the employees have earned in return for their service in the current and prior periods. This benefit is discounted to determine its present value.

The present value of the obligation under such benefit plan is determined based on actuarial valuation carried out by an independent actuary using the Projected Unit Credit Method which recognises each period of service that give rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

The obligation is measured at present values of estimated future cash flows. The discounted rates used for determining the present value are based on the market yields on Government Securities as at the balance sheet date.

Actuarial gains and losses are recognised immediately in the profit and loss account.

1.15 Taxation

Income-tax expense comprises current tax (i.e. amount of tax for the period determined in accordance with the tax laws applicable), deferred tax charge or credit (reflecting the tax effect of timing differences between accounting income and taxable income for the period) and fringe benefit tax. Current tax Provision for current tax is recognised based on estimated tax liability computed after adjusting for allowances, disallowances and exemptions in accordance with the tax laws applicable.

Deferred taxation The deferred tax charge or credit and the corresponding deferred tax liabilities and assets are recognised using the tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the asset can be realised in future; however, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognised only if there is a virtual certainty of realisation of the assets. Deferred tax assets are reviewed as at each balance sheet date and written down or written-up to reflect the amount that is reasonable/virtually certain (as the case may be) to be realised.

<< Back Next >> ANNUAL REPORT 2008-09

Schedules to the consolidated financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees in millions)

1 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

1.15 Taxation (Continued)

Fringe benefit tax Provision for Fringe Benefit Tax (‘FBT’) is made on the basis of applicable FBT on the taxable value of chargeable expenditure of the Company as prescribed under the Income Tax Act, 1961.

Securities transaction tax Securities Transaction Tax (‘STT’) incurred for the current year has been charged off to the profit and loss account. STT to t he extent allowable during the previous year has been included in provision for income tax.

1.16 Preliminary expenses

Preliminary expenses are charged to the profit and loss account in the year in which they are incurred.

1.17 Operating leases

Lease payments for assets taken on operating lease are recognised as an expense in the profit and loss account on a straight line basis over the lease term.

1.18 Earnings per share

The Group reports basic and diluted earnings per share in accordance with Accounting Standard 20 — Earnings Per Share prescribed by the Companies (Accounting Standards) Rules, 2006. Basic earnings per share is computed by dividing the net profit after tax attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue equity shares were exercised or converted during the year. Diluted earnings per share is computed using the weighted average number of equity shares and dilutive potential equity shares outstanding during the year.

1.19 Employee stock option plans

The Group follows the intrinsic value method to account for the compensation cost of its stock based employee compensation plans. The compensation cost is amortised on a straight line basis.

1.20 Provisions and contingencies

The Group creates a provision when there is present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that the outflow of resources would be required to settle the obligation, the provision is reversed.

Contingent assets are not recognised in the financial statements. However, contingent assets are assessed continually and if it is virtually certain that an economic benefit will arise, the asset and related income are recognised in the period in which the change occurs.

1.21 Provisioning on advances

Crossborder Investments Private Limited and ECL Finance Limited, subsidiaries of the Company follow the policy of recognising general loan loss provision at the rate of 0.50 per cent on all receivables from financing business, except for initial public offer funding and those loans on which specific provision is held in accordance with prudential norms prescribed by the Reserve Bank of India. On a prudent basis, the Group has not written back provision made on loan repaid.

1.22 Fund expenses

Expenses incurred on behalf of schemes of Edelweiss Mutual Fund are recognised to the profit and loss account unless considered recoverable from schemes of the fund in accordance with provisions of the Securities and Exchange Board of India (Mutual Funds) Regulations.

<< Back Next >> ANNUAL REPORT 2008-09

Schedules to the consolidated financial statements as at 31 March 2009 (Continued) (Currency: Indian rupees in millions)

31 March 2009 31 March 2008 2 SHARE CAPITAL

Authorised:

100,000,000 (Previous year: 100,000,000) Equity shares of Rs. 5 each 500.00 500.00 4,000,000 (Previous year: 4,000,000) Preference shares of Rs. 5 each 20.00 20.00 520.00 520.00

Issued, Subscribed and Paid-up:

74,933,155 (Previous year: 74,933,155) Equity shares of Rs. 5 each, fully paid-up 374.67 374.67 Nil (Previous year: 520,000) 12% Redeemable preference – 2.60 shares of Rs. 5 each, fully paid-up redeemed during the year 374.67 377.27

Bonus: a. During the previous year, 44,916,806 Equity shares of Re. 1 each have been allotted as fully paid-up bonus shares by capitalisation of Rs. 44.92 million from securities premium account. b. During the previous year, 35,937,448 Equity shares of Rs. 5 each have been allotted as fully paid-up bonus shares by capitalisation of Rs. 179.69 million from securities premium account.

Consolidation: a. During the previous year, the Company has consolidated the face value of equity shares from Re. 1 per share to Rs. 5 per share and accordingly issued 17,968,724 equity shares of Rs. 5 each to the shareholders of the Company holding equity shares of Re. 1 each on July 20, 2007. b. During the previous year, 12% redeemable preference shares of face value of Re. 1 each were consolidated into preference shares of face value of Rs. 5 each, thereby, resulting in reduction of shares from 2,600,000 to 520,000.

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Schedules to the consolidated financial statements as at 31 March 2009 (Continued) (Currency: Indian rupees in millions)

31 March 2009 31 March 2008 3 RESERVES AND SURPLUS

General reserve Opening balance 89.11 31.45 Add : Additions during the year 74.71 57.66 163.82 89.11

Securities premium account Opening balance 13,682.03 3,917.75 Add : Additions during the year 26.84 10,249.26 Less: Adjustment for reduction in minority interest 163.71 – Less: Capitalisation of reserves – 281.30 Less: Expenses relating to initial public offer – 203.68 13,545.16 13,682.03

Debenture redemption reserve Opening balance – 76.33 Less : Transfer to profit and loss account – 76.33 – –

Capital redemption reserve Opening balance – – Add : Transfer from profit and loss account 2.60 – 2.60 –

Statutory reserve under section 45-IC of The Reserve Bank of India Act, 1934 Opening balance 343.24 35.45 Add : Additions during the year 195.04 307.79 538.28 343.24

Foreign exchange translation reserve 155.31 8.83

Capital reserve Opening balance 13.82 13.82 Add : Additions during the year 1,062.83 – 1,076.65 13.82

Balance in profit and loss account 5,284.41 3,955.62

20,766.23 18,092.65

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Schedules to the consolidated financial statements as at 31 March 2009 (Continued) (Currency: Indian rupees in millions)

31 March 2009 31 March 2008 4 SECURED LOANS

Bank overdraft 1,322.18 1,001.23 (Secured by way of pledge of fixed deposits) Non-convertible debenture 1,070.60 256.00 (Secured by way of charge on immovable property and floating charge on movable property in the form of sundry debtors, cash and bank balance and loans and advances) Vehicle loan 5.31 9.72 (Secured by hypothecation of vehicles acquired) Housing loan 41.24 37.79 (Secured by hypothecation of flats) 2,439.33 1,304.74

5 UNSECURED LOANS

Fully convertible debentures 1,800.00 1,800.00 Optionally fully convertible debentures 14.60 197.08 Non-convertible debentures – 5,150.00 Inter corporate deposit 310.70 676.98 Deposits 71.66 171.43

Commercial paper 2,250.00 6,050.00 Less: Unamortised discount on commercial paper 62.77 155.17 2,187.23 5,894.83

Other loans 800.23 500.00

5,184.42 14,390.32

6 MINORITY INTEREST

Opening balance 4,798.20 1,398.79 (Less)/Add: Movement during the year (815.12) 3,399.41

3,983.08 4,798.20

<< Back Next >> ANNUAL REPORT 2008-09

Schedules to the consolidated financial statements as at 31 March 2009 (Continued) (Currency: Indian rupees in millions)

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<< Back Next >> ANNUAL REPORT 2008-09

Schedules to the consolidated financial statements as at 31 March 2009 (Continued) (Currency: Indian rupees in millions)

31 March 2009 31 March 2008 8 INVESTMENTS

Long term investments I. Quoted a. Equity shares 1,625.07 1,312.64 b. Debentures and bonds 188.88 – 1,813.95 1,312.64 II. Unquoted a. Equity shares i) In subsidiary company (Refer schedule 25.15) 0.10 – ii) Others 285.22 223.08 285.32 223.08

b. Units of venture capital funds 311.68 293.78

c. Others 36.60 –

d. Investment in equity shares of associate i) Equity shares with accured benefits 42.44 0.76 ii) Share of profit as subsidiary (1.18) 3.54 iii) Transfer to capital reserve 0.60 – iv) Share in profit of associate company 14.38 47.96 Less: Dividend received from associate company – 25.58 56.24 26.68

689.84 543.54

Less : Diminution in value of investments 34.03 16.98 655.81 526.56

Total of long term investments 2,469.76 1,839.20

Current investments I. Quoted a. Equity shares – 705.32 b. Units of mutual fund – 48.42

II. Unquoted a. Debentures and bonds i) Government securities – 196.85 ii) Others – 1,830.52 b. Units of mutual funds 227.87 2,980.94

Total of current investments 227.87 5,762.05

2,697.63 7,601.25

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Schedules to the consolidated financial statements as at 31 March 2009 (Continued) (Currency: Indian rupees in millions)

31 March 2009 31 March 2008 9 STOCK IN TRADE Face value Quantity Amount Face value Quantity Amount

A. Equity Shares (Quoted) Aban Offshore Limited – – – 2 500 1.49 ABB Limited 2 340 0.14 – – – ACC Limited 10 300 0.17 20 42,112 33.51 Aditya Birla Nuvo Limited – – – 10 4,600 6.42 Adlabs Films Limited – – – 5 181,800 111.53 Advani Hotels and Resorts Limited – – – 2 103,926 8.99 Ahmednagar Forgings Limited 10 98,532 3.07 – – – Alok Industries Limited – – – 10 23,450 1.32 Ambuja Cements Limited 2 2,430 0.17 2 30,930 3.71 Apeejay Tea Limited – – – 2 536 0.06 Arvind Mills Limited – – – 10 4,300 0.16 Ashapura Minechem Limited 2 10,053 0.24 – – – Asian Electronics Limited – – – 5 10 0.01 Aurobindo Pharma Limited – – – 5 700 0.20 Axis Bank Limited 10 52,569 21.07 10 23,400 18.48 B. L. Kashyap and Sons Limited 5 80,117 10.44 5 62,750 103.10 Bajaj Hindusthan Limited 1 450,300 20.86 1 64,600 12.17 Ballarpur Industries Limited – – – 2 181,018 5.03 Balmer Lawrie & Co. Limited – – – 10 26,133 1.77 Balrampur Chini Mills Limited – – – 2 720,000 58.21 Bang Overseas Limited – – – 10 3 0.01 Bank of Baroda – – – 10 17,500 4.96 Bank of India – – – 10 7,600 1.93 BEML Limited – – – 10 500 0.50 Bharat Electronics Limited – – – 10 2,300 2.46 Bharat Forge Limited 2 12,000 1.09 – – – Bharat Heavy Electricals Limited 10 780 1.18 10 104,400 200.93 Bharat Petroleum Corporation Limited 10 36,875 12.92 10 4,400 1.75 Bharti Airtel Limited 10 26,530 16.11 10 583,000 451.61 Blue Dart Express Limited – – – 10 100 0.05 BOC India Limited – – – 10 187,612 29.28 Bombay Dyeing & Mfg Co. Limited – – – 10 300 0.18 Bombay Rayon Fashions Limited 10 53,372 7.71 – – – Bongaigaon Refinery & Petrochemicals Limited 10 3,333,411 136.67 – – – Bosch Chassis Systems India Limited – – – 10 302,108 177.12 C & C Constructions Limited – – – 10 45,490 8.71 Cairn India Limited 10 490,525 90.31 10 152,500 33.79 California Software Company Limited – – – 10 136,497 11.33 CEAT Limited – – – 10 10,405 1.14 Central Bank of India 10 80,000 2.59 – – – Centurion Bank of Punjab Limited – – – 2 888,216 37.94 Century Textiles & Industries Limited – – – 10 7,076 5.04 Cipla Limited 2 123,740 24.99 2 86,250 17.74 Citigroup* $0.10 4,000 0.31 – – – CMC Limited 10 2,634 0.81 – – – Consolidated Finvest & Holdings Limited – – – 10 30,427 1.80 Cummins India Limited 2 1,900 0.35 – – – Dabur India Limited – – – 1 35,711 3.41

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Schedules to the consolidated financial statements as at 31 March 2009 (Continued) (Currency: Indian rupees in millions)

31 March 2009 31 March 2008 9 STOCK IN TRADE (Continued) Face value Quantity Amount Face value Quantity Amount DCM Limited – – – 10 7,096 0.78 Deccan Aviation Limited – – – 10 37,400 4.56 Dena Bank – – – 10 39,375 2.00 Disa India Limited 10 2,389 3.93 10 100 0.21 Dish TV India Limited 1 12,440 0.30 – – – Dish TV India Limited (Partly Paid up) 1 7,819 0.06 – – – Divi’s Laboratories Limited – – – 2 2,170 2.75 DLF Limited 2 2,710 0.45 2 31,900 20.60 Dr. Reddy’s Laboratories Limited – – – 5 30,400 17.33 eClerx Services Limited – – – 10 5,000 1.23 Educomp Solutions Limited – – – 10 3,675 13.91 Elgi Equipments Limited 1 478 0.02 – – – Era Infra Engineering Limited – – – 10 22,277 13.14 Escorts Limited – – – 10 675 0.06 Essar Oil Limited – – – 10 1,203,071 244.32 Federal National Mortgage Association ** – 2,350 0.05 – – – Fem Care Pharma Limited 10 7,890 5.26 – – – Financial Technologies (India) Limited 2 74,453 39.05 2 2,400 3.56 Freddie Mac* $0.21 3,600 0.08 – – – GAIL (India) Limited 10 252,900 58.13 10 62,500 25.95 Garware Offshore Services Limited – – – 10 663,199 137.78 Gillette India Limited – – – 10 626 0.54 Glenmark Pharmaceuticals Limited – – – 1 50 0.03 GMR Infrastructure Limited 2 205,000 19.44 2 33,750 4.85 Grasim Industries Limited 10 314 0.48 10 6,160 15.86 Grauer & Well India Limited – – – 10 41,990 3.89 GSS America Infotech Limited – – – 10 650,000 276.69 Gujarat Narmada Valley Fertilizer Co. Limited – – – 10 1,475 0.19 Gujarat NRE Coke Limited 10 86,713 1.71 10 12,499 1.55 GVK Power & Infrastructure Limited 1 2,292,994 47.07 – – – HBL Power Systems Limited – – – 10 537 0.15 HCL Technologies Limited 2 1,070 0.11 2 27,300 6.54 HDFC Bank Limited 10 680 0.66 10 5,425 8.95 HDFC Limited 10 28,950 40.88 10 18,974 45.15 Hero Honda Motors Limited 2 320 0.34 2 7,200 4.97 Hindalco Industries Limited 1 59,003 2.96 1 97,295 16.06 Hindustan Construction Co. Limited – – – 1 4,200 0.55 Hindustan Oil Exploration Co. Limited 10 51,200 2.89 10 134,400 13.75 Hindustan Petroleum Corporation Limited 10 10,400 2.66 10 31,200 7.97 Hindustan Unilever Limited 1 182,480 42.23 1 42,000 9.61 Hitachi Home and Life Solutions (India) Limited – – – 10 6,166 0.71 Honeywell Automation India Limited – – – 10 115 0.18 Hotel Leela Venture Limited – – – 2 26,250 1.05 Housing Development and Infrastructure Limited 10 442,277 79.35 10 13,800 8.37 ICICI Bank Limited 10 58,475 19.46 10 406,704 312.92 IDBI Bank Limited 10 14,400 0.65 – – – IDBI Limited – – – 10 241,200 21.13 Idea Cellular Limited 10 129,150 6.47 10 148,500 14.94 IFCI Limited 10 141,840 2.63 10 2,835,051 125.03 I-Flex Solutions Limited – – – 10 2,470 2.33

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Schedules to the consolidated financial statements as at 31 March 2009 (Continued) (Currency: Indian rupees in millions)

31 March 2009 31 March 2008 9 STOCK IN TRADE (Continued) Face value Quantity Amount Face value Quantity Amount India Cements Limited – – – 10 187,050 34.94 India Fund Inc. (The) – – – $10 1,000 1.77 India Infoline Limited 2 1,169,185 53.60 – – – Indiabulls Financial Services Limited – – – 2 4,025 1.65 Indiabulls Real Estate Limited – – – 2 7,905 3.86 Indiabulls Securities Limited 2 20,306 0.43 – – – Indian Bank – – – 10 12,100 1.98 Indian Hotels Company Limited – – – 1 86,496 9.71 Indian Oil Corporation Limited – – – 10 6,600 2.93 Indian Overseas Bank – – – 10 28,025 3.69 Indo Tech Transformers Limited 10 86,078 25.81 – – – Infomedia India Limited – – – 10 98,957 22.35 Infosys Technologies Limited* $1.00 3,800 4.69 – – – Infosys Technologies Limited 5 5,915 7.81 5 186,408 264.83 Infrastructure Development Finance Company 10 175,000 9.08 10 16,225 2.45 Limited IRB Infrastructure Developers Limited – – – 10 2,200 0.37 Ispat Industries Limited 10 224,223 2.25 10 2,784,650 86.74 ITC Limited 1 199,525 34.49 1 229,500 44.10 J.K Investo Trade India Limited – – – 10 1,005 0.21 Jaiprakash Associates Limited 2 387,000 28.79 2 747,748 169.40 Jaiprakash Hydro-Power Limited 10 12,500 0.32 10 9,375 0.51 Jet Airways (India) Limited 10 21,600 3.33 10 28,005 15.60 Jindal Saw Limited – – – 10 500 0.32 Jindal Stainless Limited – – – 2 30,000 4.24 Jindal Steel & Power Limited 1 13,760 15.54 1 10,400 20.45 JSW Steel Limited 10 34,650 6.63 10 393,537 322.43 Kalpataru Power Transmission Limited 10 7,052 2.30 – – – Kotak Mahindra Bank Limited 10 1,100 0.31 – – – KPIT Cummins Infosystems Limited – – – 2 37,950 2.98 Lanco Industries Limited – – – 10 35,700 13.49 Lanco Infratech Limited – – – 10 7,225 2.75 Larsen & Toubro Limited 2 50,535 31.39 2 66,000 191.89 Lehman Bros.* $0.10 9,000 0.01 – – – Lumax Industries Limited – – – 10 40,906 7.63 Lupin Limited – – – 10 700 0.34 Mahanagar Telephone Nigam Limited – – – 10 30,400 2.94 Mahindra & Mahindra Limited 10 445 0.17 10 25,898 16.89 Marico Limited – – – 1 156,460 9.66 Maruti Suzuki India Limited 5 460 0.35 5 130,399 107.84 Matrix Laboratories Limited 2 96,591 14.14 – – – MIC Electronics Limited 2 683,944 12.24 10 16,887 11.40 Moser-Baer (I) Limited – – – 10 33,000 4.17 MphasiS Limited – – – 10 10,400 1.90 Nagarjuna Construction Company Limited – – – 2 8,000 1.68 Nagarjuna Fertilizer & Chemicals Limited 10 63,001 0.97 10 66,500 2.46 Nagreeka Capital & Infrastructure Limited – – – 5 5,584 0.35 Nahar Capital and Financial Services Limited – – – 5 10,630 0.64 National Aluminium Company Limited 10 1,030 0.22 10 4,600 2.08 Network 18 Fincap Limited 5 10,442 0.72 5 350,876 74.04 Network 18 Media and Investments Limited 5 144 0.01 – – –

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Schedules to the consolidated financial statements as at 31 March 2009 (Continued) (Currency: Indian rupees in millions)

31 March 2009 31 March 2008 9 STOCK IN TRADE (Continued) Face value Quantity Amount Face value Quantity Amount New Delhi Television Limited – – – 2 467,780 180.21 Neyveli Lignite Corporation Limited – – – 10 182,910 21.92 NIIT Limited 2 352,765 7.14 2 20,300 2.02 Novartis India Limited 10 56,738 20.13 – – – NTPC Limited 10 13,160 2.37 10 966,874 186.53 Oil and Natural Gas Corporation Limited 10 43,915 34.26 10 425,034 416.77 Omaxe Limited – – – 10 64,900 13.46 OnMobile Global Limited – – – 10 52,088 28.34 Orbit Corporation Limited 10 10 – 10 1 – Panasonic Carbon India Limited – – – 10 2,251 0.24 Pantaloon Retail (India) Limited 2 6,800 0.80 2 3,000 1.23 Parry Agro Industries Limited – – – 10 2,557 4.81 Parsvnath Developers Limited – – – 10 54,348 11.42 Perfect Circle India Limited – – – 1 110,782 3.76 Petronet LNG Limited – – – 10 2,200 0.15 Pfizer* $0.50 985 0.68 – – – PNB Gilts Limited 10 46,399 0.86 10 483,438 13.49 Polaris Software Lab Limited 5 16,800 0.76 5 8,100 0.64 Power Finance Corporation Limited – – – 10 43,200 6.97 Power Grid Corporation of India Limited 10 6,720 0.64 – – – Praj Industries Limited 2 57,200 3.01 2 302,500 40.35 Pratappur Sugar and Industries Limited – – – 1 221,778 9.54 Punj Lloyd Limited 2 148,500 12.22 2 513,000 159.44 Punjab National Bank 10 505 0.21 10 127,801 64.25 Rajesh Exports Limited – – – 1 2,446 0.19 Ranbaxy Laboratories Limited 10 299,870 49.69 5 15,200 6.66 Reliance Capital Limited 10 390 0.14 10 177,012 217.51 Reliance Communications Limited 5 3,295 0.57 5 184,450 94.02 Reliance Infrastructure Limited 10 194,117 100.03 10 254,613 318.48 Reliance Industries Limited 10 31,010 47.28 10 243,050 550.70 Reliance Natural Resources Limited 5 836,784 37.52 5 2,002,558 199.86 Reliance Petroleum Limited 10 479,535 45.29 10 4,203,564 656.60 Reliance Power Limited 10 3,825 0.39 10 108,422 34.48 RPG Transmission Limited – – – 10 28 0.01 Rural Electrification Corporation Limited – – – 10 1,940,178 206.53 Satyam Computer Services Limited – – – 2 316,800 124.34 Sesa Goa Limited – – – 10 11 0.03 Shipping Corporation Of India Limited – – – 10 800 0.16 Shopper’s Stop Limited – – – 10 16,203 6.57 Shree Renuka Sugars Limited 2 290,000 20.22 10 9,500 9.18 Shriram City Union Finance Limited 10 100 0.03 – – – Siemens Limited 2 11,068 2.57 – – – Sobha Developers Limited – – – 10 350 0.21 Sparsh BPO Services Limited – – – 10 256,105 37.33 SRF Limited – – – 10 91,500 9.21 State Bank of India 10 5,503 5.75 10 160,524 256.88 Steel Authority of India Limited 10 6,595 0.64 10 1,223,098 226.64 Sterlite Industries ( India ) Limited 2 1,127 0.40 2 363,323 258.58 Sterlite Techonologies Limited – – – 2 25,200 4.10 Sun Pharmaceuticals Industries Limited 10 2,130 2.27 – – –

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Schedules to the consolidated financial statements as at 31 March 2009 (Continued) (Currency: Indian rupees in millions)

31 March 2009 31 March 2008 9 STOCK IN TRADE (Continued) Face value Quantity Amount Face value Quantity Amount

E. Debentures/Bonds (Quoted) 10.70% IRFC 2023 Bonds 1,000,000 12 13.46 – – – 11.25% Tata Cap 2014 NCD 1,000 622,999 660.76 – – – 11.30% IDBI 2018 Bond 1,000,000 53 58.71 – – – 12% Tata Capital 2014 NCD 1,000 437,278 465.80 – – – 6.05% GOI 2019 Bonds 100 500,000 46.51 – – – 6.85% IIFCL 2014 Tax Free Series II 100,000 6,496 648.87 – – – 7.60% HUDCO 2013 1,000,000 4 3.53 – – – ECL24APR08 990,402 180 178.27 – – – 2,075.91 –

F. Debentures (Unquoted) Citicorp Finance Debenture- Series 225 100,000 1,000 100.00 – – – Trent Limited 1,000 6 0.01 1,000 9 0.01 100.01 0.01

G. Mutual Fund (Quoted) Kotak Sensex 10 23,686 2.30 – – – Benchmark Mutual Fund 10 30,854 8.93 – – – 11.23 –

H. Warrants (Quoted) Network 18 Fincap Limited 228,120 4.40 – – Orbit Corporation Limited 276,246 1.80 21,349 0.20 Renaissance Jewellery Limited 5,000 0.01 5,166 0.06 Trent Limited – – 734 0.07 6.21 0.33

I. Certificate of deposits State Bank of Bikaner & Jaipur CD 28.09.09 70 6.71 – – IDBI Bank Ltd. CD - 29.09.2009 5,000 481.73 – – 488.44 –

J. Commodity # Goldmini 17.8500 26.98 7.6000 8.74 Gold 201.4970 301.38 75.0000 90.37 Silver 7,926.1429 152.66 967.6500 18.70 Zinc Ingots 100,305.0000 7.37 – – 488.39 117.81

4,641.76 9,678.84 * Face value in USD ** no par value # Quantity in Kg.

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Schedules to the consolidated financial statements as at 31 March 2009 (Continued) (Currency: Indian rupees in millions)

31 March 2009 31 March 2008 9 STOCK IN TRADE (Continued) Face value Quantity Amount Face value Quantity Amount Suzlon Energy Limited 2 2,390 0.10 – – – Take Solutions Limited 1 112,434 2.06 – – – Tata Communications Limited 10 456 0.24 – – – Tata Consultancy Services Limited 1 39,060 20.71 1 211,495 171.41 Tata Investment Corporation Limited – – – 10 47,866 23.50 Tata Motors Limited 10 720 0.13 10 2,884 1.79 Tata Power Co. Limited 10 355 0.27 10 5,400 6.05 Tata Steel Limited 10 1,165 0.24 10 68,668 46.19 Tata Teleservices (Maharashtra) Limited – – – 10 193,325 5.43 Teledata Informatics Limited – – – 2 41,607 0.99 Television Eighteen India Limited 5 6,800 0.47 – – – The Bank of Rajasthan Limited – – – 10 132,037 7.27 The Federal Bank Limited – – – 10 108,795 23.57 The Madras Aluminium Co. Limited – – – 10 1,305 0.64 Thomas Cook (India) Limited – – – 1 468,027 44.73 Titan Industries Limited 10 412 0.32 10 1,236 1.31 Transport Corporation of India Limited – – – 2 90,146 7.67 Triveni Engineering & Industries Limited – – – 2 279,125 29.66 Tulip IT Services Limited – – – 10 722 0.62 TVS Motor Company Limited – – – 1 26,550 0.89 Uniflex Cables Limited – – – 10 103,249 4.23 Unitech Limited 2 2,690 0.10 2 97,200 26.63 United Breweries Limited 1 26,500 1.95 – – – UTV Software Communications Limited 10 68,945 13.72 10 267,754 204.88 Welspun Gujarat Stahl Rohren Limited 10 92,800 5.86 10 21,600 7.72 Wipro Limited – – – $10 30,000 13.83 Wipro Limited 2 16,735 4.04 2 8 0.01 Wire and Wireless (India) Limited – – – 1 18,900 0.68 Wockhardt Limited – – – 5 1,200 0.32 Wyeth Limited – – – 10 363 0.17 Yes Bank Limited 10 484,097 24.20 – – – Zee Entertainment Enterprises Limited 1 68,603 6.98 1 193,200 46.74 1,461.38 9,280.38

B. Equity Shares (Unquoted) Chi Investment Limited – – – 10 15,771 3.24 Citigroup Global Services Limited 10 1 0.01 10 1 0.01 FCI Oen Connectors Limited – – – 10 1 0.01 Indiabulls Securities Limited – – – 2 4,025 1.23 Teledata Marine Solutions Limited 2 26,500 0.88 2 26,500 0.88 Teledata Techno Limited 2 26,500 0.88 2 26,500 0.88 1.77 6.25

C. Preference Shares (Quoted) Network 18 Fincap Limited 5 39,492 3.13 – – – Tata Steel Limited 100 160,296 5.16 100 2,580,443 273.93 8.29 273.93

D. Preference Shares (Unquoted) Ispat Industries Limited 10 6,000 0.13 10 6,000 0.13 0.13 0.13

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Schedules to the consolidated financial statements as at 31 March 2009 (Continued) (Currency: Indian rupees in millions)

31 March 2009 31 March 2008 10 SUNDRY DEBTORS (Unsecured and considered good, unless otherwise stated)

Debtors outstanding for a period exceeding six months (a) Considered good 11.35 4.76 (b) Considered doubtful 86.36 6.93 97.71 11.69 Other debts (a) Considered good 423.89 1,776.14 (b) Considered doubtful 10.08 39.56 433.97 1,815.70 531.68 1,827.39

Less : Provision for doubtful debts 96.44 46.61

435.24 1,780.78

11 CASH AND BANK BALANCES

Cash in hand 0.88 0.63 Cheques in hand 385.54 – Balances with scheduled banks - in Current accounts 2,923.70 3,430.30 - in Fixed deposits (Refer schedule 25.12) 13,608.55 16,005.64 Balances with other banks 294.33 4.86

17,213.00 19,441.43

12 OTHER CURRENT ASSETS (Unsecured and considered good)

Accrued interest on fixed deposits 668.55 353.92 Accrued interest on inter-corporate deposits 1.88 0.58 Accrued interest on debt instruments 14.78 5.91 Accrued interest on loans given 0.24 0.86 Dividend receivable 23.80 25.58 Margin on trading of securities (net) – 2.59 Margin for government securities 0.75 –

710.00 389.44

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Schedules to the consolidated financial statements as at 31 March 2009 (Continued) (Currency: Indian rupees in millions)

31 March 2009 31 March 2008 13 RECEIVABLE FROM FINANCING BUSINESS

Loans given - Secured 5,503.34 9,086.61 - Unsecured 805.86 62.01 6,309.20 9,148.62

Less : Provision for non-performing assets 14.10 –

6,295.10 9,148.62

14 LOANS AND ADVANCES (Unsecured and considered good)

Advances recoverable in cash or in kind or for value to be received 1,511.80 1,171.12 Deposits placed with exchange/depositories 678.19 540.17 Deposits - others 333.69 449.46 Inter-corporate deposits placed 148.00 15.50 Initial margin 1,205.00 145.65

Mark-to-Market Margin - Equity Index/Stock Futures 285.08 199.29 Less: Provision for loss on Equity Index/Stock Futures 285.08 199.29 – –

Equity Index/Stock Options Premium Account 1,043.79 310.88 Less: Provision for loss on Equity Index/Stock Options 68.30 23.78 975.49 287.10

Mark-to-Market Margin - Commodity Futures 31.90 47.91 Less: Provision for loss on Commodity Futures 31.90 47.91 – –

Advance tax and tax deducted at source 21.72 367.51 (Net of provision for taxation Rs. 3,242.06 million; Previous year: Rs. 1,724.03 million)

4,873.89 2,976.51

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Schedules to the consolidated financial statements as at 31 March 2009 (Continued) (Currency: Indian rupees in millions)

31 March 2009 31 March 2008 15 CURRENT LIABILITIES

Sundry creditors 2,289.99 6,953.42 Book overdraft 377.22 3,389.62

Equity Index/Stock Options Premium Account 828.71 52.64 Add: Provision for Loss on Equity Index/Stock Options 160.50 7.72 989.21 60.36

Mark-to-Market Margin - Commodity Futures 61.27 84.28 Mark-to-Market Margin - Equity Index/Stock Futures 93.37 654.72 Income received in advance – 16.37 Interest accrued but not due on unsecured loan 144.88 104.91 Other liabilities 205.93 458.82

4,161.87 11,722.50

16 PROVISIONS

Gratuity 37.11 24.25 Provision for deferred bonus (Refer schedule 25.10) 675.59 675.59 Proposed dividend 224.80 150.18 Dividend distribution tax 12.20 25.52 General loan loss provision 58.20 45.51 Other provisions (Refer schedule 25.10) 6.11 6.11

1,014.01 927.16

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Schedules to the consolidated financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees in millions)

31 March 2009 31 March 2008 17 FEE AND COMMISSION INCOME

Income from broking 1,647.94 2,807.37 Referral and other fees 210.25 330.22 Investment banking fees 195.13 800.09 Advisory fees 327.10 368.48 Processing fees 60.79 131.87

2,441.21 4,438.03

18 INCOME FROM ARBITRAGE AND TRADING IN SECURITIES, COMMODITIES AND DERIVATIVES

(Loss)/profit on trading in securities (net) (2,096.25) 750.33 Profit on trading in equity derivative instruments (net) 4,163.78 2,534.06 Profit on trading in currency derivative instruments (net) 4.03 – Profit on trading in commodity futures (net) 1,029.36 201.92 Loss on trading in commodity forwards (net) (240.60) – (Loss)/profit on trading in commodities (net) (348.66) 6.27

2,511.66 3,492.58

19 INCOME FROM INVESTMENTS AND DIVIDEND

Gain on structured products 28.97 – Profit on sale of current investment 197.39 64.31 Profit on sale of long term investment 117.90 201.66 Dividend on stock in trade 139.45 113.02 Dividend on current investment 152.81 321.99 Dividend on long term investment 48.17 17.04 Share in profit of associate companies 12.70 48.27

697.39 766.29

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Schedules to the consolidated financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees in millions)

31 March 2009 31 March 2008 20 INTEREST INCOME

Interest income on – Loan 1,442.14 1,329.43 – Intercorporate deposits 19.75 7.56 – Fixed deposits 1,663.17 812.14 – Debt instrument 159.47 10.97 – Margin 6.40 10.08 – Others 23.71 0.70

3,314.64 2,170.88

21 OTHER INCOME

Commission 8.10 – Diminution in value of current investments written back 5.26 – Diminution in value of long term investments written back 1.25 1.43 Bad debts recovered 0.32 – Provision for doubtful advances written back 2.79 – Profit on sale of fixed assets 0.07 – Profit on sale of receivable 2.44 – Miscellaneous income 19.83 19.33

40.06 20.76

22 EMPLOYEE COSTS

Salaries and bonus 1,605.95 2,014.17 Contribution to provident fund and other funds 13.79 6.78 Gratuity 12.88 12.79 Staff welfare 26.73 23.49

1,659.35 2,057.23

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EDELWEISS ANNUAL REPORT 2008-09

Schedules to the consolidated financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees in millions)

31 March 2009 31 March 2008 23 OPERATING AND OTHER EXPENSES

Advertisement and business promotion 59.69 109.92 Auditors’ remuneration 9.58 7.46 Commision to non- executive directors 2.50 – Bad debts and advances written off 13.92 23.33 Commission and brokerage 46.28 74.09 Communication 83.17 56.57 Computer expenses 23.88 27.28 Computer software 59.72 58.99 Clearing charges 2.52 – Wealth tax 0.03 – Dematerialisation charges 10.07 20.46 Mark-to-market loss on current investments – 17.75 Directors’ sitting fees 1.46 0.29 Donation 9.82 16.59 Electricity charges 54.83 31.21 Foreign exchange loss (net) 1.57 14.56 Insurance 20.60 8.79 Interest paid on interest rate swaps 12.34 – Legal and professional fees 151.06 226.76 Loss on sale of fixed assets 0.31 0.96 Membership and subscription 48.43 28.67 Office expenses 44.12 24.70 Postage and courier 13.36 10.56 Printing and stationery 33.13 33.87 Provision on standard assets 12.69 45.51 Provision for non-performing assets 14.10 – Provision for diminution in value of long term investments 18.30 – Provision for doubtful debts 48.68 54.00 Rates and taxes 83.41 69.81 Rent 347.11 174.05 Repairs and maintenance - others 9.68 12.16 Security transaction tax 720.38 180.73 Seminar and conference 34.17 – Service tax expenses 169.13 300.33 Stamp duty 131.43 237.87 Stock exchange expenses 117.61 282.00 Preliminary expenses 4.08 7.91 Warehousing charges 4.06 – Mutual fund expenses 9.80 – Trusteeship fees 0.58 – Travelling and conveyance 103.53 93.29 Miscellaneous expenses 10.53 29.28

2,541.66 2,279.75

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Schedules to the consolidated financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees in millions)

31 March 2009 31 March 2008 24 FINANCIAL EXPENSES

Interest on – Optionally fully convertible debentures 3.01 51.27 – Fully convertible debentures 229.84 235.02 – Inter-corporate deposits 41.14 69.71 – Non convertible debentures 397.10 580.92 – Term loan – 43.04 – Bank overdraft 20.09 60.57 – Deposits 16.16 14.53 – Others 107.44 43.71 Discount on commercial paper 460.64 861.02 Financial charges 0.52 0.36 Bank charges 61.01 51.34

1,336.95 2,011.49

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EDELWEISS ANNUAL REPORT 2008-09

Schedules to the consolidated financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees in millions)

NOTES TO THE ACCOUNTS 25.1 Segment reporting The Group’s business is organised and management reviews the performance based on the business segments as mentioned below:

Segment Activities covered Agency business Broking, advisory and product distribution services Capital Arbitrage and trading in securities, commodities and derivatives and wholesale financing

Income for each segment has been specifically identified. Expenditure, assets and liabilities are either specifically identifiable with individual segments or have been allocated to segments on a systematic basis. Based on such allocations, segmental balance sheet as at 31 March 2009 and segmental profit & loss account for the year ended 31 March 2009 have been prepared. Since the business operations of the Group are primarily concentrated in India, the Group is considered to operate only in the domestic segment.

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Schedules to the consolidated financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees in millions)

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EDELWEISS ANNUAL REPORT 2008-09

Schedules to the consolidated financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees in millions)

25 NOTES TO THE ACCOUNTS (CONTINUED) 25.2 Related parties (A) Individuals owning, directly or indirectly, an interest in the voting power of the reporting enterprise that gives them control or significant influence over the enterprise Rashesh Shah Vidya Shah Venkat Ramaswamy Aparna T. C. (B) Key management personnel Naresh Kothari Hiralal Chopra (C) Relatives of individuals exercising significant influence Neel Shah Kaavya Venkat Shilpa Mody Sripad Desai Sharmishta Chandrakant Shah A. V. Ramaswamy (D) Enterprises in which/where significant influence is exercised Oak Holdings Private Limited Rashesh Shah H.U.F. Edelweiss Employee Welfare Trust Blue River Capital Advisors (India) Private Limited Blue River Capital Management Company 1, LLC Edelweiss Asset Reconstruction Company Limited (w.e.f. 12 December 2008) Edelweiss Real Estate Advisors Private Limited. Edelcap Insurance Advisors (E) Subsidiary company Edelgive Foundation (Refer Schedule 25.15) (F) Enterprises which exercise significant influence over subsidiary, with whom transactions have taken place Lehman Brothers Netherlands Horizon B.V.

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Schedules to the consolidated financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees in millions)

25 NOTES TO THE ACCOUNTS (CONTINUED) 25.2 Related parties (Continued) Transactions and balances with related parties:

Capital account transactions Equity shares investments Edelgive Foundation 0.10 (-) Edelweiss Real Estate Advisors Pvt. Ltd. - (0.25)

Edelweiss Asset Reconstruction Company Ltd. 10.28 (-)

Lehman Brothers Netherlands Horizon B.V. - (146.98) Non convertiable debenture subscribed by Oak Holdings Pvt. Ltd. 29.50 (-) Share premium Lehman Brothers Netherlands Horizon B.V. - (1,533.62) Preference shares redeemed Rashesh Shah 2.60 (-) Loans Given Edelweiss Employee Welfare Trust 201.65 (175.72) Edelweiss Real Estate Advisors Pvt. Ltd. 7.17 (1.97) Edelcap Insurance Advisors - (0.05) Oak Holdings Pvt. Ltd. - (25.10) Proceeds from repayment of loan Oak Holdings Pvt. Ltd. - (25.10) Loans taken Inter-corporate deposits accepted Edelweiss Real Estate Advisors Pvt. Ltd. 10.90 (19.80) Inter-corporate deposits repaid Edelweiss Real Estate Advisors Pvt. Ltd. 29.70 (1.00) Dividend paid Rashesh Shah 21.73 (-)

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EDELWEISS ANNUAL REPORT 2008-09

Schedules to the consolidated financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees in millions)

25 NOTES TO THE ACCOUNTS (CONTINUED) 25.2 Related parties (Continued) Transactions and balances with related parties:

Enterprises Relatives of Enterprises in Individuals which exercise Key individuals which/where exercising significant Particulars Management exercising significant Subsidiary significant influence over Personnel significant influence is control subsidiary influence exercised company Venkat Ramaswamy 10.61 (-) Aparna T. C. 2.40 (-) Kaavya Venkat 2.40 (-) Vidya Shah 6.07 (-) A V Ramaswamy 0.01 (-) Shilpa Mody 0.01 (-) Sharmishta Chandrakant Shah 4.33 (-) Sripad Desai 0.01 (-) Remuneration Rashesh Shah 12.22 (31.43) Venkat Ramaswamy 10.52 (30.88) Vidya Shah - (0.03) Naresh Kothari 8.95 (37.63) Hiralal Chopra 2.11 (2.38) Interest income Edelweiss Real Estate Advisors Pvt. Ltd. 0.29 (-) Interest expense Interest Expense on Structured Products Oak Holdings Pvt. Ltd. 0.20 (-) Interest paid on intercorporate deposits Edelweiss Real Estate Advisors Pvt. Ltd. 0.24 (1.31) Rent paid Aparna T. C. 0.68 (1.16) Vidya Shah 4.41 (2.10) Fee received Blue River Capital Advisors (India) Pvt. Ltd. 3.00 (4.00)

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Schedules to the consolidated financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees in millions)

25 NOTES TO THE ACCOUNTS (CONTINUED) 25.2 Related parties (Continued) Transactions and balances with related parties:

Enterprises Relatives of Enterprises in Individuals which exercise Key individuals which/where exercising significant Particulars Management exercising significant Subsidiary significant influence over Personnel significant influence is control subsidiary influence exercised company Reimbursement recovered Edelweiss Real Estate Advisors Pvt. Ltd. 2.76 (-) Oak Holdings Pvt. Ltd. 0.01 (-) Edelgive Foundation 0.04 (-) Reimbursement recovered for common expenses Shared staff cost Edelweiss Real Estate Advisors Pvt. Ltd. 15.00 (10.13) Rent Blue River Capital Advisors (India) Pvt. 4.03 Ltd. (3.38) Edelweiss Real Estate Advisors Pvt. Ltd. 0.60 (0.90) Electricity Blue River Capital Advisors (India) Pvt. 0.53 Ltd. (0.80) Edelweiss Real Estate Advisors Pvt. Ltd. 0.30 (0.30) Professional fees recovered Edelweiss Real Estate Advisors Pvt. Ltd. - (0.06) Printing and stationery recovered Edelweiss Real Estate Advisors Pvt. Ltd. - (0.06) Donations given Edelgive Foundation 5.48 (-) Purchase of securities acting as a broker Edelweiss Employee Welfare Trust 203.90 (-) Rashesh Shah - (420.38) Vidya Shah 219.77 (1.67) Venkat Ramaswamy - (18.27) Aparna T. C. 184.60 (377.33)

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EDELWEISS ANNUAL REPORT 2008-09

Schedules to the consolidated financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees in millions)

25 NOTES TO THE ACCOUNTS (CONTINUED) 25.2 Related parties (Continued) Transactions and balances with related parties:

Balances with related parties Investments Edelweiss Real Estate Advisors Pvt. Ltd. 0.50 (0.50) Blue River Capital Advisors (India) Pvt. Ltd. 0.10 (0.10) Edelweiss Asset Reconstruction 10.78 Company Ltd. (-) Edelgive Foundation 0.10 (-) Non convertible debentures outstanding Oak Holdings Pvt. Ltd. 29.50 (-)

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Schedules to the consolidated financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees in millions)

25 NOTES TO THE ACCOUNTS (CONTINUED) 25.2 Related parties (Continued) Transactions and balances with related parties:

Loans Edelweiss Asset Reconstruction 0.54 Company Ltd. (-) Edelweiss Real Estate Advisors Pvt. Ltd. 0.79 (9.23) Edelcap Insurance Advisors - (0.05) Oak Holdings Pvt. Ltd. - (0.21) Advances Edelweiss Real Estate Advisors Pvt. Ltd. 5.06 (11.40) Edelweiss Asset Reconstruction 0.02 Company Ltd. (0.03) Edelweiss Employee Welfare Trust 424.82 (223.17) Blue River Capital Advisors (India) Pvt. Ltd. 3.31 (1.11) Edelgive Foundation 0.21 (-) Bonus payable Rashesh Shah 11.00 (28.00) Venkat Ramaswamy 11.70 (26.70) Hiralal Chopra - (0.50) Naresh Kothari 4.00 (32.05) Interest payable on structured product Oak Holdings Pvt. Ltd. 0.20 (-) Inter-corporate deposits accepted Edelweiss Real Estate Advisors Pvt. Ltd. - (18.80) Amounts in brackets represent previous year numbers

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EDELWEISS ANNUAL REPORT 2008-09

Schedules to the consolidated financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees in millions)

25 NOTES TO THE ACCOUNTS (CONTINUED) 25.3 Earnings per share

In accordance with Accounting Standard 20 on earnings per share prescribed by Companies (Accounting Standards) Rules, 2006, the computation of earnings per share is set out below:

2009 2008

a) Shareholders earnings (as per profit and loss account) 1,864.44 2,732.40 Less: Preference dividend declared by the Company (including dividend distribution tax ) 0.30 0.37 Net profit available to equity shareholders for the purpose of calculating basic and diluted earnings per share 1,864.14 2,732.03 b) Calculation of weighted average number of equity shares of Rs. 5 each: – Number of shares at the beginning of the year 74,933,155 44,916,806 – Number of shares issued during the year – *30,016,349 Total number of equity shares outstanding at the end of the year 74,933,155 74,933,155 Weighted average number of equity shares outstanding during the year (based on the date of issue of shares) 74,933,155 64,604,696 Number of dilutive potential equity shares 1,829,176 3,711,240 c) Basic earnings per share (in rupees) 24.88 42.29 d) Diluted earnings per share (in rupees) 24.28 39.99 * includes issuance of bonus and consolidation of equity shares and conversion of preference shares.

25.4 Deferred taxes

The primary components relating to deferred tax assets are as follows:

2009 2008

Deferred tax asset Tax effect of the timing differences on account of: Provision for gratuity 12.26 7.93 Provision for standard assets 21.32 15.47 Provision for diminution in value of current investments – 6.03 Provision for advances 11.99 3.81 Provision for mark to market loss on outstanding future and option contracts 175.71 90.34 Difference between book and tax depreciation 18.62 6.15 Disallowance under Section 43B 265.09 20.74 Provision for doubtful debts 31.07 15.47 Preliminary expenses allowed under Section 35 D 1.48 1.86 Provision for non performing assets 3.25 – Amortisation of income on sale of receivable 1.51 – Carried forward losses 0.02 –

Deferred tax asset 542.32 167.80

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Schedules to the consolidated financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees in millions)

25 NOTES TO THE ACCOUNTS (CONTINUED)

25.5 Disclosure pursuant to Accounting Standard 15 (Revised) – Employee Benefits

A) Defined contribution plan (Provident fund): Amount of Rs. 13.77 million (Previous year: Rs. 6.78 million) is recognised as expenses and included in “ Employee Costs” — Schedule 22 in the profit and loss account. B) Defined benefit plan (Gratuity): The following tables summarise the components of the net benefit expenses recognised in the profit and loss account and the fund status and amount recognised in the balance sheet for the Gratuity benefit plan. Profit and loss account Net employee benefit expenses (recognised in employee cost)

2009 2008 Current service cost 25.17 20.23 Interest on defined benefit obligation 4.49 2.55 Expected return on plan assets 0.09 – Net actuarial losses/(gains) recognised in the year – – Past service cost – – Actuarial (gain)/losses (16.87) (10.02)

Total included in ‘employee benefit expense’ 12.88 12.76

Balance sheet Details of provision for gratuity

2009 2008

Liability at the end of the year 37.11 24.25 Fair value of plan assets at the end of the year – – Difference 37.11 24.25 Unrecognised past service cost – – Unrecognised transition liability – –

Amount in Balance sheet 37.11 24.25

Changes in the present value of the defined benefit obligation are as follows:

2009 2008

Liability at the beginning of the year 24.25 11.82 Interest cost 3.88 2.55 Current service cost 25.57 20.23 Past service cost (non vested benefit) – – Past service cost (vested benefit) – – Benefits paid (0.03) (0.33) Actuarial (gain)/loss (16.56) (10.02)

Liability at the end of the year 37.11 24.25

Principal actuarial assumptions at the balance sheet date:

2009 2008

Discount rate 7% 8% Salary escalation 8% 8% Employee attrition rate 2%-15% 2%

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EDELWEISS ANNUAL REPORT 2008-09

Schedules to the consolidated financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees in millions)

25 NOTES TO THE ACCOUNTS (CONTINUED)

25.6 Operating leases

The Group has taken various premises on operating lease. Gross rental expenses for the year ended 31 March 2009 aggregated to Rs. 347.11 million (Previous year Rs. 174.05 million) which has been included under the head Operating expenses – Rent in the profit and loss account.

Details of future minimum lease payments for non-cancellable operating leases are as follows:

2009 2008 Minimum lease payments for non cancellable lease – not later than one year 103.67 139.06 – later than one year and not later than five years 93.10 106.41 – later than five years – –

Total 196.77 245.47

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Schedules to the consolidated financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees in millions)

25 NOTES TO THE ACCOUNTS (CONTINUED) 25.7 A) Open interest in Equity Index/Stock Futures as at the balance sheet date: Long Position

Sr. Name of Future Series of Number of Number of No. Future Contract Units involved 1 Aban Offshore Limited 30-Apr-09 10 4,000 2 ABB Limited 30-Apr-09 157 78,500 3 ACC Limited 30-Apr-09 70 52,640 4 Adlabs Films Limited 30-Apr-09 8 14,400 5 Ambuja Cements Limited 30-Apr-09 131 540,244 6 Associated Cement Company Limited 30-Apr-09 21 15,792 7 Axis Bank Limited 30-Apr-09 140 126,000 8 Balrampur Chini Mills Limited 30-Apr-09 7 67,200 9 Bharat Heavy Electricals Limited 30-Apr-09 610 183,000 10 Bharat Petroleum Corporation Limited 30-Apr-09 81 89,100 11 Bharti Airtel Limited 30-Apr-09 1,333 666,500 12 Bombay Dyeing & Manufacturing Company Limited 30-Apr-09 9 16,200 13 Bombay Rayon Fashions Limited 30-Apr-09 38 87,400 14 Cairn India Limited 30-Apr-09 169 422,500 15 Cipla Limited 30-Apr-09 124 155,000 16 Divi’s Laboratories Limited 30-Apr-09 10 3,100 17 DLF Limited 30-Apr-09 474 758,400 18 Educomp Solutions Limited 30-Apr-09 4 600 19 GAIL (India) Limited 30-Apr-09 287 322,875 20 GMR Infrastructure Limited 30-Apr-09 6 30,000 21 Grasim Industries Limited 30-Apr-09 170 59,840 22 HCL Technologies Limited 30-Apr-09 91 236,600 23 HDFC Bank Limited 30-Apr-09 380 152,000 24 Hero Honda Motors Limited 30-Apr-09 180 72,000 25 Hindalco Industries Limited 30-Apr-09 75 527,700 26 Hindustan Unilever Limited 30-Apr-09 776 776,000 27 Housing Development Finance Corporation Limited 30-Apr-09 557 83,550 28 ICICI Bank Limited 30-Apr-09 572 400,400 29 Idea Cellular Limited 30-Apr-09 181 977,400 30 Infosys Technologies Limited 30-Apr-09 1,225 245,000 31 ITC Limited 30-Apr-09 517 1,163,250 32 IVRCL Infrastructure & Projects Limited 30-Apr-09 1 2,000 33 Jaiprakash Associates Limited 30-Apr-09 13 58,500 34 Larsen & Toubro Limited 30-Apr-09 492 196,800 35 LIC Housing Finance Limited 30-Apr-09 13 22,100 36 Mahindra & Mahindra Limited 30-Apr-09 80 99,840 37 Maruti Suzuki India Limited 30-Apr-09 134 107,200 38 National Aluminium Company Limited 30-Apr-09 102 234,600 39 NTPC Limited 30-Apr-09 1,800 2,925,000 40 Oil & Natural Gas Corpn. Limited 30-Apr-09 1,692 761,400 41 Power Grid Corporation of India Limited 30-Apr-09 391 1,505,350 42 Punjab National Bank 30-Apr-09 188 112,800 43 Ranbaxy Laboratories Limited 30-Apr-09 95 152,000 44 Reliance Capital Limited 30-Apr-09 189 104,328 45 Reliance Communications Limited 30-Apr-09 530 742,000 46 Reliance Industries Limited 30-Apr-09 1,596 478,800 47 Reliance Infrastructure Limited 30-Apr-09 68 37,536

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EDELWEISS ANNUAL REPORT 2008-09

Schedules to the consolidated financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees in millions)

25 NOTES TO THE ACCOUNTS (CONTINUED)

25.7 A) Open interest in Equity Index/Stock Futures as at the balance sheet date (Continued):

Long Position (Continued)

Sr. Name of Future Series of Number of Number of No. Future Contract Units involved 48 Reliance Petroleum Limited 30-Apr-09 812 2,720,200 49 Reliance Power Limited 30-Apr-09 426 852,000 50 Rolta India Limited 30-Apr-09 48 86,400 51 S&P CNX Nifty 30-Apr-09 427 21,350 52 Sesa Goa Limited 30-Apr-09 24 72,000 53 Shree Renuka Sugars Limited 30-Apr-09 23 115,000 54 Siemens Limited 30-Apr-09 69 103,776 55 State Bank Of India 30-Apr-09 889 234,696 56 Steel Authority of India Limited 30-Apr-09 282 1,522,800 57 Sterlite Industries (India) Limited 30-Apr-09 311 272,436 58 Sun Pharmaceuticals Industries Limited 30-Apr-09 317 71,325 59 Suzlon Energy Limited 30-Apr-09 87 522,000 60 Tata Communications Limited 30-Apr-09 99 103,950 61 Tata Consultancy Services Limited 30-Apr-09 626 313,000 62 Tata Motors Limited 30-Apr-09 110 187,000 63 Tata Power Company Limited 30-Apr-09 200 80,000 64 Tata Steel Limited 30-Apr-09 188 287,264 65 The Great Eastern Shipping Company Limited 30-Apr-09 18 43,200 66 Triveni Engineering & Industries Limited 30-Apr-09 3 23,100 67 Unitech Limited 30-Apr-09 184 1,656,000 68 United Spirits Limited 30-Apr-09 19 4,750 69 Wipro Limited 30-Apr-09 424 508,800 70 S&P CNX Nifty 28-May-09 144 7,200 71 Bombay Rayon Fashions Limited 25-Jun-09 5 11,500 72 S&P CNX Nifty 25-Jun-09 291 14,550 Short Position

Sr. Name of Future Series of No. of Number of No. Future Contracts Units involved 1 Amtek Auto Limited 30-Apr-09 11 52,800 2 Axis Bank Limited 30-Apr-09 7 6,300 3 Bajaj Hindusthan Limited 30-Apr-09 68 387,600 4 BANK Nifty 30-Apr-09 204 10,200 5 Bharat Forge Company Limited 30-Apr-09 3 12,000 6 Bharat Petroleum Corpn. Limited 30-Apr-09 7 7,700 7 Bharti Airtel Limited 30-Apr-09 32 16,000 8 Bombay Rayon Fashions Limited 30-Apr-09 3 6,900 9 Cairn India Limited 30-Apr-09 86 215,000 10 Central Bank Of India 30-Apr-09 10 80,000 11 Crompton Greaves Limited 30-Apr-09 13 26,000 12 Cummins India Limited 30-Apr-09 1 1,900 13 Dish TV India Limited 30-Apr-09 1 20,600 14 Financial Technologies (India) Limited 30-Apr-09 2 1,200 15 GAIL (India) Limited 30-Apr-09 127 142,875 16 Grasim Industries Limited 30-Apr-09 73 25,696 17 GVK Power & Infrastructure Limited 30-Apr-09 11 209,000

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Schedules to the consolidated financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees in millions)

25 NOTES TO THE ACCOUNTS (CONTINUED)

25.7 A) Open interest in Equity Index/Stock Futures as at the balance sheet date (Continued): Short Position (Continued) Sr. Name of Future Series of No. of Number of No. Future Contracts Units involved 18 Hindustan Oil Exploration Co. Limited 30-Apr-09 8 51,200 19 Hindustan Petroleum Corporation Limited 30-Apr-09 8 10,400 20 Hindustan Unilever Limited 30-Apr-09 179 179,000 21 Housing Development and Infrastructure Limited 30-Apr-09 99 306,504 22 Housing Development Finance Corporation Limited 30-Apr-09 221 33,150 23 ICICI Bank Limited 30-Apr-09 93 65,100 24 IFCI Limited 30-Apr-09 9 141,840 25 India Cements Limited 30-Apr-09 1 2,900 26 India Infoline Limited 30-Apr-09 10 50,000 27 Indian Hotels Company Limited 30-Apr-09 6 45,576 28 Indian Oil Corporation Limited 30-Apr-09 569 341,400 29 Industrial Development Bank of India Limited 30-Apr-09 3 14,400 30 Infosys Technologies Limited 30-Apr-09 442 88,400 31 Ispat Industries Limited 30-Apr-09 9 224,100 32 ITC Limited 30-Apr-09 3 6,750 33 IVRCL Infrastructure & Projects Limited 30-Apr-09 10 20,000 34 Jaiprakash Associates Limited 30-Apr-09 99 445,500 35 Jaiprakash Hydro-Power Limited 30-Apr-09 1 12,500 36 Jet Airways (India) Limited 30-Apr-09 9 21,600 37 Jindal Steel & Power Limited 30-Apr-09 19 6,080 38 JSW Steel Limited 30-Apr-09 8 13,200 39 Kotak Mahindra Bank Limited 30-Apr-09 14 15,400 40 Larsen & Toubro Limited 30-Apr-09 57 22,800 41 LIC Housing Finance Limited 30-Apr-09 10 17,000 42 Nagarjuna Fertilizer & Chemicals Limited 30-Apr-09 3 63,000 43 Network 18 Fincap Limited 30-Apr-09 112 224,000 44 Oil & Natural Gas Corporation Limited 30-Apr-09 82 36,900 45 Pantaloon Retail (I) Limited 30-Apr-09 3 5,100 46 Polaris Software Lab Limited 30-Apr-09 3 16,800 47 Power Grid Corporation Of India Limited 30-Apr-09 9 34,650 48 Praj Industries Limited 30-Apr-09 13 57,200 49 Punj Lloyd Limited 30-Apr-09 77 115,500 50 Ranbaxy Laboratories Limited 30-Apr-09 181 289,600 51 Reliance Capital Limited 30-Apr-09 9 4,968 52 Reliance Industries Limited 30-Apr-09 46 13,800 53 Reliance Infrastructure Limited 30-Apr-09 307 169,464 54 Reliance Natural Resources Limited 30-Apr-09 117 836,784 55 Reliance Petroleum Limited 30-Apr-09 77 257,950 56 S&P CNX Nifty 30-Apr-09 44,781 2,239,050 57 State Bank of India 30-Apr-09 13 3,432 58 Steel Authority Of India Limited 30-Apr-09 3 16,200 59 Tata Consultancy Services Limited 30-Apr-09 12 6,000 60 Tata Steel Limited 30-Apr-09 3 4,584 61 Tata Teleservices (Maharastra) Limited 30-Apr-09 39 407,550 62 Television Eighteen India Limited 30-Apr-09 2 6,800 63 Titan Industries Limited 30-Apr-09 1 412 64 Welspun Gujarat Stahl Rohren Limited 30-Apr-09 19 60,800

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EDELWEISS ANNUAL REPORT 2008-09

Schedules to the consolidated financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees in millions)

25 NOTES TO THE ACCOUNTS (CONTINUED)

25.7 A) Open interest in Equity Index/Stock Futures as at the balance sheet date (Continued): Short Position (Continued) Sr. Name of Future Series of No. of Number of No. Future Contracts Units involved 65 Zee Entertainment Enterprises Limited 30-Apr-09 15 42,000 66 Indian Oil Corporation Limited 28-May-09 25 15,000 67 S&P CNX Nifty 28-May-09 1,375 68,750 68 Tata Teleservices (Maharastra) Limited 28-May-09 27 282,150 69 Bombay Rayon Fashions Limited 25-Jun-09 2 4,600 B) Open interest in Commodity Futures as at the balance sheet date Long Position Sr. Name of Future Expiry No. of Number of No. Date Contracts Units involved 1 Gold 995 4-Apr-09 3,580 358,000 2 Light Sweet Crude Oil 15-Apr-09 581 58,100 3 Aluminium 30-Apr-09 4 20,000 4 Copper 30-Apr-09 1,235 1,235,000 5 Gold Mini 995 5-May-09 2,641 26,410 6 Light Sweet Crude Oil 15-May-09 217 21,700 7 Gold 995 5-Jun-09 559 55,900 8 Gold 995 5-Aug-09 337 33,700 9 Gold 995 5-Oct-09 27 2,700 Short Position

Sr. Name of Commodity Future Expiry Date No. of Number of No. Contracts Units involved 1 Gold Mini 995 4-Apr-09 1,136 11,360 2 Natural Gas 20-Apr-09 864 1,080,000 3 Heating Oil 24-Apr-09 70 294,000 4 Aluminum 30-Apr-09 333 1,665,000 5 Lead 30-Apr-09 204 1,020,000 6 Nickel 30-Apr-09 1,260 315,000 7 Zinc 30-Apr-09 682 3,410,000 8 Silver 5-May-09 264 1,320 9 Gold 995 5-Jun-09 796 79,600 C) Open interest in Currency Derivatives as at the balance sheet date

Long Position

Sr. Name of Future Series of Number of Number of Units No. Future Contracts involved 1 USD 28-Apr-09 333 333,000 2 USD 26-Jun-09 260 260,000 3 USD 29-Jul-09 274 274,000 4 USD 27-Aug-09 965 965,000 5 USD 28-Sep-09 156 156,000 6 USD 28-Oct-09 652 652,000 7 USD 26-Nov-09 601 601,000 8 USD 29-Dec-09 251 251,000 9 USD 27-Jan-10 35 35,000 10 USD 24-Feb-10 10 10,000

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Schedules to the consolidated financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees in millions)

25 NOTES TO THE ACCOUNTS (CONTINUED)

25.7 C) Open interest in Currency Derivatives as at the balance sheet date (Continued)

Short Position

Sr. Name of Future Series of Number of Number of Units No. Future Contracts involved 1 USD 28-Apr-09 4,487 4,487,000 2 USD 27-May-09 4,285 4,285,000 3 USD 26-Jun-09 345 345,000 4 USD 27-Aug-09 39 39,000 25.8 Option contracts outstanding as on the balance sheet date

Sr. Name of the Option – Index/Stock/ Commodities/ Currency Total premium carried forward No. as at 31 March 2009 (Net of provisions made) 1 BANK Nifty 1.16 2 Cairn India Limited 0.62 3 DLF Limited 0.09 4 GVK Power & Infrastructure Limited 0.13 5 Hindalco Industries Limited 0.03 6 Hindustan Unilever Ltd 0.53 7 ICICI Bank Limited 0.26 8 Infosys Technologies Limited 5.38 9 ITC Limited 0.30 10 National Thermal Power Corporation Limited 0.12 11 Oil & Natural Gas Corporation Limited 0.27 12 Power Grid Corporation of India Limited 0.50 13 Ranbaxy Laboratories Limited 0.23 14 Reliance Communications Limited 0.65 15 Reliance Industries Limited 0.95 16 Reliance Infrastructure Limited 0.81 17 S&P CNX Nifty (29.81) 18 State Bank of India 0.94 19 Steel Authority of India Limited 0.99 20 Tata Steel Limited 0.32 21 Tata Teleservices (Maharashtra) Limited 0.21 22 Unitech Limited 1.90 23 Gold (0.17) 24 HKD options – HIS APR09 (0.13) Grand total (13.72)

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EDELWEISS ANNUAL REPORT 2008-09

Schedules to the consolidated financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees in millions)

25 NOTES TO THE ACCOUNTS (CONTINUED)

25.9 Employee stock option plans

The Company has currently six Employee Stock Option Plans (‘Plans’) in force. The Plans provide that the Company’s employees and those of its subsidiaries are granted an option to acquire equity shares of the Company that vests in a graded manner. The options may be exercised within a specified period.

The Company follows the intrinsic value method to account for its stock based compensation plans. Compensation cost is measured as the excess, if any, of the fair market value of the underlying share over the exercise price.

During the previous year, the Company has issued ESOP 2007 Plan wherein stock options were granted to employees with a variable exercise price (i.e. the exercise price was linked to either a discount on market price at the time of exercise or a specified amount, whichever is higher). The stock options vested after fifteen days from the date of grant. For determination of compensation cost, the Company has assumed the exercise price to be the specified amount. During the year, the Company has issued ESOP 2008 Plan wherein stock options were granted to employees with a variable exercise price (i.e. the exercise price was linked to either a discount on market price at the time of exercise or a specified amount, whichever is higher). The stock options vested after one year from the date of grant. For determination of compensation cost, the Company has assumed the exercise price to be the specified amount. The shareholders of the Company also approved by a special resolution passed by postal ballot dated 30 March, 2009, the grant of 5 million options under the new Employee Stock Option Plan, ESOP 2009. No stock options have been granted under this plan upto the date of this balance sheet.

With respect to stock options granted upto 31 March 2008, the fair market value of the underlying shares has been determined based on an independent valuer’s report as these stock options were granted by the Company to its employees when it was not listed on the stock exchanges. The fair value under stock options granted during the year is arrived as stipulated in the Guidance Note on Accounting for Employee Share Based Payments issued by The Institute of Chartered Accountants of India. The compensation cost recorded in the profit and loss account for the year is Rs. 6.80 million (Previous year: Rs. 3.49 million).

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Schedules to the consolidated financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees in millions) ) – ) – ) – 0 0 – 0 0 0 0

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9 . 5 5 2 2

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EDELWEISS ANNUAL REPORT 2008-09

Schedules to the consolidated financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees in millions)

25 NOTES TO THE ACCOUNTS (CONTINUED)

25.9 Employee stock option plans (Continued)

(*) Pricing formula:

ESOP 2008 (I)

Period during which vested From the date of vesting to From 1 January 2011 to options are exercised 31 December 2010 31 December 2011 Exercise price payable for such vested Higher of price after 10% discount to Price after 10% discount to the reference options market price as on the exercised date or price Rs. 1,200

ESOP 2008 (III)

ESOP 2007 (I)

Period during which From the date of vesting From 1 October 2008 to From 1 October 2009 to From 1 October 2010 to vested options are to 30 September 2008 30 September 2009 30 September 2010 30 September 2011 exercised Exercise price payable In case shares are listed, In case shares are Rs. 583 Rs. 217 for such vested options 10% discount to market listed, 25% discount to price or Rs. 1,167; market price or Rs. 833; whichever is higher; whichever is higher; otherwise Rs. 1,167. otherwise Rs. 833.

ESOP 2007 (II)

Period during From the date From 1 July 2008 to From 1 July 2009 to From 1 July 2010 to From 1 July 2011 to which vested of vesting to 30 June 2009 30 June 2010 30 June 2011 30 June 2012 options are 30 June 2008 exercised Exercise price In case shares In case shares are In case shares are Rs. 500 Rs. 333 payable for such are listed, 10% listed, 25% discount listed, 50% discount vested options discount to market to market price or to market price or price or Rs. 1,167; Rs. 833; whichever Rs. 667; whichever whichever is higher; is higher; otherwise is higher; otherwise otherwise Rs. 1,167. Rs. 833. Rs. 667.

ESOP 2007 (III)

Period during which From the date of vesting From 1 January 2008 to From 1 January 2009 to From 1 January 2010 to vested options are to 31 December 2007 31 December 2008 31 December 2009 31 December 2010 exercised Exercise price payable Rs. 1,167 In case shares are In case shares are Rs. 517 for such vested options listed, 25% discount to listed, 50% discount to market price or Rs. 833; market price or Rs. 667; whichever is higher; whichever is higher; otherwise Rs. 833 otherwise Rs. 667

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Schedules to the consolidated financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees in millions)

25 NOTES TO THE ACCOUNTS (CONTINUED)

25.9 Employee stock option plans (Continued)

Following summarises the information about stock options outstanding as at 31 March 2009:

Plan ESOP 2002 ESOP 2004 ESOP 2006 ESOP 2007 ESOP 2007 ESOP 2007 ESOP 2008 ESOP 2008 Scheme D Scheme F Scheme G Scheme I Scheme II Scheme III Scheme I Scheme III As at 31 March 2009 – Range of exercise price Rs. 5.00 to Rs. 10.42 to Rs. 79.17 to Pricing Pricing Pricing Pricing Pricing Rs. 79.17 Rs.166.67 Rs.166.67 formula formula formula formula formula – Number of shares arising out of options 3,000 800,555 1,794,600 408,000 788,300 1,755,200 419,200 419,200 – Weighted average life of outstanding options (in years) 2.50 5.86 6.92 2.50 3.25 1.75 2.75 4.75

Fair value methodology

The fair value of options used to compute pro-forma net income and earnings per share have been estimated on the dates of each grant, on or after the date the ‘Guidance Note on Accounting for Employee Share-based Payments’, issued by the council of the Institute of Chartered Accountants of India, became applicable, i.e. 1 April 2005, using the black-scholes option pricing model. In absence of the shares of the Company being listed at the time of the grant, the Company has estimated the volatility based on the historical market volatility. The various assumptions considered in the pricing model for the aforementioned ESOP’s granted are:

2009 Net Profit (as reported) 1,864.44 Less: Impact of incremental cost under fair value approach 38.31 Net Profit: (pro-forma) 1,826.13 Basic earnings per share (as reported) (Rs.) 24.88 Basic earnings per share (pro-forma) (Rs.) 24.37 Diluted earnings per share (as reported) (Rs.) 24.28 Diluted earnings per share (pro-forma) (Rs.) 23.79

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EDELWEISS ANNUAL REPORT 2008-09

Schedules to the consolidated financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees in millions)

25 NOTES TO THE ACCOUNTS (CONTINUED) 25.10 Provisions Nature of Liability Provision as on Addition Amount used Unused amount Provision as on 1 April 2008 reversed 31 March 2009 Claims and rebates (#) 6.11 – – – 6.11 Deferred bonus (@) 675.59 – – – 675.59

Total 681.70 – – – 681.70 (#) During the financial year 2005-06, Edelweiss Securities Limited had received claims from certain Beneficial Owners (BO) on account of transactions in Depository accounts at its branch through counterfeit signatures by the remisiers on Delivery Instructions Slips. In respect of any other future claims by BOs, a prudential provision of Rs. 6.11 million has been made during the financial year 2005-06 by the management. (@) During the financial year 2007-08, the Group has provided for bonus payable to the employees. This provision includes deferred bonus to be payable at future dates to employees in service.

25.11 Capital commitment Capital commitments (net of advances) – Rs. 316.28 million (Previous year: Rs. 40.77 million).

25.12 Contingent liability a) Edelweiss Securities Limited, has provided bank guarantees aggregating to Rs. 3,807 million (Previous year: Rs. 4,755 million) as on 31 March 2009 for the following purposes to: i) National Stock Exchange of India Limited - Rs. 3,504.50 million (Previous year: Rs. 4,224 million) and Rs. 2.5 million (Previous year: Rs. 5 million) for meeting margin requirements and towards security deposit respectively. ii) Bombay Stock Exchange Limited - Rs. 300 million (Previous year: Rs. 525 million) and Rs. Nil (Previous year: Rs. 1 million) for meeting margin requirements and towards security deposit respectively.

It has pledged fixed deposits with banks aggregating of Rs. 1,903.50 million (Previous year: Rs. 2,387.16 million) for obtaining the above bank guarantees.

Further to above, Edelweiss Securities Limited has also pledged fixed deposits with the following: i) OTCEI Rs. 0.30 million (Previous year: Rs. 0.30 million) for meeting base capital requirements. ii) Bombay Stock Exchange Limited Rs. 52.50 million (Previous year: Rs. 600 million) for meeting base capital requirements. iii) National Stock Exchange of India Limited Rs. 6,457.80 million (Previous year: Rs. 10,106.37 million) for meeting base capital requirements. iv) Multi Commodity Stock Exchange of India Limited Rs. 42.50 million (Previous year: Rs. Nil) for meeting base capital requirements. v) Citibank amounting to Rs. 50 million (Previous year: Rs. Nil) for availing secured bank overdraft. vi) HDFC Bank amounting to Rs. 1,013.90 million (Previous year: Rs. Nil) for availing secured bank overdraft. vii) Federal Bank amounting to Rs. 550 million (Previous year: Rs. Nil) for availing secured bank overdraft.

b) Edelweiss Commodities Limited has provided bank guarantee aggregating Rs. 100.00 million (Previous year: Rs. 100.00 million) as on 31 March 2009 to The Multi Commodity Exchange of India Limited for meeting margin requirements.

Edelweiss Commodities Limited has pledged fixed deposit with bank amounting to Rs. 50.00 million (Previous year: Rs. 50.00 million) for obtaining the above bank guarantee.

Fixed deposits have also been pledged with:

i) Multi Commodity Exchange of India Limited Rs. 739.70 million (Previous year: Rs. Nil) for meeting margin requirements. ii) National Commodity and Derivatives Exchange Limited Rs. 20.00 million (Previous year: Rs. Nil) for meeting margin requirements.

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Schedules to the consolidated financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees in millions)

25 NOTES TO THE ACCOUNTS (CONTINUED) 25.12 Contingent liability (Continued)

iii) National Spot Exchange Limited Rs. 1.25 million (Previous year: Rs. Nil) for meeting base capital requirements. iv) Axis Bank Rs. 800 million (Previous year: Rs. Nil) for meeting margin requirements for forward contracts entered with the bank.

c) Edel Commodities Limited has placed fixed deposit with bank amounting to Rs. 48.50 million (Previous year: Rs. Nil) towards Letter of Credit by bank.

d) Edelweiss Broking Limited has provided bank guarantees aggregating to Rs. 100 million (Previous year: Rs. Nil) as on 31 March 2009 for the following purposes to:

i) National Stock Exchange of India Limited - Rs. 100.00 million (Previous year: Rs. Nil).

Edelweiss Broking Limited has pledged fixed deposits with banks aggregating of Rs. 50 million (Previous year: Rs. Nil) for obtaining the above bank guarantees.

Fixed deposits have also been pledged with:

i) Bombay Stock Exchange Limited Rs. 10.50 million (Previous year: Rs. Nil) for meeting base and additional base capital requirements. ii) National Stock Exchange of India Limited Rs. 10.00 million (Previous year: Rs. Nil) for meeting base capital requirements.

e) EC Commodity Limited has provided bank guarantee aggregating Rs. 3.25 million as on 31 March 2009 to The Multi Commodity Exchange of India Limited for meeting margin requirements.

EC Commodity Limited has pledged fixed deposit with bank amounting to Rs. 1.63 million for obtaining the above bank guarantee.

EC Commodity Limited has also pledged fixed deposit with bank amounting to Rs. 53.25 million with The Multi Commodity Exchange of India Limited for meeting margin requirements.

f) ECL Finance Limited has placed fixed deposit amounting to Rs. 1,000 million (Previous year: Rs. Nil) with NSCCL towards margin requirement.

g) Taxation matters in respect of the Company for which appeal is pending – Rs. 1.75 million (Previous year: Rs. 15.86 million). The demand paid under protest in respect of disputed taxation matters pertaining to open assessments of earlier years is Rs. 1.75 million (Previous year: Rs 5.44 million).

h) Taxation matters in respect of which appeal is pending – Rs.0.99 million (Previous year: Rs. 1.25 million). This is being disputed by Crossborder Investments Private Limited and hence not provided for. The demand paid under protest against such contingent liability is Rs.0.18 million (Previous year: Rs. 0.18 million).

i) The Company has issued corporate guarantees to the extent of Rs. 6,188.30 million (Previous year: Rs. 7,310 million), in favour of banks to secure the credit facilities sanctioned by these banks to Edelweiss Securities Limited, EC Commodity Limited, Edelweiss Broking Limited and Edelweiss Commodities Limited.

Based on details provided above, fixed deposits with scheduled banks includes Rs. 12,855.33 million (Previous year: Rs. 13,143.83 million) pledged with stock exchanges and banks for business purposes.

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EDELWEISS ANNUAL REPORT 2008-09

Schedules to the consolidated financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees in millions)

25 NOTES TO THE ACCOUNTS (CONTINUED)

25.13 In accordance with the accounting policy set out on paragraph 1.21 of significant accounting policies, general loan loss provision, created in the books as at 31 March 2009, is Rs 58.20 million (Previous year: Rs. 45.51 million). Further provision towards non- performing assets created in the books as at 31 March 2009, is Rs. 14.10 million (Previous year: Rs. Nil).

25.14 Utilisation of proceeds from initial public offer

The Company has fully utilised, as per the Objects of the issue, the net issue proceeds of Rs. 6,714.89 million raised by the Initial Public Offering in the financial year 2007-08.

25.15 Investment in subsidiary company which has not been consolidated, represents investment in Edelgive Foundation, a company registered under section 25 of the Companies Act, 1956, with the sole objective of philanthropy, where no economic benefit shall be derived by the Group.

25.16 Prior period comparatives

Previous year figures have been regrouped and reclassified wherever necessary.

For and on behalf of the Board of Directors

Rashesh Shah Venkat Ramaswamy B Renganathan Chairman & Managing Director Executive Director V. P. & Company Secretary

Mumbai | 22 May 2009

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EDELWEISS ANNUAL REPORT 2008-09

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EDELWEISS ANNUAL REPORT 2008-09

Edelweiss Capital Limited

Standalone Financial Statements for the year ended 31 March 2009 together with Auditors’ Report

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EDELWEISS ANNUAL REPORT 2008-09

Auditors’ Report to Standalone Financial Statements

To the Members of Edelweiss Capital Limited

We have audited the accompanying balance sheet of Edelweiss Capital Limited (‘the Company’) as at 31 March 2009, the profit and loss account and the cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

1. As required by the Companies (Auditor’s Report) Order, 2003 and amendments thereto (together referred to as ‘the Order’) issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order.

2. Further to our comments in the Annexure referred to above, we report that:

(a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of the audit;

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

(c) The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account;

(d) In our opinion, the balance sheet, profit and loss account and cash flow statement comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

(e) On the basis of the written representations received from the directors of the Company as at 31 March 2009, and taken on record by the Board of Directors, we report that none of the directors are disqualified as on 31 March 2009 from being appointed as director in terms of clause (g) of sub-section (1) of section 274 to the Companies Act, 1956; and

(f) In our opinion, and to the best of our information and according to the explanations given to us, the said financial statements, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the balance sheet, of the state of affairs of the Company as at 31 March 2009;

(ii) in the case of the profit and loss account, of the profit of the Company for the year ended 31 March 2009; and

(iii) in the case of cash flow statement, of the cash flows of the Company for the year ended 31 March 2009.

For B S R & Associates Chartered Accountants

Akeel Master Mumbai Partner 22 May 2009 Membership No.: 046768

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Annexure to Auditors’ Report - 31 March 2009

(Referred to in our report of even date)

We report the following:

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) The Company has a regular programme of physical verification of its fixed assets by which all fixed assets are verified in a phased manner over a period of three years. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets.

(c) Fixed assets disposed off during the year were not substantial, and therefore, do not affect the going concern assumption.

(ii) The Company is a service company. Accordingly, it does not hold any physical inventories. Thus, paragraph 4(ii) of the Or der is not applicable.

(iii) (a) The Company has granted unsecured loans to its subsidiary companies which are covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount outstanding during the year was Rs. 68,905 lakhs and the year-end balance of such loans was Rs. 25,832 lakhs.

(b) In our opinion, the rate of interest and other terms and conditions on which loans have been granted to the companies listed in the register maintained under section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company.

(c) In the case of loans granted to the companies listed in the register maintained under section 301, which are repayable on demand, the borrowers have been regular in repaying the interest as stipulated.

(d) The loans granted to the companies listed in the register maintained under section 301 are repayable on demand. Accordingly, there is no overdue amount of more than Rs. 1 lakh in respect of loans granted to any of the companies, firms or other parties listed in the register maintained under section 301.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of fixed assets and with regards to sale of services. In our opinion and according to the information and explanations given to us, there is no continuing failure to correct major weaknesses in internal control system. The Company does not hold physical inventories.

(v) (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts and arrangements referred to in (a) above and exceeding the value of Rs. 5 lakhs with any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits from the public.

(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(viii) The Central Government has not prescribed the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 for any of the services rendered by the Company.

(ix) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including Income-tax, Provident Fund, Wealth tax, Service tax and other material statutory dues have been generally regularly deposited during the year by the Company with the appropriate authorities. As explained to us, the Company did not have any dues on account of Employees’ State Insurance, Sales-tax, Customs Duty, Excise Duty, Cess, Investor Education and Protection Fund.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income-tax, Provident Fund, Service tax, Wealth tax and other material statutory dues were in arrears as at 31 March 2009 for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us, there are no dues of Income-tax, Provident Fund, Wealth tax, Service tax and other material statutory dues which have not been deposited with the appropriate authorities on account of any dispute.

(d) There were no dues on account of cess under section 441A of the Companies Act, 1956 since the date from which the aforesaid section comes into force has not yet been notified by the Central Government.

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EDELWEISS ANNUAL REPORT 2008-09

Annexure to Auditors’ Report - 31 March 2009 (Continued)

(x) The Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses in the financial year and in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to its bankers or debenture holders.

(xii) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion and according to information and explanations given to us, the Company is not a chit fund, nidhi or mutual benefit fund/society.

(xiv) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of the transactions and contracts in respect of trading in securities during the year and timely entries have been made therein. Further, such securities have been held by the Company in its own name, except to the extent of exemption granted under section 49 of the Companies Act, 1956.

(xv) In our opinion and according to the information and explanations given to us, the terms and conditions on which the Company has given guarantees for loans taken by others from banks are not prejudicial to the interest of the Company.

(xvi) The Company did not have any term loans outstanding during the year.

(xvii) According to the information and explanations given to us and on overall examination of the balance sheet of the Company, we are of the opinion that the funds raised on short term basis have not been used for long term investments.

(xviii) The Company has not made any preferential allotment of shares to companies/firms/parties covered in the register maintained under section 301 of the Companies Act, 1956.

(xix) According to the information and explanations given to us, the Company has created security or charge in respect of debentures issued during the year.

(xx) The Company has not raised any money by public issues.

(xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year.

For B S R & Associates Chartered Accountants

Akeel Master Mumbai Partner 22 May 2009 Membership No.: 046768

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Balance Sheet as at 31 March 2009

(Currency: Indian rupees) Schedule 31 March 2009 31 March 2008 SOURCES OF FUNDS Shareholders’ funds Share capital 3 374,665,775 377,265,775 Stock options outstanding account 12,793,545 5,988,757 Reserves and surplus 4 13,173,588,543 13,120,313,593 13,561,047,863 13,503,568,125 Loan funds Secured loans 5 1,084,586,885 1,271,157,263 Unsecured loans 6 4,007,226,491 9,758,115,328

TOTAL 18,652,861,239 24,532,840,716

APPLICATION OF FUNDS Fixed assets 7 Gross block 103,114,082 122,762,059 Less: Accumulated depreciation 57,060,843 46,018,126 Net block 46,053,239 76,743,933 Capital work-in-progress 17,440,580 16,044,433 63,493,819 92,788,366

Investments 8 12,497,261,410 10,592,339,574

Deferred tax asset 22.4 83,675,255 8,484,621

Current assets, loans and advances Sundry debtors 9 44,081,508 80,846,891 Cash and bank balances 10 219,035,814 1,146,283,063 Loans and advances 11 6,481,301,584 13,405,683,294 6,744,418,906 14,632,813,248 Less: Current liabilities and provisions Current liabilities 12 342,183,119 464,088,904 Provisions 13 393,805,032 329,496,189 735,988,151 793,585,093

Net current assets 6,008,430,755 13,839,228,155

TOTAL 18,652,861,239 24,532,840,716

Significant accounting policies 2 Notes to the accounts 22 The Schedules referred to above form an integral part of the Balance Sheet. As per our report attached. For B S R & Associates For and on behalf of the Board of Directors Chartered Accountants Rashesh Shah Chairman & Managing Director Akeel Master Venkat Ramaswamy Executive Director Partner Membership No.: 046768 B Renganathan V. P. & Company Secretary

Mumbai | 22 May 2009

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EDELWEISS ANNUAL REPORT 2008-09

Profit and Loss Account for the year ended 31 March 2009

(Currency: Indian rupees) Schedule 31 March 2009 31 March 2008 INCOME Fee income 14 240,793,599 816,136,200 Income from arbitrage and trading in securities and derivatives 15 – (1,922,780) Income from investments and dividend 16 350,774,419 125,651,754 Interest income 17 1,322,330,224 934,814,787 Other income 18 3,492,887 1,988,570 1,917,391,129 1,876,668,531 EXPENDITURE Employee costs 19 283,686,820 411,127,850 Operating and other expenses 20 300,917,021 285,942,730 Financial expenses 21 978,187,195 773,244,563 Depreciation 7 43,783,165 13,248,256 1,606,574,201 1,483,563,399

PROFIT BEFORE TAXATION 310,816,928 393,105,132

Provision for taxation - Income tax 118,750,000 107,200,000 (includes short provision for earlier year of Rs. 65,050,000; Previous year: Rs. Nil) - Deferred tax benefit (75,190,634) (5,968,231) - Fringe benefit tax 3,550,000 4,122,000 PROFIT AFTER TAXATION 263,707,562 287,751,363

BALANCE IN PROFIT AND LOSS ACCOUNT BROUGHT FORWARD 553,560,277 499,070,028

PROFIT AND LOSS ACCOUNT BALANCE AVAILABLE FOR APPROPRIATION 817,267,839 786,821,391

APPROPRIATIONS Proposed dividend 224,799,465 150,178,310 Interim preference dividend 254,729 – Dividend distribution tax 12,218,418 25,522,804 Transfer to general reserve 26,500,000 57,560,000 Transfer to capital redemption reserve 2,600,000 – Profit and loss account balance carried to balance sheet 550,895,227 553,560,277 817,267,839 786,821,391

Basic earnings per share (Rs.) (Face value Rs. 5 each) 22.3 3.52 4.45 Diluted earnings per share (Rs.) (Face value Rs. 5 each) 22.3 3.43 4.21

Significant accounting policies 2 Notes to the accounts 22 The Schedules referred to above form an integral part of the Profit and Loss Account.

Mumbai | 22 May 2009

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Cash Flow Statement for the year ended 31 March 2009

(Currency: Indian rupees) 31 March 2009 31 March 2008 A CASH FLOW FROM OPERATING ACTIVITIES

Profit before taxation 310,816,928 393,105,132

Adjustments for Depreciation 43,783,165 13,248,256 Profit on sale of investments (107,535,187) (22,709,344) Profit on sale of fixed assets (1,351,612) (7,312) Interest income (1,351,304,957) (934,814,787) Financial expenses 591,626,784 563,524,576 Dividend income (214,264,499) (102,942,410) Write back of provision for diminution in long term investments (1,000,000) (1,425,000) Provision for diminution in long term investments 18,300,000 – Bad debts written off 3,180,546 10,677,570 Provision for doubtful debts 35,856,808 4,778,467 ESOP compensation cost 6,804,788 3,494,278 Provision for doubtful advances written back (321,518) (4,741) Operating cash flow before working capital changes (665,408,754) (73,075,315)

Adjustments for Decrease /(increase) in loans and advances 15,793,065 (745,248,884) Increase in sundry debtors (1,950,453) (23,594,420) (Decrease)/increase in current liabilities and provisions (165,662,604) 297,236,628 Cash used in operations (817,228,746) (544,681,991)

Income taxes paid 118,467,750 331,994,774

Net cash used in operating activities during the year – A (935,696,496) (876,676,765)

B CASH FLOW FROM INVESTING ACTIVITIES

Purchase of fixed assets (17,663,411) (83,753,893) Proceeds from sale of fixed assets 4,526,405 192,221 Decrease/(increase) in current investments (Refer Note 2) 2,184,968,001 (1,807,491,786) Profit on sale of investments 107,535,187 22,709,344 Purchase of long-term investments (4,108,689,837) (6,307,375,995) Sale of long-term investments 1,500,000 3,255,000 Dividend received 61,264,499 104,566,011 Interest income on fixed deposit 113,662,944 4,384,271 Net cash used in investing activities during the year – B (1,652,896,212) (8,063,514,827)

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EDELWEISS ANNUAL REPORT 2008-09

Cash Flow Statement for the year ended 31 March 2009 (Continued)

(Currency: Indian rupees) 31 March 2009 31 March 2008 C CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from issue of share capital including securities premium 26,840,000 9,090,496,177 Repayment on redemption of preference shares (2,600,000) – Initial public offering expense – (203,681,942) Borrowed through secured loans 5,581,179,839 1,263,145,042 Repayment of secured loans (5,767,750,216) (1,279,688) Borrowed through unsecured loans 326,220,000,000 83,806,081,563 Repayment of unsecured loans (331,981,000,000) (75,775,081,563) Dividend paid (150,433,039) – Dividend distribution tax paid (25,566,095) – Decrease/(increase) in loan to subsidiary companies (Refer Note 2) 7,061,299,828 (8,510,043,720) Interest income from subsidiary companies 1,234,098,580 925,386,054 Financial expenses (534,723,438) (537,924,296) Net cash generated from financing activities during the year – C 1,661,345,459 10,057,097,627

Net (decrease)/increase in cash and cash equivalents (A+B+C) (927,247,249) 1,116,906,035

Cash and cash equivalent as at the beginning of the year 1,146,283,063 29,377,028 Cash and cash equivalent as at the end of the year (Refer Note 1) 219,035,814 1,146,283,063

Note: 1 Cash and cash equivalents represent cash, balances with banks in current account and fixed deposits placed with banks (Refer schedule 10 to the financial statements).

2 Net figures have been reported on account of volume of transactions.

Mumbai | 22 May 2009

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Schedules to the financial statements for the year ended 31 March 2009 (Currency: Indian rupees)

1 BACKGROUND

Edelweiss Capital Limited (‘the Company’) was incorporated as a public limited company on 21 November 1995 and is the ultimate holding company of Edelweiss group of entities. The Company is registered as a Merchant Banker and Portfolio Management Advisor with the Securities & Exchange Board of India (‘SEBI’). The Company is principally engaged in providing investment banking services and fund management activities along with the other Edelweiss group entities.

2 SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of preparation of financial statements

The accompanying financial statements are prepared and presented under the historical cost convention, on the accrual basis of accounting and comply with the Accounting Standards prescribed by the Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 1956 to the extent applicable. The financial statements are presented in Indian rupees.

2.2 Use of estimates

The preparation of the financial statements in conformity with the generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenues and expenses and disclosure of contingent liabilities on the date of the financial statements. Actual results could differ from the estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.

2.3 Revenue recognition

a) Investment banking fee income is recognised, on an accrual basis in accordance with the terms and contracts entered into between the Company and the counterparty.

b) Income from arbitrage and trading in securities and derivatives comprises profit/loss on sale of securities held as stock-in-trade and profit/loss on equity derivative instruments. Profit/loss on sale of securities is determined based on the weighted average cost of the securities sold. Profit/loss on equity derivative transactions is accounted for based on the ‘Guidance Note on Accounting for Equity Index and Equity Stock Futures and Options’ issued by The Institute of Chartered Accountants of India which is more fully explained in sections 2.4 to 2.5.

c) Interest income is recognised on accrual basis.

d) Dividend income is recognised when the right to receive payment is established.

e) Profit earned on sale of investment is recognised on trade date basis. Profit/loss on sale of investments is determined basde on the weighted average cost of the investments sold.

f) Portfolio management fees are accounted on accrual basis as follows:

a. In case of percentage based fees, as a percentage of the unaudited Net Asset Value at the end of each financial quarter, on a quarterly basis.

b. In case of return based fee, as a percentage of the annual profit, on an annual basis.

2.4 Equity Index / Stock – Futures

a) Equity Index/Stock Futures are marked-to-market on a daily basis. Debit or credit balance disclosed under Loans and Advance sor Current Liabilities, respectively, in the “Mark-to-Market Margin – Equity Index/Stock Futures Account”, represents the net amount paid or received on the basis of movement in the prices of Index/Stock Futures till the balance sheet date. b) As on the balance sheet date, the profit/loss on open positions in Index/Stock Futures are accounted for as follows: • Credit balance in the “Mark-to-Market Margin – Equity Index/Stock Futures Account”, being anticipated profit, is ignored and no credit is taken in the profit and loss account.

• Debit balance in the “Mark-to-Market Margin – Equity Index/Stock Futures Account”, being anticipated loss, is recognised in the profit and loss account.

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EDELWEISS ANNUAL REPORT 2008-09

Schedules to the financial statements for the year ended 31 March 2009 (Continued) (Currency: Indian rupees)

2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2.4 Equity Index / Stock – Futures (Continued) to which the squared-up contract pertains is outstanding at the time of the squaring-up of the contract, the contract price of the contract so squared-up is determined using weighted average method for calculating profit/loss on squaring-up.

2.5 Equity Index / Stock – Options

a) “Equity Index/Stock Option Premium Account” represents premium paid or received for buying or selling the options, respectively.

c) When the option contracts are squared-up before expiry of the options, the premium prevailing on that date is recognised inp rofit and loss account. If more than one option contract in respect of the same index/stock with the same strike price and expiry date to which the squared-up contract pertains is outstanding at the time of squaring-up of the contract, weighted average method is followed for determining profit or loss. On expiry of the contracts and on exercising the options, the difference between final settlement price and the strike price is transferred to the profit and loss account. In both the above cases, premium paid or received for buying or selling the option, as the case may be, is recognised in the profit and loss account for all squared-up/settled contracts.

d) “Equity Index/Stock Options Margin Account”, representing initial margin paid, and “Margin Deposit”, representing additional margin paid over and above initial margin, for entering into contracts for Equity Index/Stock options, which are released on final settlement/squaring-up of underlying contracts, are disclosed under Loans and Advances.

2.6 Fixed assets and depreciation

Fixed assets are stated at cost less accumulated depreciation. The cost of fixed assets comprises purchase price and any attributable cost of bringing the asset to its working condition for its intended use.

Depreciation is provided on a written down value basis from the date the asset is ready to use or put to use, whichever is earlier. In respect of assets sold, depreciation is provided upto the date of disposal.

Depreciation is charged at the rates prescribed in the Schedule XIV to the Companies Act, 1956 as given below:

Class of asset Rate of depreciation Flat 5.00% Office equipments 13.91% Computers 40.00% Vehicles 25.89% Electrical fittings 13.91% Furniture and fixtures 18.10%

Leasehold improvements are amortised on a straight-line basis over the estimated useful lives of the assets or the period of lease, whichever is shorter.

All fixed assets individually costing less than Rs. 5,000 are fully depreciated in the year of purchase.

Software expense includes expenditure on licences for various office applications which are written off in the year of purchase on a prudent basis.

2.7 Impairment of assets

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired based on internal/ external factors. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs, is less than its carrying amount, the carrying amount is reduced to its recoverable amount.

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Schedules to the financial statements for the year ended 31 March 2009 (Continued) (Currency: Indian rupees)

2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2.7 Impairment of assets (Continued) The reduction is treated as an impairment loss and is recognised in the profit and loss account. If at the balance sheet date, there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of the depreciable historical cost.

2.8 Stock-in-trade

a) The securities acquired with the intention of short-term holding and trading positions are considered as stock-in-trade and disclosed as current assets.

b) The securities held as stock-in-trade under current assets are valued at lower of weighted average cost or market value. Inc ase of units of mutual funds, net asset value of units declared by the mutual funds is considered as market value.

2.9 Investments

Investments are classified into long-term investments and current investments. Investments which are intended to be held for one year or more are classified as long-term investments and investments which are intended to be held for less than one year are classified as current investments.

Long-term investments are carried at cost less diminution in value which is other than temporary, determined separately for each investment.

2.10 Foreign currency transactions

2.11 Retirement benefits

Provident fund The Company contributes to a recognised provident fund which is a defined contribution scheme. The contributions are accounted for on an accrual basis and recognised in the profit and loss account.

Gratuity The Company’s gratuity scheme is a defined benefit plan. The Company’s net obligation in respect of the gratuity benefit is calculated by estimating the amount of future benefit that the employees have earned in return for their service in the current and prior periods, that benefit is discounted to determine its present value.

The present value of the obligation under such benefit plan is determined based on actuarial valuation using the Projected Unit Credit Method which recognises each period of service that give rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

Actuarial gains and losses are recognised immediately in the profit and loss account.

2.12 Taxation

Income-tax expense comprises current tax (i.e. amount of tax for the period determined in accordance with the Income Tax Act, 1961), deferred tax charge or benefit (reflecting the tax effect of timing differences between accounting income and taxable income for the period) and fringe benefit tax.

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EDELWEISS ANNUAL REPORT 2008-09

Schedules to the financial statements for the year ended 31 March 2009 (Continued) (Currency: Indian rupees)

2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2.12 Taxation (Continued) Current tax

Provision for current tax is recognised based on estimated tax liability computed after adjusting for allowances, disallowances and exemptions in accordance with the tax laws applicable.

Deferred taxation The deferred tax charge or benefit and the corresponding deferred tax liabilities and assets are recognised using the tax rates that have been enacted or substantially enacted as at the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the asset can be realised in future; however, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognised only if there is a virtual certainty of realisation of the assets. Deferred tax assets are reviewed as at each balance sheet date and written down or written up to reflect the amount that is reasonable/virtually certain (as the case may be) to be realised.

Securities transaction tax

Securities Transaction Tax (‘STT’) to the extent allowable under section 88E of the Income Tax Act, 1961 during the previous y ear has been included in provision for income tax.

2.13 Operating leases

Lease payments for assets taken on operating lease are recognised as an expense in the profit and loss account on a straight-line basis over the lease term.

2.14 Earnings per share

The Company reports basic and diluted earnings per share in accordance with Accounting Standard 20 – Earnings Per Share prescribed by the Companies (Accounting Standards) Rules, 2006. Basic earnings per share is computed by dividing the net profit after tax by the weighted average number of equity shares outstanding during the year.

Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue equity shares were exercised or converted during the year. Diluted earnings per share is computed by dividing the net profit after tax by weighted average number of equity shares and dilutive potential equity shares outstanding during the year.

2.15 Employee stock option plans

The Company follows the intrinsic value method to account for compensation cost of its stock based employee compensation plans. The compensation cost is amortised on a straight-line basis.

2.16 Provisions and contingences

The Company creates a provision when there is present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

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Schedules to the financial statements as at 31 March 2009 (Continued) (Currency: Indian rupees)

31 March 2009 31 March 2008 3 SHARE CAPITAL

Authorised : 100,000,000 (Previous year: 100,000,000) Equity shares of Rs. 5 (Previous year: Rs. 5) each 500,000,000 500,000,000 4,000,000 (Previous year: 4,000,000) Preference shares of Rs. 5 (Previous year: Rs. 5) each 20,000,000 20,000,000 520,000,000 520,000,000 Issued, Subscribed and Paid-up: 74,933,155 (Previous year: 74,933,155) Equity shares of Rs. 5 (Previous year: Rs. 5) each, fully paid-up 374,665,775 374,665,775 Nil (Previous year: 520,000) 12% Redeemable preference shares of Rs. 5 (Previous year: Rs. 5) each, fully paid-up redeemed during the year – 2,600,000 374,665,775 377,265,775 Bonus: a. During the previous year, 44,916,806 equity shares of Re. 1 each have been allotted as fully paid-up bonus shares by capitalisation of Rs. 44,916,806 from securities premium account. b. During the previous year, 35,937,448 equity shares of Rs. 5 each have been allotted as fully paid-up bonus shares by capitalisation of Rs. 179,687,240 from securities premium account.

Consolidation: a. During the previous year, the Company has consolidated the face value of equity shares from Re. 1 per share to Rs. 5 per share and accordingly issued 17,968,724 equity shares of Rs. 5 each to the shareholders of the Company holding equity shares of Re. 1 each on 20 July 2007. b. During the previous year, 12% redeemable preference shares of face value of Re. 1 each were consolidated into preference shares of face value of Rs. 5 each, thereby, resulting in reduction of shares from 2,600,000 to 520,000.

4 RESERVES AND SURPLUS

Securities premium account At the beginning of the year 12,477,743,416 3,917,757,549 Add: Additions during the year 26,840,000 9,044,970,485 Less: Capitalisation on issue of bonus shares and conversion of convertible preference shares – 281,302,676 Less: Expenses relating to initial public offer – 203,681,942 12,504,583,416 12,477,743,416 Capital redemption reserve At the beginning of the year – – Add: Additions during the year 2,600,000 – 2,600,000 – General Reserve At the beginning of the year 89,009,900 31,449,908 Add: Appropriation from profit and loss account 26,500,000 57,560,000 Less: Utilised during the year* – 8 115,509,900 89,009,900

Balance in profit and loss account 550,895,227 553,560,277

13,173,588,543 13,120,313,593 * the difference of Rs. 8 on consolidation of equity shares from face value of Re. 1 per share to Rs. 5 per share arising out of the fractional entitlement/ rounding off is adjusted in general reserve.

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EDELWEISS ANNUAL REPORT 2008-09

Schedules to the financial statements as at 31 March 2009 (Continued) (Currency: Indian rupees)

31 March 2009 31 March 2008 5 SECURED LOANS

Non convertible debentures 1,070,600,000 256,000,000 (Secured by way of charge on immovable property and floating charge on movable property in the form of sundry debtors, cash and bank balance and loans and advances) Bank overdraft – 1,001,232,877 (Secured by pledge of fixed deposit) Vehicles loan 1,608,720 3,618,016 (Secured by hypothecation of vehicles acquired) Housing loan 12,378,165 10,306,370 (Secured by hypothecation of the flat under construction) 1,084,586,885 1,271,157,263

6 UNSECURED LOANS

Fully convertible debentures 1,800,000,000 1,800,000,000 Non convertible debentures – 4,250,000,000 Inter corporate deposits 20,000,000 31,000,000

Commercial paper 2,250,000,000 3,750,000,000 Less: Unamortised discount 62,773,509 72,884,672 2,187,226,491 3,677,115,328

4,007,226,491 9,758,115,328

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EDELWEISS ANNUAL REPORT 2008-09

Schedules to the financial statements as at 31 March 2009 (Continued) (Currency: Indian rupees)

31 March 2009 31 March 2008 8 INVESTMENTS Long-term investments I. Quoted (a) Equity shares 150 150

II. Unquoted (a) Equity shares (i) In subsidiaries 9,407,089,312 5,369,499,483 (ii) In associates 600,000 600,000 (iii) Others 245,342,129 220,342,121 9,653,031,441 5,590,441,604 (b) Preference shares (i) In subsidiaries 1,550,000,000 1,550,000,000

(d) Units of venture capital funds 270,762,500 262,762,500

(e) Others 36,600,000 –

12,531,293,941 8,424,104,104

Less: Diminution in value of unquoted long-term investments 34,032,681 16,732,681 12,497,261,260 8,407,371,423

Total long-term investments (I + II) 12,497,261,410 8,407,371,573 Current investments I. Unquoted (a) Units of mutual funds – 2,184,968,001 Total current investments – 2,184,968,001

Total investments 12,497,261,410 10,592,339,574 Aggregate of quoted investment – At book value 150 150 – At market value 1,411 3,143 Aggregate of unquoted investment – At book value 12,497,261,260 10,592,339,424

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Schedules to the financial statements as at 31 March 2009 (Continued) (Currency: Indian rupees)

31 March 2009 31 March 2008 9 SUNDRY DEBTORS

Unsecured Debtors outstanding for a period exceeding six months (a) Considered good 7,294,472 760,256 (b) Considered doubtful 43,837,257 4,778,467 Other debts (a) Considered good 36,787,036 80,086,635 (b) Considered doubtful 1,834,349 – 89,753,114 85,625,358 Less: Provision for doubtful debts 45,671,606 4,778,467 44,081,508 80,846,891

10 CASH AND BANK BALANCES

Cash in hand 321,709 255,156 Cheques in hand 181,777,008 – Balances with scheduled banks – in Current accounts 1,837,097 33,934,907 – in Fixed deposits 35,100,000 1,112,093,000 219,035,814 1,146,283,063

11 LOANS AND ADVANCES (Unsecured and considered good, unless otherwise stated)

Advances recoverable in cash or in kind or for value to be received (a) Subsidiaries 226,103,302 249,904,315 (b) Others 609,379,332 375,020,004 (Refer schedule 22.18) Accrued interest on fixed deposits 2,437,222 5,044,462 Accrued interest on loans 6,150,673 – Loans to subsidiary companies 5,264,775,663 12,326,075,491 (includes interest accrued Rs. 1,027,285,364; Previous year: Rs. 632,821,796) Deposits 153,818,735 227,170,115 Advance tax and tax deducted at source 218,636,657 222,468,907 (net of provision for taxation of Rs. 419,894,084 ; Previous year: Rs. 297,566,384) 6,481,301,584 13,405,683,294

12 CURRENT LIABILITIES

Sundry creditors (Refer schedule 22.17) (a) Subsidiaries 188,407 52,369 (b) Others 209,795,530 311,745,770 209,983,937 311,798,139

Book overdraft 1,767,405 48,675,969 Interest accrued but not due 100,103,958 43,200,611 Other liabilities 30,327,819 60,414,185 342,183,119 464,088,904

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EDELWEISS ANNUAL REPORT 2008-09

Schedules to the financial statements as at 31 March 2009 (Continued) (Currency: Indian rupees)

31 March 2009 31 March 2008 13 PROVISIONS

Gratuity 9,117,568 6,082,203 Provision for deferred bonus (Refer schedule 22.16) 147,712,872 147,712,872 Proposed dividend 224,799,465 150,178,310 Dividend distribution tax 12,175,127 25,522,804 393,805,032 329,496,189

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Schedules to the financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees)

31 March 2009 31 March 2008 14 FEE INCOME

Investment banking fees 195,125,425 800,087,095 (Tax deducted at source Rs. 12,410,799; Previous year: Rs. 74,525,665) Advisory fees 18,913,907 4,004,987 (Tax deducted at source Rs. 2,518,669; Previous year: Rs. 231,750) Other fees 26,754,267 12,044,118 (Tax deducted at source Rs. 2,883,870; Previous year: Rs. Nil) 240,793,599 816,136,200

15 INCOME FROM ARBITRAGE AND TRADING IN SECURITIES AND DERIVATIVES

Profit / (loss) on trading in securities (net) – 12,347,643 Profit / (loss) on trading of derivative instruments (net) – (14,270,423) – (1,922,780)

16 INCOME FROM INVESTMENTS AND DIVIDEND

Profit on sale of current investment (net) 107,535,187 – Gain on structured products 28,974,733 – Profit on sale of long-term investment (net) – 22,709,344 Dividend on current investment 61,239,493 102,922,408 Dividend on long term investment 153,025,006 20,002 350,774,419 125,651,754

17 INTEREST INCOME

On loan to subsidiary companies 1,074,754,917 818,233,509 (Tax deducted at source Rs. 15,835,289; Previous year: Rs. 185,411,712) On fixed deposits 114,914,499 9,310,427 (Tax deducted at source Rs. 13,454,488; Previous year: Rs. 2,107,999) On debentures of subsidiary company 130,368,930 107,152,545 (Tax deducted at source Rs. 29,541,600; Previous year: Rs. 24,280,766) Others 2,291,878 118,306 (Tax deducted at source Rs. 97,114; Previous year: Rs.Nil) 1,322,330,224 934,814,787

18 OTHER INCOME

Diminution in value of long-term investments written back 1,000,000 1,425,000 Provision for doubtful advances written back and bad debts recovered 321,518 4,741 Profit on sale of fixed asset 63,112 7,312 Foreign exchange gain (net) 819,757 – Miscellaneous income 1,288,500 551,517 3,492,887 1,988,570

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EDELWEISS ANNUAL REPORT 2008-09

Schedules to the financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees)

31 March 2009 31 March 2008 19 EMPLOYEE COSTS

Salaries and bonus # 271,265,551 400,693,799 Contribution to provident fund and other funds 4,025,629 2,109,429 Gratuity 3,035,365 3,006,709 Staff welfare 5,360,275 5,317,913 283,686,820 411,127,850

20 OPERATING AND OTHER EXPENSES

Advertisement, publicity and business promotion # 15,729,904 24,065,904 Auditors’ remuneration (Refer schedule 22.10) 2,843,253 2,212,312 Commission to Non- Executive Directors 2,500,000 – Bad debts written off 3,180,546 10,677,570 Commission and brokerage 430,801 28,041,635 Communication 11,627,883 9,261,585 Wealth Tax 27,700 – Computer software and website development charges # 9,152,000 12,752,069 Custodian charges 602,900 126,012 Dematerialisation charges 845,675 159,488 Directors’ sitting fees 720,000 120,000 Donation 192,744 824,000 Electricity # 4,523,154 2,065,659 Foreign exchange loss (net) – 242,552 Insurance 3,528,822 2,548,051 Legal and professional fees 55,523,315 74,369,318 Membership and subscription 11,317,778 10,067,678 Office expense 16,399,043 1,860,568 Postage and courier 6,345,128 643,954 Printing and stationery # 13,546,738 2,975,979 Provision for diminution in value of long term investment 18,300,000 – Provision for doubtful debts 35,856,808 4,778,467 Rates and taxes 6,303,549 13,899,222 Rent # 36,934,273 25,720,950 Repairs and maintenance – others 7,653,267 7,660,801 Securities transaction tax – 1,102,801 Seminars and conference 744,399 1,691,481 Travelling and conveyance 35,157,776 47,248,640 Miscellaneous expenses 929,565 826,034 300,917,021 285,942,730

21 FINANCIAL EXPENSES

Interest on – Fully convertible debentures 229,842,505 235,019,423 – Inter corporate deposits 5,363,748 1,887,436 – Non convertible debentures 323,588,414 282,113,384 – Expenses on debenture redemption 28,974,733 – – Term loan – 43,040,995 – Bank overdraft 3,584,650 1,232,877 – Vehicle loan 272,734 230,461 Discount on commercial paper 384,727,763 208,783,978 Financial charges 392,763 – Bank charges 1,439,885 936,009 978,187,195 773,244,563

# Refer schedule 22.19

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Schedules to the financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees)

22 NOTES TO THE ACCOUNTS

22.1 Segment reporting

The Company’s business is organised and management reviews the performance, based on the business segments as mentioned below:

Segment Activities covered Agency business Advisory and transactional services Holding company activities Group’s fund management Others Trading, arbitrage and unallocated items

Based on such allocations, segmental balance sheet as at 31 March 2009 and segmental profit and loss account for the year ended 31 March 2009 have been prepared.

Since the business operations of the Company are primarily concentrated in India, the Company is considered to operate only in the domestic segment.

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EDELWEISS ANNUAL REPORT 2008-09

Schedules to the financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees)

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Schedules to the financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees)

22 NOTES TO THE ACCOUNTS (CONTINUED) 22.2 Related parties (A) Subsidiaries/entities which are controlled by the Company and with whom transactions have taken place during the year: Edelweiss Securities Limited Edelweiss Commodities Limited (formerly ECAL Advisors Limited) Edelweiss Insurance Brokers Limited Crossborder Investments Private Limited Edelweiss Capital USA, LLC Edelweiss Trustee Services Limited (formerly Edelweiss Trustee Services Private Limited) ECL Finance Limited Edelcap Securities and Transaction Services Limited (formerly Edelcap Securities and Transaction Services Private Limited) Edelcap Securities Limited ECap Equities Limited EC Commodity Limited Edel Commodities Limited Edelweiss Financial Products & Solutions Limited (formerly IRIS Distribution Company Limited) Edelweiss Trusteeship Company Limited (formerly Edelweiss Trusteeship Company Private Limited) Edelweiss Asset Management Limited (formerly Edelweiss Asset Management Private Limited) Edelweiss Broking Limited (formerly Edelweiss Investment and Advisory Services Limited) Edelweiss Property Advisors Private Limited Edel Land Limited Edelweiss Primary Dealership Limited Edelweiss Capital (Singapore) Pte. Limited EC International Limited, Mauritius Edelweiss Alternative Asset Advisors Limited Edelweiss Housing Finance Limited Edelgive Foundation Edelweiss Employee Welfare Trust Edelweiss Asset Reconstruction Company Limited (upto 12 December 2008) (B) Subsidiaries/entities which are controlled by the Company and with whom no transactions have taken place during the year: EC Global Limited (through Crossborder Investments Private Limited) Edelweiss International (Singapore) Pte. Limited (through Edelweiss Capital (Singapore) Pte. Limited) Edelweiss Securities (Singapore) Pte. Limited (through Edelweiss Capital (Singapore) Pte. Limited) Edelweiss Galleon Alternative Asset Advisors Pte. Limited (through Edelweiss Capital (Singapore) Pte. Limited) (C) Associates: Edelweiss Asset Reconstruction Company Limited (w.e.f. 13 December 2008) (through Edelweiss Alternative Asset Advisors Limited) Edelweiss Real Estate Advisors Private Limited Blue River Capital Advisors (India) Private Limited Blue River Capital Management Company I, LLC (No transactions during the year) (through EC Global Limited) (D) Individuals owning, directly or indirectly, an interest in the voting power of the Company that gives them control or significant influence over the Company : Rashesh Shah Vidya Shah Venkat Ramaswamy Aparna T. C. (E) Relatives of Individuals owning, directly or indirectly, an interest in the voting power of the Company that gives them control or significant influence over the Company: Kaavya Venkat Shilpa Mody Sripad Desai Sharmishta Chandrakant Shah A V Ramaswamy (F) Enterprises which exercise significant influence: Edelcap Insurance Advisors Oak Holdings Private Limited

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EDELWEISS ANNUAL REPORT 2008-09

Schedules to the financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees)

22 NOTES TO THE ACCOUNTS (CONTINUED) 22.2 Related party (Continued) Transactions and balances with related parties: Particulars Subsidiaries/ entities Associates Individual Relatives of Enterprises controlled by the exercising individuals which exercise Company significant exercising significant control significant control influence Capital account transactions Equity shares investments ECL Finance Limited 2,267,722,979 (2,802,341,753) Crossborder Investments Private Limited 700,000,000 (1,000,000,000) Edelweiss Commodities Limited – (1,100,000,000) Edelweiss Asset Management Limited 880,000,000 (120,000,000) Edelweiss Trusteeship Company Limited – (1,000,000) Edelweiss Financial Products & Solutions Limited 35,625,000 (10,000,000) ECap Equities Limited – (10,000,000) Edelcap Securities Limited – (10,000,000) Edelweiss Broking Limited 30,000,000 (15,000,000) Edelweiss Asset Reconstruction Company Limited – (500,000) EC Commodity Limited 10,000,000 (–) Edel Commodities Limited 500,000 (–) Edelweiss Alternative Asset Advisors Limited 110,800,000 (–) Edelweiss Housing Finance Limited 500,000 (–) Edelgive Foundation 100,000 (–) Edelweiss Property Advisors Private Limited 500,000 (–) Edelweiss Capital (Singapore) Pte. Limited 145,500 (–) Edel Land Limited 500,000 (–) Edelweiss Primary Dealership Limited 500,000 (–) EC International Limited 1,196,250 (–) Edelweiss Real Estate Advisors Private Limited – (250,000)

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Schedules to the financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees)

Optionally fully convertible debentures ECL Finance Limited – (1,020,900,000)

Non convertible debentures subscribed Oak Holdings Private Limited 29,500,000 (–)

Preference shares redeemed Rashesh Shah 2,600,000 (–) Current account transactions

Amounts received Edelweiss Securities Limited 115,267,501,700 (108,295,452,200) Edelweiss Insurance Brokers Limited 40,800,000 (19,494,393) Edelweiss Commodities Limited 35,758,252,705 (27,756,635,000) Crossborder Investments Private Limited 34,050,513,251 (33,433,552,000) ECL Finance Limited 17,059,380,721 (57,100,793,224) ECap Equities Limited 9,163,975,000 (–) Edelcap Securities Limited 15,406,840,000 (–) Edelweiss Financial Products & Solutions Limited 610,265,505 (4,240,000) Edelweiss Alternative Asset Advisors Limited 16,100,000 (–) Edelweiss Broking Limited 515,000 (10,366,230) Edelweiss Trustee Services Limited 966,000 (–) Edel Commodities Limited 1,393,000 (–) Edelweiss Asset Management Limited – (2,358,763) Edelweiss Real Estate Advisors Private Limited 15,613,924 (1,900,000)

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EDELWEISS ANNUAL REPORT 2008-09

Schedules to the financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees)

Amounts given Edelweiss Securities Limited 114,845,162,330 (110,557,250,200) Edelweiss Insurance Brokers Limited 60,229,080 (29,907,329) Edelweiss Commodities Limited 34,654,445,027 (27,182,135,000) Crossborder Investments Private Limited 30,942,340,048 (36,853,930,145) ECL Finance Limited 15,775,184,602 (58,338,427,200) ECap Equities Limited 9,310,947,559 (3,205,371) Edelcap Securities Limited 13,578,541,251 (2,007,588,750) Edelweiss Financial Products & Solutions Limited 757,157,110 (22,140,000) Edelweiss Asset Reconstruction Company Limited 537,622 (30,612) Edelweiss Asset Management Limited – (1,190,323) Edelweiss Broking Limited 69,774,093 (10,366,230) Edelweiss Employee Welfare Trust 201,650,000 (175,715,952) Edelweiss Trustee Services Limited 971,225 (–) Edelweiss Alternative Asset Advisors Limited 18,746,296 (–) Edel Commodities Limited 51,493,615 (–) EC Commodity Limited 250,210,817 (–) Edelweiss Real Estate Advisors Private Limited 7,174,614 (1,965,000) Edelcap Insurance Advisors – (50,000) Oak Holdings Private Limited – (25,100,000)

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Schedules to the financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees)

22 NOTES TO THE ACCOUNTS (CONTINUED) 22.2 Related party (Continued) Transactions and balances with related parties: Particulars Subsidiaries/ entities Associates Individual Relatives of Enterprises controlled by the exercising individuals which exercise Company significant exercising significant control significant control influence Edelcap Securities and Transaction Services Limited 570,000 (–) Reimbursement recovered Crossborder Investments Private Limited 153,859,438 (–) Edelweiss Commodities Limited 136,475,508 (–) ECap Equities Limited 93,415,429 (–) ECL Finance Limited 101,922,463 (–) Edelcap Securities and Transaction Services Limited 3,804,008 (–) Edelcap Securities Limited 112,564,590 (–) Edelweiss Asset Management Limited 10,183,218 (–) Edelweiss Asset Reconstruction Company Limited 48,824 (–) Edelweiss Financial Products & Solutions Limited 41,404,490 (–) Edelweiss Insurance Brokers Limited 4,773,061 (–) Edelweiss Broking Limited 228,101 (–) Edelweiss Real Estate Advisors Private Limited 2,763,478 (–) Edelweiss Trustee Services Limited 650,576 (–) Edelweiss Trusteeship Company Limited 34,228 (–) Edelweiss Property Advisors Private Limited 27 (–) Edelweiss Housing Finance Limited 3,636 (–) EC Commodity Limited 256,217 (–) Edel Commodities Limited 47 (–) Oak Holdings Private Limited 9,467 (–) Edelweiss Alternative Asset Advisors Limited 3,334,963 (–) Edelgive Foundation 44,956 (–)

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EDELWEISS ANNUAL REPORT 2008-09

Schedules to the financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees)

Purchase of derivative instruments # Edelweiss Securities Limited – (1,112,745,365)

Sale of derivative instruments # Edelweiss Securities Limited – (1,222,290,326)

Dividend paid Rashesh Shah 21,725,106 (–) Venkat Ramaswamy 10,605,312 (–) Aparna T. C. 2,400,000 (–) Kaavya Venkat 2,400,000 (–) Vidya Shah 6,072,240 (–) A V Ramaswamy 10,000 (–) Shilpa Mody 240 (–) Sharmishta Chandrakant Shah 4,325,240 (–) Sripad Desai 5,000 (–)

Remuneration Rashesh Shah 12,218,078 (31,434,303) Venkat Ramaswamy 10,524,001 (30,876,781) Vidya Shah – (27,763)

Rent paid Aparna T. C. 677,600 (1,161,600)

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Schedules to the financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees)

Dividend income Edelweiss Securities Limited 153,000,000 (–)

Interest income Edelweiss Securities Limited 249,039,427 (195,854,565) Edelweiss Insurance Brokers Limited 3,914,853 (1,035,010) Edelweiss Commodities Limited 174,305,969 (190,870,265) Crossborder Investments Private Limited 284,155,992 (337,510,697) ECL Finance Limited 116,347,771 (92,947,402) Edelweiss Financial Products & Solutions Limited 811,044 (10,997) ECap Equities Limited 120,173,701 (281) Edelcap Securities Limited 124,028,421 (4,290) Edelweiss Broking Limited 683,305 (–) Edel Commodities Limited 513,539 (–) EC Commodity Limited 213,699 (–) Edelweiss Asset Reconstruction Company Limited 38,137 (–) Edelweiss Trustee Services Limited 5,297 (–) Edelweiss Alternative Asset Advisors Limited 538,557 (–) Edelweiss Real Estate Advisors Private Limited 285,463 (–)

Loss on structured products Crossborder Investments Private Limited 28,974,733 (–)

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EDELWEISS ANNUAL REPORT 2008-09

Schedules to the financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees)

Primary market transactions Brokerage paid Edelweiss Securities Limited – (17,964,732)

Interest Expense on Structured Products Oak Holdings Private Limited 200,000 (–)

Reimbursements paid for common expenses Communication Edelweiss Securities Limited – (522,577) Reimbursements recovered for common expenses Shared staff cost Edelweiss Securities Limited 60,000,000 (19,600,000) Edelweiss Commodities Limited 5,000,000 (5,800,000) Crossborder Investments Private Limited – (51,800,000) Edelweiss Real Estate Advisors Private Limited 10,000,000 (9,200,000) ECL Finance Limited 20,000,000 (5,000,000)

Rent Edelweiss Securities Limited 46,224,289 (47,700,000) ECL Finance Limited 17,400,000 (2,400,000) Edelweiss Asset Management Limited – (900,000) Blue River Capital Advisors (India) Private Limited 4,033,652 (3,379,200)

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Schedules to the financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees)

Electricity Edelweiss Securities Limited 10,811,688 (5,642,145) Edelweiss Commodities Limited – (35,582) ECL Finance Limited 6,000,000 (6,000,000) Blue River Capital Advisors (India) Private Limited 525,158 (798,622) Printing and stationery Edelweiss Securities Limited – (11,382,035) Edelweiss Insurance Brokers Limited – (62,382) Edelweiss Commodities Limited – (9,452) Crossborder Investments Private Limited – (13,232) ECL Finance Limited 1,200,000 (600,000)

Office expense Edelweiss Securities Limited – (5,793,582)

Software Expenses Edelweiss Securities Limited 14,320,000 (25,800,000) ECL Finance Limited 590,000 (–) Edelweiss Insurance Brokers Limited 700,000 (–) Edelweiss Commodities Limited 144,000 (–) Crossborder Investments Private Limited 408,000 (–)

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EDELWEISS ANNUAL REPORT 2008-09

Schedules to the financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees)

Incorporation expenses recovered Edelweiss Financial Products & Solutions Limited – (121,810) Edelweiss Asset Management Limited – (1,168,440) Edelweiss Trusteeship Company Limited – (66,072) Edelweiss Property Advisors Private Limited 64,240 (–) Edelweiss Housing Finance Limited 1,859,440 (–) Edel Commodities Limited 254,130 (–) Edel Land Limited 255,040 (–)

Travelling and conveyance Edelweiss Securities Limited – (276,544)

Balances with related parties

Sundry creditors Edelcap Securities and Transaction Services Limited – (52,369)

ECL Finance Limited 188,407 (–)

Investments Edelweiss Securities Limited 442,000,000 (442,000,000) Edelweiss Insurance Brokers Limited 4,997,600 (4,997,500) Edelweiss Commodities Limited 2,108,000,000 (2,108,000,000)

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Schedules to the financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees)

22 NOTES TO THE ACCOUNTS (CONTINUED) 22.2 Related party (Continued) Transactions and balances with related parties: Particulars Subsidiaries/ entities Associates Individual Relatives of Enterprises controlled by the exercising individuals which exercise Company significant exercising significant control significant control influence Crossborder Investments Private Limited 1,972,268,230 (1,272,268,230) Edelweiss Capital USA, LLC 2,392,000 (2,392,000) Edelweiss Real Estate Advisors Private Limited 500,000 (500,000) Blue River Capital Advisors (India) Private Limited 100,000 (100,000) Edelweiss Trustee Services Limited 500,000 (500,000) ECL Finance Limited 6,211,464,732 (3,943,741,753) ECap Equities Limited 10,000,000 (10,000,000) Edelcap Securities Limited 10,000,000 (10,000,000) Edelweiss Asset Management Limited 1,000,000,000 (120,000,000) Edelweiss Asset Reconstruction Company Limited – (500,000) Edelweiss Broking Limited 45,000,000 (15,000,000) Edelweiss Financial Products & Solutions Limited 45,625,000 (10,000,000) Edelweiss Trusteeship Company Limited 1,000,000 (1,000,000) EC Commodity Limited 10,000,000 (–) Edel Commodities Limited 500,000 (–) Edelweiss Alternative Asset Advisors Limited 110,800,000 (–) Edelweiss Housing Finance Limited 500,000 (–) Edelgive Foundation 100,000 (–) Edelweiss Property Advisors Private Limited 500,000 (–) Edelweiss Capital (Singapore) Pte. Limited 145,500 (–) Edel Land Limited 500,000 (–) Edelweiss Primary Dealership Limited 500,000 (–)

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EDELWEISS ANNUAL REPORT 2008-09

Schedules to the financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees)

22 NOTES TO THE ACCOUNTS (CONTINUED) 22.2 Related party (Continued) Transactions and balances with related parties: Particulars Subsidiaries/ entities Associates Individual Relatives of Enterprises controlled by the exercising individuals which exercise Company significant exercising significant control significant control influence EC International Limited 1,196,250 (–) Contribution towards the corpus of Edelweiss Investment Trust Edelweiss Trusteeship Company Limited – (100,000) Loans Edelweiss Securities Limited 2,545,121,385 (2,967,460,753) Edelweiss Insurance Brokers Limited 38,061,088 (18,632,008) Edelweiss Commodities Limited 186,071,559 (1,289,879,237) Crossborder Investments Private Limited 1,520,401,781 (4,628,574,984) ECL Finance Limited 114,889,402 (1,399,085,521) ECap Equities Limited 147,032,776 (60,217) Edelcap Securities Limited 176,054,569 (2,004,353,318) Edelweiss Financial Products & Solutions Limited 164,800,110 (17,908,505) Edelweiss Asset Reconstruction Company Limited 537,622 (–) Edelweiss Alternative Asset Advisors Limited 2,646,296 (–) Edelweiss Broking Limited 69,259,093 (–) Edel Commodities Limited 50,100,615 (–) EC Commodity Limited 250,210,817 (–) Edelweiss Real Estate Advisors Private Limited 791,614 (9,230,924) Edelweiss Trustee Services Limited 5,225 (–) Edelweiss Capital USA, LLC 120,947 (120,947) Edelcap Insurance Advisors – (50,000) Oak Holdings Private Limited – (208,000)

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Schedules to the financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees)

Interest payable on structured products Oak Holdings Private Limited 200,000 (–)

Advances Edelweiss Securities Limited 179,410,165 (139,568,516) Edelweiss Insurance Brokers Limited 4,183 (239,461) Edelweiss Commodities Limited 5,103,311 (6,320,803) Crossborder Investments Private Limited 23,658,935 (52,649,651) Edelweiss Real Estate Advisors Private Limited 4,982,500 (9,230,924) ECL Finance Limited – (30,206,889) ECap Equities Limited 6,120 (3,145,090) Edelcap Securities Limited 2,290,200 (3,234,460) Edelweiss Asset Management Limited 162,280 (782,093) Edelweiss Asset Reconstruction Company Limited 18,531 (30,612) Edelweiss Financial Products & Solutions Limited 6,560,719 (13,726,740) Edelweiss Employee Welfare Trust 424,815,952 (223,165,952) Blue River Capital Advisors (India) Private Limited 3,307,211 (1,111,875) Edelweiss Trustee Services Limited 612 (–) Edelweiss Alternative Asset Advisors Limited 5,186,552 (–) Edelgive Foundation 212,160 (–) EC Commodity Limited 256,170 (–)

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EDELWEISS ANNUAL REPORT 2008-09

Schedules to the financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees)

Bonus payable Rashesh Shah 11,000,000 (28,000,000) Venkat Ramaswamy 11,700,000 (26,700,000) # Inclusive of brokerage Amounts in brackets represent previous year numbers. 22.3 Earnings per share In accordance with Accounting Standard 20 – Earnings Per Share prescribed by Companies (Accounting Standards) Rules, 2006, the computation of earnings per share is set out below: 2009 2008 a) Shareholders earnings (as per profit and loss account) 263,707,562 287,751,363 Less: Preference dividend declared by the Company (including dividend distribution tax) 298,020 365,024 Net profit available to equity shareholders for the purpose of calculating basic and diluted earnings per share 263,409,542 287,386,339

b) Calculation of weighted average number of equity shares of Rs. 5 each: – Number of shares at the beginning of the year 74,933,155 44,916,806 – Number of shares issued during the year* – 30,016,349 Total number of equity shares outstanding at the end of the year 74,933,155 74,933,155 Weighted average number of equity shares outstanding during the year (based on 74,933,155 64,604,696 the date of issue of shares) Number of dilutive potential equity shares 1,829,176 3,711,240

c) Basic earnings per share (in rupees) 3.52 4.45

d) Diluted earnings per share (in rupees) 3.43 4.21 * includes issuance of bonus equity shares and consolidation of equity shares and conversion of preference shares. 22.4 Deferred taxes The primary components relating to deferred tax assets are as follows: 2009 2008 Deferred tax asset Tax effect of the timing differences on account of: Difference between book and tax depreciation 11,222,180 4,793,079 Provision for gratuity 3,099,061 2,067,341 Provision for doubtful debts 13,811,931 1,624,201 Disallowances under section 43B of the Income Tax Act, 1961 55,542,083 – Deferred tax asset 83,675,255 8,484,621

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Schedules to the financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees)

22 NOTES TO THE ACCOUNTS (CONTINUED)

22.5 Disclosure pursuant to Accounting Standard 15 ( Revised ) - Employee Benefits

A) Defined contribution plan (Provident fund):

Amount of Rs. 4,010,689 (previous year: Rs. 2,109,429) is recognised as expenses and included in “ Employee Costs” – Schedule 19 in the profit and loss account.

B) Defined benefit plan (Gratuity):

The following tables summarise the components of the net employee benefit expenses recognised in the profit and loss account, the fund status and amount recognised in the balance sheet for the gratuity benefit plan.

Profit and loss account

Net employee benefit expenses (recognised in employee cost) 2009 2008 Current service cost 4,502,598 3,210,942 Interest on defined benefit obligation 846,785 505,877 Expected return on plan assets – – Net actuarial losses/(gains) recognised in the year – – Past service cost – – Actuarial (gain)/losses (2,314,018) (710,110) Total included in ‘employee benefit expense’ 3,035,365 3,006,709

Balance sheet Details of provision for gratuity 2009 2008 Liability at the end of the year 9,117,568 6,082,203 Fair value of plan assets at the end of the year – – Difference 9,117,568 6,082,203 Unrecognised past service cost – – Unrecognised transition liability – – Amount in Balance sheet 9,117,568 6,082,203

Changes in the present value of the defined benefit obligation are as follows: 2009 2008 Liability at the beginning of the year 6,082,203 3,149,535 Interest cost 846,785 505,877 Current service cost 4,502,598 3,210,942 Past service cost (non vested benefit) – – Past service cost (vested benefit) – – Benefits paid – (74,041) Actuarial (gain)/loss (2,314,018) (710,110) Liability at the end of the year 9,117,568 6,082,203

Principal actuarial assumptions as at the balance sheet date: 2009 2008 Discount rate 7.00% 8.00% Salary escalation 8.00% 8.00% Employee attrition rate 2.00%-15.00% 2.00%

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EDELWEISS ANNUAL REPORT 2008-09

Schedules to the financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees)

22 NOTES TO THE ACCOUNTS (CONTINUED)

22.6 Operating leases

The Company has taken various premises on operating lease. Gross rental expenses for the year ended 31 March 2009 aggregated to Rs. 36,934,273 (Previous year: Rs. 25,720,950) which has been included under the head Operating expenses – Rent, in the profit and loss account.

Details of future minimum lease payments for the non-cancellable operating leases are as follows:

2009 2008 Minimum lease payments for non-cancellable leases – not later than one year 1,080,000 42,475,905 – later than one year and not later than five years 149,425 6,550,316 – later than five years – – Total 1,229,425 49,026,221

Future minimum lease payments for the non-cancellable operating leases are before sharing of expenses with group companies.

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Schedules to the financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees)

0 0 0 0 0 0

0 – 0 3 0 0 0 0 0 0 2 0 0 0 5 0 5 t 0 2 0 6 0 0 0 0 3 0 0 0 , , , , 0 1 1 , t n 0 0 0 0 7 0 0 0

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i o 5 5 s l

o 0 0 0 0 y l 0 C – t 2 0 6 0 ) 9 0 0 0 0 0 0 0 i 0 . C 0 0 7 0 t 2 0 0 0 0 0 0 0 , , , , 0 s , y 1 0 0 0 0 0 0 0 0 0 9 0 ) n t , , , , , , , , 0 . o i 3 0 9 4 9 0 0 5 0 0 0 0 a 0 t 1 0 4 9 s 5 0 0 5 0 4 4 , , 0 N n u , ( 9 5 9 1 2 2 o 2 1 a , , , 0 Q 9 4 1 6 u N 9 ( Q

4 ,

d 1 – – e

t t o n – – – – – u 0 u – – – – – – – – 0 q o 0 t n , n m 0 u 0

u A 5 – o

d l m s

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n y d a t ) l i . p t o s – – – – n S – m o 0 – – – – – – – – a 0 o N u 0 y c ( , ) t

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i Q t s n b u u o

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– – – 9

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N u

d c – – – – – ( 0 0 0 0 0

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t 7 t 0 7 6 7 s r 0 0 1 , n , o 8 e 5 5 t 3 a 4 v 1 1 4 u n N

1 ( n , u Q 1 o o c

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7 , , , , , , , , , , , , ,

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i o

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c u N 3 ( – n Q

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t e i a n i r r a n t t m n i e e i t S t m v n r i L t t i i t u

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d o r o a n s s u m E p L c s s s I s n o

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s n L u u a o r i e s s e T i e r r r a e c i n r

t I S C C T A T F B A h e c e i u

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l l l l l l l l l l l a s a L a t u e e e e e e e e e e e 7 t o . r o q d d d d C d d d d C d d d o 2 2 K T E C E E E E E E E E E E E E E 2 2

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EDELWEISS ANNUAL REPORT 2008-09

Schedules to the financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees)

y 0 0 0 0 0 0 0 2 0 0 0 0 0 0 t 0 0 0 0 i 0 0 5 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 u 0 0 2 0 0 0 3 0 0 0 0 5 0 0 0 0 0 0 , , , , , , , , , , , , , , t t q , , , , 0 0 6 0 0 0 0 9 0 0 0 5 0 0 e 0 n 0 0 0 n

0 0 9 0 0 0 0 8 0 0 0 4 0 0 0 0 0 0 u u 0 5 0 1 8 5 0 5 9 0 5 9 1 5 0 1 6 5 1 o , , , , , , , , 0 o ) 0 1 0 0 7 0 0 0 0 m , d 0 1 5 7 0 2 m 1 0 A e 2 1 3 9 0 0 g A , , , 5 g u n 1 1 1 2 i , n n 1 i i s 0 t s o 2 l n

o 0 0 0 f l o 0 0 0 9 0 0 0 0 0 0 0 0 0 0 0 C 0 0 0 o y C 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

0 0 0 C t ) , , , ( y i 0 0 0 4 0 0 0 0 0 0 0 0 5 0 0 . e

, , , , , , , , , , , , , , , t t 0 0 0 ) s s i . 0 0 0 6 5 0 0 9 0 0 6 0 7 5 d 0 n 1 6 5 t a

o s 0 5 5 0 0 5 0 5 0 5 5 8 2 1 e a e n t 0 9 5 2 8 2 2 N o r u , , , , a ( o c N 5 0 0 2 Q u u ( n 1 0 1 i q

6 Q , n n i 1

u –

– – g –

n t i – – – – – – – – – – – – – – 0 t s n l 0 t e u u i 0 n , s o n 0 u e a r 0 m o

p , 5 A e m m r d o a A l c h o

d s l – – – y

r o r . – – – – – – – – – – – – – – 0 y a e 1 S t ) i 0 : i . y p t d 0 1

t s i , )

i n f . 1 t o s 0

a s o . 5 b

n N u e o ( o u a i R Q N t s

u (

a f o r t Q

e e s – – – r h t e a

r t – – – – 0 0 9 0 0 0 0 0 0 0 0 h n i u n 0 5 2 0 0 0 0 0 0 0 0 s

t 0 2 8 0 0 5 0 0 0 0 u 0 y r , , , , , , , , , , , n n o n e 0 6 9 0 0 5 0 0 0 0 0 e u a p 0 9 8 0 0 4 0 0 0 0 0 m b

s p 8 1 0 5 5 o 1 5 5 0 5 1 e 0 A , , , , e d m 1 0 1 8 0 s m

s . o 1 3 1 a e A s e l 1 0 h C ,

s b R c – – – 4 i

e r a t h r u y h m t t )

e c – – – – i 0 0 0 0 3 0 0 0 0 0 0 . P o t r v r o 0 0 0 0 4 0 0 0 0 0 0 s f t n u

n y 0 0 0 0 9 0 0 0 0 5 0 o , , , , , , , , , , , t s a e o P ) i r . 6 0 0 5 2 5 0 0 0 7 N 0 e u t c ( r a

s 5 5 5 2 6 5 5 5 8 1 n Q a h y 2 0 2 o l , , a s h l

N 2 6 s u u (

y 9 f t s

i 1 Q 0 0 0 , y u u l d 0 0 0 1 l n q t e 0 0 0 a o , , , e t n

n 0 0 0 b o u – – – – – – – – – – 0 0 3 0 0 s

t 0 0 0 o u i 0 0 o 8 0 0 i 0

1 6 5 t q f 0 0 4 0 0 0 t , , , , , m p o n 0 0 0 9 0 0

n , A o g u

0 0 9 0 0 e 0

u / n 9 0 3 0 0 i – u 0 , , , , l , s o

n 5 0 0 a 0 0 0 e s , e r m v 2 0 4 5 0 e 2 0 0 0

t p a 0 2 9 3 0 2 0 0 0 A e g , , ,

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<< Back Next >> ANNUAL REPORT 2008-09

Schedules to the financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees) – 0 0 1 5 6 0 0 0 0 0 9 0 0 0 0 0 9 4 0 0 6 0 0 0 0 0 8 0 8 8 9 2 2 0 1 0 0 0 5 0 1 0 8 0 2 9 0 2 0 0 0 9 5 t 0 0 5 2 3 1 0 0 0 0 0 4 0 5 1 4 0 0 1 4 8 0 0 0 0 1 6 0 , , , , , , , , , , , , , , , , , , , , , , , n , , 0 3 2 4 6 3 5 4 0 0 0 0 2 1 5 0 2 4 7 0 0 0 0 1 u 0 0 7 4 6 4 1 0 0 0 7 1 1 3 0 4 4 2 0 5 0 0 4 0 o 0 4 3 3 2 4 5 0 3 1 3 3 3 1 3 3 0 0 0 , , , , , , , , , , , , , m 2 2 1 1 2 2 2 1 5 1 2 0 5 4 g 0 A 2 2 2 n i s 0 o 8 0 1 0 0 0 0 0 0 5 8 0 0 0 1 0 0 0 7 0 0 9 0 3 9 5 8 l 0 5 0 0 5 0 5 5 3 0 9 9 1 0 1 0 0 0 4 0 0 4 0 4 1 6 1 y 0 3 5 8 0 8 2 5 2 6 6 8 2 0 0 0 0 7 5 5 8 1 8 C t ) 1 8 , , , , , , , , , , , , , , , , , , , , i , . , t 0 1 7 0 4 2 7 3 7 5 0 1 1 0 0 5 4 3 4 7 4 4 s 2 3 3 1 1 6 8 2 7 1 2 5 2 0 1 1 n 6 2

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EDELWEISS ANNUAL REPORT 2008-09

Schedules to the financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees)

0 0 0 0 0 0 0 5 0 0 0 0 0 0 t 7 t

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<< Back Next >> ANNUAL REPORT 2008-09

Schedules to the financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees) – – – – – – – – – – – – – – – – – – t n u o m A g n i – – – – – – – – – – – – – – – – – – s

o l y t ) i C . t s n o a N u ( Q 6 0 5 8 3 6 2 1 6 6 0 9 4 6 8 3 6 0 9 0 5 3 8 6 3 9 8 7 7 8 5 4 7 1 0 0 1 0 8 0 9 9 6 8 8 1 6 5 9 5 2 6 8 6 , , , , , , , , , , , , , , , , , , t 3 2 2 5 4 3 4 2 0 6 0 6 9 4 0 9 1 2 n 7 7 7 2 7 6 2 2 6 1 9 9 3 7 1 5 6 2 u 0 7 2 3 9 4 2 5 6 8 4 4 7 5 0 4 1 3 , , , , , , , , , , , , , , , , , , * o 0 4 2 0 0 1 0 3 8 0 1 6 3 0 1 0 0 0 *

0 4 0 4 1 5 0 6 2 4 8 4 3 0 5 5 0 0 m s 1 7 6 1 3 5 3 2 6 5 5 7 2 5 8 4 0 4 A , , , , , , , , , , , , , n 1 1 2 7 5 3 2 3 4 2 4 1 1 o 1 2 i t p 0 8 3 0 6 8 7 3 5 9 8 4 3 0 9 2 4 0 m 0 2 0 2 5 2 7 1 3 3 5 3 2 9 5 6 5 7 e 2 2 2 5 8 4 2 3 7 2 6 5 5 3 7 9 2 4 y , , , , , , , , , , , , , , , , , , d t ) i 7 7 4 3 4 2 2 6 1 6 5 0 9 1 5 9 6 0 . e t 7 0 2 0 7 9 0 8 4 3 9 9 2 0 8 9 9 2 s n R 2 4 1 1 0 9 0 6 1 0 8 4 8 9 9 9 8 o , , , , , , , , , , , , , , , , a 0 4 1 1 2 2 9 0 3 4 3 5 4 9 1 3 N u 6 5 2 5 7 6 7 4 3 8 3 3 7 ( 2 7 2 2 9 3 3 2 4 1 Q , , 1 5 0 0 0 0 2 9 0 2 9 0 0 8 0 3 0 0 1 0 0 0 0 0 3 0 0 3 8 0 0 7 0 1 0 0 1 0 0 0 0 0 6 3 0 4 5 0 0 2 0 6 6 0 3 0 t , , , , , , , , , , , , , , , , , , 2 0 0 0 2 0 0 7 6 0 0 0 0 1 2 0 n 2 0 7 0 0 0 2 1 0 4 9 0 0 1 0 6 2 0 8 0 u 7 0 0 0 5 6 0 3 4 0 0 0 0 1 3 0 4 0 o , , , , , , , , , , , , , , , , , , 2 0 0 0 3 1 0 1 6 0 0 1 0 0 0 0 9 0 m * 4 1 5 6 1 4 8 4 3 0 5 5 0 0 0 3 0

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C n n B 2 2 I R B B G B R B C D C G D R D F D F D D D G D I D P D I F T O H -

<< Back Next >> ANNUAL REPORT 2008-09

EDELWEISS ANNUAL REPORT 2008-09

Schedules to the financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees) – – – – – – – – – – – – – – – – – t n u o m A g n i – – – – – – – – – – – – – – – – – s o l y t ) i C . t s n o a N u ( Q 1 9 7 2 5 6 1 8 2 0 3 5 1 1 4 6 2 0 8 3 1 1 5 6 2 2 4 8 7 9 5 3 5 0 7 8 8 1 1 3 3 8 8 9 7 6 2 6 1 9 7 0 9 4 , , , , , , , , , , , , , , , , , , t 9 8 0 1 1 6 0 8 9 2 9 0 3 0 2 9 9 5 n 5 2 2 6 7 0 6 1 3 3 7 4 1 7 4 4 8 2 u 2 1 4 9 2 3 0 1 1 5 7 8 7 5 0 4 0 2 , , , , , , , , , , , , , , , , , , * o 0 0 0 5 0 1 2 3 5 1 0 6 4 0 0 0 0 0 *

0 4 5 5 2 4 7 0 8 0 4 1 2 5 8 9 0 5 m s 5 6 9 8 2 0 9 3 3 5 2 5 9 9 1 9 4 2 A , , , , , , , , , , n 2 1 6 4 1 4 7 2 3 3 o 1 1 i t p 0 0 0 2 7 3 8 9 1 2 0 9 5 8 1 8 3 8 m 0 0 0 9 0 6 3 7 4 1 7 7 8 8 4 2 0 0 e 0 0 0 8 4 5 5 8 8 9 7 8 4 4 4 8 7 5 y , , , , , , , , , , , , , , , , , , d t ) i 0 0 0 3 4 2 7 7 8 0 8 9 7 1 2 4 4 6 . e t 0 0 0 0 9 9 6 0 4 8 6 9 5 0 4 2 3 4 s n R 0 0 0 3 7 7 9 9 5 3 1 8 4 1 0 0 7 9 o , , , , , , , , , , , , , , , , , , a 0 0 0 3 3 3 6 9 5 1 2 0 2 7 9 1 3 3 N u 0 4 5 5 7 0 9 2 7 3 9 1 7 1 7 3 2 4 ( 5 6 9 4 6 4 1 2 6 1 3 8 Q , 1 0 0 6 1 8 9 0 0 8 0 0 0 0 0 0 0 0 0 0 0 6 2 2 9 8 0 3 0 0 0 0 0 0 0 0 0 0 0 8 8 9 8 6 0 0 0 0 0 0 0 0 0 0 0 t , , , , , , , , , , , , , , , , , , 0 0 6 0 8 7 2 0 0 0 0 0 0 0 0 n 0 0 0 0 0 0 6 1 0 3 0 1 0 0 0 0 0 0 0 0 0 u 0 0 3 0 1 4 5 0 4 0 0 0 0 0 0 0 0 0 o , , , , , , , , , , , , , , , , , , 0 0 1 2 3 2 1 0 2 0 0 0 0 0 0 0 0 0 m * 5 2 4 7 0 8 0 4 1 2 5 8 9 0 5 0 4 5

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<< Back Next >> ANNUAL REPORT 2008-09

Schedules to the financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees) – – – – – – – – – – – – – – – t n u o m A g n i – – – – – – – – – – – – – – – s o l y t ) i C . t s n o a N u ( Q 4 3 6 4 0 4 9 8 0 7 1 0 6 4 5 1 5 4 5 1 8 9 8 3 7 4 0 0 3 8 6 4 2 9 3 6 8 3 7 2 3 6 8 1 2 3 1 7 1 6 7 9 2 1 , , , , , , , , , , , , , , , , , , t 1 7 3 2 5 9 6 5 6 1 6 2 2 4 6 9 3 3 n 5 5 6 3 8 2 9 5 3 0 7 5 6 1 5 8 5 5 u 3 8 0 4 3 5 2 1 0 7 9 3 1 3 0 5 8 4 , , , , , , , , , , , , , , , , , , * o 2 3 1 0 0 0 3 3 2 2 0 0 0 3 1 3 3 0 *

5 7 9 0 0 5 5 1 7 4 8 9 0 5 3 9 5 0 m s 7 1 4 5 5 2 9 0 8 7 6 5 0 2 0 0 1 5 A , , , , , , , , , , , , , , , n 5 9 2 2 3 8 4 3 3 1 1 8 9 8 0 o 1 7 1 i t p 0 4 7 2 3 6 5 9 0 8 2 0 6 2 6 5 0 3 m 0 7 2 0 0 0 9 7 1 4 1 9 1 8 6 3 3 5 e 0 3 7 7 3 5 2 9 9 4 6 5 2 0 0 8 6 6 y , , , , , , , , , , , , , , , , , , d t ) i 0 1 1 1 0 3 5 7 8 3 5 7 1 4 2 0 6 0 . e t 0 1 7 0 0 4 5 3 2 8 0 4 1 7 0 2 3 9 s n R 0 2 3 8 6 2 2 5 6 6 0 3 0 3 5 7 1 0 o , , , , , , , , , , , , , , , , , a 0 3 8 1 2 5 6 8 3 8 4 0 0 0 7 9 4 N u 0 7 9 9 2 7 6 2 0 3 0 4 2 3 ( 5 5 3 1 3 3 1 1 6 9 6 8 Q , , 1 6 0 0 4 4 6 0 7 1 0 6 0 5 0 0 4 0 0 4 0 0 9 3 4 0 0 3 0 6 0 2 0 0 7 0 0 5 0 0 2 6 1 0 3 1 0 1 0 7 0 0 5 0 0 8 t , , , , , , , , , , , , , , , , , , 0 0 2 9 9 0 1 6 0 2 0 6 0 0 9 n 0 0 1 0 0 3 2 9 0 0 7 0 6 0 5 0 0 0 0 0 5 u 0 0 4 5 2 0 7 9 0 1 0 0 0 0 1 0 0 3 o , , , , , , , , , , , , , , , , , , 0 0 0 3 4 0 2 0 0 0 0 1 0 0 0 0 0 2 m * 7 9 0 5 8 7 4 8 9 0 5 3 9 5 0 0 5 5

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<< Back Next >> ANNUAL REPORT 2008-09

EDELWEISS ANNUAL REPORT 2008-09

Schedules to the financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees) – – – – – – t n u o m A g n i – – – – – – s o l y t ) i C . t s n o a N u ( Q 8 5 0 0 9 9 4 2 9 7 8 1 5 7 0 8 5 5 6 6 4 , , , , , , , t 1 1 6 8 7 2 4 n 1 6 6 9 7 2 7 u 1 5 5 4 4 9 9 , , , , , , , * o 0 2 0 9 3 1 3 *

0 6 6 3 4 0 5 m s 5 8 1 3 2 0 0 A , , , , , , n 8 3 3 4 5 3 o 3 1 7 1 i t 3 p 9 0 1 3 6 3 5 m 5 0 9 0 8 7 9 e 3 0 1 8 3 9 3 y , , , , , , , d t ) 6 i 0 3 5 5 4 6 . e t 6 0 0 5 4 0 9 s 4 n R 0 8 5 5 8 2 , o , , , , , , a 2 0 0 6 1 2 1 N 2 u 0 4 1 1 9 ( 1 , 5 3 3 6 Q , , 6 3 1 3 1 0 0 0 0 4 0 3 0 3 0 0 7 0 4 0 1 0 0 4 0 , t , , , , , , 4 0 8 0 0 4 n 0 7 0 1 0 0 7 0 . u 9 , 0 8 0 0 9 0 e o , , , , , , 0 s 0 9 5 2 0 3 0 m * 9 u 6 7 3 0 5 0 ,

8 5 3 0 0 5 A o * 1 , , , , , s 7 * h 8 1 3 5 3 e

3 3 1 1 s d a n h 5 3 0 5 3 6 3 u f 5 7 0 9 8 8 0 c

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a 4 2 0 1 2 1 6 f N 0 1 0 9 8 1 u o ( 9 5 6 1 3

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) G N Q a t s u u u d d e i t t t a s h M h n n c G e t u u u e h c ( e e n

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2 2 P o G * U R 2 2 U U D U E - R D T * *

<< Back Next >> ANNUAL REPORT 2008-09

Schedules to the financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees)

22 NOTES TO THE ACCOUNTS (CONTINUED)

22.8 Managerial remuneration

The aggregate managerial remuneration under section 198 of the Companies Act, 1956, to the directors (including managing director) is:

Particulars 2009 2008 Whole-time directors Salaries and bonus 21,026,238 60,882,134 Rent Perquisite 1,715,841 1,428,950 Total remuneration 22,742,079 *62,311,084 Non-whole-time directors Commission 2,500,000 – Total remuneration 2,500,000 –

Provision for gratuity is based on actuarial valuation done on an overall Company basis which is excluded from above.

*Managerial remuneration for the financial year 2007-08 is in accordance with Central Government approval.

Computation of Net Profit in accordance with section 349 of the Companies Act, 1956 and calculation of commission payable to non-whole-time directors for financial year 2008-09:

Particulars 2009 Profit before tax as per profit and loss account 310,816,928 Add: Whole-time directors’ remuneration 22,742,079 Commission to non-whole-time directors 2,500,000 Provision for diminution in the value of long term investments 18,300,000 Provision for doubtful debts 35,856,808 Gratuity provision 3,035,365 Loss on sale of fixed assets 3,245 Sub-total 82,437,497 Less: Profit on sale of fixed assets credited to profit and loss account 1,354,857 Write back of provision for diminution in long-term investments 1,000,000 Provision for doubtful advances written back 321,518 Sub-total 2,676,375 Profit as per section 349 of the Companies Act, 1956 390,578,050 Commission payable to non-whole-time directors: Maximum allowed as per Companies Act,1956 at 1% 3,905,781 Commission approved by the Board 2,500,000

<< Back Next >> ANNUAL REPORT 2008-09

EDELWEISS ANNUAL REPORT 2008-09

Schedules to the financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees)

22 NOTES TO THE ACCOUNTS (CONTINUED) 22.9 Foreign currency transactions The Company has undertaken the following transactions in foreign currency:

2009 2008

Expenditure incurred in foreign currency (on accrual basis) Travel 2,601,338 3,653,283 Professional fees 26,368,075 1,848,821 Employee cost 507,800 4,743,950 Purchase of fixed assets 1,427,734 – Printing and distribution 1,182,132 – Initial public offer expense (charged to securities premium) – 15,452,936 Interest on fully convertible debenture 229,842,505 235,019,423 Subscription charges 3,340,489 730,359

Total 265,270,073 261,448,772

Income earned in foreign currency (on accrual basis) Fee income 63,123,850 46,944,892 Reimbursement 215,671 4,150,456 Other income – 630,733

Total 63,339,521 51,726,081

Amount remitted in foreign currency during the year ended 31 March 2009 on account of equity dividend:

Number of equity shareholders 16 Number of equity shares 16,593,669

Dividend relates to year ended 31 March 2008 Amount remitted (Rupees) 33,187,338

During the year ended 31 March 2008 no dividend on equity and preference shares has been remitted in foreign currency.

22.10 Auditors’ remuneration

2009 2008 As auditors 2,250,000 2,100,000 Other matters 506,963 *8,190,710 Out-of-pocket expenses 86,290 61,412

Total 2,843,253 10,352,122

* includes Rs. 8,139,810 paid towards audit, restatement of financials and issue of comfort letter with regard to the Initial Public Offering (“IPO”) of the Company. The same has been included in IPO expenses, which has been adjusted against the securities premium account.

<< Back Next >> ANNUAL REPORT 2008-09

Schedules to the financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees)

22 NOTES TO THE ACCOUNTS (CONTINUED)

22.11 Employee stock option plans

During the year, the Company has issued ESOP 2008 Plan wherein stock options were granted to employees with a variable exercise price (i.e. the exercise price was linked to either a discount on market price at the time of exercise or a specified amount, whichever is higher). The stock options vested after one year from the date of grant. For determination of compensation cost, the Company has assumed the exercise price to be the specified amount.

The shareholders of the Company also approved by a special resolution passed by postal ballot dated 30 March, 2009, the grant of 5 million options under the new Employee Stock Option Plan, ESOP 2009. No stock options have been granted under this plan upto the date of this balance sheet.

With respect to stock options granted upto 31st March 2008, the fair market value of the underlying shares has been determined based on an independent valuer’s report as these stock options were granted by the Company to its employees when it was not listed on the stock exchanges. The fair value under stock options granted during the year is arrived as stipulated in the Guidance Note on Accounting for Employee Share Based Payments issued by The Institute of Chartered Accountants of India.

The compensation cost recorded in the profit and loss account for the year is Rs. 6,804,788/- (Previous year: Rs. 3,494,278).

<< Back Next >> ANNUAL REPORT 2008-09

EDELWEISS ANNUAL REPORT 2008-09

Schedules to the financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees) ) ) – 0 0 0

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1 1 . 2 2 2 2

<< Back Next >> ANNUAL REPORT 2008-09

Schedules to the financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees)

22 NOTES TO THE ACCOUNTS (CONTINUED)

22.11 Employee stock option plans (Continued)

(*) Pricing formula:

ESOP 2008 (I)

Period during which vested From the date of vesting to 31 December 2010 From 1 January 2011 to 31 December 2011 options are exercised Exercise price payable for Higher of price after 10% discount to Market Price after 10% discount to the reference price. such vested options price as on the exercised date or Rs. 1,200. ESOP 2008 (III)

Period during From the date From From From which vested of vesting to 1 October 2008 1 October 2009 1 October 2010 options are 30 September 2008 to to to exercised 30 September 2009 30 September 2010 30 September 2011 Exercise price In case shares In case shares Rs. 583 Rs. 217 payable for such are listed, 10 % are listed, 25 % vested options discount to market discount to market price or Rs. 1,167; price or Rs. 833; whichever is higher; whichever is higher; otherwise Rs. 1,167. otherwise Rs. 833. ESOP 2007 (II)

Period during From the date From From From which vested of vesting to 1 January 2008 to 1 January 2009 to 1 January 2010 to options are 31 December 2007 31 December 2008 31 December 2009 31 December 2010 exercised Exercise price Rs. 1,167 In case shares are In case shares are Rs. 517 payable for such listed, 25% discount listed, 50% discount vested options to market price or to market price or Rs. 833; whichever Rs. 667; whichever is higher; otherwise is higher; otherwise Rs. 833 Rs. 667

<< Back Next >> ANNUAL REPORT 2008-09

EDELWEISS ANNUAL REPORT 2008-09

Schedules to the financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees)

22 NOTES TO THE ACCOUNTS (CONTINUED)

22.11 Employee stock option plans (Continued)

Following summarises the information about stock options outstanding as at 31 March 2009:

Weighted average exercise prices of stock options – outstanding at the beginning of the year 42.08 83.28 90.74 217.00 333.00 517.00 N.A. N.A. – granted during the year N.A. N.A. N.A. N.A. N.A. N.A. 463.03 348.15 – forfeited/cancelled during the year N.A. 79.17 79.17 217.00 333.00 517.00 463.03 348.15 – exercised during the year N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. – outstanding at the end of the year 42.08 83.07 90.87 217.00 333.00 517.00 463.03 348.15 – exercisable at the end of the year N.A. 64.88 79.17 217.00 333.00 517.00 463.03 348.15 The weighted average market share price for stock options exercised during the year is Rs. Nil (Previous year: Rs. 1,192). Fair value methodology The fair value of options used to compute pro-forma net income and earnings per share have been estimated on the dates of each grant, on or after the date the ‘Guidance Note on Accounting for Employee Share-based Payments’, issued by the council of The Institute of Chartered Accountants of India, became applicable, i.e. 1 April 2005, using the black-scholes option pricing model. In absence of the shares of the Company being listed at the time of the grant, the Company has estimated the volatility based on the historical market volatility. The various assumptions considered in the pricing model for the aforementioned ESOP’s granted are:

2009 Dividend yield 0.4% - 1.5% Expected volatility 16.29% - 46.30% Risk free interest rate 6.50% - 7.75% Expected life of the option 3.19 – 9 years Impact of fair value method on net profit and earnings per share Had compensation cost for the Company’s stock option plans outstanding been determined based on the fair value approach, the Company’s net profit and earnings per share would have reduced to the pro-forma amounts as indicated below: 2009 Net Profit (as reported) 263,707,562 Less: Impact of incremental cost under fair value approach 38,313,452 Net Profit: (pro-forma) 225,394,110 Basic earnings per share (as reported) (Rs.) 3.52 Basic earnings per share (pro-forma) (Rs.) 3.00 Diluted earnings per share (as reported) (Rs.) 3.43 Diluted earnings per share (pro-forma) (Rs.) 2.93 22.12 Capital commitment Capital commitments (net of advances) – Rs. 39,000,000 (Previous year: Rs. 21,555,096) 22.13 Contingent liability Taxation matters in respect of which appeal is pending – Rs. 1,747,928 (Previous year: Rs. 15,858,396). The demand paid under protest in respect of disputed taxation matters pertaining to open assessments of earlier years is Rs. 1,747,928 (Previous year: Rs. 5,441,046). The Company has issued corporate guarantees to the extent of Rs. 6,188,300,000 (Previous year: Rs. 7,310,000,000), in favour of banks to secure the credit facilities sanctioned by these banks to Edelweiss Securities Limited, EC Commodity Limited , Edelweiss Broking Limited and Edelweiss Commodities Limited (subsidiary companies).

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Schedules to the financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees)

22 NOTES TO THE ACCOUNTS (CONTINUED) 22.14 Secured loans (non-convertible debentures) Series of issue Amount Outstanding Date of redemption Equity linked debenture 1 39,000,000 28-May-09 Equity linked debenture 2 19,000,000 28-May-09 Equity linked debenture 3 26,000,000 30-Jun-11 Equity linked debenture 4 33,000,000 30-Jun-11 Equity linked debenture 6 30,000,000 20-Jun-11 Equity linked debenture 7 20,000,000 20-Jun-11 Equity linked debenture 9 54,000,000 28-May-09 Equity linked debenture 10 15,000,000 28-May-09 Equity linked debenture 11 20,000,000 28-May-09 D0D803 19,000,000 30-Jun-10 D1D804 5,000,000 29-Jul-11 D1E807 23,000,000 5-Aug-11 D9D801 6,000,000 30-Jun-09 D9D802 35,000,000 30-Jun-09 D9D805 180,000,000 30-Jun-09 E1F802 44,000,000 1-Sep-11 F1G801 33,000,000 3-Oct-11 F1G803 18,000,000 10-Oct-11 F1G806 35,000,000 4-Oct-11 F1G807 23,000,000 14-Oct-11 F1G808 50,000,000 11-Oct-11 F9F801 38,000,000 11-Sep-09 F9G802 1,000,000 3-Oct-09 F9G804 16,000,000 9-Oct-09 G0H804 10,000,000 8-Nov-10 G1G809 12,000,000 17-Oct-11 G1G810 16,000,000 18-Oct-11 G1H801 37,000,000 8-Nov-11 G1H802 37,000,000 7-Nov-11 G9G805 9,000,000 7-Oct-09 G9H803 12,000,000 4-Nov-09 H1H802 5,000,000 25-Nov-11 H9H801 14,000,000 27-Nov-09 H9H801 1,000,000 27-Nov-09 I0I802 20,000,000 30-Dec-10 I1I801 5,000,000 29-Dec-11 I9J803 28,000,000 31-Dec-09 J9D806 20,000,000 31-Dec-09 J9J801 4,000,000 29-Jan-10 K1K801 1,500,000 28-Feb-12 L9L802 7,500,000 30-Mar-10 L9K801 14,000,000 28-Dec-09 A1A803 3,000,000 29-Mar-12 A2A901 1,500,000 03-Apr-12 A2A902 2,000,000 03-Apr-12 A2A904 7,800,000 30-Apr-12 A2A905 2,000,000 27-Apr-12 A0A906 1,000,000 28-Apr-10 A0A907 1,500,000 29-Apr-10 A2B901 800,000 26-Apr-12 A0B903 2,500,000 28-Apr-10 B2B902 2,000,000 18-May-12 B0B904 3,500,000 26-May-10 B2B905 3,000,000 28-May-12 B0C903 4,000,000 03-Jun-10 B2C901 500,000 08-Jun-10 B0C902 500,000 10-Jun-10 Total 1,070,600,000 The non-convertible debentures issued at premium, if any, during the year are redeemable at par.

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EDELWEISS ANNUAL REPORT 2008-09

Schedules to the financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees)

22 NOTES TO THE ACCOUNTS (CONTINUED) 22.15 Additional information pursuant to the provision of paragraph 3 of Part II of Schedule VI to the Companies Act, 1956 :

Particulars 2009 2008 Quantity Amount Quantity Amount Opening stock Equity shares – – – –

Purchase Equity shares – – 585,353 291,242,073

Sales Equity shares – – 585,353 303,589,716

Closing stock Equity shares – – – –

Profit on sale of securities – – – 12,347,643

22.16 During the financial year 2007-08 the company has provided for bonus payable to the employees. This provision includes deferred bonus to be payable at future dates to employees in service and the same has been disclosed hereunder:

Nature of Liability Provision as on Addition Amount Used Unused Amount Provision as on 1 April 2008 Reversed 31 March 2009 Deferred Bonus 147,712,872 – – – 147,712,872 Total 147,712,872 – – – 147,712,872

22.17 Details of dues to micro, small and medium enterprises

The Company has requested its creditors to confirm the applicability to them under the Micro Small and Medium Enterprises Development Act, 2006. Based on the responses received by the Company, the details of dues to micro, small and medium enterprises are as under :

Sr. Particulars 2009 2008 No. 1. the principal amount and the interest due thereon (to be shown separately) remaining unpaid to any supplier as at the end of accounting period. Nil Nil 2. the amount of interest paid by the buyer in terms of section 16 of the Micro Small and Medium Enterprise Development Act, 2006, along with the amounts of the payment made to the supplier beyond the appointed day during accounting period. Nil Nil 3. the amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the appointed day during the period) but without adding the interest specified under Micro Small and Medium Enterprise Development Act, 2006. Nil Nil 4. the amount of interest accrued and remaining unpaid at the end of accounting period. Nil Nil 5. the amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues as above are actually paid to the small enterprise for the purpose of disallowance as a deductible expenditure under section 23 of the Micro Small and Medium Enterprise Development Act, 2006. Nil Nil

<< Back Next >> ANNUAL REPORT 2008-09

Schedules to the financial statements for the year ended 31 March 2009 (Continued) (Currency : Indian rupees)

22 NOTES TO THE ACCOUNTS (CONTINUED)

22.18 Loans and advances include i) Rs. 556,153 (Previous year: Rs. 30,612) due from Edelweiss Asset Reconstruction Company Limited (maximum amount due at any time during the year Rs. 556,153; Previous year: Rs. 30,612) ii) Rs. 5,774,114 (Previous year: Rs. 9,230,924) due from Edelweiss Real Estate Advisors Private Limited (maximum amount due at any time during the year Rs. 11,063,494; Previous year: Rs. 9,230,924) iii) Rs. 424,815,952 (Previous year: Rs. 223,165,952) due from Edelweiss Employees Welfare Trust (maximum amount due at any time during the year Rs. 424,815,952; Previous year: Rs. 223,165,952) 22.19 Cost sharing Edelweiss Capital Limited, being the holding company within the Edelweiss Group incurs expenditure like common senior management compensation cost, rent expenditure, which is for the common benefit of itself and certain subsidiary companies. This cost so expended is recovered as reimbursement from the subsidiaries on the basis of number of employees, area occupied, time spent by employees for other companies, actual identifications etc. Accordingly, and as identified appropriately, these expenditure heads in Sched ule 19 and Schedule 20 are net of the reimbursements. 22.20 Utilisation of proceeds from initial public offer The Company has fully utilised, as per the Objects of the issue, the net issue proceeds of Rs. 671.49 crores raised by the Initial Public Offering in the financial year 2007-08. 22.21 Schedule VI disclosures Disclosures under Schedule VI to the Companies Act, 1956 has been made to the extent applicable to the Company. 22.22 Prior period comparatives Previous year figures have been regrouped and rearranged wherever necessary.

For and on behalf of the Board of Directors

Rashesh Shah Venkat Ramaswamy B Renganathan Chairman & Managing Director Executive Director V. P. & Company Secretary

Mumbai | 22 May 2009

<< Back Next >> ANNUAL REPORT 2008-09

EDELWEISS ANNUAL REPORT 2008-09

Balance sheet abstract and Company’s general business profile

I Registration details

Registration No. U99999MH1995PLC094641 State code 11

Balance sheet date 31 03 2009

II Capital raised during the year (Amount in thousand Rupees)

Public issue Rights issue – –

Bonus issue Private placement – –

III Position of mobilisation and deployment of funds (Amount in thousand Rupees)

Total Lilabilities Total Assets 18,652,861 18,652,861

Source of funds

Paid–up capital Reserves and surplus 374,666 13,173,588

Stock options outstanding Deferred tax liability 12,794 –

Secured loans Unsecured loans 1,084,587 4,007,226

Application of funds

Net fixed assets Investments 63,494 12,497,261

Net current assets Miscellaneous expenditure 6,008,431 —

Deferred Tax Asset 83,675

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Balance sheet abstract and Company’s general business profile

IV Performance of the Company (Amount in thousand Rupees)

Turnover Total expenditure 1,917,391 1,606,574

Profit/ (loss) before tax Profit/ (loss) after tax 310,817 263,708

Earnings per share (in Rupees) Dividend rate 3.52 60%

V Generic names of three principal products/ services of the Company

(as per monetary terms)

Item code No Not applicable

(ITC Code)

Product Description Investment Banking and Financial Services

For and on behalf of the Board of Directors

Rashesh Shah Venkat Ramaswamy B Renganathan Chairman & Managing Director Executive Director V. P. & Company Secretary

Mumbai | 22 May 2009

<< Back Next >> ANNUAL REPORT 2008-09

EDELWEISS ANNUAL REPORT 2008-09

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<< Back Next >> ANNUAL REPORT 2008-09

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<< Back Next >> ANNUAL REPORT 2008-09

EDELWEISS ANNUAL REPORT 2008-09

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