ANNUAL REPORT 07-08

$ $ $ $ $ $ $ $

POWERING INDIA’S GROWTH Mission To provide credible, professional and customer focused world class investment banking services

WELCOME TO SBICAP Vision To be the best India based investment bank

Bankers State Bank of India

Statutory Auditors M/s. S.R. Batliboi & Co. Chartered Accountant INDEX Address of Registered Office SBI Capital Markets Limited & Corporate Office 202 Maker Tower ‘E’, Cuffe Parade Mumbai - 400 005 Board of Directors 02 About us 04

Financial Highlights 05

About SBICAP Group 06

Project Advisory and 08 Structured Finance (PA&SF)

Capital markets 10 D

Mergers & Acquisions 12 E

T I M

and A dvisory I L

S T

Our people 14 E K R A M

Financials 15 L A T I P A C

I B S

1 ANNUAL REPORT 07-08

Board of Directors

People who made the difference

SHRI O. P. BHATT Chairman

SHRI R.SRIDHARAN SMT BHARATI RAO Director Director

SHRI M. R. SIVARAMAN Director

2 DR. R.H. PATIL DIRECTOR

SHRI BANSI S. MEHTA DR. SWATI A. PIRAMAL DIRECTOR Director

SHRI D. SUNDARAM SHRI AJAY SAGAR Director Director D E T I M I

SHRI A. P. VERMA L

S

Managing Director & CEO T E K R A M

L A T I P A C

I B S

3 ANNUAL REPORT 07-08

About us Powering India’s growth through global experience Locations 4Ahmedabad 4Bangalore 4Chennai 4Hyderabad 4Kolkatta 4New Delhi 4Chandigarh 4Guwhati 4London

I he wholly-owned subsidiary of State Bank of India, SBI Capital Markets Limited (SBICAP), is India's leading investment bank and project advisor as well as one of the oldest players in the Indian Capital Market. This apex fund mobilizer pioneered privatization in the country and enjoys over two decades of trusted brand name in raising funds and in assisting renowned Corporates, Banks, Financial Institutions, PSUs, State Government undertakings and other corporate houses in the country.

As a full-service Merchant Banker, SBICAP has carved a niche for itself in Project Finance & Syndication. It offers a wide array of advisory services catering to the diverse requirements of clients and is perfectly attuned to the futuristic needs of an expanding economy. Committed to professionalism and quality service, SBICAP is looked upon as the “One Stop Shop” for Investment, Advisory and Financial Services.

Headquartered in Mumbai with eight offices across the country and an international subsidiary, SBICAP has entered into tie-ups with Investment Banks / Banks in Sri Lanka, Bangladesh, Oman & Qatar. SBICAP is also an alliance member of M & A International Inc., the world's leading alliance of independent advisors specializing in mergers and acquisitions in the middle markets.

SBICAP commenced operations in August 1986 and has four subsidiaries viz., SBICAP Securities Ltd., SBICAPS Ventures Limited, SBICAP Trustee Company Ltd. and SBICAP (UK) Ltd. In January 1997, fresh equity shares were issued to Asian Development Bank (ADB) and ADB now holds 13.84% stake in the equity of SBICAP. An illustrious parentage coupled with international associations have further established SBICAP as a truly “World Class Investment Bank”.

4 Financial Highlights

0 25 50 75 100 125 150 175 200 225 250

FY04 142.75

FY05 175.06 GROSS INCOME FY06 179.05 (Rs.in crores ) FY07 148.84

FY08 230.08

0 15 30 45 60 75 90 105 120 135 150

FY04 63.23

FY05 88.12 PROFIT AFTER TAX FY06 90.62 (Rs.in crores ) FY07 64.36

FY08 130.33

0 5 10 15 20 25 30

FY04 10.90

FY05 15.18 EARNINGS PER SHARE FY06 15.62 (Rs.in crores ) FY07 11.09

FY08 22.46

0 75 150 225 300 375 425 500 525

FY04 303.96

FY05 342.45 NET WORTH FY06 366.91 (Rs.in crores ) FY07 378.15 D E T FY08 435.54 I M I L

S T E K R A M

L A T I P A C

I B S

5 About SBICAP GROUP Powering India’s dynamic investment plans

SBI CAPITAL MARKETS LIMITED GROUP

Dominating its presence in the Indian investment banking space for over 20 years now, SBI Capital Markets Ltd. has carved a niche for itself as “India's Premier Financial Institution”. A subsidiary of State Bank of India, SBI Capital Markets Ltd. (SBICAP) was founded in 1986 to support India's ambitious business and investment dreams. Armed with experience and financial expertise in the dynamics of investments, SBICAP is as of now India's most active investment bank and project advisor.

SBICAP offers an extensive bouquet of investment banking services and products to all business streams; their clientele includes reputed corporate houses and government. Not confining its reach within India, SBICAP has strategically partnered with overseas investment banks / banks based in Sri Lanka, Bangladesh, Oman and Qatar. Its alliance membership with M&A International Inc. (World's leading Alliance of Independent Advisors, Specializing in Mergers and Acquisitions in the middle markets) enables SBICAP offer investment portfolios and opportunities that are truly global!

To keep pace with current trends, SBICAP has strategically positioned itself to cater to the investment needs of the surging mid- corporate segment. Identified as the most prominent player in Indian business arena, SBICAP aims to provide an array of Investment, Advisory and Financial services to the booming mid-level business segment.

SBICAP SECURITIES LIMITED (SSL)

The stock market has revolutionized the dynamics of investments today and SBICAP has been on its toes to make the most of this opportunity, which in turn has laid the foundation of SBICAP SECURITIES LIMITED (SSL).

Retail investors can avail the convenience of equity trading and retail broking services via SBICAP Securities Ltd. Being a wholly owned subsidiary of SBI Capital Markets Limited and a part of State Bank Group, SSL showcases a concentrated approach towards equity broking and distribution of third party financial products reaching out to Institutional Investors, Private Clients, Corporates and Financial Intermediaries.

SSL's primary market business of selling and distribution is designed to bring various businesses together by sourcing primary flows for institutional investor clients as well as for corporate IPOs mandated / non-mandated to the parent SBICAP. SSL has further optimized its services by subdividing secondary market operations into institutional equity and retail equity businesses, coupled with in-depth research and resource assistance, thus empowering clients to chalk out integrated and market proven investment strategies.

6 ANNUAL REPORT 07-08

SBICAPS VENTURES LIMITED

The temperament of Indian Investors and entrepreneurs has led to an ambitious growth of young enterprises that nurture the booming economic environment, as well as present opportunities for Private Equity and Venture Capitalists.

In order to bridge this gap of alternative investments, SBICAP launched SBICAPS Ventures Limited; a dedicated financial entity to provide much needed capital to foster dynamic entrepreneurial plans and solidified its reputation as a 360-degree financial services provider.

SBICAPS Ventures Limited launched its first fund in alliance with Japan's SOFTBANK INVESTMENT for USD 100 million. The fund targets India's rapidly growing knowledge industry base with typical investments in the USD 2 to USD 10 million range over a holding period of 3 to 5 years. The knowledge sectors targeted include BPO, KPO, life sciences, online businesses, technology- enabled design and manufacturing, as well as, emerging areas of nanotechnology and environmental technology.

SBICAP (UK) LIMITED

SBICAP (UK) Ltd incorporated on 1 September 2005 is a wholly owned subsidiary of SBICAP and part of State Bank group formed to provide the following services:

4Cross Border Mergers & Acquisitions 4Arrangement of Foreign Currency Debt / Equities viz. FCCBs / GDRs for Indian Issuers 4Arrangement of Investments for Private Equity Deals 4Marketing of Public Offerings 4Liaison with investors for broking services of SBICAP Securities Ltd. D E T I M I L

S T E K R A M

L A T I P A C

I B S

7 Our Project Portfolio

4 Project Structuring & Due Deligence 4 Structured Finance and Syndication 4 Infrastructure Project Advisory 4 Securitisation 4 Debt & Equity Syndication

8 ANNUAL REPORT 07-08

Project Advisory and Structured Finance Powering India's growth-engines beyond limits.

Ambition and achievement have been aligned with India's goal to becoming a powerful economy. This has led to the development of public utilities and infrastructure projects that reflects her voluminous growth. With our futuristic insight and proficiency, we master the areas of Project Advisory and Funds Syndication that empower our clients to look beyond and achieve as desired.

Business dynamics are ever changing. Today global domains demand an action packed and robust approach to accomplish the extensive goals that are driven by a coherent synthesis of innovation and action. This ambitious pathway needs to be coupled with undaunted professionalism and a progressive approach to combat the upcoming challenges, opportunities and threats that may circumstantially arise.

Adopting a steady amalgam of analytical skills, consulting capabilities and deft transactional expertise, SBICAP has created an ace position for itself in the area of Project Advisory and Funds Syndication. PA&SF is the largest Group in SBICAP; playing a fundamental role in offering customized solutions to an extensive and diversified client base that includes corporates, financial D

institutions, governments and high net worth individuals. Drawing upon years of in-depth experience, our professionals display E T I M their skills in originating, executing and structuring the most favorable deals for our customers. I L

S T E K

Optimizing our customer's financial interests to the utmost, the PA&SF Group provides advisory and fund arranging services R A M

across various sectors, such as energy, telecom, transportation, urban infrastructure, agro industries, pharma and healthcare, L A T

textiles, cements and steel. I P A C

I B S

9 The existing bouquet of our services

4 Pre IPO Placement 4 Issue Management ( Public / Follow on Offering ) 4 Qualified Institutional Placement

10 ANNUAL REPORT 07-08

Capital Markets Powering investors to explore and exploit opportunities; Globally.

As the Indian financial markets become ever more closely aligned with global markets, foreign phenomenon is increasingly causing domestic volatility. The present liquidity crunch has made even seasoned investors going easy with their ambitious plans. In these turbulent times, our vigilant and veteran team aids our clients to explore potent possibilities through their experience and in-depth perception. We synthesize complex and often forbidding opportunities in the external business environment into growth engines for stakeholders through our objective financial and transaction advisory services.

R ecent tales of Indian capital markets have been strewn with highs and lows. Such an environment presents myriad opportunities in capital raising and balance sheet realignment in a rising interest-rate regime; which require a certain degree of astute competence. Developing countries have benchmarked their financial reforms to the Indian capital markets that have only grown in depth and complexity. However, despite high economic growth, these markets entangled themselves in a web of regulations, thus reducing the scope of maneuverability.

Capitalizing on these possibilities, SBICAP has effectively within the last decade, maintained a leading position in the Indian Capital Market Advisory space through significant book building and fixed price offerings. SBICAP has constantly acted as a D

fulcrum for clients in their growth efforts and stakeholder value creation through foreseeing, interpreting, and arbitrating various E T I M issues. I L

S T E

SBICAP has handled fund raising for corporates in the private and public sector domains, Banks, Financial Institutions, State K R

Government undertakings, etc., both in Domestic as well as the International Capital Markets. Our experience in managing an A M

L

assortment of Capital Market products has aided us to develop accumulated expertise in this field to ensure customized A T I P

solutions suiting the needs of our diverse clientele. A C

I B S

11 Our Product Portfolio

4 Mergers & Acquisitions 4 Joint Venture Advisory 4 Private Placement of Equity 4 Open offer / De-Listing / Buy Backs / Rights Issue 4 Business / Financial Restructuring 4 Economic Feasibility / Viability

4 Business Valuations 4 Due Diligence 4 Foreign Currency Convertible Bonds

12 ANNUAL REPORT 07-08

Mergers & Acquisitions and Advisory Powering ambitious dreams into lucrative realities

Dynamic business environments usually determine the fluctuating movements in global financial markets and economies. However, there is a mainstream financial activity that is oblivious to such fluctuations and is known to restructure and reorganize competent commercial entities. Needless to mention, these procedures are accompanied by logistic and regulatory complexities. As companies undertake a series of measures to underscore growth organically as well as to stay buoyant during economic uncertainties, our expertise and experience allow us to help our customers identify M&A transactions which cement their market positions, enhance brand recognition as well as leave a global footprint. We offer clients tailor made solutions to suit their distinctive needs thereby adhering to their corporate strategy.

T he preceding year brought in its wake the subprime crisis, exponentially high oil prices and US induced inflation around the world. M&A amid such events took a backseat for over-ambitious firms but made valuations for certain companies lucrative. This led to several inefficient companies being taken over by those who weathered the volatile stock markets and sky high interest rates. This trend of M&A is only set to increase as efficient companies in India are favorably leveraged and are thus poised to go bargain shopping for attractive deals.

FOR OUR CUSTOMERS We offer our clients hailing from the public and private sectors, a host of service offerings in the M&A advisory arena ranging from D

target recognition to final deal closure, advising and assisting them at every step of the transaction. E T I M I L

Our services include management of the merger / acquisition process, structuring the transaction, due diligence, valuations, S T E

assisting the client in negotiations and ensuring compliance with the regulatory formalities with the ultimate aim of successfully K R

closing the transaction. A M

L A T We are also engaged in syndication of Private Equity and Venture Capital Financing, arranging equity financing for companies I P A C

and entrepreneurs, covering mid stage to late stage financing. I B S

13 ANNUAL REPORT 07-08

People Powering India Inducing nurturance and recognition in a thriving habitat.

About People

Right talents provide great value to any organisation and are responsible for spearheading its expected growth and anticipated graph of success. While understanding the competitiveness prevailing in these speculating times, it becomes imperative for the HR to consume the right talent who comprehend the pressures of a knowledge-based industry and react skillfully. Our team of experts exude knowledge and proficiency to the organisation by aligning their well-determined ambitions with those of the organisations'.

SBICAP fosters an environment that keeps them connected with its employees at all levels. While inducing nurturance and recognition in a thriving habitat, the talents also get rewarded for their contribution to the organisation. Amidst an arena of booming ambition and equal opportunities, SBICAP takes pride in flaunting a financial brigade of over 300 experts.

Nurturing Talent

Empowering our people with knowledge that is result driven is mandatory.The focus is on developing young managers of today into aggressive decision makers of tomorrow in order to stay top notch in the industry. The idea is to create 'solution providers' rather than 'just thinkers' and foster their growth and character by providing valuable training and tutorials that matures them in to serious professionals with finesse and versatility of thought.

Attractive packages coupled with a stimulating environment and excellent peer influences inspire leading professionals to perform result-driven tasks with dexterity. At SBICAP, we maintain a concentrated approach on offering content and fulfilling working environment to our employees that stimulates them to contribute more towards the betterment of the organisation.

Focused Dedication

Backed by SBI Group resources, our team remains equipped with performance driven skills that drives them to deliver solutions that are futuristic and offer a worthy return on investment. These solutions aid our customers in realising their financial ambitions and accomplishing their enduring goals on a dynamic and larger canvas.

14 SBI CAPITAL MARKETS LIMITED

Directors Report 17

Annexure A: Management Discussusion & Analysis 21

Annexure B Corporate Governance 26

Annexure C 30

Auditor’s Report 32

Balance Sheet 36

Profit and Loss Account 37

Cash Flow Statement 38

Schedules 40

Balance Sheet Abstract 66

Section 212 67

SBICAP SECURITIES LIMITED 69

SBICAPS VENTURES LIMITED 97

SBICAP TRUSTEE COMPANY LIMITED 110

SBICAP (UK) LTD 122

D E T I M I L

S T E K R A M

L A T I P A C

I B S

15 POWERING RESULTS : SBICAPS

16 DIRECTORS’ REPORT FOR THE YEAR 2007 -2008

T o the Members, Your Directors take pleasure in presenting the Twenty Second Annual Report of the Company together with the Profit and Loss Account for the year ended 31st March 2008 and the Balance Sheet as on that date.

PERFORMANCE HIGHLIGHTS (Rs. in crores) YEAR ENDED MARCH 31 2008 2007 Operating Results Gross Income 230.08 148.84 Profit before Provisions, Depreciation, Interest & Tax 181.78 106.61 Provisions 5.70 1.57 Depreciation 6.07 13.39 Interest 0.03 7.73 Profit before tax 169.98 83.92 Profit after tax 130.33 64.36 Financial Position Equity Share Capital 58.03 58.03 Reserves and Surplus 381.57 320.12 Debt Funds 2.48 27.19 Other Selected Data Earnings per share (Rs.) 22.46 11.09 Return on Equity 30% 17% Dividend per share (Rs.) 10.00 8.00* Book Value per share (Rs.) 75.05 65.16 *Including Interim Dividend of Rs. 7/-

Dividend and Transfer to General Reserves

Out of the current year's profits, the Directors recommend a Dividend of Rs.10/- per Equity Share absorbing a sum of Rs. 58.03 crores and propose that a sum of Rs.13.03 crores be transferred to the General Reserve.

Management Discussion and Analysis

Management Discussion and Analysis is annexed to and forms part of this report (Annexure 'A').

Corporate Governance

The Directors' Report on Corporate Governance for the year 2007-08 is attached (Annexure 'B').

Subsidaries

The performance of the four subsidiaries during the year 2007-08 is as follows :- D

SBICAP Securities Limited E T I M I L

The business of erstwhile Securities SBU comprising equity broking, research and distribution of third party products was S T

th E taken over by SBICAP Securities Ltd. (SSL). SSL commenced broking operations under its own name from 28 June 2006. K R A M

During the year, SSL was empanelled by 22 new institutional clients. Currently, SSL has 98 institutional clients including 13 L A T

FIIs. These clients have together generated total revenue of Rs 13.05 crores during the year. The broking income from I P A

institutional clients increased by 19.78% during the year over the corresponding period last year. C

I B S

17 DIRECTORS’ REPORT (contd.)

SSL's Research Group provides comprehensive analysis for its stock broking clients who include major institutional investors participating in the Indian capital markets. In 2007-08, SSL continued to be one of the leading research backed Institutional Broking houses catering to a wide range of clients across Mutual Funds, Banks, FIIs and other Institutional entities. Backed by a wide repertoire of globally reputed databases, SSL's Research Group consisting of eleven analysts and one economist has been providing insightful knowledge and comprehensive analysis across major sectors of the economy. Apart from covering major corporates and sectors, SSL's Research Group has been focusing on providing analytical information and investment leads through its various daily and weekly products. The Investment Banking mandates of SBI Capital Markets Ltd. continued to be another key area where SSL's Research Group continued to provide key inputs in various issues handled.

The retail broking foray which started in 2006 has been further strengthened with the total number of Branches going up from 34 to 40 as at the end of March 2008. SSL also offers Depository Participant (DP) services at all its branches. The number of retail broking clients has gone up by over 128% during the period under review. SSL started DP operations in January 2007 and the number of DP clients has increased by over 600%.

The Sales and Distribution (S&D) group handles primary market sales of issuances of debt and equity instruments along with distribution of primary and secondary market investments in Mutual Funds Schemes. During the year under review, SSL mobilised approximately Rs 19457.25 crores as against Rs.16863.58 crores mobilised last year. Next year, SSL proposes to strengthen marketing infrastructure across all locations and boost income from this activity. SSL has also started distributing IPOs where SBICAP is not a Book Running Lead Manager (BRLM). This new activity will increase utilization of the branch network and improve the ratings in the league tables. As per the prime database league tables, SSL has been ranked 7th largest broker in terms of the amounts mobilised in various IPOs/FPOs during 2007-08. Apart from this, the group has also mobilised significant amounts for mutual funds and has earned substantial revenue from this activity.

As planned last year, in an effort to reach out to a wide range of investors and offer them broking at their convenience, SSL has launched E-broking during the year under review. SSL is offering these services to the customers of State Bank of India, State Bank of Indore, State Bank of Hyderabad, State Bank of Patiala, State Bank of Mysore and State Bank of Saurashtra. SSL has already crossed 2000 E - broking Accounts. SSL is also in discussion with State Bank of Travancore and State Bank of Bikaner and Jaipur for offering this product to their customers. SSL has also started offering E - IPO to all their E - broking clients. SSL is in the process of testing the E - MF module to enable E-broking clients to invest in mutual funds with ease. With the completion of E - MF initiative, SSL would be offering full bouquet of financial services to its clientele on the E - broking platform.

During the year, SSL earned a total income of Rs. 44.84 crores and Profit before Tax (PBT) of Rs. 18.77 crores and Profit after Tax (PAT) of Rs. 12.21 crores.

SBICAPS Ventures Limited

A Knowledge Sector Fund of US$ 100 million has been jointly set up by SBICAPS Ventures Ltd. (SVL) and SBI Holdings Inc., (Softbank), Japan. In terms of the Agreement, SVL is participating in the said Fund up to a maximum of US$ 5 million and the balance US$ 95 million is being funded by Softbank. Further, in terms of the said Agreement, a separate Asset Management Company (AMC) to act as Investment Manager to the fund, has been formed with a shareholding of 50% each by SVL and Softbank.

During the year under review, SVL has invested an amount of Rs. 60 lacs (Equivalent of US$ 1,50,000) as its 5% share in the total investment of USD 3 million in Aptivaa Consulting Solutions Pvt. Ltd. (Aptivaa). Aptivaa is a risk and compliance consulting company with global footprints having offices in Mumbai and London. The company provides consulting, implementation support and analytics outsourcing services in the field of Risk Management and Compliance. It has clients in UK, Middle East, SE Asia and India. The team has also developed proprietary frameworks that radically enhance productivity on Basel II consulting and implementation.

During the year, SVL earned a miscellaneous income of Rs. 5,000/-. SVL incurred an expenditure of Rs.1,34,234/- towards administrative expenses and Rs. 2,85,187/- towards employee cost and depreciation of Rs. 911/-. This has resulted in a loss of Rs. 4,15,332/-.

18 DIRECTORS’ REPORT (contd.)

SBICAP Trustee Company Limited

SBICAP Trustee Company Limited (STCL), the wholly owned subsidiary, was formed to act as Trustee for the Venture Capital Fund. STCL has not commenced business activities, during the year. STCL earned bank interest of Rs. 15,400/- and incurred an expenditure of Rs. 29,312/-, which has resulted into a loss of Rs. 13,912/- before tax.

SBICAP (UK) Limited (SUL)

During the year, the principal activity of SUL was the provision of corporate finance advice and arrangement.

SUL achieved an income of GBP 1,55,799 during the year. However, SUL incurred a pre-tax loss of GBP 58,504. The shortfall in performance of SUL is attributed to a lower income booking on account of non-closure of 2 FCCB mandates due to change in RBI policies coupled with an increase in expenditure owing to shifting of office to new premises and increase in staff component.

Directors

During the year under review, the following changes took place among the Directors of the Company :-

Shri Y. Vijayanand, resigned as Director w.e.f. 31st August, 2007, consequent to his retirement from State Bank of India with effect from that date.

Smt. Bharati Rao, Dy. Managing Director & CDO, State Bank of India, was appointed as Director w.e.f. 17th November, 2007.

Shri T. S. Bhattacharya, resigned as Director w.e.f. 1st February, 2008, consequent to his retirement from State Bank of India w.e.f. 31st January, 2008.

Shri R. Sridharan resigned as Managing Director & CEO and as Director w.e.f. 25th February, 2008, consequent to his posting as Dy. Managing Director (On Special Duty) at State Bank of India, Corporate Centre.

Shri A. P. Verma was appointed as Managing Director & CEO of the Company w.e.f. 26th February, 2008.

Shri R. Sridharan, Dy. Managing Director & GE (Subsidiaries), State Bank of India was appointed as Director w.e.f. 25th March, 2008.

Shri Bansi S. Mehta, Director and Dr. Swati A. Piramal, Director, retire by rotation at the 22nd Annual General Meeting of the Company and being eligible, offer themselves for re-appointment.

The Board places on record its deep appreciation of the valuable contributions made by Shri T. S. Bhattacharya, Shri Y. Vijayanand and Shri R. Sridharan during their tenure as Directors/Managing Director & CEO and extends a hearty welcome to Smt. Bharati Rao, Shri R. Sridharan and Shri A. P. Verma to the Board.

Directors' Responsibility Statement

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

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

(ii) Appropriate accounting policies have been selected and applied consistently, and the judgements and estimates that have been made are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as on 31st March 2008 and of the profit or loss of the company for the year ended 31st March, 2008;

(iii) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the D E T I

provisions of the Companies Act for safeguarding the assets of the company and for preventing and detecting frauds and M I L

other irregularities; S T E K R

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

L A T I P A C

I B S

19 DIRECTORS’ REPORT (contd.)

The Directors also wish to draw the attention of the Shareholders to the report of the Auditors to the Shareholders issued by M/s. S. R. Batliboi & Co., the Statutory Auditors, on the financial accounts for the year ended March 31, 2008.

Companies (Disclosures of particulars in the report of the Board of Directors) Rules, 1988

In terms of the above Rules issued by the Central Government, the following information is furnished :-

Conservation of Energy and Technology Absorption Since the Company is engaged in Merchant Banking and Advisory Services, there is no information to report under this head.

Foreign Exchange Earnings and Outgo During the year under review, SBICAP earned foreign exchange equivalent to Rs.54.36 crores towards consideration received on sale of shares and Advisory fees and reimbursement of expenses from overseas clients. The total foreign exchange expended amounted to Rs. 47.50 Lacs on account of foreign travel and other expenses.

Auditors

M/s. S.R. Batliboi & Co., Chartered Accountants, the Company's Statutory Auditors, retire at the conclusion of the 22nd Annual General Meeting of the Company. The Audit Committee of the Board at their 55th Meeting held on the 15th April, 2008 has recommended the re-appointment of M/s. S. R. Batliboi & Co. as the Statutory Auditors to hold office from the conclusion of the 22nd Annual General Meeting up to the conclusion of the 23rd Annual General Meeting. The said recommendation of the Audit Committee has been upheld by the Board of Directors at their 128th meeting held on the 22nd April, 2008. M/s. S. R. Batliboi & Co. are duly qualified for re-appointment and have also confirmed that their appointment if made, would be within the limits prescribed by Section 224(1B) of the Companies Act 1956.

Particulars of Employees

The information as required under Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, is given in Annexure 'C'.

Acknowledgment

The Board of Directors would like to express its thanks to SEBI - the Company's Regulator, for the advice and guidance received. The Board is also grateful to the State Bank family for providing significant business support, which has been mutually rewarding.

The Board of Directors places on record its appreciation for the valued support from our clients, which has been very crucial for its standing in the industry. The Board would also like to thank the investing community, intermediaries in the investment- banking field and the governmental authorities for the co-operation extended from time to time. The Board also places on record its deep appreciation for the dedication and commitment of its staff and looks forward to their increased involvement and contribution in the journey ahead.

For and on behalf of the Board of Directors

O. P. Bhatt Chairman

Place : Mumbai Date : 22nd April, 2008

20 ANNEXURE A

Management Discussion and Analysis

1. Macroeconomic Review

Global Economy The global economy continued to expand vigorously in the first half of 2007, with growth running around 5 per cent. China's economy gained further momentum, growing by 11.5 percent, while India and Russia also continued to grow strongly. These three countries alone have accounted for one-half of global growth over the past year. Among the advanced economies, growth in the Euro area and Japan slowed in the second quarter of 2007 after two quarters of strong gains. In the U.S., growth averaged 2.25 percent in the first half of 2007 as the housing downturn continued to apply considerable drag.

Inflation has become a major concern especially for emerging and developing countries, reflecting higher energy and food prices. In the U.S. and EU core inflation has gradually eased to below 2 percent, while in Japan, prices have essentially been flat. Some emerging market and developing countries have seen more inflationary pressures, reflecting strong growth and the greater weight of rising food prices in their consumer price indices.

Central banks globally were generally tightening monetary policy to head off nascent inflationary pressures and mounting market disruptions. Expectations of policy tightening have however been rolled back since the onset of the financial market turmoil. Among emerging markets, the central banks continue to struggle with difficult policy options to sustain rapid economic growth in the face of turmoil in the interbank markets and challenges caused by inflationary conditions.

With the conditions in financial markets expected to stabilize only gradually during the course of 2008 and 2009, the global economic outlook remains muted. The risk spreads will remain substantially wider than the exceptionally low levels that prevailed prior to August 2007, bank lending standards will continue to tighten, and the commodity prices will remain roughly at the high levels of end-2007, if not moving higher. Under the baseline, global growth is estimated to slow down from 4.9 percent in 2007 to 3.7 percent in 2008 and broadly remain unchanged in 2009 with 25% chances of growth dipping to 3% or less.

The U.S. is projected to tip into a mild recession in 2008, despite aggressive rate cuts by the Federal Reserve and timely implementation of a fiscal stimulus package. As macroeconomic and financial weakness feed off each other, housing sector will continue to fall; consumption will decline as households retrench in the face of falling home prices, reduced employment, and tighter credit; and business investment will also take a hit. The incipient recovery in 2009 is likely to be slow, held back by continued household and financial balance sheet strains.

Other advanced economies, particularly in Western Europe, will slow to well below potential; dampened by both trade and financial channels. Growth in emerging and developing economies, like India, will also ease but will remain robust during both 2008 and 2009, primarily driven by increasing investment demand and local consumption. Headline inflation will remain elevated in the first half of 2008, but will moderate gradually thereafter, reflecting the receding impact of recent increases in commodity prices.

Domestic Economy In this global backdrop, the year CY07 proved to be a great year for the Indian economy, with a real GDP growth of 9.2%. However moderation is expected in this momentum with estimated GDP growth slowing to 7.9 percent and 8.0 percent over CY08 and CY09 respectively. This slow down could be averted if agricultural growth picks up to 4% per annum.

The fiscal deficit to GDP ratio was 3.1 percent in FY08 vs. 3.5 percent in FY07 and the revenue deficit was at 1.4 percent in D

FY08 vs. 1.9 percent in FY07. The budget estimates for 2008-09, fiscal deficit is estimated at Rs.1.333 bn (2.5 percent of E T I M

GDP) and revenue deficit is estimated at Rs. 552 bn (1.0 percent of GDP). It is a matter of satisfaction that many states have I L

S

more or less eliminated revenue deficits and maintained their fiscal deficits. T E K R

Balance of payments data for the Indian economy indicate that merchandise exports registered a growth of 24.6 percent in A M

L

US dollar terms during the first nine months of 2007-08 as compared with 22.0 percent a year ago. Real GDP originating A T I P

from agriculture and allied activities is estimated to have registered a growth of 2.6 percent and the growth of real GDP A C

I B S

21 ANNEXURE A (contd.)

originating in industry is estimated at 8.9 percent. The sustained momentum for exports will depend on the U.S. recovery and the extent of diversification we are able to achieve in export products and in markets.

Sustained expansion in domestic as well as export demand, increased capacity utilization, augmentation of capacities and positive business and consumer confidence underpinned the strength of the manufacturing sector.

2. Investenmt Banking Strategies

The Company continued to synergise its efforts with State Bank of India and its Associate Banks. As a part of these efforts, joint presentations are being made to the clients on behalf of SBICAP and State Bank of India and joint training sessions are being arranged for employees of both the Groups.

During the year, SBICAP Securities Limited, the subsidiary of the Company incorporated in the previous year for Stock Broking activities, has opened additional branches and is now offering its services from a total of 40 branches located across the country. SBICAP Securities is offering Cash, F&O and IPO services to the clients. It has also launched Internet based e-broking services for the clients of SBI, State Bank of Indore, State Bank of Hyderabad, State Bank of Patiala, State Bank of Mysore and State Bank of Saurashtra.

The venture capital subsidiary viz. SBICAPS Ventures Limited, established by the Company, is completing the legal formalities for making operational a US$ 100 Million Knowledge Sector Fund jointly with SBI Holdings Inc. (Softbank), Japan. SBICAPS Ventures and Softbank have already jointly made one investment of USD 3 million and are actively looking at other deals for investment.

During the year, the operations of SBICAP (UK) Limited have stabilized and we have strengthened this office to expand the reach of our relationship and also our placement capabilities.

In its Project Advisory & Structured Finance activities, the Company has been able to strengthen its position globally. The Company has retained for the third consecutive year the 1st rank in Asia Pacific (including Japan) for its role as Mandated Lead Arranger for Project Finance Debt during the calendar year 2007. In the global rankings, the Company retained 9th position in the year 2007. We have strengthened our teams in this area to capitalize on opportunities available in these markets.

3. SBICAP'S Performance

The performance of your Company during the year 2007-2008 has been discussed below:

3.1 Quantitative Performance

Your Company has recorded a Profit after Tax (PAT) of Rs. 130.33 crores, compared to Rs. 64.36 crores in the previous year. The Company registered a gross income of Rs. 230.08 crores during the year, as compared to Rs. 148.84 crores in the previous year. There has been a robust growth in fee-based income of SBICAP during the year, in consonance with the policy decision of the Company to move towards Knowledge based activity.

The performance in respect of various activities is as under:

3.1.1 Merchant Banking & Advisory Fees

3.1.1(a) Capital Markets

The Group's activities covered Initial Public Offers for equity, private placement of equity and private placement of debt, Rights Issue, Qualified Institutional Placement during the year 2007-08. The company handled 6 public issue assignments in FY 2008 as Book Runners vis-à-vis 8 in FY 2007 and the total amount mobilized was Rs. 23,227.39 crores. Our market share in terms of amount mobilized increased from 17% in FY 2007 to about 43% in equity public issues during the current year.

During FY 2008, the Company has handled 1 Rights Issue of ITD Cementation amounting to Rs. 244.72 crores and the first Qualified Institutional Placement issue of Bank of India wherein the issue size was Rs.1359.82 crores.

22 ANNEXURE A (contd.)

The financial year 2007- 08 witnessed an increase in number of issues in the Debt Private Placement segment primarily in the financial sector. The number of issues increased to 580 in FY 2007- 08 compared to 337 in FY 2006 - 07. It also witnessed an increase in the amount mobilized by way of private placement of debt. The total funds raised during FY 2007 - 08 were Rs. 98817 crores compared to Rs. 71261 crores in FY 2006 - 07.

During the year, the Company has handled 12 private placement issues and was associated with funds raised to the tune of Rs. 9180 crores.

3.1.1(b) Project Advisory & Structured Finance

For, the Project (including Infrastructure) Advisory & Structured Finance business, the year saw SBICAP further consolidating its leadership position in the country as also at the Asia Pacific Level in project finance syndications while achieving impressive top-line growth.

The Group's revenues catapulted by more than 70% to over Rs. 140.63 crores (up from around Rs. 82 crores earlier). In terms of syndication volumes, the syndication kitty topped Rs. 70,000 crores for the year posting a growth of around 75% over the previous year.

Some of the pioneering transactions handled by the group during the year included:

- Advisors to CSEB (the procurer) for a long term power procurement programme involving tariff based bidding, resulting in lowest power tariff, ever bid in the country.

- Bid Advisory to TATA Power (the successful bidder) for the first Ultra Mega Power Project awarded in the country.

- Debt syndication for a 9 mmtpa refinery being set up by Guru Gobind Singh Refineries Limited (GGSRL), one of the largest project finance transaction in the country.

- Revival of sick sugar units in Bihar.

Internationally, SBICAP retained or improved its position in the league tables, emerging as number one (rankings by Thomson's Project International) Mandated Lead Arranger for Project Finance in Asia-Pacific for the third consecutive year. We also maintained our position at number 9 in the global list. In addition, SBICAP was also ranked as 1st in India for debt syndication mandates (both project finance and corporate finance) by Bloomberg. On advisory side, we were ranked as 1st for project advisory mandates closed in the Asia Pacific region (4th in 2006) and 5th globally for project advisory mandates won during 2007 (by Thomson PFI).

A few more accolades came our way in the form of several awards won by the transaction involving the 9 mmtpa refinery being developed by Guru Gobind Singh Refineries Limited (GGSRL) where we acted as the Financial Advisor and Lead arrangers. These include:

- Best Petrochemical deal of Year (Asia Pacific) from PFI

- Best Oil & Gas Deal of year (Asia) from Euromoney in 2007

- Banker's Deal of the Year - India by Financial Times, London and The Banker magazine

The quality and volume of work at PA&SF has also helped us in attracting talented and experienced people resulting in the group's strength going up to 113 (up from 74 executives in the previous year).

3.1.1(c) Mergers & Acquisitions & Advisory D E T I M I L The group during the year positioned itself as a full service investment banking outfit offering a complete bouquet of S T

advisory services including Cross Border M&A transactions, Private Equity, Open Offers, Delisting as well as Rights Issues. E K R A M The group successfully leveraged the recently acquired status as the only Indian member of M&A International and L A T cross border M&A deals closed during the year included a buy side mandate from an Italian Company for the f India's I P A C

largest private factoring company by the parent bank. I B S

23 ANNEXURE A (contd.)

acquisition of an Indian Company in Industrial Heating space and a cross border investment in an Indian financial services company. The group also handled two open offers consequent upon two other cross border acquisitions. Domestic M&A transactions included the acquisition of India's largest private factoring company by the parent bank.

Advisory assignments handled by the group included a successful divestment by state tourism corporation and valuation for a wind power company.

The group also made a concerted bid to expand its presence in the private equity space and successfully closed two transactions during the year. Private Equity along with cross border M&A has been identified as a key focus area by the group and it is currently mandated to raise equity for 10 companies and is in the process of executing half a dozen cross border M&A deals.

The group is also presently advising three international majors in finalizing partners for their proposed joint ventures in India.

3.1.1(d) Institutional Relationships Group

Institutional Relationships Group (IRG) has been put in place to enable focused attention to institutional investors. The objectives of formation of IRG is to establish a platform to strengthen existing relationships, create new relationships and facilitate the placement of an increasing array of financial products with the institutional investors as also to focus on augmenting overseas placement capabilities. During the year, the group was successful in creating a number of new relationships which will add to our capabilities.

3.1.2 Income from Securities-Treasury & Investments

The Treasury & Investments Group (T&IG) manages the liquidity and the asset liability profile of the Company. T&IG invests the Company's funds in a judicious mix of debt and equity instruments to maximise the returns on the portfolio.

The equity markets were volatile during the year on concerns about global economy and its impact on India. While the corporate performance during the year remained robust, the markets were negatively impacted by funds outflow and increased volatility in the global markets. There was no clear direction in the debt markets either. Whereas the global reduction in the interest rates, particularly in the second half of the year, favored a reduction of interest rates in India, the domestic conditions including liquidity situation and elevated inflation levels pointed to higher level of interest rates. In the above scenario our funds portfolio was aligned to maximize returns without taking any excessive risks.

The Company does not accept public deposits and there are no unclaimed or unpaid deposits with the company.

3.1.3 Asset Finance

Pursuant to SEBI directives, the Company stopped executing fresh Leasing and Hire purchase contracts w.e.f. 1st July 1998. However, contractual obligations undertaken prior to the said date are being fulfilled.

3.2 Qualitative Performance

3.2.1 Human Resources

Being the pioneer in the Indian Capital Markets, our company is known for its credible, professional and customer focused world class Investment Banking services. To support the mission of the organization, the Human Resources of SBICAP is always in the process of achieving the corporate objective and aligning with the growing business of SBICAP.

We have a right mix of 175 Experienced Professionals, Bankers, Management Graduates, Chartered Accountants, etc. to help the organization accomplish its goals and objectives. We need a diverse pool of talent with specialized skill set to fulfill our requirements, which is achieved with the help of various sources of recruitment.

The organization is growing rapidly and to keep pace with the growth, this year we have taken 35 experienced professional from the industry and 29 Management graduates from premier B- schools. We also inducted few summer

24 ANNEXURE A (contd.)

trainees including a few from Foreign Universities, who worked on several projects as per the organization's requirements.

Being a knowledge driven organization, we provide the right platform to our people for Continuous Learning through Training & Development. We have been updating the skill set of employees continuously by sending them on several training programs in India as well as abroad. In the year 2007-08, 138 officials were deputed to various institutions / conferences / workshops.

Our milestones for the year are :

• Salary restructuring was done for the employees. • Performance Linked Variable Pay has been revamped as per the market conditions. • Online Performance Management System based on the principle of Balanced Score Card. • Reviewing and benchmarking the HR policies. • Employee engagement programmes.

3.2.2 Information Technology

The Information technology group is providing support for IT Infrastructure and Software Applications of the company. • The group has set up a Disaster Recovery and off-site backup facility. • To provide protection from spam mails and to enhance the security for the mailing system a dedicated Anti Spam server has been configured. • All Security policies recommended by M/S Palladion during their Information System Audit have been implemented. • In order to enhance the uptime of IT infrastructure of Regional offices, Facility Management Service has been extended to four Regional Offices. • Group has migrated all systems in Corporate as well as Regional Offices to Windows 2003 from Windows NT platform which is obsolete.

4 Future Outlook

The Indian economy remained buoyant through major part of the year. The growth in the economy has been on account of investment in multiple sectors of the economy coupled with increased consumption expenditure as a consequence of impressive growth in disposable income. However, the increased consumption expenditure has also met with supply side constraints leading to increase in price levels causing concern. The capital markets have recently experienced a downswing from the earlier peaks and the mood is cautious due to the weakness in global markets and rising oil prices. The India growth story, is however expected to continue, albeit at a slightly slower pace.

We have also intensified our efforts towards bidding for more international mandates particularly in Asia, Middle –East and Africa where we have distinct cost advantages. The Company has been co-ordinating very closely with SBI Group for arranging acquisition financing for the Indian corporates with ambitions for overseas expansion. Restrictions in overseas borrowings may however, constrain our efforts towards establishing funding relationships with complementary institutions outside India. While the measures for inflation control may also place some constraints on our syndication activities, we are confident of completing all the existing mandates. We also anticipate growing requirements for private equity funding in Mid-corporate segment and we propose to increase our focus in this activity in the following year. D E T I M I L

S T E K R A M

L A T I P A C

I B S

25 ANNEXURE B

Corporate Governance Report

The principles of Corporate Governance are followed in letter and spirit even though ours is not a listed Company. For your Company, corporate governance is not just an objective in isolation but a means to an end - "To be the Best India based Investment Bank".

i) Composition of the Board

The Board of Directors comprises ten Directors out of whom five are independent, i.e. Directors who are not having any pecuniary relationship or transactions with the Company, its promoters or management, which, in the opinion of the Board, is likely to affect the independence of judgement of a Director. Given hereunder is the composition of the Board of Directors along with their brief profiles :-

1. Shri O. P. Bhatt, Chairman [SBI Nominee] : Shri Bhatt is the Chairman of State Bank of India (SBI) since 1st July 2006 and is also Head of the entire State Bank Group consisting of 8 domestic and 5 international banking subsidiaries, 10 non-banking subsidiaries and 2 joint ventures. His 35 years in SBI covered a variety of assignments both in domestic and international banking. He was closely associated with SBI's ambitious computerization project and spent 6 years co-ordinating the team's efforts from the Bank's Corporate Centre at Mumbai. In September 1997, he was posted as the Bank's Representative at Washington D. C. where his duties included maintaining rapport with FRB, FDIC, US Exim, Indian Embassy, American Banks, World Bank, IMF, etc. He has held a string of critical assignments and was quickly promoted from General Manager to Chief General Manager and then as Deputy Managing Director. He was General Manager in charge of Development and Personal Banking at the Bank's Lucknow Head Office, Chief General Manager of North East Circle and then, the Managing Director of State Bank of Travancore. In view of his successful handling of these critical assignments, he was appointed as Managing Director of SBI and was in charge of the Bank's National Banking Group, which handles the entire retail portfolio of the Bank, prior to taking over as Chairman.

2. Shri R. Sridharan, Dy. Managing Director & GE (Subsidiaries) [ SBI Nominee ] : Shri Sridharan has over 35 years experience in the banking sector. He has held various responsible positions in State Bank of India and SBI Capital Markets Limited such as Executive Vice President - State Bank of India, Tokyo Branch, Regional Head - Corporate Accounts Group, SBI, Ahmedabad, General Manager - Treasury, SBI, Mumbai, Chief General Manager - Bangalore (Karnataka Circle) and Managing Director & CEO, SBI Capital Markets Limited. He has also held assignments in the State Bank of India's International Division as also at its Frankfurt Branch. He was also deputed to the Ministry of Finance, Government of India, New Delhi as Advisor.

3. Smt. Bharati Rao, Dy. Managing Director & CDO [ SBI Nominee ] : Smt. Rao has over 35 years experience in the banking sector. She has held various responsible positions in State Bank of India. Her 35 years in the Bank have seen a range of assignments both in India and abroad in areas like Commercial Banking, Project Finance and International Banking. She has had stints as Manager - Business Development, Singapore, Deputy General Manager - Overseas Branch, Bangalore, General Manager - Project Finance SBU, Mumbai, Chief General Manager - International Banking Group, Foreign Offices, Mumbai, Dy. Managing Director & Group Executive (International Banking), Corporate Centre, Mumbai and Dy. Managing Director & Chief Credit Officer, Corporate Centre, Mumbai with an additional charge as Dy. Managing Director and Group Executive (Associate Banks).

4. Shri M. R. Sivaraman, I.A.S (Retired), Non Executive Independent Director : Shri Sivaraman has over 41 years of experience as a member of the Indian Administrative Service. He retired as Revenue Secretary, Ministry of Finance, Government of India and also held the position of an Executive Director in the International Monetary Fund (IMF) and also Advisor to the U.N. Security Council Committee on Counter Terrorism.

5. Dr. R. H. Patil, Non Executive Independent Director : Dr. Patil has over 39 years of experience in the fields of Finance and Securities Market. He retired as the Managing Director of the National Stock Exchange of India and was also associated with establishment of reputed institutions like Stock Holding Corporation of India Ltd., National Stock Exchange of India Ltd., Credit Analysis and Research Ltd. He was also Chairman of UTI Asset Management Co. Pvt. Ltd. At present, he is Chairman of Clearing Corporation of India Ltd. and National Securities Depository Ltd. (NSDL).

26 ANNEXURE B (contd.)

6. Shri Bansi S. Mehta, Non Executive Independent Director : Shri Mehta is a well-known practising Chartered Accountant and is a Sr. Partner of Bansi S. Mehta & Co., Chartered Accountants. Shri Mehta has rich experience of over 48 years in the fields of financial management, taxation, accounting and auditing.

7. Shri D. Sundaram, Non Executive Independent Director & Chairman of the Audit Committee : Shri Sundaram is Vice Chairman of Hindustan Unilever Ltd. (HUL) and has over 32 years of experience in the areas of Finance and Accounting. He has been with the HUL group since 1975 and was seconded twice to Unilever, London. He has held important positions such as Commercial Manager & Treasurer, Finance Member – TOMCO Integration Team, Finance Director BBLIL and Sr. Vice President– Finance, Central Asia & Middle East Group.

8. Dr. Swati A. Piramal, Non Executive Independent Director : Dr. Swati Piramal, Director (Strategic Alliances & Communications) of Nicholas Piramal India Ltd. is a Medical Doctor (M.B.B.S.) from the University of Bombay and has graduated with Masters Degree from Harvard School of Public Health, Boston USA. Dr. Piramal's special research interests include Herbal, Clinical Discovery and Nutrition Research in Pharmaceuticals. Her specific research interests focus on Malaria, Tuberculosis, AIDS and Diabetes. She holds directorships of well-known institutions/companies like Council of Scientific & Industrial Research (CSIR), Life Insurance Corporation of India, Nicholas Piramal Limited etc.

9. Shri Ajay Sagar, Non Executive Director [ Asian Development Bank Nominee ]: Shri Sagar is Head, Private Sector and Finance Sector, India Resident Mission, Asian Development Bank. Shri Sagar has over 27 years of experience in Banking. Prior to joining ADB, Shri Sagar was Managing Director at Bank of America in Hong Kong and managed its Asian Structured Finance business. He has held various responsible positions at Bank of America in Hong Kong and India, handling Asian Project and Export Finance, Syndications, Investment Banking, Treasury, Trade Finance and Mergers and Acquisition activities. He has also advised on formulation of regulatory and exchange control policies for development of local capital markets and local currency lending. He has been actively engaged in implementation of economic capital framework in financial institutions.

10. Shri A. P. Verma, Managing Director & CEO [ SBI Nominee ]: Shri Verma has over 32 years of Banking experience with State Bank of India. He has held various positions in State Bank of India and SBI Capital Markets Limited such as Head Corporate Accounts Group Branch, Kolkata, General Manager – International Banking Group at the Bank's Corporate Centre in Mumbai, Executive Vice President at SBI Capital Markets Limited looking after Venture Capital business and President & COO, SBI Capital Markets Limited. ii) Tenure

The Chairman has been appointed by State Bank of India (SBI) in terms of Articles 139(ii) & 157 of the Articles of Association of the Company.

The Non-Executive Nominee Directors have been appointed by SBI in terms of Article 139(i) and 140 of the Articles of Association of the Company.

The Non-Executive Independent Directors have been appointed as Directors liable to retire by rotation under Section 255 of the Companies Act 1956.

The Non-Executive Nominee Director appointed by ADB has been nominated under Article 141 of Articles of Association of the Company and is not liable to retire by rotation.

The Managing Director & CEO has been appointed by SBI in terms of Article 168 of the Articles of Association of the Company. D E T I M iii) Responsibilities I L

S T E

The Board of Directors focus on monitoring the business operations and the development of business strategies, while the task K R A

of reviewing matters like status of overdues, status of litigations etc., are delegated to a Committee of Directors (COD) M

L A constituted for the purpose by the Board. T I P A C

I B S

27 ANNEXURE B (contd.)

The Board has evolved a Calendar of Reviews, which has identified the various reports / reviews to be submitted on a periodical basis to the Board / COD / Audit Committee and the said Calendar of Reviews is strictly followed.

iv) Role of the Independent Directors

The Independent Directors play a very crucial role in the deliberations at the Board meetings and their wide experience, expertise and knowledge on matters of economics, finance, capital markets, taxation, accounting, auditing etc., have benefited the Company immensely. v) Board Meetings

During the year under review, 5 Board meetings were held and the attendance record of each Director at the said Board Meetings is given hereunder :- Name of the Director Number of Board Meetings attended

Shri O. P. Bhatt, Chairman 3 Shri T. S. Bhattacharya, Nominee Director, SBI 3 (resigned w.e.f. 1/2/08) Shri Y. Vijayanand, Nominee Director, SBI 3 (resigned w.e.f. 31/8/07) Shri R. Sridharan, Nominee Director, SBI Nil (appointed w.e.f. 25/3/08) Smt. Bharati Rao, Nominee Director, SBI 1 (appointed w.e.f. 17/11/07) Shri M. R. Sivaraman, Non Executive Independent Director 3 Dr. R. H. Patil, Non Executive Independent Director 4 Shri Bansi S. Mehta, Non Executive Independent Director 4 Shri D. Sundaram, Non Executive Independent Director 3 Dr. Swati A. Piramal, Non Executive Independent Director 2 Shri Ajay Sagar, Nominee Director, ADB 5 Shri R. Sridharan, Managing Director & CEO, SBI Nominee 5 (resigned w.e.f. 25/2/08) Shri A.P. Verma, Managing Director & CEO, SBI Nominee Nil (appointed on 26/2/08)

vi) Composition and role of the Audit Committee and the scope of Internal Audit Function

An Audit Committee comprising Shri D. Sundaram, Chairman, Shri M. R. Sivaraman, Director, Dr. R. H . Patil, Director, Shri R. Sridharan, Director and Smt. Bharati Rao, Director, is operational and the composition of the Audit Committee as well as its role and functions are generally in conformity with the stipulations of the Kumar Mangalam Birla Committee Report on Corporate Governance, the combined code of the London Stock Exchange, the code prescribed by the Blue Ribbon committee for the NASDAQ and the New York Stock Exchange, and the Report of the advisory group on corporate governance set up by the RBI's standing committee on international financial standards and Codes. The composition and the role of the Audit Committee are also in compliance with Section 292A of the Companies Act 1956. The scope of internal audit has also been modified to comply with the recommendations of the said authorities. vii) Strengthening of the compliance systems

The Company has set in place an effective system to ensure compliance with all the applicable Laws / Statutes and the same is monitored by the Compliance & Risk Management Dept. viii) Compliance with SEBI 's Prohibition of Insider Trading Regulations

With a view to prevent insider trading, a suitable Code of Ethics has been set in place to regulate the dealings in securities by all the employees of the Company and compliance with the same is monitored by the Manager (Compliance & Risk Management). The Code of Ethics of the Company is in conformity with the SEBI (Prohibition of Insider Trading) Regulations, 1992.

28 ANNEXURE B (contd.)

ix) Directors are duly qualified to act as such

As per the declarations submitted to the Company, all the Directors are duly qualified to act as such and none of them is disqualified under section 274(1)(g) of the Companies Act, 1956. This aspect has also been verified by the Statutory Auditors of the Company. Declaration

I confirm that all Board Members and Senior Management have affirmed compliance with the Company's Code of Conduct for the financial year ended 31st March 2008.

(A. P. Verma) Managing Director & CEO D E T I M I L

S T E K R A M

L A T I P A C

I B S

29 ANNEXURE C

Statement Pursuant to Section 217(2A) of The Companies Act, 1956 and Companies (Particulars of Employees) Rules, 1975

Name Designation / Nature Remuneration Qualification & Date of Age Last of Duties Rs. Experience commencement Employment of employment held, Designation (A) Employed through out the year and are in receipt of remuneration aggregating not less than Rs. 24,00,000/- per annum

Shri Sr. Vice President & 38,37,179 B. E., M. Tech. 7.11.2000 41 Dy. General Supratim Group Head - Project M. B. A. Years Manager, Industrial Sarkar Advisory & Structured - 16 Years Development Bank Finance of India (IDBI) (Group Head- Project Advisory & Structured Finance) Shri Sr. Vice President & 38,19,446 B. E., M.M.S. 2.5.1991 40 First Ashish Group Head - 17 Years Years employment Sable - Institutional after M.M.S. Relationship Group (Maintaining relationships with institutional investors like FlIs, Mutual Funds, Banks to enhance placement capabilities and contribute towards business development of the Company) Shri Vice President - 32,26,640 B. Sc., 2.6.1993 42 Foreman, R. Narayan Corporate Relations B. Tech., Years Hindustan (Relationships and PGDM (IIMA) Motors, Earth Business Development) - 18 Years Moving Equipment Division Shri. Vice President (CRBD) 31,37,274 B.E., M.M.S. 1.6.1995 37 Asst. Engineer, Sanjiv (Business -14 years Years Tata Counsulting Ferreria Development) Engineers Ms. Vice President & 31,37,210 B.Com, A.C.A. 10.1.1994 36 Essar Meenakshi Group Head - Mergers -14 Years Years Services Limited Iyer and Acquisitions & Corporate Advisory (Handling activities relating to mergers-sell -side, buy-side, advisory, private equity placement and take over offers) Shri Vice President & 30,82,372 B.Com., A.C.A. 16.2.1993 40 First Jayesh Group Head (Treasury -14 Years Years employment Bavishi & Investments) after A.C.A. (Treasury & Invest- ment activities) Shri Vice President 25,59,440 B.Tech., 1.6.1999 38 Sr. Engineer, Rajat (PASF) PGDBM Years BHEL, Advance Misra ( PASF activities related ( Finance-XLRI) Research to Power vertical) -15 Years Project Div. Shri Vice President (PASF) 24,77,051 B.Sc 16.3.2006 42 DGM, IDBI Sanjeev (Head PASF New Delhi B.Tech Years Aggarwal office) -19 Years Shri Vice President & Group 24,00,642 B.Com., A.C.A. 1.2.1996 39 First Sudarshan Head (Accounts & Audit) -12 Years Years employment Jha after A.C.A.

30 ANNEXURE C (contd.)

(B) Employed for part of the year and are in receipt of remuneration aggregating not less than Rs. 2,00,000/- per month NIL

NOTES: 1) The above remuneration includes salaries, allowances, arrears of salary, leave encashment, performance linked variable pay, monetary value of perquisites as per Income Tax Rules, reimbursement of Leave Travel Allowance and Medical expenses claimed during the year.

2) Other terms and conditions of service include Company's contribution to Provident Fund, Gratuity fund, Superannuation Fund.

3) The nature of employment – all employments are non contractual.

4) % of equity shares held by the employee in the Company within the meaning of sub-clause (iii) of clause (a) of Section 217(2A) of the Companies Act, 1956 – Nil.

5) The employees are not related to any Directors of the Company.

For and on behalf of the Board of Directors

Place : Mumbai O. P. Bhatt Date : 22nd April, 2008 Chairman D E T I M I L

S T E K R A M

L A T I P A C

I B S

31 AUDITORS’ REPORT

To, The Members of SBI Capital Markets Limited

1. We have audited the attached Balance Sheet of SBI Capital Markets Limited ('the Company') as at March 31, 2008 and also 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.

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 management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 (as amended) ('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.

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

i. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

ii. 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;

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

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

v. On the basis of the written representations received from the directors, as on March 31, 2008, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2008 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

vi. In our opinion and to the best of our information and according to the explanations given to us, the said accounts 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;

a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2008;

b) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and

c) in the case of Cash Flow Statement, of the cash flows for the year ended on that date.

S.R. Batliboi & Co. Chartered Accountants

per Vijay Maniar Partner Membership No.: 36738

Place: Mumbai April 22, 2008

32 AUDITORS’ REPORT (contd.)

Annexure referred to in paragraph 3 of our report of even date

Re: SBI Capital Markets Limited.

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

(b) All fixed assets, except certain leased assets were physically verified by the management in the previous year in, accordance with a planned program of verifying them which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Certain leased fixed assets have not been physically verified as per the terms of the agreement where the Company obtains conformation from the lessee on the regular basis. As informed no material discrepancies were noted on such verification.

(c) There was no substantial disposal of fixed assets during the year.

(ii) (a) The securities held as stock in trade and in custody of the Company have been physically verified by the management at reasonable intervals while securities held by the custodian are verified with the confirmation statement received from them on a regular basis. In our opinion, the frequency of such verification is reasonable.

(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory and no discrepancies were noticed on comparing the physical securities/statement from custodian with book records.

(iii) As informed, the Company has not granted nor taken any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

(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, for the purchase of securities and fixed assets and for the sale of securities and services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas.

(v) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Act that need to be entered into the register maintained under section 301 have been so entered.

(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 provision of clause (viii) of the Order is not applicable to the Company in the year under audit and hence not reported upon.

(ix) (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, income tax, sales tax, service tax and other material statutory dues applicable to it. The provisions of Investor Education and Protection Fund, wealth tax, customs duty, excise duty and cess are not applicable to the Company in the current year.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of D E T provident fund, income tax, service tax, sales tax, cess and other undisputed statutory dues were outstanding, I M I L at the year end, for a period of more than six months from the date they became payable. S T E K

(c) According to the records of the Company, the dues outstanding of income tax , sales tax, wealth tax, service R A M tax, custom duty, excise duty and cess on account of any dispute, are as follows: L A T I P A C

I B S

33 AUDITORS’ REPORT (contd.)

Name of Nature of dues Amount Period Forum where the statute ( Rs. in to which dispute is thousands) the amount pending relates

Income Tax Act Issue relating to 2,035 1996-97 Commissioner 1961 disallowance of 3,237 1997-98 of Income various expenses 29,931 2001-02 Tax ( Appeals) 666 2003-04 and Income 31,438 2004-05 Tax Appellate 27,204 2005-06 Tribunal (ITAT)

Sales Tax Issue relating to 8,489 1989-90 Commissioner of ( Central Lease tax to Sales Tax & State) 2000-01

Bombay Issue relating 858 1998-99 Commissioner of Sales Tax Act, to Sales tax to of Sales tax 1959 2000-01

(x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders.

(xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor’s Report) Order, 2003 (as amended) are not applicable to the Company.

(xiv) In respect of dealing/trading in shares, securities, debentures and other investments, in our opinion and according to the information and explanations given to us, proper records have been maintained of the transactions and contracts and timely entries have been made therein. The shares, securities, debentures and other investments have been held by the Company, in its own name.

(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions.

(xvi) The Company did not have any term loans outstanding during the year. For this purpose loans with repayment periods beyond 36 months are considered as long term loans.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet and cash flow statement of the Company, we report that no funds raised on short-term basis have been used for long-term investment.

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

(xix) The Company did not have any outstanding secured debentures during the year.

(xx) The Company has not raised any money through a public issue.

34 AUDITORS’ REPORT (contd.)

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

S.R. Batliboi & Co. Chartered Accountants per Vijay Maniar Partner Membership No.: 36738

Place: Mumbai April 22, 2008 D E T I M I L

S T E K R A M

L A T I P A C

I B S

35 BALANCE SHEET

(Rupees in thousands unless otherwise stated)

Schedule As at 31st Mar-08 As at 31st Mar-07

SOURCES OF FUNDS Shareholders’ Funds Share capital 1 580,337 580,337 Reserve and surplus 2 3,815,682 3,201,182 4,396,019 3,781,519

Loan Funds Secured loans 3 - 250,000 Unsecured loans 4 24,775 21,862 24,775 271,862

Total 4,420,794 4,053,381

APPLICATION OF FUNDS Fixed Assets 5 Gross block 1,387,096 1,542,284 Less: Accumulated depreciation / amortisation (1,266,189) (1,368,352) Net block 120,907 173,932 Investments 6 1,726,308 1,685,720 Deferred Tax Asset 40,608 15,435 Current Assets, Loans & Advances Interest accrued 7 32,892 9,933 Stock-in-trade 8 1,984,170 1,196,672 Stock-on-hire under hire purchase, net 9 1,446 1,446 Sundry debtors 10 176,465 211,166 Cash and bank balances 11 450,579 128,435 Loans and advances 12 822,451 870,483 3,468,003 2,418,135 Less: Current Liabilities & Provisions Current liabilities 13 (134,018) (122,169) Provisions 14 (801,014) (117,672) (935,032) (239,841) Net Current Assets 2,532,971 2,178,294 Total 4,420,794 4,053,381 Notes to Accounts 23

The schedules referred to above and the notes to accounts form an integral part of the Accounts As per our report of even date

S.R. BATLIBOI & Co. For and on behalf of Board of Directors Chartered Accountants

per Vijay Maniar O.P. Bhatt A. P. Verma Nilesh N. Shah Partner Chairman Managing Director & CEO Company Secretary Membership No.: 36738

Mumbai April 22, 2008

36 PROFIT AND LOSS ACCOUNT

(Rupees in thousands unless otherwise stated)

Schedule For the year ended For the year ended 31st Mar-08 31st Mar-07

Income Merchant banking and advisory fees (net) 15 1,218,531 878,474 Income from securities 16 858,496 278,163 Lease and hire purchase income 17 105,595 189,914 Other income 18 118,146 141,851 2,300,768 1,488,402

Expenditure Employee costs 19 300,000 196,472 Interest expense 20 338 77,343 Depreciation / amortisation 5 60,722 133,940 Provisions 21 57,035 15,737 Other expenses 22 182,872 225,696 600,967 649,188

Profit Before tax 1,699,801 839,214 Provision for current income tax (413,200) (225,000) Provision for current fringe benefit tax (3,342) (5,781) Deferred tax credit 20,086 35,138 Profit After tax 1,303,345 643,571 Balance brought forward from previous year 801,968 753,861 Profit available for appropriation 2,105,313 1,397,432

Appropriations Interim dividend - 406,236 Proposed final dividend 580,337 58,034 Dividend distribution tax 98,628 66,837 Transfer to general reserve 130,335 64,357 809,300 595,464

Surplus carried to Balance Sheet 1,296,013 801,968

Earning per share( Basic and Diluted in Rs.)

( Face value Rs.10/- per share) 22.46 11.09 Notes to Accounts 23

The schedules referred to above and the notes to accounts form an integral part of the Accounts As per our report of even date

S.R. BATLIBOI & Co. For and on behalf of Board of Directors D E T Chartered Accountants I M I L

per Vijay Maniar O.P. Bhatt A. P. Verma Nilesh N. Shah S T E K

Partner Chairman Managing Director & CEO Company Secretary R A M

Membership No.: 36738 L A T I

Mumbai P A C

April 22, 2008 I B S

37 CASH FLOW STATEMENT

(Rupees in thousands unless otherwise stated)

For the year ended For the year ended 31st Mar-08 31st Mar-07

Cash flow from operating activities :- Net profit before taxation 1,699,801 839,214 Adjustment for- Profit on sale of assets (net) (1,106) (2,358) Profit on sale of long term investments (684,688) (111,615) Interest on long term investments (20,935) (21,916) Dividend income (150,451) (158,002) Interest expenses 338 77,343 Depreciation 60,722 133,940 Provision on investments 10,238 5,551 Provision on stock-in-trade (690) 4,398 Provision for doubtful debts (net) 26,860 942 (759,712) (71,717) Operating profit before working capital changes 940,089 767,497 Decrease /(increase) in sundry debtors 7,841 286,012 Decrease /(increase) in other current assets (22,959) 5.087 Decrease /(increase) in loans & advances (1,695) 46,820 Decrease /(increase) in stock-in-trade (786,808) 1,342,516 Decrease /(increase) in current liabilities 11,850 (58,683) Decrease /(increase) in provisions 60,327 (7,050) Decrease /(increase) in provision for gratuity 1,397 - Decrease /(increase) in Provision for leave encashment (4,268) - (734,315) 1,614,702 Cash generated from operations 205,774 2,382,199 Fringe benefit tax paid (3,492) (5,631) Income tax paid (363,473) (218,978) (366,965) (224,609) I. Net cash from operating activities (161,191) 2,157,590 Cash flow from investing activities :- Purchase of fixed assets (8,762) (15,040) Sale of fixed assets 2,171 7,622 Sale consideration received from SBICAP Securities Limited for : Fixed assets - 7,456 Current assets - 62,751 Loans and advances - 48,473 Current liabilities - (27,849) Interest on long term investments 20,935 21,916 Dividend income 150,451 158,002 Purchase of investments (586,954) (1,000,923) Sale of investments 1,220,815 541,885 II. Net cash from investing activities. 798,656 (195,706)

38 CASH FLOW STATEMENT (contd.)

(Rupees in thousands unless otherwise stated)

For the year ended For the year ended 31st Mar-08 31st Mar-07

Cash flow from financing activities :- Repayment of bank borrowing (251,672) (658,965) Bank borrowing availed 1,672 - Interest expenses (338) (77,343) Deposit received 2,914 5,375 Repayment of deposits - (41,852) Dividend payment (58,034) (986,573) Tax on dividend payment (9,863) (138,367)

III. Net cash used in financing activities (315,321) (1,897,725) Net change in cash & cash equivalents (I+II+III) 322,145 64,158 Cash & cash equivalents at the beginning of the year 128,334 64,177 Cash & cash equivalents at the end of the year 450,479 128,335

Cash and cash equivalent included in cash flow statement comprise the following balance sheet amounts :-

As at 31st As at 31st Mar-08 Mar-07

Cash on hand 21 13 Balances with scheduled banks current accounts 450,458 128,322 450,479 128,335 (Exludes amounts placed as deposits with scheduled banks towards cash margin for various guarantees issued by banks on behalf of the Company.) 100 100

The Cash flow statement and the notes to accounts given in schedule 23 form an integral part of the Accounts. As per our report of even date

S.R. BATLIBOI & Co. For and on behalf of Board of Directors Chartered Accountants per Vijay Maniar O.P. Bhatt A. P. Verma Nilesh N. Shah Partner Chairman Managing Director & CEO Company Secretary Membership No.: 36738

Mumbai April 22, 2008 D E T I M I L

S T E K R A M

L A T I P A C

I B S

39 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET

(Rupees in thousands unless otherwise stated) SCHEDULES

As at 31st Mar-08 As at 31st Mar-07

SCHEDULE - 1 Share Capital Authorised 100,000,000 (2007: 100,000,000) Equity shares of Rs.10/- each 1,000,000 1,000,000 1,000,000 (2007: 1,000,000) Redeemable Preference Shares of Rs. 100/- each 100,000 100,000 Total 1,100,000 1,100,000 Issued, subscribed and paid up 58,033,711 (2007: 58,033,711) Equity shares of Rs.10/- each fully paid up 580,337 580,337 Of the above, 50,000,004 (2007: 50,000,004) shares are held by the State Bank of India ('SBI') the holding company and its nominees.

SCHEDULE - 2 Reserves and Surplus Securities premium Account (as per last account ) 634,663 634,663 Statutory reserve (as per last account) 241,087 241,087 General reserve As per last account 1,523,464 1,459,107 Add : Transfer from profit and loss account 130,335 64,357 1,653,799 1,523,464 Less : Adjustment for Employee Benefits provision (net of deferred tax Rs.5,087) (Refer to note no 23 A( c) ) 9,880 - 1,643,919 1,523,464 Profit and loss account balance 1,296,013 801,968 Total 3,815,682 3,201,182

SCHEDULE - 3 Secured Loans Short term loan from bank - 250,000 Total - 250,000 Note : The bank had a negative lien on the Company’s long-term investments for the above loan.

SCHEDULE - 4 Unsecured Loans Deposits 24,775 21,862 Total 24,775 21,862 Note : Deposits represent security deposits received as per the lease agreements and includes Rs.Nil (2007:Rs.Nil) repayable within one year.

40 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT (contd.) ) d - t t e 1 2 9 6 6 5 3 2 7 t s a 2 7 0 6 0 0 5 3 0

a 1 - t 4 0 1 4 9 4 5 9 s r , , , , , , , , 3 s

a A 5 1 5 8 1 0 1 3 e 1 6 2 6 7 M s i 1 w K r C e h O t o L

B s

s - t t T 0 8 5 6 2 1 5 7 2 8 e l a s 5 6 3 8 1 2 3 0 3 0 E

n 1 - 1 4 6 2 4 9 0 9 9 s r u N , , , , , , , , , 3

a A 2 0 0 9 1 5 1 0 3 s 6 1 2 1 2 7 d M 1 1 n a s u o h t

n i - t

4 2 6 2 4 0 1 9 2 e 8 s s 2 4 5 5 5 0 6 8 5 c 0 e 1 - 5 9 6 8 9 2 0 1 3 n , , , , , , , , , r e 3 a

N 9 4 7 9 1 1 1 6 8 a p l t 9 3 2 9 6 6 u O a a M I

0 2 3 R , , , B ( T s 1 1 1 a A Z I T R O / M s n - - - 8 8 4 5 0 5 5 A r

o 6 5 1 4 0 / 8 4 i e

t f 1 7 3 5 1 8 3 , , , , , , , c N s 2 8 1 9 1 2 3 u n O 1 3 6 0 I d a 1 1 4 r T e T A D I C s E - n 1 6 6 3 4 4 8 2 0 R 7 8 3 3 9 8 1 2 4 o i P 2 7 6 5 4 4 5 7 9 t , , , , , , , i E 3 5 4 1 4 0 3 d D 4 6 3 d

) 1 0 A D 4 E 4 . , T y 4 t A t

e 7 3 4 8 3 0 1 0 3 2 7 . e L s i c 0 s 5 2 7 3 6 6 0 4 5 5 c 1 - U 2 9 3 4 4 2 1 5 3 7 n

r R o , , , , , , , , , t : a M p r s 6 7 4 0 1 6 1 8 7 l a

a 1 U 9 3 2 1 8 6 3 a A g s e 1 3 6 C B n , , , a y i

C 1 1 1 s s u A u o o i h

v e e r v i t p ( a

l r i t - e 8 e 4 0 1 8 6 1 6 6 4 s N c 0 p

7 1 9 3 6 2 9 9 8 1 - . o n 6 4 2 1 3 1 0 0 2 r 3 - s , , , , , , , , , a

a l o t 1 5 8 9 3 7 2 7 2 R

c a a 6 4 4 1 0 8 4 M

r

1 1 3 5 B a a s , , ,

e a 1 1 1 n y i

y e n h t a

r p o f m

/ o s s n - - - s 6 2 7 5 0 0 4 r C o

o i 9 4 6 4 0 5 6 e l t f e

0 6 5 5 1 9 0 K t , , , , , , , c s h t n C 9 1 2 9 1 3 6 u

n e 1 3 6 1 y d a O r 1 1 4 b e m L

r T i D d B l

a e p S s h

- - - - - S n m 0 6 6 2 0 i h

o 1 4 0 6 4 O i c s t 5 4 8 7 0 R a i , , , , e e 5 2 8 5 d d G

1 - u d l / c A 0 n 0 i

1 . s t s t e 7 h 4 6 7 9 6 6 0 6 4 8 s R c 0 g

7 9 8 9 6 6 0 i 9 8 0 1 - f n

r 6 9 4 8 3 6 1 0 2 3 t o R , , , , , , , , , , a

p l a 1 8 9 8 3 6 1 2 2 3 s

p a A i 1 6 4 4 1 4 4 4 e s r h B 1 2 5 9 a , , , s a r 1 1 1 h e s

b 5 m 1

e f o M s

t t h E s S g o S i T c S B

R E

)

T s s & S n p

e w E e i t o r S y d o

h n S r l u D s 5 A u t s n e

t e

l e S r E r - x o s e c i n

b i E e m T A i a t f

t I

s n

I E b p L i h e e a

i

s i s t E M & c L Y s e r I B

u m c g

n t L I A a s L e U e

q e e s e n

e o t s i r r B r g G e A d m u D I S n u e

d u

M a : p n l m

l t e ,

o N i T

i p E r i i e l t , d G c e p w i s d i e E u v c A e n t a l n e H t E i m N i f f D r h a t u f T K e B

a x o f o u e l S o r C

. u e e i q A o R I . r N N I I T B ( C F O V L P e I B S T P S F A M

L A T I P A C

I B S

41 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET (contd.)

(Rupees in thousands unless otherwise stated) SCHEDULES

As at 31st Mar-08 As at 31st Mar-07

SCHEDULE - 6 Investments (Long term, non trade, at cost less provisions) Quoted Equity shares 1,00,000 (2007: 1,00,000) shares of Re.1/- each 23,655 23,655 fully paid in Hindustan Unilever Ltd Nil (2007: 1,500) shares of Rs.5/- each - 3,053 fully paid in Infosys Ltd Nil (2007: 1,50,000) shares of Rs.10/- each - 23,549 fully paid in Mahanagar Telephone Nigam Ltd 50,000 (2007: 50,000) shares of Rs.5/- each 25,645 25,645 fully paid in Biocon India Ltd 24,000 (2007: 40,000) shares of Rs.10/- each 14,634 24,391 fully paid in Mahindra & Mahindra Ltd Nil (2007: 1,00,000) shares of Rs.10/- each - 22,322 fully paid in Bank of Baroda Ltd 1,00,000 (2007: 1,00,000) shares of Rs.10/- each 25,215 25,215 fully paid in Oriental Bank of Commerce Ltd 2,90,000 (2007: 6,00,000) shares of Re.1/- each 11,341 23,462 fully paid in Ashok Leyland Ltd Nil (2007: 2,00,000) shares of Rs.10/- each - 48,860 fully paid in Great Eastern Shipping Company Ltd 2,00,000 (2007: Nil) shares of Re.1/- each 28,362 - fully paid in Indian Hotels Ltd Nil (2007: 5,000) shares of Rs.10/- each - 11,591 fully paid in Grasim Ltd Nil (2007: 6,000) shares of Rs.10/- each - 6,246 fully paid in Siemens Ltd Nil (2007: 9,500) shares of Rs.10/- each - 8,575 fully paid in ACC Ltd 90,000 (2007: 90,000) shares of Rs.2/- each 10,857 10,857 fully paid in Ambuja Cements Ltd 40,000 (2007: 40,000) shares of Rs.10/- each 36,720 36,720 fully paid in Tata Tea Ltd 1,50,000 (2007: 1,50,000) shares of Re.1/- each 25,915 25,915 fully paid in ITC Ltd Nil (2007: 5,000) shares of Rs.10/- each - 10,768 fully paid in Bharat Heavy Electricals Ltd 73,548 (2007: 1,00,000) shares of Rs.10/- each 9,922 22,490 fully paid in Ucal Fuel 105,600 (2007: 105,600) shares of Rs.10/- each *- *- fully paid in Pentasoft Technologies Ltd 1,12,500 (2007:1,12,500) shares of Rs.10/- each 37,913 39,150 fully paid in Hindustan Petroleum Corp. Ltd.

42 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET (contd.)

(Rupees in thousands unless otherwise stated) SCHEDULES

As at 31st Mar-08 As at 31st Mar-07

32,000 (2007: 32,000) shares of Rs.10/- each 24,631 24,631 fully paid in Tata Motors Ltd. Nil (2007: 50,000) shares of Rs.1/- each - 2,400 partly paid in Hindalco Industries Ltd. 5,00,000 (2007: 5,00,000) shares of Rs.10/- each 49,250 49,250 fully paid in Andhra Bank Ltd Nil (2007:21,951) shares of Rs.10/- each - 11,295 fully paid in Jammu and Kashmir Bank Ltd 1,05,900 (2007: 347,200) shares of Rs.10/- each 318 1,042 fully paid in Seasons Furnishings Ltd 2,000 (2007: Nil) shares of Rs.10/- each 1,530 - fully paid in Future Capital Holding Ltd 2,00,000 (2007: Nil) shares of Rs.10/- each 29,479 - fully paid in Gateway Distriparks Ltd. Sub-total 355,387 481,082 Total quoted investments 355,387 481,082 Unquoted Equity shares 21,75,000 (2007: 24,00,000) shares of Rs.10/- each 38,063 42,000 fully paid in National Stock Exchange of India Ltd 1,032,500 (2007: 1,032,500) shares of Rs.10/- each *- *- fully paid in SBI Home Finance Ltd 1,100,000 (2007: 1,100,000) shares of Rs.10/- each 11,000 11,000 fully paid in OTC Exchange of India 1,000,001 (2007: 1,000,001) shares of Rs.10/- each 10,000 10,000 fully paid in Investor Services of India Ltd Nil (2007: 10,000) shares of Re.1/- each - 10 fully paid in Bombay Stock Exchange of India Ltd 190,800 (2007: 190,800) shares of Rs.10/- each *- *- fully paid in Uniroll Leather (India) Ltd 434,700 (2007: 434,700) shares of Rs.10/- each *- *- fully paid at a premium of Rs.12/- in Veekay Fibres Ltd 114,748 (2007 : 114,748) shares of Rs.10/- each *- *- fully paid in Anjani Solvents India Ltd 416,809 (2007: 416,809) shares of Rs.10/- each *- *- fully paid at a premium of Rs.10/- in Kusum Ingots & Alloys Ltd 150,000 (2007: 150,000) shares of Rs.10/- each *- *- fully paid in Raghunath Cotton & Oil Products Ltd

17,100 (2007: 17,100) shares of Rs.10/- each *- *- D E T fully paid in Varun Polymol Organics Ltd I M I L 391,900 (2007: 391,900) shares of Rs.10/- each *- *- S T

fully paid in Nova Dhatu Udyog Ltd E K R

450,000 (2007: 450,000) shares of Rs.10/- each *- *- A M

L

fully paid in Nikhar Fabrics Ltd A T I P

150,000 (2007: 150,000) shares of Rs.10/- each *- *- A C

I

fully paid in Essem Coated Steels Ltd B S

43 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET (contd.)

(Rupees in thousands unless otherwise stated) SCHEDULES

As at 31st Mar-08 As at 31st Mar-07

10,078 (2007: 10,078) shares of Rs.10/- each *- *- fully paid at a premium of Rs.2/- in Sureka Coated Tubes & Sheets Ltd 1,00,000 (2007: 1,00,000) shares of Rs.10/- each *- *- fully paid in Meltech Alloy Powder India Ltd 39,830 (2007: 39,830) shares of Rs.10/- each *- *- fully paid in Khetawat Chemicals & Fertilisers Ltd 99,200 (2007: 99,200) shares of Rs.10/- each *- *- fully paid in AVN Tubes Ltd 1,150,000 (2007: 1,150,000) shares of Rs.10/- each *- *- fully paid in Arrow Metalspins Ltd 3,10,500 (2007: 3,10,500) shares of Rs.10/- each *- *- fully paid in Heynen India Ltd 5,00,000 (2007: 5,00,000) shares of Rs.10/- each *- *- fully paid in Hygienic Foods Ltd 10,70,000 (2007: 10,70,000) shares of Rs.10/- each *- *- fully paid in GML Chip Components Ltd 4,33,700 (2007: 4,33,700) shares of Rs.10/- each *- *- fully paid in Microwin Electronix Ltd 4,00,000 (2007: 4,00,000) shares of Rs.10/- each *- *- fully paid in Koyana Rocla Pipes Ltd 4,91,700 (2007: 4,91,700) shares of Rs.10/- each *- *- fully paid in Anasuya Spinners Ltd 2,20,720 (2007: 2,20,720) shares of Rs.10/- each *- *- fully paid at a premium of Rs.35 in Coventry Spring & Engineering Company Ltd 4,35,000 (2007: 4,35,000) shares of Rs.10/- each *- *- fully paid in Pittie Cement & Industries Ltd 4,06,500 (2007: 4,06,500) shares of Rs.10/- each *- *- fully paid at a premium of Rs.20/- in Atash Industries Ltd 5,95,900 (2007: 5,95,900) shares of Rs.10/- each *- *- fully paid at a premium of Rs.30/- in Niwas Spinning Mills Ltd 4,64,450 (2007: 4,64,450) shares of Rs.10/- each *- *- fully paid in Cethar Industries (India) Ltd 2,10,200 (2007: 2,10,200) shares of Rs.10/- each *- *- fully paid in Rane Computer Consultancy Ltd 2,13,700 (2007: 2,13,700) shares of Rs.10/- each *- *- fully paid in Associated Marmo & Granites Ltd 93,700 (2007: 93,700) shares of Rs.10/- each *- *- fully paid in Shiva Medicare Ltd 2,10,000 (2007: 2,10,000) shares of Rs.10/- each *- *- fully paid in Injecto India Ltd 10,00,000(2007: Nil) shares of Rs.39.63 each 39,630 - fully paid in ONGC Mittal Energy Ltd Sub-total 98,693 63,010 Equity shares in companies under the same management 909,090 (2007: 909,090) shares of Rs. 110/- each 100,000 100,000 fully paid in SBI DFHI Ltd (formerly SBI Gilts Ltd) Sub-total 100,000 100,000

44 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET (contd.)

(Rupees in thousands unless otherwise stated) SCHEDULES

As at 31st Mar-08 As at 31st Mar-07

Equity shares in subsidiaries 5,00,00,000 (2007: 5,00,00,000) shares of Rs. 10/- each 500,000 500,000 fully paid in SBICAP Securities Ltd 2,00,000 (2007: 2,00,000) shares of Rs.85.93 each 17,185 17,185 fully paid in SBICAP UK Ltd 50,000 (2007: 50,000) shares of Rs. 10/- each 500 500 fully paid in SBICAP Trustee Co. Ltd 31,00,000 (2007: 50,000) shares of Rs. 10/- each 31,000 500 fully paid in SBICAP Ventures Ltd Sub-total 548,685 518,185 Debentures 197,826 (2007: 197,826) 14% non-convertible debentures *- *- of Rs.100/- each fully paid of Orkay Industries Ltd Nil (2007: 82,000) 18% non-convertible debentures of - *- Rs. 100/- each fully paid of Century Wood Ltd Sub-total - - Bonds 27,35,425 (2007 :27,35,425) 6.60% tax free ARS Bonds of Rs. 100/- 273,543 273,543 each of Administrator of Specified Undertaking of UTI Sub-total 273,543 273,543 Others Nil (2007: 49,90,000) units of Rs. 10/- each - 49,900 fully paid Reliance Equity Fund - Dividend Payout Nil (2007: 50,00,000) units of Rs. 10/- each - 50,000 fully paid SBI Arbitrage Opportunities Fund - Growth 50,00,000 (2007: 50,00,000) units of Rs. 10/- each fully paid 50,000 50,000 Reliance Fixed Horizon Fund II Annual plan series VI- 392 days -Growth 50,00,000 (2007: 50,00,000) units of Rs. 10/- each 50,000 50,000 fully paid JM Fixed Maturity Fund series IV- yearly plan- 375 days - Growth 50,00,000 (2007: 50,00,000) units of Rs. 10/- each 50,000 50,000 fully paid SBI Debt Fund Series - 13 Months - II -Growth 28,28,854 (2007: Nil) units of Rs. 10/- each 100,000 - fully paid SBI Magnum Balanced Fund Dividend Payout 35,39,410 (2007: Nil) units of Rs. 10/- each 100,000 - fully paid FT India Balance Fund Dividend Payout Sub-total 350,000 249,900 Total unquoted investments 1,370,921 1,204,638 Total investments 1,726,308 1,685,720 Aggregate of quoted investments: D

(i) Cost 405,069 525,370 E T I M

(ii) Market Value 299,356 415,734 I L

(iii) Book Value 355,387 481,082 S T E

Aggregate of unquoted investments: K R A M

(i) Cost 1,585,377 1,427,295 L A T

(ii) Book Value 1,370,921 1,204,638 I P A C

* Fully provided for. I B S

45 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET (contd.)

(Rupees in thousands unless otherwise stated) SCHEDULES

As at 31st Mar-08 As at 31st Mar-07

SCHEDULE - 7 Interest Accrued Interest accrued 32,892 9,933 32,892 9,933

SCHEDULE - 8 Stock - in - trade Quoted Equity shares 2,00,000 (2007: 4,78,440) shares of Rs.10/- each 2,310 4,402 fully paid in Madras Fertilizers Ltd Nil (2007: 2,14,006) shares of Rs.10/- each - 2,140 fully paid in South Asian Petrochem Ltd. Sub-total 2,310 6,542 Total quoted stock-in-trade 2,310 6,542 Unquoted Equity shares 2,60,000 (2007: 2,60,000) shares of Rs.10/- each *- 1,326 fully paid in Pasupati Fabrics Ltd 38,100 (2007: 38,100) shares of Rs.10/- each *- *- fully paid in GKB Opthalmics Ltd 3,37,100 (2007: 3,37,100) shares of Rs.10/- each *- *- fully paid in American Paints (India) Ltd 7,74,700 (2007: 7,74,700) shares of Rs.10/- each *- *- fully paid in Sen Pet (Formerly known as Elque Polyesters Ltd) 74,678 (2007: 74,678) shares of Rs.5/- each *- *- fully paid in GPI Textiles Ltd 15,400 (2007: 15,400) shares of Rs.10/- each fully *- *- paid in Cremica Agro Foods Ltd 77,000 (2007: 77,000) shares of Rs.10/- each fully *- *- paid in Hindustan Fibres Ltd 24,000 (2007: 24,000) shares of Rs.10/- each fully *- *- paid in Eastern Synpacks Ltd 57,690 (2007: 57,690) shares of Rs.10/- each fully *- *- paid in Karthik Alloys Ltd 5,600 (2007: 5,600) shares of Rs.10/- each fully *- *- paid in Mercury Laboratories Ltd 1,100 (2007: 1,100) shares of Rs.10/- each fully *- *- paid in Hindustan Biotech Ltd Sub-total - 1,326 Debentures Nil (2007: 2) 7.95% non-convertible debentures of Rs.40,00,000/- each fully paid of Tinplate Co of India Ltd. - 8,000 Sub-total - 8,000

46 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET (contd.)

(Rupees in thousands unless otherwise stated) SCHEDULES

As at 31st Mar-08 As at 31st Mar-07

Preference Shares 1,40,000 (2007: 1,40,000) 0.0001% shares of Rs.10/- each fully *- *- paid in Pasupati Fabrics Ltd 74,678 (2007: 74,678) 0.01% shares of Rs.5/- each fully *- *- paid in GPI Textiles Ltd Sub Total - - Others 72,07,310 (2007: 3,22,22,473) Units of ICICI Prudential Liquidity Fund 72,077 322,225 Super Institutional Plan Daily Dividend 2,69,63,251 (2007: 3,04,14,671) Units of JM Money Manager Fund 269,715 304,147 Super Plus Plan Dividend Nil (2007: 51,16,298) Kotak Fixed Maturity Plan - 6M series 3-dividend - 51,164 Nil (2007: 1,00,00,000) Kotak Fixed Maturity Plan - 3M series 12-dividend - 100,000 Nil (2007: 51,07,930) LIC FMP series 12 - 6 months - 51,079 Nil (2007: 1,50,18,957) Units of Reliance Liquidity Fund - Daily Dividend - 150,236 Nil (2007 : 51,05,204) Units of Tata Fixed Horizon Fund - 51,053 Series 6 Scheme H 181 days Nil( 2007:1,00,00,000) Units of Reliance Fixed Horizon Fund I - 100,000 Quarterly Plan series IV Nil (2007: 50,90,085) UTI HFMP 186 days plan - 50,901 50,00,000 (2007:Nil) Units of HDFC Fund - Series VI 50,000 - Wholesale February 2008 Plan Dividend Payout 1,00,00,000 (2007:Nil) Units of HDFC Fund - Series VI 100,000 - Wholesale January 2008 (2)Plan Dividend Payout 1,00,79,264 (2007:Nil) Units of Birla Sunlife Fund - Birla Interval 100,793 - Income Fund - Quarterly - Series II -Dividend reinvestment 1,00,19,193 (2007:Nil) Units of Birla Sunlife Fund - Birla Interval 100,192 - Income fund Monthly-Series 1 -Dividend reinvestment 1,00,85,597 (2007: Nil) Units of ICICI Prudential 100,856 - Interval Plan I Quarterly -dividend reinvestment 1,00,00,000 (2007: Nil) Units of ING VYSYA Mutual Fund 100,000 - ING Fixed Maturity Fund- Series xxxvi - Dividend Payout 2,84,14,593 (2007: Nil) LIC MF Liquid Plan 311,995 - 1,00,13,310 ( 2007:Nil) Units of Reliance Monthly Interval Fund series I 100,217 - Institutional Dividend 3,58,468 (2007: Nil) UTI Liquid Cash Plan Institutional Daily 365,439 - Dividend Plan 99,97,301(2007: Nil) units of Sundarm Mutual Fund 100,000 - Sundaram BNP Paribas Fixed Income Interval Fund Plan B Quarterly Plan D E T 1,10,21,766 (2007: Nil) units of SBI Mutual Fund 110,576 - I M I L SBI-Premier Liquid Fund - Super IP - Daily Dividend S T

1,00,00,000 (2007: Nil) units of SBI Mutual Fund 100,000 - E K R

SBI Debt Fund Series -90 days -20- Dividend A M

L

Sub-total 1,981,860 1,180,804 A T I P A C

I B S

47 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET (contd.)

(Rupees in thousands unless otherwise stated) SCHEDULES

As at 31st Mar-08 As at 31st Mar-07

Total unquoted stock-in-trade 1,981,860 1,190,130 Total stock-in-trade 1,984,170 1,196,672 Aggregate of quoted stock-in-trade: (i) Cost 3,000 9,317 (ii) Market/realisable value 2,310 6,542 (iii) Book Value 2,310 6,542 Aggregate of unquoted stock-in-trade: (I) Cost 2,003,822 1,210,767 (iii) Book Value 1,981,860 1,190,130 * Fully provided for.

SCHEDULE - 9 Stock-on-hire under Hire Purchase, net Stock-on-hire, gross 1,587 1,587 Less: Unmatured finance charges 141 141 Total 1,446 1,446 Note: The above amount represents the principal due on non-performing assets, which has been fully provided and disclosed under the head ‘Provisions’.

SCHEDULE - 10 Sundry Debtors (unsecured) Considered good Debts outstanding for a period exceeding six months 14,779 29,616 Other debts 161,686 181,550 176,465 211,166 Considered doubtful Debts outstanding for a period exceeding six months 30,178 9,316 Other debts 5,998 - 36,176 9,316 Less: Provision for doubtful debts 36,176 9,316 - - Total 176,465 211,166 Notes : Included in sundry debtors are the following amounts due from companies under the same management as defined under Section 370 (1B) of the Companies Act,1956. State Bank of India 1,910 690 S S Venture Services 429

SCHEDULE - 11 Cash and Bank Balances Cash on hand 21 13 Balances with scheduled banks Current accounts [Refer note 10 under schedule 23 (B)] 45,911 28,080 Deposit accounts 404,647 100,342 Total 450,579 128,435 Note : Deposit accounts amounting to Rs.100 (2007 :Rs. 100) are with scheduled banks towards the cash margin for various guarantees issued by banks on behalf of the Company.

48 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET (contd.)

(Rupees in thousands unless otherwise stated) SCHEDULES

As at 31st Mar-08 As at 31st Mar-07

SCHEDULE - 12 Loans and Advances (Unsecured and considered good unless otherwise stated) Advances recoverable in cash or in kind or for value to be received Considered good 23,545 20,981 Considered doubtful 6,943 6,943 30,488 27,924 Less: Provision for doubtful advances 6,943 6,943 23,545 20,981 Deposits Others 36,392 37,261 36,392 37,261 Advance tax and tax deducted at source [net of provision for 747,310 797,037 income-tax Rs 2,842,839 (2007: Rs.2,429,339)] Advance interest tax [net of provision for interest tax 15,204 15,204 Rs 13,861(2007: Rs 13,861)] Total 822451 870,483 Note : 1) Included in Loans and Advances are the following amounts due from companies under the same management as defined under Section 370(1B) of the Companies Act, 1956. State Bank of India 48 299 SBICAP Securities Ltd. 6,917 1,840 SBICAP Ventures Ltd. 285 2,483 S.S. Ventures Ltd 273 - SBICAP Trustees Co. Ltd. - 64 2) The maximum amount due from companies under the same management as defined under Section 370(1B) of the Companies Act, 1956 during the year was as follows :- State Bank of India 299 299 SBICAP Securities Ltd. 6,917 12,952 SBICAP Ventures Ltd. 2,611 2,483 SBICAP Trustees Co. Ltd. 64 64 SBI Cards & Payment Services Pvt. Ltd. - 527 S.S. Ventures Ltd 273 -

SCHEDULE - 13 Current Liabilities

Sundry creditors D E T I

Total outstanding dues of Micro, Medium and Small Enterprises - - M I L

Total outstanding dues of creditors other than Micro, Medium S T E

and Small Enterprises 80,044 65,710 K R A

Other liabilities 25,868 23,435 M

L A

Advances and deposits 20,284 25,132 T I P Unaccrued lease rentals 7,822 7,892 A C

I B

Total 134,018 122,169 S

49 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET (contd.)

(Rupees in thousands unless otherwise stated) SCHEDULES

As at 31st Mar-08 As at 31st Mar-07

SCHEDULE - 14 Provisions Proposed dividend 580,337 58,034 Provision for FBT - 149 Provision for: Gratuity 9,577 8,180 Compensated Leave 10,699 - Bonus 100,327 40,000 Stock-on-hire under hire purchase 1,446 1,446 Corporate Tax on Dividend 98,628 9,863 Total 801,014 117,672

50 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT (contd.)

(Rupees in thousands unless otherwise stated) SCHEDULES

As at 31st Mar-08 As at 31st Mar-07

SCHEDULE - 15 Merchant Banking and Advisory Fees Issue management 110,513 161,367 Arranger's fees - 26,677 Advisory fees 1,108,018 690,430 Total 1,218,531 878,474

SCHEDULE - 16 Income from Securities Interest [tax deducted at source Rs.1,483 (2007: Rs.302)] 20,938 23,230 Profit on sale of investments (net) 684,688 111,615 Trading profits on stock-in-trade (net) 2,419 (14,684) Dividend 150,451 158,002 Total 858,496 278,163

SCHEDULE - 17 Lease and Hire Purchase Income Lease rentals (excluding sales-tax) 105,595 189,804 Lease and Hire Purchase overdue interest / finance charges - 110 Total 105,595 189,914

SCHEDULE - 18 Other Income Profit/(loss) on sale of fixed assets (net) 1,106 2,358 Rental income [tax deducted at source Rs.8,438 (2007: Rs.5,446)] 33,812 25,494 Bad debts recovered 17,556 54,206 Foreign exchange fluctuation (net) 154 - Others 34,477 40,464 Write-back of provision on: Investments 13,043 - Stock-in-trade 1,400 - Bonus 6,146 14,482 Compensated Leave 4,268 - Doubtful debts 6,184 4,847 Total 118,146 141,851

SCHEDULE - 19 Employee Costs D E

Salaries, wages and bonus 273,318 174,081 T I M I

Contribution to provident and pension funds 10,130 7,456 L

S Contribution to Gratuity 2,180 2,322 T E K

Contribution to Superannuation 7,962 6,431 R A M

Staff welfare 6,410 6,182 L A T Total 300,000 196,472 I P A C

I B S

51 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT (contd.)

(Rupees in thousands unless otherwise stated) SCHEDULES

As at 31st Mar-08 As at 31st Mar-07

SCHEDULE - 20 Interest Expense Bank and others 338 77,343 Total 338 77,343

SCHEDULE - 21 Provisions (Expense) Provision for: Diminution in value of investments 23,281 5,551 Fall in value of stock-in-trade 710 4,398 Doubtful debts 33,044 5,788 Total 57,035 15,737

SCHEDULE - 22 Other Expenses Legal and professional fees 18,264 24,685 Conveyance and travelling 34,023 34,724 Rent 38,376 37,352 Rates and taxes 1,304 2,253 Brokerage expenses 162 27,490 Bad debts written off 22,531 10,121 Postage, telephone and telex 8,904 7,669 Advertisement 6,012 13,277 Printing and stationery 5,620 5,920 Electricity 8,890 6,714 Repairs and maintenance: Building 3,189 3,538 Others 5,523 9,256 Insurance 1,133 1,825 Directors' sitting fees 307 181 Tax on perquisities 727 521 Miscellaneous expenses 27,907 40,170 Total 182,872 225,696

52 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT (contd.)

(Rupees in thousands unless otherwise stated) SCHEDULE – 23

Notes to Accounts A. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES a) Basis of preparation The financial statements have been prepared to comply in all material respects with the Notified by Companies Accounting Standards Rules, 2006 and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention on an accrual basis, except in case of assets for which provision for impairment is made and revaluation is carried out and as modified for dividend income, which is accounted for on cash basis. The accounting policies have been consistently applied by the Company and except for the changes in accounting policy discussed more fully below, are consistent with those used in the previous year.

b) Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period end. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates.

c) Changes in Accounting Policies Adoption of Accounting Standard AS15 (Revised) Employee Benefits Till March 31, 2007, the Company was providing for liabilities on account of employees benefit based on AS -15 (old). In the current year, the Company has adopted the Accounting Standard 15 (Revised) which is mandatory from accounting periods commencing on or after December 7, 2006. Accordingly, the Company has provided for employee benefits i.e. gratuity and compensated leave absences based on actuarial valuation done as per projected unit credit method. Further in accordance with the transitional provision in the revised accounting standard, Rs. 9,879,817 (net of tax liability Rs.50,87,335) has been adjusted to the General Reserve.

d) Fixed Assets and Depreciation • Fixed assets are stated at cost less accumulated depreciation and impairment loss, if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use.

• Depreciation on fixed assets, other than leased fixed assets and software is provided using the written down value at the rates prescribed in Schedule XIV to the Companies Act, 1956, on a pro-rata basis.

• In case of fixed assets leased prior to April 1, 2001, depreciation is provided using the straight-line method at the rates prescribed in Schedule XIV to the Companies Act, 1956, on a pro-rata basis, or amount worked out in the ratio of lease rentals accrued as per the agreement to the lease rentals for the entire primary period of lease, whichever is higher (on a cumulative basis). This method is followed in preference to the recommendations made by the Institute of Chartered Accountants of India, in its Guidance Note, 'Accounting for Lease'. This Guidance Note is recommendatory in nature.

e) Intangibles • Softwares are amortized on over a period of 3 years on a straight line basis.

f) Impairment D E T • The carrying amounts are reviewed at each balance sheet date when required to assess whether they are I M I L recorded in excess of their recoverable amounts, and where carrying values exceed this estimated recoverable S T E

amount, assets are written down to their recoverable amount. K R A M

• After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining L A T

useful life. I P A C

I B S

53 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT (contd.)

g) Investments • Investments include equity shares, preference shares, debt instruments and units of mutual funds, which are intended to be held to maturity or for a period of not less than one year. These investments are classified as long term investments. All other investments are classified as current investments.

• Long term investments are carried at cost arrived at on weighted average basis and are stated net of provision. Cost comprises purchase price, brokerage and stamp duty. Appropriate provision is made for, other than temporary, diminution in the value of investments. The premium paid over the face value of the debt instruments is amortized over its residual maturity on a straight-line method.

h) Stock-in-trade • Securities acquired and held, principally for the purpose of selling them in the near term, are classified as stock-in- trade.

• Quoted securities are valued at lower of cost and market value. Unquoted equity shares are valued at the lower of cost and break-up value. Unquoted debt instruments are valued in accordance with the valuation guidelines issued by Fixed Income Money Market and Derivatives Association of India (FIMMDA). Accordingly, stock of government dated securities, corporate/FI debentures/bonds are valued at lower of cost or market/fair value. The premium paid over the face value of the debt instruments is amortized over its residual maturity on a straight-line method. Appropriate provisions, as prescribed by Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998 are made for non-performing debt instruments. Commercial papers / treasury bills are valued at carrying cost. The discount, if any, is amortised over the holding period of the instrument based on the original yields for the residual maturities and the carrying value of the instrument is adjusted correspondingly. Units of mutual fund are valued at lower of cost and net asset value.

• Cost comprises purchase price, brokerage and stamp duty and is computed on weighted average basis. The market value is the price at which the securities are traded in the market. In the absence of such market price, the market value is derived based on market related spreads over the Government benchmark curve, as specified in FIMMDA guidelines.

I) Income recognition Revenue is recognized to the extent that it is probable that economic benefits will flow to the Company and revenue can be easily measured.

Fee based Income: • Issue management and advisory fees are recognised as per the terms of the agreement with the client.

• Fees for private placement are recognised on completion of assignment.

Income from securities: • Gains and losses on the sale of securities are recognised on trade date.

• Dividend income on equity shares and mutual funds is recognised in the year in which it is received.

Interest is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable except interest in respect of non-performing / doubtful assets which is recognised on cash basis.

Lease and hire purchase income:

Lease and hire purchase rentals are accounted for on accrual basis except those in respect of non- performing / doubtful assets, which are recognised on cash basis. Appropriate provision, as prescribed by Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998, is made for non- performing assets.

54 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT (contd.)

j) Foreign currency transactions Initial Recognition Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

Conversion Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction; and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.

Exchange Differences Exchange differences arising on the settlement of monetary items or on reporting company's monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or as expenses in the year in which they arise except those arising from investments in non-integral operations.

k) Retirement benefits • Retirement benefits to employees comprise gratuity, superannuation, provident fund and pension fund. The Company's employees are covered under the employees' gratuity scheme and superannuation scheme established by the Life Insurance Corporation of India ('LIC').

• Retirement benefits in the form of Provident Fund are a defined contribution scheme and the contributions are charged to the Profit and Loss Account of the year when the contributions to the respective funds are due. There are no other obligations other than the contribution payable to the respective trusts.

• Gratuity liability is a defined benefit obligation and is provided for on the basis of an actuarial valuation on projected unit credit method made at the end of each financial year.

• Short term compensated absences are provided for on based on estimates. Long term compensated absences are provided for based on actuarial valuation. The actuarial valuation is done as per projected unit credit method.

• Actuarial gains/losses are immediately taken to profit and loss account and are not deferred.

l) Income taxes i) Tax expense comprises current, deferred and fringe benefit taxes. Current income tax and fringe benefit tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act. Deferred income taxes reflect the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.

ii) Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. Deferred tax assets are recognised on carry forward of unabsorbed depreciation and tax losses only if there is virtual certainty supported by convincing evidence that such deferred tax assets can be realised against future taxable profits.

iii) Unrecognised deferred tax assets of earlier years are re-assessed and recognised to the extent that it has become

reasonably certain that future taxable income will be available against which such deferred tax assets can be D E T I

realised. M I L

S T

iv) At each balance sheet date, the Company re-assesses unrecognised deferred tax assets. It recognises E K R

unrecognised deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the A M

case may be that sufficient future taxable income will be available against which such deferred tax assets can be L A T I

realised. P A C

I B S

55 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT (contd.)

v) The carrying amount of deferred tax assets are reviewed at each balance sheet date. The company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.

m) Earnings per share Basic and diluted earnings per share are reported in accordance with AS 20, "Earnings Per Share". Basis earnings per equity share has been computed by dividing net profit after tax by weighted average number of equity shares outstanding for the year. Diluted earnings per equity share have been computed using the weighted average number of equity shares and dilutive potential equity shares outstanding during the year.

n) Provisions A provision is recognised when an enterprise has a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

o) Operating Leases Leases where the lessor effectively retains substantially all the risk and benefits of ownership of the leased term, are classified as operating lease. Operating lease payments are recognised as an expense in the profit and loss account on a straight line basis over the lease term.

p) Segment information - basis of preparation The Company's primary segments are businesses, which are organized around the following service lines: • Fee based segment provides merchant banking and advisory services like issue management, underwriting, arranger, project advisory & structured finance.

• Fund based segment undertakes deployment of funds in leasing / hire purchase and dealing in various securities.

• Other segment includes fee income and other corporate income and expenses, which are either not allocable to any specific business segment or not material enough to warrant a separate disclosure as a reportable segment.

• The risk and returns of the business of the Company is neither associated with geographical segmentation nor the clients of the Company are grouped geographically hence, there is no secondary segment reporting based on geographical segment. Common costs identifiable with each segment have been allocated, based on the relative utilisation of such benefits by each segment, out of the total costs.

q) Cash and Cash equivalents Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.

56 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT (contd.)

B) OTHER NOTES

1. Earnings per equity share (EPS) (Rupees in thousands unless otherwise stated) For the year ended For the year ended 31st Mar-08 31st Mar-07

I Basic and diluted EPS (Rs.) 22.46 11.09 II Nominal value per share (Rs.) 10 10 EPS has been calculated based on the net profit after taxation of Rs.1,303,345 (2007: Rs.643,571) and the weighted average number of equity shares outstanding during the year of 58,033,711 (2007: 58,033,711). Basic and diluted EPS has been computed by dividing net profit after tax by weighted average number of equity shares outstanding during the year. There are no dilutive potential equity shares outstanding during the year.

2. Deferred taxes (Rupees in thousands unless otherwise stated)

As at 31st March-08 As at 31st March-07 Tax Assets/(Liabilities) due to temporary timing difference in respect of: Deferred tax assets Depreciation on fixed assets 18,569 6,636 Provision on Gratuity 3,255 2,780 Provision for doubtful HP & leased assets 492 492 Provision on compensated leave 3,636 - Provision for doubtful debts 12,296 3,167 Provision for doubtful sales tax deposits 2,360 2,360 Deferred tax assets 40,608 15,435 Less : Opening Deferred Tax Asset 15,435 (19,703) Less : Deferred tax asset on transitional provision 5,087 - Deferred tax credit for the year 20,086 35,138

3. Contingent Liabilities and Commitments (Rupees in thousands unless otherwise stated) As at 31st March-08 As at 31st March-07

(I) Claims against the Company not acknowledged as debts 120,656 120,656 (ii) Guarantees issued 1,925 1,415 (iii) Partly paid shares - 2,400

4. Based on the legal advice and favourable legal decisions by various authorities, no provision has been made in respect of income tax demands aggregating to Rs.782,664 (2007: Rs.779,238) in excess of provision held. These demands have been contested by the Company at various appellate authorities. D E T I M I L

S T E K R A M

L A T I P A C

I B S

57 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT (contd.)

5. Supplementary Profit And Loss Data (a) Managerial remuneration (i) The Managing Director & Chief Executive Officer is on secondment from SBI and their remuneration, which is in accordance with the service rules of SBI, has been charged in the books of accounts. (Rupees in thousands unless otherwise stated) (ii) Remuneration to Managing Director & CEO For the year ended For the year ended 31st Mar-08 31st Mar-07

Salary and bonus 626 493 Contribution to provident and pension funds 45 35 Perquisites 185 269 856 797 As the future liability for Gratuity and Compensated leave absences is provided on actuarial basis for the Company as a whole, the amount pertaining to the directors is not ascertainable and therefore not included above.

There is no commission payable to any director of the Company. Consequently, the computation of profits as required under Section 349 of the Companies Act, 1956 has not been included.

(b) Payments to auditors (excluding service tax) (included in legal and professional fees) As auditors 1,000 1,000 For tax audit 100 100 For other matters 400 665 For out-of-pocket expenses 50 50 1,550 1,815

(c) Expenditure in foreign currency (on accrual basis) Travel and other expenses 4,750 4,598

(d) Earnings in foreign currency (on accrual basis) Advisory fees from overseas clients and reimbursement of expenses 26,247 - Sale Consideration of Investment and interest thereon 517,394 - 543,641 28,547

58 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT (contd.)

6. Related Parties

The following is the list of parties related due to control criteria as per AS-18, Related Party Disclosure:

Name of the Party Relationship State Bank of India Holding Company

The following is the list of parties related due to significant influence criteria as per AS-18 with whom the transactions have taken place:

Name of the Party Relationship State Bank of Bikaner & Jaipur Fellow Subsidiary State Bank of Hyderabad Fellow Subsidiary State Bank of Indore Fellow Subsidiary State Bank of Mysore Fellow Subsidiary State Bank of Patiala Fellow Subsidiary State Bank of Saurashtra Fellow Subsidiary State Bank of Travancore Fellow Subsidiary SBI Commercial and International Bank Limited Fellow Subsidiary SBI DFHI Limited Fellow Subsidiary SBI Funds Management Pvt. Limited Fellow Subsidiary SBI Life Insurance Company Limited Fellow Subsidiary SBI Cards & Payment Services Pvt. Limited Fellow Subsidiary SBICAP Securities Limited Subsidiary SBICAPS Ventures Limited Subsidiary SBICAP Trustee Company Limited Subsidiary SBICAP (UK) Limited Subsidiary SBI Home Finance Limited Associate S. S. Ventures Associate Shri R. Sridharan, Managing Director & Chief Executive Officer Key Management Personnel (upto 25.02.2008) Shri A. P. Verma, President & Chief Operating Officer Key Management Personnel (upto 25.02.2008) Shri A. P. Verma, Managing Director & Chief Executive Officer Key Management Personnel (from 26.02.2008) D E T I M I L

S T E K R A M

L A T I P A C

I B S

59 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT (contd.)

Details of Transactions with the above related parties are as under : (Rupees in thousands unless otherwise stated) Particulars Holding Company Subsidiaries Fellow Subsidiaries Associates Mar-08 Mar-07 Mar-08 Mar-07 Mar-08 Mar-07 Mar-08 Mar-07 Expenses during the year ended Deputation of Employees 16,213 16,651 ------State Bank of Hyderabad - - - - 1,044 999 - - State Bank of Bikaner and Jaipur - - - - - 475 - - State Bank of Mysore - - - - 471 521 - - State Bank of Saurashtra - - - - 555 513 - - State Bank of Travancore - - - - 3 155 - - Rent 4,829 4,436 ------State Bank of Hyderabad - - - - 433 - - - State Bank of Saurashtra - - - - 257 - - - State bank of Indore - - - - - 64 - - Bank & Other Charges 663 1,931 ------SBI DFHI Limited -- - - 3 3 - - SBI Commercial and International Bank Ltd -- - - 1 1 - - SBICAP Securities Ltd. -5------Interest Expense 338 77,343 ------SBI Commercial and International Bank Ltd ------Bad debts - 2,001 ------Provision for doubtful debts - 32 ------State Bank of Travancore - - - - - 20 - - Brokerage ------SBICAP Securities Ltd. -- - 4,227 - - - -

Income during the year ended Brokerage -- 9,739 - - - - - SBICAP Securities Ltd. - - - 4,012 - - - - SBI Funds Management Pvt. Ltd. -- - - - 1,045 - - SBI Life Insurance Company -- - - - 539 - - Others -- - - - 60 - - Arrangers Fee -- 19,704 - - - - - SBI Funds Management Pvt. Ltd. - - - - - 2,731 - - Advisory Fees 3,009 5,132 ------SBI Cards & Payment Services ------SBI Factors - - - - 1,500 - - - SBI DFHI - - - - 500 - - - Bank Interest - 666 ------State Bank of Patiala - - - - 12,884 - - - SBI Commercial and International Bank Ltd - - - - 10,584 - - - Fees for private placement ------State Bank of Saurashtra -- - - -700 - - State Bank of Indore -- - - -1,100 - - State Bank of Bikaner & Jaipur -- - - -500 - - State Bank of Hyderabad -- - - -500 - - Rent ------SBICAP Securities Ltd. - - 7,495 3,678 - - - - SBI Funds Management Pvt. Ltd. - - - - 26,137 21,816 - - S.S. Ventures Services Ltd. ------180 - Dividend ------SBI DFHI Limited -- - - - 6,818 - - SBICAP Securities Ltd. - - 15,000 - - - - - Write back of provision --100 - -- --

60 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT (contd.)

(Rupees in thousands unless otherwise stated) Particulars Holding Company Subsidiaries Fellow Subsidiaries Associates Mar-08 Mar- 07 Mar-08 Mar-07 Mar-08 Mar-07 Mar-08 Mar-07 Balance receivable as at Debtors 1,910 662 ------S.S. Ventures Services Ltd. ------429 - Cash at Bank 45,794 27,962 ------SBI Commercial and International Bank Ltd - - - - 117 118 - - Deposit with Bank 100 100 ------SBI Commercial and International Bank Ltd - - - - 104,305 100,242 - - State Bank of Patiala - - - - 200,000 - - - Loans & Advances 48 ------SBICAP Securities Ltd. - - 6,917 1,840 - - - - SBICAP Ventures Ltd. - - 285 64 - - - - SBICAPS Trustee Co. Ltd. - - - 2,483 - - - - S.S. Ventures Services Ltd. ------273 - Other Current Assets ------SBI Commercial and International Bank Ltd - - - - 5,460 299 - - State Bank of Patiala - - - - 12,884 - - - Investments ------*- *- SBI DFHI Limited - - - - 100,000 100,000 - - SBICAP Securities Ltd. - - 500,000 500,000 - - - - SBICAP Ventures Ltd - - 31,000 - - - - - Others - - 17,685 18,185 - - - -

Balance payable as at Creditors 268 150 ------SBI Funds Management Pvt. Ltd. - - - - 85 - - - SBICAP Securities Ltd. - - 1,891 - - - - - State Bank of Bikaner & Jaipur - - - - 9 8 - - State Bank of Indore - - - - 12 - - - Secured Loans - 250,000 ------

Others transactions during the year ended Dividend paid 500,000 400,000 ------Deputation of Employee ------SBICAP Securities Ltd. -- - 14,405 - - - - Fees Shared 373,322 258,420 ------SBICAP Securities Ltd. - - 48,784 39,723 - - - - State Bank of Patiala - - - - 1,375 - - - State Bank of Mysore - - - - 500 - - - State Bank of Hyderabad - - - - 1,000 - - - Guarantees 1,925 1,415 ------

I. Included in expenses relating to deputation of employees are amounts aggregating to Rs.1,623 (2007: Rs.1,550) pertaining to salaries paid to key management personnel. II. *- Fully provided for. D E T I M I L

S T E K R A M

L A T I P A C

I B S

61 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT (contd.)

7. Details of transactions under Stock-in-trade during the period 1st April, 2007 to 31st March, 2008 (Figures relating to financial year 2006-07 are indicated in bracket) (Rupees in thousands unless otherwise stated) Particulars Opening Stock Additional Purchases Sales/Redemption Closing Stock Nos. Amt. Nos. Amt. Nos. Amt. Nos. Amt. Stock-in-Trade Preference Shares 214,678 *- - - - - 214,678 *- (214,678) (-) - - - - (214,678) *-

Debentures 2 8,000 - - 2 8,000 - - (2) (14,000) (-) (-) (-) (6,000) (2) (8,000)

Equity Shares 2,357,814 7,868 629,500 309,526 1,121,946 317,431 1,865,368 2,310 (2,812,483) (113,255) (5,017,092) (1,564,263) (5,471,761) (1,665,649) (2,357,814) (7,868)

Units of Mutual Fund 118,075,619 1,180,804 646,669,385 8,451,156 605,584,951 7,650,931 159,160,053 1,981,860 (164,318,723) (2,376,111) (585,184,360) (7,025,913) (631,427,464) (8,221,220) (118,075,619) (1,180,804) Asset Securitisation Trust ------PTC 1&2 (19) (46,003) (-) (-) (19) (46,460) - - Total 1,196,672 8,760,682 7,976,362 1,984,170 (2,549,369) (8,590,176) (9,939,329) (1,196,672) *- Fully provided for

8. Segmental Reporting (Rupees in thousands unless otherwise stated) Fund Based Segment Fee Based Segment Corporate & Others Consolidated For the year ending 31 Mar-08 31 Mar-07 31 Mar-08 31 Mar-07 31 Mar-08 31 Mar-07 31 Mar-08 31 Mar-07 Revenue External sales 1,026,082 472,091 1,226,340 878,475 48,346 78,784 2,300,768 1,429,350 Inter-segment sales ------Total revenue 1,026,082 472,091 1,226,340 878,475 48,346 78,784 2,300,768 1,429,350 Result Segment result 941,072 346,474 1,055,360 754,764 48,346 68,632 2,044,778 1,169,870 Unallocated revenue ------59,052 Unallocated corporate expenses ------344,639 312,365 Operating profit ------1,700,139 916,557 Interest expense ------338 77,343 Income tax ------396,456 195,643 Profit from ordinary activities ------1,303,345 643,571 Extraordinary item, net ------Net profit ------1,303,345 643,571

Fund Based Segment Fee Based Segment Corporate & Others Consolidated As at 31 Mar-08 31 Mar-07 31 Mar-08 31 Mar-07 31 Mar-08 31 Mar-07 31 Mar-08 31 Mar-07 Segment assets 4,175,761 3,068,761 175,548 206,514 100 399 4,351,409 3,275,674 Unallocated corporate assets ------1,004,417 1,017,550 Total assets ------5,355,826 4,293,224 Segment liabilities 54,875 51,913 16,786 23,121 - - 71,661 75,034 Unallocated corporate liabilities ------888,147 436,668 Total liabilities ------959,808 511,702 Capital expenditures ------8,762 15,040 Depreciation ------60,722 133,940

Identification of direct cost to each segment, allocation of common cost and unallocable cost are based on management's judgment.

62 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT (contd.)

(Rupees in thousands unless otherwise stated) 9. Gratuity and other post-employment benefit plans: (AS 15 120(b)) The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The following tables summarise the components of net benefit expense recognised in the profit and loss account and the funded status and amounts recognised in the balance sheet for the respective plans.

Profit and Loss account Net employee benefit expense (recognised in Employee Cost) [AS15 Revised ( c) (i) to (x)] Gratuity

2008 2007 Current service cost 1,186 *- Interest cost on benefit obligation 769 *- Expected return on plan assets (304) *- Net actuarial(gain) / loss recognised in the year 4,271 *- Past service cost - *- Net benefit expense 5,922 *- Actual return on plan assets 195 *-

Balance sheet Details of Provision for gratuity Gratuity

2008 2007 Defined benefit obligation 12,152 *- Fair value of plan assets (2,575) *- Less: Unrecognised past service cost - *- Plan asset / (liability) 9,577 *-

Changes in the present value of the defined benefit obligation are as follows: [AS15 Revised 120(e) (i) to (viii)] Gratuity

2008 2007 Opening defined benefit obligation 8,369 *- Interest cost 769 *- Current service cost 1,186 *- Benefits paid (2,334) *- Actuarial (gains) / losses on obligation 4,162 *- Closing defined benefit obligation 12,152 *- D E T I M I L

S T E K R A M

L A T I P A C

I B S

63 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT (contd.)

(Rupees in thousands unless otherwise stated) Changes in the fair value of plan assets are as follows Gratuity 2008 2007

Opening fair value of plan assets 1,782 *- Expected return 304 *- Contributions by employer 2,932 *- Benefits paid (2,334) *- Actuarial gains / (losses) (109) *- Closing fair value of plan assets 2,575 *-

The Company expects to contribute Rs.5,000 to gratuity in 2008-09.

The major categories of plan assets as a percentage of the fair value of total plan assets are as follows: [AS15 Revised (h)] Gratuity 2008 2007 % % Investments with insurer 100 *-

The principal assumptions used in determining gratuity for the Company’s plans are shown below: {As15 Revised 120 (l) (i) to (v)} Gratuity 2008 2007 % % Discount rate 7.9 *- Expected rate of return on assets 7.5 *- Employee turnover Age (Years) 21-44 25% *- Age (Years) 45-57 2% *- Healthcare cost increase rate N.A. N.A.

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

Amounts for the current period are as follows: [AS15 Revised 120(n)] Gratuity 2008 2007 Defined benefit obligation 12,152 *- Plan assets 2,575 *- Surplus / (deficit) (9,577) *- Experience adjustments on plan liabilities 923 *- Experience adjustments on plan assets (109) *- * 2008 being the first year of disclosure, previous year figures are not available

64 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEETAND PROFIT AND LOSS ACCOUNT (contd.)

10. The Company has cheques in hand aggregating Rs. 3,409 (2007 : Rs. 8,230), which have been included in the respective bank accounts. 11. Office premises obtained on operating lease. There are no restriction imposed by the lease agreement. The Company has option to terminate the agreement after a period of two years.

Particulars March 2008 March 2007 Total minimum lease payment under non cancellable operating lease I. Not later than one year - 7,253 II. Later than one year and not later than five years - - III. Later than five years - - Lease payments recognised in profit and loss account. - 7,253

12. During the previous year on June 28, 2006, the Company transferred its broking business to a wholly owned subsidiary SBICAP Securities Limited. Details of assets and liabilities transferred are given below : Amount Fixed assets 7,456 Current assets 62,751 Loans and advances 48,473 Cash and bank 86,124 Less : - Current liabilities and provisions 27,849 Sale consideration received 176,955

13. Prior Year Comparatives Prior year amounts have been reclassified, wherever necessary, to conform to the current year's presentation.

S.R. BATLIBOI & Co. For and on behalf of Board of Directors Chartered Accountants per Vijay Maniar O.P. Bhatt A. P. Verma Nilesh N. Shah Partner Chairman Managing Director & CEO Company Secretary Membership No.: 36738

Mumbai April 22, 2008 D E T I M I L

S T E K R A M

L A T I P A C

I B S

65 BALANCE SHEET ABSTRACT AND THE COMPANY’S GENERAL BUSINESS PROFILE

(Rupees in thousands unless otherwise stated) Registration details Registration number 40298 State code 11 Balance sheet date March 31, 2008

Capital raised during the year Public issue Nil Rights issue Nil Bonus issue Nil Private placement Nil

Position of mobilisation and deployment of funds Total liabilities and shareholders funds 5,355,827 Total assets 5,355,826

Sources of funds Paid-up capital 580,337 Reserves and surplus 3,815,682 Unsecured loans 24,775

Application of funds Net fixed assets 120,907 Investments 1,726,308 Deferred tax assets 40,608 Net current assets 2,532,971 Accumulated losses Nil

Performance of Company Turnover 2,300,768 Total expenditure 600,967 Profit/(loss) before tax 1,699,801 Profit/(loss) after tax 1,303,345 Earning per share (Basic and Diluted in Rs.) 22.46 (Face value Rs.10/- per share) Dividend rate % 80%

Generic names of three principal services of the Company (As per Monetary Terms) Income from merchant banking activities 1,218,531 Income from securities 858,496 Income from lease and hire purchase 105,595

66 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT (contd.) ) . ) - - y 8 h p 0 P d r d % 4 c 0 u 0 t e B a . - 0 3 t a 0 L n 3 d 0 7 a

G i e 2 i , t

0 1 d , - s a K 4

r / 9 1 , 4 P U e 1

(

O 3

4 s

y i l 5 P P 0 l h w 3 A B c 0 u r r 0 e F C G , a I

h f t 0 y B M r o o 0

S a 2 s s t s e e h r r e l a c a n h e h u

S S S

s . y d N n n

a a

h . s ) ) - - p y e 8 h p

s t u d % 9 9 i c e 0 u e m t o t - 0 1 8 l u a 0 i o ( ( L h s d 0

q t e 2 i

N C

1 u y , E - a n r

/ i n 1

P T 0 0

a

3 s

0 1 y e p

l P l h 0 . e , A c s u m p r 0 F C o R u a 5 I

f C R B M ( o

S s e r a h S

O E C

. ) ) - - y 8 h p S & t d % 5 3 i

c 0 u t P r - 0 1 9 u a 0 L o d 0 4 7 A

q e t 2 i , (

1 s c C , E - a 2 I

/ ( e e 1 P r r 0 0

B i 3

0 1 u y a S

l D t l h 0 .

, n c s u m s g r 0 r r e F n R a 0 i e

o V , f t g V M 1 o

c a

. 3 e n s P r

a e i . r D A M a

f h o S

d r a

o . - - y 8 h p 3 3 P t B d % i c

0 u 7 2 t A f - 0 u s a 0 0 4 L , , d 0 o C

q e e 2 i

I i

2 0 1 f s , E - a l n

/ 2 4 B e 1 P a i a 0 0 1

S t 3 h i

0 1 p y

l r e l h 0 . , m u c s u b

r 0 c o F R a 0 n e

, C f t

o S M 0 t

o n y

0 a r d a , s h a n 5 e i m r a B r d

i a i . r a h s P o . h S b F

O C u S

s i s o

t r r t

d n a a f f n g u

e e a n o o d o

c c i c s s t e d n n

t i c i i a e y y l s s t r r A i

m e i a a y y r

i i e n m r r

L e i s , d

d h o t a a i i t

h L i i 6 s

t

e s s d d t d d d

d d 5 n s i i k b b e e e i e e e n t r t t 9

i s s i i u k u s

d d d e a s 1 r b b

a S d n k S n n m m e ,

a

u

u r i i M t e e e e s

y e t

e

a L L l S S r i M c r

s r

y h h a l a t t s s M a o a t e e A i m n

t l t i

i a f l f

e e h h d t a e e p i i s t t L o a y o e y

k k p

t

a s p e f f i l s l r r s i s s b t a o o C p a o a m a a

n i i

e e u e I a h o C s s c c s a s t

M M k r r S

I

B r s C n s n C

p l l r

a a

a o B I a o a S e a a o y e e

t t m f L n L n r h i i S B

i y i y y M / / t

o f

f

a

p p f l e l l s S

s

b t

t

d n a a C o i a i d a a f e e d y i i

i i f f t d

i a s l o h C h e C n s c c e o o s

t

t t

t p i b e r

r I

I a n n h s m e r r n a

u h t r P a P B a B p m

e

o o

u

s i s e f f f C f n f n

s S S n

i

i

o n L m i

y b f f o I o o

e e f f y y r c

o o r r r t t i s h m B o o c m s s a 2 t t

a i a s a n n C

o e i u i i u S 1 A e

y y f h d

u u n i r v r d o d o f k 2 y o

i i i i M e S

o o r s

a o a r

8 o 8 8

s s v i s v i r r

h a t n b a e y 0 t t 0 0 i m m b e d b e d i a p t

i i u o r r i s h

0 0 0 a a M r u u i e t d n s r s

p p u t e S

i i 2 2 l 2 o y

S S

r

b o

b e e

s q c

s , ,

a , t t l / e e e h e u t u

n e t e e i 1 t 1 h 1 b E a a a i h h h r t i

d S S t t t h i h p 3 n 3 3 f S g g u

i

e t t c

w n

f

r

a r o e

e e w e c S f f f n h h h

t a o r r

o o o l r

t C t n c o

o c f o c f a l g m g

m

l e

r a r r e d I o t t n a g a g a a s s s s i h a e a a b e c t t t t t f n B n t c e c t i a

i i a i i

d

i

t f f

f f e D a M

M M i e d S e f m p t t e t

t

o o o o E m u b f b u a e e o x r r r r h i n s o n s n

T s t t I T N L o E C N a n P o P i N a O P o P i e r M u I 8 m

L ) ) P ) ) ) ) 0 a

a b a b a b t 0 S N ( ( ( ( ( ( 2 n T

, i e E 2 a . K m 2 b

o R e l t i m A N r a .

u t r p M . . . .

S S 1 2 3 4 M A L A T I P A C

I B S

67 SBICAP Securities Limited Directors’ Report 69 Auditors Report 73 Balance Sheet 76 Profit and Loss Account 77 Cash Flow Statement 78 Schedules 80 Balance Sheet Abstract 96

SBICAPS Ventures Limited Directors’ Report 97 Auditors Report 99 Balance Sheet 101 Profit and Loss Account 102 Cash Flow Statement 103 Schedules 104 Balance Sheet Abstract 109

SBICAP Trustee Company Limited Directors’ Report 110 Auditors Report 112 Balance Sheet 115 Profit and Loss Account 116 Cash Flow Statement 117 Schedules 118 Balance Sheet Abstract 121

SBICAP (UK) Limited Directors’ Report 122 Auditors Report 124 Profit and Loss Account 125 Balance Sheet 126 Cash Flow Statement 127 Notes to Accounts 128

68 DIRECTORS’ REPORT FOR THE YEAR 2007-2008

T o the Members, Your Directors take pleasure in presenting the 3rd Annual Report together with the Profit and Loss Account for the year ended 31st March 2008 and the Balance Sheet as on that date.

PERFORMANCE HIGHLIGHTS (Rs. in crores) YEAR ENDED MARCH 31 2008 2007 Operating Results Gross Income 44.84 18.24 Profit before provisions, Depreciation, Interest and Tax 22.26 7.91 Provisions 2.51 1.09 Depreciation 0.98 0.47 Interest - - Profit before tax 18.77 6.35 Profit after tax 12.21 4.04 Financial Position Equity Share Capital 50.00 50.00 Reserves 13.88 3.47 Debt Funds - - Other Selected Data Earnings per share (Rs.) 2.44 0.90 Return on Equity (%) 19.11 7.56 Dividend per share (Rs.) 0.30 - Book Value per share (Rs.) 12.78 10.69

I. Operations and Major Events during the year

The business of erstwhile Securities SBU comprising equity broking, research and distribution of third party products was taken over by this company. As advised earlier, SBICAP Securities Ltd (SSL) commenced broking operations under its own name from 28th June 2006. During the year, 22 new institutional clients were brought to our fold. Currently, SSL has 98 institutional clients including 13 FIIs. These clients have together generated total revenue of Rs 13.05 crores during the year. The broking income from institutional clients increased by 19.78% during the year.

SSL’s Research Group provides comprehensive analysis for its stock broking clients who include major institutional investors participating in the Indian capital markets. In 2007-08, SSL continued to be one of India’s leading research backed Institutional Broking houses catering to a wide range of clients across Mutual Funds, Banks, FIIs and other Institutional entities. Backed by a wide repertoire of globally reputed databases, SSL’s Research Group consisting of eleven analysts and one economist has been providing insightful knowledge and comprehensive analysis across major sectors of the economy. Apart from initiating coverage on major corporates and sectors, SSL’s Research Group has been focusing on providing analytical information and investment leads through its various daily and weekly products. The Investment Banking mandates of SBI Capital Markets Ltd continues to be another key area where the Research Group has been providing key inputs on various IPOs, FPOs and QIPs handled by them. Leveraging on its distinctive research, the Research Group will endeavor to enhance its coverage capabilities D E T by augmenting the team size substantially in the coming year. I M I L

S E The retail broking foray which started in 2006 has been further strengthened with the total number of Branches going up from 34 I T I R to 40 as at the end of March 2008. The Company also offers D.P. services at all its branches. The number of retail broking clients U C E has crossed 16000 (as against 7000 last year). We started our DP operations in January 2007 and the number of DP clients has S

P already crossed 7700 (as against 1000 clients last year). A C I B S

69 DIRECTORS’ REPORT (contd.)

The Sales and Distribution (S&D) group handles primary market sales of issuances of debt and equity instruments along with distribution of primary and secondary market investments in Mutual Funds Schemes. During the next fiscal, the Company plans to focus strongly on this activity. During the year under review, SSL mobilised approximately Rs 19457.25 crores as against Rs.16863.58 crores mobilised last year. During the next year, we propose to strengthen marketing infrastructure across all locations and boost the income from this activity. SSL has also started distributing IPOs where SBICAP is not a BRLM. This new activity will increase utilization of the branch network and improve the ratings in the league tables. As per the prime database league tables, SSL has been ranked 7th largest broker in terms of the amounts mobilised in various IPOs/FPOs during 2007-08. Apart from this, the group has also mobilised significant amounts for mutual funds and has earned substantial revenue from this activity.

As planned last year, in an effort to reach out to a wide range of investors and offer them broking at their convenience, SSL has launched E-broking during the year under review. SSL is offering these services to the customers of State Bank of India, State Bank of Indore, State Bank of Hyderabad, State Bank of Patiala and State Bank of Saurashtra. We have already crossed 2000 E-broking Accounts. We are also in discussions with State Bank of Travancore and State Bank of Bikaner and Jaipur for offering this product to their customers. SSL has also started offering E-IPO to all their E-broking clients. SSL is in the process of testing the E-MF module to enable E-broking clients to invest in mutual funds with ease. As per the present plan, this product is expected to be launched in a couple of months. With the completion of E-MF iniatiative, SSL would be offering full bouquet of financial services to its clientele on the E-broking platform as well.

II Financial Results

During the period under review, the company conducted its broking operations (both cash and futures) and DP operations. It also undertook sales and distribution of financial products such as Mutual Funds, RBI Bonds, IPOs etc. Through these activities and from interest on fixed deposits it earned a total income of Rs. 44.84 crores and PBT of Rs. 18.77crores. After taking into consideration taxes and interim dividend declared, net surplus carried forward is Rs. 10.15 crores. Net Profit after tax for the period under review is more than three times the profit earned during the last financial year.

III. Dividend

The company has already paid an interim dividend of 3%. In order to conserve resources, no further dividend is proposed. The interim dividend declared and paid earlier is to be treated as final.

IV. Personnel

The company continues to lay great stress on human resources as the most valuable asset it has. As on 31st March 2008, its workforce strength stood increased to 237 as against 140 as on 31st March 2007. There were 52 resignations and 149 fresh recruitments during the year. Continuous learning is ensured through interventions like external training programmes as well on-the-job training imparted to the employees in order to upgrade their technical, marketing and analytical skills. Institutional Sales and Research teams have both been revamped and a major attempt made to beef up the sales force for acquiring retail clients across all branches.

V. Deposits

The Company has not accepted any deposits from the Public, during the period under review.

VI. Directors

During the year under review, the following changes took place among the Directors of the Company:- Shri V. Gopinathan resigned as Director & Managing Director w.e.f. 30th June 2007 consequent to his retirement from the services from State Bank of India. Shri Yelluri Vijayanand resigned as Director w.e.f. 31st August, 2007 consequent to his retirement from the services from State Bank of India.

70 DIRECTORS’ REPORT (contd.)

Shri R. Sridharan has resigned as Director & Chairman w.e.f. 25th February, 2008 consequent to his posting as Dy. Managing Director (On Special Duty) at the Corporate Centre, State Bank of India, Mumbai. Shri Sridhar Raju was appointed as Managing Director of the Company w.e.f. 28th August, 2007. Smt Bharati Rao, DMD (Associate Banks) was appointed as Nominee Director of the Company w.e.f. 6th December, 2007. Shri Sridhar Raju and Smt. Bharati Rao were appointed as Directors of the Company during the year. In accordance with the provisions of the Companies Act 1956, Shri Sridhar Raju and Smt. Bharati Rao hold office up to the date of the Third Annual General Meeting. The Company has received a Notice from a member under Section 257 of the Companies Act, 1956, proposing Shri Sridhar Raju and Smt. Bharati Rao as candidates for the office of Directors at the Third Annual General Meeting. Shri Sridhar Raju and Smt. Bharati Rao have conveyed their consent for being appointed as Directors.

In this regard, we would like to place on record the valuable contributions made by Shri V. Gopinathan, Shri Yelluri Vijayanand and Shri R. Sridharan in guiding the company and the interest shown by them in the growth of the company.

VII. Directors' Responsibility Statement

Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Directors confirm that : - (i) in the preparation of the annual accounts, the applicable accounting standards have been followed; (ii) appropriate accounting policies have been selected and applied consistently, and the judgements and estimates that have been made are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as on 31st March, 2008 and of the profit or loss of the company for the period ended 31st March, 2008; (iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act for safeguarding the assets of the company and for preventing and detecting frauds and other irregularities; (iv) the annual accounts have been prepared on a going concern basis.

The Directors also wish to draw the kind attention of the Shareholders to the report of the Auditors to the Shareholders issued by M/s. S R Batliboi & Co, the Statutory Auditors, on the financial accounts for the year ended March 31, 2008.

VIII.Auditors

M/s S R Batliboi, Chartered Accountants, the Statutory Auditors of the Company, retire at the conclusion of the Third Annual General Meeting of the Company. The Board of Directors at their 15th Meeting held on 11th April, 2008, have recommended the appointment of M/s S R Batliboi & Co, Chartered Accountants as the Statutory Auditors of the Company to hold office from the conclusion of the Third Annual General Meeting up to the conclusion of the Fourth Annual General Meeting of the Company. The Company has received a Certificate from M/s S R Batliboi & Co. to the effect that their appointment, if made, would be within the limits prescribed under Section 224(1B) of the Companies Act, 1956.

IX. Companies (Disclosures of Particulars in the Report of the Board of Directors) Rules, 1988

In terms of the above Rules issued by the Central Government, the following information is furnished:-

Conservation of Energy and Technology Absorption As the Company is engaged only in the business of stock broking activities and other financial services during the period under review, there is no information to report under this head. D E T Foreign Exchange Earnings and Outgo I M I L

During the year under review, the Company has not earned any foreign exchange and there is no foreign exchange outgo. S E I T I R

X. Particulars of Employees U C E S

In terms of the Companies (Particulars of Employees) Rules, 1975 and in terms of Department of Company Affairs Notification P A C I B S

71 DIRECTORS’ REPORT (contd.)

G.S.R. 288 (E) dated the 17th April 2002, issued hereunder, no employee of the Company (whether employed throughout the financial year 2007- 2008 or for a part of the said year) has received remuneration as stipulated by the said Rules.

XI. Acknowledgement

The Board of Directors would like to express its thanks to SEBI, the Company’s Regulator, the National Stock Exchange of India Limited and Bombay Stock Exchange Limited, Central Depository Services (India) Limited for their advice and guidance received.

The Board is grateful to the State Bank of India and the SBICAP family for providing significant support and guidance to the company in its day-to-day operations. The Board also records its appreciation of the unstinted support extended by all staff members.

For and on behalf of the Board of Directors

A.P. Verma Chairman Date :- 11th April,2008

72 AUDITORS’ REPORT

To, The Members of SBICAP Securities Limited

1. We have audited the attached Balance Sheet of SBICAP Securities Limited (‘the Company’) as at March 31, 2008 and also 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.

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 management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003 (as amended) (‘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.

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

i. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit; ii. 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; iii. The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account; iv. In our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the accounting standards referred to in subsection (3C) of section 211 of the Companies Act, 1956. v. On the basis of the written representations received from the directors, as on March 31, 2008, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2008 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956. vi. In our opinion and to the best of our information and according to the explanations given to us, the said accounts 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; a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2008; b) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and c) in the case of Cash Flow Statement, of the cash flows for the year ended on that date.

S.R. Batliboi & Co. Chartered Accountants per Vijay Maniar

Partner D E T I M

Membership No.: 36738 I L

S E I T I

Mumbai R U C

April 11, 2008 E S

P A C I B S

73 ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE

Re : SBICAP Securities Limited

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. (b) Fixed assets have been physically verified by the management during the year and no material discrepancies were identified on such verification. (c) There was no substantial disposal of fixed assets during the year.

(ii) (a) The Company does not hold any inventory during the year and hence the provisions of clause 4(ii) of the Order are not applicable to the Company.

(iii) As informed, the Company has neither granted nor taken any loans, secured or unsecured to / from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

(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, for the purchase of fixed assets and for the sale of services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas. The company has not purchased any inventory nor sold any goods. Hence, internal control procedures over these areas have not been commented upon.

(v) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Act that need to be entered into the register maintained under section 301 have been so entered.

(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 provision of clause 4(viii) of the Order is not applicable to the Company in the year under audit and hence not reported upon.

(ix) (a) Undisputed statutory dues including provident fund, employees state insurance, income tax, service tax and cess have generally been regularly deposited with the appropriate authorities. As informed, the provisions of investor education and protection fund, sales tax, wealth tax, excise duty and customs duty are currently not applicable to the Company.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees’ state insurance, income tax, service tax, cess and other undisputed statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable. As informed, the provisions of investor education and protection fund, sales tax, wealth tax, excise duty and customs duty are currently not applicable to the Company.

(c) According to the information and explanation given to us, there are no dues of income tax, service tax and cess which have not been deposited on account of any dispute. As informed, the provisions of sales tax, wealth tax, excise duty and customs duty are currently not applicable to the Company.

74 ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE (contd.)

(x) The Company has been registered for a period of less than five years and hence we are not required to comment on whether or not the accumulated losses at the end of the financial year is fifty per cent or more of its net worth and whether it has incurred cash losses in such financial year and in the immediately preceding financial year.

(xi) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not taken any funds from financial institution and bank hence the provisions of clause 4(xi) of the Order are not applicable to the Company.

(xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4 (xiii) of the Order are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by other from bank or financial institution.

(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 an overall examination of the balance sheet and cash flow statement of the Company, we report that no funds raised on short-term basis have been used for long-term investment.

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

(xix) The Company did not have any outstanding debentures during the year.

(xx) The Company has not raised any money through a public issue.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

S.R. Batliboi & Co. Chartered Accountants per Vijay Maniar Partner

Membership No.: 36738 D E T I M I L

Mumbai S E I T April 11, 2008 I R U C E S

P A C I B S

75 BALANCE SHEET

(Rupees)

Schedule As at 31st Mar-08 As at 31st Mar-07

SOURCES OF FUNDS Shareholders’ Funds Share capital 1 500,000,000 500,000,000 Reserves and surplus 2 138,841,149 34,740,096 638,841,149 534,740,096 Deferred Tax Liability (Net) 15(B)(2) 74,507 1,456,179 TOTAL 638,915,656 536,196,275

APPLICATION OF FUNDS Fixed Assets 3 Gross block 40,572,174 23,888,739 Less: Accumulated depreciation/amortisation 14,463,885 4,734,857 Net block 26,108,289 19,153,882 Capital work-in-progress including capital advances 364,000 1,853,563 Current Assets, Loans & Advances Interest accrued 21,252,556 6,976,748 Sundry debtors 4 34,230,640 20,787,757 Cash and bank balances 5 636,673,062 489,878,269 Loans and advances 6 59,111,290 63,005,651 (A) 751,267,548 580,648,425 Less : Current Liabilities & Provisions Current liabilities 7 135,615,461 64,012,730 Provisions 8 3,208,720 1,446,865 (B) 138,824,181 65,459,595 Net Current Assets (A - B) 612,443,367 515,188,830 Total 638,915,656 536,196,275

Notes to Accounts 15

The schedules referred above and the notes to accounts form an integral part of the Balance Sheet. As per our report of even date

S.R. BATLIBOI & Co. For and on behalf of Board of Directors of Chartered Accountants SBICAP Securities Limited.

per Vijay Maniar A. P. Verma Sridhar Raju Dhanashri Kenkre a Partner Chairman Managing Director Company Secretary Membership No.: 36738

Mumbai Mumbai April 11, 2008 April 11, 2008

76 PROFIT AND LOSS ACCOUNT

(Rupees)

For the year ended Schedule 31st Mar-08 As at 31st Mar-07

Income Brokerage (Gross) 193,143,801 87,880,950 Less: Service tax 20,960,459 9,469,306 172,183,342 78,411,644 Selling and distribution commission (Gross) 255,522,874 96,919,740 Less: Service tax 27,497,643 9,754,218 9 228,025,231 87,165,522 Depository services (Gross) 1,619,307 14,271 Less: Service tax 182,264 2,017 10 1,437,043 12,254 Interest 37,916,433 16,119,696 (Tax deducted at source: Rs.8,626,744/-, March 2007: Rs.3,617,843/-) Other income 11 8,815,643 656,290 448,377,692 182,365,406 Expenditure Employee cost 12 85,708,596 42,701,704 Operating expenses 13 104,521,252 40,023,056 Administration expenses 14 60,593,180 31,426,563 Depreciation / amortisation 3 9,825,248 4,734,857 260,648,276 118,886,180 Profit Before Tax 187,729,416 63,479,226 Provision for tax Current income tax (66,000,000) (21,000,000) Deferred tax 1,163,869 (1,456,179) Fringe benefit tax (820,000) (600,400) Profit After Tax 122,073,285 40,422,647 Balance brought forward from previous year 34,740,096 (5,682,551) Less: Provision for compensated absence as per transitional provision 422,982 - Profit available for appropriation 156,390,399 34,740,096 Appropriations : Interim dividend 15,000,000 - Tax on interim dividend 2,549,250 - Transfer to general reserve 3,051,832 - Surplus carried to Balance Sheet 135,789,317 34,740,096 Earning per share (Basic and Diluted in Rs.) (Face value Rs.10/- per share) 15(B)(1) 2.44 0.90

Notes to Accounts 15 The schedules referred above and the notes to accounts form an integral part of the Profit and Loss Account. As per our report of even date

S.R. BATLIBOI & Co. For and on behalf of Board of Directors of D E T Chartered Accountants SBICAP Securities Limited. I M I L per Vijay Maniar A. P. Verma Sridhar Raju Dhanashri Kenkre S E I T

Partner Chairman Managing Director Company Secretary I R

Membership No.: 36738 U C E S

Mumbai Mumbai P A C April 11, 2008 April 11, 2008 I B S

77 CASH FLOW STATEMENT

(Rupees)

For the year ended For the year ended 31st Mar-08 31st Mar-07

Cash flow from operating activities :- Profit Before Tax 187,729,416 63,479,226 Adjustments for non-cash transactions Depreciation 9,825,248 4,734,857 Excess provision for doubtful debts written back (591,287) 709,427 Loss on sale of fixed assets 251,952 - Provision for leave encashment 1,852,396 - Provision for gratuity 591,762 123,776 11,930,071 5,568,060 Operating profit before working capital changes 199,659,487 69,047,286 Adjustments for : Decrease /(increase) in fixed deposits under lien (202,500,000) (31,000,000) Decrease /(increase) in fixed deposits (original maturity > 3 months) 90,000,000 (212,500,000) Decrease /(increase) in current assets (27,127,403) 41,624,830 Decrease /(increase) in loans and advances 16,185,144 (20,873,016) (Decrease)/increase in current liabilities 71,602,731 35,809,588 (51,839,528) (186,938,598) Cash generated from operations before tax 147,819,959 (117,891,312) Fringe benefit tax paid (820,000) (600,400) Direct taxes paid (79,613,872) (19,600,579) (80,433,872) (20,200,979) I. Net cash from operating activities 67,386,087 (138,092,291) Cash flow from investing activities :- Purchase consideration paid to SBI Capital Markets Limited for : Fixed assets - (7,455,551) Current assets - (62,750,871) Loans and advances - (48,473,071) Current liabilities - 27,848,518 Purchase of fixed assets (17,131,707) (16,433,188) Sale of fixed assets 100,100 - Capital advance 1,489,563 (1,853,563) II. Net cash from investing activities. (15,542,044) (109,117,726) Cash Flow from financing activities :- Proceeds from issue of shares - 399,500,000 Interim dividend paid (15,000,000) - Tax on interim dividend (2,549,250) - III. Net cash used in financing activities (17,549,250) 399,500,000 Net change in cash & cash equivalents (I+II+III) 34,294,793 152,289,983 Cash & cash equivalents at the beginning of the year 153,878,269 1,588,286 Cash & cash equivalents at the end of the year (a) 188,173,062 153,878,269 Fixed deposits under lien 233,500,000 31,000,000 Fixed deposits (original maturity > 3 months) 215,000,000 305,000,000 (b) 448,500,000 336,000,000 Total (a+b) 636,673,062 489,878,269 As per our report of even date S.R. BATLIBOI & Co. For and on behalf of Board of Directors of Chartered Accountants SBICAP Securities Limited. per Vijay Maniar A. P. Verma Sridhar Raju Dhanashri Kenkre Partner Chairman Managing Director Company Secretary Membership No.: 36738 Mumbai Mumbai April 11, 2008 April 11, 2008

78 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET

(Rupees) SCHEDULES

As at 31st Mar-08 As at 31st Mar-07

SCHEDULE - 1 Share Capital Authorised 100,000,000 (Previous year : 100,000,000) Equity Shares of Rs. 10/- each 1,000,000,000 1,000,000,000

Issued, subscribed and paid up 50,000,000 (Previous year : 50,000,000) Equity Shares of Rs.10/- each fully paidup in cash 500,000,000 500,000,000 Total 500,000,000 500,000,000 (The above shares are held by SBI Capital Markets Ltd., the holding company and its nominees)

SCHEDULE - 2 Reserves and Surplus General Reserves Balance as per last account - - Add : Transferred from Profit and Loss Account 3,051,832 - 3,051,832 - Profit and Loss Account 135,789,317 34,740,096 Total 138,841,149 34,740,096 D E T I M I L

S E I T I R U C E S

P A C I B S

79 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT (contd.) ) s - t t e 2 9 7 4 2 7 e a s 3 7 5 1 8 0

p 1 - 4 2 5 6 8 s r , , , , , u 3 a 1 9 8 4 3 A R ( 7 5 7 4 5 M 5 1 9 4 1 , , , , , K 3 2 0 2 9 1 1 C O L B

t t T 4 2 5 7 8 2 8 a s 5 6 6 0 8 8 0 E

1 - 2 5 0 4 2 8 s r N , , , , , , 3 a 1 6 3 7 8 3 A 3 8 2 6 0 5 M 0 6 5 8 1 1 , , , , , , 5 2 0 7 6 9 1 2 1

t 0 0 9 6 5 7 e 8 s 2 7 0 8 8 5 c 0 1 - 6 3 1 7 8 8 n , , , , , , r 3 N a

1 5 4 2 3 4 a l t 6 4 2 3 6 3 O a a M I

1 7 1 4 4 7 , , , , , B T s 1 9 3 4 4 A a 1 S I T R O M

- - - n 1 9 0 A

0 1 / 2 o

i 5 7 2 t , , , N c 0 5 6 O u 6 3 9 I d T e A I D C

E 4 2 9 3 8 7 s R 9 0 7 7 4 5 n P 2 5 9 4 2 8 o , , , , , , i E t 8 2 4 9 5 4 i D 4 7 5 4 2 3

d 7 5 5 9 8 7 , , , , d D 5 2 9 4 A E T

A - t 7 8 9 3 7 e 7 L s 2 6 4 1 5 c 0 U 1 - 8 8 8 3 8 n

l , , , , , i t M a 3 2 4 3 4 r l a

U 7 7 0 8 3 p a s 4 1 6 4 7 C A , , B a 3 4 C A

t e 8 4 2 5 3 4 9 s c 0 7 3 7 9 7 3 1 - n r 8 9 1 1 1 7 3 , , , , , , a

a l t 2 1 7 0 2 8 a a M 9 3 4 0 7 8

1 4 6 3 5 8 B s , , , , , , a 6 3 9 1 0 3 1 1 4 2

- - - n 5 7 2 o 8 8 7 i 0 t 1 2 K , , , c C 7 1 8 u 6 8 4 O d 3 4 L e B D

S

S s 0 5 6 6 7 9 n 0 8 5 6 0 3 O 7 7 9 2 7 7 o R , , , , , , i t 4 9 4 2 1 8 i G 1 9 4 7 3 8 d 5 0 1 3 1 8 d , , , , , , 2 1 5 8 7 3 A 1 2

- , 9 7 6 7 9 t 7 e 5 4 0 2 3 s 0 c 2 1 4 9 7 1 - , , , , , l n i t 5 2 3 7 8 r a a 4 3 8 2 8 l

p 0 3 5 9 8 a s , , , , , A a B 4 2 4 2 3

1 2 S T s S s E e e T r r S s t E u a t S n S x w 3 i A e t

S f r - F s

m E o A t a

p E & L e S e i

s

E L y s u r r B s

L I s q e e U e s t t r B G E A u D I u u

u

t o N p p E i i e l d G v c A n a e H i m m N r t f T e x f o o r C u i A o N T O F C I C T P S F

80 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET (contd.)

(Rupees) SCHEDULES

As at 31st Mar-08 As at 31st Mar-07

SCHEDULE - 4 Sundry Debtors Debts outstanding for a period exceeding six months Unsecured, considered doubtful 66,342 497,700 Other debts Unsecured, considered good 34,230,640 17,237,677 Unsecured, considered doubtful 51,798 211,727 34,348,780 17,947,104 Less: Provision for doubtful debts 118,140 709,427 Exchange account - 3,550,080 Total 34,230,640 20,787,757 Included in Sundry Debtors are: Dues from companies under the same management: - State Bank of India (ultimate holding company) 890,775 361,041 - SBI Capital Markets Limited (holding company) 2,132,761 - - SBI Mutual Funds (fellow subsidiary) 162,366 9,408 - State Bank of Mysore (fellow subsidiary) - 935 - State Bank of Indore (fellow subsidiary) 2,882 - - SBI Life Insurance (fellow subsidiary) 23,731 - - SBI DFHI Limited (fellow subsidiary) 5,158 12,611

SCHEDULE - 5 Cash and Bank Balances Cash on hand 1,000 2,000 Balances with scheduled banks - in Current accounts Client designated 155,036,329 120,621,932 Others 33,135,733 33,254,337

- in Fixed deposit accounts 215,000,000 305,000,000 - Fixed deposits under lien with Stock Exchanges and Bank 233,500,000 31,000,000 Total 636,673,062 489,878,269

SCHEDULE - 6 Current Assets, Loans and Advances Unsecured, considered good Advances recoverable in cash or kind for value to be received 2,013,417 2,873,099 Advance tax and tax deducted at source [net of provision for income-tax Rs. 66,000,000 (Previous year Rs. Nil)] 12,290,784 -

Deposits with Stock Exchanges/clearing house 33,014,082 53,014,082 D E T Other deposits 11,793,007 7,118,470 I M I L

Unsecured, considered doubtful S E I T Arbitration deposit 141,822 - I R

59,253,112 63,005,651 U C E S Less: Provision for arbitration deposit 141,822 - P A C

Total 59,111,290 63,005,651 I B S

81 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET (contd.)

(Rupees) SCHEDULES

As at 31st Mar-08 As at 31st Mar-07

SCHEDULE - 7 Current Liabilities Exchange account 7,317,641 - Clients payable 65,848,149 28,107,182 Other liabilities 32,458,434 16,627,499 Creditors for expenses 29,991,237 19,278,049 Total 135,615,461 64,012,730 Dues to companies under the same management: -SBI Capital Markets Ltd (Holding company) 6,879,319 3,251,709 -State Bank of Bikaner and Jaipur (Fellow Subsidiary) - 500,000 -State Bank of Mysore (Fellow Subsidiary) - 200,000 -State Bank of Indore (Fellow Subsidiary) - 700,000 -State Bank of Saurashtra (Fellow Subsidiary) 1,011 - -State Bank of Hyderabad (Fellow Subsidiary) - 100,000 Dues of Micro, Medium and Small Enterprises included in Creditors for expenses - -

SCHEDULE - 8 Provisions Provision for tax [net of advance tax Rs.Nil (Previous year Rs.19,891,911)] - 1,323,089 Provision for gratuity 715,539 123,776 Provision for compensated absences 2,493,181 - Total 3,208,720 1,446,865

82 SCHEDULES ANNEXED TO AND FORMING PART OF PROFIT AND LOSS ACCOUNT (contd.)

(Rupees) SCHEDULES For the year ended For the year ended 31st Mar-08 31st Mar-07

SCHEDULE - 9 Selling and Distribution Commission Mutual Funds 163,086,756 41,182,040 IPO's 63,721,478 43,061,541 Bond 1,181,397 2,921,941 Others 35,600 - Total 228,025,231 87,165,522

SCHEDULE - 10 Depository Services Income Annual maintenance charges 277,957 1,000 Transaction charges 1,140,865 9,778 Dematerisation charges 18,221 1,476 Total 1,437,043 12,254

SCHEDULE - 11 Other Income Dividend - 89,029 Provision written back Performance linked variable payment 2,696,602 - Broking debtors 591,287 - S&D commission payable 5,203,794 Miscellaneous income 323,960 567,261 Total 8,815,643 656,290

SCHEDULE - 12 Employee Costs Salaries, wages and bonus 78,040,517 38,310,410 Contribution to provident and pension funds 2,514,719 719,080 Gratuity expense 709,822 855,696 Staff welfare expense 4,443,538 2,816,518 Total 85,708,596 42,701,704

SCHEDULE - 13 Operating Expenses Mutual Fund brokerage 48,899,809 10,302,199 IPO brokerage 30,378,277 17,234,964 Bond brokerage 636,371 2,134,010 Stamp duty 11,090,231 5,084,882 D

Transaction charges 4,466,544 1,731,969 E T I M I

Depository charges 3,270,285 1,564,509 L

S E

Other operating expenses 5,228,926 1,261,096 I T I

Provision for doubtful debts - 709,427 R U C

Sundry debtors written off 550,809 - E S

Total 104,521,252 40,023,056 P A C I B S

83 SCHEDULES ANNEXED TO AND FORMING PART OF PROFIT AND LOSS ACCOUNT (contd.)

(Rupees) SCHEDULES For the year ended For the year ended 31st Mar-08 31st Mar-07

SCHEDULE - 14 Administrative Expenses Rent (Refer Schedule 15(B)(5)) 16,909,483 9,108,821 Advertisement 1,063,901 482,815 Travelling and conveyance 6,548,491 3,393,488 Communication 5,804,522 3,084,669 Printing and stationery 4,836,146 2,290,440 Legal and professional fees (Refer Schedule 15(B)(8b)) 2,345,286 2,722,777 Electricity charges 3,845,074 1,137,580 Membership and subscriptions 2,797,064 1,493,146 Office maintenance 2,246,233 1,532,643 Repairs and maintenance (others) 2,033,740 1,718,088 Staff recruitment 4,418,484 1,716,580 Books and periodicals 168,405 137,313 Business promotion 517,742 288,767 Courier 2,550,512 875,809 Director's sitting fees 72,000 24,000 Bank charges 1,113,352 192,522 Registration charges 383,499 512,240 Rates and taxes 327,956 198,537 Stamp and franking charges 590,548 452,918 Loss on sale of fixed assets 251,952 - Miscellaneous expenses 1,768,790 63,410 Total 60,593,180 31,426,563

84 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2008 (contd.)

SCHEDULES

SCHEDULE – 15 A. Notes to Accounts STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES a) Basis of Preparation The financial statements have been prepared to comply in all material respects with the Notified accounting standard by Companies Accounting Standard Rules, 2006 and the relevant provisions of the Companies Act,1956. The financial statements have been prepared under the historical cost convention on an accrual basis except in case of assets for which provision for impairment is made and revaluation is carried out. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.

b) Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period end. Although these estimates are based upon management’s best knowledge of current events and actions, actual results could differ from these estimates.

(c) Changes in Accounting Policies Adoption of Accounting Standard AS15 (Revised) Employee Benefits Till March 31, 2007, the Company was providing for gratuity based on actuarial valuation report submitted by independent actuary. In Current year, the Company has adopted the Accounting Standard 15 (Revised) which is mandatory from accounting periods commencing on or after from December 7, 2006. Accordingly the company has provided for gratuity based on actuarial valuation done as per projected unit credit method.Further in accordance with the transitional provision in the revised accounting standard, Rs.422,982 (net of deferred tax Rs.217,803) has been adjusted to the General Reserve. This change is not having material impact on the profit for the current year.

(d) Fixed assets and Depreciation Fixed assets are stated at cost less accumulated depreciation and impairment loss, if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use.

Depreciation on fixed assets is provided using the written down value method at rates prescribed in Schedule XIV to the Companies Act, 1956, on pro-rata basis from date of acquisition/capitalisation. Assets costing less than Rs.5,000/- are depreciated 100% in the year of capitalization.

Intangible assets, comprising of computer software are being amortised on a straight-line method over a period of three years from the year of acquisition or installation.

(e) Impairment The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the assets net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted D E

average cost of capital. After impairment, depreciation is provided on the revised carrying amount of the assets over T I M I

its remaining useful life. L

S E I T I

(f) Lease R U C E

Leases where the lessor effectively retains substantially all the risks and the benefits of ownership of the leased term S

P

are classified as operating lease. Operating lease payments are recognized as an expense in the Profit and Loss A C I B

account on a straight-line basis over the lease term. S

85 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT (contd.)

SCHEDULES

(g) Income recognition Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.

Brokerage income in relation to stock broking activity is recognized on the trade date of transaction and includes stamp duty and transaction charges. Amounts receivable from and payable to clients for broking transactions are disclosed separately as Trade executed but not settled.

Underwriting commission relating to public issues is accounted for on finalisation of allotment of the public issue. Brokerage Income relating to public issues / Mutual Fund / Other Securities is accounted for based on mobilisation and intimation received from clients / intermediaries.

Interest income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

(h) Foreign currency transactions Initial Recognition Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. Conversion Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction; and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined. Exchange Differences Exchange differences arising on the settlement of monetary items or on reporting company's monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or as expenses in the year in which they arise except those arising from investments in non-integral operations.

Exchange differences arising on a monetary item that, in substance, form part of company's net investment in a non- integral foreign operation is accumulated in a foreign currency translation reserve in the financial statements until the disposal of the net investment, at which time they are recognised as income or as expenses.

(i) Retirement benefits Retirement benefits in the form of Provident Fund is a defined contribution scheme and the contributions are charged to the Profit and Loss Account of the year when the contributions to the respective funds are due. There are no other obligations other than the contribution payable to the respective trusts.

Gratuity liability is a defined benefit obligation and provided for on the basis of an actuarial valuation made at the end of each financial year.

Short term compensated absences are provided for on based on estimates. Long term compensated absences are provided for based on actuarial valuation. The actuarial valuation is done per projected unit credit method.

Actuarial gains/losses are immediately taken to profit and loss account and are not deferred.

86 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT (contd.)

SCHEDULES

(j) Income Taxes Tax expense comprises of current, deferred and fringe benefit tax. Current income tax and fringe benefit tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. If the company has unabsorbed depreciation or carry forward tax losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that such deferred tax assets can be realised against future taxable profits.

At each balance sheet date the Company re-assesses unrecognised deferred tax assets. It recognises unrecognised deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realised.

The carrying amount of deferred tax assets are reviewed at each balance sheet date. The Company writes down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.

(k) Segment Reporting Policies The Company's primary business segments are reflected based on the principal business carried out, i.e. share and stock broking on the National Stock Exchange of India Limited and Bombay Stock Exchange Limited and other related ancillary services.

The risk and returns of the business of the Company is neither associated with geographical segmentation nor the clients of the Company are grouped geographically, hence there is no secondary segment reporting based on geographical segment.

(l) Earnings Per Share Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting preference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the period. Partly paid equity shares are treated as a fraction of an equity share to the extent that they were entitled to participate in dividends relative to a fully paid equity share during the reporting period. The weighted average numbers of equity shares outstanding during the period are adjusted for events of bonus issue; bonus element in a rights issue to existing shareholders; share split; and reverse share split (consolidation of shares).

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects

of all dilutive potential equity shares. D E T I M I L

(m) Provisions S E I T I

A provision is recognised when an enterprise has a present obligation as a result of past event; it is probable that an R U C

outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. E S

P A C I B S

87 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT (contd.)

Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

(n) Cash and Cash equivalents Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-term investments in fixed deposits with an original maturity of three months or less.

88 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT (contd.)

B) OTHER NOTES 1. Earnings Per Equity Share (EPS) (Rupees) For the year ended For the year ended 31st Mar-08 31st Mar-07 I Basic and diluted EPS (Rs.) 2.44 0.90 II Nominal value per share (Rs.) 10 10

EPS has been calculated based on the net profit after taxation of Rs.122,073,285/- (2007 : Rs 40,422,647) and the weighted average number of equity shares outstanding during the year of 50,000,000 (2007 : 44,775,185).

Basic and diluted EPS has been computed by dividing net profit after tax by weighted average number of equity shares outstanding during the year. There are no dilutive potential equity shares outstanding during the year.

2. Deferred Taxes The tax effects of significant temporary differences are as follows: (Rupees) As at As at 31st Mar-08 31st Mar-07 Deferred Tax Liabilities Differences in depreciation on block of fixed assets per tax books and financial books 1,205,307 1,736,635 Total (A) 1,205,307 1,736,635

Deferred Tax Assets Effect of expenditure debited to profit and loss account in current year but allowed for tax purpose in subsequent years: (i) Provision on Gratuity 243,212 41,663 (ii) Provision for doubtful debts 40,156 238,793 (ii) Provision for compenseted absence 847,432 - Total (B) 1,130,800 280,456 Net Deferred Tax Liability (A-B) 74,507 1,456,179

(Rupees) As at As at 31st Mar-08 31st Mar-07 3. Capital Commitments Estimated amount of contracts remaining to be executed on capital account & not provided for 2,879,069 2,595,275

4. Contingent Liability Claims against the Company not acknowledged as debts 43,300 - D E T I M I L

S E I T I R U C E S

P A C I B S

89 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT (contd.)

5. Gratuity and Compensated Absences (Revised AS-15) The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The following tables summarise the components of net benefit expense recognised in the profit and loss account and the funded status and amounts recognised in the balance sheet for the respective plans.

Profit and Loss Account Net employee benefit expense (recognised in Employee Cost) Gratuity (Rs.)

31st Mar-08 31st Mar-07

Current service cost 524,279 - Interest cost on benefit obligation 64,245 - Expected return on plan assets (71,064) - Net actuarial( gain) / loss recognised in the year 116,867 - Past service cost - - Net benefit expense 634,327 -

Actual return on plan assets 143,752 -

Balance Sheet Details of Provision for gratuity and compensated absences Gratuity Compensated Absenses (Rs.)

31st Mar-08 31st Mar-07 31st Mar-08 31st Mar-07

Defined benefit obligation 1,563,851 785,772 2,493,181 640,785 Fair value of plan assets (848,312) (704,560) - - 715,539 81,212 2,493,181 640,785 Less: Unrecognised past service cost -- - - Plan asset / (liability) 715,539 81,212 2,493,181 640,785

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

Gratuity (Rs.)

31st Mar-08 31st Mar-07

Opening defined benefit obligation 785,772 - Interest cost 64,245 - Current service cost 524,279 - Benefits paid - - Actuarial (gains) / losses on obligation 189,555 - Closing defined benefit obligation 1,563,851 785,772

90 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT (contd.)

Changes in the fair value of plan assets are as follows: Gratuity (Rs.)

31st Mar-08 31st Mar-07

Opening fair value of plan assets 704,560 - Expected return 71,064 - Contributions by employer - - Benefits paid - - Actuarial gains / (losses) 72,688 - Closing fair value of plan assets 848,312 704,560

The Company expects to contribute Rs.500,000 to gratuity in 2007-08. The major categories of plan assets as a percentage of the fair value of total plan assets are as follows:

Gratuity (Rs.)

31st Mar-08 31st Mar-07

Investments with insurer (in %) 100% 100% Total 100% 100%

The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled. There has been significant change in expected rate of return on assets due to the improved stock market scenario.

The principal assumptions used in determining gratuity and post-employment medical benefit obligations for the Company’s plans are shown below : Gratuity Compensated Absenses (Rs.)

31st Mar-08 31st Mar-07 31st Mar-08 31st Mar-07

Discount rate 8.50% p.a 8.25% p.a 8.50% p.a 8.25% p.a Expected rate of return on assets 7.50% p.a 7.50% p.a - - Increase in Compensation cost 8.00% p.a 8.00% p.a 8.00% p.a 8.00% p.a

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

Amounts for the current and previous four periods are as follows: Gratuity (Rs.)

31st Mar-08 31st Mar-07

Defined benefit obligation 1,563,851 785,772 Plan assets 843,312 704,560 Surplus / (deficit) (715,539) (81,212) Experience adjustments on plan liabilities 246,865 - Experience adjustments on plan assets 72,688 - D E T Information is available only for the previous year. I M I L

S E I T I R U C E S

P A C I B S

91 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT (contd.)

6. As of the year end, the Company was contingently liable in respect of trades executed on behalf of various clients in accordance with bye-laws of the exchanges, for which settlement dates were subsequent to the balance sheet date. These trades have been settled subsequently on the respective settlement dates.

7. Office premises obtained on operating lease. There are no restrictions imposed by the lease agreement. The Company has option to terminate the agreement after a period of two years. (Rs.) Particulars As at As at 31st Mar-08 31st Mar-07

Lease payments for the year 16,909,483 9,108,821 Minimum Lease Payments : I. Not later than one year 16,417,340 11,724,624 II. Later than one year and not later than five years 5,649,889 13,245,663 III. Later than five years - -

8. Supplementary Profit and Loss Data (a) Managerial remuneration (i) The Managing Director and Whole-time Director are on secondment from State Bank of India ('SBI') and their remuneration, which is in accordance with the service rules of SBI, has been charged in the books of accounts. (Rs.) (ii) Remuneration to the Chairman & Whole-time Director / For the For the year ended year ended Managing Director & CEO / Whole-time Director 31st Mar-08 31st Mar-07 Salary and bonus 2,418,830 1,201,930 Contribution to provident and pension funds 107,965 73,798 2,526,795 1,275,728

Note: As the future liability for Gratuity and leave encashment is provided on an actuarial basis for the Company as a

whole, the amount pertaining to the directors is not ascertainable and therefore not included above.

There is no commission payable to any director of the Company. Consequently, the computation of profits as required under Section 349 of the Companies Act, 1956 has not been included.

(Rs.) (b) Payments to auditors (included in legal and For the For the year ended year ended professional fees) (excluding service tax) 31st Mar-08 31st Mar-07

As auditors 850,000 600,000

For other services 50,000 225,000 Reimbursement of out-of-expenditure 9,966 - 909,966 825,000

(c) Expenditure in foreign currency (on accrual basis) Travel and other expenses - 144,408

92 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT (contd.)

9. Related Parties Names of related parties where control exists irrespective of whether transactions have occurred or not:

Name of the Party Relationship State Bank of India Ultimate Holding Company SBI Capital Markets Limited Holding Company Names of other related parties with whom transactions have taken place during the year: Name of the Party Relationship SBI Life Insurance Company Limited Fellow Subsidiary SBI Mutual Funds Fellow Subsidiary SBI DFHI Ltd. Fellow Subsidiary State Bank of Bikaner and Jaipur Fellow Subsidiary State Bank of Hyderabad Fellow Subsidiary State Bank of Indore Fellow Subsidiary State Bank of Mysore Fellow Subsidiary State Bank of Patiala Fellow Subsidiary State Bank of Saurashtra Fellow Subsidiary State Bank of Travancore Fellow Subsidiary SBI Commercial & International Bank Ltd. Fellow Subsidiary Shri V. Gopinathan, Managing Director (upto 30-06-07) Key Management Personnel Shri R. Shridharan, Chairman (upto 25-02-08) Key Management Personnel Shri A. P. Verma, Director, Chairman (from 03-03-08) Key Management Personnel Shri Sridhar Raju, Managing Director (from 20-08-07) Key Management Personnel Shri R.N Nehriya, Chief Operating Officer Key Management Personnel Shri S. H. Visweswaraiah, Director & SVP (Operations) Key Management Personnel

Related Parties defined under clause 3 of AS – 18 “Related Party Disclosures” have been identified on the basis of representation made by the management and information available with the Company. D E T I M I L

S E I T I R U C E S

P A C I B S

93 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT (contd.)

Details of Transactions with the above related parties are as under : (Rupees) Particulars Ultimate Holding Company Fellow Subsidiaries Key Management Holding Company Subsidiaries Personal Mar-08 Mar- 07 Mar-08 Mar-07 Mar-08 Mar-07 Mar-08 Mar-07 Expenses during the year ended Employees cost - - 1,255,350 12,613,305 - - - - Shri V. Gopinathan, Ex-Managing Director ------508,894 699,090 Shri Sridhar Raju, Managing Director ------606,464 - Shri R.N Nehriya, Chief Operating Officer ------712,701 515,875 Shri S. H. Visweswaraiah, SVP (Operations) ------698,735 576,638 Shri R.Sridharan, Chairman ------11,000 - (upto February 25, 2008) Shri A.P.Verma, Chairman ------16,000 - (from March 3, 2008) Rent - - 8,320,762 3,677,625 - - - - Brokerage paid for selling and distribution -- - 4,011,590 - - - - Bank Guarantee Commission 933,138 ------Reimbursement of expenses incurred on behalf of the company for : Other expenses reimbursed - - 5,460,094 4,849,321 - - - -

Income during the year ended Selling and distribution commission (IPO) - - 43,696,627 44,549,611 - - - - Brokerage (stock broking) 35,206,634 13,411,519 1,661,637 4,226,817 - - - - Brokerage (stock broking) - fellow subsidiaries: SBI Mutual Funds - - - - 8,496,978 4,037,714 - - SBI DFHI Limited - - - - 1,001,796 1,083,718 - - SBI Life Insurance Limited - - - - 8,105,198 2,920,039 - - Others - - - - 804,952 464,083 - - Interest Income: State Bank of Bikaner and Jaipur - - - - 8,516,385 3,511,802 - - State Bank of Travancore - - - - 13,050,376 2,939,640 - - SBI Commercial & International Bank Ltd - - - - 8,004,968 9,668,254 - - State Bank of Saurashtra - - - - 7,820,821 - - - State Bank of India 523,883 ------

Balance receivable as at Interest accrued: State Bank of Bikaner and Jaipur - - - - 1,615,979 3,511,802 - - State Bank of Travancore - - - - 6,567,562 2,939,640 - - SBI Commercial & International Bank Ltd - - - - 6,486,612 525,306 - - State Bank of Saurashtra - - - - 6,048,623 - - - State Bank of India 327,666 ------Brokerage receivable 890,775 361,041 2,132,761 - 194,136 22,955 - - Bank balances 34,905,826 32,454,901 - - 11,049,526 - - - Fixed deposits 12,500,000 - - - 436,000,000 336,000,000 - - Others 36,160 ------

Balance payable as at Trade executed but not settled - - 29,194 1,411,561 - - - - Other liability - - 6,850,125 1,840,148 - - - - Creditors for expenses: ------State Bank of Bikaner and Jaipur - - - - - 500,000 - - State Bank of Mysore --- - - 200,000 - - State Bank of Indore -- - - - 700,000 - - Others - - - - 1,011 100,000 - -

Others transactions during the year ended Investment in equity capital - - - 399,500,000 - - - - Purchase consideration paid for acquisition of broking business: Fixed assets acquired - - - 7,455,611 - - - - Current assets acquired -- - 111,223,882 - - - - Cash and bank Balances - - - 86,123,943 - - - - Current liabilities and Provisions - - - (27,848,517) - - - - Fixed assets acquired - - 356,816 5,375,120 - - - - Bank fixed deposits transferred - - - 7,025,000 - - - - Rent deposits paid - - 3,975,000 1,800,000 - - - - Rent deposits returned - - 4,000,000 - - - - - Others transactions - - - 1,858,307 - - - -

94 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT (contd.)

10. Segmental Reporting

The Company’s operations fall under single business segment of broking services. As a share and a stock broker, the Company is engaged in the business of securities broking and its allied services and selling and distriubution activities in capital markets in India. Further, all the transactions and the assets of the Company are recorded/located in India. Since the Company’s business activity primarily falls within a single business and geographical segment, no additional disclosure is to be provided under AS 17-Segment Reporting, other than those already provided in the financial statements.

11. Information with regard to other matters specified in paragraphs 4A, 4C, and 4D of Part II of Schedule VI of the Companies Act,1956 are either nil or not applicable to the Company for the year ended March 31, 2008.

12. Previous year figures are regrouped and rearranged wherever necessary.

S.R. BATLIBOI & Co. For and on behalf of Board of Directors Chartered Accountants SBICAP Securities Limited. per Vijay Maniar A. P. Verma Sridhar Raju Dhanashri Kenkre Partner Chairman Managing Director Company Secretary Membership No.: 36738

Mumbai Mumbai April 11, 2008 April 11, 2008 D E T I M I L

S E I T I R U C E S

P A C I B S

95 BALANCE SHEET ABSTRACT AND THE COMPANY’S GENERAL BUSINESS PROFILE

( Rupees in thousands unless mentioned otherwise) Registration details Registration number 155485 State code 11 Balance sheet date March 31st, 2008

Capital raised during the year Public issue Nil Rights issue Nil Bonus issue Nil Private placement Nil

Position of mobilisation and deployment of funds Total liabilities and shareholders funds 777,740 Total assets 777,740

Sources of funds Paid-up capital 500,000 Reserves and surplus 138,841 Deferred tax liability 75

Application of funds Net fixed assets 26,108 Net current assets 612,443 Miscellaneous expenditure - Accumulated losses Nil

Performance of Company Turnover 448,378 Total expenditure 260,648 Profit/(loss) before tax 187,729 Profit/(loss) after tax 122,073 Earning per share (Basic and Diluted in Rs.) 2.44 (Face value Rs.10/- per share) Dividend rate %

Generic names of three principal services of the Company (As per Monetary Terms) Income from Stock broking operations 172,183 Income from Selling and distribution of Mutual fund and IPOs 228,025

96 DIRECTORS’ REPORT FOR THE YEAR 2007 -2008

T o th e M embers,

Your Directors have pleasure in presenting the 3rd Annual Report and the Audited Accounts of SBICAPS Ventures Limited for the year ended 31st March 2008.

I. Operations and Major Events during the year

A Knowledge Sector Fund of US$ 100 million has been jointly set up by SBICAPS Ventures Ltd. (SVL) and SBI Holdings Inc., (Softbank), Japan. In terms of the Agreement, SVL is participating in the said Fund up to a maximum of US$ 5 million and the balance US$ 95 million is being funded by Softbank. Further, in terms of the said Agreement, a separate Asset Management Company (AMC) to act as Investment Manager to the fund, has been formed with a shareholding of 50% each by SVL and Softbank. During the year under review, SVL has invested an amount of Rs.60 lacs (Equivalent of US$ 1,50,000) as its 5% share in the total investment of USD 3 million in Aptivaa Consulting Solutions Pvt. Ltd. (Aptivaa). Aptivaa is a risk and compliance consulting company with global footprints having offices in Mumbai and London. The company provides consulting, implementation support and analytics outsourcing services in the field of Risk Management and Compliance. It has clients in UK, Middle East, SE Asia and India. The team has also developed proprietary frameworks that radically enhance productivity on Basel II consulting and implementation.

II. Financial Results

During the year under review, the Company earned miscellaneous income of Rs. 5,000/-. The Company incurred a total expenditure of Rs. 4,19,421/- and depreciation of Rs. 911/- on office equipments. This has resulted in a loss of Rs. 4,15,332/-.

III. Dividend

No dividend is proposed, as the Company has not earned any profit during the year under review.

IV. Deposits

The Company has not accepted any deposits from the Public, during the year under review.

V. Directors

During the year under review, the following changes took place among the Directors of the Company:- Shri Y. Vijayanand resigned as Director w.e.f. 31st August 2007, consequent to his retirement from State Bank of India.

Smt. Bharati Rao, Dy. Managing Director & CDO, State Bank of India, was appointed as Director w.e.f. 17th November, 2007.

Shri R. Sridharan resigned as Director w.e.f. 25th February 2008 conseqent to his posting as Dy. Managing Director (On Special Duty) at State Bank of India, Corporate Centre.

Shri R. Sridharan, Dy. Managing Director & GE (Subsidiaries), State Bank of India was appointed as Director w.e.f. 25th March, 2008.

Shri A. P. Verma, Director retires by rotation at the 3rd Annual General Meeting of the Company and being eligible, offers himself for re-appointment. D E T Shri Y. Vijayanand Shri R I

The Board places on record its deep appreciation of the valuable contributions made by and . M I L Sridharan Smt. Bharati Rao Shri R. Sridharan during their tenure as Directors and extends a hearty welcome to and to the S E R

Board. U T N E V

S P A C I B S

97 DIRECTORS’ REPORT (contd.)

VI. Directors' Responsibility Statement

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

(I) in the preparation of the annual accounts, the applicable accounting standards have been followed;

(ii) appropriate accounting policies have been selected and applied consistently, and the judgments and estimates that have been made are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as on 31st March, 2008 and of the profit or loss of the company for the year ended 31st March, 2008;

(iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act for safeguarding the assets of the company and for preventing and detecting frauds and other irregularities;

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

The Directors also wish to draw the kind attention of the Shareholders to the report of the Auditors to the Shareholders issued by M/s. Khimji Kunverji & Co. - the Statutory Auditors, on the financial accounts for the year ended March 31, 2008.

VII. Auditors

M/s. Khimji Kunverji & Co., Chartered Accountants, the Company's Statutory Auditors, retire at the conclusion of the 3rd Annual General Meeting of the Company. The Board of Directors at their 12th Meeting held on 21st April, 2008, have recommended the appointment of M/s Khimji Kunverji & Co., Chartered Accountants as the Statutory Auditors of the Company to hold office from the conclusion of the 3rd Annual General Meeting upto the conclusion of the 4th Annual General Meeting of the Company. The Company has received a Certificate from M/s Khimji Kunverji & Co. to the effect that their appointment, if made, would be within the limits prescribed under Section 224(1B) of the Companies Act, 1956.

VIII. Companies (Disclosures of Particulars in the Report of the Board of Directors) Rules, 1988

In terms of the above Rules issued by the Central Government, the following information is furnished :- Conservation of Energy and Technology Absorption Since the Company has not commenced the business activities during the year under review, there is no information to report under this head. Foreign Exchange Earnings and Outgo During the year under review, the Company has not earned any foreign exchange.

IX. Particulars of Employees

There is no such information to report in terms of the Companies (Particulars of Employees) Rules, 1975 and in terms of Department of Company Affairs Notification G.S.R. 288 (E) dated the 17th April 2002, issued there under.

X. Acknowledgement

The Board is grateful to the State Bank and SBICAP family for providing significant support during the year.

For and on behalf of the Board of Directors

(R. Sridharan) (A. P. Verma) Director Director

Date :- 22nd April, 2008

98 AUDITORS’ REPORT

To, The Members of SBICAPS Ventures Limited

1. We have audited the attached Balance Sheet of SBICAPS Ventures Limited as at March 31, 2008 and also the Profit and Loss Account and 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.

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 misstatements. 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.

3. As required by the Companies (Auditor's Report) Order, 2003 (as amended) (herein after 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 (herein after referred to as "the Act"), we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order, to the extent applicable.

4. Further to our comments in the Annexure referred to above, we report that:- (i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit; (ii) 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; (iii) The Balance Sheet, Profit and Loss Account and Cash Flow statement dealt with by this report are in agreement with the books of account; (iv) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow statement dealt with by this report comply with the accounting standards referred to in section 211(3C) of the Act; (v) On the basis of written representations received from directors as on March 31, 2008 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2008 from being appointed as a director in terms of section 274 (1)(g) of the Act.

5. In our opinion and to the best of our information and according to the explanation given to us, the said accounts read together with significant accounting policies and notes appearing in Schedule "8" give the information required by the Act, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India; a) in the case of the Balance Sheet, of the state of the affairs of the Company as at March 31, 2008; and b) in case of the Profit and Loss Account, of the Loss of the company for the year ended on that date, c) in the case of Cash Flow statement, of the cash flows of the Company for the year ended on that date.

For and on behalf of KHIMJI KUNVERJI & CO D

Chartered Accountants E T I M I L Nilesh S. Vikamsey S E

Partner R U T N

Membership No.37665 E V

S P

Mumbai A C I B

Date: April 22, 2008 S

99 ANNEXURE TO AUDITORS’ REPORT

(Referred to in paragraph 3 of our report of even date)

Clauses (ii), (iii), (v), (vii), (viii), (x), (xi), (xii), (xiii), (xiv), (xv), (xvi), (xviii), (xix) and (xx) of paragraph 4 and 5 of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company and hence not reported upon

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

(b) All the fixed assets have been physically verified by management during the year but there is regular programme of verification which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) During the year the Company has not disposed off substantial part of its fixed assets.

(ii) 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 for the purchase of fixed assets. During the course of our audit, no major weakness has been noticed in the internal control system in respect of that area.

(iii) In our opinion and according to the information and explanation given to us, the company has complied with the provision of Section 58A, 58AA or any other relevant provision of the Act and the Companies (Acceptance of Deposits) Rules, 1975 with regards to the deposits accepted from the public. We are informed by the management that no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any Tribunal.

(iv) (a) According to the records of the Company, the Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident fund and any other material statutory dues applicable to it and there are no arrears as at 31st March 2008 for a period of more than six months from the date they became payable.

We are informed that the company was not liable for Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Excise Duty, Custom Duty and Service Tax during the year.

(iv) (b) According to the information & explanations given to us, there is no outstanding due of Provident fund not deposited on account of any dispute.

(v) According to the information and explanations given to us and on overall examination of the balance sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment.

(vi) Based upon the audit procedures performed and information and explanations given to us, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For and on behalf of KHIMJI KUNVERJI & CO Chartered Accountants

Nilesh S. Vikamsey Partner Membership No.37665

Mumbai Date: April 22, 2008

100 BALANCE SHEET AS AT 31 MARCH 2008

(Rupees)

Schedule As at 31st Mar-08 As at 31st Mar-07

SOURCES OF FUNDS Shareholders' Funds Share Capital 1 31,000,000 500,000

Loan Funds Unsecured Loan from Holding Company 285,187 2,482,974

31,285,187 2,982,974

APPLICATION OF FUNDS Fixed Assets 2 7,689 - Investments 3 26,499,615 - Current Assets, Loans & Advances 4 1,435,565 56,419

Less: Current Liabilities & Provisions 5 65,169 (65,600) Net Current Assets 1,370,396 (9,181)

Profit and Loss account 3,407,487 2,992,155 31,285,187 2,982,974 Significant Accounting Policies & Notes to Accounts 8- -

Schedules referred to above form an integral part of the Accounts

As per our attached report of even date

For KHIMJI KUNVERJI & CO. For and on behalf of the Board Chartered Accountants SBICAPS Ventures Limited

per Nilesh S. Vikamsey R. Sridharan A. P. Verma Nutan Rane partner (Director) (Director) (Company Secretary) Membership No.37665

Place : Mumbai Date : 22-Apr-08 D E T I M I L

S E R U T N E V

S P A C I B S

101 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2008

(Rupees)

Schedule For the year ended For the year ended 31st Mar-08 31st Mar-07

Income Miscellaneous income 5,000 - Total 5,000 - Expenditure Employee cost 6 285,187 - Administrative expenses 7 134,234 1,105,768 Preliminary/share capital increase - - Expenditure written off - 1,686,991 Total 419,421 2,792,759 Net profit / (loss) before depreciation/amortisation and taxation (414,421) (2,792,759) Depreciation/amortisation 911 - Net profit / (loss) before taxation (415,332) (2,792,759) Provision for income tax - - Net profit / (loss) (415,332) (2,792,759) Balance brought forward, from last Balance Sheet (2,992,155) (199,396) Balance carried to Balance Sheet (3,407,487) (2,992,155) Basic / Diluted Earning Per Share (EPS) (Refer note no.4 of Schedule 8) (0.32) (55.86) Significant Accounting Policies & Notes to Accounts 8

Schedules referred to above form an integral part of the Accounts

As per our attached report of even date

For KHIMJI KUNVERJI & CO. For and on behalf of the Board Chartered Accountants SBICAPS Ventures Limited

per Nilesh S. Vikamsey R. Sridharan A. P. Verma Nutan Rane partner (Director) (Director) (Company Secretary) Membership No.37665

Place : Mumbai Date : 22-Apr-08

102 CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2008

(Rupees)

For the year ended For the year ended 31st Mar-08 31st Mar-07 A. Cash flow from operating activities Net loss before depreciation / amortisation & tax (414,421) (2,792,759) Adjustment for : Decrease / (increase) in current assets - 220,400 Operating loss before working capital changes (414,421) (2,572,359) Increase / (decrease) in current liabilities (431) 49,070 Net cash from operating activities (414,852) (2,523,289)

B. Cash flow from investment activities Investments in Aptivaa Consulting Solutions Private Limited (5,966,005) - Investments in S S Ventures Services Limited (20,533,610) - Purchase of office equipment (8,600) - Net cash (used in) / from investing activities (26,508,215) -

C. Cash flow from financing activities Proceeds received from private placement of Equity Shares 30,500,000 - Repayment of loans from holding company (2,197,787) 2,482,974 Net cash (used in) / from financing activities 28,302,213 2,482,974

Net increase in cash and equivalent 1,379,146 (40,315)

Cash and cash equivalent (opening balance) 56,419 96,374 Cash and cash equivalent (closing balance) 1,435,565 56,419 Notes: 1) Cash and cash equivalents include: Cash in hand - 500 Balances with bank 1,435,565 55,919 1,435,565 56,419

2) Previous year's figures have been regrouped/ rearranged to confirm to the current year's presentation, whenever necessary

As Per Our Attached Report Of Even Date

For KHIMJI KUNVERJI & CO. For and on Behalf of the Board Chartered Accountants SBICAPS Ventures Limited D

Nilesh S. Vikamsey R. Sridharan A. P. Verma Nutan Rane E per T I M I L

partner (Director) (Director) (Company Secretary) S E

Membership No.37665 R U T N E V

Place : Mumbai S P A C

Date : 22-Apr-08 I B S

103 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET & PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2008

(Rupees)

As at 31st Mar-08 As at 31st Mar-07

SCHEDULE - 1 Share Capital Authorised 2,50,00,000 (P.Y. 2,50,00,000) Equity Shares of Rs. 10 each 250,000,000 250,000,000 Issued, subscribed & paid up 31,00,000 (P. Y. 50,000) Equity Shares of Rs. 10 each fully paid up 31,000,000 500,000 31,00,000 (P. Y. 50,000) shares: 100% held by holding company SBI Capital Markets Limited & its nominees 31,000,000 500,000 Schedule 2 on pg no. 106 SCHEDULE - 3 Investments Long term investments Unquoted i) Trade Equity Shares: S S Ventures Services Limited (2,053,361 Equity Shares of Rs. 10/- each fully paid up) 20,533,610 - ii) Non-trade Equity Shares: Aptivaa Consulting Solutions Private Limited (500 Equity Shares of Rs. 10/- each fully paid up) 348,075 - Preference Shares: Compulsorily Convertible Preference Shares of Aptivaa Consulting Solutions Private Limited (8,070 Preference Shares of Rs. 696.15/- 5,617,930 - each fully paid up) 26,499,615 -

SCHEDULE - 4 Current Assets, Loans & Advances Cash in hand - 500 Balances in scheduled banks - in current account 1,435,565 55,919 1,435,565 56,419

SCHEDULE - 5 Current Liabilities & Provisions A. Current Liabilities Sundry creditors for expenses 65,169 65,100 Security deposit - 500

B. Provisions - - 65,169 65,600

104 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET & PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2008 (contd.) (Rupees)

As at 31st Mar-08 As at 31st Mar-07

SCHEDULE - 6 Employee Cost Salaries and allowances 267,399 - Contribution to pension fund 4,328 - Contribution to provident fund 10,011 - Medical expenses 3,449 - 285,187 -

SCHEDULE - 7 Administrative Expenses Printing and stationery 340 - Payment to auditors: Audit fees 58,000 58,000 Reimbursement of service tax 7,169 7,100 Reimbursement of expenses - 3,673 Legal & professional 2,000 523,662 Travel & conveyance expenses - 509,284 Profession tax 7,500 - Stamp fees and other charges 30,500 - Rates and taxes 14,914 - Miscellaneous expenses 2,577 4,049 Service tax expenses 11,234 - 134,234 1,105,768 D E T I M I L

S E R U T N E V

S P A C I B S

105 106 YEAR SHEET ( SCHEDULES c o n t d . ) ENDED

(Rupees) & PROFIT SCHEDULE - 2

ANNEXED

Fixed Assets 31

GROSS BLOCK ACCUMULATED DEPRECIATION / AMORTIZATION NET BLOCK MARCH

AND

As at 1st Deduction/ As at 31st As at 1st Deduction/ As at 31st As at 31st As at 31st April-07 Additions Adjustments Mar-08 April-07 Additions Adjustments Mar-08 Mar-08 Mar-07 LOSS

T 2008 O

Office equipment - 8,600 - 8,600 - 911 - 911 7,689 - AND

ACCOUNT TOTAL - 8,600 - 8,600 - 911 - 911 7,689 - FORMING Total (Previous year) ------FOR P

AR THE T OF

BALANCE SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET & PROFIT AND LOSS ACCOUNT (contd.)

SCHEDULE – 8 Significant Accounting Policies & Notes to Accounts (A) SIGNIFICANT ACCOUNTING POLICIES

1. Accounting Convention The financial Statements have been prepared under the historical cost convention on an accrual basis in compliance with all material aspect of the applicable Accounting Standards in India and the relevant provisions of the Companies Act, 1956. Except otherwise mentioned, the accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.

2. Revenue Recognition Income from Service is recognised as they are rendered based on agreements/ arrangements. Dividend income on investments is accounted for when the right to receive the payment is established.

3. Fixed Assets Fixed assets are stated at cost, less accumulated depreciation and impairment if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use.

4. Depreciation / Amortisation Depreciation on fixed assets is provided on Written down Value Method at the rates and in the manner specified in the Schedule XIV of the Indian Companies Act, 1956.

5. Investments Current Investments are stated at lower of cost and market/fair value. Long Term Investments are stated at cost after deducting provision made, if any, for permanent diminution in the value.

6. Translation of Foreign Currency Items Transactions in foreign currency are recorded at the rate of exchange prevailing on the date of transaction. Foreign currency monetary items are reported using closing rate of exchange at the year end. The resulting exchange gain/loss is reflected in the profit and loss account. Other items, like fixed assets, investments in equity shares are carried in terms of historical cost using the exchange rate at the date of transaction.

7. Retirement Benefits The Company makes defined contribution to Provident Fund which is recognized in the Profit and Loss Account on accrual basis.

8. Taxation Provision for current tax is made on the basis of estimated taxable income for the current accounting year in accordance with the Income Tax Act, 1961.

Deferred tax for timing differences between the book and tax profits for the year is accounted for, using the tax rates and laws that have been substantively enacted as of the balance sheet date. Deferred tax assets arising from timing differences are recognised to the extent there is reasonable certainty that these would be realized in future. D E T I

Deferred tax assets in case of unabsorbed losses and unabsorbed depreciation are recognised only if there is virtual M I L

certainty that such deferred tax asset can be realized against future taxable profits. S E R U T N

Fringe Benefit Tax is provided in accordance with the provisions of the Income Tax Act, 1961. E V

S P A C I B S

107 SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET & PROFIT AND LOSS ACCOUNT (contd.)

9. Earning Per Share Basic and diluted earning per share is reported in accordance with AS-20, 'Earning per Share'. Basis of earnings per equity share has been computed by dividing net loss after tax by weighted average number of shares outstanding for the year.

(B) NOTES ON ACCOUNTS

1. Expenditure in foreign currency during the year is Nil/- (Previous Year Rs. Nil).

2. Administrative expenditure includes prior period expenses of Rs.5,000 paid towards Professional Tax for the financial year 2005-06 and 2006-07.

3. No amount is outstanding in respect of the any enterprises covered under The Micro, Small and Medium Enterprise Development Act, 2006.

4. In the opinion of the Board, the Current Assets & Loans & Advances are stated approximately at value which could be realized in the ordinary course of business. The provision for all known liabilities is adequate and neither in excess of nor short of amounts reasonably necessary. 5. Transactions with related party: Name of Related Party Nature of Relationship

a) SBI Capital Markets Ltd. Holding Company b) State Bank of India Ultimate Holding company c) SS Venture Services Ltd. Associate Amt in Rs. Nature of Transaction Ultimate Holding Company Holding Company Associates 2008 2007 2008 2007 2008 2007 1) Expenses Deputation cost - - 285,187 - - - Bank charges 559 140 - - - - 2) Assets a) Investments SS Venture Services Ltd. - - - - 20,533, 610 - b) Bank Account 1,435,565 55,919 - - - - 3) Liabilities Advances for expenses - - 285,187 2,482,974 - -

6. Calculation of Earnings Per Share (EPS): Particulars Current Year (Rs.) Previous Year (Rs.) Profit/ (loss) after tax (414,572) (2,792,759) Basic/ Diluted EPS (0.32) (55.86) Nominal Value per share 10 10 Weighted average number of equity shares 1,314,658 50,000

7. The figures for the previous year have been regrouped/rearranged wherever necessary.

For and on behalf of Board SBICAPS Ventures Limited R. Sridharan A. P. Verma Nutan Rane Director Director Company Secretary

Place: Mumbai Dated: April 22, 2008

108 ADDITIONAL INFORMATION PURSUANT TO THE PROVISIONS OF PART IV OF SCHEDULE VI TO THE COMPANIES ACT 1956

Balance Sheet Abstract and the Company's General Business Profile i) Registration Details Registration No. U 67 190 MH 2005 PLC 157240 State Code 11 Balance Sheet Date March 31, 2008 ii) Capital raised during the year (Amount in Rs. ) Public Issue NIL Rights Issue NIL Bonus Issue NIL Private Placement 30,500,000 iii) Position of mobilisation of funds and deployment of funds (in Rs.)

Total Liabilities 31,285,187 Total Assets 31,285,187 Sources of funds Paid-up capital 31,000,000 Reserves & surplus NIL Secured loans NIL Unsecured loans 285,187 Application of funds Net fixed assets 7,689 Investments 26,499,615 Net current assets 1,370,396 Misc. Expenditure NIL Accumulated losses 3,407,487

Iv) Performance of the company (In Rs.) Turnover 5,000 Total expenses 420,332 Profit/(Loss) before taxation (415,332) Profit/(Loss) after taxation (415,332) Earning per share (0.32) Dividend rate NIL v) Generic names of three principal products / services of the company (as per monetary terms)

Service description Fund/Investment Manager ITC Code No. Nil

For and on behalf of the Board SBICAPS Ventures Limited

R. Sridharan A. P. Verma Nutan Rane (Director) (Director) (Company Secretary) D E T I M I L Place : Mumbai S E

Date : 22-Apr-08 R U T N E V

S P A C I B S

109 DIRECTORS’ REPORT FOR THE YEAR 2007-2008

T o th e M embers,

Your Directors have pleasure in presenting the 3rd Annual Report and the Audited Accounts of SBICAP Trustee Company Limited for the year ended 31st March 2008.

I. Operations

The Company proposes to carry on the trusteeship functions. The Company also proposes to undertake the business of Security Trustee/Security Agent pursuant to the approval accorded by the members.

II. Financial Results

During the period under review, the company earned interest of Rs.15,400/-. The company incurred an expenditure of Rs. 29,312/-, which has resulted in a loss of Rs. 13,912/- before provision for income tax. The loss after provision for tax works out to Rs. 18,672/-.

III. Dividend

No dividend is proposed, as the Company has not earned any profit during the year under review.

IV. Deposits

The Company has not accepted any deposits from the Public, during the year under review.

V. Directors

During the year under review, the following changes took place among the Directors of the Company :-

Smt. Renu Challu, resigned as Director w.e.f. 10th September, 2007, consequent to her posting as Chief General Manager, Bhopal Circle, State Bank of India.

Shri G. N. Dash, Executive Vice President, SBI Capital Markets Limited, was appointed as Director w.e.f. 28th December, 2007, under Article 148 of the Articles of Association of the Company.

Shri Harish Bahl, resigned as Director w.e.f. 1st February, 2008, consequent to his posting as General Manager, Inspection & Audit Department, Bhopal Zone, State Bank of India.

Shri M. K. Nag, Executive Vice President, SBI Capital Markets Limited, was appointed as Director w.e.f. 19th March, 2008, under Article 148 of the Articles of Association of the Company.

Shri G. N. Dash, resigned as Director w.e.f. 29th March, 2008, consequent to his posting as Director, SBIICM, Hyderabad.

The Board places on record its deep appreciation of the valuable contributions made by Smt. Renu Challu, Shri Harish Bahl and Shri G. N. Dash, during their tenure as Directors and extends a hearty welcome to Shri M. K. Nag to the Board.

In accordance with the provisions of the Companies Act 1956, Shri M. K. Nag holds office upto the date of the Third Annual General Meeting. The Company has received a Notice from a member under Section 257 of the Companies Act, 1956, proposing him as a candidate for the office of Director liable to retire by rotation. Shri M. K. Nag has conveyed his consent for being appointed as Director.

Shri Sridhar Raju, Director retires by rotation at the 3rd Annual General Meeting of the Company and being eligible, offers himself for re-appointment.

110 DIRECTORS’ REPORT (contd.)

VI. Directors' Responsibility Statement

Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Directors confirm that:- (i) in the preparation of the annual accounts, the applicable accounting standards have been followed;

(ii) appropriate accounting policies have been selected and applied consistently, and the judgements and estimates that have been made are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as on 31st March 2008 and of the profit or loss of the company for the period ended 31st March, 2008;

(iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act for safeguarding the assets of the company and for preventing and detecting frauds and other irregularities;

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

The Directors also wish to draw the kind attention of the Shareholders to the report of the Auditors to the Shareholders issued by M/s Khandelwal Jain & Co - the Statutory Auditors, on the financial accounts for the year ended March 31, 2008

VII. Auditors

M/s Khandelwal Jain & Co, Chartered Accountants, the Statutory Auditors of the Company, retire at the conclusion of the Second Annual General Meeting of the Company .

The Board of Directors at their 10th Meeting held on 17th April, 2008, have recommended the re-appointment of M/s Khandelwal Jain & Co, Chartered Accountants as the Statutory Auditors of the Company to hold office from the conclusion of the Third Annual General Meeting upto the conclusion of the Fourth Annual General Meeting of the Company. The Company has received a Certificate from M/s Khandelwal Jain & Co. to the effect that their appointment, if made, would be within the limits prescribed under Section 224(1B) of the Companies Act, 1956.

VIII. Companies (Disclosures of Particulars in the Report of the Board of Directors) Rules, 1988

In terms of the above Rules issued by the Central Government, the following information is furnished :- Conservation of Energy and Technology Absorption Since the Company has not commenced the business activities during the period under review, there is no information to report under this head.

Foreign Exchange Earnings and Outgo During the period under review, the Company has not earned any foreign exchange.

IX. Particulars of Employees

As the company does not have any employee, there is no information to report in terms of the Companies (Particulars of Employees) Rules, 1975 and in terms of Department of Company Affairs Notification G.S.R. 288 (E) dated the 17th April 2002, issued thereunder.

X. Acknowledgement D

The Board is grateful to the State Bank and SBICAP family for providing significant support in the formation of the company. E T I M I L

For and on behalf of the Board of Directors Y N A P M O C

E

Director Director E T S

th U

Date :- 17 April, 2008 R T

P A C I B S

111 AUDITORS’ REPORT

To, The Members SBICAP Trustee Company Limited

1. We have audited the attached Balance Sheet of SBICAP TRUSTEE COMPANY LIMITED as at 31st March 2008 and also 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.

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 from material misstatements. 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 financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956, as amended by the Companies (Auditors' Report) (Amendment) Order, 2004 and on the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of the audit, we enclose in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order to the extent they are applicable to the Company.

4. Further to our Comments in the Annexure referred to in paragraph 3 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 our 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 dealt with by this report comply with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956;

e) based on written representation received from the Directors of the Company and taken on record by the Board of Directors and according to the information and explanation given to us, we report that, none of the Directors is disqualified as on 31st March, 2008 from being appointed as a Director in terms of Clause (g) of Sub-Section (1) of Section 274 of the Companies Act, 1956;

f) in our opinion and to the best of our information and according to the explanations given to us, the said accounts, read together with the notes thereon, 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 31st March, 2008;

ii) in the case of the Profit and Loss Account, of the Loss of the Company for the year ended on that date; and

iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that.

For KHANDELWAL JAIN & CO. Chartered Accountants,

(S. S. SHAH) PARTNER Membership No.33632

Place : Mumbai Date : 17th April 2008

112 ANNEXURE TO THE AUDITORS’ REPORT

(Referred to in Paragraph 3 of our report of even date to the Members of SBICAP TRUSTEE COMPANY LIMITED on the accounts for the year ended March 31, 2008.)

1. a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. b) The Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

2. Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the Company has not entered into any contracts or arrangements that need to be entered in the register maintained under section 301 of the Companies Act, 1956.

3. The Company has not accepted any deposits during the year from the public within the meaning of the provisions of Sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the rules made thereunder.

4. a) According to the information and explanations given to us, and on the basis of our examination of the books of account, there were no undisputed statutory dues payable including provident fund, investor education and protection fund, employees' state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and any other statutory dues wherever applicable.

b) According to the information and explanation given to us, there were no dues in respect of sales tax, income tax, customs duty, wealth tax, service tax, excise duty and cess that have not been deposited with the appropriate authorities on account of any dispute.

5. The Company has not taken any loan from banks or financial institutions and the Company has not issued any debentures.

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

7. The company is not dealing in or trading in shares, securities, debentures and other investments.

8. In our opinion and according to the information and explanations given to us, the Company has not given guarantee for loans taken by others from banks or financial institutions.

9. The Company has not taken any term loans during the year.

10. In our opinion and according to the information and explanation given to us and on an overall examination of the Balance sheet of the Company, we report that, funds raised on short term basis have prima facie, not been used during the year for long term investment.

11. The Company has not made any preferential allotment of shares to the parties and companies covered in the register D E T maintained under section 301 of the Companies Act, 1956. I M I L

Y N

12. The Company has not issued any Debentures during the year covered by our report. A P M O C

E

13. During the year covered by our report, the Company has not raised any money by public issue. E T S U R T

P A C I B S

113 ANNEXURE TO THE AUDITORS’ REPORT (contd.)

14. Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on the Company or by the Company has been noticed or reported during the course of our audit.

15. The other clauses 4(i), (ii), (iv), (vii), (viii), (x), (xiii) of para 4 of the Companies (Auditor's Report) Order, 2003, as amended by the Companies (Auditors' Report) (Amendment) Order 2004, are not applicable to company.

For KHANDELWAL JAIN & CO. Chartered Accountants,

(S. S. SHAH) PARTNER Membership No.33632

Place : Mumbai Date : 17th April 2008

114 BALANCE SHEET AS AT 31 MARCH 2008

(Rupees)

Schedule As at 31st Mar-08 As at 31st Mar-07

SOURCES OF FUNDS Shareholders' Funds Share capital 1 500,000 500,000 500,000 500,000

APPLICATION OF FUNDS Current Assets, Loans and Advances 2 Interest accrued 1,086 1,137 Cash and bank balances 321,167 351,076 Loans and advances 1,629 1,629 323,882 353,842 Less: Current Liabilities and Provisions 3 68,523 79,811 Net Current Assets 255,359 274,031 Profit and Loss Account 244,641 225,969 500,000 500,000

Statement of Significant Accounting Policies and Notes forming part of the Accounts 4

As per our report of even date

For KHANDELWAL JAIN & CO. For and on behalf of the Board of Directors Chartered Accountants

(S.S. SHAH) PARTNER [Director] [Director] Membership No. : 33632

Place : Mumbai DATE : 17th April 2008 D E T I M I L

Y N A P M O C

E E T S U R T

P A C I B S

115 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2008

(Rupees)

Schedule For the year ended For the year ended 31st Mar’08 31st Mar’07

Income Interest from bank 15,400 14,425 15,400 14,425

Expenditure Rates and taxes 7,000 - Audit fees 10,112 10,102 Bank charges 261 1,000 Legal and professional fees 2,000 79,264 Profession tax 7,500 - Miscelleaneous expenses 2,205 8,739 Conveyance 234 - 29,312 99,105 Net (loss) before Tax (13,912) (84,680) Provision for income tax (4,760) (4,370) Net (loss) after Tax (18,672) (89,050) Balance Loss brought forward from last Balance Sheet (225,969) (136,919) Balance carried to Balance Sheet (244,641) (225,969) Earning Per Share (Basic & Diluted) (0.37) (1.78) (Face value of Rs. 10/- each)

Statement of Significant Accounting Policies 4 and Notes forming part of the Accounts

As per our report of even date

For KHANDELWAL JAIN & CO. For and on behalf of the Board of Directors Chartered Accountants

(S.S. SHAH) PARTNER [Director] [Director] Membership No. : 33632

Place : Mumbai DATE : 17th April 2008

116 CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2008

(Rupees)

Current Year Previous Year

A. Cash flow from operating activities Net (loss) before taxation (18,672) (89,050) Adjustment for:- Non cash expenses - - Operating loss before working capital changes (18,672) (89,050) Decrease /(increase) in current assets 51 1,780 (Decrease) / increase in current liabilities (11,288) 60,563 Income tax paid - (1,629) Net cash from / (used in) operating activities (29,909) (28,336)

B. Cash flow from investing activities - - Net cash flow from investing activities - -

C. Cash flow from financing activities Proceeds from issuance of Share Capital - - Net cash flow from financing activities - - Net Cash Flow (A+B+C) (29,909) (28,336) Opening Cash & Cash Equivalents 351,076 379,412 Closing Cash & Cash Equivalents 321,167 351,076 29,909 28,336

As per our report of even date for KHANDELWAL JAIN & CO. For and on behalf of the Board of Directors Chartered Accountants

(S.S. SHAH) PARTNER [Director] [Director] Membership No. : 33632

Place : Mumbai DATE : 17th April 2008 D E T I M I L

Y N A P M O C

E E T S U R T

P A C I B S

117 SCHEDULES FORMING PART OF BALANCE SHEET

(Rupees) SCHEDULES

As At 31st Mar - 08 As At 31 Mar - 07

SCHEDULE - 1 Share Capital Authorised 500,000 (Previous year 500,000) Equity Shares of Rs. 10 each 5,000,000 5,000,000 5,000,000 5,000,000 Issued, subscribed and paid up 50,000 (Previous year 50,000) Equity Shares of Rs. 10 each fully paid up 500,000 500,000 (All the above shares are held by SBI Capital Markets Limited, the holding company and its nominees) 500,000 500,000

SCHEDULE - 2 Current Assets, Loans And Advances A) Interest accrued 1,086 1,137 B) Balances with scheduled banks -Cash in hand - 500 -In saving bank accounts - 43,319 -In term deposits 321,167 321,167 307,257 351,076 C) Loans and advances Advances recoverable in cash or in kind for value to be received -Tax deducted at source from interest on FDR 1,629 1,629 323,882 353,842

SCHEDULE - 3 Current Liabilities And Provisions Current Liabilities Sundry creditors for expenses 10,112 73,941 Bank overdraft as per books 48,281 - Security deposit - 500 Other liabilities 1,000 59,393 1,000 75,441

Provisions For income tax 9,130 4,370 68,523 79,811

118 SCHEDULES FORMING PART OF BALANCE SHEET (contd.)

SCHEDULE - 4 Statement of Significant Accounting Policies and Notes forming part of the Accounts for the year ended March 31, 2008

A. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES: 1. Accounting Convention The financial statements are prepared under the historical cost convention, and in compliance with the accounting standards issued by Institute of Chartered Accountants of India, provisions of the Companies Act, 1956 and other applicable statutory enactments.

2. Recognition of Income and Expenditure Revenue/Income and Cost/Expenditure are generally accounted on accrual basis as they are earned or incurred.

3. Taxation Income Tax expense comprises both, current tax and deferred tax charge or credit. Deferred taxes are recognized as and when they arise as per Accounting Standard – 22 'Accounting for Taxes on Income' issued by The Institute of Chartered Accountants of India.

4. Earning per share Basic and diluted earning per share is reported in accordance with AS 20,”Earning Per Share”. Basic and diluted earning per equity share has been computed by dividing net profit after tax by number of equity shares outstanding for the year.

5. Provisions The Company recognises a provision when there is a present obligation as a result of past event that probably requires an outflow of resources in respect of which a reliable estimate can be made. A disclosure for contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, requires an outflow of resources.

B. NOTES FORMING PART OF ACCOUNTS:

1. Nature of activities The Company has been established to carry out trusteeship functions in general and for Venture Capital Funds in particular.

2. The Company has been appointed as Trustee of SBICAP VENTURE FUNDS, a Trust set up pursuant to Trust Deed dated 28th February 2006 by SBI Capital Markets Ltd. (the Settlor) to carry on the activity of a Venture Capital Fund. The Settlor has paid a sum of Rs. 1,000/- towards the initial corpus of the said Trust. The Company is holding the said amount in trust and is shown under the head Other Liabilities in Schedule 3 to the balance sheet. The application for registration of venture capital fund was filed with Securities and Exchange Board of India (SEBI). However, due to some change in business plan of the settlor, the registration of the Venture Capital Fund with SEBI is not being proceeded with. The Company now proposes to commence the Security trustee / Security agency business.

3. Related Party Information (i) Relationships: Where Control exists: - D E T

Name of Party Relationship I M I L

State Bank of India Ultimate Holding Company Y N

SBI Capital Markets Ltd. Holding Company A P M

SBICAPS Ventures Ltd. Fellow Subsidiary O C

SBICAP Securities Ltd. Fellow Subsidiary E E T

SBICAP (UK) Limited Fellow Subsidiary S U R T

P A C I B S

119 SCHEDULES FORMING PART OF BALANCE SHEET (contd.)

(ii) Details of transactions with SBI Capital Markets Ltd. are as follows:-

(Rupees) Particulars Current Year Previous Year

Reimbursement of expenses incurred on behalf of the Company for: Legal and professional fee 500 70,100 Other expenses 9,439 9,789 Balance payable as at 31st March - 63,839

Notes: a) The Company has not entered into any transactions with other related parties. b) Related party relationships on the basis of Accounting Standard 18 (AS18) as in (i) above are as given by the Company and relied upon by the Auditors.

4. Earnings Per Equity Share: Particulars For the year ended For the year ended 31.03.2008 31.03.2007 a. (Loss) attributable to equity shareholders’ (Rs.) (18,672) (89,050) b. Weighted average number of equity shares outstanding during the period (Nos.) 50,000 50,000 c. Basic/Diluted Earnings per equity share (a/b) (Rs.) (0.37) (1.78) d. Face value of each equity share (Rs.) 10 10

5. The deferred tax asset on account of loss related to write off of preliminary expenses has not been accounted for, on consideration of prudence.

6. The previous period’s figures have been regrouped, rearranged and reclassified wherever necessary.

As per our report of even date

For KHANDELWAL JAIN & CO. For and on behalf of the Board of Directors Chartered Accountants

(S.S. SHAH) PARTNER [Director] [Director] Membership No. : 33632

Place : Mumbai DATE : 17th April 2008

120 ADDITIONAL INFORMATION PURSUANT TO THE PROVISIONS OF PART IV OF SCHEDULE VI TO THE COMPANIES ACT 1956.

Balance Sheet Abstract and the Company's General Business Profile i) Registration details

Registration No. U 65991 MH 2005 PLC 158386 State Code 11 Balance Sheet Date 31st March, 2008 ii) Capital raised during the year (amount in Rs. thousand)

Public Issue NIL Rights Issue NIL Bonus Issue NIL Private Placement NIL iii) Position of mobilisation of funds and deployment of funds (amount in Rs. thousand) (amount in Rs. thousand) Total Liabilities 500 Total Assets 500 Sources of funds Paid-up capital 500 Reserves and surplus NIL Secured loan NIL Unsecured loan NIL Application of funds Net fixed assets NIL Investments NIL Net current assets 255 Misc. expenditure NIL Accumulated losses 245 iv) Performance of the Company (amount in Rs. thousand)

Income 15 Total expenses 29 Loss before taxation (14) Loss after taxation (19) Earning per share in Rs. (0.37) Dividend rate NIL

v) Generic names of three principal products / services of the company (as per monetary terms)

Service description Trusteeship ITC Code No. NIL

For and on behalf of the Board of Directors

[DIRECTOR] [DIRECTOR] D E T PLACE : MUMBAI I M I L

DATE : 17th April 2008 Y N A P M O C

E E T S U R T

P A C I B S

121 T o the Members,

The Directors present their report and the accounts of the company for the year ended 31 March 2008.

Principal Activities and Business Review

The principal activity during the year was the provision of corporate finance advice and arrangement.

The company shows a pre-tax loss of £58,504 (2007 : £509,798) and income of £155,799 (2007 : £695,408). The Shortfall in performance of the Company is mainly attributed to the lower income booking resulted from non-closure of FCCB mandates under execution (due to the non receipt of Reserve Bank of India (RBI) approvals required as per the revised RBI policies on FCCBs/ECBs) coupled with an increase in the expenditure incurred during the period owing to shifting of the office to new premises at 29-30 Cornhill Street, London and increased staff expenditure related to the strengthening of the SBIPCAP (UK) Limited team. The directors intend to continue to develop the business by diversifying into cross border products in addition to the existing products line and anticipate that operations and performance will improve during the year ahead.

Results and Dividends

The trading results for the year and the company’s financial positions at the end of the year are shown in the attached accounts.

The directors have not recommended a dividend.

Directors

The directors who served the company during the year were as follows : Mr Ramesh Ahuja Mrs Sudha Malhotra Mr Ranganathan Sridharan Mr Vijayanand Yeluri Mrs Bharati Rao Mr Thangavelu Chandran

Mrs Bharati Rao was appointed as a director on 31 December 2007. Mr Thangavelu Chandran was appointed as a director on 15 February 2008.

Mr Ramesh Ahuja resigned as a director on 15 February 2008. Mr Ranganathan Sridharan resigned as a director on 25 February 2008. Mr Vijayanand Yeluri resigned as director on 31 August 2007.

122 ( Mr 9 April Director ON accordance withsection This confirmationis A - - Each of Auditor prevention and The directorsare the financialposition The directors continue in must also then apply In preparing af Company law Accepted Accounting The directors Directors’ c resolutionto fairs ofthe o relevant auditinformation the directorhas so far . Thangavelu n BEHALF t i

2008 n thepersonsw asthe u e preparethe themon Responsibilities business. d company thoseaccounts,the ) areresponsible areresponsible requiresthedirectors OF re-appointRees directorisaware, detectionof Chandran alsoresponsiblefor THE takenallsteps givenandshould aconsistentb ofthe Practice. ho isa andof accountson 385of BOARD companyandto fraudand directoratthe andto theprofit forpreparing forkeeping theCompanies Pollockas thereisno directorsarerequired asis, makingjudgements thathe establishthatthe toprepare thegoing beinterpreted safeguardingtheassets otherirregularities. orlossof properaccounting dateof auditorsfor /she relevantauditinformation theaccounts enablethemto concernbasis accountsforeach Act 1985. thecompanyfor oughtto approvalofthis inaccordancewith auditorsareaw theensuing toselectsuitable inaccordance havetakenas ensurethat andestimates recordswhich unlessit ofthe thatyear financialyearwhich annualreport yearwill companyandhence are of ofwhich theprovisionsof isinappropriate theaccountscomply withapplicable accountingpolicies,as adirectorto . thatinformation. thatare disclosewith beproposed thecompany’ confirmsthat: prudentand giveatrue makehimself/herselfaware lawand s234ZA topresume fortakingreasonable reasonableaccuracy atthe s auditorsare withthe UnitedKingdom ofthe annualgeneral andfair reasonable. describedonpage thatthe Companies Companies viewof unaware;and companywill The directors stepsforthe atany thestate meetingin Generally Act 1985. Act 1985. ofany 8,and time of

123 SBICAP (UK) LIMITED AUDITORS’ REPORT

Independent Auditors’ Report to the Members of SBICAP (UK) Ltd

We have audited the accounts of SBICAP (UK) Ltd for the year ended 31 March 2008 on pages 5 to 12 which have been prepared on the basis of the accounting policies set out on page 8.

This report is made solely to the company’s shareholders, as a body, in accordance with Section 235 of the Companies Act 1985. Our audit work has been undertaken so that we might state to the company’s shareholders those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s shareholders as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditors :

As described in the Statement of Directors’ Responsibilities, the company’s directors are responsible for the preparation of the accounts in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

Our responsibility is to audit the accounts in accounts in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland).

We report to you our opinion as to whether the accounts give a true and fair view and are properly prepared in accordance with the Companies Act 1985. We also report to you whether, in our opinion, the information given in the Directors’ Report is consistent with the accounts. In addition we report to you if, in our opinion, the company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if the information specified by law regarding directors’ remuneration and other transactions is not disclosed.

We read the Directors’ Reports and consider the implications for our report if we become aware of any apparent misstatements within it.

Basis of Audit Opinion

We conducted our audit in accordance with International Standards on Auditing (UK And Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the accounts. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the accounts, and of whether the accounting policies are appropriate to the company’s circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the accounts are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the accounts.

Opinion In our opinion: • the accounts give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice, of the state of the company’ s affairs as at 31 March 2008 and of its loss for the year then ended; • the accounts have been properly prepared in accordance with the Companies Act 1985; and • the information given in the Directors’ Report is consistent with the accounts.

Rees Pollock Chartered Accountants & Registered Auditors

9 April 2008

124 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2008

Note 2008 2007 £ £

Turnover 2 155,799 695,408

Cost of sales 43,184 102,659 Gross Profit 112,615 592,749

Administrative expenses 201,151 96,426 Operating (Loss) / Profit 3 (88,536) 496,323

Interest receivable 33,813 13,475 Interest payable and similar charges 6 (3,781) - (Loss) / Profit on the Ordinary Activities Before Taxation (58,504) 509,798

Tax on (loss) / Profit on ordinary activities 7 (13,770) 154,895 (Loss) / Profit for the Financial Year (44,734) 354,903

Balance brought forward 354,903 - Balance carried forward 310,169 354,903

All of the activities of the company are classed as continuing. The company has no recognised gains or losses other than the result for the year as set out above D E T I M I L

) K U (

P A C I B S

125 BALANCE SHEET AS AT 31 MARCH 2008

Note £ 2008 2007 £ £ FIXED ASSETS Tangible assets 8 37,189 -

CURRENT ASSETS Debtors 9 67,419 - Cash at Bank 448,093 721,088 515,512 721,088 Creditors: Amounts falling due within one year 10 42,532 166,185

Net Current Assets 472,980 554,903 Total Assets Less Current Liabilities 510,169 554,903

Capital and Reserves Called-up equity share capital 12 200,000 200,000 Profit and loss account 310,169 354,903 Shareholders’ Funds 13 510,169 554,903

The financial statement on pages 5 to 12 were approved by the board of directors on 9 April 2008 and were signed on its behalf by:

Mr. Thangavelu Chandran Director

126 CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2008

Note £ 2008 2007 £ £ Net Cash (Outflow) / Inflow from Operating Activities 14 (70,376) 507,613

Returns on Investment and Servicing of Finance Interest received 33,813 13,475 Interest Paid (3,781) - Net Cash Inflow from Returns on Investment and Servicing of Finance 30,032 13,475

Taxation (194,895) -

Capital Expenditure Payment to acquire tangible fixed assets (37,756) - Net Cash Outflow from Capital Expenditure (37,756) -

Cash(Outflow) / Inflow before Financing (272,995) 521,088

Financing Issue of equity share capital - - 199,999 Net Cash Inflow from Financing - 199,999 (Decrease) / Increase in Cash 15 (272,995) 721,087 D E T I M I L

) K U (

P A C I B S

127 1. Accounting policies

Basis of accounting The accounts have been prepared under the historical cost convention, and in accordance with applicable accounting standards. Turnover The turnover shown in the profit and loss account represents the value services provided during the year, stated net of value added tax. Depreciation Depreciation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful economic life of that asset as follows: Leasehold Property - 18.1% p.a. reducing balance Equipment - 40% p.a. reducing balance Operating lease agreements Rentals applicable to operating leases where substantially all of the benefits and risks of ownership remain with the lessor are charged against profits on a straight line basis over the period of the lease. Deferred taxation Deferred taxation is provided on all timing differences, without discounting, calculated at the rate at which it is estimated that tax will be payable, except where otherwise required by accounting standards. Foreign currencies Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of the transaction. Exchange differences are taken into account in arriving at the operating profit. Financial instruments Financial instruments are classified and accounted for, according to the substance of the contractual arrangement, as either financial assets, financial liabilities or equity instruments. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

2. Turnover

The turnover and loss before tax are attributable to the one principle activity of the company. An analysis of turnover is given below: 2008 2007 £ £ United Kingdom 155,799 695,408

128 ( 7. 6. 5. 4. 3. c o n t d . ) (Loss) /P

fromthe The tax T (b) Factorsaf UK Corporation Current T T (a) Interest payableon Emoluments Interest payable Directors’ Social securitycosts W The aggregate Number of - for The average Particulars of - as Auditors’ Depreciation ofow Operating (loss)/ Operating otal currenttax axation on ages and Analysis ofcharge auditor otherservices assessedonth standardrate remuneration rofit on ax managementstaf emoluments Salaries (loss)/ numberof ordinaryactivities fecting currenttax employees payrollcostsof taxbasedon ordinaryactivitiesbefore Profitisstated

andsimilar ned fixedassets bankborrowing Profit inthe ofcorporation e (loss)/ staf year f employedby f theresultsfor theabove charges charge Profiton aftercharging: taxin ordinaryactivitiesfor were: thecompanyduring taxation theUK theyear of30% at30% (2007-30%) (2007-30%) theyear thefinancialyear dif fers amountedto: (13,770) (13,770) (58,504) 76,209 58,523 17,788 40,735 3,781 5,500 2008 2008 2008 2008 2008 2008 2008 567 No.

2 £ £ £ £ £ £ - 509,798 154,895 154,895 29,183 15,253 15,253 5,000 5,800 2007 2007 2007 2007 2007 2007 2007 No. £ £ £ £ £ 1 £ - - -

129 SBICAP (UK) LIMITED (contd.)

7. Taxation on ordinary activities (contd.) 2008 2007 £ £ Profit / ( Loss) on ordinary activities multiplied by rate of tax (17,551) 152,939 Disallowed expenditure 5,212 1,956 Excess of capital allowances over depreciation (1,431) - Total current tax (note 7(a)) (13,770) 154,895

8. Tangible fixed assets

Leasehold Property Equipment Total £££ Cost Additions 37,326 430 37,756 At 31 March 2008 37,326 430 37,756 Depreciation Charge for the year 501 66 567 At 31 March 2008 501 66 567 Net Book value At 31 March 2008 36,825 364 37,189 At 31 March 2007 - - -

9. Debtors

2008 2007 £ £ Corporation tax repayable 53,770 - Other debtors 13,649 - 67,419 -

10. Creditors: amounts falling due within one year

2008 2007 £ £ Trade creditors - 5,000 Corporation tax - 154,895 Other taxation and social security 15,126 6,290 Other creditors 956 - Accruals and deferred income 26,450 - 42,532 166,185

11. Commitments under operating leases

At 31 March 2008 the company had annual commitment under non-cancellable operating lease as set out below : Land & Building 2008 2007 £ £ Operating leases which expire: Within 2 to 5 years 53,982 -

130 17. 16 15. 14. 13. 12. ( c o n t d . ) parent companyis The immediateparent Ultimate parent Net funds Cash in Net cash: Analysis of Net funds Net funds Movement innet (Decrease) / Reconciliation of Net cash Increase increditors Increase in Depreciation Operating (loss)/ Reconciliation of Closing shareholders’ Opening shareholders’ Net (reduction) New ordinary (Loss) /P Reconciliation of Ordinary sharesof Equity share Ordinary sharesof Allotted, calledup 200,000 Ordinaryshare Authorised share Sharecapital handand (outflow)/ rofit for at31 at1 debtors changesin increaseincash sharecapitalsubscribed

April 2007 March2008 /additionto thefinancialyear fundsinthe company profit capital: atbank andfullypaid: StateBank netcash operating(loss) movementin £1each £1each inflowfromoperating funds companyisSBI funds of£1 netfunds shareholders’ flowto period each inthe ofIndia, shareholders’ period movementin /profit CapitalMarketLimited, acompanyincorporated activities funds tonet funds cash(outflow) netfunds 200,000 200,000 No acompanyincorporated At 1Apr inIndia. 2008 /inflow 200,000 200,000 721,088 721,088 2007 from £ ££ operating Cash Flows (44,734) (272,995) (272,995) (272,995) (272,995) (88,536) (70,376) (13,649) (44,734) 448,093 721,088 510,169 554,903 200,000 200,000 200,000 inIndia. 31,242 2008 200£ 2008 2008 567 activities No £ 8 £ £ - The ultimate At 31 2007 Mar2008 448,093 448,093 721,088 721,087 721,087 507,613 496,323 554,903 554,902 199,999 354,903 200,000 200,000 200,000 1 1,290 2007 2007 2007 2007 £ 1 £ £ 1 £ £ £ - -

131 SBICAP (UK) LIMITED Mr. S. K. Bhattacharya, MD & CCRO, State Bank of India and Mr. A. P. Verma, MD & CEO, SBI Capital

Markets Ltd., welcoming Mr. Prithvi Haldea, Chairman and Managing Director, Prime Database the speaker

for the talk organized by SBI Capital Markets Ltd. on “Capital Markets – Myth & Reality”.

Mr. R. Sridharan, Ex - MD & CEO, SBI Capital Markets Ltd. introducing Ms. Roopa Purushothaman, Chief

Economist, Future Group the speaker for the talk on “Urban Growth and Rural India” organized by SBI

Capital Markets Ltd.

132 Shri A. P. Verma, Managing Director and CEO handing over dividend cheque of Rs. 50,00,000,40/- to

Shri O. P. Bhatt, Chairman, State Bank of India.

133 Notes

134 Notes

135 Notes

136 Regional Offices

Ahmedabad +91 (79) 2656 0122 [email protected] Bangalore +91 (80) 2558 5471 [email protected] Chennai +91 (44) 2821 3801 [email protected] Hyderabad +91 (40) 2332 1605 [email protected] Kolkata +91 (33) 2288 6602 [email protected] New Delhi +91 (11) 2341 8460 [email protected]

Branch Offices

Chandigarh +91 (172) 270 0753 [email protected] Guwahati +91 (361) 223 7511 [email protected]

Subsidiaries

SBICAP Securities Ltd. +91 (22) 2217 8300 [email protected] SBICAPS Ventures Ltd. +91 (22) 2217 8300 [email protected] SBICAP (UK) Ltd. +44 (20) 7929 3529 [email protected] ANNUAL REPORT 07-08

SBI Capital Markets Limited 202, Maker Tower ‘E’ Cuffe Parade, Mumbai 400 005 Tel : +91-22-2217 8300 Fax : +91-22-2218 8332 YOUR CREDIBLE PARTNER Website : www.sbicaps.com