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ANNUAL REPORT

07-08

POWERINGINDIA’S GROWTH

To provide credible, professional and customer focused

world class investment banking services

WELCOMETO SBICAP

Mission

To be the best India based investment bank

INDEX

Board of Directors 02

About us 04

Financial Highlights 05

About SBICAP Group 06

Project Advisory and 08Structured Finance (PA&SF)

Capital markets 10

Mergers & Acquisions 12 and A dvisory

Our people 14

Financials 15

Statutory AuditorsM/s. S.R. Batliboi & Co.Chartered Accountant

Address of Registered Office& Corporate Office

SBI Capital Markets Limited

202 Maker Tower ‘E’, Cuffe Parade

Mumbai - 400 005

Bankers State Bank of India

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Vision

SHRI O. P. BHATTChairman

People who mad the differencee

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SHRI R.SRIDHARANDirector

SMT BHARATI RAODirector

SHRI M. R. SIVARAMANDirector

Board of Directors

SHRI A. P. VERMAManaging Director & CEO

DR. R.H. PATILDIRECTOR

SHRI BANSI S. MEHTADIRECTOR

DR. SWATI A. PIRAMALDirector

SHRI D. SUNDARAMDirector

SHRI AJAY SAGARDirector

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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”.

Locations4Ahmedabad

4Bangalore

4Chennai

4Hyderabad

4Kolkatta

4New Delhi

4Chandigarh

4Guwhati

4London

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Powering India’s growth through global experience

A N N U A L R E P O RT

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About us

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142.75

175.06

179.05

148.84

230.08

0 25 50 75 100 125 150 175 200 225 250

Financial Highlights

GROSS INCOME

(Rs.in crores )

63.23

88.12

90.62

64.36

130.33

0 15 30 45 60 75 90 105 120 135 150

PROFIT AFTER TAX

(Rs.in crores )

10.90

15.18

15.62

11.09

22.46

0 5 10 15 20 25 30

EARNINGS PER SHARE

(Rs.in crores )

303.96

342.45

366.91

378.15

435.54

0 75 150 225 300 375 425 500 525

NET WORTH

(Rs.in crores )

FY04

FY05

FY06

FY07

FY08

FY04

FY05

FY06

FY07

FY08

FY04

FY05

FY06

FY07

FY08

FY04

FY05

FY06

FY07

FY08

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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.

About SBICAP GROUPPowering India’s dynamic investment plans

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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:

Cross Border Mergers & Acquisitions

Arrangement of Foreign Currency Debt / Equities viz. FCCBs / GDRs for Indian Issuers

Arrangement of Investments for Private Equity Deals

Marketing of Public Offerings

Liaison with investors for broking services of SBICAP Securities Ltd.

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Our Project Portfolio

4 Project Structuring & Due Deligence

4 Structured Finance and Syndication

4 Infrastructure Project Advisory

4 Securitisation

4 Debt & Equity Syndication

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Project Advisory and Structured FinancePowering 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.

usiness 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

institutions, governments and high net worth individuals. Drawing upon years of in-depth experience, our professionals display

their skills in originating, executing and structuring the most favorable deals for our customers.

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

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

textiles, cements and steel.

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The existing bouquet of our services

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4 Pre IPO Placement

4 Issue Management ( Public / Follow on Offering )

4 Qualified Institutional Placement

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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.

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

fulcrum for clients in their growth efforts and stakeholder value creation through foreseeing, interpreting, and arbitrating various

issues.

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

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

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

solutions suiting the needs of our diverse clientele.

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Our Product Portfolio

4 Mergers & Acquisitions

4 Private Placement of Equity

4 Business / Financial Restructuring

4 Business Valuations

4 Foreign Currency Convertible Bonds

4 Joint Venture Advisory

4 Open offer / De-Listing / Buy Backs / Rights Issue

4 Economic Feasibility / Viability

4 Due Diligence

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Mergers & Acquisitions and Advisory Powering ambitious dreams into lucrative realities

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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.

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.

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

target recognition to final deal closure, advising and assisting them at every step of the transaction.

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

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

closing the transaction.

We are also engaged in syndication of Private Equity and Venture Capital Financing, arranging equity financing for companies

and entrepreneurs, covering mid stage to late stage financing.

FOR OUR CUSTOMERS

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People Powering IndiaInducing 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.

A N N U A L R E P O RT

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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

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RESULTS : SBICAPSPOWERING

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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 :-

SBICAP Securities Limited

The business of erstwhile Securities SBU comprising equity broking, research and distribution of third party products was thtaken over by SBICAP Securities Ltd. (SSL). SSL commenced broking operations under its own name from 28 June 2006.

During the year, SSL was empanelled by 22 new institutional clients. 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 over the corresponding period last year.

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.

2007YEAR ENDED MARCH 31

PERFORMANCE HIGHLIGHTS

2008

(Rs. in crores)

Operating Results

230.08181.78

5.70

6.07

0.03

169.98

130.33

Financial Position

58.03

381.57

2.48

Other Selected Data

22.46

30%

10.00

75.05

Gross Income 148.84Profit before Provisions, Depreciation, Interest & Tax 106.61

Provisions 1.57

Depreciation 13.39

Interest 7.73

Profit before tax 83.92

Profit after tax 64.36

Equity Share Capital 58.03

Debt Funds 27.19

Earnings per share (Rs.) 11.09

Return on Equity 17%

Dividend per share (Rs.) 8.00*

Book Value per share (Rs.) 65.16

*Including Interim Dividend of Rs. 7/-

Reserves and Surplus 320.12

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DI RECTORS’ REPORT FOR THE YEAR 2007 -2008

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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/-.

DI RECTORS’ REPORT ( c o n t d . )

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DI RECTORS’ REPORT

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.

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

stShri Y. Vijayanand, resigned as Director w.e.f. 31 August, 2007, consequent to his retirement from State Bank of India with

effect from that date.

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

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

thShri R. Sridharan resigned as Managing Director & CEO and as Director w.e.f. 25 February, 2008, consequent to his posting

as Dy. Managing Director (On Special Duty) at State Bank of India, Corporate Centre.

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

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

March, 2008.

ndShri Bansi S. Mehta, Director and Dr. Swati A. Piramal, Director, retire by rotation at the 22 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.

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 st st31 March 2008 and of the profit or loss of the company for the year ended 31 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.

Directors

Directors' Responsibility Statement

( c o n t d . )

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DI RECTORS’ REPORT ( c o n t d . )

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

ndM/s. S.R. Batliboi & Co., Chartered Accountants, the Company's Statutory Auditors, retire at the conclusion of the 22 Annual th thGeneral Meeting of the Company. The Audit Committee of the Board at their 55 Meeting held on the 15 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 nd rdthe 22 Annual General Meeting up to the conclusion of the 23 Annual General Meeting. The said recommendation of the

th ndAudit Committee has been upheld by the Board of Directors at their 128 meeting held on the 22 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. BhattChairman

Place : MumbaindDate : 22 April, 2008

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ANNEXURE A

Management Discussion and Analysis

Global Economy

Domestic Economy

1. Macroeconomic Review

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.

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

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

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

more or less eliminated revenue deficits and maintained their fiscal deficits.

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

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

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

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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 stCompany has retained for the third consecutive year the 1 rank in Asia Pacific (including Japan) for its role as Mandated

thLead Arranger for Project Finance Debt during the calendar year 2007. In the global rankings, the Company retained 9

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:

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:

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.

3.1 Quantitative Performance

3.1.1 Merchant Banking & Advisory Fees

3.1.1(a) Capital Markets

ANNEXURE A( c o n t d . )

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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.

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 styear. We also maintained our position at number 9 in the global list. In addition, SBICAP was also ranked as 1 in India

for debt syndication mandates (both project finance and corporate finance) by Bloomberg. On advisory side, we were st th thranked as 1 for project advisory mandates closed in the Asia Pacific region (4 in 2006) and 5 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).

The group during the year positioned itself as a full service investment banking outfit offering a complete bouquet of

advisory services including Cross Border M&A transactions, Private Equity, Open Offers, Delisting as well as Rights Issues.

The group successfully leveraged the recently acquired status as the only Indian member of M&A International and

cross border M&A deals closed during the year included a buy side mandate from an Italian Company for the f India's

largest private factoring company by the parent bank.

3.1.1(b) Project Advisory & Structured Finance

3.1.1(c) Mergers & Acquisitions & Advisory

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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.

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.

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.

stPursuant to SEBI directives, the Company stopped executing fresh Leasing and Hire purchase contracts w.e.f. 1 July

1998. However, contractual obligations undertaken prior to the said date are being fulfilled.

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

3.1.1(d) Institutional Relationships Group

3.1.2 Income from Securities-Treasury & Investments

3.1.3 Asset Finance

3.2 Qualitative Performance

3.2.1 Human Resources

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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.

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.

3.2.2 Information Technology

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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 :-

st1. Shri O. P. Bhatt, Chairman [SBI Nominee] : Shri Bhatt is the Chairman of State Bank of India (SBI) since 1 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).

ANNEXURE B

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ANNEXURE B

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.

iii) Responsibilities

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

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

constituted for the purpose by the Board.

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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.

ANNEXURE B( c o n t d . )

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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 stthe financial year ended 31 March 2008.

(A. P. Verma)Managing Director & CEO

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ANNEXURE C

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

(A) Employed through out the year and are in receipt of remuneration aggregating not less than Rs. 24,00,000/- per annum

Name Designation / Nature Remuneration Qualification & Date of Age Last

of Duties Rs. Experience commencement Employment

of employment held, Designation

Shri Sr. Vice President & 38,37,179 B. E., M. Tech. 7.11.2000 41 Dy. GeneralSupratim Group Head - Project M. B. A. Years Manager, IndustrialSarkar Advisory & Structured - 16 Years Development Bank

Finance of India (IDBI)(Group Head- Project Advisory & StructuredFinance)

Shri Sr. Vice President & 38,19,446 B. E., M.M.S. 2.5.1991 40 FirstAshish Group Head - 17 Years Years employmentSable - Institutional after M.M.S.

Relationship Group(Maintainingrelationships withinstitutional investorslike FlIs, Mutual Funds,Banks to enhanceplacement capabilitiesand contribute towardsbusiness developmentof 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, EarthBusiness 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 CounsultingFerreria Development) Engineers

Ms. Vice President & 31,37,210 B.Com, A.C.A. 10.1.1994 36 EssarMeenakshi Group Head - Mergers -14 Years Years Services Limited

Iyer and Acquisitions & Corporate Advisory(Handling activitiesrelating to mergers-sell-side, buy-side, advisory, private equityplacement and takeover offers)

Shri Vice President & 30,82,372 B.Com., A.C.A. 16.2.1993 40 FirstJayesh Group Head (Treasury -14 Years Years employmentBavishi & 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, AdvanceMisra ( 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, IDBISanjeev (Head PASF New Delhi B.Tech YearsAggarwal office) -19 Years

Shri Vice President & Group 24,00,642 B.Com., A.C.A. 1.2.1996 39 FirstSudarshan Head (Accounts & Audit) -12 Years Years employmentJha after A.C.A.

(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. BhattndDate : 22 April, 2008 Chairman

3 1

ANNEXURE C( c o n t d . )

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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 ManiarPartner Membership No.: 36738 Place: MumbaiApril 22, 2008

3 3

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

provident fund, income tax, service tax, sales 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.

(c) According to the records of the Company, the dues outstanding of income tax , sales tax, wealth tax, service

tax, custom duty, excise duty and cess on account of any dispute, are as follows:

AUDITORS’ REPORT( c o n t d . )

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AUDITORS’ REPORT( c o n t d . )

Name of Nature of dues Amount Period Forum wherethe statute ( Rs. in to which dispute is

thousands) the amount pendingrelates

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.

3 5

AUDITORS’ REPORT

(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 ManiarPartnerMembership No.: 36738

Place: MumbaiApril 22, 2008

( c o n t d . )

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BALANCE SHEET

(Rupees in thousands unless otherwise stated)

SOURCES OF FUNDS

580,337

3,815,682

4,396,019

-

24,775

24,775

4,420,794

APPLICATION OF FUNDS

1,387,096

(1,266,189)

120,907

1,726,308

40,608

32,892

1,984,170

1,446

176,465

450,579

822,451

3,468,003

(134,018)

(801,014)

(935,032)

2,532,971

4,420,794

Shareholders’ Funds

Share capital 1 580,337

Reserve and surplus 2 3,201,182

3,781,519

Loan Funds

Secured loans 3 250,000

Unsecured loans 4 21,862

271,862

Total 4,053,381

Fixed Assets 5

Gross block 1,542,284

Less: Accumulated depreciation / amortisation (1,368,352)

Net block 173,932

Investments 6 1,685,720

Deferred Tax Asset 15,435

Current Assets, Loans & Advances

Interest accrued 7 9,933

Stock-in-trade 8 1,196,672

Stock-on-hire under hire purchase, net 9 1,446

Sundry debtors 10 211,166

Cash and bank balances 11 128,435

Loans and advances 12 870,483

2,418,135

Less: Current Liabilities & Provisions

Current liabilities 13 (122,169)

Provisions 14 (117,672)

(239,841)

Net Current Assets 2,178,294

Total 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

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

3 7

PROFIT AND LOSS ACCOUNT

Schedule For the year ended 31st Mar-08

(Rupees in thousands unless otherwise stated)

Income

Merchant banking and advisory fees (net) 15 878,474

Income from securities 16 278,163

Lease and hire purchase income 17 189,914

Other income 18 141,851

1,488,402

Expenditure

Employee costs 19 196,472

Interest expense 20 77,343

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

1,218,531

858,496

105,595

118,146

2,300,768

300,000

338

Depreciation / amortisation 5 133,940

Provisions 21 15,737

Other expenses 22 225,696

649,188

Profit Before tax 839,214

Provision for current income tax (225,000)

Provision for current fringe benefit tax (5,781)

Deferred tax credit 35,138

Profit After tax 643,571

Balance brought forward from previous year 753,861

Profit available for appropriation 1,397,432

Appropriations

Interim dividend 406,236

Proposed final dividend 58,034

Dividend distribution tax 66,837

Transfer to general reserve 64,357

595,464

Surplus carried to Balance Sheet 801,968

Earning per share( Basic and Diluted in Rs.)

( Face value Rs.10/- per share) 11.09

Notes to Accounts 23

60,722

57,035

182,872

600,967

1,699,801

(413,200)

(3,342)

20,086

1,303,345

801,968

2,105,313

-

580,337

98,628

130,335

809,300

1,296,013

22.46

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For the year ended 31st Mar-07

CASH FLOW STATEMENT

(Rupees in thousands unless otherwise stated)

For the year ended31st Mar-08

For the year ended31st Mar-07

Cash flow from operating activities :-

Net profit before taxation 839,214

Adjustment for-

Profit on sale of assets (net) (2,358)

Profit on sale of long term investments (111,615)

Interest on long term investments (21,916)

Dividend income (158,002)

Interest expenses 77,343

Depreciation 133,940

Provision on investments 5,551

Provision on stock-in-trade 4,398

Provision for doubtful debts (net) 942

(71,717)

Operating profit before working capital changes 767,497

Decrease /(increase) in sundry debtors 286,012

Decrease /(increase) in other current assets 5.087

Decrease /(increase) in loans & advances 46,820

Decrease /(increase) in stock-in-trade 1,342,516

Decrease /(increase) in current liabilities (58,683)

Decrease /(increase) in provisions (7,050)

Decrease /(increase) in provision for gratuity -

Decrease /(increase) in Provision for leave encashment -

1,614,702

Cash generated from operations 2,382,199

Fringe benefit tax paid (5,631)

Income tax paid (218,978)

(224,609)

I. Net cash from operating activities 2,157,590

Cash flow from investing activities :-

Purchase of fixed assets (15,040)

Sale of fixed assets 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 21,916

Dividend income 158,002

Purchase of investments (1,000,923)

Sale of investments 541,885

II. Net cash from investing activities. (195,706)

1,699,801

(1,106)

(684,688)

(20,935)

(150,451)

338

60,722

10,238

(690)

26,860

(759,712)

940,089

7,841

(22,959)

(1,695)

(786,808)

11,850

60,327

1,397

(4,268)

(734,315)

205,774

(3,492)

(363,473)

(366,965)

(161,191)

(8,762)

2,171

-

-

-

-

20,935

150,451

(586,954)

1,220,815

798,656

3 8

3 9

CASH FLOW STATEMENT( c o n t d . )

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(Rupees in thousands unless otherwise stated)

For the year ended31st Mar-08

For the year ended31st Mar-07

Cash flow from financing activities :-

Repayment of bank borrowing (658,965)

Bank borrowing availed -

Interest expenses (77,343)

Deposit received 5,375

Repayment of deposits (41,852)

Dividend payment (986,573)

Tax on dividend payment (138,367)

III. Net cash used in financing activities (1,897,725)

Net change in cash & cash equivalents (I+II+III) 64,158

Cash & cash equivalents at the beginning of the year 64,177

Cash & cash equivalents at the end of the year 128,335

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

As at 31stMar-07

Cash on hand 13

Balances with scheduled banks current accounts 128,322

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

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

(251,672)

1,672

(338)

2,914

-

(58,034)

(9,863)

(315,321)

322,145

128,334

450,479

As at 31st Mar-08

21

450,458

450,479

100

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

SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET

(Rupees in thousands unless otherwise stated)

4 0

SCHEDULE - 1

Authorised

100,000,000 (2007: 100,000,000)

Equity shares of Rs.10/- each 1,000,000

1,000,000 (2007: 1,000,000)

Redeemable Preference Shares of Rs. 100/- each 100,000

Total 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

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

Securities premium Account (as per last account ) 634,663

Statutory reserve (as per last account) 241,087

General reserve

As per last account 1,459,107

Add : Transfer from profit and loss account 64,357

1,523,464

Less : Adjustment for Employee Benefits provision

(net of deferred tax Rs.5,087) (Refer to note no 23 A( c) ) -

1,523,464

Profit and loss account balance 801,968

Total 3,201,182

SCHEDULE - 3

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

Deposits 21,862

Total 21,862

Note :

Deposits represent security deposits received as per the lease agreements

and includes Rs.Nil (2007:Rs.Nil) repayable within one year.

Share Capital

1,000,000

100,000

1,100,000

580,337

Reserves and Surplus

634,663

241,087

1,523,464

130,335

1,653,799

9,880

1,643,919

1,296,013

3,815,682

Secured Loans

-

-

Unsecured Loans

24,775

24,775

SCHEDULES

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

4 1

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SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT

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SCHEDULES ANNEXED TO AND FORMING PARTOF BALANCE SHEET

4 2

SCHEDULE - 6

Quoted

Equity shares

1,00,000 (2007: 1,00,000) shares of Re.1/- each 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

fully paid in Biocon India Ltd

24,000 (2007: 40,000) shares of Rs.10/- each 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

fully paid in Oriental Bank of Commerce Ltd

2,90,000 (2007: 6,00,000) shares of Re.1/- each 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 -

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

fully paid in Ambuja Cements Ltd

40,000 (2007: 40,000) shares of Rs.10/- each 36,720

fully paid in Tata Tea Ltd

1,50,000 (2007: 1,50,000) shares of Re.1/- each 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 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 39,150

fully paid in Hindustan Petroleum Corp. Ltd.

Investments (Long term, non trade, at cost less provisions)

23,655

-

-

25,645

14,634

-

25,215

11,341

-

28,362

-

-

-

10,857

36,720

25,915

-

9,922

*-

37,913

(Rupees in thousands unless otherwise stated)

SCHEDULES

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

( c o n t d . )

(Rupees in thousands unless otherwise stated)

4 3

32,000 (2007: 32,000) shares of Rs.10/- each 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

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 1,042

fully paid in Seasons Furnishings Ltd

2,000 (2007: Nil) shares of Rs.10/- each -

fully paid in Future Capital Holding Ltd

2,00,000 (2007: Nil) shares of Rs.10/- each -

fully paid in Gateway Distriparks Ltd.

Sub-total 481,082

Total quoted investments 481,082

Unquoted

Equity shares

21,75,000 (2007: 24,00,000) shares of Rs.10/- each 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

fully paid in OTC Exchange of India

1,000,001 (2007: 1,000,001) shares of Rs.10/- each 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 *-

fully paid in Varun Polymol Organics Ltd

391,900 (2007: 391,900) shares of Rs.10/- each *-

fully paid in Nova Dhatu Udyog Ltd

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

fully paid in Nikhar Fabrics Ltd

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

fully paid in Essem Coated Steels Ltd

24,631

-

49,250

-

318

1,530

29,479

355,387

355,387

38,063

*-

11,000

10,000

-

*-

*-

*-

*-

*-

*-

*-

*-

*-

SCHEDULES

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

( c o n t d . )

4 4

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 -

fully paid in ONGC Mittal Energy Ltd

Sub-total 63,010

Equity shares in companies under the same management

909,090 (2007: 909,090) shares of Rs. 110/- each 100,000

fully paid in SBI DFHI Ltd (formerly SBI Gilts Ltd)

Sub-total 100,000

*-

*-

*-

*-

*-

*-

*-

*-

*-

*-

*-

*-

*-

*-

*-

*-

*-

*-

*-

*-

39,630

98,693

100,000

100,000

(Rupees in thousands unless otherwise stated)

SCHEDULES

SCHEDULES ANNEXED TO AND FORMING PARTOF BALANCE SHEET( c o n t d . )

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

4 5

Equity shares in subsidiaries

5,00,00,000 (2007: 5,00,00,000) shares of Rs. 10/- each 500,000

fully paid in SBICAP Securities Ltd

2,00,000 (2007: 2,00,000) shares of Rs.85.93 each 17,185

fully paid in SBICAP UK Ltd

50,000 (2007: 50,000) shares of Rs. 10/- each 500

fully paid in SBICAP Trustee Co. Ltd

31,00,000 (2007: 50,000) shares of Rs. 10/- each 500

fully paid in SBICAP Ventures Ltd

Sub-total 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

each of Administrator of Specified Undertaking of UTI

Sub-total 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

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

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

fully paid SBI Debt Fund Series - 13 Months - II -Growth

28,28,854 (2007: Nil) units of Rs. 10/- each -

fully paid SBI Magnum Balanced Fund Dividend Payout

35,39,410 (2007: Nil) units of Rs. 10/- each -

fully paid FT India Balance Fund Dividend Payout

Sub-total 249,900

Total unquoted investments 1,204,638

Total investments 1,685,720

Aggregate of quoted investments:

(i) Cost 525,370

(ii) Market Value 415,734

(iii) Book Value 481,082

Aggregate of unquoted investments:

(i) Cost 1,427,295

(ii) Book Value 1,204,638

* Fully provided for.

500,000

17,185

500

31,000

548,685

*-

-

-

273,543

273,543

-

-

50,000

50,000

50,000

100,000

100,000

350,000

1,370,921

1,726,308

405,069

299,356

355,387

1,585,377

1,370,921

(Rupees in thousands unless otherwise stated)

SCHEDULES

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

4 6

SCHEDULE - 7

Interest accrued 9,933

9,933

SCHEDULE - 8

Quoted

Equity shares

2,00,000 (2007: 4,78,440) shares of Rs.10/- each 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 6,542

Total quoted stock-in-trade 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

Interest Accrued

32,892

32,892

Stock - in - trade

2,310

-

2,310

2,310

*-

*-

*-

*-

*-

*-

*-

*-

*-

*-

*-

-

-

-

(Rupees in thousands unless otherwise stated)

SCHEDULES

SCHEDULES ANNEXED TO AND FORMING PARTOF BALANCE SHEET( c o n t d . )

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

4 7

(Rupees in thousands unless otherwise stated)

SCHEDULES

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 322,225

Super Institutional Plan Daily Dividend

2,69,63,251 (2007: 3,04,14,671) Units of JM Money Manager Fund 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 -

Wholesale February 2008 Plan Dividend Payout

1,00,00,000 (2007:Nil) Units of HDFC Fund - Series VI -

Wholesale January 2008 (2)Plan Dividend Payout

1,00,79,264 (2007:Nil) Units of Birla Sunlife Fund - Birla Interval -

Income Fund - Quarterly - Series II -Dividend reinvestment

1,00,19,193 (2007:Nil) Units of Birla Sunlife Fund - Birla Interval -

Income fund Monthly-Series 1 -Dividend reinvestment

1,00,85,597 (2007: Nil) Units of ICICI Prudential -

Interval Plan I Quarterly -dividend reinvestment

1,00,00,000 (2007: Nil) Units of ING VYSYA Mutual Fund -

ING Fixed Maturity Fund- Series xxxvi - Dividend Payout

2,84,14,593 (2007: Nil) LIC MF Liquid Plan -

1,00,13,310 ( 2007:Nil) Units of Reliance Monthly Interval Fund series I -

Institutional Dividend

3,58,468 (2007: Nil) UTI Liquid Cash Plan Institutional Daily -

Dividend Plan

99,97,301(2007: Nil) units of Sundarm Mutual Fund -

Sundaram BNP Paribas Fixed Income Interval Fund Plan B Quarterly Plan

1,10,21,766 (2007: Nil) units of SBI Mutual Fund -

SBI-Premier Liquid Fund - Super IP - Daily Dividend

1,00,00,000 (2007: Nil) units of SBI Mutual Fund -

SBI Debt Fund Series -90 days -20- Dividend

Sub-total 1,180,804

*-

*-

-

72,077

269,715

-

-

-

-

-

-

-

50,000

100,000

100,793

100,192

100,856

100,000

311,995

100,217

365,439

100,000

110,576

100,000

1,981,860

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SCHEDULES ANNEXED TO AND FORMING PARTOF BALANCE SHEET( c o n t d . )

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

SCHEDULE - 9

Stock-on-hire, gross 1,587

Less: Unmatured finance charges 141

Total 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

Considered good

Debts outstanding for a period exceeding six months 29,616

Other debts 181,550

211,166

Considered doubtful

Debts outstanding for a period exceeding six months 9,316

Other debts -

9,316

Less: Provision for doubtful debts 9,316

-

Total 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 690

S S Venture Services

SCHEDULE - 11

Cash on hand 13

Balances with scheduled banks

Current accounts [Refer note 10 under schedule 23 (B)] 28,080

Deposit accounts 100,342

Total 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.

Stock-on-hire under Hire Purchase, net

1,587

141

1,446

Sundry Debtors (unsecured)

14,779

161,686

176,465

30,178

5,998

36,176

36,176

-

176,465

1,910

429

Cash and Bank Balances

21

45,911

404,647

450,579

4 8

(Rupees in thousands unless otherwise stated)

SCHEDULES

Total unquoted stock-in-trade 1,190,130

Total stock-in-trade 1,196,672

Aggregate of quoted stock-in-trade:

(i) Cost 9,317

(ii) Market/realisable value 6,542

(iii) Book Value 6,542

Aggregate of unquoted stock-in-trade:

(I) Cost 1,210,767

(iii) Book Value 1,190,130

* Fully provided for.

1,981,860

1,984,170

3,000

2,310

2,310

2,003,822

1,981,860

SCHEDULES ANNEXED TO AND FORMING PARTOF BALANCE SHEET( c o n t d . )

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

4 9

(Rupees in thousands unless otherwise stated)

SCHEDULES

SCHEDULE - 12

(Unsecured and considered good unless otherwise stated)

Advances recoverable in cash or in kind or for value to be received

Considered good 20,981

Considered doubtful 6,943

27,924

Less: Provision for doubtful advances 6,943

20,981

Deposits

Others 37,261

37,261

Advance tax and tax deducted at source [net of provision for 797,037

income-tax Rs 2,842,839 (2007: Rs.2,429,339)]

Advance interest tax [net of provision for interest tax 15,204

Rs 13,861(2007: Rs 13,861)]

Total 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 299

SBICAP Securities Ltd. 1,840

SBICAP Ventures Ltd. 2,483

S.S. Ventures Ltd -

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

SBICAP Securities Ltd. 12,952

SBICAP Ventures Ltd. 2,483

SBICAP Trustees Co. Ltd. 64

SBI Cards & Payment Services Pvt. Ltd. 527

S.S. Ventures Ltd -

SCHEDULE - 13

Sundry creditors

Total outstanding dues of Micro, Medium and Small Enterprises -

Total outstanding dues of creditors other than Micro, Medium

and Small Enterprises 65,710

Other liabilities 23,435

Advances and deposits 25,132

Unaccrued lease rentals 7,892

Total 122,169

Loans and Advances

23,545

6,943

30,488

6,943

23,545

36,392

36,392

747,310

15,204

822451

48

6,917

285

273

-

299

6,917

2,611

64

-

273

Current Liabilities

-

80,044

25,868

20,284

7,822

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

5 0

(Rupees in thousands unless otherwise stated)

SCHEDULES

SCHEDULE - 14

Proposed dividend 58,034

Provision for FBT 149

Provision for:

Gratuity 8,180

Compensated Leave -

Bonus 40,000

Stock-on-hire under hire purchase 1,446

Corporate Tax on Dividend 9,863

Total 117,672

Provisions

580,337

-

9,577

10,699

100,327

1,446

98,628

801,014

SCHEDULES ANNEXED TO AND FORMING PARTOF BALANCE SHEET( c o n t d . )

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

SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT

5 1

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(Rupees in thousands unless otherwise stated)

SCHEDULES

SCHEDULE - 15

Issue management 161,367

Arranger's fees 26,677

Advisory fees 690,430

Total 878,474

SCHEDULE - 16

Interest [tax deducted at source Rs.1,483 (2007: Rs.302)] 23,230

Profit on sale of investments (net) 111,615

Trading profits on stock-in-trade (net) (14,684)

Dividend 158,002

Total 278,163

SCHEDULE - 17

Lease rentals (excluding sales-tax) 189,804

Lease and Hire Purchase overdue interest / finance charges 110

Total 189,914

SCHEDULE - 18

Profit/(loss) on sale of fixed assets (net) 2,358

Rental income [tax deducted at source Rs.8,438 (2007: Rs.5,446)] 25,494

Bad debts recovered 54,206

Foreign exchange fluctuation (net) -

Others 40,464

Write-back of provision on:

Investments -

Stock-in-trade -

Bonus 14,482

Compensated Leave -

Doubtful debts 4,847

Total 141,851

SCHEDULE - 19

Salaries, wages and bonus 174,081

Contribution to provident and pension funds 7,456

Contribution to Gratuity 2,322

Contribution to Superannuation 6,431

Staff welfare 6,182

Total 196,472

Merchant Banking and Advisory Fees

110,513

-

1,108,018

1,218,531

Income from Securities

20,938

684,688

2,419

150,451

858,496

Lease and Hire Purchase Income

105,595

-

105,595

Other Income

1,106

33,812

17,556

154

34,477

13,043

1,400

6,146

4,268

6,184

118,146

Employee Costs

273,318

10,130

2,180

7,962

6,410

300,000

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

( c o n t d . )

5 2

SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT

SCHEDULE - 20

Bank and others 77,343

Total 77,343

SCHEDULE - 21

Provision for:

Diminution in value of investments 5,551

Fall in value of stock-in-trade 4,398

Doubtful debts 5,788

Total 15,737

SCHEDULE - 22

Legal and professional fees 24,685

Conveyance and travelling 34,724

Rent 37,352

Rates and taxes 2,253

Brokerage expenses 27,490

Bad debts written off 10,121

Postage, telephone and telex 7,669

Advertisement 13,277

Printing and stationery 5,920

Electricity 6,714

Repairs and maintenance:

Building 3,538

Others 9,256

Insurance 1,825

Directors' sitting fees 181

Tax on perquisities 521

Miscellaneous expenses 40,170

Total 225,696

Interest Expense

338

338

Provisions (Expense)

23,281

710

33,044

57,035

Other Expenses

18,264

34,023

38,376

1,304

162

22,531

8,904

6,012

5,620

8,890

3,189

5,523

1,133

307

727

27,907

182,872

(Rupees in thousands unless otherwise stated)

SCHEDULES

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

( c o n t d . )

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SCHEDULE – 23

A. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

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.

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.

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.

• 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.

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

• The carrying amounts are reviewed at each balance sheet date when required to assess whether they are

recorded in excess of their recoverable amounts, and where carrying values exceed this estimated recoverable

amount, assets are written down to their recoverable amount.

• After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

Notes to Accounts

a) Basis of preparation

b) Use of estimates

c) Changes in Accounting Policies

d) Fixed Assets and Depreciation

e) Intangibles

f) Impairment

(Rupees in thousands unless otherwise stated)

SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT( c o n t d . )

5 4

g) Investments

h) Stock-in-trade

I) Income recognition

Fee based Income:

Income from securities:

Lease and hire purchase income:

• 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.

• 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.

Revenue is recognized to the extent that it is probable that economic benefits will flow to the Company and

revenue can be easily measured.

• 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.

• 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 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.

SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT( c o n t d . )

5 5

j) Foreign currency transactions

Initial Recognition

Conversion

Exchange Differences

k) Retirement benefits

l) Income taxes

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.

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 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.

• 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.

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

realised.

iv) 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.

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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.

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.

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.

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.

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.

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.

m) Earnings per share

n) Provisions

o) Operating Leases

p) Segment information - basis of preparation

q) Cash and Cash equivalents

SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT( c o n t d . )

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SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT( c o n t d . )

B) OTHER NOTES

I Basic and diluted EPS (Rs.) 11.09

II Nominal value per share (Rs.) 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.

Tax Assets/(Liabilities) due to temporary timing

difference in respect of:

Deferred tax assets

Depreciation on fixed assets 6,636

Provision on Gratuity 2,780

Provision for doubtful HP & leased assets 492

Provision on compensated leave -

Provision for doubtful debts 3,167

Provision for doubtful sales tax deposits 2,360

Deferred tax assets 15,435

Less : Opening Deferred Tax Asset (19,703)

Less : Deferred tax asset on transitional provision -

Deferred tax credit for the year 35,138

(I) Claims against the Company not acknowledged as debts 120,656

(ii) Guarantees issued 1,415

(iii) Partly paid shares 2,400

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.

1. Earnings per equity share (EPS)

22.46

10

2. Deferred taxes

18,569

3,255

492

3,636

12,296

2,360

40,608

15,435

5,087

20,086

3. Contingent Liabilities and Commitments

4.

120,656

1,925

-

(Rupees in thousands unless otherwise stated)

For the year ended31st Mar-08

For the year ended31st Mar-07

(Rupees in thousands unless otherwise stated)

(Rupees in thousands unless otherwise stated)

As at 31st March-08 As at 31st March-07

As at 31st March-08 As at 31st March-07

5 8

SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT( c o n t d . )

5. Supplementary Profit And Loss Data

626

45

185

856

1,000

100

400

50

1,550

4,750

26,247

517,394

543,641

(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.

(ii) Remuneration to Managing Director & CEO

Salary and bonus 493

Contribution to provident and pension funds 35

Perquisites 269

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

For tax audit 100

For other matters 665

For out-of-pocket expenses 50

1,815

(c) Expenditure in foreign currency (on accrual basis)

Travel and other expenses 4,598

(d) Earnings in foreign currency (on accrual basis)

Advisory fees from overseas clients and reimbursement

of expenses -

Sale Consideration of Investment and interest thereon -

28,547

(Rupees in thousands unless otherwise stated)

For the year ended31st Mar-08

For the year ended31st Mar-07

5 9

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)

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Details of Transactions with the above related parties are as under :

Particulars Holding Company Subsidiaries Fellow Subsidiaries Associates

Mar-07 Mar-07 Mar-07 Mar-07

Expenses during the year ended

Deputation of Employees 16,651 - - -

State Bank of Hyderabad - - 999 -

State Bank of Bikaner and Jaipur - - 475 -

State Bank of Mysore - - 521 -

State Bank of Saurashtra - - 513 -

State Bank of Travancore - - 155 -

Rent 4,436 - - -

State Bank of Hyderabad - - - -

State Bank of Saurashtra - - - -

State bank of Indore - - 64 -

Bank & Other Charges 1,931 - - -

SBI DFHI Limited - - 3 -

SBI Commercial and International Bank Ltd - - 1 -

SBICAP Securities Ltd. - - - -

Interest Expense 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 5,132

SBI Cards & Payment Services - - - -

SBI Factors - - - -

SBI DFHI - - - -

Bank Interest 666 - - -

State Bank of Patiala - - - -

SBI Commercial and International Bank Ltd - - - -

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. - 3,678 - -

SBI Funds Management Pvt. Ltd. - - 21,816 -

S.S. Ventures Services Ltd. - - - -

Dividend - - - -

SBI DFHI Limited - - 6,818 -

SBICAP Securities Ltd. - - - -

Write back of provision 100 - - -

Mar-08 Mar-08 Mar-08 Mar-08

16,213 - - -

- - 1,044 -

- - - -

- - 471 -

- - 555 -

- - 3 -

4,829 - - -

- - 433 -

- - 257 -

- - - -

663 - - -

- - 3 -

- - 1 -

- 5 - -

338 - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

3,009 - - - -

- - - -

- - 1,500 -

- - 500 -

- - - -

- - 12,884 -

- - 10,584 -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- 7,495 - -

- - 26,137 -

- - - 180

- - - -

- - - -

- 15,000 - -

- - - -

- -

(Rupees in thousands unless otherwise stated)

SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT( c o n t d . )

6 1

(Rupees in thousands unless otherwise stated)

Particulars Holding Company Subsidiaries Fellow Subsidiaries Associates

Mar- 07 Mar-07 Mar-07 Mar-07

Balance receivable as at

Debtors 662 - - -

S.S. Ventures Services Ltd. - - - -

Cash at Bank 27,962 - - -

SBI Commercial and International Bank Ltd - - 118 -

Deposit with Bank 100 - - -

SBI Commercial and International Bank Ltd - - 100,242 -

State Bank of Patiala - - - -

Loans & Advances - - - -

SBICAP Securities Ltd. - 1,840 - -

SBICAP Ventures Ltd. - 64 - -

SBICAPS Trustee Co. Ltd. - 2,483 - -

S.S. Ventures Services Ltd. - - - -

Other Current Assets - - -

SBI Commercial and International Bank Ltd - - 299 -

State Bank of Patiala - - - -

Investments - - - *-

SBI DFHI Limited - - 100,000 -

SBICAP Securities Ltd. - 500,000 - -

SBICAP Ventures Ltd - - - -

Others - 18,185 - -

Balance payable as at

Creditors 150 - - -

SBI Funds Management Pvt. Ltd. - - - -

SBICAP Securities Ltd. - - - -

State Bank of Bikaner & Jaipur - - 8 -

State Bank of Indore - - - -

Secured Loans 250,000 - - -

Others transactions during the year ended

Dividend paid 400,000 - - -

Deputation of Employee - - - -

SBICAP Securities Ltd. - 14,405 - -

Fees Shared 258,420 - - -

SBICAP Securities Ltd. - 39,723 - -

State Bank of Patiala - - - -

State Bank of Mysore - - - -

State Bank of Hyderabad - - - -

Guarantees 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.

Mar-08 Mar-08 Mar-08 Mar-08

1,910 - - -

- - - 429

45,794 - - -

- - 117 -

100 - - -

- - 104,305 -

- - 200,000 -

48 - - -

- 6,917 - -

- 285 - -

- - - -

- - - 273

- - - -

- - 5,460 -

- - 12,884 -

- - - *-

- - 100,000 -

- 500,000 - -

- 31,000 - -

- 17,685 - -

268 - - -

- - 85 -

- 1,891 - -

- - 9 -

- - 12 -

- - - -

500,000 - - -

- - -

- - - -

373,322 - - -

- 48,784 - -

- - 1,375 -

- - 500 -

- - 1,000 -

1,925 - - -

-

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(Rupees in thousands unless otherwise stated)

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)

Amt. Amt. Amt. Amt.

*- - - *-

(-) - - *-

8,000 - 8,000 -

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

7,868 309,526 317,431 2,310

(113,255) (1,564,263) (1,665,649) (7,868)

1,180,804 8,451,156 7,650,931 1,981,860

(2,376,111) (7,025,913) (8,221,220) (1,180,804)

- - - -

(46,003) (-) -

1,196,672 8,760,682 7,976,362 1,984,170

(2,549,369) (8,590,176) (9,939,329) (1,196,672)

8. Segmental Reporting

31 Mar-08 31 Mar-08 31 Mar-08 31 Mar-08

1,026,082 1,226,340 48,346 2,300,768

- - - -

1,026,082 1,226,340 48,346 2,300,768

941,072 1,055,360 48,346 2,044,778

- - - -

- - - 344,639

- - - 1,700,139

- - - 338

- - - 396,456

- - - 1,303,345

- - - -

- - - 1,303,345

31 Mar-08 31 Mar-08 31 Mar-08 31 Mar-08

4,175,761 175,548 100 4,351,409

- - - 1,004,417

- - - 5,355,826

54,875 16,786 - 71,661

- - - 888,147

- - - 959,808

- - - 8,762

- - - 60,722

Particulars Opening Stock Additional Purchases Sales/Redemption Closing Stock

Nos. Nos. Nos. Nos.

Stock-in-Trade

Preference Shares 214,678 - - 214,678

(214,678) - - (214,678)

Debentures 2 - 2 -

(2) (-) (-) (2)

Equity Shares 2,357,814 629,500 1,121,946 1,865,368

(2,812,483) (5,017,092) (5,471,761) (2,357,814)

Units of Mutual Fund 118,075,619 646,669,385 605,584,951 159,160,053

(164,318,723) (585,184,360) (631,427,464) (118,075,619)

Asset Securitisation Trust - - - - -

PTC 1&2 (19) (-) (19) -

Total

*- Fully provided for

Fund Based Segment Fee Based Segment Corporate & Others Consolidated

For the year ending 31 Mar-07 31 Mar-07 31 Mar-07 31 Mar-07

Fund Based Segment Fee Based Segment Corporate & Others Consolidated

As at 31 Mar-07 31 Mar-07 31 Mar-07 31 Mar-07

(46,460)

Revenue

External sales 472,091 878,475 78,784 1,429,350

Inter-segment sales - - - -

Total revenue 472,091 878,475 78,784 1,429,350

Result

Segment result 346,474 754,764 68,632 1,169,870

Unallocated revenue - - - 59,052

Unallocated corporate expenses - - - 312,365

Operating profit - - - 916,557

Interest expense - - - 77,343

Income tax - - - 195,643

Profit from ordinary activities - - - 643,571

Extraordinary item, net - - - -

Net profit - - - 643,571

Segment assets 3,068,761 206,514 399 3,275,674

Unallocated corporate assets - - - 1,017,550

Total assets - - - 4,293,224

Segment liabilities 51,913 23,121 - 75,034

Unallocated corporate liabilities - - - 436,668

Total liabilities - - - 511,702

Capital expenditures - - - 15,040

Depreciation - - - 133,940

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

(Rupees in thousands unless otherwise stated)

SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT( c o n t d . )

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(Rupees in thousands unless otherwise stated)

9. Gratuity and other post-employment benefit plans: (AS 15 120(b))

2008

1,186

769

(304)

4,271

-

5,922

195

2008

12,152

(2,575)

-

9,577

2008

8,369

769

1,186

(2,334)

4,162

12,152

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

2007

Current service cost *-

Interest cost on benefit obligation *-

Expected return on plan assets *-

Net actuarial(gain) / loss recognised in the year *-

Past service cost *-

Net benefit expense *-

Actual return on plan assets *-

Balance sheet

Details of Provision for gratuity

Gratuity

2007

Defined benefit obligation *-

Fair value of plan assets *-

Less: Unrecognised past service cost *-

Plan asset / (liability) *-

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

[AS15 Revised 120(e) (i) to (viii)]

Gratuity

2007

Opening defined benefit obligation *-

Interest cost *-

Current service cost *-

Benefits paid *-

Actuarial (gains) / losses on obligation *-

Closing defined benefit obligation *-

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SCHEDULES ANNEXED TO AND FORMING PART OF BALANCESHEET AND PROFIT AND LOSS ACCOUNT( c o n t d . )

Changes in the fair value of plan assets are as follows

Gratuity

2007

Opening fair value of plan assets *-

Expected return *-

Contributions by employer *-

Benefits paid *-

Actuarial gains / (losses) *-

Closing fair value of plan assets *-

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

2007

%

Investments with insurer *-

The principal assumptions used in determining gratuity for the Company’s plans are shown below:

{As15 Revised 120 (l) (i) to (v)}

Gratuity

2007

%

Discount rate *-

Expected rate of return on assets *-

Employee turnover

Age (Years) 21-44 *-

Age (Years) 45-57 *-

Healthcare cost increase rate 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

2007

Defined benefit obligation *-

Plan assets *-

Surplus / (deficit) *-

Experience adjustments on plan liabilities *-

Experience adjustments on plan assets *-

* 2008 being the first year of disclosure, previous year figures are not available

2008

1,782

304

2,932

(2,334)

(109)

2,575

2008

%

100

2008

%

7.9

7.5

25%

2%

N.A.

2008

12,152

2,575

(9,577)

923

(109)

(Rupees in thousands unless otherwise stated)

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10.

11.

March 2008

-

-

-

-

12.

13. Prior Year Comparatives

The Company has cheques in hand aggregating Rs. 3,409 (2007 : Rs. 8,230), which have been included in the respective

bank accounts.

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 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

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

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

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SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEETAND PROFIT AND LOSS ACCOUNT( c o n t d . )

6 6

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

6 7

SB

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SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT( c o n t d . )S

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6 8

SBICAP Securities Limited

SBICAPS Ventures Limited

SBICAP Trustee Company Limited

SBICAP (UK) 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

Directors’ Report 97

Auditors Report 99

Balance Sheet 101

Profit and Loss Account 102

Cash Flow Statement 103

Schedules 104

Balance Sheet Abstract 109

Directors’ Report 110

Auditors Report 112

Balance Sheet 115

Profit and Loss Account 116

Cash Flow Statement 117

Schedules 118

Balance Sheet Abstract 121

Directors’ Report 122

Auditors Report 124

Profit and Loss Account 125

Balance Sheet 126

Cash Flow Statement 127

Notes to Accounts 128

6 9

DI RECTORS’ 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 2007

Gross Income 18.24

Profit before provisions, Depreciation, Interest and Tax 7.91

Provisions 1.09

Depreciation 0.47

Interest -

Profit before tax 6.35

Profit after tax 4.04

Equity Share Capital 50.00

Reserves 3.47

Debt Funds -

Earnings per share (Rs.) 0.90

Return on Equity (%) 7.56

Dividend per share (Rs.) -

Book Value per share (Rs.) 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

by augmenting the team size substantially in the coming year.

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. The Company also offers D.P. services at all its branches. The number of retail broking clients

has crossed 16000 (as against 7000 last year). We started our DP operations in January 2007 and the number of DP clients has

already crossed 7700 (as against 1000 clients last year).

2008

Operating Results

44.84

22.26

2.51

0.98

-

18.77

12.21

Financial Position

50.00

13.88

-

Other Selected Data

2.44

19.11

0.30

12.78

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DI RECTORS’ REPORT

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.

( c o n t d . )

7 1

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.

Foreign Exchange Earnings and Outgo

During the year under review, the Company has not earned any foreign exchange and there is no foreign exchange outgo.

X. Particulars of Employees

In terms of the Companies (Particulars of Employees) Rules, 1975 and in terms of Department of Company Affairs Notification

DI RECTORS’ REPORT ( c o n t d . )

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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

DI RECTORS’ REPORT ( c o n t d . )

7 3

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

Membership No.: 36738

Mumbai

April 11, 2008

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ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OURREPORT 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.

7 5

(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

Mumbai

April 11, 2008

ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORTOF EVEN DATE( c o n t d . )

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BALANCE SHEET

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

(Rupees)

SOURCES OF FUNDS

500,000,000

138,841,149

638,841,149

74,507

638,915,656

APPLICATION OF FUNDS

40,572,174

14,463,885

26,108,289

364,000

21,252,556

34,230,640

636,673,062

59,111,290

751,267,548

135,615,461

3,208,720

138,824,181

612,443,367

638,915,656

Shareholders’ Funds

Share capital 1 500,000,000

Reserves and surplus 2 34,740,096

534,740,096

Deferred Tax Liability (Net) 15(B)(2) 1,456,179

TOTAL 536,196,275

Fixed Assets 3

Gross block 23,888,739

Less: Accumulated depreciation/amortisation 4,734,857

Net block 19,153,882

Capital work-in-progress including capital advances 1,853,563

Current Assets, Loans & Advances

Interest accrued 6,976,748

Sundry debtors 4 20,787,757

Cash and bank balances 5 489,878,269

Loans and advances 6 63,005,651

(A) 580,648,425

Less : Current Liabilities & Provisions

Current liabilities 7 64,012,730

Provisions 8 1,446,865

(B) 65,459,595

Net Current Assets (A - B) 515,188,830

Total 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

7 7

PROFIT AND LOSS ACCOUNT

(Rupees)

Schedule As at 31st Mar-07

Income

Brokerage (Gross) 87,880,950

Less: Service tax 9,469,306

78,411,644

Selling and distribution commission (Gross) 96,919,740

Less: Service tax 9,754,218

9 87,165,522

Depository services (Gross) 14,271

Less: Service tax 2,017

10 12,254

Interest 16,119,696

(Tax deducted at source: Rs.8,626,744/-, March 2007: Rs.3,617,843/-)

Other income 11 656,290

182,365,406

Expenditure

Employee cost 12 42,701,704

Operating expenses 13 40,023,056

Administration expenses 14 31,426,563

Depreciation / amortisation 3 4,734,857

118,886,180

Profit Before Tax 63,479,226

Provision for tax

Current income tax (21,000,000)

Deferred tax (1,456,179)

Fringe benefit tax (600,400)

Profit After Tax 40,422,647

Balance brought forward from previous year (5,682,551)

Less: Provision for compensated absence as per transitional provision -

Profit available for appropriation 34,740,096

Appropriations :

Interim dividend -

Tax on interim dividend -

Transfer to general reserve -

Surplus carried to Balance Sheet 34,740,096

Earning per share (Basic and Diluted in Rs.)

(Face value Rs.10/- per share) 15(B)(1) 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

193,143,801

20,960,459

172,183,342

255,522,874

27,497,643

228,025,231

1,619,307

182,264

1,437,043

37,916,433

8,815,643

448,377,692

85,708,596

104,521,252

60,593,180

9,825,248

260,648,276

187,729,416

(66,000,000)

1,163,869

(820,000)

122,073,285

34,740,096

422,982

156,390,399

15,000,000

2,549,250

3,051,832

135,789,317

2.44

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

For the year ended 31st Mar-08

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CASH FLOW STATEMENT

(Rupees)

For the year ended31st Mar-08

For the year ended31st Mar-07

Cash flow from operating activities :-

Profit Before Tax 63,479,226

Adjustments for non-cash transactions

Depreciation 4,734,857

Excess provision for doubtful debts written back 709,427

Loss on sale of fixed assets -

Provision for leave encashment -

Provision for gratuity 123,776

5,568,060

Operating profit before working capital changes 69,047,286

Adjustments for :

Decrease /(increase) in fixed deposits under lien (31,000,000)

Decrease /(increase) in fixed deposits (original maturity > 3 months) (212,500,000)

Decrease /(increase) in current assets 41,624,830

Decrease /(increase) in loans and advances (20,873,016)

(Decrease)/increase in current liabilities 35,809,588

(186,938,598)

Cash generated from operations before tax (117,891,312)

Fringe benefit tax paid (600,400)

Direct taxes paid (19,600,579)

(20,200,979)

I. Net cash from operating activities (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 (16,433,188)

Sale of fixed assets -

Capital advance (1,853,563)

II. Net cash from investing activities. (109,117,726)

Cash Flow from financing activities :-

Proceeds from issue of shares 399,500,000

Interim dividend paid -

Tax on interim dividend -

III. Net cash used in financing activities 399,500,000

Net change in cash & cash equivalents (I+II+III) 152,289,983

Cash & cash equivalents at the beginning of the year 1,588,286

Cash & cash equivalents at the end of the year (a) 153,878,269

Fixed deposits under lien 31,000,000

Fixed deposits (original maturity > 3 months) 305,000,000

(b) 336,000,000

Total (a+b) 489,878,269

As per our report of even date

187,729,416

9,825,248

(591,287)

251,952

1,852,396

591,762

11,930,071

199,659,487

(202,500,000)

90,000,000

(27,127,403)

16,185,144

71,602,731

(51,839,528)

147,819,959

(820,000)

(79,613,872)

(80,433,872)

67,386,087

-

-

-

-

(17,131,707)

100,100

1,489,563

(15,542,044)

-

(15,000,000)

(2,549,250)

(17,549,250)

34,294,793

153,878,269

188,173,062

233,500,000

215,000,000

448,500,000

636,673,062

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

SCHEDULES ANNEXED TO AND FORMING PART OFBALANCE SHEET

SCHEDULE - 1

Authorised

100,000,000 (Previous year : 100,000,000)

Equity Shares of Rs. 10/- each 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

Total 500,000,000

(The above shares are held by SBI Capital Markets Ltd., the holding company and its nominees)

SCHEDULE - 2

General Reserves

Balance as per last account -

Add : Transferred from Profit and Loss Account -

-

Profit and Loss Account 34,740,096

Total 34,740,096

Share Capital

1,000,000,000

500,000,000

500,000,000

Reserves and Surplus

-

3,051,832

3,051,832

135,789,317

138,841,149

(Rupees)

SCHEDULES

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

7 9

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TAN

GIB

LE

AS

SE

TS

Offi

ce E

quip

men

ts 4

,045

,259

2,

514,

700

367,

085

47

3,82

7 74

8,29

4 60

,501

5,03

1,25

4 3,

571,

432

Fur

nitu

res

& F

ixtu

res

2,33

2,14

7 1,

099,

785

-

172,

868

572,

502

-

2,68

6,56

2 2,

159,

279

Com

pute

rs

14,5

83,4

06

5,14

4,95

6 81

,187

3,60

4,84

9 5,

554,

979

35,7

19

10,5

23,0

65

10,9

78,5

57

INTA

NG

IBL

E A

SS

ET

S

Com

pute

r S

oftw

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2,92

7,92

7 8,

372,

266

-

483,

313

2,94

9,47

3 -

7,86

7,40

7 2,

444,

614

Tota

l 23

,888

,739

17

,131

,707

44

8,27

2

4,73

4,85

7 9,

825,

248

96,2

20

26,1

08,2

88

19,1

53,8

82

Pre

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- 23

,888

,739

-

-

4,73

4,85

7 -

19,1

53,8

82

-

6,19

2,87

41,

161,

620

3,43

1,93

274

5,37

0

19,6

47,1

759,

124,

109

11,3

00,1

933,

432,

786

40,5

72,1

7414

,463

,885

23,8

88,7

394,

734,

857

GR

OS

S B

LOC

KC

UM

ULA

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PR

EC

IATI

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/ A

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Bal

ance

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Ded

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Bal

ance

as a

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Bal

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as a

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as a

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at31

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(Ru

pe

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SC

HE

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- 3

Fix

ed A

sset

s

( c o n t d . )

( c o n t d . )

SCHEDULES ANNEXED TO AND FORMING PART OFBALANCE SHEET

8 1

(Rupees)

SCHEDULES

SCHEDULE - 4

Debts outstanding for a period exceeding six months

Unsecured, considered doubtful 497,700

Other debts

Unsecured, considered good 17,237,677

Unsecured, considered doubtful 211,727

17,947,104

Less: Provision for doubtful debts 709,427

Exchange account 3,550,080

Total 20,787,757

Included in Sundry Debtors are:

Dues from companies under the same management:

- State Bank of India (ultimate holding company) 361,041

- SBI Capital Markets Limited (holding company) -

- SBI Mutual Funds (fellow subsidiary) 9,408

- State Bank of Mysore (fellow subsidiary) 935

- State Bank of Indore (fellow subsidiary) -

- SBI Life Insurance (fellow subsidiary) -

- SBI DFHI Limited (fellow subsidiary) 12,611

SCHEDULE - 5

Cash on hand 2,000

Balances with scheduled banks

- in Current accounts

Client designated 120,621,932

Others 33,254,337

- in Fixed deposit accounts 305,000,000

- Fixed deposits under lien with Stock Exchanges and Bank 31,000,000

Total 489,878,269

SCHEDULE - 6

Unsecured, considered good

Advances recoverable in cash or kind for value to be received 2,873,099

Advance tax and tax deducted at source [net of provision for income-tax

Rs. 66,000,000 (Previous year Rs. Nil)] -

Deposits with Stock Exchanges/clearing house 53,014,082

Other deposits 7,118,470

Unsecured, considered doubtful

Arbitration deposit -

63,005,651

Less: Provision for arbitration deposit -

Total 63,005,651

Sundry Debtors

66,342

34,230,640

51,798

34,348,780

118,140

34,230,640

890,775

2,132,761

162,366

-

2,882

23,731

5,158

Cash and Bank Balances

1,000

155,036,329

33,135,733

215,000,000

233,500,000

636,673,062

Current Assets, Loans and Advances

2,013,417

12,290,784

33,014,082

11,793,007

141,822

59,253,112

141,822

59,111,290

-

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

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SCHEDULE - 7

Exchange account -

Clients payable 28,107,182

Other liabilities 16,627,499

Creditors for expenses 19,278,049

Total 64,012,730

Dues to companies under the same management:

-SBI Capital Markets Ltd (Holding company) 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) -

-State Bank of Hyderabad (Fellow Subsidiary) 100,000

Dues of Micro, Medium and Small Enterprises included

in Creditors for expenses -

SCHEDULE - 8

Provision for tax [net of advance tax Rs.Nil (Previous year Rs.19,891,911)] 1,323,089

Provision for gratuity 123,776

Provision for compensated absences -

Total 1,446,865

Current Liabilities

7,317,641

65,848,149

32,458,434

29,991,237

135,615,461

6,879,319

-

-

-

1,011

-

-

Provisions

-

715,539

2,493,181

3,208,720

SCHEDULES ANNEXED TO AND FORMING PART OFBALANCE SHEET

8 2

(Rupees)

SCHEDULES

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

( c o n t d . )

SCHEDULES ANNEXED TO AND FORMING PART OF PROFITAND LOSS ACCOUNT

8 3

( c o n t d . )

(Rupees)

SCHEDULES

SCHEDULE - 9

Mutual Funds 41,182,040

IPO's 43,061,541

Bond 2,921,941

Others -

Total 87,165,522

SCHEDULE - 10

Annual maintenance charges 1,000

Transaction charges 9,778

Dematerisation charges 1,476

Total 12,254

SCHEDULE - 11

Dividend 89,029

Provision written back

Performance linked variable payment -

Broking debtors -

S&D commission payable

Miscellaneous income 567,261

Total 656,290

SCHEDULE - 12

Salaries, wages and bonus 38,310,410

Contribution to provident and pension funds 719,080

Gratuity expense 855,696

Staff welfare expense 2,816,518

Total 42,701,704

SCHEDULE - 13

Mutual Fund brokerage 10,302,199

IPO brokerage 17,234,964

Bond brokerage 2,134,010

Stamp duty 5,084,882

Transaction charges 1,731,969

Depository charges 1,564,509

Other operating expenses 1,261,096

Provision for doubtful debts 709,427

Sundry debtors written off -

Total 40,023,056

Selling and Distribution Commission

163,086,756

63,721,478

1,181,397

35,600

228,025,231

Depository Services Income

277,957

1,140,865

18,221

1,437,043

Other Income

2,696,602

591,287

5,203,794

323,960

8,815,643

Employee Costs

78,040,517

2,514,719

709,822

4,443,538

85,708,596

Operating Expenses

48,899,809

30,378,277

636,371

11,090,231

4,466,544

3,270,285

5,228,926

-

550,809

104,521,252

-

For the year ended31st Mar-07

For the year ended31st Mar-08

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SCHEDULES ANNEXED TO AND FORMING PART OF PROFITAND LOSS ACCOUNT( c o n t d . )

For the year ended31st Mar-07

SCHEDULES

For the year ended31st Mar-08

SCHEDULE - 14

Rent (Refer Schedule 15(B)(5)) 9,108,821

Advertisement 482,815

Travelling and conveyance 3,393,488

Communication 3,084,669

Printing and stationery 2,290,440

Legal and professional fees (Refer Schedule 15(B)(8b)) 2,722,777

Electricity charges 1,137,580

Membership and subscriptions 1,493,146

Office maintenance 1,532,643

Repairs and maintenance (others) 1,718,088

Staff recruitment 1,716,580

Books and periodicals 137,313

Business promotion 288,767

Courier 875,809

Director's sitting fees 24,000

Bank charges 192,522

Registration charges 512,240

Rates and taxes 198,537

Stamp and franking charges 452,918

Loss on sale of fixed assets -

Miscellaneous expenses 63,410

Total 31,426,563

Administrative Expenses

16,909,483

1,063,901

6,548,491

5,804,522

4,836,146

2,345,286

3,845,074

2,797,064

2,246,233

2,033,740

4,418,484

168,405

517,742

2,550,512

72,000

1,113,352

383,499

327,956

590,548

251,952

1,768,790

60,593,180

(Rupees)

SCHEDULES ANNEXED TO AND FORMING PART OFBALANCE SHEET AND PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 31 MARCH 2008

8 5

SCHEDULES

SCHEDULE – 15

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

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.

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.

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.

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.

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

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

its remaining useful life.

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

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

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

A. Notes to Accounts

a) Basis of Preparation

b) Use of Estimates

(c) Changes in Accounting Policies

(d) Fixed assets and Depreciation

(e) Impairment

(f) Lease

( c o n t d . )

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SCHEDULES

(g) Income recognition

(h) Foreign currency transactions

Initial Recognition

Conversion

Exchange Differences

(i) Retirement benefits

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.

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.

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 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.

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.

SCHEDULES ANNEXED TO AND FORMING PART OFBALANCE SHEET AND PROFIT AND LOSS ACCOUNT( c o n t d . )

8 7

SCHEDULES

(j) Income Taxes

(k) Segment Reporting Policies

(l) Earnings Per Share

(m) Provisions

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.

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.

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.

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.

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SCHEDULES ANNEXED TO AND FORMING PART OFBALANCE SHEET AND PROFIT AND LOSS ACCOUNT( c o n t d . )

8 8

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.

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.

(n) Cash and Cash equivalents

SCHEDULES ANNEXED TO AND FORMING PART OFBALANCE SHEET AND PROFIT AND LOSS ACCOUNT( c o n t d . )

8 9

B) OTHER NOTES

I Basic and diluted EPS (Rs.) 0.90

II Nominal value per share (Rs.) 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.

The tax effects of significant temporary differences are as follows:

Deferred Tax Liabilities

Differences in depreciation on block of fixed assets per tax books

and financial books 1,736,635

Total (A) 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 41,663

(ii) Provision for doubtful debts 238,793

(ii) Provision for compenseted absence -

Total (B) 280,456

Net Deferred Tax Liability (A-B) 1,456,179

Estimated amount of contracts remaining to be

executed on capital account & not provided for 2,595,275

Claims against the Company not acknowledged as debts -

1. Earnings Per Equity Share (EPS)

2.44

10

2. Deferred Taxes

1,205,307

1,205,307

243,212

40,156

847,432

1,130,800

74,507

3. Capital Commitments

2,879,069

4. Contingent Liability

43,300

For the year ended31st Mar-08

For the year ended31st Mar-07

As at 31st Mar-08

As at31st Mar-07

As at 31st Mar-08

As at31st Mar-07

(Rupees)

(Rupees)

(Rupees)

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5. Gratuity and Compensated Absences (Revised AS-15)

524,279

64,245

(71,064)

116,867

-

634,327

143,752

1,563,851 2,493,181

(848,312) -

715,539 2,493,181

- -

715,539 2,493,181

785,772

64,245

524,279

-

189,555

1,563,851

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)

Current service cost -

Interest cost on benefit obligation -

Expected return on plan assets -

Net actuarial( gain) / loss recognised in the year -

Past service cost -

Net benefit expense -

Actual return on plan assets -

Balance Sheet

Details of Provision for gratuity and compensated absences

Defined benefit obligation 785,772 640,785

Fair value of plan assets (704,560) -

81,212 640,785

Less: Unrecognised past service cost - -

Plan asset / (liability) 81,212 640,785

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

Opening defined benefit obligation -

Interest cost -

Current service cost -

Benefits paid -

Actuarial (gains) / losses on obligation -

Closing defined benefit obligation 785,772

31st Mar-08

Gratuity

31st Mar-08

Gratuity

31st Mar-08 31st Mar-07

Compensated Absenses

31st Mar-08

Gratuity

31st Mar-07

31st Mar-07

31st Mar-07

(Rs.)

(Rs.)

(Rs.)

SCHEDULES ANNEXED TO AND FORMING PART OFBALANCE SHEET AND PROFIT AND LOSS ACCOUNT( c o n t d . )

9 1

Changes in the fair value of plan assets are as follows:

Opening fair value of plan assets -

Expected return -

Contributions by employer -

Benefits paid -

Actuarial gains / (losses) -

Closing fair value of plan assets 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:

Investments with insurer (in %) 100%

Total 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 :

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:

Defined benefit obligation 785,772

Plan assets 704,560

Surplus / (deficit) (81,212)

Experience adjustments on plan liabilities -

Experience adjustments on plan assets -

Information is available only for the previous year.

704,560

71,064

-

-

72,688

848,312

100%

100%

8.50% p.a 8.50% p.a

7.50% p.a -

8.00% p.a 8.00% p.a

1,563,851

843,312

(715,539)

246,865

72,688

Discount rate 8.25% p.a 8.25% p.a

Expected rate of return on assets 7.50% p.a -

Increase in Compensation cost 8.00% p.a 8.00% p.a

Gratuity

Gratuity

31st Mar-08 31st Mar-07

Gratuity Compensated Absenses

Gratuity

31st Mar-08 31st Mar-07

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

31st Mar-08 31st Mar-07

(Rs.)

(Rs.)

(Rs.)

(Rs.)S

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9 2

6.

7.

16,909,483

16,417,340

5,649,889

-

8. Supplementary Profit and Loss Data

2,418,830

107,965

2,526,795

850,000

50,000

9,966

909,966

-

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.

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.

Particulars

Lease payments for the year 9,108,821

Minimum Lease Payments :

I. Not later than one year 11,724,624

II. Later than one year and not later than five years 13,245,663

III. Later than five years -

(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.

(ii) Remuneration to the Chairman & Whole-time Director /

Managing Director & CEO / Whole-time Director

Salary and bonus 1,201,930

Contribution to provident and pension funds 73,798

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.

(b) Payments to auditors (included in legal and

professional fees) (excluding service tax)

As auditors 600,000

For other services 225,000

Reimbursement of out-of-expenditure -

825,000

(c) Expenditure in foreign currency (on accrual basis)

Travel and other expenses 144,408

As at 31st Mar-08

As at 31st Mar-07

(Rs.)

For theyear ended

31st Mar-08

For theyear ended

31st Mar-07

(Rs.)

For theyear ended

31st Mar-08

For theyear ended

31st Mar-07

(Rs.)

SCHEDULES ANNEXED TO AND FORMING PART OFBALANCE SHEET AND PROFIT AND LOSS ACCOUNT( c o n t d . )

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.

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Details of Transactions with the above related parties are as under :

Mar-08 Mar-08 Mar-08 Mar-08

- 1,255,350 - -

- - - 508,894

- - - 606,464

- - - 712,701

- - - 698,735

- - - 11,000

- - - 16,000

- 8,320,762 - -

- - - -

933,138 - - -

- 5,460,094 - -

- 43,696,627 - -

35,206,634 1,661,637 - -

- - 8,496,978 -

- - 1,001,796 -

- - 8,105,198 -

- - 804,952 -

- - 8,516,385 -

- - 13,050,376 -

- - 8,004,968 -

- - 7,820,821 -

523,883 - - -

- - 1,615,979 -

- - 6,567,562 -

- - 6,486,612 -

- - 6,048,623 -

327,666 - - -

890,775 2,132,761 194,136 -

34,905,826 - 11,049,526 -

12,500,000 - 436,000,000 -

36,160 - - -

- 29,194 - -

- 6,850,125 - -

- - - -

- - - -

- - - -

- - - -

- - 1,011 -

- - - -

- - - -

- - - -

- - - -

- - - -

- 356,816 - -

- - - -

- 3,975,000 - -

- 4,000,000 - -

- - - -

Particulars Ultimate Holding Company Fellow Subsidiaries Key Management

Holding Company Subsidiaries Personal

Mar- 07 Mar-07 Mar-07 Mar-07

Expenses during the year ended

Employees cost - 12,613,305 - -

Shri V. Gopinathan, Ex-Managing Director - - - 699,090

Shri Sridhar Raju, Managing Director - - - -

Shri R.N Nehriya, Chief Operating Officer - - - 515,875

Shri S. H. Visweswaraiah, SVP (Operations) - - - 576,638

Shri R.Sridharan, Chairman - - - -

(upto February 25, 2008)

Shri A.P.Verma, Chairman - - - -

(from March 3, 2008)

Rent - 3,677,625 - -

Brokerage paid for selling and distribution - 4,011,590 - -

Bank Guarantee Commission - - - -

Reimbursement of expenses incurred on

behalf of the company for :

Other expenses reimbursed - 4,849,321 - -

Income during the year ended

Selling and distribution commission (IPO) - 44,549,611 - -

Brokerage (stock broking) 13,411,519 4,226,817 - -

Brokerage (stock broking) - fellow subsidiaries:

SBI Mutual Funds - - 4,037,714 -

SBI DFHI Limited - - 1,083,718 -

SBI Life Insurance Limited - - 2,920,039 -

Others - - 464,083 -

Interest Income:

State Bank of Bikaner and Jaipur - - 3,511,802 -

State Bank of Travancore - - 2,939,640 -

SBI Commercial & International Bank Ltd - - 9,668,254 -

State Bank of Saurashtra - - - -

State Bank of India - - - -

Balance receivable as at

Interest accrued:

State Bank of Bikaner and Jaipur - - 3,511,802 -

State Bank of Travancore - - 2,939,640 -

SBI Commercial & International Bank Ltd - - 525,306 -

State Bank of Saurashtra - - - -

State Bank of India - - - -

Brokerage receivable 361,041 - 22,955 -

Bank balances 32,454,901 - - -

Fixed deposits - - 336,000,000 -

Others - - - -

Balance payable as at

Trade executed but not settled - 1,411,561 - -

Other liability - 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 - - 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 - 5,375,120 - -

Bank fixed deposits transferred - 7,025,000 - -

Rent deposits paid - 1,800,000 - -

Rent deposits returned - - - -

Others transactions - 1,858,307 - -

(Rupees)

SCHEDULES ANNEXED TO AND FORMING PART OFBALANCE SHEET AND PROFIT AND LOSS ACCOUNT( c o n t d . )

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.

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.

Previous year figures are regrouped and rearranged wherever necessary.

11.

12.

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

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SCHEDULES ANNEXED TO AND FORMING PART OFBALANCE SHEET AND PROFIT AND LOSS ACCOUNT( c o n t d . )

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

( Rupees in thousands unless mentioned otherwise)

BALANCE SHEET ABSTRACT AND THE COMPANY’SGENERAL BUSINESS PROFILE

9 6

T o th e M embers,

rdYour Directors have pleasure in presenting the 3 Annual Report and the Audited Accounts of SBICAPS Ventures Limited stfor the year ended 31 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:-

stShri Y. Vijayanand resigned as Director w.e.f. 31 August 2007, consequent to his retirement from State Bank of India.

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

thShri R. Sridharan resigned as Director w.e.f. 25 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 thw.e.f. 25 March, 2008.

rdShri A. P. Verma, Director retires by rotation at the 3 Annual General Meeting of the Company and being eligible,

offers himself for re-appointment.

The Board places on record its deep appreciation of the valuable contributions made by Shri Y. Vijayanand and Shri R.

Sridharan during their tenure as Directors and extends a hearty welcome to Smt. Bharati Rao and Shri R. Sridharan to the

Board.

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DI RECTORS’ REPORT FOR THE YEAR 2007 -2008

9 8

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 stbeen made are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as on 31

stMarch, 2008 and of the profit or loss of the company for the year ended 31 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

rdM/s. Khimji Kunverji & Co., Chartered Accountants, the Company's Statutory Auditors, retire at the conclusion of the 3 th stAnnual General Meeting of the Company. The Board of Directors at their 12 Meeting held on 21 April, 2008, have

recommended the appointment of M/s Khimji Kunverji & Co., Chartered Accountants as the Statutory Auditors of the rd thCompany to hold office from the conclusion of the 3 Annual General Meeting upto the conclusion of the 4 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 thDepartment of Company Affairs Notification G.S.R. 288 (E) dated the 17 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

ndDate :- 22 April, 2008

( c o n t d . )

DI RECTORS’ REPORT

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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 & COChartered Accountants

Nilesh S. VikamseyPartner

Membership No.37665

Mumbai

Date: April 22, 2008

AUDITORS’ REPORT

1 0 0

ANNEXURE TO AUDITORS’ REPORT

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 stno arrears as at 31 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

(Referred to in paragraph 3 of our report of even date)

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

(Rupees)

SOURCES OF FUNDS

31,000,000

285,187

31,285,187

APPLICATION OF FUNDS

7,689

26,499,615

1,435,565

65,169

1,370,396

3,407,487

31,285,187

-

Shareholders' Funds

Share Capital 1 500,000

Loan Funds

Unsecured Loan from Holding Company 2,482,974

2,982,974

Fixed Assets 2 -

Investments 3 -

Current Assets, Loans & Advances 4 56,419

Less: Current Liabilities & Provisions 5 (65,600)

Net Current Assets (9,181)

Profit and Loss account 2,992,155

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

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BALANCE SHEET AS AT 31 MARCH 2008

(Rupees)

Schedule For the year ended 31st Mar-08

For the year ended 31st Mar-07

Income

Miscellaneous income -

Total -

Expenditure

Employee cost 6 -

Administrative expenses 7 1,105,768

Preliminary/share capital increase -

Expenditure written off 1,686,991

Total 2,792,759

Net profit / (loss) before depreciation/amortisation and taxation (2,792,759)

Depreciation/amortisation -

Net profit / (loss) before taxation (2,792,759)

Provision for income tax -

Net profit / (loss) (2,792,759)

Balance brought forward, from last Balance Sheet (199,396)

Balance carried to Balance Sheet (2,992,155)

Basic / Diluted Earning Per Share (EPS) (Refer note no.4 of Schedule 8) (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

5,000

5,000

285,187

134,234

-

-

419,421

(414,421)

911

(415,332)

-

(415,332)

(2,992,155)

(3,407,487)

(0.32)

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PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 31 MARCH 2008

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CASH FLOW STATEMENTFOR THE YEAR ENDED 31 MARCH 2008

A. Cash flow from operating activities

Net loss before depreciation / amortisation & tax (2,792,759)

Adjustment for :

Decrease / (increase) in current assets 220,400

Operating loss before working capital changes (2,572,359)

Increase / (decrease) in current liabilities 49,070

Net cash from operating activities (2,523,289)

B. Cash flow from investment activities

Investments in Aptivaa Consulting Solutions Private Limited -

Investments in S S Ventures Services Limited -

Purchase of office equipment -

Net cash (used in) / from investing activities -

C. Cash flow from financing activities

Proceeds received from private placement of Equity Shares -

Repayment of loans from holding company 2,482,974

Net cash (used in) / from financing activities 2,482,974

Net increase in cash and equivalent (40,315)

Cash and cash equivalent (opening balance) 96,374

Cash and cash equivalent (closing balance) 56,419

Notes:

1) Cash and cash equivalents include:

Cash in hand 500

Balances with bank 55,919

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

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

(414,421)

-

(414,421)

(431)

(414,852)

(5,966,005)

(20,533,610)

(8,600)

(26,508,215)

30,500,000

(2,197,787)

28,302,213

1,379,146

56,419

1,435,565

-

1,435,565

1,435,565

(Rupees)

For the year ended 31st Mar-08

For the year ended31st Mar-07

(Rupees)

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

SCHEDULE - 1

Authorised

2,50,00,000 (P.Y. 2,50,00,000) Equity Shares of Rs. 10 each 250,000,000

Issued, subscribed & paid up

31,00,000 (P. Y. 50,000) Equity Shares of Rs. 10 each fully paid up 500,000

31,00,000 (P. Y. 50,000) shares: 100% held by holding company SBI Capital

Markets Limited & its nominees

500,000

SCHEDULE - 3

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) -

ii) Non-trade

Equity Shares:

Aptivaa Consulting Solutions Private Limited

(500 Equity Shares of Rs. 10/- each fully paid up) -

Preference Shares:

Compulsorily Convertible Preference Shares of Aptivaa Consulting

Solutions Private Limited (8,070 Preference Shares of Rs. 696.15/- -

each fully paid up)

-

SCHEDULE - 4

Cash in hand 500

Balances in scheduled banks - in current account 55,919

56,419

SCHEDULE - 5

A. Current Liabilities

Sundry creditors for expenses 65,100

Security deposit 500

B. Provisions -

65,600

Share Capital

250,000,000

31,000,000

31,000,000

Investments

20,533,610

348,075

5,617,930

26,499,615

Current Assets, Loans & Advances

-

1,435,565

1,435,565

Current Liabilities & Provisions

65,169

-

-

65,169

Schedule 2 on pg no. 106

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SCHEDULES ANNEXED TO AND FORMING PART OF BALANCESHEET & PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2008

(Rupees)

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

SCHEDULE - 6

Salaries and allowances -

Contribution to pension fund -

Contribution to provident fund -

Medical expenses -

-

SCHEDULE - 7

Printing and stationery -

Payment to auditors:

Audit fees 58,000

Reimbursement of service tax 7,100

Reimbursement of expenses 3,673

Legal & professional 523,662

Travel & conveyance expenses 509,284

Profession tax -

Stamp fees and other charges -

Rates and taxes -

Miscellaneous expenses 4,049

Service tax expenses -

1,105,768

Employee Cost

267,399

4,328

10,011

3,449

285,187

Administrative Expenses

340

58,000

7,169

-

2,000

-

7,500

30,500

14,914

2,577

11,234

134,234

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( c o n t d . )

SCHEDULES ANNEXED TO AND FORMING PART OF BALANCESHEET & PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2008

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8,60

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8,60

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SCHEDULES ANNEXED TO AND FORMING PART OF BALANCESHEET & PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2008

SCHEDULE – 8

(A) SIGNIFICANT ACCOUNTING POLICIES

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.

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.

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.

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.

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.

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.

The Company makes defined contribution to Provident Fund which is recognized in the Profit and Loss Account on accrual

basis.

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.

Deferred tax assets in case of unabsorbed losses and unabsorbed depreciation are recognised only if there is virtual

certainty that such deferred tax asset can be realized against future taxable profits.

Fringe Benefit Tax is provided in accordance with the provisions of the Income Tax Act, 1961.

Significant Accounting Policies & Notes to Accounts

1. Accounting Convention

2. Revenue Recognition

3. Fixed Assets

4. Depreciation / Amortisation

5. Investments

6. Translation of Foreign Currency Items

7. Retirement Benefits

8. Taxation

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( c o n t d . )

SCHEDULES ANNEXED TO AND FORMING PART OF BALANCESHEET & PROFIT AND LOSS ACCOUNT

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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

Expenditure in foreign currency during the year is Nil/- (Previous Year Rs. Nil).

Administrative expenditure includes prior period expenses of Rs.5,000 paid towards Professional Tax for the financial year

2005-06 and 2006-07.

No amount is outstanding in respect of the any enterprises covered under The Micro, Small and Medium Enterprise

Development Act, 2006.

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.

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

2007 2007 2007

1) Expenses

Deputation cost - - -

Bank charges 140 - -

2) Assets

a) Investments

SS Venture Services Ltd. - - -

b) Bank Account 55,919 - -

3) Liabilities

Advances for expenses - 2,482,974 -

Particulars Previous Year (Rs.)

Profit/ (loss) after tax (2,792,759)

Basic/ Diluted EPS (55.86)

Nominal Value per share 10

Weighted average number of equity shares 50,000

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

9. Earning Per Share

1.

2.

3.

4.

5. Transactions with related party:

2008 2008 2008

- 285,187 -

559 - -

- - 20,533, 610

1,435,565 - -

-

6. Calculation of Earnings Per Share (EPS):

Current Year (Rs.)

(414,572)

(0.32)

10

1,314,658

7.

- 285,187

1 0 8

( c o n t d . )

SCHEDULES ANNEXED TO AND FORMING PART OF BALANCESHEET & PROFIT AND LOSS ACCOUNT

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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)

Place : Mumbai

Date : 22-Apr-08

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T o th e M embers,

rdYour Directors have pleasure in presenting the 3 Annual Report and the Audited Accounts of SBICAP Trustee Company stLimited for the year ended 31 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 :-

thSmt. Renu Challu, resigned as Director w.e.f. 10 September, 2007, consequent to her posting as Chief General Manager,

Bhopal Circle, State Bank of India.

thShri G. N. Dash, Executive Vice President, SBI Capital Markets Limited, was appointed as Director w.e.f. 28 December, 2007,

under Article 148 of the Articles of Association of the Company.

stShri Harish Bahl, resigned as Director w.e.f. 1 February, 2008, consequent to his posting as General Manager, Inspection &

Audit Department, Bhopal Zone, State Bank of India.

thShri M. K. Nag, Executive Vice President, SBI Capital Markets Limited, was appointed as Director w.e.f. 19 March, 2008,

under Article 148 of the Articles of Association of the Company.

thShri G. N. Dash, resigned as Director w.e.f. 29 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.

rdShri Sridhar Raju, Director retires by rotation at the 3 Annual General Meeting of the Company and being eligible, offers

himself for re-appointment.

DI RECTORS’ REPORT FOR THE YEAR 2007-2008

11 0

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 stbeen made are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as on 31

stMarch 2008 and of the profit or loss of the company for the period ended 31 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 .

th thThe Board of Directors at their 10 Meeting held on 17 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 thEmployees) Rules, 1975 and in terms of Department of Company Affairs Notification G.S.R. 288 (E) dated the 17 April 2002,

issued thereunder.

X. Acknowledgement

The Board is grateful to the State Bank and SBICAP family for providing significant support in the formation of the company.

For and on behalf of the Board of Directors

Director Director

thDate :- 17 April, 2008

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DI RECTORS’ REPORT ( c o n t d . )

11 2

AUDITORS’ REPORT

To,

The Members

SBICAP Trustee Company Limited

st1. We have audited the attached Balance Sheet of SBICAP TRUSTEE COMPANY LIMITED as at 31 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 : MumbaithDate : 17 April 2008

11 3

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

maintained under section 301 of the Companies Act, 1956.

12. The Company has not issued any Debentures during the year covered by our report.

13. During the year covered by our report, the Company has not raised any money by public issue.

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11 4

ANNEXURE TO THE AUDITORS’ REPORT ( c o n t d . )

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 : MumbaithDate : 17 April 2008

(Rupees)

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

SOURCES OF FUNDS

500,000

500,000

APPLICATION OF FUNDS

1,086

321,167

1,629

323,882

68,523

255,359

244,641

500,000

Shareholders' Funds

Share capital 1 500,000

500,000

Current Assets, Loans and Advances 2

Interest accrued 1,137

Cash and bank balances 351,076

Loans and advances 1,629

353,842

Less: Current Liabilities and Provisions 3 79,811

Net Current Assets 274,031

Profit and Loss Account 225,969

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

11 5

BALANCE SHEET AS AT 31 MARCH 2008

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Schedule For the year ended31st Mar’08

(Rupees)

Income

Interest from bank 14,425

14,425

Expenditure

Rates and taxes -

Audit fees 10,102

Bank charges 1,000

Legal and professional fees 79,264

Profession tax -

Miscelleaneous expenses 8,739

Conveyance -

99,105

Net (loss) before Tax (84,680)

Provision for income tax (4,370)

Net (loss) after Tax (89,050)

Balance Loss brought forward from last Balance Sheet (136,919)

Balance carried to Balance Sheet (225,969)

Earning Per Share (Basic & Diluted) (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

15,400

15,400

7,000

10,112

261

2,000

7,500

2,205

234

29,312

(13,912)

(4,760)

(18,672)

(225,969)

(244,641)

(0.37)

For the year ended31st Mar’07

11 6

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2008

(Rupees)

Current Year Previous Year

A. Cash flow from operating activities

Net (loss) before taxation (89,050)

Adjustment for:-

Non cash expenses -

Operating loss before working capital changes (89,050)

Decrease /(increase) in current assets 1,780

(Decrease) / increase in current liabilities 60,563

Income tax paid (1,629)

Net cash from / (used in) operating activities (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) (28,336)

Opening Cash & Cash Equivalents 379,412

Closing Cash & Cash Equivalents 351,076

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

(18,672)

-

(18,672)

51

(11,288)

-

(29,909)

-

-

-

-

(29,909)

351,076

321,167

29,909

11 7

CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2008

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As At 31st Mar - 08 As At 31 Mar - 07

SCHEDULE - 1

Authorised

500,000 (Previous year 500,000)

Equity Shares of Rs. 10 each 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

(All the above shares are held by

SBI Capital Markets Limited, the holding

company and its nominees)

500,000

SCHEDULE - 2

A) Interest accrued 1,137

B) Balances with scheduled banks

-Cash in hand - 500

-In saving bank accounts - 43,319

-In term deposits 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

353,842

SCHEDULE - 3

Current Liabilities

Sundry creditors for expenses 10,112 73,941

Bank overdraft as per books 48,281 -

Security deposit - 500

Other liabilities 1,000 1,000 75,441

Provisions

For income tax 4,370

79,811

Share Capital

5,000,000

5,000,000

500,000

500,000

Current Assets, Loans And Advances

1,086

321,167

1,629

323,882

Current Liabilities And Provisions

59,393

9,130

68,523

SCHEDULES

(Rupees)

11 8

SCHEDULES FORMING PART OF BALANCE SHEET

SCHEDULE - 4

A. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES:

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.

Revenue/Income and Cost/Expenditure are generally accounted on accrual basis as they are earned or incurred.

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.

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.

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:

The Company has been established to carry out trusteeship functions in general and for Venture Capital Funds in

particular.

The Company has been appointed as Trustee of SBICAP VENTURE FUNDS, a Trust set up pursuant to Trust Deed dated th28 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.

(i) Relationships:

Where Control exists: -

Name of Party Relationship

State Bank of India Ultimate Holding Company

SBI Capital Markets Ltd. Holding Company

SBICAPS Ventures Ltd. Fellow Subsidiary

SBICAP Securities Ltd. Fellow Subsidiary

SBICAP (UK) Limited Fellow Subsidiary

Statement of Significant Accounting Policies and Notes forming part of the Accounts for the year ended

March 31, 2008

1. Accounting Convention

2. Recognition of Income and Expenditure

3. Taxation

4. Earning per share

5. Provisions

1. Nature of activities

2.

3. Related Party Information

11 9

SCHEDULES FORMING PART OF BALANCE SHEET( c o n t d . )

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(ii) Details of transactions with SBI Capital Markets Ltd. are as follows:-

Particulars Previous Year

Reimbursement of expenses incurred on behalf of the Company for:

Legal and professional fee 70,100

Other expenses 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.

Particulars For the year ended31.03.2007

a. (Loss) attributable to equity shareholders’ (Rs.) (89,050)

b. Weighted average number of equity shares

outstanding during the period (Nos.) 50,000

c. Basic/Diluted Earnings per equity share (a/b) (Rs.) (1.78)

d. Face value of each equity share (Rs.) 10

The deferred tax asset on account of loss related to write off of preliminary expenses has not been accounted for, on

consideration of prudence.

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

Current Year

500

9,439

-

4. Earnings Per Equity Share:

For the year ended 31.03.2008

(18,672)

50,000

(0.37)

10

5.

6.

(Rupees)

1 2 0

SCHEDULES FORMING PART OF BALANCE SHEET( c o n t d . )

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]

PLACE : MUMBAI

DATE : 17th April 2008

1 2 1

ADDITIONAL INFORMATION PURSUANT TO THE PROVISIONSOF PART IV OF SCHEDULE VI TO THE COMPANIES ACT 1956.

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1 2 2

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.

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Directors’ Responsibilities

The directors are responsible for preparing the accounts in accordance with applicable law and United Kingdom Generally

Accepted Accounting Practice.

Company law requires the directors to prepare accounts for each financial year which give a true and fair view of the state of

affairs of the company and of the profit or loss of the company for that year.

In preparing those accounts, the directors are required to select suitable accounting policies, as described on page 8, and

then apply them on a consistent basis, making judgements and estimates that are prudent and reasonable. The directors

must also prepare the accounts on the going concern basis unless it is inappropriate to presume that the company will

continue in business.

The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time

the financial position of the company and to enable them to ensure that the accounts comply with the Companies Act 1985.

The directors are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the

prevention and detection of fraud and other irregularities.

Auditor

Each of the persons who is a director at the date of approval of this annual report confirms that :

- so far as the director is aware, there is no relevant audit information of which the company’s auditors are unaware; and

- the director has taken all steps that he / she ought to have taken as a director to make himself/herself aware of any

relevant audit information and to establish that the auditors are aware of that information.

This confirmation is given and should be interpreted in accordance with the provisions of s234ZA of the Companies Act 1985.

A resolution to re-appoint Rees Pollock as auditors for the ensuing year will be proposed at the annual general meeting in

accordance with section 385 of the Companies Act 1985.

ON BEHALF OF THE BOARD

Mr. Thangavelu Chandran

Director

9 April 2008

1 2 3

( c o n t i n u e d )

1 2 4

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 PollockChartered Accountants & Registered Auditors

9 April 2008

PROFIT AND LOSS ACCOUNT FOR THE YEARENDED 31 MARCH 2008

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Note 2008 £

2007 £

Turnover 2 695,408

Cost of sales 102,659

Gross Profit 592,749

Administrative expenses 96,426

Operating (Loss) / Profit 3 496,323

Interest receivable 13,475

Interest payable and similar charges 6 -

(Loss) / Profit on the Ordinary Activities Before Taxation 509,798

Tax on (loss) / Profit on ordinary activities 7 154,895

(Loss) / Profit for the Financial Year 354,903

Balance brought forward -

Balance carried forward 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

155,799

43,184

112,615

201,151

(88,536)

33,813

(3,781)

(58,504)

(13,770)

(44,734)

354,903

310,169

1 2 5

FIXED ASSETS

37,189

CURRENT ASSETS

472,980

510,169

200,000

310,169

510,169

Tangible assets 8 -

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 554,903

Total Assets Less Current Liabilities 554,903

Capital and Reserves

Called-up equity share capital 12 200,000

Profit and loss account 354,903

Shareholders’ Funds 13 554,903

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

Note 2007 £

2008 £

£

1 2 6

BALANCE SHEET AS AT 31 MARCH 2008

Net Cash (Outflow) / Inflow from

Operating Activities 14 507,613

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 13,475

Taxation -

Capital Expenditure

Payment to acquire tangible fixed assets (37,756) -

Net Cash Outflow from Capital Expenditure -

Cash(Outflow) / Inflow before Financing 521,088

Financing

Issue of equity share capital - 199,999

Net Cash Inflow from Financing 199,999

(Decrease) / Increase in Cash 15 721,087

(70,376)

30,032

(194,895)

(37,756)

(272,995)

-

-

(272,995)

Note 2007 £

2008£

£

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CASH FLOW STATEMENT FOR THE YEAR ENDED31 MARCH 2008

1. Accounting policies

The accounts have been prepared under the historical cost convention, and in accordance with applicable

accounting standards.

The turnover shown in the profit and loss account represents the value services provided during the year, stated

net of value added tax.

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

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 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.

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 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:

2007£

United Kingdom 695,408

Basis of accounting

Turnover

Depreciation

Operating lease agreements

Deferred taxation

Foreign currencies

Financial instruments

2008£

155,799

1 2 8

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3. Operating (loss) / Profit

Operating (loss) / Profit is stated after charging:

2007£

Depreciation of owned fixed assets -

Auditors’ remuneration

- as auditor 5,000

- for other services 5,800

4. Particulars of employees

The average number of staff employed by the company during the financial year amounted to:

2007No.

Number of management staff 1

The aggregate payroll costs of the above were:

2007£

Wages and Salaries 15,253

Social security costs -

15,253

5. Directors’ emoluments

2007£

Emoluments 29,183

6. Interest payable and similar charges

2007£

Interest payable on bank borrowing -

7. Taxation on ordinary activities

(a) Analysis of charge in the year

2007£

Current Tax

UK Corporation tax based on the results for the year at 30% (2007-30%) 154,895

Total current tax 154,895

(b) Factors affecting current tax charge

The tax assessed on the (loss) / Profit on ordinary activities for the year differs

from the standard rate of corporation tax in the UK of 30% (2007-30%)

2007£

(Loss) / Profit on ordinary activities before taxation 509,798

2008£

567

-

2008No.

2

2008£

40,735

17,788

58,523

2008£

76,209

2008£

3,781

2008£

(13,770)

(13,770)

2008£

(58,504)

5,500

( c o n t d . )

1 3 0

( c o n t d . )

7. Taxation on ordinary activities (contd.)

2007£

Profit / ( Loss) on ordinary activities multiplied by rate of tax 152,939

Disallowed expenditure 1,956

Excess of capital allowances over depreciation -

Total current tax (note 7(a)) 154,895

8. Tangible fixed assets

LeaseholdProperty Total

£ £

Cost

Additions 37,326 37,756

At 31 March 2008 37,326 37,756

Depreciation

Charge for the year 501 567

At 31 March 2008 501 567

Net Book value

At 31 March 2008 36,825 37,189

At 31 March 2007 - -

9. Debtors

2007£

Corporation tax repayable -

Other debtors -

-

10. Creditors: amounts falling due within one year

2007£

Trade creditors 5,000

Corporation tax 154,895

Other taxation and social security 6,290

Other creditors -

Accruals and deferred income -

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

2007£

Operating leases which expire:

Within 2 to 5 years -

2008£

(17,551)

5,212

(1,431)

(13,770)

Equipment£

430

430

66

66

364

-

2008£

53,770

13,649

67,419

2008£

-

-

15,126

956

26,450

42,532

2008£

53,982

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12. Share capital

Authorised share capital:

2007£

200,000 Ordinary share of £1 each 200,000

Allotted, called up and fully paid:

2007No £

Ordinary shares of £1 each 200,000 200,000

Equity share

Ordinary shares of £1 each 200,000 200,000

13. Reconciliation of movement in shareholders’ funds

£

(Loss) / Profit for the financial year 2007

354,903

New ordinary share capital subscribed 199,999

Net (reduction) / addition to shareholders’ funds 554,902

Opening shareholders’ funds 1

Closing shareholders’ funds 554,903

14. Reconciliation of operating (loss) / profit to net cash (outflow) / inflow from operating activities

2007£

Operating (loss) / profit 496,323

Depreciation -

Increase in debtors -

Increase in creditors 11,290

Net cash (outflow) / inflow from operating activities 507,613

15. Reconciliation of net cash flow to movement in net funds

2007£

(Decrease) / increase in cash in the period 721,087

Movement in net funds in the period 721,087

Net funds at 1 April 2007 1

Net funds at 31 March 2008 721,088

16 Analysis of changes in net funds

At 1Apr 2007 Cash Flows£ £

Net cash:

Cash in hand and at bank 721,088 (272,995)

Net funds 721,088 (272,995)

17. Ultimate parent company

The immediate parent company is SBI Capital Market Limited, a company incorporated in India. The ultimate

parent company is State Bank of India, a company incorporated in India.

2008£

200,000

2008No £

200,000 200,000

200,000 200,000

200£

(44,734)8

-

(44,734)

554,903

510,169

2008

(88,536)

567

(13,649)

31,242

(70,376)

2008£

(272,995)

(272,995)

721,088

448,093

At 31 Mar 2008£

448,093

448,093

£

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.

1 3 2

1 3 3

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.

1 3 4

N o t e s

1 3 5

N o t e s

1 3 6

N o t e s

Regional Offices

+91 (79) 2656 0122 head.aro@sbicaps.com

+91 (80) 2558 5471 head.bro@sbicaps.com

+91 (44) 2821 3801 head.chenro@sbicaps.com

+91 (40) 2332 1605 head.hro@sbicaps.com

+91 (33) 2288 6602 head.calro@sbicaps.com

+91 (11) 2341 8460 head.ndro@sbicaps.com

Branch Offices

+91 (172) 270 0753 chdro@sbicaps.com

+91 (361) 223 7511 kc.pegu@sbicaps.com

Subsidiaries

+91 (22) 2217 8300 sslcare@sbicaps.com

+91 (22) 2217 8300 corporate.office@sbicaps.com

+44 (20) 7929 3529 ramesh.ahuja@sbicaps.com

Ahmedabad

Bangalore

Chennai

Hyderabad

Kolkata

New Delhi

Chandigarh

Guwahati

SBICAP Securities Ltd.

SBICAPS Ventures Ltd.

SBICAP (UK) Ltd.

ANNUAL REPORT

07-08

SBI Capital Markets Limited202, Maker Tower ‘E’Cuffe Parade, Mumbai 400 005Tel : +91-22-2217 8300Fax : +91-22-2218 8332Website : www.sbicaps.comYOUR CREDIBLE PARTNER