DSP Merrill Lynch

The Directors have pleasure in presenting the Thirty Third Annual
 Report of the Company; the Audited Statement of Accounts and
 the Auditors Report for the year ended 31st March, 2008.
 
 Financial Results
 
 The financial results for the period are summarised below:
 
                                                      (Rs. million)
 
 Particulars                           Year ended      Period ended
                                         31.03.08        (15 months)
                                                           31.03.07
 
 Gross Income                           12,718.30         11,736.35
 
 Profit before Depreciation
 and Taxation                            6,825.02          5,760.76
 
 Depreciation                              281.66            127.01
 
 Profit before Tax                       6,543.36          5,633.75
 
 Provision for Tax                       2,207.97          1,781.88
 
 Profit after Depreciation and
 
 Taxation                                4,335.39          3,851.87
 
 Balance brought forward                 5,077.03          2,006.57
 
 Balance available for
 appropriation                           9,412.42          5,858.44
 
 Appropriations
 
 Reserve u/s 45 IC of RBI
 Act, 1934                                   -               770.38
 
 Preference Dividend                       202.50              9.43
 
 Dividend Distribution Tax                  34.42              1.60
 
 Balance Carried to Balance
 
 Sheet                                   9,175.50          5,077.03
 
 Earnings Per Share (in Rs.)               182.15            170.70
 
 Dividend
 
 The Directors recommend payment of dividend of 3% on Preference Shares
 of Rs. 10/- each for the year ended 31st March, 2008. In view of the
 growth plans of the Company and its subsidiaries and the intent to
 finance the capital requirement for such plans through internal
 accruals, it was decided not to recommend any dividend on equity shares
 for the year ended 31st March, 2008.
 
 Corporate Update, Operations and Future Outlook
 
 The Indian economy recorded a third year of 9% real GDP growth in FY
 2007-08 reflecting the continued strength of the accelerated
 development of the Indian economy. Reflecting rising international
 investor confidence in Indias long-term prospects, foreign investment
 - direct as well as portfolio - began to expand during the year.
 However, inflation began to increase in February-March 2008 driven in
 particular by higher commodity prices including oil and metals. Given
 the backdrop of surplus liquidity, the Reserve Bank of India (RBI)
 tightened monetary conditions to contain inflation expectations. The
 RBI raised the Cash Reserve Ratio applicable to commercial banks in a
 series of steps from 6% in March 2007 to 7.50% in March 2008. The
 resultant higher interest rate regime, in our view, is likely to soften
 real GDP growth in FY 2008-09.
 
 
 FY 2007-08 was another record-breaking year for the Indian equity
 markets, on the back of a strong FY 2006-07. The markets witnessed
 record offerings in the year. Total equity raising during the year was
 -US.6 billion, the highest ever in the history of Indian capital
 markets.The domestic equity markets deepened further with a more
 diverse mix of equity offerings across a variety of sectors.
 
 The Indian stock market was one of the best performing Asian markets in
 FY 2007-08 with a 20% return. During the year, India benefited from
 record net Foreign Institutional Investor (Fll) inflows to the tune of
 US.9 billion. Recent trends in international markets and increasing
 yieIds on rupee denominated debt have resulted in higher investment by
 FMs in Indian debt during the year.  Flls invested US.12 billion
 into the debt market in FY 2007-08 compared to US.23 billion in FY
 2006-07.
 
 The Company had a record performance across all businesses. The total
 revenues and profits for the current year surpassed those for the 15
 month period last year. We will continue to focus on business
 performance and growth in the coming year. However, the global economic
 scenario, rising inflation and tightening of liquidity in the country
 together with subdued market sentiment may impact performance in the
 coming year.
 
 The Company holds 40% stake in DSP Merrill Lynch Fund Managers Ltd.
 (DSPMLFM), an Asset Management Company registered with the Securities &
 Exchangs Board of India (SEBI). In line with the realignment of Merrill
 Lynchs asset management business globally, the Company agreed to sell
 its stake in DSPMLFM to Black Rock Advisors Singapore Pte Ltd.This is
 subject to obtaining the necessary regulatory approvals. The gains
 arising on such sale will be recognized in the a:counts upon closing of
 the aforesaid sale transaction.  
 
 The Company was engaged as a Primary Dealer (PD) in Government
 Securities. Consequent to the change in RBI regulations, the Company
 surrendered the PD registration to RBI. RBI issued a fresh PD
 registration to DSP Merrill Lynch Securities Trading Ltd., a wholly
 owned subsidiary of the Company, which commenced the PD business on
 27th July, 2007.
 
 We are pleased to inform th!at DSP Merrill Lynch Limited (DSPML) was
 named Best Private Bank by Euromoney magazine in 2008 for the fourth
 consecutive year and Best Equity House in India by The Asset magazine
 in 2007. Several capital market deals on which we advised also received
 various deal related awards by eminent publications.
 
 
 Technology
 
 The Company continued to focus on technology to enhance productivity
 and efficiency and several new technology projects were undertaken to
 support the increased business volumes and automate processes. The
 Company also invested in enhancing the business continuity technology
 infrastructure.
 
 Corporate Social Responsibility (CSR)
 
 The Company increased its focus on CSR related initiatives within the
 three key focus areas of Wildlife/Environrnent, Youth/ Education and
 Health. The company maintained its support for partner NGOs such as
 ADAPT, Akanksha Foundation, Akshaya Patra, Bombay Natural History
 Society, Cancer Patients Aid Association, Childline, HelpAge India,
 ISKCON Food Relief Foundation, REAP and others. CSR programmes are
 broadly carried out in three forms - volunteering, monetary
 contribution and giving in kind. These programs comprise mentoring
 programme for underprivileged children from Akanksha, blood donation
 camps, participation in the Mumbai Marathon, matching donation
 programme, contribution in kind to various charities and several
 others.
 
 Continuing on the past years track record, we hope to continue the
 momentum to make a positive difference to the communities around us.
 
 Subsidiaries
 
 DSP Merrill Lynch Capital Limited (DSPMLC)
 
 The audited statement of accounts of DSPMLC for the year ended 31st
 March, 2008, together with the report of Directors and the Auditors, as
 required under Section 212 of the Companies Act, 1956, are attached.
 
 DSP Merrill Lynch Trust Services Limited (DSPMLTS)
 
 The audited statement of accounts of DSPMLTS for the year ended 31st
 March, 2008, together with the report of Directors and the Auditors, as
 required under Section 212 of the Companies Act, 1956, are attached.
 
 DSP Merrill Lynch Securities Trading Limited (DSPMLST)
 
 The audited statement of accounts of DSPM LST for the year ended 31st
 March, 2008, together with the report of Directors and the Auditors, as
 required under Section 212 of the Companies Act, 1956, are attached.
 
 Directors
 
 We are saddened to inform you that one of the directors Mr. Christopher
 Reeves passed away on 20th November, 2007.  Mr. Reeves was a director
 of the Company since 1995 and had long supported the international
 investment in India. The Board places on record its appreciation for
 the contributions made by him during his tenure.
 
 During the year, the following directors were appointed on the Board of
 the Company:
 
 Mr. Rahul Malhotra was appointed as Alternate Director to Mr. Raymundo
 Yu with effect from 18th September, 2007.
 
 Mr. Daniel Cochran was appointed as Additional Director effective 26th
 June, 2008. In terms of the provisions of the Companies Act, 1956, your
 approval is sought for appointing him as Director on the Board of the
 Company as detailed in the notice convening the Annual General Meeting.
 
 Subject to receipt of necessary regulatory approvals Mr. Nozer Shroff
 and Mr. Pradeep Dokania are proposed to be appointed as Additional
 Directors on the Board. In view of the same and in terms of the
 provisions of the Companies Act, 1956, your approval would be sought
 for appointing these Additional Directors as Directors on the Board of
 the Company as detailed in the notice convening the Annual General
 Meeting.  Since Mr. Dokania and Mr. Shroff are in employment of the
 Company, they would also become whole time directors of the Company.
 
 We are also pleased to inform you that Mr. Kevan Watts has been
 appointed as President and Wholetime Director with effect from 1st
 April, 2008 and the Company has made the necessary application to the
 Central Government for its approval towards his appointment. Mr. Watts
 has worked at Merrill Lynch for over 27 years in New York, London and
 Hong Kong and has held a number of senior management positions. He has
 been a Director on the Board of the Company since 1998. This is a
 strong reflection of the commitment of Merrill Lynch to the Indian
 business.
 
 Mr. Hemendra Kothari and Mr. Raymundo Yu retire by rotation, and being
 eligible, offer themselves for reappointment. The Board recommends
 their reappointment. Mr. Hemendra Kothari continues to be Chairman of
 the Company.
 
 During the year, the following directors resigned from the Board:
 
 Mr. Christopher Reeves passed away on 20th November, 2007. As a result,
 Mr. Pradeep Dokania who was appointed as Alternate Director to Mr.
 Reeves on 18th September, 2007 automatically ceased to hold office as
 his Alternate effective 20th November, 2007.
 
 Mr. Ahmass Fakahany stepped down from the Board on 1st February, 2008.
 As a result, Mr. Kumar Shah who was appointed as Alternate Director to
 Mr. Fakahany on 18th September, 2007, automatically ceased to hold
 office as his Alternate effective 1st February, 2008.
 
 Mr. Kevan Watts has been appointed as President and Wholetime Director
 with effect from 1st ApriL2008. Asa result, Mr. Pradeep Dokania who was
 holding office as his Alternate effective 6th February, 2008,
 automatically ceased to hold office as his Alternate effective 1st
 April, 2008.
 
 Mr. John Sievwright who was appointed as Additional Director on 6th
 February, 2008 stepped down from the Board of the Company with effect
 from 5th May, 2008. As a result, Mr. Kumar Shah who was appointed as
 his Alternate Director effective 6th February, 2008 ceased to hold
 office as his Alternate effective 5th May, 2008.
 
 During the period in which Mr. Kumar Shah and Mr. Pradeep Dokania were
 appointed as Alternate Directors on the Board, they were deemed to be
 Wholetime Directors of the Company.
 
 Audit Committee:
 
 The Audit Committee comprises the following directors:
 
 Mr. Daniel Cochran - Chairman
 Mr. Shitin Desai
 Mr. Jason Brand
 Mr. Rahul Malhotra
 
 The above Committee functions as an Audit Committee for the purpose of
 the Companies Act, 1956.
 
 Directors Responsibility Statement
 
 Pursuant to Section 217(2AA) of the Companies (Amendment) Act, 2000,
 the Board of Directors of the Company state that:
 
 (i) While preparing the accounts for the year, applicable accounting
 standards have been followed consistently along with proper explanation
 relating to material departures, if any, have been made;
 
 (ii) Accounting policies have been applied consistently, and reasonable
 and prudent judgements and estimates have been made so as to give a
 true and fair view of the Companys state of affairs at the end of the
 financial year and of the profit of the Company for that period;
 
 (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 fraud and other irregularities; and
 
 (iv) The annual accounts have been prepared on a going concern basis.
 
 Auditors
 
 M/s. Deloitte Haskins & Sells, Chartered Accountants, retire at the
 ensuing Annual General Meeting and being eligible, offer themselves for
 reappointment. The Company has received a consent letter from them in
 conformity with the provisions of Section 224(1 -B) of the; Companies
 Act, 1956. The Board recommends their appointment and requests you to
 authorise the Board of the Company to fix their remuneration.
 
 Particulars of Employees
 
 The particulars in accordance with Section 217(2A) of the Companies
 Act, 1956, read with the Companies (Particulars of Employees) Rules,
 1975, as amended, forms a part of this report and are being attached
 separately.
 
 Information In Accordance With The Companies (Disclosure Of Particulars
 In The Report Of The Board Of Directors) Rules, 1988
 
 The Company has not been associated with any manufacturing activities.
 Hence, there is no report pertaining to conservation of energy or
 technology absorption. The details of earnings and expenditure in
 foreign currency are given in Note No. 22 (c), (d) and (e) of the
 accounts .
 
 Acknowledgement
 
 The Directors wish to thank all the regulators for their ongoing
 guidance. The Directors express their appreciation for the support
 extended by the shareholders of the Company and also take this
 opportunity to thank employees for their contribution.
 
 
                           For and on behalf of the Board of Directors
 
 
 
                           Hemendra Kothari
                           Chairman                            
 
 Mumbai
 Date; 26th June, 2008