Indiabulls Financial Services

The Directors have great pleasure in presenting the 9th Annual Report
 together with audited statement of accounts for the financial year
 ended March 31, 2008.
 
 FINANCIAL RESULTS
 
 The highlights of the financial results of the Company for the
 financial year ended March 31, 2008 are as under:
 
                                                   Amount (in Rs.)
 
 Particulars                      For the year ended For the year ended
                                       March 31,2008      March 31,2007
 
 Profit before Depreciation            572,91,39,462      232,18,46,504
 
 Less: Depreciation                      6,05,11,284        1,24,69.477
 
 Profit before Tax                     566,86,28,178      230,93,77,027
 
 Less: Provision for Tax               184,84,50,731       77,83,45,158
 
 Profit after Tax                      382,01,77,447      153,10,31,869
 
 Prior period adjustment                    4,77,592          --
 
 Add brought forward balance            30,29,58,501          15,90,257
 
 Addition/Deduction pursuant to the 
 Scheme of Arrangement:
 Add: Transfer from ICSL under 
 Amalgamation                            870,900,645         --
 
 Less: The difference between the 
 face value of shares issued and the
                                         375,862,816         --
 
 book value of net assets taken over
 from ICSL after accounting for the
 cancellation of investment in and
 after crediting the Reserve Fund
 Securities Premium Account
 Amount available for appropriation    4,617,696,185      153,26,22,126
 
 Appropriation
 
 Dividend on Preference Shares           9,10,76,206       11,52,84,823
 
 Interim Dividend paid on Equity Shares       -            35,93,50,756
 
 Proposed Final Dividend on 
 Equity Shares                         215,41,29,407       19,47,75,378
 
 Dividend on Equity Shares issued 
 after the year end on account of
                                         2,79,70,903          --    
 GDR / Warrants.  Corporate 
 Dividend Tax on:
 
 - Dividend on Preference Shares         1,54,78,401         174,42,069
 
 - Interim Dividend paid on 
   Equity Shares                              -             5.03,98,944
 
 - Dividend proposed on Equity Shares   36,60,94,293        3,31,02,075
 
 - Dividend on Equity Shares issued 
   after the year end on account of
   GDR / Warrants.                         47,53,655            --
 
 Transfer to Reserve Fund (u/s 45IC 
 of the R.B.I Act, 1934)                76,40,35,489       30,62,06,380
 
 Transfer to General Reserve             381,970,000       15,31.03,200
 
 Balance carried to Balance Sheet.       812,187,831       30,29,58,501
 
 REVIEW OF OPERATIONS
 
 The Revenue of the Company for the year increased by over 275% from Rs
 353.74 crore to Rs. 1327.85 crore. The Companys net profit for the
 year was Rs 382.02 crore (last year Rs. 153.10 crore) thereby
 registering an annual growth of 150%. The consolidated revenues and PAT
 of the Company along with its subsidiaries for the year ended March
 31,2008 was Rs. 1688.76 crore and Rs. 580.64 crore respectively. The
 consolidated revenues and PAT grew by 36% and 31% respectively for the
 year ended March 31,2008. The consolidated Earning Per Share (EPS) for
 the year was Rs. 22.84. The current year figures are inclusive of the
 figures for Indiabulls Credit Services Limited which got merged with
 the Company with effect from December 24,2007, pursuant to the court
 approved scheme of arrangement.
 
 BUSINESS HIGHLIGHTS
 
 D Total outstanding & serviced loans as on March 31,2008 were Rs.
 10,441 crore compared to total outstanding & serviced loans of Rs
 3,097.9 crore as on March 31,2007 (a growth of over 237.03% yoy).
 
 Average annualized yield on Rs 10,441 crore outstanding and serviced
 portfolio is 20.01%.
 
 The Company continued to show strong momentum in the mortgage and
 commercial credit businesses, with strong growth in both segments
 making them the largest and fastest growing loan segments. In light of
 deteriorating credit markets globally, the Company has adopted a
 cautious approach and has tightened its credit policies further for
 fresh disbursements and as a result the Mortgage portfolio now stands
 at an average Loan to Value (LTV) of 42.73%.
 
 Total outstanding small ticket personal loans were Rs. 383.5 crore as
 on March 31, 2008 which, constitutes about 3 7% of the current loan
 portfolio.
 
 The Company believes that its strong balance sheet and liquidity
 provide a strong competitive advantage in the current market
 environment and allow it to maintain its leadership position in the
 financial services business.
 
 The Company substantially increased the cash it carries on its balance
 sheet both as a prudent measure given the global liquidity and credit
 crisis and to benefit from the significant growth opportunities
 available. Although cash on Balance Sheet earned a lower interest rate
 than the corporate borrowing rate, it has enabled the Company to
 continue to seek strong growth and benefit from the current
 environment.
 
 DIVIDEND
 
 The Board of Directors of your Company recommend a final dividend of
 Rs. 8.50 per share (425% on the face value of Rs.  2 per share), which,
 if approved at the ensuing Annual General Meeting, will be paid to (i)
 all those Members whose names appear in the Register of Members as on
 the Book Closure date indicated in the Notice Convening the AGM which
 forms a part of the Annual Report and (ii) all those Members whose
 names appear on that date as beneficial owner as furnished by National
 Securities Depository Limited and Central Depository Services (India)
 Limited.
 
 In addition to the above, the Company had paid a preference dividend @
 5% upto February 02,2008 and thereafter 10% aggregating Rs.
 9,10,76,206/-to Oberon Limited, a foreign entity.
 
 MANAGEMENT DISCUSSION & ANALYSIS REPORT
 
 Managements Discussion and Analysis Report for the year under review,
 as stipulated under Clause 49 of the Listing Agreement with the Stock
 Exchanges in India, is presented in a separate section forming part of
 the Annual Report.
 
 SIGNIFICANT DEVELOPMENTS
 
 Scheme of Arrangement (the Scheme): The Scheme providing for
 amalgamation of Indiabulls Credit Services Limited (ICSL) with the
 Company and the demerger of the securities broking and advisory
 business of the Company as a going concern, to Indiabulls Securities
 Limited (ISL) and their respective shareholders and creditors under
 sections 391-394 of the Companies Act, 1956, had been sanctioned by the
 Honble High Court of Judicature at Delhi on November 23, 2007. Upon
 coming into effect of the Scheme on December 24, 2007 and with effect
 from the Appointed Date on April 1, 2007, ICSL stands amalgamated with
 the Company and the securities broking and advisory business of the
 Company stands demerged from IBFSL and transferred to and vested in ISL
 on a going concern basis. 2,56,80,708 fully paid Equity Shares of Rs.
 2/- each were issued to the shareholders of ICSL pursuant to the
 Scheme, Consequent to the said allotment the paid up equity capital of
 the Company increased to Rs.  50,68,53,978 divided into 25,34,26,989
 equity shares of Rs. 2/ - each.
 
 Life Insurance Venture: The Company has signed a joint venture
 agreement with Sogecap, the insurance arm of Societe Generale (SocGen)
 for its upcoming life insurance venture. Sogecap will invest Rs. 150
 crore to subscribe to 26% of the paid up capital in the Joint Venture.
 The Company has already got approval from the Reserve Bank of India for
 holding 49.5% equity stake in the life insurance venture, and has also
 been issued R1 by IRDA, the insurance regulator, for initiating
 necessary regulatory approvals.
 
 Commodities Exchange: The Company has entered into a Memorandum of
 Understanding with MMTC Limited, the largest commodity trading business
 in India to establish a Commodities Exchange with 26% ownership with
 MMTC.  Forward Markets Commission, Department of Consumer Affairs,
 Govt, of India has conveyed the in-principal approval of the Government
 on MMTC proposal for setting up Nationwide Multi Commodity Exchange in
 partnership with the Company.
 
 Asset Management Business: Securities and Exchange Board of India
 (SEBI) has approved the setting up of an Asset Management Company and a
 Trustee Company for setting up a Mutual Fund. As a result thereof, the
 Company is in the process of setting up an Asset Management Company and
 a Trustee Company for setting up the Mutual Fund.
 
 UTILISATION OF ISSUE PROCEEDS
 
 The details of utilisation of proceeds of the money raised by the
 Company through GDR, ESOS, Preference Shares.  Preferential Allotment
 and Warrants are as under:
 
                                             Amount (in Rs.)
 
                                       March 31, 2008    March 31, 2007
 
 Balance amount to be utilized in 
 the beginning of the year              6,411,799,743     2,487,326,006
 
 Gross Proceeds of Issue raised 
 through GDR                           12,235,062,493           --
 
 Gross Proceeds of Issue raised 
 through ESOP                                 -               9,600,000
 
 Gross Proceeds of Issue raised 
 through Preference Shares                    -           6,440,000,100
 
 Gross Proceeds of Issue raised 
 through Preferential allotment 
 to Crown Capital                             -           3,023,250,000
 
 Gross Proceeds of Issue raised 
 through conversion of Warrants               -             902,000,000
 
 Gross Proceeds of Issue raised 
 through conversion of Warrants II
                                        1,213,800,000       250,000,000
 
 Total Proceeds raised (A)              19,860,662,236   13,112,176,106 
 
 Less: Utilization of Issue Proceeds
 
 Share issue expenses-GDR                (337,260,354)         --
 
 Investment in Subsidiary                  (1,000,000)   (2,565,062,000)
 
 Investment in Associate....                    -          (189,584,000)
 
 Investment in Debentures of 
 Associate Companies                            -          (380,168,000)
 
 Loans to
 Subsidiaries................                   -        (1,559,826,852)
 
 Amount transferred.to 
 Indiabulls Reai Estate Ltd.............        -        (1,981,708,934)
 
 lnyestment..in.lndiabulls .Real
 Estate.Ltd,..................                  -              (500,000)
 
 Transferred to ISL under demerger       (25,000,000)              -  
 
 Security deposit for expansion of 
 offices.                               (108,520,705)        (3,735,000)
 
 Purchase of fixed assets
                                        (162,843,352)       (19,791,577)
 
 Total Utilization of Proceeds (B)...   (634,624,411)    (6,700,376,363)
 
 Balance amount being temporary 
 utilization of Proceeds              19,226,037,825      6,411,799,743
 
 EMPLOYEES STOCK OPTION
 
 In compliance with the terms of the court approved Scheme of
 Arrangement, which came into effect on December 24,2007, the Company
 had adopted and created Employee Stock Option Schemes for the benefit
 of Indiabulls Credit Services Limited (ICSL) option holders, who were
 granted options under the ESOP Schemes of ICSL. Accordingly an
 aggregate of 36 lacs options were granted on equally favourable terms
 as that under the ESOP Schemes of ICSL.
 
 The Company has also proposed amendments in the terms of its existing
 Employee Stock Option Schemes, the details whereof are given in the AGM
 Notice.
 
 The disclosures required to be made in the Directors Report in respect
 to the stock options, in terms of the SEBI (Employee Stock Option
 Scheme and Stock Purchase Scheme) Guidelines, 1999, are as per the
 Annexure forming part of the Directors Report.
 
 SUBSIDIARIES
 
 The statement pursuant to Section 212( 1) (e) of the Companies Act,
 1956 relating to subsidiary companies forms a part of the financial
 statements.
 
 In terms of approval granted by the Ministry of Company Affairs,
 Government of India vide letter No. 47/286/2008 CL-III dated 9th May,
 2008, under Section 212(8) of the Companies Act, 1956, copies of the
 Balance Sheet, Profit and Loss Account, Reports of the Board of
 Directors and Auditors of the subsidiaries of the Company as of March
 31,2008 have not been attached with the Balance Sheet of the Company.
 These documents will be made available upon request by any Member of
 the Company interested in obtaining the same. However, as directed by
 the Ministry of Company Affairs, the financial data of the subsidiaries
 have been furnished under Details of Subsidiaries forming a part of
 the Annual Report.  Further, pursuant to Accounting Standard AS-21
 issued by The Institute of Chartered Accountants of India, Consolidated
 Financial Statements presented by the Company includes financial
 information of its subsidiaries.
 
 FIXED DEPOSITS
 
 The Company has not accepted any fixed deposits from the public during
 the year.
 
 DIRECTORS
 
 During the year Mr. Rajiv Rattan, one of the Whole-time Directors, has
 been designated as the Vice Chairman of the Company.
 
 In accordance with the provisions of Sections 255 and 256 of the
 Companies Act, 1956 and Article 121 of the Companys Articles of
 Association, Mr. Shamsher Singh and Mr. Saurabh K. Mittal, Directors,
 retire by rotation and, being eligible, offer themselves for
 reappointment at the ensuing Annual General Meeting.
 
 Brief resume of the Directors proposed to be reappointed, nature of
 their expertise in specific functional areas and names of companies in
 which they hold directorships and memberships/ chairmanships of Board
 Committees, as stipulated under Clause 49 of Listing Agreement with the
 Stock Exchanges in India, are provided in the Report on Corporate
 Governance forming part of the Annual Report.
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 As required under Section 217 (2AA) of the Companies Act, 1956, your
 Directors confirm that:
 
 1.  in the preparation of the annual accounts, the applicable
 accounting standards have been followed and that there are no material
 departures from the same;
 
 2.  the Directors have selected such accounting policies and applied
 them consistently and made judgments and estimates that are reasonable
 and prudent so as to give a true and fair view of the state of affairs
 of the Company as at 31 st March, 2008 and the profit of the Company
 for the year ended on that date;
 
 3.  the Directors have taken proper and sufficient care for maintaining
 adequate accounting records in accordance with the provisions of the
 Companies Act, 1956 for safeguarding the assets of the Company and for
 preventing and detecting fraud and other irregularities; and
 
 4.  the Directors have prepared the Annual Accounts of the Company on a
 going concern basis.
 
 AUDITORS & AUDITORS REPORT
 
 M/s. Deloitte Haskins & Sells, Chartered Accountants, Statutory
 Auditors of the company, will retire at the conclusion of the ensuing
 Annual General Meeting and, being eligible, offer themselves for
 reappointment. The Company has received a certificate from the Auditors
 to the effect that their reappointment, if made would be in accordance
 with the limits specified under Section 224(1 B) of the Companies Act,
 1956. The Board recommends their re-appointment.
 
 The Notes to the Accounts referred to in the Auditors Report are self
 explanatory and, therefore, do not call for any further explanation.
 
 LISTING WITH STOCK EXCHANGES
 
 The equity shares of the Company continue to remain listed with the
 Bombay Stock Exchange Limited (BSE) and the National Stock Exchange of
 India Limited (NSE). The listing fees payable to both the exchanges for
 the financial year 2008-09 have been paid. Global Depositary Receipts
 (GDRs) of the Company continued to be listed on Luxembourg Stock
 Exchange.
 
 CORPORATE GOVERNANCE REPORT
 
 Pursuant to clause 49 of the Listing Agreements with the Stock
 Exchanges, a detailed report on Corporate Governance is included in the
 Annual Report. A Practicing Company Secretarys Certificate certifying
 the Companys compliance with the requirements of Corporate Governance
 stipulated under Clause 49 of the Listing Agreement is attached with
 the Corporate Governance Report.
 
 INFORMATION PURSUANT TO SECTION 217 OF THE COMPANIES ACT, 1956
 
 The information required to be disclosed under Section 217 (1) (e) of
 the Companies Act, 1956, read with the Companies (Disclosure of
 Particulars in the Report of the Board of Directors) Rules, 1988 with
 respect to conservation of Energy, Technology Absorption and Foreign
 Exchange Earnings and Outgo, is given in the Annexure and forms a part
 of this Report.
 
 In terms of the provisions of Section 217 (2A) of the Companies Act,
 1956 read with the Companies (Particulars of Employees) Rules, 1975 as
 amended, the names and other particulars of the employees are required
 to be set out in the Annexure to the Directors Report. However, as per
 the provisions of Section 219(1)(b)(iv) of the said Act, the Annual
 Report excluding the aforesaid information is being sent to all the
 Members of the Company and others entitled thereto.  Any member
 interested in obtaining such particulars may write to the Company
 Secretary at the Registered Office of the Company.
 
 ACKNOWLEDGEMENT
 
 Your Directors wish to express their gratitude for the continuous
 assistance and support received from the investors, clients, bankers,
 regulatory and government authorities, during the year. Your Directors
 also wish to place on record their deep sense of appreciation for the
 contributions made and committed services rendered by the employees of
 the Company.
 
 
                            For and on behalf of the Board of Directors
 
 Date : 25th July, 2008     Sameer Gehlaut
 Place: New Delhi           Chairman