Motilal Oswal Financial Services

Dear Shareholders,
 
 I write to you at the close of this very challenging and tough year
 which has been a true test for investor confidence and the strength of
 the business models of capital market participants.
 
 In such turbulent times, we continued to lead our clients to find a
 right path in this journey; by providing them best in-class research,
 advisory and execution services.  We continue to expand our client base
 across business segments and remain fully committed to the trust we
 have developed over the years with them by working towards a better
 financial future for each of our clients.
 
 A focused approach, strong balance sheet, consistent margins, a
 successful time- tested business model and well diversified income
 streams helped your company deliver sound results in challenging times.
 Our constant focus to rationalize costs and maintain our margins and
 thus returns for the businesses delivered results. Our plans for
 existing as well as new business lines are well in place to capture the
 long term growth potential, while striking the right balance between
 current profitability and investing for future; in the current
 environment.
 
 On a consolidated basis, your company posted consolidated revenue of
 Rs. 4,661 million (down 33% as compared to FY08) and a consolidated
 adjusted PAT of Rs. 926 million (down 41% as compared to FY08). Our
 endeavor to diversify our revenue streams resulted in 30% of our
 revenue coming from non-broking businesses vis-a-vis 20% in previous
 year. Investment Banking advisory fees was Rs. 452 million and
 contributed to 10% of total revenues for the group. Income from Fund
 based activities was Rs. 639 million and contributed to 14% of total
 revenues. Asset Management fees were Rs.  214 million and contributed
 to 5% of total revenues. Despite the fluctuations in market volumes and
 revenues, our margins continue to be stable with EBIDTA and PAT margins
 at 39% (FY 2008:39%) and 20% (FY 2008:22%) respectively.
 
 During the last financial year, your company received several accolades
 including:
 
 - The Best Franchisor in Financial Services in the retail and
 franchising industry by The Franchising World Magazine for the second
 year in succession
 
 - Limca Book of Records for creating Indias largest dealing room in
 Mumbai
 
 - In the latest Starmine India Broker Rankings 2009 from Thomson
 Reuters, we won awards in 3 out of 4 categories
 
 - The prestigious Nasscom -CNBC TV 18 IT User Award -2008 for the
 Financial Services category
 
 In terms of outlook, FY 2010 has started on a positive note for the
 eguity markets with the Sensex almost doubling from recent lows to
 around 15,000 levels and the daily eguity volumes averaging at Rs. 890
 billion in the first few months of FY 2010 versus Rs. 554 billion in 04
 FY09 and Rs. 612 billion in FY09. Sustained improvement in the economy
 and capital markets augur well for all our key businesses. We are
 confident of capturing the resulting opportunities through our all
 season business model and a strong unleveraged Balance Sheet.
 
 I would like to express my gratitude to our Board of Directors for
 their continued support and guidance. I am also grateful to all our
 stakeholders - our customers, business associates, bankers, employees,
 vendors and shareholders, who have reposed their trust in us and given
 us constant support.
 
 With best wishes,
 
 Sincerely,
 
 Motilal Oswal
 Chairman and Managing Director
 
 Mumbai, 29th June, 2009