MANAGEMENT DISCUSSION AND ANALYSIS
Mahindra & Mahindra Financial Services Limited (MMFSL, MahindraFinance or the Company) is one of Indias leading NBFCs. The focusof the Company lies in servicing the rural and semi-urban sector of India, and to helpthem Rise, as 70 per cent of Indias population comes from those belts. Backedby the parentage of US$ 11.1 billion Indian Multinational Mahindra Group, the Companystarted its operations in 1993 by financing the Mahindra range of vehicles.
In January 2011, Mahindra & Mahindra Limited launched a new brand identity spanningall industries, companies, and geographies. The new brand positioning, is driven by theexpression, "Rise". In addition to guiding our product and service development,this thought currently drives internal business transformation to help us to consistentlydeliver on our core purpose and achieve the goal of becoming a leading global player.
We are also en route to re-evaluating all our processes from HR policies to brand anddigital architecture to drive positive change in our business success, as well as ourrelationships with all our stakeholders.
The Indian economy has once again emerged as one of the most consistent economies ofworld post recession. During 2010-11, the overall gross GDP of India stood at 8.6 percent, going beyond the revised growth of 8 per cent according to the Advanced Estimate2009-10 of Central Statistics Office (CSO). This rise can be attributed to agriculture andallied activities, which witnessed a robust growth of 5.4 per cent in 2010-11, compared toa growth of 0.4 per cent in 2009-10. Industry and service sector has also grownconsiderably. The index of six core industries in the Index of Industrial Production (IIP)has increased by 5.6 per cent during April-January 2010-11. The cumulative FDI inflowsfrom April 2000 to January 2011 stood at US$ 189.8 billion. The strength of the economicrecovery during FY11, unanticipated by many, has been a revelation of not only the strongfundamentals of the economy but also the opportunities that it holds for the future.Timely and aggressive policy responses by the RBI and the Government have helped overcomechallenges to aid the growth process. According to the UNCTAD World Investment Report2010, India will emerge as the second most attractive location for FDI for 2010-12. TheIndian economy is expected to drive positivity in reaching the US$ 3.5 trillion mark by2020, despite rising inflation being a significant concern. (Source: Indian Brand EquityFoundation)
Demographic patterns by 2018
| ||(millions) |
|Country ||Population variation |
|Europe ||-15 |
|Japan ||-7 |
|USA ||14 |
|Western Asia ||32 |
|China ||42 |
|Latin America ||53 |
|South East Asia ||56 |
|India ||141 |
|Africa ||156 |
|World ||200 |
(Source: Indian Brand Equity Foundation)
INDIAN NBFC SECTOR
The consistent growth of the Indian economy, in turn resulted in the growth of IndianFinancial Sector. To induce all inclusive growth, the Government of India has takenfurther initiatives for rural housing development and employment generation.Aforementioned factors resulted robust growth in the Indian NBFC space as it caters mainlyto the financing needs of Indian rural and semi-urban areas. In retail finance, the shareof NBFCs stood at 38 per cent in 2010-11, which is anticipated to match the market shareof banks by the end of 2013.
MARKET SHARE OF BANKS AND NBFCS IN RETAIL FINANCE
| || || || || || || ||(%) |
|Year ||FY 2007 ||FY 2008 ||FY 2009 ||FY 2010 ||FY 2011 ||FY 2012 ||FY2013 |
| || || || || ||(E) ||(E) ||(E) |
|Banks (Excluding Housing Finance) ||74 ||69 ||68 ||62 ||58 ||55 ||53 |
|NBFC ||26 ||31 ||32 ||38 ||42 ||45 ||47 |
In tandem with this, the Assets Under Management (AUM) of retail NBFCs has grown fromRs. 1.56 trillion in 2009 to Rs. 1.85 trillion in 2010, which is expected to be doubled bythe end of 2013.
AUM OF RETAIL NBFCS
| || || || || || || ||(Rs. in trillions) |
|Year ||FY 2007 ||FY 2008 ||FY 2009 ||FY 2010 ||FY 2011 ||FY 2012 ||FY2013 |
| || || || || ||(E) ||(E) ||(E) |
|NBFC ||0.92 ||1.44 ||1.56 ||1.85 ||2.37 ||2.89 ||3.45 |
SECTORS THAT DRIVE LOAN GROWTH IN INDIAN NBFCS
Growth in Indian vehicle segment
|Vehicle segment ||Domestic sales in FY ||Domestic sales in FY |
| ||2010 (in thousands) ||2011 (in thousands) |
|Passenger Vehicle ||1,951 ||2,520 |
|Commercial Vehicle ||532 ||676 |
|Three-wheelers ||440 ||526 |
|Two-wheelers ||9,370 ||11,790 |
(Source: Society of Indian Automobile Manufacturers)
In addition to this, the tractor industry of India has grown by 20 per cent in FY 2011,compared to the previous fiscal. Growth of all the segments of Indian automobile sectorresulted in a robust 60 per cent growth in vehicle financing, over the period of2004-2010.
Estimated Industry disbursement in Indian auto finance
| || || || || ||(Rs. in billions) |
|Vehicles ||FY 2007 ||FY 2008 ||FY 2009 ||FY 2010 ||FY 2011 |
|Cars ||241 ||270 ||294 ||245 ||304 |
|Utility Vehicles ||84 ||95 ||102 ||78 ||105 |
|Commercial Vehicles ||218 ||302 ||286 ||194 ||232 |
|Two-wheelers ||118 ||145 ||112 ||76 ||71 |
|Total ||661 ||812 ||794 ||593 ||712 |
(Source: CRISIL Research)
Segmental break-up of disbursement of Indian auto Finance Industry
| || || || || ||(%) |
| ||FY 2008 ||FY 2009 ||FY 2010 ||FY 2011 (E) ||FY 2014 (E) |
|Cars ||33 ||36 ||35 ||39 ||43 |
|Utility Vehicles ||11 ||11 ||13 ||13 ||13 |
|Commercial Vehicles ||32 ||28 ||28 ||27 ||26 |
|Two-wheelers ||13 ||11 ||9 ||7 ||6 |
|Tractors ||11 ||14 ||15 ||14 ||12 |
CONSUMER CREDIT MARkET
The Indian consumer credit market has undergone robust changes, as it relies on thegrowing consumer sales in last few years. According to The Confederation of IndianIndustry, the rural consumer market size stands approximately at US$ 425 billion in thecurrent fiscal with a customer base of 720790 million customers. The market today isdouble the size of the US$ 220 billion market in 2004-05. CRISIL expects the increasedgrowth to boost the consumer credit market of NBFCs by 50 per cent during 2010-13.
NDIAN HOUSING FINANCE MARKET
India has a shortage of approximately 26.53 million houses, especially in rural areas.The Union budget 2010-11 has increased rural housing fund to Rs. 3,000 crores, compared toRs. 2,000 crores in 2009-10. Growth in agriculture and rural economy is expected to reporta growth of 24 per cent in housing loan in the next fiscal (Source: moneycontrol.com).Housing development in rural and semi-urban areas will catalyse the growth of NBFCs.
Housing loans and penetration
|Year ||FY 07 ||FY 08 ||FY 09 ||FY 10 |
|Housing loan ||3,523 ||4,123 ||4,805 ||5,604 |
|(Rs. in billions) || || || || |
|Housing loan as a % of GDP ||9.3 ||9.1 ||9.2 ||9.6 |
(Source: CRISIL Research, September 2010)
GROWING MUTUAL FUND AND INSURANCE SECTOR
Increased per capita income of India (17.3 per cent in 2010-11 compared to 10.5 percent in the previous year) resulted in a growth of household savings from around US$ 100billion to US$ 260 billion in last 10 years, out of which 60 per cent was held infinancial assets. According to KPMG, these positive reinforcements will result in anapproximate 22-25 per cent growth in Indian Mutual Fund Industry during 2010-15.
(Source: The Economic Times)
Again, the insurance sector accounts for US$ 33-38 billion household savings. TheAssociated Chamber of Commerce and Industry of India expect the total insurance businessto reach the benchmark of Rs. 2000 billion in the next two years from the current level ofRs. 500 billion.
The innovative and customised financial service offerings by MMFSL, with expertise inserving rural India, helped tap into Indias rural financing needs and overcome thechallenges that the rural and semi-urban class faces, to fulfil their aspirations and thushelping them to Rise.
The Companys strategy is to provide a range of financial products and services toits customers through its nationwide distribution network. The Company seeks to positionitself between the organised banking sector and local money lenders, offering itscustomers competitive, innovative, and speedy lending services. Through its universallyrelevant rebranding, key strengths of the Company is its strong relationship with dealers,in-depth understanding of the market, its wide network of branches, a large locallyrecruited employee force and management of asset quality risks have become drivers ofbusiness success. The debt offering of MMFSL are extremely well recognised by creditrating agencies like CRISIL (AA+), FITCH (AA ind) and Brickworks Credit Ratings (AA+). TheFixed Deposit Programme of the Company has been rated FAAA/Stable by CRISIL.
Vehicle loans (Utility vehicles, Commercial
Vehicles, Tractors, Cars, Two-wheelers)
Used Vehicle Financing
Mutual Fund Distribution
Loan against Gold
Construction Equipment Loan
The housing finance and insurance broking businesses are provided by its twosubsidiaries, Mahindra Rural Housing Finance Limited and Mahindra Insurance BrokersLimited respectively.
Acquired a considerable market share in the New vehicle market of India
The value of assets financed registered a growth of 61.7 per cent to Rs.14,419.9 crores in 2010-11 as compared to Rs. 8,915.4 crores in 2009-10
The Companys total assets increased by 44.6 per cent from Rs. 9,515.0crores on 31st March, 2010 to Rs. 13,754.1 crores on 31st March, 2011
Total income registered 28.3 per cent growth, from Rs. 1,568.8 crores in 2009-10to Rs. 2,012.5 crores in 2010-11, in tandem with the 62 per cent increased business volume
Total borrowing stands at Rs. 9,675.0 crores, with a diversified and balancedfunding
Number of offices increased to 547 in the current year, spreading across 25states and 4 Union Territories
On a cumulative basis, number of customer contracts increased by 30.9 per centfrom 11,89,848 as at 31st March, 2010 to 15,57,622 as at 31st March, 2011
Number of employees engaged stands at 8,723 in 2010-11
Net NPA to Total Assets reduced to 0.6 per cent in 2010-11, compared to that of0.9 per cent in the previous fiscal
The financial statements have been prepared in compliance with the requirements of theCompanies Act, 1956, and Generally Accepted Accounting Principles (GAAP) in India. Theabridged financials of MMFSL for 2010-11 including revenue, expenditure and profits arepresented in the following table:
Abridged Profit and loss account
| || || ||(Rs. in crores unless indicated otherwise) |
| ||2010-11 ||2009-10 ||Growth |
|Revenue || || || |
|Income from operations ||1973.9 ||1530.8 ||28.9% |
|Other income ||38.6 ||38.0 ||1.6% |
|Total ||2012.5 ||1568.8 ||28.3% |
|Expenditure || || || |
|Financial Expenses ||660.2 ||501.7 ||31.6% |
|Employee cost ||151.5 ||128.1 ||18.3% |
|Other Expenses ||325.9 ||187.0 ||74.3% |
|Provisions & Write Offs ||156.7 ||221.5 ||-29.3% |
|Depreciation & Amortisation ||15.8 ||9.9 ||59.6% |
|Total ||1310.1 ||1048.2 ||25.0% |
|PBT ||702.4 ||520.6 ||34.9% |
|Direct tax ||239.3 ||177.9 ||34.5% |
|PAT ||463.1 ||342.7 ||35.1% |
|Basic EPS (Rs.) ||47.9 ||35.8 ||33.8% |
During the year, the growth in cumulative contracts was at 30.9 per cent with 15,57,622customers acquired, surpassing the benchmark of 1.5 million customers. The Companystotal assets grew by 44.6 per cent from Rs. 9515.0 crores in 2009-10 to Rs. 13,754.1crores in 2010-11. As a result, total revenues grew by 28.3 per cent from Rs. 1,568.8crores in 2009-10 to Rs. 2012.5 crores in 2010-11.
The net spread on its assets was maintained at 6.2 percentage points in 2010-11 asagainst 6.3 percentage points in 2009-10.
Profit before tax (PBT) of the Company grew at 34.9 per cent from Rs 520.6 crores in2009-10 to Rs. 702.4 crores in 2010-11, whereas profit after tax (PAT) grew by 35.1 percent from Rs. 342.7 crores to Rs. 463.1 crores during the same period.
Consequently, basic earnings per share has increased from Rs. 35.8 in 2009-10 to Rs.47.9 in 2010-11.
Key Ratios of the company
| ||2010-11 ||2009-10 |
|PBT/Total income (%) ||34.9 ||33.2 |
|PAT/Total income (%) ||23.0 ||21.8 |
|PBT/Total Assets (%) ||5.1 ||5.5 |
|RONW* (%) ||22.0 ||21.5 |
|Debt/Equity ||3.7 ||3.9 |
|Capital Adequacy (%) ||20.3 ||18.5 |
|Tier I capital (%) ||17.0 ||16.1 |
|Tier II capital (%) ||3.3 ||2.4 |
|Book Value (Rs.) (excluding ESOPs) ||242.8 ||180.0 |
*Based on Average Net Worth
The debt to equity ratio was at 3.7 on 31st March, 2011. In real terms, and relative toother financing companies, there is significant scope of increasing the borrowings to growthe business in the future.
The Company also has a capital adequacy ratio of 20.3 per cent much higher above themandated 12 per cent by the Reserve Bank of India (RBI). The book value of the Companystood at Rs. 242.8 as on 31st March, 2011.
As a prudent practice, the Company makes additional provisions for non-performingassets (NPAs) at a faster rate than that prescribed by the RBI. During the year,write-offs and provisions of the Company decreased by 43.4 per cent from Rs. 221.5 croresin 2009-10 to Rs. 125.3 crores (excluding provision on standard assets) in 2010-11. Thegross NPA to total asset ratio improved from 6.4 per cent in 2009-10 to 4.0 per cent in2010-11; the net NPA to total asset ratio stood at 0.6 per cent in 2010-11 as against 0.9per cent in 2009-10.
Non-Performing asset (nPa) analysis
| || ||(Rs. in crores unless indicated otherwise) |
| ||2010-11 ||2009-10 |
|Gross Non- ||548.8 ||611.3 |
|Performing Assets || || |
|Less: NPA provisions ||474.3 ||528.3 |
|Net Non-Performing ||74.5 ||83.0 |
|Assets || || |
|Total Assets (including provision) ||13860.6 ||9623.4 |
|Gross NPA to Total ||4.0% ||6.4% |
|Assets (%) || || |
|Net NPA to Total ||0.6% ||0.9% |
|Assets (%) || || |
Note: The above figures exclude assigned assets
Indian Economy is growing at a phenomenal pace. Increased financial penetration andfavourable socio-economic growth is expected to make the Indian NBFCs a Rs. 4 trillionmarket by 2013. (Source: CRISIL)
Financing as per cent of GDP
| || || ||(%) |
| ||FY 97 ||FY 05 ||FY 10 |
|Agriculture ||29 ||22 ||20 |
|Manufacturing ||20 ||17 ||17 |
|Financing ||12 ||15 ||16 |
|Other services sector ||39 ||46 ||47 |
Moreover, the sector has been receiving increased capital inflows (Rs. 175 billion overthe (Source: Reliance Capital Report) Past three years). Low penetration of financialservices in the Indian market is further expected to enhance the figures. The philosophyof Rise takes the rural market into consideration, where the economic growth continues andthe consumer story remains robust. Since the past few years, the Government has takenseveral initiatives to augment the growth of rural India. Financing and other schemes suchas NREGA and Bharat Nirman leading to an increased availability of wealth as wages haveincreased more than 100 per cent in past three years with an escalating middle class,which is aspiring to pursue urban consumption patterns. NREGA has led to almost 100 percent increase of labour cost in the last three years, reduced migration and led to severalother positive social effects in rural India.
Through equipment and agri-services that help farmers raise farm productivity, weenable better future even in rural areas. Led by rising rural prosperity, increasingaspirations and low penetration levels the auto industry has seen strong demand from therural market. Higher infrastructure investments and rural employment schemes areincreasing employment opportunities, leading to decline in availability of labour foragricultural activities, prompting farmers with medium-sized land holdings to eitherpurchase or rent tractors. Non-farm use of tractors (haulage in construction andinfrastructure activities) has been increasing, providing an additional source of incometo farmers and benefiting tractor demand. Higher non-farm use has led to decline in theaverage life of a tractor, leading to high replacement demand.
Passenger car demand in the rural segment has been spurred by improvement inaffordability levels, new small-car model launches, lower penetration, and increasingaspiration levels. The Company expects higher cash sales and higher farm income, whichwould keep sales momentum fairly strong, despite rising interest rates.
Again, sales from rural markets have been increasing for the two-wheeler industry,particularly for the motorcycle segment. The Company expects rural market to continuegrowing at a higher pace compared with urban markets due to lower penetration.
The vehicle segment of rural India on the other hand has huge potential to grow asdespite containing 41 per cent of the car and UV market. Rural India only accounts for 25per cent of the segments total disbursements.
On the other hand, building a pucca house features top on the priority list for ruralhouseholds. Purchasing power of the rural population has increased tremendously in thepast few years owing to various Government of India schemes to encourage rural income. TheCompany expects rural housing to be the biggest beneficiary of enhanced affordabilitysince building a Pucca house is a top priority for a farmer. The Governments furtherfocus on rural development through various schemes and developing rural infrastructure(especially power) has led to strong growth of the consumer durable industry.
Nevertheless, lack of rural infrastructure has led to rural India being deprived ofcredit significantly. Rural India accounts for only 9 per cent of total deposits and 7 percent of total credit, even though ~70 per cent of the population resides in rural regions.Moreover, only 30 per cent of the bank branches are operational in rural areas with formalcredit being available to only 34 per cent of the population. Lack of rural creditpenetration is evident in the number of PSU bank branches opened in rural India.
Rural population is largely excluded from organised credit (especially banks) and itdepends on the unorganised segment like money lenders or unregistered pawn brokers. Givenlack of finance to this segment, most money lenders charge exorbitant rates of interest of24 48 per cent, depending on the collateral.
A host of macroeconomic activities like improving rural infrastructure, increase inarea under irrigation, increase in MSP prices, and NREGA are stimulating rural activities.This would help reduce unemployment and significantly improve rural cash flows andpurchasing power. Strong cash flows have brought down LTVs, which has reduced credit risksince it increases owners equity. This would be beneficial for rural NBFCs since itwill enable better risk management and bring down loan losses. Furthermore, with increasein the income base, the number of people eligible for credit will also move up, making therural market more attractive for growth and expansion. With increasing aspirations, demandfor products beyond basic needs will go up, which would help NBFCs scale their existingbusinesses and diversify their product mix.
The inherent nature of the business exposes the Company to several challenges,including the demand for transportation services in India, changes in Indian regulationsand policies affecting utility vehicles, tractors, commercial vehicles and cars, naturaldisasters, calamities, fuel prices and other macroeconomic conditions in India andglobally. Moreover, Companys customers are individuals or small enterprises thattypically have less financial wherewithal than corporate borrowers or fleet owners and aremore susceptible to adverse economic conditions.
On the other hand, regulatory issues related to priority sector lending andsecuritisation, RBI guidelines related to waiving loans in agricultural sector andstate-level regulatory norms for the underprivileged are major concern of the industry.
To grow in tandem with the growing economy, NBFCs will require a fund base of Rs. 910billion in next two years. The huge fund requirements may restrict the banks to fund theNBFC sector. With many players invading the market, the ability to compete effectivelywill depend, to some extent, on the Companys ability to raise low-cost funding inthe future. Furthermore, as a result of increased competition in the vehicle financesector, variable interest rate and payment terms, and lower processing fees are graduallybeing common, which in turn creates a standardisation in the products offered.
Risk management is critical to the success of any NBFCs. To align risk management withthe Companys organisational structure, MMFSL has a Risk Management Committee of theBoard in place, which manages and reviews the risk management system, policy, and strategyfrom time to time. The Company also has an operating risk management team, headed by theChief Financial Officer and comprising functional heads to manage risks. The teamidentifies, assesses, and monitors all principal risks in accordance with defined policiesand procedures.
THE MAJOR RISKS FACED BY THE COMPANY AND THEIR MITIGATION
Risk: Around 54 per cent of the Companys AUM is from financing the vehiclesmanufactured by Mahindra & Mahindra Limited (M&M), the parent Company. A lowergrowth by M&M can affect the loan growth by the Company.
Mitigation: The Company is gradually expanding its vehicle financing segment, byfinancing vehicles manufactured by other companies.
Risk: Government interventions related to priority sector lending, farm debt waiverschemes may have an impact on the operations of the Company.
Mitigation: The Company continuously monitors the regulatory compliances. The TierI and Tier II Capital Adequacy ratio are in tandem with the regulatory norms.
Risk: The inherent nature of lending exposes the Company to considerable creditrisk. Non Performing Assets can further expose the Company to statutory compliances.
Mitigation: The Company believes ability to understand the customers play criticalrole in managing the risk. The employee knowledge about the borrowers and strong businessmodel reduces the risk of borrower default significantly.
Risk: High fiscal deficit may result in higher borrowing by the government, whichwill consequently affect the interest rates and liquidity.
Mitigation: The Company manages a strategic funding mix to reduce the dependency onbanks. Moreover superior credit rating helps MMFSL to raise wholesale funds at acompetitive rate.
Risk: Simplified sanction procedures and low entry barriers have encouraged aninflux of new players in the NBFC market. The new and existing NBFCs expose the Company toconsiderable competition risk.
Mitigation: MMFSL has a strong pan India presence, with 81 per cent rural offices.The Company has considerably penetrated completely untapped rural belts which gives it anedge over its competitors.
In the long run, the growth in vehicle financing would be driven by the demand arisingfrom changing demographics and income patterns and financial results by improved portfoliohealth on account of stringent credit norms and reduction in delinquency level.
The Company sees huge potential for the housing finance business in the rural andsemi-urban markets, which till date remains untapped to a large extent. Even as theCompany takes these initiatives forward, the main focus will be on expanding the branchnetwork systematically. The main challenge as the Company grows will be to maintain thestrong levels of operational performance by introducing innovative products with localrelevance, giving priority to customer focus and convenience, and simultaneouslymaintaining strong processes and prudent risk management.
Nevertheless, the Company is positive about the growth scenario and confident toleverage this opportunity with its strategic moves. The Tie-ups with automobile giantslike Maruti and Hyundai Motors will gradually extend the presence of MMFSL in the vehiclemarket. On the other hand, tie-up with National Housing Bank will extend the horizon ofhousing finance. The outlook for 2011-12 continues to be cautiously optimistic subject toa normal monsoon and stable fuel prices.
INTERNAL CONTROL SYSTEM
The Company has an effective internal control system, commensurate with its size andnature to ensure smooth business operation, including assurance of recording all thetransaction details, ensuring regulatory compliance and protecting the Company assets fromany kind of loss or misuse.
The Company has appointed audit firms across the country to conduct internal audits toaccess the adequacy of the internal control procedures and processes and their reports arerenewed by the Audit Committee of the Board. Reports of the Internal Auditors, as well asthe action taken on the matters reported upon, are discussed at the Audit Committeemeetings.
IN FORMATION TECHNOLOGY (IT)
Information Technology support systems aids the Company in performing the processesinvolved in a loan transaction. The information technology system is controlled from theCompanys head office in Mumbai, allowing senior management to receive operationaldata on a prompt basis. As of 31st March, 2011, more than 90 per cent of the offices wereconnected to the centralised data centre in Mumbai. Further, the Companys fieldexecutives use more than 4,000 hand-held GPRS devices to collect loan instalments at thecustomers home or business locations. The Company is also in the process of rollingout handheld machines, which will be used to conduct origination of business by theemployees in the field.
The Companys production servers also maintain a daily automated backup. TheCompany currently has the technology and facilities in place to back up its systems andhas established a disaster recovery procedure in Mumbai.
MATERIAL DEVELOPMENT ON HUMAN RESOURCE
The Company values the diverse qualities and culture its people bring to it. Thesuccess of the Company is attributed to the richness of knowledge, ideas and experience ofits varied workforce. In order to maintain balance between the number of employees andupcoming business expansions, the Company continues to invest in successfully recruitingand retaining talented employees from a variety of backgrounds, including creditevaluation, risk management, treasury, technology and marketing. To develop the keycompetencies, MMFSL has set up the Mahindra Finance Academy. The structured andtransparent performance appraisal system provides continuous feedback and reward to theemployees, which in turn guides and motivates them towards meeting the organisationalgoals. On the other hand, rewarding key performers with Employees Stock OptionScheme creates a sense of ownership among the employees.
Certain statements in the Management Discussion and Analysis describing theCompanys objectives, predictions may be "forward-looking statements"within the meaning of applicable laws and regulations. Actual results may varysignificantly from the forward looking statements contained in this document due tovarious risks and uncertainties. These risks and uncertainties include the effect ofeconomic and political conditions in India, volatility in interest rates, new regulationsand Government policies that may impact the Companys business as well as its abilityto implement the strategy. The Company does not undertake to update these statements.