ICICI Prudential Asset Management Co Ltd Management Discussions

PRUDENTIAL ICICI ASSET MANAGEMENT COMPANY LIMITED ANNUAL REPORT 2005-2006 MANAGEMENT DISCUSSION AND ANALYSIS OPERATIONS DURING THE YEAR Mutual Fund Business a. Assets Under Management (AUM): During the year under review, the assets under management of Prudential ICICI Mutual Fund crossed Rs. 235,595,956 thousand as on March 31, 2006 as compared to Rs. 152,009,210 thousand as on March 31, 2005. b. Awards bagged by Prudential ICICI Mutual Fund (the Fund): Your Directors are pleased to record that during the period under review, the following awards were won by the Mutual Fund. i) The Fund has been ranked by CRISIL Fund Services as the Best performing Mutual Fund of the year 2005 based on its performance in CRISIL - CPR. ii) Prudential ICICI Long Term Plan - Cumulative has featured as Best Fund over Three years by Lipper Fund Awards India 2006. iii) Prudential ICICI Dynamic Plan has been ranked ICRA-MFR 1, and has been awarded the Silver Award for Second Best Performance in the category of Open Ended Diversified Equity Scheme - Defensive for one-year period ending December 31, 2005. iv) CRISIL CNBC BNP Paribas Fund House of the Year 2005 Award. c. Operations and Consumer Service: With a view to render timely and efficient customer service, the Investment Manager of the Fund has been making good progress in networking its 30 branches. The service levels at these branches have been consistently maintained to cope with the continuously increasing client base. d. Personnel: Your Company continues to place emphasis on attracting and recruiting quality manpower and takes a lot of effort in training and retaining them. Your Company believes that one of the ways to achieve the above objectives is to provide long-term incentives to the performing employees. The total strength of the company as on March 31, 2006 stood at 316 from 238 as on March 31, 2005. UPDATE ON NEW PRODUCTS During the Financial year 2005-2006, your Company has launched the following new schemes under Prudential ICICI Mutual Fund. Name of Schemes Scheme Type Date of Fund Allotment mobilised during NFO (Rs. in 000s) Prudential ICICI Blended Plan - Open ended May 31, 2005 9,637,992 Plan A Equity Fund Prudential ICICI Blended Plan - Open ended May 31, 2005 3,650,681 Plan B Debt Fund Prudential ICICI Infrastructure Open ended August 31, 13,979,242 Fund Equity Fund 2005 Prudential ICICI Services Open ended November 30, 6,565,651 Industries Fund Equity 2005 Scheme Prudential ICICI Fixed Maturity Closed ended January 23, 1,676,831 Plan - Series 28 - 4 Months Plan debt Scheme 2006 Prudential ICICI Fixed Maturity Closed ended January 27, 1,352,090 Plan - Series 28 - 16 Months Plan debt Scheme 2006 Prudential ICICI Fixed Maturity Closed ended March 21, 6,359,164 Plan - Series 27 - Monthly Plan debt Scheme 2006 Prudential ICICI Fusion Fund Closed ended March 25, 5,879,412 Equity Scheme 2006 Prudential ICICI Fixed Maturity Closed ended March 30, 6,741,313 Plan - Series 28 debt Scheme 2006 Prudential ICICI Fixed Maturity Closed ended March 31, 358,147 Plan - Series 31 - 4 Months Plan debt Scheme 2006 Total 56,200,523 PERFORMANCE OF THE SCHEMES OF PRUDENTIAL ICICI MUTUAL FUND Your Company is acting as the Investment Manager for seven closeended schemes and twenty-three open-ended schemes of Prudential ICICI Mutual Fund. The Net Asset Value of the Scheme is given below: Close-ended Fund: Scheme Name Date of A B C Allotment Prudential ICICI Fixed Maturity Plan January 23, 2006 1,694,172 10.1211 1.21 - Series 28 - 4 Months Plan Prudential ICICI Fixed Maturity Plan January 27, 2006 1,352,589 10.0013 0.06 - Series 28 - 16 Months Plan Prudential ICICI Fixed Maturity Plan March 21, 2006 6,375,159 10.0253 0.25 - Series 27 - Monthly Plan Prudential ICICI Plan 1 March 24, 2005 1,713,769 10.5635 5.53 Prudential Fusion Fund March 25, 2006 6,155,687 10.4700 0.047 Prudential ICICI Fixed Maturity Plan - Series 28 March 30, 2006 6,748,232 10.0111 0.11 Prudential ICICI Fixed Maturity Plan March 31, 2006 358,147 -* -* - Series 31 - 4 Months Plan Total 24,397,755 A = Net Assets as on March 31, 2006 (Rs. in 000s) B = Net Assets Value per unit as on March 31, 2006 (Rs.) - For Growth option C = Compounded Annualized Return (%) from the date of allotment of units till March 31, 2006 - For Growth option * NAV and absolute return is not calculated as the units were allotted on March 31, 2006. Open-ended Funds: Scheme Name Date of A B C Allotment Prudential ICICI Power October 1, 1994 10,942,101 69.1600 18.31 Prudential ICICI Liquid Plan June 24, 1998 56,610,870 17.1693 5.22 Prudential ICICI Growth Plan July 9, 1998 3,350,348 80.9400 31.06 Prudential ICICI Income Plan July 9, 1998 2,704,294 20.3646 5.79 Prudential ICICI FMCG Fund March 31, 1999 1,216,243 39.4600 21.65 Prudential ICICI Tax Plan August 19, 1999 3,962,173 86.7900 38.61 Prudential ICICI Gilt Fund- August 19, 1999 1,876,350 20.9255 11.80 Investment Plan: Prudential ICICI Gilt Fund - August 19, 1999 931,066 17.1382 6.00 Treasury Plan: Prudential ICICI Balanced Fund November 3, 1999 3,711,270 30.6400 34.57 Prudential ICICI Technology Fund March 3, 2000 1,327,299 11.2300 1.93 Prudential ICICI Monthly Income November 10, 4,481,706 17.7312 10.77 Plan 2000 Prudential ICICI Child Care Plan- August 31, 2001 837,479 36.8100 34.40 Gift Option: Prudential ICICI Child Care Plan- August 31, 2001 289,562 18.4898 14.11 Study Option: Prudential ICICI Short Term Plan October 25, 2001 5,252,636 13.2706 6.29 Prudential ICICI Index Fund February 26, 2002 46,539 29.9125 30.69 Prudential ICICI Sweep Plan March 6, 2002 3,795,933 11.8720 4.30 Prudential ICICI Long Term Plan March 28, 2002 1,601,350 14.5665 9.45 Prudential ICICI Flexible September 27, 301,571 12.7624 7.23 Income Plan 2002 Prudential ICICI Dynamic Plan October 31, 2002 9,038,853 53.3568 63.25 Sensex Prudential ICICI Exchange Traded Fund January 10, 2003 9,044 114.8451 46.46 Prudential ICICI Floating Rate Plan March 28, 2003 20,083,388 11.6497 5.20 Prudential ICICI Gilt Fund- November 19, 791,157 10.9025 3.72 Investment Plan - PF Option 2003 Prudential ICICI Advisor December 18, 87,503 18.3381 28.41 Series- Aggressive Plan 2003 Prudential ICICI- December 18, 129,206 12.4859 9.59 Advisor Series Cautious Plan 2003 Prudential ICICI Advisor December 18, 107,405 15.4815 19.75 Series - Moderate Plan 2003 Prudential ICICI Advisor December 18, 79,822 21.8619 38.07 Series- Very Aggressive Plan 2003 Prudential ICICI Advisor December 18, 184,750 11.1635 4.64 Series- Very Cautious Plan 2003 Prudential ICICI Gilt Fund- February 11, 2004 369,185 10.9080 4.16 Treasury Plan - PF Option Prudential ICICI Fixed March 20, 2004 8,475,032 11.1469 5.46 Maturity Plan-Yearly- Series 24 Prudential ICICI Income March 30, 2004 2,564,958 13.0860 14.37 Multiplier Fund Prudential ICICI Fixed August 10, 2004 2,512,258 10.6998 4.21 Maturity Plan - Series 25 - 15 months Prudential ICICI Discovery Fund August 16, 2004 11,032,100 25.2300 76.93 Prudential ICICI Fixed September 10, 6,300,505 10.1688 1.69 Maturity Plan - Yearly - 2004 Series 25 Prudential ICICI Long Term September 15, 5,143,036 10.8027 5.60 Floating Rate Plan 2004 Prudential ICICI Emerging October 28, 2004 6,064,893 24.7600 89.20 S.T.A.R. (Stocks Targeted At Returns) Fund Prudential ICICI Fixed December 14, 4,217,999 10.7347 5.64 Maturity Plan - 2004 Yearly - Series 12 Prudential ICICI Fixed December 31, 1,334,188 10.6961 5.55 Maturity Plan - Yearly - 2004 Series 5 Prudential ICICI Blended May 31, 2005 7,682,124 10.5365 5.36* Plan - Plan A Prudential ICICI Blended May 31, 2005 2,054,734 10.4731 4.73* Plan - Plan B Prudential ICICI August 31, 2005 14,390,031 14.8400 48.40* Infrastructure Fund Prudential ICICI Services November 30, 5,321,196 11.7600 17.60* Industries Fund 2005 Total 211,212,157 A = Net Assets as on March 31, 2006 (Rs. in 000s) B = Net Assets Value per unit as on March 31, 2006 (Rs.) - For Growth option C = Compounded Annualized Return (%) from the date of allotment of units till March 31, 2006 - For Growth option * Absolute returns During the period from April 1, 2005 to March 31, 2006, the Nifty and SENSEX changed as set out below INDICES VALUE & PERFORMANCE Index March 31, 2006 April 1, 2005 % Change BSE Sensex 11,279.96 6,605.04 70.78% S & P CNX Nifty 3,402.55 2,067.65 64.56% PORTFOLIO MANAGEMENT SERVICES As you are aware, the Company is offering Portfolio Management Services (PMS) since October 2000, for discretionary, non-discretionary, and advisory services across both equity and fixed income assets. The Assets under Management under PMS (including debt & equity advisory) as on March 31, 2006 is Rs. 64,429,460 thousand. BUY-BACK OF EQUITY SHARES OF THE COMPANY In pursuance of the special resolution passed at the Extra Ordinary General Meeting held on March 3, 2006, Prudential ICICI Asset Management Company Limited has given effect to buy-back of its shares during the year 2005- 2006. Accordingly, the number of shares of the Company has been reduced from 18,521,111 to 18,018,552 due to extinguishment of 502,559 shares on account of the said buy-back. SALES OFFICES Your Company has established a wide reach to the retail customers through its 30 well-equipped sales offices.