India Securities Ltd Merged Management Discussions

INDIA SECURITIES LIMITED ANNUAL REPORT 2010-2011 MANAGEMENT DISCUSSION AND ANALYSIS Industry Structure & Developments During the F.Y 2010-11, Indian economy has shown growth rate of 8.6% marked by growth in agriculture and continued momentum in manufacturing and service sectors. However, high inflation and global economic scenario continues to pose serious threats for the growth in financial service sector and the general economic growth in the current fiscal. Opportunities & Threats Since focus of Company is to continue as investment holding company, management will look out for strategic investment opportunities in key emerging sectors and sustain the existing consultancy business. As Company has discontinued finance business, it will have isolated risk to market uncertainties. Operations and Financial Performance During the year under review, your Company has earned a Total Income of Rs. 7.64 crore from business operations, compared to Rs. 10.45 crore in the previous year. Company has sold the finance undertaking and is pursuing consultancy and advisory services business apart from being an investment holding company. The Honble High court of Judicature at Madras has approved the scheme of amalgamation of Essar Telecommunications Holdings Private Limited with the Company vide its order dated April 21, 2011. Both the companies have filed the copies of the court order with Registrar of Companies, Tamilnadu and the scheme of amalgamation has come into force w.e.f. May 6, 2011. Accordingly, Company was vested with 10.97% stake in Vodafone Essar Limited, Essars Telecom Venture in partnership with Vodafone Group (held through its subsidiary ETHL Communications Holdings Limited) and the Company has issued 67,62,30,000 equity shares of Re 1 each and 15,41,000 Non Cumulative Preference shares of Rs. 2000 each on May 10, 2011 in consideration for the amalgamation. The erstwhile Compulsorily Convertible Preference Shares(CCPS) issued by the Company have been converted into equity shares as a part of scheme of amalgamation with the permission of the holders of CCPS. In line with Essar Groups decision to exit from the telecom venture, on 1st July 2011, Companys subsidiary ETHL Communications Holding Limited has entered into definitive agreements to sell its 10.97% stake in Vodafone Essar Limited to Vodafone Group or its nominees for USD 1.26 billion. Subsequently, the sale of 5.485% stake is effected to the nominee of Vodafone for INR 2800 crores. The sale of balance 5.485% shall be consummated by 15th February 2012 and is secured by bank guarantee for the purchase consideration issued by ING Bank N. V. Hongkong. As approved by shareholders at the court convened meeting held on July 26, 2011, the scheme of amalgamation of ETHL Communications Holdings Limited with the Company is in final stage and awaits approval from Honble High court of Judicature at Chennai and at Mumbai. Delisting of Equity Shares The resolution for delisting of equity shares from Bombay Stock Exchange Limited has been duly approved with requisite majority through postal ballot declared on September 27, 2011. Company has also received in principle approval for the same from Bombay Stock Exchange Limited and is in process of completing the formalities for public announcement as required under SEBI (Delisting of Equity Shares) Regulations, 2009. Upon successful completion of delisting, the promoters intend to consolidate the company with unlisted group investment companies to form a single investment holding company focusing strategic investment in group companies. Shifting of Registered Office During the year under review, Company Law Board, Mumbai bench had passed an order approving the shifting of registered office of the Company from Mumbai in the State of Maharashtra to Chennai in the State of Tamilnadu w.e.f. May 31, 2010. Segmentwise Performance Company is continuing only Advisory & Consultancy Business and other Financial Services. However, since finance business was carried out only for the part of the year, segment wise performance has been provided under note no. 8 of the notes to accounts annexed to balance sheet. Outlook The outlook for the year 2011-12 continues to be of cautious optimism. PUBLIC DEPOSITS: There are no unclaimed/unpaid deposits as on 31.03.2011.