MIRA INFORM REPORT

Report Date :

09.08.2011

IDENTIFICATION DETAILS

Name :	INVESTSMART FINANCIAL SERVICES LIMITED [w.e.f. 08.08.2007]

Formerly Known As :	TAJIR INVESTMENT AND PROPERTIES LIMITED

Registered Office :	Dhana Singh Processor Premises, J. B. Nagar, Andheri-Kurla Road, Andheri (East), Mumbai-400059, Maharashtra

Country :	India

Financials (as on) :	31.03.2010

Date of Incorporation :	19.02.1996

Com. Reg. No.:	11-097473

Capital Investment / Paid-up Capital :	Rs.1462.847 Millions

CIN No.: [Company Identification No.]	U67190MH1996PLC097473

TAN No.: [Tax Deduction & Collection Account No.]	MUMT05058E

PAN No.: [Permanent Account No.]	AAACT3247R

Legal Form :	A closely held Public Limited Liability Company.

Line of Business :	The Company is primarily engaged in the business of financing products such as Margin Trade Financing, Loan against Shares, Loan against Mutual Fund, IPO Financing and ESOP Financing.

No. of Employees :	Not Available

RATING & COMMENTS

MIRA’s Rating :

Ba (45)

RATING

STATUS

PROPOSED CREDIT LINE

41-55

Overall operation is considered normal. Capable to meet normal commitments.

Satisfactory

Maximum Credit Limit :	USD 14000000

Status :	Satisfactory

Payment Behaviour :	Usually correct

Litigation :	Clear

Comments :	Subject is a subsidiary of HSBC InvestDirect (India) Limited. It is an established company having satisfactory track. There appears some losses being incurred by the company in the current year i.e. 2009-10. However, trade relations are reported as fair. Business is active. Payments are reported to be usually correct and as per commitments. In view of strong holding, the company can be considered normal for business dealings at usual trade terms and conditions.

NOTES :

Any query related to this report can be made on e-mail : infodept@mirainform.com while quoting report number, name and date.

ECGC Country Risk Classification List – April 1, 2010

Country Name

Previous Rating

(31.12.2009)

Current Rating

(01.04.2010)

India

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

LOCATIONS

Registered Office :	Dhana Singh Processor Premises, J. B. Nagar, Andheri-Kurla Road, Andheri (East), Mumbai-400059, Maharashtra, India
Tel. No.:	91-22-67897777
Fax No.:	91-22-67897968
E-Mail :	pallavi.hegde@hsbcinv.com tax@hsbcinv.com

DIRECTORS

As on 30.08.2010

Name :	Mr. Ajay Dua
Designation :	Director
Address :	B-3 Defence Colony, New Delhi-110024, India
Date of Birth/Age :	15.07.1947
Date of Appointment :	29.09.2008
Din No.:	02318948

Name :	Mr. Hardeep Singh
Designation :	Director
Address :	608 A, The Aralias, DLF Golf Course, DLF Phase 5, Gurgaon-122009, Haryana, India
Date of Birth/Age :	08.09.1954
Date of Appointment :	29.09.2008
Din No.:	00088096

Name :	Ms. Sonal Dave
Designation :	Director
Address :	401, B Wing, Chaitanya Towers, Appasaheb Marathe Marg, Prabhadevi, Mumbai-400025, Maharashtra, India
Date of Birth/Age :	16.04.1964
Date of Appointment :	29.09.2008
Din No.:	00017710

Name :	Mr. Shantanu Ambedkar
Designation :	Director
Address :	701, Neat House, Off S. K. Bole Road, College Lane, Dadar (West), Mumbai-400028, Maharashtra, India
Date of Birth/Age :	18.06.1968
Date of Appointment :	29.09.2008
Din No.:	02346725

Name :	Mr. Manasjie Mishra
Designation :	Managing Director
Address :	3/7 Sarvpriya Vihar, New Delhi-110016, India
Date of Birth/Age :	31.07.1965
Date of Appointment :	28.11.2008
Din No.:	01854071

Name :	Mr. Prachetas Raykar
Designation :	Director
Address :	1801 Rushabh Towers, Jhakaria Bunder Cross Road, Sewree (West), Mumbai-400015, Maharashtra, India
Date of Birth/Age :	13.07.1973
Date of Appointment :	29.04.2009
Din No.:	02611050

Name :	Mr. Porus Vazifdar
Designation :	Director
Address :	1101 Safal Heights, Opposite Union Park, Chembur, Mumbai-400071, Maharashtra, India
Date of Birth/Age :	30.01.1967
Date of Appointment :	29.06.2009
Din No.:	02403394

KEY EXECUTIVES

Name :	Ms. Pallavi Hegde
Designation :	Secretary
Address :	703/B Greenwoods Apartments, Near Cinemax, Andheri-Kurla Road, Andheri (East), Mumbai-400059, Maharashtra, India
Date of Birth/Age :	17.08.1977
Date of Appointment :	21.07.2009

Name :	Ms. Shraddha B. Shah
Designation :	Company Secretary
Address :	A-203, B-206, Vijay Apartment, 161-Prabhat Colony, Santacruz (East), Mumbai-400055, Maharashtra, India
Date of Birth/Age :	07.11.1981
Date of Appointment :	17.03.2008
Date of Ceasing:	20.07.2009

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

As on 30.08.2010

Names of Shareholders		No. of Shares
HSBC InvestDirect (India) Limited, India [Formerly Known as IL and FS Investment Limited]		146284650
HSBC InvestDirect (India) Limited, India Jointly with Kishore Dalwani		10
HSBC InvestDirect (India) Limited, India Jointly with Manasije Mishra		10
HSBC InvestDirect (India) Limited, India Jointly with Porus Vazifdar		10
HSBC InvestDirect (India) Limited, India Jointly with Kashmira Mathew		10
HSBC InvestDirect (India) Limited, India Jointly with Bhuvnesh Khanna		10
HSBC InvestDirect (India) Limited, India Jointly with Dilip Mehta		10
HSBC InvestDirect (India) Limited, India Jointly with Pallavi Hegde		10

Total		146284720

As on 30.08.2010

Equity Share Breakup		Percentage of Holding
Category
Bodies corporate		100.00
Total		100.00

BUSINESS DETAILS

Line of Business :

The Company is primarily engaged in the business of financing products such as Margin Trade Financing, Loan against Shares, Loan against Mutual Fund, IPO Financing and ESOP Financing.

GENERAL INFORMATION

Bankers :

Union Bank of India Limited, , 66/80, Mumbai Samachar Marg Branch, Fort, Mumbai-400023, Maharashtra, India

BANKING FACILITIES:

Particular	As on 31.03.2010 (Rs. in Millions)	As on 31.03.2009 (Rs. in Millions)	As on 31.03.2008 (Rs. in Millions)	As on 31.03.2007 (Rs. in Millions)
From Banks
Overdraft	0.856	1.142	0.178	0.000
Short Term Loan Non Convertible Debenture	0.000	0.000	2450.000	0.000
Optionally Fully Convertible Debenture	0.000	0.000	0.000	1250.000
Loans From Others	0.000	0.000	500.000	11.000
Total	0.856	1.142	2950.178	1261.000

Unsecured Loan
Short Term Loan
Line of Credit (From the holding company)	1327.500	1355.000	376.000	0.000
From Others	0.000	0.000	800.000	1088.000
Commercial Paper	0.000	0.000	250.000	0.000
Total	1327.500	1355.000	1426.000	1088.000


Banking Relations :	--

Financial Institution:	IL and FS Trust Company Limited, IL and FS Financial Centre, Plot No. C 22, G Block, Bandra Kurla Complex, Bandra East, Mumbai-400051, Maharashtra, India

Auditors :
Name :	BSR and Company Chartered Accountant
Address :	Lodha Excelus, 1^st Floor, Apollo Mills Compound, N M Joshi Marg, Mahalakshmi, Mumbai-400011, Maharashtra, India

Associates/Subsidiaries :

Holding Company:	HSBC InvestDirect (India) Limited (L67120MH1997PLC110386)

Fellow Subsidiaries:	HSBC InvestDirect Academy for Insurance and Finance Limited (Formerly known as IL and FS Academy for Insurance and Finance Limited) HSBC InvestDirect Distribution Services (India) Limited (Formerly known as IL and FS Investsmart Commodities Limited) HSBC InvestDirect Securities (India) Limited (Formerly known as IL and FS Investsmart Securities Limited) HSBC InvestDirect Sales and Marketing (India) Limited Investsmart Insurance Agency Private Limited

CAPITAL STRUCTURE

As on 30.08.2010

Authorised Capital :

No. of Shares	Type	Value	Amount
147000000	Equity Shares	Rs.10/- each	Rs.1470.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
146284720	Equity Shares	Rs.10/- each	Rs.1462.847 Millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2010	31.03.2009	31.03.2008	31.03.2007
SHAREHOLDERS FUNDS
1] Share Capital		1462.847	1462.847	1462.847	902.847
2] Share Application Money		0.000	0.000	0.000	0.000
3] Reserves & Surplus		2217.407	2391.660	2349.729	1115.529
4] (Accumulated Losses)		0.000	0.000	0.000	0.000
NETWORTH		3680.254	3854.507	3812.576	2018.376
LOAN FUNDS
1] Secured Loans		0.856	1.142	2950.178	1261.000
2] Unsecured Loans		1327.500	1355.000	1426.000	1088.000
TOTAL BORROWING		1328.356	1356.142	4376.178	2349.000
DEFERRED TAX LIABILITIES		0.000	0.000	0.000	0.000

TOTAL		5008.610	5210.649	8188.754	4367.376

APPLICATION OF FUNDS

FIXED ASSETS [Net Block]		271.871	304.592	1.509	0.378
Capital work-in-progress		0.000	0.000	0.000	0.000

INVESTMENT		0.000	0.000	0.000	0.000
DEFERREX TAX ASSETS		0.000	41.609	1.188	0.303

CURRENT ASSETS, LOANS & ADVANCES
	Inventories	350.044	0.000	8.451	0.000
	Sundry Debtors	0.680	3.143	1.011	0.000
	Cash & Bank Balances	892.655	2309.769	538.301	61.126
	Other Current Assets	22.192	43.728	136.492	41.052
	Loans & Advances	3701.125	2769.079	7713.200	4294.118
Total Current Assets		4966.696	5125.719	8397.455	4396.296
Less : CURRENT LIABILITIES & PROVISIONS
	Sundry Creditors	38.859	27.658	42.361	4.240
	Other Current Liabilities	44.495	39.032	143.064	21.783
	Provisions	146.603	194.581	25.973	3.578
Total Current Liabilities		229.957	261.271	211.398	29.601
Net Current Assets		4736.739	4864.448	8186.057	4366.695

MISCELLANEOUS EXPENSES		0.000	0.000	0.000	0.000

TOTAL		5008.610	5210.649	8188.754	4367.376

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2010	31.03.2009	31.03.2008	31.03.2007
	SALES
		Income	470.761	1075.141	1357.611	299.548
		Other Income	40.779	23.372	0.944	0.022
		TOTAL (A)	511.540	1098.513	1358.555	299.570

Less	EXPENSES
		Employees Cost	212.983	215.339	87.918	14.263
		Administrative and General Expenses	211.107	334.319	53.900	26.651
		Prior Period Credit	(3.338)	0.000	0.000	0.000
		TOTAL (B)	420.752	549.658	141.818	40.914

Less	PROFIT BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C)		90.788	548.855	1216.737	258.656

Less	FINANCIAL EXPENSES (D)		161.057	447.968	612.079	227.754

	PROFIT BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)		(70.269)	100.887	604.658	30.902

Less/ Add	DEPRECIATION/ AMORTISATION(F)		60.045	34.837	0.423	0.000

	PROFIT / LOSS BEFORE TAX (E-F) (G)		(130.314)	66.050	604.235	30.902

Less	TAX (H)		43.939	24.119	204.715	14.926

	PROFIT / LOSS AFTER TAX (G-H) (I)		(174.253)	41.931	399.520	15.976

Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		365.363	331.822	12.302	(0.474)

Less	APPROPRIATIONS
		Transfer to General Reserve	0.000	8.390	80.000	3.200
	BALANCE CARRIED TO THE B/S		191.110	365.363	331.822	12.302

	Earnings Per Share (Rs.)		(1.21)	0.29	3.15	0.85

KEY RATIOS

PARTICULARS		31.03.2010	31.03.2009	31.03.2008	31.03.2007
PAT / Total Income	(%)	(34.06)	3.82	29.41	5.33

Net Profit Margin (PBT/Sales)	(%)	(27.68)	6.14	44.51	10.32

Return on Total Assets (PBT/Total Assets}	(%)	(2.49)	1.22	7.19	0.70

Return on Investment (ROI) (PBT/Networth)		(0.04)	0.02	0.16	0.02

Debt Equity Ratio (Total Liability/Networth)		0.42	0.42	1.20	1.18

Current Ratio (Current Asset/Current Liability)		21.60	19.62	39.72	148.52

LOCAL AGENCY FURTHER INFORMATION

NOTE: The registered office of the company has been shifted from The IL and FS Financial Centre, Plot C-22, G Block, Bandra-Kurla Complex, Bandra (East), Mumbai-400051, Maharashtra, India to the present address w.e.f. 18.03.2009.

BACKGROUND

Subject is registered as a Non Banking Financial Company (‘NBFC’) (non-deposit accepting) as defined under section 45-IA of the Reserve Bank of India (‘RBI’) Act, 1934. The Company was originally incorporated as Tajir Investment and Properties Limited on 19 February 1996. However on 08 August, 2007 pursuant to receipt of approval from Registrar of Companies, the name of the Company was changed to Investsmart Financial Services Limited. The Company is a wholly owned subsidiary of HSBC InvestDirect (India) Limited.

The Company is primarily engaged in the business of financing products such as Margin Trade Financing, Loan against Shares, Loan against Mutual Fund, IPO Financing and ESOP Financing. During the current year, the Company has discontinued its Promoter Funding business.

OPERATIONS AND OUTLOOK FOR THE CURRENT YEAR

During the year, the Company made a net loss of Rs.174.250 Millions. The loss was on account of exiting concentrated exposures in the promoter financing segment which lead to lower average assets for the year. As the year progressed the Company further strengthened its risk policies to ensure better asset quality. The Company despite exiting concentrated promoter financing exposures has been successful in increasing its asset book to Rs. 3301.320 Millions. as on March 31, 2010, from Rs. 2415.770 Millions. as on March 31, 2009.

During the year, the Company witnessed a gradual revival in its lending business due to improved sentiment in Indian capital markets. The Company added 236 new clients into its fold for the financial year taking the total client base to 1320. The Company has decided to focus on building a vibrant retail NBFC business going forward and has realigned the NBFC operations with a renewed retail focus. The Company reduced the non retail business and has defined a revised retail organization structure.

BANKERS CHARGES REPORT AS PER REGISTRY

This form is for	Creation of charge
Corporate identity number of the company	U67190MH1996PLC097473
Name of the company	INVESTSMART FINANCIAL SERVICES LIMITED
Address of the registered office or of the principal place of business in India of the company	The IL and FS Financial Centre, Plot C - 22, G Block, Bandra - Kurla Complex, Bandra (East), Mumbai-400051, Maharashtra, India
Type of charge	Book Debts Movable Property (not being pledge) Immovable Property
Particular of charge holder	Union Bank of India Limited, , 66/80, Mumbai Samachar Marg Branch, Fort, Mumbai-400023, Maharashtra, India
Email	msmcredit@unionbankofindia.com
Nature of description of the instrument creating or modifying the charge	Deed of hypothecation creating pari-passu charge on book debts, moveable and immoveable properties of the Company, present and future
Date of instrument Creating the charge	12.11.2007
Amount secured by the charge	Rs.500.000 Millions
Brief particulars of the principal terms an conditions and extent and operation of the charge	Rate of Interest 12.50% per annum with Monthly rests or at such other revised rate/s as may be prescribed by the Bank from time to time depending upon the changes in the Prime Lending Rate of the Bank or the directives of Reserve Bank of India from time to time or the policy of the Bank on advances Terms of Repayment Line of credit facility to the extent of Rs.500.000 millions at any one time and is repayable on demand Margin 50% Extent and Operation of the charge Pari passu charge on book debts, moveable and immovable properties of the Company, present and future, in favour of Union Bank of India, which is currently charged in favour of Optionally Fully Convertible Debenture Holders, Infrastructure Leasing and Financial Services Limited (IL and FS), Non-Convertible Debenture Holders in respect of such debentures issued from time to time.
Short particulars of the property charged	All piece and parcel of vacant land bearing sub-division layout plot no.20, survey No.13/1+14/1+15/2+17/1 admeasuring 280.05 sq. mts or 333.69 sq. yds situated at Village Vadgaon within the limit of Panchayat Samity Mawal, Zilla Parishad Pune and Registration District of Pune and Sub-Registration District of Mawal and rights, title, interest and benefit in all and singular, the Company’s moveable-all tangible and intangible moveable assets including all the receivables, intellectual property rights, goodwill

FIXED ASSETS:

Freehold Land
Data Processing Equipment
Office Equipments
Furniture and Fixtures
Leasehold Improvements
Electric Installations
Software
Trademark Arrangement

CMT REPORT (Corruption, Money Laundering & Terrorism]

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

1] INFORMATION ON DESIGNATED PARTY

No records exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

2] Court Declaration :

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

3] Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

6] Records on Int’l Anti-Money Laundering Laws/Standards :

Charges or investigation registered against subject: None

7] Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

8] Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

9] Compensation Package :

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

CONTRAVENTION

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.44.96
UK Pound	1	Rs.73.94
Euro	1	Rs.64.55

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	5
PAID-UP CAPITAL	1~10	6
OPERATING SCALE	1~10	5
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	5
--PROFITABILIRY	1~10	4
--LIQUIDITY	1~10	5
--LEVERAGE	1~10	5
--RESERVES	1~10	5
--CREDIT LINES	1~10	5
--MARGINS	-5~5	-
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	NO
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	NO
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		45

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
-	NB	New Business	-

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.

MIRA INFORM REPORT

350.044

0.000

0.680

3.143

892.655

2309.769

22.192

43.728

3701.125

2769.079

4966.696

38.859

27.658

44.495

39.032

146.603

194.581

229.957

4736.739

(34.06)

(27.68)

(2.49)

(0.04)

0.42

21.60

Unit