darashaw is amongst the oldest

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Darashaw is amongst the oldest, continuously managed broking and investment-bankinghouse in India. Founded in 1926, it has been built on the tradition of integrity, efficiency, client

commitment and a reputation for developing the markets in which it operates.

Darashaw has the distinction of being the first resource mobilisers and brokers in government

securities to be appointed by Reserve Bank of India on the banks inception in 1938. It is today,a leading broking and investment bank offering an increasing range of services, includingconsultancy, to meet its clients financial and strategic objectives with discretion and trust.

Darashaw is headquartered in Mumbai, and is spread across eight cities in India with over 100professionals. We have recently setup operations in Singapore as well.

Our founder, Mr. Darashaw Master was a pioneer of the Indian debt market and contributedto its development and expansion. He was responsible for the induction of the erstwhile princelystates and several other brokers into the debt markets. Darashaw had the distinction of being theSole Broker to the Nizam of Hyderabad, the then single largest player in the capital markets.

The seventies witnessed a tremendous growth in the banking sector, following its nationalisation.Darashaw, under Mr. Keki D. Mehta, continued to contribute to the development of the market.Mr. Mehta was involved in the policy changes initiated by the Reserve Bank of India to make itsmarket intervention techniques more effective. He was also a member of the Bombay StockExchanges committee on audit and reporting systems for the broking community. Mr. Mehta, aqualified chartered accountant, is on the boards of various companies.

Over the last decade India has seen explosive growth of volumes and products in the financialsector, heightened activity in trading, development of sophisticated risk management tools likederivatives and structured products. The third generation at Darashaw has been instrumental in

the education of investors and regulators and the innovation of first ever deals.

Group Companies

1. Darashaw & Company Pvt. Ltd.

Member Bombay Stock Exchange ( SEBI Registration No: INB010992230 BSE CashSegment )

Member Bombay Stock Exchange ( SEBI Registration No: INF010992230 BSEF&O Segment )

Member National Stock Exchange ( SEBI Registration No: INB230992233 NSECash Segment ) Member National Stock Exchange ( SEBI Registration No: INF230992233 NSE

F&O Segment ) Merchant Banker Category I ( SEBI Registration No: INM000010676 ) Portfolio Manager ( SEBI Registration No: INP000000431 ) Mutual Fund Advisor ( SEBI Registration No: ARN-2648 ) Member Mangalore Stock Exchange ( SEBI Registration No: INB141178732 )


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Member Over the counter Exchange of India ( SEBI Registration No: INB200533211 )

2. Darashaw Securities Pvt. Ltd.

Member National Stock Exchange ( SEBI Registration No: INB230533233 NSE

WDM Segment ) Member National Stock Exchange ( SEBI Registration No: INF230533233 NSE Debt

F&O Segment )

3. Baman K. Mehta & Co.

Member Vadodara Stock Exchange ( SEBI Registration No: INB190393918 )

4. TSR Darashaw Limited. ( www.tsrdarashaw.com )

Registrar and Share Transfer Agents Category I ( SEBI Registration No:

INR000004009 )

The Darashaw Credo

As Darashaw learns and grows in the 21st century, along with commitment to performance andthirst for change, it has continuously stressed upon total, unyielding integrity. It is a company ofhigh integral values and standards. Our reputation for honest and reliable business conduct, builtby our people over so many years, is tested and proved in each business transaction we make.

The Darashaw Values Positive Thinking Independent Working and Thinking Task Orientation and Thoroughness In Work Ability To Build Close Relationships Aggressive and Persistent In Achieving Goals Language, Communication And Quantitative Skills Recognising and Harvesting Market Potential Problem Solver Developing Others

Organisation Building Be An Internal Darashawite and External Ambassador

Strategic Business Units
http://www.tsrdarashaw.com/http://www.tsrdarashaw.com/


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Darashaws business has been structured on Pan National Strategic Business units. Each of theseSBUs leverage the strong presence and the vast domain knowledge that we enjoy in the IndianDebt and Equity Markets to serve our clients better and to seek out new business opportunities.

Darashaws strategy has been to seek continuous growth by deriving synergy between the

various markets that it operates in. We have built a very strong institutional and semi-institutional distribution muscle, which allows us to cover the entire demand and supply chainfor debt and equity assets.

The business that we deal in is divided into the following SBUs:

1. Consultancy

- Infrastructure Advisory- Business Consulting

2. Investment Banking

3. Retirement Benefits

- Provident Fund Intermediation- Provident Fund Advisory- Pensions Consulting- Cooperatives and Rural Banks

4. Equity

- Equity Institutional Dealing- Fundamental Research- Technical Research

- Private Client Group

5. Debt

- Institutional Dealing

Investment Banking

Introduction

The Investment Banking team at Darashaw was set up in 1994 and ever since has been at theforefront of the domestic debt market. We have built a reputation as a respected, committed andtrusted Investment Banker. We have been Pioneers in bringing forthNew Issuers, New Investorsand New Innovative Instruments in the Indian debt markets.

We offer a range ofAdvisory and Investment Banking Services backed by research, views andknowledge to meet our clients financial and strategic objectives with discretion, excellence andtrust:


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Resource Mobilisation: Darashaw has helped to develop the long-term debt markets inthe country. During the last four financial years, we have been associated with debtmobilization of over Rs. 35,000 crore. We have mobilized funding through Non-Convertible bonds, short term and long term loans. We are now making a foray intoEquity funding for our clients through Private Placement and Public Issuance of their

equity.

Liability Management Solutions: Darashaw has been a pioneer in structuring LiabilityManagement for corporate clients. The basic objective of the exercise is to restructurehigh cost debt, utilize derivatives for managing interest rate / currency risks therebypositively impacting the Profit and Loss A/C of the Company.

Risk Management Solutions: We have given risk management solutions for corporatetreasuries with the use of derivative structures. Interest Rate Derivatives are beingincreasingly used as an effective hedging tool and as an important method of interest costreduction. Darashaw has acted as a principal driver and advisor in this field with its

clients.

Business Consulting: Darashaw is providing many value-added Corporate ConsultancyServices to its clients. The range of services include Strategic Planning, BusinessRestructuring, Treasury Management, Profit improvement plans, Divestments, FinancialRisk Management & Costing, Valuation, Business Planning and Budgeting.

Structured Products Group: Given the importance of the securitisation market andpossible growth opportunity and economic benefits in India, Darashaw was amongst thefirst to set up Structured Products Group within the Investment Banking Team. TheSecuritisation market in India is still in its infancy and our activities have been tiltedtowards developmental. With our emphasis on development of the market for theproduct, our efforts are directed towards:

- Research and knowledge dissemination- Interaction with Regulators and decision makers

Some of our recent prestigious mandates include:

Pioneered the first everPerpetual Bond issuance of Indian Overseas Bank and UCO

Bank Debt restructuring of Rs.1200 crore forNINL Debt restructuring of approx Rs.1200 crore forMCGM Fund mobilisation forFood Corporation of India of over Rs. 1300 crore over the past

two years Arrangers for Tier II issues ofIndian Overseas Bank, Exim Bank, Bank of Baroda,

UCO Bank and Bank of India in 2005-06


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Advisors to Tata Engineerings Rs. 671 crore Convertible Debentures & Non-Convertible Debentures issued on a Rights Basis

Sole Arranger of Rs. 400 crore Short Term Loans to Idea Cellular Limited for CellularTelecom Project

Mobilization of FCNR (B) loans and rupee term loan forHindustan Inks

Successful structuring and placement of an Innovative Low Coupon structure forTheIndian Hotels Co Ltd. to raise Rs. 300 crore

Consultancy

Introduction

Infrastructure advisory services and fund raising for large infrastructure projects areanother facet of multifarious financial solutions of DARASHAW. In tackling many

challenging core sector projects, DARASHAW has acquired critical experience,especially in City Developmental Projects, Roads, Urban Infrastructure, specializedprojects, ESOP Advisory, Pre-IPO Advisory and business restructuring.

Established with a focus on Corporate and Infrastructure Advisory

In a short span of 5 years the division has been successful in carving out a niche in thefield of Financial Advisory among its clients both in Private and Public Sector.

Consulting

Infrastructure Corporate

Financial Feasibility Funding Option Study Bankable Project

Report Strategic Planning Bid Process

Management

Fund Mobilization

Business Valuation Pre-IPO Advisory ESOP Advisory Pvt. Equity Placement

M & A

Empanelment

World Bank Asian Development Bank KfW, Germany Corporate Debt Restructuring Cell


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Stressed Asset Stabilisation Fund Power Finance Corporation Gujarat Urban Development Mission Gujarat Infrastructure Development Board Maharashtra Board for Restructuring of State Enterprises

Himachal Pradesh Infrastructure Development Board Karnataka Urban Infrastructure Development Corporation State Industrial Development Corporation of Uttaranchal Ltd.

Debt Intermediation : Debt - Institutional

Dealing

Introduction

While the Fixed Income Market in India has attained some depth and maturity in governmentSecurities, the Corporate Bonds Market is yet to reach even close to the same level. However,with a heightened focus on treasury operations by Banks and increase in the number of marketparticipants, the market is in a high growth phase. The Institutional Dealing Team at Darashaw isamongst the Top 3 intermediaries in the secondary market for corporate Bonds, and asknowledge provider, services the investment needs of the participants.

Core Functions of the team

Intermediation services in the Secondary Corporate Bond market to Darashaws clientbase which includes around 200 investors comprising Banks, Financial Institutions,Primary Dealers, Mutual Funds, Insurance Companies, Pension & Provident Funds andCorporates.

Structured Deals in conjunction with the Investment Banking Team Knowledge sharing through Daily Deal Records & Weekly market Analysis. The Daily

Deal Record is used, besides our clients, by News Wires and by CRISIL for its ValuationMatrix.

Link between the Wholesale Debt Market and the Retail Market

Future Outlook

The Corporate Bond Market today is only around 3% of the market for Government Securities inIndia, while Internationally the Corporate Bond Markets are larger than the Treasury BondMarkets. This alone presents a strong argument for high growth. A greater focus on Treasuryoperations by Banks and faster settlements through dematerialisation of Securities hascontributed to the growth of the market.


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The investor base is increasing every year with more Mutual Funds, Insurance Companies andCorporates entering the market. One of the largest investors worldwide, the Pension & ProvidentFunds, need to be recognized as mainstream investors and the norms governing their investmentsneed to be relaxed.

With greater flexibility and freedom of investing, the participants will grow and the IndianCorporate Bonds market will evolve into a stronger, more vibrant & liquid market.

Equity Sales

Darashaw & Company Pvt. Ltd. is a registered member with both BSE as well as NSE (Cash andF & O Segment). OurEquity Institutional Broking business unit has relationships with severalleading FIIs, Mutual funds, Banks, Financial Institutions & Insurance companies. We havea dedicated research and sales team catering to the specific needs of our clients.

Out Institutional equity effort is based on a team approach where Institutional Sales, Researchand Dealing work towards providing innovative ideas, better service and execution capabilities.

We advise institutions on their portfolio for long term investments as well as positional tradingideas in stocks for the short and medium term. We value our customers and ensure the bestpossible information and service.

Wealth Management

Darashaw & Company Pvt. Ltd. is a SEBI registered Portfolio Manager since 2001. The Private

client group offers portfolio management services to HNIs (resident / non resident), HUFs,corporates and trusts.

Our portfolio management services offer the benefits of professional money management withthe flexibility and control of owning individual stocks and securities.

Our investment methodology revolves around the long term objective of wealth creation. Weidentify the sunrise sectors and pick value stocks through a fundamental and or technicalperspective and buy into them early thus enabling us to give superior gains to the investor.

The portfolio performance is optimized by a combination of long term investments, medium

term fundamental picks and technical picks with efficient entry and exit levels.

There is total transparency of the portfolio through regular updates and interactions withdedicated relationship managers and fund managers.


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Sovereign Bond

What DoesSovereign BondMean?

A debt security issued by a national government within a given country and denominated in a.The foreign currency used will most likely be a hard currency, and may represent significantlymore risk to the bondholder.

The government of a country with an unstable economy will tend todenominate its bonds in the currency of a country with a stable economy. Becauseof default risk, sovereign bonds tend to be offered at a discount. Brady bonds, whichare issued by governments in developing countries, are a popular example ofsovereign debt securities.

Debt is that which is owed; usually referencingassets owed, but the term can also covermoralobligations and other interactions not requiring money. In the case of assets, debt is a means ofusing futurepurchasing powerin the present before a summationhas been earned. Somecompaniesand corporations use debt as a part of their overallcorporate financestrategy.

A debt is created when a creditoragrees tolenda sum of assets to a debtor. In modern society,debt is usually granted with expected repayment; in most cases, plus interest.

The debt-to-equity ratio (D/E) is a financial ratio indicating the relative proportion of

shareholders' equity and debt used to finance a company's assets. Closely related

to leveraging, the ratio is also known as Risk, Gearing or Leverage. ...

he ratio of a company's liabilities to its equity. Long-term debt-equity is the ratio of

a company's long-term liabilities to its equity. Total debt-equity is the ratio of a

company's long-term and current liabilities (debt that will be paid off within one

year) to its equity. ...

Money Market:Whenever a bear market comes along, investors realize (yet again!) that the stock

market is a risky place for their savings. It's a fact we tend to forget while

enjoying the returns of a bull market! Unfortunately, this is part of the risk-return

tradeoff. To get higher returns, you have to take on a higher level of risk. For many

investors, a volatile market is too much to stomach - the money market offers an

alternative to these higher-risk investments. The money market is a subsection of the

fixed income market. We generally think of the term fixed income as being synonymous to
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The European Financial Stability Facility, the 440 billion- euro bailout fund set up by the EUafter the Greece rescue, plans to sell bonds in January to pay for aid to Ireland. While backed bymost of the same nations that would be involved in a euro bond, it has attracted a AAA ratingthrough a number of credit enhancements and would therefore likely attract lower yields than aeuro bond, according to analysts at Credit Agricole Corporate & Investment Bank.

Politicians are tabling ideas to tackle the euro-regions fiscal crisis after the European CentralBank was forced to step up its buying of government bonds when a bailout of Ireland last monthfailed to defend the regions bond markets against investors betting on a breakup of the euro.

Irish bonds fell after the nation said Nov. 21 that it had asked for a bailout, with the 10-year yieldreaching a record 680 basis points more than benchmark German bunds on Nov. 30. Yields havedeclined since the ECB stepped up purchases of bonds from Ireland, Portugal and Greece onDec. 1, reducing the Irish- German spread to 503 basis points yesterday.

Intellectually Attractive

Luxembourg Prime Minister Jean-Claude Juncker and Italian Finance Minister Giulio Tremontiput forward a plan for selling joint bonds in a Financial Times commentary on Dec. 6,heightening the current debate. The idea is intellectually attractive, EU Economic andMonetary Affairs Commissioner Olli Rehn said the same day, while Greek Prime MinisterGeorge Papandreou said its time to seriously discuss it.

Juncker, who chairs meetings of euro-group finance ministers, took a swipe at the Germanopposition, prompting a riposte from a key ally of German Chancellor Angela Merkel.

Germany rejected his proposal to create euro-region bonds too quickly and has shown simple

thinking on the matter, Juncker said on Dec. 8, Die Zeit reported citing an interview. Germany isdealing with European matters in an unEuropean way and the bond proposal was dismissedbefore Germany had examined it properly, the German newspaper cited him as saying.

The Debate

Michael Meister, the senior finance and economy spokesman for Merkels Christian Democraticbloc, shot back in an interview later that day.

We cant put any more on the table, Meister said in an interview. Juncker and Tremonti cansurely say what they want. They can go ahead with joint bonds if they want, he said.

The objections may not be final, Major said. Merkel opposed bilateral loans to Greece on thesame grounds, before joining euro-region nations and the International Monetary Fund inproviding 110 billion euros of loans to the debt-stricken nation. Merkel also backs a change inthe European Union treaty that allows for the creation of a permanent crisis mechanism.

Merkels stance is a negotiating position, Major said. The worst-case scenario would be moreexpensive for Germany than issuing common bonds, he said.


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Euro Falls

The euro fell against most of its major counterparts today and yields on Spanish and Italianbonds jumped as leaders from Germany and France said they are against increasing the EUs 440billion-euro rescue fund and rejected joint euro-area bonds.

Common bonds would make governments less responsible, when what we want to do is theopposite, French President Nicolas Sarkozy told reporters after meeting with Merkel today inthe southern German city of Freiburg.

The creation of common bonds or bills for the euro area may help bring an end to the regionsfiscal crisis by deepening market liquidity, according to Sander Schol, a London-based directorat the Association for Financial Markets in Europe.

The AFMEs European Prime Dealers Association wrote a research paper for the EuropeanParliament on the potential for a common European Issuance Program. It found smaller

liquidity premiums, more effective hedging and the removal of the market- making obligationwould lead to lower interest rates, Schol said.

Optimal Risk Sharing

Such bonds might be the optimal risk-sharing scheme, Goldman Sachs rate strategistFrancesco Garzarelli and economist Natacha Valla said yesterday. Designed correctly, a jointbond program would create a financial incentive for fiscal prudence and reduce moral hazard,Arnaud Mares, an executive director at Morgan Stanley and former senior vice president atMoodys Investors Service, said on Dec. 6.

Compelling theory is unlikely to bring the plan to fruition anytime soon, according to saidMichael Leister, a fixed-income analyst at WestLB AG in Dusseldorf.

For Germany or France it wouldnt be at all attractive, because they would end up paying ahigher yield, he said. This isnt a concept you can sell to the German electorate right now, andprobably the same in Austria and France.

Bond valuation is the determination of the fair price of abond. As with any security or capitalinvestment, the theoretical fair value of a bond is thepresent valueof the stream of cash flows it

is expected to generate. Hence, the value of a bond is obtained by discounting the bond'sexpected cash flows to the present using the appropriatediscount rate. In practice this discountrate is often determined by reference to other similar instruments, provided that such instrumentsexist.

If the bond includes embedded options, the valuation is more difficult and combines optionpricing with pure discounting. Depending on the type of option, the option price as calculated iseither added to or subtracted from the price of the "straight" portion. This total is then the value
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of the bond; the various yields can then be calculated for the total price. See furtherunderBondoption.

BondWhen a company (or government) borrows money from the public or banks(bondholders) and agrees to pay it back later

Par Value The amount of money that the company borrows. Usually it is $1,000.

Coupon

Payments

This is like interest. The company makes regular payments to the bondholders,like every 6 months or every year.

Indenture

The legal stuff. A written agreement between the company and the bond holder.They talk about how much the coupon payments will be, and when the money(par value) will be paid back to the bondholder.

Maturity Date Date when the company pays the par value back to the bondholder.

Market

Interest RateThis changes everyday.

The thing about bonds is that the interest rate (coupon payments) is fixed. It doesn't change. Andbonds last a long time. Like 10 years or whatever. So in the meantime, the market interest rate(the interest rates in general) go up and down. OK, well, if the coupon payments are for 10% andthen the market interest rates fall from 10% to 8%, then that bond at 10% is valuable, right. It ispaying 10% while the overall interest rate is only 8%. Exactly how much is it worth? You mean'what is the present value of a bond?'

The Present Value

of a Bond=

The Present Value of the CouponPayments (an annuity)

+The Present Value of the Par Value(time value of money)

Example

Par Value = $ 1,000 Maturity Date is in 5 years Annual Coupon Payments of $100, which is 10% Market Interest rate of 8%

The Present Value of the Coupon Payments (an annuity) = $399.27

The Present Value of the Par Value (time value of money) =$680.58

The Present Value of a Bond = $ 399.27 + $ 680.58 = $1,079.86
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darashaw is amongst the oldest

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