Over the years, your Company has largely been investing in listed equity, with a disciplined approach to investing for the long term. In the last few years, the Company has augmented this philosophy by investing larger and larger sums to leaders in sectors, which the Company expects to hold for a long period. It will be the endeavour of the Company to concentrate larger sums to such investments which the Company believes has a potential to remain value accretive over the long term.

The Company has shared with the shareholders that the Company will reduce its dependency on realized gains and endeavour to maintain distributable earnings, thereby allowing the investments to accrue gains over a longer term. In the last three years, the Company has distributed more than 60% of the distributable profits earned. This strategy, supported by a vibrant equity market, has resulted in a significant outperformance of the listed portfolio during the current year.

The management has endeavoured to bring out the performance of the Company's portfolio over the last 15 years using what we have called the "Value Created" measure. Value Created is a measure which evaluates the wealth created net of the capital invested by the shareholders. "Value Created" is the Realisable Value of Investments as on 31st March ( each year ) to which is added Current and Fixed assets while any contribution from shareholders and outstanding liabilities and provisions are reduced.

The shareholders will be pleased to note that the 'Value Created' in the Company's portfolio has multiplied 9.39 times over the last 15 years viz-a-viz a 5.67 times increase in the value of BSE 200 over the same period.

The BSE 200 not being a Total Return Index excludes the impact of accrual of dividend income, declared by its constituent companies. In the case of our Company, the impact of dividend declared by the company, provided annually and reflected in the value of Net Current Assets, being higher than the dividend earned by the company results in a negative impact to the " Value Created" at the end of the year. Thus, over the last fifteen years the differential between the CAGR of the Company's portfolio vis-a-vis the CAGR of the BSE 200 Index would have been higher if compared on an apple to apple basis.

On account of the rights issue of convertible bonds and warrants the equity and share brmium increased from Rs.89.34 crores as on 31st March, 2008 to Rs.782 crores as on 31st March, 2012. Shareholders will be pleased to note that for the portfolio as a whole, post the increase in the equity and share brmium, the "Value Created" has recorded a CAGR in apbrciation of 21.25% vis-a-vis the BSE 200 which has recorded a CAGR of 17.90% in apbrciation for the three year period 31st March, 2012 to 31st March, 2015. It is heartening that this performance has been achieved while the management of the Company has endeavoured to reduce risk of the portfolio with a prudent allocation to unlisted equity and fixed income securities.

Global Equity Markets

Global equity markets continue to remain buoyant in the sixth year of recovery after the collapse in 2009 and investors are enjoying one of the longest bull markets since the 1940's. Globally two indices have recorded the highest outperformance, Standard & Poor's 500 index and the BSE 200 which have more than tripled since bottoming out in March 2009. The markets have apbrciated through a debt crisis in the US and Europe, escalating conflicts in the Middle East, renewed tensions with Russia over Ukraine and Europe's stagnating economy.

Most market strategists believe that the markets are expensively valued and have run up ahead of fundamentals but do not exhibit signs that typically accompany a market peak. Investors remain circumspect and haven't become rash. Companies with stressed balance sheets enjoying valuation bubbles are yet not visible in the listed market in India. In the US and in India there is a fear that some of the e-commerce and social media stocks have reached excessive valuations.

In the US there have been 12 bull markets since the end of World War II, with the average run lasting 58 months, according to S&P Capital IQ. At 72 months, the current streak is the fourth longest in that period with the longest having stretched 113 months into circa 2000. The U.S. economy continues to strengthen and inflation remains tame. While the Fed has ended its bond-buying programme, other global central banks, like the European Central Bank and the Bank of Japan have initiated providing stimulus to their economies.

India has emerged as an investment case quite separate from the other BRIC nations and other emerging markets, as a consequence of the fall in global commodities especially oil. The sudden fall in the price of oil by almost 50% has created unbrdictable stress in the development of some of the commodity exporters including middle-east countries, countries in South America and Russia. Fall in global commodities has improved India's macro economy landscape through lower imported inflation, lower trade deficit and lower fiscal deficit facilitating the central bank to lower interest rates.

Global investors have found tremendous comfort and confidence in the government's development vision. The government has embarked upon endeavours which are expected to stimulate growth in the capex cycle and in the economy in the years to come. General consensus brvails that Railways and Road construction are areas which could see visible development in FY1516. The finance budget has increased capital outlays in both these sectors.

While incremental development will result in higher growth, the acute situation of stalled projects has been detrimental to corporate sector investment. Resurgence in confidence of companies to invest for the next capex cycle will be visible once capital invested by entities in stalled projects begins to earn a fair return.

To quote the Economic survey, " the accumulated stock of stalled projects at the end of December 2014 stood at Rs.8.8 lac crore [Rs.1.8 lac cr (public) + Rs.7 lac cr (private)], which has reached a staggering 8-9% of GDP over the last three fiscal years and have been a leading reason behind the decline in Gross Fixed Capital Formation (GFCF). From a peak of 24% (yoy) in last quarter of 2009-10, the rate of growth of GFCF now languishes around zero." It goes on to say that clearing the top 100 stalled projects will address 83 per cent of the problem of stalled projects by value. Off late there has been some revival in projects in Q1 and Q2 FY14 and may have reached a low in Q4FY13.

During the year, the markets will find that indicators of revival may become visible towards the second and third quarter of the financial year. If the aforesaid areas of concern do not find themselves being addressed then perhaps the markets may have to reconcile to discounting earnings lower than envisaged by investors at the close of FY1415.

Over the last year, equity market participants have reconciled to the fact that the year FY1516 may not see the economic revival which was visualised a few months ago. The expectation has now moved to a more robust growth in FY1617 which could very well be the case. If all goes well, next year industry and trade will move onto the new era of Goods & Services Tax (GST). There may be some hiccups and a period of adjustment but manufacturers and distributors are looking forward to GST being implemented. The benefits of GST will flow into the economy a year or two later once distribution linkages have stabilized with the tax reform.

Your Company's portfolio is concentrated in high quality companies with minimal balance sheet risk and in sectors which have consistent growth namely Banks & Finance companies (ICICI, Axis, IDFC); FMCG companies (Titan, ITC,

Nestle ); or which enjoy natural competitive advantage namely, Pharma ( Sun Pharma, Glenmark, Cadilla ), IT (TCS, Infosys, Tech Mahindra ) and Engineering (L&T, BEL, BEML). In the power sector we have investments in leaders namely NTPC, Powergrid and Tata Power. In Auto our large investments are in Tata Motors and Maruti Suzuki. In this downturn we have started investing in Hero MotoCorp and Bajaj Auto.

Keeping with its policy to augment the potential for apbrciation, the Company continues to invest for the long term while availing opportunities to realize gains in periods of exuberance in the markets. The Company continues to invest in Tata and Non-Tata companies, both in the listed and unlisted categories; though investments in Tata companies constitute a larger portion and are of a longer term and strategic nature.

9. MEETINGS :

During the year, six Board Meetings and four Audit Committee Meetings were convened and held. Details of the composition of the Board and its Committees and of the Meetings held and attendance of the Directors at such Meetings, are provided in the Corporate Governance Report. The Board has constituted an Audit Committee under the Chairmanship of Mr. H. N. Sinor, the other members of the Committee being Mr. A.B.K. Dubash, Mr. F. N. Subedar and Mr. P P. Shah. There have not been any instances during the year when recommendations of the Audit Committee were not accepted by the Board.