to the Members

The Board of Directors (the Board) of the Company has the pleasure in presenting the Thirty Ninth Annual Report of the Company, the Audited Statement of Accounts and the Auditors' Report for the year ended 31^st March, 2014

Financial Results

The financial results of the Company for the year ended 31^st March, 2014- are summarised below

(Rs. mm)

Gross income for the year was Rs 6,404 mm, 16% higher than Rs 5,538 mm in the previous year, primarily due to increase in income from advisory & transactional services and other income Expenses increased by 2% to Rs 4,127 mm vs Rs 4,058 mm in previous year Profit before exceptional item and tax was Rs 2,277 mm, 54 % higher than Rs 1,480 mm in previous year and profit after tax was Rs 1,478 mm, 26% higher than Rs 1,169 mm in the previous year

Dividend

With a view to reinvest the profits in the business, the Board does not recommend any dividend on equity shares of the Company for the year ended 31^st March, 2014

Proposed transfer of Wealth Management business to Julius Baer Group

In August 2012, Merrill Lynch & Co, Inc (the "Controlling Enterprise") (merged with Bank of America Corporation w e f 1^st October, 2013) agreed to procure to sell the international Wealth Management businesses ("WM Business") based outside of the United States to Julius Baer Group ("JBG"), a leading Swiss private banking group The transaction is subject to local regulatory and other approvals in every relevant jurisdiction

The existing WM business of the Company, subject to local regulatory and other approvals, and the shares of its wholly owned subsidiary - DSP Merrill Lynch Trust Services Ltd are proposed to be transferred to JBG To facilitate the proposed transfer, the Company has incorporated a step-down subsidiary - Merrill Lynch Wealth Advisors Private Limited ("MLWA") which intends to acquire the requisite licenses from the regulators to function as a Stock Broker, Depository Participant, Investment Advisor, and register with the AMFI as a Distributor of Mutual Funds in India MLWA is proposed to be transferred to JBG which will then be followed by a transfer of the WM Business by the Company to JB-owned MLWA Until then MLWA will not conduct any business

Till the proposed transfer of the WM business to MLWA, the Company will continue to conduct the WM business in the normal course of business

The WM Lending business of DSP Merrill Lynch Capital Limited, a wholly owned subsidiary of the Company, is also proposed to be transferred to JBG, subject to local regulatory and other approvals

Corporate Update, Operations and Future Outlook

The Indian economy in 2013-14 started on a poor note but a series of reform measures have provided some room for optimism Slowing economic growth and rising inflation was compounded by a highly volatile global environment as the US Federal Reserve prepared to taper its quantitative easing program (QE-III) Economies and currencies with high current account deficit came under pressure and Indian external vulnerabilities led to a sharp fall in the currency A series of measures to reduce current account deficit accompanied by the inward remittances on account of RBI scheme on borrowings by banks via FCNR B/Head office borrowing scheme have brought in some stability The GDP growth of 4 7% for 2013-14 was close to the 10 year low of 4 5% achieved in 2012-13 But with the first majority Government in 30 years, business confidence is improving and an acceleration of the reform process could lead to a gradual recovery in the economy

The overall business environment continued to remain challenging in the current year. Financial year 2012-13 had witnessed a drop in revenues and as a result, the revenues have reflected an increase in the current year. This was due to the income from advisory and transactional services recovering from lower levels in the previous year, partly due to higher fee income on account of M&A deals. The investment banking fee pool is expected to continue to remain under pressure with several players chasing few deals. Activity in primary markets continued to remain depressed with equity raising during the year at US$ 6.8 billion compared with US$ 14.9 billion in the previous year. However, the announced M&A deal volumes increased to US$ 35.5 billion during the financial year from US$ 24.3 billion in 2012-13.

Amidst volatility, Indian markets yielded a strong return of 18.8 per cent in 2013-14 against a modest return of 8.2 per cent during the previous fiscal year. Secondary markets witnessed considerably higher interest from institutional investors as well, as we saw the return of retail investors towards the end of the fiscal year. Brokerage continued to remain under pressure. During the year, FlIs bought about US$ 13.4 billion of Indian equities as compared to US$ 25.8 billion in the previous financial year. However, domestic institutions continued to remain net sellers of Indian equities with an outflow of US$ 9 billion as compared to US$ 12.7 billion in the previous financial year.

The company believes that the worst is over for the economy and growth should gradually recover to 5.4 per cent in financial year 2015 and 6.5 per cent in financial year 2016. The newly elected government is taking measures to attract foreign investment in the capital markets and also through the easing of foreign direct investment (FDI) norms. These steps are likely to have a positive impact in the coming quarters. Business sentiment is gradually improving and we expect to see increase in corporate activity in the coming quarters. However, India is closely intertwined with the global economy and global events have shown visible impact on Indian markets in the recent time. Global geo-political and economic uncertainties continue and impact of its interplay with the local markets will be a significant watch item in terms of business potential for your company going forward.

Licenses

During the year under review, the Company was granted the license to act as Investment Adviser.

Credit Rating

CRISIL Limited has reaffirmed "CRISIL A1+" rating for the Commercial Paper program of the company. The ratings indicate very strong degree of safety with regard to timely payment of financial obligations.

DSP Merrill Lynch Capital Limited (DSPMLC)

The audited statement of accounts of DSPMLC for the year ended 31^st March, 2014, together with the report of Directors and the Auditors, as required under Section 212 of the Companies Act, 1956, are attached.

DSP Merrill Lynch Trust Services Limited (DSPMLTS)

The audited statement of accounts of DSPMLTS for the year ended 31^st March, 2014, together with the report of Directors and the Auditors, as required under Section 212 of the Companies Act, 1956, are attached.

Merrill Lynch Wealth Advisors Private Limited

The Company promoted a wholly subsidiary company "Merrill Lynch Wealth Advisors Private Limited" that was incorporated under the Companies Act 2013 on 27^th June, 2014 and subsequently Rs. 500 mm was contributed towards subscription money by the Company on 8^th July, 2014.

Directors

As per the provisions of the Companies Act, 2013, Mr. Avinash Gupta (DIN 05106833) and Mr. Jyotivardhan Jaipuria (DIN 05111689) will retire by rotation in the ensuing AGM and being eligible, seek re-appointment. The Board of Directors recommends their re-, appointment.

During the year, Mr. Allen Arakal (DIN 05102650) and Mr. Pradeep Dokania (DIN 00005270) resigned from the Board of the Company effective 15^th July 2014 and 22^nd May 2014 respectively. The Board places on record its appreciation for the contributions made by them during their tenure on the Board.

Audit Committee

The Audit Committee comprises the following Directors:

• Mr. Kumar Shah (DIN 00033865)

• Mr. Asit Bhatia (DIN 051 12750)

• Mr. Jyotivardhan Jaipuria (DIN 05111689)

Directors' Responsibility Statement

Pursuant to Section 217(2AA) of the Companies (Amendment) Act, 2000, the Board of the Company state that:

(i) While preparing the accounts for the year, applicable accounting standards have been followed consistently along with proper explanation relating to material departures, if any, have been made;

(ii) Accounting policies have been applied consistently, and reasonable and prudent judgments and estimates have been made so as to give a true and fair view of Company's state of affairs at the end of the financial year and of the profit of the Company for that period;

(iii) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; and

(iv) The annual accounts have been prepared on a going concern basis.

Auditors

M/s. Price Waterhouse (Reg. No. 301112E), Chartered Accountants, the Statutory Auditors of the Company, hold office till the conclusion of the ensuing Annual General Meeting (AGM) and are eligible for re-appointment. It is proposed to appoint them as statutory auditors of the Company from the conclusion of ensuing AGM till the conclusion of the forty fourth AGM to be held in the year 2019, subject to ratification of their appointment at every AGM. The Statutory Auditors have, under Section 139(1) of the Companies Act, 2013 and the Rules framed there-under, furnished a certificate of their eligibility and consent for re-appointment.

Particulars of Employees

The particulars in accordance with Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, forms a part of this report and are being attached separately.

Information In Accordance With The Companies (Disclosure Of Particulars In The Report Of The Board Of Directors) Rules, 1988

The Company has not been associated with any manufacturing activities. Hence, there is no report pertaining to conservation of energy or technology absorption. The details of earnings and expenditure in foreign currency are given in Note 25b, 25c & 25d of the Accounts..

Acknowledgement

The Directors wish to thank all the regulators for their ongoing guidance and express their appreciation for the support extended by the shareholders of the Company and also take this opportunity to thank employees for their contribution.

For and on behalf of the Board of Directors