Dear Shareholders,

Until a few months ago all economists were predicting higher and higher GDP growth and there were only two views on India: bullish and super bullish. A stage for mild slow down in the Indian economy was set by the combined effect of tighter domestic monitory policy, sudden appreciation of Indian rupee against US dollar and intensification of global economic woes. The GDP growth for the year 2008-09 is predicted to be between 7% and 8% as compared to 9% projected earlier.

The commodities have touched all time high. Oil is now more than USD 125, gold has crossed USD 1000 and inflation is intolerably high in most economies. The food prices are rising and rice is at a 34 year high. There is a severe credit crunch has the declining assets of banks is making them more cautious about lending.

We feel that India is still very strong and there is no need to panic. Our GDP can certainly grow to 9% and even 10% with proper Government support. There are three reasons for this optimism. First, India's growth does not depend primarily on exports. Second, the effect of US slow down may limit Foreign Institutional Investment and a large scale FII inflows only leads to volatility in stock market. For growth we need Foreign Direct Investment and there is no reason why FDI inflows should be affected. India has emerged as a fast growing and a very large economy and it will continue to attract the attention of MNCs from all over the world. Thirdly, the major driver of India's growth is domestic consumption and this is likely to remain high. It is said that finance is a brain which matches the labor with capital. Finance is what brings together the savers and the borrowers. For quite some time India will remain in the borrowing category and the rich will have no better place to invest than in India