Free Declaration in Support - District Court of California - California

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EXHIBIT E

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...... · ·-

To: Praveen Chakravarty

Sent: Monday, October 15, 2007 1:52 AM

From: [email protected] [mailto:[email protected]]

Subject: Follow up
Praveen,

Pierre and I enjoyed meeting with you and your team on our recent trip. Of course we missed our flight by 10 minutes after leaving you at the Oberol, but made it back to Hong Kong eventually. Pierre and I both came away feeling we had some good discussions and that there is a lot of complementary interest. As we discussed, the way we'd like to take this forward is to first Identify the core group of your team, I think you said about 20-25 individuals. We'd like to then work on preparing employment documents for all of them. Once you have theft and all is satisfactory, we'd look to you to resign from 'Monies Weisel enmass. If their reaction is that they'd move to shut down the remainder of the office, we can step in and offer to take over the remainder as a gesture to save them the office shutdown costs. First step would be to get from you a list of all employees, their current comp and job descriptions. Next I'd like you to highlight the 20 or 25 key individuals, and a bit more info on their job descriptions and background. For this group, please include an indication of what comp levels you would think about for their move to BNP Paribas. Once I get this from you, you and I can arrange for a call to talk through the info. We should be able to move this process along quickly once we get the info from you. I will be in China from tomorrow evening through Friday but will be picking up my emails. Please don't hesitate to call my mobile on +852 9101 6901 if anything arises. Best regards, Jon This message and any attachments (the "message") is intended solely for the addressees and If you receive this message in error, please delete it and immediately notify the sender. its purpose, any dissemination or disclosure, either whole or partial, is prohibited excep The internet can not guarantee the integrity of this message. BNP PARIBAS (and its subsidiaries) shall (will) not therefore be liable for the message if Do not print this message unless it is necessary, consider the environment. Ce message et toutes les pieces jointes (ci-apres le "message") sont etablis a l'intention message par erreur, merci de le detruire et d'en avertir immediatement l'expediteur. Toute utilisation de ce message non conforme a sa destination, toute diffusion ou toute pu L'internet ne permettant pas d'assurer l'integrite de ce message, BNP PAR/BAS (et ses fili N'imprimez ce message que si necessaire, pensez a l'environnement.

TVVPL00001457

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EXHIBIT F

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Costs
# of Analysts # of Associates

Support Staff Total Purchase Price Signing Bonus Analysts Associates Support Staff Praveen Year 1 Guarantee Comp Analysts Associates Support Staff Praveen Praveen Perks

12 13 3 $5,000,000 $1,200,000 $375,000 $275,000 $50,000 $500,000 $3,700,000 $1,700,000 $1,300,000 $200,000 $500,000 $100,000

Timelines Contracts for Praveen and Analysts Analyst Signing Bonus payment Analysts Resign Praveen Signing Bonus payment Praveen Resigns Contracts for Associates & Support Associates & Support Signing Bonus Associates Resign Support Staff Resign TWP Decision on Real Estate Start Date

1-Nov 8-Nov 10-Nov 11-Nov 13-Nov 17-Nov 21-Nov 23-Nov 23-Nov 8-Dec 9-Jan

Milestones Office Set up Finalize Coverage Plan Launch Coverage of 30 stocks Start Analyst marketing Start Morning Call Coverage of 30 more stocks Total Coverage of 100 stocks

9-Jan 8-Feb 8-Apr 8-Apr 8-Apr 7-Jun 6-Aug

Thomas Weisel Analyst Meeting Schedule - Oberoi Business Center
Name Preeti Dubey Vijay Sarathi Abhiram Eleswarupu Sandeep Mathew Sameer Naringrekar Joseph George Lakshmi Ganti Amit Shah Vishal Sharma Girish Nair Interview Time 10/25 10am 10/25 11am 10/25 12pm 10/25 lpm 10/25 2pm 10/25 3pm 10/26 10am 10/26 11am 10/26 12pm 10/26 1pm IP yrs Sector Coverage Work Ex Logistics & Infrastructure 8.0 Telecom & Media 11.0 IT Services 6.0 Energy & Env Services 4.0 Telecom Equipment 11.0 Consumer - Retail 4.0 Capital Goods & Machinery 9.0 Oil & Gas 4.0 Healthcare Services 7.0 Electronic Supply Chain 5.0 Education MS (Finance) - Wisconsin, CFA Ph.D (IIM-A), CFA BE, MBA(ISB) MMS (BITS) BE, MBA (ISB) CA (Rank), CFA B.E, MBA (JIM-C) MS (Finance) -North Carolina MBA (Missouri), CFA, CA BE, MBA(TAPMI)

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Purchase Price Analysts Year 1 Guarantee Associates Year 1 Guarantee Support Staff Year 1 Total Year 1 Comp Guarantee Signing Bonus Praveen Chakravarty Year 1 Guarantee Comp Housing & Other Perks Signing Bonus

$5,000,000 $1,730,000 $1,300,000 $139,635 $3,169,635 $676,922 $1,153,443 $500,000 $100,000 $553,443

(Base - 865k, Bonus 865k) (Base 650k, Bonus 650k) (Base - 90k, Bonus 50k) (Incl. TVVP Bonus) (Base 200k, Bonus - 300k) (Incl. unvested equity of 60k shares Q$13)

Analysts Avg Work Ex % with MBA % with CFA current Base 10/25 11am 10/25 2pm 10126 10am 10/25 10em 10/26 12pm 10/25 12pm 10/26 1pm 10/25 1pm ions 3pm ions 11am

10 7.0 85% 35% Proposed Base $115,000 $100.000 $100,000 $100.000 $100,000 $70,000 $70,000 $70,000 $70,000 $70,000 $865,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50.000 $50,000 $50,000 $50,000 $50,000 $50.000 $50,000 $50,000 $650,000

Associates Avg Work Ex % with MBA % with CFA Guaranteed Bonus $115,000 $100,000 $100,000 $100.000 $100,000 $70.000 $70,000 $70,000 $70,000 $70,000 $865,000 $50,000 $50.000 $50,000 $50.000 $50,000 $50,000 $50,000 $50,000 $50.000 $50,000 $50,000 $50.000 $50.000 $650,000

13 4.0 100% 14% Signing Bonus $44.275 $44,275 $46,200 $46.200 $46,200 $26,031 $34,125 $31,850 $33,841 $31,500 $304,497 $23,625 $24,500 $21,000 $18,375 $22,750 $24,500 $24,500 $15,750 $19.250 $20,125 520,125 $21,000 $17,500 $273,000 $657,497 a yni Sector Coverage Work Ex Education I Telecom & Media Telecom Equipment Capital Goods & Machinery Logistics & Infrastructure Heakhcare Services IT Services Electronic Supply Chain Energy & Env Services Consumer-Retell Oil & Gas 11.0 11.0 9.0 8.0 7.0 6.0 5.0 4.5 4.0 4.0 7.0 7.0 6.0 6.0 6.0 4.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 2.0 4.0 Ph.D (IIM-A), FA BE, MBA (SE BE, MBA (IIN C) MS (Finance) - Wisconsin, CFA MBA (Mimeo! ). CFA, CA BE, MBA(ISB BE. MBA(TAF MI) MMS (BITS) CA (Rank). CI A MS (Finance) -North Carolina

Name Vijay Sarathi Smear Neringrekar Lakshmi Gantt Preeti Dubey Mahal Sharma Abhiram Eieswarupu Glrish Nair Sandeep Mathew Joseph George Arne Shah

07 Bonus

t otal VI t.omp txpected US TWP Bass (5)

Total $230,000 $200.000 $200,000 $200.000 $200,000 $140.000 $140,000 $140,000 $140,000 $140.000 $1,730,000 10 analysts $100,000 $100,000 $105000 $100,000 $100,000 $100,000 $100,000 5100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $1,300,000 13 associates $3,030,000

.

RIbhu Kumar Amit Dabas Vivek Rattan Parses P Abhishek B Samir Dlwan Krishna P Avinash S Sriram S Manish G Charankt S Karan Gupta Shashank Total Research Comp HR/Prod Mgmt 10/26 2pm I IT Admin Assistant I Total Support Comp Praveen Chalcravarty Housing Restricted Stock I

MBA (IIM-C) B.Tech(IIT-D) MBA(IIM-B) MBA (Bmfor 1 nlv) MBA(TAPMI) B.Tech(IIT-D) MBA(IIM-I) MS (Finance) - Brandeis Univ B.Tech (BITS I. MBA (NME) B.E. MBA (MC I) CA. CFA. Mil ISB) MBA (IIM-L) CFA Level 2.1 BA (IIT-M) MBA (AIM, MI Ma) MBA(XLRI)

$27,300 847.850 $14,300 $89,450 $200,000 $60.500

$19,110 $23,925 $7,150 $50,185 $300,000

$46.410 $ 2,250 $71,775 $5,075 $21,450 $2,100 $139,635 $19,425 $500,000 560,000 $400,000

REDACTED

TWPL00001459

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EXHIBIT G

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mancia
Vijay Sarathi (91 22)6650 1677 India Financials 13 Mar:,:h 2008

Overweight
(in t'at'on)

SO WHAT? THE BNP PARIBAS ANGLE OVERWEIGHT - in tine. v\,itii the Street. Our thesis identifies thL signals of a zcOfisolidati, ci wave and the need for fr,'2,h capital 'infusion. Top-down and bottom- lp estimation of credit growth.
72, Share
Roc

·

BBG

Tnrtet
price (INR)
1A-In '0 00

Mkt
Upside (A) (USDrn) (x)

Roe

P/BV
(x)
2.1

code
IGICIEC

price (INR)

cap 2008E 2009E 2010E (x)

·

LUY BIJ'e

2. 3

IDFC,
pena,es to the coTe bnl · P/BV tx OR Source BNP ParbateslInlaten

44

Initiate on sector With an OVERWEIGHT. Strong loan exPaiitiorron growth 'expected in capital spending, a consolidation wave gradually emerding, a benign medium term interest rate outlook, further equity capital expansion and very reasonable valuations. In short, growth in the banking sector is imperative for the India growth story.

The fountainhead of growth
Many ideas with key success factors in place We believe there are a number of interesting plays which are well positioned with respect to the critical success factors in Indian banking low cost deposit base through a wide spread branch network, large scale to exploit the anticipated growth in corporate capex and retail spending, income base well diversified across fund and fee incomes and excellent management vitality. Initiating with a BUY on ICICI Bank and IDFC. Corporate loans to drive credit growth; retail to take a breather We expect healthy bank credit growth of about 20% over the next five years, driven by our base-case assumption regarding broad money and GDP growth. We expect no challenges in terms of loan growth for the banking system in India. Using a top-down and a corroborative bottomup analysis, we predict extremely strong capital spending of approximately USD750b over the next four years across various sectors in India. We expect this spend to translate into a 25% CAGR for the aggregate corporate loan book. We are anticipating a relatively muted 10-15% growth in retail loans in the near-to-medium term, primarily on account of a slowdown in the mortgage book due to inflated asset prices. However, the long-term outlook for retail credit growth is extremely strong, given the low penetration of financial services in India compared with other countries. We see signs of a consolidation wave We believe the Indian banking system is entering a phase of consolidation on account of seemingly stretched credit-to-deposit ratios, the need for scale and the low cost deposit imperative of banks, given the licensing restrictions around branch expansion. We also believe banks will have to expand their equity capital to maintain growth. Asset quality remains strong - exposure to global credit headwinds not material. Attractive valuations. Exposure to the global credit crisis is limited to a few banks and largely through the investment book. The sector trades at average FY09E P/BV of 2.0x.

Vijay Sarathi, CFA
BNP Paribas India Solutions Pvt Ltd (91 22) 6650 1677 [email protected]

Abhishek Bhattacharya
BNP Paribas India Solutions Pvt Ltd (91 22) 6650 1678 [email protected]

Company ICICIBank State Bank Of India HDFCBank Axis Bank Kotak Mahindra Bank Punjab National Bank Bank of India Bank of Baroda Canara Bank Union Bank of India
Consolidated as on FY07 Sources: CMIE: BNP Paribas

Mkt cap (INR b) 942.12 973.0 472.2 320.7 233.7 164.6 150.0 112.8 96.5 76.8

Revenue Loan assets (INR b) 328.3 661.2 84.4 55.3 34.5 135.4 102.2 104.3 123.5 83.4 (INR b) 2,114.0 4,872.9 469.4 368.8 155.7 978.7 853.4 855.6 988.9 623.9

300 250 200 150 100 50

-MSCI (LHS) -BANKEX (RHS)

14000 12000 10000 8000 6000 4000 2000

Mar-07 Jun-07 Sep-07 Dec-07 Ma 08
Source: Dataslrearn

Please see the important notice on the inside back cover.

BNP PARIBAS
CORPORATE A INVESTMENT BANKING

Case 3:07-cv-06198-MHP
VIJAY SARATHI

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INDIA FINANCIAL SERVICES

Contents
Credit growth needed to drive GDP growth
Credit deployment ratio and healthy money supply growth to drive loan growth 3 4 6 9 10 13 14 19 20 21 22 22 23 23

Capital expenditure to boost corporate credit demand Demographics and low penetration ratios to propel retail credit growth
Demand for credit driven by low penetration ratios

A consolidation wave on the horizon
With the credit deposit ratio touching efficient frontier, SCBs will need to look out for inorganic growth

Our interest rate outlook
Margins tend to widen in a falling interest-rate environment

Asset quality is not a cause for concern
Exposure of the Indian banking sector to global credit meltdown Impact of the loan waiver announced in the recent budget

Appendices
Devil's advocate: Investment Risks

Please see India Research Team list on page 24.

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INDIA FINANCIAL SERVICES

INVESTMENT THESIS: MACROECONOMIC SCENARIO

Credit growth needed to drive GDP growth
We expect India's long-term consumption growth to remain intact, even if it eases in the near term, with GDP growth riding on gross capital formation (GDP). If India achieves growth of 8% pa for the next five years, we estimate it would translate to bank credit growth of 15-20%.
ronl

Rta

(INR t) 30 -

Highest GDP growth in the past 15 years

Sources:CMIE; BNP Paribas

India's real GDP grew at a five-year CAGR of 7.6% from 2002-07 driven primarily by 17.3% growth in GCF and 5.9% growth in private final consumption expenditure (PFCE).

Exhibit 2: GDP Break Up By Expenditure
wan GDP at factor cost -- at 1999-00 prices (LHS)
Private final consumption expenditure (LHS) Mita Gross capital formation (LHS) -- Government final consumption expenditure (RHS) -- Financial services (RHS) GCF driving growth -- a positive signal for the long-term consumption growth story

FY01
Sources: MOSPI; RBI

FY02

FY03

FY04

FY05

FY06

FY07

The financial services sector grew at 9% in the same time period. However, it only accounted for 6.1% of total GDP in 2007. Investment growth has outpaced consumption growth across sectors, indicating a strong credit-demand outlook.

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INDIA FINANCIAL SERVICES

0:17
(INR t) 10 9 8 765 4 3 2 PM11111Consumption expenditure - PFCE (LHS) Investment expenditure - GCF (LHS) -- Growth in PFCE (RI-IS) -- Growth in GCF (RI-IS) (%) - 40

- 20 - 10

For agriculture and manufacturing sectors, Investments grew at 19% (five-year CAGR) compared to 3% growth n consumption Q

- (10) (20) FY07

FY01
Sources:CMIE; RBI

FY02

FY03

FY04

FY05

FY06

xh bit 4: Sector Wis (LHS) Communication sector PFCE (LHS) (INR tr-- Services PFCE Infrastructure sector PFCE 3.0 -- Communication sector PFCE 2.5
MEI IIMME Services PFCE (LHS) MN Infrastructure sector PFCE

WSW Ala
Services GFCF (LHS) xaq Infrastructure sector GFCF (LHS) 'NNE Communication sector GFCF (LHS) --Services GFCF Infrastructure sector GFCF --Communication sector GFCF (%) 80 60 40 20 0 (20) (40) (60)

2.0 1.5 1.0 0.5 0.0 FY01
Sources: CMIE: RBI

FY02

FY03

FY04

FY05

FY06

FY07

While investment in the services sector grew in tandem with consumption growth, the infrastructure sector has seen flat growth -- with supply-side constraints hampering consumption growth. We expect the infrastructure sector to lead the demand for credit in future as India is at an inflection point of investment growth. We expect the infrastructure sector to see a huge increase in capital spending. There is gross under-investment in the core infrastructure sectors in India compared with other countries. For example, mobile telephone penetration ratio (a proxy for penetration of communication infrastructure) is at 24% compared to 60-80% for Asian peers and power consumption is 620kWh per capita compared to 1,800 for China and a global average of 2,600.

Credit deployment ratio and healthy money supply growth to drive loan growth
We estimate that 16-18% growth in money supply is required to sustain GDP growth of 8% and this should translate into a healthy base case credit growth of 20% for the next three to four years.

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INDIA FINANCIAL SERVICES

(1NR t) 35

Bank credit to commercial sector (LHS) Broad money -- M3 (LHS) IWO GDP at constant prices (LHS) -- M3 growth/GDP growth (RHS) -- Bank credit growth/M3 growth (RHS)

(%) 4.8 4.4 4.0 3.6 3.2 2.8 2.4 2.0 1.6 1.2 0.8 0.4 0.0

Sources:CMIE;RBI;BNP Paribas

Money supply (M3) has grown at 22.8% over the last five years; bank credit to the commercial sector posted a five-year CAGR of 17.2%. Money supply growth appears to have stabilized at about the 2x GDP growth, while bank credit growth has outpaced money supply growth over the last few years on a smoothened three-year CAGR basis.

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INDIA FINANCIAL SERVICES

INVESTMENT THESIS: CORPORATE SECTOR SCENARIO

Capital expenditure to boost corporate credit demand
Using both top-down and corroborative bottom-up capital expenditure analysis, we estimate the combined planned capital expenditure across various sectors will be in the range of about USD750b in FY08-11, primarily led by the infrastructure sector. This translates into corporate loan book growth of 25% for Indian banks over the next four years. We believe strong revenue growth and decreasing debt ratios will further fuel demand for bank credit. · ital Expenditure Estimates
(INR b) 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 FY08E
Source: BNP Paribas estimates 7- Infrastructure

M Utilities It Construction & housing M Telecom El Metal & mining · Oil & gas · Others

sector -- utilities, construction and telecom to account for around 60% of USD750b capex over the next four years

FY09E

FY10E

FY11E

We expect capital expenditure of roughly USD750b to translate into USD550b of credit demand, which translates into a 25% CAGR for the corporate loan book of all scheduled commercial banks.

Kai

(1NR Oman GDP at constant prices (LHS) 30 -- Growth in capital depreciation (RI-IS) 25 20 15 10 -

NDP at constant prices (LHS) 8 Capital depredation shows a downtick indicating the possibility of an impending capital expenditure cycle

-5 -4 3 2

1990

1992

1994

1996

1998

2000

2002

2004

2006

Sources: CMIE; BNP Paribas estimates

The difference between GDP and NDP can be used as a proxy for impending capital expenditure. In the past, every growth downtick has been followed by another capex cycle lasting three to four years. The downtick in 2007 further points to the onset of a new capex cycle. Strong growth in corporate revenue and decreasing debt ratios provide huge scope for future borrowing.

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INDIA FINANCIAL SERVICES

(lNR b) 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0

M Oil & gas · Financial services In Cement, construction & capital goods M IT

Consumer
Metal & mining · Utilities & telecom

Overall, the revenues for BSE500 companies increased at 22% from FY02 to FY07 with IT services, consumer and financial services expanded at 45%, 24% and 17%, respectively

FY02
Sources: Capitaine; CMIE

FY03

FY04

FY05

FY06

FY07

Robust growth in the corporate sector: At an aggregate level, BSE500 companies

(representing 85% of listed market capitalization) have increased their revenue at a fiveyear (FY02-07) CAGR of 22% led primarily by 45% growth in IT services and a 24% growth in the consumer sector.
Exhibit 9: BSE 500 Debt Equity Ratio Movement (%) 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 FY02
Sources: CMIE; BNP Paribas

-Oil & gas -Utilities

-Metal & mining -Consumer Capital goods Cement & construction Telecom

Almost all the sectors have debt-to-equity ratio of less than 80%, signifying scope for increasing leverage in future

FY03

FY04

FY05

FY06

FY07

The financials sector recorded revenue growth of 17%, receiving a big boost from relatively benign interest-rate conditions between FY04 and FY06.
Decreasing debt ratios offer tremendous scope for future borrowing: Backed by strong revenue growth, the leverage ratios of most of these sectors have improved dramatically over the past five years. The relatively low leverage ratios point to the growth potential of corporate credit in the banking sector.

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INDIA FINANCIAL SERVICES

10: Corporate Loan Composition (1NR b) Consumer (LHS) Cement, construction & capital goods (LHS) Metal & mining (LHS) IT & other services (LHS) MIMI Utilities (LHS) MIN Oil & gas (LHS) Consumer growth (RHS) --Cement, construction & capital goods growth (RHS) Metal & mining growth (RHS) - IT & other services growth (RHS) Utilities growth (RHS) -Oil & gas growth (RHS
UM

(%)

Loan book has shown a growth of above 20% for all the sectors

2000
Sources:CMIE:BNP Paribas

2001

2002

2003

2004

2005

2006

The infrastructure sector has seen the highest loan book growth, with credit outstanding for construction and utilities sectors growing at 52% and 32%, respectively, over the past five years. The consumer sector, which includes FMCG (fast moving consumer goods), retail, tourism and media continues to have the biggest loan book among all sectors and is growing at healthy five-year (FY02-07) CAGR of 17%. To sum up, the impending capex cycle, particularly for the infrastructure sector, and high loan book growth for consumer-driven sectors add up to an impressive corporate credit growth picture.

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INDIA FINANCIAL SERVICES

INVESTMENT THESIS: RETAIL SECTOR SCENARIO

Demographics and low penetration ratios to propel retail credit growth
The current slowdown in consumer credit growth notwithstanding, we expect India's retail credit to grow in the high teens over the next five years, given the arrival of a demographic 'sweet spot', huge latent demand for financial products and services, and high potential for personal credit.

(Population m)

tiossi Age group 0-14 (LHS) Age group 15-34 (LHS) mom Age group 35-60 (LHS) Age above 60 (LHS) -- Annual household income below INR0.1m (RHS) --·-- Annual Household income of INR0.1-2m (RHS)

(Population m)

'

- 800 600 - 500 - 400 - 300 - 200 - 100 0

.- orking class (age 15W 60) population at 60% and spending middle class at 48% of total population by 2011 put consumer credit on a very robust growth platform

1991
Sources: Mospi; BNP Paribas estimates

2001

2011E

The burgeoning consumption class: Since the economic liberalization of 1991, the Indian middle class with household income of INR100,000-500,000 has grown at a 4.3% CAGR compared to overall population growth of about 1.3%. The increasing proportion of young people in the workforce was the primary driver. This sweet spot is here to stay for a long time: Based on our estimates, the working population of India (15-60 age group) is expected to constitute 60% of India's population by 2011, of which 56% will belong to the high-spending 15-35 age group. The middle class with household income of INR100,000 to INR2m should grow to 48% of the total population by 2011 from 27% in 2001. Increasing disposable incomes driving spending propensity: Indian consumption patterns have changed drastically in the last few years, with a dramatic shift in spending from consumer staples to more income-elastic goods and services.
Exhibit 12: Savings To GDP Ratio (%) 4.50 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 1990 1992 -- Currency holding -- Shares and debentures -- Provident and pension funds ----... ,X Increasing proportion of savings being directed towards non-bank deposit financial products

Sources: CMIE, BNP Paribas

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INDIA FINANCIAL SERVICES

Demand for credit driven by low penetration ratios
Exhibit 13: Financial Services Penetration (%) 300 250 200 150 100 50 Retail loans to Mutual Fund Home loan to Personal loans Insurance Credit card GDP AUM to GDP GDP to GDP premium outstanding to written to GDP GDP
Sources: CEIC data; BNP Paribas estimates/

mill

Korea (LHS) Malaysia (LHS)

US (LHS) -India (RHS)
ma

Consumer credit to GDP ratio is 13% for India compared to 250% for Korea and 200% for Taiwan

Large latent demand for personal credit: Both in terms of banking services' reach and utilization, India lags far behind its Asian peers. Though the consumption demand is growing, India has a long way to go to match other developing economies in terms of consumer credit, mortgages, assets under management and insurance penetration, signifying a huge latent demand.

As is evident from the chart, India has a very low personal debt level. This combined with favorable demographics and growing income levels will increase the latent demand for financial services and products, in our opinion.

Extti . (USD/capita) 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0

-pita Penetration Ratios
min

US (LHS)

amm Korea (LHS) MIN Taiwan (LHS) (USD/capita) - 90 - 80 - 70 - 60 - 50 - 40 - 30 - 20 - 10 0'

/Consumer credit per capita is USD4 for India compared to USD60,000 for US and USD45,000 for Korea, Credit card loan per capita is just USD4. One bank branch per 1,600 people compared to one for every 400 for Taiwan and 320 for US

Credit per capita

Mortgage per capita Insurance premium Credit card per capita per capita

Sources: CEIC; BNP Paribas estimates

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INDIA FINANCIAL SERVICES

Retail credit has been showing aggressive growth led by the private sector
7.7T;

(INR t) 8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00 2000 2001 2002 2003 2004 2005 2006

(- olumn 1: Corporate C Column 2: Rural/SME Column 3: Retail Retail loans have grown at five-year CAGR of 41% compared to 21% and 17% for corporate and rural/SME respectively

-----------I-- Private-sector banks

have improved their market share in the retail segment to 30% in 2006 from 10')/0 in 2001

Sources: CMIE; BNP Paribas

Retail loans driving the bulk of the growth over the last five years: Retail loans

have doubled their share in the overall loan book over the last five years from 12.5% in 2001 to 25% at the end of 2006.
Huge growth in the private sector market share: Private-sector banks have

increased their presence hugely in the retail sector.
bit 16: Break Down Of Retail Advances (INR b) Home loan (LHS) Personal loan (LHS) WM Car loan (LHS) M Two wheeler loan (LHS) Mil Credit card 1111/211 Consumer durable Average retail loan size per account (RHS) -- Average housing loan size per account (RHS) Other retail loans average size per account (RHS
UM

Half of the growth has come from increase in ticket sizes. Growth in ticket sizes Home loans: 32% Other retail loans: 20%

Growth CAGR 2002-07 Home loans: 51% Personal loan: 39% Credit Cards: 45% Car loans: 20% Two-wheeler loans: 25% 2001 2002 2003 2004 2005 2006 2007E

Sources: CMIE/BNP Paribas estimates

Home loans, credit cards and personal loans leading within the retail loan book

While half of the 40% growth in the retail sector has been driven by increasing reach of financial services, the other half has come from the growth in average loan-ticket size (for example, home loans due to ballooning asset prices).

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Higher interest costs led the relative slowdown in FY07, FY08: With a tight monetary regime in FY07 and FY08 and rising assets prices (housing sector, in particular) retail credit saw a slowdown in 2007, with an estimated growth rate of 25%.

(INR m) 9.00 8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00 Jan-03

It Affordability

Mean home price Mean home prices are moving beyond average affordability

Jul-03

Jan-04

Jul-04

Jan-05

Jul-05

Jan-06

Jul-06

Jan-07

Source: BNP Paribas estimates

Growing market share for private-sector banks: Private-sector banks improved their market share to 26% and 35% for home loans and other personal loans, respectively, in 2006 from 7% and 14% in 2003. We expect private-sector banks to continue to improve their market share and hence expand at a rate higher than the sector average. Outlook for the medium term: We expect the overall retail loan book to expand at lowto mid-teen levels over the next two to three years with about 8% growth in home loans. We expect personal loans and credit card spends to grow at more than 20% in the same period. Overall, we expect a 12% growth in retail credit. In summary, we expect the loan books for the banking system to be driven more by the growth in corporate loan book and to a lesser extent by the expansion in retail loans.

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INVESTMENT THESIS: SECTOR DYNAMICS

A consolidation wave on the horizon
We believe the stage is set for a consolidation wave in the Indian banking sector. There are a large number of banks on a strong long-term growth footing with capacity for inorganic growth. To grow the low cost CASA deposit base, there is a growing need to increase branch presence beyond the organic limits set by the Reserve Bank of India (RBI). Also, capital-adequacy norms and growth compulsions will compel smaller banks to look for fresh equity infusion through stake sales, mergers, rights offers and private placements. Indian scheduled commercial banks (SCBs) have expanded at a furious pace since the opening up of the Indian economy in 1991. The combined loans and deposits of SCBs grew by 21% y-y and 19% y-y, respectively, from 1991 to 2007.
,2641..T

(INR t) 30 25 20 15 10 5

a Public banks sector Li Private banks sector a Foreign banks sector

Column 1: Credit Column 2: Deposit Credit growth of 25% and deposit growth of 20% from 2002-07

CO

CO

Sources: CMIE; BNP Paribas

Relative growth in loan book -- private sector took the lead: While public-sector banks have increased their loan books by 25% over the past five years, private-sector banks have risen at 30%, accounting for 20.6% of banking loan assets in 200T
Exhibit 19: Credit Deposit Ratio Move' (%) 135 120 105 90 ratio has grown to 72% from 58% in 2002 - 10 60 45 1991 1993 Overall (LHS) Private sector (LHS) -Public sector growth (RHS) -Foreign banks growth (RI-IS)
BMW

Pm

Public sector (LHS) Foreign banks -Private sector growth (RHS)

Private sector and foreign banks expanding loan books furiously at the margin

Overall credit-to-deposit

Sources CMIE; BNP Paribas

Private and foreign banks fast catching up in deposit share: The deposit base of public-sector banks has grown by just 19% compared to a five year CAGR of 26% for bath private sector and foreign banks.

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Historically, public-sector banks have dominated the sector with sheer branch presence. In the future, we expect private-sector banks to continue increasing their market share given their aggressive strategies for both branch expansion and credit growth.


(%)

-- Blended cost of deposits: overall (LHS) Blended cost of deposits: public (LHS) Blended cost of deposits: private (LHS) -- Blended cost of deposits: foreign (LHS) -- CASA ratio: overall (RHS) =WNW CASA ratio: public (RHS) -- CASA ratio: private (RHS) -- CASA ratio: foreign (RHS)

( %)

7-- Blended cost of deposits and CASA ratio have inverse correlation as is evident in the mirror image formation. Private banks with highest CASA ratio have lowest deposit costs

2004



2005



2006



2007

Sources: CMIE; BNP Paribas

On the deposit side, current and savings account deposits (CASA) are very important for maintaining competitive net interest margins (NIMs). As the chart shows, blended cost of deposits decreases when the CASA proportion increases. We believe the need to increase CASA deposits through branch network expansion will be critical for both private and public-sector banks. CASA deposits are the cheapest source of funding for all SCBs with costs of 2-4% compared to 10-13% for term deposits and 5-15% for other borrowings.

With the credit deposit ratio touching efficient frontier, SCBs will need to look out for inorganic growth
i.
t' ".4Mtlp9tFAV"

qtfse

Liabilities (USD b) Borrowings from the banking system (%) Deposits (%) Other borrowings (%)
Sources: RBI; BNP Paribas

880 Assets (USD b)

880
7.8 2.5 27.5 62.2

2.5 Cash and balances with RBI (%) 86.0 Assets with banking system (%) 11.5 Investments (%) Bank credit (%)

7Considering a base of 86% as deposits, effective cash reserve ratio is at 9% and statutory investments are at 32%, compared to 7.5% and 25%, respectively, stipulated by RBI

Indian banks are subject to regulatory reserve requirements with 1) CRR (cash reserve ratio), which requires them to maintain 7.5% of their net demand and time liabilities (NDTL) with the RBI in interest-free balances; and 2) SLR (statutory liquidity ratio), wherein they have to invest a minimum of 25% of their NDTL in government treasury and other approved securities. There is little room for further improvements in the existing credit-to-deposit ratio of 72.5%, assuming that the central bank is not likely to relax the SLR requirements in the near term. Hence, the key drivers to balance sheet growth should come from increasing the deposit base by increasing branch presence and hence expanding the low-cost CASA base faster than competition. Basel II norms also stipulate total capital-adequacy ratio of 12% for all scheduled commercial banks with tier-1 capital (consisting primarily of equity) and tier-2 capital (consisting primarily of subordinated debt) requirements of 7.5% and 4.5%, respectively.

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This should make the smaller banks with adequacy ratios on the borderline look out for fresh equity infusion.

Sector composition throws up sufficient opportunities for consolidation, given a plethora of small and undervalued banks

71,
FY09E P/B (x) 5.5 5.0 4.5 4.03.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 0 0

(-- host of small banks A particularly in the public sector with high CASA mix and low P/BV ratios allow for consolidation opportunities (Bubble size indicates market cap)

10

20

30

40

50

60

70

CASA to total deposit ratio (%) Sources: CMIE; BNP Paribas

Good opportunity to cherry-pick probable acquisition targets: There are around 2025 small banks with CASA ratios higher than 30% and FY09E P/BV multiples of less than 2x.
Public-sector banks have historically enjoyed greater reach with significant presence across different regions of the country. Also, public-sector banks now command lower valuation multiples than their private counterparts. This throws up significant opportunities for larger banks to increase their reach by mergers or acquisitions with smaller regional players with complementary geographic presence. State Bank of India (SBI), the largest bank in India, is already in talks with its seven listed subsidiaries for merging into a single entity, which would give them the largest scale by far in the sector. Given labor union opposition, this merger may move forward very slowly, but highlights the imperative of CASA scale in the banking sector. Another example of this wave from the private sector -- the boards of HDFC Bank and Centurion Bank of Punjab very recently approved the merger of the two. The share swap-based merger will enable HDFC Bank move up the ladder in terms of asset size and geographical presence.

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cy And PIBV Ratio
FY09E P/BV (x) 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 11 10
Sources: CMIE; BNP Paribas

st Private sector

· Public sector

0

Banks with CAR lower or around the stipulated 12% would need to look for fresh equity infusion through stake sales, mergers, rights issues and QIPs

12

13

14 15 16 Capital adequacy ratio (%)

17

18

19

20

Significant possibility of stake sales, rights issues mergers and private placements in the sector: With double-digit growth in asset sizes, a lot of banks with capital adequacy ratios (CAR) of around 12% will need to raise fresh equity to comply with Basel II requirements. We expect lot of stake sales, mergers, private placements and rights offers in the sector. The sector has already witnessed many rights issues and placements in last two years.
Exhibit 24: Possible Picks Under he Consolidation Theme
FY09E P/BV (x) 3.00 - · Dena Bank · Central Bank of India 2.70 2.40 - · Corporation Bank 0Syndicate Bank 2.10 ·1 N G Vysya Bank 1.80 Allahabad Bank 1.50 1.20 0.90 0.60 0.30 0.00 11.25 11 00 11.50 · Bank Of India ·Andhra Bank 0 Vijaya Bank O tico Bank o Dhanalakshmi Bank Bank Of Maharashtra 43 Some possible ideas based on FY09E P/BV and capital adequacy needs. Figures on bubbles indicate market cap in INR billion

11.75 12.00 12.25 Capital adequacy ratio (%)

12.50

12.75

13.00

Sources: CMIE; BNP Paribas

We have listed a few names that might need to look for fresh equity in near future based on capital adequacy needs, and are attractively priced based on estimated FY09 book value. Which Indian banks will likely pass a Warren Buffet investment screen? We ran a stock screen with parameters which may be emphasized by a long-term investor, purportedly used by the sage himself! The attributes of our screen are as follows - run sequentially. · · · · · Cash profits greater than INR2b (USD50m). Net profit margin of at least 10% in each of the past three years. RONW greater than 10% in each of the past three years. Market capitalization of at least INR20b (USD500m). FY09 P/BV less than 2x.

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The following banks pass the screen.
Exhibit 25: Banks Clearing The Buffet Screener Company Name Cash PATM >10% RONW>10% profits for last 3 yrs for last 3 yrs (INR b) 8.2 Yes Yes 17.0 Yes Yes 6.7 Yes Yes 5.3 Yes Yes 17.5 Yes Yes 15.0 Yes Yes 2.1 Yes Yes 9.7 Yes Yes 2.0 Yes Yes Mkt cap (INR b) 44.3 96.5 40.8 42.2 164.6 79.3 21.2 69.9 29.3 P/BV (FY09) (x) 0.67 0.77 0.96 1.02 1.15 1.21 1.26 1.44 1.62 Relatively more value picks amongst the public sector banks

Allahabad Bank Canara Bank Andhra Bank Corporation Bank Punjab National Bank Indian Overseas Bank Karur Vysya Bank Ltd. Indian Bank Karnataka Bank Ltd.
Sources:CMIE:BNP Paribas

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.Y.erse Snapshot For India
Fee

Company Allahabad Bank Canara Bank Andhra Bank Corporation Bank Punjab National Bank Indian Overseas Bank Karur Vysya Bank Indian Bank Karnataka Bank State Bank of Mysore Kotak Mahindra Bank Axis Bank HDFCBank State Bank of India ICICIBank Bank of Baroda Bank of India Union Bank of India Syndicate Bank IDBI Oriental Bank of Commerce State Bank of Bikaner & Jaipur Bank of Maharashtra Central Bank of India State Bank of Travancore Uco Bank Vijaya Bank Federal Bank Ltd. Jammu & Kashmir Bank Centurion Bank of Punjab Dena Bank IN G Vysya Bank Indusind Bank South Indian Bank Bank of Rajasthan Yes Bank City Union Bank Development Credit Bank Dhanalakshmi Bank Lakshmi Vitas Bank
Sources: CMIE; BNP Paribas

PATM Cash >10% for profits last 3 yrs (INR b)
l713

RONW
>10% for last 3 yrs Mkt cap (1NR b)

Capital P/BV adequacy (FY09) ratio
(x) ) (%) 12.8
13.7

CASA to income to total total
deposit (%) 38.0 31.5 34.5
34.2

income ( %) 5.8 4.4 5.1 4.9
7.2

NPM RONW FY07 FY07
( %) 11 10 14 14 18 10 15 10 15 14 12 11 10 11 11 10 16 15 12 6 12 14 12 34 10 9 9 8 8 7 6 6 4 10 13 13 17
2

1377
_I 93 112

171 1
2 1

ft.-1 I

15

1 21
1 22

12.0 12.1 14.0 12.9 15.1 13.5 13.1 11.5 18.4 16.9 13.8
12.3

( %) 15 17 14 16 26 28 18 21
27

46.1 34.5
27.7

5.9 9.4
3.2

57
2 I)

199

1 44
1 32 2.31

35.4
23.4 32.0 30.2

5.9 11.4
33.6

(31
121

Yei
999

233.7
7 2,2 2

2.91 2.91
3.27

11 16 20 12 14 20 18 17 16 15 11 24 19 20 28 6 16 10 5 11 10 10 8 -1 15
27

39.9
57.7 42.7 23.7 33.4 32.2

5733 3799
14.1 135

1
799

739
4.'; 44

4.1 3.7 1 7 9.5 3.1 2.3 2.1 1.8 1.4 1.3 1.3 1.0 0.9 0.3 0.3 0.3

No No No No No No No No No No No No No No No No No No No No No No No Yes No No No

No No No No No No No No No No No No No No No No No No No No No No No Yes No No No

973.0 1,051.4 112.8 150.0 76.8 45.2 74.0 62.6
27.0

1.75 1.86 0.93 1.42 0.99 0.83
1.27

15.8 13.5 12.5 13.0 12.0
13.3 12.7

14.1 16.1 10.8 16.6 5.0 5.8
3.3 3.3

34.5 30.6 25.4
30.3

0.74 1.53 0.95 0.70 1.57 0.84 0.86 1_11 1.10 3.48
1.27 2.25

3.9 5.4 12.9 5.5 4.8 8.6 3.5
2.2

21.6 31.6
26.3

45.2 24.8 47.9 34.1
83.2

14.4 12.8 11.6 13.0 11.6
12.2

35.0
43.2

43.5
28.3 29.2

30.8
25.2 37.0

17.4
33.3

13.1 13.8 11.5 11.3
12.3

5.4 4.4
21.3

35.5 15.2 15.4 60.1 9.1 15.5 1.9 4.8

3.08 0.98 4.48 2.80
1.22

12.0 14.9 12.9 14.2 14.0
13.7

30.6 44.5 28.9 14.9
23.9

5.3 11.4 9.2
2.3

31.8 5.8
24.3 28.3

5.3 15.0
3.3 13.7

14
22

1.95 1.21 1.40

9.9 14.0

28.4
22.0

3.5 7.4

6 4

-3 11 5

Valuations look attractive across the board after the recent market correction.

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INVESTMENT THESIS: MONETARY POLICY

Our interest rate outlook
In a pre-election year we expect the central bank will worry as much if not more about inflation control than maintaining or fuelling growth. Given the trade-off between inflation control, growth imperatives and rising interest-rate differential with the US, we believe the central bank will ease policy rates gradually over the next few quarters. Oil prices in India are regulated and the rapid increase in global oil prices has not filtered through to the end customer. Hence the published inflation indices do not portray a true picture. This implies a good chance that the RBI will maintain policy rates at current levels as far as inflation is concerned. On the other hand, the interest-rate gap is widening between India and the US, especially after the 125bp rate cut by the US Fed over the past couple of months.
Exhibit 27:', (%) 40 35 -30 25 20 15 10 5 0 Mar-02 Jan-03 Nov-03 Sep-04 Jul-05 May-06 Mar-07 -3 -2 1 0 Jan 08
7 .1#Zirt t

-WPI growth (LHS) -Bank credit growth (LHS) -Cash reserve ratio (RHS)

"M3 growth (U-IS) --Repo rate (RHS) -Fed fund rate (RHS)

A (.-

bout of monetary tightening in recent times through repo-rate and CRR hikes have moderated M3 growth and credit growth from the 30% levels to the early 20% levels

Sources: CMIE; RBI; US Fed; BNP Paribas

Ex .1

37-Fe--","74:7

n

est Rate Differential And Foreign Inflows -FDI inflows (LHS) -Repo rate (RHS) Net Fll inflows (LHS) --Fed fund rate (RHS) (%) Growing differential with \ US Fed rates have resulted in huge spikes in both FDI and Fll investments in last few years

(INR b) 300 250 200 150 100 50 0 (50) (100) (150) Mar-01

Jul-02

Nov-03

Mar-05

Jul-06

Nov-07

Sources: RBI; CMIE; DGFT; BNP Paribas

We believe the central bank will gradually ease the policy rates by approximately 50bp to lower the 'arbitrage incentive' in light of the expanding interest rate differential with the US.

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Margins tend to widen in a falling interest-rate environment
Lending rates are typically sticky on the way down and so we expect margin expansion in a falling interest rate environment. Also RBI norms permitting, increasing rate differential between India and the US makes external commercial borrowings very attractive for larger banks.

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INVESTMENT THESIS: ASSET QUALITY

Asset quality is not a cause for concern
We believe the asset quality of Indian banks is fairly strong. As illustrated below, Indian banks have reduced the proportion of non-performing assets in their books dramatically over the last few years.
Of NO Performing Assets (NPAs) (INR b) NPAs of all scheduled commercial banks (LHS) NPAs of public banks sector (LHS) NPAs of private banks sector (LHS) S NPAs of foreign banks in India (LHS) -- NPA ratio for all SCBs (RHS) NPA ratio for public banks sector (RHS) -- NPA ratio for Private banks sector (RHS) NPA ratio for foreign banks sector (RHS)
111111111



(%)

800 700 600 500 400 300 200 100 0 2000

- 16 - 14 - 12 - 10

Overall NPAs to outstanding advances ratio has come down to 13% in 2006 from 12.8% in 2000. The ratio is 2.4% for private banks sector

2001



2002



2003



2004



2005



2006

Sources: CMIE; BNP Paribas

At an aggregate level, the non-performing assets have declined in absolute terms since 2002. Loan-loss assets account for even lower proportion of advances: In terms of breakup of NPAs, substandard assets, doubtful assets and loan-loss assets account for 0.95%, 1.95% and 0.45%, respectively.
144kitil r7,1-Y;
D4L1 jqt:'; %

Possible 1.5-2 year cycle in asset restructuring

70 60 50 40 30 20 10 0 2001
Sources: CMIE: BNP Paribas

----Loan growth: overall (LHS) -- Loan growth: public sector (LHS) Loan growth: private sector (LHS) Loan loss asset growth: overall (RHS) --Loan loss asset growth: public sector (RHS) -- Loan loss asset growth: private sector (RHS)

(%) .-Growth in loan loss assets has tapered off in last few years while loan - 250 growth has been robust 200 indicating -- either high quality marginal lending or likely rise in NPAs as the book ages 100 - 50 -0 (50)

2002

2003

2004

2005

2006

Private-sector banks have been growing with better risk-management processes and will likely maintain NPA levels of about 2%. However, with exposure to noncollateralized lending increasing over time, the ratio could move up marginally.

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Exposure of the Indian banking sector to global credit meltdown
The Indian banking sector is relatively immune to the deteriorating global credit situation, with only a tiny percentage of banks exposed the sub-prime retail credit situation in the US. Any exposure is largely indirect, through an investment book that consists of collateralized debt obligations (CDO), credit linked notes (CLN) and other fixed-income instruments. Underlying credit for credit derivatives largely consists of Indian companies who have borrowed abroad. Indian banks have written credit wraps/guarantees for these companies and, with credit spreads widening over the past few months, these credit instruments have suffered a loss in value and hence the need to record mark-to-market losses, as is evident in the recent mark downs announced by ICICI Bank. We believe there will be more mark downs likely in the future. Though it is too early to ascertain the full impact of this, from the data available so far, these mark downs are more likely near-term effects and the underlying portfolio is good.

Impact of the loan waiver announced in the recent budget
In the recent budget announced on 29 February 2008, the finance minister announced a loan waiver package to the tune of INR600bn. The package will apply to all the agriculture loans made up until March 2007 and due as of December 2007. Of this total waiver package, we estimate that the loan exposure of scheduled commercial banks to be INR120bn and the rest being shared by cooperative banks and regional rural banks (there are approximately 100 cooperative and regional rural banks in India currently). We estimate the total agriculture credit by Indian banks to be about 1NR2321bn (approximately 12% of the total bank credit). Approximately 26% of this credit is being waived by the government. Looking a level below, we believe a bulk of this credit is coming from the regional rural and cooperative banks, about INR480bn. The share of scheduled commercial banks in this loan waiver is about INR120bn or approximately 7% of their outstanding agriculture credit, or approximately 0.6% of their aggregate credit book. However, there are strong indications that the banks will be compensated by the government for these loan waivers. If the government does not compensate the banks adequately for these waivers, then we believe the public sector banks are relatively disadvantaged as compared with private-sector banks. The bigger risk in our view is the likely trend that will begin to crystallize from such 'election year' antics. It will be naïve to imagine that subsequent governments that come to power in India will not resort to similar 'electioneering'.

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APPENDIX 1

Devil's advocate: Investment Risks
Key risks to our investment thesis are:
1) In the near term, the central bank could maintain status quo about interest rates due to inflation concerns. But we see more chances of a rate cut than a status quo. 2) Global credit headwinds are making their way into the Indian banking sector through mark downs on the investment book. While we believe this is a near term effect and could be reversed when the credit spreads tighten, we expect more such mark downs in the near to medium term given the volatility persistence in the global credit markets. Consolidation amongst the public-sector banks is likely to proceed more slowly or delayed beyond reasonable expectations due to resistance from the employee unions and resistance from the individual bank managements. Indian banks are mandated by the Indian government to direct approximately 1820% of their loan book to 'priority' sectors, a part of which is agricultural loans. The government can mandate the banking system to write-off these loans, which could hamper their profitability if not compensated for by the government. Public-sector banks in India are prone to work strikes by employee unions demanding wage increases, which could hamper productivity and increase operational costs.

3)

4)

5)

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India Research Team
Praveen Chakravarty
Head of India Research BNP Paribas India Solutions Pvt Ltd (91 22) 6650 1696 [email protected]

Preeti Dubey,

CFA

Karan Gupta
Metals & Mining (Associate) BNP Paribas India Solutions Pvt Ltd (91 22) 6650 1662 [email protected]

Metals & Mining BNP Paribas India Solutions Pvt Ltd (91 22) 6650 1671 [email protected]

Vishal Sharma
Infrastructure - E&C BNP Paribas India Solutions Pvt Ltd (91 22) 6650 1672 [email protected]

Shashank Abhisheik
Infrastructure - E&C (Associate) BNP Paribas India Solutions Pvt Ltd (91 22) 6650 1673 [email protected]

Sandeep Mathew
Real Estate BNP Paribas India Solutions Pvt Ltd (91 22)6650 1665 [email protected]

Avneesh Sukhija
Real Estate (Associate) BNP Paribas India Solutions Pvt Ltd (91 22) 6650 1667 [email protected]

Lakshminarayana Garai
Capital Goods/Cement BNP Paribas India Solutions Pvt Ltd (91 22)6650 1676 [email protected]

Charanjit Singh
Capital Goods/Cement (Associate) BNP Paribas India Solutions Pvt Ltd (91 22) 6650 1686 [email protected]

Girish Nair
Utilities BNP Paribas India Solutions Pvt Ltd (91 22) 6650 1679 [email protected]

Sriram Somayajula
Utilities (Associate) BNP Paribas India Solutions Pvt Ltd (91 22) 6650 1670 [email protected]

Amit Shah
Oil & Gas

BNP Paribas India Solutions Pvt Ltd (91 22) 6650 1664 [email protected]

Alok Deshpande
Oil & Gas (Associate) BNP Paribas India Solutions Pvt Ltd (91 22) 6650 1663 [email protected]

Abhiram Eleswarapu
Tech - IT BNP Paribas India Solutions Pvt Ltd (91 22)6650 1684 [email protected]

Avinash Singh
Tech - IT (Associate) BNP Paribas India Solutions Pvt Ltd (91 22) 6650 1685 [email protected]

Sameer Naringrekar
Tech - Telecom BNP Paribas India Solutions Pvt Ltd (91 22) 6650 1674 [email protected]

Kunal Vora
Tech - Telecom (Associate) BNP Paribas India Solutions Pvt Ltd (91 22)6650 1675 [email protected]

Vijay Sarathi, CFA
Financial Services BNP Paribas India Solutions Pvt Ltd (91 22) 6650 1677 [email protected]

Abhishek Bhattacharya
Financial Services (Associate) BNP Paribas India Solutions Pvt Ltd (91 22) 6650 1678 [email protected]

Joseph George
Consumer BNP Paribas India Solutions Pvt Ltd (91 22) 6650 1669 [email protected]

Manish Gupta
Consumer (Associate) BHP Paribas India Solutions Pvt Ltd (91 22) 6650 1668 [email protected]

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Case 3:07-cv-06198-MHP
VIJAY SARATHI

Document 54-3

Filed 07/10/2008

Page 32 of 34
13 MARCH 2008

INDIA FINANCIAL SERVICES

NOTES

26

BNP PARIBAS

Case 3:07-cv-06198-MHP
VIJAY SARATHI

Document 54-3

Filed 07/10/2008

Page 33 of 34
13 MARCH 2008

INDIA FINANCIAL SERVICES

DISCLAIMERS & DISCLOSURES
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This report was produced by a member company of the BNP Paribas Group ("Group"). This report is for the use of intended recipients only and may not be reproduced (in whole or in part) or delivered or transmitted to any other person without our prior written consent. By accepting this report, the recipient agrees to be bound by the terms and limitations set out herein. The information contained in this report has been obtained from public sources believed to be reliable and the opinions contained herein are expressions of belief based on such information. No representation or warranty, express or implied, is made that such information or opinions is accurate, complete or verified and it should not be relied upon as such. This report does not constitute a prospectus or other offering document or an offer or solicitation to buy or sell any securities or other investments. Information and opinions contained in this report are published for reference of the recipients and are not to be relied upon as authoritative or without the recipient's own independent verification or taken in substitution for the exercise of judgement by the recipient. All opinions contained herein constitute the views of the analyst(s) named in this report, they are subject to change without notice and are not intended to provide the sole basis of any evaluation of the subject securities and companies mentioned in this report. Any reference to past performance should not be taken as an indication of future performance. No member company of the Group accepts any liability whatsoever for any direct or consequential loss arising from any use of the materials contained in this report. The analyst(s) named in this report certifies that (i) all views expressed in this report accurately reflect the personal views of the analyst(s) with regard to any and all of the subject securities and companies mentioned in this report and (ii) no part of the compensation of the analyst(s) was, is, or will be, directly or indirectly, related to the specific recommendation or views expressed herein. This report is prepared for professional investors and is being distributed in Hong Kong by BNP Paribas Securities (Asia) Limited to persons whose business involves the acquisition, disposal or holding of securities, whether as principal or agent. BNP Paribas Securities (Asia) Limited, a subsidiary of BNP Paribas, is regulated by the Securities and Futures Commission for the conduct of dealing in securities and advising on securities. This report is being distributed in the United Kingdom by BNP Paribas London Branch to persons who are not private customers as defined under U.K. securities regulations. BNP Paribas London Branch, a branch of BNP Paribas, is regulated by the Financial Services Authority for the conduct of its designated investment business in the U.K. This report is being distributed in the United States by BNP Paribas Securities Corporation to U.S. Persons as defined under U.S. securities regulations or by a member of the Group that is not registered as a U.S. broker-dealer to major U.S. institutional investors. BNP Paribas Securities Corporation, a subsidiary of BNP Paribas, is a broker-dealer registered with the Securities and Exchange Commission. BNP Paribas Securities Corporation accepts responsibility for the contents of this report only where the report has been distributed by it to U.S. recipients. Distribution or publication of this report in any other places to persons which are not permitted under the applicable laws or regulations of such places is strictly prohibited.

Recommendation structure
All share prices are as at market close on 7 March 2008 unless otherwise stated. Stock recommendations are based on absolute upside (downside), which we define as (target price* - current price)! current price. If the upside is 10% or more, the recommendation is BUY. If the downside is 10% or more, the recommendation is REDUCE. For stocks where the upside or downside is less than 10%, the recommendation is HOLD. In addition, we have key buy and key sell lists in each market, which are our most commercial and/or actionable BUY and REDUCE calls and are limited to at most five key buys and five key sells in each market at any point in time. Unless otherwise specified, these recommendations are set with a 12-month horizon. Thus, ills possible that future price volatility may cause a temporary mismatch between upside/downside for a stock based on market price and the formal recommendation. *In most cases, the target price will equal the analyst's assessment of the current fair value of the stock. However, if the analyst doesn't think the market will reassess the stock over the specified time horizon due to a lack of events or catalysts, then the target price may differ from fair value. In most cases, therefore, our recommendation is an assessment of the mismatch between current market price and our assessment of current fair value. Sector recommendations are based on: OVERWEIGHT -- Sector coverage universe fundamentals are improving. NEUTRAL -- Sector coverage universe fundamentals are steady, neither improving nor deteriorating. UNDERWEIGHT -- Sector coverage universe fundamentals are deteriorating. © 2008 BNP Paribas Group

27

BNP PARIBAS

Case 3:07-cv-06198-MHP

Document 54-3

Filed 07/10/2008

Page 34 of 34

'HONG KONG BNP Paribas Securities (Asia) Ltd 63/F, Two International Finance Centre 8 Finance Street, Central Hong Kong SAR China Tel (852)2825 1888 Fix (652)2845 0411

BEIJING BNP Paribas Equities (Asia) Ltd Beijing-Representation Office Unit 1818, South Tower Beijing Keep Centre 1 quoit Hu g Road, Chao Yang Dis id Be!ling 100020. China Tel (86 10) 5563 1118 Falk (85 10) 5561 2228

SI-IA NG HAI BNP Paribas Bet Shanghai Reefer Rodin 5605-08 F ·.t. 1265 Nanjing Xi HI Shang hai 20004. China Tel (86 21) 6289 Fan 18621) 628E SINGAPORE BINIP Pant · (Si05 440r t Fs, I t1 (Co Reg E. 1 · 20 Collye, #08-01 T1,1,, Sir9PO rE · Tel (65)6 L Fax (55) FRANKFURT :·SNPParit ; mainzer Lam:fairs , . 06325 Frankfurt Germany 're! (49 60)7153 663 Fax (49 69) 7193 2520

BANGKOK In cnaPeration with BNP Paribas) frianachart Securitles Parbftp Co Lid 83/F. Unit At Siam Tower Building in Rama 1 Road. Patumwan ,1793606 10330 -holland Tel (66 2) 917 4000 cax 166 2)653 1470 TAIPEI = 11 nbas Securities · 1, 91(Co Ltd -2crom 302, 3/F i2 Min Shang East ad Sec. 4 -aipei 105 -.wort -el (886 2) 2175 700C1 00 (006 "4)2719 8530 GENEVA E3NP Paribas Place del-ki ll-and' 211 Geneva 11 2.,v9zerland Tel (41 22) 7877377 Fax (4122)7878020

JAKARTA

:KUALA LUMPUR.: SEOUL : BNp Paribas Capital (Malaysia) sdn. Bhd. BNp Panbas'Securities Korea CS Ltd :Suite 21.03 Level 21 MenaTa Dion 22/1°, TaePyeringno Building 27 Jalan Sultan 316 Taepveongn6 2-ga Jurig gir, Seoul 100-767 50250 Kuala Lumpur Malaysia z krIrep Tel (60 3) 2050 9928 Teti (62) 2125 6500 P98 (82 0593 Fax (60 3) P370 028

TOKYO sire

NEW YORK 13NP Paribas The Equitable Tower 787 Seventh Aven6e New York NY 10019. USA Tel (1 212)841 3800 Fax (1 212) 841 3810

BASEL BNP Paribas · . Aeschengraben 26 CH 4002 Basel . Swftzerland · "Tel (41 61) 276 5555 · . Fax (41 61) 276 5514

LONDON

LYON BNP Paribas Equities Fiance. Societe de Bourse 3 rue de L' Arbre See 69001 Lyon France Tel (334)7210 4001 Fax (33 4)72104029

, MADRID BNP Paribas SA, sucursal en Espana HermanOs Becouer 3 PO Box 50784 28006 Madrid Spain Tel (34 i) 745 9000 Fax (34 91) '456888

MAN Blip panbaS Equrties ttaNa SIM SPA Piazza San Fedele. 2 20121 Milan Italy Tel (39 02) 72 47 1 Fax (39 02) 72 47 6562

PARIS BNP Paribas Equities France Societe de Bourse ·-· : 20 boulevard pes

ZURiCH ONE Pm-I . Talstrass t 8022 Zureir Switzerland Tel (41 1)229 6 Fax (41 1)2671

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MANAMA BNP Paribas Bahrain PO Box 5253 Manama Bahrain Tel (973) 53 3978 Fax (973)53 1237

www.equities.bnpparibas.corn

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