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Aditya Birla Nuvo LimitedMANAGEMENT DISCUSSION AND ANALYSISHowever, in the short term, the sector may foundthe macro-economic environment challenging forgrowing quality book on account of overall bearishsentiments, volatile stock markets and highinterest rates.ABFL aims at scaling up its book size cautiouslywhile managing risks optimally. LeveragingAditya Birla Group’s large ecosystem for SMEfunding will be a key focus area. Extension ofportfolio with entry in new arrays of products,strong parent brand and an experienced teamhaving seen more than two decades ofbusiness cycles will aid ABFL in reachingtowards its goal.Private Equity (Aditya Birla Private Equity)Industry OverviewGrowth momentum of Private Equity (“PE”)investments in India built during 2010 continuedin the calendar year 2011 too. During 2011, totalinvestments by the PE firms in India rose by24% to reach USD 10 billion (including VentureCapital investments and excluding PE investmentsin Real Estate) compared to USD 8 billion in theprevious calendar year. The number of PE dealsincreased from 362 deals in 2010 to over 441deals in 2011. This takes total investments by PEfirms in India to about USD 47 billion across morethan 2,000 transactions over the past five years(Source: Venture Intelligence).Performance ReviewAfter the successful launch of its first fund at asize of ` 881 Crore (including 20% sponsor’scommitment) in March 2010, Aditya Birla PrivateEquity (“ABPE”) launched its second fund calledSunrise Fund.Sunrise fund closed for subscription in March 2012at a size of ` 299 Crore (including 10% sponsor’scommitment) taking total funds undermanagement to ` 1,179 Crore.The first fund has already deployed about 50%of its total corpus in following companies:a) Anupam Industries – a leading manufacturerof industrial and construction cranes,b) Bombay Stock Exchange – the oldest stockexchange in Asia,c) Credit Analysis & Research Ltd. – a leadingcredit rating agency,d) GEI Industrial systems and its subsidiary - aleader in air-cooled heat exchangers andcondensers for more than 40 yearse) Alphion India Pvt. Ltd. - Gigabit passive opticalnetworking systems maker for nextgeneration broadband and mobile backhaulf) Trimax IT infrastructure and Services Ltd. -Systems Integration, IT InfrastructureManagement ServicesSunrise Fund has made one investment till datein SMS Paryavaran Ltd. which is into design andconstruction of Water and Waste-Water Treatmentsystems.Both the funds have strong pipeline of deals todeploy the balance of the fund corpus.Aditya Birla Capital Advisors Private Limited(“ABCAP”) provides the investment managementand advisory services to ABPE Trust, a venturecapital fund registered with SEBI. During2011-12, ABCAP posted revenue of ` 21 Croreand net profit of ` 4 Crore vis-a-vis ` 18 Croreand ` 4 Crore respectively in the previous year.OutlookIn the past six months, PE investments haveslowed down due to economic uncertainty andweak capital markets. However, according toVenture Intelligence, the large uninvested capitallying with PE funds and the increasingly attractivevaluations of Indian companies – including thelisted ones – signals to a turnaround in the comingfuture.Backed by its strong investment managementteam and salient parentage brand, Aditya BirlaPrivate Equity is well positioned to tap theopportunity offered by the private equityspace.Broking (Aditya Birla Money Limited)Industry OverviewThe Indian retail broking industry is highlyfragmented with the top ten players contributingto less than 20% of equity broking market size.The number of demat accounts in the countryshows the depth of equity penetration. Currentlythere are about 20 million demat accounts inIndia, which grew at a CAGR of 14% during thepast five years. However in 2011-12, industry hasseen the lowest demat account additions in pastfive years.MANAGEMENT DISCUSSION AND ANALYSISAnnual Report 2011-2012 25