CRISIL has assigned India's first Fund Governance and Process Quality rating (Fund House rating), to HDFC Asset Management Company Limited (HDFC AMC). CRISIL's Fund House rating service represents a breakthrough innovation: though several other evaluation products for mutual funds exist, these are overwhelmingly driven by quantitative dynamics, and are limited to scheme-specific analyses. CRISIL's Fund House ratings are the first to focus on larger issues, and offer a comprehensive view of an AMC.

According to Ms. Roopa Kudva, Executive Director and Chief Rating Officer, CRISIL, "CRISIL has been a pioneer in rating and ranking mutual funds in India. Our new product, Fund House ratings, complements our existing product range and provides a comprehensive framework to assess governance and process-related aspects in an asset management company (AMC). With significant qualitative insights, CRISIL's Fund House ratings provide investors and other stakeholders a powerful tool for assessing and evaluating fund houses."

Fund House ratings involve a detailed assessment of all aspects of an AMC's functioning: organisational structure and corporate governance; investment processes; risk management practices; operational processes and selling and client servicing practices. Fund house ratings will benefit investors, distributors and AMCs themselves. Investors and distributors can rely on these ratings to identify AMCs that follow the highest standards of corporate governance and process quality. This product is especially relevant in the current environment where a larger number of sophisticated investors are conscious of governance related issues and want to factor such qualitative assessments into their decision making process. AMCs too can use these ratings as external feedback on their strengths and weaknesses benchmarked to industry best practices.

According to Mr. Milind Barve, Managing Director, HDFC AMC, "In our pursuit of providing superior performance and customer service, it is our endeavour that we set for ourselves high standards of corporate governance. We believe that in the long run how we do business will go a long way in establishing the trust of our investors and distributors. CRISIL's unique service provides an unbiased and independent assessment of the qualitative factors that drive a fund house's performance".

CRISIL has rated HDFC AMC 'Fund House Level 1' under its Fund Governance and Process Quality rating (Fund House rating) product. This Fund House rating, the first announced by CRISIL, signifies that HDFC AMC has the highest governance levels and process quality in fund management practices. The rating reflects the strengths arising from the strong parentage of HDFC AMC (its promoters are HDFC Ltd. and Standard Life Investments), the stature and experience of the Boards of the AMC and Trustee Company, capable management team, well-defined investment philosophy and business processes, and an emphasis on compliance-related aspects.

HDFC AMC draws considerable strength from the HDFC brand, which gives it enormous visibility and credibility. The strong governance levels at the AMC reflect the fact that the boards of both the AMC and the Trustee Company have eminently reputed and experienced directors, with diversity of expertise. The representation of independent directors on both boards is adequate.

HDFC AMC is one of the few AMCs in India to have highly profitable operations. In addition, the skilled and experienced management team at HDFC AMC engenders superior fund management practices. The AMC has robust investment processes and policies and its schemes have been consistent performers. HDFC AMC has a strong selling and distribution infrastructure. Underlining these strengths in governance and process quality is the fact that the AMC espouses a strong sense of integrity and ethical behaviour among employees. HDFC AMC endeavours to cultivate the highest levels of investor trust, in line with the group philosophy at HDFC.

About the AMC
Promoted in 2000 by HDFC Limited (rated 'AAA/FAAA/Stable/P1+' by CRISIL) and Standard Life Investments, HDFC Mutual Fund is one of the leading mutual funds in India. HDFC AMC, which oversees the management of HDFC Mutual Fund, offers a full suite of mutual fund products and services; the assets managed by the AMC in Mutual Fund products were at Rs.188.65 billion as at September 30, 2005. In addition, the AMC is also registered as a Portfolio Manager and advises/manages assets of clients. The AMC reported a PAT of Rs. 316.1 million in FY2004-05. The PAT for the six months ended 30th September, 2005 (unaudited) was Rs. 209.40 million. The AMC has declared an interim dividend of 35 per cent in October 2005.