18 March 2008
CRISIL IPO grade 4/5 assigned to the IPO of
UTI Asset Management Company Ltd.

CRISIL has assigned a CRISIL IPO Grade "4/5" (pronounced "four on five") to the proposed initial public offer of UTI Asset Management Company Ltd. (UTI AMC). This grade indicates that the fundamentals of the issue are above average relative to other listed equity securities in India. However, this grade is not an opinion on whether the issue price is appropriate in relation to the issue fundamentals. The offer price for the issue may be higher or lower than the level justified by its fundamentals. The grade is not a recommendation to buy / sell or hold the graded instrument, the graded instrument's future market price or its suitability for a particular investor.

The grading reflects UTI AMC's position as one of the leading players in the mutual funds industry. The company has a higher proportion of retail and equity assets under management (AUM) as compared to other players by virtue of its strong retail distribution channel and brand recognition. The retail base helps UTI AMC to better manage the churn of assets, while the higher proportion of equity provides higher recurring management fees as compared to debt funds. The grading reflects CRISIL's expectation that the management will be able to harness these strengths to mobilise mutual fund assets and register growth to substitute the expected decline in income from the Specified Undertaking of Unit Trust of India (SUUTI 1). CRISIL also expects that in spite of being a specialised asset management company; UTI AMC will be able to effectively compete with universal service providers like the ICICI group, the HDFC group and the Reliance (ADAG) group.

The grading has factored in the undifferentiated nature of products offered by the mutual funds industry in India. This and customers' lack of knowledge about the product, leads to high bargaining power of distributors'   vis -  - vis   AMCs   in  the   MF  Industry.  Consequently,

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distributors command a majority of the surplus made in the AMC business. Further, increasing competition and proactive policy changes by the regulator may put pressure on management fees in the AMC business in future. CRISIL believes that more pro-activeness on part of the management will be critical to capture emerging opportunities in the fast changing asset management businesses like domestic portfolio management services and private equity.

The choice of the pre-IPO strategic investors, their role in UTI AMC's management and the utilisation of proceeds garnered through private placement can have a material impact on the company's business profile.

About the company and the issue
UTI Asset Management Company Ltd. (UTI AMC) was formed as a result of the bifurcation of the erstwhile Unit Trust of India into two entities in October 2002. UTI AMC, in its new form, commenced operations with effect from February 1, 2003. Four government-owned sponsors - State Bank of India, LIC, Punjab National Bank, and Bank of Baroda - took equal stakes in the UTI AMC. Subsequent to the IPO the sponsors would still hold majority stake of about 54 per cent.

UTI AMC is one of the largest players in Indian mutual fund industry, with a market share of around 10.3 per cent as of December 2007. UTI AMC has 8.1 million retail investors spread across 455 cities accounting for 51.2 percent of the total domestic AUM.

The company also offers PMS to its clients. As of September 2007, UTI AMC's PMS business had around 320 clients and assets under management (AUM) amounting to Rs 21,609 million.

In addition, UTI AMC has three wholly-owned subsidiaries:
• UTI Venture Funds Management Company Pvt. Ltd (UTIVF), which has till date launched 2 funds with total committed corpus of about Rs 8,535 million
• UTI International Limited (UTIIL), which markets UTI AMC's domestic funds overseas and manages the assets and services investors of its offshore funds. As of September 2007, the total AUM of overseas funds was Rs 17,840 million
• UTI Retirement Solutions Ltd. that has been floated to manage the assets of Pension Fund Regulatory Development Authority

In 2006-07, UTI AMC reported a net profit of Rs 1,529 million on a turnover of Rs 4,096 million. This is as against net profit and revenues of Rs 1,747 million and Rs 3,921 million respectively in 2005-06.

UTI AMC aims to raise Rs.23 billion to Rs.24 billion by this proposed offer for sale of 48,500,000 equity shares.

1 SUUTI was formed subsequent to the bifurcation of the erstwhile UTI into two separate entities. It is vested with the assets of UTI's US-64 and assured return funds, while UTI AMC manages all SEBI-compliant schemes. UTI AMC provides support services such as fund administration, accounting, and investor services to SUUTI.

About CRISIL IPO Grading
CRISIL IPO (Initial Public Offering) Grading is an opinion on the fundamentals of the graded issue that reflects CRISIL's independence and expertise. This opinion is expressed as a relative assessment in relation to other listed equity securities in India. The assessment is based on a grading exercise carried out by industry specialists from CRISIL Research. A CRISIL IPO Grade 5/5 indicates strong fundamentals and a CRISIL IPO Grade 1/5 indicates poor fundamentals. CRISIL IPO Grading reflects its assessment of the graded company's equity fundamentals as distinct from an assessment of debt fundamentals. A CRISIL IPO Grade should not be construed to mean a comment on the price of the graded security nor is it a recommendation to invest or not to invest in the graded security.

About CRISIL Limited
CRISIL is India's leading Ratings, Research, Risk and Policy Advisory Company.

About CRISIL Research
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March 10, 2008