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Notes to Accounts of Edelweiss Financial Services Ltd.

Mar 31, 2017

1.1. Segment reporting

Primary Segment (Business Segment)

The Company’s business is organised and management reviews the performance based on the business segments as mentioned below:

Income for each segment has been specifically identified. Expenditure, assets and liabilities are either specifically identified with individual segments or have been allocated to segments on a systematic basis.

Based on such allocations, segment disclosures relating to revenue, results, assets and liabilities have been prepared.

Secondary Segment

Since the business operations of the Company are primarily concentrated in India, the Company is considered to operate only in the domestic segment and therefore there is no reportable geographic segment.

1.2. Related Parties

Disclosure as required by Accounting Standard 18 - “Related Party Disclosure”:

(A) Subsidiaries which are controlled by the Company:

Edelweiss Securities Limited Edelweiss Finance & Investments Limited ECL Finance Limited

Edelweiss Global Wealth Management Limited

EC Global Limited, Mauritius (through Edelweiss Finance & Investments Limited)

Edelweiss Insurance Brokers Limited Edelweiss Trustee Services Limited

Edelweiss Business Services Limited (formerly known as Edelweiss Web Services Limited) (through Edelweiss Broking Limited) Edelcap Securities Limited (through ECap Equities Limited)

Edelweiss Asset Management Limited ECap Equities Limited Edelweiss Broking Limited Edelweiss Trusteeship Company Limited Edelweiss Alternative Asset Advisors Limited

Edelweiss Housing Finance Limited (through Edelweiss Commodities Services Limited)

Edelweiss Investment Adviser Limited EC Commodity Limited

Edel Commodities Limited (through Edelweiss Commodities Services Limited)

Edel Land Limited

Edelweiss Custodial Services Limited (through Edelweiss Securities Limited)

EC International Limited, Mauritius Edelweiss Capital (Singapore) Pte. Limited

Edelweiss Alternative Asset Advisors Pte. Limited (through Edelweiss Capital (Singapore) Pte. Limited)

Edelweiss International (Singapore) Pte. Limited (through Edelweiss Capital (Singapore) Pte. Limited)

Aster Commodities DMCC, United Arab Emirates (through EC International Limited, Mauritius)

EAAA LLC, Mauritius (through EC International Limited)

EW Special Opportunities Advisors LLC, Mauritius (through EAAA LLC)

EW India Special Assets Advisors LLC, Mauritius (through EAAA LLC)

Edel Investments Limited

Edelweiss Tokio Life Insurance Company Limited

Edelweiss Investment Advisors Private Limited, Singapore (through Edelweiss Capital (Singapore) Pte. Limited) Edelweiss Commodities Services Limited

Edelweiss Comtrade Limited (through Edelweiss Securities Limited)

Edel Finance Company Limited (through Edelweiss Broking Limited)

Edelweiss Capital Markets Limited (through Edelweiss Commodities Services Limited)

EW SBI Crossover Advisors LLC, Mauritius (through EAAA LLC)

EFSL Trading Limited (formerly known as EFSL Commodities Limited) (through Edel Commodities Limited)

Edel Commodities Trading Limited (Upto 17 November 2016)

EFSL Comtrade Limited (through Edelweiss Commodities Services Limited)

Edelweiss Retail Finance Limited (through Edelcap Securities Limited)

Edelweiss Securities (Hong Kong) Private Limited (through Edelweiss Securities Limited)

Edelweiss Metals Limited (upto 30 June 2016)

Edelweiss Financial Services Inc, United States of America (through Edelweiss Securities Limited)

Edelweiss Commodities Pte. Ltd, Singapore (through EFSL Comtrade Limited)

Edelweiss Commodities Nigeria Limited (Upto 17 November 2016)

Edelweiss Agri Value Chain Limited (through Edelweiss Commodities Services Limited)

EdelGive Foundation

Edelweiss Multi Strategy Funds Management Private Limited (formerly known as Forefront Capital Management Private Limited)

Edelweiss Wealth Advisors LLP (Formerly known as Forefront Wealth Advisors LLP) (through Edelweiss Commodities Services Limited)

Auris Corporate Centre Limited (through Ecap Equities Limited)

Olive Business Centre Limited (through Ecap Equities Limited)

Eternity Business Centre Limited (through Ecap Equities Limited)

Serenity Business Park Limited (through Ecap Equities Limited)

Burlington Business Solutions Limited (through Ecap Equities Limited)

Edelweiss India Capital Management, Mauritius (through Multi Strategy Funds Management Private Limited)

Edelweiss Multi Strategy Fund Adivsors LLP (Formerly known as Forefront Alternate Investment Advisors LLP) (through Edelweiss Multi Strategy Funds Management Private Limited)

Edelweiss Commodities (CHAD) SARL (Upto 17 November 2016)

EFSL International Limited (through EC International Limited)

Edelweiss Financial Services (UK) Limited (through Edelweiss Securities Limited)

Edelweiss Holdings Limited

Edelweiss Tarim Urunleri Anonim Sirketi, Turkey (through EFSL Comtrade Limited)

Edelweiss AIF Fund I - EW Clover Scheme -1 (through Edelcap Securities Limited)

Edelweiss General Insurance Company Limited

Edelweiss Finvest Private Limited (formerly known as Arum Investments Private Limited) (through Ecap Equities Limited) Edelweiss Asset Reconstruction Company Limited (through Edelweiss Custodial Services Limited) (from 16 September 2016) Edelweiss Private Equity Tech Fund (through Ecap Equities Limited) (from 21 November 2016)

Edelweiss Securities (IFSC) Limited (from 23 December 2016)

(B) Associates:

Allium Finance Private Limited (through Edelweiss Commodities Services Limited)

Edelweiss Fund Advisors Private Limited

Dahlia Commodities Services Private Limited (through Edelweiss Securities Limited)

Magnolia Commodities Services Private Limited (through Edelweiss Securities Limited)

Aeon Credit Service India Private Limited (through ECL Finance Limited)

(C) Individuals owning, directly or indirectly, an interest in the voting power of the Company that gives them control or significant influence over the Company:

Mr. Rashesh Shah

Mr. Venkat Ramaswamy

Ms. Vidya Shah

Ms. Aparna T. C.

(D) Key managerial personnel :

Mr. Rashesh Shah - Chairman, Managing Director & CEO Mr. Venkat Ramaswamy - Executive Director Mr. Himanshu Kaji - Executive Director Mr. Rujan Panjwani - Executive Director

(E) Relatives of individuals exercising significant influence and relatives of KMP, with whom transactions have taken place: Ms. Kaavya Venkat

Ms. Shilpa Mody Ms. Sejal Premal Parekh Mr. A V Ramaswamy Ms. Sneha Sripad Desai Mr. Nalin Kaji Ms. Shabnam Panjwani

(F) Enterprises over which KMPs / Relatives exercise significant influence, with whom transactions have taken place:

Spire Investment Advisors LLP

In accordance with Accounting Standard 20 - “Earnings Per Share” prescribed by Companies (Accounts) Rules, 2014, the computation of earnings per share is set out below:

1.3 Disclosure pursuant to Accounting Standard 15 (Revised) - Employee Benefits A) Defined contribution plan (Provident fund):

Amount of Rs.14.50 million (Previous year: Rs.13.10 million) is recognised as expense and included in “Employee benefit expense” - Note 2.24 in the statement of profit and loss.

B) Defined benefit plan (Gratuity):

The following tables summarise the components of the net employee benefit expenses recognised in the statement of profit and loss, the funded status and amount recognised in the balance sheet for the gratuity benefit plan.

1.3. Employee stock option plans

The Company has currently two Employee Stock Option Plans (‘Plans’) in force. The Plans provide that the Company’s employees and those of its subsidiaries and associates are granted an option to acquire equity shares of the Company that vest in a graded manner. The options may be exercised within a specified period. The plans also provide that if the ESOP Committee so notifies, the participant may have an option to receive cash in lieu of exercising the vested options in the manner provided in the ESOP Scheme in this regards.

The Company follows the intrinsic value method to account for its stock based compensation plans. Compensation cost is measured as the excess, if any, of the fair market value of the underlying share on the date of grant over the exercise price.

During the year, the Company granted stock options to employees under the ESOP 2011 Plan where the exercise price was linked to either closing market price of the shares on the date of the grant or book value of the shares as per the last audited balance sheet of the Company as on the date of the grant, whichever is higher.

The options can be exercised within two years from the date of vesting.

During the years ended 31 March 2012, 31 March 2013, 31 March 2014, 31 March 2016 and 31 March 2017, the Company had granted stock options to the employees under the ESOP 2011 Plan (formulated in F.Y. 2011-12) where the exercise price was linked to either closing market price of the shares on the date of the grant or book value of the shares as per the last audited balance sheet of the Company as on the date of the grant, whichever is higher.

During the year ended 31 March 2011, the Company had formulated ESOP 2010 Plan wherein stock options were granted to employees where the exercise price was linked to either closing market price of the shares on the date of the grant or book value of the shares as per the last audited balance sheet of the Company as on the date of the grant, whichever is higher.

The options can be exercised within four years from the date of vesting.

During the year ended 31 March 2010, the Company had formulated ESOP 2009 Plan wherein stock options were granted to employees where the exercise price was linked to either closing market price of the shares on the date of the grant or book value of the shares as per the last audited balance sheet as on the date of the grant, whichever is higher.

The options can be exercised within two years from the date of vesting.

For determination of compensation cost, the Company has assumed the exercise price to be the specified amount.

Since the exercise price in all the above Plans is linked to closing market price of the shares on the date of the grant date, there is no compensation cost based on intrinsic value of options.

With respect to stock options granted upto 31 March 2008, the fair market value of the underlying shares has been determined based on an independent valuer’s report as these stock options were granted by the Company to its employees when it was not listed on the stock exchanges. The fair value of such stock options is arrived as stipulated in the Guidance Note on Accounting for Employee Share Based Payments issued by The Institute of Chartered Accountants of India. Based on intrinsic value method compensation cost charged in the statement of profit and loss for the year is Rs.Nil (Previous year: write back of Rs.0.10 million).

Fair value methodology

The fair value of options used to compute pro-forma net income and earnings per share have been estimated on the dates of each grant, on or after the date the ‘Guidance Note on Accounting for Employee Share-based Payments’, issued by the Institute of Chartered Accountants of India, became applicable, i.e. 1 April 2005, using the Black-Scholes option pricing model. The Company has estimated the volatility based on historical market volatility. The various assumptions considered in the pricing model for the aforementioned ESOP’s granted are:

1.4 Share application money pending allotment

The Company has received Rs.40.94 million (Previous year: Rs.20.58 million) towards share application on exercise of ESOPs which will result in an issue of 1,133,100 shares (Previous year: 634,625 shares). Of the total receipts Rs.39.81 million (Previous year: Rs.19.95 million) has been received towards share premium. These shares have since been allotted.

1.5 Capital Commitment

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs.30.66 million (Previous year: Rs.49.33 million).

1.6 Contingent liabilities

a) Claims against the Company not acknowledged as debt:

Taxation matters in respect of which appeal is pending Rs.566.00 million (Previous year: Rs.492.94 million);

b) Other claim not acknowledged as debt:

Corporate guarantees issued on behalf of subsidiaries to the extent of Rs.70,503.54 million (Previous year: Rs.81,466.24 million).

The Company’s pending litigations mainly comprise of claims against the Company pertaining to proceedings pending with Income tax, service tax and other authorities. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contingent liabilities where applicable, in the financial statements. The Company believes that the outcome of these proceedings will not have a materially adverse effect on the Company’s financial position and results of operations.

1.7 Details of dues to micro, small and medium enterprises

Trade Payables includes Rs.Nil (Previous year: Rs.Nil) payable to “Suppliers” registered under the Micro, Small and Medium Enterprises Development Act, 2006. No interest has been paid / is payable by the Company during the year to “Suppliers” registered under this Act. The aforementioned is based on the responses received by the Company to its inquiries with suppliers with regard to applicability under the said Act.

1.8 Cost sharing

Edelweiss Financial Services Limited, being the holding company along with group companies, incurs expenditure like common senior management compensation cost in financial year 2015-16, Group mediclaim, etc. which is for the common benefit of itself and its certain subsidiaries including the Company. This cost so expended is reimbursed by the Company on the basis of number of employees, time spent by employees of other companies, actual identifications etc. On the same lines, costs like rent, electricity charges incurred by the Company for the benefit of fellow subsidiaries and associate companies are recovered as reimbursement by the Company from the subsidiaries and associate companies on similar basis. Accordingly, and as identified by the management, the expenditure heads in note 2.24 and 2.26 include reimbursements paid and are net of the reimbursements received based on the management’s best estimate.

1.9 Based on the opinion of the Expert Advisory Committee of the Institute of Chartered Accountants of India, the Company, from the quarter ended 30 June 2016, is presenting interest income from its group companies on a gross basis under the head income from operations which until then was presented on a net basis. The Company has accordingly presented interest income from its group companies of Rs.1,007.83 million for the year ended 31 March 2017 on gross basis. Income from operations and finance costs for the year ended 31 March 2016 are therefore not comparable. This has no impact on the net profit of the Company for the years.

1.10 Derivative Transactions

The Company uses forward exchange contracts and futures to hedge its exposure in foreign currency. The information on open derivative instrument is as follows:

Note: The Company has an asset cover in excess of 100% in accordance with the terms of the trust deed in respect of listed Secured Redeemable Non-convertible Debentures aggregating to Rs.1,062.00 million (previous year : Rs.2,762.00 million) by way of charge on immovable property, floating charge on movable properties in the form of receivables.

1.11 The Company has received demand notices from tax authorities on account of disallowance of expenditure for earning exempt income under section 14A of Income Tax Act, 1961 read with Rule 8D of the Income Tax Rules, 1962. The Company has filed appeal and is defending its position. Due to the lack of clarity on legal position relating to the application of Rule 8D, the outcome and quantification of the eventual tax liability on the Company, if any, at this stage cannot be estimated. The Company has been advised by its tax counsel that it has a good chance in sustaining its position.

As per the provisions of Section 135 of the Companies Act, 2013,

a) Gross amount required to be spent by the Company during the year was Rs.26.31 million (Previous year: Rs.17.39 million);

b) Amount spent during the year on:

1.12 The Company has taken premises on operating lease. Rental expenses for the year ended 31 March 2017 aggregated to Rs.72.64 million (Previous year: Rs.25.57 million) which has been included under the head other expenses - Rent in the Statement of profit and loss. The Company does not have any non-cancellable operating lease.

1.13 The Company, the sponsor of Edelweiss Mutual Fund (“Edelweiss MF”), Edelweiss Trusteeship Company Limited, the trustee company of Edelweiss MF and Edelweiss Asset Management Limited, the asset management company of Edelweiss MF have entered into an agreement with JPMorgan Asset Management (Asia) Inc., the sponsor of JPMorgan Mutual Fund (JPM MF) and JPMorgan Mutual Fund India Private Limited, trustee company of JPM MF and JPMorgan Asset Management India Private Limited, the asset management company to JPM MF on March 22, 2016, for acquiring control and management of the onshore fund schemes and international fund of funds of JPM MF and the corresponding change in the sponsorship, trusteeship and administration of schemes of JPM MF, upon completion of the transaction subject to receipt of regulatory approvals. All necessary steps, including a ‘No Objection’ from SEBI were duly received and thereafter, all the schemes of JPMorgan Mutual Fund were transferred to and now form part of Edelweiss Mutual Fund with effect from close of business day on November 25, 2016.

1.14 Disclosures relating to Specified Bank Notes1 (SBNs) held and transacted during the period from 8 November 2016 to 30 December 2016 pursuant to Notification No. G.S.R. 308(E) dated 30th March, 2017:

* For the purpose of this clause, the term Specified Bank Notes (SBNs) means the bank notes of denominations of the existing series of the value of five hundred rupees and one thousand rupees as defined under the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs no. S.O. 3407(E), dated the 8 November, 2016.

1.15 The Board of Directors at their meeting held on 17 May 2017, have recommended a final dividend of Rs.0.30 per equity share (on face value of Rs.1 per equity share), subject to the approval of the members at the ensuing Annual General Meeting. In terms of revised Accounting Standard (AS) 4 ‘Contingencies and Events occurring after the Balance sheet date’ as notified by the Ministry of Corporate Affairs through amendments to Companies (Accounting Standards) Amendment Rules, 2016, dated 30 March 2016, the Company has not appropriated for the recommended final dividend (including tax) from the Statement of Profit and Loss for the year ended 31 March 2017.

1.16 The Company has a process whereby periodically all long term contracts (including derivative contracts) are assessed for material foreseeable losses. At the year end, the Company has reviewed and ensured that adequate provision as required under any law/ accounting standards for material foreseeable losses on such long term contracts (including derivative contracts) has been made in the books of accounts.


Mar 31, 2013

1. Related partes (refer note 2.27 of the fnancial statements)

(A) Subsidiaries which are controlled by the Company and with whom transactons have taken place:

Edelweiss Securites Limited

Edelweiss Insurance Brokers Limited

Edelweiss Finance & Investments Limited

Edelweiss Commodites Services Limited (formerly Comfort Projects Limited)

Edelweiss Trustee Services Limited

ECL Finance Limited

Edelweiss Custodial Services Limited

Edelcap Securites Limited

ECap Equites Limited

EC Commodity Limited

Edel Commodites Limited

Edelweiss Global Wealth Management Limited

Edelweiss Trusteeship Company Limited

Edelweiss Asset Management Limited

Edelweiss Broking Limited

Edelweiss Investment Adviser Limited (formerly Edelweiss Investment Advisors Limited)

Edel Land Limited

Edelweiss Web Services Limited (through Edelweiss Broking Limited)

EC Internatonal Limited, Mauritus

EdelGive Foundaton

Edelweiss Alternatve Asset Advisors Limited

Edelweiss Housing Finance Limited (through Edelweiss Commodites Services Limited)

Edelweiss Tokio Life Insurance Company Limited

Edel Investments Limited

Edel Finance Company Limited (through Edelweiss Financial Advisors Limited)

Edelweiss Comtrade Limited (through Edelweiss Securites Limited)

Edelweiss Capital (Singapore) Pte. Limited

Edelweiss Financial Advisors Limited (through Edelweiss Commodites Services Limited)

EFSL Commodites Limited (through Edel Commodites Limited)

EFSL Comtrade Limited (through Edel Commodites Limited)

Edel Commodites Trading Limited (through Edel Commodites Limited)

Edelweiss Capital Markets Limited (through Edelweiss Commodites Services Limited)

Allium Finance Private Limited (upto 21 August 2012) (through Edelweiss Commodites Services Limited)

EC Global Limited (through Edelweiss Finance & Investments Limited)

Aster Commodites DMCC (through EC Internatonal Limited, Mauritus)

(B) Subsidiaries which are controlled by the Company and with whom no transactons have taken place:

ECap Internatonal Limited (through EC Internatonal Limited, Mauritus)

Edelweiss Internatonal (Singapore) Pte. Limited (through Edelweiss Capital (Singapore) Pte. Limited)

Edelweiss Alternatve Asset Advisors Pte. Limited (through Edelweiss Capital (Singapore) Pte. Limited)

EAAA LLC, Mauritus (through ECap Internatonal Limited)

EW Special Opportunites Advisors LLC (through EAAA LLC, Mauritus)

EW India Special Assets Advisors LLC (through EAAA LLC, Mauritus)

Edelweiss Investment Advisors Private Limited (through Edelweiss Capital (Singapore) Pte. Limited)

EW SBI Crossover Advisors LLC (through EAAA LLC, Mauritus)

Edelweiss Securites (Hong Kong) Private Limited (with efect from 6 February 2013) (through Edelweiss Securites Limited)

Afuent Dealcom Private Limited (with efect from 19 July 2012) (through Edelcap Securites Limited)

(C) Associates:

Edelweiss Asset Reconstructon Company Limited (through Edelweiss Custodial Services Limited)

Edelweiss Fund Advisors Private Limited

Dahlia Financial Services Private Limited (through Edelweiss Securites Limited)

Magnolia Financial Services Private Limited (through Edelweiss Securites Limited)

Arum Investments Private Limited (through Edelweiss Securites Limited)

Edelweiss Precious Metals Private Limited (through Edelweiss Commodites Services Limited)

Afuent Dealcom Private Limited (upto 18 July 2012) (through Edelcap Securites Limited)

Allium Finance Private Limited (with efect from 22 August 2012) (through Edelweiss Commodites Services Limited)

Aeon Credit Services India Private Limited (with efect from 25 June 2012) (through ECL Finance Limited)

(D) Individuals owning, directly or indirectly, an interest in the votng power of the Company that gives them control or signifcant infuence over the Company:

Rashesh Shah

Venkat Ramaswamy

Vidya Shah

Aparna T. C.

(E) Key managerial personnel:

Himanshu Kaji (with efect from 01 November 2011)

(F) Relatves of individuals owning, directly or indirectly, an interest in the votng power of the Company that gives them control or signifcant infuence over the Company:

Kaavya Venkat

Shilpa Mody

Sharmishta Chandrakant Shah (upto 11 May 2012)

A V Ramaswamy

Sejal Premal Parekh (with efect from 9 July 2012)

Meena Subramanian (with efect from 30 January 2013)

Sneha Sripad Desai (with efect from 30 January 2013)

(G) Enterprise over which signifcant infuence is exercised:

Edelweiss Employees Welfare Trust

(H) Enterprises which exercise signifcant infuence over the Company:

Spire Investment Advisors LLP Oak Holdings Private Limited

2. Share applicaton money pending allotment (refer note 2.32 of the fnancial statements)

The Company has received Rs. 22.50 million towards share applicaton on exercise of ESOPs which will result in an issue of 2,929,800 shares. Of the total receipts, Rs. 19.57 million has been received towards share premium. These shares have since been alloted.

3. Capital commitment (refer note 2.33 of the fnancial statements)

Estmated amount of contracts remaining to be executed on capital account and not provided for (net of advances) – Rs. 1.41 million (Previous year: Rs. Nil).

4. Contngent liability (refer note 2.34 of the fnancial statements)

a. Taxaton maters in respect of which appeal is pending Rs. 52.61 million (Previous year: Rs. 5.35 million).

b. The Company has issued corporate guarantees to the extent of Rs. 38,268.76 million (Previous year: Rs. 23,902.70 million), in favour of banks to secure the credit facilites sanctoned by these banks to Edelweiss Securites Limited, Edelweiss Commodites Services Limited (formerly Comfort Projects Limited), ECL Finance Limited, Edelweiss Housing Finance Limited, Aster Commodites DMCC, EC Global Limited (subsidiary companies) and Rs. 13,735.90 million (Previous year: Rs. 7,000 million) in favour of IDBI Trusteeship Services Limited for non-convertble debentures issued by ECL Finance Limited and Edelweiss Housing Finance Limited (subsidiary companies) against due discharge of debt.

5. Details of dues to micro, small and medium enterprises (refer note 2.35 of the fnancial statements)

Trade payables includes Rs. Nil (Previous year: Rs. Nil) payable to "Suppliers" registered under the Micro, Small and Medium Enterprises Development Act, 2006. No interest has been paid / is payable by the Company during the year to "Suppliers" registered under this act. The aforementoned is based on the responses received by the Company to its inquiries with suppliers with regard to applicability under the said act.

6. Impact of change in accountng policy (refer note 2.38 of the fnancial statements)

From 1 April 2011, the Company by virtue of its holding company actvites has adopted the practce of charging its actual borrowing cost on the loans extended to its group companies. Consequently, in the fnancial results, interest income amountng to Rs. 4,268.21 million (Previous year: Rs. 4,002.75 million) has been neted against fnance costs.

7. Transfer of Portolio Management Services business (refer note 2.42 of the fnancial statements)

During the previous year, the Company had with efect from 2 February 2012 transferred its Portolio Management Services business which formed part of the agency business segment of the Company on a going concern basis to its wholly owned subsidiary, Edelweiss Global Wealth Management Limited.

8. Miscellaneous expenses includes an amount of Rs. 31.27 million paid, being disgorgement of profts as per the order received from the Securites and Exchange Commission of The United States of America dated 27 November 2012 (refer note 2.43 of the fnancial statements).

9. Prior year comparatves (refer note 2.44 of the fnancial statements)

Previous year fgures have been regrouped and rearranged wherever necessary.


Mar 31, 2012

Rights of equity shareholders:

The Company has only one class of equity shares having a par value of Rs 1 each. Each holder of equity shares Is entitled to one vote per share held. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts.

The distribution will be in proportion to the number of equity shares held by the shareholders.

Consolidation:

During the F.Y. 2007-08: 89,843,620 equity shares of Rs 1 each were consolidated into fully paid-up 17,968,724 equity shares of f 5 each.

Share split:

During the F.Y. 2010-11: 75,099,118 equity shares of Rs 5 each were split into fully paid-up 375,495,590 equity shares of Rs 1 each.

Details of bonus shares issued:

(a) during the F.Y. 2007-08: 44,916,806 equity shares of Rs 1 each (before consolidation of face value of equity share from Rs 1 per share To Rs 5 per share) were allotted as fully paid up bonus shares by capitalisation of Rs 44.92 million from securities premium account.

(b) during the F.Y. 2007-08: 35,937,448 equity shares of Rs 5 each were allotted; as fully paid up bonus shares by capitalisation of Rs 179.69 million from securities premium account.

(c) during the F.Y. 2010-11: 375,495,590 equity shares of Rs 1 each (after sfllit of face value of equity share from Rs 5 per share to Rs 1 per share) were alloted as fully paid-up bonus shares by capitalisation of Rs 2.60 million from capital redemption reserve and Rs 372.90 million from securities premium account.

1.1 Segment reporting

The Company's business is organised and management reviews the performance, based on the business segments as mentioned below:

Income for each segment has been specifically identified. Expenditure, assets and liabilities are either specifically identifiable with individual segments or have been allocated to segments on a systematic basis.

Based on such allocations, segmental balance sheet as at 31 March 2012 and segmental statement of profit and loss for the year ended 31 March 2012 have been prepared.

Since the business operations of the Company are primarily concentrated in India, the Company is considered to operate only in the domestic segment.

1.2 Related parties

(A) Subsidiaries which are controlled by the Company and with whom transactions have taken place:

Edelweiss Securities Limited

Edelweiss Insurance Brokers Limited

Edelweiss Finance & Investments Limited

Edelweiss Trustee Services Limited

ECL Finance Limited

Edelweiss Custodial Services Limited

Edelcap Securities Limited

ECap Equities Limited

EC Commodity Limited

Edel Commodities Limited

Edelweiss Global Wealth Management Limited (formerly Edelweiss Financial Products & Solutions Limited)

Edelweiss Trusteeship Company Limited

Edelweiss Asset Management Limited

Edelweiss Broking Limited

Edelweiss Investment Advisors Limited

Edel Land Limited

Edelweiss Web Services Limited (through Edelweiss Broking Limited)

EC International Limited, Mauritius Edelgive Foundation

Edelweiss Alternative Asset Advisors Limited

Edelweiss Housing Finance Limited (through Comfort Projects Limited)

Edelweiss Tokio Life Insurance Company Limited

Edel Investments Limited

Comfort Projects Limited

Edelweiss Stock Broking Limited (through Edelweiss Financial Advisors Limited)

Edel Finance Company Limited (through Edelweiss Financial Advisors Limited)

Edelweiss Comtrade Limited (formerly known as Anagram Comtrade Limited) (through Edelweiss Securities Limited)

Edelweiss Capital (Singapore) Pte. Limited

Edelweiss Financial Advisors Limited (through Comfort Projects Limited)

EFSL Commodities Limited (through Edel Commodities Limitefl)

EFSL Comtrade Limited (through Edel Commodities Limited)

Edel Commodities Trading Limited (through Edel Commodities limited) .

Edelweiss Capital Markets Limited (through Comfort Projects Limited) ,

Allium Finance Private Limited (through Comfort Projects Limited) .

Arum Investments Private Limited (upto 28 March 2011) (through Edelweiss Securities Limited)

Edelweiss Capital USA, LLC (upto 09 September 2010)

(B) Subsidiaries which are controlled by the Company and with whom no transactions have taken place:

EC Global Limited (through Edelweiss Finance & Investments Limited)

Aster Commodities DMCC (through EC International Limited, Mauritius)

ECap International Limited (through EC International Limited, Mauritius)

Edelweiss International (Singapore) Pte. Limited (through Edelweiss Capital (Singapore) Pte. Limited)

Edelweiss Alternative Asset Advisors Pte. Limited. (through Edelweiss Capital (Singapore) Pte. Limited)

EAAA LLC, Mauritius (through ECap International Limited)

EW Special Opportunities Advisors LLC (through EAAA LLC, Mauritius)

EW India Special Assets Advisors LLC (through EAAA LLC, Mauritius)

Edelweiss Investment Advisors Private Limited (through Edelweiss Capital (Singapore) Pte. Limited)

EW SBI Crossover Advisors LLC (through EAAA LLC, Mauritius)

(C) Associates:

Edelweiss Asset Reconstruction Company Limited (through Edelweiss Alternative Asset Advisors Limited)

Edelweiss Fund Advisors Private Limited

Dahlia Financial Services Private Limited (through Edelweiss Securities Limited)

Magnolia Financial Services Private Limited (through Edelweiss Securities Limited)

Arum Investments Private Limited (with effect from 29 March 2011) (through Edelweiss Securities Limited)

Edelweiss Precious Metals Private Limited (through Comfort Projects Limited)

Affluent Dealcom Private Limited (through Edelcap Securities Limited)

(D) Individuals owning, directly or indirectly, an interest in the voting power of the Company that gives them control or significant influence over the Company:

Rashesh Shah Venkat Ramaswamy

(E) Key managerial personnel:

Himanshu Kaji (with effect from 01 November 2011)

(F) Relatives of individuals owning, directly or indirectly, an interest in the voting power of the Company that gives them control or significant influence over the Company:

Vidya Shah Aparna T. C.

Kaavya Venkat Shilpa Mody

Sharmishta Chandrakant Shah A V Ramaswamy

(G) Enterprise over which significant influence is exercised:

Edelweiss Employees Welfare Trust

(H) Enterprise which exercise significant influence over the Company:

Spire Investment Advisors LLP Oak Holdings Private Limited

Note: With effect from 1 April 2011 (being the appointed date), the securities business of erstwhile Edelweiss Trading & Holdings Limited (ETHL), a subsidiary of Edelweiss Financial Services Limited, has been demerged and merged with Edelweiss Securities Limited (ESL) and businesses other than securities business have been merged with Comfort Projects Limited (CPL) (a wholly owned subsidiary of Edelweiss Financial Services Limited) vide an order of the Hon. High Court of Andhra Pradesh. The effective date of the order is May 12, 20i2. All related party transactions during the year and the outstanding balances as at the end of the year have accordingly been disclosed against ESL and CPL respectively in the financial statements of the Company. Also, investment in erstwhile ETHL is now disclosed as investment in CPL.

* includes issuance of bonus equity shares and split of equity shares during the year ended 31 March 2011.

1.3 Disclosure pursuant to Accounting Standard 15 (Revised) - Employee Benefits

A) Defined contribution plan (Provident fund):

Amount of Rs 8.76 million (Previous year: Rs 5.75 million) is recognised as expense and included in "Employee benefit expenses" - note 2.23 in the statement of profit and loss.

B) Defined benefit plan (Gratuity):

The following tables summarise the components of the net employee benefit expenses recognised in the statement of profit and loss, the funded status and amount recognised in the balance sheet for the gratuity benefit plan.

1.4 Employee stock option plans

The Company has currently seven Employee Stock Option Plans ('Plans') in force. The Plans provide that the Company's employees and those of its subsidiaries are granted an option to acquire equity shares of the Company that vest in a graded manner. The options may be exercised within a specified period.

The Company follows the intrinsic value method to account for its stock based compensation plans. Compensation cost is measured as the excess, if any, of the fair market value of the underlying share on the date of grant over the exercise price.

During the year, the Company has formulated ESOP 2011 Plan wherein stock options were granted to employees where the exercise price was linked to either closing market price of the shares on the date of the grant or book value of the shares as per the last audited balance sheet as on the date of the grant, whichever is higher.

1.5 Share application money pending allotment

The company has received Rs 11.78 million towards share application on excercise of ESOPs which will result in an issue of 1,002,000 shares. Of the total receipts, Rs 10.78 million has been received towards share premium. These shares have since been allotted.

1.6 Capital commitment

Capital commitments (net of advances) - Rs Nil (Previous year: Rs Nil)

1.7 Contingent liability

a. Taxation matters in respect of which appeal is pending - Rs 5.35 million (Previous year: Rs 20.42 million).

b. The Company has issued corporate guarantees to the extent of Rs 23,902.70 million (Previous year: Rs 15,950 million), in favour of banks to secure the credit facilities sanctioned by these banks to Edelweiss Securities Limited, Comfort Projects Limited, ECL Finance Limited, Edel Commodities Trading Limited, Edelweiss Comtrade Limited, Edelweiss Housing Finance Limited, EFSL Commodites Limited, EFSL Comtrade Limited (subsidiary companies) and Rs 7,000 million (Previous year: Rs 5,000 million) in favour of IDBI Trusteeship Services Limited for non-convertible debentures issued by ECL Finance Limited (subsidiary company) against due discharge of debt.

1.8 Disclosure of loans and advances pursuant to clause 32 of listing agreement

a. Rs 66.88 million (Previous year: Rs 13.73 million) due from Edelweiss Alternative Asset Advisors Limited (maximum amount due at any time during the year Rs 196.09 million; Previous year: Rs 29.76 million)

b. Rs 350.90 million (Previous year: Rs 155.54 million) due from Edelweiss Broking Limited (maximum amount due at any time during the year Rs 589.39 million; Previous year: f 922.52 million)

c. Rs 1,475.84 million (Previous year: X 514.39 million) due from EC Commodity Limited (maximum amount due at any time during the year X 5,810.18 million; Previous year: Rs 5,158.72 million)

d. Rs 3,869.27 million (Previous year: Rs 22,047.70 million due from Edelweiss Trading & Holdings Limited and Rs Nil from Comfort Projects Limited) due from Comfort Projects Limited (maximum amount due at any time during the year Rs 32,217.76 million from Comfort Projects Limited; Previous year: Rs 52,415.11 million from Edelweiss Trading and Holdings Limited and Rs Nil from Comfort Projects Limited)

1.9 Disclosure of loans and advances pursuant to clause 32 of listing agreement (Continued)

e. Rs 2,001.62 million (Previous year: Rs 104.40 million) due from ECap Equities Limited (maximum amount due at any time during the year Rs 2,293.47 million; Previous year: Rs 8,332.87 million)

f. Rs 2,546.35 million (Previous year: Rs 314.84 million) due from Edel Commodities Limited (maximum amount due at any time during the year Rs 4,851.95 million; Previous year: Rs 519.26 million)

g. Rs 720.05 million (Previous year: Rs 1,430.70 million) due from Edelcap Securities Limited (maximum amount due at any time during the year Rs 5,832.78 million; Previous year: Rs 8,464.84 million)

h. Rs 3,045.72 million (Previous year: t 2,458.91 million) due from Edelweiss Finance & Investments Limited (maximum amount due at any time during the year Rs 7,833.92 million; Previous year: Rs 9,796.27 million)

i. Rs 84.57 million (Previous year: Rs 44.24 million) due from Edel Land Limited (maximum amount due at any time during the year Rs 84.57 million; Previous year: Rs 168.55 million)

j. Rs 508.05 million (Previous year: Rs 1,469.26 million) due from Edelweiss Securities Limited (maximum amount due at any time during the year Rs 13,574.80 million; Previous year: Rs 16,498.33 million) k. Rs 68.38 million (Previous year: Rs 64.43 million) due from Edelweiss Web Services Limited (maximum amount due at any time during the year Rs 92.14 million; Previous year: Rs 96.83 million)

I. Rs Nil (Previous year: Rs Nil) due from Edelweiss Trustee Services Limited (maximum amount due at any time during the year f Nil; Previous year: Rs 0.50 million) m. Rs 203.02 million (Previous year: Rs 94.59 million) due from Edelweiss Global Wealth Management Limited (formerly Edelweiss Financial Products & Solutions Limited) (maximum amount due at any time during the year Rs 799.01 million; Previous year: Rs 3,791.85 million)

n. Rs 1,380.45 million (Previous year: Rs 1,404.65 million) due from Edelweiss Employees Welfare Trust (maximum amount due at any time during the year Rs 1,404.65 million; Previous year: Rs 1,444.05 million)

o. Rs 636.74 million (Previous year: Rs 533.42 million) due from Edelweiss Housing Finance Limited (maximum amount due at any time during the year Rs 3,217.40 million; Previous year: Rs 533.42 million)

p. Rs Nil (Previous year: Rs Nil) due from Edelweiss Custodial Services Limited (maximum amount due at any time during the year Rs Nil; Previous year: Rs 1.10 million) q. Rs 36.00 million (Previous year: Rs 70.01 million) due from Edelweiss Financial Advisors Limited (maximum amount due at any time during the year Rs 420.00 million; Previous year: Rs 980.00 million) r. Rs 1,652.30 million (Previous year: Rs 8.38 million) due from Edelweiss Investment Advisors Limited (maximum amount due at any time during the year Rs 1,652.30 million; Previous year: Rs 178.00 million) s. Rs Nil (Previous year: Rs Nil) due from Edelweiss Tokio Life Insurance Company Limited (maximum amount due at any time during the year Rs Nil; Previous year: Rs 0.70 million) t. Rs 8.69 million (Previous year: Rs 1.79 million) due from Edelweiss Capital (Singapore) Pte. Limited (maximum amount due at any time during the year Rs 8.98 million; Previous year: Rs 1.82 million)

u. Rs 2,352.95 million (Previous year: Rs 5,279.16 million) due from EC International Limited (maximum amount due at any time during the year Rs 2,352.95 million; Previous year: Rs 5,279.16 million)

v. Rs 639.13 million (Previous year: Rs 140.91 million) due from ECL Finance Limited (maximum amount due at any time during the year Rs 15,084.88 million; Previous year: Rs 31,408.27 million) w. Rs 9.61 million (Previous year: Rs 13.74 million) due from Edelweiss Insurance Brokers Limited (maximum amount due at any time during the year Rs 16.27 million; Previous year: Rs 41.56 million)

x. Rs Nil (Previous year: Rs Nil) due from Edelweiss Fund Advisors Private Limited (maximum amount due at any time during the year Rs 0.10 million; Previous year: Rs 1.45 million) y. Rs 0.93 million (Previous year: Rs Nil) due from Edelweiss Comtrade Limited (maximum amount due at any time during the year Rs 1200.00 million; Previous year: Rs Nil)

All the above loans are repayable on demand except for loan of Rs 276.30 million (Previous year: Rs 541.20 million) to Edelcap Securities Limited where repayment is as per contracted terms.

1.10 Cost sharing

The Company, being the holding company of Edelweiss group incurs expenditure like common senior management compensation cost, advertisement cost, rent expenditure, etc. which is for the common benefit of itself and certain subsidiary companies. This cost so expended is recovered as reimbursement from the subsidiaries on the basis of number of employees, area occupied, time spent by employees for other companies, actual identifications, etc. On the same lines, operational cost expended by the Company's Subsidiary for the benefit of the Company is reimbursed by the Company. Accordingly, and as identified by management, the expenditure heads in notes 2.23 and 2.25 are net of these reimbursements.

1.11 Impact of change in accounting policy

The Company has ceased to charge Brand Equity, Brand Protection, Brand Promotion fees to its subsidiaries from 1 April 2011. Had the Company continued to charge these fees, Advisory, rating support and other fees disclosed under Fee Income in the standalone financial results would have been higher by Rs 438.00 million.

From 1 April 2011, the Company by virtue of its holding company activities has adopted the practice of charging its actual borrowing cost on the loans extended to its group companies. Consequently, in the standalone financial results, interest income amounting to Rs 4,002.75 million has been netted against finance costs.

1.12 Transfer of Portfolio Management Services Business

The company has with effect from 2 February 2012 transferred its Portfolio Management Services business which forms part of the Agency business segment of the company on a going concern basis to its wholly owned subsidiary, Edelweiss Global Wealth Management Limited.

1.13 The Company has received demand notices from tax authorities on account of disallowance of expenditure for earning exempt income under section 14A(2) of Income Tax Act, 1961 read with Rule 8D of the Income Tax Rules, 1962. The company has filed appeal and is defending its position. Due to the lack of clarity on legal position relating to the application of Rule 8D, the outcome and quantification of the eventual tax liability on the company, if any, at this stage cannot be estimated. The Company has been advised by its tax counsel that it has a good chance in sustaining its position.

1.14 Prior year comparatives

Previous year figures have been regrouped and rearranged wherever necessary.


Mar 31, 2011

1 BACKGROUND

Edelweiss Capital Limited (the Company) was incorporated as a public limited company on 21 November 1995 and is the ultimate holding company of Edelweiss group of entities. The Company is registered as a Merchant Banker and Portfolio Management Advisor with the Securities & Exchange Board of India (SEBI). The Company is principally engaged in providing investment banking services and holding company activities comprises of development, managerial and financial support to the businesses of Edelweiss group entities.

1.2 Segment reporting

The Company’s business is organised and management reviews the performance, based on the business segments as mentioned below:

Segment Activities covered

Agency business Advisory and transactional services

Holding company activities Development, managerial and financial support to the businesses of Edelweiss group entities

Income for each segment has been specifically identified. Expenditure, assets and liabilities are either specifically identifiable with individual segments or have been allocated to segments on a systematic basis.

Based on such allocations, segmental balance sheet as at 31 March 2011 and segmental profit & loss account for the year ended 31 March 2011 have been prepared.

Since the business operations of the Company are primarily concentrated in India, the Company is considered to operate only in the domestic segment.

1.3 Related parties

(A) Subsidiaries which are controlled by the Company and with whom transactions have taken place during the year

Edelweiss Securities Limited

Edelweiss Trading & Holdings Limited (formerly known as Edelweiss Commodities Limited)

Edelweiss Insurance Brokers Limited

Edelweiss Finance & Investments Limited

Edelweiss Capital USA, LLC (wound-up during F.Y. 2009-10)

Edelweiss Trustee Services Limited

ECL Finance Limited

Edelweiss Custodial Services Limited

Edelcap Securities Limited

ECap Equities Limited

EC Commodity Limited

Edel Commodities Limited

Edelweiss Financial Products & Solutions Limited

Edelweiss Trusteeship Company Limited

Edelweiss Asset Management Limited

Edelweiss Broking Limited

Edelweiss Investment Advisors Limited (formerly known as Edelweiss Property Advisors Limited)

Edel Land Limited

Edelweiss Web Services Limited (formerly known as Edelweiss Capital Services Limited)

EC International Limited, Mauritius

Edelgive Foundation

Edelweiss Alternative Asset Advisors Limited

Edelweiss Housing Finance Limited

Edelweiss Tokio Life Insurance Company Limited

Edel Investments Limited

Allium Finance Private Limited (with effect from 15 June 2009)

(through Edelweiss Trading & Holdings Limited)

Arum Investments Private Limited (with effect from 15 June 2009 to 28 March 2011)

(through Edelweiss Securities Limited)

Edelweiss Capital (Singapore) Pte. Limited

Edelweiss Financial Advisors Limited (formerly known as Anagram Capital Limited)

(through Edelweiss Securities Limited and Edelweiss Finance & Investments Limited)

(B) Enterprise over which significant influence is exercised

Edelweiss Employee Welfare Trust

(C) Subsidiaries which are controlled by the Company and with whom no transactions have taken place during the year

EC Global Limited (through Edelweiss Finance & Investments Limited)

Aster Commodities DMCC

(through EC International Limited, Mauritius)

ECap International Limited (through EC International Limited, Mauritius)

(C) Subsidiaries which are controlled by the Company and with whom no transactions have taken place during the year (Continued)

Edelweiss International (Singapore) Pte. Limited

(through Edelweiss Capital (Singapore) Pte. Limited)

Edelweiss Alternative Asset Advisors Pte. Limited

(through Edelweiss Capital (Singapore) Pte. Limited)

EAAA LLC, Mauritius (through EC International Limited, Mauritius)

EW Special Opportunities Advisors LLC (through EAAA LLC, Mauritius)

EW India Special Assets Advisors LLC (through EAAA LLC, Mauritius)

Comfort Projects Limited (through Edelweiss Trading & Holdings Limited)

Edelweiss Investment Advisors Private Limited, Singapore

(through Edelweiss Capital (Singapore) Pte. Limited)

Edelweiss Comtrade Limited (formerly known as Anagram Comtrade Limited)

(through Edelweiss Financial Advisors Limited)

Edelweiss Stock Broking Limited (formerly known as Anagram Stockbroking Limited)(through Edelweiss Financial Advisors Limited)

Edel Finance Company Limited (formerly known as Dropadi Finance Limited)

(through Edelweiss Financial Advisors Limited)

Edelweiss Capital Markets Limited (through Edelweiss Trading & Holdings Limited)

EW Crossover Advisors LLC (through EAAA LLC, Mauritius)

(D) Associates

Edelweiss Asset Reconstruction Company Limited

(through Edelweiss Alternative Asset Advisors Limited)

Edelweiss Fund Advisors Limited

Dahlia Financial Services Private Limited (through Edelweiss Securities Limited)

Magnolia Financial Services Private Limited (through Edelweiss Securities Limited)

Arum Investments Private Limited (with effect from 29 March 2011) (through Edelweiss Securities Limited)

(E) Individuals owning, directly or indirectly, an interest in the voting power of the Company that gives them control or significant influence over the Company

Rashesh Shah

Venkat Ramaswamy

(F) Relatives of individuals owning, directly or indirectly, an interest in the voting power of the Company that gives them control or significant influence over the Company

Vidya Shah

Aparna T. C.

Kaavya Venkat

Shilpa Mody

Sharmishta Chandrakant Shah

A V Ramaswamy

(G) Enterprise which exercise significant influence over the Company

Oak Holdings Private Limited (upto 28 March 2011)

1.4 Disclosure pursuant to Accounting Standard 15 (Revised) - Employee Benefits

(A) Defined contribution plan (Provident fund):

Amount of Rs. 5.75 million (Previous year: Rs. 3.61 million) is recognised as expense and included in “ Employee Costs” – Schedule 18 in the profit and loss account.

(B) Defined benefit plan (Gratuity):

The following tables summarise the components of the net employee benefit expenses recognised in the profit and loss account, the fund status and amount recognised in the balance sheet for the gratuity benefit plan.

21.7 Operating leases

The Company has taken various premises on operating lease. Gross rental expenses for the year ended 31 March 2011 aggregated to Rs. 13.36 million (Previous year: Rs. 18.01 million) which has been included under the head Operating expenses – Rent – Schedule 19, in the profit and loss account.

1.5 Employee stock option plans

The Company has currently seven Employee Stock Option Plans (Plans’) in force. The Plans provide that the Company’s employees and those of its subsidiaries are granted an option to acquire equity shares of the Company that vests in a graded manner. The options may be exercised within a specified period.

The Company follows the intrinsic value method to account for its stock based compensation plans. Compensation cost is measured as the excess, if any, of the fair market value of the underlying share over the exercise price.

During the year, the Company has issued ESOP 2010 Plan wherein stock options were granted to employees where the exercise price was linked to either closing market price of the shares on the date of the grant or book value of the shares as per the last audited balance sheet as on the date of the grant, whichever is higher.

The schedule of stock options vesting period for ESOP 2010 Plan is as follows:-

Sr. Vesting date Maximum % of options that No.. shall vest

1 12 months from the date of grant 25 (Twenty five)% of grant

2 24 months from the date of grant 25 (Twenty five)% of grant

3 36 months from the date of grant 25 (Twenty five)% of grant

4 48 months from the date of grant 25 (Twenty five)% of grant

Total 100 (One hundred)% of grant

During the previous year, the Company has issued ESOP 2009 Plan wherein stock options were granted to employees where the exercise price was linked to either closing market price of the shares on the date of the grant or book value of the shares as per the last audited balance sheet as on the date of the grant, whichever is higher.

The schedule of stock options vesting period is as follows:-

Sr. Vesting date Maximum % of options that shall vest

1 36 months from the date of grant 30 (Thirty)% of grant

2 48 months from the date of grant 30 (Thirty)% of grant

3 60 months from the date of grant 40 (Forty)% of grant

Total 100 (One hundred)% of grant

For determination of compensation cost, the Company has assumed the exercise price to be the specified amount.

With respect to stock options granted upto 31 March 2008, the fair market value of the underlying shares has been determined based on an independent valuer’s report as these stock options were granted by the Company to its employees when it was not listed on the stock exchanges. The fair value under stock options granted during the year is arrived as stipulated in the Guidance Note on Accounting for Employee Share Based Payments issued by The Institute of Chartered Accountants of India. The compensation cost recorded in the profit and loss account for the year is Rs. 3.21 million (Previous year: Rs. 7.63 million).

(*) Pricing formula:

ESOP 2008 (I)

Period during which From the date of vesting to From 1 January 2011 vested options are 31 December 2010 to 31 December 2011 exercised

Exercise price 10 % discount to market 10% discount to the payable for such price or Rs. 120; whichever reference price i.e; vested options is higher; otherwise Rs. average of closing 120. price of grant date and 14 days preceding the grant date

ESOP 2008 (III)

Period during which From the date of vesting to From 1 January vested options are 31 December 2012 2013 to 31 December exercised 2013

Exercise price In case shares are listed, 10% discount to the payable for such 10 % discount to market reference price vested options price or Rs. 120; whichever i.e., average of is higher; otherwise Rs. closing price of 120. grant date and 14 days preceding the grant date

1.6 Capital commitment

Capital commitments (net of advances) – Rs.Nil (Previous year: Rs. Nil)

1.7 Contingent liability

(a) Taxation matters in respect of which appeal is pending – Rs.20.42 million (Previous year: Rs. 2.39 million).

(b) The Company has issued corporate guarantees to the extent of Rs.15,950 million (Previous year: Rs. 3,800 million), in favour of banks to secure the credit facilities sanctioned by these banks to Edelweiss Securities Limited, EC Commodity Limited, Edelweiss Broking Limited and Edelweiss Trading & Holdings Limited (subsidiary companies) and Rs. 5,000 million (Previous year: Rs. 2,500 million) in favour of IDBI Trusteeship Services Limited for non-convertible debentures issued by ECL Finance Limited (subsidiary company) against due discharge of debt.

1.8 Disclosure of loans and advances pursuant to clause 32 of listing agreement

(a) Rs. 13.73 million (Previous year: Rs. 11.35 million) due from Edelweiss Alternative Asset Advisors Limited (maximum amount due at any time during the year Rs. 29.76 million; Previous year: Rs. 11.35 million)

(b) Rs. Nil (Previous year: Rs. Nil) due from Edelweiss Asset Management Limited (maximum amount due at any time during the year Rs. Nil; Previous year: Rs. 3.20 million)

(c) Rs. 155.54 million (Previous year: Rs. 317.15 million) due from Edelweiss Broking Limited (maximum amount due at any time during the year Rs. 922.52 million; Previous year: Rs. 1,500.73 million)

(d) Rs. 514.39 million (Previous year: Rs. 28.61 million) due from EC Commodity Limited (maximum amount due at any time during the year Rs. 5,158.72 million; Previous year: Rs. 2,838.51 million)

(e) Rs. 22,047.70 million (Previous year: Rs. 4,510.16 million) due from Edelweiss Trading & Holdings Limited (maximum amount due at any time during the year Rs. 52,415.11 million; Previous year: Rs. 3,955.10 million)

(f) Rs. 104.40 million (Previous year: Rs. 546.42 million) due from ECap Equities Limited (maximum amount due at any time during the year Rs. 8,332.87 million; Previous year: Rs. 4,527.62 million)

(g) Rs. 314.84 million (Previous year: Rs. 63.08 million) due from Edel Commodities Limited (maximum amount due at any time during the year Rs. 519.26 million; Previous year: Rs. 975.99 million)

(h) Rs. 1,430.70 million (Previous year: Rs. 1,341.44 million) due from Edelcap Securities Limited (maximum amount due at any time during the year Rs. 8,464.84 million; Previous year: Rs. 4,573.42 million)

(i) Rs. 2,458.91 million (Previous year: Rs. 1,496.41 million) due from Edelweiss Finance & Investments Limited (maximum amount due at any time during the year Rs. 9,796.27 million; Previous year: Rs. 3,912.42 million)

(j) Rs. 44.24 million (Previous year: Rs. 2.85 million) due from Edel Land Limited (maximum amount due at any time during the year Rs. 168.55 million; Previous year: Rs. 5.30 million)

(k) Rs. 1,469.26 million (Previous year: Rs. 4,709.41 million) due from Edelweiss Securities Limited (maximum amount due at any time during the year Rs. 16,498.33 million; Previous year: Rs. 12,129.62 million)

(l) Rs. 64.43 million (Previous year: Rs. Nil) due from Edelweiss Web Services Limited (maximum amount due at any time during the year Rs. 96.83 million; Previous year: Rs. 0.70 million)

(m) Rs. Nil (Previous year: Rs. 0.50 million) due from Edelweiss Trustee Services Limited (maximum amount due at any time during the year Rs. 0.50 million; Previous year: Rs. 0.50 million)

(n) Rs. 94.59 million (Previous year: Rs. Nil) due from Edelweiss Financial Products & Solutions Limited (maximum amount due at any time during the year Rs. 3,791.85 million; Previous year: Rs. 751.56 million)

(o) Rs. 1,404.65 million (Previous year: Rs. 1,444.05 million) due from Edelweiss Employees Welfare Trust (maximum amount due at any time during the year Rs. 1,444.05 million; Previous year: Rs. 1,451.80 million)

(p) Rs. 284.70 million (Previous year: Rs. 130.20 million) due from Edelweiss Employees Incentive and Welfare Trust (maximum amount due at any time during the year Rs. 284.70 million; Previous year: Rs. 130.20 million)

(q) Rs. 533.42 million (Previous year: Rs. Nil) due from Edelweiss Housing Finance Limited (maximum amount due at any time during the year Rs. 533.42 million; Previous year: Rs. Nil)

(r) Rs. Nil (Previous year: Rs. Nil) due from Edelweiss Custodial Services Limited (maximum amount due at any time during the year Rs. 1.10 million; Previous year: Rs. Nil)

(s) Rs. 70.01 million (Previous year: Rs. Nil) due from Edelweiss Financial Advisors Limited (maximum amount due at any time during the year Rs. 980.00 million; Previous year: Rs. Nil)

(t) Rs. 8.38 million (Previous year: Rs. Nil) due from Edelweiss Investment Advisors Limited (maximum amount due at any time during the year Rs. 178.00 million; Previous year: Rs. Nil)

(u) Rs. Nil (Previous year: Rs. Nil) due from Edelweiss Tokio Life Insurance Company Limited (maximum amount due at any time during the year Rs. 0.70 million; Previous year: Rs. Nil)

(v) Rs. 1.79 million (Previous year: Rs. Nil) due from Edelweiss Capital (Singapore) Pte. Limited (maximum amount due at any time during the year Rs. 1.82 million; Previous year: Rs. Nil)

(w) Rs. 5,279.16 million (Previous year: Rs. 534.55 million) due from EC International Limited (maximum amount due at any time during the year Rs. 5,279.16 million; Previous year: Rs. 2,838.51 million)

(x) Rs. 140.91 million (Previous year: Rs. 510.18 million) due from ECL Finance Limited (maximum amount due at any time during the year Rs. 31,408.27 million; Previous year: Rs. 7,317.55 million)

(y) Rs. 13.74 million (Previous year: Rs. 32.11 million) due from Edelweiss Insurance Brokers Limited (maximum amount due at any time during the year Rs. 41.56 million; Previous year: Rs. 45.74 million)

(z) Rs. Nil (Previous year: Rs. Nil) due from Edelweiss Asset Reconstruction Company Limited (maximum amount due at any time during the year Rs. Nil; Previous year: Rs. 21.11 million)

(aa) Rs. Nil (Previous year: Rs. Nil) due from Edelweiss Fund Advisors Private Limited (maximum amount due at any time during the year Rs. 1.45 million; Previous year: Rs. 3.55 million)

- All the above loans are repayable on demand except for loan of Rs. 453.50 million and Rs. 541.20 million to Edelweiss Finance & Investments Limited and Edelcap Securities Limited respectively where repayment is as per contracted terms.

- Of the above loans, items (l), (o), (p), (q), (s) and (u) are at the interest rate below the rate specified in the section 372A.

1.9 Cost sharing

Edelweiss Capital Limited, being the holding company incurs expenditure like common senior management compensation cost, advertisement cost, rent expenditure, etc. which is for the common benefit of itself and certain subsidiary companies. This cost so expended is recovered as reimbursement from the subsidiaries on the basis of number of employees, area occupied, time spent by employees for other companies, actual identifications, etc. On the same lines, operational cost expended by the Company’s Subsidiary for the benefit of the Company is reimbursed by the Company. Accordingly, and as identified appropriately, the expenditure heads in Schedule 18 and Schedule 19 are net of these reimbursements.

1.10 Impact of change in accounting policy

From the current year, the Company has started accounting all benchmark linked debentures products on fair value basis as against the previous policy for not recognising unrealised gain. The impact of the same is Nil.

1.11 The Company has received demand notices from tax authorities on account of disallowance of expenditure for earning exempt income under section 14A (2) of Income Tax Act, 1961 read with Rule 8D of the Income Tax Rules, 1962. The company has filed appeal and is defending its position. Due to the lack of clarity on legal position relating to the application of Rule 8D, the outcome and quantification of the eventual tax liability on the company, if any, at this stage cannot be estimated. The Company has been advised by its tax counsel that it has a good chance in sustaining its position.

1.12 Schedule VI disclosures

Disclosures under Schedule VI to the Companies Act, 1956 have been made to the extent applicable to the Company.

1.13 Prior period comparatives

Previous year figures have been regrouped and rearranged wherever necessary.


Mar 31, 2010

1.1 Segment reporting

The Company’s business is organised and management reviews the performance, based on the business segments as mentioned below:

Segment Activities covered

Agency business Advisory and transactional services

Holding company activities Group’s fund management

Income for each segment has been specifically identified. Expenditure, assets and liabilities are either specifically identifiable with individual segments or have been allocated to segments on a systematic basis.

Based on such allocations, segmental balance sheet as at 31 March 2010 and segmental profit & loss account for the year ended 31 March 2010 have been prepared.

Since the business operations of the Company are primarily concentrated in India, the Company is considered to operate only in the domestic segment.

1.2 Related parties

(A) Subsidiaries which are controlled by the Company and with whom transactions have taken place during the year:

Edelweiss Securities Limited

Edelweiss Commodities Limited

Edelweiss Insurance Brokers Limited

Edelweiss Finance & Investments Limited

Edelweiss Capital USA, LLC

Edelweiss Trustee Services Limited

ECL Finance Limited

Edelweiss Custodial Services Limited

Edelcap Securities Limited

ECap Equities Limited

EC Commodity Limited

Edel Commodities Limited

Edelweiss Financial Products & Solutions Limited

Edelweiss Trusteeship Company Limited

Edelweiss Asset Management Limited

Edelweiss Broking Limited

Edelweiss Property Advisors Limited

Edel Land Limited

Edelweiss Capital Services Limited

EC International Limited, Mauritius

Edelgive Foundation

Edelweiss Alternative Asset Advisors Limited

Edelweiss Housing Finance Limited

Edelweiss Tokio Life Insurance Company Limited

Edel Investments Limited

Allium Finance Private Limited (w.e.f. 15 June 2009)

(through Edelweiss Commodities Limited)

Arum Investments Private Limited (w.e.f.15 June 2009)

(through Edelweiss Securities Limited)

Edelweiss Capital (Singapore) Pte. Limited

Edelweiss Asset Reconstruction Company Limited (upto 12 December 2008)

(B) Enterprise over which significant influence is exercised:

Edelweiss Employee Welfare Trust

(C) Subsidiaries which are controlled by the Company and with whom no transactions have taken place during the year:

EC Global Limited (through Edelweiss Finance & Investments Limited)

Aster Commodities DMCC (through EC International Limited, Mauritius) ECap International Limited (through EC International Limited, Mauritius) Edelweiss International (Singapore) Pte. Limited (through Edelweiss Capital (Singapore) Pte. Limited)

Edelweiss Securities (Singapore) Pte. Limited

(through Edelweiss Capital (Singapore) Pte. Limited)

Edelweiss Alternative Asset Advisors Pte. Limited

(through Edelweiss Capital (Singapore) Pte. Limited)

EAAA LLC Mauritius (through EC International Limited, Mauritius)

EW Special Opportunities Advisors LLC (through EAAA LLC, Mauritius)

EW India Special Assets Advisors LLC (through EAAA LLC, Mauritius)

(D) Associates:

Edelweiss Asset Reconstruction Company Limited (w.e.f. 13 December 2008)

(through Edelweiss Alternative Asset Advisors Limited)

Edelweiss Real Estate Advisors Private Limited

Blue River Capital Advisors (India) Private Limited

Blue River Capital Management Company I, LLC (through EC Global Limited)

Dahlia Financial Services Private Limited (through Edelweiss Securities Limited)

Magnolia Financial Services Private Limited (through Edelweiss Securities Limited)

(E) Individuals owning, directly or indirectly, an interest in the voting power of the Company that gives them control or significant influence over the Company:

Rashesh Shah Venkat Ramaswamy

(F) Relatives of individuals owning, directly or indirectly, an interest in the voting power of the Company that gives them control or significant influence over the Company:

Vidya Shah

Aparna T. C.

Kaavya Venkat

Shilpa Mody

Sharmishta Chandrakant Shah

A V Ramaswamy

(G) Enterprise which exercise significant influence over the company:

Oak Holdings Private Limited

1.3 Earnings per share

In accordance with Accounting Standard 20 – Earnings Per Share prescribed by Companies (Accounting Standards) Rules, 2006, the computation of earnings per share is set out below:

1.4 Disclosure pursuant to Accounting Standard 15 (Revised) - Employee Benefits

(A) Defined contribution plan (Provident fund):

Amount of Rs. 3.61 million (Previous year: Rs. 4.02 million) is recognised as expenses and included in “ Employee Costs” – Schedule 18 in the profit and loss account.

(B) Defined benefit plan (Gratuity):

The following tables summarise the components of the net employee benefit expenses recognised in the profit and loss account, the fund status and amount recognised in the balance sheet for the gratuity benefit plan.

1.5 Operating leases

The Company has taken various premises on operating lease. Gross rental expenses for the year ended 31 March 2010 aggregated to Rs. 18.01 million (Previous year: Rs. 36.93 million) which has been included under the head Operating expenses – Rent – Schedule 19, in the profit and loss account.

Provision for gratuity is based on actuarial valuation done on an overall basis which is excluded from above.

Computation of Net Profit in accordance with section 349 of the Companies Act, 1956 and calculation of commission payable to non- whole-time directors for financial year 2009-10:

1.6 Employee stock option plans

The Company has currently six Employee Stock Option Plans (‘Plans’) in force. The Plans provide that the Company’s employees and those of its subsidiaries are granted an option to acquire equity shares of the Company that vests in a graded manner. The options may be exercised within a specified period.

The Company follows the intrinsic value method to account for its stock based compensation plans. Compensation cost is measured as the excess, if any, of the fair market value of the underlying share over the exercise price.

During the year, the Company has issued ESOP 2009 Plan wherein stock options were granted to employees where the exercise price was linked to either closing market price of the shares on the date of the grant or book value of the shares as per the last audited balance sheet as on the date of the grant, whichever is higher. The schedule of stock options vesting period is as follows:-

For determination of compensation cost, the Company has assumed the exercise price to be the specified amount.

During the previous year, the Company has issued ESOP 2008 Plan wherein stock options were granted to employees with a variable exercise price (i.e. the exercise price was linked to either a discount on market price at the time of exercise or a specified amount, whichever is higher). The stock options vested after one year from the date of grant. For determination of compensation cost, the Company has assumed the exercise price to be the specified amount.

With respect to stock options granted upto 31 March 2008, the fair market value of the underlying shares has been determined based on an independent valuer’s report as these stock options were granted by the Company to its employees when it was not listed on the stock exchanges. The fair value under stock options granted during the year is arrived as stipulated in the Guidance Note on Accounting for Employee Share Based Payments issued by The Institute of Chartered Accountants of India. The compensation cost recorded in the profit and loss account for the year is Rs. 7.63 million (Previous year: Rs.6.80 million).

1.7 Capital commitment

Capital commitments (net of advances) – Rs.Nil

(Previous year: Rs. 39 million)

1.8 Contingent liability

a. Taxation matters in respect of which appeal is pending – Rs.8.72 million (Previous year: Rs. 2.06 million). The demand paid under protest in respect of disputed taxation matters pertaining to open assessments of earlier years is Rs. 1.75 million (Previous year: Rs. 1.75 million).

b. The Company has issued corporate guarantees to the extent of Rs. 3,800 million (Previous year: Rs. 6,188.30 million), in favour of banks to secure the credit facilities sanctioned by these banks to Edelweiss Securities Limited, EC Commodity Limited, Edelweiss Broking Limited and Edelweiss Commodities Limited (subsidiary companies) and Rs. 2,500 million in favour of IDBI Trusteeship Services Limited for non-convertible debentures issued by ECL Finance Limited against due discharge of debt (subsidiary company).

c. Fixed deposits of Rs. 300 million (Previous year: Rs. Nil) is marked as lien in favour of IDBI Trusteeship Services Limited, for non- convertible debentures issued by the Company.

1.9 Details of dues to macro enterprises and small enterprises

The Company has requested its creditors to confirm the applicability to them under the Micro Small and Medium Enterprises Development Act, 2006. Based on the responses received by the Company, the details of dues to macro enterprises and small enterprises:

1.10 Disclosure of loans and advances pursuant to clause 32 of listing agreement

a) Rs. 11.35 million (Previous year: Rs. 2.65 million) due from Edelweiss Alternative Asset Advisors Limited (maximum amount due at any time during the year Rs. 11.35 million; Previous year: Rs. 16.17 million)

b) Rs. Nil (Previous year: Rs. Nil) due from Edelweiss Asset Management Limited (maximum amount due at any time during the year Rs. 3.20 million; Previous year: Rs. Nil)

c) Rs. 317.15 million (Previous year: Rs. 69.26 million) due from Edelweiss Broking Limited (maximum amount due at any time during the year Rs. 1,500.73 million; Previous year: Rs. 73.39 million)

d) Rs. 28.61 million (Previous year: Rs. 250.21 million) due from EC Commodity Limited (maximum amount due at any time during the year Rs. 2,838.51 million; Previous year: Rs. 250.21 million)

e) Rs. 4,510.16 million (Previous year: Rs. 186.07 million) due from Edelweiss Commodities Limited (maximum amount due at any time during the year Rs. 13,955.10 million; Previous year: Rs. 5,296.67 million)

f) Rs. 546.42 million (Previous year: Rs. 147.03 million) due from ECap Equities Limited (maximum amount due at any time during the year Rs. 4,527.62 million; Previous year: Rs. 3,178.81 million)

g) Rs. 63.08 million (Previous year: Rs. 50.10 million) due from Edel Commodities Limited (maximum amount due at any time during the year Rs. 975.99 million; Previous year: Rs. 50.10 million)

h) Rs. 1,341.44 million (Previous year: Rs. 176.05 million) due from Edelcap Securities Limited (maximum amount due at any time during the year Rs. 4,573.42 million; Previous year: Rs. 3,043.01 million)

1.11 Disclosure of loans and advances pursuant to clause 32 of listing agreement. (Continued)

i) Rs. 1,496.41 million (Previous year: Rs. 1,520.40 million) due from Edelweiss Finance & Investments Limited (maximum amount due at any time during the year Rs. 3,912.42 million; Previous year: Rs. 5,490.08 million)

j) Rs. 2.85 million (Previous year: Rs. Nil) due from Edel Land Limited (maximum amount due at any time during the year Rs. 5.30 million; Previous year: Rs. Nil)

k) Rs. 4,709.41 million (Previous year: Rs. 2,545.12 million) due from Edelweiss Securities Limited (maximum amount due at any time during the year Rs. 12,129.62 million; Previous year: Rs. 6,869.21 million)

l) Rs. Nil (Previous year: Rs. Nil) due from Edelweiss Capital Services Limited (maximum amount due at any time during the year Rs. 0.70 million; Previous year: Rs. Nil)

m) Rs. 0.50 million (Previous year: Rs. 0.01 million) due from Edelweiss Trustee Services Limited (maximum amount due at any time during the year Rs. 0.50 million; Previous year: Rs. 0.39 million)

n) Rs. Nil (Previous year: Rs. 164.80 million) due from Edelweiss Financial Products & Solutions Limited (maximum amount due at any time during the year Rs. 751.56 million; Previous year: Rs. 355.75 million) o) Rs. 1,444.05 million (Previous year: Rs. 424.82 million) due from Edelweiss Employees Welfare Trust (maximum amount due at any time during the year Rs.1,451.80 million; Previous year: Rs. 424.82 million)

p) Rs. 130.20 million (Previous year: Rs. Nil) due from Edelweiss Employees Incentive and Welfare Trust (maximum amount due at any time during the year Rs. 130.20 million; Previous year: Rs. Nil)

q) Rs. 534.55 million (Previous year: Rs. Nil) due from EC International Limited (maximum amount due at any time during the year Rs. 2,838.51 million; Previous year: Rs. Nil)

r) Rs. 510.18 million (Previous year: Rs. 114.89 million) due from ECL Finance Limited (maximum amount due at any time during the year Rs. 7,317.55 million; Previous year: Rs. 2,787.98 million)

s) Rs. 32.11 million (Previous year: Rs. 38.06 million) due from Edelweiss Insurance Brokers Limited (maximum amount due at any time during the year Rs. 45.74 million; Previous year: Rs. 38.99 million)

t) Rs. Nil (Previous year: Rs. 0.54 million) due from Edelweiss Asset Reconstruction Company Limited (maximum amount due at any

time during the year Rs. 21.11 million; Previous year: Rs. 0.54 million) u) Rs. Nil (Previous year: Rs. 0.79 million) due from Edelweiss Real Estate Advisors Private Limited (maximum amount due at any time during the year Rs. 3.55 million; Previous year: Rs. 11.06 million) All the above loans are repayable on demand except for loan of Rs. 482.50 million and Rs. 1,304.80 million to Edelweiss Finance & Investments Limited and Edelcap Securities Limited respectively where repayment is as per contracted terms. Of the above loans, items a) to p) are at the interest rate below the rate specified in the section 372A

1.12 Cost sharing

Edelweiss Capital Limited, being the holding company incurs expenditure like common senior management compensation cost, advertisement cost, rent expenditure, etc. which is for the common benefit of itself and certain subsidiary companies. This cost so expended is recovered as reimbursement from the subsidiaries on the basis of number of employees, area occupied, time spent by employees for other companies, actual identifications etc. On the same lines, operational cost expended by the Company’s Subsidiary for the benefit of the Company is reimbursed by the Company. Accordingly, and as identified appropriately, the expenditure heads in Schedule 18 and schedule 19 are net of these reimbursements.

1.13 Schedule VI disclosures

Disclosures under Schedule VI to the Companies Act, 1956 has been made to the extent applicable to the Company.

1.14 Prior period comparatives

Previous year figures have been regrouped and rearranged wherever necessary.

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