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Directors Report of IIFL Holdings Ltd.

Mar 31, 2013

The Directors have pleasure in presenting the Eighteenth Annual Report along with the audited statements of accounts of your Company for the financial year ended March 31, 2013.

Financial results:

A summary of the financial performance of the Company and its major subsidiaries, for the financial year ended March 31, 2013, is as under:

(Rs. Million)

Name of Company Revenues Profit after tax

Aggregate 26,652.6 2,793.4

India Infoline Limited 5,504.7 958.1

India Infoline Finance Limited 16,939.8 1,747.5

India Infoline Housing Finance Limited 451.5 139.7

India Infoline Insurance Services Limited 31.7 4.4

India Infoline Insurance Brokers Limited 903.7 26.8

India Infoline Commodities Limited 1,044.9 90.0

India Infoline Media and Research Services Limited 1,110.3 18.2

IIFL Realty Limited 917.5 193.6

IIFL Wealth Management Limited 1,602.6 282.9

IIFL Distribution Services Private Limited 34.4 19.9

IIFL Trustee Services Limited 5.5 1.7

India Infoline Asset Management Company Limited 15.3 (24.2)

IIFL Alternate Assets Advisors Limited 135.7 8.5

India Infoline Distribution Company Limited 33.5 7.0

IIFL Securities Ceylon (Pvt) Limited 33.6 (10.1)

IIFL Inc. 89.1 (4.6)

IIFL Private Wealth (Dubai) Limited 29.5 (20.6)

IIFL Private Wealth (Mauritius) Limited 284.6 44.6

IIFL Wealth (UK) Limited 32.5 0.2

IIFL (Asia) Pte. Limited 25.0 1.2

IIFL Capital Pte. Limited 54.6 9.5

IIFL Securities Pte Limited 321.7 160.4

IIFL Private Wealth Hong Kong Limited 13.7 1.1

Inter Company Adjustments (2,973.6) (860.6)

Other Subsidiaries 10.8 (1.8)

A summary of the consolidated financial performance of your Company, for the financial year ended March 31, 2013, is as under:

(Rs. Million)

2012-13 2011-12

Gross total income 26,652.6 18,864.7

Profit before interest, depreciation and taxation 13,536.0 7,840.5

interest and financial charges 8,692.5 5,043.1

Depreciation 839.3 802.2

Profit before tax 4,004.3 1,995.2

Taxation - Current 1,420.3 835.2

- Deferred (227.2) (207.9)

- Short or excess provision for income tax 17.8 7.2

Net profit for the year 2,793.4 1,360.7

Less: Exceptional item (net of tax) - -

Net profit before minority interest 2,793.4 1,360.7

Less: Minority interest (71.4) (40.0)

Less: Appropriations

Interim Dividend (927.4) (433.6)

Dividend Distribution Tax (150.5) (70.3)

Transfer to General Reserve (306.0) (65.2)

Transfer to Special Reserve (378.0) (216.3)

Debenture Redemption Reserve (220.0) (630.0)

Less: Adjustments for Minority Interest and fair value (31.8) 69.7

Add: Additions/deductions on account of Merger 189.1 -

Add: Balance brought forward from the previous year 2,979.9 3,004.9

Balance to be carried forward 3,877.3 2,979.9

A summary of the stand-alone financial performance of your Company, for the financial year ended March 31, 2013, is as under:

(Rs. Million)

2012-13 2011-12

Gross total income 5,504.7 6,390.0

Profit before interest, depreciation and taxation 1,292.6 1,440.2

Interest and financial charges 90.9 378.6

Depreciation 132.9 314.4

Profit before tax 1,068.8 747.2

Taxation - Current 109.0 142.7

- Deferred 1.7 (29.1)

- Short or excess provision for income tax - 0.6

Net profit for the year 958.1 633.0

Less: Appropriations

Interim Dividend 883.1 433.6

Dividend Distribution tax 18.9 70.3

Transfer to General Reserve 96.0 65.2

Add: Balance brought forward from the previous year 1,801.1 1,737.2

Balance to be carried forward 1,811.6 1,801.1

Review of operations

On a consolidated basis, in the current year, your Company''s income increased by 41.3% to Rs. 26.7 bn and EBITDA increased by 73% to Rs. 13.54 bn. Profit before tax increased by 100.7% and Profit after tax before minority interest increased by 105.3% to Rs. 2.79 bn.

Equity broking and related income marginally increased by 1.2% to Rs. 5.53 bn. Our Credit and Finance business gained further momentum and increased by 66.6% to Rs. 18.17 bn contributing 68% of total revenues, in the current year. Marketing and Distribution income also grew by 18.8% to Rs. 2.89 bn. The other income stood at Rs. 71.5 mn.

Key initiatives

i. Equity Business

Qualified Depository Participant for Qualified Foreign Investor

The Company received SEBI approval as Qualified

Depository Participant (QDP) to undertake newly opened up Qualified Foreign Investor (QFI) transactions in Indian Market. Under this initiative, your Company has already sourced several investors who have made sizeable investment in Indian securities. The Company expects this segment to grow as it facilitates higher QFI transactions in coming years.

Membership of MCX Stock Exchange

The Company received membership from the newly launched MCX Stock Exchange for Cash and Derivatives Segments during the year.

ii. Fund Management Business Alternative Investment Funds

During the year, the Company as a sponsor, received approval from SEBI for newly opened up Alternative Investment Funds (AIFs) under all three categories namely, IIFL Venture Fund (Category I AIF - Venture Capital Fund), IIFL Private Equity Fund (Category II AIF) and IIFL Opportunities Fund (Category III AIF).

As AIFs, these Funds are pooled investment vehicles for HNIs and corporate investors for investing in various securities under the respective Fund. The Company''s subsidiary namely IIFL Alternate Asset Advisors Limited is the Investment Manager for these funds. Under IIFL Private Equity Fund (Category II AIF), IIFL Income Opportunities Fund was launched as a close ended debt scheme in February 2013. The Fund received an overwhelming response from large number of HNIs and corporate investors with a commitment of Rs. 6,200 mn.

We intend to launch various schemes under the above Funds as well as new AIFs in the coming future. We believe that this segment offers enormous potential for providing fund management services and opportunity for rapid growth in the coming years.

Mutual Funds

During the financial year ended March 31, 2013, IIFL Mutual Fund increased the number of its equity schemes by launching IIFL Dividend Opportunity Fund, an open ended index scheme. The scheme garnered Rs. 212.7 mn from 16,426 investors. The Fund also launched a close ended debt scheme, which mobilised Rs. 1,222.1 mn. As on March 31, 2013, IIFL Mutual Fund managed 6 schemes, with Net Assets under Management (AUM) of Rs. 3,282.3 mn as compared to Rs. 1711.3 mn as on March 31, 2012. The number of investor folios increased to 26,928 during the year, from 8,883 folios a year ago. The Fund is in the process of launching further schemes including liquid and other debt schemes, which would enable more debt participation and higher AUM.

iii. NBFC Business

During the year under review, India Infoline Finance Limited, the NBFC subsidiary of the Company, successfully completed Initial Public Offering of Subordinated Debt through Unsecured Redeemable Non-Convertible Debentures ("NCDs") of Rs. 2,500 mn with green shoe option of additional Rs. 2,500 mn. The issue received an overwhelming response and was oversubscribed in three days. The Company retained Rs. 5,000 mn through allotment of NCDs. These NCDs are listed and traded on the NSE and BSE.

During the year, the NBFC subsidiary initiated securitization and assignment of some eligible loans under the revised Securitisation & Assignment Guidelines of RBI.

During the last quarter, the Company, after extensive evaluation, commenced financing of commercial vehicles. The Company has hired a specialised and experienced team for this business. The Company expects to drive and grow this business in the coming years.

iv. Investor Conferences Institutional Investors'' conference

Your Company''s institutional research products have been well appreciated by the target investors. Your Company''s fourth Global Investors'' Conference titled ''Enterprising India-IV'' held in Mumbai in February 2013 had participation from leading corporate and eminent leaders/speakers and received an overwhelming response from global institutional investors.

Wealth Management''s Investor Summit

IIFL Wealth Management''s second Investor Summit titled ''See Clearly'', was held in Pune and Mumbai in the months of January and February, 2013 respectively, and received an equally overwhelming response.

v. Corporate Social Responsibility Financial Literacy

As part of Corporate Social Responsibility initiative, your company continued with its comprehensive financial education and awareness program called FLAME - Financial Literacy Agenda for Mass Empowerment. Under this initiative, your Company has so far successfully completed over 300 FLAME workshops for investors and students. Almost 200 schools covering over 50,000 students have enrolled for the Fin-Lites distance learning program. Our other initiatives include a comprehensive mass media campaign on financial literacy, dedicated portal and helpline and effective use of social media platforms like Twitter and Facebook to answer queries besides providing easy to understand books on Finance (108 Mantras for Financial Success).

Helping the underprivileged and physically handicapped

IIFL has tied up with KJ Somaiya Institute of Management Studies & Research (SIMSR) to impart basic financial knowledge to underprivileged sections of the society and physically handicapped people. The program covers lessons on savings, budgeting, banking, credit management, microfinance and self-help groups (SHGs).

FLAME has sponsored Financial Literacy Courses being conducted in National Society for Equal Opportunities for the Handicapped (NASEOH), Vocational Training Institute & Adarsh Vidyalaya.

vi. Aadhaar

UID-AADHAAR card is an effective government document, which confirms details about identity of Indians. IIFL encourages all its employees to register themselves for the UID-ADHAAR program and submit their UID-AADHAAR number or enrollment number to the Company.

vii. Awards and Recognitions:

Your Company was conferred with the following awards during the financial year ended March 31, 2013:

- An IIFL Analyst was rated as the ''Best Market Analyst'' by Zee Business at the Zee Business Market Analyst Awards 2012

- ''Best Broking House with Global Presence'' awarded by D&B Equity Broking Awards 2012

- IIFL''s Wealth Management subsidiary bagged award for ''Best Wealth Management House - India'' by The Asset Triple A 2012

- BSE Group felicitated IIFL for being one of the top performers in the ''Equity FI'' category on Muhurat Trading day

- Mr. Nirmal Jain, our Chairman, received the ''Entrepreneur of the Year'' award at the 10th Franchise India Awards, 2012

Restructuring

In order to achieve simplified business structure, focused management, strengthen core competencies and enhance value creation for the group, the Board of Directors of your Company have approved transfer of Company''s broking, Depository Participant, Portfolio Management, Mutual Fund Distribution and Investment Banking businesses ("Financial Services Undertaking") to a wholly owned subsidiary, India Infoline Distribution Company Limited ("IIDCL"), through a scheme of arrangement in terms of Section 391 to 394 of the Companies Act, 1956. As the said transfer is to a wholly owned subsidiary, it does not involve issue of new shares by the Company. The Scheme is subject to necessary approvals of regulatory authorities, shareholders, creditors and High Court. The Company has already initiated the process. The appointed date for the transfer is April 1, 2013.

Further, in order to achieve better operational efficiency and control, IIFL (Thane) Private Limited, a step down subsidiary, was merged with IIFL Realty Limited, a direct and the Company''s office infrastructure support subsidiary.

Dividend on equity shares

During 2012-13, the Company declared and paid an interim dividend of Rs. 3 per share (face value of Rs. 2 per share). The same is considered as final. The total dividend paid in 2011-12 was Rs. 1.5 per share.

Employees Stock Option Schemes (ESOS)

The Company granted 3,300,000 stock options to employees during the year under its Employee Stock Option Scheme 2007 and 2008. Details as per the Securities and Exchange Board of India (Employees Stock Option Scheme and Employee Stock Option Purchase Scheme) Guidelines, 1999, are attached as an annexure.

During the year under review, the Company allotted 62,05,680 equity shares of Rs. 2/- each to the eligible employees.

Deposits

During the year, the Company did not accept/renew any deposits within the meaning of Section 58A of the Companies Act, 1956 and the rules made there under and as such, no amount of principal or interest was outstanding as on the balance-sheet date.

Subsidiary Companies

As on March 31, 2013, the Company had 28 subsidiaries located in India and overseas. Pursuant to the general exemption granted by the Ministry of Corporate Affairs vide circular dated February 8, 2011, the Board of Directors had at their meeting held on May 11, 2013 approved attaching the consolidated financials of all the subsidiaries of the Company along with that of the Company. Copies of the Balance Sheet, Profit and Loss Account, Report of the Board of Directors and Report of the Auditors of each of the subsidiary Companies are not attached to the accounts of the Company for the previous financial year 2012-13. Your Company will make available these documents/details upon request by any member of the Company. These documents/details will also be available for inspection by any member of the Company at its registered office and also at the registered offices of the concerned subsidiaries. The Annual Report of all the subsidiaries shall be uploaded upon the website of the Company. As required by Accounting Standard - 21 (AS-21) issued by the Institute of Chartered Accountants of India, the Company''s consolidated financial statements included in this Annual Report incorporates the accounts of its subsidiaries. A summary of key financials of the Company''s subsidiaries is also included in this Annual Report.

Management Discussion and Analysis Report and Report of the Directors on Corporate Governance

In accordance with Clause 49 of the listing agreements, the Management Discussion and Analysis Report and the Report of the Directors on Corporate Governance form part of this report.

A certificate from Statutory Auditors Messrs Sharp & Tannan Associates, Chartered Accountants, regarding compliance with the conditions of Corporate Governance as stipulated under Clause 49 of the listing agreement is also attached.

Directors

In accordance with Sections 255 and 256 of the Companies Act, 1956 ("Act") read with Article 137 of the Articles of Association of the Company, Mr. Kranti Sinha and Mr. A K Purwar are liable to retire by rotation at the ensuing AGM. Being eligible, they offer themselves for reappointment.

The Board recommends for shareholders'' approval.

Dr. S Narayan has been appointed by the Board as an Additional Director of the Company with effect from August 1, 2012. As per provisions of Section 260 of the Act, Dr. Narayan holds the position till the date of the ensuing Annual General Meeting of the Company. The Company has received notice in writing from a member under Section 257 of the Act, proposing appointment of Dr. Narayan as a Director of the Company.

The proposal to appoint Dr. Narayan as Director of the Company is recommended for shareholders'' approval.

Directors'' Responsibility Statement

In accordance with the provisions of Section 217 (2AA) of the Companies Act, 1956 and based on the information provided by the management, your Directors state that:

(a) In the preparation of the annual accounts, the applicable accounting standards were followed;

(b) Appropriate accounting policies were selected and applied consistently and that judgments and estimates made were reasonable and prudent so as to give a true and fair view of the state of affairs of your Company as at March 31, 2013, and of its profit for the year ended on that date;

(c) Proper and sufficient care was taken to maintain adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities;

(d) The annual accounts of the Company were prepared on a going concern basis.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The additional information required in accordance with sub-section (1)(e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules,1988, is appended to and forms part of this Report.

Particulars of Employees

In accordance with the provisions of Section 217(2A) of the Companies Act, 1956 and the rules framed thereunder, the names and other particulars of employees are set out in the annexure to the Directors'' Report. In terms of the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Directors'' Report is being sent to all the shareholders of the Company excluding the aforesaid annexure. The annexure is available for inspection at the registered office of the Company. Any shareholder interested in the said information may write to the Company Secretary at the registered office of the Company.

Statutory Auditors

Messrs Sharp & Tannan Associates, Chartered Accountants, Mumbai, retire at the ensuing Annual General Meeting and being eligible offers themselves for re-appointment. The Company has received a confirmation from Messrs Sharp & Tannan Associates to the effect that their appointment, if made, would be within the limits prescribed under Section 224(1 B) of the Companies Act, 1956. The Audit Committee and Board of Directors recommend the re-appointment of Messrs Sharp & Tannan Associates, Chartered Accountants as Statutory Auditors of the Company.

Appreciation

Your Directors place on record their sincere appreciation for the assistance and guidance provided by the government, regulators, stock exchanges, other statutory bodies and Company''s bankers for the assistance, cooperation and encouragement extended to the Company.

Your Company''s employees are instrumental in your Company scaling new heights, year after year. Their commitment and contribution is deeply acknowledged. Your involvement as shareholders is also greatly valued. Your Directors look forward to your continuing support.

On behalf of the Board

Place: Singapore Nirmal Jain

Date: May 11, 2013 Chairman


Mar 31, 2012

The Directors have pleasure in presenting the Seventeenth Annual Report along with the audited statements of accounts of your Company for the financial year ended March 31, 2012.

I. Financial results

A snapshot of the financial performance of the Company and its major subsidiaries for the financial year 2011-12 is as under:

(Rs.million)

Name of Company Revenues Profit before interest, Profit after tax depreciation and tax

Aggregate 18,864.7 7,840.5 1,360.7

India Infoline Ltd 6,390.0 1,431.5 633.0

India Infoline Finance Ltd 9,103.7 6,195.4 1,018.5

India Infoline Housing Finance Ltd 431.3 239.1 35.9

India Infoline Insurance Services Ltd 54.6 33.6 1.6

India Infoline Insurance Brokers Ltd 857.9 41.4 26.5

India Infoline Commodities Ltd 1,031.9 110.3 28.5

India Infoline Media and Research Services Ltd 424.6 79.8 15.8

IIFL Realty Ltd 574.6 449.2 (40.0)

IIFL Wealth Management Ltd 1,070.0 277.5 147.6

India Infoline Venture Capital Fund (0.5) (43.2) (43.8)

IIFL Inc 70.3 (3.7) 1.4

India Infoline Asset Management Company Ltd 10.4 (16.2) (23.0)

Finest Wealth Managers Private Ltd 24.4 13.6 9.1

IIFL Securities Ceylon (Pvt) Ltd 26.3 5.5 3.9

IIFL Private Wealth Dubai Ltd 1.5 (33.2) (33.4)

IIFL Private Wealth (Mauritius) Ltd 37.9 0.8 0.7

IIFL Wealth (UK) Ltd 14.8 (1.4) (1.4)

IIFL (Asia) Pte. Ltd - (268.6) (178.0)

IIFL Capital Pte. Ltd 35.1 (35.5) (39.2)

IIFL Securities Pte Ltd 215.5 (38.3) (43.6)

Inter Company Adjustments (1,525.8) (591.2) (143.6)

Other Subsidiaries 16.2 (5.9) (15.7)

A snapshot of the consolidated financial performance of your Company is as under: (Rs.million)

2011-12 2010-11

Gross total income 18,864.7 14,739.4

Profit before interest, depreciation and taxation 7,840.5 6,067.5

Interest and financial charges 5,043.1 2,357.9

Depreciation 802.2 581.7

Profit before tax 1,995.2 3,127.9

Taxation - Current 835.2 1,073.6

- Deferred (207.9) (127.7)

- Short or excess provision for income tax 7.2 34.7

Net profit for the year 1,360.7 2,147.3

Less: Exceptional item (net of tax) - -

Net profit before minority interest 1,360.7 2,147.3

Less: Minority interest (40.0) (35.9)

Less: Appropriations Interim dividend (433.6) (860.4)

Dividend distribution tax (70.3) (147.3)

Transfer to general reserve (65.2) (206.0)

Transfer to special reserve (216.3) (185.5)

Debenture Redemption Reserve (630.0) -

Adjustments for Minority Interest and fair value 69.7 (190.4)

Add: Balance brought forward from the previous year 3,004.9 2,483.1

Balance to be carried forward 2,979.9 3,004.9

A snapshot of the standalone financial performance of your Company is as under:

(Rs.million)

2011-12 2010-11

Gross total income 6,390.0 7,995.5

Profit before interest, depreciation and taxation 1,440.2 2,834.9

Interest and financial charges 378.6 861.5

Depreciation 314.4 240.8

Profit before tax 747.2 1,732.6

Taxation - Current 142.7 512.3

- Deferred (29.1) (10.9)

- Short or excess provision for income tax 0.6 7.6

Net profit for the year 633.0 1,223.6

Less: Appropriations - -

Interim dividend 433.6 859.2

Dividend distribution tax 70.3 127.6

Transfer to general reserve 65.2 123.0

Add: Balance brought forward from the previous year 1,737.2 1,623.4

Balance to be carried forward 1,801.1 1,737.2

II. Review of operations

On a consolidated basis, in the current year, your Company's income increased by 28% to Rs. 18.9 billion and EBIDTA increased by 29.2% to Rs. 7.8 billion. However with higher interest outgo, Profit before tax declined by 36.2% and Profit after tax before minority interest decreased by 36.6% to Rs. 1.4 billion.

Due to sluggish capital markets, equity broking and related income decreased by 18.5% to Rs. 5.5 billion. Our Credit and Finance business gained momentum and increased by 76.4% to Rs. 10.9 billion, contributing 58% to total revenues, in the current year. Marketing and distribution income also grew by 31.9% to Rs. 2,430.7 million. The other income stood at Rs. 71.9 million.

III. Key initiatives

Maiden NCD issue by NBFC subsidiary

During the year under review, India Infoline Finance Limited, the NBFC subsidiary, successfully completed Initial Public Offering of Secured Redeemable Non-Convertible Debentures ("NCDs") of Rs. 3.75 billion with green shoe option to retain additional Rs. 3.75 billion. The issue received an overwhelming response and was oversubscribed and the Company could retain Rs. 7.5 billion subscription. These NCDs are listed and traded on the National Stock Exchange and Bombay Stock Exchange.

Launch of IIFL Real Estate Fund

India Infoline Venture Capital Fund (IIFL VCF), the venture capital arm of India Infoline Group (IIFL), successfully completed the launch of its Real Estate Fund - 'IIFL Real Estate Fund (Domestic) Series 1' in January, 2012. The fund was fully subscribed with total commitment of Rs. 5 billion with green shoe option of Rs. 2.5 billion. The fund is focused on the real estate sector in India by investing in equity, debt and equity-linked instruments of promising real estate development projects and companies involved in projects predominantly located in Tier-I cities which have significant growth potential.

IIFL Mutual Fund

Subsequent to SEBI approval to mutual fund business, IIFL Mutual Fund launched its first New Fund Offer IIFL Nifty ETF in September, 2011 and received an encouraging response from investors. IIFL Nifty ETF ranked second in most traded Equity ETF's on NSE and has a high level of retail investors of over 7,000. IIFL Mutual Fund also launched 3 series of debt schemes under IIFL Fixed Maturity Plan. The total net assets under management of IIFL Mutual Fund as on March 31, 2012 was Rs. 1,711.3 million.

New products introduced by IIFL Wealth Management IIFL Wealth Management introduced new products structured on the fixed income side including NCDs, NABARD,

Structured Notes and Introduced Family Office, a multi- manager investment platform offering a complete wealth structuring solution and inter-generational transfer solution to clients. The total assets under wealth advisory crossed Rs. 200 billion during the year.

Global operations

During the year, the Company set up wholly owned subsidiaries in Hong Kong, Mauritius and Dubai to undertake financial advisory and distribution services.

Global investor conference

Your Company's institutional research products have been well appreciated by the target audience. "Enterprising India- III", your Company's third Global Investors Conference, held in February, 2012 at Mumbai had participation from leading corporates and eminent leaders / speakers. The Conference received an overwhelming response from global investors and institutional participants.

Corporate Social Initiative - Financial Literacy

As a part of its Corporate Social Responsibility initiative, your Company launched a comprehensive financial education and awareness initiative, FLAME - Financial Literacy Agenda for Mass Empowerment, in 2011.

Under this initiative your Company has successfully completed over 250 FLAME workshops for investors and students. Over 45 schools covering 5,500 students have enrolled for the Fin-Lites distance learning programme.

Our other initiatives include a comprehensive mass media campaign on financial literacy, dedicated portal and helpline and effective use of social media platforms like Twitter and Facebook to answer queries and books and publications.

Corporate Social Initiative - Helping the underprivileged and physically handicapped

IIFL sponsored Swadhaar Finaccess (SFA), an NGO to impart financial education to women living in slum communities through a specially designed Financial Education Programme (FEP).

IIFL has also tied up with KJ Somaiya Institute of Management Studies & Research (SIMSR) to impart basic financial knowledge to underprivileged sections and physically handicapped sections of the society. The programmes covers lessons on savings, budgeting, banking, credit management, microfinance and self-help groups (SHGs).

Awards and Recognitions:

Your Company was conferred the following awards during 2011-12:

- Best Broking House with Global Presence' awarded by D&B Equity Broking Awards 2011

- Awarded 'Best Broker - India' by Finance Asia Country Awards for Achievement 2011

- IIFL's Wealth Management subsidiary bagged Euro money awards for Best Fixed Income Portfolio Management &

Best Commodities Investment in India 2012 and 'Best Wealth Management House - India' by The Asset Triple A 2011

IV. Merger of subsidiary

India Infoline Marketing Services Limited ("IIMSL"), a wholly- owned subsidiary was merged with the Company with effect from April 1, 2011. The Scheme of Amalgamation was sanctioned by the Hon'ble High Court of Judicature at Bombay vide order dated April 27, 2012. Pursuant to the Scheme, the Authorised Share Capital of the Company increased to Rs. 1200 million. Similarly, Moneyline Credit Limited, step down NBFC subsidiary was merged with, India Infoline Finance Limited, direct NBFC subsidiary. This enabled consolidation of all lending and investments businesses (except housing loans) under one NBFC subsidiary and ensures better operations and control.

V. Dividend on equity shares

During 2011-12, the Company declared and paid an interim dividend of Rs. 1.5 per share (face value of Rs. 2 per share). The same is considered as final. The total dividend paid in 2010- 11 was Rs. 3 per share.

VI. Allotment of shares

During 2011-12, your Company allotted 2,613,380 equity shares of Rs. 2 each on exercise of stock options under the Employee Stock Option Schemes of the Company.

VII. Deposits

During 2011-12, your Company did not accept / renew any deposits within the meaning of Section 58A of the Companies Act, 1956 and the rules made there under and as such, no amount of principal or interest was outstanding as on the balance sheet date.

VIII. Subsidiary companies

As on March 31, 2012, the Company has 29 subsidiaries located in India and overseas. Pursuant to the general exemption granted by the Ministry of Corporate Affairs vide circular dated February 8, 2011, the Board of Directors had at their meeting held on May 15, 2012 approved attaching the consolidated financials of all the subsidiaries of the Company along with that of the Company. The copies of the Balance Sheet, Profit and Loss Account, Report of the Board of Directors and Report of the Auditors of each of the subsidiary companies are not attached to the accounts of the Company for financial year 2011-12. Your Company will make available these documents / details upon request by any member of the Company. These documents / details will also be available for inspection by any member of the Company at its registered office and also at the registered offices of the concerned subsidiaries. The Annual Report of all the subsidiaries shall be uploaded upon the website of the Company. As required by Accounting Standard - 21 (AS-21) issued by the Institute of Chartered Accountants of India, the Company's consolidated financial statements included in this Annual Report incorporates the accounts of its subsidiaries. A summary of key financials of the Company's subsidiaries is also included in this Annual Report.

IX. Management Discussion and Analysis

The Management Discussion and Analysis Report for 2011- 12, as required under Clause 49 of the Listing Agreement is given as a separate statement in the Annual Report.

X. Disclosure of Employee Stock Options

During 2011-12, the Company granted 5,200,000 stock options to the employees under its Employee Stock Option Scheme 2007 and 2008. Details as per the Securities and Exchange Board of India (Employees Stock Option Scheme and Employee Stock Option Purchase Scheme) Guidelines, 1999, are attached as an annexure.

XI. Directors

In accordance with Sections 255 and 256 of the Companies Act of 1956 read with Article 137 of the Articles of Association of the Company, Mr. Nilesh Vikamsey, retires by rotation and being eligible, offers himself for reappointment at the ensuing Annual General Meeting of the Company.

Mr. Sunil Kaul has been appointed as an Additional Director of the Company by the Board with effect from November 5, 2011. As per the provisions of Section 260 of the Companies Act, 1956, ("Act"), Mr. Kaul holds the position till the date of the forthcoming Annual General Meeting of the Company. The Company has received notice in writing from a member under Section 257 of the Act, proposing appointment of Mr. Kaul as a Director of the Company.

Mr. Chandran Ratnaswami has been appointed as an Additional Director of the Company by the Board with effect from May 15, 2012. As per the provisions of Section 260 of the Companies Act, 1956, ("Act"), Mr. Chandran holds the position till the date of the forthcoming Annual General Meeting of the Company. The Company has received notice in writing from a member under Section 257 of the Act, proposing appointment of Mr. Chandran as a Director of the Company.

The proposals for appointment of Mr. Sunil Kaul and Mr. Chandran Ratnaswami as Directors of the Company are recommended for shareholders approval.

XII. Directors' Responsibility Statement

As required by Section 217 (2AA) of the Companies Act, 1956, your Directors confirm that:

(a) In the preparation of the annual accounts, the applicable accounting standards were followed

(b)Appropriate accounting policies were selected and applied consistently and that judgments and estimates made were reasonable and prudent so as to give a true and fair view of the state of affairs of your Company as at March 31, 2012, and of its profit for the year ended on that date

(c) Proper and sufficient care was taken to maintain adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities

(d)The annual accounts were prepared on an ongoing concern basis

XIII. Conservation of energy, technology absorption, foreign exchange earnings and outgo

The additional information required in accordance with sub- section (1)(e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules,1988, is appended to and forms part of this Report.

XIV. Corporate Governance Report

The Corporate Governance Report giving the details as required under Clause 49 of the Listing Agreement in the stock exchanges is given separately and forms part of the Director's Report to shareholders.

A certificate from the Statutory Auditors, M/s Sharp &

Tannan Associates, Chartered Accountants, regarding compliance with the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is also attached.

With respect to the Corporate Governance Voluntary Guidelines, 2009 issued by the Ministry of Corporate Affairs, Government of India, your Company is broadly complying with many of the requirements of the guidelines and is also in the process of implementing the remaining suggestions. The gist of major compliance with the said guidelines is given below:

a) Separation of offices of Chairman and Chief Executive:

The roles and offices of Chairman and Chief Executive are separated. Mr. Nirmal Jain is a Chairman of the Company and Mr. R Venkataraman is the Managing Director of the Company.

b) Remuneration of Directors: The Independent Directors on the Board are paid sitting fees for attending the meeting of the Board and / or any Committee thereof. Further, Independent Directors are paid commission as approved by the Board within the overall limit approved by the shareholders of the Company.

c) Independent Directors: Independent Directors are not involved in the day-to-day management of the Company.

d) Number of companies in which an individual may become a Director: The Company has appraised its board members about the restriction on number of other directorships.

e) Internal Auditors: The Company has an internal audit department which carries out audits in designated areas.

f) Internal Control: The Board ensures the effectiveness of the Company's system of internal controls including financial, operational and compliance controls and risk management systems.

XV. Particulars of employees

In accordance with the provisions of Section 217(2A) of the Companies Act, 1956 and the rules framed there under, the names and other particulars of employees are set out in the annexure to the Directors' Report. In terms of the provisions of Section 219 (1) (b) (iv) of the Companies Act, 1956, the Directors' Report is being sent to all the shareholders of the Company excluding the aforesaid information. The annexure is available for inspection at the registered office of the Company. Any shareholder interested in the said information may write to the Company Secretary at the registered office of the Company.

XVI. Statutory Auditors

M/s. Sharp & Tannan Associates, Chartered Accountants, Mumbai, retire at the ensuing Annual General Meeting and being eligible offers themselves for reappointment. M/s Sharp & Tannan Associates have sought reappointment and confirmed that their reappointment shall be within the limits of Section 224(1B) of the Companies Act, 1956. The necessary eligibility certificate under Section 224(1B) of the Companies Act, 1956 was received from them. The Audit Committee and Board of Directors recommend the re- appointment of M/s Sharp & Tannan Associates, Chartered Accountants as the Auditors of the Company.

XVII. Appreciation

Your Directors place on record their sincere appreciation for the assistance and guidance provided by the government, regulators, stock exchanges, other statutory bodies and Company's bankers for the assistance, cooperation and encouragement extended to the Company.

Your Company's employees are instrumental in your Company scaling new heights, year after year. Their commitment and contribution is deeply acknowledged. Your involvement as shareholders is also greatly valued. Your Directors look forward to your continued support.

On behalf of the Board

Nirmal Jain

Dated: May 15, 2012 Chairman


Mar 31, 2010

The Directors have pleasure in presentng the 15th Annual Report along wih the audited statements of accounts of your Company for the financial year ended March 31, 2010.

I Financial results

A snapshot of the financial performance of he Company and s major subsidiares for he fnancial year 2009-10 s as under:

(Rs. mn) Name of Company Revenues Profit before Profi after interest tas depreciation and tax Aggregate 11,238.7 4,373.1 2,340.5 India Infoline Ltd. 6,981.9 2,754.2 1,520.2 india Infoline Investment Services Ltd. 1,650.3 855.3 475.5 Moneyline Credit Ltd. 572.9 94.1 7.1 india Infoline Distribution Company Ltd. 67.9 68.2 35.8 india nfoline Housing Finance Ltd. 54.6 34.2 19.5 india nfoline Marketing Services Ltd. 860.5 130.6 34.0 india nfoline Insurance Services Ltd. 164.8 79.8 18.1 india nfoline Insurance Brokers Ltd. 385.5 31.7 20.6 india nfoline Commodities Ltd. 275.9 44.8 26.7 india Infoline Media and Research Services Ltd. 53.8 44.7 10.9 NFL Realty Ltd. 207.6 207.6 (5.7) FL Wealth Management Ltd. 626.4 222.2 147.3 FL (Asia) Pte. Ltd. 331.8 103.1 29.5 NFL Inc. 49.2 14.8 16.9 Inter Company Adjustments 1,055.0 298.6 - Other subsidiaries 10.6 (13.6) (15.9)

The consolidated financial performance is as under: (rs. mn)

2009-10 2008-09 Gross total income 11,238.7 8,775.0

Profit before interest, depreciation and taxation 4373.1 2,922.7

Interest and fnancial charges 291.4 331.8

Depreciation 534.6 396.0

Profit before tax 3,547.1 2,194.9

Taxation Current 1,201.1 653.7

Deferred (37.4) (30.9)

Fringe benefit tax - 27.9

Short or excess provision for ncome ax 42.9 (29.2)

Net profit for the year 340.5 1,573.4

Less: Exceptional item (net of tax)

Net profit before minority interest 340.5 1,573.4

Less: Minority interest (20.6) (125.2) Less: Appropriations

Interim dividend 852.0 794.5 Proposed dividend Dividend distribution tax 44.8 135.0

Transfer to general eserve 52.0 105.8

Transfer to special reserve 102.4 139.0

Add: Balance brought forward from the previous year 2,087.1 1,813.3

Balance to be carried forward 3155.8 2,087.2

A snapshot of he stand-alone fnancial performance of ndia nfoline Limited is as under: (rs. mn)

2009-10 2008-09

Gross total income 6,981.9 4,921.3

Profit before interest, depreciation and taxation 2754.2 1,848.8

Interest and fnancial charges 102.5 78.5

Depreciation 318.6 255.6

Profit before tax 2,333.1 1,514.7

Taxation Current 831.6 480.8

Deferred (58.2) (12.3)

Fringe benefit tax - 10.3

Short or excess provision for ncome ax 39.6 (22.3)

Net profit for the year 520.1 1,058.2

Less: Exceptional Item (Net of ax)

Less: Appropriations

Interim dividend 852.0 794.5

Dividend distribution tax 144.8 135.0

Transfer to general reserve 152.0 105.8

Add: Balance brought forward from the previous year 1,252.1 1,229.1

Balance to be carried forward 1623.4 1,252.0

II Review of operations

The Indian capital markets staged a remarkable recovery during 2009-10 on the back of an overall global change in sentiment and economic recovery in India. Your Company continues to buid upon its competitve position as a leading player in Indian financial services sector. On a consolidated basis, the Companys income increased by 28.0% to Rs. 11.2 bn and EBITDA increased 49.6% to Rs. 4.4 bn. Profit after tax before extra ordinary items and minority interest increased by 48.7% to Rs. 2.3 bn.

Income from the core business of equity broking increased by 35.4% to Rs. 6.1 bn. Income from wealth management and mutual fund advisory increased significanty by 87.3% and stood at Rs. 331.6 mn. The income from merchant banking activities rose manifold to Rs. 387.7 mn, whereas life insurance distribution income increased by 11.4% to Rs. 536.4 mn. Income from financing grew by 9.9% to Rs. 2.9 bn. The other businesses viz., commodities broking and online and other media also registered a marginal growth and stood at Rs. 907.0 mn.

During 2009-10, the Company received BQ1 broker grading from CRISIL, reflecting its superior quality of operations and services. The Companys research analysts were felicitated at the Indias best market analysts awards - 2009 by Zee Business for being the best in the Oil and Gas and Commodities sectors and finalists in the Banking and IT sectors. The Company was rated by AsiaMoney in 2009 among the countrys three leading brokerages. Additionally, Mr Nirmal Jain, founder and Chairman of India Infoline Ltd., was ranked second in the study of Indias

Most Valuable CEOs by Businessword n November 2009.

Ill Key nitiatives

Your Company continued to successfully scale up its wealth management business, which has been among the fastest growing in India with assets under advice having crossed Rs. 50 bn. It is one of the industrys strongest platforms across various product propositions, which feed into a strong advisory setup. Your Company filed its application for final approval from Securities Exchange Board of India (SEBI) for he proposed mutual fund business.

The lending business was revived and scaled up in view of favourable macro- economic conditions. Housing finance business is also now being actively pursued.

Your Companys institutional and retail research products have been well appreciated by the target audience. Enterprising India1, your Companys first Global Investors Conference, held in February 2010 at Mumbai, received an overwhelming response. It witnessed participation of more than 450 fund managers, over 70 corporates, world- enowned economists and thought eaders.

Your Company now has offices in Dubai, New York and Singapore representing an increasing international footprint IIFL Securities Pte Ltd, which set up its office in early 2008, is the Singapore arm of he India Infoline Group. It has received in-principle approval for Securities Trading and Clearing memberships from Singapore Stock Exchange (SGX). This paves the way for IIFL to be the fist India-based broker to become a member of SGX. IIFL Securities Ceylon (Pvt) Ltd., the subsidiary in Sr Lanka has applied

for membership of Colombo Stock Exchange.

Your Company had taken several initiatives to optimise cost without compromising on service quality and efficiency. Already, a significant part of back office, MIS, customer care and call center operations has been migrated to your Companys Chennai facility. Your Company has set up its new corporate office measuring over one lakh sq. ft. equipped with modern state-of-the-art facilities at Lower Parel, wherein all corporate functions are carried out. Your Company has also shifted its registered office to owned premises in Thane, Maharashtra.

During the year, your Company changed the brand identity of the India Infoline group from India Infoline to IIFL. Incidentally, IIFL is the Bloomberg code for India Infoline. When the group started international operations as well as institutional research, the same was branded with the short form or the Bloomberg code, IIFL. In order to avoid confusion between India Infoline and IIFL, your Company undertook a branding campaign to communicate the fact that IIFL stands for India Infoline Group. Also, your Company retained Ogilvy & Mather as the advertising agency.

IV Buy back

Pursuant to the resolution passed by the Board of Directors of the Company and in accordance with the provisions of the Companies Act, 1956 and the Securities and Exchange Board of India (buy back of securities) Regulations, 1998, the Company made a public announcement on December 4, 2008, to buy-back the Companys equity shares at a price not exceeding Rs. 43.2 per share, aggregating to Rs. 989.1 mn subject o

a buy-back of minimum 5 mn equity shares and maximum of 6 mn equity shares. The buy-back was open from December 18, 2008 and closed on November 28, 2009 and the Company bought back 25,57,915 equity shares at an aggregate value of Rs. 108.0 mn. Consequently, the paid-up equity share capital of the Company declined from Rs. 572.0 mn to Rs. 567.0 mn as on November 28, 2009.

V Dividend on equity shares

During 2009-10, the Company declared and paid two interim dividends of Rs. 1.2 per share and 1.8 per share totaling to Rs. 3.0 per share (face value of Rs. 2 per share). The same is considered as final. The total dividend paid in 2008-09 was Rs. 2.8 per share. The total outflow on account of dividend payout (including dividend distribution tax and surcharge) was Rs. 996.8 mn (previous year Rs. 929.2 mn)

VI Changes in equity capital

During 2009-10, the paid-up share capital of the Company after buy-back of shares increased from Rs. 566.8 mn to Rs. 570.4 mn consequent to allotment of 18,14,775 equity shares of Rs. 21- each on exercise of stock options under the Employee Stock Option Schemes of he Company.

VI Change in registered offce of the Company

The registered office of the Company shifted to NFL House, Sun Infotech Park, Road No. 16V, Plot No.B-23, Ml DC, Thane Industrial Area, Wagle Estate, Thane - 400 604, Maharashtra.

VIM Deposits

During 2009-10, your Company did not accept/renew any deposits within the meaning of Section 58A of the

Companies Act, 1956 and the rules thereunder and as such, no amount of principal or interest was outstanding as on the balance-sheet date.

IX Subsidiary companies

As at March 31, 2010, the Companys subsidiaries and step-down subsidiaries were as follows:

Sr Name of he Company No.

1 India Infoline nvestment Services Ltd.

2 Moneyline Credit Ltd.

3 India Infoline Distribution Company Ltd.

4 India nfoline Housing Finance Ltd.

5 India Infoline Marketing Services Ltd.

6 India Infoline Insurance Services Ltd.

7 India Infoline nsurance Brokers Ltd.

8 India Infoline Commodities Ltd.

9 India Infoline Media and Research Services Ltd.

10 IIFL Realty Ltd.

11 FL Wealth Management Ltd.

12 FL Energy Ltd.

13 IFL Capital Ltd.

14 ndia Infoline Trustee Company Ltd.

15 India nfoline Asset Management Company Ltd.

16 Unval Industries Private Ltd.

17 IIFL (Asia) Pte. Ltd.

18 ndia Infoline Commodites DMCC

19 IFL Capital Pte. Ltd.

20 FL Securities Pte. Ltd.

21 FL Inc.

22 FLWealthUK)Ltd.

Pursuant to the approval of the central government under Section 212(8) of the Companies Act, 1956, copies of the

Balance Sheet, Profit and Loss Account, Report of the Board of Directors and Report of the Auditors of each of the subsidiary Companies are not attached to the accounts of the Company for financial year 2009-10. The Company will make available these documents/details upon request by any member of the Company. These documents/details will also be available for inspection by any member of the Company at its registered office and also at the registered offices of the concerned subsidiaries. As required by Accounting Standard - 21 (AS-21) issued by the Institute of Chartered Accountants of ndia, the Companys consolidated financial statements included in this Annual Report ncorporates the accounts of its subsidiaries. A summary of key financials of the Companys subsidiaries s also included in this Annual Report.

X Management Discussion and Analysis

The Management Discussion and Analysis Repor for 2009-10, as required under Clause 49 of the Listing Agreement is given as a separate statement in the Annual Report.

XI Disclosure of Employee Stock Options

During 2009-10, the Company granted 13,45,000 stock options to the employees under its Employee Stock Option Scheme 2008. Details as per the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, are attached as an annexure

XII Directors

In accordance with Sections 255 and 256 of the Companies Act of 1956 read with Arcle 137 of the Articles of

Association of the Company, Mr. Kranti Sinha, retires by rotation and being eligible, offers himself for reappointment at the ensuing Annual General Meeting of he Company.

XIII Directors Responsibiy Statement

As required by Section 217 2AA) of the Companies Act, 1956, your Directors confrm that:

(a) In the preparation of the annual accounts, the applicable accounting standards were followed;

(b) Appropriate accounting policies were selected and applied consistently and that judgments and estimates made were reasonable and prudent so as to give a true and fair view of the state of affairs of your Company as at March 31, 2010, and of ts profit for the year ended on that date;

c) Proper and sufficient care was taken o maintain adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities;

(d) The annual accounts were prepared on an ongoing concern basis.

gy technology absorption, foreign exchange earnings and outgo

The additional information required in accordance with sub-section (l)(e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, is appended to and forms part of this Report.

XV Corporate Governance Report

The Securites and Exchange Board of India (SEBI) prescribed Corporate Governance standards. Your Directors reaffirm their commitment to these standards and this Annual Report carres a section on Corporate Governance.

A certificate from the Statutory Auditors, M/s Sharp & Tannan Associates, Chartered Accountants, regarding compliance with the conditions of Corporate Governance as stipulated under clause 49 of the listing agreement is annexed herewith.

XVI Particulars of employees

In accordance with the provisions of Section 217(2A) of the Companies Act, 1956 and the rules framed thereunder, the names and other partculars of employees are set out in the annexure to the Directors Report. In terms of the provisions of Section 219 (1) (b) iv) of the Companies Act, 1956, the Diectors Report is being sent to all the shareholders of the Company excluding the aforesaid information. The annexure s available for inspection at the registered office of the Company. Any shareholder interested in the said information may write to the Company Secretary at the registered office of the Company.

XVII Statutory Auditors

M/s. Sharp & Tannan Associates, Chartered Accountants, Mumbai, retire at the ensuing Annual General Meeting and being eligible offers themselves for re-appointment. M/s Sharp & Tannan Associates have sought re-appointment and confirmed that their re-appointment shall be within the mits of Section 224(1 B) of the Companies Act, 1956.

The necessary eligibility certcate under Section 224QB) of the Companies Act, 1956 was received from them. The Audit Committee and Board of Directors recommend the appointment of M/s Sharp & Tannan Associates, Chartered Accountants as the Auditors of the Company.

The notes to the accounts referred to in the Auditors Report are self-explanatory and therefore do not call for any further comments.

XVIII Appreciation

Your Directors place on record their sincere appreciation for the assistance and guidance provided by the government, regulators, stock exchanges, other statutory bodies and Companys bankers for the assistance, cooperation and encouragement extended to the Company.

Your Companys employees are instrumental in your Company scaling new heights, year after year. Their commitment and contribution is deeply acknowledged. Your involvement as shareholders is also greatly valued. Your Directors look forward to your continuing support.

On behalf of he Board

Nirmal Jain

Chairman and Managing Diector

Dated: Apr 24, 2010

 
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