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Directors Report of IIFL Holdings Ltd.

Mar 31, 2017

Dear Shareholders,

The Directors present the Twenty Second Annual Report of IIFL Holdings Limited (‘your Company’) together with the Audited Financial Statements for the financial year ended March 31, 2017.

1. FINANCIAL RESULTS

A summary of the financial performance of your Company and its major subsidiaries/associates, for the financial year ended March 31, 2017 is as under:

(Rs. in Million)

Name of Company

Revenue

Profit after tax

Consolidated

49,248.83

8,222.76

IIFL Holdings Limited

1,923.37

1,567.78

India Infoline Finance Limited

22,642.24

3,427.28

India Infoline Housing Finance Limited

9,049.75

835.58

Samasta Microfinance Limited

328.45

8.09

IIFL Wealth Management Limited

4,524.71

864.38

India Infoline Limited

5,083.99

760.00

IIFL Wealth Finance Limited

4,614.72

1,003.86

IIFL Real Estate Limited ( Formerly IIFL Facilities Services Limited )

1,312.29

69.39

IIFL Asset Management Limited

861.94

148.85

5paisa Capital Limited (Formerly IIFL Capital Limited)

74.67

(104.45)

IIFL Asset Management (Mauritius) Limited

663.25

350.69

India Infoline Media and Research Services Limited

569.40

451.51

India Infoline Insurance Brokers Limited

321.76

115.86

IIFL Capital Pte. Limited

239.26

31.20

India Infoline Commodities Limited

159.87

37.14

IIFL Distribution Services Limited

144.41

0.67

IIFL Capital Inc.

89.77

6.82

IIFL Private Wealth Management (Dubai) Limited

78.59

19.20

IIFL Securities Pte Limited

99.84

10.10

IIFL Investment Adviser and Trustee Services Limited

99.28

3.47

IIFL Wealth (UK) Limited

66.88

0.001

IIFL Alternate Asset Advisers Limited

57.01

9.30

IIFL Private Wealth Hong Kong Limited

20.24

3.75

Others

331.34

68.26

Inter Company Adjustments

(4,108.20)

(1465.97)

Consolidated Financial Results

A summary of the consolidated financial performance of your Company, for the financial year ended March 31, 2017, is as under:

(Rs.in Million)

Particulars

2016-2017

2015-2016

Gross total income

49,248.83

39,626.43

Profit before interest, depreciation and taxation

33,726.00

25,891.51

Interest and financial charges

20,922.00

16,799.95

Depreciation

539.71

660.82

Profit before tax (from Continuing Operations)

12,264.29

8,430.74

Taxation - Current

4,215.18

2,915.53

- Deferred

(283.32)

(79.11)

- Short or excess provision for income tax

86.27

41.77

Net profit for the year (from Continuing Operations)

8,246.16

5,552.55

Profit/(loss) before tax from Discontinuing Operation

(23.40)

(4.47)

Net profit before minority interest

8,222.76

5,548.08

Less: Share of Profit to Minority Shareholders

1,361.87

436.32

Net profit after minority interest

6,860.89

5,111.76

Less: Minority interest

730.37

1,023.97

Less: Appropriations

Dividend

1,449.62

1,613.65

Dividend Distribution Tax

291.04

286.88

Transfer to Special Reserve

1,082.40

703.98

Transfer to Debenture Redemption Reserve

830.15

1,429.41

Transfer to Capital Redemption Reserve

1,500.00

-

Deferred tax Liability

14.81

5.02

Add: Adjustment arising out of Liquidation of Subsidiary

-

55.94

Add: Balance brought forward from the previous year

5,579.16

5,474.37

Balance to be carried forward

6,541.66

5,579.16

* Previous periods figures have been regrouped / rearranged wherever necessary

Standalone Financial Results:

A summary of the standalone financial performance of your Company, for the financial year ended March 31, 2017, is as under:

(Rs. in Million)

Particulars

2016-2017

2015-2016

Gross total income

1,923.37

2,114.10

Profit before interest, depreciation and taxation

1,804.61

1,973.11

Interest and financial charges

67.92

63.45

Depreciation

5.83

0.88

Profit before tax

1,730.86

1,90 8.78

Taxation - Current

84.91

159.63

- Deferred

13.93

24.87

- Short or excess provision for income tax

40.84

-

Profit/(loss) after Tax from Continuing Operation

1,591.18

1,724.28

Profit/(Loss) after Tax from Discontinuing Operation

(23.40)

(4.47)

Profit/(Loss) for the year

1,567.78

1,719.81

Less: Appropriations

-

Interim Dividend

1,429.19

1,340.80

Dividend Distribution Tax

0.64

-

Transfer to Debenture Redemption Reserve

41.90

42.01

Add: Balance brought forward from the previous year

2,214.13

1,877.13

Balance to be carried forward

2,310.18

2,214.13

* Previous periods figures have been regrouped / rearranged wherever necessary

2. REVIEW OF BUSINESS AND OPERATIONS AND STATE OF YOUR COMPANY’S AFFAIRS

During the year, your Company’s total income, on a consolidated basis, increased to Rs.49,249 million, up 24% year-on-year (y-o-y). Profit before tax increased to Rs.12,240 million, up 45% y-o-y and Profit after tax before minority interest increased to Rs.8,223 million, up 48% y-o-y.

The Company’s financial services business is well diversified consisting of NBFC business which also includes the newly acquired micro finance business constituting 46%, Housing Finance business constituting 18%, Wealth Management business constituting 22%, and capital markets and other businesses comprising of investment banking, equity broking and related income constituting 14% of the group’s total income.

During the year, the income from the NBFC business has increased by 14% y-o-y to Rs.31,651 million. This was driven by growth in the loan AUM by 14% from Rs.195 billion in FY16 to Rs.223 billion in FY17. The retail home loan business witnessed robust growth of 55% and the home loan book grew to Rs.81,924 million as of March 31, 2017 as against Rs.52,843 million in the previous year. During the year, income from the Wealth Management business witnessed significant growth of 83% y-o-y to reach Rs.10,822 million and assets under advice, distribution and management increased by 51% y-o-y to Rs.1,201 billion. The Company through its step down subsidiary i.e. IIFL Asset Management Limited manages over Rs.86 billion of AIF Assets, making it one of the largest AIF platforms in the country. Income from Capital Market and Investment Banking business increased by 3% y-o-y to Rs.5,672 million. Other income stood at Rs.124 million.

There is no change in the nature of business of the Company. There were no significant or material orders passed by regulators or courts or tribunals impacting the going concern status and Company’s operations in future.

3. MACROECONOMIC OVERVIEW

India remains one of the fastest growing economies in the world. According to the Central Statistical Office’s (CSO) revised estimates, India’s GDP growth remained steady at 7.1% in FY17 with the third quarter registering a growth rate of 7% y-o-y despite the effects of demonetisation. Certain macroeconomic indicators like automobile sales, export traffic and unemployment suggest that the economy is steadily recovering from the impact of demonetisation, announced on 8th November, 2016, with the RBI forecasting GDP growth at 7.4% in FY18.

Consumer inflation moderated to 4.5% in FY17 versus 4.9% in FY16 (Ministry of Statistics and Programme Implementation, 2017) and is likely to remain below 5% in FY18. RBI cut policy rates by 50 bps through the course of FY17. Low commodity prices have helped push current account deficit to less than 1% of GDP The Central Government remains on the path of fiscal consolidation and is projected to reduce fiscal deficit to 3.2% of GDP in FY18 from 3.5% in FY17. However, state finances have been worsening and maintaining FRBM prescribed limits of fiscal deficit would be challenging due to UDAY scheme, Pay Commission implementation and the recent trend of farm loan waivers in some states.

Government continues to make efforts to revive investment cycle and is spending on building physical infrastructure like road, rails etc. Government has been able to revive many stalled projects in the public sector; however, private sector investments remain weak given low capacity utilization and leveraged balance sheets. The government continued with further liberalized FDI and FPI investments, whereby placing most of the sectors under automatic route and very few sectors under approval route. Overall FDI inflows had increased to $ 60.08 billion during the year 2016-17. The government has further liberalized foreign investments and recently abolished the Foreign Investment Promotion Board (FIPB). We are on the verge of one of the most important reform measures in the country - the transition to the Goods and Services Tax (GST) from 1st July, 2017. The GST will unify India into a single market thereby simplifying the compliance process, broadening the tax base and improving productivity. While there remains a possibility of disruption in the short run, given the scale of change, recent experience with the demonetization exercise suggests that the disruption to economy from GST implementation, if any, is likely to be small and short lived. The long-term potential from GST is immense.

4. DIVIDEND ON EQUITY SHARES

During the year 2016-17, Company declared and paid an interim dividend of Rs.4.50 per equity share (i.e. 225% of face value of Rs.2/- per share). This led to an outgo of Rs.1,429 million owing to dividend (excluding dividend distribution tax). The same is considered as final. The total dividend paid during the financial year 2015-16 was Rs.4.25/- per share which includes a special dividend of Rs.1.25/- per equity share to commemorate a decade of listing.

The dividend payout for the year under review is in accordance with the Company’s policy to pay sustainable dividend linked to long-term growth objectives of the Company, to be met by internal cash accruals. The Board had approved the Dividend Distribution Policy on January 25, 2017 in line with the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015. The Policy is available on the Company’s website at https: // www.iifl.com/aboutus/policies.

During the year, unclaimed dividend pertaining to F.Y. 2009-10 of Rs.602,134 and Rs.1,176,922 pertaining to Interim Dividend 1 and Interim Dividend 2 respectively was transferred to the Investor Education & Protection Fund.

5. SCHEME OF ARRANGEMENTS

Demerger of 5paisa digital Undertaking

The Board of Directors of your Company at their meeting held on September 30, 2016 considered and approved the proposed demerger of Rs.5Paisa Digital Undertaking’ from IIFL Holdings Limited (“IHL”) into 5Paisa Capital Limited (“5PCL”), a 100% subsidiary of IHL engaged in distribution of financial services and broking, as follows:

a. The proposed demerger would be through a Scheme of Arrangement under section 230-232 of the Companies Act, 2013 between IHL and 5PCL and their respective shareholders. Post demerger, 5PCL will be listed on BSE Limited (“BSE”) and National Stock Exchange of India Limited (“NSE”). The appointed date of the demerger is October 01, 2016 and the Scheme shall be effective after filing the order of the National Company law Tribunal (“NCLT”) with the Registrar of Companies.

b. As per terms of the proposed scheme of Arrangement, the consideration for the demerger is by way of allotment of equity shares by 5PCL to the shareholders of IHL in the ratio of 1 share of Rs.10 each of 5PCL for every 25 shares of IHL held by the shareholders of IHL, as per the share entitlement ratio issued by the Independent Chartered Accountant i.e.M/s. SSPA & Co. and fairness opinion provided by Category I Merchant Banker i.e. M/s. Keynote Corporate Services Limited.

c. The proposed arrangement does not involve any change in the capital structure of IHL. The shareholding of 5PCL will be a mirror image of the shareholding of IHL as on record date to be determined after the approval of Scheme of Arrangement by NCLT.

The Company has received No objection from SEBI, BSE and NSE on the draft Scheme of Arrangement. Pursuant to the order of NCLT and upon approval of the Shareholders of the Company, the Scheme will become effective.

Demerger of IIFL Real Estate Limited

The Board of Directors of IIFL Holdings Limited at its meeting held on January 25, 2017 considered and noted the proposed draft Scheme of Arrangement envisaging the demerger of Real Estate Advisory services undertaking from IIFL Real Estate Limited (Formerly IIFL Facilities Services Limited and IIFL Realty Limited) (“IREL”), a wholly-owned-subsidiary of the Company into another wholly-owned-subsidiary i.e. India Infoline Insurance Services Limited, in terms of the provisions of Companies Act, 2013. The above proposal does not envisage any change in the capital structure of IIFL Holdings Limited or its interest in the aforesaid Subsidiaries. The appointed date of the proposed Scheme of Arrangement is April 01, 2017. The aforesaid scheme is subject to necessary regulatory approvals including NCLT. IREL has since filed Scheme with NCLT and is awaiting final order.

Pursuant to the said demerger, IREL’s primary business and income will be from rentals of commercial real estate assets owned by it. The proposed restructuring is to facilitate IREL as an eligible SPV for investments under the proposed IIFL REIT, subject to the required Board, SEBI and other regulatory approvals.

Merger of IIFL Properties Private Limited

The Company’s step down subsidiary under IIFL Real Estate Limited (Formerly IIFL Facilities Services Limited and IIFL Realty Limited) (“IREL”) namely IIFL Properties Private Limited was holding a real estate property. NCLT vide its order dated March 30, 2017 has approved and sanctioned the Scheme of Arrangement for the merger of IIFL Properties Private Limited with IREL for consolidation of the same. The merger has been effected w.e.f. April 01, 2015.

6. KEY INITIATIVES/DEVELOPMENTS

i. Strategic Investment by CDC Group Plc in India Infoline Finance Ltd. (NBFC) Subsidiary

CDC Group Plc, UK (“CDC”], the United Kingdom’s government-owned development finance institution invested about Rs.10 billion in India Infoline Finance Ltd (“IIFL Finance”), a Subsidiary of the Company, by way of issuance of 43,33,409 Compulsorily Convertible Preference share (“CCPS”) and 100 Equity shares. Upon Conversion of CCPS, CDC shall hold a stake of 15.45% of the total outstanding equity share capital of the IIFL Finance on a fully diluted basis. CDC’s investment will help IIFL Group in expanding the financing business and address the capital needs of under-served segments through diversified offerings.

ii. IIFL Wealth Finance Limited

I IFL Wealth Finance Limited (“IIFLW Finance”), a non-deposit taking systemically important Non-Banking Finance Company (NBFC-ND-SI) registered with the Reserve Bank of India, is a wholly owned subsidiary of IIFL Wealth Management Limited (“IIFLW”). IIFLW Finance provides loan against securities, wherein, includes capital market financing, promoter funding, margin funding, IPO financing and loan against property to ultra-high net worth individuals and corporate clients of IIFLW IIFLW has invested Rs.9000 million out of investments received from General Atlantic towards equity into IIFLW Finance during the financial year 2015-16 and has further invested Rs.620 million during the financial year 2016-17. IIFLW Finance commenced its lending business to HNI’s and Corporates in February 2016 and has grown its business during the year with the tota l loan asset(s) as on March 31, 2017 to Rs.36,000 million. IIFLW Finance has issued non-convertible debentures amounting to Rs.22.46 billion and commercial papers amounting to Rs.33.70 billion as on March 31, 2017.

iii. Investment Banking

Fiscal 2017 has been a landmark year for investment banking. IIFL Holdings Limited completed 21 transactions (the largest number of Investment Banking transactions executed by IIFL in its history in a single financial year) viz. IPOs, QIPs, NCD placements, open offers, private equity advisory and pre IPO placements. In all, IIFL was involved in capital raising and advisory transactions of ~Rs.377 billion including 5 equity IPOs.

In fiscal 2017, IIFL completed a number of large transactions with marquee clients. IIFL was involved in the largest QIP of FY2016-2017 (Motherson Sumi Systems Limited aggregating to Rs.19,934 million) and 2017 YTD (Yes Bank Limited aggregating to Rs.49,067 million). IIFL was ranked #2 in terms of amount raised through QIPs in fiscal 2017. IIFL was one of the book running lead managers in the Rs.60,568 million IPO of ICICI Prudential Life Insurance Company Limited, the first IPO in the insurance sector and the largest IPO in 6 years. Additionally, IIFL completed the Rs.100 billion public issue of NCDs of Dewan Housing Finance Corporation Limited, the largest public issue of NCDs by a private sector company till date.

IIFL has a robust pipeline of investment banking transactions spanning across a number of product categories, which are in different stages of execution.

IIFL continues to diversify its product/service offerings and invest in people, processes and technology. Our efforts and investments into this business are beginning to pay off. Clients continue to value IIFL’s focus and commitment and consider us as their trusted advisor.

iv. Samasta Microfinance Limited

During the March 2017, India Infoline Finance Limited (“IIFL Finance”) , a subsidiary of the Company, has acquired control and management of Samasta Microfinance Limited [“Samasta”], a Non Banking Finance Company -Micro Finance Institution [NBFC-MFI] registered with RBI and based in Bangalore after obtaining all regulatory and other approvals. This acquisition is through purchase of equity shares from its erstwhile shareholders as well as additional capital investment of Rs.50 Cr. in March 2017 by IIFL. Upon the acquisition, Samasta became a step down subsidiary of the Company with its shareholding standing at 95.22% as on March 31, 2017.

Samasta began operations as an MFI in March 2008 with an aim to provide financial services to the financially weaker sections in the Southern and Western states of India. It operates in Tamil Nadu, Karnataka, Maharashtra and Goa through 70 branches.

Samasta’s income from operations increased by around 66% to Rs.320 million during the year ended March 31, 2017.

The acquisition of Samasta will help IIFL in entering into the growing micro finance segment and extend its wide ranging financial services to their large customer base.

v. Other Financial Services

During the year ended March 31, 2017, IIFL Wealth Finance Limited and India Infoline Housing Finance Limited, the step down subsidiaries of the Company have obtained Corporate Insurance Agency license from IRDA for the distribution of insurance products.

During the financial year ended March 31, 2017, IIFL Wealth Management Limited has obtained membership of NSE and BSE and also become a depository participant of CDSL and NSDL for providing separate services to niche High Net-Worth Individuals and wealth management clients. The Wealth Broking has commenced operations and migration of clients under this platform is under process.

vi. 5Paisa- Digital Undertaking

5Paisa Capital Ltd (“5PCL”) is a Wholly Owned Subsidiary of IIFL Holdings Ltd. 5PCL is engaged in providing an online technology platform for trading in National Stock Exchange of India Limited and BSE Limited through web based trading terminal, mobile application and a state-of-the-art Call and Trade Unit. 5PCL is also a SEBI approved Research analyst, a Depository Participant with CDSL and registered with AMFI for distribution of mutual funds. 5PCL provides a wide range of financial services to its customers including depository services, distribution of mutual funds, bonds and debentures, Equity and Mutual fund research etc through its technology based platforms.

5PCL invested in Online Marketing, Branding and IT. Also, it has developed Robo Advisory, an automated Mutual Fund advisory platform, which has got a very good response. 30% of 5PCL’s mutual fund transactions are now happening through the Robo advisory platform. This year also saw 5PCL’s new mobile application crossing 100 thousand downloads on Play store with a very good rating of 4.2.

The Board of Directors of IIFL Holdings Limited and 5paisa Capital Limited have approved the Scheme of Arrangement for demerger of 5paisa digital undertaking of IIFL Holdings Limited into 5paisa Capital Limited on September 30, 2016. With a view to giving a segregated focus on the digital way of doing trading and distribution services, which is emerging as a new segment and possesses the potential to grow exponentially in the coming years, especially with the spread of internet and mobile penetration, 3G/4G data services across the country under the DIY (do-it-yourself) model. Further to SEBI, NSE and BSE approvals, the scheme is pending for approval from NCLT. The appointed date of the demerger is October 01, 2016 and the Scheme shall be effective after filing the order of the NCLT with the Registrar of Companies.

vii. Asset Management

During FY 2016-2017, the revenues of IIFL AMC grew by 30.3% to Rs.861.9 million and Profit After Tax growth was 148.26%.

The total assets managed by IIFL AMC under Mutual Fund, AIF and Portfolio Management Services has increased to Rs.86,980 million as on March 31, 2017 vis-s-vis Rs.55,230 million as on March 31, 2016. Under IIFL Mutual Fund Platform, the assets under management have increased from Rs.4,924.6 million to Rs.6,252.3 million. AIF assets saw a growth of 93.17% on a YoY basis to more than Rs.73,000 million as on MarchRs.17 end. Significant ramp-up was seen during the year on the back of the following new diverse product launches:

1) Category II Alternative Investment Funds:

a. IIFL Special Opportunities Fund

b. IIFL Real Estate Fund Domestic Series 4

c. IIFL Select Equity Fund

d. IIFL Income Opportunities - Series Debt Advantage

e. IIFL Income Opportunities - Series Regular Income

2) Category III Alternative Investment Funds:

a. IIFL Yield Enhancer Fund

b. IIFL Phoenix Cash Opportunities Fund

c. IIFL Focused Equity Strategies Fund

d. IIFL Regular Income Fund

e. IIFL Cash Opportunities Fund II

f. IIFL Fixed Income Plus Fund

g. IIFL Debt Advantage Fund

h. IIFL Re Organise India Equity Fund

i. IIFL Perpetual Bond Fund - Series 1

j. IIFL India Opportunities Fund - Series 1, 2 & 3

During the year, the Company took initiatives to diversify and strengthen its distribution. IIFL AMC got empaneled with several large banks and wealth management firms enabling IIFL AMC to significantly enhance it’s reach and distribute it’s products widely. The Company has also significantly strengthened its sales team and mid-office team in order to service investors better.

viii. Corporate Social Responsibility

The Corporate Social Responsibility Committee has formulated and recommended to the Board a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company, which has been approved by the Board. The CSR Policy may be accessed on the Company’s website at the link: https:// www.iifl.com/aboutus/iifl-csr-policy.

The IIFL group has identified following focus areas for Corporate Social Responsibility (“CSR”) engagement through India Infoline Foundation, a section 8 Company:

a. Girl child illiteracy eradication program for out of school and illiterate girls in Rajasthan.

b. Improving the quality of education in Government schools through technological interventions.

c. Financial Literacy and Financial Inclusion

d. Preventive Health

During the financial year, your Company deployed 2 % of its average net profits (computed as per the relevant provisions of Companies Act, 2013) of the preceding three years on CSR projects. At the group level, besides the Company, nine subsidiary companies came under the purview of the provisions for CSR for the year. During the fiscal year 2016-17, the group made a total deployment of Rs.135.05 million into CSR activities.

IIFL’s CSR has gained the necessary momentum and has implemented large scale projects, which will have substantial sustainable long term impact. The capabilities, systems and processes needed to take up big activities in an organised manner are also in place. Going forward, the Company will consolidate these projects to get a much bigger and wider impact.

ix. Investor Conference/Events

IIFL’s Enterprising India Global Investors’ Conference

IIFL’s Eighth Enterprising India Conference was held from the 21st to 23rd of February 2017. 109 companies and 600 investors participated in the event which also hosted 23 specialist speakers. The participating companies had an aggregate market value of US$ 866 bn and represented all major business sectors. The event happened against the backdrop of local and global economic uncertainty and the specialist speakers provided invaluable insights on major developments in the economy including demonetization and GST. The well attended conference suggested overall interest in India to be high among foreign investors and expectations of the economy to recover well from the effects of demonetization to be high.

The event was well timed to provide learned insights on the budget 2017 and the outlook for the new financial year.

Express Addas

I IFL Private Wealth associated with The Indian Express to put together Express Adda, a series of freewheeling dialogues on contemporary issues with newsmakers in an informal setting. The events were held in New Delhi and Mumbai.

PACT

Positive Action Changes Things 2016 -included a series of client events held in London & Dubai, and was attended by more than 250 clients collectively. Speakers such as Dr. Shashi Tharoor and leading fund managers from India addressed the audience, while stand-up comedian Vir Das tickled their funny bone.

Off The Cuff

Off The Cuff, or OTC, is a series of candid talk shows organised in collaboration with NDTV and was launched in January 2016 and held once a month. The event is hosted as an on-ground event anchored by eminent journalist Shekhar Gupta.

OTC has Shekhar Gupta in conversation with a distinguished guest in the presence of a notable, invited audience. After the initial dialogue between the guest and the moderator, OTC is open to the audience to question and engage with the guest. The idea is to break through the clutter and noise of existing debates on television and other platforms, and bring out an engaging, constructive discussion; while also keeping live audiences involved throughout. OTC is recorded and telecast on NDTV 24X7 and NDTV Prime at a later date in the month.

Ramnath Goenka Lecture Series

The Ramnath Goenka Lecture, in the spirit of the founder and the newspaper, aims to deepen understanding of change, inspire debate and enrich public discourse through the power of ideas.

The lecture was launched by Dr Raghuram Rajan, then Governor, Reserve Bank of India.

x. Awards and Recognitions

The following awards were conferred in FY17: o ET Best BFSI Brands Recognition o The prestigious Economic Times Awards for Corporate Excellence shortlisted IIFL in the Emerging Company of The Year Award category o Golden Peacock Award for Corporate Social Responsibility - 2016 o BSE Skoch Order of Merit Award for Innovative Deployment of Technology Within Investing Services Space

- ET NOW Dealing Room Heroes - 10 IIFL Employees Awarded for April - September and October - March period.

- Finance Asia -- Deal of the Year for India Awards -for ICICI Prudential Life Insurance’s $912 million IPO

- Best Independent Wealth Management Team, India at Capital Finance International o Best Wealth Management Firm, India at APAC Insider Investment Awards o I ndia Infoline Ltd received the NSDL Star Performer “Leader in Go Green Initiative -1st Position” Award. This award was given to us in recognition of DP participant executing maximum no of digital transactions with NSDL o IIFL Markets mobile app won Silicon Valley Business Awards 2016 for Best Overall App o IIFL Markets mobile app won Silicon Valley Business Awards 2016 for Best Finance and Management o IIFL Markets wins Best Technological Innovation in Capital Markets Space at Zee Business Market Excellence Awards in 2016 for IIFL Markets Application.

- Best Private Banking Services - Overall by Euro-money Private Banking and Wealth Management Survey, 2017

- Best Net-worth-specific services - Euromoney Private Banking and Wealth Management Survey, 2017

- Best Family Office Services - Euromoney Private Banking and Wealth Management Survey, 2017

- Best Research and Asset Allocation Advice -Euromoney Private Banking and Wealth Management Survey, 2017

- Best Succession Planning Advice and Trusts -Euromoney Private Banking and Wealth Management Survey, 2017

- Best Innovative Technology - Back Office Systems Euromoney Private Banking and Wealth Management Survey, 2017

- Best Wealth Manager - India Domestic by Asian Private Banker Awards of Distinction, 2016

- Best Private Bank, India by Global Finance Best Private Bank Awards 2017

- Best Performing National Financial Advisor - Wealth Distributor Award by CNBC & UTI Financial Advisors Award 2016

- Best India Start-Up Fund - Seed Venture Fund at Alternative Investment Awards

- Best Online Wealth Management Experience at The Asset Triple A Digital Enterprise o Digital Innovation Champion Award - CIO Crown 2016.

- Drivers of Digital Award 2016 - Special Jury Mention. o Gold Loan Digital Transformation was chosen as the Best Top 20 Project in 5th BFSI Innovation and Technology Summit - 2016. o BSE Skoch Awards for Innovation and Meritorious CSR

- IIFL Foundation received Skoch Blue Economy Order of Merit Award. IIFL Foundation’s projects were also adjudged as Top 100 projects in India

- Bureaucracy Today - CSR Excellence Awards to IIFL Foundation

- www.indiainfoline.com won the Best Website in Banking & Investment category from Website of the Year India, 2016. o IIFL Corporate Communications team was shortlisted among the top five for Fulcrum Awards in communication o Prayesh Jain of IIFL Wealth Management won ‘Best Auto Analyst’ Award at Zee Business Market Excellence Awards 2016.

- Bhavesh Gandhi of IIFL Wealth Management won ‘Best Pharma Analyst’ Award at Zee Business Market Excellence Awards 2016.

7. SHARE CAPITAL

During the year under review, the total share capital of the Company has increased from Rs.63,30,73,706/- to Rs.63,58,16,386/- pursuant to allotment of 13,71,340 equity shares of Rs.2/- each under Employee Stock Option Scheme(s) of the Company to the eligible employees.

8. EMPLOYEES STOCK OPTION SCHEMES (ESOS)

During the year under review 7,49,800 stock options under ESOS 2008 granted to employees have lapsed and the same have been added back to the pool, which can be used for further grant. Further, there have been no stock options granted to the employees during the year under the Employee Stock Option Scheme(s).

The issue of equity shares pursuant to exercise of options does not affect the Statement of Profit and Loss of the Company, as the exercise of options is made at the market price prevailing a day before the grant plus taxes as applicable.

There is no material change in Employees’ Stock Option Scheme during the year under review and the Scheme is in line with the SEBI (Share Based Employee Benefits) Regulations, 2014 (“SBEB Regulations”). The Company has received a certificate from the Auditors of the Company that the Scheme has been implemented in accordance with the SBEB Regulations and the resolution passed by the members. The certificate would be placed at the Annual General Meeting for inspection by members. The disclosures relating to ESOPs required to be made under the provisions of the Companies Act, 2013 and the rules made thereunder and the SEBI (Share Based Employee Benefits) Regulations, 2014 are provided on the website of the Company www.iifl.com and the same is available for inspection by the members at the Registered Office of the Company on all working days, except Saturdays and Sundays (including Public Holidays), during business hours up to the date of the Meeting.

9. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Particulars of investments made, loans given, guarantees given and securities provided along with the purpose for which the loan or guarantee or security was proposed to be utilized by the recipient are given in the standalone financial statement (please refer to Note 10,16 & 28 to the standalone financial statement).

10. SUBSIDIARY COMPANIES

As on March 31, 2017, the Company had 32 (Thirty Two) subsidiaries (including step down subsidiaries)/Associates located in India and overseas. During the year, India Infoline Finance Limited, a subsidiary of the Company has acquired controlling stake in Samasta Microfinance Limited- a Non Banking Finance Company - Micro Finance Institution [NBFC-MFI] registered with RBI and based in Bangalore. Ayusha Dairy Private Limited is a wholly-owned subsidiary of Samasta Microfinance Limited. Further, IIFL Wealth Management Ltd, a subsidiary of the Company, transferred its shareholding (71%) in India Alternatives Investment Advisors Private Limited to its private shareholders.

As per the provisions of section 134 and 136 of the Companies Act, 2013 read with applicable Rules, Regulation 33 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and applicable Accounting Standards, the Board of Directors had at their meeting held on May 04, 2017 approved the consolidated financials of all the subsidiaries of the Company along with the Company’s financial statements. 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 financial year 2016-17. The Company will make these documents/details available 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 at the registered offices of the concerned subsidiaries i.e. except on Saturdays, Sundays and Public Holidays. The Annual Report of all the subsidiaries will be uploaded on the website of the Company. As required by Companies Act, 2013, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and 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 incorporate the accounts of its subsidiaries, associates and joint ventures. A report on the performance and financial position of each of the subsidiaries, associates and joint ventures companies as per Companies Act, 2013 is provided in the prescribed Form AOC-I as Annexure A of the Consolidated Financial Statement and hence not repeated here for the sake of brevity.

Pursuant to regulation 16 and 24 of SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015, India Infoline Finance Limited, IIFL Wealth Management Limited and IIFL Wealth Finance Limited was the Material Subsidiary of the Company for the financial year 2016-17.

For the financial year 2017-18, the following are the Material Subsidiaries of the Company:

1. India Infoline Finance Limited

2. IIFL Wealth Management Limited

3. IIFL Wealth Finance Limited

4. India Infoline Housing Finance Limited

The policy on determining the material subsidiary is available on the website of the Company at www.iifl.com.

11. BUSINESS RESPONSIBILITY REPORT

The Business Responsibility Report, in terms of Regulation 34(2) (f) of SEBI(Listing Obligations and Disclosure Requirements) Regulations, 2015, describing the initiatives taken by IIFL Group from an environmental, social and governance perspective is attached as part of the Annual Report.

12. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In accordance with Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Management Discussion and Analysis Report forms part of this report.

13. DIRECTORS AND KEY MANAGERIAL PERSONNEL

a. Directors:

The Board consists of Mr. Nirmal Jain and Mr. R. Venkataraman as Executive Directors of the Company in their capacity of Chairman and Managing Director respectively. Mr. Nilesh Vikamsey, Mr. A. K. Purwar, Mr. Kranti Sinha, Dr S. Narayan and Ms. Geeta Mathur are Independent Directors and Mr. Chandran Ratnaswami is a non-executive Director of the Company.

In accordance with Section 152 of the Companies Act, 2013 (“Act”) read with Article 157 of the Articles of Association of the Company, Mr. Nirmal Jain is liable to retire by rotation at the ensuing Annual General Meeting and being eligible has offered himself for reappointment. The Board recommends the same for shareholders’ approval.

b. Key Managerial Personnel:

Mr. Nirmal Jain - Chairman, Mr. R. Venkataraman - Managing Director, Mr. Prabodh Agrawal - Chief Financial Officer and Mr. Gajendra Thakur - Company Secretary are the Key Managerial Personnel as per the provisions of the Companies Act, 2013 and rules made thereunder. None of the Key Managerial Personnel has resigned or appointed during the year under review.

The Remuneration and other details of the Key Managerial Personnel for the year ended March 31, 2017 are mentioned in the Extract to the Annual Return in Form MGT-9 which is attached as “Annexure II” and forms a part of this report of the Directors.

14. MEETING OF DIRECTORS & COMMITTEE/BOARD EFFECTIVENESS

Meetings of the Board of Directors

The Board met 6 (Six) times during the year to discuss and approve various matters including financials, appointment of auditor, declaration of dividend, review of audit reports and other board businesses. For further details please refer to the report on Corporate Governance.

Committees of the Board

In accordance with the applicable provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board constituted the following Committees: o Audit Committee

- Nomination and Remuneration Committee o Corporate Social Responsibility Committee

- Stakeholders Relationship Committee

- Risk Management Committee

Audit Committee:

The Audit Committee comprises of Mr Nilesh Vikamsey, Mr Kranti Sinha, Ms Geeta Mathur and Mr R. Venkataraman. The role, terms of reference and powers of the Audit Committee are in conformity with the requirements of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Committee met during the year under review and discussed on various matters including financials, audit reports and appointment of auditors. During the period under review, the Board of Directors of the Company accepted all the recommendations of the Audit Committee.

The terms of reference of Audit Committee and other details thereof has been provided in the Corporate Governance Report.

Nomination and Remuneration Committee:

The Nomination and Remuneration Committee comprises of three Independent Directors with Mr Kranti Sinha as the Chairman of the Committee, Mr Nilesh Vikamsey and Mr A K Purwar as members of the Committee.

The role, terms of reference and powers of the Nomination and Remuneration Committee are in conformity with the requirements of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the same has been provided in the Corporate Governance Report.

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a Nomination and Remuneration policy in compliance with the aforesaid provisions for selection and appointment of Directors, KMP, senior management personnel of the company. The said policy is stated in the Corporate Governance Report of the Company. The details of Committee meeting are provided in the Corporate Governance Report.

Corporate Social Responsibility Committee:

As per the provision of Section 135 of the Companies Act, 2013, the Company has constituted Corporate Social Responsibility (CSR) Committee, comprises of Mr Nilesh Vikamsey, Mr Nirmal Jain and Mr R. Venkataraman. The Committee has approved CSR Policy of the Company. The group has set-up India Infoline Foundation (generally referred as “IIFL Foundation”) a Section 8 Company under the Companies Act, 2013, which will act as the principal arm to undertake CSR initiatives on behalf of the IIFL Group. The details of CSR Committee meeting are provided in the Corporate Governance Report. The policy on corporate social responsibility is available on the website www.iifl.com. The Annual Report on Corporate Social responsibility is attached as “Annexure I”.

Stakeholders Relationship Committee:

In compliance with the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Companies Act, 2013, the Company has constituted a Stakeholders Relationship Committee. The Committee comprises of Ms. Geeta Mathur, Independent Director as the Chairperson, Mr Nirmal Jain and Mr R. Venkataraman, Executive Directors as the Members. The details of the Stakeholders Relationship Committee meeting are given in the Corporate Governance Report.

The role, terms of reference of the Stakeholders Relationship Committee are in conformity with the requirements of the Companies Act, 2013 and Regulation 20 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the same has been provided in the Corporate Governance Report.

The Company received 17 complaints from investors under SEBI’s SCORES portal. All complaints were redressed to the satisfaction of the investors. No complaints were pending either at the beginning or at the end of the year.

Risk Management Committee:

In compliance with the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Companies Act, 2013, the Company has constituted a Risk Management Committee. The objective of the Committee is to oversee the risk management governance structure, define and review the framework for identification, assessment, monitoring, mitigation and reporting of risks.

The Risk Management Committee comprises of Mr. A. K. Purwar, Independent Director, Mr Nilesh Vikamsey, Independent Director and Mr Nirmal Jain, Executive Director. The details of the Risk Management Committee meeting is provided in the Corporate Governance Report.

Board Effectiveness

Familiarization Program for the Independent Directors

In compliance with the requirements of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has put in place a Familiarization Programme for Independent Directors to familiarize them with the working of the Company, their roles, rights and responsibilities vis-a-vis the Company, the industry in which the Company operates, business model etc. Details of the Familiarization Programme are explained in the Corporate Governance Report and are also available on the Company’s website at http://www.iifl.com.

Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and SEBI Circular no SEBI/CFD/CMD/CIR/P/2017/004 dated January 05, 2017, the Board of Directors has carried out an annual performance evaluation of its own performance, the committee and the Directors individually including Independent Directors based out of the criteria and framework adopted by the Board. The Board approved the evaluation results as collated by Nomination and Remuneration Committee (“NRC”). The evaluation process, manner and performance criteria for independent directors in which the evaluation has been carried out by is explained in the Corporate Governance Report.

The Board considered and discussed the inputs received from the Directors. Also, the Independent Directors at their meeting held on March 17, 2017 reviewed the following:

- Performance of Non-Independent Directors and the Board as a whole o Performance of the Chairperson of the Company

- Assessed the quality, quantity and timeliness of flow of information between the Company’s management and the Board, which is necessary for the Board to effectively and reasonably perform their duties

The Independent Directors expressed their satisfaction with overall functioning and implementations of their suggestions.

The evaluation process endorsed the Board Members’ confidence in the ethical standards of the Company, the cohesiveness that exists amongst the Board Members, the two-way candid communication between the Board and the Management and the openness of the Management in sharing strategic information to enable Board Members to discharge their responsibilities.

Declaration by Independent Directors

The Company has received necessary declaration from each Independent Director under section 149(7) of the Companies Act, 2013 that he/she meets the criteria of independent laid down in Section 149(6) of the Companies Act, 2013 and Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

15. DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134(5) of the Companies Act, 2013, it is hereby confirmed that:

a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the directors had prepared the annual accounts on a going concern basis;

e) t he Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

f) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

16. RISK MANAGEMENT

Your Directors have in place Risk Management Committee to assist the Board in (a) overseeing and approving the company’s enterprise wide risk management framework; and (b) overseeing that all the risks that the organisation faces such as strategic, financial, credit, market, liquidity, security, property, IT, legal, regulatory, reputational and other risks have been identified and assessed. There is an adequate risk management infrastructure in place capable of addressing those risks.

The Company’s management monitors and reports principal risks and uncertainties that can affect its ability to achieve its strategic objectives. The company’s management systems, organisational structures, policy, processes, standards, and code of conduct together form the risk management governance system of the company.

The Company has in place a Risk Management Policy and introduced several process improvements to internal controls systems and processes to drive a common integrated view of risks and optimal and mitigation responses. This integration is enabled through suitable co-ordination across group wide Risk Management, Internal Control and Internal Audit methodologies and processes.

17. INTERNAL FINANCIAL CONTROLS

The Company has in place adequate internal controls with reference to financial statements and operations and the same are operating effectively. The Internal Auditors tested the design and effectiveness of the key controls and no material weaknesses were observed in their examination. Further, Statutory Auditors verified the systems and processes and confirmed that the Internal Financial Controls system over financial reporting are adequate and such controls are operating effectively.

18. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES

The Company has put in place a policy for Related Party Transactions (RPT Policy), which has been approved by the Board of Directors. The policy provides for identification of RPTs, necessary approvals by the Audit Committee/Board/ Shareholders, reporting and disclosure requirements in compliance with Companies Act, 2013 and provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

All contracts executed by the Company during the financial year with related parties were on arm’s length basis and in the ordinary course of business. All such Related Party Transactions were placed before the Audit Committee/Board for approval, wherever applicable.

During the year, the Company has not entered into any contract / arrangement / transaction with related parties, which could be considered material in accordance with Regulation 23 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the policy of the Company on materiality of related party transactions. The policy for determining ‘material’ subsidiaries and the policy on materiality of Related Party Transactions and dealing with Related Party Transactions as approved by the Board may be accessed on the Company’s website www.iifl.com. You may refer to Note no. 34 to the financial statement, which contains related party disclosures. Since all related party transactions entered into by the Company were on an arm’s length basis and in the ordinary course of business and the Company had not entered into any material related party contracts, Form AOC-2 disclosure is not required to be provided.

19. EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return of the Company in form MGT - 9 is annexed herewith as “Annexure - II”.

20. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There have been no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of this annual report.

21. SECRETARIAL AUDIT

The Board had appointed M/s. Nilesh Shah & Associates, Practicing Company Secretaries to conduct Secretarial Audit of the Company for the year 2016-17. The Auditor had conducted the audit and their report thereon was placed before the Board. The report of the Secretarial Auditor is annexed herewith as “Annexure - III”. There are no qualifications or observations in the Report.

22. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The additional information on energy conservation, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3) (m) of the Companies Act, 2013 read with Rule, 8 of the Companies (Accounts) Rules, 2014, is appended as “Annexure -IV” to and forms part of this Report.

23. WHISTLE BLOWER POLICY/ VIGIL MECHANISM

I n Compliance of the Companies Act, 2013 and Regulation 22 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has adopted a Whistle Blower Policy and has established the necessary vigil mechanism for Directors, Employees and Stakeholders to report genuine concerns about unethical behaviour, actual or suspected fraud or violation of the Company’s code of conduct or ethics policy. The Company has disclosed the policy at the website at https://www.iifl.com/aboutus/policies.

24. PREVENTION OF SEXUAL HARASSMENT

Your Company recognizes its responsibility and continues to provide a safe working environment for women, free from sexual harassment and discrimination. In Compliance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has put in place a Policy on prevention of Sexual Harassment of Women at workplace.

Your Directors further state that the during the fiscal year 2016-17, there were no complaints received pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The following is reported pursuant to Section 22 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013:

a) Number of complaints received in the year : Nil

b) Number of complaints disposed off during the year : Nil

c) Number of cases pending more than ninety days: Nil

d) Number of workshops or awareness programme against sexual harassment carried out:

The Company has conducted an online training for creating awareness against the sexual harassment against the women at work place.

e) Nature of action taken by the employer or district officer: Not applicable

25. PARTICULARS OF EMPLOYEES

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in “Annexure - V”.

Further, a statement showing the names and other particulars of employees drawing remuneration in excess of the limits as set out in the Rules 5(2) and 5(3) of the aforesaid Rules, forms part of this report. However, in terms of first proviso to Section 136(1) of the Act, the Annual Report and Accounts are being sent to the members and others entitled thereto, excluding the aforesaid information. The said information is available for inspection by the members at the Registered Office of the Company during business hours on working days up to the date of the ensuing Annual General Meeting. If any member is interested in obtaining a copy thereof, such member may write to the Company Secretary, whereupon a copy would be sent.

26. STATUTORY AUDITORS

As per the provisions of Section 139 of the Companies Act 2013, M/s. Sharp & Tannan Associates, Chartered Accountants, Mumbai (Firm Registration Number: 109983W), will conclude their term as the Statutory Auditors from the close of the forthcoming Annual General Meeting of the Company.

The Board of Directors places on record its appreciation for the services rendered by M/s. Sharp & Tannan Associates as the Statutory Auditors of the Company.

Subject to the approval of the members, the Board of Directors of the Company has recommended the appointment of M/s. Deloitte Haskins & Sells LLP, Chartered Accountants (ICAI Firm Registration Number 117366W/W-100018) as the Statutory Auditors of the Company pursuant to Section 139 of the Companies Act, 2013. Members’ attention is drawn to a Resolution proposing the appointment of Deloitte Haskins & Sells LLP, Chartered Accountants as Statutory Auditors of the Company which is included at Item No 03 of the Notice convening the Annual General Meeting.

27. REPORTING OF FRAUDS BY AUDITORS

During the year under review, the Statutory Auditors and the Secretarial Auditor have not reported any instances of frauds committed in the Company by its Officers or Employees to the Audit Committee under section 143(12) of the Companies Act, 2013, details of which needs to be mentioned in this Report.

28. RBI/FEMA COMPLIANCE

During the year, the Reserve Bank of India vide its press release dated June 10, 2016 has notified FII/ FPI investment limit in the paid up capital of IIFL Holdings Limited to 80% under the Portfolio Investment Scheme.

Pursuant to RBI Master circular No. 15/2015-16 dated July 01, 2015, the Statutory Auditors of the Company has certified compliances with regards to Regulations on downstream investments and other FEMA provisions.

29. CORPORATE GOVERNANCE

The Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements set out by SEBI. The Company has also implemented several best Corporate Governance practices as prevalent globally. The report on Corporate Governance as stipulated under the SEBI(Listing Obligations and Disclosure Requirements) Regulations, 2015 forms an integral part of this Report. The requisite certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance is attached to the report on Corporate Governance.

30. GENERAL

Your Directors state that during the financial year 2016-17:

1. The Company did not accept/renew any deposits within the meaning of Section 73 of the Companies Act, 2013 and the rules made there under and as such, no amount of principal or interest was outstanding as on the balance-sheet date.

2. The Company has not issued equity shares with differential rights as to dividend, voting or otherwise.

3. The Company has not issued any sweat equity shares during the year.

4. There are no significant and material orders passed against the Company by the Regulators or Courts or Tribunals, which would impact the going concern status of the Company and its future operations.

31. 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 Directors also gratefully acknowledge all stakeholders of the Company viz. customers, members, dealers, vendors, banks and other business partners for the excellent support received from them during the year. Our employees are instrumental in the Company to scale 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.

For and on behalf of the Board

Nirmal Jain

Chairman

DIN:00010535

Date: May 04, 2017

Place: Mumbai


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, 2011

The Director have pleasure in presenting the Sixteenth Annual Report along with the audited statements of accounts of your Company for the financial year ended March 31, 2011.

I FInancIal Results

A snapshot of the financial performance of the Company and its major subsidiaries for the financial year 2010-11 is as under:

Rs mn

Name of Company Revenues Profit before Profit after

tax interest,

depreciation and

tax

Aggregate 14,739.4 6,067.5 2,147.3

India Infoline Limited 7,995.5 2,832.4 1,223.6

India Infoline

Investment Services

Limited 4,519.1 3,254.4 826.6

Moneyline Credit Limited 314.8 108.4 32.3

India Infoline

Distribution

Company Limited 67.0 6.2 (0.6)

India Infoline

Housing Finance

Limited 294.0 181.1 64.2

India Infoline

Marketing Services

Limited 930.1 151.9 (51.2)

India Infoline

Insurance Services

Limited 89.5 37.1 0.8

India Infoline

Insurance Broker Limited 609.7 70.0 45.6

India Infoline

Commodities Limited 468.7 90.0 30.5

India Infoline

Media and Research

Services Limited 202.0 193.2 16.1

IIFL Realty Limited 364.9 358.7 (9.8)

IIFL Wealth Management

Limited 1,134.4 426.0 250.6

IIFL (Asia) Pte.

Limited (53.8) (69.9) (79.2)

IIFL Inc. 60.9 1.6 0.4

IIFL Securities Ceylon

(Pvt) Limited 18.4 5.7 3.3

India Infoline Venture

Capital Fund 4.0 (102.6) (103.1)

India Infoline Trustee

Company Limited - (0.5) (0.3)

India Infoline Asset

Management Company

Limited 2.0 (14.1) (10.4)

India Infoline

Commodities DMCC - (20.1) (20.4)

IIFL Capital Pte.

Limited 60.2 (25.4) (17.9)

IIFL Securities Pte.

Limited 207.9 10.2 32.5

Inter Company

Adjustments (2,609.6) (1,463.9) (117.4)

Other Subsidiaries 59.7 37.1 31.1

The consolidated financial performance is as under:

Rs mn

2010-11 2009-10

1 Gross total income 14,739.4 11,238.8

Profit before interest depreciation

and taxation 6,067.5 4,373.1

Interestb and financial charges 2,35.7.9 291.4

Depreciation 5,81.7 534.6

Profit before tax 3,127.9 3,547.1

Taxation - Current 1,073.6 1,201.1

- Deferred (127.7) (3.74)

- Short or excess provision for income tax 34.7 42.9

net profit for the year 2,147.3 2,340.5

Less: Minority interest (35.9) (20.6)

net Profit after minority interest 2,111.4 2,319.9

Less: Appropriations

Interim dividend 860.4 852.0

Dividend distribution tax 147.3 144.8

Transfer to general reserve 206.0 152.1

Transfer;to special reserve 185.5 102.4

net Profit after Tax and appropriation 712.2 1068.6

Less: Adjustments for Interest

and Fair Value 190.4 672.6

Add: Balance brought forward from

the previous year 2483.1 2,087.1

Balance to be carried 3,004.9 2,483.1

Segment wise information is as under:

Rs mn

2010-11 2009-10

Equity brokerage and related income 6,697.3 7,018.1

Financing..an.d..Investing income 6,180.5 2,917.8

Marketing and distribution income 1,842.7 1,293.1

Other income 19.0 9.8

Balance to be carried 14,739.4 11,238.8

A snapshot of the stand-alone financial performance of India Infoline Limited is as under:

Rs mn

2010-11 2009-10

Gross total income 79,955.5 6,981.9

Profit before interest, depreciation

and taxation 2,832.4 2,754.2

Interes and financial charges 859.0 1.02.5

Depreciation 240.8 318.6

Profit before tax 1,732.6 2,333.1

Taxation.- Current 512.3 831.6

- Deferred (10.9) (5.8.2)

-Short or excess provision for Income tax 7.6 39.6

net profit for the year 1,223.6 1,520.1

Less: Appropriations - -

Interim dividend 859.2 852.0

Dividend distribution tax 127.6 144.8

Transfer to general reserve 123.0 152.0

Add: Balance brought forward 1,623.4 1,252.1

Balance to be;..carried...forward 1,737.2 1,623.4

II REVIEW OF OPERATIONS

On a consolidated basis, the Companys income increased by 31.1% to Rs 14.74 bn and EBITDA increased by 38.7% to Rs 6.07 bn. The income growth was primarily driven by credit and financing business. With significant increase in cost as well as quantum of borrowings, interest cost was Rs 2.36 bn in the year under review, as compared to Rs 291.36 mn in the previous year. Consequently profit before and after tax was a shade lower in the year. Profit after tax before minority interest decreased by 8.3% to Rs 2.14 bn.

Income from equity broking and related activities decreased marginally by 4.6% and stood at Rs 6.70 bn. Income from Financing and Investing significantly increased by 111.8% and stood at Rs 6.18 bn. Marketing and distribution income increased by 42.5% to Rs 1,842.7 mn. Other income increased to Rs 19.0 mn.

III KEY INITIATIVES

IIFL Mutual Fund

During the year under review, IIFL Mutual Fund, sponsored by your Company, received final regulatory approval from the Securities and Exchange Board of India (SEBI) to commence operations. This will enable commencement of mutual fund business and launching of mutual fund schemes in due couriere.

IIFL, with its distribution reach spanning over 500 cities/towns, is well placed to take the mutual fund penetration wider and deeper. Your Company sees an opportunity for mutual fund mobilization in tier-II and tier-III cities. We aim to leverage upon our indepth undertanding of technology and reach to offer retail investor a variety of products with minimal expense ratio and encourage them to invest for the long term.

Asia Expansion

During the year, on the global financial services business, the Companys Singapore subsidiary received the final approval from Singapore Stock Exchange for its equity broking business. The subsidiary commenced its broking operations from December 2010. Similarly the Companys subsidiary in Sri Lanka received the approval from Colombo Stock Exchange and SEC, Sri Lanka for undertaking broking business in July 2010, thereby becoming the first Indian broking Company to set up broking business in Sri Lanka. We expect both these subsidiaries to scale up their business substantially during the current year and going forward.

other International Initiatives

Under the advisory, wealth management and distribution business, the Company has set up subsidiaries in UK and Dubai and received approvals from the overseas regulator during the year. We expect these subsidiaries to commence business during the current year.

New Memberhips

Your Company has received Trading and Clearing memberhip of Currency Derivative Segment of United Stock Exchange of India Limited. Further IIFL Capital Limited, the wholly owned subsidiary received Trading and Clearing memberhip from National Stock Exchange of India Limited, Bombay Stock Exchange Limited and MCX Stock Exchange Limited.

Investor conferences

Your Companys institutional and retail research products have been well appreciated by the target audience. “Enterprising India-II", your Companys second Global investor Conference, held in February 2011 at Mumbai had participation from leading corporate and eminent leader/speaker and received an overwhelming response from investor. IIFLs Global Investor Conference, Discover Sri Lanka held in Colombo in July 2010 had an encouraging participation from more than 50 leading global and local investor and several leading Sri Lankan corporates along with a number of heads of government undertakings, banks and government officials. IIFL conducted several investor meets and camps across India, on its own as well as with leading media house ET Now to spread financial literacy and awareness about risk- return of various financial products, aspects of financial planning and undertanding of investor rights.

Employee skill Upgradation

Your Company had taken several steps to train its employees. It has introduced various training modules covering functional knowledge as well as skill set development. These modules are delivered through internet e-learning platform as well as classroom sessions followed by tests. The training programme will cover all sales and customer relationship manager to clear the test in a time bound manner.

Financial literacy campaign

Your Company has taken a pionnering intiative to spread fInancial literacy. It launched a comprehensive financial education and awareness initiative, FLAME Rs Financial Literacy Agenda for Mass Empowerment on February 18, 2011. FLAME was launched by Dr K C Chakrabarty, Deputy Governor, RBI and Mr Deepak S Parekh, Chairman, HDFC at a function attended by the leading luminaries from the financial services space.

Under this initiative IIFL Group has launched a series of advertisements in leading newspaper on financial literacy and also plans to conduct seminar and issue training materials to the public for spreading financial literacy.

IV AWARDS AND RECOGNITIONS

Your Company has been awarded the Best Equity Broker of the Year at the Bloomberg UTV Financial leadership Awards, 2011. The award was presented by the Honble Finance Minister of India, Shri Pranab Mukherjee on March 26, 2011.

V BUYBACK

Puruant to the resolution passed by the Board of Director of the Company and in accordance with the provisions of the Companies Act, 1956 and the Securities and Exchange Board of India (Buyback of securities) Regulations, 1998, the Company made a public announcement on December 24, 2010, to buy-back the Companys equity shares at a price not exceeding Rs 99.0 per share, aggregating to Rs 1.04 bn. The Buyback was successfully completed and the Company bought back 12,999,877 equity shares and utilised maximum offer size of Rs 1.04 bn.

VI DIVIDEND ON EQUITY SHARES

During the year 2010-11, the Company declared and paid interim dividend of 150% i.e. Rs 3 per share (face value of Rs 2 per share). The same is considered as final. The total dividend paid in 2009-10 was Rs 3 per share. The total outflow on account of dividend payout (including dividend distribution tax and surcharge) was Rs 986.8 mn (previous year Rs 996.8 mn).

VII TRANSFER TO RESERVE

The Company proposes to transfer Rs 123 mn to the General Reserve and retain Rs 113.79 mn to the profit and loss account.

VIII ALLOTMENT OF SHARES

During the year 2010-11, your Company allotted 14,194,925 equity shares of Rs 2 each on exercise of stock options under the Employee Stock Option Schemes of the Company. Towards the said allotments, the Company received a total consideration ofRs 605.4 mn including premium of Rs 577 mn.

IX DEPOSITS

During the year 2010-11, 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.

X SUBSIDIARY COMPANIES

The Company had 22 subsidiaries at the beginning of the year. 7 subsidiaries namely

1) IIFL Trustee Services Limited

2) Finest Wealth manager Private Limited

3) IIFL Securities Ceylon (Pvt) Limited

4) IIFL Private Wealth Hong Kong Limited

5) IIFL Capital Ceylon Limited

6) IIFL Private Wealth (Mauritius) Limited and

7) IIFL Private Wealth Management (Dubai) Limited

have been set up/acquired during the year 2010-11. Consequently, the total number of subsidiaries as on March 31, 2011 is 29.

Pursuant to the general exemption granted by the Ministry of Corporate Affair vide circular dated February 8, 2011, the Board of Director had at their meeting held on May 7, 2011 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 Director and Report of the Auditor of each of the subsidiary Companies are not attached to the accounts of the Company for financial year 2010-11. 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. 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 Companys consolidated financial statements included in this Annual Report incorporates the accounts of its subsidiaries. A summary of key financials of the Companys subsidiaries is also included in this Annual Report.

XI MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis Report for 2010-11, as required under Clause 49 of the Listing Agreement, is given as a separate statement in the Annual Report.

XII DISCLOSURE OF EMPLOYEE STOCK OPTIONS

During the year 2010-11, the Company granted 250,000 stock options to the employees under its Employee Stock Option Scheme 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.

XIII DIRECTOR

The Board at its meeting held on May 7, 2011, elevated the existing Executive Director, Mr. R Venkataraman as “Managing Director", and consequently the existing Chairman and Managing Director, Mr. Nirmal Jain has been re-designated as the “Executive Chairman" subject to necessary approvals.

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. A. K. Purwar, retires by rotation and being eligible, offer himself for reappointment at the ensuing Annual General Meeting of the Company. Mr. Sat Pal Khattar, Non Executive Director of the Company, resigned with effect from October 27, 2010. The Board places on record sincere appreciation of Mr. Sat Pal Khattars contribution towards growth of your Company over the last decade.

XIV DIRECTOR RESPONSIBILITY STATEMENT

As required by Section 217(2AA) of the Companies Act, 1956, your Director 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 affair of your Company as at March 31, 2011, 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.



XV CONSERVATION OF ENERGY, TECHNOLOGY

ABSORPTION, FOREIGN EXCHANGE 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 Particular in the Report of the Board of Director) Rules,1988, is appended to and forms part of this Report.

XVI CORPORATE GOVERNANCE REPORT

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

A certificate from the Statutory Auditor, 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.

XVII Particular 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 Particular of employees are set out in the annexure to the Director Report. In terms of the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Director Report is being sent to all the shareholder 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.

XVIII STATUTORY Auditor

M/s. Sharp & Tannan Associates, Chartered Accountants, Mumbai, retire at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment. M/s Sharp & Tannan Associates have sought re-appointment and confirmed that their re-appointment 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 Director recommend the appointment of M/s Sharp & Tannan Associates, Chartered Accountants as the Statutory Auditor of the Company.

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

XIX APPRECIATION

Your Director place on record their sincere appreciation for the assistance and guidance provided by the government, regulator, stock exchanges, other statutory bodies, and Companys banker 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 and support as shareholder is also greatly valued. Your Director look forward to your continuing trust in us.

On behalf of the Board

Nirmal Jain

Chairman

Dated: May 7, 2011


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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