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Notes to Accounts of Indiabulls Ventures Ltd.

Mar 31, 2015

Corporate Information:

Indiabulls Ventures Limited ("IBVL" or "the Company", CIN: L74999DL1995PLC069631) (formerly known as Indiabulls Securities Limited) carries on the business as stock and share brokers on the National Stock Exchange of India Limited ("NSE") and the BSE Limited ("BSE"); depository participants and other related ancillary services. On February 1, 1996 IBVL received a certificate of registration from the Securities and Exchange Board of India ("SEBI") under sub-section 1 of section 12 of the Securities and Exchange Board of India Act, 1992 to carry on the business as a stock broker. Accordingly, all provisions of the Securities and Exchange Board of India Act, 1992, and Rules and Regulations relating thereto are applicable to the Company. On April 2, 2008 the Equity shares of the Company were listed on the NSE and the BSE after the demerger of the Company from Indiabulls Financial Services Limited (erstwhile holding company) vide Scheme of Arrangement.

Pursuant to Section 13 and other applicable provisions of the Companies Act, 2013, and the Rules made thereunder (including any statutory modification(s) or re-enactment thereof for the time being in force) read with the Companies (Incorporation) Rules, 2014 and subject to the approval of Registrar of Companies, NCT of Delhi and Haryana, the name of the Company has been changed from "Indiabulls Securities Limited" to "Indiabulls Ventures Limited" w.e.f. 12th March, 2015 to reflect various referral business activities carried on by the Company.

Note - 2

(i) In the event of liquidation of the Company, the holders of Equity Shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of Equity Shares held by the shareholders.

(ii) Holders of Global Depository Receipts ('GDRs') will be entitled to receive dividends, subject to the terms of the Deposit Agreement, to the same extent as the holders of Equity Shares, less the fees and expenses payable under such Deposit Agreement and any Indian tax applicable to such dividends. Holders of GDRs don't have voting rights with respect to the Deposited Shares. The GDRs may not be transferred to any person located in India including Indian residents or ineligible investors except as permitted by Indian laws and regulations.

Note 3. Shares reserved for issue under options:

(a) 6,713,404 Equity Shares (Previous year 10,435,525 Equity Shares) of face value of Rs. 2 each are reserved under various option schemes of the Company (Refer note - 33).

(b) 30,940,001 Equity Shares (Previous year 58,210,000 Equity Shares) of face value of Rs. 2 each are reserved towards Share Warrants of the Company (Refer note - 5(i)).

Note 4.

(i) The Board of Directors of the Company at their meeting held on October 21, 2013 and as approved at its Extra-Ordinary General Meeting held on November 20, 2013 have resolved to create, offer, issue and allot up to 58,210,000 warrants, convertible into 58,210,000 equity shares of Rs. 2/- each on a preferential allotment basis, pursuant to Section 81(1A) of the Companies Act, 1956, at a conversion price of Rs. 13/- per equity share of the Company, arrived at in accordance with the SEBI Guidelines in this regard and subsequently these warrants were allotted on December 2, 2013 to the promoter, certain promoter entities, persons other than promoter and promoter group entity (erstwhile promoters and promoter group entities upto July 17, 2014) and to an executive director ("the warrant holders") and 25% application money amounting to Rs. 189,182,500/- was received from them. The warrants were to be converted into equivalent number of equity shares on payment of the balance amount at any time on or before June 1, 2015. In the event the warrants are not converted into equity shares within the said period, the Company is eligible to forfeit the amounts received towards the warrants. During the year ended March 31, 2015, the Company has allotted 27,269,999 Equity Shares on conversion of equivalent numbers of warrants to certain promoter group entities and an executive director on realisation of balance 75% towards these warrants. Further, subsequent to the Balance Sheet date the Company has allotted 20,111,217 Equity Shares on April 07, 2015 and 10,828,784 Equity Shares on April 10, 2015 on conversion of equivalent numbers of warrants to the warrant holders on realisation of balance 75% towards these warrants.

Note 5.

(a) During the year ended March 31, 2015, the Company has sold wholly owned subsidiary Auxesia Soft Solutions Limited for Rs. 500,000 to Indiabulls Distribution Services Limited, a wholly owned subsidiary of the Company.

(b) During the year ended March 31, 2012, Copal Partners Limited had bought back 223,222 shares held by the Company vide the Purchase and Cancellation Agreement for the consideration of Rs. 86,226,344. Further, the Company had sold 586,193 shares held by it in Copal Partners Limited to Moody's Group UK LTD for the consideration of Rs. 231,992,806 vide the Share Purchase Deed. Further, the Company had received Rs. Nil (Previous year Rs. 6,687,129) as an additional consideration. As a result thereof, the stake of the Company in Copal Partner Limited had been reduced from 4.74% to 1.63%. The proportionate cost of the shares bought back and sold aggregates to Rs. 351,362,195. Out of the total consideration of Rs. 231,992,806 receivable from Moody's Group UK LTD, the Company had received partial amount of Rs. Nil (Previous year Rs. 16,049,110) towards Escrow Account and Rs. 63,412,482 (excluding foreign exchange gain of Rs. 17,449,672) [Previous year Rs. 63,412,482 (excluding foreign exchange gain of Rs. 14,231,506)] is receivable as at the year ended March 31, 2015 in the form of Loan Notes and Escrow account of the Moody's Group UK LTD.

During the year, the Company has sold balance 288,722 Ordinary Shares on exercise of call option by the Moody's Group UK LTD for a cash consideration of Rs. 594,992,390. As a result thereof, the stake of the Company in Copal Partners Limited stand to nil from 1.63% earlier.

Note 6.

Loss on Erroneous Transactions :

The loss on squaring off of erroneous transactions on account of trading in securities amounting to Rs. 43,934 (net) (Previous year Rs. 32,468 (net)) has been debited to the Statement of Profit and Loss.

Note 7.

A. Contingent liabilities not provided for in respect of:

Particulars As at As at March 31, March 31, 2015 2014 Amount(Rs) Amount (Rs)

- Claims against the Company not acknowledged as debts in respect of: Penalty for synchronised trading under SEBI regulations(i) 1,500,000 1,500,000 Arbitration matters(ii) — 2,153,393 Court Cases(ii) 9,289,313 6,640,343

- Fixed Deposits pledged against overdraft facility availed by Subsidiary Companies 5,424,700,000 1,589,250,000

(i) During the year ended March 31, 2011, the Securities Appellate Tribunal ("SAT") had passed an order dated October 26, 2010 in favour of the Company setting aside the penalty imposed by SEBI. However, during the year ended March 31, 2012, SEBI had preferred an appeal at the Honourable Supreme Court of India against the judgment of the SAT. The matter is pending adjudication.

(ii) The Company is involved in various legal proceedings as respondents / defendants for various claims including those related to conduct of its business. In respect of these claims, the Company believes, these claims do not constitute material litigation matters and with its meritorious defenses the ultimate disposition of these matters will not have material adverse effect on its financial statements / position.

B. Commitments :

Particulars As at As at March 31, March 31, 2015 2014 Amount(Rs) Amount (Rs)

Capital Commitments for purchase of fixed assets 1,425,000 400,000,000

Note 8.

Employee Stock Option Schemes: a) Employees Stock Option Scheme - 2008

Pursuant to a resolution passed by the Shareholders on January 19, 2009, the Company had cancelled and withdrawn the existing "Employee Stock Option Scheme - 2007", covering 15,000,000 stock options and established a new Employee Stock Option Scheme titled "Employee Stock Option Scheme - 2008" in accordance with the provisions of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 ("SEBI Guidelines").

Under the Scheme, the Company was authorised to grant 20,000,000 Equity settled options to eligible employees including its directors (other than promoter directors) and employees of its subsidiary companies including their directors. All options under the Scheme are exercisable for Equity Shares of the Company. Employees covered by the plan were granted an option to purchase shares of the Company subject to the requirements of vesting.

A Compensation Committee constituted by the Board of Directors of the Company administered the plan. The Compensation Committee at its meeting held on January 24, 2009, had granted, under the "Indiabulls Securities

Limited Employees Stock Option Scheme - 2008" ("IBSL ESOP - 2008"), 20,000,000 Stock Options representing an equal number of Equity Shares of face value Rs. 2 each in the Company, to the Eligible Employees, at an exercise price of Rs. 17.40, being the latest available closing market price on the National Stock Exchange of India Ltd., as on January 23, 2009 following the intrinsic method of accounting as is prescribed in the Guidance Note on Accounting for Employees Share-Based Payments ("the Guidelines") issued by the Institute of Chartered Accountants of India. As the options have been granted at intrinsic value, there is no employee stock compensation expense on account of the same. The Stock Options so granted, shall vest in the eligible employees over a period of 10 years beginning from January 25, 2010 being the first vesting date. The options granted under each of the slabs, can be exercised by the grantees within a period of five years from the relevant vesting date.

b ) Employees Stock Option Scheme - 2009

The Shareholders of the Company at their Annual General Meeting held on September 30, 2009 have authorised the Board of Directors to grant 20,000,000 options, representing equivalent number of Equity Shares of face value Rs. 2 each in one or more tranches, pursuant to an Employee Stock Option Scheme titled as 'Indiabulls Securities Limited Employees Stock Option Scheme - 2009' ("IBSL ESOP - 2009"). The options covered under the Scheme would be granted at a price and on such terms and conditions as may be decided by the Compensation Committee, to the eligible employees of the Company and its subsidiaries.

The Compensation Committee constituted by the Board of Directors of the Company, at its meeting held on December 1, 2009, granted, under the "Indiabulls Securities Limited Employees Stock Option Scheme- 2009" ("IBSL ESOP - 2009") 10,000,000 Stock Options representing an equal number of Equity Shares of face value Rs. 2 each in the Company, at an exercise price of Rs. 35.25, being the latest available closing market price on the National Stock Exchange of India Ltd., on November 30, 2009. The Stock Options so granted, shall vest uniformly over 10 years beginning from December 2, 2010 being the first vesting date. The option granted under each of the slabs, can be exercised within a period of five years from the relevant vesting date.

Further, the Compensation Committee constituted by the Board of Directors of the Company has at its meeting held on April 12, 2010, granted, under the "Indiabulls Securities Limited Employees Stock Option Scheme - 2009" ("IBSL ESOP - 2009") 2,050,000 Stock Options representing an equal number of Equity Shares of face value Rs. 2 each in the Company, at an exercise price of Rs. 31.35, being the latest available closing market price on the National Stock Exchange of India Ltd., on April 9, 2010. The Stock Options so granted, shall vest uniformly over 10 years beginning from April 13, 2011 being the first vesting date. The options granted under each of the slabs, can be exercised within a period of five years from the relevant vesting date.

Note 9.

Segment Reporting :

The Company operates in one reportable business segment i.e., "Broking & related activities" and operates in one reportable geographical segment, i.e. "within India". Hence, no separate information for segment wise disclosure is required in accordance with the requirements of Accounting Standard (AS) 17 - "Segment Reporting" .

Note 10.

Related Party Disclosures :

Disclosures in respect of Accounting Standard 18 - 'Related Party Disclosures' :

Nature of Relationship Name of the Party

(a) Related parties where control exists:

Subsidiary Companies * Indiabulls Commodities Limited

India Ethanol and Sugar Limited

Devata Tradelink Limited

Indiabulls Brokerage Limited

Indiabulls Distribution Services Limited

Auxesia Soft Solutions Limited

Pushpanjli Finsolutions Limited (formerly known as Pushpanjli Finsolutions Private Limited)

Arbutus Constructions Limited (formerly known as Arbutus Constructions Private Limited)

Gyansagar Buildtech Limited (formerly known as Gyansagar Buildtech Private Limited)

Shivshakti Financial Services Limited (formerly known as Shivshakti Financial Services Private Limited)

Astraea Constructions Limited (formerly known as Astraea Constructions Private Limited )

Silenus Buildtech Limited (formerly known as Silenus Buildtech Private Limited)

Astilbe Builders Limited (formerly known as Astilbe Builders Private Limited )

Pushpanjli Fincon Limited (formerly known as Pushpanjli Fincon Private Limited )

Viscaria Builders Private Limited (w.e.f. June 11, 2013 till February 28, 2014)

India Land and Properties Limited (w.e.f. November 18, 2014) (formerly known as India Land and Properties Private Limited)

Positive Housings Private Limited (w.e.f. February 04, 2015)

* These Companies include step down subsidiaries and step down subsidiaries of the subsidiaries of the company

(b) Other Related Parties:

Key Management Personnel Mr. Divyesh B. Shah, Whole Time Director & Chief Executive Officer

Mr. Ashok Sharma, Whole Time Director

Mr. Sameer Gehlaut, Dominant Promoter

Mr. Rajiv Rattan, Dominant Promoter (upto July 17, 2014)

Mr. Saurabh K. Mittal, Dominant Promoter (upto July 17, 2014)

Note 11.

Employee Benefits:

Provident Fund, Gratuity and Compensated Absences - disclosures as per Accounting Standard 15 (Revised) - 'Employee Benefits' :

Contributions are made to Government Provident Fund and Family Pension Fund and other statutory funds which cover all regular employees eligible under the respective acts. Both the employees and the Company make predetermined contributions to the Provident Fund. The contributions are normally based on a certain proportion of the employee's salary. The Company has recognised an amount of Rs. 865,843 (Previous year Rs. 413,168) towards Employer's Contribution for the above mentioned funds.

Provision for unfunded Gratuity and Compensated Absences for eligible employees is based on an actuarial valuation carried out at the end of every financial year. Major drivers in actuarial assumptions, typically, are years of service and employee compensation. Commitments are actuarially determined using the 'Projected Unit Credit' Method. Gains / losses on changes in actuarial assumptions are accounted for in the Statement of Profit and Loss.

Note 12.

Donation represents amount contributed toward Corporate Social Responsibility as required under section 133 of the Companies Act, 2013.

Note 13.

As per the best estimate of the Management, no provision is required to be made as per Accounting Standard 29 - 'Provisions, Contingent Liabilities and Contingent Assets' , in respect of any present obligation as a result of a past event that could lead to a probable outflow of resources which would be required to settle the obligation.

Note 14.

Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosures.


Mar 31, 2014

Note - 1

Corporate Information:

Indiabulls Securities Limited ("IBSL" or "the Company") carries on the business as stock and share brokers on the National Stock Exchange of India Limited ("NSE") and the BSE Limited ("BSE"); depository participants and other related ancillary services. On February 1, 1996 IBSL received a certificate of registration from the Securities and Exchange Board of India ("SEBI") under sub-section 1 of section 12 of the Securities and Exchange Board of India Act, 1992 to carry on the business as a stock broker. Accordingly, all provisions of the Securities and Exchange Board of India Act, 1992, and Rules and Regulations relating thereto are applicable to the Company. On April 2, 2008 the Equity shares of the Company were listed on the NSE and the BSE after the demerger of the Company from Indiabulls Financial Services Limited (erstwhile holding company) vide Scheme of Arrangement.

Note - 2

Earnings per Equity Share (EPS) :

Disclosure in respect of Accounting Standard – 20 ''Earnings Per Share'' as notified under the Companies (Accounting

Standards) Rules, 2006, as amended:

The basic earnings per Equity Share is computed by dividing the net profit attributable to Equity Shareholders for the year by the weighted average number of Equity Shares outstanding during the reporting year. Diluted earnings per Equity

Share is computed by considering the weighted average number of Equity Shares and also the weighted average number of Equity Shares that could have been issued on the conversion of all dilutive potential Equity Shares. The dilutive potential

Equity Shares are adjusted for the proceeds receivable, had the shares been actually issued at fair value.

Dilutive potential Equity Shares are deemed converted as of the beginning of the year, unless they have been issued at a later date. The number of Equity Shares and potential dilutive Equity Shares are adjusted for the potential dilutive effect of Employee Stock Option Plan and warrants as appropriate.

Note - 3

Loss on Erroneous Transactions :

The loss on squaring off of erroneous transactions on account of trading in securities amounting to Rs. 32,468 (net) (Previous year Rs. 302,749 (net)) has been debited to the Statement of Profit and Loss.

Note - 4

A. Contingent liabilities not provided for in respect of:

Particulars As at As at March 31, 2014 March 31, 2013 Amount (Rs.) Amount (Rs.)

– Claims against the Company not acknowledged as debts in respect of:

Penalty for synchronised trading under SEBI regulations(i) 1,500,000 1,500,000

Arbitration matters(ii) 2,153,393 201,637

Court Cases 6,640,343 3,820,285

– Fixed Deposits pledged against overdraft facility availed by Subsidiary Companies 1,589,250,000 —

– Corporate guarantee for bank guarantees availed by subsidiary — 100,000,000

(i) During the year ended March 31, 2011, the Securities Appellate Tribunal ("SAT") had passed an order dated October 26, 2010 in favour of the Company setting aside the penalty imposed by SEBI. However, during the year ended March 31, 2012, SEBI had preferred an appeal at the Honourable Supreme Court of India against the judgment of the SAT.

(ii) The Company is involved in various legal proceedings as respondents / defendants for various claims including those related to conduct of its business. In respect of these claims, the Company believes, these claims do not constitute material litigation matters and with its meritorious defenses the ultimate disposition of these matters will not have material adverse effect on its financial statements / position.

Note - 5

Employee Stock Option Schemes:

a) Employees Stock Option Scheme - 2008

Pursuant to a resolution passed by the Shareholders on January 19, 2009, the Company had cancelled and withdrawn the existing "Employee Stock Option Scheme - 2007", covering 15,000,000 stock options and established a new Employee Stock Option Scheme titled "Employee Stock Option Scheme - 2008" in accordance with the provisions of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 ("SEBI Guidelines").

Under the Scheme, the Company was authorised to grant 20,000,000 Equity settled options to eligible employees including its directors (other than promoter directors) and employees of its subsidiary companies including their directors. All options under the Scheme are exercisable for Equity Shares of the Company. Employees covered by the plan were granted an option to purchase shares of the Company subject to the requirements of vesting.

A Compensation Committee constituted by the Board of Directors of the Company administered the plan. The Compensation Committee at its meeting held on January 24, 2009, had granted, under the "Indiabulls Securities Limited Employees Stock Option Scheme - 2008" ("IBSL ESOP - 2008"), 20,000,000 Stock Options representing an equal number of Equity Shares of face value Rs. 2 each in the Company, to the Eligible Employees, at an exercise price of Rs. 17.40, being the latest available closing market price on the National Stock Exchange of India Ltd., as on January 23, 2009 following the intrinsic method of accounting as is prescribed in the Guidance Note on Accounting for Employees Share-Based Payments ("the Guidelines") issued by the Institute of Chartered Accountants of India. As the options have been granted at intrinsic value, there is no employee stock compensation expense on account of the same. The Stock Options so granted, shall vest in the eligible employees over a period of 10 years beginning from January 25, 2010 being the first vesting date. The options granted under each of the slabs, can be exercised by the grantees within a period of five years from the relevant vesting date.

b) Employees Stock Option Scheme - 2009

The Shareholders of the Company at their Annual General Meeting held on September 30, 2009 have authorised the Board of Directors to grant 20,000,000 options, representing equivalent number of Equity Shares of face value Rs. 2 each in one or more tranches, pursuant to an Employee Stock Option Scheme titled as ''Indiabulls

Securities Limited Employees Stock Option Scheme - 2009'' ("IBSL ESOP - 2009"). The options covered under the Scheme would be granted at a price and on such terms and conditions as may be decided by the Compensation Committee, to the eligible employees of the Company and its subsidiaries.

The Compensation Committee constituted by the Board of Directors of the Company, at its meeting held on December 1, 2009, granted, under the "Indiabulls Securities Limited Employees Stock Option Scheme- 2009" ("IBSL ESOP – 2009") 10,000,000 Stock Options representing an equal number of Equity Shares of face value Rs. 2 each in the Company, at an exercise price of Rs. 35.25, being the latest available closing market price on the National Stock Exchange of India Ltd., on November 30, 2009. The Stock Options so granted, shall vest uniformly over 10 years beginning from December 2, 2010 being the first vesting date. The option granted under each of the slabs, can be exercised within a period of five years from the relevant vesting date.

Further, the Compensation Committee constituted by the Board of Directors of the Company has at its meeting held on April 12, 2010, granted, under the "Indiabulls Securities Limited Employees Stock Option Scheme – 2009" ("IBSL ESOP – 2009") 2,050,000 Stock Options representing an equal number of Equity Shares of face value Rs. 2 each in the Company, at an exercise price of Rs. 31.35, being the latest available closing market price on the National Stock Exchange of India Ltd., on April 9, 2010. The Stock Options so granted, shall vest uniformly over 10 years beginning from April 13, 2011 being the first vesting date. The options granted under each of the slabs, can be exercised within a period of five years from the relevant vesting date.

Note - 6

Segment Reporting :

The Company operates in one reportable business segment i.e., "Broking & related activities" and operates in one reportable geographical segment, i.e. "within India". Hence, no separate information for segment wise disclosure is required in accordance with the requirements of Accounting Standard (AS) 17 - "Segment Reporting" as notified under the Companies (Accounting Standards) Rules, 2006, as amended.

Note - 7

Related Party Disclosures :

Disclosures in respect of Accounting Standard 18 - ''Related Party Disclosures'' as notified under the Companies (Accounting Standards) Rules, 2006, as amended:

Nature of Relationship Name of the Party

(a) Related parties where control exists: Subsidiary Companies *

Indiabulls Commodities Limited

India Ethanol and Sugar Limited

Devata Tradelink Limited

Indiabulls Brokerage Limited

Indiabulls Distribution Services Limited

Auxesia Soft Solutions Limited

Pushpanjli Finsolutions Private Limited (w.e.f. June 28, 2013)

Arbutus Constructions Private Limited (w.e.f. June 11, 2013)

Gyan Sagar Buildtech Private Limited (w.e.f. June 11, 2013) (formerly known as Gyan Sagar Software Technologies Private Limited)

Shivshakti Financial Services Private Limited (w.e.f. June 28, 2013)

Astraea Constructions Private Limited (w.e.f. June 11, 2013)

Silenus Buildtech Private Limited (w.e.f. June 11, 2013) (formerly known as Silenus Software Technologies Private Limited)

Astilbe Builders Private Limited (w.e.f. June 11, 2013)

Pushpanjli Fincon Private Limited (w.e.f. June 11, 2013)

Viscaria Builders Private Limited (w.e.f. June 11, 2013 till February 28, 2014)

* These Companies include step down subsidiaries of the subsidiaries of the company

(b) Other Related Parties:

Key Management Personnel

Mr. Divyesh B. Shah, Whole Time Director & Chief Executive Officer

Mr. Ashok Sharma, Whole Time Director Mr. Sameer Gehlaut, Dominant Promoter

Mr. Rajiv Rattan, Dominant Promoter Mr. Saurabh K. Mittal, Dominant Promoter

Note - 8

Employee Benefits:

Provident Fund, Gratuity and Compensated Absences - disclosures as per Accounting Standard 15 (Revised) - ''Employee Benefits'' as notified by the Companies (Accounting Standards) Rules, 2006, as amended:

Contributions are made to Government Provident Fund and Family Pension Fund and other statutory funds which cover all regular employees eligible under the respective acts. Both the employees and the Company make predetermined contributions to the Provident Fund. The contributions are normally based on a certain proportion of the employee''s salary. The Company has recognised an amount of Rs. 413,168 (Previous year Rs. 481,561) towards Employer''s Contribution for the above mentioned funds.

Provision for unfunded Gratuity and Compensated Absences for eligible employees is based on an actuarial valuation carried out at the end of every financial year. Major drivers in actuarial assumptions, typically, are years of service and employee compensation. Commitments are actuarially determined using the ''Projected Unit Credit'' Method. Gains / losses on changes in actuarial assumptions are accounted for in the Statement of Profit and Loss.

Note - 9

No borrowing cost has been capitalised during the year.

Note - 10

As per the best estimate of the Management, no provision is required to be made as per Accounting Standard 29 - ''Provisions, Contingent Liabilities and Contingent Assets'' as notified under the Companies (Accounting Standards) Rules, 2006, as amended, in respect of any present obligation as a result of a past event that could lead to a probable outflow of resources which would be required to settle the obligation.

Note - 11

Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosures.


Mar 31, 2013

Note -1

Corporate Information:

Indiabulls Securities Limited ("IBSL" or "the Company") carries on the business as stock and share brokers on the National Stock Exchange of India Limited ("NSE") and the BSE Limited ("BSE"); depository participants and other related ancillary services. On February 1, 1996 IBSL received a certificate of registration from the Securities and Exchange Board of India ("SEBI") under sub-section 1 of section 12 of the Securities and Exchange Board of India Act, 1992 to carry on the business as a stock broker. Accordingly, all provisions of the Securities and Exchange Board of India Act, 1992, and Rules and Regulations relating thereto are applicable to the Company. On April 2, 2008 the Equity shares of the Company were listed on the NSE and the BSE after the demerger of the Company from Indiabulls Financial Services Limited (erstwhile holding company) vide Scheme of Arrangement.

Note - 2

Earnings per Equity Share (EPS) :

Disclosure in respect of Accounting Standard - 20 ''Earnings Per Share'' as notified under the Companies (Accounting Standards) Rules, 2006, as amended:

The basic earnings per Equity Share is computed by dividing the net profit/(loss) attributable to Equity Shareholders for the year by the weighted average number of Equity Shares outstanding during the reporting year. Diluted earnings per Equity

Share is computed by considering the weighted average number of Equity Shares and also the weighted average number of

Equity Shares that could have been issued on the conversion of all dilutive potential Equity Shares. The dilutive potential

Equity Shares are adjusted for the proceeds receivable, had the shares been actually issued at fair value.

Dilutive potential Equity Shares are deemed converted as of the beginning of the year, unless they have been issued at a later date. The number of Equity Shares and potential dilutive Equity Shares are adjusted for the potential dilutive effect of Employee Stock Option Plan as appropriate.

Note - 3 Leases:

The Company has taken office premises on operating lease at various locations in India and lease rent in respect of the same amounting to Rs. 58,792,839 (Previous Year Rs. 145,797,340) net of apportionment has been charged to the Statement of Profit and Loss. (Refer note - 27(i)). The minimum lease rental outstanding are as under:

Note - 4

Loss on Erroneous Transactions :

The loss on squaring off of erroneous transactions on account of trading in securities amounting to Rs. 302,749 (Net) (Previous year Rs. 599,078 (Net)) has been debited to the Statement of Profit and Loss.

Note - 5

A. Contingent liabilities not provided for in respect of:

Particulars As at As at March 31, 2013 March 31, 2012 Amount (Rs.) Amount (Rs.)

Claims against the Company not acknowledged as debts in respect of:

Penalty for synchronised trading under SEBI regulations"1 1,500,000 1,500,00

Arbitration matters''11'' 201,637 147,658

Court Cases 3,820,285 3,858,471

Corporate guarantee for bank guarantees availed by subsidiary 100,000,000 70,000,00

(i) During the year ended March 31, 2011, the Securities Appellate Tribunal ("SAT") had passed an order dated October 26, 2010 in favour of the Company setting aside the penalty imposed by SEBI. However, during the year ended March 31, 2012, SEBI had preferred an appeal at the Honourable Supreme Court of India against the judgment of the SAT.

(ii) The Company is involved in various legal proceedings as respondents / defendants for various claims including those related to conduct of its business. In respect of these claims, the Company believes, these claims do not constitute material litigation matters and with its meritorious defenses the ultimate disposition of these matters will not have material adverse effect on its financial statements / position.

B. The Company had filed an objection petition before the Madras High Court against the arbitral award passed against the Company in an arbitral dispute between Indiabulls Financial Services Limited & others and A. Indira Anand & K Bharathi wherein the Company was impleaded in its capacity as a depository of the pledgers and share broker of the creditor. By the impugned award dated February 18, 2012 the sole arbitrator has imposed a penalty of Rs. 130,000,000 on the Company. The petition is pending adjudication.

Note - 6

Employee Stock Option Schemes:

a) Employees Stock Option Scheme - 2008

Pursuant to a resolution passed by the Shareholders on January 19, 2009, the Company had cancelled and withdrawn the existing "Employee Stock Option Scheme - 2007", covering 15,000,000 stock options and established a new Employee Stock Option Scheme titled "Employee Stock Option Scheme - 2008" in accordance with the provisions of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 ("SEBI Guidelines").

Under the Scheme, the Company was authorised to grant 20,000,000 Equity settled options to eligible employees including its directors (other than promoter directors) and employees of its subsidiary companies including their directors. All options under the Scheme are exercisable for Equity Shares of the Company. Employees covered by the plan were granted an option to purchase shares of the Company subject to the requirements of vesting.

A Compensation Committee constituted by the Board of Directors of the Company administered the plan. The Compensation Committee at its meeting held on January 24, 2009, had granted, under the "Indiabulls Securities Limited Employees Stock Option Scheme - 2008" ("IBSL ESOP - 2008"), 20,000,000 Stock Options representing an equal number of Equity Shares of face value Rs. 2 each in the Company, to the Eligible Employees, at an exercise price ofRs. 17.40, being the latest available closing market price on the National Stock Exchange of India Ltd., as on January 23, 2009 following the intrinsic method of accounting as is prescribed in the Guidance Note on Accounting for Employees Share-Based Payments ("the Guidelines") issued by the Institute of Chartered Accountants of India. As the options have been granted at intrinsic value, there is no employee stock compensation expense on account of the same. The Stock Options so granted, shall vest in the eligible employees over a period of 10 years beginning from January 25, 2010 being the first vesting date. The options granted under each of the slabs, can be exercised by the grantees within a period of five years from the relevant vesting date.

b) Employees Stock Option Scheme - 2009

The Shareholders of the Company at their Annual General Meeting held on September 30, 2009 have authorised the Board of Directors to grant 20,000,000 options, representing equivalent number of Equity Shares of face value Rs. 2 each in one or more tranches, pursuant to an Employee Stock Option Scheme titled as ''Indiabulls Securities Limited Employees Stock Option Scheme - 2009'' ("IBSL ESOP - 2009"). The options covered under the Scheme would be granted at a price and on such terms and conditions as may be decided by the Compensation Committee, to the eligible employees of the Company and its subsidiaries.

The Compensation Committee constituted by the Board of Directors of the Company, at its meeting held on December 1, 2009, granted, under the "Indiabulls Securities Limited Employees Stock Option Scheme- 2009" ("IBSL ESOP - 2009") 10,000,000 Stock Options representing an equal number of Equity Shares of face value Rs. 2 each in the Company, at an exercise price of Rs. 35.25, being the latest available closing market price on the National Stock Exchange of India Ltd., on November 30, 2009. The Stock Options so granted, shall vest uniformly over 10 years beginning from December 2, 2010 being the first vesting date. The option granted under each of the slabs, can be exercised within a period of five years from the relevant vesting date.

Further, the Compensation Committee constituted by the Board of Directors of the Company has at its meeting held on April 12, 2010, granted, under the "Indiabulls Securities Limited Employees Stock Option Scheme - 2009" ("IBSL ESOP - 2009") 2,050,000 Stock Options representing an equal number of Equity Shares of face value Rs. 2 each in the Company, at an exercise price ofRs. 31.35, being the latest available closing market price on the National Stock Exchange of India Ltd., on April 9, 2010. The Stock Options so granted, shall vest uniformly over 10 years beginning from April 13, 2011 being the first vesting date. The options granted under each of the slabs, can be exercised within a period of five years from the relevant vesting date.

Note - 7

Segment Reporting :

Segment information for the year ended March 31, 2013 as per Accounting Standard 17 - ''Segment Reporting'' as notified under the Companies (Accounting Standards) Rules, 2006, as amended:

(a) Primary segment information (by Business Segments);

(Previous year''s figures are stated in Italics)

(b) The Company operates solely in one Geographic segment namely "Within India" and hence no separate information for Geographic segment wise disclosure is required.

(c) The Company''s primary business segment is reflected based on principal business activities carried on by the Company. The Company''s primary business is ''Broking and related activities'' and ''Advisory services''. Broking and related activities include business as a stock and share broker on the National Stock Exchange of India Limited and the BSE Limited and other related ancillary services. Advisory services mainly comprise of financial services related fees.

(d) Segment revenue, results, assets and liabilities include amounts identifiable to each segment and amounts allocated on a reasonable basis.

(e) The accounting policies adopted for segment reporting are in line with the accounting policies adopted for preparation of financial information as disclosed in Note - 2.

Note - 8 Employee Benefits:

Provident Fund, Gratuity and Compensated Absences - disclosures as per Accounting Standard 15 (Revised) - ''Employee Benefits'' as notified by the Companies (Accounting Standards) Rules, 2006, as amended:

Contributions are made to Government Provident Fund and Family Pension Fund and other statutory funds which cover all regular employees eligible under the respective acts. Both the employees and the Company make predetermined contributions to the Provident Fund. The contributions are normally based on a certain proportion of the employee''s salary. The Company has recognised an amount of Rs. 481,561 (Previous year Rs. 673,063) towards Employer''s Contribution for the above mentioned funds.

Provision for unfunded Gratuity and Compensated Absences for eligible employees is based on an actuarial valuation carried out at the end of every financial year. Major drivers in actuarial assumptions, typically, are years of service and employee compensation. Commitments are actuarially determined using the ''Projected Unit Credit'' Method. Gains / losses on changes in actuarial assumptions are accounted for in the Statement of Profit and Loss.

Note - 9

Rates and taxes include Rs. Nil (Previous year Rs. 255,543,931) relating to Rates / Taxes / Stamp Duty paid in respect of certain transactions entered into by clients in earlier years. Interest - others include Rs. Nil (Previous year Rs. 168,172,078) pertains to penal interest paid thereon.

Note - 10

Derivative Instruments:

The Company has not entered into any derivative contract for hedging any foreign currency exposure. The year end foreign currency exposures that have not been hedged by derivative instruments or otherwise are given below :

Note - 11

No borrowing cost has been capitalised during the year.

Note - 12

As per the best estimate of the Management, no provision is required to be made as per Accounting Standard 29 - ''Provisions, Contingent Liabilities and Contingent Assets'' as notified under the Companies (Accounting Standards) Rules, 2006, as amended, in respect of any present obligation as a result of a past event that could lead to a probable outflow of resources which would be required to settle the obligation.

Note - 13

Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosures.


Mar 31, 2012

Note -1

Corporate Information:

Indiabulls Securities Limited ("IBSL" or "the Company") carries on the business as stock and share brokers on the National Stock Exchange of India Limited ("NSE") and the BSE Limited ("BSE"); depository participants and other related ancillary services. On February 1,1996 IBSL received a certificate of registration from the Securities and Exchange Board of India ("SEBI") under sub-section 1 of section 12 of the Securities and Exchange Board of India Act, 1992 to carry on the business as a stock broker. Accordingly, all provisions of the Securities and Exchange Board of India Act, 1992, and Rules and Regulations relating thereto are applicable to the Company. On April 2,2008 the Equity shares of the Company were listed on the NSE and the BSE after the demerger of the Company from Indiabulls Financial Services Limited (erstwhile holding company) vide Scheme of Arrangement.

(i) In the event of liquidation of the Company, the holders of Equity Shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of Equity Shares held by the shareholders.

(ii) Holders of Global Depository Receipts ('GDRs') will be entitled to receive dividends, subject to the terms of the Deposit Agreement, to the same extent as the holders of Equity Shares, less the fees and expenses payable under such Deposit Agreement and any Indian tax applicable to such dividends. Holders of GDRs don't have voting rights with respect to the Deposited Shares. The GDRs may not be transferred to any person located in India including Indian residents or ineligible investors except as permitted by Indian laws and regulations.

(iii) During the financial year 2007-08, the Company had restructured/ reorganised its business operations through a scheme of arrangement Under Sections 391 - 394 of the Companies Act, 1956 (duly sanctioned by the Hon'ble High Court of Judicature at Delhi on November 23, 2007). The Scheme of arrangement provided for the demerger of the Company (securities broking and advisory business (a part of fee income) as a going concern from Indiabulls Financial Services Limited ("IBFSL"). Upon coming into effect of the Scheme on April 24, 2007 and with effect from the Appointed Date on April 01, 2007, in terms of the Scheme, the Company had issued and allotted 253,426,989 Equity Shares of face value of Rs. 2 each aggregating to Rs. 506,853,978 and 9,966,667 cumulative, non-convertible redeemable Preference Shares of face value of Rs. 4.61 each aggregating to Rs. 45,946,335 to the respective share- holders of IBFSL.

(iv) 23,486,341 Equity Shares of face value of Rs. 2 each were bought back by the Company during the year ended March 31,2010.

As per records of the Company, including its register of shareholders/members and other declarations received from shareholders regarding beneficial interest. The above shareholding represents both legal and beneficial ownerships of shares.

(v) Shares reserved for issue under options:

13,125,008 Equity Shares (Previous year 27,231,233 Equity Shares) of face value of Rs. 2 are reserved under various option schemes of the Company (Refer note - 32).

(i) Pursuant to the notification dated December 29,2011 issued by the Ministry of Corporate Affairs amending Accounting Standard 11 -'Accounting for the Effects of Changes in Foreign Exchange Rates' as notified under the Companies (Accounting Standards) Rules, 2006, as amended, the Company has exercised the option as per Paragraph 46A inserted in the said Accounting Standard for amortization of foreign exchange gain/loss on long-term monetary items over the remaining life of the concerned monetary items. Consequently, an amount of Rs. 3,138,319 (Previous year Rs. Nil) is carried forward in the Foreign Exchange Monetary Item Translation Difference Account as on March 31,2012, net of forex gain amounting to Rs. 153,093 (Previous year Rs. Nil) amortised in the Statement of Profit and Loss.

(ii) Interim Dividend per Share Rs. Nil (Previous Year Re. 1).

(i) Term loans are secured against hypothecation of the vehicles purchased. The rate of interest of such term loans ranges between 9% p.a. to 12% p.a. The term loans are repayable in equated monthly installments ranging for a period of 3 to 5 years.

(i) Disclosures under the Micro, Small and Mediurn Enterprises Development Act, 2006:

(a) An amount of Rs. Nil (Previous year Rs, Nil) and Rs. Nil (Previous year Rs. Nil) was due and outstanding to suppliers as at the end of the accounting year on account of principal and interest respectively.

(b) No interest was paid during the year in terms of Section 16 of the Micro, Small and Medium Enterprises Development Act, 2006; no amount was paid to the supplier beyond the appointed date.

(c) No interest is payable at the end of the year other than interest under Micro, Small and Medium Enterprises Development Act, 2006.

(d) No amount of interest was accrued and unpaid at the end of the accounting year.

The above information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of the information available with the Company. This has been relied upon by the Auditors.

(i) In respect of amounts mentioned under Section 205Cof the Companies Act, 1956, Rs. Nil (Previous year Rs. Nil) were required to be credited to the Investor Education and Protection Fund as at March 31,2012.

(a) During the year, the Company had invested an additional amount of Rs. Nil (Previous year Rs. 20,000,000) in its wholly owned subsidiary Indiabulls Brokerage Limited.

(b) As at March 31, 2012 and March 31, 2011, the Company holds 100% of the Equity Share capital of Indiabulls Distribution Services Limited ("IDSL") at a cost of Rs. 500,000. Based on the audited financials of IDSL as at March 31, 2012 and March 31,2011, there has been an erosion in the value of investment made in IDSL as the operations in IDSL are in the process of being set up. Considering the investment in IDSL as strategic and long-term in nature, the Company considers the losses suffered by IDSL as temporary in nature and accordingly no provision for diminution in value has been made in the books of accounts.

(c) During the year, the Company has invested an amount of Rs. 500,000 in a newly formed wholly owned subsidiary Auxesia Soft Solutions Limited.

(d) During the year ended March 31,2009, the Company had given loan of Rs. 1,809,300,000 to one of its wholly owned subsidiaries - viz. DevataTradelink Limited ("DTL"). During that financial year, DTL had incurred / provided for losses aggregating to Rs. 1,562,932,320 in respect of dealing in securities. Based upon the availability of resources as at that year end to repay those loans and considering the erosion of the net worth of the said subsidiary, the Company had written off loans given to DTL aggregating to Rs. 1,809,300,000 as bad loans/advances written off. Investments made by the Company in the Equity Share capital of DTL amounting to Rs. 500,000 though considered as strategic and long-term in nature, considering the losses suffered by this subsidiary, diminution in the value of this investment is considered as other than temporary in nature and accordingly provision for diminution in value amounting to Rs. 500,000 was made in books of account in that financial year. During the year, the Company has given an additional loan amounting to Rs. 300,000,000 (Previous year Rs. Nil) to the said subsidiary.

(e) During the year Copal Partners Limited has bought back 223,222 shares held by the Company vide the Purchase and Cancellation Agreement for the consideration of Rs. 86,226,344. Further, the Company had sold 586,193 shares held by it in Copal Partners Limited to Moody's Group UK LTD for the consideration of Rs. 231,992,806 vide the Share Purchase Deed. As a result thereof, the stake of the Company in Copal Partners Limited has been reduced from 4.74% to 1.63%. The proportionate cost of the shares bought back and sold aggregates to Rs. 351,362,195. Out of the total consideration of Rs. 231,992,806 receivable from Moody's Group UK LTD an amount of Rs. 77,952,063 (excluding foreign exchange gain of Rs. 3,291,412) is receivable as at the yearend in the form of Loan Notes and Escrow account of the Moody's Group UK LTD.

Note-2

Deferred tax assets (net)

In compliance with Accounting Standard 22 - 'Accounting for Taxes on Income' as notified under the Companies (Accounting Standards) Rules, 2006, as amended, deferred tax credit (net) of Rs. 25,247,378 (Previous year - Rs. 66,651,375) has been credited to the Statement of Profit and Loss for the year ended March 31,2012. The breakup of deferred tax into major components is as under:

(i) Fixed deposits includes:

a. Rs. 776,300,000 (Previous year Rs. 1,884,173,628 ) pledged with the banks against bank guarantees issued by banks for base capital and additional base capital to the National Stock Exchange of India, BSE Limited and the National Securities Clearing Corporation Limited.

b. Rs. Nil (Previous year Rs. 250,000,000) pledged against working capital loan taken from bank.

c. Rs. 47,400,000 (Previous year Rs. 172,400,000) pledged with the National Stock Exchange of India, BSE Limited and National Securities Clearing Corporation Limited for the purpose of base capital and additional base capital.

d. Rs. 874,500,000 (Previous year Rs. 1,914,500,000) pledged with banks for overdraft facilities.

e. Rs. 6,881,400 (Previous year Rs. 22,138,193) pledged for arbitration matters.

f. Rs. 25,000 (Previous year Rs. 25,000) pledged with State Commission, New Delhi for appeal filed by the Company in a consumer dispute matter.

(ii) During the year, pursuant to the Order of the Hon'ble Sole Arbitrator, the Company has sold shares held by one of its customers in its beneficiary depository account held with the Company. Further, the said Arbitrator has ordered the Company to deposit the money in an interest bearing account in its name specifying that the sum has been deposited subject to further orders in the Arbitration. The Company has thus invested such sums of money aggregating to Rs. 613,023,555 (Net) in various fixed deposits with a scheduled bank. As at the year end, the said fixed deposits are being netted off against the dues payable to the customer.

(i) During the year, personnel costs amounting to Rs. Nil (Previous Year Rs. 156,026,787) were apportioned to the Company from its subsidiary company - Indiabulls Commodities Limited.

(ii) During the year, personnel costs amounting to Rs. 109,707,465 (Previous Year Rs. Nil) were apportioned to the subsidiary company Indiabulls Distribution Services Limited.

(i) During the year, Lease rent amounting to Rs. 27,094,810 (Previous Year Rs. Nil) was apportioned to Indiabulls Distribution Services Limited - a subsidiary of the Company.

(ii) During the year, Business Promotion expense amounting to Rs. 1,206,197 (Previous Year Rs. Nil) was apportioned to Indiabulls Distribution Services Limited - a subsidiary of the Company.

Note - 3 Earnings per Equity Share (EPS):

Disclosure in respect of Accounting Standard - 20 'Earnings Per Share 'as notified under the Companies (Accounting Standards) Rules, 2006, as amended:

The basic earnings per Equity Share is computed by dividing the net profit attributable to Equity Shareholders for the year by the weighted average number of Equity Shares outstanding during the reporting year. Diluted earnings per Equity Share is computed by considering the weighted average number of Equity Shares and also the weighted average number of Equity Shares that could have been issued on the conversion of all dilutive potential Equity Shares. The dilutive potential Equity Shares are adjusted for the proceeds receivable, had the shares been actually issued at fair value.

Dilutive potential Equity Shares are deemed converted as of the beginning of the year, unless they have been issued at a later date. The number of Equity Shares and potential dilutive Equity Shares are adjusted for the potential dilutive effect of Employee Stock Option Plan as appropriate.

Note - 4 Leases:

The Company has taken office premises on operating lease at various locations in India and lease rent in respect of the same amounting to Rs 145,797,340 (Previous Year Rs. 213,514,710) has been charged to the Statement of Profit and Loss. The minimum lease rental outstanding are as under

The agreements are executed for a period ranging from 11 months to 10 years with a renewable clause and in many cases, it also provides for termination at will by either party giving a prior notice period between 30 to 90 days.

Note - 5 Loss on Erroneous Transactions:

The loss on squaring off of erroneous transactions on account of trading in securities amounting to Rs. 599,078 (Net)

(Previous year Rs. 864,630 (Net)) has been debited to the Statement of Profit and Loss.

Note - 6 A. Contingent liabilities not provided for in respect of:

(Amount in Rs.)

Particulars As at As at

March 31,2012 March 31, 2011

- Claims against the Company not acknowledged as debts in respect of:

Penalty for synchronized trading under SEBI regulations111 1,500,000 1,500,000

Arbitration matters" 147,658 2,415,706

Court Cases 3,858,471 -

- Corporate guarantee for bank guarantees availed by subsidiary 70,000,000 100,000,000



(i) During the previous year, the Securities Appellate Tribunal ("SAT") has passed an order dated October 26, 2010 in favour of the Company setting aside the penalty imposed by SEBI. However, during the year, SEBI has preferred an appeal at the Honourable Supreme Court of India against the judgment of the SAT.

(ii) The Company is involved in various legal proceedings as respondents / defendants for various claims including those related to matters relating to conduct of its business. In respect of these claims, the Company believes, these claims do not constitute material litigation matters and with its meritorious defenses the ultimate disposition of these matters will not have material adverse effect on its financial statements / position.

B. The Company has filed an objection petition before the Madras High Court against the arbitral award passed against the Company in an arbitral dispute between Indiabulls Financial Services Limited & others and A. Indira Anand & K Bharathi wherein the Company was imp leaded in its capacity as a depository of the pledges and share broker of the creditor. By the impugned award dated February 18, 2012 the sole arbitrator has imposed a penalty of Rs. 130,000,000 on the Company. The petition is pending adjudication.

Note - 7 Employee Stock Option Schemes:

Indiabulls Employees' Welfare Trust

During the financial year 2010-11, pursuant to the approval accorded at an Extraordinary General Meeting of the Members of the Company held on September 30, 2010, the "Indiabulls Employees' Welfare Trust" ("Trust") has been formed on October 04, 2010 with an initial Corpus of Rs. 50,000, contributed equally by the Company and four other listed Settlor entities, to administer and implement the Settlor entities' current un-granted Employee Stock Option Schemes ("ESOP") and any future ESOP / Employee Stock Purchase Schemes of the Settlor entities. The Company being one of the Settlors has contributed its share of Rs. 10,000 as initial contribution towards the corpus of the said Trust. The Trust is administered by Independent Trustees. In terms of the Trust Deed, Equity Shares of the Settlor entities are to be purchased by the Trust to the extent permissible in terms of the ESOP scheme as approved by the Members of the Company for the purposes of allotment of the same to eligible Employees of Settlor companies and their subsidiaries, upon exercise of options granted by the Compensation Committee of Settlor companies, at a price to be determined by the Trust based on its carrying cost. During the year, there has been no new grants made by. the Company which are required to be administered by the Trust.

a) Employees Stock Option Scheme - 2008

Pursuant to a resolution passed by the Shareholders on January 19,2009, the Company had cancelled and withdrawn the existing "Employee Stock Option Scheme - 2007", covering 15,000,000 stock options and established a new Employee Stock Option Scheme titled "Employee Stock Option Scheme - 2008" in accordance with the provisions of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 ("SEBI Guidelines").

Under the Scheme, the Company was authorised to grant 20,000,000 Equity settled options to eligible employees including its directors (other than promoter directors) and employees of its subsidiary companies including their directors. All options under the Scheme are exercisable for Equity Shares of the Company. Employees covered by the plan were granted an option to purchase shares of the Company subject to the requirements of vesting.

A Compensation Committee constituted by the Board of Directors of the Company administered the plan. The Compensation Committee at its meeting held on January 24, 2009, had granted, under the "indiabulls Securities Limited Employees Stock Option Scheme - 2008" ("IBSL ESOP - 2008"), 20,000,000 Stock Options representing an equal number of Equity Shares of face value Rs. 2 each in the Company, to the Eligible Employees, at an exercise price of Rs. 1 7,40, being the latest available closing market price on the National Stock Exchange of India Ltd., as on January 23, 2009 following the intrinsic method of accounting as is prescribed in the Guidance Note on Accounting for Employees Share-Based Payments ("the Guidelines") issued by the Institute of Chartered Accountants of India. As the options have been granted at intrinsic value, there is no employee stock compensation expense on account to the same. The Stock Options so granted, shall vest in the eligible employees over a period of 10 years beginning from January 25, 2010 being the first vesting date. The options granted under each of the slabs, can be exercised by the grantees within a period of five years from the relevant vesting date.

b) Employees Stock Option Scheme - 2009

The Shareholders of the Company at their Annual General Meeting held on September 30, 2009 have authorised the Board of Directors to grant 20,000,000 options, representing equivalent number of Equity Shares of face value Rs. 2 each in one or more tranches, pursuant to an Employee Stock Option Scheme titled as' Indiabulls Securities Limited Employees Stock Option Scheme - 2009'("IBSL ESOP - 2009").The options covered under the Scheme would be granted at a price and on such terms and conditions as may be decided by the Compensation Committee, to the eligible employees of the Company and its subsidiaries.

The Compensation Committee constituted by the Board of Directors of the Company, at its meeting held on December 1,2009, granted, under the "Indiabulls Securities Limited Employees Stock Option Scheme- 2009" ("IBSL ESOP - 2009") 10,000,000 Stock Options representing an equal number of Equity Shares of face value Rs. 2 each in the Company, at an exercise price of Rs. 35.25, being the latest available closing market price on the National Stock Exchange of India Ltd., on November 30, 2009. The Stock Options so granted, shall vest uniformly over 10 years beginning from December 2, 2010 being the first vesting date. The option granted under each of the slabs, can be exercised within a period of five years from the relevant vesting date.

Further, the Compensation Committee constituted by the Board of Directors of the Company has at its meeting held on April 12, 2010, granted, under the "Indiabulls Securities Limited Employees Stock Option Scheme - 2009" ("IBSL ESOP - 2009") 2,050,000 Stock Options representing an equal number of Equity Shares of face value Rs. 2 each in the Company, at an exercise price of Rs. 31.35, being the latest available closing market price on the National Stock Exchange of India Ltd., on April 9, 2010. The Stock Options so granted, shall vest uniformly over 10 years beginning from April 13,2011 being the first vesting date. The options granted under each of the slabs, can be exercised within a period of five years from the relevant vesting date.

The expected volatility was determined based on historical volatility data.

Had the compensation cost for the stock options granted under the IBSL ESOP - 2008 and IBSL ESOP - 2009 been determined based on the fair value approach, the Company's net (loss) / profit and Basic/Diluted earnings per Equity Share would have been as per the pro forma amounts indicated below:

Note - 8

Segment Reporting:

Segment information for the year ended March 31,2012 as per Accounting Standard 17-'Segment Reporting' as notified under the Companies (Accounting Standards) Rules, 2006, as amended:

(a) Primary segment information (by Business Segments):

(b) The Company operates solely in one Geographic segment namely "Within lndia''and hence no separate information for Geographic segment wise disclosure is required.

(c) The Company's primary business segment is reflected based on principal business activities carried on by the Company. The Company's primary business is 'Broking and related activities' and 'Advisory services'. Broking and related activities include business as a stock and share broker on the National Stock Exchange of India Limited and the BSE Limited and other related ancillary services. Advisory services mainly comprise of financial services related fees.

(d) Segment revenue, results, assets and liabilities include amounts identifiable to each segment and amounts allocated on a reasonable basis.

(e) The accounting policies adopted for segment reporting are in line with the accounting policies adopted for preparation of financial information as disclosed in Note - 2.

Note - 9 Employee Benefits:

Provident Fund, Gratuity and Compensated Absences - disclosures as per Accounting Standard 15 (Revised) - 'Employee Benefits' as notified by the Companies (Accounting Standards) Rules, 2006, as amended:

Contributions are made to Government Provident Fund and Family Pension Fund and other statutory funds which cover all regular employees eligible under the respective acts. Both the employees and the Company make predetermined contributions to the Provident Fund. The contributions are normally based on a certain proportion of the employee's salary. The Company has recognised an amount of Rs. 673,063 (Previous year Rs. 1,096,978) towards Employer's Contribution for the above mentioned funds.

Provision for unfunded Gratuity and Compensated Absences for eligible employees is based on an actuarial valuation carried out at the end of every financial year. Major drivers in actuarial assumptions, typically, are years of service and employee compensation. Commitments are actuarially determined using the 'Projected Unit Credit' Method. Gains / losses on changes in actuarial assumptions are accounted for in the Statement of Profit and Loss.

Disclosures in respect of Gratuity and Compensated Absences:

Note-10

Rates and taxes include Rs. 255,543,931 (Previous year Rs. Nil) relating to Rates / Taxes / Stamp Duty paid in respect of certain transactions entered into by clients in earlier years. Interest - others include Rs. 168,172,078 (Previous year Rs. Nil) pertains to penal interest paid thereon.

Note - 11

Derivative Instruments:

The Company has not entered into any derivative contract for hedging any foreign currency exposure. The yearend foreign currency exposures that have not been hedged by derivative instruments or otherwise are given below:

Note -12

No borrowing cost has been capitalised during the year.

Note -13

As per the best estimate of the Management, no provision is required to be made as per Accounting Standard 29*'- 'Provisions, Contingent Liabilities and Contingent Assets' as notified under the Companies (Accounting Standards) Rules, 2006, as amended, in respect of any present obligation as a result of a past event that could lead to a probable outflow of resources which would be required to settle the obligation.

Note -14

The Revised Schedule VI has become effective from April 1, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosures.


Mar 31, 2009

1. lndiabulls Securities Limited ("IBSL"or"theCompany") carries on the business as stockandsharebrokersonthe National Stock Exchange of India Limited and Bombay Stock Exchange Limited; depository participants and other related ancillary services. On February 1,1996IBSL received a certificate of registration from the Securities and Exchange Board of India under sub-section 1 of section 12 of the Securities and Exchange Board of India Act, 1992 to carry on the business as a stock broker. Accordingly, all provisions of the Securities and Exchange Board of India Act, 1992, and rules and regulations relating thereto are applicable to IBSL. On April 2,2008 the equity shares of the Company got listed on National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited (BSE) afterthe demerger of the Company from Indiabulls Financial Services Limited.

2. Contingent liability not provided for in respect of:

a) Bank guarantees outstanding in respect of credit facilities availed from banks Rs. 4,050,000,000 (Previous Year Rs. 5,850,000,000).

b) Capital commitments in respect of interior works and acquisition of fixed assets as at the year end (net of advances)Rs. 2,881,074(PreviousYearRs. 18,655,387).

c) Penalty on syncronised trading Rs. 1,500,000 (Previous Year Rs. Nil) under SEBI regulations.

3. The Board of Directors of Indiabulls Financial Services Limited (IBFSL) the erstwhile holding Company, at their meeting held on February 15,2007, approved the restructuring / re-organization ("the Scheme") of the business of the Company.; In pursuance of section 391-394 of the Companies Act, 1956 the said Scheme has been approved by the members of the erstwhile holding Company and sanctioned by the Honorable High Court of New Delhi dated November 23,2007.

Upon coming into effect of the Scheme with effect from the appointed date i.e. -April 1,2007, IBFSLs securities broking and advisory service business had been demerged and transferred to the Company on a going concern basis. The Scheme has been given effect to in the financial statements and accordingly, the assets comprising of fixed assets, investments, sundry debtors, loans- and advances, security deposits and cash aggregating to Rs. 461,032,891; current liabilities (including general purpose liabilities) amounting to Rs. 272,156,401; proportionate liability of Rs. 45,946,335 in respect of Preference Share Capital, and an amount of Rs. 93,001,590 related to the advisory income (net of expenses, for the current period), which had been recorded by the IBFSL in trust on behalf of the Company have been so transferred by IBFSL to the Company.

In terms of the Scheme, the Company has issued and allotted 253,426,989 Equity shares of face value of Rs. 2 each aggregating to Rs. 506,853,978 and 9,966,667 cumulative, non convertible redeemable Preference shares of face value of Rs. 4.61 each aggregating to Rs. 45,946,335 to the respective shareholders of IBFSL. The existing Equity Share capital of the Company before giving effect to the Scheme amounting to Rs. 178,340,990 has been cancelled in terms of the Scheme.

In terms of the Scheme, the net adjustment aggregating to Rs. 185,582,833 has been reduced from the Capital Redemption Reserve for the year ended March 31,2008.

4. Reorganisation of capital

In consideration of Demerger, including the transfer and vesting of securities broking and advisory service business of Indiabulls Financial Services Limited (Demerged undertaking) in Indiabulls Securities Limited (Resulting Company), the Company issued and allotted to each member of the IBFSL whose name is recorded in the register of members and records of the depositary as members of the IBFSL on January 8,2008 (Demerger record date) equity shares in IBSL in the ratio of 1 (one) equity shares in IBSL of face value of Rs. 2/- each credited as fully paid-up for every 1 (one) equity share of Rs.2/- each fully paid up held by such member in IBFSL.

As a result the existing equity capital consisting of 17,834,099 Equity shares of face value of Rs. 10 each of IBSL has been cancelled and a fresh equity capital consisting of 253,426,989 Equity shares of face value of Rs. 2 each has been issued. Further, the face value of existing 9,966,667 Cumulative, Redeemable, Non-convertible Preference shares of face value of Rs 162 each of IBFSL has been allocated proportionately as per the ratio of the net worth of the Demerged Undertaking to the net worth of the IBFSL immediately before the Demerger and accordingly, IBSL has issued and allotted 9,966,667 Cumulative, Redeemable, Non-convertible Preference shares of face value of Rs. 4.61 to the respective preference shareholder of IBFSL as on the record date. The terms and conditions including dividend and redemption on which IBFSL Preference shares were issued and allotted would mutatis mutandis apply to preference shares issued by IBSL. Accordingly, these Preference shares will be redeemed at par after five years from the date of issue of the Preference shares i.e. August 2,2006. The dividend rate on these preference shares has changed from 5 % to 10% w.e.f. February 2,2008 in terms of its issue by IBFSL.

In terms of the Scheme, the Authorised Capital of the Company has been reorganised to Rs. 1,115,250,000 divided into 500,000, 000 Equity Shares of Rs. 2/- and 25,000,000 Preference shares of Rs.4.61each. Subsequent to the year ended March 31,2008 the equity shares issued on the demerger of the Company were listed on National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited (BSE) on April 2, 2008.

5. On March 30,2007, Indiabulls Securities Limited had implemented the Employees Stock Option Scheme 2007 ("IBSL ESOS-2007" or "Scheme"). Under the plan, Indiabulls Securities Limited was authorised to issue up to 3,000,000 options, each convertible into one equity shares of Rs. 10 each, to eligible employees of the Company and its subsidiary including employees of its erstwhile holding Company at an exercise price of Rs. 200 per share. Employees covered by the plan were granted an option to purchase shares under the IBSL ESOS - 2007, subject to the requirements of vesting. These options vested uniformly over a period of 5 years, whereby 20% of the options vest on each vesting date as per the vesting schedule. A Compensation Committee was constituted by the Board of Directors of the Company to administer the plan.

Pursuant to the shareholders authorisation dated November 24,2007, these options were to be convertible into an equivalent number of equity shares of the Company over a period often years beginning from April 1,2008. Further, as a consequence of the change in the face value of the equity shares of the Company from Rs. 10/- to Rs. 2/- each pursuant to the Scheme, 3,000,000 stock options granted by the Company prior to the Demerger Effective Date (giving right to an option holder to subscribe for one equity share of Rs. 10/- each at an exercise price of Rs. 200/- per share) was increased to 15,000,000 stock options (giving right to an option holder to subscribe for one Equity Share of Rs. 2/- each at an exercise price of Rs. 40/- per share).

* The number of options and exercise price have been adjusted taking into account change in the face value of the equity shares of the Company from Rs. 10/- to Rs. 2/- each pursuant to the Scheme.

** During the current financial year all the unvested and vested options were surrendered by the respective option holders and Compensation Committee decided not to regrant the same and decided to cancel unvested and vested options 15,000,000 options and withdraw the scheme. On January 19,2009, pursuant to the shareholders approval, the Company cancelled and withdrew the Indiabulls Employees Stock Option Scheme-2007 and cancelled the 15,000,000 unvested stock options granted including ungranted options.

Employees Stock Option Scheme - 2008

Pursuant to resolution passed by the shareholders on January 19,2009 the Company has cancelled and withdrawn the existing "Employee Stock Option Scheme-2007", covering 15,000,000 stock option and establish a new Employee Stock Option Scheme titled "Employee Stock Option Scheme-2008" in Accordance with the provisions of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 ("SEBI Guidelines"). Under the Scheme, the Company was authorised to grant 20,000,000 equity settled options to eligible employees including its directors (other than promoter directors) and employees of its subsidiary companies including their directors. All options under the Scheme are exercisable for equity shares of the Company. Employees covered by the plan were granted an option to purchase shares of the Company subject to the requirements of vesting.

A Compensation Committee constituted by the Board of Directors of the Company administered the plan. The Compensation Committee at its meeting held on January 24, 2009, has granted, under the "Indiabulls Securities . Limited Employees Stock Option Scheme - 2008", 20,000,000 Stock Options representing an equal number of equity shares of face value Rs 2/- each in the Company, to the Eligible Employees, at an exercise price of Rs 17.40, being the latest available closing market price on the National Stock Exchange of India Ltd, as on January 23,2009 following the intrinsic method of accounting as is prescribed in the Guidance Note issued by the Institute of Chartered Accountants of India on Accounting for Employees Share based Payments ("the Guidelines"). As the options have been granted at intrinsic value, there is no employee stock compensation expense oh account of the same. The Stock Options so granted, shall vest in the eligible employees uniformly over a period of 10 years beginning from January 25, 2010 being the first vesting date. The options granted under each of the slabs, can be exercised by the grantees within a period of five years from the relevant vesting date.

6. On March 06, 2009 the Shareholders of Indiabulls Securities Limited, by means of a Special Resolution passed through the postal ballot, with requisite majority authorised the buy-back of the Companys fully paid-up Equity Shares of face value Rs. 21- each from the open market through stock exchanges, at a price not exceeding Rs. 33/- per share up to a maximum amount of Rs. 83,17,96,227, being 25% of the total paid-up equity capital and free reserves as per the audited balance sheet of the Company as at the year ended March 31,2008, to be financed out of the Companys free reserves and surplus and balance in the Profit and Loss Account. The Company has proposed to buyback upto 39,281,000 of its fully paid up Equity Shares and minimum number of 5,000,000 of its fully paid up Equity Shares at a price not exceeding Rs 33/- per Equity Share. Subsequent to year end the Company has bought back 7,271 shares as of date.

7. During the current financial year there was variation in the terms of Appointment of Mr. Ashok Sharma pursuant to Section 302 of the Companies Act, 1956. Mr. Ashok Sharma who was appointed as a Whole-time Director of the Company on May 18,2005 (effective from May 18,2005) and has been drawing remuneration from the Company with effect from May 18, 2005, pursuant to the shareholders approval, accorded in the Annual General Meeting of the Company dated August 26,2005. While the terms of his remuneration as approved by the Shareholders, he was to receive remuneration from the Company till March 31,2009, in the Board meeting dated December 8,2008 Mr. Ashok Sharma expressed his desire to continue as the Whole time Director of the Company, without any remuneration, effective December 1, 2008. The last drawn remuneration by Mr. Ashok Sharma was Rs.200,000/- per month. Accordingly, in deference of his desire the Board has decided that with effect from December 1, 2008 Mr. Ashok" Sharma would be Whole time Director of the Company without any remuneration.

8. SecuredLoans

a) Vehicles Loans of Rs. 20,902,980(Previous Year Rs. 47,058,929) are secured against hypothecation of Vehicles. b) Working Capital loan of Rs. 400,000,000 (Previous Year Rs. 400,000,000) are secured against Fixed Deposits placed with Banks.

9. During the year the Company has issued 90 days Commercial Paper of Rs. 1,000,000,000 at the discount rate of 14% which was subsequently repaid. Further, 178 days Commercial Paper amounting to Rs. 500,000,000 was issued at the discount rate of 12%, the same remained outstanding on March 31,2009.

10. Fixed deposits include Rs. 2,068,791,440 (Previous Year Rs. 2,925,000,000) pledged with the banks against bank guarantees issued by banks for base capital and additional base capital to National Stock Exchange of India, Bombay Stock Exchange of India and National Securities Clearing Corporation Limited.

Fixed Deposits include Rs. 400,000,000 (Previous Year 400,000,000) pledged against working capital loan taken from Bank.

Fixed Deposits include Rs. 7,500,000 (Previous Year 7,500,000) are pledged with National Stock Exchange of India,

Bombay Stock Exchange of India and National Securities Clearing Corporation Limited for the purpose of Base capital.

11. During the year the Company had advanced a sum of Rs. 1,809,300,000 by way of loan to one of its wholly owned subsidiary-viz. Devata Tradelink Limited ("DTL"). DTL has incurred / provided for losses aggregating to Rs. 1,562,932,320 in respect of dealing in securities. Based upon the availability of resources as at the year end to repay those loans and considering the erosion of the networth of the subsidiary, the Company has written off loans given to DTL aggregating to Rs. 1,809,300,000 as bad loans/ advances written off. Investments made by the company in the equity share capital of DTL amounting to Rs. 500,000 though considered as strategic and long term in nature, considering the losses suffered by this subsidiary, diminution in the value of the investment is considered as other than temporary in nature and accordingly provision for diminution in value amounting to Rs. 500,000 has been made in books of account.

12. The loss on squaring off of erroneous transactions on account of trading in securities amounting to Rs. 1,426,911 (Net) (Previous Yearprofit Rs. 3,428,597 (Net) has been adjusted to Profit and Loss account.

13. Segment Reporting:

Segment information for the period from April 1,2008 to March 31,2009

a) The Company operates solely in one Geographic segment namely "Within India" and hence no separate information for Geographic segment wise disclosure is required.

b) The Companys primary Business segment is reflected based on principal business activities carried on by the Company. The Companys primary business activity is to carry on business of stock and share broker on National Stock Exchange of India Limited and Bombay Stock Exchange Limited and other related ancillary services.

c) Others business segment constitutes Investment and dealing in tradable securities. This not being the normal business activity of the Company, the same is shown as "Others".

d) Segment revenue, results, assets and liabilities include amounts identifiable to each segment and amounts allocated on a reasonable basis.

e) The accounting policies adopted for segment reporting are in line with the accounting policies adopted for preparation of financial information as disclosed in (A) above.

14. Disclosures in respect of applicability of AS-18 Related Party Disclosures:

a) Related parties where control exists:

Nature of relationship Name of party

Subsidiary Companies Indiabulls Commodities Limited (Formerly Indiabulls Commodities Private Limited) India Ethanol and Sugar Limited DevataTradelink Limited Indiabulls Brokerage Limited

b) Other related parties:

Nature of relationship Name of party

Key Management Personnel Mr. Divyesh B. Shah, Director Mr. Ashok Sharma, Director Mr. Rajiv Rattan, Director & Person exercising significant control

Mr. Saurabh K. Mittal, Directors Person exercising significant control Mr. Sameer Gehlaut, Person exercising significant control

15. During the year, the Company acquired Nil (Previous Year 1,098,317) Ordinary Shares of face value of £ .001 in Copal Partners Limited amounting to Rs. Nil (Previous Year Rs. 476,694,683).

16. During the year the Company invested an amount of Rs. 35,000,000 (Previous Year Rs. 500,000) in wholly owned subsidiary Indiabulls Brokeraae Limited (Previous vear- DevataTradelink Limited).

17. Remittance during the year in foreign currency on account of preference dividend Interim Dividend (Year ended March 2009) Numberof Shareholders: 1 (Previous Year: 1)

Preference Shares held on which dividend is remitted: 9,966,667 (Previous Year 9,966,667)

Amount Remitted: Rs 4,403,233 (Previous Year Rs 1,722,987*)

The above remittance for previous year includes preference dividend for the half year ended September 30,2007 amounting to Rs. 1,148,658 paid by the erstwhile holding Company to the preference shareholders and is transferred to the Company in accordance with the Scheme.

The Company does not have information as to the extent to which remittances, if any, in foreign currencies on account of dividend have been made to non - resident shareholders.

18. The Board of Directors of the Company at its meeting held on June 25,2009 has recommended a Dividend of Rs. 2 per share (100% on the face value of Rs. 2 per share) for the financial year 2008-09, out of the opening balance in Profit. and Loss account. As the company has incurred losses during the year amounting to Rs. 130,421,989, the company has transferred an amount equivalent to 10% of the Surplus of Profit and Loss account balance brought forward after adjusting the loss incurred by the company during the year and also deducting the Interim Preference Dividend (including Corporate Dividend Tax) and proposed Preference Dividend (including Corporate Dividend Tax) for the year amounting to Rs. 4,050,027 and Rs. 1,325,463 respectively.

19. Derivative Instruments:

The Company has not entered into any derivative instrument during the year. The Company does not have any foreign currency exposures towards receivables, payables or any other derivative instrument that have not been hedged.

20. Disclosures underthe Micro, Small and Medium Enterprises Development Act, 2006:

a) An amount of Rs. Nil (Previous Year Nil) and Rs. Nil (Previous Year Nil) was due and outstanding to suppliers as at the end of the accounting year on account of Principal and Interest respectively.

b) No interest was paid during the year.

c) No interest is payable at the end of the year other than interest under Micro, Small and Medium Enterprises Development Act, 2006.

d) No amount of interest was accrued and unpaid at the end of the accounting year.

The above information and that given in Schedule H - "Current Liabilities and Provisions" regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.

21. No borrowing cost has been capitalised during the period.

22. Information under paragraphs 3 and 4 of Part II to Schedule VI of the Companies Act, 1956 is stated to the extent applicable to the Company.

23. Provision for Current Tax includes provision for Wealth Tax of Rs. 496,045 (Previous year Rs. 361,000).

24. As per the best estimate of the management, no provision is required to be made as per Accounting Standard (AS) 29 - Provisions, Contingent Liabilities and Contingent Assets as notified under the Companies (Accounting Standards) Rules, 2006, in respect of any present obligation as a result of a past event that could lead to a probable outflow of resources, which would be required to settle the obligation.

25. In respect of amounts as mentioned under Section 205C of the Companies Act, 1956, there were no dues required to ," be credited to the Investor Education and Protection Fund as at March 31,2009.

26. Previous years figures have been re-grouped / re-arranged wherever considered necessary to confirm to current years groupings and classifications.

 
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