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Directors Report of JM Financial Ltd.

Mar 31, 2015

The Members,

The Directors of the Company take pleasure in presenting their Thirtieth Annual Report together with the annual audited financial statements for the financial year ended March 31,2015.

FINANCIAL RESULTS

The summary of the Company''s financial performance, both on a consolidated and standalone basis, for the financial year 2014-15 as compared to the previous financial year 2013-14 is given below:

(Rs. in Crore) Consolidated Standalone Particulars 2014-15 2013-14 2014-15 2013-14

Gross income 1,403.04 1,006.67 104.54 87.16

Profit before depreciation and amortisation expenses, finance 955.16 603.23 88.49 75.27 costs & tax expenses

Less: Depreciation and amortisation expenses 18.05 15.24 0.40 0.41

Finance costs 420.20 307.83 7.59 0.09

Profit before tax 516.91 280.16 80.50 74.77

Current tax 158.96 83.19 2.50 3.75

Deferred tax (2.78) (4.83) (0.10) (0.03)

Tax adjustments of earlier years (net) 0.21 1.62 - -

Profit after tax but before minority interest and share in 360.52 200.18 78.10 71.05 associate companies

Less: Share of minority interest 48.76 15.15 - -

Add: Share in profit of associates 18.76 24.50 - -

NET PROFIT 330.52 209.53 78.10 71.05

FINANCIAL PERFORMANCE Consolidated

The consolidated turnover of JM Financial Group stood at Rs. 1,403.04 Crore for the financial year ended March 31, 2015 as against Rs. 1,006.67 Crore for the previous year. The Group made a net profit of Rs. 330.52 Crore for the year ended March 31,2015 as compared to the net profit of Rs. 209.53 Crore in the previous year.

The consolidated financials reflect the cumulative performances of various subsidiaries and associates of JM Financial Group. Detailed description about these entities is contained in the Management Discussion and Analysis report forming part of the Annual Report.

Standalone

Being a Core Investment Company (CIC), most of our revenue is in nature of dividend income on investments in subsidiary companies.

The turnover of the Company stood at Rs. 104.54 Crore for the year ended March 31, 2015 as against Rs. 87.16 crore in the previous year. The Company made a net profit of Rs. 78.10 Crore for the year ended March 31, 2015 as compared to the net profit of Rs. 71.05 Crore in the previous year.

DIVIDEND

The Board of Directors, at its meeting held on January 28, 2015, had declared an interim dividend of Rs. 0.55 per equity share of the face value Rs. 1/- each (Previous year Rs. 0.45 per share), which was paid to the eligible members on February 11,2015. The Directors are now pleased to recommend a final dividend of Rs. 0.80 per share for the financial year 2014-15. With this recommendation, the total dividend works out to Rs. 1.35 per share (Previous year Rs. 1/- per share). The total outgo on account of interim and final dividend would be Rs. 106.15 Crore for the financial year 2014-15 as against Rs. 75.60 Crore in the previous year. The total amount of dividend distribution tax, on a consolidated basis, is Rs. 20.22 Crore as against Rs. 13.58 Crore in the previous year.

The final dividend, if declared at the Thirtieth Annual General Meeting, will be paid on and from August 1, 2015 to those members whose names appear in the Register of Members at the close of the business hours on June 9, 2015. In respect of shares held in dematerialised form, dividend will be credited to the bank accounts of the members as per the data furnished by the Depositories as at the close of business hours on June 9, 2015.

APPROPRIATIONS

The following appropriations have been made from the profits of the Company:

(Rs. in Crore) Consolidated Standalone particulars 2014-15 2013-14 2014-15 2013-14

Net Profit 330.52 209.53 78.10 71.05

Add: Balance profit 1,456.70 1,379.51 1,062.74 1,075.90 brought forward from previous year

Less: Depreciation 0.28 - # - of earlier years adjusted

Profit available for 1,786.94 1,589.04 1,140.84 1,146.95 appropriation

Less: Appropriations

Interim dividend 43.09 33.99 43.09 33.99

Proposed Final 63.06 41.61 63.06 41.61 dividend

Dividend on equity 0.10 0.02 0.10 0.02 shares allotted after the adoption of previous yearsRs. accounts

Dividend 20.22 13.58 2.29 1.08 distribution tax

Transferred to - 11.40 - 7.50 General reserve

Transferred to 63.39 27.10 15.63 - Statutory reserve

Transferred to - 4.64 - - Capital redemption reserve

Surplus carried to 1,597.08 1,456.70 1,016.67 1,062.74 balance sheet

# denote amounts below Rs. 50,000/- SHARE CAPITAL

Issue of shares pursuant to the exercise of right by Warrant- holders

The Allotment Committee of the Board allotted an aggregate of 2,32,93,878 equity shares of the face value of Rs. 1/- each to the following allottees, upon the exercise of right by them as Warrantholders.

Sr. Name of the No of Equity Date of No. Allottees Shares allotted Allotment

1 Mr. Vikram Shankar 1,16,46,939 December 11, Pandit 2014

2 Mr. Hariharan 58,23,470 December 23, Ramamurthi Aiyar 2014

3 Mrs. Aparna Murthy 58,23,469 December 23, Aiyar 2014

Issue of shares arising out of Employee Stock Option Scheme

During the FY 2014-15, the Allotment Committee of the Board allotted an aggregate of 50,86,302 equity shares upon exercise of stock options by the eligible employees (the Employees) under Employees Stock Option Scheme - Series 4, Series 5 and Series 6.

Consequent upon the allotments made to the Warrantholders and the Employees as above, the paid-up equity share capital of the Company has increased to Rs. 78,37,23,677 (comprising 78,37,23,677 equity shares of Rs. 1/- each) as on March 31,2015 from Rs. 75,53,43,497 as at the end of the previous financial year (comprising 75,53,43,497 equity shares of Rs. 1/- each).

Additionally, the Allotment Committee of the Board at its meetings held on April 16, 2015, May 13, 2015 and May 29, 2015, has respectively allotted 16,59,799, 21,13,641 and 7,67,257 equity shares to the Employees upon exercise of stock options by them. Upon these allotments, the paid-up equity share capital of the Company has increased post March 31, 2015 to Rs. 78,82,64,374 representing 78,82,64,374 equity shares of the face value of Rs. 1/- each.

EMPLOYEE STOCK OPTION SCHEME

The Nomination and Remuneration Committee (then called Compensation Committee) of the Board of the Company granted 44,85,267 stock options to the eligible employees (the Employees) under the Employee Stock Option Scheme - Series 7 on April 1,2014. Out of the total number of stock options so far granted under Series 1 to 7, 47,11,289 stock options have lapsed and 1,05,60,299 stock options have been exercised by the Employees. The aggregate number of stock options outstanding as on March 31,2015 is 2,40,49,622.

The Nomination and Remuneration Committee of the Board, at its meeting held on April 16, 2015, further granted 14,44,440 stock options to the Employees under the Employee Stock Option Scheme - Series 8.

The disclosures required to be made under applicable SEBI Regulations/Guidelines and Section 62(1) of the Companies Act, 2013 (hereinafter called "the Act") read with Rule 12(2) of the Companies (Share Capital and Debentures) Rules, 2014 are given in Annexure I to this Report.

DEPOSITS

During the year under review, the Company has neither invited nor accepted any deposits from the public.

SUBSIDIARIES AND ASSOCIATES

As on March 31, 2015, the Company had 18 entities as its subsidiaries (including step down subsidiaries) and associates. The subsidiaries are ; JM Financial Institutional Securities Limited, JM Financial Services Limited, JM Financial Commtrade Limited, JM Financial Overseas Holdings Private Limited (Mauritius), JM Financial Singapore Pte Limited (Singapore), JM Financial Securities, Inc. (Delaware - United States of America), PT JM Financial Securities Indonesia (Indonesia), JM Financial Products Limited, JM Financial Credit Solutions Limited (formerly known as FICS Consultancy Services Limited), JM Financial Investment Managers Limited, Infinite India Investment Management Limited, JM Financial Asset Management Limited, JM Financial Properties and Holdings Limited, CR Retail Malls (India) Limited, JM Financial Insurance Broking Private Limited and Astute Investments, a partnership firm in which JM Financial Services Limited and JM Financial Commtrade Limited, subsidiaries of the Company are partners.

The Company had 2 associates viz., JM Financial Asset Reconstruction Company Private Limited and JM Financial Trustee Company Private Limited.

During the year, pursuant to an Investment Agreement between the Company, Mr. Vikram Shankar Pandit and Mr. Hariharan Ramamurthi Aiyar, we capitalized JM Financial Credit Solutions Limited (NBFC) with Rs. 350 Crore. This NBFC also received an investment of Rs. 539.78 Crore (including Rs. 14.78 Crore received from Mrs. Aparna Murthy Aiyar) from funds managed by Mr. Vikram Shankar Pandit and Mr. Hariharan Ramamurthi Aiyar.

PT JM Financial Securities, Indonesia, is in the process of being wound up. This decision was made after long-drawn efforts to set up and build team for operations in Indonesia yielded sub- optimum results.

In accordance with Section 129(3) of the Act and Clause 32 of the Listing Agreement, the consolidated financial statements of the Company and all its subsidiary companies have been prepared and duly audited by the Auditors, and form part of the Annual Report. A statement containing salient features of the financial statements of the subsidiary and associate companies is also included in the Annual Report at page nos. 132 & 133 .

The Annual Report of the Company, containing therein its standalone and the consolidated financial statements has been placed on the website of the Company viz., www.imfi.com in accordance with third proviso to Section 136(1) of the Act. Further, audited financial statements of each of the subsidiary companies have also been placed on the website of the Company. Members interested in obtaining a copy of the audited financial statements of the subsidiary companies may write to the Company Secretary at the Company''s registered office.

The Company shall make available, the audited financial statements and related information of its subsidiaries, to those members who wish to have copies of the same and these documents will also be kept open for inspection by Members at the registered office of the Company between 2.00 p.m. and 4.00 p.m. on any working day (Monday to Friday), up to the date of the Thirtieth Annual General Meeting.

Reserve Bank of India (RBI) vide its notification dated November 27, 2014, revised guidelines for Licensing of Small Finance Banks and Payment Banks. The Company has decided to not apply for any of these licenses as in its view, the business model envisaged under the conditions of these guidelines are not complementary to its businesses housed in subsidiaries and associates.

AWARDS AND RECOGNITIONS

Various subsidiaries of the Company were conferred the following awards and recognitions during the year:

JM Financial Institutional Securities Limited

- At the Asset''s Triple A Country Awards 2014, JM Financial Institutional Securities Limited received the award for the Best M&A House in India.

- At the BW Business World Magna Awards 2015, JM Financial Institutional Securities Limited received the award for the M&A Deal Maker of the Year.

JM Financial Services Limited

- At the UTI MF & CNBC-TV18''s Financial Advisor Awards 2013-14, JM Financial Services Limited received the award for Best Performing National Financial Advisor (Institutional).

- At the Great Places to Work For 2014, conducted by The Great Place to Work Institute, India in Partnership with The Economic Times, JM Financial Services Limited received the following awards:

- Ranked 41st amongst "India''s 100 Best Companies to Work for 2014".

- Ranked 4th best in the Industry (Financial Services) in "India''s Best Companies To Work For 2014"

JM Financial Asset Management Limited

- At the Great Places to Work For 2014 conducted by The Great Place to Work Institute, India in Partnership with The Economic Times, JM Financial Asset Management Limited received the following awards:

- Ranked 50th amongst "India''s 100 Best Companies to Work for 2014".

- Ranked 5th best in the Industry (Financial Services) in "India''s Best Companies To Work For 2014"

BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

During the year, the Board of Directors appointed Ms. Jagi Mangat Panda as an Additional Director (Independent) of the Company with effect from March 31, 2015. Ms. Panda holds office as Additional Director until the Thirtieth Annual General Meeting, and is eligible for appointment as a Director as provided under Article 117 of the Articles of Association of the Company. The Company has received a notice under Section 160 of the Act from a member with requisite deposit signifying his intention to propose the candidature of Ms. Panda for the office of a Director. A brief profile of Ms. Panda is given in the Notice convening the Thirtieth Annual General Meeting.

Mr. Nimesh Kampani, the Chairman and Managing Director, though appointed as the Managing Director for a fixed term of 5 years with effect from April 1, 2012, will retire by rotation as a Director, to enable compliance by the Company with the provisions of Section 152 of the Act, and being eligible, has offered himself for re-appointment at the Thirtieth Annual General Meeting.

As on March 31, 2015, the Board of Directors of the Company comprised seven Directors, one of whom is the Chairman and Managing Director. The remaining six directors are Non- Executive and Independent Directors.

Mr. Nimesh Kampani, the Chairman and Managing Director is the Key Managerial Personnel (KMP) within the meaning of Section 203(1) of the Act.

Mr. P K Choksi and Mr. Manish Sheth are the other KMPs designated as the Company Secretary and the Chief Financial Officer (CFO) respectively.

All of the above KMPs have been appointed by the Board of Directors as required under the provisions of Section 203(1) of the Act.

DECLARATIONS GIVEN BY INDEPENDENT DIRECTORS

All the Non-Executive and Independent Directors have confirmed to the Board that they qualify to be considered as independent as per the definition of ''Independent Director'' stipulated in Section 149(6) of the Act and Clause 49(M)(B)(1) of the Listing Agreement. These confirmations have been placed before, and noted by the Board.

BOARD MEETINGS

The Board meets at regular intervals to discuss and decide on the Company''s policies and strategy apart from other Board matters. The tentative annual calendar of the Board and Committee Meetings is circulated in advance to facilitate the Directors to plan their schedule and to ensure participation in the meetings.

During the financial year 2014-15, eight board meetings were held on May 6, 2014, July 3, 2014, July 31, 2014, September 19, 2014, November 4, 2014, December 12, 2014, January 28, 2015 and March 31, 2015. The gap between the two board meetings did not exceed 120 days.

POLICIES ON DIRECTORS'' APPOINTMENT AND REMUNERATION

The policies of the Company on Directors'' appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a Director and other matters provided under sub-section (3) of Section 178 of the Act is appended as Annexure II (a) & (b) to this Report.

EVALUATION OF BOARD OF DIRECTORS

Pursuant to the provisions of the Act and Clause 49 of the Listing Agreement, the Nomination and Remuneration Committee of the Board carried out the annual evaluation of the performance of the Board as a whole, the Directors individually as well as of various Committees of the Board. A structured evaluation feedback form was prepared after taking into consideration the inputs received from the directors, covering various aspects such as board structure and composition, effectiveness of board process, information and functioning, establishment and determination of responsibilities of Committees, and quality of relationship between the board and the management.

Also, a separate questionnaire was prepared to evaluate the performance of individual directors including the Chairman and Managing Director, which had parameters such as professional conduct, roles and functions, discharge of duties, and their contribution to Board/Committee/Senior Management. The performance evaluation of the Independent Directors was carried out by the Nomination and Remuneration Committee and noted in turn by the Board.

BOARD COMMITTEES

Your Company has five Committees of Board, viz,

1. Audit Committee

2. Stakeholders'' Relationship Committee

3. Nomination and Remuneration Committee

4. Corporate Social Responsibility Committee

5. Allotment Committee

Details of all the Committees along with their composition, terms of reference and meetings held during the year are provided in ''Report on Corporate Governance'' forming part of the Annual Report.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirements under Section 134(3)(c) read with Section 134(5) of the Act with respect to Directors'' Responsibility Statement, your Directors hereby confirm that:

(a) in the preparation of the annual accounts, the applicable accounting standards have been followed;

(b) appropriate accounting policies have been selected and applied consistently and estimates and judgments made 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 and loss of the Company for that period;

(c) proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of Act have been taken for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities;

(d) the annual accounts have been prepared on a going concern basis;

(e) internal financial controls to be followed by the Company have been laid down and that such internal financial controls are adequate and were operating effectively; and

(f) proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

STATUTORY AUDITORS

M/s. Khimji Kunverji & Co., Chartered Accountants, who are the Statutory Auditors of the Company, hold office, in accordance with the provisions of the Act, for a period of three years viz., FY 2014-15, 2015-16 and 2016-17 from the conclusion of the Twenty Ninth Annual General Meeting until the conclusion of the Thirty Second Annual General Meeting i.e., upto the financial year 2016-17. As per Section 139 (2) of the Act and the applicable Rules of the Act, the appointment of Statutory Auditors needs to be ratified by the members at every Annual General Meeting. Accordingly, the members are requested to ratify the appointment of the Statutory Auditors at Thirtieth Annual General Meeting.

SECRETARIAL AUDIT

Pursuant to the requirements of Section 204(1) of the Act, and Rule 9 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Naren Shroff & Associates, Company Secretary in Practice to conduct the secretarial audit for the financial year 2014-15.

The Secretarial Audit Report as received from Naren Shroff & Associates is appended to this Report as Annexure III.

COMMENTS ON AUDITORS'' REPORT

There are no qualifications, reservations, adverse remarks or disclaimers made by M/s. Khimji Kunverji & Co., Statutory Auditors, in their Audit Report and by Naren Shroff & Associates, Company Secretary in Practice, in his Secretarial Audit Report. The Statutory Auditors have not reported any incident of fraud to the Audit Committee of the Company during the financial year 2014-15.

CORPORATE SOCIAL RESPONSIBILITY

The Board has constituted a Corporate Social Responsibility (CSR) Committee in accordance with Section 135 of the Act. The CSR Policy of the Company, inter alia, contains the activities that can be undertaken by the Company for CSR, composition and meetings of CSR Committee, details of existing Charitable trusts within the JM Financial group, annual allocation for CSR activities, areas of CSR projects, criteria for selection of CSR projects, modalities of execution/implementation of CSR activities and the monitoring mechanism of CSR activities/projects. The details of CSR activities undertaken by the Company in the prescribed format are described in Annexure IV to this Report.

RISK MANAGEMENT AND INTERNAL CONTROLS

The Company has a well-defined risk management framework in place. Further, it has established procedures to periodically place before the Board, the risk assessment and management measures. The details of the risks faced by the Company and the mitigation thereof are discussed in detail in the Management Discussion and Analysis report that forms part of the Annual Report.

REPORTS ON CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION & ANALYSIS

The reports on Corporate Governance and Management Discussion and Analysis for the year under review, as stipulated under Clause 49 of the Listing Agreement form part of the Annual Report. The certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance is annexed to the Corporate Governance Report.

PARTICULARS OF EMPLOYEES AND RELATED INFORMATION

In terms of the provisions of Section 197(12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement containing the disclosures pertaining to remuneration and other details as required under the Act and the above Rules are provided in the Annual Report. The disclosures as specified under Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, have been appended to this Report as Annexure V.

The information regarding employee remuneration as required pursuant to Rule 5(2) and Rule 5(3) of the (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is available for inspection by Members at the registered office of the Company between 2.00 p.m. and 4.00 p.m. on any working day (Monday to Friday), upto the date of the Thirtieth Annual General Meeting. Any Member interested in obtaining such information may write to the Company Secretary and the same will be furnished on such request.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The particulars of loans, guarantees or investments under Section 186 of the Act are not furnished since the provisions of Section 186 of the Act are not applicable to the Company, being a Core Investment Company registered with Reserve Bank of India.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

The particulars of contracts or arrangements with related parties referred to in Section 188(1), as prescribed in Form AOC - 2 are appended as Annexure VI.

EXTRACT OF ANNUAL RETURN

Pursuant to the requirements under Section 92(3) and Section 134(3) of the Act read with Rule 12 of Companies (Management and Administration) Rules, 2014, an extract of Annual Return in prescribed Form MGT-9 is given in the Report as Annexure VII.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

In view of the nature of activities which are being carried on by the Company, the particulars as prescribed under Section 134(3) (m) of the Act read with Companies'' (Accounts) Rules, 2014 regarding Conservation of Energy and Technology Absorption, and research and development are not applicable to the Company.

During the year, the Company has not earned any foreign exchange on standalone basis; the details of the amount spent in foreign exchange is provided at note number 2.32 of the notes to the standalone financial statements which forms part of the audited financial statements.

VIGIL MECHANISM/WHISTLE BLOWER POLICY

The Company has established a vigil mechanism to provide appropriate avenues to the Directors and employees to bring to the attention of the Management, the concerns about behavior of employees that raise concerns including fraud by using the mechanism provided in the Whistle Blower Policy. The details of the said Policy are included in the Report on Corporate Governance which forms part of the Annual Report.

During the financial year 2014-15, no cases under this mechanism were reported in the Company and any of its subsidiaries/ associates.

POLICY FOR PREVENTION, PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

Our policy against sexual harassment is embodied both in the Code of Conduct of JM Financial Group as also in a specifically written policy in accordance with The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

During the financial year 2014-15, no cases in the nature of sexual harassment were reported at any workplace of JM Financial group.

ACKNOWLEDGEMENTS

The Directors express their sincere gratitude to the Reserve Bank of India, Securities and Exchange Board of India, BSE Limited, National Stock Exchange of India Limited, Ministry of Finance, Ministry of Corporate Affairs, Registrar of Companies, Forward Markets Commission, Metropolitan Stock Exchange of India Limited, National Commodity and Derivatives Exchange Limited, National Securities Depository Limited, Central Depository Services (India) Limited, other government and regulatory authorities, lenders, financial institutions and the bankers of JM Financial group for their ongoing support.

The Directors also place on record their sincere appreciation for the continued support extended by the Company''s stakeholders and trust reposed by them in the Company. The Directors sincerely appreciate the commitment displayed by the employees of the Company and its subsidiaries/associates across all levels, resulting in satisfactory performance during the year.

On behalf of the Board of Directors Place: Mumbai Nimesh Kampani Date : May 29, 2015 Chairman and Managing Director


Mar 31, 2014

The Directors of your Company take pleasure in presenting the Twenty Ninth Annual Report together with the annual audited financial statements for the financial year ended March 31, 2014.

FINANCIAL RESULTS

Summary of the Company''s financial performance, both on consolidated and standalone basis, for FY 2013-14 as compared to the previous financial year is given below:



(Rs. in Crore)

Consolidated Standalone Particulars 2013-14 2012-13 2013-14 2012-13

Gross income 1,006.67 1,042.23 87.16 56.19

Profit before depreciation and amortisation expenses, finance costs & tax expenses 603.23 643.01 75.27 49.04

Less: Depreciation and amortisation expenses 15.24 12.16 0.41 0.26

Finance costs 307.83 376.92 0.09 0.03

Profit before tax 280.16 253.93 74.77 48.75

Current tax 83.19 74.68 3.75 2.60

Deferred tax (4.83) (1.75) (0.03) (0.14)

Tax adjustments of earlier years (net) 1.62 2.00 - 1.48

Profit after tax but before minority interest and share in associate companies 200.18 179.00 71.05 44.81

Less: Share of minority interest 15.15 15.94 - -

Add: Share in profit of associates 24.50 19.86 - -

Net Profit 209.53 182.92 71.05 44.81

Add: Balance profit brought forward from previous year 1,379.51 1,315.92 1,075.90 1,108.77

Profit available for appropriation 1,589.04 1,498.84 1,146.95 1,153.58

Less: Appropriations

Interim dividend 33.99 30.06 33.99 30.06

Proposed final dividend 41.61 37.71 41.61 37.71

Dividend on equity shares allotted after the adoption of previous years'' accounts 0.02 0.03 0.02 0.03

Dividend distribution tax 13.58 15.94 1.08 4.88

Transferred to General reserve 11.40 6.54 7.50 5.00

Transferred to Statutory reserve 27.10 25.30 - -

Transferred to Capital redemption reserve 4.64 3.75 - -

Surplus carried to balance sheet 1,456.70 1,379.51 1,062.74 1,075.90



DIVIDEND

The Board of Directors at its meeting held on January 29, 2014 had declared an interim dividend of Rs. 0.45 per equity share of Rs. 1/- each, which was paid to the members on February 14, 2014. Your Directors are now pleased to recommend a final dividend of Rs. 0.55 per share for the financial year 2013-14. With this recommendation, the total dividend for the financial year 2013- 14 works out to Rs. 1.00 per share (Previous year Rs. 0.90 per share). The total outgo on account of interim and final dividend would be Rs. 75.60 Crore for the financial year 2013-14 as against Rs. 67.77 Crore in the previous year. The total amount of dividend distribution tax, on a consolidated basis, is Rs. 13.58 Crore as against Rs. 15.94 Crore in the previous year.

The final dividend, if declared at the ensuing Annual General Meeting, will be paid on and from July 5, 2014 to those members whose names appear in the Register of Members at the close of the business hours on June 26, 2014. In respect of shares held in dematerialised form, dividend will be credited to the bank account of the members as per the data furnished by the Depositories as at the close of business hours on June 26, 2014.

FINANCIAL PERFORMANCE

Consolidated

The consolidated turnover of JM Financial Group stood at Rs. 1,006.67 Crore for the financial year ended March 31, 2014 as against Rs. 1,042.23 Crore for the previous year. The group made a net profit of Rs. 209.53 Crore for the year ended March 31, 2014 as compared to the net profit of Rs. 182.92 Crore in the previous year. Despite a lower consolidated turnover during the current year as compared to the previous year, the consolidated net profit was higher indicating improved earning margin.

The consolidated financials reflect the cumulative performances of various businesses of JM Financial Group that are housed in various subsidiaries and associates. Detailed discussion about these businesses is contained in the Management Discussion and Analysis section forming part of this report.

Standalone

Being a Core Investment Company, most of our revenue is in nature of income on investments.

The turnover of the Company on a standalone basis stood at Rs. 87.16 Crore for the year ended March 31, 2014 as against Rs. 56.19 crore in the previous year. The Company made a net profit of Rs. 71.05 Crore for the year ended March 31, 2014 as compared to the net profit of Rs. 44.81 Crore in the previous year.

SHARE CAPITAL

Issue of shares arising out of Employee Stock Option Scheme

The paid-up share capital of your Company increased by Rs. 37,28,835 during the FY 2013-14, on account of allotment of 37,28,835 equity shares of Rs. 1/- each on exercise of stock options by the eligible employees (the Employees) under Employees Stock Option Scheme – Series 4 and Series 5. As on March 31, 2014, the paid-up capital of your Company stood at Rs. 75,53,43,497 (comprising 75,53,43,497 equity shares of Rs. 1/- each) as against Rs. 75,16,14,662 as at the end of the previous financial year (comprising 75,16,14,662 equity shares of Rs. 1/- each).

Additionally, the Allotment Committee of the Board at its meetings held on April 29, 2014 and May 6, 2014 has respectively allotted 9,02,978 and 3,23,301 equity shares to the Employees arising out of the exercise of stock options by them. With the said allotment, the paid-up equity share capital of your Company has increased post March 31, 2014 to Rs. 75,65,69,776 representing 75,65,69,776 equity shares of the face value of Rs. 1/- each. Exercise price of the options under Series 4, 5 and 6 is Rs. 1/- share.

The difference between the market price and the exercise price on the date of the grant of the stock options is being paid by the respective subsidiary companies in respect of the Employees to whom the stock options have been granted and such amount is credited to the Securities Premium Account on allotment of the shares upon exercise of the stock options by them.

Issue and allotment of Warrants

Consequent upon receipt of the approval of the members at the Extraordinary General Meeting held on June 14, 2013 and the regulatory approvals to the extent required, your Company has issued (on a preferential basis) and allotted 2,32,93,878 Warrants to Mr. Vikram Shankar Pandit (1,16,46,939 Warrants), Mr. Hariharan Ramamurthi Aiyar (58,23,470 Warrants) and Mrs. Aparna Murthy Aiyar (58,23,469 Warrants). The Company has received Rs. 11.09 crore from the above investors calculated at 25% of the total amount payable by them @ Rs. 19.05 per equity share as required under the applicable regulations issued by SEBI for the issues on a preferential basis. The details of the Warrants allotted by the Allotment Committee of the Board to the above persons are given below:

Name No. of Date of Right to exercise Warrants Allotment the Warrants Allotted

Mr. Vikram 1,16,46,939 December Within a period of Shankar 16, 2013 12 months from the Pandit date of allotment of the Warrants, in terms of the approval given by the Foreign Investment Promotion Board i.e. on or before December 15, 2014

Mr. Hariharan 58,23,470 June 27, Within a period of Ramamurthi 2013 18 months from the Aiyar date of allotment of the Warrants i.e. on or before December 26, 2014

Mrs. Aparna 58,23,469 June 27, Within a period of Murthy 2013 18 months from the Aiyar date of allotment of the Warrants i.e. on or before December 26, 2014



EMPLOYEE STOCK OPTION SCHEME

During the year under review, the Compensation Committee of the Board of your Company granted 36,45,774 stock options to the eligible employees (the Employees) under the Employees'' Stock Option Scheme – Series 6 on May 6, 2013. Out of 3,48,35,943 stock options so far granted under Series 1 to 6, 41,83,933 stock options have lapsed due to the cessation of the Employees. The aggregate number of stock options outstanding as on March 31, 2014 is 2,51,78,013. The particulars of the total number of options granted, options exercised and options lapsed till March 31, 2014 is given below:

Particulars as on March 31, 2014 No. of Options

Total No. of stock options granted 3,48,35,943

Less: No. of stock options exercised 54,73,997

Less: No. of stock options lapsed 41,83,933

No. of stock options outstanding as on 2,51,78,013 March 31, 2014

The Compensation Committee has further granted 44,85,267 stock options to the Employees under the Employees'' Stock Option Scheme - Series 7 with grant date of April 1, 2014. These options will vest in three equal tranches at the end of first, second and third year from the date of grant.

The disclosures required to be made under Clause 12.1 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are given in Annexure I to this Report.

DEPOSITS

Your Company has neither invited nor accepted any deposits from Public under Section 58A of the Companies Act, 1956 during the year under review.

APPLICATION FOR BANKING LICENSE

As was reported in the previous year''s Directors'' Report, your Company had made an application to the Reserve Bank of India (RBI) for a banking license in accordance with the guidelines issued by the RBI for licensing of new banks in the private sector on February 22, 2013. The RBI has since given ''in principle'' approval for setting up bank to two applicants out of all the applicants, your Company was not one of them. The RBI has stated in its Press Release that it intends to use the learning from this licensing exercise to revise the Guidelines appropriately and move towards giving licences more regularly, i.e., virtually "on tap". Further, it has stated to frame categories of differentiated bank licences to allow a wider pool of entrants into banking. Your Company will await future announcements in this regard to decide its plans.

CORE INVESTMENT COMPANY

Pursuant to an application made by your Company, the RBI has granted registration to your Company as a Core Investment Company. The registration will allow your Company greater flexibility compared to current situation, including the ability to borrow funds and deploy the same to its group entities.

SUBSIDIARY COMPANIES

As on March 31, 2014, your Company had 15 subsidiaries (including step down subsidiaries) viz., JM Financial Institutional Securities Limited, JM Financial Products Limited, JM Financial Asset Management Limited, JM Financial Investment Managers Limited, Infinite India Investment Management Private Limited, JM Financial Properties and Holdings Limited, JM Financial Services Limited, JM Financial Commtrade Limited, JM Financial Insurance Broking Private Limited, CR Retail Malls (India) Limited, FICS Consultancy Services Limited, JM Financial Overseas Holdings Private Limited (Mauritius) , JM Financial Singapore Pte Limited (Singapore) , JM Financial Securities, Inc. (Delaware - United States of America) and PT JM Financial Securities Indonesia (Indonesia).

During the year under review, FICS Consultancy Services Limited became a subsidiary of your Company. Further, JM Financial Insurance Broking Private Limited, which was hitherto a step-down subsidiary, became a wholly owned subsidiary of your Company.

As per the provisions of Section 212 of the Companies Act, 1956, your Company is required to attach, inter alia, the Directors'' Report, Balance Sheet and Statement of Profit and Loss of its subsidiaries to its annual report. The Ministry of Corporate Affairs, Government of India vide its circular No. 2/2011 dated February 8, 2011 has provided an exemption to companies from complying with the provisions of Section 212 subject to fulfillment of certain conditions as mentioned in the said circular. Accordingly, the financial statements of the subsidiaries of your Company are not attached to this Annual Report.

As required under the aforesaid circular and pursuant to Clause 32 of the Listing Agreement, the consolidated financial statements of your Company duly audited by the statutory auditors form part of this Annual Report. Your Company shall make available, the audited annual accounts and related information of its subsidiaries, to those members who wish to have copies of the same and these documents will also be kept open for inspection by any member at the Company''s registered office on any working day, except on Saturdays, between 3.00 p.m. and 5.00 p.m. up to the date of the ensuing Annual General Meeting.

AWARDS AND RECOGNITIONS

The following subsidiaries of your Company have been conferred the awards and recognitions during the year under review:

JM Financial Institutional Securities Limited

JM Financial Institutional Securities Limited received the following awards at the M&A Atlas Awards 2013:

– India Deal of the Year (Large Markets) received for the demerger of the Pantaloons format business from Pantaloon Retail (India) Limited and acquisition of controlling stake by the Aditya Birla Group.

– Investment Bank of the Year

JM Financial Services Limited

- At the BSE Awards held on November 3, 2013, JM Financial Services Limited received the following awards:

- Ranked amongst Top 10 Brokers for the Retail Segment.

- Ranked amongst Top 3 Brokers for Bidding the IPO Applications and OFS Trades.

REPORTS ON CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS

The reports on Corporate Governance and Management Discussion and Analysis for the year under review, as stipulated under Clause 49 of the Listing Agreement form part of the Annual Report. The certificate from the Auditors of the Company confirming compliance with the conditions of corporate governance is annexed to the Corporate Governance Report.

BOARD OF DIRECTORS

As on March 31, 2014, the Board of Directors of your Company comprised of six Directors one of whom is the Managing Director. The remaining five directors are non-executive and independent directors. The composition of the Board is in consonance with Clause 49 of the Listing Agreement, as amended from time to time, and in accordance with the applicable provisions of Companies Act, 2013.

In accordance with the provisions of Section 149 and other applicable provisions of the Companies Act, 2013, your Company is seeking appointment of Mr. E A Kshirsagar, Mr. Darius E Udwadia, Mr. Paul Zuckerman, Dr. Vijay Kelkar and Mr. Keki Dadiseth as Independent Directors for five consecutive years. Details relating to their appointment are mentioned in the Statement annexed to the Notice under Section 102 of the Companies Act, 2013.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirements under Section 217(2AA) of the Companies Act, 1956 with respect to Directors'' Responsibility Statement, it is hereby confirmed that:

(i) in the preparation of the annual accounts for the financial year ended March 31, 2014, the applicable accounting standards have been followed;

(ii) the Directors have 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 as at March 31, 2014, and of the profit or loss of the Company for the year under review;

(iii) the Directors have taken proper and sufficient care for maintaining adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) the Directors have prepared the annual accounts for the financial year ended March 31, 2014 on a ''going concern'' basis.

STATUTORY AUDITORS

M/s. Khimji Kunverji & Co, Mumbai, the Statutory Auditors of your Company retire at the ensuing Annual General Meeting and offer themselves for re-appointment. In accordance with Section 139 of the Companies Act, 2013 (''the Act'') read with the Rules made there under, M/s. Khimji Kunverji & Co, Mumbai, can be appointed as the Statutory Auditors of the Company for a period of maximum three years. They have confirmed that their appointment, if made, shall be in accordance with the provisions of Section 139(1) of the Act read with Companies (Audit and Auditors) Rules, 2014 and that they satisfy the criteria given under Section 141 of the Act. They have also confirmed that they hold a valid peer review certificate as prescribed under Clause 41(1)(h) of the Listing Agreement. Members are requested to consider their appointment for a period of three years.

The Audit committee and Board of Directors have recommended the appointment of M/s. Khimji Kunverji & Co., Chartered Accountants as the Statutory Auditors of your Company.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

In view of the nature of activities which are being carried on by your Company, the particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956 read with Companies'' (Disclosures of Particulars in the Report of the Board of Directors) Rules, 1988 regarding Conservation of Energy and Technology Absorption are not applicable to the Company.

During the year under review, your Company has not earned any foreign exchange from any transactions; the details of the amount spent in foreign exchange is provided in note number 2.30 of the notes to the standalone financial statements which forms part of the audited annual accounts.

On consolidated basis, the Indian subsidiaries of your Company have earned an aggregate of Rs. 61.18 Crore in foreign exchange during FY 2013-14. The foreign exchange outgo by the Indian subsidiaries aggregates Rs. 4.56 Crore during the FY 2013-14.

CORPORATE SOCIAL RESPONSIBILITY

At JM Financial, an essential component of our Corporate Social Responsibility (CSR) is to care for our community. Your Company has always been a responsible corporate citizen and have partnered with various NGOs and supported organizations which work for several social causes. Your Company has also constituted the CSR Committee pursuant to the provisions of the Companies Act, 2013 to undertake and monitor the CSR activities. Detailed information on the initiatives by the Company towards CSR activities is provided in the Corporate Social Responsibility section of the Management Discussion and Analysis forming part of the Annual Report.

POLICY FOR PREVENTION, PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

Our policy against sexual harassment is made under the overall ambit of the Code of Conduct of JM Financial Group and in accordance with The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

During the calendar year 2013, no cases were reported or filed for sexual harassment at any workplace of JM Financial group.

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 II 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 members of the Company excluding the aforesaid information. The said Annexure is available for inspection at the registered office of the Company. Any member interested in the said information may write to the Company Secretary at the registered office of the Company.

Your Company had 13 employees as on March 31, 2014. Out of the total number of employees, 3 employees employed throughout the year were in receipt of remuneration of more than Rs. 60.00 Lakh per annum and 1 employee employed for part of the year was in receipt of remuneration of more than Rs. 5.00 Lakh per month.

JM Financial Limited, its subsidiaries and associates had an aggregate 967 employees as on March 31, 2014. Out of the total number of employees, 58 employees employed throughout the year were in receipt of remuneration of more than Rs. 60.00 Lakh per annum and 12 employees employed for part of the year were in receipt of remuneration of more than Rs. 5.00 Lakh per month.

ACKNOWLEDGEMENTS

Your Directors express their sincere gratitude to the Reserve Bank of India, Securities and Exchange Board of India, BSE Limited, National Stock Exchange of India Limited, Ministry of Finance, Ministry of Corporate Affairs, Registrar of Companies, Forward Markets Commission, Multi Commodity Exchange of India Limited, National Commodity and Derivatives Exchange Limited, National Securities Depository Limited, Central Depository Services (India) Limited, other government and regulatory authorities, lenders, financial institutions and the Company''s bankers for their ongoing support. The Directors also place on record their sincere appreciation for the continued support extended by the Company''s stakeholders and trust reposed by them in your Company. Your Directors sincerely appreciate the commitment displayed by the employees of the Company and its subsidiaries across all levels, resulting in satisfactory performance during the year.



On behalf of the Board of Directors



Place: Mumbai Nimesh Kampani

Date: May 6, 2014 Chairman & Managing Director


Mar 31, 2013

To The Members,

The Directors of your Company take pleasure in presenting the Twenty Eighth Annual Report together with the annual audited statement of accounts for the financial year ended March 31, 2013.

FINANCIAL RESULTS

A summary of the Company''s financial performance, both on consolidated and standalone basis, for FY 2012-13 as compared to the previous financial year is given below:

(Rs. in Crore)

Consolidated Standalone

Particulars 2012-13 2011-12 2012-13 2011-12

Gross income 1,042.23 873.97 56.19 63.31

Profit before depreciation and amortisation expenses, 643.01 490.25 49.04 46.21 finance costs & tax expense

Less: Depreciation & amortisation expenses 12.16 11.47 0.26 0.54

Finance costs 376.92 296.07 0.03 0.05

Profit before tax 253.93 182.71 48.75 45.62

Current tax 74.68 56.26 2.60 3.15

Deferred tax (1.75) 3.19 (0.14) (0.03)

Tax adjustment of earlier years (net) 2.00 0.10 1.48 -

Profit after tax but before minority interest and 179.00 123.16 44.81 42.50 share in associate companies

Less: Share of minority interest 15.94 9.49 - -

Add: Share in profit of associates 19.86 7.50 - -

Net Profit 182.92 121.17 44.81 42.50

Add: Balance profit brought forward from previous year 1,315.92 1,269.52 1,108.77 1,117.25

Profit available for appropriation 1,498.84 1,390.69 1,153.58 1,159.75

Less: Appropriations

Interim dividend 30.06 - 30.06 -

Proposed final dividend 37.71 45.04 37.71 45.04

Dividend on equity shares issued after the adoption 0.03 - 0.03 - of previous years'' accounts

Dividend distribution tax 15.94 7.31 4.88 0.44

Transferred to General reserve 6.54 6.22 5.00 5.50

Transferred to Statutory reserve 25.30 16.20 - -

Transferred to Capital redemption reserve 3.75 - - -

Surplus carried to balance sheet 1,379.51 1,315.92 1,075.90 1,108.77

DIVIDEND

The Board of Directors had declared and paid an interim dividend of Rs.0.40 per equity share of Rs.1/- each in February 2013. Your Directors are now pleased to recommend a final dividend of Rs.0.50 per share for the financial year 2012-13. With this recommendation, the total dividend for the financial year 2012-13 works out to Rs.0.90 per share (Previous year Rs.0.60 per share). The total outgo on account of dividend would be Rs.67.77 Crore for the year under review as against Rs.45.04 Crore in the previous year. The total outgo on account of dividend distribution tax on a consolidated basis, is Rs.15.94 Crore as against Rs.7.31 Crore in the previous year.

The final dividend, if declared at the forthcoming Annual General Meeting, will be paid on and from August 2, 2013 to those members whose names appear in the Register of Members at the close of the business hours on July 23, 2013. In respect of shares held in dematerialised form, dividend will be credited to the bank account of the members as per the data furnished by the Depositories as on July 23, 2013.

FINANCIAL PERFORMANCE

Consolidated

The Company crossed the Rs.1,000 Crore mark in total revenue for the first time on a consolidated basis. The consolidated turnover of JM Financial Group stood at Rs.1,042.23 Crore for the financial year ended March 31, 2013 as against Rs.873.97 Crore for the previous year. The group made a net profit of Rs.182.92 Crore for the year ended March 31, 2013 as compared to the net profit of Rs.121.17 Crore in the previous year.

The consolidated financials reflect the cumulative performances of various businesses of JM Financial Group that are housed in various subsidiaries and associates for primarily regulatory reasons. Detailed discussion about these businesses is contained in the Management Discussion and Analysis section forming part of this report.

Standalone

The turnover of the Company on a standalone basis stood at Rs.56.19 Crore for the year ended March 31, 2013 as against Rs.63.31 Crore in the previous year. On Standalone basis, the Company made a net profit of Rs.44.81 Crore for the year ended March 31, 2013 as compared to the net profit of Rs.42.50 Crore in the previous year.

SHARE CAPITAL

Issue of shares arising out of Employee Stock Option Scheme

The paid-up share capital of your Company increased by Rs.17,45,162 in FY 2012-13, on account of allotment of 17,45,162 equity shares of Rs.1/- each on exercise of stock options by the eligible employees under Employees Stock Option Scheme - Series 4. As on March 31, 2013, the issued, subscribed and paid- up capital of the Company stood at Rs.75,16,14,662 as against Rs.74,98,69,500 in the previous year comprising 75,16,14,662 equity shares of Rs.1/- each as compared to 74,98,69,500 equity shares of Rs.1/- each in the previous year.

Proposed issuance of Warrants

The Board of Directors, at its meeting held on May 16, 2013, has approved issuance of 2,32,93,878 Warrants on a preferential basis to Mr. Vikram Shankar Pandit (1,16,46,939 Warrants), Mr. Hariharan Ramamurthi Aiyar (58,23,470 Warrants) and Mrs. Aparna Murthy Aiyar (58,23,469 Warrants) subject to the approval of shareholders and such other regulatory approvals as may be required. The warrant holders shall have a right to apply for and be allotted the equity shares at an exercise price of Rs.19.05 per share of the face value of Rs.1/- each within a period of 18 months from the date of allotment of the Warrants to them. The Extraordinary General Meeting of the Members of the Company is scheduled to be held on June 14, 2013 to pass the necessary special resolution approving the above issue. The said preferential issue is proposed to be made in accordance with the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 as amended as of date.

EMPLOYEE STOCK OPTION SCHEME

The Members of the Company had approved at the 22nd Annual General Meeting held on September 6, 2007, the issuance of stock options to the extent of shares representing 5% of the equity shares outstanding on that date. The Company has instituted Employee Stock Option Scheme for the benefit of the employees/directors of the Company and/or its subsidiaries (''the Employees'') which is in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (SEBI Guidelines) as amended from time to time.

During the year under review, the Compensation Committee of the Board of your Company had on April 16, 2012 granted 73,02,669 stock options to the Employees under the Employees'' Stock Option Scheme - Series 5. Out of 3,1 1,90,169 stock options so far granted under Series 1 to 5, 23,92,100 stock options have lapsed due to the resignation of the Employees. The aggregate number of stock options outstanding as on March 31, 2013 is 2,70,52,907. The particulars of the total options granted, options exercised and options lapsed till March 31, 2013 is given hereunder:

Particulars No. of Options

Total No. of Stock Options granted 3,11,90,169 upto March 31, 2013

Less: No. of Stock Options exercised 17,45,162 upto March 31, 2013

Less: No. of Stock Options lapsed upto 23,92,100 March 31, 2013

No. of Stock Options outstanding as 2,70,52,907 on March 31, 2013

The Compensation Committee has further granted 36,45,774 stock options to the Employees under the Employees'' Stock Option Scheme - Series 6 on May 6, 2013. These options will vest in three equal tranches at the end of first, second and third year from the date of grant.

The disclosures required to be made under Clause 12.1 of the SEBI Guidelines are given in Annexure I to this Report.

DEPOSITS

Your Company has neither invited nor accepted any deposits from Public under Section 58A of the Companies Act, 1956 during the year under review.

APPLICATION FOR BANKING LICENSE

The Reserve Bank of India (RBI) announced the guidelines for licensing of new banks in the private sector on February 22, 2013. Your Company meets the criteria laid out in the said guidelines and hence the Board of Directors has accorded its ''in principle'' approval to the Company making an application to RBI for acquiring a banking license in accordance with the guidelines for licensing of new private sector banks.

Additionally, the Board has also accorded its ''in principle'' consent for appointment of Mr. Vikram Shankar Pandit, Ex-CEO Citi Group Inc and Ex President & COO of Morgan Stanley''s institutional securities and investment banking businesses, as the Non-Executive Chairman of the proposed bank subject to the regulatory and other approvals including the approval of RBI, as may be required.

NBFC BUSINESS AND DISTRESSED ASSETS FUND

The Board of Directors of your Company has accorded its ''in principle'' approval to the proposal for investment of up to USD 100 mn in JM Financial Group''s NBFC business out of the funds to be raised by Mr. Vikram Pandit.

Additionally, JM Financial Group proposes to form the Distressed Assets Fund jointly with Mr. Vikram Pandit with an initial target capitalisation of USD 100 mn.

SUBSIDIARY COMPANIES

Your Company had 14 subsidiaries (including step down subsidiaries) viz., JM Financial Institutional Securities Private Limited, JM Financial Products Limited, JM Financial Asset Management Private Limited, JM Financial Investment Managers Limited, Infinite India Investment Management Private Limited, JM Financial Properties and Holdings Limited (formerly known as JM Financial GILTS Limited), JM Financial Services Limited, JM Financial Commtrade Limited, JM Financial Insurance Broking Private Limited, CR Retail Malls (India) Limited, JM Financial Overseas Holdings Private Limited (Mauritius), JM Financial Singapore Pte Ltd. (Singapore), JM Financial Securities, Inc. (Delaware - United States of America) and PT JM Financial Securities Indonesia (Indonesia).

During the year, JM Financial Securities Inc and PT JM Financial Securities Indonesia were incorporated as step down subsidiaries.

As per the provisions of Section 212 of the Companies Act, 1956, the Company is required to attach, inter alia, the Directors'' Report, Balance Sheet and Statement of Profit and Loss of the subsidiaries to its annual report. The Ministry of Corporate Affairs, Government of India vide its circular No. 2/2011 dated February 8, 2011 has provided an exemption to companies from complying with the provisions of Section 212 subject to fulfillment of certain conditions as mentioned in the said circular. Accordingly, the annual report of the Company for the FY 2012-13 does not contain the financial statements of the subsidiaries. As required under the aforesaid circular and pursuant to Clause 32 of the Listing Agreement, the consolidated financial statements of the Company duly audited by the statutory auditors form part of this Annual Report. Your Company shall make available, the audited annual accounts and related information of its subsidiaries, to those members who wish to have copies of the same and these documents will also be kept open for inspection by any member at the Registered Office of the Company on any working day, except on Saturdays, between 3.00 p.m. and 5.00 p.m. up to the date of the ensuing Annual General Meeting.

AWARDS AND RECOGNITIONS

Your Company, represented by its subsidiaries and associates has been ranked among Top 100 in "India''s Best Companies to Work for 2013" conducted by Great Place to Work Institute. Your Company''s subsidiaries have also received various other awards, recognitions and certifications during the year under review, the details of which are:

JM Financial Institutional Securities Private Limited

- Featured in India''s best dealmakers 2012 (Business World) under Qualified Institutional Placement category for Mahindra & Mahindra Financial Services Limited.

JM Financial Services Limited

- Ranked among the Top 50 in "India''s Best Companies to Work for 2013" conducted by Great Place to Work Institute.

JM Financial Asset Management Private Limited

- Ranked among Top 100 in "India''s Best Companies to Work for 2013" conducted by Great Place to Work Institute.

- Ranked among the best in the industry (Financial Services) in "India''s Best Companies to Work for 2013" conducted by Great Place to Work Institute.

REPORTS ON CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION & ANALYSIS

The reports on Corporate Governance and Management Discussion & Analysis for the year under review, as stipulated under Clause 49 of the Listing Agreement are forming part of the Annual Report. The certificate from the Auditors of the Company confirming compliance with the conditions of corporate governance is annexed to the Corporate Governance Report.

BOARD OF DIRECTORS

In accordance with Article 130 of the Articles of Association of the Company and the provisions of the Companies Act, 1956, Mr. E A Kshirsagar and Mr. Darius E Udwadia, Independent Directors, retire by rotation at the forthcoming Annual General Meeting (AGM) and, being eligible, have offered themselves for re-appointment as Directors of your Company.

Pursuant to the provisions of Section 260 of the Companies Act, 1956, read with Article 117, Mr. Keki Dadiseth was appointed as an additional director by the Board of Directors of the Company with effect from October 30, 2012. He holds office as a Director up to the date of the forthcoming AGM. Your Company has received a notice in writing from a Member proposing his candidature for the office of Director.

Additional Information and brief profile, as stipulated under the Listing Agreement for each of the above Directors seeking re-appointment / appointment, is annexed to the Notice of the AGM. Further, the business items relating to the re-appointment/ appointment of above directors have been included in the Notice of the AGM.

During the year, Mr. Ashith Kampani, a Non-Executive Director resigned from the Board and accordingly ceased to be a Director of your Company with effect from June 30, 2012. The Board of Directors places on record its appreciation for the valuable services rendered by Mr. Kampani during his tenure as a Director of the Company.

Dr. Pravin P Shah, an Independent Director, passed away on December 4, 2012 whereupon he ceased to be a Director of your Company with effect from that date. The Directors place on record their deep appreciation for the valuable contribution made by Dr. Shah during his tenure as a Director of the Company.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirements under Section 217(2AA) of the Companies Act, 1956 with respect to Directors'' Responsibility Statement, it is hereby confirmed that:

(i) in the preparation of the annual accounts for the financial year ended March 31, 2013, the applicable accounting standards have been followed;

(ii) the Directors have 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 as at March 31, 2013, and of the profit or loss of the Company for the year under review;

(iii) the Directors have taken proper and sufficient care for maintaining adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) the Directors have prepared the annual accounts for the financial year ended March 31, 2013 on a ''going concern'' basis.

STATUTORY AUDITORS

M/s. Khimji Kunverji & Co., Chartered Accountants, who are the Statutory Auditors of the Company, hold office, in accordance with the provisions of the Companies Act, 1956, up to the conclusion of the forthcoming Annual General Meeting. They have sought their re-appointment and have confirmed that their re-appointment, if made, will be within the limits prescribed under sub-section (1B) of Section 224 of the Companies Act, 1956 and that they are not beneficially holding any security of the Company as defined under Section 226(3)(e) of the said Act. They have also confirmed that they hold a valid peer review certificate as prescribed under Clause 41(1)(h) of the Listing Agreement. Members are requested to consider their re-appointment.

The Audit committee and Board of Directors have recommended the appointment of M/s. Khimji Kunverji & Co., Chartered Accountants as the Statutory Auditors of the Company for the year 2013-14.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

In view of the nature of activities which are being carried on by your Company, the particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956 read with Companies'' (Disclosures of Particulars in the Report of the Board of Directors) Rules, 1988 regarding Conservation of Energy and Technology Absorption are not applicable to the Company.

During the year under review, your Company has not earned any foreign exchange and the details of the amount spent in foreign exchange is provided in note number 2.28 of the notes to the standalone financial statements which forms part of the audited annual accounts.

CORPORATE SOCIAL RESPONSIBILITY

At JM Financial, an essential component of our Corporate Social Responsibility (CSR) is to care for our community. Your Company has always been a responsible corporate citizen and have partnered with various NGOs and supported organisations which work for relevant social causes. Detailed information on the initiatives by the Company towards CSR activities is provided in the Corporate Social Responsibility section of the Management Discussion and Analysis 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 II 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 said 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.

Your Company had 12 employees as on March 31, 2013. Out of the total number of employees, 3 employees employed throughout the year were in receipt of remuneration of more than Rs.60.00 Lakh per annum and 1 employee employed for part of the year was in receipt of remuneration of more than Rs.5.00 Lakh per month.

ACKNOWLEDGEMENTS

Your Directors express their sincere gratitude to the Reserve Bank of India, the Securities and Exchange Board of India, BSE Limited, National Stock Exchange of India Limited, Ministry of Finance, Ministry of Corporate Affairs, Registrar of Companies, Forward Markets Commission, Multi Commodity Exchange of India Limited, Depositories, other government and regulatory authorities, lenders, financial institutions and the Company''s bankers for the ongoing support extended by them. The Directors also place on record their sincere appreciation for the continued support extended by the Company''s stakeholders and trust reposed by them in your Company. Your Directors sincerely appreciate the commitment displayed by the employees of the Company and its subsidiaries across all levels, resulting in successful performance during the year.

On behalf of the Board of Directors

Place: Mumbai Nimesh Kampani

Date: May 30, 2013 Chairman & Managing Director


Mar 31, 2012

The Directors of your Company have pleasure in presenting their Twenty Seventh Annual Report together with the audited annual accounts for the financial year ended March 31, 2012.

FINANCIAL RESULTS

(Rs.in crore)

Consolidated Standalone

2011-12 2010-11 2011-12 2010-11

Gross income 873.97 895.92 63.31 44.12

Profit before depreciation 490.25 494.37 46.21 20.91

and amortization expenses,

Finance costs & Tax expenses

Less: Depreciation and 11.47 12.44 0.54 0.62

amortization expense

[Finance costs 296.07 243.53 0.05 0.02

Less: Reversal of Interest - (10.53) - (10.53)

on income tax refund

Profit before tax 182.71 227.87 45.62 9.74

Provision for tax 56.26 57.99 3.15 2.00

Deferred Tax 3.19 (4.84) (0.03) (2.30)

Tax adjustment of earlier 0.10 (0.37) - #

years (net)

Profit after tax but before 123.16 175.09 42.50 10.04

minority interest and share in asso ciate companies

Less: Share in profit of 9.49 7.38 minority interest (net)

Add: Share in profit of 7.50 6.85 associates

Net Profit 121.17 174.56 42.50 10.04

Add: Balance profit 1,269.52 1,169.06 1,117.24 1,154.75

brought forward from earlier years

Profit available for 1,390.69 1,343.62 1,159.74 1,164.79

appropriation

Appropriations

Proposed dividend 45.04 44.99 45.04 44.99

Dividend distri bution tax 7.31 7.45 0.44 1.06

General reserve 6.22 5.06 5.50 1.50

Statutory reserve 16.20 15.75 - -

Capital redemption reserve - 0.85 - -

Surplus carried to balance 1,315.92 1,269.52 1,108.76 1,117.24

sheet 1,390.69 1,343.62 1,159.74 1,164.79

# Denotes amount below Rs50,000/-

DIVIDEND:

The Directors are pleased to recommend the payment of a dividend of Rs0.60 per share for the financial year 2011-12 which is same as paid for the financial year 2010-11. The payment of dividend together with dividend distribution tax thereon will absorb Rs45.48 Crore as against Rs46.05 Crore during the previous year. The dividend payout ratio on the basis of consolidated profit after tax for the current year, inclusive of tax on dividend is 37.53% as compared to 26.38% for the previous year.

The dividend, if declared at the ensuing Annual General Meeting, will be paid on and from August 16, 2012 to those members whose names would appear in the Register of Members at the close of the business hours on August 3, 2012. In respect of the shares held in dematerialized form, the amount of dividend will be credited to the bank account of the respective members as per the data furnished by the Depositories as on that date.

FINANCIAL PERFORMANCE:

On consolidated basis, your Company earned a gross income of Rs873.97 Crore during the year under review as against Rs895.92 Crore in the previous year. The consolidated profit before tax is Rs182.71 Crore as against Rs227.87 Crore in the previous year. After providing for tax, the consolidated net profit of your Company is Rs121.17 Crore as against Rs174.56 Crore in the previous year. The consolidated net worth of your Company at the yearend stood at Rs1,879.93 Crore which translates to a book value of Rs25.07 per share. The consolidated basic earnings per share is Rs1.62.

On standalone basis, your Company earned gross income of Rs63.31 Crore during the year under review as against Rs44.12 crore reported in the previous year The profit before tax is Rs45.62 Crore as against the Rs9.74 Crore during the previous year. After providing for tax, the net profit of your Company is Rs42.50 Crore as against the net profit of Rs10.04 Crore in the previous year. The basic earnings per share is Rs0.57.

REISSUE OF FORFEITED SHARES:

During the year under review, your Company re-issued 87,000 equity shares of Rs1/- each which were earlier forfeited on account of non-payment of allotment/call moneys. These shares have been issued to JM Financial Group Employees' Welfare Trust at a price of Rs27.46 per share on July 21, 2011.

EMPLOYEE STOCK OPTION SCHEME:

The employee stock option scheme instituted by your Company for the benefit of the employees / directors of the Company and its subsidiaries / associates (the Employees) is in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (SEBI Guidelines). During the year under review, the Compensation Committee of the Board of your Company had on April 21, 2011 granted 7,500,000 stock options to the Employees under the Employees' Stock Option Scheme - Series 4. Out of 23,887,500 stock options granted by the Company under Series 1 to 4, 1,738,227 stock options have lapsed due to the resignation of the Employees. The aggregate number of stock options outstanding as on March 31, 2012 is 22,149,273.

Additionally, the Compensation Committee of the Board of your Company has further granted 7,302,669 stock options to the Employees under the Employees' Stock Option Scheme - Series 5 on April 16, 2012. These options will vest in three equal tranches at the end of first, second and third year from the date of grant. After the grant of the above options the total number of stock options outstanding as on the date of this report stands at 29,451,942.

The disclosures required to be made under Clause 12.1 of the SEBI Guidelines are given in Annexure I to this Report.

DEPOSITS:

Your Company has not accepted any deposits from public 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 March 31, 2012.

INTERNATIONAL BUSINESS:

The Directors are pleased to report that as a part of the Group's strategy to expand internationally, JM Financial Singapore Pte Ltd. was established as step down subsidiary of your Company in Singapore during the year for carrying on financial services activities. The Group has also made substantial progress in establishing its presence in other jurisdictions, viz., Indonesia and USA.

SUBSIDIARY COMPANIES:

Amalgamation of some of the subsidiaries

During the year under review, as part of management restructuring exercise, various businesses conducted by the subsidiaries of your Company, which had close synergies with each other were proposed to be merged into one entity in order to achieve higher consolidated networth for business and economies of scale arising out of such synergies.

Pursuant to this, it was decided to merge JM Financial Institutional Securities Private Limited, JM Financial Securities Private Limited, JM Financial Ventures Limited and its four subsidiaries viz., Oracle Enterprises Private Limited, Latitude Mercantile Private Limited, Ardour Trading Private Limited and Saptarishi Sales and Trading Private Limited with JM Financial Consultants Private Limited (being renamed as JM Financial Institutional Securities Private Limited), a wholly owned subsidiary of your Company.

The Scheme of Arrangement has since been sanctioned by the High Court of Judicature at Bombay vide its Order dated April 27, 2012. The Appointed Date fixed for the purpose of the amalgamation as above is March 31, 2012.

Audited accounts of subsidiary companies

Your Company's subsidiaries both direct and indirect are; JM Financial Consultants Private Limited (being renamed as JM Financial Institutional Securities Private Limited), JM Financial Products Limited, JM Financial Services Private Limited, JM Financial Asset Management Private Limited, JM Financial Commtrade Limited, JM Financial Investment Managers Limited, Infinite India Investment Management Private Limited, JM Financial Insurance Broking Private Limited, JM Financial GILTS Limited, CR Retail Malls (India) Ltd., JM Financial Overseas Holdings Private Limited, JM Financial Singapore Pte. Ltd. and JM Financial International Private Limited.

In terms of exemption granted by the Ministry of Corporate Affairs, vide General Circular No. 2/2011 dated February 8, 2011, copies of the Balance Sheet, Statement of Profit & Loss, report of the Board of Directors and report of the auditors of the subsidiary companies have not been attached to the annual audited accounts of the Company for the year ended March 31, 2012. However, as required under the aforesaid circular and pursuant to Clause 32 of the Listing Agreement, the consolidated financial statements of the Company duly audited by the statutory auditors forms part of this Annual Report. Your Company shall make available, the audited annual accounts and related information of its subsidiaries, to those shareholders who wish to have copies of the same.

The audited annual accounts of subsidiary companies will also be kept open for inspection by any shareholder at the registered office of the Company on any working day, except on Saturdays, between 3.00 p.m. and 5.00 p.m. up to the date of the ensuing Annual General Meeting.

AWARDS FOR EXCELLENCE IN 2011-12:

Various subsidiaries of your Company have been conferred the following awards during the FY 2011-12;

JM Financial Consultants Private Limited (being renamed as JM Financial Institutional Securities Private Limited),

"Team of the Year" in the Indian Investment Banks category at the International Financial Law Review India Awards 2011.

JM Financial Services Private Limited

- Highest Broker Grading BQ 1 for the year 2011 by the rating agency CRISIL Ltd.

- 'Best Performing National Advisor - Institutional' award at the UTI MF and CNBC TV-18 Financial Advisor Awards 2012.

- Selected amongst the top 10 companies in India for rewards and recognition to the employees given by Great Places to Work Institute.

JM Financial Asset Management Private Limited

ICRA Mutual Fund Awards 2012

- JM Money Manager Fund was ranked as a Five Star Fund in the category of 'Open Ended Ultra Short Term' schemes for its 3 year performance till December 31, 2011.

- JM High Liquidity Fund was ranked as a Seven Star Fund in the category of 'Open Ended Liquid' schemes for its one year performance till December 31, 2011.

- JM High Liquidity Fund-Institutional Plan has been ranked as a Seven Star Fund in the category of 'Open Ended Liquid-IP schemes for its one year performance till December 31, 2011.

MANAGEMENT DISCUSSION & ANALYSIS AND CORPORATE GOVERNANCE REPORTS:

The Management Discussion and Analysis report and the Corporate Governance report for the year under review, together with a Certificate from the Statutory Auditors of your Company on compliance of the conditions of Corporate Governance, as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report.

DIRECTORS: Composition

The Board comprises seven Directors, five of whom are Non-executive & Independent Directors, one Non-executive Director and one Managing Director.

- Retirement by rotation

In accordance with Article 130 of the Articles of Association of the Company read with the provisions of the Act, Dr. Pravin P Shah and Dr. Vijay Kelkar, retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment.

- Re-appointment of Managing Director

Your Directors have re-appointed Mr. Nimesh Kampani as Managing Director of the Company for a period of 5 (five) years commencing from April 1, 2012. The resolution seeking approval of the Members for the appointment of Mr. Kampani as Managing Director forms part of the Notice convening the Twenty Seventh Annual General Meeting.

The Board recommends re-appointment of the Directors retiring by rotation and the re-appointment of the Managing director.

A brief profile of the Managing Director and each of the Directors proposed to be re-appointed along with other details and their shareholding in the Company as stipulated under Clause 49 of the Listing Agreement is appended as an annexure to the Notice convening the forthcoming Annual General Meeting.

DIRECTORS' RESPONSIBILITY STATEMENT:

In pursuance of Section 217(2AA) of the Act, the Directors confirm that:

- in the preparation of the annual accounts, the applicable accounting standards have been followed;

- they have 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 your Company at the end of the financial year and of the profit or loss of your Company for that period;

- they have taken proper and sufficient care for maintaining adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

- they have prepared the annual accounts on a going concern basis.

STATUTORY AUDITORS:

M/s. Khimji Kunverji & Co., Chartered Accountants, Mumbai, retire at the Twenty Seventh Annual General Meeting and being eligible, offer themselves for re-appointment. They have sought their re-appointment and have confirmed that their re-appointment, if made, will be within the limits of the provisions of Section 224(1B) of the Companies Act, 1956 and that they are not beneficially holding any security of the Company as defined under Section 226(3)(e) of the said Act. They have also confirmed that they hold a valid peer review certificate as prescribed under Clause 41(1)(h) of the Listing Agreement.

The Audit Committee and Board of Directors recommend the appointment of M/s. Khimji Kunverji & Co., Chartered Accountants as the Statutory Auditors of the Company for the year 2012-13.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

The particulars as required under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, on conservation of energy and technology absorption are not applicable to your Company, since it is not a manufacturing company. During the year under review, your Company has not earned any foreign exchange and the details of the amount spent in foreign exchange is provided in note number 2.28 and 2.29 of the Notes to financial statement which forms part of the audited annual accounts.

CORPORATE SOCIAL RESPONSIBILITY:

At JM Financial, Corporate Social Responsibility (CSR) encompasses much more than social outreach programmes and is an integral part of the way the Company conducts its business. Detailed information on the initiatives of the Company towards CSR activities is provided in the Corporate Social Responsibility section of the Management Discussion and Analysis report.

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 II 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 said 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.

Your Company had 26 employees as on March 31, 2012. Out of the total number of employees, 7 employees employed throughout the year were in receipt of remuneration of more than Rs60.00 Lakh per annum and 1 employee employed for part of the year was in receipt of remuneration of more than Rs5.00 Lakh per month.

ACKNOWLEDGEMENTS:

The Directors place on record their sincere appreciation for the ongoing support provided by Securities and Exchange Board of India, Reserve Bank of India, BSE Limited, National Stock Exchange of India Limited, Ministry of Finance, Ministry of Corporate Affairs, Registrar of Companies, Forward Markets Commission, Depositories, other regulatory authorities and the Company's bankers.

The Directors also take this opportunity to express their gratitude to the stakeholders of your Company for their trust and confidence. The Directors recognize and acknowledge the unstinted support provided by the employees at all levels and also for their sincerity, commitment and professionalism. Your Directors look forward to their continuing support and all round efforts.

On behalf of the Board of Directors

Nimesh Kampani

Place: Mumbai Chairman & Managing Director

Date: May 24, 2012


Mar 31, 2010

The Directors of your Company are pleased to present their Twenty Fifth Annual Report together with the audited annual accounts for the financial year ended March 31, 2010.

FINANCIAL RESULTS (Rs.in Crore)

For the year ended

March 31, March 31, March 31, March 31, Particulars 2010 2009 2010 2009

Consolidated Standalone

Gross income 598.81 464.92 95.29 24.54

Profit before depreciation, interest & tax 231.72 166.33 48.29 15.28

Less: Depreciation 12.00 12.11 0.66 0.27

Interest 58.78 60.01 0.04 0.03

Provision/(Reversal) for/of diminution in value (25.22) 136.72 (1.11) 1.83 of investments

Provision/(Reversal) for/of mark-to- market loss on (15.29) 17.18 - - securities

Provision on standard assets - 18.79 - -

Profit/(Loss) before tax 201.45 (78.48) 48.70 13.15

Provision for tax 47.37 28.32 1.39 5.13

Provision for fringe benefit tax - 1.18 - 0.05

Profit/(Loss) after tax but before minority 154.08 (107.98) 47.31 7.97 interest and share in associate companies

Less: Share of minority interest (net) 4.45 (0.19) - -

Add: Share of Profit in associate companies 2.03 2.58 - -

Net Profit/(Loss) 151.66 (105.21) 47.31 7.97

Add: Profit brought forward from earlier years 1090.55 1225.40 1152.31 1160.39

Profit available for appropriation 1242.21 1120.19 1199.62 1168.36

APPROPRIATIONS

Proposed dividend

-Normal 18.74 15.00 18.74 15.00

- Silver jubilee special 18.74 - 18.74 -

Dividend distri -bution tax 6.42 2.55 2.40 0.05

General reserve 6.63 1.00 5.00 1.00

Statutory reserve 17.93 11.09 - -

Capital redemption reserve 4.69 - - -

Balance carried to balance sheet 1169.06 1090.55 1154.74 1152.31

1242.21 1120.19 1199.62 1168.36

DIVIDEND

Your Directors are pleased to recommend the payment of a normal dividend of Re. 0.25 per share and a "Silver Jubilee Special Dividend" of Re.0.25 per share for the year ended March 31, 2010. The payment of dividend together with distribution tax thereon will absorb Rs.39.88 crore. The dividend, if declared at the forthcoming Annual General Meeting, will be paid on or after July 30, 2010 to those Members whose names would appear in the Register of Members at the close of business hours on July 21, 2010. In respect of shares held in dematerialised form, it will be paid to those Members whose names are furnished by the Depositories as beneficial owners as on that date.

FINANCIAL HIGHLIGHTS

On a consolidated basis, your Company earned a gross income of Rs.598.81 crore during the year as against Rs.464.92 crore in the previous year; and the profit before tax of Rs.201.45 crore as against the loss before tax of Rs.78.48 crore during the previous year.

On a standalone basis, your Company earned a higher gross income of Rs.95.29 crore during the year as against Rs.24.54 crore in the previous year; and profit before tax of Rs.48.70 crore as against Rs.13.15 crore during the previous year. The higher revenue and profit is largely attributed to higher interest income from treasury oparations and the receipt of interim dividend from the subsidiaries of your Company. The net worth of your Company at the year end stands at Rs.1653.80 crore which translates to a book value of Rs.22.06 per share.

EMPLOYEE STOCK OPTION SCHEME

As reported in the previous years report, your Company has instituted Employee Stock Option Scheme (ESOS) for the benefit of the employees/directors (the Employees) of the Company and/or its subsidiaries. During the year under review and current financial year, the Compensation Committee of the Board of your Company has granted 52,50,000 options to the eligible employees. With this, the aggregate number of options granted by your Company to the Employees is 1,63,87,500. The vesting schedule of these options is in three equal tranches at the end of third, fourth and fifth year from the date of their respective grants and the exercise period is 7 years from the date of grant.

The details of ESOS as stipulated under Clause 12.1 of SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are given in Annexure I to this Report.

SUBSIDIARY COMPANIES

The subsidiaries of the Company are: JM Financial Consultants Private Limited, JM Financial Services Private Limited, JM Financial Investment Managers Limited, JM Financial Commtrade Limited, JM Financial Ventures Limited, JM Financial Products Private Limited, JM Financial Securities Private Limited, JM Financial Institutional Securities Private Limited, JM Financial Asset Management Private Limited, JM Financial Holdings (Mauritius) Limited, JMF-BR Investments Holdings (Mauritius) Limited, Oracle Enterprises Private Limited, JM Financial Overseas Holdings Private Limited, JM Financial Insurance Broking Private Limited, Persepolis Investments Limited, Persepolis PIPE & Investments Limited and Infinite India Investment Management Private Limited.

During the year, the Joint Venture formed in the areas of real estate fund and property management with SRS Private Investment Management LLC (SRS) was terminated. Pursuant to this termination, your Company, which owned 50% equity in Infinite India Investment Management Private Limited (Infinite), a joint venture entity, acquired 46.88% equity held by SRS. Consequently, Infinite has become a subsidiary of your Company. The remaining 3.12% equity has since been acquired by your Company during the current financial year. With this, Infinite has become a wholly owned subsidiary of your Company.

The Ministry of Corporate Affairs has granted exemption to your Company under Section 21 2(8) of the Companies Act, 1956 with regard to attaching the Balance Sheet, Profit & Loss Account and other documents of all its subsidiaries for the year ended March 31, 2010. However, the shareholders who wish to have a copy of the annual audited accounts of the subsidiaries will be provided the same upon receipt of a request from them. These documents will be put up on the Companys website viz. www.jmfinancial.in and will also be available for inspection by any shareholder at the registered office of the Company on any working day. The financial information of subsidiary companies is disclosed along with the consolidated financial statements. In accordance with the requirements of the Listing Agreement executed with the Stock Exchanges, the consolidated financial statements of the Company are annexed to the Annual Report.

MANAGEMENT DISCUSSION AND ANALYSIS & CORPORATE GOVERNANCE REPORT

The Management Discussion and Analysis for the financial year 2009-10 and a detailed report on Corporate Governance, as required under Clause 49 of the Listing Agreement executed with the Stock Exchanges, are given in separate sections forming part of the Annual Report.

A certificate from the statutory auditors of the Company, M/s. Khimji Kunverji & Co., confirming compliance with the conditions of Corporate Governance stipulated in Clause 49 is annexed to the report on Corporate Governance.

DIRECTORS

In accordance with Article 1 30 of the Articles of Association of the Company read with the provisions of the Companies Act, 1956, Mr. Ashith N Kampani and Mr. E A Kshirsagar, retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment.

Pursuant to the provisions of Section 260 of the Companies Act, 1956, read with Article 117, Dr. Vijay Kelkar was appointed as an additional director of the Company with effect from March 19, 2010. He holds Office as a Director up to the date of the forthcoming Annual General Meeting. Your Company has received notice in writing from a Member proposing his candidature for the office of Director.

A brief resume and other details, as stipulated under the Listing Agreement for each of the above Directors seeking appointment/re-appointment are given as Additional Information on Directors which forms part of the Notice. Further, the required resolutions for appointment of the above Directors at the forthcoming Annual General Meeting are included in the Notice convening the Annual General Meeting.

Mr. M R Mondkar ceased to be a Director of the Company with effect from April 1, 2010. The Board of Directors places on record its sincere appreciation for the valuable services rendered by Mr. Mondkar during his tenure as a Director of the Company.

As was reported in the previous years report, Nagarjuna Finance Limited (NFL) was not in default of repayment of fixed deposits and/or interest thereon during the time Mr. Nimesh N Kampani was a non executive director of NFL. Mr. Kampani has been actively contesting the allegations made against him for defaults in repayment of fixed deposits and interest thereon.

The Directors have been informed that in the matter of non payment of deposits of NFL, the Honble High Court in Andhra Pradesh at Hyderabad on October 14, 2009, granted an interim stay of all further proceedings including lookout notices issued against Mr. Kampani until further orders. In civil case pertaining to the same matter, the Honble High Court in Andhra Pradesh, in company appeal of 2003, writ petition of 2004 and company petitions of 2002, 2003, 2004, 2005 and 2006, has recently passed an Order, inter alia, stating that the promoter and erstwhile directors are not liable for the affairs of NFL after their resignation from the board of directors and consequently they are personally not liable to pay the amounts to the depositors.

DIRECTORS RESPONSIBILITY STATEMENT

In pursuance of Section 217(2AA) of the Companies Act, 1956, the Directors confirm that:

- in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures from the same; .¦--.,.¦-

- they have 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 year;

- they have taken proper and sufficient care for maintaining adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

- they have prepared the annual accounts on a going concern basis.

STATUTORY AUDITORS

The retiring auditors, namely, M/s. Khimji Kunverji & Co., Chartered Accountants, Mumbai, hold office until the conclusion of the forthcoming Annual General Meeting and are seeking re-appointment. They have confirmed that their appointment, if made, at the Annual General Meeting, will be within the limits prescribed under sub-section (1 B) of Section 224 of the Companies Act, 1956 and that they are not beneficially holding any security of your Company as defined under Section 226(3)(e) of the said Act. They have also confirmed that they hold a valid peer review certificate as prescribed under Clause 41(l)(h) of the Listing Agreement. Members are requested to consider their re-appointment.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars as required under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, on conservation of energy and technology absorption are not applicable to your Company, since it is not a manufacturing company. During the year under review, your Company has not earned any foreign exchange and the details of the amount spent in foreign exchange is provided in note number 13 and 14 of the Notes to Accounts which forms part of the Annual Report.

PARTICULARS OF EMPLOYEES

The information required under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, is set out in Annexure II to this Report. Your Company had 26 employees as on March 31, 201 0. Out of the total number of employees, 14 employees employed throughout the year were in receipt of remuneration of more than Rs.24.00 lakh per annum and 2 employees employed for part of the year were in receipt of remuneration of more than Rs.2.00 lakh per month.

In accordance with Section 21 9(l)(b)(iv) of the Companies Act, 1956, the Report and Accounts are being sent to the Members excluding the aforesaid Annexure. Any Member interested in obtaining a copy of the said Annexure may write to the Company Secretary at the registered office of the Company.

ACKNOWLEDGEMENTS

Your Directors place on record their gratitude for the continued co-operation and guidance extended by the Securities and Exchange Board of India, Reserve Bank of India, Bombay Stock Exchange Limited, National Stock Exchange of India Limited and Bankers of the Company. Your Directors also wish to express their gratitude to the Members and all other stakeholders of the Company for their trust and patronage and place on record their appreciation for the committed service rendered by the employees of your Company and its subsidiaries, joint venture and associates.

On behalf of the Board of Directors

Place: Mumbai Nimesh N Kampani

Date: May 25, 2010 Chairman & Managing Director



 
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