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Directors Report of Motilal Oswal Financial Services Ltd.

Mar 31, 2023

The Directors of your Company have pleasure in presenting the Eighteenth Board''s Report together with the Audited Financial Statements for the financial year ended March 31,2023.

FINANCIAL RESULTS

The summary of the Company''s financial performance, both on a consolidated and standalone basis, for the financial year ("FY") 2022-23 and FY 2021-22 is given below:

(? in Lakhs)

Particulars

Consolidated

Standalone

2022-23

2021-22

2022-23

2021-22

Total Revenue

4,19,712

4,31,641

2,69,271

2,61,546

Total Expense (Excluding Interest and Depreciation)

2,30,066

2,17,757

1,70,002

1,55,041

Profit before Interest, Depreciation and Taxation

1,89,646

2,13,884

99,269

106,505

Interest

59,583

47,477

21,733

16,216

Depreciation

5,838

4,826

5,006

3,876

Profit before taxation

Add/ (Less): Provision for Taxation

1,24,225

1,61,581

72,530

86,413

Current Tax

29,062

23,588

15,829

14,807

Deferred Tax

1,823

7,109

35

1,123

Less: Tax for earlier year(s)

58

(189)

(225)

(199)

Tax Expenses

30,943

30,508

15,639

15,731

Profit after Taxation from Continuing Operations

93,282

1,31,073

56,891

70682

Share of Profit from Associates and Joint Ventures

196

172

-

-

(net of taxes)

Profit for the Period

93,478

1,31,245

56,891

70,682

Add/ Less: Other Comprehensive Income (OCI) Actuarial gain/ (loss)

169

176

64

(27)

Fair value gain/ (loss) of investment held through FVOCI

(5,467)

4,488

(3,976)

2,324

Tax on OCI

650

558

446

(259)

Total Comprehensive Income

88,830

1,35,351

53,425

72,720

Net profit attributable to:

Owners of parent

88,520

1,35,081

Non-controlling interests

310

270

-

-

Add: Balance brought forward from previous year

4,30,698

3,20,438

3,07,292

2,53,272

Profit available for appropriation Less: Appropriations

93,169

1,30,974

56,891

70,682

Acturial gain/(losses) on post retirement benefit plan

125

131

48

(20)

(net of taxes)

Transfer to Statutory Reserve

(4,027)

(2,729)

-

-

Interim Dividend and Final Dividend

(14,825)

(8,674)

(14,823)

(7,365)

Buyback Transaction cost

(3,843)

-

(3,842)

-

ECL provision reserve

-

(28)

-

-

Business combination cost

(2,223)

-

(1,235)

(7,032)

Provision of Stamp Duty (Net of Tax impact)

-

(2,245)

-

(2,245)

Transfer to Non-controlling interest

(125)

(7,171)

-

-

Balance of Profit carried forward

4,98,950

4,30,698

3,44,331

3,07,292

FINANCIAL PERFORMANCE Standalone

The standalone revenue in FY 2022-23 stood at ? 2,69,271 Lakhs vs ? 2,61,546 Lakhs in FY 2021-22. Total expenses (before interest and depreciation) for the year stood at ? 1,70,002 Lakhs. People cost increased by 14% YoY to ? 61,095 Lakhs. Operating expenses increased by 2% YoY to ? 77,886 Lakhs. The profit before depreciation, interest and taxation (EBITDA) stood at ? 99,269 Lakhs. Reported net profit after tax for the year came in at ? 56,891 Lakhs.

Consolidated

The consolidated revenue for the year was ? 4,19,712 Lakhs. The average daily traded volumes (ADTO) for the equity markets during FY 2022-23 stood at ? 154 Lakh Crores, up 121% YoY from ? 70 Lakh Crores in FY 2021-22. The overall Cash market ADTO reported a decline of 21% YoY at ? 57,564 Crores in FY 2022-23. Within derivatives, futures volume decreased 4% YoY to ? 1.1 Lakh Crores while options rose 125% YoY to ? 152 Lakh Crores. Amongst cash market participants, retail constitutes 47% of total cash volume, institution 25% and prop 28%. The proportion of DII in the cash market was 10%. In FY 2022-23, 2.5 Crores new demat accounts were added as against 3.5 Crores in FY 2021-22. The number of demat accounts stood at 11.45 Crores in FY 2022-23, a growth of 28% YoY.

Key Highlights

- Capital market business (Broking Investment Banking) income grew 11% YoY to ? 2,833 Crores.

- The Company had 35 Lakhs retail broking and distribution clients growing at a CAGR of 27% from FY 2017-18 to FY 2022-23. Client acquisition stood at 6.5 Lakhs during the year.

- Our financial product distribution AUM was ? 21,292 Crores as of March 2023, up 17% YoY.

- Investment banking business successfully completed 4 marquee deals in FY 2022-23. The team has a rich pipeline and continues to engage on a wide cross-section of mandated transactions across capital markets and advisory.

- Asset management income stood at ? 555 Crores. Total assets under management across mutual funds, PMS and AIF was ? 45,620 Crores, down 7% YoY. Within this, the mutual fund AUM stood at to ? 29,560 Crores, while Alternates AUM (PMS and AIF) stood at ? 15,830 Crores.

- The private equity income grew by 36% YoY to ? 177 Crores. The income from wealth management business stood at ? 223 Crores, up 14% YoY. The wealth management AUM for FY 2022-23 was at ? 52,000 Crores, up 51% YoY.

- Housing finance gross income stood at ? 532 Crores. HFC loan book grew by 10% YoY to ? 3,772 Crores as of March 2023. Disbursements stood at ? 1,007 Crores, up 57% YoY.

In our fund based businesses, our total investments including alternate investments stood at ? 4,280 Crores with a since inception IRR of 16%.

Total expenses (before interest, depreciation and taxation) for the year was ? 2,30,066 Lakhs. Profit before depreciation, interest and taxation (EBITDA) stood at ? 1,89,646 Lakhs, a decrease of 11% from the previous year. Profit after tax for the year decreased by 29% to ? 93,282 Lakhs.

The detailed results of operations of the Company are given in the Management Discussion and Analysis Report forming part of the Annual Report.

FUTURE OUTLOOK

We have delivered sustainable performance in FY2023 despite of market headwinds. Our strategy is to further diversify our business model towards more annuity sources of earnings.

Our Asset Management business has seen improvement in performance which is expected to culminate into better fund flows. Our Wealth Management business is on its way to achieve scale as we continue to invest in Relationship Managers. Our Housing Finance business has witnessed turnaround by improving disbursement and profitability parameters. Our brand is now being recognized across each of our businesses. Each of our business segments offer huge headroom for growth and we are well placed to benefit from this.

CONSOLIDATED FINANCIAL STATEMENTS

As per Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") and applicable provisions of the Companies Act, 2013 ("the Act") read with the Rules made thereunder (as amended from time to time), the Consolidated Financial Statements of the Company for the FY 2022-23 have been prepared in compliance with applicable Indian Accounting Standards and on the basis of the Audited Financial Statements of the Company and its subsidiaries, as approved by the respective Board of Directors ("Board").

The Consolidated Financial Statements together with the Auditors'' Report is forming part of the Annual Report.

ENVIRONMENT, SOCIAL AND GOVERNANCE INITIATIVES

Since your Company strongly believes in raising corporate transparency, strengthening risk management, promoting stakeholder engagement, improving communications with Stakeholders, your Company has undertaken various Environment, Social and Governance(ESG) initiatives during FY 2022-23. The separate disclosure on ESG initiatives is forming part of this Annual Report.

INFORMATION ON THE STATE OF AFFAIRS OF THE COMPANY

The information on the affairs of the Company has been given in Management Discussion and Analysis Report forming part of the Annual Report.

MATERIAL CHANGES AND COMMITMENTS, AFFECTING THE FINANCIAL POSITION OF THE COMPANY

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

DIVIDEND

In terms of Regulation 43A of the Listing Regulations, the Board of the Company has approved the Dividend Distribution Policy in line with the requirements of the Listing Regulations and it is available on the website of the Company and can be accessed at https://www.motilaloswalgroup.com/Downloads/IR/206776066708.-Dividend-Distribution-Policy.pdf.

During the year under review, the Board of the Company, based on the parameters laid down in the Dividend Distribution Policy, at its meeting held on January 24, 2023 had declared and paid an Interim Dividend of ? 7/- per Equity Share for the FY 2022-23, out of the profits of the Company for the third quarter and nine months ended December 31,2022, on 14,78,75,116 Equity Shares having face value of ? 1/- each, aggregating to ? 103,51,25,812/-.

Further, the Board at its Meeting held on April 27, 2023 have recommended a Final Dividend of ? 3/- per Equity Share having face value of ? 1/- each for FY 2022-23, subject to approval of the Members of the Company at the ensuing Annual General Meeting ("AGM").

The Final Dividend, if approved at the ensuing AGM, would be paid to those Members whose name appear in the Register of Members/ Beneficial Holders as on July 04, 2023.

TRANSFER TO RESERVES

The Board of your Company decided not to transfer any amount to the General Reserve and retain the entire amount of profit under Retained Earnings.

CREDIT RATING

During the year under review, the Credit Rating agencies have reaffirmed/ assigned the below credit ratings:

Rating Agency

Instrument Type

Size of Issue (? Crore)

Rating/Outlook

Rating

Action

CRISIL Limited

Commercial Papers

1,750

CRISIL A1

Reaffirmed

Non-Convertible Debentures

500

CRISIL AA Stable

Assigned

ICRA Limited

Commercial Papers

3,500

[ICRA]A1

Assigned

Long-term Principal Protected Market Linked Debentures

100

PP-MLD[ICRA]AA

(Stable)

Reaffirmed

Non-Convertible Debentures

300

[ICRA]AA (Stable)

Reaffirmed

Bank Lines - Unallocated

300

[ICRA]AA (Stable)

Reaffirmed

India Ratings & Research Private Limited

Commercial Papers

1,000

IND A1

Assigned

2,500

IND A1

Affirmed

Non-Convertible Debentures

300

IND AA/Stable

Affirmed

Bank Lines - Unallocated

300

IND AA/Stable

Affirmed

The above ratings indicate a very strong degree of safety regarding timely servicing of financial obligations.

SHARE CAPITAL

During the year under review, the Company has allotted 3,38,752 Equity Shares having face value of ? 1/- each to eligible employees upon exercise of the vested options granted to the said employees under various Employee Stock Option Schemes of the Company and bought-back 14,54,545 Equity Shares.

Consequently, the paid up Share Capital of the Company as at March 31, 2023 stood at ? 14,79,47,126/-comprising of 14,79,47,126 Equity Shares having face value of ? 1/- each.

The Authorised Share Capital of the Company as on March 31, 2023 is ? 1,74,00,00,000/- divided into 1,12,00,00,000 Equity Shares of ? 1/- each aggregating to ? 1,12,00,00,000/- and 62,00,000 Preference Shares of ? 100/- each aggregating to ? 62,00,00,000/- .

BUY-BACK OF EQUITY SHARES

The Board of Directors at its Meeting held on May 17, 2022 had approved the proposal of Buy-back of fully paid up Equity Shares of face value of ? 1/- each not exceeding 14,54,545 equity shares (representing 0.98% of the total

paid-up Equity Share Capital of the Company as on March 31, 2022) at a price of ? 1,100/- per Equity Share paid in cash for an aggregate amount not exceeding ? 160,00,00,000/- excluding transaction cost, which represents 5.09% and 4.11% of the fully paid-up Equity Share capital and free reserves as at March 31,2022, respectively, through the "Tender Offer" route using mechanism for acquisition of shares through stock exchange as prescribed under the SEBI (Buy-Back of Securities) Regulations, 2018, as amended from time to time (the "Buy-back Regulations") and the Act read with the Rules made thereunder. The tender period for the Buy-back was open from Friday, June 24, 2022 and closed on Thursday, July 07, 2022. Accordingly, the Company has bought back 14,54,545 Equity Shares on July 18, 2022 (i.e. settlement date) and the said shares have been extinguished on July 22, 2022.

EMPLOYEE STOCK OPTION SCHEMES

The disclosures required to be made under the SEBI (Share Based Employee Benefits & Sweat Equity) Regulations, 2021 ("ESOP Regulations") (as amended from time to time), are available on the website of the Company at https://www.motilaloswalgroup.com/Downloads/IR/2012017271ESOP-Annexure-2022-23.pdf.

Further, the Company confirms that all the Employee Stock Option Schemes of the Company are falling under direct route and not under Trust route and accordingly the provisions related to Trust route as specified in the ESOP Regulations are not applicable to the Company. Further, all the permanent employees (except the persons as mentioned in the ESOP Regulations) of the Company and its subsidiary companies are entitled to participate in the said Schemes of the Company. Further, the Company confirms that it has not granted employee stock options equal to or exceeding one percent of the Issued Share Capital of the Company at the time of grant of stock options to any employees of the Company/ Subsidiary Company. There has been no change in the ESOP Schemes during the year under review.

The Secretarial Auditor of the Company, M/s. U. Hegde & Associates, has certified that the Company''s above-mentioned Schemes have been implemented in accordance with the ESOP Regulations and the Resolutions passed by the Members of the Company for the respective Schemes. The Certificate from the Secretarial Auditor, confirming compliance with the aforesaid provisions would be presented to the Members at the ensuing AGM of the Company. The Employee Stock Option Schemes are administered by the Nomination and Remuneration Committee ("NRC") of the Board of the Company, in accordance with the applicable provisions of the ESOP Regulations.

DEBENTURES

During the year under review, the Company has issued and allotted 284 Non-Convertible Debentures ("NCDs") of ? 10 Lakhs each aggregating to ? 28.40 Crore, on private placement basis. These NCDs are listed and traded on BSE Limited. Further, 3,622 NCDs of ? 10 Lakhs each aggregating to ? 362.2 Crore were redeemed during the year. Accordingly, 442 NCDs of ? 10 Lakhs each aggregating to ? 44.20 Crore are outstanding as on March 31, 2023.

The Company has been servicing payment of the interest on the due dates.

The details of the Debenture Trustee of the Company is as under:

Beacon Trusteeship Limited

4C & D, Siddhivinayak Chambers,

Gandhi Nagar, Opp. MIG Cricket Club,

Bandra (East), Mumbai 400 051,

Tel: 91 (0)22 2655 8759, 91 955 544 9955 Website: www.beacontrustee.co.in

DEPOSITS

During the year under review, the Company has not accepted or renewed any amount falling within the purview of provisions of Section 73 of the Act read with the Companies (Acceptance of Deposits) Rules, 2014.

ANNUAL RETURN

Pursuant to the provisions of Section 134(3) and Section 92(3) of the Act read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, the Annual Return of the Company in prescribed Form MGT-7 for the financial year ended March 31, 2023 is uploaded on the website of the Company at https://www.motilaloswalgroup.com/Downloads/IR/691471774Form MGT 7 AGM Website Upload.pdf

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report for the year under review, as stipulated under Regulation 34 of the Listing Regulations is presented in a separate section forming part of the Annual Report.

SUBSIDIARY COMPANIES

The Company along with its subsidiaries, offers a diversified range of financial products and services such as institutional equities, asset management business, housing finance, private equity, private wealth management, investment banking, loan against securities and investment activities.

As on March 31,2023, the Company had 18 subsidiaries (including step down subsidiaries). There are no associate companies or joint venture within the meaning of Section 2(6) of the Act as on March 31,2023.

Further, pursuant to the provisions of Section 136(1) of the Act, the Financial Statements for the period ended March 31, 2023 of each subsidiary of the Company is made available on the website of the Company at www.motilaloswalgroup.com.

Material Subsidiaries

As required under Regulation 16(1)(c) and 46 of the Listing Regulations, the Board has approved the Policy on Determination of Material Subsidiaries ("Policy"). The said Policy is available on the website of the Company and can be accessed at https://www.motilaloswalgroup.com/Downloads/IR/212618793Policy-on-Determination-of-Material-Subsidiaries.pdf. Accordingly, Motilal Oswal Home Finance Limited ("MOHFL''), Motilal Oswal Asset Management Company Limited ("MOAMC") and Motilal Oswal Finvest Limited ("MOFL'') are material subsidiaries of the Company.

Investment in Subsidiaries

During the year under review, the Company has acquired entire Share Capital i.e. 50,000 Equity Shares having face value of ? 10/- each of MO Alternative IFSC Private Limited ("MO Alternative"). Accordingly, MO Alternative has become the Wholly-owned Subsidiary of the Company.

During the year under review, the Company has also set up a Representative Office in Dubai, United Arab Emirates. Performance and Financial Position of Subsidiaries

As required under Rule 5 and Rule 8(1) of the Companies (Accounts) Rules, 2014, a report on the highlights of performance of subsidiaries and their contribution to the overall performance of the Company has been appended as "Annexure 1" to this Report.

Pursuant to the provisions of Section 129(3) of the Act, a statement containing salient features of the Financial Statements of subsidiaries in Form AOC-1 is annexed to the Consolidated Financial Statements forming part of the Annual Report. Your Company will also e-mail the copy of separate Audited Financial Statements in respect of each of the Subsidiary Company upon request by any Member of the Company interested in obtaining the same.

In accordance with the provisions of Section 136 of the Act, the separate Audited Financial Statements in respect of each of the Subsidiary Company is also made available on the website of your Company at www.motilaloswalgroup.com. These documents will be available for inspection in electronic mode. Members can inspect the same up to the date of AGM, by sending an e-mail to the Company at [email protected].

The Company monitors performance of its subsidiary companies, inter alia, by the following means:

• Financial Statements, in particular investments made by the Subsidiary Companies, are reviewed quarterly by the Company''s Audit Committee.

• Minutes of Board Meetings of the Subsidiary Companies are placed before the Company''s Board quarterly.

• A statement containing all significant transactions and arrangements entered into by the Subsidiary Companies is placed before the Company''s Board.

• Presentations are made to the Company''s Board on business performance of major subsidiaries of the Company by the Senior Management.

BOARD, COMMITTEES OF THE BOARD & KEY MANAGERIAL PERSONNEL Composition of Board

The composition of the Board of the Company is in accordance with the provisions of Section 149 of the Act and Regulation 17 of the Listing Regulations, with an optimum combination of Executive, Non-Executive and Independent Directors.

The Board of the Company has 10 (Ten) Directors comprising of 1 (One) Non-Executive Chairman, 1 (One) Managing Director & Chief Executive Officer, 2 (Two) Whole-time Directors, 1 (One) Non-Executive Director and 5 (Five) Independent Directors. The complete list of Directors of the Company has been provided in the Report on Corporate Governance forming part of the Annual Report.

The Directors on the Board of the Company are persons with proven competency, integrity, experience, leadership qualities, financial and strategic insight. They have a strong commitment to the Company and devote sufficient time to the Meetings.

During the year under review, there was no change in the composition of the Board of the Company.

Director(s) liable to retire by rotation

In accordance with Section 152 of the Act and the Articles of Association of the Company, Mr. Motilal Oswal and Mr. Rajat Rajgarhia will retire by rotation at the ensuing AGM and being eligible, have offered themselves for re-appointment. Based on the recommendation of the NRC, the Board recommends their re-appointment(s) for the approval of the Members of the Company. The brief profile of Mr. Motilal Oswal and Mr. Rajat Rajgarhia are included in the Notice of the AGM of the Company.

Re-appointment of Directors

The Board, based on the performance evaluation and on recommendation of the NRC, has considered below re-appointments at its Meeting held on April 27, 2023 subject to approval of the Members of the Company and on terms and conditions including remuneration as mentioned in the Notice of the ensuing AGM.

Sr.

No.

Name of the Director

DIN

Designation

Term

Effective from

1.

Mr. Ajay Menon

00024589

Whole-time Director

5 years

August 21,2023

2.

Mr. Chitradurga Narasimha Murthy (Mr. C. N. Murthy)

00057222

Independent Director

3 years

July 01, 2023

3.

Mr. Pankaj Bhansali

03154793

Independent Director

5 years

July 01, 2023

4.

Mrs. Divya Sameer Momaya

00365757

Independent Director

5 years

July 01, 2023

5.

Mr. Chandrashekhar Karnik

00003874

Independent Director

3 years

September 16, 2023

6.

Mrs. Swanubhuti Jain

09006117

Independent Director

5 years

December 24, 2023

The Resolutions seeking approval of Members for the re-appointment of all the Directors are detailed in the Notice of the ensuing AGM along with their brief profile.

Meetings of the Board

During the year under review, the Board met 5 (five) times to discuss and approve various matters including financials, buy-back and other businesses. For further details, please refer to the Report on Corporate Governance forming part of the Annual Report. The maximum interval between any two meetings did not exceed 120 (One Hundred and Twenty) days, as prescribed in the Act and the Listing Regulations.

Committees of the Board

The Board has set up various Committees in compliance with the requirements of the business & relevant provisions of applicable laws and layered down well documented terms of references of all the Committees. Details with respect to the Composition, terms of reference and number of meetings held, etc. are included in the Report on Corporate Governance forming part of the Annual Report.

During the year under review, all the recommendations/submissions made by the Audit Committee and other Committees of the Board were accepted by the Board.

Separate Meeting of Independent Directors

As stipulated in the Code of Conduct for Independent Directors under the Act and the Listing Regulations, a separate Meeting of the Independent Directors of the Company was held on April 28, 2022 to review the performance of Non-Independent Directors (including the Chairman) and the Board as a whole. The Independent Directors also assessed the quality, quantity and timeliness of flow of information between the Company Management and the Board, which is necessary to effectively and reasonably perform and discharge their duties.

Declaration by Independent Directors

All the Independent Directors of your Company have submitted their declaration of independence, as required, pursuant to the provisions of Section 149(7) of the Act and Regulation 25(8) of the Listing Regulations, stating that they meet the criteria of independence, as provided in Section 149(6) of the Act and Regulation 16(1)(b) of the Listing Regulations and are not disqualified from continuing as Independent Directors of your Company. Further, veracity of the above declarations has been assessed by the Board, in accordance with Regulation 25(9) of the Listing Regulations.

The Board is of the opinion that the Independent Directors of the Company hold highest standards of integrity and possess requisite qualifications, expertise & experience (including the proficiency) and competency in the business & industry knowledge, financial expertise, digital & information technology, corporate governance, legal and compliance,

marketing & sales, risk management, leadership & human resource development and general management as required to fulfill their duties as Independent Directors.

Further, in terms of Section 150 of the Act read with Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, all the Independent Directors have confirmed that they have registered themselves with databank maintained by the Indian Institute of Corporate Affairs ("MCA"). These declarations/ confirmations have been placed before the Board. The Independent Directors are also required to undertake online proficiency selfassessment test conducted by the IICA within a period of 2 (Two) years from the date of inclusion of their names in the data bank, unless they meet the criteria specified for exemption. Accordingly, Mr. Pankaj Bhansali, Mrs. Divya Momaya and Mrs. Swanubhuti Jain have passed online proficiency self-assessment test conducted by the IICA while Mr. C. N. Murthy and Mr. Chandrashekhar Karnik are exempt to pass the online proficiency self-assessment test pursuant to the first proviso of Rule 6(4) of the Companies (Appointment and Qualification of Directors) Rules, 2014.

Key Managerial Personnel

As at March 31, 2023, the Company has the following Key Managerial Personnel:

1) Mr. Motilal Oswal - Managing Director & Chief Executive Officer

2) Mr. Ajay Menon - Whole-time Director

3) Mr. Rajat Rajgarhia - Whole-time Director

4) Mr. Shalibhadra Shah - Chief Financial Officer

5) Mr. Kailash Purohit - Company Secretary & Compliance Officer

FAMILIARIZATION PROGRAMMES

In terms of the provisions of Regulation 25 of the Listing Regulations, the Company has framed a policy on ''Familiarisation Programme for Independent Directors''. Accordingly, upon appointment of an Independent Director, the appointee is given a formal Letter of Appointment, which inter alia, explains the role, function, duties and responsibilities expected as a Director of the Company.

Further, the Independent Directors are familiarised with the Company, their roles, responsibilities in the Company, nature of industry in which the Company operates, business model of the Company, various businesses in the group etc. The Directors are also explained in detail the compliance required from them under the Act and the Listing Regulations. Further, on an ongoing basis as a part of Agenda of the Board/ Committee Meetings, presentations are regularly made to the Independent Directors on various matters inter-alia covering the business strategies, management structure, management development, quarterly and annual results, budgets, review of Internal Audit, risk management framework, operations of subsidiaries and associates.

The Policy on familiarisation programme for Independent Directors along with the details of the Familiarization Programmes are available on the website of the Company and can be accessed at https://www.motilaloswalgroup.com/Downloads/IR/453138119Familiarization-Programmes-for-Independent-Director 2023.pdf.

COMPANY''S POLICY ON DIRECTOR''S APPOINTMENT AND REMUNERATION

Section 178 of the Act and Regulation 19 read with Part D of Schedule II of the Listing Regulations requires the NRC to formulate a Policy relating to the remuneration for the Directors, Key Managerial Personnel ("KMP"), Senior Management and other employees of the Company and recommend the same for approval of the Board.

The Company, based on the recommendation of the NRC, has framed a Nomination and Remuneration Policy relating to appointment of Directors, payment of managerial remuneration, Directors qualifications, positive attributes,

independence of Directors and other related matters as provided under Section 178 of the Act and Regulation 19 read with Part D of Schedule II of the Listing Regulations.

Accordingly, in compliance to the aforesaid provisions, the Nomination and Remuneration Policy of the Company is available on the website of the Company and can be accessed at: https://www.motilaloswalgroup.com/Downloads/IR/101791301707.-MOFSL-Nomination-and-Remuneration-Policy.pdf

The salient features of the Policy are given below:

Appointment criteria and qualifications:

1. The NRC shall identify and ascertain the integrity, qualification, expertise and experience of the person for appointment as Director, KMP or Senior Management and recommend to the Board his/ her appointment.

2. A person should possess adequate qualification, expertise and experience for the position he/ she is considered for appointment. The NRC has discretion to decide whether qualification, expertise and experience possessed by a person are sufficient/ satisfactory for the concerned position.

3. The Company shall not appoint or continue the employment of any person as Managing Director/ Whole-time Director/ Manager who has attained the age of seventy years.

Provided that the term of the person holding this position may be extended beyond the age of seventy years with the approval of the Shareholders by passing a Special Resolution based on the explanatory statement annexed to the notice for such motion indicating the justification for extension of appointment beyond seventy years.

4. The Company shall not appoint a person or continue the directorship of any person as a Non-Executive Director who has attained the age of seventy-five years unless a Special Resolution is passed to that effect, in which case the explanatory statement annexed to the notice for such motion shall indicate the justification for appointing such a person.

> Evaluation:

The performance evaluation shall be carried out as given below:-

Performance Evaluation by

Of Whom

Nomination and Remuneration Committee

- Every Director''s performance

Board of Directors

- All Directors excluding the Director being evaluated

- Board and Committees as a whole

Independent Directors

- Review the performance of Non-independent Directors and Chairperson of the Company

The NRC shall carry out evaluation of performance of every Director at regular interval (yearly).

> Removal:

Due to reasons for any disqualification mentioned in the Act, the Rules made thereunder or under any other applicable provisions of the Act, Rules and Regulations, the NRC may recommend, to the Board with reasons recorded in writing, removal of a Director, KMP or Senior Management subject to the provisions and compliance of the said Act, Rules and Regulations.

> Retirement:

The Director, KMP and Senior Management shall retire as per the applicable provisions of the Act and the

prevailing internal policy of the Company. The Board will have the discretion to retain the Director, KMP, Senior

Management in the same position/ remuneration or otherwise even after attaining the retirement age, for the

benefit of the Company.

Provisions relating to remuneration of Managerial Person, KMP and Senior Management> General:

1. The remuneration/ compensation/ commission etc. to Managerial Person, KMP and Senior Management will be determined by the NRC and recommended to the Board for approval. The remuneration/ compensation/ commission etc. shall be subject to the prior/ post approval of the Shareholders of the Company and such other approval, wherever required.

2. The remuneration and commission to be paid to Managerial Person shall be as per the statutory provisions of the Act and the Rules made thereunder and Listing Regulations, for the time being in force.

3. Increments to the existing remuneration/ compensation structure may be recommended by the NRC to the Board which should be within the slabs approved by the Shareholders in the case of Managerial Person.

4. The remuneration structure will have a right mix of guaranteed (fixed) pay, performance pay and long term variable pay based on business growth and other factors such as growth in Shareholder''s value to ensure that it is competitive and reasonable.

5. Where any insurance is taken by the Company on behalf of its Managerial Person, KMP and Senior Management for indemnifying them against any liability, the premium paid on such insurance shall not be treated as part of the remuneration payable to any such personnel.

> Remuneration to Managerial Person, KMP and Senior Management:1. Fixed pay:

Managerial Person, KMP and Senior Management shall be eligible for a monthly remuneration as may be approved by the Board on the recommendation of the NRC in accordance with the statutory provisions of the Act and the rules made there under for the time being in force. The break-up of the pay scale and quantum of perquisites including employer''s contribution to Provident Fund(s), pension scheme(s), medical expenses, club fees etc. shall be decided and approved by the Board on the recommendation of the NRC and approved by the shareholders and such other approval, wherever required.

2. Variable Pay:

The Company may in its discretion structure any portion of remuneration to link rewards to corporate and individual performance, fulfilment of specified improvement targets or the attainment of certain financial or other objectives set by the Board. The amount payable shall be based on performance against pre-determined financial and non-financial metrics.

3. Provision for excess remuneration:

If, in any financial year, the Company has no profits or its profits are inadequate, the Company shall pay remuneration to its Managerial Person in accordance with the provisions of Schedule V of the Act. If any Managerial Person draws or receives, directly or indirectly by way of remuneration any such sums in excess of the limits prescribed under the Act or without such approval, wherever required, he/ she shall refund such sums to the Company and until such sum is refunded, hold it in trust for the Company.

Provided that the Company may waive the recovery of any sum refundable to it after passing of the Special Resolution within two years from the date the sum becomes refundable.

> Remuneration to Non-Executive/ Independent Director:1. Remuneration/ Commission:

The remuneration/ commission, if any, shall be in accordance with the statutory provisions of the Act and the Rules made thereunder for the time being in force.

2. Sitting Fees:

The Non-Executive/ Independent Director may receive remuneration by way of fees for attending meetings of the Board or Committee thereof.

Provided that the amount of such fees shall not exceed the maximum amount as provided in the Act, per meeting of the Board or Committee or such amount as may be prescribed from time to time.

3. Limit of Remuneration/ Commission:

Remuneration/ Commission may be paid to Non-Executive/ Independent Directors within the monetary limit approved by the Shareholders, subject to the limit not exceeding 1% of the net profits of the Company computed as per the applicable provisions of the Act. If, in any financial year, the Company has no profits or its profits are inadequate, the Company shall pay remuneration to its Non-Executive/Independent Directors in accordance with the provisions of Schedule V of the Act. If any Non-Executive/ Independent Directors draws or receives, directly or indirectly by way of remuneration any such sums in excess of the limits prescribed under the Act or without such approval, wherever required, he/ she shall refund such sums to the Company, within two years or such lesser period as may be allowed by the Company, and until such sum is refunded, hold it in trust for the Company.

Provided that the Company may waive the recovery of any sum refundable to it after passing of the Special Resolution within two years from the date the sum becomes refundable.

PERFORMANCE EVALUATION

Pursuant to the provisions of Section 134(3)(p) and Schedule IV of the Act and in accordance to Regulation 17(10) and 25(4) of the Listing Regulations, the Board has carried out the annual performance evaluation of the Board as a whole, various Committees of the Board and of the Individual Directors. The performance evaluation of the Independent Directors was carried out by the entire Board.

The Board and the NRC reviewed the performance of the Individual Directors based on various aspects which, inter alia, included transparency, performance, the level of participation in the Board Meetings, inputs provided to executive management on matters of strategic importance, familiarization with the business of the Company and its subsidiaries, etc.

In a separate meeting of Independent Directors, performance of Non-Independent Directors and the Chairman of the Company was evaluated, taking into account the views of the Executive Directors and Non-Executive Directors. The same was discussed in the Board meeting that followed the meeting of Independent Directors, at which the performance of the Board, its committee and Individual Directors was also discussed.

The outcome of the performance evaluation of the Board for the year under review was discussed by the NRC and the Board at their respective meetings. All the Directors expressed satisfaction with the evaluation process.

SUCCESSION PLAN

The Board of Directors has satisfied itself that plans are in place for ensuring orderly succession for appointments to the Board and to Senior Management.

PARTICULARS OF EMPLOYEES

Disclosure with respect to the percentage increase in remuneration, ratio of the remuneration of each Director and Key Managerial Person to the median employee''s remuneration and other details in terms of sub-section 12 of Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, has been appended as "Annexure 2" to the this Report.

In terms of first proviso to Section 136 of the Act, the Report and Financial Statements are being sent to the Members and others entitled thereto, excluding the information on employees'' particulars as required pursuant to the provisions of Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The said information pertaining to the names and other particulars of employees will be available for inspection by Members in electronic mode. Members can inspect the same up to the date of AGM, by sending an e-mail to the Company at [email protected]. Any Member interested in obtaining a copy of the said Annexure may write to the Company Secretary & Compliance Officer in this regard.

The Board of Directors affirms that the remuneration paid to Senior Management of the Company is as per the Nomination and Remuneration Policy of the Company.

GOVERNANCEReport on Corporate Governance

A detailed Report on Corporate Governance in terms of Schedule V of the Listing Regulations for FY 2022-23, is forming part of the Annual Report.

Further, a Certificate from M/s. Singhi & Co., the Statutory Auditors of the Company confirming compliance with conditions of Corporate Governance as stipulated in Regulation 34 read with Schedule V to the Listing Regulations is annexed to the Report on Corporate Governance.

Code of Conduct

Pursuant to Regulation 26(3) of the Listing Regulations, all the Directors & Senior Management of the Company have affirmed compliance with the Code of Conduct of the Company.

Vigil Mechanism/ Whistle Blower Policy

Pursuant to the provisions of Section 177(9) of the Act read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules 2014 and Regulation 22 of the Listing Regulations, the Company has framed Vigil Mechanism/ Whistle

Blower Policy ("Policy") to enable directors and employees to report genuine concerns or grievances, significant deviations from key management policies and report any non-compliance and wrong practices, e.g., unethical behavior, fraud, violation of law, inappropriate behavior/ conduct etc.

The functioning of the Vigil Mechanism is reviewed by the Audit Committee from time to time. None of the Directors or employees have been denied access to the Audit Committee of the Board.

The objective of this mechanism is to maintain a redressal system which can process all complaints concerning questionable accounting practices, internal controls, or fraudulent reporting of financial information.

The Policy framed by the Company is in compliance with the requirements of the Act & Listing Regulations and is available on the website of the Company and can be accessed at https://www.motilaloswalgroup.com/Downloads/IR/785307607MOFSL Vigil-MechanismWhistle-Blower-Policy.pdf.

Prevention of Sexual Harassment of Women at Workplace

The Company has zero tolerance on sexual harassment at workplace. The Company has formulated a Policy on Prevention of Sexual Harassment at Workplace and has also constituted an Internal Complaints Committee ("ICC") as stipulated by the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder. Appropriate reporting mechanisms are in place for ensuring protection against Sexual Harassment and the right to work with dignity.

During the year under review, ICC had received one complaint relating to sexual harassment, which has been investigated and closed.

RISK MANAGEMENT

Risk is an integral and unavoidable component of business. Though risks cannot be eliminated, an effective risk management program ensures that risks are reduced, avoided, mitigated or shared.

The Company realizes the importance of Enterprise Risk Management ("ERM") framework and had taken early initiatives towards its implementation. The Company has also formulated group Risk Management Policy.

A systematic approach has been adopted that originates with the identification of risk, categorization and assessment of identified risk, evaluating effectiveness of existing controls and building additional controls to mitigate risk and monitoring the residual risk through effective Key Risk Indicators ("KRI"). The implementation is being carried out in phased manner with the objective to encompass the entire line of businesses.

Effective ERM involves a robust implementation of three lines of defense - first line of defense is the front-line employees, the second line of defense is the risk and compliance function and the third line of defense is external and internal auditors. To build an effective risk culture significant effort has been made towards robustness of these lines of defense.

Further, pursuant to Regulation 21 of the Listing Regulations, the Board of Directors have also constituted the Risk Management Committee of the Board, details of which are mentioned in the Report on Corporate Governance. The composition of the Committee is in conformity with the Listing Regulations, with majority of members being Directors of the Company. The Risk Management Committee is, inter alia, authorized to monitor and review the risk assessment, mitigation and risk management plans for the Company from time to time and report the existence, adequacy and effectiveness of the above process to the Audit Committee/ Board on a periodic basis.

Further, in terms of SEBI Circular SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/24 dated February 06, 2023 the Company is identified as Qualified Stock Broker and accordingly, the Board at its Meeting held on April 27, 2023 has taken necessary steps to ensure compliance with respect to enhanced obligations and responsibilities provided in aforesaid Circular.

In the opinion of the Board, there are no material elements of risks threatening the existence of the Company.

The details of composition of the Risk Management Committee and its terms of reference, is provided in the Report on Corporate Governance which forms part of this Annual Report.

BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT

In terms of Regulation 34(2)(f) of the Listing Regulations, the initiatives taken by the Company from an Environmental, Social, Governance & Sustainability perspective are provided in the Business Responsibility & Sustainability Report ("BRSR") which is presented in a separate section and forms part of the Annual Report and is also uploaded on the website of the Company at www.motilaloswalgroup.com. BRSR includes details on performance against the nine principles of the National Guidelines on Responsible Business Conduct and a report under each principle, which is divided into essential and leadership indicators is also part of it.

The Business Responsibility & Sustainability Committee overviews the BRSR and policies as may be required from time to time.

STATUTORY AUDITORS

Pursuant to the provisions of Section 139 of the Act read with the Companies (Audit and Auditors) Rules, 2014, M/s. Singhi & Co., Chartered Accountants were appointed as the Statutory Auditors of the Company by the Members at the 17th AGM of the Company held on July 11,2022 for a term of 5 (five) years commencing from 17th AGM till the conclusion of 22nd AGM of the Company.

The Auditors have confirmed that they are not disqualified to continue as Auditors and are eligible to hold office as Auditors of the Company.

The Audit Committee reviews the independence and objectivity of the Auditors and the effectiveness of the Audit process.

Mr. Nikhil Singhi, Partner, M/s. Singhi & Co., Chartered Accountants, Statutory Auditors of the Company, has signed the Audited Financial Statements of the Company.

Statutory Auditors'' Report

The Statutory Auditors'' Report issued by M/s. Singhi & Co., Chartered Accountants for the year under review does not contain any qualification, reservations, adverse remarks or disclaimer. The Notes to the Accounts referred to in the Auditors'' Report are self-explanatory and therefore do not call for any further clarifications under Section 134(3)(f) of the Act. Further, pursuant to Section 143(12) of the Act, the Statutory Auditors of the Company have not reported any instances of frauds committed in the Company by its officers or employees.

SECRETARIAL AUDITOR

In terms of the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board had appointed M/s. U. Hegde & Associates, Practicing Company Secretaries, as Secretarial Auditor to undertake the Secretarial Audit of the Company for the FY 2022-23.

Secretarial Audit and Annual Secretarial Compliance Report

The Secretarial Audit Report issued by the Secretarial Auditor has been appended as "Annexure 3" to this Report.

Pursuant to the provisions of Regulation 24A of the Listing Regulations, Annual Secretarial Compliance Report for the financial year ended March 31,2023 was obtained from M/s. U. Hegde & Associates, Practicing Company Secretaries.

There is no adverse remark, qualifications or reservation in the Secretarial Audit Report and Annual Secretarial Compliance Report.

Secretarial Audit of Material Subsidiaries

In terms of Regulation 24A of the Listing Regulations, the Secretarial Audit Report of material subsidiaries i.e. MOHFL, MOAMC & MOFL received from their respective Secretarial Auditors for the FY 2022-23 are available at website of the Company at www.motilaloswalgroup.com.

MAINTENANCE OF COST RECORDS & COST AUDIT

The Company is engaged in carrying Stock Broking & related activities and hence provisions related to maintenance of cost records and requirement of cost audit as prescribed under the provisions of Section 148(1) of the Act are not applicable.

INTERNAL AUDITORS

The Board at its Meeting held on April 28, 2022 had appointed M/s. Aneja Associates, Chartered Accountants, as Internal Auditors for the FY 2022-23 to conduct the internal audit of the various areas of operations and records of the Company. Further, the Board at its Meeting held on April 27, 2023 has appointed M/s. BDO India LLP and M/s. M S K C & Associates, Chartered Accountants as the Internal Auditors for a term of 5 (five) years commencing from FY 2023-24 to FY 2027-28.

The periodic reports of the said internal auditors are regularly placed before the Audit Committee along with the comments of the management on the action taken to correct any observed deficiencies on the working of the various departments.

INTERNAL FINANCIAL CONTROLS

The Internal Financial Controls with reference to the Financial Statements as designed and implemented by the Company are adequate. The Internal Financial Control procedure adopted by the Company are adequate for safeguarding its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information. During the year under review, the Internal Financial Controls were operating effectively and no material or serious observations were received from the Auditors of the Company for inefficiency or inadequacy of such controls.

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

A) Conservation of energy: Information on Conservation of energy as required under Section 134(3)(m) of the Act read with the Rules made thereunder is not applicable to the Company and hence, no annexure forms part of this report.

B) Technology Absorption: The Management keeps itself abreast of the technological advancements in the industry and has adopted the best in class technology across business, operations and functions.

The Company is accelerating the technology and digital transformation on continuous basis. It stays invested in creating a seamless digital and customer experience across digital touchpoints. Your Company''s focused approach is to keep on enhancing its in-house tech capabilities.

For detailed information on initiatives taken by the Company for technology absorption, please refer Business Responsibility & Sustainability Report forming part of the Annual Report.

C) Foreign Exchange Earnings and Outgo: Please refer Note No. 47 to the Standalone Financial Statements, forming part of the Annual Report.

DISCLOSURE OF DETAILS OF UNCLAIMED EQUITY SHARES IN THE SUSPENSE ACCOUNT:

Pursuant to Regulation 34 and Schedule V of the Listing Regulations, the Company reports the following details in respect of unclaimed equity shares that are kept in Specific Demat Accounts of Motilal Oswal Financial Services Limited:

Particulars

Number of Shareholders

Number of Equity Shares

Aggregate Number of Shareholders and the outstanding shares in the suspense account lying as on April 1, 2022

5

575

Number of Shareholders who approached the Company for transfer of shares from suspense account during the year

-

-

Number of Shareholders to whom shares were transferred from the suspense account during the year

-

-

Aggregate Number of Shareholders and the outstanding shares in the suspense account lying as on March 31, 2023

5

575

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

Pursuant to the provisions of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, the shares in respect of which the dividend is unpaid/ unclaimed for seven consecutive years are required to be transferred to Investor Education and Protection Fund ("IEPF") after giving an opportunity to the Shareholders to claim the said unpaid/ unclaimed dividend.

Accordingly, the Company issued the reminder letters to such Shareholders to claim the dividend and also published the notice to such effect in the leading newspapers in English and Regional Language having wide circulation and accordingly informed them that in the event of failure to claim said divided, the unpaid/ unclaimed dividend along with shares pertaining to unpaid/ unclaimed dividend would be transferred to IEPF.

Subsequently, the Company has transferred unpaid/ unclaimed dividend, amounting to ? 2,44,174/- on June 24, 2022, ? 1,09,144/- on August 25, 2022, ? 2,72,370/- on March 29, 2023 and 1,381 Equity Shares to IEPF on December 07, 2022 and 204 Equity Shares on April 20, 2023. The details of such shares are available on the website of the Company at https://www.motilaloswalgroup.com/Investor-Relations/Disclosures/IEPF. The concerned Shareholders are requested to claim the said shares by directly approaching IEPF Authority.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(5) of the Act, the Board of the Company, to the best of their knowledge, belief, ability and explanations obtained by them, confirm that:

1) in the preparation of the Annual Financial Statements for the financial year ended March 31,2023, the applicable Accounting Standards have been followed along with proper explanation relating to material departures, if any;

2) 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 31,2023 and of the profit of the Company for that period;

3) the Directors have taken proper and sufficient care for the maintenance of 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;

4) the Directors have prepared the annual accounts on a going concern basis;

5) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating effectively;

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

CORPORATE SOCIAL RESPONSIBILITY

The Company recognizes its responsibility towards society and strongly intends to contribute towards development of knowledge based economy.

In terms of the provisions of Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Company has constituted a Corporate Social Responsibility ("CSR") Committee. The composition and terms of reference of the CSR Committee is provided in the Report on Corporate Governance forming part of the Annual Report.

The Company has also formulated a CSR Policy which is available on the website of the Company at https://www.motilaloswalgroup.com/Downloads/IR/187119518002.-CSR-Policy April-27.-2023.pdf

Further, the detailed CSR initiatives undertaken by the Company are available on the website of the Company at https://www.motilaloswal.com/foundation/.

The Company''s CSR activities are mainly focused on Education. The social contribution made by the Company is covered in ESG section forming part of this Annual Report. We assure you that your Company will continue to work towards its social commitment and contribute in nation building with the same zeal.

The Company has made contribution through Motilal Oswal Foundation, a not-for-profit charitable company incorporated under Section 25 of the Companies Act, 1956 to various other not-for-profit organisations.

An Annual Report on CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014 has been appended as "Annexure 4" to this Report. Further, the Annual

Action Plan on CSR activities for FY 2023-24 is also uploaded on the website of the Company at https://www.motilaloswalgroup.com/Downloads/IR/257509837MOFSL-CSR-Annual-Action-Plan-2023-24.pdf.

PARTICULARS OF LOANS, GUARANTEES, INVESTMENTS AND SECURITIES

Particulars of loans given, investments made or guarantees or securities provided and the purpose for which the loan or guarantee or security is proposed to be utilised by the recipient of loan or guarantee or security pursuant to Section 186 of the Act are given under Notes to Accounts annexed to Standalone Financial Statements for the year ended March 31, 2023 and the same forms part of this Annual Report.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

In line with the requirements of the Act and Listing Regulations and pursuant to the recommendation of the Audit Committee, the Company has formulated the policy on Materiality and dealing with Related Party Transactions ("RPT Policy") which is available on the Company''s website and can be accessed at https://www.motilaloswalgroup.com/Downloads/IR/235673531Policy-on-Materiality-and-Dealing-with-Related-Party-Transactions.pdf.

All related party transactions entered into during the FY 2022-23 were on an arm''s length basis and in the ordinary course of business.

All related party transactions were placed before the Audit Committee for prior approval. Prior omnibus approval of the Audit Committee is obtained for the transactions which are of unforeseen or repetitive in nature. The details of all such related party transactions entered into pursuant to the omnibus approval of the Committee, were placed before the Audit Committee on a quarterly basis for its review.

Further, the Company has also obtained approval of the Members of the Company for entering into material related party transaction with MOHFL.

Pursuant to Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014, there are no transactions to be reported under Section 188(1) of the Act. Accordingly, the disclosure of Related Party Transactions, as required in Form AOC-2 is not applicable to the Company.

Details of transactions, contracts and arrangements entered into with related parties by the Company, during FY 2022-23, is given under Note no. 51 to the Standalone Financial Statements, which forms part of the Annual Report.

The particulars of loans/ advances, etc., required to be disclosed in the Annual Accounts of the Company pursuant to Para A of Schedule V of the Listing Regulations are furnished in the Notes to Accounts annexed to Standalone Financial Statements, which forms part of the Annual Report.

COMPLIANCE WITH SECRETARIAL STANDARD

The Company has followed the applicable Secretarial Standards, i.e. SS-1 and SS-2, issued by the Institute of Company Secretaries of India, relating to ''Meetings of the Board of Directors'' and ''General Meetings'' respectively.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

During the year under review, there were no significant and material orders passed by the regulators or courts or tribunals that would impact the going concern status of the Company and its future operations.

OTHER DISCLOSURES

Your Directors state that no disclosure or reporting is required in respect of the following matters as there were no transactions on these matters during the year under review:

> Issue of equity shares with differential rights as to dividend, voting or otherwise.

> There has been no change in the nature of business of the Company.

> Mr. Motilal Oswal, Managing Director and Chief Executive Officer of the Company draws remuneration from MOHFL, Subsidiary Company in capacity of Interim Managing Director. Further, Whole-time Directors of the Company do not receive any remuneration or commission from any of the subsidiaries.

> There are no proceedings, either filed by the Company or filed against the Company, pending under the Insolvency and Bankruptcy Code, 2016 as amended, before National Company Law Tribunal or other courts during the FY 2022-23.

> There was no instance of one-time settlement with any Bank or Financial Institution.

ACKNOWLEDGEMENT

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, Regional Directors, Registrar of Companies, 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. The 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 under review.

For and on behalf of the Board of Motilal Oswal Financial Services Limited

Sd/-

Raamdeo Agarawal Chairman

(DIN:00024533)

Place: Mumbai Date: April 27, 2023


Mar 31, 2022

The Directors of your Company have the pleasure in presenting the Seventeenth Board''s Report together with the Audited Financial Statements for the Financial Year ended March 31, 2022.

FINANCIAL RESULTS

The summary of the Company''s financial performance, both on a consolidated and standalone basis, for the Financial Year ("FY") 2021-22 as compared to the previous FY 2020-21 is given below:

(? in Lakhs)

Particulars

Consolidated

Standalone

2021-22

2020-21

2021-22

2020-21

Total Revenue

4,31,983

3,63,412

2,61,144

2,22,462

Profit before Interest, Depreciation, Taxation and exceptional items

2,14,226

2,02,431

1,06,848

1,12,822

Interest

47,819

43,028

16,558

12,770

Depreciation

4,826

4,752

3,876

3,676

Profit before Taxation and exceptional items

1,61,581

1,54,652

86,413

96,436

Add/(Less): Exceptional Items

-

(8,810)

-

(8,810)

Profit before taxation

Add/(Less) : Provision for Taxation

1,61,581

1,45,842

86,413

87,626

Current Tax

23,588

15,849

14,807

8,985

Deferred Tax

7,109

10,914

1,123

3,832

Less : Tax for earlier year (s)

(189)

(1,217)

(199)

(258)

Tax Expenses

30,508

25,546

15,731

12,559

Profit after Taxation from Continuing Operations

1,31,073

1,20,296

70,682

75,066

Share of Profit from Associates and Joint Ventures (net of taxes)

172

6,177

-

-

Profit for the Period

Add/Less: Other Comprehensive Income (OCI)

1,31,245

1,26,473

70,682

75,066

Acturial gain/(loss)

176

311

(27)

163

Fair value gain/(loss) of investment held through FVOCI

4,488

32,706

2,324

27,411

Tax on OCI

558

3,825

(259)

(3,177)

Total Comprehensive Income Net profit attributable to:

1,35,351

1,55,665

72,720

99,464

Owners of parent

1,35,081

1,55,233

-

-

Non-controlling interests

269

431

-

-

Add: Balance brought forward from previous year

3,65,525

2,15,349

2,52,746

1,87,606

Profit Available for appropriation

1,35,087

1,54,252

70,682

75,066

Less: Appropriations

(11,636)

(4,075)

-

-

Transfer to Statutory Reserve

(2,729)

(659)

-

-

Transfer to Capital redemption Reserve

-

-

-

-

Interim Dividend and Final Dividend

(8,673)

(2,894)

(7,365)

(3,081)

Tax on Buyback

-

(2,820)

-

(2,820)

Significant changes due to business combination

-

-

(9,277)

(4,025)

Dividend Distribution Tax

-

-

-

-

Expected Credit Loss Impairment reserve

-

-

-

-

Transfer to General Reserve

-

-

-

Transfer to Minority interest

(137)

(67)

-

-

Balance of Profit carried forward

4,88,977

3,65,526

3,06,787

2,52,746

FINANCIAL PERFORMANCE Standalone

The standalone revenues in FY 2021-22 stood at ?2,61,144 Lakhs vs ?2,22,462 Lakhs in FY 2020-21. Total expenses (excluding interest and depreciation) for the year came in at ?1,54,297 Lakhs which increased by 41% over previous year. People cost increased by 37% YoY to ?52,888 Lakhs. Operating expenses increased by 44% YoY to ?75,461 Lakhs. The profit before depreciation, interest and taxation (EBITDA) stood at ?1,06,847 Lakhs. Reported net profit for the year came in at ? 70,682 Lakhs.

Consolidated

The consolidated revenues for the year were ? 4,31,983 Lakhs for the year under review, an increase of 19% as compared to the previous year.

The average daily traded volumes (ADTO) for the equity markets during FY 2021-22 stood at ?69.5 Lakh Crores, up 161% YoY from ?26.7 Lakh Crores in FY 2020-21. The overall Cash market ADTO reported growth of 12% YoY at ? 72,443 Crores in FY 2021-22. Within derivatives, futures volume increased 9% YoY to ? 1.2 Lakh Crores while options rose 171% YoY to ? 67.6 Lakh Crores. Amongst cash market participants, retail constituted 51% of total cash volume, institution 20% and prop 28%. The proportion of DII in the cash market was 8%. In FY 2021-22, a record of 3.5 Crores new demat accounts were added as against 1.4 Crores in FY 2020-21. The number of demat accounts stood at 8.97 Crores in FY 2021-22, a growth of 63% YoY.

Key Highlights

- Capital market business (Broking IB) income grew 48% YoY to ? 2,537 Crores.

- The Company had 28.5 Lakhs retail broking and distribution clients growing at a CAGR of 28% from FY 2017-18 to FY 2021-22. Client acquisition stood at 8.8 Lakhs during the year, up 43% YoY.

- Our financial product distribution AUM was ?16,764 Crores as of March 2022, up 31% YoY.

- Investment banking business made a strong turnaround in business with 13 deals completed in FY 2021-22. The team have a rich pipeline and continues to engage on a wide cross-section of mandated transactions across capital markets and advisory.

- Asset management income increased by 17% YoY to ?622 Crores, as compared to last year. Total assets under management across mutual funds, PMS and AIF was ?49,020 Crores, up 13% YoY. Within this, the mutual fund AUM was up 18% YoY to ?30,600 Crores, while Alternates AUM (PMS and AIF) stood at ?18,177 Crores.

- The private equity income stood at ?254 Crores, up 154% YoY. The income from wealth management business stood at ?194 Crores, up 53% YoY. The wealth management AUM for FY 2021-22 was at ?34,389 Crores, up 36% YoY.

- Housing finance related gross income of ?528 Crores, down 3% YoY. HFC loan book was ?3,485 Crores, as of March 2022. Disbursements stood at ?643 Crores, up 136% YoY.

In line with the long term strategy to grow RoE sustainably, Motilal Oswal Financial Services Limited (MOFSL) had made strategic allocation of capital to long term RoE enhancing opportunities like Motilal Oswal Home Finance Limited, and sponsor commitments to our mutual fund and private equity funds. As of March 2022, our total quoted equity investments stood at ?2,676 Crores.

Total expenses (excluding interest and depreciation) for the year at ?2,17,757 Lakhs registered an increase of 35% over previous year. Profit before depreciation, interest and taxation (EBITDA) stood at ?2,14,226 Lakhs, an increase of 6% from the previous year. Profit for the year increased by 9% to ?1,31,073 Lakhs.

The detailed results of operations of the Company are given in the Management Discussion & Analysis forming part of this Report.

FUTURE OUTLOOK

Our strategy to diversify our business model towards more annuity sources of earnings continues to deliver positive results. The annuity nature of earnings in the businesses like asset based businesses and housing finance business has brought in visibility of our earnings. Our businesses have delivered strong and sustainable performance in FY2022. Our brand is now being recognized across each of our businesses. Each of our business segments offers huge headroom for growth and we are well placed to benefit from this.

CONSOLIDATED FINANCIAL STATEMENT

As per Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") and applicable provisions of the Companies Act, 2013 ("the Act") read with the Rules made thereunder (as amended from time to time), the Consolidated Financial Statement of the Company for the FY 2021-22 have been prepared in compliance with applicable Indian Accounting Standards and on the basis of Audited Financial Statement of the Company and its subsidiaries, as approved by the respective Board of Directors ("Board").

The Consolidated Financial Statement together with the Auditors'' Report is forming part of this Annual Report.

MOFSL “HIGHEST EVER" OR “LARGEST EVER"

The diversified business model of the Group has led to the largest ever profitability in the FY 2021-22. The key highlights for FY 2021-22 are as follows:> Highest ever Annual Revenue and Profit

> Highest ever AMC, Distribution, Wealth and DP AUM

> Highest ever Fund Raise by PE & RE

> Highest ever AMC and Wealth Business Annual Profit

> Highest ever Broking ADTO & Revenue

> Highest ever New Client Acquisition in Broking

> Highest ever NIM led by lowest ever CoF for Home Finance

ENVIRONMENT, SOCIAL AND GOVERNANCE (ESG) INITIATIVES

Since your Company strongly believes in raising corporate transparency, strengthening risk management, promoting stakeholder engagement, improving communications with Stakeholders, your Company has undertaken various Environment, Social and (Corporate) Governance (ESG) initiatives during FY 2021-22. The separate disclosure on ESG initiatives and contribution by the Company in battling against COVID-19 is forming part of this Annual Report.

INFORMATION ON THE STATE OF AFFAIRS OF THE COMPANY

The Information on the affairs of the Company has been given in Management Discussion & Analysis Report forming part of this Annual Report.

CORPORATE RESTRUCTURING OF GROUP ENTITIES

In order to consolidate the fund management business of the Group, demonstrating the Promoter Group''s direct commitment etc., the Board of Directors (the "Board") of the Company on December 24, 2020 and members of the Company on December 16, 2021, considered and approved the Scheme of Arrangement between Passionate Investment Management Private Limited ("PIMPL'' or "the Transferor Company 1") and MOPE Investment Advisors Private Limited ("MOPE" or "the Transferee Company 2" or "the Demerged Company 1" or "the Transferor Company 3") and Motilal Oswal Real Estate Investment Advisors Private Limited ("MORE" or "the Transferor Company 2") and Motilal Oswal Real Estate Investment Advisors II Private Limited ("MORE II" or "the Demerged Company 2" or "the Transferor Company 4") and MO Alternate Investment Advisors Private Limited (erstwhile Motilal Oswal Fincap Private Limited) ("MO Alternate" or "the Resulting Company") and Motilal Oswal Financial Services Limited ("MOFSL'' or "the Transferee Company 1" or "the Holding Company of the Resulting Company" or "the Company") and their respective shareholders ("the Scheme") under Sections 230-232 of the Act involving the following:-

i. Amalgamation of Passionate Investment Management Private Limited with Motilal Oswal Financial Services Limited and consequent issue of equity shares by Motilal Oswal Financial Services Limited;

ii. Amalgamation of Motilal Oswal Real Estate Investment Advisors Private Limited with MOPE Investment Advisors Private Limited;

iii. Post the amalgamation as stated in clause (ii) above, demerger of the Fund Management Undertaking (defined as Fund Management Undertaking 1 in the Scheme) of MOPE Investment Advisors Private Limited into MO Alternate Investment Advisors Private Limited and consequent issue of equity shares by Motilal Oswal Financial Services Limited to the shareholders of MOPE Investment Advisors Private Limited;

iv. Post the demerger as stated in clause (iii) above, amalgamation of MOPE Investment Advisors Private Limited with Motilal Oswal Financial Services Limited and consequent issue of equity shares by Motilal Oswal Financial Services Limited;

v. Post the amalgamation as stated in clause (iv) above, demerger of the Fund Management Undertaking (defined as Fund Management Undertaking 2 in the Scheme) of Motilal Oswal Real Estate Investment Advisors II Private Limited into MO Alternate Investment Advisors Private Limited and consequent issue of equity shares by Motilal Oswal Financial Services Limited to the shareholders of Motilal Oswal Real Estate Investment Advisors II Private Limited;

vi. Post the demerger as stated in clause (v) above, amalgamation of Motilal Oswal Real Estate Investment Advisors II Private Limited with Motilal Oswal Financial Services Limited and consequent issue of equity shares by Motilal Oswal Financial Services Limited;

vii. Various other matters consequential or otherwise integrally connected herewith.

After obtaining all the statutory and regulatory approvals including No Objection Certificate from Stock Exchanges, your Company had filed an application with Hon''ble National Company Law Tribunal, Mumbai Bench ("NCLT") to said effect.

The Hon''ble NCLT vide its Order dated March 11, 2022 has approved the Scheme of Arrangement between Group Entities. Further, the Scheme was made effective from March 30, 2022. The appointed date was April 1,2020.

Theaforesaidrestructuringwillnotleadtoanychangeincontrolandthebriefpresentationexplainingtheentirearrangement and copy of the Hon''ble NCLT order is uploaded on the website of the Company at www.motilaloswalgroup.com.

MATERIAL CHANGES AND COMMITMENTS, AFFECTING THE FINANCIAL POSITION OF THE COMPANY

Pursuant to the Corporate Restructuring of Group Entities under the Scheme of Arrangement which was made effective from March 30, 2022, the updated/revised Standalone Financial Statements (Amalgamated) of the Company as on March 31, 2021 have been approved by the Audit Committee and Board at their respective Meeting held on March 30, 2022 for the limited purpose of filing return with Tax Authorities.

Except as stated above, there have been no other material changes and commitments, affecting the financial position of the Company, which have occurred between the end of the financial year of the Company and the date of this Report.

DIVIDEND

In terms of Regulation 43A of Listing Regulations, the Board of Directors of the Company has approved the Dividend Distribution Policy ("Policy") in line with the requirements of the Listing Regulations and it is available on the website of the Company and can be accessed at https://www.motilaloswalgroup.com/Downloads/IR/206776066708.-Dividend-Distribution-Policy.pdf.

During the year under review, the Board of Directors of the Company, based on the parameters laid down in the Dividend Distribution Policy, at its meeting held on January 27, 2022 had declared and paid an Interim Dividend of f7/- per Equity Share for the FY 2021-22, out of the profits of the Company for the third quarter and nine months ended December 31,2021, on 14,71,76,074 Equity Shares having face value of ?1/- each, aggregating to ?103,02,32,518/-.

Further, the Board of Directors of the Company at its meeting held on April 28, 2022 have recommended a Final Dividend of ?3/- per Equity Share having face value of ?1/- each for FY 2021-22, subject to approval of the Members of the Company at the ensuing Annual General Meeting ("AGM").

The Final Dividend, if approved at the ensuing AGM, would be paid to those Members whose name appears in the Register of Members / Beneficial Holders as on July 4, 2022.

TRANSFER TO RESERVES

The Board of your Company decided not to transfer any amount to the General Reserve and retain the entire amount of profit under Retained Earnings.

Further, pursuant to the Corporate Restructuring of Group Entities under Scheme of Arrangement which was made effective from March 30, 2022, the Statutory Reserve of Passionate Investment Management Private Limited ("PIMPL'' or Transferor Company 1) of ?5,232.75 Lakhs was transferred to General Reserve of the Company.

CREDIT RATING

During the year under review, the Credit Rating agencies have reaffirmed/ assigned the below credit ratings:

Rating Agency

Instrument Type

Size of Issue (fin Crore)

Rating/Outlook

Rating

Action

ICRA Limited

Commercial Papers

1,500

[ICRA]A1

Assigned

1,000

[ICRA]A1

Reaffirmed

Long-term Principal Protected Market Linked Debentures

100

PP-MLD[ICRA]AA

(Stable)

Reaffirmed

Non-Convertible Debentures

300

[ICRA]AA (Stable)

Reaffirmed

Bank Lines - Unallocated

300

[ICRA]AA (Stable)

Reaffirmed

Rating Agency

Instrument Type

Size of Issue (fin Crore)

Rating/Outlook

Rating

Action

India Rating & Research Private Limited

Commercial Papers

250

IND A1

Assigned

2,250

IND A1

Affirmed

Non-Convertible Debentures

300

IND AA/Stable

Affirmed

Principal Protected Market-Linked Debentures

300

INDPP-MLD

AAemr/Stable

Affirmed

CRISIL Limited

Commercial Papers

1,750

CRISIL A1

Reaffirmed

The above ratings indicate a very strong degree of safety regarding timely servicing of financial obligations.

SHARE CAPITAL

During the year under review, the Company has allotted 5,74,100 Equity Shares having face value of f1/- each to eligible employees upon exercise of the vested options granted to the said employees under various Employee Stock Option Schemes of the Company.

Further, pursuant to Corporate Restructuring of Group Entities under Scheme of Arrangement, the Company has allotted 8,82,42,508 Equity Shares to the shareholders of Transferor Companies i.e. Passionate Investment Management Private Limited ("PIMPL''), MOPE Investment Advisors Private Limited ("MOPE") and Motilal Oswal Real Estate Investment Advisors II Private Limited ("MORE II") as per the treatment provided in the Scheme. This includes cancellation of 8,63,74,063 Equity Shares held by PIMPL against issue of equal number of new Equity Shares of the Company to the shareholders of PIMPL and issue of 18,68,445 new Equity Shares of the Company to the shareholders of MOPE & MORE II.

Consequently, the paid up Share Capital of the Company as at March 31, 2022 stood at ?14,90,62,919/- (Rupees Fourteen Crore Ninety Lakhs Sixty Two Thousand Nine Hundred Nineteen only) equity shares having face value of f1/- each.

The Authorised Share Capital of the Company as on March 31,2021 was ?149,00,00,000/- divided into 92,50,00,000 Equity Shares of ?1/- each and 56,50,000 Preference Shares of ?100/- each. Pursuant to the Order dated March 11, 2022 passed by the Hon''ble NCLT approving the Scheme of Arrangement, the Authorized Share Capital of the Company stands increased to ?1,74,00,00,000/- divided into 1,12,00,00,000 Equity Shares of ?1/- each aggregating to ?1,12,00,00,000/- and 62,00,000 Preference Shares of ?100/- each aggregating to ?62,00,00,000/- .

EMPLOYEE STOCK OPTION SCHEMES

The disclosures required to be made under the SEBI (Share Based Employee Benefits) Regulations, 2014 ("ESOP Regulations") (as amended from time to time), are available on the website of the Company at www.motilaloswalgroup.com.

Further, the Company confirms that all the Employee Stock Options Schemes of the Company are falling under direct route and not trust route and accordingly the provisions related to trust route as specified in the ESOP Regulations are not applicable to the Company. Further, all the permanent employees (except the persons as mentioned in the regulations) of the Company, its holding company and its subsidiary companies are entitled to participate in said schemes of the Company. Further, the Company confirms that it has not granted employee stock options equal to or exceeding one percent of the issued capital of the Company at the time of grant of stock options to any employees of the Company/Holding Company/Subsidiary Company.

The Secretarial Auditor of the Company, M/s. U. Hegde and Associates, have certified that the Company''s above-mentioned Schemes have been implemented in accordance with the ESOP Regulations and the Resolutions passed by the Members for the respective Schemes.

The Employee Stock Option Schemes are administered by the Nomination and Remuneration Committee of the Board of the Company, in accordance with the applicable ESOP Regulations.

DEBENTURES

During the year under review, the Company has issued and allotted 780 Non-Convertible Debentures ("NCDs") of ?10 Lakhs each aggregating to ?7800 Lakhs. Accordingly, 3,780 NCDs of ?10 Lakhs each aggregating to ?37,800 Lakhs are outstanding as on March 31,2022.

The Company has been servicing payment of the interest on the due dates.

The details of the Debenture Trustee of the Company is as under:

Beacon Trusteeship Limited

4C & D, Siddhivinayak Chambers, Gandhi Nagar, Opp. MIG Cricket Club, Bandra (East), Mumbai 400 051, Tel: 91 (0)22 2655 8759, 91 955 544 9955 Website: www.beacontrustee.co.in

DEPOSITS

During the year under review, the Company has not accepted or renewed any amount falling within the purview of provisions of Section 73 of the Act read with the Companies (Acceptance of Deposits) Rules, 2014 (as amended).

The particulars of loans/advances, etc., required to be disclosed in the Annual Accounts of the Company pursuant to Para A of Schedule V of the Listing Regulations are furnished in the Notes to Accounts annexed to Standalone Financial Statements which forms part of this Annual Report.

ANNUAL RETURN

Pursuant to the provisions of Section 134(3) and 92(3) of the Act read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, the Annual Return of the Company for the financial year ended March 31, 2022 is uploaded on website of the Company at https://www.motilaloswalgroup.com/Investor-Relations/Financial-Report/ Financial-Statement-of-Subsidiaries

SUBSIDIARY COMPANIES

The Company along with its subsidiaries, offers a diversified range of financial products and services such as Loan against Securities, Investment Activities, Private Wealth Management, Broking and Distribution, Asset Management Business, Housing Finance, Institutional Equities, Private Equity and Investment Banking.

As of March 31, 2022, the Company had 17 subsidiaries (including step down subsidiaries). Pursuant to Corporate Restructuring of Group Entities under the Scheme of Arrangement becoming effective from March 30, 2022, MOPE Investment Advisors Private Limited, Motilal Oswal Real Estate Investment Advisors Private Limited and Motilal Oswal Real Estate Investment Advisors II Private Limited were amalgamated and ceased to be subsidiaries of the Company. There are no associate companies or joint venture within the meaning of Section 2(6) of the Act as on March 31,2022.

Further, pursuant to the provisions of Section 136(1) of the Act, the financial statement for the period ended March 31, 2022 of each subsidiary of the Company is available on the website of the Company at www.motilaloswalgroup.com.

As required under Regulation 16(1)(c) and 46 of the Listing Regulations, the Board of Directors has approved the Policy on Determination of Material Subsidiaries ("Policy"). The said policy is available on the website of the Company and can be accessed at https://www.motilaloswalgroup.com/Downloads/IR/212618793Policy-on-Determination-of-Material-Subsidiaries.pdf Accordingly, Motilal Oswal Home Finance Limited ("MOHFL''), Motilal Oswal Asset Management Company Limited ("MOAMC") and Motilal Oswal Finvest Limited ("MOFL'') are material subsidiaries of the Company.

Investment in Subsidiaries

During the year under review, the Company has acquired:

> 172,65,446 equity shares having face value of ?10/- each of Motilal Oswal Finvest Limited (Wholly Owned Subsidiary);

> 30,00,000 equity shares having face value of ?10/- each of Glide Tech Investment Advisory Private Limited (Wholly Owned Subsidiary);

> 96,00,000 equity shares having face value of ?10/- each of Motilal Oswal Finsec IFSC Limited (Wholly Owned Subsidiary);

> 92,24,259 equity shares having face value of ?1/- each of Motilal Oswal Asset Management Company Limited (Wholly Owned Subsidiary).

Performance and Financial Position of Subsidiaries

As required under Rule 5 and Rule 8(1) of the Companies (Accounts) Rules, 2014, a report on the highlights of performance of subsidiaries, associates and joint venture companies and their contribution to the overall performance of the Company has been appended as "Annexure 1" to the Board''s Report. Pursuant to the provisions of Section 129(3) of the Act, a statement containing salient features of financial statement of subsidiaries in Form AOC-1 is annexed to the Consolidated Financial Statement of this Annual Report. Your Company will also E-mail the copy of separate audited financial statement in respect of each of the subsidiary company upon request by any Member of the Company interested in obtaining the same. In accordance with provisions of Section 136 of the Act, the separate audited financial statement in respect of each of the subsidiary company is also available on the website of your Company at www.motilaloswalgroup.com. These documents will be available for inspection in electronic mode. Members can inspect the same up to the date of AGM, by sending an e-mail to the Company at [email protected].

BOARD, COMMITTEES OF THE BOARD & KEY MANAGERIAL PERSONNELComposition of Board

The composition of the Board of Directors of the Company is in accordance with the provisions of Section 149 of the Act and Regulation 17 of the Listing Regulations, with an optimum combination of Executive, Non-Executive and Independent Directors.

The Board of the Company has 10 (Ten) Directors comprising of 1 (One) Non-Executive Chairman, 1 (One) Managing Director & Chief Executive Officer, 2 (Two) Whole-time Directors, 1 (One) Non-Executive Director and 5 (Five) Independent Directors. The complete list of Directors of the Company has been provided in the Report on Corporate Governance forming part of this Annual Report.

During the year under review, there was no change in the composition of the Board of Directors of the Company.

Director(s) liable to retire by rotation

Section 152 of the Act provides that unless the Articles of Association provide for the retirement of all directors at every AGM, not less than two-third of the total number of directors of a public company (excluding the Independent Directors) shall be persons whose period of office is liable to determination by retirement of directors by rotation. Accordingly, Mr. Raamdeo Agarawal and Mr. Navin Agarwal will retire by rotation at the ensuing AGM and being eligible, have offered themselves for re-appointment. The details of Mr. Raamdeo Agarawal and Mr. Navin Agarwal are included in the notice of the AGM of the Company.

The resolutions for the appointment/re-appointment of all the Directors proposed for Shareholders'' approval along with their brief profiles as detailed in the Notice of AGM would be placed for your approval.

Composition and Meetings of Board of Directors & Committee(s)

The Composition of Board and Committee(s) as on March 31,2022 and the details of the Meetings of the Board and Committee(s) of the Company held during FY2021-22 are disclosed in the Report on Corporate Governance forming part of this Annual Report.

During the year under review, all the recommendations/submissions made by the Audit Committee and other Committees of the Board were accepted by the Board.

Separate Meeting of Independent Directors

As stipulated in the Code of Conduct for Independent Directors under the Act and the Listing Regulations, a separate Meeting of the Independent Directors of the Company was held on April 29, 2021 to review the performance of NonIndependent Directors (including the Chairman) and the Board as a whole. The Independent Directors also assessed the quality, quantity and timeliness of flow of information between the Company Management and the Boards which is necessary to effectively and reasonably perform and discharge their duties.

Declaration by Independent Directors

Pursuant to Section 149(7) of the Act, Regulation 16(1)(b) and Regulation 25(8) of the Listing Regulations, the Independent Directors have provided a declaration to the Board of Directors that they meet the criteria of Independence as prescribed in the Act and the Listing Regulations, and are not aware of any situation which exists or may be reasonably anticipated that could impair or impact their ability to discharge duties as an Independent Director with an objective independent judgement and without any external influence. Further, veracity of the above declarations has been assessed by the Board, in accordance with Regulation 25(9) of the Listing Regulations.

The Board is of the opinion that the Independent Directors of the Company hold highest standards of integrity and possess requisite expertise and experience (including the proficiency) required to fulfill their duties as Independent Directors.

Further, in terms of Section 150 of the Act read with Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, as amended by Ministry of Corporate Affairs (''MCA''), all the Independent Directors have confirmed that they have registered themselves with databank maintained by The Indian Institute of Corporate Affairs (''IICA''). These declarations/confirmations have been placed before the Board. The Independent Directors are also required to undertake online proficiency self-assessment test conducted by IICA within a period of 2 (Two) years from the date of inclusion of their names in the data bank, unless they meet the criteria specified for exemption.

Mrs. Divya Momaya and Ms. Swanubhuti Jain have passed online proficiency self-assessment test conducted by IICA, while Mr. C. N. Murthy and Mr. Chandrashekhar Karnik are not required to pass the online proficiency selfassessment test pursuant to the exemption provided under first proviso of Rule 6(4) of the Companies (Appointment and Qualification of Directors) Rules, 2014. However, Mr. Pankaj Bhansali has confirmed to undertake the said online proficiency self-assessment within prescribed timeline.

As at March 31, 2022, the Company has the following Key Managerial Personnel:

1) Mr. Motilal Oswal - Managing Director & Chief Executive Officer

2) Mr. Ajay Menon - Whole-time Director

3) Mr. Rajat Rajgarhia- Whole-time Director

4) Mr. Shalibhadra Shah - Chief Financial Officer

5) Mr. Kailash Purohit - Company Secretary & Compliance Officer

FAMILIARIZATION PROGRAMMES

The Company has formulated a policy on ''familiarisation programme for independent directors''. Accordingly, upon appointment of an Independent Director, the appointee is given a formal Letter of Appointment, which inter alia, explains the role, function, duties and responsibilities expected as a Director of the Company.

Further, the Company also familiarize the Independent Directors with the Company, their roles, responsibilities in the Company, nature of industry in which the Company operates, business model of the Company, various businesses in the group etc. The Director is also explained in detail the compliance required from him under the Act and the Listing Regulations. Further, on an ongoing basis as a part of Agenda of Board / Committee Meetings, presentations are regularly made to the Independent Directors on various matters inter-alia covering the business strategies, management structure, management development, quarterly and annual results, budgets, review of Internal Audit, risk management framework, operations of subsidiaries and associates.

The Policy on familiarisation programme for independent directors along with the details of the familiarization Programmes are available on the website of the Company and can be accessed at https://www.motilaloswalgroup. com/Downloads/IR/33122429Familiarization-Programmes-for-Independent-Director 2022.pdf

COMPANY''S POLICY ON DIRECTOR''S APPOINTMENT AND REMUNERATION

Section 178 of the Act and Regulation 19 read with Part D of Schedule II of the Listing Regulations, as amended from time to time, requires the Nomination and Remuneration Committee ("NRC") to formulate a Policy relating to the remuneration for the Directors, Key Managerial Personnel ("KMP"), Senior Management and other employees of the Company and recommend the same for approval of the Board.

Accordingly, in compliance to the aforesaid provisions, the Nomination and Remuneration Policy of the Company is available on the website of the Company and can be accessed at https://www.motilaloswalgroup.com/Downloads/ IR/724496156Nomination-and-Remuneration-Policy.pdf. The salient features of the Policy are given below:-

Appointment criteria and qualifications:

1. The Committee shall identify and ascertain the integrity, qualification, expertise and experience of the person for appointment as Director, KMP or Senior Management and recommend to the Board his / her appointment.

2. A person should possess adequate qualification, expertise and experience for the position he / she is considered for appointment. The Committee has discretion to decide whether qualification, expertise and experience possessed by a person are sufficient/ satisfactory for the concerned position.

3. The Company shall not appoint or continue the employment of any person as Managing Director/Whole-time Director/Manager who has attained the age of seventy years.

Provided that the term of the person holding this position may be extended beyond the age of seventy years with the approval of shareholders by passing a special resolution based on the explanatory statement annexed to the notice for such motion indicating the justification for extension of appointment beyond seventy years.

> Evaluation:

The performance evaluation shall be carried out as given below:-

Performance Evaluation by

Of Whom

Nomination and Remuneration Committee

- Every Director''s performance

Board of Directors

- Board as a whole and Committees of Board

- All Directors excluding the Director being evaluated

Independent Directors

- Non - Independent Directors

- Chairman of the Company

- Board as a whole

The Committee shall carry out evaluation of performance of every Director at regular interval (yearly).

> Removal:

Due to reasons for any disqualification mentioned in the Act, rules made there under or under any other applicable Act, rules and regulations, the Committee may recommend, to the Board with reasons recorded in writing, removal of a Director, KMP or Senior Management subject to the provisions and compliance of the said Act, rules and regulations.

> Retirement:

The Director, KMP and Senior Management shall retire as per the applicable provisions of the Act and the prevailing internal policy of the Company. The Board will have the discretion to retain the Director, KMP, Senior Management in the same position / remuneration or otherwise even after attaining the retirement age, for the benefit of the Company.

PROVISIONS RELATING TO REMUNERATION OF MANAGERIAL PERSON, KMP AND SENIOR MANAGEMENT> General:

1. The remuneration / compensation / commission etc. to Managerial Person, KMP and Senior Management will be determined by the Committee and recommended to the Board for approval. The remuneration / compensation / commission etc. shall be subject to the prior/post approval of the shareholders of the Company and such other approval, wherever required.

2. The remuneration and commission to be paid to Managerial Person shall be as per the statutory provisions of the Act and Listing Regulations, and the rules made there under for the time being in force.

3. Increments to the existing remuneration / compensation structure may be recommended by the Committee to the Board which should be within the slabs approved by the Shareholders in the case of Managerial Person.

4. The remuneration structure will have a right mix of guaranteed (fixed) pay, pay for performance and long term variable pay based on business growth and other factors such as growth in shareholder value to ensure that it is competitive and reasonable.

5. Where any insurance is taken by the Company on behalf of its Managerial Person, KMP and for Senior Management for indemnifying them against any liability, the premium paid on such insurance shall not be treated as part of the remuneration payable to any such personnel.

> Remuneration to Managerial Person, KMP and Senior Management:1. Fixed pay:

Managerial Person, KMP and Senior Management shall be eligible for a monthly remuneration as may be approved by the Board on the recommendation of the Committee in accordance with the statutory provisions of the Act and the rules made there under for the time being in force. The break-up of the pay scale and quantum of perquisites including employer''s contribution to Provident Fund(s), pension scheme(s), medical expenses, club fees, etc. shall be decided and approved by the Board on the recommendation of the Committee and approved by the shareholders and such other approval, wherever required.

2. Variable Pay:

The Company may in its discretion structure any portion of remuneration to link rewards to corporate and individual performance, fulfilment of specified improvement targets or the attainment of certain financial or other objectives set by the Board. The amount payable shall be based on performance against predetermined financial and non-financial metrics.

3. Provision for excess remuneration:

If, in any financial year, the Company has no profits or its profits are inadequate, the Company shall pay remuneration to its Managerial Person in accordance with the provisions of Schedule V of the Act. If any Managerial Person draws or receives, directly or indirectly by way of remuneration any such sums in excess of the limits prescribed under the Act or without such approval, wherever required, he/she shall refund such sums to the Company and until such sum is refunded, hold it in trust for the Company.

> Remuneration to Non-Executive/Independent Director:1. Remuneration/Commission:

The remuneration/commission, if any, shall be in accordance with the statutory provisions of the Act and the rules made there under for the time being in force.

2. Sitting Fees:

The Non-Executive/Independent Director may receive remuneration by way of fees for attending meetings of Board or Committee thereof.

Provided that the amount of such fees shall not exceed the maximum amount as provided in the Act, per meeting of the Board or Committee or such amount as may be prescribed from time to time.

3. Limit of Remuneration/Commission:

Remuneration/Commission may be paid to Non-Executive Directors within the monetary limit approved by shareholders, subject to the limit not exceeding 1% of the net profits of the Company computed as per the applicable provisions of the Act.

PERFORMANCE EVALUATION

Pursuant to the provisions of Section 134(3)(p) and Schedule IV of the Act and in accordance to Regulation 17(10) and 25(4) of the Listing Regulations, the Board has carried out the annual performance evaluation of the Board as a whole, various Committees of the Board and of the individual Directors. The performance evaluation of the Independent Directors was carried out by the entire Board. The Directors expressed their satisfaction with the evaluation process.

The Board and the Nomination and Remuneration Committee reviewed the performance of the individual Directors on the basis of the criteria such as Transparency, Performance, etc.

In a separate meeting of Independent Directors, performance of Non-Independent Directors, performance of the Board as a whole and performance of the Chairman was evaluated, taking into account the views of the executive directors and non-executive directors. The same was discussed in the Board meeting that followed the meeting of independent directors, at which the performance of the Board, its committee and individual Directors was also discussed.

The outcome of the performance evaluation of the Board for the year under review was discussed by the NRC and the Board at their respective meetings. All Directors expressed satisfaction with the evaluation process.

PARTICULARS OF EMPLOYEES

Disclosure with respect to the percentage increase in remuneration, ratio of the remuneration of each Director and Key Managerial Person to the median employee''s remuneration and other details in terms of sub-section 12 of Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are forming part of this report and has been appended as "Annexure 2" to the Board''s Report.

In terms of first proviso to Section 136 of the Act, the Report and Financial Statements are being sent to the Members and others entitled thereto, excluding the information on employees'' particulars as required pursuant to provisions of Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

In accordance with the provisions of Section 197 of the Act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the annexure pertaining to the names and other particulars of employees will be available for inspection in electronic mode. Shareholders can inspect the same up to the date of AGM, by sending an e-mail to the Company at [email protected]. Any shareholder interested in obtaining a copy of the said Annexure may write to the Company Secretary & Compliance Officer in this regard.

The Board of Directors affirms that the remuneration paid to Senior Management of the Company is as per the Nomination and Remuneration Policy of the Company.

GOVERNANCEReport on Corporate Governance

A detailed Report on Corporate Governance in terms of Schedule V of the Listing Regulations for FY 2021-22, is forming part of this Annual Report.

Further, a Certificate from M/s. Singhi & Co., the Statutory Auditors of the Company confirming compliance of conditions of Corporate Governance as stipulated in Regulation 34 read with Schedule V to the Listing Regulations is annexed to the Report on Corporate Governance.

Code of Conduct

Pursuant to Regulation 26(3) of the Listing Regulations, all the Directors & Senior Management of the Company have affirmed compliance with the Code of Conduct of the Company.

Vigil Mechanism/Whistle Blower Policy

Pursuant to the provisions of Section 177(9) of the Act read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 and Regulation 22 of the Listing Regulations (as amended from time to time), the Company has framed Vigil Mechanism/Whistle Blower Policy ("Policy") to enable directors and employees to report genuine concerns or grievances, significant deviations from key management policies and reports of any non-compliance and wrong practices, e.g., unethical behavior, fraud, violation of law, inappropriate behavior /conduct etc.

The functioning of the Vigil Mechanism is reviewed by the Audit Committee from time to time. None of the Directors or employees have been denied access to the Audit Committee of the Board.

The objective of this mechanism is to maintain a redressal system which can process all complaints concerning questionable accounting practices, internal controls, or fraudulent reporting of financial information.

The Policy framed by the Company is in compliance with the requirements of the Act and Listing Regulations. The same is available on the website of the Company and can be accessed at https://www.motilaloswalgroup.com/ Downloads/IR/1677814951Vigil-MechanismWhistle-Blower-Policy.pdf

Prevention of Sexual Harassment of Women at Workplace

The Company has in place a Policy for Prevention, Prohibition and Redressal of Sexual Harassment at Workplace. Appropriate reporting mechanisms are in place for ensuring protection against Sexual Harassment and the right to work with dignity.

Further, the Company has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 to redress complaints received regarding sexual harassment.

During the year under review, no complaints in relation to sexual harassment at workplace have been reported.

RISK MANAGEMENT

The Company realizes the importance of Enterprise Risk Management ("ERM") framework and had taken early initiatives towards its implementation. The Company has also formulated group risk management policy.

A systematic approach has been adopted that originates with the identification of risk, categorization and assessment of identified risk, evaluating effectiveness of existing controls and building additional controls to mitigate risk and monitoring the residual risk through effective Key Risk Indicators ("KRI"). The implementation is being carried out in phased manner with the objective to encompass the entire line of businesses.

Effective ERM involves a robust implementation of three lines of defense - first line of defense is the front-line employees, the second line of defense is the risk and compliance function and the third line of defense is external and internal auditors. To build an effective risk culture significant effort has been made towards robustness of these lines of defense.

Further, pursuant to Regulation 21 of the Listing Regulations, the Board of Directors have also constituted the Risk Management Committee of the Board, details of which are mentioned in the Corporate Governance Report. The

composition of the Committee is in conformity with the Listing Regulations, as amended, with all members being Directors of the Company. The Risk Management Committee is, inter alia, authorized to monitor and review the risk assessment, mitigation and risk management plans for the Company from time to time and report the existence, adequacy and effectiveness of the above process to the Audit Committee/Board on a periodic basis.

In the opinion of Board, there are no elements of risks threatening the existence of the Company.

The details of composition of the Risk Management Committee and its terms of reference, is provided in Corporate Governance Report which forms part of this Annual Report.

BUSINESS RESPONSIBILITY REPORT

In terms of Regulation 34(2)(f) of the Listing Regulations, as amended from time to time, top 1000 listed entities based on their market capitalization as on March 31, are required to prepare a Business Responsibility Report ("BRR") forming part of this Annual Report.

Accordingly, the Company has prepared the BRR describing the initiatives taken by the Board from an Environmental, Social and Governance perspective. The Business Responsibility Committee overviews the BRR and frames and overviews such polices as may be required from time to time.

The said BRR is forming part of this Annual Report and is also uploaded on the website of the Company at www.motilaloswalgroup.com.

STATUTORY AUDITORS

Pursuant to the provisions of Section 139(2) of the Act read with rules made thereunder, the Members at their Twelfth AGM held on July 27, 2017, had appointed M/s. Walker Chandiok & Co. LLP, Chartered Accountants, ("Walker") as the Statutory Auditors of the Company for a term of five years, i.e. from the conclusion of Twelfth AGM till the conclusion of the Seventeenth AGM.

In order to attain the synergy at group level, Walker was also appointed as Statutory Auditor of material subsidiaries of the Company namely Motilal Oswal Home Finance Limited (MOHFL), Motilal Oswal Asset Management Company Limited (MOAMC) and Motilal Oswal Finvest Limited (MOFL) and other group entities for the term of 5 years.

Pursuant to the "Guidelines for Appointment of Statutory Auditors (SAs) of NBFCs (including HFCs)" issued by RBI, NBFCs are required to appoint new Statutory Auditors of their respective company for the period of 3 years (including existing period). Further, as per the said guidelines, the same Auditor cannot be appointed for two RBI regulated entities within same Group and every Statutory Auditor can conduct audit of only 8 NBFCs/HFCs in aggregate. Further, Walker had completed 3 years as Statutory Auditors in MOFL and 2 years in MOHFL.

In view of the aforesaid, Walker had resigned from MOFL due to completion of 3 years and has expressed their inability to continue as Statutory Auditors of MOHFL also for balance period of 1 year due to limitation of audit of 8 NBFCs.

Further, due to aforesaid regulatory restrictions, Group was also required to appoint 2 separate auditors for MOHFL and MOFL.

Further, pursuant to the provisions of Listing Regulations, the Statutory Auditor of the Company shall undertake a limited review of the audit of all the entities/companies whose accounts are to be consolidated with the Company and at least eighty percent of each of the consolidated revenue, assets and profits, respectively, shall have been subject to audit or in case of unaudited results, subjected to limited review.

In view of the above, the Management evaluated various audit firms and decided to discontinue the audit services of Walker across the Group pursuant to the mutual agreement between the Company and Walker. Accordingly, Walker agreed to resign as Statutory Auditors of the Company w.e.f. closure of business hours of August 12, 2021.

Consequent to resignation of Walker as Statutory Auditors, the Board of Directors of the Company, ("the Board"), at it meeting held on August 13, 2021, on the recommendation of the Audit Committee of the Board, resolved to fill the casual vacancy caused by the resignation of Walker with the appointment of M/s. Singhi & Co., Chartered Accountants as Statutory Auditors of the Company, subject to approval of the members, to hold office till the conclusion of ensuing AGM.

Further, the members of the Company approved the appointment of M/s. Singhi & Co., Chartered Accountants as Statutory Auditors of the Company through Postal Ballot on October 19, 2021 to hold office till the conclusion of 17th AGM of the Company.

Since the term of appointment of M/s. Singhi & Co., Chartered Accountants is expiring at the ensuing 17th AGM of the Company, a resolution seeking approval of the Members for appointment of M/s. Singhi & Co., Chartered Accountants as Statutory Auditors of the Company for a term of five years commencing from 17th AGM till conclusion of 22nd AGM of the Company, is included in the Notice of the ensuing AGM.

M/s. Singhi & Co., has furnished a certificate of their eligibility and consent under Section 139 and 141 of the Act read with the Companies (Audit and Auditors) Rules 2014 for their continuance as the Auditors of the Company for the FY 2022 - 23. In terms of the Listing Regulations, the Auditors have confirmed that they hold a valid certificate issued by the Peer Review Board of the ICAI.

Mr. Nikhil Singhi, Partner, Singhi & Co., Chartered Accountants, Statutory Auditors, has signed the Audited Financial Statements of the Company.

Statutory Auditors'' Report

The Statutory Auditors'' Report issued by M/s. Singhi & Co., Chartered Accountants for the year under review does not contain any qualification, reservations or adverse remarks. The Notes to the Accounts referred to in the Auditors'' Report are self-explanatory and therefore do not call for any further clarifications under Section 134(3)(f) of the Act. Further, pursuant to Section 143(12) of the Act, the Statutory Auditors of the Company have not reported any instances of frauds committed in the Company by its officers or employees.

SECRETARIAL AUDITOR

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (as amended from time to time), the Company had appointed M/s. U. Hegde and Associates, Practicing Company Secretaries, to undertake the Secretarial Audit of the Company for the FY 2021-22.

Secretarial Audit & Annual Secretarial Compliance Report

The Secretarial Audit Report issued by the Secretarial Auditor has been annexed to this Board''s Report as "Annexure 3".

Pursuant to the provisions of Regulation 24A of the Listing Regulations, Annual Secretarial Compliance Report for the Financial Year ended March 31, 2022 was obtained from M/s. U. Hegde and Associates, Practicing Company Secretaries.

There is no adverse remark, qualifications or reservation in the Secretarial Audit Report and Secretarial Compliance Report.

Secretarial Audit of Material Subsidiaries

In terms of Regulation 24A of Listing Regulations, the Secretarial Audit Report of material subsidiaries i.e. MOHFL, MOAMC & MOFL for the FY 2021-22 are made available at website of the Company at www.motilaloswalgroup.com.

INTERNAL AUDITORS

The Board of Directors at their meeting held on April 29, 2021 had appointed M/s. Aneja Associates, Chartered Accountants, as Internal Auditors of the Company for the FY 2021-22. The Internal Auditors have been periodically reporting to the Audit Committee with regards to their audit process and key audit findings during the year.

MAINTENANCE OF COST RECORDS & COST AUDIT

The Company is engaged in carrying Stock Broking & related activities and hence provisions related to maintenance of cost records and requirement of cost audit as prescribed under the provisions of Section 148(1) of the Act are not applicable.

INTERNAL FINANCIAL CONTROLS

The Internal Financial Controls with reference to financial statements as designed and implemented by the Company are adequate. The Internal Financial Control procedure adopted by the Company are adequate for safeguarding its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information. During the year under review, the Internal Financial Controls were operating effectively and no material or serious observation has been received from the Auditors of the Company for inefficiency or inadequacy of such controls.

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

Pursuant to the provisions of Section 134(3) (m) of the Act read with Rule 8(3)(A) and 8(3)(B) of Companies (Accounts) Rules, 2014, the initiatives taken by the Company for conservation of energy and technology absorption are provided in Business Responsibility Report annexed to this Report.

Details of the foreign exchange earnings and outgo are given in the Note No. 47 to the Standalone Financial Statement of the Company.

DISCLOSURE OF DETAILS OF UNCLAIMED EQUITY SHARES IN THE SUSPENSE ACCOUNT:

Pursuant to Regulation 34 and Schedule V of Listing Regulations, the Company reports the following details in respect of unclaimed equity shares that are kept in Specific Demat Accounts of Motilal Oswal Financial Services Limited:-

Particulars

Number of Shareholders

Number of Equity Shares

Aggregate Number of Shareholders and the outstanding shares in the suspense account lying as on April 1, 2021

5

575

Number of Shareholders who approached the Company for transfer of shares from suspense account during the year

-

-

Number of Shareholders to whom shares were transferred from the suspense account during the year

-

-

Aggregate Number of Shareholders and the outstanding shares in the suspense account lying as on March 31, 2022

5

575

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

Pursuant to the provisions of Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, the shares in respect of whom the dividend is unpaid/unclaimed for seven consecutive years are required to be transferred to Investor Education and Protection Fund ("IEPF") after giving an opportunity to shareholders to claim the said unpaid/unclaimed dividend.

Accordingly, the Company issued the reminder letters to such shareholders to claim the dividend and also published the notice to such effect in the leading newspaper in English and Regional Language having wide circulation and accordingly informed them that in the event of failure to claim said divided, the unpaid/unclaimed dividend along with shares pertaining to unpaid/unclaimed dividend would be transferred to IEPF.

Subsequently, the Company has transferred unpaid/ unclaimed dividend, amounting to ?8,06,495/- on September 17, 2021 and 14 Equity Shares to IEPF on October 19, 2021. The details of such shares are available on the website of the Company at https://www.motilaloswalgroup.com/Investor-Relations/Disclosures/IEPF. The concerned shareholders are requested to claim the said shares by directly approaching IEPF Authority.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(5) of the Act in relation to the Audited Financial Statements of the Company for the year ended March 31, 2022, the Board of Directors confirm that, to the best of its knowledge and belief:

1) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

2) 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 31,2022 and of the profit of the Company for that period;

3) the Directors have taken proper and sufficient care for the maintenance of 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;

4) the Directors have prepared the annual accounts on a going concern basis;

5) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating effectively;

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

CORPORATE SOCIAL RESPONSIBILITY

The Company recognizes the responsibilities towards society and strongly intends to contribute towards development of knowledge based economy.

In accordance with the requirements of the provisions of Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Company has constituted a Corporate Social Responsibility ("CSR") Committee. The composition and terms of reference of the CSR Committee is provided in the Corporate Governance Report forming part of this Annual Report.

The Company has also formulated a CSR Policy which is available on the website of the Company at https://www. motilaloswalgroup.com/Downloads/IR/200139696902.-CSR-Policy.pdf

Further, the detailed CSR initiatives undertaken by the Company are available at www.motilaloswal.com/foundation/

In the wake of COVID-19 pandemic, the Company extended and will continue to extend full support and co-operation in adhering to the directives issued by the Government and steps taken by the Government to overcome the crisis. The social contribution made by the Company is covered in ESG section forming part of this Annual Report. We assure you that your Company will continue to work towards its social commitment and contribute in nation building with the same zeal.

The Company has made contribution through Motilal Oswal Foundation, a not-for-profit charitable company incorporated under Section 25 of the Act and to various other not-for-profit organisations.

An Annual Report on activities as required under Companies (Corporate Social Responsibility Policy) Rules, 2014 (as amended from time to time) has been appended as "Annexure 4" to the Board''s Report. Further, the Annual Action Plan on CSR activities for FY 2022-23 is also uploaded on the website of the Company at https://www.motilaloswalgroup.com/Downloads/IR/100662267501.-Policy-on-Materiality-and-Dealing-with-Related-Party-Transactions 27.01.2022 final.pdf

PARTICULARS OF LOANS, GUARANTEES, INVESTMENTS AND SECURITIES

Particulars of loans given, investments made or guarantees or securities provided and the purpose for which the loan or guarantee or security is proposed to be utilised by the recipient of loan or guarantee or security pursuant to Section 186 of the Act are given under Notes to Accounts annexed to Standalone Financial Statements for the year ended March 31,2022 and the same forms part of this Annual Report.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

InlinewiththerequirementsoftheActandListingRegulationsandpursuanttotherecommendationoftheAuditCommittee, the Company has formulated the policy on Materiality and dealing with Related Party Transactions ("RPT Policy") which is available on the Company''s website and can be accessed at https://www.motilaloswalgroup.com/Downloads/ IR/100662267501 .-Policy-on-Materiality-and-Dealing-with-Related-Party-Transactions 27.01.2022 final.pdf

All related party transactions entered into during the FY 2021-22 were on an arm''s length basis and in the ordinary course of business.

All Related Party Transactions were placed before the Audit Committee for prior approval. Prior omnibus approval of the Audit Committee is obtained for the transactions which are of unforeseen or repetitive in nature. The details of all such related party transactions entered into pursuant to the omnibus approval of the Committee, were placed before the Audit Committee on a quarterly basis for its review.

Pursuant to Section 134 (3) (h) of the Act read with Rule 8 (2) of the Companies (Accounts) Rules, 2014, there are no transactions to be reported under Section 188 (1) of the Act. Accordingly, the disclosure of Related Party Transactions, as required in Form AOC-2 is not applicable to the Company.

Details of transactions, contracts and arrangements entered into with related parties by the Company, during FY 2021-22, is given under Notes to Accounts annexed to Financial Statements, which forms part of this Annual Report.

COMPLIANCE WITH SECRETARIAL STANDARD

The Company has followed the applicable Secretarial Standards, i.e. SS-1 and SS-2, relating to ''Meetings of the Board of Directors'' and ''General Meetings'' respectively.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

During the year under review, there were no significant and material orders passed by the regulators or courts or tribunals that would impact the going concern status of the Company and its future operations.

Further, the Hon''ble NCLT, Mumbai Bench has vide its order dated March 11, 2022 approved the Scheme of Arrangement between group entities.

OTHER DISCLOSURES

Your Directors state that no disclosure or reporting is required in respect of the following matters as there were no transactions on these matters during the year under review:

> Issue of equity shares with differential rights as to dividend, voting or otherwise.

> There has been no change in the nature of business of the Company.

> Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries.

> There are no proceedings, either filed by the Company or filed against the Company, pending under the Insolvency and Bankruptcy Code, 2016 as amended, before National Company Law Tribunal or other courts during the year 2022.

> There was no instance of one-time settlement with any Bank or Financial Institution.

ACKNOWLEDGEMENT

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, Regional Directors, Registrar of Companies, 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. The 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 under review.

For and on behalf of the Board of Motilal Oswal Financial Services Limited

Sd/-

Raamdeo Agarawal

Chairman (DIN:00024533)

Place : Mumbai Date : April 28, 2022


Mar 31, 2019

Dear Members,

The Directors of your Company have the pleasure in presenting the Fourteenth Board''s Report together with the Audited Financial Statements for the financial year ended March 31, 2019.

Financial Results

The summary of the Company''s financial performance, both on a consolidated and standalone basis, for the Financial Year ("FY") 2018-19 as compared to the previous FY 2017-18 is given below:

(RS, in Lakhs)

Particulars

Consolidated

Standalone

2018-19

2017-18

2018-19

2017-18

Total Revenue

2,46,823

2,75,234

1,24,869

1,35,897

Profit before Interest, Depreciation, Taxation and exceptional items

92,519

1,39,500

51,579

62,812

Less: Interest

51,685

52,843

10,428

9,288

Depreciation

2,395

3,749

1,801

2,942

Profit before Taxation

38,439

82,908

39,350

50,582

Add/(Less): Provision for Taxation

Current Tax

18,426

18,797

8,914

8,590

Deferred Tax

(8,958)

1,984

(1,927)

1,287

Minimum Alternate Tax

-

-

-

530

Less: Tax for earlier year(s)

(61)

(195)

-

267

Total Tax Expenses

9,407

20,586

6,987

10,674

Profit after Tax from continuing operations

29,032

62,322

32,363

39,907

Loss from discontinuing operations before tax

-

-

(186)

892

Tax on discontinuing operations

-

-

54

312

Loss from discontinuing operations after tax

-

-

(132)

(580)

Share of profit from associates (net of taxes)

798

906

-

-

Profit for the period

29,830

63,228

32,231

39,327

Add/(Less): Other Comprehensive Income (OCI)

Actuarial gain/loss

190

617

34

472

Fair value gain/(loss) of investment held through FVOCI

(470)

10,470

(737)

10,470

Tax on OCI

(10)

35

74

84

Total Comprehensive Income

29,540

74,350

31,603

50,353

Net profit attributable to:

Owners of parent

29,397

62,228

-

-

Non-controlling interests

433

1,000

-

-

Add: Balance brought forward from previous year

1,86,081

1,39,282

1,67,001

1,30,336

Profit Available for appropriation

2,15,478

2,01,510

31,603

50,353

Less: Appropriations

Transfer to Statutory Reserve

(42)

(3,879)

-

(2,594)

Transfer to Capital Redemption Reserve

(245)

(191)

-

-

Interim Dividend/Proposed dividend

(5,956)

(5,789)

(12,375)

(10,210)

Dividend Distribution Tax

(2,733)

(966)

(1,048)

(884)

Minority Balance Sheet Effect

(928)

(264)

-

-

Balance of Profit carried forward

1,99,025

1,86,081

1,85,181

1,67,001

Financial Performance Standalone

The standalone revenues in FY19 stood at RS,1,249 crores vs RS,1,359 crores in FY18. Total expenses (before interest and depreciation) for the year came in at RS,733 crores which remained flattish over previous year. People cost increased marginally by 2.8% to RS,279 crores. Operating expenses declined by 4.5% to RS,318 crores. Other costs were RS,135 crores, an increase of 14% over previous year. The profit before depreciation, interest, exceptional items and taxation (EBITDA) stood at RS,516 crores. Reported net profit for the year came in at RS,322 crores.

Consolidated

The consolidated revenues for the year were RS,2,468 crores for the year FY 2018-19 under review, a decrease of 10% as compared to the previous year.

- Broking and related income remained flat YoY at RS,1,011 crores. The average daily traded volumes (ADTO) for the equity markets during FY2019 stood at RS,9.93 lakh crores, up 46% YoY from 6.79 lakh crores in FY2018. The overall Cash market ADTO reported growth of 7% YoY at RS,35,180 crores in FY2019. However, the absolute growth was affected due to decrease in delivery, which saw de-growth of 8.2% YoY to RS,8,854 crores v/s 26% growth in FY2018. Within derivatives, futures volume rose 9.7% YoY to RS,87,564 crores while options rose 54% YoY to RS,8.70 lakh crores. Amongst cash market participants, retail constitutes 53% of total cash volume, institution constitutes 25% of total cash volume and prop constitutes 20%. Within institution, DII cash volumes increased 6% YoY to 3,627 crores vs 51% in the previous year, reflecting the lull market sentiments during the year. The proportion of DII in the cash market remained constant at 10.4%.Due to our continued focus and investments into this business; we succeeded in capturing a larger chunk of the incremental volumes this year across both cash and derivatives. As of MaRs,2019, The company had more than 11,99,923 retail broking and distribution clients growing at a CAGR of 13% from FY15-19. The client acquisitions stood at ~1,50,000 during the year and has maintained the trend in last two years. Our Pan-India distribution reach stood at 2,500 business locations across 588 cities. The distribution revenues now contribute ~14.5% of the gross broking income with continual increase in distribution AUM. Our financial product distribution AUM was RS,9,572 crores as of MaRs,2019, up 27% YoY with net sales of RS,1,716 crores in FY2019.

- Investment banking fee saw a decline over the previous year, to RS,38 crores. The overall market volatility caused due to various issues like liquidity crisis, cross-border tensions, global trade war concerns kept the IPO & QIP transactions muted during the year. The pipeline remains robust and is likely to fructify with the ease in market.

- Asset management income continued to gain traction, increasing 9% YoY to RS,590 crores, as compared to last year. Total assets under management/advice across mutual funds, PMS and private equity businesses was RS,38,893 crores, up 9% YoY. Within this, the mutual fund AUM was up 10% YoY to RS,19,979 crores, PMS AUM was up 7% YoY to RS,15,996 crores and AIF AUM was RS,2,759 crores. The company saw increased mobilization into its open-end equity mutual fund products and PMS products.

- In the private equity business, the 4th real estate fund was launched with the target size of RS,1,200 crore and has made 2nd close at RS,850 crore. The private equity income excluding the share of lumpy profits on investment exits stood at RS,98 crores, up 92% YoY. The income from wealth management business stood at RS,47 crores, up 29% YoY. The wealth management AUM continued to attract assets with closing AUM for FY19 at RS,17,464 crores

- Housing finance related gross income largely remained flat at RS,648 crores as the efforts were concentrated to improve the processes and the structure of the business. The focus was more on improving the asset quality and risk management. HFC loan book was RS,4,357 crores, as of March, 2019

- Fund based income stood at RS,22 crores. In line with the long term strategy to grow Return on Equity sustainably, MOFSL made strategic allocation of capital to long term RoE enhancing opportunities like Aspire Home Finance and sponsor commitments to mutual fund and private equity funds of MOFSL group. The NBFC loan book, previously run from equity capital, is now being run as a spread business. The year also included profit earned on exits in the Private Equity fund in which MOFSL made sponsor commitments.

Total expenses (before interest and depreciation) for the year at RS,1,543 crores registered a 14% jump over previous year. People cost increased marginally by 2% to RS,502 crores. Operating expenses declined by 6% to RS,462 crores. Other costs were RS,515 crores, an increase of 74% over previous year. The profit before depreciation, interest, exceptional items and taxation (EBITDA) stood at RS,925 crores. Reported net profit for the year came in at RS,298 crores.

The detailed results of operations of the Company are given in the Management Discussion & Analysis forming part of the Annual Report.

Future Outlook

Our strategy to diversify our business model towards more annuity sources of earnings is showing definite results. The annuity nature of earnings in the new businesses like asset based businesses and housing finance business has brought in visibility of our earnings. Our businesses have stood strong in the volatile year of FY2019 while maintaining operating parameters. Our brand is now being recognized across each of our businesses. We achieved a 10% ROE in FY2019, and are well on course to improve this on a sustainable basis. The opportunity size in all our business segments is still huge, and our businesses are well placed to benefit from the growth potential they offer.

Consolidated Financial Statement

As per Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") and applicable provisions of the Companies Act, 2013 ("the Act") read with the Rules issued there under (as amended from time to time), the Consolidated Financial Statement of the Company for the FY 2018-19 have been prepared in compliance with applicable Indian Accounting Standards and on the basis of Audited Standalone Financial Statement of the Company and its subsidiaries, as approved by the respective Board of Directors.

The Consolidated Financial Statement together with the Auditors'' Report forms part of the Annual Report.

Information on the State of Affairs of the Company

The Information on the affairs of the Company is given in the Management Discussion & Analysis Report forming part of the Annual Report.

Material Changes and Commitments

During the year under review, pursuant to Order dated July 30, 2018, the Board of Directors of the Company at its meeting held on August 21, 2018 has made the Scheme of Amalgamation of Motilal Oswal Securities Limited ("Transferor Company/wholly owned subsidiary company") with Motilal Oswal Financial Services Limited ("Transferee Company/the Company") and their respective shareholders ("Scheme"), effective from August 21, 2018.

De-Registration as Non-Banking Financial Company

Prior to amalgamation, the Company was registered as Systemically Important Non-Banking Financial Company ("NBFC") under Section 45-IA of the Reserve Bank of India Act, 1934.

The Company had made an application for surrender of Certificate of Registration ("CoR") with Reserve Bank of India ("RBI") and transferred its lending business to Motilal Oswal Finvest Limited (erstwhile Motilal Oswal Capital Markets Limited) as a going concern via slump sale. The RBI vide its order dated March 14, 2019 approved the cancellation of CoR held by the Company.

Further, subsequent to Scheme becoming effective, the Company is undertaking the broking business as its principal business activity.

Dividend

The Board of Directors of the Company has approved the Dividend Distribution Policy ("Policy") in line with the requirements of Listing Regulations (as amended from time to time). The Policy is appended as "Annexure 1" to the Annual Report and is also been uploaded on the Company''s website at http://www.motilaloswaleroup.com/Downloads/IR/28010529Dividend-Distribution-Policy.pdf.

The Board of Directors of the Company at its meeting held on January 16, 2019, had declared and paid an Interim Dividend of RS,4.00/- per Equity Share for the FY 2018-19, out of the profits of the Company for the third quarter and nine months ended DecembeRs,31, 2018, on 14,55,92,483 Equity Shares of face value of RS,1/- each, aggregating to RS,58,23,69,932/-.

The Board of Directors of the Company at its meeting held on May 11, 2019 have recommended a Final Dividend of RS,4.50/- per Equity Share of face value of RS,1/- each for FY 2018-19, subject to approval of the Members of the Company at the ensuing Annual General Meeting ("AGM").

The Final Dividend, if approved at the ensuing AGM, would be paid to those Members whose name appears in the Register of Members/Beneficial Holders as on July 25, 2019.

Credit Rating

During the year under review, ICRA Limited reaffirmed the long term credit rating of [ICRA] AA" Rating with a stable outlook to the NCD Programme of RS,350 crores of the Company. Further, CRISIL Limited reaffirmed the Credit Rating of "CRISIL A1 " India Rating & Research also reaffirmed the Credit Rating of "IND A1 " to the Commercial Programme of RS,1300 Crores of the Company. Accordingly, there was no revision in the credit ratings during the year under review. The ratings indicate a very strong degree of safety regarding timely servicing of financial obligations.

Further, during the year under review, the Company does not have any fixed deposit programme or any scheme or proposal involving mobilization of funds in India or abroad.

Share Capital

During the year under review, the Company has allotted 5,96,800 Equity Shares under various Employee Stock Option Schemes of the Company.

Pursuant to the allotment of the Equity Shares, the paid up Equity Share Capital of the Company as on March 31, 2019 is RS,14,56,80,358/- (Rupees Fourteen Crores Fifty Six Lakhs Eighty Thousand Three Hundred and Fifty Eight only).

The Authorized Share Capital of the Company as on March 31, 2019 is RS,149,00,00,000/- divided into 92,50,00,000 Equity Shares of RS,1/- each and 56,50,000 Preference Shares of RS,100/- each.

Debentures

The Company holds 2,000 debentures of RS,10 Lakhs each aggregating to RS,200 Crores as on March 31, 2019.

The details of the Debenture Trustee of the Company is as under:

Vistra ITCL (India) Limited

IL & FS Financial Centre, Plot No. C22, G Block, 7th Floor Bandra Kurla Complex, Bandra - East, Mumbai - 400051 Direct: 91 22 6593662, Website: www.vistraitcl.com

Employee Stock Option Schemes

The disclosures required to be made under the SEBI (Share Based Employee Benefits) Regulations, 2014 ("SBEB Regulations") (as amended from time to time), are available on the website of the Company at www.motilaloswalgroup.com.

The Certificate from the Statutory Auditors, confirming compliance with the aforesaid provisions would be placed before the members at the ensuing AGM of the Company.

The Employee Stock Option Schemes are administered by the Nomination and Remuneration Committee ("NRC") of the Board of the Company, in accordance with the applicable SBEB Regulations.

Subsidiary Companies

The Company along with its subsidiaries, offers a diversified range of financial products and services such as Loan against Securities, Investment Activities, Private Wealth Management, Broking and Distribution, Asset Management Business, Housing Finance, Institutional Equities, Private Equity and Investment Banking.

During the year under review the erstwhile Motilal Oswal Securities Limited has promoted a new wholly owned subsidiary namely Motilal Oswal Finsec IFSC Limited ("MOFIL"). Further, the Company is in process of subscribing to equity share capital of MOFIL, subject to requisite approvals.

As of March 31, 2019, the Company had 17 subsidiaries (including step down subsidiaries). The details of these subsidiaries are set out in form MGT-9 forming part of the Annual Report. There are no associate companies or joint venture within the meaning of Section 2(6) of the Act as on March 31, 2019.

Material Subsidiaries

As required under Regulations 16(1)(c) and 46 of the Listing Regulations, the Board of Directors has approved the Policy for determining Material Subsidiaries ("Policy"). The said Policy is available on the website of the Company at https://www.motilaloswalgroup.com/Downloads/IR/212618793Policy-on-Determination-of-Material-Subsidiaries.pdf. Accordingly, Motilal Oswal Home Finance Limited (erstwhile Aspire Home Finance Corporation Limited) and Motilal Oswal Asset Management Company Limited are material subsidiaries of the Company. The name of Aspire Home Finance Corporation Limited has been changed to Motilal Oswal Home Finance Limited w.e.f. May 28, 2019.

Investment in Subsidiaries

During the year under review, the Company has acquired 2,91,26,212 equity shares of RS,10/- each of Motilal Oswal Finvest Limited and 6,00,00,000 equity shares of RS,1/- each of Motilal Oswal Home Finance Limited.

Performance and Financial Position of Subsidiaries

As required under Rule 5 and Rule 8(1) of the Companies (Accounts) Rules, 2014, a report on the highlights of performance of subsidiaries, associates and joint venture companies and their contribution to the overall performance of the Company is appended as "Annexure 2" to the Annual Report. Pursuant to the provisions of Section 129(3) of the Act, a statement containing salient features of financial statement of subsidiaries in Form AOC-1 is annexed to the Consolidated Financial Statement in the Annual Report. Your Company will also make available copy of separate audited financial statement in respect of each of the subsidiary company upon request by any Member of the Company interested in obtaining the same. In accordance with provisions of Section 136 of Act, the separate audited financial statement of each subsidiary company is also available on the website of your Company at www.motilaloswalgroup.com. These documents will also be available for inspection till the date of ensuing AGM between 11.00 A.M. to 1.00 P.M. at Registered Office of the Company.

Public Deposits

During the year under review, the Company has not accepted any deposits from the public.

Board of Directors

The composition of the Board of Directors of the Company is in accordance with the provisions of Section 149 of the Act and Regulation 17 of the Listing Regulations, with an appropriate combination of Executive, Non-Executive including Independent Directors.

The Company has 8 (Eight) Directors comprising of 1 (One) Chairman, Managing Director & Chief Executive Officer, 2 (Two) Joint Managing Directors, 1 (One) Whole-time Director and 4 (Four) Independent Directors. The complete list of Directors of the Company has been provided in the Report on Corporate Governance forming part of the Annual Report.

During the year under review, the Members of the Company at the AGM held on SeptembeRs,27, 2018 had approved the appointment of Mr. Navin Agarwal as the Managing Director of the Company for the period of 5 years commencing from August 21, 2018 to August 20, 2023, Mr. Ajay Menon as Director of the Company w.e.f. August 21, 2018 and Whole-time Director of the Company for the period of 5 years commencing from August 21, 2018 to August 20, 2023 and Ms. Rekha Shah as the Independent Director of the Company for the period of 5 years commencing from August 21, 2018 to August 20, 2023.

Section 152 of the Act provides that unless the Articles of Association provide for the retirement of all directors at every AGM, not less than two-third of the total number of directors of a public company (excluding the Independent Directors) shall be persons whose period of office is liable to determination by retirement of directors by rotation. Accordingly, Mr. Raamdeo Agarawal, Joint Managing Director will retire by rotation at the ensuing AGM and being eligible, has offered himself for re-appointment. The details of Mr. Raamdeo Agarawal is stated in the Notice of the AGM of the Company.

The resolution for the re-appointment of Mr. Raamdeo Agarawal as detailed in the notice of AGM would be placed for your approval at the ensuing AGM.

Meetings and Composition of Board of Directors and Committee(s)

The details of the Meetings of the Board and Committee(s) of the Company held during FY 2018-19 are disclosed in the Report on Corporate Governance forming part of Annual Report of the Company.

The Composition of Board and Committee(s) as on March 31, 2019 are disclosed in the Report on Corporate Governance.

Declaration by Independent Directors

All Independent Directors have submitted the declaration of independence, as required pursuant to provisions of the Section 149(7) of the Act, stating that they meet the criteria of independence as provided in Section 149(6) of the Act and Regulation 16(1)(b) of the Listing Regulations and are not disqualified from continuing as Independent Directors of the Company. These confirmations have been placed before the Board.

Disclosure on Maintenance of Cost Records

During the year under review, the Company was engaged in Non-Banking Financial activities (till August 21, 2018) and Broking activities (from August 22, 2018) and hence is not required to maintain cost records in accordance with the provisions of the Act.

Familiarization Programmes

The Company has familiarized the Independent Directors with the Company, about their roles, responsibilities in the Company, nature of industry in which the Company operates, business model of the Company, various businesses in the group etc. The details of the familiarization Programmes are available on the website of the Company at https://www.motilaloswalgroup.com/Downloads/IR/79247375Familiarization-Programmes-for-Independent-Directors.pdf.

Code of Conduct

Pursuant to Regulation 26(3) of the Listing Regulations, all the Directors of the Company have affirmed compliance with the Code of Conduct of the Company.

Key Managerial Personnel

During the year under review, Mr. Navin Agarwal, Managing Director and Mr. Ajay Menon, Whole-time Director, were designated as Key Managerial Personnel ("KMP") of the Company.

As at March 31, 2019, the Company has the following KMP:

1) Mr. Motilal Oswal - Chairman, Managing Director & Chief Executive Officer

2) Mr. Raamdeo Agarawal - Joint Managing Director

3) Mr. Navin Agarwal - Managing Director

4) Mr. Ajay Menon - Whole-time Director

5) Mr. Shalibhadra Shah - Chief Financial Officer

6) Mr. Kailash Purohit - Company Secretary & Compliance Officer

Company''s Policy on Director Appointment and Remuneration

Section 178 of the Act and Regulation 19 read with Part D of Schedule II of the Listing Regulations, as amended from time to time, requires the NRC to formulate a Policy relating to the remuneration for the Directors, KMP, Senior Management and other employees of the Company and recommend the same for approval of the Board.

Appointment Criteria and Qualifications:

Accordingly, in compliance to the aforesaid provisions, the Nomination and Remuneration Policy of the Company is available on the website of the Company at https://www.motilaloswalgroup.com/Downloads/IR/724496156Nomination-and-Remuneration-Policy.pdf. The salient features of the Policy are given below:-

Appointment criteria and qualifications:

1. The Committee shall identify and ascertain the integrity, qualification, expertise and experience of the person for appointment as Director, KMP or Senior Management and recommend to the Board his/her appointment.

2. A person should possess adequate qualification, expertise and experience for the position he/she is considered for appointment. The Committee has discretion to decide whether qualification, expertise and experience possessed by a person are sufficient/satisfactory for the concerned position.

3. The Company shall not appoint or continue the employment of any person as Managing Director/Whole-time Director/Manager who has attained the age of seventy years.

Provided that the term of the person holding this position may be extended beyond the age of seventy years with the approval of shareholders by passing a special resolution based on the explanatory statement annexed to the notice for such motion indicating the justification for extension of appointment beyond seventy years.

- Evaluation:

The performance evaluation shall be carried out as given below:-

Performance Evaluation by

Of Whom

Nomination and Remuneration Committee

Every Director''s performance

Board of Directors

All Directors, Board and Committees

Independent Directors

Review the performance of Non-Independent Directors and Chairman of the Company

The Committee shall carry out evaluation of performance of every Director at regular interval (yearly).

- Removal:

Due to reasons for any disqualification mentioned in the Act, rules made there under or under any other applicable Act, rules and regulations, the Committee may recommend, to the Board with reasons recorded in writing, removal of a Director, KMP or Senior Management subject to the provisions and compliance of the said Act, rules and regulations.

- Retirement:

The Director, KMP and Senior Management shall retire as per the applicable provisions of the Act and the prevailing internal policy of the Company. The Board will have the discretion to retain the Director, KMP, Senior Management in the same position/remuneration or otherwise even after attaining the retirement age, for the benefit of the Company.

Provisions Relating to Remuneration of Managerial Person, KMP and Senior Management

- General:

1. The remuneration/compensation/commission etc. to Managerial Person, KMP and Senior Management will be determined by the Committee and recommended to the Board for approval. The remuneration/compensation/commission etc. shall be subject to the prior/post approval of the shareholders of the Company and such other approval, wherever required.

2. The remuneration and commission to be paid to Managerial Person shall be as per the statutory provisions of the Act and Listing Regulations, and the rules made there under for the time being in force.

3. Increments to the existing remuneration/compensation structure may be recommended by the Committee to the Board which should be within the slabs approved by the Shareholders in the case of Managerial Person.

4. The remuneration structure will have a right mix of guaranteed (fixed) pay, pay for performance and long term variable pay based on business growth and other factors such as growth in shareholder value to ensure that it is competitive and reasonable

5. Where any insurance is taken by the Company on behalf of its Managerial Person, KMP and for Senior Management for indemnifying them against any liability, the premium paid on such insurance shall not be treated as part of the remuneration payable to any such personnel.

- Remuneration to Managerial Person, KMP and Senior Management: 1. Fixed pay:

Managerial Person, KMP and Senior Management shall be eligible for a monthly remuneration as may be approved by the Board on the recommendation of the Committee in accordance with the statutory provisions of the Act and the rules made there under for the time being in force. The break-up of the pay scale and quantum of perquisites including employer''s contribution to Provident Fund(s), pension scheme(s), medical expenses, club fees etc. shall be decided and approved by the Board on the recommendation of the Committee and approved by the shareholders and such other approval, wherever required.

1. Variable Pay:

The Company may in its discretion structure any portion of remuneration to link rewards to corporate and individual performance, fulfillment of specified improvement targets or the attainment of certain financial or other objectives set by the Board. The amount payable shall be based on performance against pre-determined financial and non-financial metrics.

2. Provision for excess remuneration:

If, in any financial year, the Company has no profits or its profits are inadequate, the Company shall pay remuneration to its Managerial Person in accordance with the provisions of Schedule V of the Act. If any Managerial Person draws or receives, directly or indirectly by way of remuneration any such sums in excess of the limits prescribed under the Act or without such approval, wherever required, he/she shall refund such sums to the Company and until such sum is refunded, hold it in trust for the Company.

- Remuneration to Non-Executive / Independent Director:

1. Remuneration/Commission:

The remuneration/commission, if any, shall be in accordance with the statutory provisions of the Act and the rules made there under for the time being in force.

2. Sitting Fees:

The Non-Executive/Independent Director may receive remuneration by way of fees for attending meetings of Board or Committee thereof.

Provided that the amount of such fees shall not exceed the maximum amount as provided in the Act, per meeting of the Board or Committee or such amount as may be prescribed from time to time.

3. Limit of Remuneration/Commission:

Remuneration/Commission may be paid to Non-Executive Directors within the monetary limit approved by shareholders, subject to the limit not exceeding 1% of the net profits of the Company computed as per the applicable provisions of the Act.

Performance Evaluation

Pursuant to the provisions of Section 134(3)(p) of the Act and Schedule IV of the Act and in accordance to Regulation 17(10), 25(4) of the Listing Regulations, the Board has carried out the annual performance evaluation of the Board as a whole, various Committees of the Board and of the individual Directors. The performance evaluation of the Independent Directors was carried out by the entire

Board. The Directors expressed their satisfaction with the evaluation process.

A declaration to the effect that they meet the criteria of independence as provided in sub-section (6) of Section 149 of the Act has also been received from Independent Directors of the Company.

The Board and the NRC reviewed the performance of the individual Directors on the basis of the criteria such as Transparency, Performance, etc.

In a separate meeting of Independent Directors, performance of Non-Independent Directors and performance of the Chairman was evaluated, taking into account the views of the Executive Directors and Non-Executive Directors. The same was discussed in the Board meeting that followed the meeting of independent directors, at which the performance of the Board, its Committees and individual Directors was also discussed.

Particulars of Employees

In accordance with the provisions of Section 197(12) of the Act, the ratio of the remuneration of each Director to the median employee''s remuneration and other details in terms of sub-section 12 of Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is appended as "Annexure 3" to the Annual Report.

In terms of first proviso to Section 136 of the Act, the Report and Financial Statements are being sent to the Members and others entitled thereto, excluding the information on employees'' particulars as required pursuant to provisions of Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

In accordance with the provisions of Section 197 of the Act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the annexure pertaining to the names and other particulars of employees is available for inspection at the Registered Office of the Company during the business hours on working days of the Company up to the date of the ensuing AGM. Any shareholder interested in obtaining a copy of the said Annexure may write to the Company Secretary & Compliance Officer in this regard.

The Board of Directors affirms that the remuneration paid to employees of the Company is as per the Nomination and Remuneration Policy of the Company.

Report on Corporate Governance

The Report on Corporate Governance for the year under review, is forming part of the Annual Report. The Certificate from the Statutory Auditors of the Company confirming compliance with the conditions of Corporate Governance as stipulated in Regulation 34 and Schedule V to the Listing Regulations is annexed to the Report on Corporate Governance.

Business Responsibility Report

In terms of Regulation 34(2)(f) of the Listing Regulations, top 500 listed entities based on their market capitalization as on March 31, are required to prepare a Business Responsibility Report ("BRR") forming part of the Annual Report.

Accordingly, the Company has prepared the BRR describing the initiatives taken by the Board from an environmental, Social and Governance perspective and has also constituted the Business Responsibility Committee to overview the BRR and frame and overview such polices as may be required from time to time.

The said BRR is forming part of Annual Report of the Company and is also uploaded on the website of the Company at www.motilaloswalgroup.com.

Statutory Auditors

Pursuant to the provisions of Section 139(2) of the Act and the rules made there under, the Members of the Company at their Twelfth AGM held on July 27, 2017, had appointed M/s. Walker Chandiok & Co. LLP, Chartered Accountants, as the Statutory Auditors of the Company for a term of five years i.e. from the conclusion of Twelfth AGM till the conclusion of the Seventeenth AGM.

Mr. Sudhir Pillai, Partner, Walker Chandiok & Co. LLP, Chartered Accountants, Statutory Auditors, has signed the Audited Financial Statements of the Company.

Statutory Auditors'' Report

The Statutory Auditors'' Report issued by M/s. Walker Chandiok & Co. LLP for the year under review does not contain any qualification, reservations or adverse remarks. The Notes to the Accounts referred to in the Auditors'' Report are self-explanatory and therefore do not call for any further clarifications under Section 134(3)(f) of the Act. Further, pursuant to Section 143(12) of the Act, the Statutory Auditors of the Company have not reported any instances of frauds committed in the Company by its officers or employees.

Secretarial Audit Report

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (as amended from time to time), the Company had appointed M/s. U. Hegde and Associates, Practicing Company Secretaries, to undertake the Secretarial Audit of the Company for the FY 2018-19.

The Secretarial Audit Report is appended as "Annexure 4" to the Annual Report.

Further, the Secretarial Compliance Report for the financial year ended March 31, 2019 was obtained from M/s. U. Hegde and Associates, Practicing Company Secretaries, in relation to compliance of all applicable SEBI Regulations/circulars/guidelines issued thereunder, pursuant to requirement of Regulation 24A of Listing Regulations.

There is no adverse remark, qualifications or reservation in the Secretarial Audit Report and Secretarial Compliance Report.

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

Considering the Company''s Non-Banking Financial activities (till August 21, 2018) and Broking activities (from August 22, 2018) during the year under review, the particulars regarding conservation of energy and technology absorption as required to be disclosed pursuant to the Rule 8(3) of the Companies (Accounts) Rules, 2014 are not relevant to its activities.

Details of the foreign exchange earnings and outgo are given in the Note No. 49 to the Standalone Financial Statement.

Transfer of Shares Pertaining to Unclaimed/Unpaid Dividend to Investor Education and Protection Fund

Pursuant to Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, the shares of the shareholders in respect of whom the dividend is unpaid/unclaimed for seven consecutive years are required to be transferred to Investor Education and Protection Fund ("IEPF") after giving an opportunity to shareholders to claim the said unpaid/unclaimed dividend.

Accordingly, the Company issued the reminder letters to such shareholders to claim the dividend and also published the notice to such effect in the leading newspaper in English and regional language having wide circulation and accordingly informed them that in the event of failure to claim said divided, the unpaid/unclaimed dividend along with shares pertaining to unpaid/unclaimed dividend would be transferred to IEPF.

Subsequently, the Company has transferred 643 equity shares to IEPF on SeptembeRs,19, 2018 and 10,099 equity shares on March 18, 2019 under review. The details of such shares are available on the website of the Company at https://www.motilaloswalgroup.com/Investor-Relations/Disclosures/IEPF The concerned shareholders are requested to claim the said shares by directly approaching IEPF Authority.

Disclosure of Details of Unclaimed Equity Shares in the Suspense Account:

Pursuant to Regulation 34 and Schedule V of Listing Regulations, the details in respect of unclaimed equity shares that are kept in Specific Demat Accounts of the Company is given below:

Particulars

Number of Shareholders

Number of Equity shares

Aggregate Number of Shareholders and the outstanding shares in the suspense account lying as on April 1, 2018

5

575

Number of Shareholders who approached the Company for transfer of shares from suspense account during the year

-

-

Number of Shareholders to whom shares were transferred from the suspense account during the year

-

-

Aggregate Number of Shareholders and the outstanding shares in the suspense account lying as on March 31, 2019

5

575

Depository System

The Equity Shares of the Company are compulsorily tradable in electronic form. As on March 31, 2019, out of the Company''s total paid-up Equity Share Capital comprising of 14,56,80,358 Equity Shares, only 28,260 Equity Shares are in physical form and the remaining shares are in electronic form (demat form). In view of the numerous advantages offered by the Depository System, the Members holding shares in physical form are advised to avail the facility of dematerialization.

Directors'' Responsibility Statement

Pursuant to the provisions of Section 134(5) of the Act, the Board of Directors confirm that, to the best of its knowledge and belief:

1) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

2) 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, 2019 and of the profit of the Company for that period;

3) the Directors have taken proper and sufficient care for the maintenance of 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;

4) the Directors have prepared the annual accounts on a going concern basis;

5) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating effectively;

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

Internal Financial Controls

The Internal Financial Controls with reference to financial statements as designed and implemented by the Company are adequate. The Internal Financial Control procedure adopted by the Company are adequate for safeguarding its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information. During the year under review, the Internal Financial Controls were operating effectively and no material or serious observation has been received from the Auditors of the Company for inefficiency or inadequacy of such controls.

Vigil Mechanism/Whistle Blower Policy

Pursuant to Rule 7 of the Companies (Meetings of Board and its Powers) Rules 2014 read with Section 177(9) of the Act and as per Regulation 22 of the Listing Regulations (as amended from time to time), the Company has framed Vigil Mechanism/Whistle Blower Policy ("Policy") to enable directors and employees to report genuine concerns or grievances, significant deviations from key management policies and reports any non-compliance and wrong practices, e.g., unethical behavior, fraud, violation of law, inappropriate behavior/conduct etc.

The functioning of the Vigil Mechanism is reviewed by the Audit Committee from time to time. None of the Directors or employees have been denied access to the Audit Committee of the Board.

The objective of this mechanism is to maintain a redressal system which can process all complaints concerning questionable accounting practices, internal controls, or fraudulent reporting of financial information.

The Policy framed by the Company is in compliance with the requirements of the Act and Listing Regulations and is available on the website of the Company at https://www.motilaloswalgroup.com/Downloads/IR/1677814951Vigil-MechanismWhistle-Blower-Policy.pdf.

Corporate Social Responsibility

The Company recognizes the responsibilities towards society and strongly intends to contribute towards development of knowledge based economy.

In accordance with the requirements of the provisions of Section 135 of the Act, the Company has constituted a Corporate Social Responsibility ("CSR") Committee. The composition and terms of reference of the CSR Committee is provided in the Report on Corporate Governance forming part of the Annual Report.

The Company has also formulated a CSR Policy which is available on the website of the Company at http://www.motilaloswalgroup.com/Downloads/IR/1129307840CSRPolicy.pdf.

An Annual Report on activities as required under Companies (Corporate Social Responsibility Policy) Rules, 2014 (as amended from time to time) is appended as "Annexure 5" to the Annual Report.

The Company has made contribution through Motilal Oswal Foundation, a not-for-profit charitable company incorporated under Section 25 of the Companies Act, 1956 and through various other not-for-profit organisations.

Particulars of Loans Given, Investments Made, Guarantees Given or Security Provided by the Company

Details of loans, guarantees and investments covered under the provisions of Section 186 of the Act are given in the Notes to the Standalone Financial Statement.

Particulars of Contracts or Arrangements with Related Parties

The Board of Directors has approved the policy on transactions with related parties ("RPT Policy"), pursuant to the recommendation of the Audit Committee. In line with the requirements of the Act and Listing Regulations, the Company has formulated the RPT Policy which is also available on the Company''s website at https://www.motilaloswalgroup.com/Downloads/IR/853061866Policy-on-Materiality-and-Dealing-with-Related-Party-Transactions.pdf.

All related party transactions entered into during the FY 2018-19 were on an arm''s length basis and in the ordinary course of business.

All Related Party Transactions were placed before the Audit Committee for prior approval. Prior omnibus approval of the Audit Committee is obtained for the transactions which are of unforeseen or repetitive in nature. The details of all such related party transactions entered into pursuant to the omnibus approval of the Committee, were placed before the Audit Committee on a quarterly basis for its review.

During the year under review, there were no material contracts or arrangements or transactions entered into by the Company with related parties pursuant to Section 188 of Act and accordingly Form AOC-2 is not applicable.

The Directors draw attention of the Members to Note No. 54 to the Standalone Financial Statement which sets out related party disclosures.

Compliance with Secretarial Standard - 1

The Company has complied with Secretarial Standard-1 (SS-1) on meeting of Board of Directors.

Business Risk Management

The Company realizes the importance of Enterprise Risk Management ("ERM") framework and had taken early initiatives towards its implementation. The Company has also formulated group risk management policy.

A systematic approach has been adopted that originates with the identification of risk, categorization and assessment of identified risk, evaluating effectiveness of existing controls and building additional controls to mitigate risk and monitoring the residual risk through effective Key Risk Indicators ("KRI"). The implementation is being carried out in phased manner with the objective to encompass the entire line of businesses.

Effective ERM involves a robust implementation of three lines of defense - first line of defense is the front-line employees, the second line of defense is the risk and compliance function and the third line of defense is external and internal auditors. To build an effective risk culture significant effort has been made towards robustness of these lines of defense.

In the opinion of Board, there are no elements of risks threatening the existence of the Company.

Policy for Prevention, Prohibition and Redressal of Sexual Harassment at Workplace

The Company has in place a Policy for Prevention, Prohibition and Redressal of Sexual Harassment at Workplace. Appropriate reporting mechanisms are in place for ensuring protection against Sexual Harassment at Workplace.

During the year under review, the Company has received one complaint in this regard and the same has been resolved during the year under review.

Further, the Company has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Extract of Annual Return as Required and Prescribed under Section 92(3) of the Act and Rules made thereunder

The extract of Annual Return in MGT-9 as required under Section 92(3) of the Act and prescribed in Rule 12 of the Companies (Management and Administration) Rules, 2014 is appended as "Annexure 6" to the Annual Report. The Annual Return will be uploaded on the website of the Company www.motilaloswalgroup.com.

Significant and Material Orders passed by the Regulators or Courts

The Hon''ble NCLT vide its Order dated July 30, 2018 has approved the Scheme of Amalgamation of Motilal Oswal Securities Limited ("Transferor Company/wholly owned subsidiary company") with Motilal Oswal Financial Services Limited ("Transferee Company/the Company") and their respective shareholders and the amalgamation is made effective from August 21, 2018.

Further, during the year under review, the Company has received the certificate of registration from SEBI for carrying stock broking business and an order from RBI for cancellation of Certificate of Registration as an NBFC.

Further, no penalties have been levied by the RBI/SEBI/any other Regulators during the year under review.

Compliance with RBI Regulations

During the year under review, the Company was registered as NBFC and has complied with all the applicable regulations of RBI till August 21, 2018.

Acknowledgement

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, Multi Commodity Exchange of India Limited, National Commodity & Derivatives Exchange Limited, Central Depository Services (India) Limited, National Securities Depository Limited, Ministry of Finance, Ministry of Corporate Affairs, Registrar of Companies, 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. The 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.

For and on behalf of the Board

of Motilal Oswal Financial Services Limited

Motilal Oswal

Place : Mumbai Chairman and Managing Director

Date: May 11, 2019 (DIN: 00024503)


Mar 31, 2018

Dear Members,

The Directors of your Company have the pleasure in presenting the Thirteenth Board''s Report together with the Audited Financial Statements for the financial year ended March 31, 2018.

Financial Results

The summary of the Company''s financial performance, both on a consolidated and standalone basis, for the Financial Year ("FY") 2017-18 as compared to the previous FY 2016-17 is given below:

(Rs, in Lakhs)

Particulars

Consolidated

Standalone

2017-18#

2016-17#

2017-18#

2016-17#

Total Revenue

2,76,968

1,92,362

1,27,274

13,265

Profit before Interest, Depreciation, Taxation and exceptional items

1,29,967

1,00,860

52,828

12,539

Interest

49,559

44,226

9,288

488

Depreciation

3,749

3,284

2,942

692

Profit before Taxation and exceptional items

76,659

53,350

40,598

11,359

Add/(Less): Exceptional Items

-

(2,788)

-

(2,788)

Profit before taxation

Add/(Less) : Provision for Taxation

76,659

50,562

40,598

8,571

Current Tax

(20,278)

(13,611)

8,278

663

Deferred Tax

(212)

(3,097)

(817)

355

Minimum Alternate Tax

(138)

1,458

530

(791)

Less : Tax for earlier year (s)

195

1,141

267

(286)

Tax Expenses

20,433

14,109

8,258

(59)

Profit after Taxation

56,154

35,997

32,340

8,630

Add: Balance brought forward from previous year

1,05,107

77,616

90,580

4,334

Profit Available for appropriation

Less: Appropriations

1,61,261

1,13,613

1,22,920

12,964

Transfer to Statutory Reserve

(3,879)

(3,368)

(2,594)

(1,726)

Interim Dividend/ Proposed dividend

(10,129)

(3,588)

(10,129)

(3,588)

Dividend Distribution Tax Credit of Dividend Distribution Tax

(966)

(730)

(966)

(730)

Balance of Profit carried forward

1,45,728

1,05,107

1,09,231

6,920

# The figures for FY 2016-17 are of the standalone entity whereas the figures for FY 2017-18 are updated after giving effect to Scheme of Amalgamation of Motilal Oswal Securities Limited ("Transferor Company/wholly owned subsidiary company") with Motilal Oswal Financial Services Limited ("Transferee Company/the Company") and their respective shareholders ("Scheme") pursuant to approval provided by the Hon''ble National Company Law Tribunal, Mumbai Bench ("NCLT") vide its Order dated July 30, 2018. The Scheme is made effective from August 21, 2018. The appointed date is April 01, 2017. For details, refer Notes to Financial Statements forming part of this Annual Report.

Consolidated

The consolidated revenues for the year were RS, 2,770 Crores for the year FY 2017-18 under review, an increase of 43% as compared to the previous year.

- Broking revenues increased by 47% YoY to RS, 777 Crores. Average daily volumes in the equity markets were RS, 6.79 Lakh Crores in FY2018, up 67% from last year. Cash market volumes were up 38% YoY to RS, 32,976 Crores. Within cash, delivery was up 26% YoY to RS, 9,646 Crores. Derivative volumes were up 69% YoY to RS, 6.46 Lakh Crores. Within derivatives, futures rose up 28% YoY to RS, 79,855 Crores. This year, options were up 77% YoY to RS, 5.66 Lakh Crores. Amongst cash market participants, prop registered a growth of 47% YoY while retail was up 41% YoY. Domestic Institutional Investors ("DII") cash volumes increased 51% YoY, led by renewed interest in equity mutual funds from retail/HNI investors. The proportion of retail within cash volumes increased from 55.27% to 55.4% YoY while that of DII increased from 9.25% to 10.3% YoY. Our overall equity market share maintained at 2%. Due to our continued focus and investments into this business, we succeeded in capturing a larger chunk of the incremental volumes this year across both cash and derivatives. As of March 31, 2018, our client base included more than 10,50,000 retail broking and distribution clients and 675 institutions. Our Pan-India distribution reach stood at 2,200 business locations across 588 cities. Our depository assets was RS, 60,710 Crores, up 35% YoY, and distribution AUM was RS, 7,530 Crores, up 71% YoY.

- Investment banking fee saw a 30% growth over the previous year, to RS, 113.5 Crores. The IPO & QIP transactions gathered significant momentum this year. FY2018 saw the business clock it''s all time high revenues since inception.

- Asset management fees also saw significant traction, increasing 87% YoY to RS, 696 Crores, as compared to last year. Total assets under management/advice across mutual funds, PMS and private equity businesses was RS, 40,334 Crores, up 72% YoY. Within this, the mutual fund AUM was RS, 18,159 Crores, PMS AUM was RS, 14,952 Crores, AIF AUM was RS, 2,417 Crores and private equity AUM was RS, 4,694 Crores. The company saw increased mobilization into its open-end equity mutual fund products and PMS products. In the private equity business, the 3rd private equity fund - India Business Excellence Fund III, launched during the year with target size of RS, 2,000 Crores.

- Housing finance related income increased by 34% to RS, 651 Crores as the business gained traction this year in terms of clients, network, banking lines and loan book. HFC loan book was RS, 4,863 Crores, as compared to RS, 4,141 Crores last year.

- Fund based income increased by 69% to RS, 182 Crores. In line with the long term strategy to grow Return on Equity sustainably, the Company made strategic allocation of capital to long term RoE enhancing opportunities like Aspire Home Finance and sponsor commitments to mutual fund and private equity funds of Motilal Oswal Group ("MO Group"). The NBFC loan book, previously run from equity capital, is now being run as a spread business. The year also included profit earned on exits in the Private Equity fund in which the Company made sponsor commitments.

Total expenses (before interest and depreciation) for the year at RS, 1,470 Crores registered a 61% jump over previous year. People cost increased by 42% to RS, 500 Crores. Operating expenses increased by 63% to RS, 600 Crores. Other costs were RS, 370 Crores, an increase of 91% over previous year. The profit before depreciation, interest, exceptional items and taxation (EBITDA) increased by 29% to RS, 1,300 Crores.

Reported net profit for the year after minority interest stood at RS, 561.50 Crores, an increase of 56%.

MO Group''s commitments to our own mutual fund products stood at RS, 956 Crores, as of March 31, 2018. The unrealized gain on these investments is V 376 Crores, as of March 31, 2018. The same is not reflected in the profit and loss account for the year. MO Group''s commitments to our alternative investment products stood at RS, 269 Crores, as of March, 2018.

The detailed results of operations of the Company are given in the Management Discussion & Analysis forming part of this Report.

Appropriations

The Company proposes to transfer RS, 2,954 Lakhs (Previous year RS, 1,726 Lakhs) to Special Reserves created u/s 45-IC of the Reserve Bank of India Act, 1934.

Future Outlook

Our strategy to diversify our business model towards more annuity sources of earnings is showing definite results. The annuity nature of earnings in the new businesses like asset based businesses and housing finance business has brought in visibility of our earnings. Our businesses built scale during FY2018, while maintaining operating parameters. Our brand is now being recognized across each of our businesses. We achieved a 20% ROE in FY2018, and are well on course to achieve this on a sustainable basis. The opportunity size in all our business segments is still huge, and our businesses are well placed to benefit from the growth potential they offer.

Consolidated Financial Statement

As per Regulation 33 of the Listing Regulations and applicable provisions of the Companies Act, 2013 ("the Act") read with the Rules issued there under, the Consolidated Financial Statement of the Company for the FY 2017-18 have been prepared in compliance with applicable Accounting Standards and on the basis of Audited Financial Statement of the Company and its subsidiaries, as approved by the respective Board of Directors.

The Consolidated Financial Statement together with the Auditors'' Report forms part of this Annual Report.

Information on the State of Affairs of the Company

The Information on the State of Affairs of the Company has been given as part of Management Discussion & Analysis Report forming part of Annual Report of the Company.

Material Changes and Commitments

During the year under review, the Board of Directors of the Company at its meeting held on November 04, 2017 had approved Scheme of Amalgamation of Motilal Oswal Securities Limited ("Transferor Company/wholly owned subsidiary company") with Motilal Oswal Financial Services Limited ("Transferee Company/the Company") and their respective shareholders ("Scheme").

Motilal Oswal Securities Limited ("MOSL") is the flagship company of the Motilal Oswal Group. MOSL is a member of BSE Limited, National Stock Exchange of India Limited, Multi Commodity Exchange of India Ltd. & National Commodity & Derivatives Exchange Limited and acts as a Stock Broker & Commodities Broker to execute proprietary trades and also trades on behalf of its clients which include retail customers (including high net worth individuals), mutual funds, foreign institutional investors, financial institutions and corporate clients. It is registered with Central Depository Services (India) Limited and National Securities Depository Limited in the capacity of Depository Participant. It is registered with SEBI in capacity of Research Analyst and Investment Advisor and with various other Authorities like AMFI, CERSAI, KRA Agencies (CVL, Dotex, NDML, CAMS, Karvy and UIDAI).

The Scheme was filed by the Company with the Hon''ble NCLT on November 29, 2017.

Pursuant to Order dated December 22, 2017 passed by Hon''ble NCLT, the Meeting of the Members of the Company was held on February 20, 2018, wherein the Scheme was approved by the Members. Further, the Members of the Company have provided their approval through Postal Ballot Process on February 19, 2018 for transferring the existing lending business of the Company to Motilal Oswal Capital Markets Limited (Erstwhile Motilal Oswal Capital Markets Private Limited) ("MOCML"), its wholly owned subsidiary, as a going concern via slump sale.

Accordingly, the entire lending business of the Company has been transferred to MOCML on August 20, 2018 by executing Business Transfer Agreement.

Pursuant to Order dated July 30, 2018, the Hon''ble NCLT has approved the Scheme. Subsequently, the Board of the Company at its meeting held on August 21, 2018 has made the Scheme effective from the said date i.e. August 21, 2018. The appointed date for the Scheme is April 1, 2017.

De-Registration as Non Banking Financial Company

The Company is registered as Non-Banking Financial Company ("NBFC") under Section 45-IA of the Reserve Bank of India Act, 1934.

However, RBI does not accept any responsibility or guarantee about the present position as to the financial soundness of the Company or for the correctness of any of the statements or representations made or opinions expressed by the Company and for repayment of deposits/ discharge of liabilities by the Company.

Further, the Company has made an application for surrender of Certificate of Registration with Reserve Bank of India and transferred its lending business to MOCML as a going concern via slump sale. Further, subsequent to Scheme becoming effective, the Company is undertaking the broking business as its principal business activity.

Dividend

The Board of Directors of the Company has approved the Dividend Distribution Policy ("Policy") in line with the requirements of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") (as amended from time to time). The Policy is appended as "Annexure 1" to this Annual Report and is also been uploaded on the Company''s website at http://www. motilaloswaleroup.com/Downloads/IR/28010529Dividend-Distribution-Policy.pdf.

The Board of Directors of the Company at its meeting held on January 24, 2018, had declared and paid an Interim Dividend of V 4/- per Equity Share for the FY 2017-18, out of the profits of the Company for the third quarter and nine months ended December 31, 2017, on 14,47,20,783 Equity Shares of face value of R 1/- each aggregating to V 57,88,83,132/-.

The Board of Directors of the Company at its meeting held on May 21, 2018 have recommended a Final Dividend of V 4.50 per Equity Share of face value of R 1/- each for FY 2017-18, subject to approval of the Members of the Company at the ensuing Annual General Meeting ("AGM").

The Final Dividend, if approved at the ensuing AGM, would be paid to those Members whose name appears in the Register of Members/Beneficial Holders as on record date i.e. September 21, 2018.

Credit Rating

During the year, CRISIL Limited reaffirmed the Credit Rating of "CRISIL A1 " and India Rating & Research has assigned Credit Rating of "IND A1 " to the Commercial Paper Programme of RS, 25,000 Lakhs of the Company.

Share Capital

During the year under review, the Company has allotted 6,26,082 Equity Shares under various Employee Stock Option Schemes of the Company.

Pursuant to the allotment of the Equity Shares, the paid up Equity Share Capital of the Company as on March 31, 2018 is RS, 14,50,83,558/- (Rupees Fourteen Crores Fifty Lakhs Eighty Three Thousand Five Hundred and Fifty Eight Only).

Pursuant to making the Scheme effective, the Authorized Share Capital of the Company has been increased from RS, 13,700 Lakhs divided into 87,00,00,000 Equity Shares of RS, 1/- each and 50,00,000 Preference Shares of RS, 100/- each to RS, 14,900 Lakhs divided into 92,50,00,000 Equity Shares of RS, 1/- each and 56,50,000 Preference Shares of RS, 100/-.

Debentures

During the year under review, the Company has redeemed 500 Series C Secured Redeemable Non-Convertible Debentures ("NCDs") of RS, 10 Lakhs each amounting to RS, 5,000 Lakhs during the FY 2017-18. Accordingly, all the NCDs of the Company stands redeemed as on March 31, 2018.

However, 2,000 Secured Redeemable Non-Convertible Debentures of face value of RS, 10 Lakhs each of MOSL are been transferred to the Company pursuant to the amalgamation.

Employee Stock Option Schemes

The disclosures required to be made under the SEBI (Share Based Employee Benefits) Regulations, 2014 ("SBEB Regulations") (as amended from time to time), are available on the website of the Company at www.motilaloswalgroup.com.

The Certificate from the Statutory Auditors, confirming compliance with the aforesaid provisions would be placed before the Members at the ensuing AGM of the Company.

The Employee Stock Option Schemes are administered by the Nomination and Remuneration Committee of the Board of the Company, in accordance with the applicable SBEB Regulations.

Subsidiary Companies

The Company along with its subsidiaries, offers a diversified range of financial products and services such as Loan against shares, Investment activities, Private wealth management, Broking and distribution, Asset management business, Housing finance, Institutional equities, Private equity and Investment banking.

As of March 31, 2018, the Company had 18 subsidiaries (including step down subsidiaries). The details of these subsidiaries are set out in form MGT-9 forming part of the Annual Report. There are no associate companies or joint venture within the meaning of Section 2(6) of the Act.

Material Subsidiaries

As required under Regulations 16(1)(c) and 46 of the Listing Regulations, the Board of Directors has approved the Policy for determining Material Subsidiaries ("Policy"). The said policy is available on the website of the Company at http://www.motilaloswalgroup.com/ Downloads/IR/SUBSIDIARIES.pdf. Further, pursuant to Regulation 16(1)(c) of Listing Regulations, Motilal Oswal Asset Management Company Limited ("MOAMC") has become material subsidiary of the Company based on Consolidated Financial Statements for FY 2017-18. Accordingly, the Company has three Material subsidiaries namely Motilal Oswal Securities Limited ("MOSL"), Aspire Home Finance Corporation Limited ("AHFCL") and MOAMC as on March 31, 2018.

Investment in Subsidiaries

During the year under review, the Company and MOSL has acquired 6,03,44,826 and 5,17,24,141 equity shares of RS, 1/- each respectively of AHFCL.

Performance and Financial Position of Subsidiaries

As required under Rule 5 and Rule 8(1) of the Companies (Accounts) Rules, 2014, a report on the highlights of performance of subsidiaries, associates and joint venture companies and their contribution to the overall performance of the Company has been appended as "Annexure 2" to this Annual Report. Pursuant to the provisions of Section 129(3) of the Act, a statement containing salient features of financial statement of subsidiaries in Form AOC-1 is annexed to the Consolidated Financial Statement in the Annual Report. Your Company will also make available copy of separate audited financial statement in respect of each of the subsidiary company upon request by any Member of the Company interested in obtaining the same. In accordance with provisions of Section 136 of the Act, the separate audited financial statement in respect of each of the subsidiary company is also available on the website of your Company at www.motilaloswalgroup.com. These documents will also be available for inspection at the Registered Office of the Company during the business hours on working days of the Company up to the date of the ensuing AGM.

Public Deposits

During the year under review, the Company has not accepted any deposits from the public.

Board of Directors

The composition of the Board of Directors of the Company is in accordance with the provisions of Section 149 of the Act and Regulation 17 of the Listing Regulations, with an appropriate combination of Executive, Non-Executive and Independent Directors.

The Company has 8 (Eight) Directors comprising of 1 (One) Chairman, Managing Director & Chief Executive Officer, 2 (Two) Joint Managing Directors, 1 Whole-time Director and 4 (Four) Independent Directors. The list of Directors of the Company as on March 31, 2018 has been provided in the Report on Corporate Governance forming part of this Report.

The Board of Directors at its meeting held on August 21, 2018 has subject to approval of the Members of the Company, approved the appointment of Mr. Navin Agarwal as the Managing Director of the Company for the period of 5 years commencing from August 21, 2018 to August 20, 2023.

Further, the Board at its meeting held on August 21, 2018 has appointed Mr. Ajay Menon and Ms. Rekha Shah as Additional Director of the Company w.e.f. August 21, 2018 under the provisions of Section 161 of the Act and will hold the office up to the date of the ensuing AGM of the Company. Further, the Board has subject to approval of the Members of the Company, approved the appointment of Mr. Ajay Menon as the Director of the Company w.e.f. August 21, 2018 and as Whole-time Director of the Company for the period of 5 years commencing from August 21, 2018 to August 20, 2023. The Board has subject to approval of the Members of the Company, approved the appointment of Ms. Rekha Shah as an Independent Director of the Company for the period of 5 years commencing from August 21, 2018 to August 20, 2023.

A brief profile of Mr. Navin Agarwal, Mr. Ajay Menon and Ms. Rekha Shah is provided in the Notice of the ensuing AGM of the Company.

The Shareholders are requested to consider the appointment of Mr. Navin Agarwal as Managing Director, Mr. Ajay Menon as Whole-time Director, liable to retire by rotation and Ms. Rekha Shah as an Independent Director in the ensuing AGM.

Section 152 of the Act provides that unless the Articles of Association provide for the retirement of all directors at every AGM, not less than two-third of the total number of directors of a public company (excluding the Independent Directors) shall be persons whose period of office is liable to determination by retirement of directors by rotation. Accordingly, Mr. Motilal Oswal, Chairman & Managing Director will retire by rotation at the ensuing AGM and being eligible, has offered himself for re-appointment. The details of Mr. Motilal Oswal is provided in the Notice of the ensuing AGM of the Company.

The resolutions for the appointment/re-appointment of Directors as detailed in the Notice of the ensuing AGM would be placed for your approval at the ensuing AGM.

The terms and conditions of appointment of Independent Directors are also available on the website of the Company at www.motilaloswalgroup.com.

Meetings and Composition of Board of Directors and Committee(s):

The details of the Meetings of the Board and Statutory Committee(s) of the Company held during FY 2017-18 are disclosed in the Report on Corporate Governance forming part of Annual Report of the Company.

The Composition of Board and Committee(s) as on March 31, 2018 are disclosed in the Report on Corporate Governance. Further, pursuant to aforesaid changes in composition of the Board, please find below changes in composition of Statutory Committee(s) w.e.f. August 21, 2018:

Sr. No.

Name of Committee

Name of Member

Designation

Nature of Changes (Cessation/ Appointment)

1

Audit Committee

Ms. Rekha Shah

Independent Director

Appointment

2

Nomination and Remuneration Committee(1)

Mr. Navin Agarwal

Managing Director

Cessation

Mr. Praveen Tripathi

Independent Director

Appointment

3

Stakeholders Relationship Committee

Ms. Rekha Shah

Independent Director

Appointment

(1) The nomenclature has been changed to Nomination and Remuneration Committee ("NRC") from Nomination and Remuneration / Compensation Committee w.e.f. August 21, 2018.

Declaration by Independent Directors

All Independent Directors have submitted the declaration of independence, as required pursuant to provisions of the Section 149(7) of the Act, stating that they meet the criteria of independence as provided in Section 149(6) of the Act and Regulation 16(1)(b) of the Listing Regulations and are not disqualified from continuing as Independent Directors of the Company.

Disclosure on Maintenance of Cost Records

The Company engaged in Non-Banking Financial Activity during the year under review is not required to maintain cost records in accordance with the provisions of the Act.

Familiarization Programmes

The Company has familiarized the Independent Directors with the Company, their roles, responsibilities in the Company, nature of industry in which the Company operates, business model of the Company, various businesses in the group etc. The details of the familiarization programmes are available on the website of the Company at http://www.motilaloswalgroup.com/Downloads/ IR/16069033Familiarization-Programmes-for-Independent-Director.pdf.

Code of Conduct

Pursuant to Regulation 26(3) of the Listing Regulations, all the Directors of the Company have affirmed compliance with the Code of Conduct of the Company.

Key Managerial Personnel

During the year under review, consequent to resignation of Mr. Sameer Kamath as Chief Financial Officer of the Company with effect from April 27, 2017, Mr. Shalibhadra Shah is appointed as Chief Financial Officer of the Company with effect from April 27, 2017. Further, consequent to resignation of Mr. Murli Krishnan Iyer as the Company Secretary & Compliance Officer of the Company with effect from September 13, 2017, Mr. Kailash Purohit is appointed as Company Secretary & Compliance Officer of the Company with effect from November 4, 2017.

As at March 31, 2018, the Company has the following Key Managerial Personnel:

1) Mr. Motilal Oswal - Chairman, Managing Director & Chief Executive Officer

2) Mr. Raamdeo Agarawal - Joint Managing Director

3) Mr. Shalibhadra Shah - Chief Financial Officer

4) Mr. Kailash Purohit - Company Secretary & Compliance Officer

Company''s Policy on Director Appointment and Remuneration

Section 178 of the Act and Regulation 19 read with Part D of Schedule II of the Listing Regulations, as amended from time to time, requires the NRC to formulate a Policy relating to the remuneration for the Directors, Key Managerial Personnel ("KMP"), Senior Management and other employees of the Company and recommend the same for approval of the Board.

Accordingly, in compliance to provisions to the aforesaid provisions, the Nomination and Remuneration Policy of the Company is available on the website of the Company at http://motilaloswalgroup.com/Downloads/IR/756054990MQFSL-Nomination-and-Remuneration-Policy-Final.pdf. The salient features of the Policy are given below:-

I. Appointment and Removal of Director, KMP and Senior Management

- Appointment criteria and qualifications:

a. The Committee shall identify and ascertain the integrity, qualification, expertise and experience of the person for appointment as Director, KMP or at Senior Management level and recommend to the Board his / her appointment.

b. A person should possess adequate qualification, expertise and experience for the position he / she is considered for appointment. The Committee has discretion to decide whether qualification, expertise and experience possessed by a person are sufficient / satisfactory for the concerned position.

c. The Company shall not appoint or continue the employment of any person as Managing Director/Whole-time Director/ Manager who has attained the age of seventy years.

Provided that the term of the person holding this position may be extended beyond the age of seventy years with the approval of shareholders by passing a special resolution based on the explanatory statement annexed to the notice for such motion indicating the justification for extension of appointment beyond seventy years.

- Term / Tenure:

a. Managing Director/Whole-time Director/Manager (Managerial Person):

- The Company shall appoint or re-appoint any person as its Managerial Person for a term not exceeding five years at a time. No re-appointment shall be made earlier than one year before the expiry of term.

b. Independent Director:

- An Independent Director shall hold office for a term up to five consecutive years on the Board of the Company and will be eligible for reappointment on passing of a special resolution by the Company and disclosure of such appointment shall be made in the Board''s report.

- No Independent Director shall hold office for more than two consecutive terms, but such Independent Director shall be eligible for appointment after expiry of three years of ceasing to become an Independent Director.

Provided that an Independent Director shall not, during the said period of three years, be appointed in or be associated with the Company in any other capacity, either directly or indirectly.

- Evaluation:

The Committee shall carry out evaluation of performance of every Director at regular interval (yearly).

- Removal:

Due to reasons for any disqualification mentioned in the Act, rules made there under or under any other applicable Act, rules and regulations, the Committee may recommend, to the Board with reasons recorded in writing, removal of a Director, KMP or Senior Management subject to the provisions and compliance of the said Act, rules and regulations.

- Retirement:

The Director, KMP and Senior Management shall retire as per the applicable provisions of the Act and the prevailing policy of the Company. The Board will have the discretion to retain the Director, KMP, Senior Management in the same position / remuneration or otherwise even after attaining the retirement age, for the benefit of the Company.

II. Provisions relating to Remuneration of Managerial Person, KMP and Senior Management

- Remuneration to Managerial Person, KMP and Senior Management:

a. Fixed pay:

Managerial Person, KMP and Senior Management shall be eligible for a monthly remuneration as may be approved by the Board on the recommendation of the Committee in accordance with the statutory provisions of the Act, and the rules made there under for the time being in force. The break-up of the pay scale and quantum of perquisites including employer''s contribution to P.F, pension scheme, medical expenses, club fees etc. shall be decided and approved by the Board on the recommendation of the Committee and approved by the shareholders and Central Government, wherever required.

b. Variable Pay:

The Company may in its discretion structure any portion of remuneration to link rewards to corporate and individual performance, fulfillment of specified improvement targets or the attainment of certain financial or other objectives set by the Board. The amount payable shall be based on performance against pre-determined financial and non-financial metrics.

c. Provision for excess remuneration:

If, in any financial year, the Company has no profits or its profits are inadequate, the Company shall pay remuneration to its Managerial Person in accordance with the provisions of Schedule V of the Act and if it is not able to comply with such provisions, with the prior approval of the Central Government. If any Managerial Person draws or receives, directly or indirectly by way of remuneration any such sums in excess of the limits prescribed under the Act or without the prior sanction of the Central Government, where required, he/she shall refund such sums to the Company and until such sum is refunded, hold it in trust for the Company.

The Company shall not waive recovery of such sum refundable to it unless permitted by the Central Government.

- Remuneration to Non-Executive/Independent Director:

a. Remuneration / Commission:

The remuneration/commission, if any, shall be in accordance with the statutory provisions of the Companies Act, 2013, and the rules made there under for the time being in force.

b. Sitting Fees:

The Non-Executive/Independent Director may receive remuneration by way of fees for attending meetings of Board or Committee thereof.

Provided that the amount of such fees shall not exceed the maximum amount as provided in the Act, per meeting of the Board or Committee or such amount as may be prescribed by the Central Government from time to time.

c. Limit of Remuneration/Commission:

Remuneration/Commission may be paid within the monetary limit approved by shareholders, subject to the limit not exceeding 1% of the net profits of the Company computed as per the applicable provisions of the Companies Act, 2013.

Performance Evaluation

Pursuant to the provisions of section 134(3)(p) of the Act and Schedule IV of the Act and in accordance to Regulation 17(10), 25(4) of the Listing Regulations, the Board has carried out the annual performance evaluation of the Board as a whole, various Committees of the Board and of the individual Directors. The performance evaluation of the Independent Directors was carried out by the entire Board. The Directors expressed their satisfaction with the evaluation process. The manner in which the evaluation has been carried out has been explained in the Report on Corporate Governance annexed to this Report.

A declaration to the effect that they meet the criteria of independence as provided in sub-section (6) of Section 149 of the Act has also been received from Independent Directors of the Company.

The Board and the NRC reviewed the performance of the Individual Directors on the basis of the criteria such as Transparency, Performance, etc.

In a separate meeting of Independent Directors, performance of Non-Independent Directors, performance of the Board as a whole and performance of the Chairman was evaluated, taking into account the views of the Executive Directors and Non-Executive Directors. The same was discussed in the Board Meeting followed by the meeting of Independent Directors, at which the performance of the Board, its Committee(s) and Individual Directors was also discussed.

Particulars of Employees

In accordance with the provisions of Section 197(12) of the Act, the ratio of the remuneration of each Director to the median employee''s remuneration and other details in terms of sub-section 12 of Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are forming part of this report and has been appended as "Annexure 3" to this Annual Report.

In terms of first proviso to Section 136 of the Act, the Report and Financial Statements are being sent to the Members and others entitled thereto, excluding the information on employees'' particulars as required pursuant to provisions of Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

In accordance with the provisions of Section 197 of the Act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the annexure pertaining to the names and other particulars of employees is available for inspection at the Registered Office of the Company during the business hours on working days of the Company up to the date of the ensuing AGM. Any shareholder interested in obtaining a copy of the said Annexure may write to the Company Secretary & Compliance Officer in this regard.

The Board of Directors affirms that the remuneration paid to employees of the Company is as per the Nomination and Remuneration Policy of the Company.

Report on Corporate Governance

The Report on Corporate Governance for the year under review, is forming part of the Annual Report. The Certificate from the Statutory Auditors of the Company confirming compliance with the conditions of Corporate Governance as stipulated in Regulation 34 and Schedule V to the Listing Regulations is annexed to the Report on Corporate Governance.

Business Responsibility Report

In terms of Regulation 34(2)(f) of the Listing Regulations, top 500 listed entities based on their market capitalisation as on financial year end, are required to prepare a Business Responsibility Report ("BRR") forming part of the Annual Report.

Accordingly, the Company has prepared the BRR describing the initiatives taken by the Board from an Environmental, Social and Governance perspective and has also constituted the Business Responsibility Committee to overview the Business Responsibility Report and frame and overview such polices as may be required from time to time.

The said BRR is forming part of Annual Report of the Company and is also uploaded on the website of the Company at www.motilaloswalgroup.com

Statutory Auditors

Pursuant to the provisions of Section 139(2) of the Act and the rules made thereunder, the Members at their Twelfth AGM held on July 27, 2017, had appointed M/s. Walker Chandiok & Co. LLP, Chartered Accountants, as the Statutory Auditors of the Company for a term of five years i.e. from the conclusion of Twelfth AGM till the conclusion of the Seventeenth AGM subject to ratification of appointment by Members in every subsequent AGM of the Company.

However, the said requirement is dispensed with according to related provision of Companies Amendment Act, 2017 becoming effective and accordingly, the appointment of Auditors is not to be ratified by the Members in the AGM and hence M/s. Walker Chandiok & Co. LLP, Chartered Accountants, will continue to be remain the Statutory Auditors of the Company till the Seventeenth AGM of the Company without further ratification by the Members.

Mr. Sudhir N. Pillai, Partner, Walker Chandiok & Co. LLP, Chartered Accountants, Statutory Auditors, has signed the Audited Financial Statements of the Company.

Statutory Auditors'' Report

The Statutory Auditors'' Report for the year under review does not contain any qualification. The Notes to the Accounts referred to in the Auditors'' Report are self-explanatory and therefore do not call for any further clarifications under Section 134(3)(f) of the Act.

Secretarial Audit Report

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (as amended from time to time), the Company had appointed M/s. U. Hegde and Associates, Practicing Company Secretaries, to undertake the Secretarial Audit of the Company for the FY 2017-18.

The Secretarial Audit Report is appended as "Annexure 4" to this Annual Report.

There is no adverse remark, qualifications or reservation in the Secretarial Audit Report.

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

Considering the Company''s Non-Banking Financial activities during the year under review, the particulars regarding conservation of energy and technology absorption as required to be disclosed pursuant to the Rule 8(3) of the Companies (Accounts) Rules, 2014 are not relevant to its activities.

Details of the foreign exchange earnings and outgo are given in the Note No. 44 to the Financial Statements.

Transfer of Shares Pertaining to Unclaimed/Unpaid Dividend to I nvestor Education and Protection Fund

Pursuant to Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, the shares of the shareholders in respect of whom the dividend is unpaid/unclaimed for seven consecutive years are required to be transferred to Investor Education and Protection Fund ("IEPF") after giving an opportunity to shareholders to claim the said unpaid/unclaimed dividend.

Accordingly, the Company issued the reminder letters to such shareholders to claim the dividend and also published the notice to such effect in the leading newspaper in English and regional language having wide circulation and accordingly informed them that in the event of failure to claim said divided, the unpaid/unclaimed dividend along with shares pertaining to unpaid/unclaimed dividend would be transferred to IEPF.

Subsequently, the Company has transferred 2,309 Equity Shares to IEPF during the year under review. The details of such shares are available on the website of the Company at http://www.motilaloswalgroup.com/Downloads/IR/10447015List-of-shareholders-In-Respect-of-Unclaimed-Dividend 2009-10.pdf. The concerned shareholders are requested to claim the said shares by directly approaching IEPF Authority.

Disclosure of Details of Unclaimed Equity Shares in the Suspense Account:

Pursuant to Regulation 34 and Schedule V of Listing Regulations, the Company reports the following details in respect of unclaimed Equity Shares that are kept in Specific Demat Accounts.

Particulars

No. of Shareholders

No. of Equity shares

Aggregate Number of Shareholders and the outstanding shares in the suspense account lying as on April 1, 2017

6

615

Number of Shareholders who approached the Company for transfer of shares from suspense account during the year

1

40

Number of Shareholders to whom shares were transferred from the suspense account during the year

1

40

Aggregate Number of Shareholders and the outstanding shares in the suspense account lying as on March 31, 2018

5

575

Depository System

The Equity Shares of the Company are compulsorily tradable in electronic form. As on March 31, 2018, out of the Company''s total paid-up Equity Share Capital comprising of 14,50,83,558 Equity Shares, only 53,336 Equity Shares are in physical form and the remaining shares are in electronic form (demat form). In view of the numerous advantages offered by the Depository System, the Members holding shares in physical form are advised to avail the facility of dematerialization.

Directors'' Responsibility Statement

Pursuant to the provisions of Section 134(5) of the Act, the Board of Directors confirm that, to the best of its knowledge and belief:

1) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

2) 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, 2018 and of the profit of the Company for that period;

3) the Directors have taken proper and sufficient care for the maintenance of 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;

4) the Directors have prepared the annual accounts on a going concern basis;

5) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating effectively;

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

Internal Financial Controls

The Internal Financial Controls with reference to financial statements as designed and implemented by the Company are adequate. The Internal Financial Control procedure adopted by the Company are adequate for safeguarding its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information. During the year under review, the Internal Financial Controls were operating effectively and no material or serious observation has been received from the Auditors of the Company for inefficiency or inadequacy of such controls.

Vigil Mechanism/Whistle Blower Policy

Pursuant to Rule 7 of the Companies (Meetings of Board and its Powers) Rules 2014 read with Section 177(9) of the Act and as per Regulation 22 of the Listing Regulations (as amended from time to time), the Company has framed Vigil Mechanism/Whistle Blower Policy ("Policy") to enable directors and employees to report genuine concerns or grievances, significant deviations from key management policies and reports any non-compliance and wrong practices, e.g., unethical behavior, fraud, violation of law, inappropriate behavior /conduct etc.

The functioning of the Vigil Mechanism is reviewed by the Audit Committee from time to time. None of the Directors or employees have been denied access to the Audit Committee of the Board.

The objective of this mechanism is to maintain a redressal system which can process all complaints concerning questionable accounting practices, internal controls, or fraudulent reporting of financial information.

The Policy framed by the Company is in compliance with the requirements of the Act and Listing Regulations and available on the website of the Company at http://www.motilaloswalgroup.com/Downloads/IR/1062112783Vigil Mechanism Policy.pdf

Corporate Social Responsibility

The Company recognizes the responsibilities towards society and strongly intends to contribute towards development of knowledge based economy.

In accordance with the requirements of the provisions of Section 135 of the Act, the Company has constituted a Corporate Social Responsibility ("CSR") Committee. The composition and terms of reference of the CSR Committee is provided in the Corporate Governance Report forming part of Annual Report.

The Company has also formulated a CSR Policy which is available on the website of the Company at http://www.motilaloswalgroup. com/Downloads/IR/1129307840CSRPolicy.pdf.

An Annual Report on activities as required under Companies (Corporate Social Responsibility Policy) Rules, 2014 (as amended from time to time) has been appended as "Annexure 5" to this Annual Report.

The Company has made contribution through Motilal Oswal Foundation, a not-for-profit charitable company incorporated under Section 25 of the Companies Act, 1956.

Particulars of Loans given, Investments made, Guarantees given or Security provided by the Company:

Details of loans, guarantees and investments covered under the provisions of Section 186 of the Act are given in the Notes to the Financial Statement.

Particulars of Contracts or Arrangements with Related Parties:

The Board of Directors has approved the policy on transactions with related parties ("RPT Policy"), pursuant to the recommendation of the Audit Committee. In line with the requirements of the Act, and Listing Regulations, the Company has formulated the RPT Policy which is also available on the Company''s website at http://www.motilaloswalgroup.com/Downloads/IR/96263605RPT Policy.pdf

All related party transactions entered into during the FY 2017-18 were on an arm''s length basis and in the ordinary course of business.

All Related Party Transactions were placed before the Audit Committee for prior approval. Prior omnibus approval of the Audit Committee is obtained for the transactions which are of unforeseen or repetitive in nature. The details of all such related party transactions entered into pursuant to the omnibus approval of the Committee, were placed before the Audit Committee on a quarterly basis for its review.

During the year under review, there were no material contracts or arrangements or transactions entered into by the Company with related parties and accordingly Form AOC-2 is not applicable.

The Directors draw attention of the Members to Note No. 50 to the Financial Statements which sets out related party disclosures.

Business Risk Management

The Company realizes the importance of Enterprise Risk Management ("ERM") framework and had taken early initiatives towards its implementation. The Company has also formulated group Risk Management Policy.

A systematic approach has been adopted that originates with the identification of risk, categorization and assessment of identified risk, evaluating effectiveness of existing controls and building additional controls to mitigate risk and monitoring the residual risk through effective Key Risk Indicators ("KRI"). The implementation is being carried out in phased manner with the objective to encompass the entire line of businesses.

Effective ERM involves a robust implementation of three lines of defense - first line of defense is the front-line employees, the second line of defense is the risk and compliance function and the third line of defense is external and internal auditors. To build an effective risk culture significant effort has been made towards robustness of these lines of defense.

In the opinion of Board, there are no elements of risks threatening the existence of the Company.

Policy for Prevention, Prohibition and Redressal of Sexual Harassment at Workplace

The Company has in place a Policy for Prevention, Prohibition and Redressal of Sexual Harassment at Work Place. Appropriate reporting mechanisms are in place for ensuring protection against Sexual Harassment and the right to work with dignity.

During the year under review, the Company has received one complaint in this regard and the same has been resolved during the year under review.

Further, the Company has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Extract of Annual Return as Required and Prescribed under Section 92(3) of the Act and Rules made there under

The Section 134(3) (a) of the Act has been amended vide notification of Section 36 of the Companies (Amendment), 2017 with effective from July 31, 2018 by the Ministry of Corporate Affairs ("MCA") which requires company to provide "the web address, if any, where annual return referred to in Section 92(3) has been placed". Further, as the amendment to Section 92(3) of the Act vide provisions of Section 23 of the Companies (Amendment), 2017 is not yet notified by the MCA as on date of this Report, the extract of Annual Return in MGT-9 as required under Section 92(3) of the Act and prescribed in Rule 12 of the Companies (Management and Administration) Rules, 2014 is appended as "Annexure 6" to this Annual Report.

Significant and Material Orders passed by the Regulators or Courts

The Hon''ble NCLT vide its Order dated July 30, 2018 has approved the Scheme of Amalgamation of Motilal Oswal Securities Limited ("Transferor Company/wholly owned subsidiary company") with Motilal Oswal Financial Services Limited ("Transferee Company/ the Company") and their respective shareholders.

Further, no penalties have been levied by the RBI/any other Regulators during the year under review.

Compliance with RBI Regulations

During the year under review, the Company was registered as NBFC and has complied with all the applicable regulations of RBI as on March 31, 2018.

Other Disclosures

During the year under review, the Company has not obtained any registration / license / authorization, by whatever name called from any other financial sector regulators.

However, the Company has voluntarily surrendered its Certificate of Registration issued by Reserve Bank of India.

Further, the Company is in the process of making application with various financial sectors regulators for carrying out the Broking business. In interim, pursuant to the provisions of the Scheme, the Company is carrying the business in the name and style in which Motilal Oswal Securities Limited was undertaking its business.

Acknowledgement

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, 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. The 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.

For and on behalf of the Board of

Motilal Oswal Financial Services Limited

Motilal Oswal

Place : Mumbai Chairman and Managing Director

Date : August 21, 2018 (DIN: 00024503)


Mar 31, 2017

To the Members

The Directors have pleasure in presenting their 12th Report together with the audited Financial Statements of your Company for the year ended 31st March, 2017.

Financial Highlights

The Financial Highlights for the year are as under:

Motilal Oswal Financial Services Limited (Standalone)

Rs. in Lakhs

Particulars

Year ended 31st March, 2017

Year ended 31st March, 2016

Total Revenue

14,235.71

11,086.10

Profit before Interest, Depreciation, Taxation and exceptional items

12,292.08

9,101.23

Interest

(3,638.08)

(2,952.64)

Depreciation

(693.61)

(802.14)

Profit before Taxation and exceptional items

7,960.39

5,346.45

Add/(Less): Exceptional Items

610.81

-

Profit before taxation

8,571.20

5,346.45

Add/(Less) : Provision for Taxation

Current Tax

(662.81)

(1,166.66)

Deferred Tax

(354.86)

494.85

Minimum Alternate Tax

790.46

-

Less : Tax for earlier year(s)

285.70

-

Tax Expenses

(58.49)

671.81

Profit after Taxation

8,629.69

4,674.64

Add: Balance brought forward from previous year

4,334.35

6,312.79

Profit Available for appropriation

8,629.69

4,674.64

Less: Appropriations

Transfer to Statutory Reserve

(1,725.94)

(934.95)

Interim Dividend/ Proposed dividend

(3,588.13)

(4,987.17)

Dividend Distribution Tax

(730.45)

(1,012.76)

Credit of Dividend Distribution Tax

-

281.80

Balance of Profit carried forward

6,919.52

4,334.35

Summary of Consolidated Financial results of the Company and its subsidiaries for the year is as under:

Motilal Oswal Financial Services Limited - Consolidated

Rs. in Lakhs

Particulars

Year ended 31st March, 2017

Year ended 31st March, 2016

Total Revenue

180,870.87

108,064.10

Profit before Interest, Depreciation, Taxation and exceptional items

91,946.86

43,324.46

Interest

44,225.82

17,376.61

Depreciation

3,283.83

3,494.28

Profit before Taxation and exceptional items

44,437.60

22,453.57

Add: Exceptional Items

6,125.03

-

Profit before taxation

50,562.23

22,453.57

Add/(Less) : Provision for Taxation

Current Tax

(13,610.74)

(6,566.86)

Deferred Tax

(3,096.94)

581.23

Minimum Alternate Tax

1,458.24

(151.05)

Less: Tax for earlier year (s)

(1,140.63)

(15.00)

Tax Expenses

14,108.82

6,121.68

Profit after Taxation, before minority Interest

36,453.41

16,331.89

Minority interest in profits

(1,060.25)

(255.37)

Share of profit from Associates

603.87

831.08

Profit after Taxation and minority Interest

35,997.03

16,907.60

Balance brought forward from previous year

77,615.78

6,8117.69

Profit Available for appropriation

113,612.81

8,5025.30

Add/(Less): Appropriations

Transfer to Statutory Reserve

(3,378.80)

(1,730.51)

Interim Dividend/ Proposed dividend

(3,588.13)

(4,974.83)

Dividend Distribution Tax

(730.45)

(730.96)

Capital Redemption Reserve

(840.00)

-

Prior Year dividend, dividend distribution and other adjustments

19.03

(12.31)

Prior Year Adjustments

-

40.54

Balance of Profit carried forward

105,094.46

77,617.22

State of Company’s Affairs

Results: MOFSL Standalone

During the year under review, the standalone revenues for the year were RS.142.36 crores, increase of 28.41% as compared to RS.110.86 crores last year. Interest income declined 18.91% to RS.43.69 crores. Dividend income from subsidiary companies was RS.48.53 crores, as compared to RS.13.98 crores in the previous year. Profit on sale of investments was RS.30.21 crores, as compared to RS.27.81 crores last year. Rent income was RS.17.21 crores in FY2017, up 28.67%. Other operating income was RS.1.81 crores in FY2017, while other income was RS.90.07 lakhs.

Total expenses (before depreciation, interest and exceptional items) decreased during the year, from RS.19.84 crores a year back to RS.19.44 crores this year. Profit before depreciation, interest, exceptional item and taxation (EBITDA) increased by 35.06% this year, from RS.91.01 crores to RS.122.92 crores. Interest and finance charges increased from RS.29.53 crores to RS.36.38 crores.

Reported net profit increased by 84.60% to RS.86.30 crores. MOFSL Standalone’s commitments to our own mutual fund products stood at RS.381.51 crores, as of March 2017. The unrealized gain on these investments is RS.195.56 crores as of March 2017. The same is not reflected in the profit and loss account for the year.

The detailed results of operations of the Company are given in the Management Discussion & Analysis forming part of this Report.

Consolidated Results

The consolidated revenues for the year were RS.1818.32 crores for the year under review, an increase of 66.25% as compared to the previous year.

- Broking revenues increased by 30.04% to RS.661.67 crores. Average daily volumes in the equity markets were RS.4.07 lakh crores in FY2017, up 35.27% from last year. Cash market volumes were up 22.52% YoY to RS.24,687.58 crores. Within cash, delivery was up 33.12% YoY to RS.8,075.90 crores. Also, cash volumes were 83.94% higher than the average seen between FY2012-14. Delivery volumes were 106.78% higher than the FY2012-14 average. Within derivatives, futures rose up 24.73% YoY to RS.62,623.52 crores. This year, options were up 38.68% YoY to RS.3.19 lakh crores, a reversal from last year when options were dipped in the overall market volumes. Amongst cash market participants, prop saw a decline of 2.43% YoY while retail was up 38.54% YoY. DII cash volumes increased 30.66% YoY, led by renewed interest in equity mutual funds from retail/HNI investors. The proportion of retail within cash volumes increased from 48.88% to 55.27% YoY while that of DII increased from 8.67% to 9.25% YoY. Our overall equity market share increased from 1.96% to 2.10% on a YoY basis. Due to our continued focus and investments into this business, we succeeded in capturing a larger chunk of the incremental volumes this year across both cash and derivatives. As of March 2017, our client base included more than 850,000 retail broking and distribution clients and 630 institutions. Our Pan-India distribution reach stood at 2,200 business locations across 588 cities. Our depository assets was RS.44,962.52 crores, up 75.78% YoY, and distribution AUM was RS.4,392.98 crores, up 147.08% YoY.

- Investment banking fee saw a 254.20% growth over the previous year, to RS.85.52 crores. The IPO & QIP transactions gathered significant momentum this year. FY2017 saw the business clock it’s all time high revenues since inception.

- Asset management fees also saw significant traction, increasing 67.59% to RS.375.11 crores, as compared to last year. Total assets under management/advice across mutual funds, PMS and private equity businesses was RS.23,375.76 crores, up 76.10% YoY. Within this, the mutual fund AUM was RS.9,289.82 crores, PMS AUM was RS.10,473.22 crores, AIF AUM was RS.539.72 crores and private equity AUA was RS.3,073.00 crores. The company saw increased mobilization into its open-end equity mutual fund products and PMS products. In the private equity business, the 3rd real estate fund - India Realty Excellence Fund III, achieved its first close.

- Housing finance related income increased by 159.91% to RS.570.53 crores as the business gained traction this year in terms of clients, network, banking lines and loan book. HFC loan book was RS.4,141.33 crores, as compared to RS.2,087.24 crores last year.

- Fund based income increased by 4.14% to RS.117.41 crores. In line with the long term strategy to grow Return on Equity sustainably, MOFSL made strategic allocation of capital to long term RoE enhancing opportunities like Aspire Home Finance and sponsor commitments to mutual fund and private equity funds of MOFSL group. The NBFC loan book, previously run from equity capital, is now being run as a spread business. The year also included profit earned on exits in the Private Equity fund in which MOFSL made sponsor commitments.

- Other income increased by 72.84% YoY to RS.8.07 crores.

Total expenses (before interest and depreciation) for the year at RS.889.23 crores registered a 37.36% jump over last year. People cost increased by 35.87% to RS.340.98 crores. This was largely owing to an increase in hiring in housing finance business. Operating expenses increased by 53.17% to RS.356.12 crores. Other costs were RS.192.13 crores, an increase of 17.19% over last year. The profit before depreciation, interest, exceptional items and taxation (EBITDA) increased by 108.17% to RS.929.09 crores.

Reported net profit for the year after minority interest stood at RS.359.99 crores, an increase of 112.91%.

MOFSL group’s commitments to our own mutual fund products stood at RS.642.95 crores, as of March, 2017. The unrealized gain on these investments is RS.333.91 crores, as of March 2017. The same is not reflected in the profit and loss account for the year. MOFSL group’s commitments to our alternative investment products stood at RS.257.00 crores, as of March, 2017.

Future Outlook

To sum up, our strategy to diversify our business model towards more annuity sources of earnings is showing definite results. The annuity nature of earnings in the new businesses like asset based businesses and housing finance business has brought in visibility of our earnings. Our businesses built scale during FY2017, while maintaining operating parameters. Our brand is now being recognized across each of our businesses. We achieved a 20% ROE in FY2017, and are well on course to achieve this on a sustainable basis. The opportunity size in all our business segments is still huge, and our businesses are well placed to benefit from the growth potential they offer.

Credit Rating

During the year, CRISIL Limited reaffirmed the Credit Rating of “CRISIL A1 ”to the Commercial Programme of RS.250 crores of the Company. ICRA Limited assigned the credit rating of [ICRA] AA” Rating with a stable outlook to the NCD Programme of RS.150 crores of the Company. ICRA Limited assigned the credit rating of [ICRA] AA” Rating with a stable outlook to the NCD Programme of RS.50 crores of Motilal Oswal Securities Limited (MOSL), a wholly owned subsidiary of the Company. CRISIL Limited also reaffirmed the Credit Rating of “CRISIL A1 ”to the Commercial Programme of RS.700 crores of MOSL. The ratings indicate a very strong degree of safety regarding timely servicing of financial obligations. ICRA Limited assigned the credit rating of [ICRA]A1 to the Commercial Paper Programme of RS.700 crores of Aspire Home Finance Corporation Limited (AHFCL), material step down subsidiary of the Company. ICRA Limited assigned the long term credit rating of [ICRA]AA- with a Stable Outlook and CRSIL Limited assigned “CRISIL A /Stable” Rating to the NCD Programme of RS.500 crores of AHFCL.

Dividend and Reserves

The Company at the Meeting of its Board of Directors held on 30th January, 2017, had declared an interim dividend of RS.2.50 per Equity Share, out of the profits of the Company for the third quarter and nine months ended 31st December, 2016 on 14,35,25,725 Equity Shares of R 1.00 each aggregating to RS.35,88,14,313/-.

As per the requirement of the Reserve Bank of India Guidelines, your Company has transferred a sum of RS.17.26 crores to the Statutory Reserves. Further, during the year under review, the Company has not transferred any amount to the General Reserves.

Share Capital

During the year under review, the Company allotted 22,83,401 equity shares under various employee stock option schemes of the Company.

Accordingly, the paid up share capital of the Company as on 31st March, 2017 is RS.14,44,57,476 (Rupees Fourteen Crores Forty Four Lakhs Fifty Seven Thousand and Four Seventy Six only).

The Company has redeemed 500 Series A Secured Redeemable Non-Convertible Debentures of RS.10 lakhs each amounting to RS.50 crores during the year 2016-2017.

The disclosures in compliance with Section 62 of the Companies Act, 2013 read with Rule 12 of Companies (Share Capital and Debentures) Rules, 2014, SEBI (Share Based Employee Benefits) Regulations, 2014 are set out to the report as “Annexure 1”.

The Employee Stock Option Scheme is administered by the Nomination and Remuneration/Compensation Committee of the Board of the Company, in accordance with the applicable SEBI (Share Based Employee Benefits) Regulations, 2014.

Fixed Deposits

Since your Company is the non deposit taking Non Banking Financial Company, it has not accepted any deposits under Chapter V of Companies Act, 2013 during the year under review.

Subsidiaries

During the year under review, Motilal Oswal Investment Advisors Limited, subsidiary of the Company, became Public Limited Company on 31st March, 2017. Motilal Oswal Capital Limited was incorporated on 19th September, 2016 as Wholly Owned Subsidiary of Motilal Oswal Asset Management Company Limited.

Further, Motilal Oswal Securities Limited (MOSL), material wholly owned subsidiary of the Company has issued and allotted 500 Non Convertible Debentures (NCDs) of face value ofRS.10 lakhs each aggregating to RS.50 crores, on private placement basis during the said financial year. The said debentures are listed on BSE Limited. Pursuant to the listing of said debentures, MOSL is now categorized as listed entity as per Listing Regulations, 2015.

Accordingly, as on March 31, 2017, the Company has the following subsidiary companies:

Sr. No. Name of the subsidiaries

1. Motilal Oswal Securities Limited (MOSL)

2. Motilal Oswal Investment Advisors Limited

3. MOPE Investment Advisors Private Limited (MOPE)

4. Motilal Oswal Commodities Broker Private Limited

5. Motilal Oswal Insurance Brokers Private Limited

6. Motilal Oswal Capital Markets Private Limited (Subsidiary of MOSL)

7. Motilal Oswal Asset Management Company Limited (MOAMC) (Subsidiary of MOSL)

8. Motilal Oswal Trustee Company Limited (Subsidiary of MOSL)

9. Motilal Oswal Wealth Management Limited (Subsidiary of MOSL)

10. Motilal Oswal Securities International Private Limited (Subsidiary of MOSL)

11. Motilal Oswal Capital Markets (Hong Kong) Private Limited (Subsidiary of MOSL)

12. Motilal Oswal Capital Markets (Singapore) Pte. Limited. (Subsidiary of MOSL)

13. Aspire Home Finance Corporation Limited (Subsidiary of MOSL)

14. Motilal Oswal Real Estate Investment Advisors Private Limited (MORE)

(Subsidiary of MOPE Investment Advisors Private Limited)

15. Motilal Oswal Real Estate Investment Advisors II Private Limited (Subsidiary of MORE)

16. India Business Excellence Management Co. (Subsidiary of MOPE Investment Advisors Private Limited)

17. Motilal Oswal Asset Management (Mauritius) Private Limited (Subsidiary of MOAMC)

18. Motilal Oswal Capital Limited (Subsidiary of MOAMC)

The policy for determining material subsidiaries as approved by the Board is displayed on the Company’s website at www.motilaloswalgroup.com.

Pursuant to the provisions of Section 129(3) of the Companies Act, 2013, a statement containing salient features of financial statement of subsidiaries in Form AOC-1 is annexed to the Financial Statement in the Annual Report. Your Company will also make available copy of separate audited financial statement in respect of each of the subsidiary companies upon request by any Member of the Company interested in obtaining the same. In accordance with section 136 of the Companies Act, 2013, the separate audited financial statement in respect of each of the subsidiary companies is also available on the website of your Company at www.motilaloswalgroup.com. These documents will also be available for inspection till the date of AGM during the business hours at our registered office of the Company.

The financial performance of each of the subsidiary included in the consolidated financial statement of your Company is annexed herewith to this Report as “Annexure 2”.

Directors and Key Managerial Personnel

Directors

The Company has 6 (Six) Directors comprising of 1 (One) Chairman, Managing Director & Chief Executive Officer, 1 (One) Joint Managing Director, 1 (One) Non-executive Director and 3 (Three) Independent Directors.

Mr. Navin Agarwal retires by rotation at the forthcoming Annual General Meeting and being eligible, offer himself for reappointment. The details of Mr. Navin Agarwal is stated in the notice of the Annual General Meeting of the Company.

The Company has received necessary declarations from Mr. Vivek Paranjpe, Mr. PraveenTripathi and Ms. Sharda Agarwal, Independent Directors of the Company under section 149(7) of the Companies Act, 2013.

In accordance to the provisions of Companies Act, 2013, Mr. Vivek Paranjpe, Mr. Praveen Tripathi and Ms. Sharda Agarwal were appointed as Independent Directors of Company for the period of 3 years for holding office as Independent Director from the conclusion of 9th Annual General Meeting (AGM) till the conclusion of ensuing 12th Annual General Meeting (AGM). Pursuant to recommendation of Nomination and Remuneration/Compensation Committee and based on the performance evaluation report, members of the Board recommended their reappointment in Board meeting dated 27th April, 2017, subject to approval of the members for the second term of three years for holding office as Independent Director of the Company from conclusion of forthcoming AGMtill the conclusion of 15th AGM of the Company.

The Appropriate resolutions for the appointment/re-appointment of Directors as detailed in the notice of forthcoming AGM would be placed for your approval at the forthcoming AGM.

Key Managerial Personnel

In accordance to the provisions of Companies Act, 2013, Mr. Motilal Oswal, Chairman, Chief Executive Officer and Managing Director, Mr. Raamdeo Agarawal, Joint Managing Director, Mr. Shalibhadra Shah, Chief Financial Officer and Mr. Murli Krishnan Iyer, Company Secretary and Compliance Officer are Key Managerial Personnel of the Company.

Mr. Shalibhadra Shah has been appointed as the Chief Financial Officer of the Company with effect from 27th April, 2017 in place of Mr. Sameer Vasudev Kamath who stepped down from the position of Chief Financial Officer with effect from 27th April, 2017. Further, in accordance to the provisions of Section 203 of the Companies Act, 2013, Mr. Shah has also been designated as Key Managerial Personnel of the Company.

Committees of the Board

The details of all the Committees of the Board along with their charters, composition and meetings held during the year, are provided in the Report on Corporate Governance which forms part of this Annual Report. The Board has accepted all the recommendations of the Audit Committee.

Corporate Social Responsibility (CSR)

The Company, Motilal Oswal Financial Services Limited recognizes the responsibilities towards society and strongly intends to contribute towards development of knowledge based economy.

The Company has also framed the Corporate Social Responsibility (CSR) Policy containing the details of activities to be undertaken under CSR, prohibited activities under CSR, CSR Projects and Implementation Schedule, Budgeting and Allocation of funds, monitoring and evaluation of CSR activities.

As the part of the initiatives under Corporate Social Responsibility, during the year under review, the Company has made contribution in area of education and drought relief. The details of contribution is stated in Annual Report on CSR activities as annexed herewith to this Report as “Annexure 3”.

The Company has made direct contribution and also through Motilal Oswal Foundation, a not-for-profit charitable company incorporated under Section 25 of the Companies Act, 1956.

Further, Motilal Oswal Foundation has also executed the Memorandum of Understanding with Kalinga Institute of Social Sciences (KISS) for construction of residential school for tribal students.

Performance Evaluation

Pursuant to the provisions of section 134(3)(p) of the Companies Act, 2013 and Schedule IV of the Companies Act, 2013 and in accordance to Regulation 17(10), 25(4) of the Listing Regulations, 2015, the Board has carried out the annual performance evaluation of the Board as a whole, various Committees of the Board and of the Directors. The performance evaluation of the Independent Directors was carried out by the entire Board. The Directors expressed their satisfaction with the evaluation process. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report annexed to this Report.

A declaration to the effect that they meet the criteria of independence as provided in sub-section (6) of Section 149 of the Companies Act, 2013 has also been received from Independent Directors of the Company.

The Board and the Nomination and Remuneration /Compensation Committee reviewed the performance of the individual Directors on the basis of the criteria such as Transparency, Performance, etc.

In a separate meeting of Independent Directors, performance of non-independent Directors, performance of the Board as a whole and performance of the Chairman was evaluated, taking into account the views of the executive directors and nonexecutive directors. The same was discussed in the Board meeting that followed the meeting of independent directors, at which the performance of the Board, its committee and individual Directors was also discussed.

Corporate Governance

A separate report on Corporate Governance is annexed to this Report. The certificate received from the Auditors of the Company confirming compliance to the conditions of Corporate Governance as stipulated in Regulation 34 and Schedule V to the Listing Regulations, 2015, is annexed to Report on Corporate Governance.

Management Discussion and Analysis

The Management Discussion and Analysis Report for the year under review as stipulated in Regulation 34 of the Listing Regulations, 2015 is annexed to this Report.

Vigil Mechanism / Whistle Blower Policy

The Company has established the Vigil Mechanism/Whistle Blower Policy for the Directors and employees for reporting the genuine concerns or grievances, significant deviations from key management policies and reports any non-compliance and wrong practices, e.g., unethical behavior, fraud, violation of law, inappropriate behavior / conduct etc.

The functioning of the vigil mechanism is reviewed by the Audit Committee from time to time. None of the Directors or employees have been denied access to the Audit Committee of the Board.

The Vigil Mechanism/Whistle Blower Policy is uploaded on the Website of the Company at www.motilaloswalgroup.com.

Business Responsibility Report

In accordance with the provisions of SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2015, the Company has prepared the Business Responsibility Report for initiatives taken by the Board from an environmental, Social and Governance perspective.

The Company has also constituted the Business Responsibility Committee to overview the Business Responsibility Report and frame and overview such polices as may be required from time to time.

The separate Business Responsibility Report is annexed to this Report and said Report is also uploaded on the website of the Company at www.motilaloswalgroup.com.

Dividend Distribution Policy

In pursuant to the provisions of SEBI (Listing Obligations and Disclosure Requirements) (Second Amendment) Regulations, 2015, the Company has framed the Dividend Distribution Policy including the various parameters as stated in the regulations.

The dividend distribution policy is annexed to this report as “Annexure 9” and said Policy is also uploaded on the website of the Company at www.motilaloswalgroup.com.

Business Risk Management

The Company realizes the importance of Enterprise Risk Management (ERM) framework and had taken early initiatives towards its implementation.

A systematic approach has been adopted that originates with the identification of risk, categorization and assessment of identified risk, evaluating effectiveness of existing controls and building additional controls to mitigate risk and monitoring the residual risk through effective Key Risk Indicators (KRI).The implementation is being carried out in phased manner with the objective to encompass the entire line of businesses.

Effective ERM involves a robust implementation of three lines of defense-first line of defense is the front-line employees, the second line of defense is the risk and compliance function and the third line of defense is external and internal auditors. To build an effective risk culture significant effort has been made towards robustness of these lines of defense.

In the opinion of Board, there are no elements of risks threatening the existence of the company.

Internal Financial Controls

The Internal Financial Controls with reference to financial statements as designed and implemented by the Company are adequate. The Internal Financial Control procedure adopted by the Company are adequate for safeguarding its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information. During the year under review, the Internal Financial Controls were operating effectively and no material or serious observation has been received from the Auditors of the Company for inefficiency or inadequacy of such controls.

Particulars of Loans, Guarantees or Investments

Your Company being the Non Banking Financial Company having the principal business of providing loans is exempted from the provisions of Section 186 of the Companies Act, 2013 to the extent of providing loans, giving guarantee and providing security in connection with loan.

However, the details of investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in note no. 11 to the financial statement.

The particulars of loans / advances in the nature of loans to subsidiaries required to be disclosed in the annual accounts of the Company as stipulated in Regulation 34 and Schedule V to the Listing Regulations, 2015 are annexed to the financial statement in the Annual Report.

Related Party Transactions

All related party transactions entered into during the financial year were on an arm’s length basis and in the ordinary course of business.

All Related Party Transactions were placed before the Audit Committee for prior approval. Prior omnibus approval of the Audit Committee is obtained for the transactions which are of unforeseen or repetitive in nature. The details of all such related party transactions entered into pursuant to the omnibus approval of the Committee, were placed before the Audit Committee on a quarterly basis for its review.

Details of particulars of material contracts or arrangements or transactions entered into by the Company under section 188(1) of the Companies Act, 2013, with related parties in form AOC-2 are provided in “Annexure 4” as required under Section 134(3)(h) of Companies Act, 2013 and Rules made there under.

The policy on Materiality of Related Party Transactions as approved by the Board is uploaded on the Company’s Website at www.motilaloswalgroup.com.

Statutory Auditors

Your Company has appointed M/s. Haribhakti & Co. LLP, Chartered Accountants, as Statutory Auditors for the period of three years at its Annual General Meeting held on 22nd August, 2014. However, it was mandatory for the Company to rotate the Statutory Auditors of the Company on completion of maximum term under Section 139 of Companies Act, 2013. Hence due to expiry of term of existing Auditor of the Company, in accordance to the provisions of Section 139 of Companies Act, 2013 the members of the Audit Committee and Board in its Meeting on 27th April, 2017, recommended the appointment of M/s. Walker Chandiok & Co. LLP (Auditing arm of Grant Thornton) as Statutory Auditor of the Company, for the period of five years to hold the office from the conclusion of 12th AGM till the conclusion of 17th AGM of the Company. Accordingly, the members will be required to approve the terms & conditions ofappointment including remuneration in consultation with Auditors.

There were no qualifications, reservations, adverse remarks or disclaimers in the report of Statutory Auditors of the Company.

Secretarial Audit

In accordance with the provisions of Section 204 of the Companies Act, 2013 read with rules there under, the Company had appointed M/s. U. Hegde and Associates, Practicing Company Secretaries, for conducting the secretarial audit of the Company for the Financial Year 2016-17.

There were no qualifications, reservations, adverse remarks or disclaimers in the Secretarial Audit Report of the Company.

The secretarial audit report is annexed to this Report as “Annexure 5”.

Particulars of employees as required under Section 197 of the Companies Act, 2013 and Rules framed there under

In accordance with the provisions of Section 197(12) of Companies Act, 2013, the ratio of the remuneration of each Director to the median employee’s remuneration and other details in terms of sub-section 12 of Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are forming part of this report as “Annexure 6”.

In accordance with the provisions of Section 197 of the Companies Act, 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the annexure pertaining to the names and other particulars of employees is available for inspection at the Registered Office of the Company. Any shareholder interested in obtaining a copy of the said Annexure may write to the Company Secretary & Compliance Officer at the Registered Office of the Company.

Directors’ Responsibility Statement

Pursuant to Section 134(3)(c) read with Section 134(5) of the Companies Act, 2013, your Directors confirms that:

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

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

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

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

e. the directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

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

Extract of Annual Return

The details forming part of extract of annual return of the Company in Form MGT 9 is annexed herewith to the report as “Annexure 7”.

Number of Board Meetings

Four Board Meetings were held during the year under review. The details of such Board Meetings are stated in Corporate Governance Report forming part of this Annual Report.

Significant and Material Orders

There were no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and company’s operations in future during the year 31st March, 2017.

Material changes and commitments, affecting the financial position of the Company

There have been no material changes and commitments, affecting the financial position of the Company, which have occurred between the end of the financial year of the Company and the date of this Report.

Nomination and Remuneration Policy

The Board has on the recommendation of Nomination and Remuneration/Compensation Committee framed a policy on Directors’ appointment and remuneration of Directors including criteria for determining qualification, positive attributes, independence of directors and remuneration for Directors, Key Managerial Personnel and other employees. The policy is annexed to this report as “Annexure 8”.

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

In view of the nature of activities which are being carried on by the Company, Rule 8(3) of the Companies (Accounts) Rules, 2014 concerning conservation of energy and technology absorption respectively are not applicable to the Company.

There was no inflow or outflow of foreign exchange during the year under review.

Transfer of Shares pertaining to Unclaimed / Unpaid Dividend to Investor Education and Protection Fund

Pursuant to Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, the shares of the shareholders in respect of whom the dividend is unpaid/unclaimed for seven consecutive years are required to be transferred to Investor Education and Protection Fund (IEPF) after giving an opportunity to shareholders to claim the said unpaid/unclaimed dividend.

Accordingly, Company issued the reminder letters to such shareholders to claim the dividend and also published the notice to such effect in the leading newspaper in English and regional language having wide circulation and accordingly informed them that in the event of failure to claim said dividend, the unpaid/unclaimed dividend along with shares pertaining to unpaid/unclaimed dividend would be transferred to IEPF.

Acknowledgments

Your Directors take this opportunity to thank the Authorities, Bankers, Shareholders and the Customers of the Company for their continued support to the Company. The Directors also place on record their sincere appreciation of the contributions made by every member of the MOFSL family for their dedicated efforts that made these results achievable.

For and on behalf of the Board of

Motilal Oswal Financial Services Limited

Motilal Oswal

Chairman & Managing Director

(DIN:00024503)

Mumbai, 27th April, 2017


Mar 31, 2014

To the Members

The Directors have pleasure in presenting their 9th Report together with the audited Accounts of your Company for the year ended 31st March, 2014.

Financial Highlights

Summary of Financial results for the year is as under:

Motilal Oswal Financial Services Limited (Standalone)

Rs. in millions

Year ended Year ended 31st March, 2014 31st March, 2013

Revenue 977.36 949.04

Profit before Finance Cost, Taxation and Exceptional Items 652.07 752.31

Finance Cost (190.09) (134.50)

Profit before Taxation and exceptional items 461.97 617.81

Add/(Less): Exceptional Items [Income / (Expense)] (12.95) (163.80)

Profit before taxation 449.02 454.01

Add/(Less) : Provision for Taxation

Current Tax (53.97) (64.77)

Deferred Tax 3.27 (1.75)

Tax for earlier year(s) (5.24) -

Profit after Taxation, before extraordinary items for the year 393.08 387.48

Balance brought forward from previous year 600.03 623.36

Profit Available for appropriation 993.11 1,010.84

Less: Appropriations

Transfer to Statutory Reserve (78.62) (77.50)

Proposed Dividend / Interim Dividend (273.20) (290.47)

Dividend Distribution Tax (0.05) (11.84)

Transfer to General Reserve (31.45) (31.00)

Transfer to Capital Redemption Reserve (7.07) -

Balance of Profit carried forward 602.73 600.03

Summary of Consolidated Financial results of the Company and its subsidiaries for the year is as under: Motilal Oswal Financial Services Limited - Consolidated

Rs. in millions

Year ended Year ended 31st March, 2014 31st March, 2013

Revenue 4,682.64 4,728.77

Profit before Interest, Depreciation, Taxation and exceptional items 1,421.87 1,743.99

Interest (28.61) (48.03)

Depreciation (242.65) (258.55)

Profit before Taxation and exceptional items 1,150.61 1,437.41

Add/(Less) : Exceptional Items [Income / (Expense)] (555.86) 180.77

Rs. in millions

Year ended Year ended 31st March, 2014 31st March, 2013

Profit before taxation 594.75 1,618.18

Less : Provision for Taxation

Current Tax 235.94 390.29

Deferred Tax (62.41) 132.41

Minimum Alternate Tax (0.89) (8.30)

Tax for earlier year(s) 6.60 3.97

Profit after Taxation, before extraordinary items and minority interest for the year 415.51 1,099.81

Minority interest in profits (20.51) (8.95)

Profit after Taxation and minority Interest 395.01 1,090.86

Balance brought forward from previous year 6,163.65 5,597.06

Profit Available for appropriation 6,558.66 6,687.92

Less: Appropriations

Transfer to Statutory Reserve (78.62) (77.50)

Proposed dividend/Interim Dividend (273.32) (290.53)

Dividend Distribution Tax (47.57) (58.91)

Transfer to General Reserve (48.52) (113.08)

Prior Year dividend, dividend distribution and other adjustments 0.10 15.75

Transfer to Capital Redemption Reserve (7.07) -

Balance of Profit carried forward 6,103.65 6,163.65

Dividend

The Company at the Meeting of its Board of Directors held on 26th October, 2013, had declared an interim dividend of Rs. 1.00 per Equity Share, out of the profits of the Company for the six months ended 30th September, 2013 on 138,831,665 Equity Shares of Rs. 1.00 each aggregating to Rs. 138,831,665/-.

Keeping in view the overall performance during the year, your Directors are pleased to recommend a final dividend of Rs. 1 per Equity Share on 138,165,831 Equity Shares of Rs. 1.00 each aggregating to Rs. 138,165,831, payable to those members whose names appear in the Register of Members as on the Book Closure Date. The dividend distribution tax will absorb a sum of Rs. 47.57 mn.

Standalone Results

During the year under review, the standalone revenues for the year were Rs. 977.36 mn, a growth of 2.98% as compared to Rs. 949 mn last year. Within fund based income, interest income was up by 10.59% to Rs. 677.42 mn. This was largely on account of an increase in the average loan book size across the year. Other operating income was Rs. 43.50 mn in FY2014, down 62.97% YoY. The previous year had included profit earned on partial exits in few investments of the Private Equity Fund in which MOFSL made sponsor commitments. Arbitrage opportunities were also lower in the market this year, which impacted arbitrage income this year. Other income, which includes dividend from subsidiaries, was Rs. 280.20 mn.

Total expenses (before depreciation, interest and exceptional) almost doubled during the year, from Rs. 113.11 mn a year back to Rs. 242.1 mn this year. The company has made provisions for some debts where the collateral cover has fallen below acceptable thresholds.

profit before depreciation, interest, and taxation (EBITDA) decreased by 12% this year to Rs. 735.29 mn. Interest and fi nance charges increased from Rs. 134.50 mn to Rs. 190.1 mn. Exceptional item of Rs. 12.95 mn (pre-tax) represents amounts provided for positions related to exposure in the National Spot Exchange Limited. The reported net profi t increased by 1.45% to Rs. 393.1 mn.

The detailed results of operations of the Company are given in the Management Discussion & Analysis forming part of this Report.

Consolidated Results

The Consolidated Revenues of the Company for the year were Rs. 4,682.64 mn for the year under review, a marginal decrease of 0.98% as compared to the previous year.

– Broking revenues declined by 2.70% to Rs 2,884.24 mn, as secondary market activity remained muted in the cash equities segment. Average daily volumes in the equity markets reached Rs. 2 tn in FY2014, up 20.43% from last year. But this uptick was almost entirely led by the options segment, yet again. Options increased 22.84% YoY, and comprised 77.38% of overall market volumes in FY2014. Futures were up 18.1% YoY, and comprised 16.1% of market volumes, same as last year. Average daily volumes in cash equities, at Rs. 132.68 bn in FY2014, was just marginally up by 1.84% as compared to FY2013. Within this, the high-yield delivery segment showed an uptick of 3.97%. The fact that cash equities volumes have held in the Rs. 130-140 bn range since last three years possibly indicates that cash volumes might have bottomed out at last. Our overall equity market share increased marginally from 1.53% to 1.56% on a YoY basis. As on 31st March, 2014, total client base has increased to 800,385, which includes 701,845 retail broking and distribution clients. Our Pan-India distribution reach stood at 1,534 business locations across 507 cities.

– Investment banking fee at Rs. 67.52 mn saw a 13.45% decline over the previous year. Fee income was impacted due to delays in closure of few deals which are in advanced stages, although deal closures gathered some momentum this year. Continued slowdown in the corporate capex cycle and policy making impacted equity raising activities like IPO, FPO and QIP in the market. Companies continued to remain cautious and very few projects were announced. However, the deal pipeline remains healthy and the business sentiments appear to be improving in light of the evolving political scenario.

– Fund based income declined by 14.61% to Rs. 857.84 mn due to lower arbitrage opportunities in the market this year. The previous year had also included profit earned on partial exits in few investments of the Private Equity Fund in which MOFSL made sponsor commitments.

– Asset management fees saw traction this year, increasing 26.57% to Rs. 758.77 mn as compared to last year. Total assets under management/advice across mutual funds, PMS and private equity businesses was Rs. 39.21 bn. Within this, our mutual funds AUM was Rs. 5.82 bn, PE AUA was Rs. 18.90 bn, while PMS AUM was Rs. 14.49 bn. During the year, the private equity business announced the final close of its 2nd growth capital fund - India Business Excellence Fund II raising commitments of Rs. 9.54 bn from domestic and off shore investors, as well as the fi rst close of its 2nd real estate fund - India Realty Excellence Fund II raising commitments of Rs. 1.86 bn.

– Other income increased by 38.53% to Rs. 114.27 mn as compared to last year

Total expenses (before interest and depreciation) for the year at Rs. 3,260.77 mn registered a 9.25% jump over last year. People cost increased by 17.93% to Rs 1,273.25 mn. This was largely owing to an increase in hiring in the broking, wealth management, asset management and commodity businesses, as well as performance-based compensation in the private equity business. The decline in brokerage commission earned reduced the brokerage shared with intermediaries by 4.76% to Rs. 1,053.44 mn. Other costs were Rs.934.1 mn, an increase of 16.89% over last year. This was largely due to higher provisions made during this year for debts where collateral cover has fallen below acceptable thresholds. The profit before depreciation, interest, exceptional items and taxation (EBITDA) decreased by 18.47% to Rs. 1,421.87 mn. EBITDA margin decreased from 36.88% to 30.36%.

The company had exposure to National Spot Exchange Limited (NSEL). However, NSEL has not been able to adhere to its payment obligations, and the company has perused legal action against it. Pending final outcome which is uncertain, the company has fully written off /provided for these positions in the P/L to the tune of Rs. 555.86 mn (pre-tax) during the year, which is disclosed under "Exceptional Items". Reported net profit for the year after minority interest stood at Rs. 395 mn, a decline of 63.79%.

Buyback of Equity Shares

- The Board of Directors at its Meeting held on 27th April, 2013 accorded consent for the Buyback of shares of the Company from open market through the Stock Exchange Mechanism at a price not exceeding Rs 90/- per share upto a maximum of 75,00,000 fully paid-up Equity Shares of Rs 1 each (equivalent to 5.16% of Equity Share Capital outstanding as on 31st March, 2013) and a minimum of 18,75,000 fully paid-up Equity Shares of Rs. 1 each (equivalent to 1.29% of Equity Share Capital outstanding as on 31st March, 2013), subject further to the condition that the aggregate amount to be paid by the Company for the said Buy-back (excluding brokerage and other charges, if any) shall not exceed Rs. 650 mn.

- The shareholders of the Company approved the Buyback of Equity shares by Special Resolution through Postal Ballot process on 21st June, 2013. The Company published the Public Announcement for Buyback of Shares in the newspapers and filed it with Securities Exchange Board of India (SEBI) on 25th June, 2013.

- On receiving the requisite approval from the SEBI and the Stock Exchanges, the Buyback of shares commenced from 8th July, 2013 and would remain open till 9th June, 2014. Upto 31st March, 2014 the Company had bought back 94.30% of 75,00,000 shares (Maximum Off er Shares) amounting to 7,072,701 shares for a consideration of Rs. 560.10 mn (excluding brokerage and other charges).

- The Company extinguished 7,069,945 shares out of the 7,072,701 bought back shares as on 31st March, 2014. The balance 2,756 shares were extinguished on 9th April, 2014.

Future Outlook

Investor sentiments seem to be building up in light of the stability in certain macro indicators, as well as the evolving political scenario over the elections. Sustenance of macro indicators at reasonable levels, along with a revival in the capex cycle and manufacturing segment following clarity on the political front and policy/reforms movement should help increase activity levels in the capital markets. Initial evidence of this can already be seen in the early months of FY 2015. Volume levels in the cash equities market have increased since March onwards, especially in the high-yield delivery segment. Equity mutual funds are also evincing interest in terms of inflows.

Credit Rating

During the year, Crisil Limited reaffirmed the Credit Rating of "CRISIL A1 " to the Short Term Debt Programme of Rs. 1,500 mn of the Company. ICRA Limited assigned the credit rating of "PP-MLD[ICRA] AA-" Rating with a stable outlook to the Long Term Debt Programme of Rs. 250 mn of the company. Crisil Limited also reaffirmed the Credit Rating of "CRISIL A1 " to the Short Term Debt Programme of Rs. 1,000 mn of Motilal Oswal Securities Limited, a subsidiary of the Company. The ratings indicate a very strong degree of safety regarding timely servicing of financial obligations.

Employees'' Stock Option Schemes (ESOS)

Details required to be provided under the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are set out in Annexure to this Report.

Directors

Mr. Navin Agarwal retires by rotation at the forthcoming Annual General Meeting and being eligible, off er himself for reappointment. The details of the Director to be reappointed is set out in the Report on Corporate Governance annexed to this Report.

Directors'' Responsibility Statement

Pursuant to section 217(2AA) of the Companies Act, 1956, your Directors confi rm that:

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

(ii) they have, in the selection of the accounting policies, consulted the Statutory Auditors and these have been applied consistently and reasonable and prudent judgments and estimates have been made so as to give a true and fair view of the state of Affairs of the Company as at 31st March, 2014 and of the profit of the Company for the year ended on that date;

(iii) proper and sufficient care has been taken for the maintenance of 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 annual accounts have been prepared on a going concern basis.

Corporate Social Responsibility (CSR) initiatives by the Group

As per section 135 of the Companies Act, 2013 every company having net worth of Rs 500 crore or more or turnover of Rs. 1,000 crore or more or a net profit of Rs. 5 crore or more during any financial year shall constitute a Corporate Social Responsibility Committee and shall ensure that the company spends, in every financial year, at least two per cent of the average net profits of the company made during the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy.

At Motilal Oswal Group, our motto is ''Knowledge First'' and we believe that education can bring prosperity and equality in the society. In line with our motto we believe in enhancing the only human intangible asset. Recognizing our responsibilities towards the society, we intend to carry out various initiatives like supporting education, medical treatments, various other charitable and noble aids, etc.

Motilal Oswal Group resolves to contribute towards development of knowledge based economy by discharging CSR that would positively infl uence the customers, employees, shareholders, communities and other stakeholders in various aspects of its operations.

Motilal Oswal Group makes contributions to various causes directly through the individual companies and through Motilal Oswal Foundation, a charitable company of our Group.

Activities undertaken by the Group

1. The Motilal Oswal Foundation has recently set up a hostel at Lallubhai Park, Andheri (West), Mumbai - 400 058, called "Agrawal Oswal Chhatrawas" in collaboration with the Rajasthan Vidyarthi Griha. The Agrawal Oswal Chhatrawas is a state of the art hostel for students from various parts of the country who aspire for the professional course of Chartered Accountancy. It''s a 5-storey building with total capacity of approximately 210 students on triple sharing basis (with attached toilet & bath).

2. Initiated "Gyan Daan", a learning program at Janta Shikshan Sanstha, Government School which serves the children belonging to the underprivileged section of the society.

3. "Mid-day meals" to school children through the ISKCON Food Relief Foundation and thus feeding approximately 600 childrens everyday.

4. Contribution through cash and kind to various NGOs like Goonj, through the Joy of Giving Week.

5. Collection drives throughout India of toys, stationery, toiletries and clothes, etc. every year for distribution amongst the underprivileged section of society.

6. Sponsored education for 3 underprivileged children for consecutive two academic years.

7. Tie up with Light of Life Trust for providing books, study materials, school kits, etc. to the underprivileged children.

8. Celebrating the festivities with the underprivileged by giving lectures, arranging workshops, etc.

Proposed CSR Projects for FY 2014-2015

1. Ashoka University

Motilal Oswal Group is in the process of making contributions to Ashoka University. Ashoka University is envisioned to be India''s fi rst higher education institution in the class of the celebrated Ivy League and the world''s top ranked universities. Indian students can now avail of a topnotch liberal arts education at a fraction of its cost in India.

The Group intends to make an initial contribution of Rs. 2.50 crores during the year 2014-15 for the establishment of the University in New Delhi.

2. Shloka Missionaries

Motilal Oswal Group is in the process of making contributions to Shloka Missionaries, a Trust set up for setting up and running English medium schools for the underprivileged in the rural India.

The Group intends to make contribution of Rs. 50 lakhs during the year 2014-15 for the establishment of a School for the underprivileged at Umarkhed town of Maharashtra.

3. ISKCON Food Relief Foundation

Motilal Oswal Group is making contributions to ISKCON Food Relief Foundation funding the mid-day meals of approximately 600 school students daily, throughout the academic year.

The Group intends to make contribution of Rs 10 lakhs during the year 2014-15 to ISKCON Food Relief Foundation.

4. Gyan Daan at Janta Shikshan Sanstha, Government School at Worli, Mumbai.

Motilal Oswal Group has started an associate volunteering program called ''Gyan Daan'' in Mumbai. Gyan daan has initiated a learning program at a school serving children from the underprivileged section of society. The main objectives of the program are enhancing the quality of education at the school, building confi dence, developing intellectual curiosity and improving the ability of students to communicate in English. The Group works with a dedicated set of volunteers from various departments of the Motilal Oswal Group.

The Group has already made contributions to improve the physical infrastructures of Janta Sikshan Sanstha, Government School at Mumbai.

5. Muskan Foundation

Motilal Oswal Group is in the process of making contributions to Muskan Foundation, Mumbai, a foundation set up for perpetuating a new lease of life for children with multiple disabilities and visual impairment.

The Group intends to make contribution of Rs.2 lakhs during the year 2014-15 to Muskan Foundation.

6. Emergency Medical Aid to financially weak people

Motilal Oswal Group is making contributions to meet the needs of Emergency Medical Aid to financially weak people on case to case basis. The payments in this case are generally made directly to the concerned hospitals.

Committees of the Board

- Audit Committee

The Audit Committee presently comprises of Mr. Balkumar Agarwal (Chairman of the Committee), Mr. Raamdeo Agarawal, Mr. Vivek Paranjpe and Mr. Praveen Tripathi.

- Remuneration/Compensation Committee

The Remuneration/Compensation Committee of the Board of Directors presently comprises of Mr. Vivek Paranjpe (Chairman of the Committee), Mr. Balkumar Agarwal and Mr. Motilal Oswal.

- Shareholders/Investors'' Grievance Committee

The Shareholders/Investors Grievance Committee of the Board of Directors presently comprises of Mr. Balkumar Agarwal (Chairman of the Committee), Mr. Motilal Oswal and Mr. Raamdeo Agarawal.

- Debenture Committee

The Debenture Committee of the Board of Directors presently comprises of Mr. Motilal Oswal, Mr. Raamdeo Agarawal, Mr. Navin Agarwal and Mr. Balkumar Agarwal.

- Nomination Committee

The Nomination Committee of the Board of Directors presently comprises of Mr. Motilal Oswal and Mr. Raamdeo Agarawal.

- Risk Management Committee

The Risk Management Committee of the Board of Directors presently comprises of Mr. Motilal Oswal and Mr. Navin Agarwal.

- Asset Liability Management Committee (ALCO)

The Asset Liability Management Committee (ALCO) of the Board of Directors presently comprises of Mr. Motilal Oswal (Chairman of the Committee), Mr. Raamdeo Agarawal, Mr. Navin Agarwal and Mr. Ajay Menon.

- ESOP Committee

The ESOP Committee of the Board of Directors presently comprises of Mr. Motilal Oswal and Mr. Raamdeo Agarawal.

Corporate Governance

A report on the Corporate Governance along with a certificate from the Auditors of the Company regarding the compliance of conditions of Corporate Governance as also the Management Discussion and Analysis Report as stipulated under Clause 49 of the Listing Agreement are annexed to this Report.

Auditors

Messrs. Haribhakti & Co., Chartered Accountants, retire as Auditors of the Company at the forthcoming Annual General Meeting and have given their consent for re-appointment for 3 years. The members will be required to appoint Auditors for 3 years and fix their remuneration.

Subsidiaries

The Company has the following subsidiary companies:

1. Motilal Oswal Securities Limited (MOSL)

2. Motilal Oswal Investment Advisors Private Limited

3. MOPE Investment Advisors Private Limited (Formerly known as Motilal Oswal Private Equity Advisors Pvt. Ltd.)

4. Motilal Oswal Commodities Broker Private Limited

5. Motilal Oswal Insurance Brokers Private Limited

6. Motilal Oswal Capital Markets Private Limited (Subsidiary of MOSL)

7. Motilal Oswal Asset Management Company Limited (Subsidiary of MOSL)

8. Motilal Oswal Trustee Company Limited (Subsidiary of MOSL)

9. Motilal Oswal Wealth Management Limited (Subsidiary of MOSL)

10. Motilal Oswal Securities International Private Limited. (Subsidiary of MOSL)

11. Motilal Oswal Capital Markets (Hong Kong) Private Limited (Subsidiary of MOSL)

12. Motilal Oswal Capital Markets (Singapore) Pte. Limited. (Subsidiary of MOSL)

13. Aspire Home Finance Corporation Limited (Subsidiary of MOSL)

14. Motilal Oswal Real Estate Investment Advisors Private Limited (Subsidiary of MOPE Investment Advisors Private Limited)

15. Motilal Oswal Real Estate Investment Advisors II Private Limited (Subsidiary of MORE Investment Advisors Private Limited)

16. India Business Excellence Management Co. (Subsidiary of MOPE Investment Advisors Private Limited)

The Statement pursuant to section 212 of the Companies Act, 1956, containing details of the Company''s subsidiaries is attached herewith.

Fixed Deposits And Loans/Advances

The Company has not accepted any deposits from the public or employees during the year under review. The particulars of loans/advances and investment in its own shares by listed companies, their subsidiaries, associates, etc., required to be disclosed in the annual accounts of the company pursuant to Clause 32 of the Listing Agreement with the Company, are furnished separately.

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

In view of the nature of activities which are being carried on by the Company, Rules 2A and 2B of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 concerning conservation of energy and technology absorption respectively are not applicable to the Company.

There was no inflow of foreign exchange during the year under review. Details of the foreign exchange outflow are given in the notes to Accounts.

Particulars of employees as required under section 217(2A) of the Companies Act, 1956 and

Rules framed thereunder

In accordance with the provisions of Section 217(2A) of the Companies Act, 1956 and the Rules framed thereunder, the names and other particulars of employees are set out in the Annexure to the Directors'' Report. In terms of the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Directors'' Report is being sent to all the Shareholders of the Company excluding the aforesaid Annexure. The Annexure is available for inspection at the Registered Offi ce of the Company. Any shareholder interested in obtaining a copy of the said Annexure may write to the Company Secretary & Compliance Offi cer at the Registered Offi ce of the Company.

Acknowledgments

Your Directors take this opportunity to thank the Authorities, Bankers, Shareholders and the Customers of the Company for their continued support to the Company. The Directors also place on record their sincere appreciation of the contributions made by every member of the MOFSL family for their dedicated eff orts that made these results achievable.

For and on behalf of the Board

Motilal Oswal

Chairman & Managing Director

Mumbai, 26th April, 2014


Mar 31, 2013

To the Members

The Directors have pleasure in presenting their 8th Report together with the audited Accounts of your Company for the year ended 31st March, 2013.

Financial Highlights

Summary of Financial results for the year is as under:

Motilal Oswal Financial Services Limited (Standalone)

Rs. in millions

Year ended Year ended 31st March, 2013 31st March, 2012

Revenue 949.04 819.48

Profit before Finance cost, Taxation and exceptional items 752.31 694.31

Finance cost (134.50) (8.97)

Profit before Taxation and exceptional items 617.81 685.34

Add / (Less): Exceptional Items (163.80) (23.14)

Profit before taxation 454.01 662.20

Add / (Less): Provision for Taxation

Current Tax (64.77) (88.85)

Deferred Tax (1.75) (11.72)

Tax for earlier year(s) - 1.33

Profit after Taxation, before extraordinary items for the year 387.48 562.96

Balance brought forward from previous year 623.36 414.85

Profit Available for appropriation 1,010.84 977.81

Less: Appropriations

Transfer to Statutory Reserve (77.50) (112.59)

Proposed dividend / Interim Dividend (290.48) (217.68)

Dividend Distribution Tax (11.84) 20.86

Transfer to General Reserve (31.00) (45.04)

Balance of Profit carried forward 600.02 623.36

Summary of Consolidated Financial results of the Company and its subsidiaries for the year is as under:

Rs. in millions

31st March, 2013 31st March, 2012

Revenue 4,728.77 4,711.37

Profit before Finance cost, Taxation and exceptional items 1,485.44 1,455.64

Finance cost (48.03) (36.20)

Profit before Taxation and exceptional items 1,437.41 1,419.44

Add / (Less): Exceptional Items 180.77 106.73

Profit before taxation 1,618.18 1,526.17

Add / (Less): Provision for Taxation

Current Tax (390.29) (442.26)

Deferred Tax (132.41) (45.16)

Minimum Alternate Tax 8.30 -

Tax for earlier year(s) (3.97) 2.98

Profit after Taxation, before minority Interest 1,099.81 1,041.72

Minority interest in profits (8.95) (2.86)

Profit after Taxation and minority Interest 1,090.86 1,038.86

Balance brought forward from previous year 5,597.06 5,029.57

Profit Available for appropriation 6,687.92 6,068.43

Less: Appropriations:

Transfer to Statutory Reserve (77.50) (112.59)

Proposed dividend / Interim Dividend (290.53) (217.77)

Dividend Distribution Tax (43.16) (14.45)

Transfer to General Reserve (113.08) (126.56)

Balance of Profit carried forward 6,163.65 5,597.06

Dividend

The Company at the Meeting of its Board of Directors held on 18th October, 2012, had declared an interim dividend of R 1.00 per Equity Share, out of the profits of the Company for the six months ended 30th September, 2012 on 145,235,776 Equity Shares of R 1.00 each aggregating to R 145,235,776/- .

Keeping in view the overall performance during the year, your Directors are pleased to recommend a final dividend of R 1 per Equity Share on 145,235,776 Equity Shares of R1.00 each aggregating to R 145,235,776/-, payable to those members whose names appear in the Register of Members as on the Book Closure Date. The dividend distribution tax will absorb a sum of R 23,560,874/-.

Results: MOFSL Standalone

During the year under review, the standalone revenues for the year were R 949.04 million, a growth of 15.81% as compared to R 819.48 million last year. Interest income went up by 35.34% to R 612.56 million, on account of an increase in the average loan book size. Other operating income was R 89.48 million, which includes profit earned on partial exits in few investments of the Private Equity Fund in which MOFSL made sponsor commitments. Other income, which includes dividend from subsidiaries, was R 248.99 million as compared to R 355.18 million in the last year.

Due to slightly lower operating expenses, the total expenses (before depreciation, interest and exceptional items) registered a 2.42% decline to R 113.11 million this year. Profit before depreciation, interest, exceptional items, and taxation (EBITDA) increased by 18.81% this year, from R 703.58 million to R 835.93 million. Interest and finance charges increased from R 8.97 million to R 134.50 million. Exceptional item of R 163.80 million represents provision for doubtful advances / write offs. The Company''s net profit decreased by 31.17% to R 387.48 million.

The detailed results of operations of the Company are given in the Management Discussion & Analysis forming part of this Report. Consolidated Results:

The Consolidated Revenues of the Company for the year were R 4,728.77 million for the year under review, a marginal increase of 0.37% as compared to the previous year.

- Broking and related revenues declined by 8.00% to R 2,980.43 million this year. Daily volumes in the equity markets reached a high of R 1.68 trillion in FY2013, up 17% from last year. Options continue to comprise an increasing share of market volumes, from 68% in FY2012 to 76% in FY2013. Cash volumes in the market declined by 7% YoY to R 130.28 billion. Within cash, the delivery volumes were down 1% YoY and delivery''s proportion within market volumes dipped from 2.7% to 2.3%. However, there was a spurt in delivery volumes during the months of September, October, December and January coinciding with the trends in FII inflows. Our overall equity market share declined from 1.9% to 1.5% on a YoY basis. As on 31st March, 2013, total client base has increased to 773,716 while Pan-India distribution reach stood at 1,484 business locations across 527 cities. Despite challenging market conditions, we remain committed to building a strong broking franchise and our efforts were recognized at several industry platforms where we were ranked the best equity broker.

- Investment banking fees fell by 10.87% to R 78.01 million this year. Fee income was impacted due to delays in closure of few deals which are in advanced stages. Subdued equity markets impacted equity raising activities like IPO and FPOs in the market. Deal making was impacted across the industry given regulatory uncertainty, slow policy making and high borrowing costs which led to delays in transaction closures. In this environment, companies continued to remain cautious. Very few projects were announced resulting in low requirement by companies to raise capital. However, the business is well aligned to arising market opportunities.

- Fund-based income for the year was R 996.63 million, a growth of 21.21%. This is attributable to growth in interest income due to higher average loan book this year. This also includes profit earned on partial exits in few investments of the Private Equity Fund in which MOFSL made sponsor commitments.

- Asset management fees increased by 17.41% to R 591.21 million. The total assets under management / advice across mutual funds, PMS and private equity businesses were R 30.29 billion of which mutual funds AUM was R 4.64 billion, private equity AUA was R 13.05 billion and PMS AUM was R 12.60 billion. During the current year, the private equity business announced the third closing of its new PE fund - India Business Excellence Fund II raising R 5.55 billion through a combination of domestic and offshore investors.

- Other income increased by 40.75% to R 82.49 million as compared to last year

Total expenses (before interest, depreciation and exceptional items) for the year at R 2,984.78 million registered a 4.52% decline over last year. The decline in brokerage commission earned reduced the brokerage shared with intermediaries. Operating expenses declined by 7.91% to R 1,106.06 million. People costs at R 1,079.63 million declined by 5.98% compared to last year. Other operating costs which include facilities, marketing, communication, travel and other costs was R 799.09 million, an increase of 2.89% over last year. The profit before depreciation, interest, exceptional items and taxation (EBITDA) increased by 10.01% to R 1,743.99 million. EBITDA margin increased from 33.65% to 36.88%.

Exceptional item of R 180.77 million represents profit from sale of fixed assets, provision for doubtful advances / write offs and settlement payment. Reported net profit for the year after minority interest stood at R 1,090.86 million, an increase of 5.01%.

The Consolidated Financial Statements of the Company and its subsidiaries prepared in accordance with ''Accounting Standard - 21'' prescribed by The Institute of Chartered Accountants of India, form part of the Annual Report and the Accounts. The Balance Sheet, Profit and Loss Account, Reports of the Board of Directors and Auditors of the subsidiaries have not been attached with the Balance Sheet of the Company as per the general exemption provided under Section 212(8) of the Companies Act, 1956 by the Ministry of Corporate Affairs, issued vide General Circular No. 2 / 2011 dated 8th February, 2011.

The Company hereby undertakes that annual accounts of the subsidiary companies and the related detailed information shall be made available to shareholders of the holding and subsidiary companies seeking such information at any point of time. The annual accounts of the subsidiary companies shall also be kept for inspection by any shareholders in the registered office of the Company and of the subsidiary companies concerned. The Company shall furnish a hard copy of details of accounts of subsidiaries to any shareholder on demand.

The detailed results of operations of the Company and its subsidiaries are given in the Management Discussion & Analysis forming part of this report.

Buyback of Equity Shares

The Board of Directors at its meeting held on 27th April, 2013 approved the following matters:-

- Amendment to the Existing Articles of Association of the Company by insertion of Article 12A for empowering the Company to Buyback its own shares, subject to the approval of the Members.

- Buyback of Equity Shares subject to the provisions of Section 77A, 77AA, 77B and other applicable provisions, if any, of the Companies Act, 1 956, provisions contained in the Securities and Exchange Board of India (Buy Back of Securities) Regulations, 1998, including any amendments, statutory modification(s) or re-enactment(s) thereof (hereinafter referred to as ''Buy Back Regulations'') and approval of the Members of the Company.

The Company would Buyback fully paid-up equity shares of R1/- each from open market through the Stock Exchange mechanism, for an amount not exceeding R 65 Crores (Rupees Sixty Five Crores only) in cash from the BSE Limited and the National Stock Exchange of India Limited, subject to a price not exceeding R 90/- per equity share and subject to a maximum of 7.5 million fully paid-up Equity Shares of R1 each (equivalent to 5.16% of Equity shares of R1 each outstanding as on 31st March, 2013) and minimum of 1.875 million fully paid-up Equity Shares of R 1 each (equivalent to 1.29% of Equity shares of R 1 each outstanding as on 31st March, 2013).

Future Outlook

Indian Stock Markets had a mixed year in 2012-13. Multiple headwinds like inflation, volatile commodity prices, slowdown in the investment cycle, policy slowdown, depreciating Rupee impacted corporate performance and earnings visibility. However, newsflow in the second half of the year like moderation in Wholesale Price Index due to easing in commodity prices and some action on reforms created positive triggers. As inflation stability sustains and liquidity improves, it can lead to further monetary easing which should eventually help to lower the cost of borrowing and revive the investment cycle. At our end, we are building-up all our businesses relentlessly, in such a way that we are ready to en-cash on any up-turn in the market.

Credit Rating

During the year, CRISIL Limited reaffirmed the Credit Rating of "CRISIL A1 " to the Short Term Debt Program of R 1500 million of the Company. ICRA Limited assigned the credit rating of "PP-MLD[ICRA] AA-" Rating with a stable outlook to the Long Term Debt Program of R 250 million of the company. CRISIL Limited also reaffirmed the Credit Rating of "CRISIL A1 " to the Short Term Debt Program of R 1000 million of Motilal Oswal Securities Limited, a subsidiary of the Company. The ratings indicate a very strong degree of safety regarding timely servicing of financial obligations.

Finance

Issue and Allotment of 2500 Principal Protected Secured Redeemable Non-Convertible Debentures

The Company has issued and allotted 2500 Principal Protected Secured Redeemable Non-Convertible Debentures of face value of R 1,00,000 (Rupees One lakh) each aggregating to R 25,00,00,000/- (Rupees Twenty Five crores) by way of a Private Placement, which is listed at BSE Limited.

The issue proceeds will be utilized for general business purposes including capital expenditure, working capital, loan against shares and securities, repayment / prepayment of existing borrowings, etc., acquisition or purchase of land, investment in capital markets and real estate purposes.

The terms of issue are as follows:-

- The date of Allotment was 11th December, 2012.

- The tenor is 3 years, 3 months and 20 days from the Date of Allotment

- The Coupon Rate is reference Index linked return over the tenure of debenture.

- Reference Index Linked Return=Debenture Face Value* Reference Index Return Factor

- Coupon rate shall be payable on Redemption / Maturity Date

- Repayment of 100% of the Principal Amount applies to this Debenture issue.

Also during the year under review, to meet the working capital requirements, the Company has issued Commercial Papers. Employees'' Stock Option Schemes (ESOS)

Details required to be provided under the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are set out in Annexure to this Report.

Directors

Mr. Vivek Paranjpe and Mr. Praveen Tripathi retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for reappointment. The details of the Directors to be reappointed is set out in the Report on Corporate Governance annexed to this Report.

Directors'' Responsibility Statement

Pursuant to section 217(2AA) of the Companies Act, 1956, your Directors confirm that:

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

(ii) they have, in the selection of the accounting policies, consulted the Statutory Auditors and these have been applied consistently and reasonable and prudent judgments and estimates have been made so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2013 and of the Profit of the Company for the year ended on that date;

(iii) proper and sufficient care has been taken for the maintenance of 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 annual accounts have been prepared on a going concern basis.

Corporate Social Responsibility (CSR) Initiatives by the Group

The Motilal Oswal Group strongly believes in giving back to the Society. The Group makes contributions to various causes through the various Group Companies and through the Motilal Oswal Foundation.

In line with the Group''s motto of "Knowledge First", the Group has contributed largely to the education & learning front. The Motilal Oswal Foundation has recently set up a hostel at Lallubhai Park, Andheri (West) called "Agrawal Oswal Chhatrawas" in collaboration with the Rajasthan Vidyarthi Griha. The Agrawal Oswal Chhatrawas is a state of the art hostel for students from Rajasthan & other parts of the country who aspire for the professional course of Chartered Accountancy. It''s a 5-storey building with total capacity of approx. 210 students on triple sharing basis with attached toilet & bath.

The Group sponsors "mid-day meals" to school children through the Radhakrishna Trust and thus feeding 300 children every day, throughout the year.

The Group has also contributed in cash and kind to various NGOs like Goonj, through the Joy of Giving Week. We have collected items throughout India with different drives like collection of toys, stationery, toiletries and clothes every year for distribution towards the underprivileged.

The Group has sponsored education for 3 underprivileged children for consecutive two academic years.

The Group has also tied up with Light of Life Trust so as to provide books, study material, school kits etc to the kids.

The Group''s employees contribute by celebrating the festivities with the underprivileged and also volunteering by giving lectures, arranging workshops etc. and thereby developing the underprivileged.

Audit Committee

The Audit Committee presently comprises of Mr. Balkumar Agarwal (Chairman of the Committee), Mr. Raamdeo Agarawal, Mr. Vivek Paranjpe and Mr. Praveen Tripathi.

Remuneration / Compensation Committee

The Remuneration / Compensation Committee of the Board of Directors presently comprises of Mr. Vivek Paranjpe (Chairman of the Committee), Mr. Balkumar Agarwal and Mr. Motilal Oswal.

Shareholders / Investors'' Grievance Committee

The Shareholders / Investors Grievance Committee of the Board of Directors presently comprises of Mr. Balkumar Agarwal (Chairman of the Committee), Mr. Motilal Oswal and Mr. Raamdeo Agarawal.

Debenture Committee

The Debenture Committee of the Board of Directors presently comprises of Mr. Motilal Oswal, Mr. Raamdeo Agarawal, Mr. Navin Agarwal and Mr. Balkumar Agarwal.

Nomination Committee

The Nomination Committee of the Board of Directors presently comprises of Mr. Motilal Oswal and Mr. Raamdeo Agarawal.

Risk Management Committee

The Risk Management Committee of the Board of Directors presently comprises of Mr. Motilal Oswal and Mr. Navin Agarwal. Asset Liability Management Committee (ALCO)

The Asset Liability Management Committee (ALCO) of the Board of Directors presently comprises of Mr. Motilal Oswal (Chairman of the Committee), Mr. Raamdeo Agarawal, Mr. Navin Agarwal and Mr. Ajay Menon.

ESOP Committee

The ESOP Committee of the Board of Directors presently comprises of Mr. Motilal Oswal and Mr. Raamdeo Agarawal. Corporate Governance

A report on the Corporate Governance along with a certificate from the Auditors of the Company regarding the compliance of conditions of Corporate Governance as also the Management Discussion and Analysis Report as stipulated under Clause 49 of the Listing Agreement are annexed to this Report.

Auditors

Messrs. Haribhakti & Co., Chartered Accountants, retire as Auditors of the Company at the forthcoming Annual General Meeting and have given their consent for re-appointment. The members will be required to appoint Auditors for the current year and fix their remuneration.

Subsidiaries

The Company has the following subsidiary companies:

1 Motilal Oswal Securities Limited (MOSL).

2 Motilal Oswal Investment Advisors Private Limited

3 Motilal Oswal Private Equity Advisors Private Limited

4 Motilal Oswal Commodities Broker Private Limited

5 Motilal Oswal Insurance Brokers Private Limited

6 Motilal Oswal Capital Markets Private Limited (Subsidiary of MOSL)

7 Motilal Oswal Asset Management Company Limited (Subsidiary of MOSL)

8 Motilal Oswal Trustee Company Limited (Subsidiary of MOSL)

9 Motilal Oswal Wealth Management Private Limited (Subsidiary of MOSL)

10 Motilal Oswal Securities International Private Limited. (Subsidiary of MOSL)

11 Motilal Oswal Capital Markets (Hong Kong) Private Limited (Subsidiary of MOSL)

12 Motilal Oswal Capital Markets (Singapore) Pte. Limited. (Subsidiary of MOSL)

The Statement pursuant to section 212 of the Companies Act, 1956, containing details of the Company''s subsidiaries is attached herewith.

Fixed Deposits And Loans / Advances

The Company has not accepted any deposits from the public or employees during the year under review.

The particulars of loans / advances and investment in its own shares by listed companies, their subsidiaries, associates, etc., required to be disclosed in the annual accounts of the company pursuant to Clause 32 of the Listing Agreement with the Company, are furnished separately.

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

In view of the nature of activities which are being carried on by the Company, Rules 2A and 2B of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 concerning conservation of energy and technology absorption respectively are not applicable to the Company.

There was no inflow of foreign exchange during the year under review. Details of the foreign exchange outflow are given in the notes to Accounts.

Particulars of employees as required under section 217(2A) of the Companies Act, 1956 and Rules framed thereunder

In accordance with the provisions of Section 217(2A) of the Companies Act, 1956 and the Rules framed thereunder, the names and other particulars of employees are set out in the Annexure to the Directors'' Report. In terms of the provisions of Section 219(1) (b)(iv) of the Companies Act, 1956, the Directors'' Report is being sent to all the Shareholders of the Company excluding the aforesaid Annexure. The Annexure is available for inspection at the Registered Office of the Company. Any shareholder interested in obtaining a copy of the said Annexure may write to the Company Secretary & Compliance Officer at the Registered Office of the Company.

Acknowledgments

Your Directors take this opportunity to thank the Authorities, Bankers, Shareholders and the Customers of the Company for their continued support to the Company. The Directors also place on record their sincere appreciation of the contributions made by every member of the MOFSL family for their dedicated efforts that made these results achievable.

For and on behalf of the Board

Motilal Oswal

Chairman & Managing Director

Mumbai, 27th April, 2013


Mar 31, 2012

The Directors have pleasure in presenting their 7th Report together with the audited Accounts of your Company for the year ended 31st March, 2012.

Financial Highlights

Summary of Financial results for the year is as under: - Motilal Oswal Financial Services Limited (Standalone)

Rs in million Year ended 31st Year ended 31st March, 2012 March, 2011

Income 819.48 643.41

Profit before Finance Cost and Taxation 671.17 576.80

Finance Cost (8.97) (11.42)

Profit before Taxation 662.20 565.38

Less : Provision for Taxation

Current Tax 88.85 126.65

Deferred Tax Asset 11.72 11.50

For previous year (s) (1.33) 0.63

Profit for the year 562.96 426.60

Balance brought forward from previous year 414.85 351.30

Profit Available for appropriation 977.81 777.90

Less: Appropriations

Transfer to Statutory Reserve (112.59) (85.32)

Proposed dividend/Interim Dividend (217.68) (202.26)

Dividend Distribution Tax 20.86 (32.81)

Transfer to General Reserve (45.04) (42.66)

Balance of Profit carried forward 623.36 414.85

Summary of Consolidated Financial results of the Company and its subsidiaries for the year is as under: -

Rs in million 31st March, 2012 31st March, 2011

Income 4655.27 6,007.57

Profit before Finance cost, Depreciation and Taxation and Exceptional Items 1561.99 2,294.98

Finance Cost (35.99) (56.64)

Depreciation (129.70) (131.28)

Profit before Taxation and Exceptional Items 1396.30 2,107.06

Exceptional Items 129.87 -

Profit before Taxation 1,526.17 2,107.06

Less : Provision for Taxation

Current Tax 442.26 672.47

Deferred Tax 45.16 32.97

Tax for the prior year (2.98) 6.57

Profit after tax before Minority Interest 1041.72 1395.05

Minority Interest in profits (2.86) (24.44)

Profit after tax and Minority Interest 1038.86 1370.60

Profit brought forward from previous year 5,029.57 4189.77

Profit available for the Appropriations 6,068.42 5560.37

Less: Appropriations

Transfer to Statutory Reserve & Capital Redemption Reserve (112.59) (91.32)

Proposed Dividend /Interim Dividend (217.77) (215.44)

Distribution tax on proposed/Interim Dividend (14.45) (67.60)

Transfer to General Reserve (126.56) (156.45)

Balance of Profit carried to Balance Sheet 5597.06 5029.57

Dividend

The Company at the Meeting of its Board of Directors held on 16th January, 2012, had declared an interim dividend of Rs 1.00 per Equity Share, out of the profits of the Company for the nine months ended 31st December, 2011 on 14,51,19,469 Equity Shares of Rs 1.00 each aggregating to Rs 14,51,19,469/- .

Keeping in view the overall performance during the year, your Directors are pleased to recommend a final dividend of Rs 0.50 per Equity Share on the face value of Rs 1.00 each aggregating to Rs 72,561,435, payable to those members whose names appear in the Register of Members as on the Book Closure Date. The dividend distribution tax will absorb a sum of Rs 11,771,279.

Results of Operations (MOFSL Standalone)

The standalone revenues for the year were Rs 819.48 million, a growth of 27% compared to Rs 643.41 million last year. Interest income went up by 14% to Rs 452.60 million, on account of an increase in the average loan book size. Income from arbitrage operations was lower as compared to last financial year due to non deployment of surplus fund in arbitrage business. Other income includes dividend from subsidiaries (including interim dividend declared in current year) Rs 346.29 million compared to Rs 134.06 million in the last year.

Due to higher operating expenses and provision created for Sub-Standard Assets, the total expenses (before depreciation and interest) registered a 109% jump to Rs 139.04 million this year. Profit before depreciation, interest, and taxation (EBITDA) increased by 18% this year, from Rs 576.88 million to Rs 680.44 million. With a reduction in the Company's average borrowing this year, interest and finance charges fell by 21%. The Company's net profit increased by 32% to Rs 562.96 million.

The detailed results of operations of the Company are given in the Management Discussion & Analysis forming part of this Report. Consolidated Results of Operations

The Consolidated Revenues of the Company for the year were Rs 4,655.27 million, a decline of 22.51% as compared to the previous year.

- Broking and related revenues declined by 25.7% to Rs 3,201.13 million this year. The dramatic shift towards the low-yield options segment continues through this year as well, contributing to 68% of total volumes, as compared to 57% a year back. The cash segment of the market (which is also the most profitable) registered a decline of 24% in the average daily volume at Rs 139.7 billion as compared to last year whereas the overall market volumes actually saw a growth of 7% in the same period. This disproportionate rise of low yielding options segment has resulted in a drop of our overall market share from 2.5% to 1.9% this year. As on 31st March, 2012, total client base has increased to 746,932 while Pan-India distribution reach stood at 1,579 business locations across 552 cities. Despite challenging market conditions we remain committed to building a strong franchise in the broking space and our efforts were recognized at several industry platforms.

- Investment banking fees fell by 78.4% to Rs 86.33 million this year. Poor performance of equity markets adversely impacted equity raising activities by both IPO and QIPs in the market. The global slowdown and uncertainty in the government policies clubbed with high borrowing costs, has had an adverse impact on the decision making by the corporates and investors, causing a slowdown in deal activities in the current year. However, the business is well aligned to arising market opportunities and the execution pipeline remains robust.

- Fund-based income for the year was Rs 822.2 million, a growth of 7.5%. This is attributable to growth in interest income due to higher average loan book this year.

- Asset management fees increased by 17.4% to R 503.53 million. The total assets under management/advice across mutual funds, PMS and private equity businesses was Rs 29.1 billion of which mutual funds AUM was Rs 4.5 billion, private equity AUA was Rs 11.0 billion and PMS AUM was Rs 13.6 billion. During the current year, the mutual fund business launches two new schemes - Gilt Fund and Gold ETF, which saw good investor participation. The private equity business announced the first closing of its new fund - India Business Excellence Fund II raising Rs 3.5 billion through a combination of domestic and offshore investors.

- Other income declined by 61.0% to Rs 42.08 million as compared to last year.

Total expenses for the year (before interest and depreciation) at Rs 3,093.29 million registered a 16.7% decline over last year. The decline in brokerage commission earned reduced the brokerage shared with intermediaries by 19.9% to Rs 1,164.33 million. People costs at Rs 1,138.57 million declined by 17.0% as compared to last year. Other operating costs which include facilities, marketing, communication, travel and other costs declined by 10.8% to Rs 790.38 million. The profit before depreciation, interest, exceptional items and taxation (EBITDA) decreased by 31.9% to Rs 1,561.99 million. EBITDA margin reduced from 38% to 34%.

Towards consolidation of office premises at the Corporate Headquarters at Prabhadevi, some of the existing office premises in South Mumbai area were sold during the current quarter for a profit of Rs 129.87 million.

Reported net profit for the year after minority interest stood at Rs 1,038.86 million, a decline of 24.2%.

The Consolidated Financial Statements of the Company and its subsidiaries prepared in accordance with 'Accounting Standard - 21' prescribed by The Institute of Chartered Accountants of India, form part of the Annual Report and the Accounts. The Balance Sheet, Profit and Loss Account, Reports of the Board of Directors and Auditors of the subsidiaries have not been attached with the Balance Sheet of the Company as per the general exemption provided under Section 212(8) of the Companies Act, 1956 by the Ministry of Corporate Affairs, issued vide General Circular No. 2/2011 dated 8th February, 2011.

The Company hereby undertakes that annual accounts of the subsidiary companies and the related detailed information shall be made available to shareholders of the holding and subsidiary companies seeking such information at any point of time. The annual accounts of the subsidiary companies shall also be kept for inspection by any shareholders in the registered office of the Company and of the subsidiary companies concerned. The Company shall furnish a hard copy of details of accounts of subsidiaries to any shareholder on demand.

The detailed results of operations of the Company and its subsidiaries are given in the Management Discussion & Analysis forming part of this report.

Future Outlook

Indian Stock Markets had a muted year in 2011-12, due to rupee depreciation, high inflation and high interest rates. FII and retail participation have been weak due to un-exciting outlook. The valuations have corrected significantly and are at a reasonable level. Global equity markets had a better year, but India turned out to be the worst performing market in dollar terms.

Corporate earnings growth still looks to be in single digit for the current year. Lot of hope is built on the possibility of interest rate cuts in the quarters ahead. At our end, we are building-up all our businesses relentlessly, in such a way that we are ready to en-cash on any up-turn in the market.

Credit Rating

The Company enjoys the highest rating of 'A1 ' assigned by CRISIL Limited to the Short-term Debt Programme of Rs 1.5 billion of your Company. The rating indicates the highest degree of safety with regard to timely payment of interest and principal on the instrument.

CRISIL Limited also reaffirmed the rating of 'A1 ' to the Short-term Debt Programme of R 1billion of Motilal Oswal Securities Limited, a subsidiary of the Company.

Finance

During the year under review, to meet the working capital requirements, the Company had issued Commercial Papers.

Employees' Stock Option Schemes (ESOS)

Details required to be provided under the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are set out in Annexure to this Report.

Directors

Mr. Praveen Tripathi was appointed as an Additional Director on 22nd July, 2011 by the Board of Directors. It would be required to appoint him as a Director by the Members at the forthcoming Annual General Meeting. The credentials of Mr. Praveen Tripathi is given in the Corporate Governance Report annexed herewith.

The Company has received a notice from a Member signifying his intention to propose the name of Mr. Praveen Tripathi for appointment as a Director of your Company at the forthcoming Annual General Meeting of the Company.

Mr. Navin Agarwal and Mr. Balkumar Agarwal retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for reappointment.

Directors' Responsibility Statement

Pursuant to section 217(2AA) of the Companies Act, 1956, your Directors confirm that:

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

(ii) they have, in the selection of the accounting policies, consulted the Statutory Auditors and these have been applied consistently and reasonable and prudent judgments and estimates have been made so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2012 and of the Profit of the Company for the year ended on that date;

(iii) proper and sufficient care has been taken for the maintenance of 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 annual accounts have been prepared on a going concern basis.

Audit Committee

The Audit Committee presently comprises of Mr. Balkumar Agarwal (Chairman of the Committee), Mr. Raamdeo Agrawal, Mr. Vivek Paranjpe and Mr. Praveen Tripathi.

Remuneration/Compensation Committee

The Remuneration/Compensation Committee of the Board of Directors presently comprises of Mr. Vivek Paranjpe (Chairman of the Committee), Mr. Balkumar Agarwal and Mr. Motilal Oswal.

Shareholders/Investors' Grievance Committee

The Shareholders/Investors Grievance Committee of the Board of Directors presently comprises of Mr. Balkumar Agarwal (Chairman of the Committee), Mr. Motilal Oswal and Mr. Raamdeo Agrawal.

Nomination Committee

The Nomination Committee of the Board of Directors presently comprises of Mr. Motilal Oswal and Mr. Raamdeo Agrawal.

Risk Management Committee

The Risk Management Committee of the Board of Directors presently comprises of Mr. Motilal Oswal and Mr. Navin Agarwal.

Asset Liability Management Committee (ALCO)

Asset Liability Management Committee (ALCO) of the Board of Directors presently comprises of Mr. Motilal Oswal (Chairman of the Committee), Mr. Raamdeo Agrawal, Mr. Navin Agarwal and Mr. Ajay Menon.

ESOP Committee

The ESOP Committee of the Board of Directors presently comprises of Mr. Motilal Oswal and Mr. Raamdeo Agrawal. Corporate Governance

A report on the Corporate Governance along with a certificate from the Auditors of the Company regarding the compliance of conditions of Corporate Governance as also the Management Discussion and Analysis Report as stipulated under Clause 49 of the Listing Agreement are annexed to this Report.

Auditors

Messrs. Haribhakti & Co., Chartered Accountants, retire as Auditors of the Company at the forthcoming Annual General Meeting and have given their consent for re-appointment. The members will be required to appoint Auditors for the current year and fix their remuneration.

Subsidiaries

The Company has the following subsidiary companies:

1 Motilal Oswal Securities Limited (MOSL).

2 Motilal Oswal Investment Advisors Private Limited

3 Motilal Oswal Private Equity Advisors Private Limited

4 Motilal Oswal Commodities Broker Private Limited

5 Motilal Oswal Insurance Brokers Private Limited

6 Motilal Oswal Capital Markets Private Limited (Subsidiary of MOSL)

7 Motilal Oswal Asset Management Company Limited (Subsidiary of MOSL)

8 Motilal Oswal Trustee Company Limited (Subsidiary of MOSL)

9 Motilal Oswal Wealth Management Private Limited (Subsidiary of MOSL)

10 Motilal Oswal Securities International Private Limited. (Subsidiary of MOSL) (incorporated during FY 2011-12 in India)

11 Motilal Oswal Capital Markets (Hong Kong) Private Limited (Subsidiary of MOSL) (incorporated during FY 2011-12 in Hong Kong)

12 Motilal Oswal Capital Markets (Singapore) Pte. Limited. (Subsidiary of MOSL) (incorporated during FY 2011-12 in Singapore)

The Statement pursuant to section 212 of the Companies Act, 1956, containing details of the Company's subsidiaries is attached herewith.

Fixed Deposits And Loans/Advances

The Company has not accepted any deposits from the public or employees during the year under review.

The particulars of loans/advances and investment in its own shares by listed companies, their subsidiaries, associates, etc., required to be disclosed in the annual accounts of the Company pursuant to Clause 32 of the Listing Agreement with the Company, are furnished separately.

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

In view of the nature of activities which are being carried on by the Company, Rules 2A and 2B of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 concerning conservation of energy and technology absorption respectively are not applicable to the Company.

There was no inflow of foreign exchange during the year under review. Details of the foreign exchange outflow are given in the notes to Accounts.

Particulars of employees as required under section 217(2A) of the Companies Act, 1956 and Rules framed thereunder

In accordance with the provisions of Section 217(2A) of the Companies Act, 1956 and the Rules framed thereunder, the names and other particulars of employees are set out in the Annexure to the Directors' Report. In terms of the provisions of Section 219(1)

(b)(iv) of the Companies Act, 1956, the Directors' Report is being sent to all the Shareholders of the Company excluding the aforesaid Annexure. The Annexure is available for inspection at the Registered Office of the Company. Any shareholder interested in obtaining a copy of the said Annexure may write to the Company Secretary & Compliance Officer at the Registered Office of the Company.

Acknowledgments

Your Directors take this opportunity to thank the Authorities, Bankers, Shareholders and the Customers of the Company for their continued support to the Company. The Directors also place on record their sincere appreciation of the contributions made by every member of the MOFSL family for their dedicated efforts that made these results achievable.

For and on behalf of the Board

Motilal Oswal

Chairman & Managing Director

Mumbai, 25th April, 2012


Mar 31, 2011

The Directors have pleasure in presenting their 6th Report together with the audited Accounts of your Company for the year ended 31st March, 2011.

Financial Highlights

Summary of Financial results for the year is as under: -

Motilal Oswal Financial Services Limited (Standalone)

Rs. in Crores Year ended Year ended 31st March, 2011 31st March, 2010

Income 64.25 64.26

Profit before Interest and Taxation 57.70 60.16

Interest (1.16) (2.85)

Profit before Taxation 56.54 57.31

Less : Provision for Taxation

Current Tax 12.73 13.74

Deferred Tax Asset 1.15 1.17

Profit for the year 42.66 42.40

Balance brought forward from previous year 35.13 22.41

Profit Available for appropriation 77.79 64.81

Less: Appropriations

Transfer to Statutory Reserve 8.53 8.48

Proposed Dividend 20.23 17.18

Dividend Distribution Tax 3.28 0.63

Transfer to General Reserve 4.27 3.39

Balance of Profit carried forward 41.48 35.13

Summary of Consolidated Financial results of the Company and its subsidiaries for the year is as under: -

Rs. in Crores 31st March, 2011 31st March, 2010

Income 600.37 645.32

Profit before Interest, Depreciation and Taxation and Exceptional Items 229.56 276.98

Interest (5.69) (9.62)

Depreciation (13.13) (14.19)

Profit before Taxation and Exceptional Items 210.74 253.17

Exceptional Items – 0.06

Profit before Taxation 210.74 253.23

Less : Provision for Taxation

Current Tax 67.25 80.19

Deferred Tax Asset / (Liability) 3.30 (1.79)

Wealth Tax 0.03 0.02

Tax for the prior year 0.66 0.39



Profit after tax before Minority Interest 139.50 174.42

Minority Interest in profits (2.44) (3.97)

Profit after Tax and Minority Interest 137.06 170.45

Profit brought forward from previous year 418.98 282.09

Profit available for the Appropriations 556.04 452.54

Less: Appropriations

Transfer to Statutory Reserve & Capital Redemption Reserve 9.13 8.48

Pre acquisition (Profits) / Loss – (0.51)

Proposed Dividend 21.54 17.18

Distribution tax on Proposed Dividend 6.76 2.85

Transfer to General Reserve 15.64 5.56

Balance of Profit carried to Balance Sheet 502.96 418.98

Dividend

Keeping in view the overall performance during the year, your Directors are pleased to recommend a dividend of Rs. 1.40 per Equity Share on the face value of Rs. 1 each being 140% dividend, payable to those members whose names appear in the Register of Members as on the Book Closure Date. The Dividend and dividend distribution tax will absorb a sum of Rs. 23.5 crores.

Results of Operations (MOFSL Standalone)

The standalone revenues for the year were Rs. 64.25 crores, largely flat as compared to Rs. 64.26 crores last year. Interest income went up by 55% to Rs. 39.66 crores, on account of an increase in the average loan book size, as well as participation in certain IPO financing transactions for the Coal India, Power Grid and MOIL issues. Income from arbitrage operations was lower as compared to last financial year due to lower deployment of surplus funds in arbitrage.

Due to higher operating expenses and provisioning for standard loan assets as required by the RBI, the total expenses (before depreciation and interest) registered a 59.44% jump to Rs. 6.54 crores this year. Profit before depreciation, interest, and taxation (EBITDA) decreased by 4.07% this year, from Rs. 60.16 crores to Rs. 57.71 crores. With a reduction in the Companys average borrowing this year, interest and finance charges fell by 59.40%. Hence, the Companys net profit increased marginally by 0.62% to Rs. 42.66 crores.

The detailed results of operations of the Company are given in the Management Discussion & Analysis forming part of this Report.

Consolidated Results of Operations

The Consolidated Revenues of the Company for the year were Rs. 600.37 crores, a decline of 6.97% as compared to the previous year.

– Broking and related revenues declined by 4.78% to Rs. 433.37 crores this year. The market volumes have seen a dramatic shift towards the low-yield options segment which contributed 57% of total volumes, as compared to 37% a year back. This disproportionate rise of low yielding options segment has resulted in a drop of our overall market share from 3.2% to 2.5% this year. However, our market share in the cash segment remains stable. As of 31st March, 2011 we had a total of 709,041 customers, including 628,012 retail and distribution clients. Our retail distribution stands at 1,644 outlets across 611 cities.

– Investment banking fees fell by 38.70% to Rs. 39.81 crores this year. This is attributed to revenue booking on few deals in advanced stages of execution getting postponed to the next year. However, the deal pipeline remains robust for the next year.

– Fund-based income for the year was Rs. 73.79 crores, a growth of 13.73%. This was boosted by a 53.89% growth in interest income to Rs. 38.94 crores, as a result of the increase in the average loan book size this year.

– Asset management fees increased by 6.66% to Rs. 42.73 crores. With Rs. 374 crores of assets managed under our three ETFs, the mutual fund fees increased this year. PMS fees went up by 18.08% to Rs. 29.28 crores, as PMS assets grew from Rs. 981.7 crores to Rs. 1,258.4 crores this year.

– Other income declined by 47.45% to Rs. 10.67 crores, as the previous year included profit on sale of investments of Rs. 11.23 crores.

Total expenses remained largely flat for the year, at Rs. 370.81 crores. The decline in brokerage commission earned reduced the brokerage shared with intermediaries by 10.95% to Rs. 138.96 crores. On the other hand, other operating costs and marketing/ brand promotion expenses increased, due to the launch of the three mutual funds this year. Due to the lower revenues and constant costs level this year, Profit before depreciation, interest, exceptional items and taxation (EBITDA) decreased by 17.12% to Rs. 229.56 crores. EBITDA margin reduced from 43% to 38%. Net profit for the year after minority interest stood at Rs. 137.06 crores, a decline of 19.59%.

The Consolidated Financial Statements of the Company and its subsidiaries prepared in accordance with ‘Accounting Standard - 21 prescribed by The Institute of Chartered Accountants of India, form part of the Annual Report and the Accounts. The Balance Sheet, Profit and Loss Account, Reports of the Board of Directors and Auditors of the subsidiaries have not been attached with the Balance Sheet of the Company as per the general exemption provided under Section 212(8) of the Companies Act, 1956 by the Ministry of Corporate Affairs, issued vide General Circular No. 2/2011 dated 8th February, 2011.

The Company hereby undertakes that annual accounts of the subsidiary companies and the related detailed information shall be made available to shareholders of the holding and subsidiary companies seeking such information at any point of time. The annual accounts of the subsidiary companies shall also be kept for inspection by any shareholders in the registered office of the Company and of the subsidiary companies concerned. The Company shall furnish a hard copy of details of accounts of subsidiaries to any shareholder on demand.

The detailed results of operations of the Company and its subsidiaries are given in the Management Discussion & Analysis forming part of this report.

Future Outlook

Indian capital markets witnessed a challenging year with volatile FII net flows, muted retail participation in equities, growing shift towards low-yielding options and lower value of ECM deals. These were reflected in the overall market performance as well as in our own business performance.

We strongly believe that India is a great growth story and is likely to become a US$ 5 trillion economy by 2020. Backed by strong savings, there would be tremendous growth opportunities for the firms operating in the financial services space.

During the current year, we have laid a strong foundation for each of our business to scale up and grab a meaningful share of these opportunities.

Credit Rating

The Company continues to enjoy the highest rating of ‘P1+ assigned by CRISIL Limited to the Short-term Debt Programme of Rs. 400 crores of your Company. The rating indicates the highest degree of safety with regard to timely payment of interest and principal on the instrument.

CRISIL Limited also reaffirmed the rating of ‘P1+ to the Short-term Debt Programme of Rs. 400 crores of Motilal Oswal Securities Limited, a subsidiary of the Company.

Finance

During the year under review, to meet the working capital requirements, the Company has issued Commercial Papers and Unsecured Non-convertible Debentures.

Employees Stock Option Schemes (ESOS)

Details required to be provided under the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are set out in Annexure to this Report.

Directors

Mr. Ramesh Agarwal and Mr. Madhav Bhatkuly, Independent Directors retire by rotation at the forthcoming Annual General Meeting and due to their respective preoccupations do not offer themselves for re-appointment.

The Board of Directors re-appointed Mr. Motilal Oswal as the Managing Director of the Company, for a further period of 5 years, with effect from 18th January, 2011, subject to the approval of the Members at the forthcoming Annual General Meeting of the Company.

Mr. Vivek Paranjpe was appointed as an Additional Director on 28th January, 2011 by the Board of Directors. It would be required to appoint him as a Director by the Members at the forthcoming Annual General Meeting.

Directors Responsibility Statement

Pursuant to section 217(2AA) of the Companies Act, 1956, your Directors confirm that:

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

(ii) they have, in the selection of the accounting policies, consulted the Statutory Auditors and these have been applied consistently and reasonable and prudent judgments and estimates have been made so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2011 and of the Profit of the Company for the year ended on that date;

(iii) proper and sufficient care has been taken for the maintenance of 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 annual accounts have been prepared on a going concern basis.

Audit Committee

The Audit Committee presently comprises of Mr. Balkumar Agarwal (Chairman of the Committee), Mr. Ramesh Agarwal, Mr. Madhav Bhatkuly and Mr. Raamdeo Agrawal.

Remuneration / Compensation Committee

The Remuneration/Compensation Committee of the Board of Directors presently comprises of Mr. Balkumar Agarwal (Chairman of the Committee), Mr. Ramesh Agarwal and Mr. Motilal Oswal.

Shareholders / Investors Grievance Committee

The Shareholders/Investors Grievance Committee of the Board of Directors presently comprises of Mr. Balkumar Agarwal (Chairman of the Committee), Mr. Motilal Oswal and Mr. Raamdeo Agrawal.

Nomination Committee

The Nomination Committee of the Board of Directors presently comprises of Mr. Motilal Oswal and Mr. Raamdeo Agrawal.

Risk Management Committee

The Risk Management Committee of the Board of Directors presently comprises of Mr. Motilal Oswal and Mr. Navin Agarwal.

Corporate Governance

A report on the Corporate Governance along with a certificate from the Auditors of the Company regarding the compliance of conditions of Corporate Governance as also the Management Discussion and Analysis Report as stipulated under Clause 49 of the Listing Agreement are annexed to this Report.

Auditors

Messrs Haribhakti & Co., Chartered Accountants, retire as Auditors of the Company at the forthcoming Annual General Meeting and have given their consent for re-appointment. The members will be required to appoint Auditors for the current year and fix their remuneration.

Fixed Deposits and Loans / Advances

The Company has not accepted any deposits from the public or employees during the year under review.

The particulars of loans/advances and investment in its own shares by listed companies, their subsidiaries, associates, etc., required to be disclosed in the annual accounts of the company pursuant to Clause 32 of the Listing Agreement with the Company, are furnished separately.

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

In view of the nature of activities which are being carried on by the Company, Rules 2A and 2B of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 concerning conservation of energy and technology absorption respectively are not applicable to the Company.

There was no inflow of foreign exchange during the year under review. Details of the foreign exchange outflow are given in the notes to Accounts.

Particulars of employees as required under section 217(2A) of the Companies Act, 1956 and Rules framed thereunder

In accordance with the provisions of Section 217(2A) of the Companies Act, 1956 and the Rules framed thereunder, the names and other particulars of employees are set out in the Annexure to the Directors Report. In terms of the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Directors Report is being sent to all the Shareholders of the Company excluding the aforesaid Annexure. The Annexure is available for inspection at the Registered Office of the Company. Any shareholder interested in obtaining a copy of the said Annexure may write to the Company Secretary & Compliance Officer at the Registered Office of the Company.

Acknowledgements

Your Directors take this opportunity to thank the Authorities, Bankers, Shareholders and the Customers of the Company for their continued support to the Company. The Directors also place on record their sincere appreciation of the contributions made by every member of the MOFSL family for their dedicated efforts that made these results achievable.



For and on behalf of the Board

Motilal Oswal Chairman & Managing Director

Mumbai, 30th April, 2011


Mar 31, 2010

The Directors have pleasure in presenting their 5th Report together with the audited Accounts of your Company for the year ended 3 1st March, 2010.

Financial Highlights

Summary of Financial results for the year is as under: -

Motilal Oswal Financial Services Limited (Standalone)

Rs. in million Year ended Year ended 31 st March, 31 st March, 2010 2009 Income 642.59 722.36 Profit before Interest and Taxation 601.56 683.33 Interest (28.46) (73.18) Profit before Taxation 573.10 610.15 Less : Provision for Taxation Current Tax 137.43 156.76 Deferred Tax 11.71 0.05 Fringe Benefit Tax - 0.22 Profit for the year 423.96 453.12 Balance brought forward from previous year 224.13 16.60 Profit Available for appropriation 648.09 469.72 Less: Appropriations Transfer to Statutory Reserve 84.79 90.62 Proposed dividend 171.81 113.62 Dividend Distribution Tax 6.27 5.10 Transfer to General Reserve 33.92 36.25 Balance of Profit carried forward 351.30 224.13

Dividend

Keeping in view the overall performance during the year, your Directors are pleased to recommend a dividend of Rs. 1.20 per Equity Share on the face value of Re. I each, being i 20% dividend, payable to those members whose names appear in the Register of Members as on the Book Closure Date. The Dividend and dividend distribution tax will absorb a sum of Rs. 178.08 million.

Results of Operations (MOFSL Standalone)

The Revenue for the year decreased by I 1.04% from Rs. 722.36 million to Rs. 642.59 million. The Profit before interest and taxation registered a decrease of I 1.97% and were down from Rs. 683.33 million to Rs. 601.56 million. The Companys net profit for the year is Rs. 423.96 million down from Rs. 453.12 million in the previous year, a decrease of 6.44% over the previous financial year.

The detailed results of operations of the Company are given in the Management Discussion & Analysis forming part of this Report. Subsidiary Companies and Consolidated Results of Operations

The subsidiary companies of your Company are moving on from strength to strength and contributing to the overall growth of your Company. These subsidiaries have created a niche for themselves with their excellent performance and are continuing to add to the shareholders value.

The Consolidated Group Profit for the year after exceptional items, prior period adjustments and tax and after deducting minority interests is Rs. 1,704.47 million as against Rs. 895.96 million earned last year - a growth of 90.24%. During the year under review, Motilal Oswal Securities Limited (MOSL), the Material Non-listed Subsidiary of the Company earned the revenues of Rs. 5,158.99 million and PAT of Rs. I 191.41 million. During the year under review, the market share of MOSL was 3.2% as against 4.2% in the previous financial year.

During the year under review, Motilal Oswal Insurance Brokers Private Limited became a subsidiary of the Company and Motilal Oswal Asset Management Company Limited and Motilal Oswal Trustee Company Limited became the subsidiary of MOSL and in turn of the Company. The Statement pursuant to section 212 of the Companies Act, 1956, containing details of the Companys Subsidiaries is attached.

The Consolidated Financial Statements of your Company and its subsidiaries prepared in accordance with Accounting Standard -21 prescribed by The Institute of Chartered Accountants of India, form part of the Annual Report and the Accounts. In terms of approval granted by the Central Government under section 212(8) of the Companies Act, 1956, copy of the Balance Sheet, Profit and Loss Account, Reports of the Board of Directors and Auditors of the subsidiaries have not been attached with the Balance Sheet of the Company. The Company Secretary & Compliance Officer will make these documents available upon receipt of request from any Member of the Company interested in obtaining the same. However, as directed by the Central Government, the financial data of the subsidiaries have been separately furnished forming part of the Annual Report. These documents will also be available for inspection at the Registered Office of the Company and the concerned subsidiary companies, during 2 p.m. to S p.m. on all working days upto the date of the Annual General Meeting.

The detailed results of operations of the Company and its subsidiaries are given in the Management Discussion & Analysis forming part of this report.

Credit Rating

The Company continued to enjoy the highest rating of PI + assigned by CRISIL Limited to the Short-term Debt Programme of Rs. 4 billion of your Company. The rating indicates the highest degree of safety with regard to timely payment of interest and principal on the instrument.

CRISIL Limited also reaffirmed the rating of PI + to the Short-term Debt Programme of Rs. 4 billion of Motilal Oswal Securities Limited, a subsidiary of the Company.

Finance

During the year under review, to meet the working capital requirements, the Company has issued Commercial Papers and Unsecured Non- convertible Debentures.

Employees Stock Option Schemes (ESOS)

Details required to be provided under the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are set out in Annexure to this Report.

Directors

Mr. Raamdeo Agrawal was appointed as the Joint Managing Director of the Company by the Board of Directors, for a period of 5 years, with effect from 14th October, 2009, without any remuneration, subject to the approval of the Members in the ensuing Annual General Meeting of the Company. Mr. Agrawal is also the Joint Managing Director in Motilal Oswal Securities Limited, a material unlisted subsidiary of the Company.

Mr. Navin Agarwal and Mr. Balkumar Agarwal retire by rotation at the forthcoming Annual General Meeting and, being eligible, offer themselves for re-appointment.

Directors Responsibility Statement

Pursuant to section 217(2AA) of the Companies Act, 1956, your Directors confirm that:

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

(ii) they have, in the selection of the accounting policies, consulted the Statutory Auditors and these have been applied consistently and reasonable and prudent judgments and estimates have been made so as to give a true and fair view of the state of affairs of the Company as at 3 I st March, 2010 and of the Profit of the Company for the year ended on that date;

(iii) proper and sufficient care has been taken for the maintenance of 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 annual accounts have been prepared on a going concern basis.

Audit Committee

The Audit Committee presently comprises of Mr. Balkumar Agarwal (Chairman of the Committee), Mr. Ramesh Agarwal, Mr. Madhav Bhatkuly and Mr. Raamdeo Agrawal.

Remuneration/Compensation Committee

The Remuneration/Compensation Committee of the Board of Directors presently comprises of Mr. Ramesh Agarwal (Chairman of the Committee), Mr. Balkumar Agarwal and Mr. Motilal Oswal.

Shareholders/Investors Grievance Committee

The Shareholders/Investors Grievance Committee of the Board of Directors presently comprises of Mr. Balkumar Agarwal (Chairman of the Committee), Mr. Motilal Oswal and Mr. Raamdeo Agrawal.

Nomination Committee

The Nomination Committee of the Board of Directors presently comprises of Mr. Motilal Oswal and Mr. Raamdeo Agrawal.

Risk Management Committee

The Risk Management Committee of the Board of Directors presently comprises of Mr. Motilal Oswal and Mr. Navin Agarwal.

Corporate Governance

A report on the Corporate Governance along with a certificate from the Auditors of the Company regarding the compliance of conditions of Corporate Governance as also the Management Discussion and Analysis Report as stipulated under Clause 49 of the Listing Agreement are annexed to this Report.

Auditors

Messrs Haribhakti & Co., Chartered Accountants, retire as the Statutory Auditors of the Company at the forthcoming Annual General Meeting and have given their consent for re-appointment. The members will be required to appoint the Statutory Auditors for the current year and fix their remuneration.

Fixed Deposits and Loans/Advances

The Company has not accepted any deposits from the public or employees during the year under review.

The particulars of loans/advances and investment in its own shares by listed companies, their subsidiaries, associates, etc., required to be disclosed in the annual accounts of the Company pursuant to Clause 32 of the Listing Agreement with the Company, are furnished separately.

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

In view of the nature of activities which are being carried on by the Company, Rules 2A and 2B of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 concerning conservation of energy and technology absorption respectively are not applicable to the Company.

There was no inflow of foreign exchange during the year under review. Details of the foreign exchange outflow are given in the notes to Accounts.

Particulars of employees as required under section 217(2A) of the Companies Act, 1956 and Rules framed thereunder

In accordance with the provisions of Section 217(2A) of the Companies Act, 1956 and the Rules framed thereunder, the names and other particulars of employees are set out in the Annexure to the Directors Report. In terms of the provisions of Section 219( I )(b)(iv) of the Companies Act, 1956, the Directors Report is being sent to all the Shareholders of the Company excluding the aforesaid Annexure. The Annexure is available for inspection at the Registered Office of the Company. Any shareholder interested in obtaining a copy of the said Annexure may write to the Company Secretary & Compliance Officer at the Registered Office of the Company.

Acknowledgements

Your Directors take this opportunity to thank the Authorities, Bankers of the Company, Shareholders and the Customers for their continued support to the Company. The Directors also place on record their sincere appreciation of the contributions made by every member of the MOFSL family for their dedicated efforts that made these results achievable.

For and on behalf of the Board

Motilal Oswal Chairman & Managing Director Mumbai, 19th June, 2010

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