Notes to Accounts of Dhani Services Ltd.
Mar 31, 2023
Provisions, contingent assets and contingent liabilities
Provisions are recognized only when there is a present obligation, as a result of past events, and when
a reliable estimate of the amount of obligation can be made at the reporting date. These estimates are
reviewed at each reporting date and adjusted to reflect the current best estimates. Provisions are discounted
to their present values, where the time value of money is material.
Contingent liability is disclosed for:
¦ Possible obligations which will be confirmed only by future events not wholly within the control of the
Group or
¦ Present obligations arising from past events where it is not probable that an outflow of resources will
be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be
made.
Contingent assets are neither recognised nor disclosed except when realisation of income is virtually certain,
related asset is disclosed.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability
or equity instrument of another entity.
Initial recognition and measurement
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual
provisions of the financial instrument and are measured initially at fair value adjusted for transaction
costs. However trade receivables that do not contain a significant financing component are measured at
transaction price. Subsequent measurement of financial assets and financial liabilities is described below.
i. Financial assets carried at amortised cost - a financial asset is measured at the amortised cost if both
the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual
cash flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments
of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the
effective interest rate (EIR) method.
ii. Investments in equity instruments - Investments in equity instruments which are held for trading are
classified as at fair value through profit or loss (FVTPL). For all other equity instruments, the Group
makes an irrevocable choice upon initial recognition, on an instrument by instrument basis, to classify
the same either as at fair value through other comprehensive income (FVOCI) or fair value through
profit or loss (FVTPL). Amounts presented in other comprehensive income are not subsequently
transferred to profit or loss. However, the Group transfers the cumulative gain or loss within equity.
Dividends on such investments are recognised in profit or loss unless the dividend clearly represents a
recovery of part of the cost of the investment.
iii. Investments in mutual funds - Investments in mutual funds are measured at fair value through profit
and loss (FVTPL).
The fair value of an asset or a liability is measured using the assumptions that market participants would use
when pricing the asset or liability, assuming that market participants act in their economic best interest. A
fair value measurement of a nonfinancial asset takes into account a market participant''s ability to generate
economic benefits by using the asset in its highest and best use or by selling it to another market participant
that would use the asset in its highest and best use.
In order to show how fair values have been derived, financial instruments are classified based on a hierarchy
of valuation techniques, as summarised below:
Level 1 financial instruments: Those where the inputs used in the valuation are unadjusted quoted prices
from active markets for identical assets or liabilities that the Group has access to at the measurement date.
The Group considers markets as active only if there are sufficient trading activities with regards to the
volume and liquidity of the identical assets or liabilities and when there are binding and exercisable price
quotes available on the balance sheet date.
Level 2 financial instruments: Those where the inputs that are used for valuation and are significant, are
derived from directly or indirectly observable market data available over the entire period of the instrument''s
life.
Level 3 financial instruments: Those that include one or more unobservable input that is significant to the
measurement as whole. Based on the Group''s business model for managing the investments, the Group has
classified its investments and securities for trade at FVTPL. Financial liabilities are carried at amortised cost
using the effective interest rate method. For trade and other payables the carrying amount approximates
the fair value due to short maturity of these instruments.
De-recognition of financial assets
Financial assets (or where applicable, a part of financial asset or part of a group of similar financial assets)
are derecognised (i.e. removed from the Group''s balance sheet) when the contractual rights to receive the
cash flows from the financial asset have expired, or when the financial asset and substantially all the risks
and rewards are transferred. Further, if the Group has not retained control, it shall also derecognise the
financial asset and recognise separately as assets or liabilities any rights and obligations created or retained
in the transfer.
Financial liabilitiesSubsequent measurement
Subsequent to initial recognition, all financial liabilities are measured at amortised cost using the effective
interest method.
De-recognition of financial liabilities
A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or
expires. When an existing financial liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially modified, such an exchange or
modification is treated as the de-recognition of the original liability and the recognition of a new liability.
The difference in the respective carrying amounts is recognised in the consolidated statement of profit and
loss.
Convertible debentures are separated into liability and equity components basis the terms of the contract.
On issuance of the convertible debentures, the fair value of the liability component is determined using
a market rate for an equivalent non-convertible instrument. This amount is classified as financial liability
measured at amortised cost until it is extinguished on conversion. The remainder of the proceeds is
recognised in equity since conversion option meets the fixed for fixed criteria.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if
there is a currently enforceable legal right to offset the recognised amounts and there is an intention to
settle on a net basis, to realise the assets and settle the liabilities simultaneously.
l. Impairment of financial assets
In accordance with Ind AS 109, the Group applies expected credit loss (ECL) model for measurement and
recognition of impairment loss for financial assets. The Group factors historical trends and forward looking
information to assess expected credit losses associated with its assets and impairment methodology applied
depends on whether there has been a significant increase in credit risk.
The Group follows a ''three-stage'' model for impairment based on changes in credit quality since initial
recognition as summarised below:
¦ Stage 1 (1-30 days) includes loan assets that have not had a significant increase in credit risk since initial
recognition or that have low credit risk at the reporting date.
¦ Stage 2 (31-60 days) includes loan assets that have had a significant increase in credit risk since initial
recognition but that do not have objective evidence of impairment.
¦ Stage 3 (more than 90 days) includes loan assets that have objective evidence of impairment at the
reporting date.
The Expected Credit Loss (ECL) is measured at 12-month ECL for Stage 1 loan assets and at lifetime ECL for
Stage 2 and Stage 3 loan assets. ECL is the product of the Probability of Default, Exposure at Default and Loss
Given Default, defined as follows:
Probability of Default (PD) - The PD represents the likelihood of a borrower defaulting on its financial
obligation (as per "Definition of default and credit-impaired" above), either over the next 12 months (12
months PD), or over the remaining lifetime (Lifetime PD) of the obligation.
Loss Given Default (LGD) - LGD represents the Group''s expectation of the extent of loss on a defaulted
exposure. LGD varies by type of counterparty, type and preference of claim and availability of collateral or
other credit support.
Exposure at Default (EAD) - EAD is based on the amounts the Group expects to be owed at the time of
default. For a revolving commitment, the Group includes the current drawn balance plus any further amount
that is expected to be drawn up to the current contractual limit by the time of default, should it occur.
Forward-looking economic information is included in determining the 12-month and lifetime PD, EAD and
LGD. The assumptions underlying the expected credit loss are monitored and reviewed on an ongoing basis.
In respect of trade receivables, the Group applies the simplified approach of Ind AS 109, which requires
measurement of loss allowance at an amount equal to lifetime expected credit losses. Lifetime expected
credit losses are the expected credit losses that result from all possible default events over the expected life
of a financial instrument.
In respect of its other financial assets, the Group assesses if the credit risk on those financial assets has
increased significantly since initial recognition. If the credit risk has not increased significantly since initial
recognition, the Group measures the loss allowance at an amount equal to 12-month expected credit losses,
else at an amount equal to the lifetime expected credit losses.
When making this assessment, the Group uses the change in the risk of a default occurring over the
expected life of the financial asset. To make that assessment, the Group compares the risk of a default
occurring on the financial asset as at the balance sheet date with the risk of a default occurring on the
financial asset as at the date of initial recognition and considers reasonable and supportable information,
that is available without undue cost or effort, that is indicative of significant increases in credit risk since
initial recognition. The Group assumes that the credit risk on a financial asset has not increased significantly
since initial recognition if the financial asset is determined to have low credit risk at the balance sheet date.
Financial assets are written off either partially or in their entirety to the extent that there is no realistic
prospect of recovery. Any subsequent recoveries are credited to impairment on financial instrument in
consolidated statement of profit and loss.
m. Impairment of non-financial assets
At each reporting date, the Group assesses whether there is any indication that an asset may be impaired.
If any such indication exists, the Group estimates the recoverable amount of the asset. Recoverable amount
is higher of an asset''s net selling price and its value in use. If such recoverable amount of the asset or the
recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount,
the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and
is recognised in the consolidated statement of profit and loss. If at the reporting date there is an indication
that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the
asset is reflected at the recoverable amount.
Basic earnings per equity share is calculated by dividing the net profit or loss for the period attributable to
equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares
outstanding during the period. The weighted average number of equity shares outstanding during the
period is adjusted for events including a bonus issue.
For the purpose of calculating diluted earnings per equity share, the net profit or loss for the period
attributable to equity shareholders and the weighted average number of shares outstanding during the
period are adjusted for the effects of all dilutive potential equity shares.
The Group identifies segment basis the internal organization and management structure. The operating
segments are the segments for which separate financial information is available and for which operating
profit/loss amounts are regularly reviewed by the CODM (''chief operating decision maker'') in deciding how
to allocate resources and in assessing performance.
p. Foreign currencyFunctional and presentation currency
Items included in the financial statement of the Group are measured using the currency of the primary
economic environment in which the entity operates (''the functional currency''). The consolidated financial
statements have been prepared and presented in Indian Rupees (INR), which is the Holding Company''s
functional and presentation currency.
Foreign currency transactions are recorded in the functional currency, by applying to the exchange rate
between the functional currency and the foreign currency at the date of the transaction. Foreign currency
monetary items outstanding at the balance sheet date are converted to functional currency using the
closing rate. Non-monetary items denominated in a foreign currency which are carried at historical cost are
reported using the exchange rate at the date of the transaction.
Exchange differences arising on monetary items on settlement, or restatement as at reporting date, at rates
different from those at which they were initially recorded, are recognized in the consolidated statement of
profit and loss in the year in which they arise.
Investment properties are land and buildings that are held for long term lease rental yields and/or for
capital appreciation. Investment properties are initially recognised at cost including transaction costs.
Subsequently investment properties comprising buildings are carried at cost less accumulated depreciation
and accumulated impairment losses, if any.
Depreciation on buildings is provided over the estimated useful lives of 60 years. The residual values,
estimated useful lives and depreciation method of investment properties are reviewed, and adjusted on
prospective basis as appropriate, at each reporting date. The effects of any revision are included in the
Statement of Profit and Loss when the changes arise.
An investment property is de-recognised when either the investment property has been disposed of or do
not meet the criteria of investment property i.e. when the investment property is permanently withdrawn
from use and no future economic benefit is expected from its disposal. The difference between the net
disposal proceeds and the carrying amount of the asset is recognised in the Statement of Profit and Loss in
the period of de-recognition.
The Group enters into leasing arrangements for various premises. The assessment (including measurement)
of the lease is based on several factors, including, but not limited to, transfer of ownership of leased asset
at end of lease term, lessee''s option to extend/terminate etc. After the commencement date, the Group
reassesses the lease term if there is a significant event or change in circumstances that is within its control
and affects its ability to exercise or not to exercise the option to extend or to terminate.
upto 31 March 2019, assets acquired on leases where a significant portion of risk and rewards of ownership
are retained by the lessor are classified as operating leases. Lease rental are charged to statement of profit
and loss on straight-line basis except where scheduled increase in rent compensate the lessor for expected
inflationary costs.
For any new contracts entered into on or after 1 April 2019, the Group considers whether a contract is, or
contains a lease (the transition approach has been explained and disclosed in Note 48). A lease is defined as
''a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of
time in exchange for consideration''.
The Group enters into leasing arrangements for various assets. The assessment of the lease is based on
several factors, including, but not limited to, transfer of ownership of leased asset at end of lease term,
lessee''s option to extend/purchase etc.
Recognition and initial measurement
At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the balance
sheet. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease
liability, any initial direct costs incurred by the Group, an estimate of any costs to dismantle and remove the
asset at the end of the lease (if any), and any lease payments made in advance of the lease commencement
date (net of any incentives received).
The Group enters into leasing arrangements for various assets. The assessment of the lease is based on
several factors, including, but not limited to, transfer of ownership of leased assets at end of lease term,
lessee''s option to extend/ purchase etc.
Recognition and initial measurement
At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the balance
sheet. The rigth-of-use asset is measured at cost, which is made up of the initial measurement of the
lease liability, any initial direct costs incurred by the Group, an estimate of the any costs to dismantle and
remove the asset at the end of the lease (if any), and any lease payments made in advance of the lease
commencement date (net of any incentive received).
The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date
to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group
also assesses the right-of-use asset for impairment when such indicators exist.
At lease commencement date, the Group measures the lease liability at the present value of the lease
payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily
available or the Groups incremental borrowing rate. Lease payments included in the measurement of the
lease liability are made up of fixed payments (including in substance fixed payments) and variable payments
based on an index or rate. Subsequent to initial measurement, the liability will be reduced for payments
made and increased for interest. It is re-measured to reflect any reassessment or modification, or if there
are changes in in-substance fixed payments. When the lease liability is re-measured, the corresponding
adjustment is reflected in the right-of-use asset.
The Group has elected to account for short-term leases using the practical expedients. Instead of recognising
a right-of-use asset and lease liability, the payments in relation to these are recognised as an expense in
statement of profit and loss on a straight-line basis over the lease term.
The Company had created "Indiabulls Ventures Limited - Employee Welfare Trust" (''Trust'') for the
implementation of schemes namely employees stock options plans, employees stock purchase plan and
stock appreciation rights plan. During the year ended 31 March 2021, name of the Trust has been changed
to "Udaan Employee Welfare Trust" ("Udaan-EWT"). The Company treats Udaan-EWT as its extension and
the Company''s own shares held by Udaan-EWT are treated as treasury shares. Treasury shares are presented
as a deduction from other equity. The original cost of treasury shares and the proceeds of any subsequent
sale are presented as movements in equity.
Provision is made for the amount of any dividend declared on or before the end of the reporting period
but not distributed at the end of the reporting period, being appropriately authorised and no longer at the
discretion of the Company. The final dividend on shares is recorded as a liability on the date of approval
by the shareholders, and interim dividends are recorded as a liability on the date of declaration by the
Company''s Board of Directors.
Items of Inventories are valued at lower of cost or net realizable value after providing for obsolescence and
other losses, where considered necessary. Cost is determined on Weighted Average basis. Cost includes
all charges in bringing the goods to their present location and condition, including octroi and other levies,
transit insurance and receiving charges. Net Realizable Value represents the estimated selling price in the
ordinary course of business less estimated costs necessary to make the sale
v. Recent Accounting Pronouncements
The Ministry of Corporate Affairs (MCA) on 31 March 2023, has issued Companies (Indian Accounting
Standard) Amendment Rules, 2023 in consultation with the National Financial Reporting Authority (NFRA).
The notification states that these rules shall be applicable from 1 April 2023 and would thus be applicable
for the financial year ending 31 March 2024.
- Amendments to Ind AS 1, "Presentation of Financial Statements"
Companies should now disclose material accounting policy information rather than their significant
accounting policies, together with other information, which is relevant to an understanding of financial
statements.
- Amendments to Ind AS 8, "Accounting policies, Change in Accounting Estimates and Errors"
1. Definition of ''change in account estimate'' has been replaced by revised definition of ''accounting
estimate''
2. As per revised definition, accounting estimates are monetary amounts in the financial statements
that are subject to measurement uncertainty
3. A company develops an accounting estimate to achieve the objective set out by an accounting
policy.
4. Accounting estimates include: a) Selection of a measurement technique (estimation or valuation
technique) b) Selecting the inputs to be used when applying the chosen measurement technique.
- Amendments to Ind AS 12, "Income Taxes"
1. Narrowed the scope of the Initial Recognition Exemption (IRE) (with regard to leases and
decommissioning obligations)
2. Now IRE does not apply to transactions that give rise to equal and offsetting temporary differences
3. Accordingly, companies will need to recognise a deferred tax asset and a deferred tax liability
for temporary differences arising on transactions such as initial recognition of a lease and a
decommissioning provision.
- Based on preliminary assessment, the Company does not expect these amendments to have any
significant impact on financial statements.
Mar 31, 2021
During the year ended 31 March 2019, the Board of Directors had resolved to create, offer, issue and allot up to an aggregate of 27,985,455 compulsorily convertible debentures ("CCDs") of face value of R 550 each, convertible into equivalent numbers of equity shares of R 2 each at a conversion price of R 550 per equity share (including premium of R 548 per equity share) under the Non-Promoter Category by way of a preferential issue on a private placement basis to the certain foreign investors ("the CCD holders"). During the year ended 31 March 2021, these CCDs have been converted into 27,985,452 fully paid-up equity shares of face value of R 2 each at a premium of R 548 per share.
Terms of the Issue:
a. CCDs will be compulsorily converted into fully paid-up equity shares of face value of R 2 each at a conversion price of R 550 each on or before 18 months from the date of the allotment of the CCDs.
b. CCDs carry interest rate of 14.90% per annum, payable quarterly and interest is payable and calculated on the face value of CCDs, commencing from the date of its allotment and until the date of its conversion into the equity shares.
Bank overdraft facilities were secured against bank deposits pledged with respective banks and are repayable on demand. Bank overdraft carries rate of interest 5.50% per annum (as at 31 March 2020: ranging from 7.74% to 8.19% per annum).
Vehicle loans are secured against hypothecation of the vehicles purchased. The rate of interest of such loans ranges between 8.50% to 8.75% per annum. These loans are repayable in equated monthly installments of 5 years.
v. Rights, preferences and restrictions attached to the equity shares
a. The Company has only one class of equity shares having a face value of R 2 per share. Each holder of fully paid up equity share is entitled to one vote per share. Voting rights of each holder of partly paid up equity share is proportionate to the paid up amount of such share. The final dividend proposed by the Board of Directors, if any, is subject to the approval of the shareholders in the ensuing Annual General Meeting.
b. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
c. Holders of Global Depository Receipts (''GDRs'') will be entitled to receive dividends, subject to the terms of the deposit agreement, to the same extent as the holders of equity shares, less the fees and expenses payable under such deposit agreement and any Indian tax applicable to such dividends. Holders of GDRs don''t have voting rights with respect to the deposited shares. The GDRs can not be transferred to any person located in India including Indian residents or ineligible investors except as permitted by Indian laws and regulations.
vii. Shares reserved for issue under options:
9,972,800 equity shares (As at 31 March 2020: 17,313,900 equity shares) of face value of R 2 each are reserved under various option schemes of the Company (Refer note - 42)
viii. The Company has not issued any bonus shares during the current year and five years immediately preceding current year.
ix. There are no shares issued pursuant to contract without payment being received in cash, allotted as fully paid up by way of bonus issue. During the year ended 31 March 2020, the Company had bought back 66,666,666 fully paid up equity shares of the Company at R 150 per equity share through tender route.
x. 54,433 shares (31 March 2020: 54,433 shares) of face value of R 2 per share represent the shares underlying GDRs. Each GDR represents one underlying equity share.
Nature and purpose of other reserve
Equity component of compulsory convertible debentures
On issuance of the convertible debentures, the fair value of the liability component is determined using a market rate for an equivalent non-convertible instrument. This amount is classified as financial liability measured at amortised cost until it is extinguished on conversion. The remainder of the proceeds is recognised in equity since conversion option meets the fixed for fixed criteria.
Capital redemption reserve
The same had been created in accordance with provision of the Act on account of redemption of preference shares and buy-back of equity shares.
Securities premium
Securities premium represents premium received on issue of shares. The amount is utilised in accordance with the provisions of the Act.
Foreign currency monetary item translation difference account
Pursuant to the notification dated 29 December 2011 issued by the Ministry of Corporate Affairs amending Accounting Standard 11 - ''Accounting for the Effects of Changes in Foreign Exchange Rates'' the Company has exercised the option as per Paragraph 46A inserted in the said Accounting Standard for amortisation of foreign exchange gain/loss on longterm monetary items over the remaining life of the concerned monetary items.
General reserve
Under the erstwhile Companies Act, 1956, a general reserve was created through an annual transfer of net profit at a specified percentage in accordance with applicable regulations. Consequent to the introduction of the Companies Act, 2013, the requirement to mandatory transfer a specified percentage of net profit to general reserve has been withdrawn.
Share options outstanding account
The reserve is used to recognise the fair value of the options issued to employees of the Company and subsidiary companies under Company''s employee stock option plan.
Retained earnings
Retained earnings represents surplus / accumulated earning of the Company and are available for distribution to shareholders.
Equity instruments through other comprehensive income
This represents the cumulative gains and losses arising on the fair valuation of equity instruments measured at fair value through other comprehensive income. The balance of the reserve represents such changes recognised net of amounts reclassified to retained earnings on disposal of such investments.
Treasury shares
This reserve represents Company''s own equity shares held by the Udaan Employee Welfare Trust (formerly Indiabulls Ventures Limited - Employees Welfare Trust) which is created under Dhani Services Limited - Employee Stock Benefit Scheme 2019 (ESBS 2019) (formerly Indiabulls Ventures Limited - Employee Stock Benefit Scheme 2019), Dhani Services Limited - Employee Stock Benefit Scheme 2020 (ESBS 2020) (formerly Indiabulls Ventures Limited - Employee Stock Benefit Scheme 2020) and Dhani Services Limited - Employee Stock Benefit Scheme 2021 (ESBS 2021). Treasury shares are acquired for the purpose of issuing equity shares to employees under Company''s ESBS 2019, ESBS 2020 and ESBS 2021.
(i) During the year ended 31 March 2020, the Company had decided to exercise the option permitted under Section 115BAA of the Income-tax Act, 1961 as introduced by the Taxation Laws (Amendment) Ordinance, 2019 from the financial year 2019-20. Accordingly, the provision for income-tax and deferred tax balances were recorded/ remeasured using the new tax rate and the Company had reversed deferred tax assets amounting to R 1,141.65 lakh.
Discontinued operations
On 14 January 2019, the Board of Directors considered and approved the sale and transfer of securities broking business of the Company to Dhani Stocks Limited (formerly known as Indiabulls Securities Limited and Indiabulls Commodities Limited), a wholly owned subsidiary, by way of a slump sale. On 31 July 2019, the Company entered into a business transfer agreement (BTA) with Indiabulls Securities Limited to sell its securities broking business on slump sale basis. The business transfer involved transfer of certain assets and liabilities as stated in the BTA on slump sale basis for an agreed consideration of R 34,200.00 lakh. On receipt of approvals from the regulatory authorities National Stock Exchange of India Limited, BSE Limited and the Securities and Exchange Board of India, the business stood transferred to Dhani Stocks Limited with effect from 21 February 2020.
Disclosure in respect of Indian Accounting Standard - 33 ''Earnings Per Share'' :
The basic earnings per equity share is computed by dividing the net profit attributable to equity shareholders for the year by the weighted average number of equity shares outstanding during the reporting year. Partly paid-up equity shares are treated as a fraction of an equity share to the extent they are entitled to participate in dividend relative to a fully paid-up equity share during the reporting period. Compulsory convertible debentures are treated as equivalent of equity share for the purpose of basic earnings per equity share. Treasury shares are adjusted for computation of weighted average equity shares. Diluted earnings per equity share is computed by considering the weighted average number of equity shares and also the weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares. The dilutive potential equity shares are adjusted for the proceeds receivable, had the shares been actually issued at fair value.
Dilutive potential equity shares are deemed converted as of the beginning of the year, unless they have been issued at a later date. The number of equity shares and potential dilutive equity shares are adjusted for the potential dilutive effect of employee stock option plan and warrants as appropriate.
Leases
The Company had leases for office buildings. With the exception of short-term leases and leases of low-value underlying assets, each lease is reflected on the balance sheet as a right-of-use asset and a lease liability. Variable lease payments which do not depend on an index or a rate are excluded from the initial measurement of the lease liability and right of use assets. The Company classifies its right-of-use assets in a consistent manner to its property, plant and equipment.
The Company was involved in various legal proceedings as respondents/ defendants for various claims including those related to conduct of its business. The Company had transferred its stock broking business on slump sale to its wholly owned subsidiary Dhani Stocks Limited (formerly Indiabulls Securities Limited) (DSTL). Pursuant to business transfer agreement, all the litigations related to stock broking business after slump sale will now be handled by DSTL and all liabilities arising subsequently will be settled by DSTL.
Employee stock option schemes:
The Company has issued various Employees stock options scheme (ESOP / ESOS) for the benefit of the employess of the Company and its subsidiary companies.
A. Grants during the year:
The Company has established the "Udaan Employee Welfare Trust" ("Udaan - EWT") (earlier known as Indiabulls Ventures Limited - Employees Welfare Trust" ("Trust") for the implementation and management of its employees benefit scheme viz. the "Dhani Services Limited - Employee Stock Benefit Scheme - 2019" (Scheme), for the benefit of the employees of the Company and its subsidiaries. Pursuant to Regulation 3(12) of the SEBI (Share Based Employee Benefits) Regulations, 2014, fully paid up equity shares of 10,400,000 lying in Trust have been appropriated towards the Scheme for grant of Share Appreciations Rights (SARs) to the employees of the Company and its subsidiaries as permitted by SEBI. The company will treat these SARs as equity and therefore they will be treated as equity settled SARs and accounting has been done accordingly.
i
DHANI SERVICES LIMITED
Summary of significant accounting policies and other explanatory information
for the year ended 31 March 2021
(All amounts in Indian Rupees in lakh unless stated otherwise)
B. Employees Stock Options Schemes:
(i) Employees Stock Option Scheme - 2008 (DSL ESOP - 2008)
|
Total options under the scheme (Nos.) |
DSL ESOP - 2008 |
|||
|
20,000,000 |
||||
|
Options granted (Nos.) |
20,000,000 |
9,700,000 |
500,000 |
880,600 |
|
(Regrant) |
(Regrant) |
(Regrant) |
||
|
Vesting period and percentage |
Ten years, 1st |
Five years, 20% |
Five years, 20% |
Five years, 20% |
|
Year - 15% 2nd year to 9th year - 10% each |
each year |
each year |
each year |
|
|
year |
||||
|
10th year - 5% |
||||
|
Vesting date |
25th January |
2nd July each |
2nd September |
25th March |
|
each year, |
year, |
each year, |
each year, |
|
|
commencing |
commencing |
commencing |
commencing 25 |
|
|
25 January |
2 July 2017 |
2 September |
March 2019 |
|
|
2010 |
2018 |
|||
|
Exercisable period |
5 years from |
5 years from |
5 years from |
5 years from |
|
each vesting |
each vesting |
each vesting |
each vesting |
|
|
date |
date |
date |
date |
|
|
Exercise price R) |
17.40 |
24.15 |
219.65 |
254.85 |
|
Outstanding at the beginning of 1 April 2019 (Nos.) |
870,916 |
9,700,000 |
500,000 |
693,600 |
|
Granted/ regranted during the year (Nos.) |
- |
- |
- |
- |
|
Forfeited during the year (Nos.) |
- |
10,000 |
500,000 |
152,000 |
|
Exercised during the year (Nos.) |
870,916 |
5,050,800 |
- |
25,800 |
|
Expired during the year (Nos.) |
- |
- |
- |
- |
|
Outstanding as at 31 March 2020 (Nos.) |
- |
4,639,200 |
- |
515,800 |
|
Vested and exercisable as at 31 March 2020 (Nos.) |
- |
769,200 |
- |
192,640 |
|
Remaining contractual life (weighted months) |
- |
66 |
- |
73 |
|
Outstanding at the beginning of 1 April 2020 (Nos.) |
- |
4,639,200 |
- |
515,800 |
|
Granted/ regranted during the year (Nos.) |
- |
- |
- |
- |
|
Forfeited during the year (Nos.) |
14,400 |
429,000 |
||
|
Exercised during the year (Nos.) |
- |
- |
- |
- |
|
Expired during the year (Nos.) |
- |
- |
- |
- |
|
Outstanding as at 31 March 2021 (Nos.) |
- |
4,624,800 |
- |
86,800 |
|
Vested and exercisable as at 31 March 2021 (Nos.) |
- |
2,697,000 |
- |
- |
|
Remaining contractual life (weighted months) |
- |
54 |
- |
73 |
Weighted average exercise price of share during the year ended 31 March 2021: Not applicable (31 March 2020: ^ 198.22).
245
Annual Report 2020-21
Dhani Services Limited - Employee Stock Benefit Scheme 2019 ("Scheme") ("DSL-ESBS 2019").
The Scheme has been adopted and approved pursuant to: (a) a resolution of the Board of Directors of the Company at its meeting held on 22 October 2019; and (b) a special resolution of the shareholders'' of the Company passed through postal ballot on 4 December 2019, result of which were declared on 5 December 2019.
a. Dhani Services Limited Employees Stock Option Plan 2019 ("ESOP Plan 2019")
b. Dhani Services Limited Employees Stock Purchase Plan 2019 ("ESP Plan 2019")
c. Dhani Services Limited Stock Appreciation Rights Plan 2019 ("SARs Plan 2019")
In accordance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (the "SBEB Regulations"), the Company has set up "Udaan - Employee Welfare Trust" ("Trust") for the purpose of implementation of the Scheme as per the terms of the respective Schemes as aforesaid. The Trust, in compliance with the "SBEB Regulations", is authorised to purchase upto an aggregate of 10,500,000 (One Crore Five lakh) fully paid-up equity shares, being not more than 2% (Two percent) of the fully paid-up equity share capital of the Company as on the date of approval of shareholders, from the secondary market. The Company has appropriated 10,400,000 fully paid up equity shares of the Company purchased by the Trust under the Scheme.
(iv) Dhani Services Limited - Employee Stock Benefit Scheme 2020 ("Scheme") ("DSL-ESBS 2020").
The Scheme has been adopted and approved pursuant to: (a) a resolution of the Board of Directors of the Company at its meeting held on 23 January 2020; and (b) a special resolution of the shareholders'' of the Company passed through postal ballot on 20 March 2020, result of which were declared on 21 March 2020.
This Scheme comprises:
a. Dhani Services Limited Employees Stock Option Plan 2020 ("ESOP Plan 2020")
b. Dhani Services Limited Employees Stock Purchase Plan 2020 ("ESP Plan 2020")
c. Dhani Services Limited Stock Appreciation Rights Plan 2020 ("SARs Plan 2020")
In accordance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (the "SBEB Regulations"), the Company has set up "Udaan - Employees Welfare Trust" (Trust) for the purpose of implementation of the Scheme as per the terms of the respective Schemes as aforesaid. The
Trust, in compliance with the "SBEB Regulations", is authorised to purchase upto an aggregate of 9,300,000 (Ninety Three lakh) fully paid-up equity shares, being not more than 2% (Two percent) of the fully paid-up equity share capital of the Company as on the date of approval of shareholders, from the secondary market. The Company has not granted any options/ SARs under the said scheme as at 31 March 2021.
Note - 43
Operating segments
The operations and business activities of the Company fall under within a single "stock broking and related activities" business only, which is the only reportable segment in accordance with Ind-AS 108, Operating Segments. The Company has presented "stock broking business" as discontinued operation in accordance with Ind-AS 105, Non-Current Assets Held for Sale and Discontinued Operations. Further, The Company is operating in India which is considered as a single geographical segment.
Note - 44
Employee benefits
The Company has adopted Indian Accounting Standard (Ind AS) - 19 on Employee Benefit as under :
Defined contribution plans Provident fund
The Company pays fixed contribution to provident fund at predetermined rates to a registered provident fund administered by the Government of India, which invests the funds in permitted securities. Both the Company and employees make predetermined contributions to the Provident Fund. The contributions are normally based on a certain proportion of the employee''s salary. During the year, the Company has recognized the following amounts in the Statement of Profit and Loss in respect of defined contribution plans and included in "Employee benefits expense".
months after the end of such period, the benefit is classified as a long-term employee benefit. The Company records an obligation for such compensated absences in the period in which the employee renders the services that increase this entitlement. The scheme is unfunded and liability for the same is recognized on the basis of actuarial valuation. A reversal of provision of R 15.87 lakh (previous year provision of R 12.07 lakh) for the year have been done on the basis of actuarial valuation at the year end and credited (previous year debited) to the statement of profit and loss.
The Company was carrying on the business of stock broking which was discontinued during the financial year 201920. Accordingly, as at and during the year ended 31 March 2020, the financial assets of the Company were more than fifty percent of its total assets and income from financial assets was more than fifty percent of the gross income. The Company''s present business activities consists of providing loans and making investments in group companies, consequentially, the Company may be required to apply and obtain the Certificate of Registration (CoR) from Reserve Bank of India (RBI) as a Non-Banking Financial Company (NBFC) under the category of Core Investment Company (CIC), which is currently being evaluated by the management considering the Company''s business operations and group structure. The management will take necessary steps in this regard in due course and is of the view that the impact of the above matter is not material to these standalone financial statements.
Note - 47
Disclosures in respect of Related Parties as per Indian Accounting Standard (Ind-AS) - 24 ''Related Party Disclosures'':
The Company''s related parties primarily consist of its subsidiaries including step down subsidiaries. The Company routinely enters into transactions with these related parties in the ordinary course of business on the terms equivalent to those that prevail in arm length transactions.
B Fair values hierarchy
Financial assets and financial liabilities are measured at fair value in the financial statements and are grouped into three Levels of a fair value hierarchy. The three Levels are defined based on the observability of significant inputs to the measurement, as follows:
The categories used are as follows:
Level 1: Quoted prices (unadjusted) for identical instruments in an active market;
Level 2: Directly (i.e. as prices) or indirectly (i.e. derived from prices) observable market inputs, other than Level 1 inputs; and
Level 3: Inputs which are not based on observable market data (unobservable inputs).
The management assessed that fair values of cash and cash equivalents, other bank balances, trade receivables, loans, trade payables, other payables and other financial liabilities approximate their respective carrying amounts, largely due to the short-term maturities of these instruments. The following methods and assumptions were used to estimate the fair values for other assets and liabilities:
(i) The fair values of the Company''s fixed interest bearing security deposits, loan notes and escrow account are determined by applying discounted cash flows (''DCF'') method, using discount rate that reflects the issuer''s borrowing rate as at the end of the reporting period.
(ii) The fair values of the Company fixed rate interest-bearing debt securities and borrowings are determined by applying discounted cash flows (''DCF'') method, using discount rate that reflects the issuer''s borrowing rate as at the end of the reporting period. For variable rate interest-bearing debt securities and borrowings carrying value represent best estimate of their fair value as these are subject to changes in underlying interest rate indices as and when the changes happen.
Financial risk management
i) Risk Management
The Company''s activities expose it to market risk, liquidity risk and credit risk. The Company''s board of directors has overall responsibility for the establishment and oversight of the Company risk management framework. The Company''s risk are managed by a treasury department under policies approved by the board of directors. The board of directors provides written principles for overall risk management. This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the related impact in the financial statements.
A) Credit risk
Credit Risk arises from the potential that an obligor is either unwilling to perform on an obligation or its ability to perform such obligation is impaired resulting in economic loss to the company. The Company''s exposure to credit risk is influenced mainly by cash and cash equivalents, other bank balances, investments, loans, trade receivables and other financial assets. The Company continuously monitors defaults of customers and other counterparties and incorporates this information into its credit risk controls.
a) Credit risk management
Based on business environment in which the Company operates, a default on a financial asset is considered when the counter party fails to make payments within the agreed time period as per contract. The Company assesses and manages credit risk based on internal credit rating system. Internal credit rating is performed for each class of financial instruments with different characteristics. The Company assigns the following credit ratings to each class of financial assets based on the assumptions, inputs and factors specific to the class of financial assets.
(i) Low credit risk
(ii) Moderate credit risk
(iii) High credit risk
* These represent gross carrying values of financial assets, without deduction for expected credit losses Cash and cash equivalents and bank deposits
Credit risk related to cash and cash equivalents and bank deposits is managed by only accepting highly rated banks and diversifying bank deposits and accounts in different banks across the country.
Trade receivables
Credit risk related to trade receivables is managed by continuously monitoring the recoverability of such amounts .
Other financial assets measured at amortized cost
Other financial assets measured at amortized cost includes loans and advances to employees, security deposits and others. Credit risk related to these other financial assets is managed by continuously monitoring the recoverability of such amounts.
c) Concentration of financial assets
Loans and other financial assets majorly represents loans to subsidiaries and deposits given for business purposes.
B) Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company''s approach to managing liquidity is to ensure as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due.
The Company maintains flexibility in funding by maintaining availability under committed credit lines. Management monitors the Company''s liquidity positions (also comprising the undrawn borrowing facilities) and cash and cash equivalents on the basis of expected cash flows. The Company also takes into account liquidity of the market in which the entity operates.
a) Foreign currency risk
The Company is exposed to foreign exchange risk arising from foreign currency transactions. Foreign exchange risk arises from recognised assets and liabilities denominated in a currency that is not the functional currency of the Company. To mitigate the Company''s exposure to foreign currency risk, nonrupee cash flows are monitored and forward exchange contracts are entered into in accordance with the Company''s risk management policies. The Company has not hedged its foreign currency receivables and payables.
ii) Assets
The Company''s bank deposits are carried at amortised cost and are fixed rate deposits. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.
c) Price risk
i) Exposure
The Company''s exposure price risk arises from investments held and classified in the balance sheet either as fair value through other comprehensive income or at fair value through profit or loss. To manage the price risk arising from investments, the Company diversifies its portfolio of assets.
Capital management
The Company''s capital management objectives are
- to ensure the Company''s ability to continue as a going concern
- to comply with externally imposed capital requirement and maintain strong credit ratings
- to provide an adequate return to shareholders
Management assesses the Company''s capital requirements in order to maintain an efficient overall financing structure while avoiding excessive leverage. This takes into account the subordination levels of the Company''s various classes of debt. The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt.
Buy-Back of shares
During the year ended 31 March 2020, the Company pursuant to and in terms of its shareholders'' and applicable regulatory approvals had bought back 66,666,666 fully paid-up equity shares having face value of R 2 each at a price of R 150 per share, through the ''Tender Offer'' route for an aggregate amount of R 100,000 lakh (excluding expenses towards buy back). The said buy back was completed on 4 February 2020. Consequently, the paid-up capital of the Company was reduced by R 1,333.33 lakh. Of the total buyback cash outflow excluding related expenses, an amount of R 98,666.67 lakh was utilized from Securities Premium and Capital Redemption Reserve of R 1,333.33 lakh (representing the nominal value of the shares bought back and extinguished) has been created from the balance in retained earnings as per the requirements of the Act. Buy back expenses of R 7,160.79 lakh have been adjusted with Securities Premium.
Consequent to the outbreak of the COVID-19 pandemic, the Indian Government announced a lockdown in March 2020. Subsequently, the national lockdown was lifted by the Government, but regional lockdowns continue to be implemented in areas with a significant number of COVID-19 cases. The impact of COVID-19, including changes in customer behavior and pandemic fears, as well as restriction of business and individual activities led to significant volatility in global and Indian financial markets and a significant decrease in global and local economic activities. The extent to which COVID-19 pandemic, including the current "second wave" that has significantly increased the number of cases in India, will continue to impact the Company''s performance and will depend on ongoing as well as future developments which are highly uncertain, including, among other things, any new information concerning the severity of the COVID-19 pandemic and any action to contain its spread or mitigate its impact whether government-mandated or elected by us.
The Company believes that it has considered all the possible impact of the known events arising out of COVID-19 pandemic in the preparation of these standalone financial statements. However, the impact assessment of COVID-19 is a continuing process given its nature and duration. The Company will continue to monitor any material changes to future economic condition. The Company''s capital and liquidity position remains sufficient and would continue to be the focus area for the Company; accordingly, the Company does not expect a stress on its liquidity situation in the immediate future.
Mar 31, 2018
Note â 1
Corporate information:
Indiabulls Ventures Limited (âIBVLâ or âthe Companyâ, CIN: L74999DL1995PLC069631) carries on the business as stock broker on the National Stock Exchange of India Limited (âNSEâ) and the BSE Limited (âBSEâ); depository participants and renders other related ancillary services. On February 1, 1996 IBVL received a certificate of registration from the Securities and Exchange Board of India (âSEBIâ) under sub section 1 of Section 12 of the Securities and Exchange Board of India Act, 1992 to carry on the business as a stock broker. Accordingly, all provisions of the Securities and Exchange Board of India Act, 1992, and Rules and Regulations relating thereto are applicable to the Company. On April 2, 2008 the Equity shares of the Company were listed on the NSE and the BSE after the demerger of the Company from Indiabulls Financial Services Limited (erstwhile holding company) vide Scheme of Arrangement.
i. Rights, preferences and restrictions attached to the equity shares:
a. The Company has only one class of equity shares having a face value of Rs. 2 per share. Each holder of fully paid up equity share is entitled to one vote per share. Voting rights of each holder of partly paid up equity share is proportionate to the paid up amount of such share. The final dividend proposed by the Board of Directors, if any, is subject to the approval of the shareholders in the ensuing Annual General Meeting.
b. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
c. Holders of Global Depository Receipts (âGDRsâ) will be entitled to receive dividends, subject to the terms of the deposit agreement, to the same extent as the holders of equity shares, less the fees and expenses payable under such deposit agreement and any Indian tax applicable to such dividends. Holders of GDRs donât have voting rights with respect to the deposited shares. The GDRs can not be transferred to any person located in India including Indian residents or ineligible investors except as permitted by Indian laws and regulations.
iii. Shares reserved for issue under options:
30,300,366 equity shares (Previous year 20,829,316 equity shares) of face value of Rs. 2 each are reserved under various option schemes of the Company (refer note - 31).
33,800,000 equity shares ((Previous year 33,650,000 equity shares) of face value of Rs. 2 each are reserved towards share warrants of the Company (refer note - 5 (i)).
Note 2
(i) Pursuant to the notification dated December 29, 2011 issued by the Ministry of Corporate Affairs amending Accounting Standard 11 - âAccounting for the Effects of Changes in Foreign Exchange Ratesâ the Company has exercised the option as per Paragraph 46A inserted in the said Accounting Standard for amortisation of foreign exchange gain/loss on long-term monetary items over the remaining life of the concerned monetary items. Consequently, an amount of Rs. 4,904,878 (Previous year Rs. 7,932,645) is carried forward in the foreign exchange monetary item translation difference account as on March 31, 2018, net of forex gain amounting to Rs. 2,475,304 (Previous year Rs. 3,813,806) amortised in the Statement of Profit and Loss and Rs. 773,128 (Previous year Rs. Nil) utilised towards the partial amount received from the Escrow Account through Statement of Profit and Loss.
Note 3
(i) During the year ended March 31, 2017, the Board of Directors had resolved to create, offer, issue and allot up to 58,300,000 warrants, convertible into 58,300,000 equity shares of Rs. 2 each on a preferential allotment basis at a conversion price of Rs. 19.75 per equity share to the certain promoter entities and to an executive director (âthe warrant holdersâ).
Terms of the issue:
a. 25% application money is payable upfront at the time of allotment.
b. warrants were to be converted into equivalent number of equity shares on payment of the balance amount at any time on or before February 9, 2018.
c. In the event the warrants are not converted into equity shares within the said period, the Company is eligible to forfeit the amounts received towards the warrants.
During the year ended March 31, 2017, the Company had allotted 24,650,000 equity shares on conversion of equivalent number of warrants in accordance with the terms of the issue. Further, during the year ended March 31, 2018, the Company has allotted 33,650,000 equity shares on conversion of equivalent number of warrants in accordance with the terms of the issue.
(ii) During the year ended March 31, 2018, the Board of Directors had resolved to create, offer, issue and allot up to 33,800,000 warrants, convertible into 33,800,000 equity shares of Rs. 2 each on a preferential allotment basis at a conversion price of Rs. 43.75 per equity share of the Company to the certain promoter entities (âthe warrant holdersâ).
Terms of the issue:
a. 25% application money is payable upfront at the time of allotment.
b. warrants were to be converted into equivalent number of equity shares on payment of the balance amount at any time on or before October 28, 2018.
c. In the event the warrants are not converted into equity shares within the said period, the Company is eligible to forfeit the amounts received towards the warrants.
Note 4
(i) Term loan of Rs. 1,500,000,000 is secured against receivables and current assets (including cash and cash equivalents and investments). The loan carries interest rate of 3 months MIBOR plus spread equivalent to 9.42% p.a. as at March 31, 2018 and is repayable in one bullet payment in April 2019.
(ii) Term loans of Rs. 4,172,125 (including current maturities amounting to Rs. 811,741) are secured against hypothecation of the vehicles purchased. The rate of interest of such term loans ranges between 8.50% to 8.75% p.a. The term loans are repayable in equated monthly installments of 5 years.
Note 5
(i) During the year ended March 31, 2018, the Company has invested Rs. 500,000,000 in the equity share capital of Indiabulls Asset Reconstruction Company Limited.
(ii) During the year ended March 31, 2018, the Company has acquired 100% holding in equity shares of IVL Finance Limited (formerly known as Shivshakti Financial Services Limited) from Indiabulls Distribution Services Limited (a wholly owned subsidiary of the Company) for consideration of Rs. 2,176,323,000. Subsequent to this, the Company has further invested Rs. 10,027,659,115 in the equity share capital of IVL Finance Limited.
Note â 6
Deferred tax assets
In compliance with Accounting Standard 22 - âAccounting for Taxes on Incomeâ, deferred tax (net) of Rs. 26,255,756 has been debited (Previous year credited Rs. 1,276,437) to the Statement of Profit and Loss for the year ended March 31, 2018. The breakup of deferred tax into major components is as under:
Note â 7
(i) During the year ended March 31, 2012, the Company had sold 586,193 shares held by it in Copal Partners Limited to Moodyâs Group UK LTD for the consideration of Rs. 231,992,806 vide the Share Purchase Deed. Out of the total consideration of Rs. 231,992,806 receivable from Moodyâs Group UK LTD, Rs. 52,705,971 (excluding foreign exchange gain of Rs. 17,137,818) [Previous year Rs. 59,369,946 (excluding foreign exchange gain of Rs. 19,056,103)] is outstanding as at March 31, 2018 in the form of Loan Notes of the Moodyâs Group UK LTD and Escrow account which will be due in FY 2020-21 and FY 2019-20 respectively. During the year ended March 31, 2018, the Company had received partial amount of Rs. 6,663,975 (excluding foreign exchange gain of Rs. 2,087,549) (Previous year Rs. Nil) towards Escrow Account.
Note - 8
Earnings per equity share (EPS)
Disclosure in respect of Accounting Standard â 20 âEarnings Per Shareâ :
The basic earnings per equity share is computed by dividing the net profit attributable to equity shareholders for the year by the weighted average number of equity shares outstanding during the reporting year. Partly paid-up equity shares are treated as a fraction of an equity share to the extent they are entitled to participate in dividend relative to a fully paid-up equity share during the reporting period. Diluted earnings per equity share is computed by considering the weighted average number of equity shares and also the weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares. The dilutive potential equity shares are adjusted for the proceeds receivable, had the shares been actually issued at fair value.
Dilutive potential equity shares are deemed converted as of the beginning of the year, unless they have been issued at a later date. The number of equity shares and potential dilutive equity shares are adjusted for the potential dilutive effect of employee stock option plan and warrants as appropriate.
Note â 9
Leases
The Company has taken office premises on operating lease at various locations in India and lease rent in respect of the same amounting to Rs. 13,510,351 (Previous Year Rs. 15,551,570) net of apportionment has been charged to the Statement of Profit and Loss. (refer note - 27(i) & (ii)). The agreements are executed for a period ranging from 11 months to 10 years with a renewable clause and in many cases, it also provides for termination at will by either party giving a prior notice period between 30 to 90 days. The minimum lease rental outstanding are as under:
Note â 10
i. During the year ended March 31, 2011, the Securities Appellate Tribunal (âSATâ) had passed an order dated October 26, 2010 in favour of the Company setting aside the penalty imposed by SEBI. However, during the year ended March 31, 2012, SEBI had preferred an appeal against the judgment of the SAT before the Honorable Supreme Court of India. During the year ended March 31, 2018, the Honorable Supreme Court of India has passed order in favor of the Company.
ii. The Company is involved in various legal proceedings as respondents/ defendants for various claims including those related to conduct of its business. In respect of these claims, the Company believes, these claims do not constitute material litigation matters and with its meritorious defenses the ultimate disposition of these matters will not have material adverse effect on its financial statements/ position.
Note â 11
Employee stock option schemes:
a) Employees Stock Option Scheme - 2008
During the financial year ended March 31, 2009, the Company had issued an Employee Stock Option Scheme titled âEmployee Stock Option Scheme - 2008â in accordance with the provisions of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (âSEBI Guidelinesâ).
Under the Scheme, the Company was authorised to grant 20,000,000 Equity settled options to eligible employees including its directors (other than promoter directors) and employees of its subsidiary companies including their directors. All options under the Scheme are exercisable for Equity Shares of the Company. Employees covered by the plan were granted an option to purchase shares of the Company subject to the requirements of vesting.
A Compensation Committee constituted by the Board of Directors of the Company administered the plan. The Compensation Committee had granted, under the âIndiabulls Ventures Limited Employees Stock Option Scheme - 2008â (âIBVL ESOP - 2008â), 20,000,000 stock options representing an equal number of equity shares of face value Rs. 2 each in the Company, to the eligible employees, at an exercise price of Rs. 17.40, being the latest available closing market price on the National Stock Exchange of India Limited, as on January 23, 2009. As the options have been granted at intrinsic value, there is no employee stock compensation expense on account of the same. The stock options so granted, shall vest in the eligible employees over a period of 10 years beginning from January 25, 2010 being the first vesting date. The options granted under each of the slabs, can be exercised by the grantees within a period of five years from the relevant vesting date.
Further, during the year ended March 31, 2017, the Compensation Committee had regranted 9,700,000 stock options (surrendered and lapsed options eligible for regrant) representing an equal number of equity shares of face value Rs. 2 each in the Company, to the eligible employees, at an exercise price of Rs. 24.15, being the latest available closing market price on the National Stock Exchange of India Limited, as on June 30, 2016. As the options have been granted at intrinsic value, there is no employee stock compensation expense on account of the same. The stock options so granted, shall vest uniformly over a period of 5 years beginning from July 2, 2017, the first vesting date. The options vested under each of the slabs, can be exercised within a period of five years from the relevant vesting date.
Further, during the year ended March 31, 2018, the Compensation Committee has regranted 500,000 and 880,600 stock options (surrendered and lapsed options eligible for regrant) representing an equal number of equity shares of face value Rs. 2 each in the Company, to the eligible employees, at an exercise price of Rs. 219.65 and Rs. 254.85 respectively, being the latest available closing market price on the National Stock Exchange of India Limited, as on August 31, 2017 and March 23, 2018 respectively. As the options have been granted at intrinsic value, there is no employee stock compensation expense on account of the same. The stock options so granted, shall vest uniformly over a period of 5 years beginning from September 2, 2018 and March 25, 2019 respectively, the first vesting date, the options vested under each of the slabs, can be exercised within a period of five years from the relevant vesting date.
b) Employees Stock Option Scheme â 2009
During the financial year ended March 31, 2010, the Company had issued Employee Stock Option Scheme titled as âIndiabulls Ventures Limited Employees Stock Option Scheme - 2009â (âIBVL ESOP - 2009â). Under the Scheme, the Company was authorised to grant 20,000,000 options, representing equivalent number of equity shares of face value Rs. 2 each in one or more tranches at a price and on such terms and conditions as may be decided by the Compensation Committee, to the eligible employees of the Company and its subsidiaries.
During the year ended March 31, 2010, the Compensation Committee constituted granted 10,000,000 stock options representing an equal number of Equity Shares of face value Rs. 2 each in the Company, at an exercise price of Rs. 35.25, being the latest available closing market price on the National Stock Exchange of India Limited, as on November 30, 2009. The stock options so granted, shall vest uniformly over 10 years beginning from December 2, 2010 being the first vesting date. The option granted under each of the slabs, can be exercised within a period of five years from the relevant vesting date.
During the year ended March 31, 2011, the Compensation Committee had further granted 2,050,000 Stock Options representing an equal number of equity shares of face value Rs. 2 each in the Company, at an exercise price of Rs. 31.35, being the latest available closing market price on the National Stock Exchange of India Limited, as on April 9, 2010. As the options have been granted at intrinsic value, there is no employee stock compensation expense on account of the same. The Stock Options so granted, shall vest uniformly over 10 years beginning from April 13, 2011 being the first vesting date. The options granted under each of the slabs, can be exercised within a period of five years from the relevant vesting date.
During the year ended March 31, 2016, the Compensation Committee had regranted under the IBVL ESOP â 2009 10,000,000 stock options (surrendered and lapsed options eligible for regrant) representing an equal number of equity shares of face value of Rs. 2 each in the Company, at an exercise price of Rs. 27.45, being the latest available closing market price on the National Stock Exchange of India Limited, as on August 24, 2015. As the options have been granted at intrinsic value, there is no employee stock compensation expense on account of the same. The stock options so granted, shall vest uniformly over a period of 5 years beginning from August 26, 2016, the first vesting date. The options vested under each of the slabs, can be exercised within a period of five years from the relevant vesting date. During the year ended March 31, 2017, the Company had received the request from various option holders to surrender 10,000,000 stock options, which has been accepted by the Company.
During the year ended March 31, 2017, the Compensation Committee had further regranted 9,500,000 and 10,000,000 Stock Options (surrendered and lapsed options eligible for regrant) representing an equal number of equity shares of face value Rs. 2 each in the Company, to the Eligible Employees, at an exercise price of Rs. 16.00 and Rs. 24.15 respectively, being the latest available closing market price on the National Stock Exchange of India Limited, as on May 11, 2016 and June 30, 2016. As the options have been granted at intrinsic value, there is no employee stock compensation expense on account of the same. The stock options so granted, shall vest uniformly over a period of 5 years beginning from May 13, 2017 and July 2, 2017 respectively, the first vesting date. The options vested under each of the slabs, can be exercised within a period of five years from the relevant vesting date. During the year ended March 31, 2017, the Company has received the request from various option holders to surrender 10,000,000 stock options, which has been accepted by the Company.
During the year ended March 31, 2018, the Compensation Committee has regranted 10,000,000 and 669,400 Stock Options (surrendered and lapsed options eligible for regrant) representing an equal number of Equity Shares of face value Rs. 2 each in the Company, to the Eligible Employees, at an exercise price of Rs. 219.65 and Rs. 254.85 respectively, being the latest available closing market price on the National Stock Exchange of India Limited, as on August 31, 2017 and March 23, 2018 respectively. As the options have been granted at intrinsic value, there is no employee stock compensation expense on account of the same. The stock options so granted, shall vest uniformly over a period of 5 years beginning from September 2, 2018 and March 25, 2019 respectively, the first vesting date, the options vested under each of the slabs, can be exercised within a period of five years from the relevant vesting date.
Note â 12
Segment reporting
The Company operates in one reportable business segment i.e., âBroking & related activitiesâ and operates in one reportable geographical segment, i.e. âwithin Indiaâ. Hence, no separate information for segment wise disclosure is required in accordance with the requirements of Accounting Standard (AS) 17 - âSegment Reportingâ .
Note â 13
In accordance with the provisions of section 135 of the Companies Act 2013, the Board of Directors of the Company had constituted a Corporate Social Responsibility (CSR) Committee. In terms with the provisions of the said Act, the Company was to spend a sum of Rs. 7,129,000 (previous year Rs. 7,529,000) towards CSR activities during the year ended March 31, 2018. The details of amount actually spent by the Company are:
Note â 14
The Company has not entered into any derivative contract for hedging any foreign currency exposure. The year end foreign currency exposures that have not been hedged by derivative instruments or otherwise are given below :
Note â 15
As per the best estimate of the Management, no provision is required to be made as per Accounting Standard 29 - âProvisions, Contingent Liabilities and Contingent Assetsâ , in respect of any present obligation as a result of a past event that could lead to a probable outflow of resources which would be required to settle the obligation.
Note â 16
Previous yearâs figures have been regrouped / reclassified wherever necessary to correspond with the current yearâs classification/ disclosures.
Mar 31, 2017
Note - 1
Corporate Information:
Indiabulls Ventures Limited (âIBVLâ or âthe Companyâ, CIN: L74999DL1995PLC069631) carries on the business as stock and share brokers on the National Stock Exchange of India Limited (âNSEâ) and the BSE Limited (âBSEâ); depository participants and other related ancillary services. On February 1, 1996 IBVL received a certificate of registration from the Securities and Exchange Board of India (âSEBIâ) under sub-section 1 of section 12 of the Securities and Exchange Board of India Act, 1992 to carry on the business as a stock broker. Accordingly, all provisions of the Securities and Exchange Board of India Act, 1992, and Rules and Regulations relating thereto are applicable to the Company. On April 2, 2008 the Equity shares of the Company were listed on the NSE and the BSE after the demerger of the Company from Indiabulls Financial Services Limited (erstwhile holding company) vide Scheme of Arrangement.
Pursuant to Section 13 and other applicable provisions of the Companies Act, 2013, and the Rules made thereunder (including any statutory modification(s) or re-enactment thereof for the time being in force) read with the Companies (Incorporation) Rules, 2014 and subject to the approval of Registrar of Companies, NCT of Delhi and Haryana, the name of the Company has been changed from âIndiabulls Securities Limitedâ to âIndiabulls Ventures Limitedâ w.e.f. 12th March, 2015 to reflect various referral business activities carried on by the Company.
Note - 2 Share capital
(i) In the event of liquidation of the Company, the holders of Equity Shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of Equity Shares held by the shareholders.
(ii) Holders of Global Depository Receipts (âGDRsâ) will be entitled to receive dividends, subject to the terms of the Deposit Agreement, to the same extent as the holders of Equity Shares, less the fees and expenses payable under such Deposit Agreement and any Indian tax applicable to such dividends. Holders of GDRs donât have voting rights with respect to the Deposited Shares. The GDRs can not be transferred to any person located in India including Indian residents or ineligible investors except as permitted by Indian laws and regulations.
(iii) Reconciliation of the number of shares and amount outstanding at the beginning and at the end of the financial year:
* Consequent to the de-classification of the Promoters / Promoter Group Entities / Persons Acting in Concert with the Promoters (PACs) of the Company, intimated by the Company to the Exchanges on July 18, 2014, Mr. Rajiv Rattan, Priapus Land Development Private Limited, Inuus Constructions Private Limited, Mr. Saurabh K Mittal, Hespera Land Development Private Limited and Hespera Constructions Private Limited have ceased to be the Promoters / Promoter Group Entities / PACs of the Company, with effect from July 18, 2014 and their names shall not be included, as such, in any future correspondences / filings by the Company with the Stock Exchanges / other statutory authorities.
As per records of the Company, including its register of shareholders/members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares.
(v) Shares reserved for issue under options:
(a) 20,829,316 Equity Shares (Previous year 15,384,894 Equity Shares) of face value of Rs.2 each are reserved under various option schemes of the Company (Refer note - 32).
(b) 33,650,000 Equity Shares (Previous year Nil Equity Shares) of face value of Rs.2 each are reserved towards Share Warrants of the Company (Refer note - 5(i)).
(i) Pursuant to the notification dated December 29, 2011 issued by the Ministry of Corporate Affairs amending Accounting Standard 11 - âAccounting for the Effects of Changes in Foreign Exchange Ratesâ the Company has exercised the option as per Paragraph 46A inserted in the said Accounting Standard for amortisation of foreign exchange gain/loss on long-term monetary items over the remaining life of the concerned monetary items. Consequently, an amount of Rs.7,932,645 (Previous year Rs.13,553,894) is carried forward in the Foreign Exchange Monetary Item Translation Difference Account as on March 31, 2017, net of forex gain amounting to Rs.3,813,806 (Previous year Rs.3,192,039) amortised in the Statement of Profit and Loss and Rs.Nil (Previous year Rs.892,771) utilised towards the partial amount received from the Escrow Account.
(i) The Board of Directors of the Company at their meeting held on June 15, 2016 and as approved at its Extra Ordinary General Meeting held on July 15, 2016 have resolved to create, offer, issue and allot up to 58,300,000 warrants, convertible into 58,300,000 equity shares of Rs.2/- each on a preferential allotment basis, pursuant to Section 42 and 62 of the Companies Act, 2013, at a conversion price of Rs.19.75 per equity share of the Company, arrived at in accordance with the SEBI Guidelines in this regard and subsequently these warrants were allotted on August 10, 2016 to the certain promoter entities and to an executive director (âthe warrant holdersâ) and 25% application money amounting to Rs.287,856,250/- was received from them. The warrants were to be converted into equivalent number of equity shares on payment of the balance amount at any time on or before February 9, 2018. In the event the warrants are not converted into equity shares within the said period, the Company is eligible to forfeit the amounts received towards the warrants. During the year ended March 31, 2017, the Company has allotted 24,650,000 Equity Shares on March 7, 2017 on conversion of equivalent numbers of warrants to certain promoter group entities on realisation of balance 75% towards these warrants. Subsequent to the year ended March 31, 2017 the Company has allotted 33,650,000 Equity Shares on April 10, 2017 on conversion of equivalent numbers of warrants to the warrant holders on realisation of balance 75% towards these warrants.
(i) As at March 31, 2017, the Company had received an amount of Rs.8,622,240/- towards share application money for 250,000 Equity Shares of the Company at a premium of Rs.29.35 per share under âIndiabulls Ventures Limited Employees Stock Option Scheme - 2009â (âIBVL ESOP - 2009â) and for 45,100 Equity Shares of the Company at a premium of Rs.15.40 per share under âIndiabulls Ventures Limited Employees Stock Option Scheme - 2008â (âIBVL ESOP - 2008â). The Company has sufficient authorised share capital to cover the allotment of these shares.
(i) Bank overdraft amounting to Rs.Nil (Previous year Rs.19,857,784) is secured against book debts and amounting to Rs.408,272,210 (Previous year Rs.384,024,921) is secured against fixed deposits. Working capital loan amounting to Rs.650,000,000 (Previous year Rs.500,000,000) is secured against book debts and loans and advances.
(i) Disclosures under the Micro, Small and Medium Enterprises Development Act, 2006:
(a) An amount of Rs.Nil (Previous year Rs.Nil) and Rs.Nil (Previous year Rs.Nil) was due and outstanding to suppliers as at the end of the accounting year on account of principal and interest respectively.
(b) No interest was paid during the year in terms of Section 16 of the Micro, Small and Medium Enterprises Development Act, 2006; no amount was paid to the supplier beyond the appointed date.
(c) No interest is payable at the end of the year other than interest under Micro, Small and Medium Enterprises Development Act, 2006.
(d) No amount of interest was accrued and unpaid at the end of the accounting year.
(e) No amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues above are actually paid to the small enterprise, for the purpose of disallowance of a deductible expenditure under section 23 of the Micro, Small and Medium Enterprises Development Act, 2006.
The above information regarding Micro and Small Enterprises has been determined to the extent such parties have been identified on the basis of the information available with the Company. This has been relied upon by the Auditors.
(i) The Company has invested Rs.500,000 in the equity share capital of Indiabulls Consumer Products Limited, a wholly owned subsidiary, incorporated on July 5, 2016.
(ii) During the year ended March 31, 2017, the Company has acquired 100% equity share capital of Indiabulls Asset Reconstruction Company Limited for Rs.51,000,000. The Company has further invested Rs.449,000,000 in the equity share capital of Indiabulls Asset Reconstruction Company Limited.
(iii) The Company has invested Rs.500,000 in the equity share capital of Indiabulls Logistics Limited, a wholly owned subsidiary, incorporated on January 19, 2017.
(iv) The Company has invested Rs.30,000,000 in the equity share capital of Indiabulls Infra Resources Limited, a wholly owned subsidiary, incorporated on February 1, 2017.
Note - 3
Deferred tax assets
In compliance with Accounting Standard 22 - âAccounting for Taxes on Incomeâ, deferred tax (net) of Rs.1,276,437 has been credited (Previous year credited Rs.1,279,190) to the Statement of Profit and Loss for the year ended March 31, 2017. The breakup of deferred tax into major components is as under:
Note - 4
Long-term loans and advances
(i) During the year ended March 31, 2012, the Company had sold 586,193 shares held by it in Copal Partners Limited to Moodyâs Group UK LTD for the consideration of Rs.231,992,806 vide the Share Purchase Deed. Out of the total consideration of Rs.231,992,806 receivable from Moodyâs Group UK LTD, Rs.59,369,946 (excluding foreign exchange gain of Rs.19,056,102) [Previous year Rs.59,369,946 (excluding foreign exchange gain of Rs.20,863,545)] is receivable as at the year ended March 31, 2017 in the form of Loan Notes of the Moodyâs Group UK LTD and Escrow account. During the year ended March 31, 2017, the Company had received partial amount of Rs.Nil [Previous year Rs.5,407,531 (excluding foreign exchange gain of Rs.1,364,995)] towards Escrow Account.
Note - 5
Cash and cash equivalents
(i) Fixed deposits includes:
a. Rs.918,750,000 (Previous year Rs.543,750,000) pledged with the banks against bank guarantees issued by banks for base capital and additional base capital to the National Stock Exchange of India, BSE Limited and the National Securities Clearing Corporation Limited.
b. Rs.13,875,000 (Previous year Rs.62,500,000) pledged with the National Stock Exchange of India, BSE Limited and National Securities Clearing Corporation Limited for the purpose of base capital and additional base capital.
c. Rs.436,700,000 (Previous year Rs.444,700,000) pledged with banks for overdraft facilities availed by the Company.
d. Rs.6,500,000,000 (Previous year Rs.6,500,000,000) pledged with banks for overdraft facilities availed by Indiabulls Distribution Services Limited for general / corporate business purpose.
e. Rs.4,338,945 (Previous year Rs.8,791,408) pledged for arbitration matters.
f. Rs.25,000 (Previous year Rs.25,000) pledged with State Commission, New Delhi for appeal filed by the Company in a consumer dispute matter.
(ii) Balances with banks include deposit of Rs.Nil (Previous year Rs.5,262,281) with remaining maturity of more than twelve months from balance sheet date.
(i) During the year, lease rent (excluding service tax) amounting to Rs.30,818,690 (Previous Year Rs.32,636,338) and office maintenance (excluding service tax) amounting to Rs.4,457,880 (Previous Year Rs.4,398,241) were apportioned to Indiabulls Distribution Services Limited - a wholly owned subsidiary of the Company.
(ii) During the year, lease rent (excluding service tax) amounting to Rs.1,691,440 (Previous Year Rs.1,801,379) and office maintenance (excluding service tax) amounting to Rs.153,109 (Previous Year Rs.144,398) were apportioned to the Company by Indiabulls Distribution Services Limited - a wholly owned subsidiary of the Company.
Note - 6
Earnings per Equity Share (EPS) :
Disclosure in respect of Accounting Standard - 20 âEarnings Per Shareâ :
The basic earnings per Equity Share is computed by dividing the net profit attributable to Equity Shareholders for the year by the weighted average number of Equity Shares outstanding during the reporting year. Diluted earnings per Equity Share is computed by considering the weighted average number of Equity Shares and also the weighted average number of Equity Shares that could have been issued on the conversion of all dilutive potential Equity Shares. The dilutive potential Equity Shares are adjusted for the proceeds receivable, had the shares been actually issued at fair value.
Dilutive potential Equity Shares are deemed converted as of the beginning of the year, unless they have been issued at a later date. The number of Equity Shares and potential dilutive Equity Shares are adjusted for the potential dilutive effect of Employee Stock Option Plan and warrants as appropriate.
Note - 7 Leases :
The Company has taken office premises on operating lease at various locations in India and lease rent in respect of the same amounting to Rs.15,551,570 (Previous Year Rs.14,145,727) net of apportionment has been charged to the Statement of Profit and Loss. (Refer note - 27(i) & (ii)). The minimum lease rental outstanding are as under:
The agreements are executed for a period ranging from 11 months to 10 years with a renewable clause and in many cases, it also provides for termination at will by either party giving a prior notice period between 30 to 90 days.
Note - 8
Loss on Erroneous Transactions :
The loss on squaring off of erroneous transactions on account of trading in securities amounting to Rs.38,605 (net) (Previous year Rs.24,365 (net)) has been debited to the Statement of Profit and Loss.
Note - 9
A. Contingent liabilities not provided for in respect of:
(i) During the year ended March 31, 2011, the Securities Appellate Tribunal (âSATâ) had passed an order dated October 26, 2010 in favour of the Company setting aside the penalty imposed by SEBI. However, during the year ended March 31, 2012, SEBI had preferred an appeal against the judgement of the SAT before the Honourable Supreme Court of India. The matter is pending adjudication.
(ii) The Company is involved in various legal proceedings as respondents / defendants for various claims including those related to conduct of its business. In respect of these claims, the Company believes, these claims do not constitute material litigation matters and with its meritorious defenses the ultimate disposition of these matters will not have material adverse effect on its financial statements / position.
B. Commitments :
Note - 10
Employee Stock Option Schemes:
a) Employees Stock Option Scheme - 2008
Pursuant to a resolution passed by the Shareholders on January 19, 2009, the Company had cancelled and withdrawn the existing âEmployee Stock Option Scheme - 2007â, covering 15,000,000 stock options and established a new Employee Stock Option Scheme titled âEmployee Stock Option Scheme - 2008â in accordance with the provisions of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (âSEBI Guidelinesâ).
Under the Scheme, the Company was authorised to grant 20,000,000 Equity settled options to eligible employees including its directors (other than promoter directors) and employees of its subsidiary companies including their directors. All options under the Scheme are exercisable for Equity Shares of the Company. Employees covered by the plan were granted an option to purchase shares of the Company subject to the requirements of vesting.
A Compensation Committee constituted by the Board of Directors of the Company administered the plan. The Compensation Committee at its meeting held on January 24, 2009, had granted, under the âIndiabulls Ventures Limited Employees Stock Option Scheme - 2008â (âIBVL ESOP - 2008â) (title changed by Compensation Committee at its meeting held on August 28, 2015 from âIndiabulls Securities Limited Employees Stock Option Scheme -2008â) , 20,000,000 Stock Options representing an equal number of Equity Shares of face value Rs.2 each in the Company, to the Eligible Employees, at an exercise price of Rs.17.40, being the latest available closing market price on the National Stock Exchange of India Ltd., as on January 23, 2009 following the intrinsic method of accounting as is prescribed in the Guidance Note on Accounting for Employees Share-Based Payments (âthe Guidelinesâ) issued by the Institute of Chartered Accountants of India. As the options have been granted at intrinsic value, there is no employee stock compensation expense on account of the same. The Stock Options so granted, shall vest in the eligible employees over a period of 10 years beginning from January 25, 2010 being the first vesting date. The options granted under each of the slabs, can be exercised by the grantees within a period of five years from the relevant vesting date.
Further, the Compensation Committee at its meeting held on July 1, 2016, has regranted under the IBVL ESOP- 2008 9,700,000 Stock Options (surrendered and lapsed options eligible for regrant) representing an equal number of Equity Shares of face value Rs.2 each in the Company, to the Eligible Employees, at an exercise price of Rs.24.15, being the latest available closing market price on the National Stock Exchange of India Ltd., as on June 30, 2016. The stock options so granted, shall vest uniformly over a period of 5 years beginning from July 2, 2017, the first vesting date. The options vested under each of the slabs, can be exercised within a period of five years from the relevant vesting date.
b) Employees Stock Option Scheme - 2009
The Shareholders of the Company at their Annual General Meeting held on September 30, 2009 have authorised the Board of Directors to grant 20,000,000 options, representing equivalent number of Equity Shares of face value Rs.2 each in one or more tranches, pursuant to an Employee Stock Option Scheme titled as âIndiabulls Ventures Limited Employees Stock Option Scheme - 2009â (âIBVL ESOP - 2009â) (title changed by Compensation Committee at its meeting held on August 28, 2015 from âIndiabulls Securities Limited Employees Stock Option Scheme - 2009â). The options covered under the Scheme would be granted at a price and on such terms and conditions as may be decided by the Compensation Committee, to the eligible employees of the Company and its subsidiaries.
The Compensation Committee constituted by the Board of Directors of the Company, at its meeting held on December 1, 2009, granted, under the IBVL ESOP - 2009 10,000,000 Stock Options representing an equal number of Equity Shares of face value Rs.2 each in the Company, at an exercise price of Rs.35.25, being the latest available closing market price on the National Stock Exchange of India Ltd., on November 30, 2009. The Stock Options so granted, shall vest uniformly over 10 years beginning from December 2, 2010 being the first vesting date. The option granted under each of the slabs, can be exercised within a period of five years from the relevant vesting date.
Further, the Compensation Committee constituted by the Board of Directors of the Company has at its meeting held on April 12, 2010, granted, under the IBVL ESOP - 2009 2,050,000 Stock Options representing an equal number of Equity Shares of face value Rs.2 each in the Company, at an exercise price of Rs.31.35, being the latest available closing market price on the National Stock Exchange of India Ltd., on April 9, 2010. The Stock Options so granted, shall vest uniformly over 10 years beginning from April 13, 2011 being the first vesting date. The options granted under each of the slabs, can be exercised within a period of five years from the relevant vesting date.
Further, the Compensation Committee constituted by the Board of Directors of the Company has at its meeting held on August 25, 2015, regranted under the IBVL ESOP - 2009 10,000,000 Stock Options (surrendered and lapsed options eligible for regrant) representing an equal number of equity shares of face value of Rs.2/- each in the Company, at an exercise price of â27.45, being the latest available closing market price on the National Stock Exchange of India Ltd., as on August 24, 2015. The stock options so granted, shall vest uniformly over a period of 5 years beginning from August 26, 2016, the first vesting date. The options vested under each of the slabs, can be exercised within a period of five years from the relevant vesting date. During the year ended March 31, 2017, the Company has received the request from various option holders to surrender 10,000,000 stock options, which has been accepted by the Company.
Further, the Compensation Committee at its meeting held on May 12, 2016, has regranted under the IBVL ESOP - 2009 9,500,000 Stock Options (surrendered and lapsed options eligible for regrant) representing an equal number of Equity Shares of face value Rs.2 each in the Company, to the Eligible Employees, at an exercise price of Rs.16.00, being the latest available closing market price on the National Stock Exchange of India Ltd., as on May 11, 2016. The stock options so granted, shall vest uniformly over a period of 5 years beginning from May 13, 2017, the first vesting date. The options vested under each of the slabs, can be exercised within a period of five years from the relevant vesting date.
Further, the Compensation Committee at its meeting held on July 1, 2016, has regranted under the IBVL ESOP -2009 10,000,000 Stock Options (surrendered and lapsed options eligible for regrant) representing an equal number of Equity Shares of face value Rs.2 each in the Company, to the Eligible Employees, at an exercise price of Rs.24.15, being the latest available closing market price on the National Stock Exchange of India Ltd., as on June 30, 2016. The stock options so granted, shall vest uniformly over a period of 5 years beginning from July 2, 2017, the first vesting date, the options vested under each of the slabs, can be exercised within a period of five years from the relevant vesting date. During the year ended March 31, 2017, the Company has received the request from various option holders to surrender 10,000,000 stock options, which has been accepted by the Company.
Had the compensation cost for the stock options granted under the IBVL ESOP - 2008 and IBVL ESOP - 2009 been determined based on the fair value approach, the Companyâs net profit and Basic/Diluted earnings per Equity Share would have been as per the pro forma amounts indicated below:
Note - 11
Segment Reporting :
The Company operates in one reportable business segment i.e., âBroking & related activitiesâ and operates in one reportable geographical segment, i.e. âwithin Indiaâ. Hence, no separate information for segment wise disclosure is required in accordance with the requirements of Accounting Standard (AS) 17 - âSegment Reportingâ .
Note - 12
Employee Benefits:
Provident Fund, Gratuity and Compensated Absences - disclosures as per Accounting Standard 15 (Revised) - âEmployee Benefitsâ :
Contributions are made to Government Provident Fund and Family Pension Fund and other statutory funds which cover all regular employees eligible under the respective acts. Both the employees and the Company make predetermined contributions to the Provident Fund. The contributions are normally based on a certain proportion of the employeeâs salary. The Company has recognised an amount of Rs.1,561,545 (Previous year Rs.1,048,159) towards Employerâs Contribution for the above mentioned funds.
Provision for unfunded Gratuity and Compensated Absences for eligible employees is based on an actuarial valuation carried out at the end of every financial year. Major drivers in actuarial assumptions, typically, are years of service and employee compensation. Commitments are actuarially determined using the âProjected Unit Creditâ Method. Gains / losses on changes in actuarial assumptions are accounted for in the Statement of Profit and Loss.
Note - 13
Donation includes Rs.7,529,000 (Previous year Rs.9,360,000) towards amount contributed toward Corporate Social Responsibility as required under section 135 of the Companies Act, 2013.
Note - 14
Derivative Instruments:
The Company has not entered into any derivative contract for hedging any foreign currency exposure. The year end foreign currency exposures that have not been hedged by derivative instruments or otherwise are given below :
Note - 15
Disclosure in respect of Specified Bank Notes (SBN) held and transacted during the period from November 8, 2016 to December 30, 2016 as required vide Notification No. G.S.R. 308 (E) dated March 30, 2017 issued by the Ministry of Corporate Affairs:
Note - 16
In order to augment the long-term resources of the Company for meeting the funding requirements for its business purposes, -
(i) The Board of Directors of the Company at its meeting held on March 28, 2017, has approved the preferential offer and issue of up to 33,800,000 (Three Crore Thirty Eight Lakhs) warrants convertible into equivalent number of equity shares of Rs.2 each, to certain promoter group entities, at an exercise price of Rs.43.75 per share, in accordance with Chapter VII of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations 2009, as amended. The said issue, inter alia, has been approved by the shareholders of the Company in their extra-ordinary general meeting held on April 25, 2017.
(ii) The Board of Directors of the Company at its meeting held on April 7, 2017, has approved the preferential offer and issue of 38,865,582 (Three Crore Eighty Eight Lakhs Sixty Five Thousand Five Hundred Eighty Two) equity shares of Rs.2 each, to a foreign portfolio investor registered with the Securities and Exchange Board of India, at an issue price of Rs.58.40 per equity share, in accordance with Chapter VII of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations 2009, as amended. For seeking shareholderâs approval, to the said issuance of equity shares, the Board has convened an Extraordinary General Meeting of Shareholders of the Company on Saturday, May 6, 2017.
(iii) The Board of Directors of the Company at its meeting held on April 21, 2017, has approved the preferential offer and issue of 47,390,000 (Four Crore Seventy Three Lakhs Ninety Thousand) equity shares of Rs.2 each, to a foreign investor, at an issue price of Rs.94.70 per equity share, in accordance with Chapter VII of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations 2009, as amended. For seeking shareholderâs approval, to the said issuance of equity shares, the Board has convened an Extraordinary General Meeting of Shareholders of the Company on Monday, May 22, 2017.
Note - 17
As per the best estimate of the Management, no provision is required to be made as per Accounting Standard 29 - âProvisions, Contingent Liabilities and Contingent Assetsâ , in respect of any present obligation as a result of a past event that could lead to a probable outflow of resources which would be required to settle the obligation.
Note - 18
Previous yearâs figures have been regrouped / reclassified wherever necessary to correspond with the current yearâs classification / disclosures.
Mar 31, 2016
Note - 1.
Earnings per Equity Share (EPS) :
Disclosure in respect of Accounting Standard - 20 ''Earnings Per Share'' :
The basic earnings per Equity Share is computed by dividing the net profit attributable to Equity Shareholders for the year by the weighted average number of Equity Shares outstanding during the reporting year. Diluted earnings per Equity Share is computed by considering the weighted average number of Equity Shares and also the weighted average number of Equity Shares that could have been issued on the conversion of all dilutive potential Equity Shares. The dilutive potential Equity Shares are adjusted for the proceeds receivable, had the shares been actually issued at fair value.
Dilutive potential Equity Shares are deemed converted as of the beginning of the year, unless they have been issued at a later date. The number of Equity Shares and potential dilutive Equity Shares are adjusted for the potential dilutive effect of Employee Stock Option Plan and warrants as appropriate.
Note - 2.
Loss on Erroneous Transactions :
The loss on squaring off of erroneous transactions on account of trading in securities amounting to '' 24,365 (net) (Previous year '' 43,934 (net)) has been debited to the Statement of Profit and Loss.
Note - 3.
Employee Stock Option Schemes:
a) Employees Stock Option Scheme - 2008
Pursuant to a resolution passed by the Shareholders on January 19, 2009, the Company had cancelled and withdrawn the existing "Employee Stock Option Scheme - 2007", covering 15,000,000 stock options and established a new Employee Stock Option Scheme titled "Employee Stock Option Scheme - 2008" in accordance with the provisions of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 ("SEBI Guidelines").
Under the Scheme, the Company was authorized to grant 20,000,000 Equity settled options to eligible employees including its directors (other than promoter directors) and employees of its subsidiary companies including their directors. All options under the Scheme are exercisable for Equity Shares of the Company. Employees covered by the plan were granted an option to purchase shares of the Company subject to the requirements of vesting.
A Compensation Committee constituted by the Board of Directors of the Company administered the plan. The Compensation Committee at its meeting held on January 24, 2009, had granted, under the "India bulls Ventures Limited Employees Stock Option Scheme - 2008" ("IBVL ESOP - 2008") (title changed by Compensation Committee at its meeting held on August 28, 2015 from "India bulls Securities Limited Employees Stock Option Scheme - 2008") , 20,000,000 Stock Options representing an equal number of Equity Shares of face value Rs. 2 each in the Company, to the Eligible Employees, at an exercise price of Rs. 17.40, being the latest available closing market price on the National Stock Exchange of India Ltd., as on January 23, 2009 following the intrinsic method of accounting as is prescribed in the Guidance Note on Accounting for Employees Share-Based Payments ("the Guidelines") issued by the Institute of Chartered Accountants of India. As the options have been granted at intrinsic value, there is no employee stock compensation expense on account of the same. The Stock Options so granted, shall vest in the eligible employees over a period of 10 years beginning from January 25, 2010 being the first vesting date. The options granted under each of the slabs, can be exercised by the grantees within a period of five years from the relevant vesting date.
b) employees stock option scheme - 2009
The Shareholders of the Company at their Annual General Meeting held on September 30, 2009 have authorized the Board of Directors to grant 20,000,000 options, representing equivalent number of Equity Shares of face value Rs. 2 each in one or more tranches, pursuant to an Employee Stock Option Scheme titled as ''India bulls Ventures Limited Employees Stock Option Scheme - 2009'' ("IBVL ESOP - 2009") (title changed by Compensation Committee at its meeting held on August 28, 2015 from "India bulls Ventures Limited Employees Stock Option Scheme - 2009"). The options covered under the Scheme would be granted at a price and on such terms and conditions as may be decided by the Compensation Committee, to the eligible employees of the Company and its subsidiaries.
The Compensation Committee constituted by the Board of Directors of the Company, at its meeting held on December 1, 2009, granted, under the IBVL ESOP - 2009 10,000,000 Stock Options representing an equal number of Equity Shares of face value Rs. 2 each in the Company, at an exercise price of Rs. 35.25, being the latest available closing market price on the National Stock Exchange of India Ltd., on November 30, 2009. The Stock Options so granted, shall vest uniformly over 10 years beginning from December 2, 2010 being the first vesting date. The option granted under each of the slabs, can be exercised within a period of five years from the relevant vesting date.
Further, the Compensation Committee constituted by the Board of Directors of the Company has at its meeting held on April 12, 2010, granted, under the IBVL ESOP - 2009 2,050,000 Stock Options representing an equal number of Equity Shares of face value Rs. 2 each in the Company, at an exercise price of Rs. 31.35, being the latest available closing market price on the National Stock Exchange of India Ltd., on April 9, 2010. The Stock Options so granted, shall vest uniformly over 10 years beginning from April 13, 2011 being the first vesting date. The options granted under each of the slabs, can be exercised within a period of five years from the relevant vesting date.
Further, the Compensation Committee constituted by the Board of Directors of the Company has at its meeting held on August 25, 2015, regretted under the IBVL ESOP - 2009 1,00,00,000 Stock Options (i.e., surrendered and lapsed options eligible for regnant) representing an equal number of equity shares of face value of Rs. 2/- each in
the Company, at an exercise price of Rs.27.45, being the latest available closing market price on the National Stock Exchange of India Ltd., as on August 24, 2015. The stock options so granted, shall vest uniformly over a period of 5 years beginning from August 26, 2016, the first vesting date, the options vested under each of the slabs, can be exercised within a period of five years from the relevant vesting date.
Note - 4
Segment Reporting :
The Company operates in one reportable business segment i.e., "Broking & related activities" and operates in one reportable geographical segment, i.e. "within India". Hence, no separate information for segment wise disclosure is required in accordance with the requirements of Accounting Standard (AS) 17 - "Segment Reporting" .
Note - 5.
Employee Benefits:
Provident Fund, Gratuity and Compensated Absences - disclosures as per Accounting Standard 15 (Revised) - ''Employee Benefits'' :
Contributions are made to Government Provident Fund and Family Pension Fund and other statutory funds which cover all regular employees eligible under the respective acts. Both the employees and the Company make predetermined contributions to the Provident Fund. The contributions are normally based on a certain proportion of the employee''s salary. The Company has recognized an amount of Rs. 1,048,159 (Previous year Rs. 865,843) towards Employer''s Contribution for the above mentioned funds.
Provision for unfunded Gratuity and Compensated Absences for eligible employees is based on an actuarial valuation carried out at the end of every financial year. Major drivers in actuarial assumptions, typically, are years of service and employee compensation. Commitments are actuarially determined using the ''Projected Unit Credit'' Method. Gains / losses on changes in actuarial assumptions are accounted for in the Statement of Profit and Loss.
Note - 6.
Donation represents amount contributed toward Corporate Social Responsibility as required under section 135 of the Companies Act, 2013.
Note - 7.
As per the best estimate of the Management, no provision is required to be made as per Accounting Standard 29 - ''Provisions, Contingent Liabilities and Contingent Assets'' , in respect of any present obligation as a result of a past event that could lead to a probable outflow of resources which would be required to settle the obligation.
Note - 8.
Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosures.
Mar 31, 2015
Corporate Information:
Indiabulls Ventures Limited ("IBVL" or "the Company", CIN:
L74999DL1995PLC069631) (formerly known as Indiabulls Securities
Limited) carries on the business as stock and share brokers on the
National Stock Exchange of India Limited ("NSE") and the BSE Limited
("BSE"); depository participants and other related ancillary services.
On February 1, 1996 IBVL received a certificate of registration from
the Securities and Exchange Board of India ("SEBI") under sub-section 1
of section 12 of the Securities and Exchange Board of India Act, 1992
to carry on the business as a stock broker. Accordingly, all provisions
of the Securities and Exchange Board of India Act, 1992, and Rules and
Regulations relating thereto are applicable to the Company. On April 2,
2008 the Equity shares of the Company were listed on the NSE and the
BSE after the demerger of the Company from Indiabulls Financial
Services Limited (erstwhile holding company) vide Scheme of
Arrangement.
Pursuant to Section 13 and other applicable provisions of the Companies
Act, 2013, and the Rules made thereunder (including any statutory
modification(s) or re-enactment thereof for the time being in force)
read with the Companies (Incorporation) Rules, 2014 and subject to the
approval of Registrar of Companies, NCT of Delhi and Haryana, the name
of the Company has been changed from "Indiabulls Securities Limited" to
"Indiabulls Ventures Limited" w.e.f. 12th March, 2015 to reflect
various referral business activities carried on by the Company.
Note - 2
(i) In the event of liquidation of the Company, the holders of Equity
Shares will be entitled to receive remaining assets of the Company,
after distribution of all preferential amounts. The distribution will
be in proportion to the number of Equity Shares held by the
shareholders.
(ii) Holders of Global Depository Receipts ('GDRs') will be entitled to
receive dividends, subject to the terms of the Deposit Agreement, to
the same extent as the holders of Equity Shares, less the fees and
expenses payable under such Deposit Agreement and any Indian tax
applicable to such dividends. Holders of GDRs don't have voting rights
with respect to the Deposited Shares. The GDRs may not be transferred
to any person located in India including Indian residents or ineligible
investors except as permitted by Indian laws and regulations.
Note 3. Shares reserved for issue under options:
(a) 6,713,404 Equity Shares (Previous year 10,435,525 Equity Shares) of
face value of Rs. 2 each are reserved under various option schemes of
the Company (Refer note - 33).
(b) 30,940,001 Equity Shares (Previous year 58,210,000 Equity Shares)
of face value of Rs. 2 each are reserved towards Share Warrants of the
Company (Refer note - 5(i)).
Note 4.
(i) The Board of Directors of the Company at their meeting held on
October 21, 2013 and as approved at its Extra-Ordinary General Meeting
held on November 20, 2013 have resolved to create, offer, issue and
allot up to 58,210,000 warrants, convertible into 58,210,000 equity
shares of Rs. 2/- each on a preferential allotment basis, pursuant to
Section 81(1A) of the Companies Act, 1956, at a conversion price of Rs.
13/- per equity share of the Company, arrived at in accordance with the
SEBI Guidelines in this regard and subsequently these warrants were
allotted on December 2, 2013 to the promoter, certain promoter
entities, persons other than promoter and promoter group entity
(erstwhile promoters and promoter group entities upto July 17, 2014)
and to an executive director ("the warrant holders") and 25%
application money amounting to Rs. 189,182,500/- was received from
them. The warrants were to be converted into equivalent number of
equity shares on payment of the balance amount at any time on or before
June 1, 2015. In the event the warrants are not converted into equity
shares within the said period, the Company is eligible to forfeit the
amounts received towards the warrants. During the year ended March 31,
2015, the Company has allotted 27,269,999 Equity Shares on conversion
of equivalent numbers of warrants to certain promoter group entities
and an executive director on realisation of balance 75% towards these
warrants. Further, subsequent to the Balance Sheet date the Company has
allotted 20,111,217 Equity Shares on April 07, 2015 and 10,828,784
Equity Shares on April 10, 2015 on conversion of equivalent numbers of
warrants to the warrant holders on realisation of balance 75% towards
these warrants.
Note 5.
(a) During the year ended March 31, 2015, the Company has sold wholly
owned subsidiary Auxesia Soft Solutions Limited for Rs. 500,000 to
Indiabulls Distribution Services Limited, a wholly owned subsidiary of
the Company.
(b) During the year ended March 31, 2012, Copal Partners Limited had
bought back 223,222 shares held by the Company vide the Purchase and
Cancellation Agreement for the consideration of Rs. 86,226,344.
Further, the Company had sold 586,193 shares held by it in Copal
Partners Limited to Moody's Group UK LTD for the consideration of Rs.
231,992,806 vide the Share Purchase Deed. Further, the Company had
received Rs. Nil (Previous year Rs. 6,687,129) as an additional
consideration. As a result thereof, the stake of the Company in Copal
Partner Limited had been reduced from 4.74% to 1.63%. The proportionate
cost of the shares bought back and sold aggregates to Rs. 351,362,195.
Out of the total consideration of Rs. 231,992,806 receivable from
Moody's Group UK LTD, the Company had received partial amount of Rs.
Nil (Previous year Rs. 16,049,110) towards Escrow Account and Rs.
63,412,482 (excluding foreign exchange gain of Rs. 17,449,672)
[Previous year Rs. 63,412,482 (excluding foreign exchange gain of Rs.
14,231,506)] is receivable as at the year ended March 31, 2015 in the
form of Loan Notes and Escrow account of the Moody's Group UK LTD.
During the year, the Company has sold balance 288,722 Ordinary Shares
on exercise of call option by the Moody's Group UK LTD for a cash
consideration of Rs. 594,992,390. As a result thereof, the stake of the
Company in Copal Partners Limited stand to nil from 1.63% earlier.
Note 6.
Loss on Erroneous Transactions :
The loss on squaring off of erroneous transactions on account of
trading in securities amounting to Rs. 43,934 (net) (Previous year Rs.
32,468 (net)) has been debited to the Statement of Profit and Loss.
Note 7.
A. Contingent liabilities not provided for in respect of:
Particulars As at As at
March 31, March 31,
2015 2014
Amount(Rs) Amount (Rs)
- Claims against the Company not
acknowledged as debts in respect of:
Penalty for synchronised trading
under SEBI regulations(i) 1,500,000 1,500,000
Arbitration matters(ii) Â 2,153,393
Court Cases(ii) 9,289,313 6,640,343
- Fixed Deposits pledged against
overdraft facility availed by
Subsidiary Companies 5,424,700,000 1,589,250,000
(i) During the year ended March 31, 2011, the Securities Appellate
Tribunal ("SAT") had passed an order dated October 26, 2010 in favour
of the Company setting aside the penalty imposed by SEBI. However,
during the year ended March 31, 2012, SEBI had preferred an appeal at
the Honourable Supreme Court of India against the judgment of the SAT.
The matter is pending adjudication.
(ii) The Company is involved in various legal proceedings as
respondents / defendants for various claims including those related to
conduct of its business. In respect of these claims, the Company
believes, these claims do not constitute material litigation matters
and with its meritorious defenses the ultimate disposition of these
matters will not have material adverse effect on its financial
statements / position.
B. Commitments :
Particulars As at As at
March 31, March 31,
2015 2014
Amount(Rs) Amount (Rs)
Capital Commitments for purchase
of fixed assets 1,425,000 400,000,000
Note 8.
Employee Stock Option Schemes: a) Employees Stock Option Scheme - 2008
Pursuant to a resolution passed by the Shareholders on January 19,
2009, the Company had cancelled and withdrawn the existing "Employee
Stock Option Scheme - 2007", covering 15,000,000 stock options and
established a new Employee Stock Option Scheme titled "Employee Stock
Option Scheme - 2008" in accordance with the provisions of the
Securities and Exchange Board of India (Employee Stock Option Scheme
and Employee Stock Purchase Scheme) Guidelines, 1999 ("SEBI
Guidelines").
Under the Scheme, the Company was authorised to grant 20,000,000 Equity
settled options to eligible employees including its directors (other
than promoter directors) and employees of its subsidiary companies
including their directors. All options under the Scheme are exercisable
for Equity Shares of the Company. Employees covered by the plan were
granted an option to purchase shares of the Company subject to the
requirements of vesting.
A Compensation Committee constituted by the Board of Directors of the
Company administered the plan. The Compensation Committee at its
meeting held on January 24, 2009, had granted, under the "Indiabulls
Securities
Limited Employees Stock Option Scheme - 2008" ("IBSL ESOP - 2008"),
20,000,000 Stock Options representing an equal number of Equity Shares
of face value Rs. 2 each in the Company, to the Eligible Employees, at
an exercise price of Rs. 17.40, being the latest available closing
market price on the National Stock Exchange of India Ltd., as on
January 23, 2009 following the intrinsic method of accounting as is
prescribed in the Guidance Note on Accounting for Employees Share-Based
Payments ("the Guidelines") issued by the Institute of Chartered
Accountants of India. As the options have been granted at intrinsic
value, there is no employee stock compensation expense on account of
the same. The Stock Options so granted, shall vest in the eligible
employees over a period of 10 years beginning from January 25, 2010
being the first vesting date. The options granted under each of the
slabs, can be exercised by the grantees within a period of five years
from the relevant vesting date.
b ) Employees Stock Option Scheme - 2009
The Shareholders of the Company at their Annual General Meeting held on
September 30, 2009 have authorised the Board of Directors to grant
20,000,000 options, representing equivalent number of Equity Shares of
face value Rs. 2 each in one or more tranches, pursuant to an Employee
Stock Option Scheme titled as 'Indiabulls Securities Limited Employees
Stock Option Scheme - 2009' ("IBSL ESOP - 2009"). The options covered
under the Scheme would be granted at a price and on such terms and
conditions as may be decided by the Compensation Committee, to the
eligible employees of the Company and its subsidiaries.
The Compensation Committee constituted by the Board of Directors of the
Company, at its meeting held on December 1, 2009, granted, under the
"Indiabulls Securities Limited Employees Stock Option Scheme- 2009"
("IBSL ESOP - 2009") 10,000,000 Stock Options representing an equal
number of Equity Shares of face value Rs. 2 each in the Company, at an
exercise price of Rs. 35.25, being the latest available closing market
price on the National Stock Exchange of India Ltd., on November 30,
2009. The Stock Options so granted, shall vest uniformly over 10 years
beginning from December 2, 2010 being the first vesting date. The
option granted under each of the slabs, can be exercised within a
period of five years from the relevant vesting date.
Further, the Compensation Committee constituted by the Board of
Directors of the Company has at its meeting held on April 12, 2010,
granted, under the "Indiabulls Securities Limited Employees Stock
Option Scheme - 2009" ("IBSL ESOP - 2009") 2,050,000 Stock Options
representing an equal number of Equity Shares of face value Rs. 2 each
in the Company, at an exercise price of Rs. 31.35, being the latest
available closing market price on the National Stock Exchange of India
Ltd., on April 9, 2010. The Stock Options so granted, shall vest
uniformly over 10 years beginning from April 13, 2011 being the first
vesting date. The options granted under each of the slabs, can be
exercised within a period of five years from the relevant vesting date.
Note 9.
Segment Reporting :
The Company operates in one reportable business segment i.e., "Broking
& related activities" and operates in one reportable geographical
segment, i.e. "within India". Hence, no separate information for
segment wise disclosure is required in accordance with the requirements
of Accounting Standard (AS) 17 - "Segment Reporting" .
Note 10.
Related Party Disclosures :
Disclosures in respect of Accounting Standard 18 - 'Related Party
Disclosures' :
Nature of Relationship Name of the Party
(a) Related parties where
control exists:
Subsidiary Companies * Indiabulls Commodities Limited
India Ethanol and Sugar Limited
Devata Tradelink Limited
Indiabulls Brokerage Limited
Indiabulls Distribution Services
Limited
Auxesia Soft Solutions Limited
Pushpanjli Finsolutions Limited
(formerly known as Pushpanjli
Finsolutions Private Limited)
Arbutus Constructions Limited
(formerly known as Arbutus
Constructions Private Limited)
Gyansagar Buildtech Limited
(formerly known as Gyansagar
Buildtech Private Limited)
Shivshakti Financial Services
Limited
(formerly known as Shivshakti
Financial Services Private
Limited)
Astraea Constructions Limited
(formerly known as Astraea
Constructions Private Limited )
Silenus Buildtech Limited
(formerly known as Silenus
Buildtech Private Limited)
Astilbe Builders Limited
(formerly known as Astilbe
Builders Private Limited )
Pushpanjli Fincon Limited
(formerly known as Pushpanjli
Fincon Private Limited )
Viscaria Builders Private Limited
(w.e.f. June 11, 2013 till
February 28, 2014)
India Land and Properties Limited
(w.e.f. November 18, 2014)
(formerly known as India Land
and Properties Private Limited)
Positive Housings Private Limited
(w.e.f. February 04, 2015)
* These Companies include step down subsidiaries and step down
subsidiaries of the subsidiaries of the company
(b) Other Related Parties:
Key Management Personnel Mr. Divyesh B. Shah,
Whole Time Director &
Chief Executive Officer
Mr. Ashok Sharma,
Whole Time Director
Mr. Sameer Gehlaut,
Dominant Promoter
Mr. Rajiv Rattan,
Dominant Promoter
(upto July 17, 2014)
Mr. Saurabh K. Mittal,
Dominant Promoter
(upto July 17, 2014)
Note 11.
Employee Benefits:
Provident Fund, Gratuity and Compensated Absences - disclosures as per
Accounting Standard 15 (Revised) - 'Employee Benefits' :
Contributions are made to Government Provident Fund and Family Pension
Fund and other statutory funds which cover all regular employees
eligible under the respective acts. Both the employees and the Company
make predetermined contributions to the Provident Fund. The
contributions are normally based on a certain proportion of the
employee's salary. The Company has recognised an amount of Rs. 865,843
(Previous year Rs. 413,168) towards Employer's Contribution for the
above mentioned funds.
Provision for unfunded Gratuity and Compensated Absences for eligible
employees is based on an actuarial valuation carried out at the end of
every financial year. Major drivers in actuarial assumptions,
typically, are years of service and employee compensation. Commitments
are actuarially determined using the 'Projected Unit Credit' Method.
Gains / losses on changes in actuarial assumptions are accounted for in
the Statement of Profit and Loss.
Note 12.
Donation represents amount contributed toward Corporate Social
Responsibility as required under section 133 of the Companies Act,
2013.
Note 13.
As per the best estimate of the Management, no provision is required to
be made as per Accounting Standard 29 - 'Provisions, Contingent
Liabilities and Contingent Assets' , in respect of any present
obligation as a result of a past event that could lead to a probable
outflow of resources which would be required to settle the obligation.
Note 14.
Previous year's figures have been regrouped / reclassified wherever
necessary to correspond with the current year's classification /
disclosures.
Mar 31, 2014
Note - 1
Corporate Information:
Indiabulls Securities Limited ("IBSL" or "the Company") carries on the
business as stock and share brokers on the National Stock Exchange of
India Limited ("NSE") and the BSE Limited ("BSE"); depository
participants and other related ancillary services. On February 1, 1996
IBSL received a certificate of registration from the Securities and
Exchange Board of India ("SEBI") under sub-section 1 of section 12 of
the Securities and Exchange Board of India Act, 1992 to carry on the
business as a stock broker. Accordingly, all provisions of the
Securities and Exchange Board of India Act, 1992, and Rules and
Regulations relating thereto are applicable to the Company. On April 2,
2008 the Equity shares of the Company were listed on the NSE and the
BSE after the demerger of the Company from Indiabulls Financial
Services Limited (erstwhile holding company) vide Scheme of
Arrangement.
Note - 2
Earnings per Equity Share (EPS) :
Disclosure in respect of Accounting Standard  20 ''Earnings Per Share''
as notified under the Companies (Accounting
Standards) Rules, 2006, as amended:
The basic earnings per Equity Share is computed by dividing the net
profit attributable to Equity Shareholders for the year by the weighted
average number of Equity Shares outstanding during the reporting year.
Diluted earnings per Equity
Share is computed by considering the weighted average number of Equity
Shares and also the weighted average number of Equity Shares that could
have been issued on the conversion of all dilutive potential Equity
Shares. The dilutive potential
Equity Shares are adjusted for the proceeds receivable, had the shares
been actually issued at fair value.
Dilutive potential Equity Shares are deemed converted as of the
beginning of the year, unless they have been issued at a later date.
The number of Equity Shares and potential dilutive Equity Shares are
adjusted for the potential dilutive effect of Employee Stock Option
Plan and warrants as appropriate.
Note - 3
Loss on Erroneous Transactions :
The loss on squaring off of erroneous transactions on account of
trading in securities amounting to Rs. 32,468 (net) (Previous year Rs.
302,749 (net)) has been debited to the Statement of Profit and Loss.
Note - 4
A. Contingent liabilities not provided for in respect of:
Particulars As at As at
March 31, 2014 March 31, 2013
Amount (Rs.) Amount (Rs.)
 Claims against the
Company not acknowledged
as debts in respect of:
Penalty for synchronised
trading under SEBI
regulations(i) 1,500,000 1,500,000
Arbitration matters(ii) 2,153,393 201,637
Court Cases 6,640,343 3,820,285
 Fixed Deposits pledged
against overdraft facility
availed by Subsidiary Companies 1,589,250,000 Â
 Corporate guarantee for
bank guarantees availed by
subsidiary  100,000,000
(i) During the year ended March 31, 2011, the Securities Appellate
Tribunal ("SAT") had passed an order dated October 26, 2010 in favour
of the Company setting aside the penalty imposed by SEBI. However,
during the year ended March 31, 2012, SEBI had preferred an appeal at
the Honourable Supreme Court of India against the judgment of the SAT.
(ii) The Company is involved in various legal proceedings as
respondents / defendants for various claims including those related to
conduct of its business. In respect of these claims, the Company
believes, these claims do not constitute material litigation matters
and with its meritorious defenses the ultimate disposition of these
matters will not have material adverse effect on its financial
statements / position.
Note - 5
Employee Stock Option Schemes:
a) Employees Stock Option Scheme - 2008
Pursuant to a resolution passed by the Shareholders on January 19,
2009, the Company had cancelled and withdrawn the existing "Employee
Stock Option Scheme - 2007", covering 15,000,000 stock options and
established a new Employee Stock Option Scheme titled "Employee Stock
Option Scheme - 2008" in accordance with the provisions of the
Securities and Exchange Board of India (Employee Stock Option Scheme
and Employee Stock Purchase Scheme) Guidelines, 1999 ("SEBI
Guidelines").
Under the Scheme, the Company was authorised to grant 20,000,000 Equity
settled options to eligible employees including its directors (other
than promoter directors) and employees of its subsidiary companies
including their directors. All options under the Scheme are exercisable
for Equity Shares of the Company. Employees covered by the plan were
granted an option to purchase shares of the Company subject to the
requirements of vesting.
A Compensation Committee constituted by the Board of Directors of the
Company administered the plan. The Compensation Committee at its
meeting held on January 24, 2009, had granted, under the "Indiabulls
Securities Limited Employees Stock Option Scheme - 2008" ("IBSL ESOP -
2008"), 20,000,000 Stock Options representing an equal number of Equity
Shares of face value Rs. 2 each in the Company, to the Eligible
Employees, at an exercise price of Rs. 17.40, being the latest available
closing market price on the National Stock Exchange of India Ltd., as
on January 23, 2009 following the intrinsic method of accounting as is
prescribed in the Guidance Note on Accounting for Employees Share-Based
Payments ("the Guidelines") issued by the Institute of Chartered
Accountants of India. As the options have been granted at intrinsic
value, there is no employee stock compensation expense on account of
the same. The Stock Options so granted, shall vest in the eligible
employees over a period of 10 years beginning from January 25, 2010
being the first vesting date. The options granted under each of the
slabs, can be exercised by the grantees within a period of five years
from the relevant vesting date.
b) Employees Stock Option Scheme - 2009
The Shareholders of the Company at their Annual General Meeting held on
September 30, 2009 have authorised the Board of Directors to grant
20,000,000 options, representing equivalent number of Equity Shares of
face value Rs. 2 each in one or more tranches, pursuant to an Employee
Stock Option Scheme titled as ''Indiabulls
Securities Limited Employees Stock Option Scheme - 2009'' ("IBSL ESOP -
2009"). The options covered under the Scheme would be granted at a
price and on such terms and conditions as may be decided by the
Compensation Committee, to the eligible employees of the Company and
its subsidiaries.
The Compensation Committee constituted by the Board of Directors of the
Company, at its meeting held on December 1, 2009, granted, under the
"Indiabulls Securities Limited Employees Stock Option Scheme- 2009"
("IBSL ESOP Â 2009") 10,000,000 Stock Options representing an equal
number of Equity Shares of face value Rs. 2 each in the Company, at an
exercise price of Rs. 35.25, being the latest available closing market
price on the National Stock Exchange of India Ltd., on November 30,
2009. The Stock Options so granted, shall vest uniformly over 10 years
beginning from December 2, 2010 being the first vesting date. The
option granted under each of the slabs, can be exercised within a
period of five years from the relevant vesting date.
Further, the Compensation Committee constituted by the Board of
Directors of the Company has at its meeting held on April 12, 2010,
granted, under the "Indiabulls Securities Limited Employees Stock
Option Scheme  2009" ("IBSL ESOP  2009") 2,050,000 Stock Options
representing an equal number of Equity Shares of face value Rs. 2 each in
the Company, at an exercise price of Rs. 31.35, being the latest
available closing market price on the National Stock Exchange of India
Ltd., on April 9, 2010. The Stock Options so granted, shall vest
uniformly over 10 years beginning from April 13, 2011 being the first
vesting date. The options granted under each of the slabs, can be
exercised within a period of five years from the relevant vesting date.
Note - 6
Segment Reporting :
The Company operates in one reportable business segment i.e., "Broking
& related activities" and operates in one reportable geographical
segment, i.e. "within India". Hence, no separate information for
segment wise disclosure is required in accordance with the requirements
of Accounting Standard (AS) 17 - "Segment Reporting" as notified under
the Companies (Accounting Standards) Rules, 2006, as amended.
Note - 7
Related Party Disclosures :
Disclosures in respect of Accounting Standard 18 - ''Related Party
Disclosures'' as notified under the Companies (Accounting Standards)
Rules, 2006, as amended:
Nature of Relationship Name of the Party
(a) Related parties where control exists: Subsidiary Companies *
Indiabulls Commodities Limited
India Ethanol and Sugar Limited
Devata Tradelink Limited
Indiabulls Brokerage Limited
Indiabulls Distribution Services Limited
Auxesia Soft Solutions Limited
Pushpanjli Finsolutions Private Limited (w.e.f. June 28, 2013)
Arbutus Constructions Private Limited (w.e.f. June 11, 2013)
Gyan Sagar Buildtech Private Limited (w.e.f. June 11, 2013) (formerly
known as Gyan Sagar Software Technologies Private Limited)
Shivshakti Financial Services Private Limited (w.e.f. June 28, 2013)
Astraea Constructions Private Limited (w.e.f. June 11, 2013)
Silenus Buildtech Private Limited (w.e.f. June 11, 2013) (formerly
known as Silenus Software Technologies Private Limited)
Astilbe Builders Private Limited (w.e.f. June 11, 2013)
Pushpanjli Fincon Private Limited (w.e.f. June 11, 2013)
Viscaria Builders Private Limited (w.e.f. June 11, 2013 till February
28, 2014)
* These Companies include step down subsidiaries of the subsidiaries of
the company
(b) Other Related Parties:
Key Management Personnel
Mr. Divyesh B. Shah, Whole Time Director & Chief Executive Officer
Mr. Ashok Sharma, Whole Time Director Mr. Sameer Gehlaut, Dominant
Promoter
Mr. Rajiv Rattan, Dominant Promoter Mr. Saurabh K. Mittal, Dominant
Promoter
Note - 8
Employee Benefits:
Provident Fund, Gratuity and Compensated Absences - disclosures as per
Accounting Standard 15 (Revised) - ''Employee Benefits'' as notified by
the Companies (Accounting Standards) Rules, 2006, as amended:
Contributions are made to Government Provident Fund and Family Pension
Fund and other statutory funds which cover all regular employees
eligible under the respective acts. Both the employees and the Company
make predetermined contributions to the Provident Fund. The
contributions are normally based on a certain proportion of the
employee''s salary. The Company has recognised an amount of Rs. 413,168
(Previous year Rs. 481,561) towards Employer''s Contribution for the above
mentioned funds.
Provision for unfunded Gratuity and Compensated Absences for eligible
employees is based on an actuarial valuation carried out at the end of
every financial year. Major drivers in actuarial assumptions,
typically, are years of service and employee compensation. Commitments
are actuarially determined using the ''Projected Unit Credit'' Method.
Gains / losses on changes in actuarial assumptions are accounted for in
the Statement of Profit and Loss.
Note - 9
No borrowing cost has been capitalised during the year.
Note - 10
As per the best estimate of the Management, no provision is required to
be made as per Accounting Standard 29 - ''Provisions, Contingent
Liabilities and Contingent Assets'' as notified under the Companies
(Accounting Standards) Rules, 2006, as amended, in respect of any
present obligation as a result of a past event that could lead to a
probable outflow of resources which would be required to settle the
obligation.
Note - 11
Previous year''s figures have been regrouped / reclassified wherever
necessary to correspond with the current year''s classification /
disclosures.
Mar 31, 2013
Note -1
Corporate Information:
Indiabulls Securities Limited ("IBSL" or "the Company") carries on the
business as stock and share brokers on the National Stock Exchange of
India Limited ("NSE") and the BSE Limited ("BSE"); depository
participants and other related ancillary services. On February 1, 1996
IBSL received a certificate of registration from the Securities and
Exchange Board of India ("SEBI") under sub-section 1 of section 12 of
the Securities and Exchange Board of India Act, 1992 to carry on the
business as a stock broker. Accordingly, all provisions of the
Securities and Exchange Board of India Act, 1992, and Rules and
Regulations relating thereto are applicable to the Company. On April 2,
2008 the Equity shares of the Company were listed on the NSE and the
BSE after the demerger of the Company from Indiabulls Financial
Services Limited (erstwhile holding company) vide Scheme of
Arrangement.
Note - 2
Earnings per Equity Share (EPS) :
Disclosure in respect of Accounting Standard - 20 ''Earnings Per Share''
as notified under the Companies (Accounting Standards) Rules, 2006,
as amended:
The basic earnings per Equity Share is computed by dividing the net
profit/(loss) attributable to Equity Shareholders for the year by the
weighted average number of Equity Shares outstanding during the
reporting year. Diluted earnings per Equity
Share is computed by considering the weighted average number of Equity
Shares and also the weighted average number of
Equity Shares that could have been issued on the conversion of all
dilutive potential Equity Shares. The dilutive potential
Equity Shares are adjusted for the proceeds receivable, had the shares
been actually issued at fair value.
Dilutive potential Equity Shares are deemed converted as of the
beginning of the year, unless they have been issued at a later date.
The number of Equity Shares and potential dilutive Equity Shares are
adjusted for the potential dilutive effect of Employee Stock Option
Plan as appropriate.
Note - 3 Leases:
The Company has taken office premises on operating lease at various
locations in India and lease rent in respect of the same amounting to Rs.
58,792,839 (Previous Year Rs. 145,797,340) net of apportionment has been
charged to the Statement of Profit and Loss. (Refer note - 27(i)). The
minimum lease rental outstanding are as under:
Note - 4
Loss on Erroneous Transactions :
The loss on squaring off of erroneous transactions on account of
trading in securities amounting to Rs. 302,749 (Net) (Previous year Rs.
599,078 (Net)) has been debited to the Statement of Profit and Loss.
Note - 5
A. Contingent liabilities not provided for in respect of:
Particulars As at As at
March 31, 2013 March 31, 2012
Amount (Rs.) Amount (Rs.)
Claims against the Company not
acknowledged as debts in respect of:
Penalty for synchronised trading
under SEBI regulations"1 1,500,000 1,500,00
Arbitration matters''11'' 201,637 147,658
Court Cases 3,820,285 3,858,471
Corporate guarantee for bank
guarantees availed by subsidiary 100,000,000 70,000,00
(i) During the year ended March 31, 2011, the Securities Appellate
Tribunal ("SAT") had passed an order dated October 26, 2010 in favour
of the Company setting aside the penalty imposed by SEBI. However,
during the year ended March 31, 2012, SEBI had preferred an appeal at
the Honourable Supreme Court of India against the judgment of the SAT.
(ii) The Company is involved in various legal proceedings as
respondents / defendants for various claims including those related to
conduct of its business. In respect of these claims, the Company
believes, these claims do not constitute material litigation matters
and with its meritorious defenses the ultimate disposition of these
matters will not have material adverse effect on its financial
statements / position.
B. The Company had filed an objection petition before the Madras High
Court against the arbitral award passed against the Company in an
arbitral dispute between Indiabulls Financial Services Limited & others
and A. Indira Anand & K Bharathi wherein the Company was impleaded in
its capacity as a depository of the pledgers and share broker of the
creditor. By the impugned award dated February 18, 2012 the sole
arbitrator has imposed a penalty of Rs. 130,000,000 on the Company. The
petition is pending adjudication.
Note - 6
Employee Stock Option Schemes:
a) Employees Stock Option Scheme - 2008
Pursuant to a resolution passed by the Shareholders on January 19,
2009, the Company had cancelled and withdrawn the existing "Employee
Stock Option Scheme - 2007", covering 15,000,000 stock options and
established a new Employee Stock Option Scheme titled "Employee Stock
Option Scheme - 2008" in accordance with the provisions of the
Securities and Exchange Board of India (Employee Stock Option Scheme
and Employee Stock Purchase Scheme) Guidelines, 1999 ("SEBI
Guidelines").
Under the Scheme, the Company was authorised to grant 20,000,000 Equity
settled options to eligible employees including its directors (other
than promoter directors) and employees of its subsidiary companies
including their directors. All options under the Scheme are
exercisable for Equity Shares of the Company. Employees covered by the
plan were granted an option to purchase shares of the Company subject
to the requirements of vesting.
A Compensation Committee constituted by the Board of Directors of the
Company administered the plan. The Compensation Committee at its
meeting held on January 24, 2009, had granted, under the "Indiabulls
Securities Limited Employees Stock Option Scheme - 2008" ("IBSL ESOP -
2008"), 20,000,000 Stock Options representing an equal number of Equity
Shares of face value Rs. 2 each in the Company, to the Eligible
Employees, at an exercise price ofRs. 17.40, being the latest available
closing market price on the National Stock Exchange of India Ltd., as
on January 23, 2009 following the intrinsic method of accounting as is
prescribed in the Guidance Note on Accounting for Employees Share-Based
Payments ("the Guidelines") issued by the Institute of Chartered
Accountants of India. As the options have been granted at intrinsic
value, there is no employee stock compensation expense on account of
the same. The Stock Options so granted, shall vest in the eligible
employees over a period of 10 years beginning from January 25, 2010
being the first vesting date. The options granted under each of the
slabs, can be exercised by the grantees within a period of five years
from the relevant vesting date.
b) Employees Stock Option Scheme - 2009
The Shareholders of the Company at their Annual General Meeting held on
September 30, 2009 have authorised the Board of Directors to grant
20,000,000 options, representing equivalent number of Equity Shares of
face value Rs. 2 each in one or more tranches, pursuant to an Employee
Stock Option Scheme titled as ''Indiabulls Securities Limited Employees
Stock Option Scheme - 2009'' ("IBSL ESOP - 2009"). The options covered
under the Scheme would be granted at a price and on such terms and
conditions as may be decided by the Compensation Committee, to the
eligible employees of the Company and its subsidiaries.
The Compensation Committee constituted by the Board of Directors of the
Company, at its meeting held on December 1, 2009, granted, under the
"Indiabulls Securities Limited Employees Stock Option Scheme- 2009"
("IBSL ESOP - 2009") 10,000,000 Stock Options representing an equal
number of Equity Shares of face value Rs. 2 each in the Company, at an
exercise price of Rs. 35.25, being the latest available closing market
price on the National Stock Exchange of India Ltd., on November 30,
2009. The Stock Options so granted, shall vest uniformly over 10 years
beginning from December 2, 2010 being the first vesting date. The
option granted under each of the slabs, can be exercised within a
period of five years from the relevant vesting date.
Further, the Compensation Committee constituted by the Board of
Directors of the Company has at its meeting held on April 12, 2010,
granted, under the "Indiabulls Securities Limited Employees Stock
Option Scheme - 2009" ("IBSL ESOP - 2009") 2,050,000 Stock Options
representing an equal number of Equity Shares of face value Rs. 2 each in
the Company, at an exercise price ofRs. 31.35, being the latest available
closing market price on the National Stock Exchange of India Ltd., on
April 9, 2010. The Stock Options so granted, shall vest uniformly over
10 years beginning from April 13, 2011 being the first vesting date.
The options granted under each of the slabs, can be exercised within a
period of five years from the relevant vesting date.
Note - 7
Segment Reporting :
Segment information for the year ended March 31, 2013 as per Accounting
Standard 17 - ''Segment Reporting'' as notified under the Companies
(Accounting Standards) Rules, 2006, as amended:
(a) Primary segment information (by Business Segments);
(Previous year''s figures are stated in Italics)
(b) The Company operates solely in one Geographic segment namely
"Within India" and hence no separate information for Geographic segment
wise disclosure is required.
(c) The Company''s primary business segment is reflected based on
principal business activities carried on by the Company. The Company''s
primary business is ''Broking and related activities'' and ''Advisory
services''. Broking and related activities include business as a stock
and share broker on the National Stock Exchange of India Limited and
the BSE Limited and other related ancillary services. Advisory services
mainly comprise of financial services related fees.
(d) Segment revenue, results, assets and liabilities include amounts
identifiable to each segment and amounts allocated on a reasonable
basis.
(e) The accounting policies adopted for segment reporting are in line
with the accounting policies adopted for preparation of financial
information as disclosed in Note - 2.
Note - 8 Employee Benefits:
Provident Fund, Gratuity and Compensated Absences - disclosures as per
Accounting Standard 15 (Revised) - ''Employee Benefits'' as notified by
the Companies (Accounting Standards) Rules, 2006, as amended:
Contributions are made to Government Provident Fund and Family Pension
Fund and other statutory funds which cover all regular employees
eligible under the respective acts. Both the employees and the Company
make predetermined contributions to the Provident Fund. The
contributions are normally based on a certain proportion of the
employee''s salary. The Company has recognised an amount of Rs. 481,561
(Previous year Rs. 673,063) towards Employer''s Contribution for the above
mentioned funds.
Provision for unfunded Gratuity and Compensated Absences for eligible
employees is based on an actuarial valuation carried out at the end of
every financial year. Major drivers in actuarial assumptions,
typically, are years of service and employee compensation. Commitments
are actuarially determined using the ''Projected Unit Credit'' Method.
Gains / losses on changes in actuarial assumptions are accounted for in
the Statement of Profit and Loss.
Note - 9
Rates and taxes include Rs. Nil (Previous year Rs. 255,543,931) relating to
Rates / Taxes / Stamp Duty paid in respect of certain transactions
entered into by clients in earlier years. Interest - others include Rs.
Nil (Previous year Rs. 168,172,078) pertains to penal interest paid
thereon.
Note - 10
Derivative Instruments:
The Company has not entered into any derivative contract for hedging
any foreign currency exposure. The year end foreign currency exposures
that have not been hedged by derivative instruments or otherwise are
given below :
Note - 11
No borrowing cost has been capitalised during the year.
Note - 12
As per the best estimate of the Management, no provision is required to
be made as per Accounting Standard 29 - ''Provisions, Contingent
Liabilities and Contingent Assets'' as notified under the Companies
(Accounting Standards) Rules, 2006, as amended, in respect of any
present obligation as a result of a past event that could lead to a
probable outflow of resources which would be required to settle the
obligation.
Note - 13
Previous year''s figures have been regrouped / reclassified wherever
necessary to correspond with the current year''s classification /
disclosures.
Mar 31, 2012
Note -1
Corporate Information:
Indiabulls Securities Limited ("IBSL" or "the Company") carries on the
business as stock and share brokers on the National Stock Exchange of
India Limited ("NSE") and the BSE Limited ("BSE"); depository
participants and other related ancillary services. On February 1,1996
IBSL received a certificate of registration from the Securities and
Exchange Board of India ("SEBI") under sub-section 1 of section 12 of
the Securities and Exchange Board of India Act, 1992 to carry on the
business as a stock broker. Accordingly, all provisions of the
Securities and Exchange Board of India Act, 1992, and Rules and
Regulations relating thereto are applicable to the Company. On April
2,2008 the Equity shares of the Company were listed on the NSE and the
BSE after the demerger of the Company from Indiabulls Financial
Services Limited (erstwhile holding company) vide Scheme of
Arrangement.
(i) In the event of liquidation of the Company, the holders of Equity
Shares will be entitled to receive remaining assets of the Company,
after distribution of all preferential amounts. The distribution will
be in proportion to the number of Equity Shares held by the
shareholders.
(ii) Holders of Global Depository Receipts ('GDRs') will be entitled to
receive dividends, subject to the terms of the Deposit Agreement, to
the same extent as the holders of Equity Shares, less the fees and
expenses payable under such Deposit Agreement and any Indian tax
applicable to such dividends. Holders of GDRs don't have voting rights
with respect to the Deposited Shares. The GDRs may not be transferred
to any person located in India including Indian residents or ineligible
investors except as permitted by Indian laws and regulations.
(iii) During the financial year 2007-08, the Company had restructured/
reorganised its business operations through a scheme of arrangement
Under Sections 391 - 394 of the Companies Act, 1956 (duly sanctioned by
the Hon'ble High Court of Judicature at Delhi on November 23, 2007).
The Scheme of arrangement provided for the demerger of the Company
(securities broking and advisory business (a part of fee income) as a
going concern from Indiabulls Financial Services Limited ("IBFSL").
Upon coming into effect of the Scheme on April 24, 2007 and with effect
from the Appointed Date on April 01, 2007, in terms of the Scheme, the
Company had issued and allotted 253,426,989 Equity Shares of face value
of Rs. 2 each aggregating to Rs. 506,853,978 and 9,966,667 cumulative,
non-convertible redeemable Preference Shares of face value of Rs. 4.61
each aggregating to Rs. 45,946,335 to the respective share- holders of
IBFSL.
(iv) 23,486,341 Equity Shares of face value of Rs. 2 each were bought
back by the Company during the year ended March 31,2010.
As per records of the Company, including its register of
shareholders/members and other declarations received from shareholders
regarding beneficial interest. The above shareholding represents both
legal and beneficial ownerships of shares.
(v) Shares reserved for issue under options:
13,125,008 Equity Shares (Previous year 27,231,233 Equity Shares) of
face value of Rs. 2 are reserved under various option schemes of the
Company (Refer note - 32).
(i) Pursuant to the notification dated December 29,2011 issued by the
Ministry of Corporate Affairs amending Accounting Standard 11
-'Accounting for the Effects of Changes in Foreign Exchange Rates' as
notified under the Companies (Accounting Standards) Rules, 2006, as
amended, the Company has exercised the option as per Paragraph 46A
inserted in the said Accounting Standard for amortization of foreign
exchange gain/loss on long-term monetary items over the remaining life
of the concerned monetary items. Consequently, an amount of Rs.
3,138,319 (Previous year Rs. Nil) is carried forward in the Foreign
Exchange Monetary Item Translation Difference Account as on March
31,2012, net of forex gain amounting to Rs. 153,093 (Previous year Rs.
Nil) amortised in the Statement of Profit and Loss.
(ii) Interim Dividend per Share Rs. Nil (Previous Year Re. 1).
(i) Term loans are secured against hypothecation of the vehicles
purchased. The rate of interest of such term loans ranges between 9%
p.a. to 12% p.a. The term loans are repayable in equated monthly
installments ranging for a period of 3 to 5 years.
(i) Disclosures under the Micro, Small and Mediurn Enterprises
Development Act, 2006:
(a) An amount of Rs. Nil (Previous year Rs, Nil) and Rs. Nil (Previous
year Rs. Nil) was due and outstanding to suppliers as at the end of the
accounting year on account of principal and interest respectively.
(b) No interest was paid during the year in terms of Section 16 of the
Micro, Small and Medium Enterprises Development Act, 2006; no amount
was paid to the supplier beyond the appointed date.
(c) No interest is payable at the end of the year other than interest
under Micro, Small and Medium Enterprises Development Act, 2006.
(d) No amount of interest was accrued and unpaid at the end of the
accounting year.
The above information regarding Micro, Small and Medium Enterprises has
been determined to the extent such parties have been identified on the
basis of the information available with the Company. This has been
relied upon by the Auditors.
(i) In respect of amounts mentioned under Section 205Cof the Companies
Act, 1956, Rs. Nil (Previous year Rs. Nil) were required to be credited
to the Investor Education and Protection Fund as at March 31,2012.
(a) During the year, the Company had invested an additional amount of
Rs. Nil (Previous year Rs. 20,000,000) in its wholly owned subsidiary
Indiabulls Brokerage Limited.
(b) As at March 31, 2012 and March 31, 2011, the Company holds 100% of
the Equity Share capital of Indiabulls Distribution Services Limited
("IDSL") at a cost of Rs. 500,000. Based on the audited financials of
IDSL as at March 31, 2012 and March 31,2011, there has been an erosion
in the value of investment made in IDSL as the operations in IDSL are
in the process of being set up. Considering the investment in IDSL as strategic and long-term in nature, the Company considers the losses
suffered by IDSL as temporary in nature and accordingly no provision
for diminution in value has been made in the books of accounts.
(c) During the year, the Company has invested an amount of Rs. 500,000
in a newly formed wholly owned subsidiary Auxesia Soft Solutions
Limited.
(d) During the year ended March 31,2009, the Company had given loan of
Rs. 1,809,300,000 to one of its wholly owned subsidiaries - viz.
DevataTradelink Limited ("DTL"). During that financial year, DTL had
incurred / provided for losses aggregating to Rs. 1,562,932,320 in
respect of dealing in securities. Based upon the availability of
resources as at that year end to repay those loans and considering the
erosion of the net worth of the said subsidiary, the Company had written
off loans given to DTL aggregating to Rs. 1,809,300,000 as bad
loans/advances written off. Investments made by the Company in the
Equity Share capital of DTL amounting to Rs. 500,000 though considered
as strategic and long-term in nature, considering the losses suffered
by this subsidiary, diminution in the value of this investment is
considered as other than temporary in nature and accordingly provision
for diminution in value amounting to Rs. 500,000 was made in books of
account in that financial year. During the year, the Company has given
an additional loan amounting to Rs. 300,000,000 (Previous year Rs. Nil)
to the said subsidiary.
(e) During the year Copal Partners Limited has bought back 223,222
shares held by the Company vide the Purchase and Cancellation Agreement
for the consideration of Rs. 86,226,344. Further, the Company had sold
586,193 shares held by it in Copal Partners Limited to Moody's Group UK
LTD for the consideration of Rs. 231,992,806 vide the Share Purchase
Deed. As a result thereof, the stake of the Company in Copal Partners
Limited has been reduced from 4.74% to 1.63%. The proportionate cost of
the shares bought back and sold aggregates to Rs. 351,362,195. Out of
the total consideration of Rs. 231,992,806 receivable from Moody's
Group UK LTD an amount of Rs. 77,952,063 (excluding foreign exchange
gain of Rs. 3,291,412) is receivable as at the yearend in the form of
Loan Notes and Escrow account of the Moody's Group UK LTD.
Note-2
Deferred tax assets (net)
In compliance with Accounting Standard 22 - 'Accounting for Taxes on
Income' as notified under the Companies (Accounting Standards) Rules,
2006, as amended, deferred tax credit (net) of Rs. 25,247,378 (Previous
year - Rs. 66,651,375) has been credited to the Statement of Profit and
Loss for the year ended March 31,2012. The breakup of deferred tax into
major components is as under:
(i) Fixed deposits includes:
a. Rs. 776,300,000 (Previous year Rs. 1,884,173,628 ) pledged with the
banks against bank guarantees issued by banks for base capital and
additional base capital to the National Stock Exchange of India, BSE
Limited and the National Securities Clearing Corporation Limited.
b. Rs. Nil (Previous year Rs. 250,000,000) pledged against working
capital loan taken from bank.
c. Rs. 47,400,000 (Previous year Rs. 172,400,000) pledged with the
National Stock Exchange of India, BSE Limited and National Securities
Clearing Corporation Limited for the purpose of base capital and
additional base capital.
d. Rs. 874,500,000 (Previous year Rs. 1,914,500,000) pledged with
banks for overdraft facilities.
e. Rs. 6,881,400 (Previous year Rs. 22,138,193) pledged for
arbitration matters.
f. Rs. 25,000 (Previous year Rs. 25,000) pledged with State
Commission, New Delhi for appeal filed by the Company in a consumer
dispute matter.
(ii) During the year, pursuant to the Order of the Hon'ble Sole
Arbitrator, the Company has sold shares held by one of its customers in
its beneficiary depository account held with the Company. Further, the
said Arbitrator has ordered the Company to deposit the money in an
interest bearing account in its name specifying that the sum has been
deposited subject to further orders in the Arbitration. The Company has
thus invested such sums of money aggregating to Rs. 613,023,555 (Net)
in various fixed deposits with a scheduled bank. As at the year end,
the said fixed deposits are being netted off against the dues payable
to the customer.
(i) During the year, personnel costs amounting to Rs. Nil (Previous
Year Rs. 156,026,787) were apportioned to the Company from its
subsidiary company - Indiabulls Commodities Limited.
(ii) During the year, personnel costs amounting to Rs. 109,707,465
(Previous Year Rs. Nil) were apportioned to the subsidiary company
Indiabulls Distribution Services Limited.
(i) During the year, Lease rent amounting to Rs. 27,094,810 (Previous
Year Rs. Nil) was apportioned to Indiabulls Distribution Services
Limited - a subsidiary of the Company.
(ii) During the year, Business Promotion expense amounting to Rs.
1,206,197 (Previous Year Rs. Nil) was apportioned to Indiabulls
Distribution Services Limited - a subsidiary of the Company.
Note - 3 Earnings per Equity Share (EPS):
Disclosure in respect of Accounting Standard - 20 'Earnings Per
Share 'as notified under the Companies (Accounting Standards) Rules,
2006, as amended:
The basic earnings per Equity Share is computed by dividing the net
profit attributable to Equity Shareholders for the year by the weighted
average number of Equity Shares outstanding during the reporting year.
Diluted earnings per Equity Share is computed by considering the
weighted average number of Equity Shares and also the weighted average
number of Equity Shares that could have been issued on the conversion
of all dilutive potential Equity Shares. The dilutive potential Equity
Shares are adjusted for the proceeds receivable, had the shares been
actually issued at fair value.
Dilutive potential Equity Shares are deemed converted as of the
beginning of the year, unless they have been issued at a later date.
The number of Equity Shares and potential dilutive Equity Shares are
adjusted for the potential dilutive effect of Employee Stock Option
Plan as appropriate.
Note - 4 Leases:
The Company has taken office premises on operating lease at various
locations in India and lease rent in respect of the same amounting to
Rs 145,797,340 (Previous Year Rs. 213,514,710) has been charged to the
Statement of Profit and Loss. The minimum lease rental outstanding are
as under
The agreements are executed for a period ranging from 11 months to 10
years with a renewable clause and in many cases, it also provides for termination at will by either party giving a prior notice period between
30 to 90 days.
Note - 5 Loss on Erroneous Transactions:
The loss on squaring off of erroneous transactions on account of
trading in securities amounting to Rs. 599,078 (Net)
(Previous year Rs. 864,630 (Net)) has been debited to the Statement of
Profit and Loss.
Note - 6 A. Contingent liabilities not provided for in respect of:
(Amount in Rs.)
Particulars As at As at
March 31,2012 March 31, 2011
- Claims against the Company not
acknowledged as debts in respect of:
Penalty for synchronized trading under
SEBI regulations111 1,500,000 1,500,000
Arbitration matters" 147,658 2,415,706
Court Cases 3,858,471 -
- Corporate guarantee for bank
guarantees availed by subsidiary 70,000,000 100,000,000
(i) During the previous year, the Securities Appellate Tribunal ("SAT")
has passed an order dated October 26, 2010 in favour of the Company
setting aside the penalty imposed by SEBI. However, during the year,
SEBI has preferred an appeal at the Honourable Supreme Court of India
against the judgment of the SAT.
(ii) The Company is involved in various legal proceedings as
respondents / defendants for various claims including those related to
matters relating to conduct of its business. In respect of these
claims, the Company believes, these claims do not constitute material
litigation matters and with its meritorious defenses the ultimate
disposition of these matters will not have material adverse effect on
its financial statements / position.
B. The Company has filed an objection petition before the Madras High
Court against the arbitral award passed against the Company in an
arbitral dispute between Indiabulls Financial Services Limited & others
and A. Indira Anand & K Bharathi wherein the Company was imp leaded in
its capacity as a depository of the pledges and share broker of the
creditor. By the impugned award dated February 18, 2012 the sole
arbitrator has imposed a penalty of Rs. 130,000,000 on the Company. The
petition is pending adjudication.
Note - 7 Employee Stock Option Schemes:
Indiabulls Employees' Welfare Trust
During the financial year 2010-11, pursuant to the approval accorded at
an Extraordinary General Meeting of the Members of the Company held on
September 30, 2010, the "Indiabulls Employees' Welfare Trust" ("Trust")
has been formed on October 04, 2010 with an initial Corpus of Rs.
50,000, contributed equally by the Company and four other listed
Settlor entities, to administer and implement the Settlor entities'
current un-granted Employee Stock Option Schemes ("ESOP") and any
future ESOP / Employee Stock Purchase Schemes of the Settlor entities.
The Company being one of the Settlors has contributed its share of Rs.
10,000 as initial contribution towards the corpus of the said Trust.
The Trust is administered by Independent Trustees. In terms of the
Trust Deed, Equity Shares of the Settlor entities are to be purchased
by the Trust to the extent permissible in terms of the ESOP scheme as
approved by the Members of the Company for the purposes of allotment of
the same to eligible Employees of Settlor companies and their
subsidiaries, upon exercise of options granted by the Compensation
Committee of Settlor companies, at a price to be determined by the
Trust based on its carrying cost. During the year, there has been no
new grants made by. the Company which are required to be administered by
the Trust.
a) Employees Stock Option Scheme - 2008
Pursuant to a resolution passed by the Shareholders on January 19,2009,
the Company had cancelled and withdrawn the existing "Employee Stock
Option Scheme - 2007", covering 15,000,000 stock options and
established a new Employee Stock Option Scheme titled "Employee Stock
Option Scheme - 2008" in accordance with the provisions of the
Securities and Exchange Board of India (Employee Stock Option Scheme
and Employee Stock Purchase Scheme) Guidelines, 1999 ("SEBI
Guidelines").
Under the Scheme, the Company was authorised to grant 20,000,000 Equity
settled options to eligible employees including its directors (other
than promoter directors) and employees of its subsidiary companies
including their directors. All options under the Scheme are exercisable
for Equity Shares of the Company. Employees covered by the plan were
granted an option to purchase shares of the Company subject to the
requirements of vesting.
A Compensation Committee constituted by the Board of Directors of the
Company administered the plan. The Compensation Committee at its
meeting held on January 24, 2009, had granted, under the "indiabulls
Securities Limited Employees Stock Option Scheme - 2008" ("IBSL ESOP -
2008"), 20,000,000 Stock Options representing an equal number of Equity
Shares of face value Rs. 2 each in the Company, to the Eligible
Employees, at an exercise price of Rs. 1 7,40, being the latest
available closing market price on the National Stock Exchange of India
Ltd., as on January 23, 2009 following the intrinsic method of
accounting as is prescribed in the Guidance Note on Accounting for
Employees Share-Based Payments ("the Guidelines") issued by the
Institute of Chartered Accountants of India. As the options have been
granted at intrinsic value, there is no employee stock compensation
expense on account to the same. The Stock Options so granted, shall
vest in the eligible employees over a period of 10 years beginning from
January 25, 2010 being the first vesting date. The options granted
under each of the slabs, can be exercised by the grantees within a
period of five years from the relevant vesting date.
b) Employees Stock Option Scheme - 2009
The Shareholders of the Company at their Annual General Meeting held on
September 30, 2009 have authorised the Board of Directors to grant
20,000,000 options, representing equivalent number of Equity Shares of
face value Rs. 2 each in one or more tranches, pursuant to an Employee
Stock Option Scheme titled as' Indiabulls Securities Limited Employees
Stock Option Scheme - 2009'("IBSL ESOP - 2009").The options covered
under the Scheme would be granted at a price and on such terms and
conditions as may be decided by the Compensation Committee, to the
eligible employees of the Company and its subsidiaries.
The Compensation Committee constituted by the Board of Directors of the
Company, at its meeting held on December 1,2009, granted, under the
"Indiabulls Securities Limited Employees Stock Option Scheme- 2009"
("IBSL ESOP - 2009") 10,000,000 Stock Options representing an equal
number of Equity Shares of face value Rs. 2 each in the Company, at an
exercise price of Rs. 35.25, being the latest available closing market
price on the National Stock Exchange of India Ltd., on November 30,
2009. The Stock Options so granted, shall vest uniformly over 10 years
beginning from December 2, 2010 being the first vesting date. The
option granted under each of the slabs, can be exercised within a
period of five years from the relevant vesting date.
Further, the Compensation Committee constituted by the Board of
Directors of the Company has at its meeting held on April 12, 2010,
granted, under the "Indiabulls Securities Limited Employees Stock
Option Scheme - 2009" ("IBSL ESOP - 2009") 2,050,000 Stock Options
representing an equal number of Equity Shares of face value Rs. 2 each
in the Company, at an exercise price of Rs. 31.35, being the latest
available closing market price on the National Stock Exchange of India
Ltd., on April 9, 2010. The Stock Options so granted, shall vest
uniformly over 10 years beginning from April 13,2011 being the first
vesting date. The options granted under each of the slabs, can be
exercised within a period of five years from the relevant vesting date.
The expected volatility was determined based on historical volatility
data.
Had the compensation cost for the stock options granted under the IBSL
ESOP - 2008 and IBSL ESOP - 2009 been determined based on the fair
value approach, the Company's net (loss) / profit and Basic/Diluted
earnings per Equity Share would have been as per the pro forma amounts
indicated below:
Note - 8
Segment Reporting:
Segment information for the year ended March 31,2012 as per Accounting
Standard 17-'Segment Reporting' as notified under the Companies
(Accounting Standards) Rules, 2006, as amended:
(a) Primary segment information (by Business Segments):
(b) The Company operates solely in one Geographic segment namely
"Within lndia''and hence no separate information for Geographic segment
wise disclosure is required.
(c) The Company's primary business segment is reflected based on
principal business activities carried on by the Company. The Company's
primary business is 'Broking and related activities' and 'Advisory
services'. Broking and related activities include business as a stock
and share broker on the National Stock Exchange of India Limited and
the BSE Limited and other related ancillary services. Advisory services
mainly comprise of financial services related fees.
(d) Segment revenue, results, assets and liabilities include amounts
identifiable to each segment and amounts allocated on a reasonable
basis.
(e) The accounting policies adopted for segment reporting are in line
with the accounting policies adopted for preparation of financial
information as disclosed in Note - 2.
Note - 9 Employee Benefits:
Provident Fund, Gratuity and Compensated Absences - disclosures as per
Accounting Standard 15 (Revised) - 'Employee Benefits' as notified by
the Companies (Accounting Standards) Rules, 2006, as amended:
Contributions are made to Government Provident Fund and Family Pension
Fund and other statutory funds which cover all regular employees
eligible under the respective acts. Both the employees and the Company
make predetermined contributions to the Provident Fund. The
contributions are normally based on a certain proportion of the
employee's salary. The Company has recognised an amount of Rs. 673,063
(Previous year Rs. 1,096,978) towards Employer's Contribution for the
above mentioned funds.
Provision for unfunded Gratuity and Compensated Absences for eligible
employees is based on an actuarial valuation carried out at the end of
every financial year. Major drivers in actuarial assumptions,
typically, are years of service and employee compensation. Commitments
are actuarially determined using the 'Projected Unit Credit' Method.
Gains / losses on changes in actuarial assumptions are accounted for in
the Statement of Profit and Loss.
Disclosures in respect of Gratuity and Compensated Absences:
Note-10
Rates and taxes include Rs. 255,543,931 (Previous year Rs. Nil)
relating to Rates / Taxes / Stamp Duty paid in respect of certain
transactions entered into by clients in earlier years. Interest -
others include Rs. 168,172,078 (Previous year Rs. Nil) pertains to
penal interest paid thereon.
Note - 11
Derivative Instruments:
The Company has not entered into any derivative contract for hedging
any foreign currency exposure. The yearend foreign currency exposures
that have not been hedged by derivative instruments or otherwise are
given below:
Note -12
No borrowing cost has been capitalised during the year.
Note -13
As per the best estimate of the Management, no provision is required to
be made as per Accounting Standard 29*'- 'Provisions, Contingent
Liabilities and Contingent Assets' as notified under the Companies
(Accounting Standards) Rules, 2006, as amended, in respect of any
present obligation as a result of a past event that could lead to a
probable outflow of resources which would be required to settle the
obligation.
Note -14
The Revised Schedule VI has become effective from April 1, 2011 for the
preparation of financial statements. This has significantly impacted
the disclosure and presentation made in the financial statements.
Previous year's figures have been regrouped / reclassified wherever
necessary to correspond with the current year's classification /
disclosures.
Mar 31, 2011
1. Indiabulls Securities Limited ("IBSL" or "the Company") carries on
the business as stock and share brokers on the National Stock Exchange
of India Limited and Bombay Stock Exchange Limited; depository
participants and other related ancillary services. On February 1, 1996
IBSL received a certificate of registration from the Securities and
Exchange Board of India ("SEBI") under sub-section 1 of section 12 of
the Securities and Exchange Board of India Act, 1992 to carry on the
business as a stock broker. Accordingly, all provisions of the
Securities and Exchange Board of India Act, 1992, and rules and
regulations relating thereto are applicable to IBSL. On April 2, 2008
the equity shares of the Company were listed on National Stock Exchange
of India Limited (NSE)and Bombay Stock Exchange Limited (BSE) after the
demerger of the Company from Indiabulls Financial Services Limited.
2. Contingent liabilities not provided for in respect of:
(Amount in Rs.)
As at As at
March 31,2011 March 31, 2010
-Bank Guarantees
Credit facilities availed from banks 3,750,000,000 5,000,000,000
Others à 300,000
- Claims against the Company not
acknowledged as debts in respect of:
Penalty for syncronised trading under
SEBI regulations* 1,500,000 1,500,000
Arbitration matters 2,415,706 7,732,045
Capital Commitments 3,062,554 3,560,258
- Corporate guarantee for bank
guarantees availed by subsidiary 100,000,000 170,000,000
* During the year, the Securities Appellate Tribunal ("SAT") has passed
an order dated October 26, 2010 in favour of the Company setting aside
the penalty imposed by SEBI. However, subsequent to the year end, SEBI
has preferred an appeal at the Honourable Supreme Court of India
against the judgment of the SAT.
Note:
The Company is involved in various legal proceedings as respondents /
defendants for various claims including those related to matters
relating to conduct of its business. In respect of these claims, the
Company believes, these claims do not constitute material litigation
matters and with its meritorious defenses the ultimate disposition of
these matters will not have material adverse effect on its Financial
Statements / Position.
3. During the previous year, the Company had redeemed 9,966,667 10%
Cumulative, Non-convertible Preference Shares of face value Rs. 4.61
per share amounting to Rs. 45,946,335, held by Oberon Limited.
Consequently, the paid-up Preference Share Capital of the Company stood
fully repaid.
4. Employee Stock Option Schemes:
Indiabulls Employees'Welfare Trust:
During the year, pursuant to the approval accorded at an Extraordinary
General Meeting of the members of the Company held on September 30,
2010, the "Indiabulls Employees'Welfare Trust" ("Trust") has been
formed on October 04, 2010 with an initial corpus of Rs. 50,000,
contributed equally by the Company and four other listed Settlor
entities, to administer and implement the Settlor entities' current
ungranted Employee Stock Option Schemes ("ESOP") and any future ESOP /
Employee Stock Purchase Schemes. The Company being one of the Settlor
entities of the Trust, has contributed its share of Rs. 10,000 as its
initial contribution towards the corpus of the said Trust. The Trust is
administered by Independent Trustees. In terms of the Trust Deed,
Equity shares of the Settlor entities are purchased by the Trust to the
extent permissible in terms of the ESOP scheme as approved by the
Members of the Company for the purposes of allotment of the same to
eligible Employees of settlor companies and their subsidiaries, upon
exercise of options granted by the Compensation Committee of those
companies, at a price to be determined by the Trust based on its
carrying cost. During the year, there has been no new grants made by
the Company which is required to be administered by the Trust.
Employees Stock Option Scheme-2008
Pursuant to resolution passed by the shareholders on January 19, 2009
the Company had cancelled and withdrawn the existing "Employee Stock
Option Scheme-2007", covering 15,000,000 stock options and established
a new Employee Stock Option Scheme titled Employee Stock Option
Scheme-2008" in accordance with the provisions of the Securities and
Exchange Board of India (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999 ("SEBI Guidelines"). Under the
Scheme, the Company was authorised to grant 20,000,000 equity settled
options to eligible employees including its directors (other than
promoter directors) and employees of its subsidiary companies including
their directors. All options under the Scheme are exercisable for
equity shares of the Company. Employees covered by the plan were
granted an option to purchase shares of the Company subject to the
requirements of vesting.
A Compensation Committee constituted by the Board of Directors of the
Company administered the plan. The Compensation Committee at its
meeting held on January 24, 2009, had granted, under the "Indiabulls
Securities Limited Employees StockOption Scheme-2008"("IBSL
ESOP-2008"), 20,000,000 StockOptions representing an equal number of
equity shares of face value Rs. 2 each in the Company, to the Eligible
Employees, at an exercise price of Rs. 17.40, being the latest
available closing market price on the National Stock Exchange of India
Ltd., as on January 23, 2009 following the intrinsic method of
accounting as is prescribed in the Guidance Note issued by the
Institute of Chartered Accountants of India on Accounting for Employees
Share based Payments ("the Guidelines"). As the options have been
granted at intrinsic value, there is no employee stock compensation
expense on account of the same. The Stock Options so granted, shall
vest in the eligible employees over a period of 10 years beginning from
January 25, 2010 being the first vesting date. The options granted
under each of the slabs, can be exercised by the grantees within a
period of five years from the relevant vesting date.
Employees Stock Option Scheme-2009
The Shareholders of the Company at their Annual General Meeting held on
September 30, 2009 have authorised the Board of Directors to grant
20,000,000 options, representing equivalent number of Equity shares of
face value Rs. 2 each in one or more tranches, pursuant to a new
employee stock option scheme titled as 'Indiabulls Securities Limited
Employees Stock Option Scheme-2009' ("IBSL ESOP-2009"). The options
covered under the Scheme would be granted, at a price and on such terms
and conditions as may be decided by the Compensation Committee, to the
eligible employees of the Company and its subsidiaries.
The Compensation Committee constituted by the Board of Directors of the
Company, at its meeting held on December 1, 2009, granted, under the
"Indiabulls Securities Limited Employees Stock Option Scheme- 2009"
("IBSL ESOP - 2009") 10,000,000 Stock Options representing an equal
number of equity shares of face value Rs. 2 each in the Company, at an
exercise price of Rs. 35.25, being the latest available closing market
price on the National Stock Exchange of India Ltd., as on November 30,
2009. The Stock Options so granted, shall vest uniformly within 10
years beginning from December 2, 2010 being the first vesting date. The
option granted under each of the slabs, can be exercised within a
period of five years from the relevant vesting date.
Further, the Compensation Committee constituted by the Board of
Directors of the Company has, at its meeting held on April 12, 2010,
granted, under the "Indiabulls Securities Limited Employees Stock
Option Scheme - 2009" ("IBSL ESOP - 2009") 2,050,000 Stock Options
representing an equal number of equity shares of face value Rs. 2 each
in the Company, at an exercise price of Rs. 31.35, being the latest
available closing market price on the National Stock Exchange of India
Ltd., as on April 9, 2010. The Stock Options so granted, shall vest
uniformly within 10 years beginning from April 13, 2011 being the first
vesting date. The options granted under each of the slabs, can be
exercised .vithin a period of five years from the relevant vesting
date.
5. During the year ended March 31, 2009, the Shareholders of the
Company by means of Special Resolution passed through the postal ballot
with requisite majority, authorised on March 06, 2009 the buy-back of
the Company's fully paid-up Equity Shares of face value Rs. 2 each from
the open market through stock exchanges, at a price not exceeding Rs.
33 per share up to a maximum amount of Rs. 831,796,227, being 25% of
the total paid-up equity capital and free reserves as per the audited
Balance Sheet of the Company as at March 31,2008, to be financed out of
the Company's free reserves and surplus and balance in the Profit and
Loss Account. The Company had proposed to buybackupto 39,281,000 of its
fully paid up Equity Shares and minimum number of 5,000,000 of its
fully paid up Equity Shares at a price not exceeding Rs. 33 per Equity
Share.
Subsequently, during the year ended March 31, 2010, the Company had
completed the said buy back on March 5, 2010 and had bought back
23,486,341 Equity Shares of face value of Rs. 2 each utilising an
aggregate amount of Rs. 741,909,192 from General Reserve, Securities
Premium and Profit & Loss Account.
6. Secured Loans:
a) Vehicles Loans of Rs. 8,143,586 (Previous Year Rs. 4,589,805) are
secured against hypothecation of the Vehicles purchased.
b) Working Capital loans of Rs. 250,000,000 (Previous Year Rs.
500,000,000) and Bank Overdraft of Rs. 1,720,567,925 (Previous Year Rs.
1,148,019,728) are secured against Fixed Deposits placed with Banks.
8. Fixed deposits includes:
a. Rs. 1,884,173,628 (Previous Year Rs. 2,500,562,281) pledged with
the banks against bank guarantees issued by banks for base capital and
additional base capital to National Stock Exchange of India, Bombay
Stock Exchange of India and National Securities Clearing Corporation
Limited.
b. Rs. 250,000,000 (Previous Year Rs. 500,000,000) pledged against
working capital loan taken from bank.
c. Rs. 172,400,000 (Previous Year Rs. 376,900,000) pledged with
National Stock Exchange of India, Bombay Stock Exchange of India and
National Securities Clearing Corporation Limited for the purpose of
base capital and additional base capital.
d. Rs. 1,914,500,000 (Previous Year Rs. 1,310,000,000) pledged with
banks for overdraft facilities.
e. Rs. 22,138,193 (Previous Year Rs. 18,675,079) pledged for
arbitration matters.
f. Rs. 25,000 (Previous Year Rs. 25,000) pledged with State
Commission, New Delhi for appeal filed by the Company in a consumer
dispute matter.
10. The loss on squaring off of erroneous transactions on account of
trading in securities amounting to Rs. 864,630 (Net) (Previous Year
loss Rs. 7,071,519 (Net)) has been adjusted to Profit and Loss Account.
11. Segment Reporting:
Segment information for the period from April 01, 2010 to March 31,
2011 as per AS -17'Segment Reporting' as notified under the Companies
(Accounting Standard^) Rules, 2006:
(b) The Company operates solely in one Geographic segment namely
"Within lndia"and hence no separate information for Geographic segment
wise disclosure is required.
(c) The Company's primary Business segment is reflected based on
principal business activities carried on by the Company. The Company's
primary business activity is to carry on business of stock and share
broker on National Stock Exchange of India Limited and Bombay Stock
Exchange Limited and other related ancillary services.
(d) "Others" business segment constitutes Investment and dealing in
tradable securities and arbitrage transaction in securities. This not
being the normal business activity of the Company, the same is shown as
"Others".
(e) Segment revenue, results, assets and liabilities include amounts
identifiable to each segment and amounts allocated on a reasonable
basis.
(f) The accounting policies adopted for segment reporting are in line
with the accounting policies adopted for preparation of financial
information as disclosed in (A) above.
12. Disclosures in respect of AS-18 'Related Party Disclosures'as
notified under the Companies (Accounting Standards) Rules, 2006:
(a) Related parties where control exists:
Nature of Relationship Name of the Party
Subsidiary Companies Indiabulls Commodities Limited
India Ethanol and Sugar Limited (a 100% subsidiary of Indiabulls
Commodities Limited)
Devata Trade link Limited
Indiabulls Brokerage Limited
Indiabulls Distribution Services Limited
(b) Other Related Parties:
Nature of Relationship Name of the Party
Key Management Personnel Mr. Divyesh B. Shah, Director
Mr. Ashok Sharma, Director
Mr. Sameer Gehlaut, person exercising significant influence
Mr. Rajiv Rattan, person exercising significant influence
Mr. Saurabh K. Mittal, person exercising significant influence
13. Disclosure in respect of AS - 20 'Earnings Per Share' as notified
under the Companies (Accounting Standards) Rules, 2006:
The basic earnings per share is computed by dividing the net profit
attributable to equity shareholders for the year by the weighted
average number of equity shares outstanding during the reporting year.
Diluted earnings per share are computed using the weighted average
number of equity shares and also the weighted average number of equity
shares that could have been issued on the conversion of all dilutive
potential equity shares. The dilutive potential equity shares are
adjusted for the proceeds receivable, had the shares been actually
issued at fair value.
Dilutive potential equity shares are deemed converted as of the
beginning of the year, unless they have been issued at a later date.
The number of equity shares and potential diluted equity shares are
adjusted for stock split, bonus shares and the potential dilutive
effect of employee stock option plan as appropriate.
15. Employee Benefits:
Provident Fund, Gratuity and Long Term Compensated Absences -
disclosures as per Accounting Standard (AS) 15 (Revised)-Employee
Benefits as notified by the Companies (Accounting Standards) Rules,
2006:
Contributions are made to Government Provident Fund and Family Pension
Fund and other statutory funds which cover all regular employees
eligible under the respective acts. Both the employees and the Company
make predetermined contributions to the Provident Fund. The
contributions are normally based on a certain proportion of the
employee's salary. The Company has recognised an amount of Rs.
1,096,978 (Previous year Rs. 1,080,933) towards Employer's Contribution
for the above mentioned funds.
Provision for unfunded Gratuity and Long Term Compensated Absences for
eligible employees is based upon actuarial valuation carried out at the
end of every financial year. Major drivers in actuarial assumptions,
typically, are years of service and employee compensation. Commitments
are actuarially determined using the'Projected Unit Credit' method.
Gains and losses on changes in actuarial assumptions are accounted for
in the Profit and Loss Account.
16. During the year, the Company has invested an additional amount of
Rs. 20,000,000 (Previous Year Rs. 500,000) in its wholly owned
subsidiary Indiabulls Brokerage Limited (Previous year - Indiabulls
Distribution Services Limited).
17. During the year, personnel cost amounting to Rs. 156,026,787
(Previous Year Rs. 120,551,408) was apportioned to the Company from its
subsidiary - Indiabulls Commodities Limited.
21. Derivative Instruments:
The Company does not have any foreign currency exposures towards
receivables, payables or any other derivative instrument that have not
been hedged.
22. Disclosures under the Micro, Small and Medium Enterprises
Development Act, 2006:
(a) An amount of Rs. Nil (Previous Year Rs. Nil) and Rs. Nil (Previous
Year Rs. Nil) was due and outstanding to suppliers as at the end of the
accounting year on account of Principal and Interest respectively.
(b) No interest was paid during the year in terms of section 16 of the
Micro, Small and Medium Enterprises Development Act, 2006 no amount was
paid to the supplier beyond the appointed date.
(c) No interest is payable at the end of the year other than interest
under Micro, Small and Medium Enterprises Development Act, 2006.
(d) No amount of interest was accrued and unpaid at the end of the
accounting year.
The above information and that given in Schedule H-"Current Liabilities
and Provisions" regarding Micro, Small and Medium Enterprises has been
determined to the extent such parties have been identified on the basis
of information available with the Company. This has been relied upon by
the Auditors.
23. No borrowing cost has been capitalised during the year.
24. Information under paragraphs 3 and 4 of Part II to Schedule VI of
the Companies Act, 1956 is stated to the extent applicable to the
Company.
25. Provision for Current Tax includes provision for Wealth Tax of Rs.
456,448 (Previous year Rs. 526,854).
26. During the year ended March 31,2009, the Company had advanced a
sum of Rs. 1,809,300,000 by way of loan to one of its wholly owned
subsidiary-viz Devata Tradelink Limited ("DTL"). During that financial
year, DTL had incurred / provided for losses aggregating to Rs.
1,562,932,320 in respect of dealing in securities. Based upon the
availability of resources as at that year end to repay those loans and
considering the erosion of the networth of the subsidiary, the Company
had written off loans given to DTL aggregating to Rs. 1,809,300,000 as
bad loans / advances written off. Investments made by the Company in
the equity share capital of DTL amounting to Rs. 500,000 though
considered as strategic and long term in nature, considering the losses
suffered by this subsidiary, diminution in the value of the investment
is considered as other than temporary in nature and accordingly
provision for diminution in value amounting to Rs. 500,000 was made in
books of account in that financial year.
27. As at March 31,2011, the Company holds 100% of the equity share
capital of Indiabulls Distribution Services Limited ("IDSL") at a cost
of Rs. 500,000. Based on the audited financials of IDSL as at and for
the year ended March 31, 2011, there has been an erosion in the value
of investment made in IDSL as the operations in IDSL are in the process
of being set up. Considering the investment in IDSL as strategic and
long term in nature, the Company considers the losses suffered by IDSL
as temporary in nature and accordingly no provision for diminution in
value has been made in books of account.
28. As per the best estimate of the management, no provision is
required to be made as per Accounting Standard (AS) 29-Provisions,
Contingent Liabilities and Contingent Assets as notified under the
Companies (Accounting Standards) Rules, 2006, in respect of any present
obligation as a result of a past event that could lead to a probable
outflow of resources, which would be required to settle the obligation.
29. In respect of amounts as mentioned under Section 205C of the
Companies Act, 1956, there were no dues required to be credited to the
Investor Education and Protection Fund as at March 31, 2011.
30. interim dividend of Re. 1 per equity share (50% of the face value
of Rs. 2 per equity share) amounting to Rs. 231,084,236 (excluding
corporate dividend tax thereon) was approved at the meeting of the
Board of Directors of the Company held on October 18, 2010 and was
transferred by the Company on October 22, 2010 into the designated
Dividend Account. Corporate dividend tax thereon aggregating to Rs.
38,380,203 was paid on November 01, 2010.
31. Previous year's figures have been re-grouped/re-arranged wherever
considered necessary to conform to current year's groupings and
classifications.
Mar 31, 2009
1. lndiabulls Securities Limited ("IBSL"or"theCompany") carries on the
business as stockandsharebrokersonthe National Stock Exchange of India
Limited and Bombay Stock Exchange Limited; depository participants and
other related ancillary services. On February 1,1996IBSL received a
certificate of registration from the Securities and Exchange Board of
India under sub-section 1 of section 12 of the Securities and Exchange
Board of India Act, 1992 to carry on the business as a stock broker.
Accordingly, all provisions of the Securities and Exchange Board of
India Act, 1992, and rules and regulations relating thereto are
applicable to IBSL. On April 2,2008 the equity shares of the Company
got listed on National Stock Exchange of India Limited (NSE) and Bombay
Stock Exchange Limited (BSE) afterthe demerger of the Company from
Indiabulls Financial Services Limited.
2. Contingent liability not provided for in respect of:
a) Bank guarantees outstanding in respect of credit facilities availed
from banks Rs. 4,050,000,000 (Previous Year Rs. 5,850,000,000).
b) Capital commitments in respect of interior works and acquisition of
fixed assets as at the year end (net of advances)Rs.
2,881,074(PreviousYearRs. 18,655,387).
c) Penalty on syncronised trading Rs. 1,500,000 (Previous Year Rs. Nil)
under SEBI regulations.
3. The Board of Directors of Indiabulls Financial Services Limited
(IBFSL) the erstwhile holding Company, at their meeting held on
February 15,2007, approved the restructuring / re-organization ("the
Scheme") of the business of the Company.; In pursuance of section
391-394 of the Companies Act, 1956 the said Scheme has been approved by
the members of the erstwhile holding Company and sanctioned by the
Honorable High Court of New Delhi dated November 23,2007.
Upon coming into effect of the Scheme with effect from the appointed
date i.e. -April 1,2007, IBFSLs securities broking and advisory
service business had been demerged and transferred to the Company on a
going concern basis. The Scheme has been given effect to in the
financial statements and accordingly, the assets comprising of fixed
assets, investments, sundry debtors, loans- and advances, security
deposits and cash aggregating to Rs. 461,032,891; current liabilities
(including general purpose liabilities) amounting to Rs. 272,156,401;
proportionate liability of Rs. 45,946,335 in respect of Preference
Share Capital, and an amount of Rs. 93,001,590 related to the advisory
income (net of expenses, for the current period), which had been
recorded by the IBFSL in trust on behalf of the Company have been so
transferred by IBFSL to the Company.
In terms of the Scheme, the Company has issued and allotted 253,426,989
Equity shares of face value of Rs. 2 each aggregating to Rs.
506,853,978 and 9,966,667 cumulative, non convertible redeemable
Preference shares of face value of Rs. 4.61 each aggregating to Rs.
45,946,335 to the respective shareholders of IBFSL. The existing Equity
Share capital of the Company before giving effect to the Scheme
amounting to Rs. 178,340,990 has been cancelled in terms of the Scheme.
In terms of the Scheme, the net adjustment aggregating to Rs.
185,582,833 has been reduced from the Capital Redemption Reserve for
the year ended March 31,2008.
4. Reorganisation of capital
In consideration of Demerger, including the transfer and vesting of
securities broking and advisory service business of Indiabulls
Financial Services Limited (Demerged undertaking) in Indiabulls
Securities Limited (Resulting Company), the Company issued and allotted
to each member of the IBFSL whose name is recorded in the register of
members and records of the depositary as members of the IBFSL on
January 8,2008 (Demerger record date) equity shares in IBSL in the
ratio of 1 (one) equity shares in IBSL of face value of Rs. 2/- each
credited as fully paid-up for every 1 (one) equity share of Rs.2/-
each fully paid up held by such member in IBFSL.
As a result the existing equity capital consisting of 17,834,099 Equity
shares of face value of Rs. 10 each of IBSL has been cancelled and a
fresh equity capital consisting of 253,426,989 Equity shares of face
value of Rs. 2 each has been issued. Further, the face value of
existing 9,966,667 Cumulative, Redeemable, Non-convertible Preference
shares of face value of Rs 162 each of IBFSL has been allocated
proportionately as per the ratio of the net worth of the Demerged
Undertaking to the net worth of the IBFSL immediately before the
Demerger and accordingly, IBSL has issued and allotted 9,966,667
Cumulative, Redeemable, Non-convertible Preference shares of face value
of Rs. 4.61 to the respective preference shareholder of IBFSL as on the
record date. The terms and conditions including dividend and redemption
on which IBFSL Preference shares were issued and allotted would mutatis
mutandis apply to preference shares issued by IBSL. Accordingly, these
Preference shares will be redeemed at par after five years from the
date of issue of the Preference shares i.e. August 2,2006. The
dividend rate on these preference shares has changed from 5 % to 10%
w.e.f. February 2,2008 in terms of its issue by IBFSL.
In terms of the Scheme, the Authorised Capital of the Company has been
reorganised to Rs. 1,115,250,000 divided into 500,000, 000 Equity
Shares of Rs. 2/- and 25,000,000 Preference shares of Rs.4.61each.
Subsequent to the year ended March 31,2008 the equity shares issued on
the demerger of the Company were listed on National Stock Exchange of
India Limited (NSE) and Bombay Stock Exchange Limited (BSE) on April 2,
2008.
5. On March 30,2007, Indiabulls Securities Limited had implemented the
Employees Stock Option Scheme 2007 ("IBSL ESOS-2007" or "Scheme").
Under the plan, Indiabulls Securities Limited was authorised to issue
up to 3,000,000 options, each convertible into one equity shares of Rs.
10 each, to eligible employees of the Company and its subsidiary
including employees of its erstwhile holding Company at an exercise
price of Rs. 200 per share. Employees covered by the plan were granted
an option to purchase shares under the IBSL ESOS - 2007, subject to the
requirements of vesting. These options vested uniformly over a period
of 5 years, whereby 20% of the options vest on each vesting date as per
the vesting schedule. A Compensation Committee was constituted by the
Board of Directors of the Company to administer the plan.
Pursuant to the shareholders authorisation dated November 24,2007,
these options were to be convertible into an equivalent number of
equity shares of the Company over a period often years beginning from
April 1,2008. Further, as a consequence of the change in the face
value of the equity shares of the Company from Rs. 10/- to Rs. 2/- each
pursuant to the Scheme, 3,000,000 stock options granted by the Company
prior to the Demerger Effective Date (giving right to an option holder
to subscribe for one equity share of Rs. 10/- each at an exercise price
of Rs. 200/- per share) was increased to 15,000,000 stock options
(giving right to an option holder to subscribe for one Equity Share of
Rs. 2/- each at an exercise price of Rs. 40/- per share).
* The number of options and exercise price have been adjusted taking
into account change in the face value of the equity shares of the
Company from Rs. 10/- to Rs. 2/- each pursuant to the Scheme.
** During the current financial year all the unvested and vested
options were surrendered by the respective option holders and
Compensation Committee decided not to regrant the same and decided to
cancel unvested and vested options 15,000,000 options and withdraw the
scheme. On January 19,2009, pursuant to the shareholders approval, the
Company cancelled and withdrew the Indiabulls Employees Stock Option
Scheme-2007 and cancelled the 15,000,000 unvested stock options granted
including ungranted options.
Employees Stock Option Scheme - 2008
Pursuant to resolution passed by the shareholders on January 19,2009
the Company has cancelled and withdrawn the existing "Employee Stock
Option Scheme-2007", covering 15,000,000 stock option and establish a
new Employee Stock Option Scheme titled "Employee Stock Option
Scheme-2008" in Accordance with the provisions of the Securities and
Exchange Board of India (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999 ("SEBI Guidelines"). Under the
Scheme, the Company was authorised to grant 20,000,000 equity settled
options to eligible employees including its directors (other than
promoter directors) and employees of its subsidiary companies including
their directors. All options under the Scheme are exercisable for
equity shares of the Company. Employees covered by the plan were
granted an option to purchase shares of the Company subject to the
requirements of vesting.
A Compensation Committee constituted by the Board of Directors of the
Company administered the plan. The Compensation Committee at its
meeting held on January 24, 2009, has granted, under the "Indiabulls
Securities . Limited Employees Stock Option Scheme - 2008", 20,000,000
Stock Options representing an equal number of equity shares of face
value Rs 2/- each in the Company, to the Eligible Employees, at an
exercise price of Rs 17.40, being the latest available closing market
price on the National Stock Exchange of India Ltd, as on January
23,2009 following the intrinsic method of accounting as is prescribed
in the Guidance Note issued by the Institute of Chartered Accountants
of India on Accounting for Employees Share based Payments ("the
Guidelines"). As the options have been granted at intrinsic value,
there is no employee stock compensation expense oh account of the same.
The Stock Options so granted, shall vest in the eligible employees
uniformly over a period of 10 years beginning from January 25, 2010
being the first vesting date. The options granted under each of the
slabs, can be exercised by the grantees within a period of five years
from the relevant vesting date.
6. On March 06, 2009 the Shareholders of Indiabulls Securities
Limited, by means of a Special Resolution passed through the postal
ballot, with requisite majority authorised the buy-back of the
Companys fully paid-up Equity Shares of face value Rs. 21- each from
the open market through stock exchanges, at a price not exceeding Rs.
33/- per share up to a maximum amount of Rs. 83,17,96,227, being 25% of
the total paid-up equity capital and free reserves as per the audited
balance sheet of the Company as at the year ended March 31,2008, to be
financed out of the Companys free reserves and surplus and balance in
the Profit and Loss Account. The Company has proposed to buyback upto
39,281,000 of its fully paid up Equity Shares and minimum number of
5,000,000 of its fully paid up Equity Shares at a price not exceeding
Rs 33/- per Equity Share. Subsequent to year end the Company has bought
back 7,271 shares as of date.
7. During the current financial year there was variation in the terms
of Appointment of Mr. Ashok Sharma pursuant to Section 302 of the
Companies Act, 1956. Mr. Ashok Sharma who was appointed as a Whole-time
Director of the Company on May 18,2005 (effective from May 18,2005) and
has been drawing remuneration from the Company with effect from May 18,
2005, pursuant to the shareholders approval, accorded in the Annual
General Meeting of the Company dated August 26,2005. While the terms of
his remuneration as approved by the Shareholders, he was to receive
remuneration from the Company till March 31,2009, in the Board meeting
dated December 8,2008 Mr. Ashok Sharma expressed his desire to continue
as the Whole time Director of the Company, without any remuneration,
effective December 1, 2008. The last drawn remuneration by Mr. Ashok
Sharma was Rs.200,000/- per month. Accordingly, in deference of his
desire the Board has decided that with effect from December 1, 2008 Mr.
Ashok" Sharma would be Whole time Director of the Company without any
remuneration.
8. SecuredLoans
a) Vehicles Loans of Rs. 20,902,980(Previous Year Rs. 47,058,929) are
secured against hypothecation of Vehicles. b) Working Capital loan of
Rs. 400,000,000 (Previous Year Rs. 400,000,000) are secured against
Fixed Deposits placed with Banks.
9. During the year the Company has issued 90 days Commercial Paper of
Rs. 1,000,000,000 at the discount rate of 14% which was subsequently
repaid. Further, 178 days Commercial Paper amounting to Rs. 500,000,000
was issued at the discount rate of 12%, the same remained outstanding
on March 31,2009.
10. Fixed deposits include Rs. 2,068,791,440 (Previous Year Rs.
2,925,000,000) pledged with the banks against bank guarantees issued by
banks for base capital and additional base capital to National Stock
Exchange of India, Bombay Stock Exchange of India and National
Securities Clearing Corporation Limited.
Fixed Deposits include Rs. 400,000,000 (Previous Year 400,000,000)
pledged against working capital loan taken from Bank.
Fixed Deposits include Rs. 7,500,000 (Previous Year 7,500,000) are
pledged with National Stock Exchange of India,
Bombay Stock Exchange of India and National Securities Clearing
Corporation Limited for the purpose of Base capital.
11. During the year the Company had advanced a sum of Rs.
1,809,300,000 by way of loan to one of its wholly owned subsidiary-viz.
Devata Tradelink Limited ("DTL"). DTL has incurred / provided for
losses aggregating to Rs. 1,562,932,320 in respect of dealing in
securities. Based upon the availability of resources as at the year end
to repay those loans and considering the erosion of the networth of the
subsidiary, the Company has written off loans given to DTL aggregating
to Rs. 1,809,300,000 as bad loans/ advances written off. Investments
made by the company in the equity share capital of DTL amounting to Rs.
500,000 though considered as strategic and long term in nature,
considering the losses suffered by this subsidiary, diminution in the
value of the investment is considered as other than temporary in nature
and accordingly provision for diminution in value amounting to Rs.
500,000 has been made in books of account.
12. The loss on squaring off of erroneous transactions on account of
trading in securities amounting to Rs. 1,426,911 (Net) (Previous
Yearprofit Rs. 3,428,597 (Net) has been adjusted to Profit and Loss
account.
13. Segment Reporting:
Segment information for the period from April 1,2008 to March 31,2009
a) The Company operates solely in one Geographic segment namely "Within
India" and hence no separate information for Geographic segment wise
disclosure is required.
b) The Companys primary Business segment is reflected based on
principal business activities carried on by the Company. The Companys
primary business activity is to carry on business of stock and share
broker on National Stock Exchange of India Limited and Bombay Stock
Exchange Limited and other related ancillary services.
c) Others business segment constitutes Investment and dealing in
tradable securities. This not being the normal business activity of the
Company, the same is shown as "Others".
d) Segment revenue, results, assets and liabilities include amounts
identifiable to each segment and amounts allocated on a reasonable
basis.
e) The accounting policies adopted for segment reporting are in line
with the accounting policies adopted for preparation of financial
information as disclosed in (A) above.
14. Disclosures in respect of applicability of AS-18 Related Party
Disclosures:
a) Related parties where control exists:
Nature of relationship Name of party
Subsidiary Companies Indiabulls Commodities Limited
(Formerly Indiabulls Commodities Private Limited)
India Ethanol and Sugar Limited
DevataTradelink Limited
Indiabulls Brokerage Limited
b) Other related parties:
Nature of relationship Name of party
Key Management Personnel Mr. Divyesh B. Shah, Director
Mr. Ashok Sharma, Director
Mr. Rajiv Rattan, Director &
Person exercising
significant control
Mr. Saurabh K. Mittal, Directors Person exercising
significant control
Mr. Sameer Gehlaut, Person
exercising significant control
15. During the year, the Company acquired Nil (Previous Year
1,098,317) Ordinary Shares of face value of ã .001 in Copal Partners
Limited amounting to Rs. Nil (Previous Year Rs. 476,694,683).
16. During the year the Company invested an amount of Rs. 35,000,000
(Previous Year Rs. 500,000) in wholly owned subsidiary Indiabulls
Brokeraae Limited (Previous vear- DevataTradelink Limited).
17. Remittance during the year in foreign currency on account of
preference dividend Interim Dividend (Year ended March 2009) Numberof
Shareholders: 1 (Previous Year: 1)
Preference Shares held on which dividend is remitted: 9,966,667
(Previous Year 9,966,667)
Amount Remitted: Rs 4,403,233 (Previous Year Rs 1,722,987*)
The above remittance for previous year includes preference dividend for
the half year ended September 30,2007 amounting to Rs. 1,148,658 paid
by the erstwhile holding Company to the preference shareholders and is
transferred to the Company in accordance with the Scheme.
The Company does not have information as to the extent to which
remittances, if any, in foreign currencies on account of dividend have
been made to non - resident shareholders.
18. The Board of Directors of the Company at its meeting held on June
25,2009 has recommended a Dividend of Rs. 2 per share (100% on the face
value of Rs. 2 per share) for the financial year 2008-09, out of the
opening balance in Profit. and Loss account. As the company has
incurred losses during the year amounting to Rs. 130,421,989, the
company has transferred an amount equivalent to 10% of the Surplus of
Profit and Loss account balance brought forward after adjusting the
loss incurred by the company during the year and also deducting the
Interim Preference Dividend (including Corporate Dividend Tax) and
proposed Preference Dividend (including Corporate Dividend Tax) for the
year amounting to Rs. 4,050,027 and Rs. 1,325,463 respectively.
19. Derivative Instruments:
The Company has not entered into any derivative instrument during the
year. The Company does not have any foreign currency exposures towards
receivables, payables or any other derivative instrument that have not
been hedged.
20. Disclosures underthe Micro, Small and Medium Enterprises
Development Act, 2006:
a) An amount of Rs. Nil (Previous Year Nil) and Rs. Nil (Previous Year
Nil) was due and outstanding to suppliers as at the end of the
accounting year on account of Principal and Interest respectively.
b) No interest was paid during the year.
c) No interest is payable at the end of the year other than interest
under Micro, Small and Medium Enterprises Development Act, 2006.
d) No amount of interest was accrued and unpaid at the end of the
accounting year.
The above information and that given in Schedule H - "Current
Liabilities and Provisions" regarding Micro, Small and Medium
Enterprises has been determined to the extent such parties have been
identified on the basis of information available with the Company. This
has been relied upon by the auditors.
21. No borrowing cost has been capitalised during the period.
22. Information under paragraphs 3 and 4 of Part II to Schedule VI of
the Companies Act, 1956 is stated to the extent applicable to the
Company.
23. Provision for Current Tax includes provision for Wealth Tax of Rs.
496,045 (Previous year Rs. 361,000).
24. As per the best estimate of the management, no provision is
required to be made as per Accounting Standard (AS) 29 - Provisions,
Contingent Liabilities and Contingent Assets as notified under the
Companies (Accounting Standards) Rules, 2006, in respect of any present
obligation as a result of a past event that could lead to a probable
outflow of resources, which would be required to settle the obligation.
25. In respect of amounts as mentioned under Section 205C of the
Companies Act, 1956, there were no dues required to ," be credited to
the Investor Education and Protection Fund as at March 31,2009.
26. Previous years figures have been re-grouped / re-arranged
wherever considered necessary to confirm to current years groupings
and classifications.
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