Notes to Accounts of Edelweiss Financial Services Ltd.
Mar 31, 2023
1) Investments in equity shares of subsidiaries and associates are pledged against Debt secunties issued by the company is amounting to ? Nil million (previous year ? 573 T6 million)
2) Investment in equity shares of subsidiary is pledged against Debt securities issued by another subsidiary amounting to ? 1,712.4] million Iprevious year ? 1.712.41 million)
3) Impairment on investment has been assessed based on business projection approved by Soard of directors of respective subsidiaries / associates Impairment is recognised, based on management assessment if the recoverable value is less than carrying amount
4} The Company has Employee Stock Option Plans (ESOP) in lorce Based on such ESOP schemes, the Company has granted options to acquire equity shares of the Company that would vest in o graded manner to certain employees of subsidianes / associates. To the extent that the Company has not charged and recovered the fair value of such stock options from its subsidianes / associates, it has been included m the above carrying value of investment in those subsidianes / associates.
6. Investments (Continued)
5) Edelweiss Financial Services Limited (the Company" or âEFSL") holds 30% in the equity shares of Nuvama Wealth Management Limited f NWML") Till 30 March 2023, EFSL had significant influence over NWML as per Ind AS 27 -Separate Financial Statements Investments and accounted tor such investment in NWML at cost With effect from March 30. 2023 EFSL does not have significant influence on NWML in accordance with ind AS 28 Investments in Associates and Joint Ventures pursuant to the amendment agreement dated 09 March 2023 to the amended and restated shareholders agreement dated 18 March 2021 between EFSL Edelweiss Global Wealth Management Limited fEGWML''), PAGAC Ecstasy Pte Ltd (''PAGAC) and NWML the amendment to the articles of association of NWML and the appointment of independent trustee on 30 March 2023 to act on behalf of EFSL shareholders. Accordingly, such investment in NWML has been re-measured at fair value as per requirements Ind AS 28 and has recorded a fair value gain of * 23,434 87 million during the year ended 31 March 2023.
6) During the year ended 31 March 2023, the Company had recorded impairment provision of T 1.599 95 millions on its investment in a subsidiary company on account of Group restructuring/demerger
7) During the previous year ended 31 March 2022, the Company has recorded a fair value gain of ? 3,150 million for its investment in Edelweiss Securities and Investments Private Limited based on fair valuation report obtained from registered valuer and on account of Composite scheme of Arrangement between the Company''s subsidiary and associate Companies ie Edelweiss Securities Limited CESL''L Edelweiss Securities and Investments Private Limited ("ESIPL"), Edelweiss Global Wealth Management Limited f EGWML") and their respective shareholders and creditors, under section 230 to 232 and other applicable provisions of the Companies Act. 2013 for Demerger of Asset Management Business from ESL into ESiPL The National Company Law Tnbunal Bench at Mumbai (Tribunal) has approved the aforementioned Scheme on 31 March 2022 under the applicable provisions of the Companies Act. 2013. Certified copy of the said order of the Tribunal was received by the Company on 05 April 2022 and filed with the Registrar of Companies on 22 April 2022-
1 During the F Y 2021-22 Company had sold its controlling stake in the insurance broking business (Edelweiss Gallagher Insurance Broking Limited) to its joint venture partner Arthur J Gallagher (H Co. The Company has received appropriate approval including Insurance Regulatory and Development Authority (IRDA) tor selling its investment in Edelweiss Insurance Broking business Based on sale agreement contingent consideration will be received over a period of time based on revenue achievement, Accordingly an amount of l 590.66 million recorded as receivables on account of such sale as per terms of the agreement, the said amount has been received in F.Y. 2022-23
The issue proceeds of Non-Convertible Debentures (NCDs) issued by the Company are being utilized as per the objects stated in the offer document. Further there have been no deviations in the use of proceeds of issue of NCDs from the objects stated in the offer document.
All secured Si redeemable debt securities issued by the Company arid outstanding as on reporting date are fully secured by first charge / pan passu charge as the case may be. on present & future receivables, book debts, loans and other financial Si non- financial assets. Accordingly, the Company is maintaining asset cove« of 1x or such higher asset covet required as per the terms of Offer document/ Debenture Trust Deed/ Irrformabon Memorandum
16. Equity share capital (Continued)
Note :
1 Edelweiss Employees'' Welfare Trust and Edelweiss Employees'' Incentive and Welfare Trust are extension of Company''s Financial statements. These trusts are holding 44.896,780 number of equity shares amounting to ¦? 44.90 million (Previous year * 44.90 million). These are deducted from total outstanding equity shares
2. The above two Employee Welfare Trust(s) hold an aggregate 44.896,780 equity shares of the Company for incentive and welfare benefits for group employees 3S per extant applicable SEBI regulations: Pursuant to the exercise of right available under Regulation 29 of SEBI (Share Based Employee Benefits) Regulations. 2014 the Company h3s applied before the expiry'' date of 27 October 2019 for extension of the time limit for disposing of aforesaid equity shares The said application is under consideration 3nd 3pprovai for extension from SEBI is awaited as at date.
B. Terms/rights attached to equity shares :
The Company has only one class of equity shares having a par value of T 1 oer share. Each holder of equity shares is entitled to one vote per share
In the event of liquidation of the Company, the equity shareholders will be entitled to receive the remaining assets of the Company, after distribution of all preferential amounts if any. in proportion to the number of equity shares held by the shareholders.
Nature & purpose of reserves
17.1 Capital redemption reserve
The Company has recognised capital redemption reserve on buy back of equity share capital.
17.2 Securities premium reserve
Securities premium reserve is used to record the premium on issue of shares. The reserve can be utilised only for limited purposes such as issuance of bonus shares / allotment of ESOP / SAR in accordance with the provisions of the Companies Act. 2013.
17.3 General reserve
Under the erstwhile Companies Act 1956. general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations The purpose of these transfers was to ensure that if 3 dividend distnbution in a given year is more than 10% of the paid-up capital of the Company for that year, then the total dividend distnbution is less than the total distributable results for that year. Consequent to introduction of Companies Act 2013. the requirement to mandatonly transfer a specified percentage of the net profit to general reserve has been withdrawn. However, the amount previously transferred to the general reserve can be utilised only in accordance with the specific requirements of Companies Act. 2013.
17.4 Stock Option and Shares appreciation rights outstanding
ESOP and SAR option outstanding represents the amount transferred tG reserves pursuant to the '' ESOP 2011" and "SAR 2019'' schemes
17.5 Retained earnings
Retained earnings comprises of the Company s undistributed earnings after taxes.
The Company has paid the above amount for CSR expenditure to Edelgive Foundation (subsidiary) section 8 company under Companies Act 2013.
25. (c) Leases
Rental expenses for the year ended March 31 2023 aggregated to ? 69.26 million (Previous year t S5.76 million) which has been included under the head other expenses - Rent m the Statement of profit and loss The Company does not have any non-canccllable operating lease
29. Segment information
Primary Segment (Business Segment)
The Company''s business is organised and management reviews the performance based on the business segments as mentioned below.
|
Segment |
Activities Covered |
|
Agency |
Advisory and transactional services |
|
Holding company activities |
Development, managerial and financial support to the businesses of Edelweiss group entities |
Income for each segment has been specifically identified Expenditure, assets and liabilities are either specifically identified with individual segments or have been allocated to segments on a systematic basis
The management is: the Chief Operating Decision Maker(CODM)
The operating segments are the segments for which separate financial information is available and for which operating profit / loss amounts are evaluated regularly by the CODM.
Based on such allocations, segment disclosures relating to revenue, results, assets and liabilities have been prepared Secondary Segment
Since the business operations of the Company are primarily concentrated in India, the Company is considered to operate only in the domestic segment and therefore there is no reportable geographic segment.
BO. Retirement benefit plan
A) Defined contribution plan (Provident fund and National Pension Scheme):
In accordance with Employees Provident Fund and Miscellaneous Provisions Act 1952. employees of the Company are entitled to receive benefits under the provident fund, 3 defined contribution plan, in which, both the employee and the Company contnbute monthly at a determined rate. These contributions are made to 3 recognized provident fund administered by Regional Provident Fund Commissioner. Ihe employees contribute 12% of their basic salary and the Company cantnbutes an equal amount
The Company recognised T 17.60 million (Previous year ? 16.75 million) for provident fund and other contributions in the statement of profit and loss.
B) Defined benefit plan (Gratuity):
In accordance with the Payment of Gratuity Act. 1972. the Company provides for gratuity, a defined benefit plan covering all employees. Ihe plan provides a lump sum payment to vested employees at retirement or termination of employment in accordance with the rules laid down in the Payment of Gratuity Act 1972. Ihe gratuity benefit is partially provided through funded plan and annual expense is charged to the statement of profit and loss on the basis of actuarial valuation.
The most recent actuarial valuation of pian assets and the present value of the defined benefit obligation for gratuity were carried out as at 31 March 2023. The present V3lue of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.
Based on the actuarial valuation obtained in this respect, the following table sets out the status of the gratuity plan and the amounts recognised in the Company''s financial statements as at balance sheet date:
C) Compensated absences:
The Company provides for accumulated compensated absences as at the balance sheet date using projected unit credit method based on actuarial valuation.
0) Other Disclosures
Description of Asset Liability Matching (ALM) Policy
The Company has an insurance plans invested in market linked bonds The investment returns of the market-linked plan are sensitive to the changes in interest rates The liabilities duration ts not matched with the assets duration
Description of funding arrangements and funding policy that affect future contributions
The liabilities of the fund are funded by assets. The Company aims to maintain a dose to full-fundmg position at each Balance Sheet date Future expected contributions are disclosed based on this principle
Maturity profile
The average expected remaining lifetime of the plan members is 3.5 years (31 March 2022; 4 years) as at the date of valuation This represents the weighted average of the expected remaining lifetime of all plan participants.
32. Contingent liabilities & commitments :
32.1 Contingent liabilities
ai Claims against the Company not acknowledged as debt:
- Income Tax matters in respect of which appeal is pending ? 5.69 million iPrevious year f 7.80 million)
- Service lax matters in respect of which appeal is pending ? 53436 million (Previous year t 534.36 million)
b) Other claim not acknowledged as debt
The Company''s pending litigations mainly comprise of claims against the Company pertaining to proceedings pending with Income tax. service tax and other authorities âhe Company has reviewed -ill its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contingent liabilities where applicable, in the financial statements Ihe Company believes that the outcome of these proceedings will not have a materially adverse effect on the Company''s financial position and results of operations.
The Company has received demand notices from tax authorities on account of disallowance of expenditure for earning exempt income under Section 14A of Income Tax Act 1961 read svith Rule 8D of the income Tax Rules. 1962. The company has Filed appeal/s and is defending its position. Based on the favorable outcome in Appellate proceedings in the past and as advised by the tax advisors, company is reasonably certain about sustaining its position in the pending cases hence the possibility of outflow of resources embodying economic benefits on this ground is remote.
c) Guarantees excluding financial guarantees .
Corporate/other guarantee not acknowledged as debt
Corporate/otner guarantee given by the Company on behalf of its subsidiaries and associate companies and to third paity which is outstanding as at 31 March 2023 and 31 March 2022 is given below:
|
Particulars | |
As at 1, |
As at |
|
31 March 2023 §J |
31 March 2022 |
|
|
Guarantee to trustees and others for non convertible debentures and other borrowings |
25,849.37 |
23,527.47 |
|
Guarantee to Banks for loan taken by subsidiaries and associates |
7,232.80 |
11,353.20 |
|
Total |
33,082.17 |
34.880.67 |
32.2 Capital commitment
Estimated amount of contracts remaining to be* executed on capital account and not provided for (net of advances) f. Nil million (Previous year 3 Nil million).
33 Cost Sharing
Fhe group companies provide business and support services to each other basis of the signed agreed terms The services provided are with the intent to create synergies at group level tor e g. sharing of empty spaces with the group companies, having common HR and admin teams, using one''s available resource for the benefit of the group.
In consideration of the business and management oversight by Edelweiss group, the beneficiaries shall share and pay towards the costs as agreed. It is expressly agreed between the parties that sharing of these cost shall be on the total cost over the financial year (April to March) adequate to compensate the function performed , assets employed 3nd risks assumed by group companies and will be determined by the beneficiaries and edelweiss group companies, the amount payable by the beneficianes is reviewed intermittently and any amendment to the same is mutually agreed upon »n writing by the parties. For the purpose of total cost means all operating expense including but not limited to, normal recurring cost such as office rent, communication charges, salaries, employee benefits, cost of approved third-party vendor, deprecation on .assets used and amortization
35. Capital management
The Company manages the capital structure by a balanced mix of debt and equity The Company''s capital management strategy is to effectively determine, raise and deploy capital so as to create value for fts shareholders The Company maintains sound capitalisation both from an economic and regulatory perspecfve The Company continuously monitors and adjusts overall capital demand and supply in an effort to achieve an appropriate balance of the economic and regulatory considerations at 3ll times and from all perspectives. These perspectives include specific capiTal requirements from rating agencies.
Capital structure includes infusion in the form of equity and structured debt from strategic business partners in certain of Company 5 subsi-dianes to fund expansion and assist m achieving expected growth in the competitive market
No changes were made in the objectives, policies or processes dunng the financial years ended 37 March 2023 and 31 March 2022.
This framework Is adjusted based on underlying macro-economic factors affecting business environment, financial market conditions and interest rates environment. Company monitors capital using debt-equity ratio which is total debt divided by total equity.
37. Share based payments: Employee Stock Option Plans and Stock Appreciation Rights Plans
Edelweiss Financial Services Limited ("£FSLâ hereafter), has recognised share based payment expenses for the years ended 31 March 2023 and 31 March 2022 based on fair value as on the grant date calculated as per option pricing model The grants represent equity-settled options under the Employee StGck Option Plans and Stock Appreciation Rights Plans (hereafter referred to as, ESOP 2011'''' and "SAR 2019" or "ESOPs" âSARsâ).
The Edelweiss Group has granted ESOPs under the two plans viz. ESOP 2011 & SAR 2019 to its employees on an equity-settled basis as tabulated beiow. The ESOPs/SARs provide a right to its holders (i.e. Edelweiss group employees) to purchase one EF5L share for each option at a pre-determined strike price on the expiry of the vesting period The ESOP/SAR hence represents an European call option that provides a right but not an obligation to the employees of the Edelweiss group to exercise the option by paying the strike price at any time on completion of the vesting period, subject to an outer boundary on the exercise period
38. Risk Management
The Company has operations in India Whilst risk is inherent in the Company''s activities, it is managed through an integrated risk management framework, Induding ongoing identification, measurement and monitoring, subject to risk limits and other controls. This process of risk management is critical to the Company. The Company is exposed to credit risk liquidity nsk and market risk. It is also subject to various operating and business risks.
Risk management strategy:
The strategy at an execution level is supported by -
1 Three tiered risk management structure to manage and oversee risks
2. Board and Executive Level Committees to review and approve risk exposures
3. Risk Management framework to ensure each risk the Company is exposed to is given due importance and managed through a well-defined framework and guidelines
4. Well-defined Standard Operating Procedures and Product approval framework to ensure risks are mitigated at operational level
5. Adequate segregation of duties to ensure multi-layered checks and balances
6. Exception reporting framework to ensure process and policy deviations are adequately addressed
Risk management structure:
The Board of Directors are responsible for the overall risk management approach and for approving the risk management strategies and principles.
The Board has appointed the Risk Committee which is responsible for monitoring the overall nsk process within the Company and reports to the Audit Committee
The Risk Committee has the overall responsibility for the development of the risk strategy and implementing principles, frameworks, policies and limits
The Company is responsible for implementing and maintaining nsk related procedures to ensure an independent control process is maintained The Company works closely with and reports to the Risk Committee, to ensure that procedures are compliant with the overall framework.
Credit risk
Credit risk is the risk of financial loss the Company may face due to current/potential inability or unwillingness of a customer or counterparty to meet financial /contractual obligations. Credit nsk also covers the possibility of losses associated With diminution in the credit quality of borrowers or counterparties The Company''s lending activities is restricted to only its subsidiaries within the Edelweiss Group, the Company has adopted a policy of dealing with creditworthy counterparties and obtains sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults.
Credit risk is measured as the amount that could be lost if a customer or counterparty fails to make repayments Credit risk is monrtored using various internal risk management measures and within limits approved by the board within a framework of delegated authorities It is managed through a robust risk control framework, which outlines dear and consistent policies, principles and guidance for risk managers. Presently Company has credit exposure only to it''s subsidiaries where adequate control and monitoring is ensured
38. Risk Management
Liquidity risk
Liquidity risk emanates from the possible mismatches due to differences in maturity and repayment profile of assets and liabilities. To avoid such a scenario, the Company has maintained cash reserves in the form of Fixed Deposits. Cash Loans which are callable any ume at the Company''s discretion, etc These assets carry minimal credit nsk and can be liquidated These would be to t3ke care of immediate obligations while continuing to honour commitments as a going concern.
Analysis of financial assets and liabilities by remaining contractual maturities
The table below at note number 41 summarises the maturity profile of the undiscounted cash flows of the Company''s financial assets and liabilities as 3t 31 March All OTC derivatives used for hedging are shown by maturity, based on their contractual undiscounted payment obligations. All exchange traded denvatives held for trading are analysed based on expected maturity.
Market Risk:
Market risk is the risk which can affc-ct the Company''s performance due to adverse movements m market prices of instrument due to interest rates, equity prices, foreign exchange rates The objective of the Company''s market nsk management is to manage and control market rick exposures within acceptable parameters.
foreign exchange risk - Foreign exchange risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. The Company''s foreign exposure is limited to investments and loans to Group entities outside India The Company aggregates the foreign exchange exposure emerging out of these loans/investments ana the same Is hedged using OTC and exchange traded derivatives. Positions are regularly monitored by the Company and rebalanced/ rolled over based on the inflow ana outflow of funds The Company don t have any foreign currency exposure as at March 31 2023.
39. Fair Value Measurement
39.1 Valuation governance framework
Where fair values are determined by reference to externally quoted prices or observable pricing inputs to models, independent price determination 01 validation is used For inactive markets. Company sources alternative market information, with greater weight given to information that is considered to be more relevant and reliable.
39.2. Fair value hierarchy
Fair values of financial assets and liabilities are determined according to the following hierarchy
Level I - valuation technique using quoted market price: financial instruments with quoted prices for identical instruments in active markets that company can access at the measurement date.
Level 2 - valuation technique using observable inputs: Ihose where the inputs that arc- 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 - valuation technique with significant unobservable inputs: Those that include one or more unobservable input that is significant to the measurement as whole
39.3. Financial instruments measured at Amortised Cost:
I he following table sets out the fair values and fair value hierarchy of financial instruments not measured at Amortised Cost, fair value and analysing them by the level in the fair value hierarchy into which each fair value measurement is categorised The information given below is with respect to financial instruments assets and financial liabilities measured at amortised cost for which the fair value differs is different than from the carrying amount. Carrying amounts of cash and cash equivalents trade receivables, trade and other payables as on 31 March 2023 approximate the fair value because of their short-term nature Difference between carrying amounts and fair values of bank deposits, other financials assets and other financial liabilities is not significant in each of the years presented.
39. Fair Value Measurement (Continued)
39.6. Fair valuation principles :
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current markc-t conditions (i.e.. an exit pnce). regardless of whether that price is directly observable or estimated using a valuation technique The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs
The Company''s fair value methodology and the governance over its models includes a number of controls and other procedures to ensure appropriate safeguards are in place to ensure its quality and adequacy Where fair values are determined by reference to exteroatly quoted pnces or observable pricing inputs to models, independent price determination or validation rs used For inactive markets. Company sources alternative market information, with greater weight given to formation that is considered to be more relevant and reliable.
39.7. Fair valuation techniques :
Equity instruments
The equity instruments which are actively traded on recognised stock exchanges are valued at readily available active prices on a regular basis. Such instruments are classified as Level 1 Equity instruments in non-listed entities are Initially measured at Transaction price and re-measured at each reporting date at valuation provided by external valuer at instrument level Such unlisted equity securities are classified at Level L
Derivatives:
The Company enters into certain derivative financial instruments Dnmarily with banks with investment grade credit ratings. Denvatives valued using valuation techniques with market observable inputs are mainly forward exchange contracts.
Exchange traded derivatives:
Company has entered into certain exchange-traded currency futures The Company uses latest traded prices at the reporting date to value these derivatives and classifies these instruments as Level I in the hierarchy.
39.8. Transfer between Level 1 and level 2
Dunng the year there were no transfers between level 1 and level L Similarly, there were no transfers from or transfer to level 3.
42 Total market risk exposure
Fair value or future cash flows of financial instruments will fluctuate due tG changes in market vanables such as interest rates, foreign exchange rates and equity prices The Company classifies exposures to market risk Into either trading or non-trading portfolios and manages each of those portfolios separately, Fair value or future cash flows of financial instruments will fluctuate due to changes in market variables such as interest rates, foreign exchange rates and equity prices. The Company classifies exposures to market risk into either trading or non-trading portf olios and manages each of those portfolios separately Such risks the market risk for the trading portfolio is managed and monitored based on a VaR methodology that reflects the interdependency between risk variables Non-trading positions are managed and monitored using other sensitivity analyses.
45. Events after reporting date
The Company has evaluated all events that occur after balance sheet date through the date when the financial statements were issued to determine if they must be reported The management of the Company determined that there were no reportable subsequent events except as disclosed in Note 60.
46* Details of Benami Property held
The Company does not have any benami property, where any proceeding has been initiated or pending 3gamst the company for holding any Benami property
47. Where the Company has borrowings from banks or financial institutions on the basis of security of current assets, it shall disclose the following:-
The Company has been sanctioned working capital limits from bank during the F Y 2022 on the basis of security of current assets of the Company The Company had dosed the sanctioned workings capital limit within a month and accordingly was not required to file any retum/staterr.ent with the bank. During the previous year the Company had availed overdraft facility from one Bank and pursuant tG confirmation received from the said bank, there was no requirement to file any return/statement with the bank. There is no such working capital limits sanctioned during F Y 2023 by bank to the Company
48. Wilful Defaulter
The Company is noi declared as wilful defaulter by any bank or financial Institution or other lender
52. Undisclosed income
Fhe Company have not any such transaction which Is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act. 1961).
53. The Company Doesn''t have any immovable properties whose title deeds are not held in name of the Company
The Company has granted loans or advances to Group companies in the nature of loans, without specifying period of repayment of pnncipal to companies However, during the year the Company has executed supplementary agreement with all such Group companies to stipulate the schedule for repayment of principal ''he repayment of pnncipal as per supplementary agreement is not due an these loans. Of these following are the details of the aggregate amount of loans or advances in the nature of loans granted to promoters or related parties as defined in clause (76) af section 2 of the Companies Act, 2013.
55. The Board of Directors at their meeting heid on 26 May 2023 have recommended a final dividend of ? 1.25 per equity share (on face value of ? 1 per equity share), subject to the approval of the members at the ensuing Annual General Meeting.
56. The Indian Parliament has approved the Code on Social Security, 2020 which subsumes the Provident Fund 3nd the Gratuity Act and rules there under. The Ministry of Labour and Employment has also released draft rules thereunder on 13 November 2020 and lias invited suggestions from stakeholders which are under active consideration by the Ministry The Company will evaluate the rules, assess the impact if any. and account for the same once the rules are notified and become effective
57.1 During the year ended 31 March 2023, two subsidiaries of the Company had sold certain financial assets amounting to ? 16,718.90 million (net of provisions) to various asset reconstructions company trusts ( ARC Trusts'') and acquired security receipts (SR) amounting to ? 5,227.20 million from these ARC Trusts Ind AS 109 - Financial instruments prescribed under section 133 of the Companies Act, 2013, requires substantially all risks and rewards to be transferred for the purpose of de recognition of such financial assets from these subsidiaries'' financial results. The Company had undertaken substantially all risks and rewards in respect of such financial assets. As a result, these financial assets were de-recognized in the subsidiaries'' financial results. Based on assessment of probability of default, Igss given default in respect of these financial assets (t e. sold during the year ended March 31 2023 and in earlier years) and in light of various factors viz. exposures to certain sectors and assessment of credit and market risks for certain counter parties relative to such risks at initial recognition, the Company has recorded fair value loss of ? 3,786.01 million (net) for year ended and is included in âNet gain / (loss) on fair value changes.
Dunng the previous year ended 31 March 2022. three subsidiaries of the Company had sold certain financial assets amounting to ? 1.675.60 million and 7 11,424 10 million respectively (net of provisions) to various asset reconstructions company trusts ( ARC Trusts'') and acquired security receipts (SR) amounting to f 1 42440 million and ? 9,455.70 million respectively from these ARC Trusts Ind AS 109 - Financial Instruments'', prescnbed under section 133 of the Companies Act. 2013, requires substantially all risks and rewards to be transferred for the purpose of de-recognition of such financial assets from these subsidiaries financial statement The Company had undertaken substantially ail risks and rewards in respect of such financial assets. As a result, these financial assets were de-recognized in subsidiariesâ financial statement Based on assessment of probability of default, loss giver, default in respect of these financial assets and in light of various factors viz. exposures to certain sectors and assessment of credit and market risks for certain counter parties relative to such risks at initial recognition, the company has recorded fair value gain of ? 921.14 million (net) for the year ended respectively and ts included in ''Net gain on fair value changes''
57.2 Dunng the previous year ended 31 March 2022, certain assets amounting to K 2.720.00 million were sold to alternative assets funds by the subsidiary NBFCs. The Company has, vide a put agreement dated 04 February 2022, has guaranteed / undertaken to purchase these financial assets amounting to * 2,720.00 million an occurrence of certain trigger event as per the agreement
58. Pursuant to amendments in risk and rewards agreement between the subsidiaries and the Company (as mentioned in note above) with effect from 01 lanuary 2021 fees payable on security receipts (ARC management Fee) has been agreed to be borne by the Company, as the risk and rewards are undertaken by the Company Accordingly, an amount of ? 2,099.80 million (Previous year * 2.166 33 million) towards such expenses have been recorded by the Company
59.1 The Company had amended its nsk and rewards agreement with subsidiaries ECL Finance Limited (ECLF). NIDO Home Finance Limited CNHFL) and Edelweiss Retail St Finance Limited IERFL), with effect from 01 January 2021 and agreed to bear fees payable on security receipts (ARC Fee), as the risk and rewards are undertaken / assumed by the Company. The said agreement has been extended with effect from 21 December 2022. and accordingly, an amount of f 1,139.24 millions has been recorded by the Company towards such expenses for the year ended 31 March 2023
59.2 Under the Shareholders Agreement dated OS March 2019. entered between Edelweiss Financial Services Limited |EFSL), CDPQ Private Equity Asia PTE. Limited (CDPQ) and ECL Finance Limited (together referred as Parties). EFSL had agreed, pursuant to clause 3 1 fit 8.2 to make equity investment of an amount equivalent to the amount of losses on Select real estate/structured finance Loans (Select Loans) into ECL Finance Limited within six months of the default leading to loss incurred by the ECL Finance Limited on or before the date of the conversion of the Investor CCDs into Equity Shares. The rationale for this undertaking was to keep the total equity/net worth of ECL Finance Limited unimpacted on account of impairment in these loan accounts During the year ended 31 March 2023, Parties have agreed and concluded that loss event for three of the borrowers in the Select Loans have crystalized and hence. EFSL has agreed to make good the loss amounting to ? 1.29S.20 million incurred by ECL finance Limited in earlier years Accordingly. EFSL has recorded such loss in its profit and loss for the year ended 31 March 2023 The Parties have agreed that no loss event has been crystalized in respect of other Select Loans amounts mentioned in above said clauses of the agreement and hence there is no obligation of EFSL
60. The Board of Directors of the Company at its meeting held on 13 May 2022, had approved the Scheme of arrangement between Edelweiss Financial Services Limited (''EFSL'') and Nuvama Wealth Management Limited (formerly known as Edelweiss Securities Limited) (âNWML'') and their respective shareholders and creditors, under section 230 to 232 read with section S2 and other applicable provisions of the Companies Act 2013. which inter-alia envisaged demerger of Wealth Management Business Undertaking (''Demerged Undertaking'' as defined in the Scheme) of EFSL into the NWML The National Company Law Tribunal Bench at Mumbai (Tribunal) has approved the aforementioned Scheme vide its order dated 27 April 2023 under the applicable provisions of the Companies Act. 2013. Certified copy of the said order of the Tribunal was received by the Company on 12 May 2023 and filed with the Registrar of Companies on 18 May 2023. The Scheme came into the effect from 18 May 2023. As per the Scheme, the Appointed Date of the Scheme is 18 May 2023
61. The Company''s subsidiary ECL Finance Limited (''ECLF'') has received the inspection report dated 12 January 2023 from Reserve Bank of India CRB)'') for the Financial Year 2021-22. The RBI in its inspection report has inter alia raised matter relating to the sharing of fair value gams of ? 1,994 .10 million between the ECLF and the Company This pertains to exposure towards certain borrowers that are covered under the Shareholders agreement between the Company, ECLF and an investor and the Risks & Rewards sharing agreement between the Company and ECLF ECLF has provided its Justifications for recording such fair value gains in its financial statements to RBI Further ECLF has informed to its Board of Directors in its meeting dated 24 January 2023 that recording and sharing of such fair value gains between the Company and ECLF is in accordance with agreements referred abcveJn the month of April 2D23, the ECLF submitted a detailed reply along with calculations, rationale for recognising such fair value gain and amended the Risk fit Rewards sharing agreement with the Company Further, the ECLF has sold/received redemption against such security receipts as on 31 March 2023 Accordingly there is no impact of this observation on financial statements as on 31 March 2023
62. During the year ended 31 March 2023. an investor has invested in Security receipts issued by ARC trusts as senior class investor in such trusts amounting to T12.000 million These pertain to certain loans and secunty receipts sold by one of the subsidiary company. ECL Finance Limited to the ARC trusts. EFSL and another subsidiary company. Edelweiss Secunties and Investments Private Limited (''ESIPL'') have provided a Put option to the investor assuring to pay or guarantee the payment of agreed aggregated total pay-out value 3tter reducing any payment to investors from underlying assets during the period i.e., amount invested 3long with a minimum guaranteed return as per the agreement. Further based on management assessment and given current estimates/cash Rows from underlying assets, the likelihood of any payment to investor is considered as remote
63 The Income Tax Authorities ( the Department1''} had conducted a search under section 132 of the Income Tax Act. 1961 or. the premises of the Company during March 2023. The Company had provided the requisite details which were sought by the income tax authorities during the course of the search Subsequently, the Company has received summons under section 131 (1A) of the income Tax Act, 1961 seeking certain data/information. which the Company is in the process of responding The Company confirms that neither the Department has raised any tax demand nor the Company has admitted any tax liability further, no proceeding or assessment orders have been issued post the search conducted by the Department While uncertainty exists regarding the outcome of the proceedings by the Department, the Company is extending its full cooperation with the concerned income tax authonties and based on current internal assessment management is of the view that this will not have any impact on the financial statement for the year ended 31 March 2023.
64. The Company has complied with the Rule 3 of Companies ( Accounts) Rules, 2014 amended on August 5,2022 relating to maintenance of electronic books of account and other relevant books and papers. The Company''s books of accounts and relevant books and papers are accessible in India at all times 3nd backup of accounts 3nd other relevant books and papers are maintained in electronic mode within India and kept in servers physically located in India on daily D3sis.
65. Details of Crypto Currency or Virtual Currency
The Company has not traded or invested in Crypto currency or Virtual Currency during the current financial year and any of the previous financial years.
66. During the yeai ended 31 March 2023 employee benefits expense includes a reversal of bonus provision of t 470 million. During the year ended 31 March 2022 employee benefits expense includes a reversal of long term incentive plan of t 650.00 million and created additional bonus provision amounting to t 731.00 million during the year ended 31 March 2022.
67. Dunng the year ended 31 March 2023. other income includes gam amounting to ? 6.795.64 million (previous year ? 5,315 75 million) on sale o- investments in its subsidiaries.* Namely Edelweiss Asset Reconstruction Company Limited. ECL Finance Limited. Edel Investment Limited. Nuvama Weath Management Limited ( formerly known as Edelweiss Securities Limited) & Edelweiss Alternative Asset Advisors Pte Limited )
68. The Company has a process whereby periodically all long term contracts (including derivative contracts) are assessed lor material foreseeable losses. At the year end the Company has reviewed and ensured that adequate provision as required under any law/ accounting standards for material foreseeable losses on such long term contracts (including derivative contracts) has been made m the books of accounts
70. The Company is in compliance with number of layers of companies, as prescribed under clause (87) of section 2 of the Act read with the Companies (Restriction on number of Layers) Rules 201 /
71. Previous year''s figures have been regrouped / reclassified to conform to current year presentation
72. All amounts disclosed in the financial statements and notes have been rounded off to the nearest million as per the requirements of Schedule III, unless otherwise stated
73. These financial statements have been approved for issue by the Board of Directors of the Company on 26 May 2023
Mar 31, 2022
1) Investments in equity shares of subsidiaries and associates are pledged against Debt securities issued is amounting to '' 573.16 million (previous year '' 448.64 million).
2) Investment in equity shares of subsidiary is pledged against Debt securities issued by another subsidiary amounting to '' 1,712.41 million (previous year '' Nil).
3) Impairment on investment has been assessed based on business projection approved by Board of directors of respective subsidiaries / associates. Impairment is recognised, based on management assessment, if the recoverable value is less than carrying amount.
4) The Company has Employee Stock Option Plans (ESOP) in force. Based on such ESOP schemes, the Company has granted options to acquire equity shares of the Company that would vest in a graded manner to certain employees of subsidiaries. To the extent that the Company has not charged and recovered the fair value of such stock options from its subsidiaries / associates, it has been included in the above carrying value of investment in those subsidiaries / associates.
1 During the year, EFSL sold its controlling stake in the insurance broking business (Edelweiss Gallagher Insurance Broking Limited) to its joint venture partner Arthur J Gallagher & Co. The Company has received appropriate approval including Insurance Regulatory and Development Authority (IRDA) for selling its investment in Edelweiss Insurance Broking business. Based on sale agreement, contingent consideration will be received over a period of time based on revenue achievement. Accordingly, an amount of '' 590.66 million recorded as receivables on account of such sale as per terms of the agreement.
12.1 Trade Payables includes '' 0.15 million (Previous Year '' Nil million) payable to "Suppliers" registered under the Micro, Small and Medium Enterprises Development Act, 2006. Interest paid by the Company during the year to "Suppliers" registered under this Act is '' Nil million (Previous year: '' 0.003 million). The aforementioned is based on the responses received by the Company to its inquiries with suppliers with regard to applicability under the said Act.
1. Edelweiss Employees'' Welfare Trust and Edelweiss Employees'' Incentive and Welfare Trust are extension of Company''s financial statements. These trusts are holding 44,896,780 number of equity shares amounting to '' 44.90 million (Previous year '' 44.90 million). These are deducted from total outstanding equity shares.
2. The above two Employee Welfare Trust(s) hold an aggregate 44,896,780 equity shares of the Company for incentive and welfare benefits for group employees as per extant applicable SEBI regulations. Pursuant to the exercise of right available under Regulation 29 of SEBI (Share Based Employee Benefits) Regulations, 2014, the Company has applied before the expiry date of 27 October 2019 for extension of the time limit for disposing of aforesaid equity shares. The said application is under consideration and approval for extension from SEBI is awaited as at date.
B. Terms/rights attached to equity shares :
The Company has only one class of equity shares having a par value of '' 1 per share. Each holder of equity shares is entitled to one vote per share.
In the event of liquidation of the Company, the equity shareholders will be entitled to receive the remaining assets of the Company, after distribution of all preferential amounts, if any, in proportion to the number of equity shares held by the shareholders.
19.1 Capital redemption reserve
The Company has recognised capital redemption reserve on buy back of equity share capital.
19.2 Securities premium reserve
Securities premium reserve is used to record the premium on issue of shares. The reserve can be utilised only for limited purposes such as issuance of bonus shares / allotment of ESOP / SAR in accordance with the provisions of the Companies Act, 2013.
19.3 General reserve
Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations. The purpose of these transfers was to ensure that if a dividend distribution in a given year is more than 10% of the paid-up capital of the Company for that year, then the total dividend distribution is less than the total distributable results for that year. Consequent to introduction of Companies Act 2013, the requirement to mandatorily transfer a specified percentage of the net profit to general reserve has been withdrawn. However, the amount previously transferred to the general reserve can be utilised only in accordance with the specific requirements of Companies Act, 2013.
19.4 Stock Option and Shares appreciation rights outstanding
ESOP and SAR option outstanding represents the amount transferred to reserves pursuant to the "ESOP 2011" and "SAR 2019" schemes.
19.5 Retained earnings
Retained earnings comprises of the Company''s undistributed earnings after taxes.
33. Retirement benefit plan
A) Defined contribution plan (Provident fund and National Pension Scheme):
In accordance with Employees'' Provident Fund and Miscellaneous Provisions Act, 1952, employees of the Company are entitled to receive benefits under the provident fund, a defined contribution plan, in which, both the employee and the Company contribute monthly at a determined rate. These contributions are made to a recognized provident fund administered by Regional Provident Fund Commissioner. The employees contribute 12% of their basic salary and the Company contributes an equal amount.
The Company recognised '' 16.75 million (Previous year: '' 16.30 million) for provident fund and other contributions in the statement of profit and loss.
B) Defined benefit plan (Gratuity):
In accordance with the Payment of Gratuity Act, 1972, the Company provides for gratuity, a defined benefit plan covering all employees. The plan provides a lump sum payment to vested employees at retirement or termination of employment in accordance with the rules laid down in the Payment of Gratuity Act, 1972. The gratuity benefit is partially provided through funded plan and annual expense is charged to the statement of profit and loss on the basis of actuarial valuation.
The most recent actuarial valuation of plan assets and the present value of the defined benefit obligation for gratuity were carried out as at 31 March 2022. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.
Based on the actuarial valuation obtained in this respect, the following table sets out the status of the gratuity plan and the amounts recognised in the Company''s financial statements as at balance sheet date:
C) Compensated absences :
The Company provides for accumulated compensated absences as at the balance sheet date using projected unit credit method based on actuarial valuation.
D) Other Disclosures
Description of Asset Liability Matching (ALM) Policy
The Company has an insurance plans invested in market linked bonds. The investment returns of the market-linked plan are sensitive to the changes in interest rates. The liabilities'' duration is not matched with the assets'' duration.
Description of funding arrangements and funding policy that affect future contributions
The liabilities of the fund are funded by assets. The Company aims to maintain a close to full-funding position at each Balance Sheet date. Future expected contributions are disclosed based on this principle.
Maturity profile
The average expected remaining lifetime of the plan members is 4 years (31 March 2021: 2 years) as at the date of valuation. This represents the weighted average of the expected remaining lifetime of all plan participants.
35. Contingent liabilities, commitments and leasing arrangements:
35.1 Contingent liabilities and commitments
a) Claims against the Company not acknowledged as debt:
- Income Tax matters in respect of which appeal is pending '' 7.8 million (Previous year: '' 11.30 million).
- Service Tax matters in respect of which appeal is pending '' 534.36 million (Previous year: '' 534.36 million).
b) Other claim not acknowledged as debt:
The Company''s pending litigations mainly comprise of claims against the Company pertaining to proceedings pending with Income tax, service tax and other authorities. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contingent liabilities where applicable, in the financial statements. The Company believes that the outcome of these proceedings will not have a materially adverse effect on the Company''s financial position and results of operations.
The Company has received demand notices from tax authorities on account of disallowance of expenditure for earning exempt income under Section 14A of Income Tax Act 1961 read with Rule 8D of the Income Tax Rules, 1962. The company has filed appeal/s and is defending its position. Based on the favorable outcome in Appellate proceedings in the past and as advised by the tax advisors, company is reasonably certain about sustaining its position in the pending cases, hence the possibility of outflow of resources embodying economic benefits on this ground is remote.
c) Corporate/other guarantee not acknowledged as debt:
35.2 Capital commitment
Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) '' Nil million (Previous year: '' Nil million).
Edelweiss Financial Services Limited provide necessary business and management oversights to its various subsidiaries inter-alia in the form of business and strategy planning, stake holder relation, marketing & publication, technology support, HR Policies including leadership & development of employees, governance and regulatory policies, policy advocacy, legal & litigation handling framework etc. (here in after collectively referred to as "Business and Management oversight"). The subsidiaries of Edelweiss group thus get benefitted from the oversight of expenses incurred by group companies. It is therefore imperative that expenses if incurred on providing such oversight, to be shared by its subsidiaries.
The group companies provide business and support services to each other on the basis of the signed agreed terms. The services provided are with the intent to create synergies at group level for e.g. sharing of empty spaces with the group companies, having common HR and admin teams, using one''s available resource for the benefit of the group.
In consideration of the business and management oversight by Edelweiss group, the beneficiaries shall share and pay towards the costs, as agreed. It is expressly agreed between the parties that sharing of these cost shall be on the total cost over the financial year (April to March) adequate to compensate the function performed, assets employed and risks assumed by group companies and will be determined by the beneficiaries and edelweiss group companies. The amount payable by the beneficiaries is reviewed intermittently and any amendment to the same is mutually agreed upon in writing by the parties. For the purpose of total cost means all operating expense including but not limited to, normal recurring cost such as office rent, communication charges, salaries, employee benefits, cost of approved third-party vendor, deprecation on assets used and amortization.
Information relating to remuneration paid to Key Managerial Person mentioned above exclude provision made for gratuity and provision made for bonus which are provided for group of employees on an overall basis.
38. Capital management
The Company manages the capital structure by a balanced mix of debt and equity. The Company''s capital management strategy is to effectively determine, raise and deploy capital so as to create value for its shareholders. The Company maintains sound capitalisation both from an economic and regulatory perspective. The Company continuously monitors and adjusts overall capital demand and supply in an effort to achieve an appropriate balance of the economic and regulatory considerations at all times and from all perspectives. These perspectives include specific capital requirements from rating agencies.
Capital structure includes infusion in the form of equity and structured debt from strategic business partners in certain of Company''s subsidiaries to fund expansion and assist in achieving expected growth in the competitive market.
No changes were made in the objectives, policies or processes during the financial years ended March 31, 2022 and March 31, 2021.
40. Share based payments: Employee Stock Option Plans and Stock Appreciation Rights Plans
Edelweiss Financial Services Limited ("EFSL" hereafter), has recognised share based payment expenses for the years ended 31 March 2022 and 31 March 2021 based on fair value as on the grant date calculated as per option pricing model. The grants represent equity-settled options under the Employee Stock Option Plans and Stock Appreciation Rights Plans (hereafter referred to as, "ESOP 2011" and "SAR 2019" or "ESOPs" "SARs" ).
The Edelweiss Group has granted ESOPs under the two plans viz., ESOP 2011 & SAR 2019 to its employees on an equity-settled basis as tabulated below. The ESOPs/SARs provide a right to its holders (i.e., Edelweiss group employees) to purchase one EFSL share for each option at a pre-determined strike price on the expiry of the vesting period. The ESOP/SAR hence represents an European call option that provides a right but not an obligation to the employees of the Edelweiss group to exercise the option by paying the strike price at any time on completion of the vesting period, subject to an outer boundary on the exercise period.
41. Risk Management
The Company has operations in India. Whilst risk is inherent in the Company''s activities, it is managed through an integrated risk management framework, including ongoing identification, measurement and monitoring, subject to risk limits and other controls. This process of risk management is critical to the Company. The Company is exposed to credit risk, liquidity risk and market risk. It is also subject to various operating and business risks.
Risk management strategy:
The strategy at an execution level is supported by -
1. Three tiered risk management structure to manage and oversee risks
2. Board and Executive Level Committees to review and approve risk exposures
3. Risk Management framework to ensure each risk the Company is exposed to is given due importance and managed through a well-defined framework and guidelines
4. Well-defined Standard Operating Procedures and Product approval framework to ensure risks are mitigated at operational level
5. Adequate segregation of duties to ensure multi-layered checks and balances
6. Exception reporting framework to ensure process and policy deviations are adequately addressed
Risk management structure:
The Board of Directors are responsible for the overall risk management approach and for approving the risk management strategies and principles.
The Board has appointed the Risk Committee which is responsible for monitoring the overall risk process within the Company and reports to the Audit Committee
The Risk Committee has the overall responsibility for the development of the risk strategy and implementing principles, frameworks, policies and limits.
The Company is responsible for implementing and maintaining risk related procedures to ensure an independent control process is maintained. The Company works closely with and reports to the Risk Committee, to ensure that procedures are compliant with the overall framework.
Credit risk
Credit risk is the risk of financial loss the Company may face due to current/potential inability or unwillingness of a customer or counterparty to meet financial /contractual obligations. Credit risk also covers the possibility of losses associated with diminution in the credit quality of borrowers or counterparties. The Company''s lending activities is restricted to only its subsidiaries within the Edelweiss Group, the Company has adopted a policy of dealing with creditworthy counterparties and obtains sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults.
Credit risk is measured as the amount that could be lost if a customer or counterparty fails to make repayments. Credit risk is monitored using various internal risk management measures and within limits approved by the board within a framework of delegated authorities. It is managed through a robust risk control framework, which outlines clear and consistent policies, principles and guidance for risk managers. Presently Company has credit exposure only to it''s subsidiaries where adequate control and monitoring is ensured.
Credit risk (Continued)
Liquidity risk
Liquidity risk emanates from the possible mismatches due to differences in maturity and repayment profile of assets and liabilities. To avoid such a scenario, the Company has maintained cash reserves in the form of Fixed Deposits, Cash, Loans which are callable any time at the Company''s discretion, etc. These assets carry minimal credit risk and can be liquidated. These would be to take care of immediate obligations while continuing to honour commitments as a going concern.
Analysis of financial assets and liabilities by remaining contractual maturities
The table below at note number 44 summarises the maturity profile of the undiscounted cash flows of the Company''s financial assets and liabilities as at 31 March. All OTC derivatives used for hedging are shown by maturity, based on their contractual undiscounted payment obligations. All exchange traded derivatives held for trading are analysed based on expected maturity.
Market Risk:
Market risk is the risk which can affect the Company''s performance due to adverse movements in market prices of instrument due to interest rates, equity prices, foreign exchange rates. The objective of the Company''s market risk management is to manage and control market risk exposures within acceptable parameters.
Foreign exchange risk - Foreign exchange risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. The Company''s foreign exposure is limited to investments and loans to Group entities outside India. The Company aggregates the foreign exchange exposure emerging out of these loans/investments and the same is hedged using OTC and exchange traded derivatives. Positions are regularly monitored by the Company and rebalanced/ rolled over based on the inflow and outflow of funds. The Company don''t have any foreign currency exposure as at March 31, 2022.
42. Fair Value Measurement 42.1 Valuation governance framework
Where fair values are determined by reference to externally quoted prices or observable pricing inputs to models, independent price determination or validation is used. For inactive markets, Company sources alternative market information, with greater weight given to information that is considered to be more relevant and reliable.
42.2. Fair value hierarchy
Fair values of financial assets and liabilities are determined according to the following hierarchy
Level 1 - valuation technique using quoted market price: financial instruments with quoted prices for identical instruments in active markets that company can access at the measurement date.
Level 2 - valuation technique using observable inputs: 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 - valuation technique with significant unobservable inputs: Those that include one or more unobservable input that is significant to the measurement as whole.
42.3. Financial instruments not measured at fair value:
The following table sets out the fair values of financial instruments not measured at fair value and analysing them by the level in the fair value hierarchy into which each fair value measurement is categorised. The information given below is with respect to financial assets and financial liabilities measured at amortised cost for which the fair value is different than the carrying amount. Carrying amounts of cash and cash equivalents, trade receivables (net of expected credit loss) and trade and other payables as on March 31, 2022 approximate the fair value because of their short-term nature. Difference between carrying amounts and fair values of bank deposits, other financials assets and other financial liabilities subsequently measured at amortised cost is not significant in each of the years presented.
42.6. Fair valuation principles :
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions (i.e., an exit price), regardless of whether that price is directly observable or estimated using a valuation technique. The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
The Company''s fair value methodology and the governance over its models includes a number of controls and other procedures to ensure appropriate safeguards are in place to ensure its quality and adequacy. Where fair values are determined by reference to externally quoted prices or observable pricing inputs to models, independent price determination or validation is used. For inactive markets, Company sources alternative market information, with greater weight given to formation that is considered to be more relevant and reliable.
42.7. Fair valuation techniques :
Equity instruments
The equity instruments which are actively traded on recognised stock exchanges are valued at readily available active prices on a regular basis. Such instruments are classified as Level 1. Equity instruments in non-listed entities are initially measured at transaction price and re-measured at each reporting date at valuation provided by external valuer at instrument level. Such unlisted equity securities are classified at Level 2
Derivatives:
The Company enters into certain derivative financial instruments primarily with banks with investment grade credit ratings. Derivatives valued using valuation techniques with market observable inputs are mainly forward exchange contracts.
Exchange traded derivatives:
Company has entered into certain exchange-traded currency futures. The Company uses latest traded prices at the reporting date to value these derivatives and classifies these instruments as Level 1 in the hierarchy.
42.8. Transfer between Level 1 and level 2
During the year there were no transfers between level 1 and level 2. Similarly, there were no transfers from or transfer to level 3.
48. Impact of Covid
The Company has considered the possible effects that may result from the pandemic relating to COVID-19 on the carrying amounts of receivables, intangibles, investments and other assets and repayment ability of its borrowers. In developing the assumptions relating to the possible future uncertainties in the economic conditions because of this pandemic, the Company has used internal and external sources of information. The Company has assessed the impact of the COVID-19 pandemic on its liquidity and ability to repay its obligations as and when they are due. Management has considered various financial support from banks and other fundraising opportunities in determining the Company''s liquidity position over the next 12 months.
The Company has reviewed the assumptions used and based on current estimates expects the carrying amount of these assets will be recovered. The impact of COVID-19 on the Company''s financial statements may differ from that estimated as at the date of approval of these financial statement and the Company will continue to closely monitor any material changes to future economic conditions.
49. Events after reporting date
The Company has evaluated all events that occur after balance sheet date through the date when the financial statements were issued to determine if they must be reported. The management of the company determined that there were no reportable subsequent events to be disclosed other than below:
The Board of Directors of the Company ("Board") at their meeting held on May 13, 2022 has approved the Scheme of Arrangement between the Company and Edelweiss Securities Limited ("Resulting Company" or "ESL") and their respective shareholders and creditors under Sections 230 to 232 read with Section 52 and other applicable provisions of the Companies Act, 2013 ("Act") ("Scheme") which inter alia, provides for demerger, transfer and vesting of the Demerged Undertaking (as defined in the Scheme) from the Company into the Resulting Company on a going concern basis and reduction of the capital of the Resulting Company in the manner set out in the Scheme. Post necessary regulatory and statutory approvals, the equity shares of the Resulting Company shall be listed on BSE Limited and the National Stock Exchange of India Limited.
50. Details of Benami Property held
The Company does not have any benami property, where any proceeding has been initiated or pending against the company for holding any Benami property.
51. Where the Company has borrowings from banks or financial institutions on the basis of security of current assets, it shall disclose the following:-
The Company has been sanctioned working capital limits from bank during the year on the basis of security of current assets of the Company. The Company had closed the sanctioned workings capital limit within a month and accordingly was not required to file any return/statement with the bank. During the year the Company has availed overdraft facility from one Bank and pursuant to confirmation received from the said bank, there was no requirement to file any return/statement with the bank.
52. Wilful Defaulter
The Company is not declared as wilful defaulter by any bank or financial Institution or other lender.
56. Undisclosed income
The Company have not any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
57. The Company Doesn''t have any immovable properties whose title deeds are not held in name of the Company
58. Loans and Advances
The Company has granted loans or advances to Group companies in the nature of loans, without specifying period of repayment of principal to companies. However, during the year the Company has executed supplementary agreement with all such Group companies to stipulate the schedule for repayment of principal. The repayment of principal as per supplementary agreement is not due on these loans. Of these following are the details of the aggregate amount of loans or advances in the nature of loans granted to promoters or related parties as defined in clause (76) of section 2 of the Companies Act, 2013:
59. The Board of Directors at their meeting held on 27 May 2022, have recommended a final dividend of ''1.20 per equity share (on
face value of '' 1 per equity share), subject to the approval of the members at the ensuing Annual General Meeting.
60. The Indian Parliament has approved the Code on Social Security, 2020 which subsumes the Provident Fund and the Gratuity Act
and rules there under. The Ministry of Labour and Employment has also released draft rules thereunder on 13 November 2020
and has invited suggestions from stakeholders which are under active consideration by the Ministry. The Company will evaluate the rules, assess the impact if any, and account for the same once the rules are notified and become effective.
61. During the year ended 31 March 2022, three subsidiaries of the Company had sold certain financial assets amounting to '' 1,675.60 million and '' 11,424.10 million respectively (net of provisions) to various asset reconstructions company trusts (''ARC Trusts'') and acquired security receipts (SR) amounting to '' 1,424.40 million and '' 9,455.70 million respectively from these ARC Trusts. Ind AS 109 - ''Financial Instruments'', prescribed under section 133 of the Companies Act, 2013, requires substantially all risks and rewards to be transferred for the purpose of de-recognition of such financial assets from these subsidiaries'' financial statement. The Company had undertaken substantially all risks and rewards in respect of such financial assets. As a result, these financial assets were de-recognized in subsidiaries'' financial statement. Based on assessment of probability of default, loss given default in respect of these financial assets and in light of various factors viz. exposures to certain sectors and assessment of credit and market risks for certain counter parties relative to such risks at initial recognition, the company has recorded fair value gain of '' 921.14 million (net) for the year ended respectively and is included in "Net gain on fair value changes".
62. Pursuant to amendments in risk and rewards agreement between the subsidiaries, ERCSL and the Company (as mentioned in note above), with effect from 01 January 2021, fees payable on security receipts (ARC management Fee) has been agreed to be borne by the Company, as the risk and rewards are undertaken by the Company. Accordingly, an amount of ''2,166.33 million (Previous year: '' 489.25 million) towards such expenses have been recorded by the Company.
63. During the year ended 31 March 2022, the Company has recorded a fair value gain of '' 3,150 million for its investment in Edelweiss Securities and Investments Private Limited based on fair valuation report obtained from registered valuer and on account of Composite scheme of Arrangement between the Company''s subsidiary and associate Companies i.e. Edelweiss Securities Limited ("ESL"), Edelweiss Securities and Investments Private Limited ("ESIPL"), Edelweiss Global Wealth Management Limited ("EGWML") and their respective shareholders and creditors, under section 230 to 232 and other applicable provisions of the Companies Act, 2013 for Demerger of Asset Management Business from ESL into ESIPL. The National Company Law Tribunal Bench at Mumbai (Tribunal) has approved the aforementioned Scheme on 31 March 2022 under the applicable provisions of the Companies Act, 2013. Certified copy of the said order of the Tribunal was received by the Company on 05 April 2022 and filed with the Registrar of Companies on 22 April 2022.
64. Under Shareholders'' Agreement dated 05 March 2019, entered between Edelweiss Financial Services Limited (EFSL), CDPQ Private Equity Asia PTE. Limited (CDPQ) and ECL Finance Limited (together referred as Parties), EFSL had agreed, pursuant to clause 8.1 & 8.2 to make equity investment of an amount equivalent to the amount of losses on Select real state/structured finance Loans (Select Loans) into ECL Finance Limited within six months of the default leading to loss incurred by the ECL Finance Limited on or before the date of the conversion of the Investor CCDs into Equity Shares. The rationale for this undertaking was to keep the total equity/net worth of ECL Finance Limited unimpacted on account of impairment in these loan accounts. During the previous year, Parties have agreed and concluded that loss event for two of the borrowers in the Select Loans have crystalized and hence, EFSL has agreed to make good the loss amounting to '' 1400.10 million incurred by ECL Finance Limited in earlier years. Accordingly, EFSL has recorded such loss in its profit and loss during last year. The Parties have agreed that no loss event has been crystalized in respect of other Select Loans amounts mentioned in above said clauses of the agreement and hence there is no obligation of the Company.
65. During the year ended 31 March 2022, employee benefits expense includes a reversal of long term incentive plan of '' 650.00 million and created additional bonus provision amounting to '' 731.00 million during the year ended 31 March 2022.
66. During the year ended 31 March 2022, other income includes gain amounting to '' 5,315.75 million (previous year '' 13,714.85 million) on sale of investments in its subsidiaries.
67. During the quarter and year ended 31 March 2022, certain assets amounting to '' 2,720.00 million were sold to alternative assets funds by the subsidiary NBFCs. The Company has, vide a put agreement dated 04 February 2022, has guaranteed / undertaken to purchase these financial assets amounting to '' 2,720.00 million on occurrence of certain trigger event as per the agreement.
68. The Company has a process whereby periodically all long term contracts (including derivative contracts) are assessed for material foreseeable losses. At the year end, the Company has reviewed and ensured that adequate provision as required under any law/ accounting standards for material foreseeable losses on such long term contracts (including derivative contracts) has been made in the books of accounts.
Notes:
1 Debt-equity Ratio = Total debt (Debt securities Borrowings other than debt securities) / Net worth
2 Interest Service Coverage Ratio = Profit before interest and Tax / interest expense
3 Total debt to Total assets = (Debt securities Borrowings other than debt securities) / Total assets
4 Net profit margin = Net Profit for the period / Total income
70. The Company is in compliance with number of layers of companies, as prescribed under clause (87) of section 2 of the Act read with the Companies (Restriction on number of Layers) Rules, 2017.
71. Details of Crypto Currency or Virtual Currency
The Company has not traded or invested in Crypto currency or Virtual Currency during the current financial year and any of the previous financial years.
72. Previous year''s figures have been regrouped / reclassified to conform to current year presentation.
73. All amounts disclosed in the financial statements and notes have been rounded off to the nearest million as per the requirements of Schedule III, unless otherwise stated.
74. These financial statements have been approved for issue by the Board of Directors of the Company on 27 May 2022.
The accompanying notes are an integral part of standalone financial statements.
Mar 31, 2019
1. Background
Edelweiss Financial Services Limited (âthe Companyâ) is registered with Securities and Exchange Board of India (SEBI) as Category I - Merchant Banker. The Company was incorporated on November 21, 1995 and is the ultimate holding company of Edelweiss group of companies.
The Company is principally engaged in providing investment banking services and holding company activities comprising of development, managerial and financial support to the business of Edelweiss group entities.
Note : These loans are considered to have low credit risk based on credit evaluation undertaken by the Company. There is no history of any defaults on these loans. Since the counter-parties are subsidiaries and employees of the Company, the Company regularly monitors to ensure that these entities have enough liquidity which safeguards the interest of investors and lenders. Accordingly, there is no Expected credit loss allowance on the aforesaid loans.
Note :
The Company has Employee Stock Option Plans (ESOP) in force. Based on such ESOP schemes, the Company has granted options to acquire equity shares of the Company that would vest in a graded manner to certain employees of subsidiaries. To the extent that the Company has not charged and recovered the fair value of such stock options from its subsidiaries, it has been included in the above carrying value of investment in the those subsidiaries.
2. Segment reporting
Primary Segment (Business Segment)
TheCompanyâs business is organised and management reviews the performance based on the business segments as mentioned below:
Income for each segment has been specifically identified. Expenditure, assets and liabilities are either specifically identified with individual segments or have been allocated to segments on a systematic basis.
Based on such allocations, segment disclosures relating to revenue, results, assets and liabilities have been prepared. Secondary Segment
Since the business operations of the Company are primarily concentrated in India, the Company is considered to operate only in the domestic segment and therefore there is no reportable geographic segment.
The following table gives information as required under the Indian Accounting Standard -108 on âSegment Reportingâ:
3. Disclosure as required by Indian Accounting Standard 24 - âRelated Party Disclosureâ:
(A) Subsidiaries which are controlled by the Company:
Edelweiss Securities Limited Edelweiss Finance & Investments Limited ECL Finance Limited
Edelweiss Global Wealth Management Limited
EC Global Limited, Mauritius (through EC International Limited, Mauritius)
Edelweiss Insurance Brokers Limited
Edelweiss Trustee Services Limited (through ECap Equities Limited)
Edelweiss Business Services Limited (Merged with Edelweiss Rural and Corporate Services Limited) Edelcap Securities Limited (through ECap Equities Limited)
Edelweiss Asset Management Limited ECap Equities Limited Edelweiss Broking Limited Edelweiss Trusteeship Company Limited Edelweiss Alternative Asset Advisors Limited Edelweiss Housing Finance Limited Edelweiss Investment Adviser Limited
EC Commodity Limited (through Edelweiss Rural & Corporate Services Limited)
EFSL Trading Limited (Merged with EFSL Comtrade Limited)
Edel Commodities Limited (Merged with Edelweiss Rural and Corporate Services Limited)
Edel Land Limited
Edelweiss Custodial Services Limited (through Edelweiss Securities Limited)
EC International Limited, Mauritius Edelweiss Capital (Singapore) Pte. Limited
Edelweiss Alternative Asset Advisors Pte. Limited (through Edelweiss Capital (Singapore) Pte. Limited)
Edelweiss International (Singapore) Pte. Limited (through Edelweiss Capital (Singapore) Pte. Limited)
Aster Commodities DMCC, United Arab Emirates (through EC International Limited, Mauritius)
EAAA LLC, Mauritius (through EC International Limited)
EW Special Opportunities Advisors LLC, Mauritius (through EAAA LLC)
EW India Special Assets Advisors LLC, Mauritius (through EAAA LLC)
Edel Investments Limited
Edelweiss Tokio Life Insurance Company Limited
Edelweiss Investment Advisors Private Limited, Singapore (through Edelweiss Capital (Singapore) Pte. Limited)
Edelweiss Rural & Corporate Services Limited (formerly known as Edelweiss Commodities Services Limited)
Edelweiss Comtrade Limited (through Edelweiss Rural & Corporate Services Limited)
Edel Finance Company Limited
Edelweiss Capital Markets Limited (Merged with Edelweiss Rural and Corporate Services Limited)
EFSL Comtrade Limited (Merged with Edelweiss Rural and Corporate Services Limited)
Edelweiss Retail Finance Limited (through Edelcap Securities Limited)
Edelweiss Securities (Hong Kong) Private Limited (through Edelweiss Securities Limited)
Edelweiss Financial Services Inc, United States of America (through Edelweiss Securities Limited)
Edelweiss Agri Value Chain Limited (Merged with Edelweiss Rural and Corporate Services Limited)
EdelGive Foundation
Edelweiss Multi Strategy Funds Management Private Limited (Merged with Edelweiss Asset Management Limited) Edelweiss Resolution Advisors LLP (through Edelweiss Rural and Corporate Services Limited)
Edelweiss India Capital Management, Mauritius (through Edelweiss Multi Strategy Funds Management Private Limited) (Upto June 30, 2018)
Edelweiss Multi Strategy Fund Adivsors LLP (through Edelweiss Rural and Corporate Services Limited)
EFSL International Limited, Mauritius (through EC International Limited)
Edelweiss Financial Services (UK) Limited, United Kingdom (through Edelweiss Securities Limited)
Edelweiss Holdings Limited (through ECap Equities Limited)
Edelweiss AIF Fund I - EW Clover Scheme -1 (through Edelcap Securities Limited)
Edelweiss General Insurance Company Limited
Edelweiss Finvest Private Limited (through Edelweiss Rural and Corporate Services Limited)
Edelweiss Asset Reconstruction Company Limited (through Edelweiss Custodial Services Limited)
Edelweiss Private Equity Tech Fund (through Ecap Equities Limited)
Edelweiss Securities (IFSC) Limited
Edelweiss Value and Growth Fund (through Ecap Equities Limited)
Retra Ventures Private Limited (through Ecap Equities Limited)
Allium Finance Private Limited (through Edelweiss Rural and Corporate Services Limited) (from November 29, 2018) Edelweiss Fund Advisors Private Limited (Merged with Edelweiss Rural and Corporate Services Limited)
Edelweiss Securities Trading and Management Private Limited (formerly known as Dahlia Commodities Services Private Limited) (through Edelweiss Securities Limited)
Edelweiss Securities and Investments Private Limited (formerly known as Magnolia Commodities Services Private Limited) (through Edelweiss Securities Limited)
Lichen Metals Private Limited (through Edelvalue Partners)
Edelvalue Partners (through Edelweiss Securities and Investments Private Limited)
Alternative Investment Market Advisors Private Limited (through Ecap Equities Limited)
(B) Enterprises over which control is exercised by the Company:
Trust name :
EARC SAF - 2 Trust EARC Trust - SC 6 EARC Trust - SC 7 EARC Trust - SC 9 EARC Trust - SC 102 EARC Trust - SC 109 EARC Trust - SC 112 EARC Trust - SC 130 EARC SAF - 3 Trust EARC Trust - SC 223 EARC Trust - SC 229 EARC Trust - SC 238 EARC Trust - SC 245 EARC Trust-SC 251 EARC Trust-SC 266 EARC Trust-SC 262 EARC Trust-SC 263 EARC Trust - SC 293 EARC Trust - SC 297 EARC Trust - SC 308 EARC Trust-SC314 EARC Trust-SC 325
EARC Trust - SC 329
EARC Trust - SC 331
EARC Trust - SC 306
EARC Trust - SC 321
EARC Trust-SC 334
EARC Trust - SC 318
EARC Trust - SC 332
EARC Trust - SC 348
EARC Trust - SC 349
EARC Trust-SC 350
EARC Trust-SC 352
EARC Trust-SC 354
EARC Trust-SC 357
EARC SAF -1 Trust Investor Account
EARC Trust - SC 298
EARC Trust - SC 342
EARC Trust - SC 347
EARC Trust-SC 351
EARC Trust - SC 360
EARC Trust-SC 361
EARC Trust-SC 363
EARC Trust - SC 344
EARC Trust - SC 370
EARC Trust - SC 283
EARF I - Scheme 5
EARC Trust - SC 57
EARC Trust - SC 327
(C) Associates:
Allium Finance Private Limited (through Edelweiss Rural and Corporate Services Limited) (upto November 28, 2018)
(D) Individuals owning, directly or indirectly, an interest in the voting power of the Company that gives them control or significant influence overthe Company:
Mr. Rashesh Shah
Mr. Venkatchalam Ramaswamy
Ms. Vidya Shah
Ms. Aparna T. C.
(E) Key managerial personnel (KMP) :
Mr. Rashesh Shah - Chairman, Managing Director & CEO Mr. Venkatchalam Ramaswamy - Executive Director Mr. Himanshu Kaji - Executive Director Mr. Rujan Panjwani - Executive Director
(F) Relatives of individuals exercising significant influence and relatives of KMP, with whom transaction have taken place: Ms. Kaavya Venkat
Ms. Shilpa Mody Ms. Sejal Premal Parekh Mr. A V Ramaswamy Ms. Sneha Sripad Desai Ms. Shabnam Panjwani
(G) Enterprises over which KMPs / Relatives exercise significant influence, with whom transactions have taken place:
Spire Investment Advisors LLP Shah Family Discretionary Trust
(H) Independent Directors
Mr. Berjis Desai
Mr. Biswamohan Mahapatra
Mr. Kunnasagaran Chinniah
Mr. Navtej S. Nandra
Mr. P. N. Venkatachalam
Mr. Sanjiv Misra ( upto January 24, 2019)
Mr. Sunil Mitra ( upto August 02, 2017)
Note:
1 The Intra group company loans are generally in the nature of revolving demand loans unless otherwise stated. Loan given/ taken to/from parties and margin money placed/refund received with/from related parties are disclosed based on the maximum incremental amount given/taken and placed/refund received during the reporting period.
2 Information relating to remuneration paid to key managerial person mentioned above excludes provision made for gratuity and provision made for bonus which are provided for group of employees on an overall basis.
(I) Transactions and balances with related parties (Continued)
3 Edel Commodities Limited and EFSL Trading Limited was merged into EFSL Comtrade Limited vide Order of National Company LawTribunal at Hyderabad. Further With effect from the Appointed Date i.e. August 01, 2018, EFSL Comtrade Limited, Edelweiss Business Services Limited, Edelweiss Agri Value Chain Limited, Edelweiss Capital Markets Limited and Edelweiss Fund Advisors Limited have been merged into Edelweiss Rural & Corporate Services Limited (Formerly Edelweiss Commodities Services Limited). Hence all related party transactions transacted during the year and the outstanding balances thereof, as at the end of the year relating to the Merged entity are considered to be transacted with Edelweiss Rural & Corporate Services Limited and disclosed accordingly.
4 Edelweiss Multi Strategy Funds Management Private Limited was merged into Edelweiss Asset Management Limited vide Order of National Company Law Tribunal at Mumbai. Further With effect from the Appointed Date i.e. April 01, 2017, Edelweiss Multi Strategy Funds Management Private Limited have been merged into Edelweiss Asset Management Limited. Hence all related party transactions transacted during the year and the outstanding balances thereof, as at the end of the year relating to the Merged entity are considered to be transacted with Edelweiss Asset Management Limited and disclosed accordingly.
4. Earnings per share
In accordance with Indian Accounting Standard 33 - âEarnings Per Shareâ prescribed by Companies (Accounts) Rules, 2014, the computation of earnings per share is set out below:
5. Capital commitment
Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 2.94 million (Previous year: Rs. 36.01 million).
6. Contingent liabilities
a) Claims against the Company not acknowledged as debt:
Taxation matters in respect of which appeal is pending is Rs. 534.36 million for the year (Previous year: Rs. 416.14 million);
b) Other claim not acknowledged as debt:
The Companyâs pending litigations mainly comprise of claims against the Company pertaining to proceedings pending with Income tax, service tax and other authorities. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contingent liabilities where applicable, in the financial statements. The Company believes that the outcome of these proceedings will not have a materially adverse effect on the Companyâs financial position and results of operations.
The Company has received demand notices from tax authorities on account of disallowance of expenditure for earning exempt income under Section 14A of Income Tax Act 1961 read with Rule 8D of the Income Tax Rules, 1962. The company has filed appeal/s and is defending its position. Based on the favorable outcome in Appellate proceedings in the past and as advised by the tax advisors, company is reasonably certain about sustaining its position in the pending cases, hence the possibility of outflow of resources embodying economic benefits on this ground is remote.
7. Details of dues to micro, small and medium enterprises
Trade Payables includes Rs. Nil (Previous year: Rs. Nil) payable to âSuppliersâ registered under the Micro, Small and Medium Enterprises Development Act, 2006. No interest has been paid / is payable by the Company during the year to âSuppliersâ registered under this Act. The aforementioned is based on the responses received by the Company to its inquiries with suppliers with regard to applicability under the said Act.
8. Capital Management
The Company manages the capital structure by a balanced mix of debt and equity. The Companyâs capital management strategy is to effectively determine, raise and deploy capital so as to create value for its shareholders. The Company maintains sound capitalisation both from an economic and regulatory perspective. The Company continuously monitors and adjusts overall capital demand and supply in an effort to achieve an appropriate balance of the economic and regulatory considerations at all times and from all perspectives. These perspectives include specific capital requirements from rating agencies.
Capital structure includes infusion in the form of equity and structured debt from strategic business partners in certain of Companyâs subsidiaries to fund expansion and assist in achieving expected growth in the competitive market.
No changes were made in the objectives, policies or processes during the financial years ended March 31, 2019 and March 31, 2018.
This framework is adjusted based on underlying macro-economic factors affecting business environment, financial market conditions and interest rates environment. Company monitors capital using debt-equity ratio, which is total debt divided by total equity.
9. The Board of Directors at their meeting held on May 14, 2019, have recommended a final dividend ofRs. 0.30 per equity share (previous year: Rs. 0.30 per equity share) (on face value ofRs. 1 per equity share), subject to the approval of the members at the ensuing Annual General Meeting. In terms of Indian Accounting Standard (Ind AS) 10 âContingencies and Events occurring after the Balance sheet dateâ as notified by the Ministry of Corporate Affairs through amendments to Companies (Accounting Standards) Amendment Rules, 2016, dated March 30, 2016, the Company has not appropriated for the recommended final dividend (including tax) from the Statement of Profit and Loss for the year ended March 31, 2019.
10. First-time adoption - mandatory exceptions, optional exemptions Overall principle
The Company has prepared the opening balance sheet as per Ind AS as of April 01, 2017 (the transition date) by recognising all assets and liabilities whose recognition is required by Ind AS, not recognising items of assets or liabilities which are not permitted by Ind AS, by reclassifying items from previous GAAP to Ind AS as required under Ind AS, and applying Ind AS in measurement of recognised assets and liabilities. However, this principle is subject to the certain exception and certain optional exemptions availed by the Company as detailed below.
Exemption applied
Derecognition of financial assets and financial liabilities
The Company has applied the derecognition requirements of financial assets and financial liabilities prospectively for transactions occurring on or after April 01, 2017 (the transition date).
Impairment of financial assets
The Company has applied the impairment requirements of Ind AS 109 retrospectively; however, as permitted by Ind AS 101, it has used reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments were initially recognised in order to compare it with the credit risk at the transition date. Further, the Company has not undertaken an exhaustive search for information when determining, at the date of transition to Ind ASs, whether there have been significant increases in credit risk since initial recognition, as permitted by Ind AS 101.
Past business combinations
The Company has elected not to apply Ind AS 103 Business Combinations retrospectively to past business combinations that occurred before the transition date of April 01, 2017.
Deemed cost for property, plant and equipment, investment property, and intangible assets
The Company has elected to continue with the carrying value of all of its plant and equipment, investment property, and intangible assets recognised as of April 01, 2017 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
Determining whether an arrangement contains a lease
The Company has applied Appendix C of Ind AS 17 Determining whether an Arrangement contains a Lease to determine whether an arrangement existing at the transition date contains a lease on the basis of facts and circumstances existing at that date.
Share-based payments
The Company has applied the requirements of Ind AS 102 Share-based payment to equity instruments that are unvested as of the transition to Ind AS (April 01, 2017).
11(a) Notes:
i. Expected credit loss
Under Indian GAAP provision for doubtful debts were presented under trade receivables. However, under Ind AS Trade receivables are presented net of provision for expected credit losses (ECL). Consequently, the Company has reversed Indian GAAP provisions for doubtful debts and created ECL that has reduced net worth of company.
ii. Fair value of financial assets and financial liabilities
Under Indian GAAP, the Company has accounted for unrealised losses in investments and ignore any unrealised gains. Under Ind AS, the Company has classified such investments as FVTPL investments. Ind AS requires investments to be measured at fair value at each reporting date and difference between fair values being recognised in Profit and Loss. At the date of transition to Ind AS, difference between the instruments fair value and Indian GAAP carrying amount has been recognised in retained earnings, net of related deferred taxes. This has increased net worth of the Company.
iii. Consolidation of employee welfare trust
Company has assessed control definition as per Ind AS and identified two entities (employee welfare trust) to be consolidated as part of the Company.
iv. Fair valuation of employee stock options
Equity-settled share-based payments to employees of the Group and others providing similar services that are granted by the Company are measured by reference to the fair value of the equity instruments at the grant date.
v. Deferred tax impact:
Indian GAAP requires deferred tax accounting using the statement of profit and loss approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base.
The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under Indian GAAP. In addition, the various transitional adjustments lead to temporary differences. According to the accounting policies, the Group has to account for such differences. Deferred tax adjustments are recognised in correlation to the underlying transaction either in retained earnings or a separate component of equity.
12. The financial statements for the year ended March 31, 2019 has been audited by S.R. Batliboi & Co. LLP Chartered Accountants. The financial statements for year ended March 31, 2018 and March 31, 2017 have been audited by another firm of Chartered Accountants.
13. The Comparative Ind AS financial information of the Group for the year ended March 31, 2018 and the transition date opening balance sheet as at April 01, 2017 includes in these Ind AS financial statements are based on the previously issued financial statements prepared in accordance with the Companies (Accounting Standards) Rules, 2006 audited by the predecessor auditors whose report for the year ended March 31, 2018 and March 31, 2017 dated May 03, 2018 and May 17, 2017 respectively, have expressed an unmodified opinion on those financial statements as adjusted for the difference in the accounting principles adopted by the Group on transition to Ind AS, which have been audited by the current statutory auditors S.R. Batliboi & Co. LLP.
14. Previous year figures have been reclassified to conform to this yearâs classification.
15. These abridged financial statements have been approved for issue by the Board of Directors of the Company on May 14, 2019.
Mar 31, 2018
Income for each segment has been specifically identified. Expenditure, assets and liabilities are either specifically identified with individual segments or have been allocated to segments on a systematic basis.
Based on such allocations, segment disclosures relating to revenue, results, assets and liabilities have been prepared.
Secondary Segment
Since the business operations of the Company are primarily concentrated in India, the Company is considered to operate only in the domestic segment and therefore there is no reportable geographic segment.
Disclosure as required by Accounting Standard 18 - âRelated Party Disclosureâ:
(A) Subsidiaries which are controlled by the Company:
Edelweiss Securities Limited Edelweiss Finance & Investments Limited ECL Finance Limited
Edelweiss Global Wealth Management Limited
EC Global Limited, Mauritius (through EC International Limited, Mauritius)
Edelweiss Insurance Brokers Limited
Edelweiss Trustee Services Limited
Edelweiss Business Services Limited
Edelcap Securities Limited (through ECap Equities Limited)
Edelweiss Asset Management Limited ECap Equities Limited Edelweiss Broking Limited Edelweiss Trusteeship Company Limited Edelweiss Alternative Asset Advisors Limited
Edelweiss Housing Finance Limited (through Edelweiss Commodities Services Limited)
Edelweiss Investment Adviser Limited EC Commodity Limited
Edel Commodities Limited (through Edelweiss Commodities Services Limited)
Edel Land Limited
Edelweiss Custodial Services Limited (through Edelweiss Securities Limited)
EC International Limited, Mauritius Edelweiss Capital (Singapore) Pte. Limited
Edelweiss Alternative Asset Advisors Pte. Limited (through Edelweiss Capital (Singapore) Pte. Limited) Edelweiss International (Singapore) Pte. Limited (through Edelweiss Capital (Singapore) Pte. Limited)
Aster Commodities DMCC, United Arab Emirates (through EC International Limited, Mauritius)
EAAA LLC, Mauritius (through EC International Limited)
EW Special Opportunities Advisors LLC, Mauritius (through EAAA LLC)
EW India Special Assets Advisors LLC, Mauritius (through EAAA LLC)
Edel Investments Limited
Edelweiss Tokio Life Insurance Company Limited
Edelweiss Investment Advisors Private Limited, Singapore (through Edelweiss Capital (Singapore) Pte. Limited)
Edelweiss Commodities Services Limited
Edelweiss Comtrade Limited (through Edelweiss Securities Limited)
Edel Finance Company Limited
Edelweiss Capital Markets Limited (through Edelweiss Commodities Services Limited)
EW SBI Crossover Advisors LLC, Mauritius (through EAAA LLC) (Upto 29 July 2017)
EFSL Trading Limited (through Edel Commodities Limited)
EFSL Comtrade Limited (through Edelweiss Commodities Services Limited)
Edelweiss Retail Finance Limited (through Edelcap Securities Limited)
Edelweiss Securities (Hong Kong) Private Limited (through Edelweiss Securities Limited)
Edelweiss Financial Services Inc, United States of America (through Edelweiss Securities Limited)
Cross Border Synergy Pte. Limited (formerly known as Edelweiss Commodities Pte. Limited) (through EFSL Comtrade Limited) (Upto 6 December 2017)
Edelweiss Agri Value Chain Limited (through Edelweiss Commodities Services Limited)
EdelGive Foundation
Edelweiss Multi Strategy Funds Management Private Limited
Edelweiss Wealth Advisors LLP (through Edelweiss Commodities Services Limited)
Edelweiss India Capital Management, Mauritius (through Edelweiss Multi Strategy Funds Management Private Limited) Edelweiss Multi Strategy Fund Adivsors LLP (through Edelweiss Multi Strategy Funds Management Private Limited)
EFSL International Limited, Mauritius (through EC International Limited)
Edelweiss Financial Services (UK) Limited, United Kingdom (through Edelweiss Securities Limited)
Edelweiss Holdings Limited
Edelweiss Tarim Urunleri Anonim Sirketi, Turkey (through EFSL Comtrade Limited) (Upto 27 February 2018)
Edelweiss AIF Fund I - EW Clover Scheme -1 (through Edelcap Securities Limited)
Edelweiss General Insurance Company Limited
Edelweiss Finvest Private Limited (through Ecap Equities Limited)
Edelweiss Asset Reconstruction Company Limited (through Edelweiss Custodial Services Limited)
Edelweiss Private EquityTech Fund (through Ecap Equities Limited)
Edelweiss Securities (IFSC) Limited
Edelweiss Value and Growth Fund (through Ecap Equities Limited)
Alternative Investment Market Advisors Private Limited
(B) Associates:
Allium Finance Private Limited (through Edelweiss Commodities Services Limited)
Edelweiss Fund Advisors Private Limited
Dahlia Commodities Services Private Limited (through Edelweiss Securities Limited)
Magnolia Commodities Services Private Limited (through Edelweiss Securities Limited)
Aeon Credit Service India Private Limited (through ECL Finance Limited) (Upto 22 August 2017)
(C) Individuals owning, directly or indirectly, an interest in the voting power of the Company that gives them control or significant influence over the Company:
Mr. Rashesh Shah
Mr. Venkatchalam Ramaswamy
Ms. Vidya Shah
Ms. Aparna T. C.
(D) Key managerial personnel :
Mr. Rashesh Shah - Chairman, Managing Director & CEO Mr. Venkatchalam Ramaswamy - Executive Director Mr. Himanshu Kaji - Executive Director Mr. Rujan Panjwani - Executive Director
(E) Relatives of individuals exercising significant influence and relatives of KMP, with whom transaction have taken place: Ms. Kaavya Venkat
Ms. Shilpa Mody Ms. Sejal Premal Parekh Mr. A V Ramaswamy Ms. Sneha Sripad Desai Ms. Shabnam Panjwani
(F) Enterprises over which KMPs / Relatives exercise significant influence, with whom transactions have taken place:
Spire Investment Advisors LLP Shah Family DiscretionaryTrust
1.1 Share application money pending allotment (Corresponding to note 2.33 of the complete financial statements)
The Company has received Rs.25 .08 million (Previous year: Rs.40.94 million) towards share application on exercise of ESOPs which will result in an issue of 584,190 shares (Previous year: 1,133,100 shares). Of the total receipts Rs.24.50 million (Previous year:Rs.39.81 million) has been received towards share premium. These shares have since been allotted.
1.2 During the year, the Company allotted 54,562,488 (Previous year: Nil) equity shares to the eligible Qualified Institutional Buyers (Q.IB) at a price of Rs.280 per equity share of Rs.1 each (inclusive of premium of Rs.279 per share) aggregating to Rs.15,277.50 million (Previous year: Nil) through Qualified Institutional Placement (QIP). The issue was made in accordance with the SEBI (Issue of Capital and Disclosure Requirements) Regulations 2009. (Corresponding to note 2.34 of the complete financial statements)
1.3 Capital Commitment (Corresponding to note 2.35 of the complete financial statements)
Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs.36.01 million (Previous year:Rs.30.66 million)
1.4 Contingent liabilities (Corresponding to note 2.36 of the complete financial statements)
a) Claims against the Company not acknowledged as debt:
Taxation matters in respect of which appeal is pending Rs.416.14 million (Previous year:Rs.566.00 million);
b) Other claim not acknowledged as debt:
Corporate guarantees issued on behalf of subsidiaries to the extent ofRs.67,396.74 million (Previous year:Rs.70,503.54 million).
The Companyâs pending litigations mainly comprise of claims against the Company pertaining to proceedings pending with Income tax, service tax and other authorities. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contingent liabilities where applicable, in the financial statements. The Company believes that the outcome of these proceedings will not have a materially adverse effect on the Companyâs financial position and results of operations.
The Company has received demand notices from tax authorities on account of disallowance of expenditure for earning exempt income under Section 14A of Income Tax Act 1961 read with Rule 8D of the Income Tax Rules, 1962. The company has filed appeal/s and is defending its position. Based on the favorable outcome in Appellate proceedings in the past and as advised by the tax advisors, company is reasonably certain about sustaining its position in the pending cases, hence the possibility of outflow of resources embodying economic benefits on this ground is remote.
1.5 Details of dues to micro, small and medium enterprises (Corresponding to note 2.37 of the complete financial statements)
Trade Payables includes Rs. Nil (Previous year: Rs. Nil) payable to âSuppliersâ registered under the Micro, Small and Medium Enterprises Development Act, 2006. No interest has been paid / is payable by the Company during the year to âSuppliersâ registered under this Act. The aforementioned is based on the responses received by the Company to its inquiries with suppliers with regard to applicability under the said Act.
1.6 Disclosure of loans and advances given pursuant to requirements of Regulation 34(3) of Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations, 2015. (Corresponding to note 2.38 of the complete financial statements)
1.7 Encumbrancesâ on fixed deposits held by the Company (Corresponding to note 2.41 of the complete financial statements) AU Small Finance Bank Limited:Rs.50.00 million (Previous year: Nil) against Overdraft facility.
1.8 Details of Cash and Cash Equivalents (Corresponding to note 2.16 of the complete financial statements)
Note:
*For the purpose of this clause, the term Specified Bank Notes (SBNs) means the bank notes of denominations of the existing series of the value of five hundred rupees and one thousand rupees as defined under the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs no. S.O. 3407(E), dated the 8 November, 2016.
1.9 The Board of Directors at their meeting held on 3 May 2018, have recommended a final dividend ofRs.0.30 per equity share (previous year:Rs.0.30 per equity share) (on face value ofRs.1 per equity share), subject to the approval of the members at the ensuing Annual General Meeting. In terms of revised Accounting Standard (AS) 4 âContingencies and Events occurring after the Balance sheet dateâ as notified by the Ministry of Corporate Affairs through amendments to Companies (Accounting Standards) Amendment Rules, 2016, dated 30 March 2016, the Company has not appropriated for the recommended final dividend (including tax) from the Statement of Profit and Loss for the year ended 31 March 2018. (Corresponding to note 2.45 of the complete financial statements)
1.10 The Company has a process whereby periodically all long term contracts (including derivative contracts) are assessed for material foreseeable losses. At the year end, the Company has reviewed and ensured that adequate provision as required under any law/ accounting standards for material foreseeable losses on such long term contracts (including derivative contracts) has been made in the books of accounts. (Corresponding to note 2.46 of the complete financial statements)
1.11 Previous year figures have been reclassified to conform to this yearâs classification.
Mar 31, 2017
1.1. Segment reporting
Primary Segment (Business Segment)
The Companyâs business is organised and management reviews the performance based on the business segments as mentioned below:
Income for each segment has been specifically identified. Expenditure, assets and liabilities are either specifically identified with individual segments or have been allocated to segments on a systematic basis.
Based on such allocations, segment disclosures relating to revenue, results, assets and liabilities have been prepared.
Secondary Segment
Since the business operations of the Company are primarily concentrated in India, the Company is considered to operate only in the domestic segment and therefore there is no reportable geographic segment.
1.2. Related Parties
Disclosure as required by Accounting Standard 18 - âRelated Party Disclosureâ:
(A) Subsidiaries which are controlled by the Company:
Edelweiss Securities Limited Edelweiss Finance & Investments Limited ECL Finance Limited
Edelweiss Global Wealth Management Limited
EC Global Limited, Mauritius (through Edelweiss Finance & Investments Limited)
Edelweiss Insurance Brokers Limited Edelweiss Trustee Services Limited
Edelweiss Business Services Limited (formerly known as Edelweiss Web Services Limited) (through Edelweiss Broking Limited) Edelcap Securities Limited (through ECap Equities Limited)
Edelweiss Asset Management Limited ECap Equities Limited Edelweiss Broking Limited Edelweiss Trusteeship Company Limited Edelweiss Alternative Asset Advisors Limited
Edelweiss Housing Finance Limited (through Edelweiss Commodities Services Limited)
Edelweiss Investment Adviser Limited EC Commodity Limited
Edel Commodities Limited (through Edelweiss Commodities Services Limited)
Edel Land Limited
Edelweiss Custodial Services Limited (through Edelweiss Securities Limited)
EC International Limited, Mauritius Edelweiss Capital (Singapore) Pte. Limited
Edelweiss Alternative Asset Advisors Pte. Limited (through Edelweiss Capital (Singapore) Pte. Limited)
Edelweiss International (Singapore) Pte. Limited (through Edelweiss Capital (Singapore) Pte. Limited)
Aster Commodities DMCC, United Arab Emirates (through EC International Limited, Mauritius)
EAAA LLC, Mauritius (through EC International Limited)
EW Special Opportunities Advisors LLC, Mauritius (through EAAA LLC)
EW India Special Assets Advisors LLC, Mauritius (through EAAA LLC)
Edel Investments Limited
Edelweiss Tokio Life Insurance Company Limited
Edelweiss Investment Advisors Private Limited, Singapore (through Edelweiss Capital (Singapore) Pte. Limited) Edelweiss Commodities Services Limited
Edelweiss Comtrade Limited (through Edelweiss Securities Limited)
Edel Finance Company Limited (through Edelweiss Broking Limited)
Edelweiss Capital Markets Limited (through Edelweiss Commodities Services Limited)
EW SBI Crossover Advisors LLC, Mauritius (through EAAA LLC)
EFSL Trading Limited (formerly known as EFSL Commodities Limited) (through Edel Commodities Limited)
Edel Commodities Trading Limited (Upto 17 November 2016)
EFSL Comtrade Limited (through Edelweiss Commodities Services Limited)
Edelweiss Retail Finance Limited (through Edelcap Securities Limited)
Edelweiss Securities (Hong Kong) Private Limited (through Edelweiss Securities Limited)
Edelweiss Metals Limited (upto 30 June 2016)
Edelweiss Financial Services Inc, United States of America (through Edelweiss Securities Limited)
Edelweiss Commodities Pte. Ltd, Singapore (through EFSL Comtrade Limited)
Edelweiss Commodities Nigeria Limited (Upto 17 November 2016)
Edelweiss Agri Value Chain Limited (through Edelweiss Commodities Services Limited)
EdelGive Foundation
Edelweiss Multi Strategy Funds Management Private Limited (formerly known as Forefront Capital Management Private Limited)
Edelweiss Wealth Advisors LLP (Formerly known as Forefront Wealth Advisors LLP) (through Edelweiss Commodities Services Limited)
Auris Corporate Centre Limited (through Ecap Equities Limited)
Olive Business Centre Limited (through Ecap Equities Limited)
Eternity Business Centre Limited (through Ecap Equities Limited)
Serenity Business Park Limited (through Ecap Equities Limited)
Burlington Business Solutions Limited (through Ecap Equities Limited)
Edelweiss India Capital Management, Mauritius (through Multi Strategy Funds Management Private Limited)
Edelweiss Multi Strategy Fund Adivsors LLP (Formerly known as Forefront Alternate Investment Advisors LLP) (through Edelweiss Multi Strategy Funds Management Private Limited)
Edelweiss Commodities (CHAD) SARL (Upto 17 November 2016)
EFSL International Limited (through EC International Limited)
Edelweiss Financial Services (UK) Limited (through Edelweiss Securities Limited)
Edelweiss Holdings Limited
Edelweiss Tarim Urunleri Anonim Sirketi, Turkey (through EFSL Comtrade Limited)
Edelweiss AIF Fund I - EW Clover Scheme -1 (through Edelcap Securities Limited)
Edelweiss General Insurance Company Limited
Edelweiss Finvest Private Limited (formerly known as Arum Investments Private Limited) (through Ecap Equities Limited) Edelweiss Asset Reconstruction Company Limited (through Edelweiss Custodial Services Limited) (from 16 September 2016) Edelweiss Private Equity Tech Fund (through Ecap Equities Limited) (from 21 November 2016)
Edelweiss Securities (IFSC) Limited (from 23 December 2016)
(B) Associates:
Allium Finance Private Limited (through Edelweiss Commodities Services Limited)
Edelweiss Fund Advisors Private Limited
Dahlia Commodities Services Private Limited (through Edelweiss Securities Limited)
Magnolia Commodities Services Private Limited (through Edelweiss Securities Limited)
Aeon Credit Service India Private Limited (through ECL Finance Limited)
(C) Individuals owning, directly or indirectly, an interest in the voting power of the Company that gives them control or significant influence over the Company:
Mr. Rashesh Shah
Mr. Venkat Ramaswamy
Ms. Vidya Shah
Ms. Aparna T. C.
(D) Key managerial personnel :
Mr. Rashesh Shah - Chairman, Managing Director & CEO Mr. Venkat Ramaswamy - Executive Director Mr. Himanshu Kaji - Executive Director Mr. Rujan Panjwani - Executive Director
(E) Relatives of individuals exercising significant influence and relatives of KMP, with whom transactions have taken place: Ms. Kaavya Venkat
Ms. Shilpa Mody Ms. Sejal Premal Parekh Mr. A V Ramaswamy Ms. Sneha Sripad Desai Mr. Nalin Kaji Ms. Shabnam Panjwani
(F) Enterprises over which KMPs / Relatives exercise significant influence, with whom transactions have taken place:
Spire Investment Advisors LLP
In accordance with Accounting Standard 20 - âEarnings Per Shareâ prescribed by Companies (Accounts) Rules, 2014, the computation of earnings per share is set out below:
1.3 Disclosure pursuant to Accounting Standard 15 (Revised) - Employee Benefits A) Defined contribution plan (Provident fund):
Amount of Rs.14.50 million (Previous year: Rs.13.10 million) is recognised as expense and included in âEmployee benefit expenseâ - Note 2.24 in the statement of profit and loss.
B) Defined benefit plan (Gratuity):
The following tables summarise the components of the net employee benefit expenses recognised in the statement of profit and loss, the funded status and amount recognised in the balance sheet for the gratuity benefit plan.
1.3. Employee stock option plans
The Company has currently two Employee Stock Option Plans (âPlansâ) in force. The Plans provide that the Companyâs employees and those of its subsidiaries and associates are granted an option to acquire equity shares of the Company that vest in a graded manner. The options may be exercised within a specified period. The plans also provide that if the ESOP Committee so notifies, the participant may have an option to receive cash in lieu of exercising the vested options in the manner provided in the ESOP Scheme in this regards.
The Company follows the intrinsic value method to account for its stock based compensation plans. Compensation cost is measured as the excess, if any, of the fair market value of the underlying share on the date of grant over the exercise price.
During the year, the Company granted stock options to employees under the ESOP 2011 Plan where the exercise price was linked to either closing market price of the shares on the date of the grant or book value of the shares as per the last audited balance sheet of the Company as on the date of the grant, whichever is higher.
The options can be exercised within two years from the date of vesting.
During the years ended 31 March 2012, 31 March 2013, 31 March 2014, 31 March 2016 and 31 March 2017, the Company had granted stock options to the employees under the ESOP 2011 Plan (formulated in F.Y. 2011-12) where the exercise price was linked to either closing market price of the shares on the date of the grant or book value of the shares as per the last audited balance sheet of the Company as on the date of the grant, whichever is higher.
During the year ended 31 March 2011, the Company had formulated ESOP 2010 Plan wherein stock options were granted to employees where the exercise price was linked to either closing market price of the shares on the date of the grant or book value of the shares as per the last audited balance sheet of the Company as on the date of the grant, whichever is higher.
The options can be exercised within four years from the date of vesting.
During the year ended 31 March 2010, the Company had formulated ESOP 2009 Plan wherein stock options were granted to employees where the exercise price was linked to either closing market price of the shares on the date of the grant or book value of the shares as per the last audited balance sheet as on the date of the grant, whichever is higher.
The options can be exercised within two years from the date of vesting.
For determination of compensation cost, the Company has assumed the exercise price to be the specified amount.
Since the exercise price in all the above Plans is linked to closing market price of the shares on the date of the grant date, there is no compensation cost based on intrinsic value of options.
With respect to stock options granted upto 31 March 2008, the fair market value of the underlying shares has been determined based on an independent valuerâs report as these stock options were granted by the Company to its employees when it was not listed on the stock exchanges. The fair value of such stock options is arrived as stipulated in the Guidance Note on Accounting for Employee Share Based Payments issued by The Institute of Chartered Accountants of India. Based on intrinsic value method compensation cost charged in the statement of profit and loss for the year is Rs.Nil (Previous year: write back of Rs.0.10 million).
Fair value methodology
The fair value of options used to compute pro-forma net income and earnings per share have been estimated on the dates of each grant, on or after the date the âGuidance Note on Accounting for Employee Share-based Paymentsâ, issued by the Institute of Chartered Accountants of India, became applicable, i.e. 1 April 2005, using the Black-Scholes option pricing model. The Company has estimated the volatility based on historical market volatility. The various assumptions considered in the pricing model for the aforementioned ESOPâs granted are:
1.4 Share application money pending allotment
The Company has received Rs.40.94 million (Previous year: Rs.20.58 million) towards share application on exercise of ESOPs which will result in an issue of 1,133,100 shares (Previous year: 634,625 shares). Of the total receipts Rs.39.81 million (Previous year: Rs.19.95 million) has been received towards share premium. These shares have since been allotted.
1.5 Capital Commitment
Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs.30.66 million (Previous year: Rs.49.33 million).
1.6 Contingent liabilities
a) Claims against the Company not acknowledged as debt:
Taxation matters in respect of which appeal is pending Rs.566.00 million (Previous year: Rs.492.94 million);
b) Other claim not acknowledged as debt:
Corporate guarantees issued on behalf of subsidiaries to the extent of Rs.70,503.54 million (Previous year: Rs.81,466.24 million).
The Companyâs pending litigations mainly comprise of claims against the Company pertaining to proceedings pending with Income tax, service tax and other authorities. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contingent liabilities where applicable, in the financial statements. The Company believes that the outcome of these proceedings will not have a materially adverse effect on the Companyâs financial position and results of operations.
1.7 Details of dues to micro, small and medium enterprises
Trade Payables includes Rs.Nil (Previous year: Rs.Nil) payable to âSuppliersâ registered under the Micro, Small and Medium Enterprises Development Act, 2006. No interest has been paid / is payable by the Company during the year to âSuppliersâ registered under this Act. The aforementioned is based on the responses received by the Company to its inquiries with suppliers with regard to applicability under the said Act.
1.8 Cost sharing
Edelweiss Financial Services Limited, being the holding company along with group companies, incurs expenditure like common senior management compensation cost in financial year 2015-16, Group mediclaim, etc. which is for the common benefit of itself and its certain subsidiaries including the Company. This cost so expended is reimbursed by the Company on the basis of number of employees, time spent by employees of other companies, actual identifications etc. On the same lines, costs like rent, electricity charges incurred by the Company for the benefit of fellow subsidiaries and associate companies are recovered as reimbursement by the Company from the subsidiaries and associate companies on similar basis. Accordingly, and as identified by the management, the expenditure heads in note 2.24 and 2.26 include reimbursements paid and are net of the reimbursements received based on the managementâs best estimate.
1.9 Based on the opinion of the Expert Advisory Committee of the Institute of Chartered Accountants of India, the Company, from the quarter ended 30 June 2016, is presenting interest income from its group companies on a gross basis under the head income from operations which until then was presented on a net basis. The Company has accordingly presented interest income from its group companies of Rs.1,007.83 million for the year ended 31 March 2017 on gross basis. Income from operations and finance costs for the year ended 31 March 2016 are therefore not comparable. This has no impact on the net profit of the Company for the years.
1.10 Derivative Transactions
The Company uses forward exchange contracts and futures to hedge its exposure in foreign currency. The information on open derivative instrument is as follows:
Note: The Company has an asset cover in excess of 100% in accordance with the terms of the trust deed in respect of listed Secured Redeemable Non-convertible Debentures aggregating to Rs.1,062.00 million (previous year : Rs.2,762.00 million) by way of charge on immovable property, floating charge on movable properties in the form of receivables.
1.11 The Company has received demand notices from tax authorities on account of disallowance of expenditure for earning exempt income under section 14A of Income Tax Act, 1961 read with Rule 8D of the Income Tax Rules, 1962. The Company has filed appeal and is defending its position. Due to the lack of clarity on legal position relating to the application of Rule 8D, the outcome and quantification of the eventual tax liability on the Company, if any, at this stage cannot be estimated. The Company has been advised by its tax counsel that it has a good chance in sustaining its position.
As per the provisions of Section 135 of the Companies Act, 2013,
a) Gross amount required to be spent by the Company during the year was Rs.26.31 million (Previous year: Rs.17.39 million);
b) Amount spent during the year on:
1.12 The Company has taken premises on operating lease. Rental expenses for the year ended 31 March 2017 aggregated to Rs.72.64 million (Previous year: Rs.25.57 million) which has been included under the head other expenses - Rent in the Statement of profit and loss. The Company does not have any non-cancellable operating lease.
1.13 The Company, the sponsor of Edelweiss Mutual Fund (âEdelweiss MFâ), Edelweiss Trusteeship Company Limited, the trustee company of Edelweiss MF and Edelweiss Asset Management Limited, the asset management company of Edelweiss MF have entered into an agreement with JPMorgan Asset Management (Asia) Inc., the sponsor of JPMorgan Mutual Fund (JPM MF) and JPMorgan Mutual Fund India Private Limited, trustee company of JPM MF and JPMorgan Asset Management India Private Limited, the asset management company to JPM MF on March 22, 2016, for acquiring control and management of the onshore fund schemes and international fund of funds of JPM MF and the corresponding change in the sponsorship, trusteeship and administration of schemes of JPM MF, upon completion of the transaction subject to receipt of regulatory approvals. All necessary steps, including a âNo Objectionâ from SEBI were duly received and thereafter, all the schemes of JPMorgan Mutual Fund were transferred to and now form part of Edelweiss Mutual Fund with effect from close of business day on November 25, 2016.
1.14 Disclosures relating to Specified Bank Notes1 (SBNs) held and transacted during the period from 8 November 2016 to 30 December 2016 pursuant to Notification No. G.S.R. 308(E) dated 30th March, 2017:
* For the purpose of this clause, the term Specified Bank Notes (SBNs) means the bank notes of denominations of the existing series of the value of five hundred rupees and one thousand rupees as defined under the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs no. S.O. 3407(E), dated the 8 November, 2016.
1.15 The Board of Directors at their meeting held on 17 May 2017, have recommended a final dividend of Rs.0.30 per equity share (on face value of Rs.1 per equity share), subject to the approval of the members at the ensuing Annual General Meeting. In terms of revised Accounting Standard (AS) 4 âContingencies and Events occurring after the Balance sheet dateâ as notified by the Ministry of Corporate Affairs through amendments to Companies (Accounting Standards) Amendment Rules, 2016, dated 30 March 2016, the Company has not appropriated for the recommended final dividend (including tax) from the Statement of Profit and Loss for the year ended 31 March 2017.
1.16 The Company has a process whereby periodically all long term contracts (including derivative contracts) are assessed for material foreseeable losses. At the year end, the Company has reviewed and ensured that adequate provision as required under any law/ accounting standards for material foreseeable losses on such long term contracts (including derivative contracts) has been made in the books of accounts.
Mar 31, 2013
1. Related partes (refer note 2.27 of the fnancial statements)
(A) Subsidiaries which are controlled by the Company and with whom
transactons have taken place:
Edelweiss Securites Limited
Edelweiss Insurance Brokers Limited
Edelweiss Finance & Investments Limited
Edelweiss Commodites Services Limited (formerly Comfort Projects
Limited)
Edelweiss Trustee Services Limited
ECL Finance Limited
Edelweiss Custodial Services Limited
Edelcap Securites Limited
ECap Equites Limited
EC Commodity Limited
Edel Commodites Limited
Edelweiss Global Wealth Management Limited
Edelweiss Trusteeship Company Limited
Edelweiss Asset Management Limited
Edelweiss Broking Limited
Edelweiss Investment Adviser Limited (formerly Edelweiss Investment
Advisors Limited)
Edel Land Limited
Edelweiss Web Services Limited (through Edelweiss Broking Limited)
EC Internatonal Limited, Mauritus
EdelGive Foundaton
Edelweiss Alternatve Asset Advisors Limited
Edelweiss Housing Finance Limited (through Edelweiss Commodites
Services Limited)
Edelweiss Tokio Life Insurance Company Limited
Edel Investments Limited
Edel Finance Company Limited (through Edelweiss Financial Advisors
Limited)
Edelweiss Comtrade Limited (through Edelweiss Securites Limited)
Edelweiss Capital (Singapore) Pte. Limited
Edelweiss Financial Advisors Limited (through Edelweiss Commodites
Services Limited)
EFSL Commodites Limited (through Edel Commodites Limited)
EFSL Comtrade Limited (through Edel Commodites Limited)
Edel Commodites Trading Limited (through Edel Commodites Limited)
Edelweiss Capital Markets Limited (through Edelweiss Commodites
Services Limited)
Allium Finance Private Limited (upto 21 August 2012) (through Edelweiss
Commodites Services Limited)
EC Global Limited (through Edelweiss Finance & Investments Limited)
Aster Commodites DMCC (through EC Internatonal Limited, Mauritus)
(B) Subsidiaries which are controlled by the Company and with whom no
transactons have taken place:
ECap Internatonal Limited (through EC Internatonal Limited, Mauritus)
Edelweiss Internatonal (Singapore) Pte. Limited (through Edelweiss
Capital (Singapore) Pte. Limited)
Edelweiss Alternatve Asset Advisors Pte. Limited (through Edelweiss
Capital (Singapore) Pte. Limited)
EAAA LLC, Mauritus (through ECap Internatonal Limited)
EW Special Opportunites Advisors LLC (through EAAA LLC, Mauritus)
EW India Special Assets Advisors LLC (through EAAA LLC, Mauritus)
Edelweiss Investment Advisors Private Limited (through Edelweiss
Capital (Singapore) Pte. Limited)
EW SBI Crossover Advisors LLC (through EAAA LLC, Mauritus)
Edelweiss Securites (Hong Kong) Private Limited (with efect from 6
February 2013) (through Edelweiss Securites Limited)
Afuent Dealcom Private Limited (with efect from 19 July 2012) (through
Edelcap Securites Limited)
(C) Associates:
Edelweiss Asset Reconstructon Company Limited (through Edelweiss
Custodial Services Limited)
Edelweiss Fund Advisors Private Limited
Dahlia Financial Services Private Limited (through Edelweiss Securites
Limited)
Magnolia Financial Services Private Limited (through Edelweiss
Securites Limited)
Arum Investments Private Limited (through Edelweiss Securites Limited)
Edelweiss Precious Metals Private Limited (through Edelweiss Commodites
Services Limited)
Afuent Dealcom Private Limited (upto 18 July 2012) (through Edelcap
Securites Limited)
Allium Finance Private Limited (with efect from 22 August 2012)
(through Edelweiss Commodites Services Limited)
Aeon Credit Services India Private Limited (with efect from 25 June
2012) (through ECL Finance Limited)
(D) Individuals owning, directly or indirectly, an interest in the
votng power of the Company that gives them control or signifcant
infuence over the Company:
Rashesh Shah
Venkat Ramaswamy
Vidya Shah
Aparna T. C.
(E) Key managerial personnel:
Himanshu Kaji (with efect from 01 November 2011)
(F) Relatves of individuals owning, directly or indirectly, an interest
in the votng power of the Company that gives them control or signifcant
infuence over the Company:
Kaavya Venkat
Shilpa Mody
Sharmishta Chandrakant Shah (upto 11 May 2012)
A V Ramaswamy
Sejal Premal Parekh (with efect from 9 July 2012)
Meena Subramanian (with efect from 30 January 2013)
Sneha Sripad Desai (with efect from 30 January 2013)
(G) Enterprise over which signifcant infuence is exercised:
Edelweiss Employees Welfare Trust
(H) Enterprises which exercise signifcant infuence over the Company:
Spire Investment Advisors LLP Oak Holdings Private Limited
2. Share applicaton money pending allotment (refer note 2.32 of the
fnancial statements)
The Company has received Rs. 22.50 million towards share applicaton on
exercise of ESOPs which will result in an issue of 2,929,800 shares. Of
the total receipts, Rs. 19.57 million has been received towards share
premium. These shares have since been alloted.
3. Capital commitment (refer note 2.33 of the fnancial statements)
Estmated amount of contracts remaining to be executed on capital
account and not provided for (net of advances) Â Rs. 1.41 million
(Previous year: Rs. Nil).
4. Contngent liability (refer note 2.34 of the fnancial statements)
a. Taxaton maters in respect of which appeal is pending Rs. 52.61
million (Previous year: Rs. 5.35 million).
b. The Company has issued corporate guarantees to the extent of Rs.
38,268.76 million (Previous year: Rs. 23,902.70 million), in favour of
banks to secure the credit facilites sanctoned by these banks to
Edelweiss Securites Limited, Edelweiss Commodites Services Limited
(formerly Comfort Projects Limited), ECL Finance Limited, Edelweiss
Housing Finance Limited, Aster Commodites DMCC, EC Global Limited
(subsidiary companies) and Rs. 13,735.90 million (Previous year: Rs.
7,000 million) in favour of IDBI Trusteeship Services Limited for
non-convertble debentures issued by ECL Finance Limited and Edelweiss
Housing Finance Limited (subsidiary companies) against due discharge of
debt.
5. Details of dues to micro, small and medium enterprises (refer note
2.35 of the fnancial statements)
Trade payables includes Rs. Nil (Previous year: Rs. Nil) payable to
"Suppliers" registered under the Micro, Small and Medium Enterprises
Development Act, 2006. No interest has been paid / is payable by the
Company during the year to "Suppliers" registered under this act. The
aforementoned is based on the responses received by the Company to its
inquiries with suppliers with regard to applicability under the said
act.
6. Impact of change in accountng policy (refer note 2.38 of the
fnancial statements)
From 1 April 2011, the Company by virtue of its holding company
actvites has adopted the practce of charging its actual borrowing cost
on the loans extended to its group companies. Consequently, in the
fnancial results, interest income amountng to Rs. 4,268.21 million
(Previous year: Rs. 4,002.75 million) has been neted against fnance
costs.
7. Transfer of Portolio Management Services business (refer note 2.42
of the fnancial statements)
During the previous year, the Company had with efect from 2 February
2012 transferred its Portolio Management Services business which formed
part of the agency business segment of the Company on a going concern
basis to its wholly owned subsidiary, Edelweiss Global Wealth
Management Limited.
8. Miscellaneous expenses includes an amount of Rs. 31.27 million
paid, being disgorgement of profts as per the order received from the
Securites and Exchange Commission of The United States of America dated
27 November 2012 (refer note 2.43 of the fnancial statements).
9. Prior year comparatves (refer note 2.44 of the fnancial
statements)
Previous year fgures have been regrouped and rearranged wherever
necessary.
Mar 31, 2012
Rights of equity shareholders:
The Company has only one class of equity shares having a par value of
Rs 1 each. Each holder of equity shares Is entitled to one vote per
share held. 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.
Consolidation:
During the F.Y. 2007-08: 89,843,620 equity shares of Rs 1 each were
consolidated into fully paid-up 17,968,724 equity shares of f 5 each.
Share split:
During the F.Y. 2010-11: 75,099,118 equity shares of Rs 5 each were
split into fully paid-up 375,495,590 equity shares of Rs 1 each.
Details of bonus shares issued:
(a) during the F.Y. 2007-08: 44,916,806 equity shares of Rs 1 each
(before consolidation of face value of equity share from Rs 1 per share
To Rs 5 per share) were allotted as fully paid up bonus shares by
capitalisation of Rs 44.92 million from securities premium account.
(b) during the F.Y. 2007-08: 35,937,448 equity shares of Rs 5 each were
allotted; as fully paid up bonus shares by capitalisation of Rs 179.69
million from securities premium account.
(c) during the F.Y. 2010-11: 375,495,590 equity shares of Rs 1 each
(after sfllit of face value of equity share from Rs 5 per share to Rs 1
per share) were alloted as fully paid-up bonus shares by capitalisation
of Rs 2.60 million from capital redemption reserve and Rs 372.90
million from securities premium account.
1.1 Segment reporting
The Company's business is organised and management reviews the
performance, based on the business segments as mentioned below:
Income for each segment has been specifically identified. Expenditure,
assets and liabilities are either specifically identifiable with
individual segments or have been allocated to segments on a systematic
basis.
Based on such allocations, segmental balance sheet as at 31 March 2012
and segmental statement of profit and loss for the year ended 31 March
2012 have been prepared.
Since the business operations of the Company are primarily concentrated
in India, the Company is considered to operate only in the domestic
segment.
1.2 Related parties
(A) Subsidiaries which are controlled by the Company and with whom
transactions have taken place:
Edelweiss Securities Limited
Edelweiss Insurance Brokers Limited
Edelweiss Finance & Investments Limited
Edelweiss Trustee Services Limited
ECL Finance Limited
Edelweiss Custodial Services Limited
Edelcap Securities Limited
ECap Equities Limited
EC Commodity Limited
Edel Commodities Limited
Edelweiss Global Wealth Management Limited (formerly Edelweiss
Financial Products & Solutions Limited)
Edelweiss Trusteeship Company Limited
Edelweiss Asset Management Limited
Edelweiss Broking Limited
Edelweiss Investment Advisors Limited
Edel Land Limited
Edelweiss Web Services Limited (through Edelweiss Broking Limited)
EC International Limited, Mauritius Edelgive Foundation
Edelweiss Alternative Asset Advisors Limited
Edelweiss Housing Finance Limited (through Comfort Projects Limited)
Edelweiss Tokio Life Insurance Company Limited
Edel Investments Limited
Comfort Projects Limited
Edelweiss Stock Broking Limited (through Edelweiss Financial Advisors
Limited)
Edel Finance Company Limited (through Edelweiss Financial Advisors
Limited)
Edelweiss Comtrade Limited (formerly known as Anagram Comtrade Limited)
(through Edelweiss Securities Limited)
Edelweiss Capital (Singapore) Pte. Limited
Edelweiss Financial Advisors Limited (through Comfort Projects Limited)
EFSL Commodities Limited (through Edel Commodities Limitefl)
EFSL Comtrade Limited (through Edel Commodities Limited)
Edel Commodities Trading Limited (through Edel Commodities limited) .
Edelweiss Capital Markets Limited (through Comfort Projects Limited) ,
Allium Finance Private Limited (through Comfort Projects Limited) .
Arum Investments Private Limited (upto 28 March 2011) (through
Edelweiss Securities Limited)
Edelweiss Capital USA, LLC (upto 09 September 2010)
(B) Subsidiaries which are controlled by the Company and with whom no
transactions have taken place:
EC Global Limited (through Edelweiss Finance & Investments Limited)
Aster Commodities DMCC (through EC International Limited, Mauritius)
ECap International Limited (through EC International Limited,
Mauritius)
Edelweiss International (Singapore) Pte. Limited (through Edelweiss
Capital (Singapore) Pte. Limited)
Edelweiss Alternative Asset Advisors Pte. Limited. (through Edelweiss
Capital (Singapore) Pte. Limited)
EAAA LLC, Mauritius (through ECap International Limited)
EW Special Opportunities Advisors LLC (through EAAA LLC, Mauritius)
EW India Special Assets Advisors LLC (through EAAA LLC, Mauritius)
Edelweiss Investment Advisors Private Limited (through Edelweiss
Capital (Singapore) Pte. Limited)
EW SBI Crossover Advisors LLC (through EAAA LLC, Mauritius)
(C) Associates:
Edelweiss Asset Reconstruction Company Limited (through Edelweiss
Alternative Asset Advisors Limited)
Edelweiss Fund Advisors Private Limited
Dahlia Financial Services Private Limited (through Edelweiss Securities
Limited)
Magnolia Financial Services Private Limited (through Edelweiss
Securities Limited)
Arum Investments Private Limited (with effect from 29 March 2011)
(through Edelweiss Securities Limited)
Edelweiss Precious Metals Private Limited (through Comfort Projects
Limited)
Affluent Dealcom Private Limited (through Edelcap Securities Limited)
(D) Individuals owning, directly or indirectly, an interest in the
voting power of the Company that gives them control or significant
influence over the Company:
Rashesh Shah Venkat Ramaswamy
(E) Key managerial personnel:
Himanshu Kaji (with effect from 01 November 2011)
(F) Relatives of individuals owning, directly or indirectly, an
interest in the voting power of the Company that gives them control or
significant influence over the Company:
Vidya Shah Aparna T. C.
Kaavya Venkat Shilpa Mody
Sharmishta Chandrakant Shah A V Ramaswamy
(G) Enterprise over which significant influence is exercised:
Edelweiss Employees Welfare Trust
(H) Enterprise which exercise significant influence over the Company:
Spire Investment Advisors LLP Oak Holdings Private Limited
Note: With effect from 1 April 2011 (being the appointed date), the
securities business of erstwhile Edelweiss Trading & Holdings Limited
(ETHL), a subsidiary of Edelweiss Financial Services Limited, has been
demerged and merged with Edelweiss Securities Limited (ESL) and
businesses other than securities business have been merged with Comfort
Projects Limited (CPL) (a wholly owned subsidiary of Edelweiss
Financial Services Limited) vide an order of the Hon. High Court of
Andhra Pradesh. The effective date of the order is May 12, 20i2. All
related party transactions during the year and the outstanding balances
as at the end of the year have accordingly been disclosed against ESL
and CPL respectively in the financial statements of the Company. Also,
investment in erstwhile ETHL is now disclosed as investment in CPL.
* includes issuance of bonus equity shares and split of equity shares
during the year ended 31 March 2011.
1.3 Disclosure pursuant to Accounting Standard 15 (Revised) - Employee
Benefits
A) Defined contribution plan (Provident fund):
Amount of Rs 8.76 million (Previous year: Rs 5.75 million) is
recognised as expense and included in "Employee benefit expenses" -
note 2.23 in the statement of profit and loss.
B) Defined benefit plan (Gratuity):
The following tables summarise the components of the net employee
benefit expenses recognised in the statement of profit and loss, the
funded status and amount recognised in the balance sheet for the
gratuity benefit plan.
1.4 Employee stock option plans
The Company has currently seven Employee Stock Option Plans ('Plans')
in force. The Plans provide that the Company's employees and those of
its subsidiaries are granted an option to acquire equity shares of the
Company that vest in a graded manner. The options may be exercised
within a specified period.
The Company follows the intrinsic value method to account for its stock
based compensation plans. Compensation cost is measured as the excess,
if any, of the fair market value of the underlying share on the date of
grant over the exercise price.
During the year, the Company has formulated ESOP 2011 Plan wherein
stock options were granted to employees where the exercise price was
linked to either closing market price of the shares on the date of the
grant or book value of the shares as per the last audited balance sheet
as on the date of the grant, whichever is higher.
1.5 Share application money pending allotment
The company has received Rs 11.78 million towards share application on
excercise of ESOPs which will result in an issue of 1,002,000 shares.
Of the total receipts, Rs 10.78 million has been received towards share
premium. These shares have since been allotted.
1.6 Capital commitment
Capital commitments (net of advances) - Rs Nil (Previous year: Rs Nil)
1.7 Contingent liability
a. Taxation matters in respect of which appeal is pending - Rs 5.35
million (Previous year: Rs 20.42 million).
b. The Company has issued corporate guarantees to the extent of Rs
23,902.70 million (Previous year: Rs 15,950 million), in favour of
banks to secure the credit facilities sanctioned by these banks to
Edelweiss Securities Limited, Comfort Projects Limited, ECL Finance
Limited, Edel Commodities Trading Limited, Edelweiss Comtrade Limited,
Edelweiss Housing Finance Limited, EFSL Commodites Limited, EFSL
Comtrade Limited (subsidiary companies) and Rs 7,000 million (Previous
year: Rs 5,000 million) in favour of IDBI Trusteeship Services Limited
for non-convertible debentures issued by ECL Finance Limited
(subsidiary company) against due discharge of debt.
1.8 Disclosure of loans and advances pursuant to clause 32 of listing
agreement
a. Rs 66.88 million (Previous year: Rs 13.73 million) due from
Edelweiss Alternative Asset Advisors Limited (maximum amount due at any
time during the year Rs 196.09 million; Previous year: Rs 29.76
million)
b. Rs 350.90 million (Previous year: Rs 155.54 million) due from
Edelweiss Broking Limited (maximum amount due at any time during the
year Rs 589.39 million; Previous year: f 922.52 million)
c. Rs 1,475.84 million (Previous year: X 514.39 million) due from EC
Commodity Limited (maximum amount due at any time during the year X
5,810.18 million; Previous year: Rs 5,158.72 million)
d. Rs 3,869.27 million (Previous year: Rs 22,047.70 million due from
Edelweiss Trading & Holdings Limited and Rs Nil from Comfort Projects
Limited) due from Comfort Projects Limited (maximum amount due at any
time during the year Rs 32,217.76 million from Comfort Projects
Limited; Previous year: Rs 52,415.11 million from Edelweiss Trading and
Holdings Limited and Rs Nil from Comfort Projects Limited)
1.9 Disclosure of loans and advances pursuant to clause 32 of listing
agreement (Continued)
e. Rs 2,001.62 million (Previous year: Rs 104.40 million) due from
ECap Equities Limited (maximum amount due at any time during the year
Rs 2,293.47 million; Previous year: Rs 8,332.87 million)
f. Rs 2,546.35 million (Previous year: Rs 314.84 million) due from
Edel Commodities Limited (maximum amount due at any time during the
year Rs 4,851.95 million; Previous year: Rs 519.26 million)
g. Rs 720.05 million (Previous year: Rs 1,430.70 million) due from
Edelcap Securities Limited (maximum amount due at any time during the
year Rs 5,832.78 million; Previous year: Rs 8,464.84 million)
h. Rs 3,045.72 million (Previous year: t 2,458.91 million) due from
Edelweiss Finance & Investments Limited (maximum amount due at any time
during the year Rs 7,833.92 million; Previous year: Rs 9,796.27
million)
i. Rs 84.57 million (Previous year: Rs 44.24 million) due from Edel
Land Limited (maximum amount due at any time during the year Rs 84.57
million; Previous year: Rs 168.55 million)
j. Rs 508.05 million (Previous year: Rs 1,469.26 million) due from
Edelweiss Securities Limited (maximum amount due at any time during the
year Rs 13,574.80 million; Previous year: Rs 16,498.33 million) k. Rs
68.38 million (Previous year: Rs 64.43 million) due from Edelweiss Web
Services Limited (maximum amount due at any time during the year Rs
92.14 million; Previous year: Rs 96.83 million)
I. Rs Nil (Previous year: Rs Nil) due from Edelweiss Trustee Services
Limited (maximum amount due at any time during the year f Nil; Previous
year: Rs 0.50 million) m. Rs 203.02 million (Previous year: Rs 94.59
million) due from Edelweiss Global Wealth Management Limited (formerly
Edelweiss Financial Products & Solutions Limited) (maximum amount due
at any time during the year Rs 799.01 million; Previous year: Rs
3,791.85 million)
n. Rs 1,380.45 million (Previous year: Rs 1,404.65 million) due from
Edelweiss Employees Welfare Trust (maximum amount due at any time
during the year Rs 1,404.65 million; Previous year: Rs 1,444.05
million)
o. Rs 636.74 million (Previous year: Rs 533.42 million) due from
Edelweiss Housing Finance Limited (maximum amount due at any time
during the year Rs 3,217.40 million; Previous year: Rs 533.42 million)
p. Rs Nil (Previous year: Rs Nil) due from Edelweiss Custodial
Services Limited (maximum amount due at any time during the year Rs
Nil; Previous year: Rs 1.10 million) q. Rs 36.00 million (Previous
year: Rs 70.01 million) due from Edelweiss Financial Advisors Limited
(maximum amount due at any time during the year Rs 420.00 million;
Previous year: Rs 980.00 million) r. Rs 1,652.30 million (Previous
year: Rs 8.38 million) due from Edelweiss Investment Advisors Limited
(maximum amount due at any time during the year Rs 1,652.30 million;
Previous year: Rs 178.00 million) s. Rs Nil (Previous year: Rs Nil) due
from Edelweiss Tokio Life Insurance Company Limited (maximum amount due
at any time during the year Rs Nil; Previous year: Rs 0.70 million) t.
Rs 8.69 million (Previous year: Rs 1.79 million) due from Edelweiss
Capital (Singapore) Pte. Limited (maximum amount due at any time
during the year Rs 8.98 million; Previous year: Rs 1.82 million)
u. Rs 2,352.95 million (Previous year: Rs 5,279.16 million) due from
EC International Limited (maximum amount due at any time during the
year Rs 2,352.95 million; Previous year: Rs 5,279.16 million)
v. Rs 639.13 million (Previous year: Rs 140.91 million) due from ECL
Finance Limited (maximum amount due at any time during the year Rs
15,084.88 million; Previous year: Rs 31,408.27 million) w. Rs 9.61
million (Previous year: Rs 13.74 million) due from Edelweiss Insurance
Brokers Limited (maximum amount due at any time during the year Rs
16.27 million; Previous year: Rs 41.56 million)
x. Rs Nil (Previous year: Rs Nil) due from Edelweiss Fund Advisors
Private Limited (maximum amount due at any time during the year Rs 0.10
million; Previous year: Rs 1.45 million) y. Rs 0.93 million (Previous
year: Rs Nil) due from Edelweiss Comtrade Limited (maximum amount due
at any time during the year Rs 1200.00 million; Previous year: Rs Nil)
All the above loans are repayable on demand except for loan of Rs
276.30 million (Previous year: Rs 541.20 million) to Edelcap Securities
Limited where repayment is as per contracted terms.
1.10 Cost sharing
The Company, being the holding company of Edelweiss group incurs
expenditure like common senior management compensation cost,
advertisement cost, rent expenditure, etc. which is for the common
benefit of itself and certain subsidiary companies. This cost so
expended is recovered as reimbursement from the subsidiaries on the
basis of number of employees, area occupied, time spent by employees
for other companies, actual identifications, etc. On the same lines,
operational cost expended by the Company's Subsidiary for the benefit
of the Company is reimbursed by the Company. Accordingly, and as
identified by management, the expenditure heads in notes 2.23 and 2.25
are net of these reimbursements.
1.11 Impact of change in accounting policy
The Company has ceased to charge Brand Equity, Brand Protection, Brand
Promotion fees to its subsidiaries from 1 April 2011. Had the Company
continued to charge these fees, Advisory, rating support and other fees
disclosed under Fee Income in the standalone financial results would
have been higher by Rs 438.00 million.
From 1 April 2011, the Company by virtue of its holding company
activities has adopted the practice of charging its actual borrowing
cost on the loans extended to its group companies. Consequently, in the
standalone financial results, interest income amounting to Rs 4,002.75
million has been netted against finance costs.
1.12 Transfer of Portfolio Management Services Business
The company has with effect from 2 February 2012 transferred its
Portfolio Management Services business which forms part of the Agency
business segment of the company on a going concern basis to its wholly
owned subsidiary, Edelweiss Global Wealth Management Limited.
1.13 The Company has received demand notices from tax authorities on
account of disallowance of expenditure for earning exempt income under
section 14A(2) of Income Tax Act, 1961 read with Rule 8D of the Income
Tax Rules, 1962. The company has filed appeal and is defending its
position. Due to the lack of clarity on legal position relating to the
application of Rule 8D, the outcome and quantification of the eventual
tax liability on the company, if any, at this stage cannot be
estimated. The Company has been advised by its tax counsel that it has
a good chance in sustaining its position.
1.14 Prior year comparatives
Previous year figures have been regrouped and rearranged wherever
necessary.
Mar 31, 2011
1 BACKGROUND
Edelweiss Capital Limited (the Company) was incorporated as a public
limited company on 21 November 1995 and is the ultimate holding company
of Edelweiss group of entities. The Company is registered as a Merchant
Banker and Portfolio Management Advisor with the Securities & Exchange
Board of India (SEBI). The Company is principally engaged in
providing investment banking services and holding company activities
comprises of development, managerial and financial support to the
businesses of Edelweiss group entities.
1.2 Segment reporting
The CompanyÃs business is organised and management reviews the
performance, based on the business segments as mentioned below:
Segment Activities covered
Agency business Advisory and transactional services
Holding company activities Development, managerial and financial
support to the businesses of Edelweiss
group entities
Income for each segment has been specifically identified. Expenditure,
assets and liabilities are either specifically identifiable with
individual segments or have been allocated to segments on a systematic
basis.
Based on such allocations, segmental balance sheet as at 31 March 2011
and segmental profit & loss account for the year ended 31 March 2011
have been prepared.
Since the business operations of the Company are primarily concentrated
in India, the Company is considered to operate only in the domestic
segment.
1.3 Related parties
(A) Subsidiaries which are controlled by the Company and with whom
transactions have taken place during the year
Edelweiss Securities Limited
Edelweiss Trading & Holdings Limited (formerly known as Edelweiss
Commodities Limited)
Edelweiss Insurance Brokers Limited
Edelweiss Finance & Investments Limited
Edelweiss Capital USA, LLC (wound-up during F.Y. 2009-10)
Edelweiss Trustee Services Limited
ECL Finance Limited
Edelweiss Custodial Services Limited
Edelcap Securities Limited
ECap Equities Limited
EC Commodity Limited
Edel Commodities Limited
Edelweiss Financial Products & Solutions Limited
Edelweiss Trusteeship Company Limited
Edelweiss Asset Management Limited
Edelweiss Broking Limited
Edelweiss Investment Advisors Limited (formerly known as Edelweiss
Property Advisors Limited)
Edel Land Limited
Edelweiss Web Services Limited (formerly known as Edelweiss Capital
Services Limited)
EC International Limited, Mauritius
Edelgive Foundation
Edelweiss Alternative Asset Advisors Limited
Edelweiss Housing Finance Limited
Edelweiss Tokio Life Insurance Company Limited
Edel Investments Limited
Allium Finance Private Limited (with effect from 15 June 2009)
(through Edelweiss Trading & Holdings Limited)
Arum Investments Private Limited (with effect from 15 June 2009 to 28
March 2011)
(through Edelweiss Securities Limited)
Edelweiss Capital (Singapore) Pte. Limited
Edelweiss Financial Advisors Limited (formerly known as Anagram Capital
Limited)
(through Edelweiss Securities Limited and Edelweiss Finance &
Investments Limited)
(B) Enterprise over which significant influence is exercised
Edelweiss Employee Welfare Trust
(C) Subsidiaries which are controlled by the Company and with whom no
transactions have taken place during the year
EC Global Limited (through Edelweiss Finance & Investments Limited)
Aster Commodities DMCC
(through EC International Limited, Mauritius)
ECap International Limited (through EC International Limited,
Mauritius)
(C) Subsidiaries which are controlled by the Company and with whom no
transactions have taken place during the year (Continued)
Edelweiss International (Singapore) Pte. Limited
(through Edelweiss Capital (Singapore) Pte. Limited)
Edelweiss Alternative Asset Advisors Pte. Limited
(through Edelweiss Capital (Singapore) Pte. Limited)
EAAA LLC, Mauritius (through EC International Limited, Mauritius)
EW Special Opportunities Advisors LLC (through EAAA LLC, Mauritius)
EW India Special Assets Advisors LLC (through EAAA LLC, Mauritius)
Comfort Projects Limited (through Edelweiss Trading & Holdings Limited)
Edelweiss Investment Advisors Private Limited, Singapore
(through Edelweiss Capital (Singapore) Pte. Limited)
Edelweiss Comtrade Limited (formerly known as Anagram Comtrade Limited)
(through Edelweiss Financial Advisors Limited)
Edelweiss Stock Broking Limited (formerly known as Anagram Stockbroking
Limited)(through Edelweiss Financial Advisors Limited)
Edel Finance Company Limited (formerly known as Dropadi Finance
Limited)
(through Edelweiss Financial Advisors Limited)
Edelweiss Capital Markets Limited (through Edelweiss Trading & Holdings
Limited)
EW Crossover Advisors LLC (through EAAA LLC, Mauritius)
(D) Associates
Edelweiss Asset Reconstruction Company Limited
(through Edelweiss Alternative Asset Advisors Limited)
Edelweiss Fund Advisors Limited
Dahlia Financial Services Private Limited (through Edelweiss Securities
Limited)
Magnolia Financial Services Private Limited (through Edelweiss
Securities Limited)
Arum Investments Private Limited (with effect from 29 March 2011)
(through Edelweiss Securities Limited)
(E) Individuals owning, directly or indirectly, an interest in the
voting power of the Company that gives them control or significant
influence over the Company
Rashesh Shah
Venkat Ramaswamy
(F) Relatives of individuals owning, directly or indirectly, an
interest in the voting power of the Company that gives them control or
significant influence over the Company
Vidya Shah
Aparna T. C.
Kaavya Venkat
Shilpa Mody
Sharmishta Chandrakant Shah
A V Ramaswamy
(G) Enterprise which exercise significant influence over the Company
Oak Holdings Private Limited (upto 28 March 2011)
1.4 Disclosure pursuant to Accounting Standard 15 (Revised) - Employee
Benefits
(A) Defined contribution plan (Provident fund):
Amount of Rs. 5.75 million (Previous year: Rs. 3.61 million) is
recognised as expense and included in à Employee Costsà à Schedule 18
in the profit and loss account.
(B) Defined benefit plan (Gratuity):
The following tables summarise the components of the net employee
benefit expenses recognised in the profit and loss account, the fund
status and amount recognised in the balance sheet for the gratuity
benefit plan.
21.7 Operating leases
The Company has taken various premises on operating lease. Gross rental
expenses for the year ended 31 March 2011 aggregated to Rs. 13.36
million (Previous year: Rs. 18.01 million) which has been included
under the head Operating expenses à Rent à Schedule 19, in the profit
and loss account.
1.5 Employee stock option plans
The Company has currently seven Employee Stock Option Plans (PlansÃ)
in force. The Plans provide that the CompanyÃs employees and those of
its subsidiaries are granted an option to acquire equity shares of the
Company that vests in a graded manner. The options may be exercised
within a specified period.
The Company follows the intrinsic value method to account for its stock
based compensation plans. Compensation cost is measured as the excess,
if any, of the fair market value of the underlying share over the
exercise price.
During the year, the Company has issued ESOP 2010 Plan wherein stock
options were granted to employees where the exercise price was linked
to either closing market price of the shares on the date of the grant
or book value of the shares as per the last audited balance sheet as on
the date of the grant, whichever is higher.
The schedule of stock options vesting period for ESOP 2010 Plan is as
follows:-
Sr. Vesting date Maximum % of options that
No.. shall vest
1 12 months from the date of grant 25 (Twenty five)% of grant
2 24 months from the date of grant 25 (Twenty five)% of grant
3 36 months from the date of grant 25 (Twenty five)% of grant
4 48 months from the date of grant 25 (Twenty five)% of grant
Total 100 (One hundred)% of grant
During the previous year, the Company has issued ESOP 2009 Plan wherein
stock options were granted to employees where the exercise price was
linked to either closing market price of the shares on the date of the
grant or book value of the shares as per the last audited balance sheet
as on the date of the grant, whichever is higher.
The schedule of stock options vesting period is as follows:-
Sr. Vesting date Maximum % of options that
shall vest
1 36 months from the date of grant 30 (Thirty)% of grant
2 48 months from the date of grant 30 (Thirty)% of grant
3 60 months from the date of grant 40 (Forty)% of grant
Total 100 (One hundred)% of grant
For determination of compensation cost, the Company has assumed the
exercise price to be the specified amount.
With respect to stock options granted upto 31 March 2008, the fair
market value of the underlying shares has been determined based on an
independent valuerÃs report as these stock options were granted by the
Company to its employees when it was not listed on the stock exchanges.
The fair value under stock options granted during the year is arrived
as stipulated in the Guidance Note on Accounting for Employee Share
Based Payments issued by The Institute of Chartered Accountants of
India. The compensation cost recorded in the profit and loss account
for the year is Rs. 3.21 million (Previous year: Rs. 7.63 million).
(*) Pricing formula:
ESOP 2008 (I)
Period during which From the date of vesting to From 1 January 2011
vested options are 31 December 2010 to 31 December 2011
exercised
Exercise price 10 % discount to market 10% discount to the
payable for such price or Rs. 120; whichever reference price i.e;
vested options is higher; otherwise Rs. average of closing
120. price of grant date
and 14 days
preceding the grant
date
ESOP 2008 (III)
Period during which From the date of vesting to From 1 January
vested options are 31 December 2012 2013 to 31 December
exercised 2013
Exercise price In case shares are listed, 10% discount to the
payable for such 10 % discount to market reference price
vested options price or Rs. 120; whichever i.e., average of
is higher; otherwise Rs. closing price of
120. grant date and 14
days preceding the
grant date
1.6 Capital commitment
Capital commitments (net of advances) Ã Rs.Nil (Previous year: Rs. Nil)
1.7 Contingent liability
(a) Taxation matters in respect of which appeal is pending à Rs.20.42
million (Previous year: Rs. 2.39 million).
(b) The Company has issued corporate guarantees to the extent of
Rs.15,950 million (Previous year: Rs. 3,800 million), in favour of
banks to secure the credit facilities sanctioned by these banks to
Edelweiss Securities Limited, EC Commodity Limited, Edelweiss Broking
Limited and Edelweiss Trading & Holdings Limited (subsidiary companies)
and Rs. 5,000 million (Previous year: Rs. 2,500 million) in favour of
IDBI Trusteeship Services Limited for non-convertible debentures issued
by ECL Finance Limited (subsidiary company) against due discharge of
debt.
1.8 Disclosure of loans and advances pursuant to clause 32 of listing
agreement
(a) Rs. 13.73 million (Previous year: Rs. 11.35 million) due from
Edelweiss Alternative Asset Advisors Limited (maximum amount due at any
time during the year Rs. 29.76 million; Previous year: Rs. 11.35
million)
(b) Rs. Nil (Previous year: Rs. Nil) due from Edelweiss Asset
Management Limited (maximum amount due at any time during the year Rs.
Nil; Previous year: Rs. 3.20 million)
(c) Rs. 155.54 million (Previous year: Rs. 317.15 million) due from
Edelweiss Broking Limited (maximum amount due at any time during the
year Rs. 922.52 million; Previous year: Rs. 1,500.73 million)
(d) Rs. 514.39 million (Previous year: Rs. 28.61 million) due from EC
Commodity Limited (maximum amount due at any time during the year Rs.
5,158.72 million; Previous year: Rs. 2,838.51 million)
(e) Rs. 22,047.70 million (Previous year: Rs. 4,510.16 million) due
from Edelweiss Trading & Holdings Limited (maximum amount due at any
time during the year Rs. 52,415.11 million; Previous year: Rs. 3,955.10
million)
(f) Rs. 104.40 million (Previous year: Rs. 546.42 million) due from
ECap Equities Limited (maximum amount due at any time during the year
Rs. 8,332.87 million; Previous year: Rs. 4,527.62 million)
(g) Rs. 314.84 million (Previous year: Rs. 63.08 million) due from Edel
Commodities Limited (maximum amount due at any time during the year Rs.
519.26 million; Previous year: Rs. 975.99 million)
(h) Rs. 1,430.70 million (Previous year: Rs. 1,341.44 million) due from
Edelcap Securities Limited (maximum amount due at any time during the
year Rs. 8,464.84 million; Previous year: Rs. 4,573.42 million)
(i) Rs. 2,458.91 million (Previous year: Rs. 1,496.41 million) due from
Edelweiss Finance & Investments Limited (maximum amount due at any time
during the year Rs. 9,796.27 million; Previous year: Rs. 3,912.42
million)
(j) Rs. 44.24 million (Previous year: Rs. 2.85 million) due from Edel
Land Limited (maximum amount due at any time during the year Rs. 168.55
million; Previous year: Rs. 5.30 million)
(k) Rs. 1,469.26 million (Previous year: Rs. 4,709.41 million) due from
Edelweiss Securities Limited (maximum amount due at any time during the
year Rs. 16,498.33 million; Previous year: Rs. 12,129.62 million)
(l) Rs. 64.43 million (Previous year: Rs. Nil) due from Edelweiss Web
Services Limited (maximum amount due at any time during the year Rs.
96.83 million; Previous year: Rs. 0.70 million)
(m) Rs. Nil (Previous year: Rs. 0.50 million) due from Edelweiss
Trustee Services Limited (maximum amount due at any time during the
year Rs. 0.50 million; Previous year: Rs. 0.50 million)
(n) Rs. 94.59 million (Previous year: Rs. Nil) due from Edelweiss
Financial Products & Solutions Limited (maximum amount due at any time
during the year Rs. 3,791.85 million; Previous year: Rs. 751.56
million)
(o) Rs. 1,404.65 million (Previous year: Rs. 1,444.05 million) due from
Edelweiss Employees Welfare Trust (maximum amount due at any time
during the year Rs. 1,444.05 million; Previous year: Rs. 1,451.80
million)
(p) Rs. 284.70 million (Previous year: Rs. 130.20 million) due from
Edelweiss Employees Incentive and Welfare Trust (maximum amount due at
any time during the year Rs. 284.70 million; Previous year: Rs. 130.20
million)
(q) Rs. 533.42 million (Previous year: Rs. Nil) due from Edelweiss
Housing Finance Limited (maximum amount due at any time during the year
Rs. 533.42 million; Previous year: Rs. Nil)
(r) Rs. Nil (Previous year: Rs. Nil) due from Edelweiss Custodial
Services Limited (maximum amount due at any time during the year Rs.
1.10 million; Previous year: Rs. Nil)
(s) Rs. 70.01 million (Previous year: Rs. Nil) due from Edelweiss
Financial Advisors Limited (maximum amount due at any time during the
year Rs. 980.00 million; Previous year: Rs. Nil)
(t) Rs. 8.38 million (Previous year: Rs. Nil) due from Edelweiss
Investment Advisors Limited (maximum amount due at any time during the
year Rs. 178.00 million; Previous year: Rs. Nil)
(u) Rs. Nil (Previous year: Rs. Nil) due from Edelweiss Tokio Life
Insurance Company Limited (maximum amount due at any time during the
year Rs. 0.70 million; Previous year: Rs. Nil)
(v) Rs. 1.79 million (Previous year: Rs. Nil) due from Edelweiss
Capital (Singapore) Pte. Limited (maximum amount due at any time during
the year Rs. 1.82 million; Previous year: Rs. Nil)
(w) Rs. 5,279.16 million (Previous year: Rs. 534.55 million) due from
EC International Limited (maximum amount due at any time during the
year Rs. 5,279.16 million; Previous year: Rs. 2,838.51 million)
(x) Rs. 140.91 million (Previous year: Rs. 510.18 million) due from ECL
Finance Limited (maximum amount due at any time during the year Rs.
31,408.27 million; Previous year: Rs. 7,317.55 million)
(y) Rs. 13.74 million (Previous year: Rs. 32.11 million) due from
Edelweiss Insurance Brokers Limited (maximum amount due at any time
during the year Rs. 41.56 million; Previous year: Rs. 45.74 million)
(z) Rs. Nil (Previous year: Rs. Nil) due from Edelweiss Asset
Reconstruction Company Limited (maximum amount due at any time during
the year Rs. Nil; Previous year: Rs. 21.11 million)
(aa) Rs. Nil (Previous year: Rs. Nil) due from Edelweiss Fund Advisors
Private Limited (maximum amount due at any time during the year Rs.
1.45 million; Previous year: Rs. 3.55 million)
- All the above loans are repayable on demand except for loan of Rs.
453.50 million and Rs. 541.20 million to Edelweiss Finance &
Investments Limited and Edelcap Securities Limited respectively where
repayment is as per contracted terms.
- Of the above loans, items (l), (o), (p), (q), (s) and (u) are at the
interest rate below the rate specified in the section 372A.
1.9 Cost sharing
Edelweiss Capital Limited, being the holding company incurs expenditure
like common senior management compensation cost, advertisement cost,
rent expenditure, etc. which is for the common benefit of itself and
certain subsidiary companies. This cost so expended is recovered as
reimbursement from the subsidiaries on the basis of number of
employees, area occupied, time spent by employees for other companies,
actual identifications, etc. On the same lines, operational cost
expended by the CompanyÃs Subsidiary for the benefit of the Company is
reimbursed by the Company. Accordingly, and as identified
appropriately, the expenditure heads in Schedule 18 and Schedule 19 are
net of these reimbursements.
1.10 Impact of change in accounting policy
From the current year, the Company has started accounting all benchmark
linked debentures products on fair value basis as against the previous
policy for not recognising unrealised gain. The impact of the same is
Nil.
1.11 The Company has received demand notices from tax authorities on
account of disallowance of expenditure for earning exempt income under
section 14A (2) of Income Tax Act, 1961 read with Rule 8D of the Income
Tax Rules, 1962. The company has filed appeal and is defending its
position. Due to the lack of clarity on legal position relating to the
application of Rule 8D, the outcome and quantification of the eventual
tax liability on the company, if any, at this stage cannot be
estimated. The Company has been advised by its tax counsel that it has
a good chance in sustaining its position.
1.12 Schedule VI disclosures
Disclosures under Schedule VI to the Companies Act, 1956 have been made
to the extent applicable to the Company.
1.13 Prior period comparatives
Previous year figures have been regrouped and rearranged wherever
necessary.
Mar 31, 2010
1.1 Segment reporting
The CompanyÃs business is organised and management reviews the
performance, based on the business segments as mentioned below:
Segment Activities covered
Agency business Advisory and transactional services
Holding company activities GroupÃs fund management
Income for each segment has been specifically identified. Expenditure,
assets and liabilities are either specifically identifiable with
individual segments or have been allocated to segments on a systematic
basis.
Based on such allocations, segmental balance sheet as at 31 March 2010
and segmental profit & loss account for the year ended 31 March 2010
have been prepared.
Since the business operations of the Company are primarily concentrated
in India, the Company is considered to operate only in the domestic
segment.
1.2 Related parties
(A) Subsidiaries which are controlled by the Company and with whom
transactions have taken place during the year:
Edelweiss Securities Limited
Edelweiss Commodities Limited
Edelweiss Insurance Brokers Limited
Edelweiss Finance & Investments Limited
Edelweiss Capital USA, LLC
Edelweiss Trustee Services Limited
ECL Finance Limited
Edelweiss Custodial Services Limited
Edelcap Securities Limited
ECap Equities Limited
EC Commodity Limited
Edel Commodities Limited
Edelweiss Financial Products & Solutions Limited
Edelweiss Trusteeship Company Limited
Edelweiss Asset Management Limited
Edelweiss Broking Limited
Edelweiss Property Advisors Limited
Edel Land Limited
Edelweiss Capital Services Limited
EC International Limited, Mauritius
Edelgive Foundation
Edelweiss Alternative Asset Advisors Limited
Edelweiss Housing Finance Limited
Edelweiss Tokio Life Insurance Company Limited
Edel Investments Limited
Allium Finance Private Limited (w.e.f. 15 June 2009)
(through Edelweiss Commodities Limited)
Arum Investments Private Limited (w.e.f.15 June 2009)
(through Edelweiss Securities Limited)
Edelweiss Capital (Singapore) Pte. Limited
Edelweiss Asset Reconstruction Company Limited (upto 12 December 2008)
(B) Enterprise over which significant influence is exercised:
Edelweiss Employee Welfare Trust
(C) Subsidiaries which are controlled by the Company and with whom no
transactions have taken place during the year:
EC Global Limited (through Edelweiss Finance & Investments Limited)
Aster Commodities DMCC (through EC International Limited, Mauritius)
ECap International Limited (through EC International Limited,
Mauritius) Edelweiss International (Singapore) Pte. Limited
(through Edelweiss Capital (Singapore) Pte. Limited)
Edelweiss Securities (Singapore) Pte. Limited
(through Edelweiss Capital (Singapore) Pte. Limited)
Edelweiss Alternative Asset Advisors Pte. Limited
(through Edelweiss Capital (Singapore) Pte. Limited)
EAAA LLC Mauritius (through EC International Limited, Mauritius)
EW Special Opportunities Advisors LLC (through EAAA LLC, Mauritius)
EW India Special Assets Advisors LLC (through EAAA LLC, Mauritius)
(D) Associates:
Edelweiss Asset Reconstruction Company Limited (w.e.f. 13 December
2008)
(through Edelweiss Alternative Asset Advisors Limited)
Edelweiss Real Estate Advisors Private Limited
Blue River Capital Advisors (India) Private Limited
Blue River Capital Management Company I, LLC (through EC Global
Limited)
Dahlia Financial Services Private Limited (through Edelweiss Securities
Limited)
Magnolia Financial Services Private Limited (through Edelweiss
Securities Limited)
(E) Individuals owning, directly or indirectly, an interest in the
voting power of the Company that gives them control or significant
influence over the Company:
Rashesh Shah Venkat Ramaswamy
(F) Relatives of individuals owning, directly or indirectly, an
interest in the voting power of the Company that gives them control or
significant influence over the Company:
Vidya Shah
Aparna T. C.
Kaavya Venkat
Shilpa Mody
Sharmishta Chandrakant Shah
A V Ramaswamy
(G) Enterprise which exercise significant influence over the company:
Oak Holdings Private Limited
1.3 Earnings per share
In accordance with Accounting Standard 20 Ã Earnings Per Share
prescribed by Companies (Accounting Standards) Rules, 2006, the
computation of earnings per share is set out below:
1.4 Disclosure pursuant to Accounting Standard 15 (Revised) - Employee
Benefits
(A) Defined contribution plan (Provident fund):
Amount of Rs. 3.61 million (Previous year: Rs. 4.02 million) is
recognised as expenses and included in à Employee Costsà à Schedule 18
in the profit and loss account.
(B) Defined benefit plan (Gratuity):
The following tables summarise the components of the net employee
benefit expenses recognised in the profit and loss account, the fund
status and amount recognised in the balance sheet for the gratuity
benefit plan.
1.5 Operating leases
The Company has taken various premises on operating lease. Gross rental
expenses for the year ended 31 March 2010 aggregated to Rs. 18.01
million (Previous year: Rs. 36.93 million) which has been included
under the head Operating expenses à Rent à Schedule 19, in the profit
and loss account.
Provision for gratuity is based on actuarial valuation done on an
overall basis which is excluded from above.
Computation of Net Profit in accordance with section 349 of the
Companies Act, 1956 and calculation of commission payable to non-
whole-time directors for financial year 2009-10:
1.6 Employee stock option plans
The Company has currently six Employee Stock Option Plans (ÃPlansÃ) in
force. The Plans provide that the CompanyÃs employees and those of its
subsidiaries are granted an option to acquire equity shares of the
Company that vests in a graded manner. The options may be exercised
within a specified period.
The Company follows the intrinsic value method to account for its stock
based compensation plans. Compensation cost is measured as the excess,
if any, of the fair market value of the underlying share over the
exercise price.
During the year, the Company has issued ESOP 2009 Plan wherein stock
options were granted to employees where the exercise price was linked
to either closing market price of the shares on the date of the grant
or book value of the shares as per the last audited balance sheet as on
the date of the grant, whichever is higher. The schedule of stock
options vesting period is as follows:-
For determination of compensation cost, the Company has assumed the
exercise price to be the specified amount.
During the previous year, the Company has issued ESOP 2008 Plan wherein
stock options were granted to employees with a variable exercise price
(i.e. the exercise price was linked to either a discount on market
price at the time of exercise or a specified amount, whichever is
higher). The stock options vested after one year from the date of
grant. For determination of compensation cost, the Company has assumed
the exercise price to be the specified amount.
With respect to stock options granted upto 31 March 2008, the fair
market value of the underlying shares has been determined based on an
independent valuerÃs report as these stock options were granted by the
Company to its employees when it was not listed on the stock exchanges.
The fair value under stock options granted during the year is arrived
as stipulated in the Guidance Note on Accounting for Employee Share
Based Payments issued by The Institute of Chartered Accountants of
India. The compensation cost recorded in the profit and loss account
for the year is Rs. 7.63 million (Previous year: Rs.6.80 million).
1.7 Capital commitment
Capital commitments (net of advances) Ã Rs.Nil
(Previous year: Rs. 39 million)
1.8 Contingent liability
a. Taxation matters in respect of which appeal is pending à Rs.8.72
million (Previous year: Rs. 2.06 million). The demand paid under
protest in respect of disputed taxation matters pertaining to open
assessments of earlier years is Rs. 1.75 million (Previous year: Rs.
1.75 million).
b. The Company has issued corporate guarantees to the extent of Rs.
3,800 million (Previous year: Rs. 6,188.30 million), in favour of banks
to secure the credit facilities sanctioned by these banks to Edelweiss
Securities Limited, EC Commodity Limited, Edelweiss Broking Limited and
Edelweiss Commodities Limited (subsidiary companies) and Rs. 2,500
million in favour of IDBI Trusteeship Services Limited for
non-convertible debentures issued by ECL Finance Limited against due
discharge of debt (subsidiary company).
c. Fixed deposits of Rs. 300 million (Previous year: Rs. Nil) is
marked as lien in favour of IDBI Trusteeship Services Limited, for non-
convertible debentures issued by the Company.
1.9 Details of dues to macro enterprises and small enterprises
The Company has requested its creditors to confirm the applicability to
them under the Micro Small and Medium Enterprises Development Act,
2006. Based on the responses received by the Company, the details of
dues to macro enterprises and small enterprises:
1.10 Disclosure of loans and advances pursuant to clause 32 of listing
agreement
a) Rs. 11.35 million (Previous year: Rs. 2.65 million) due from
Edelweiss Alternative Asset Advisors Limited (maximum amount due at any
time during the year Rs. 11.35 million; Previous year: Rs. 16.17
million)
b) Rs. Nil (Previous year: Rs. Nil) due from Edelweiss Asset Management
Limited (maximum amount due at any time during the year Rs. 3.20
million; Previous year: Rs. Nil)
c) Rs. 317.15 million (Previous year: Rs. 69.26 million) due from
Edelweiss Broking Limited (maximum amount due at any time during the
year Rs. 1,500.73 million; Previous year: Rs. 73.39 million)
d) Rs. 28.61 million (Previous year: Rs. 250.21 million) due from EC
Commodity Limited (maximum amount due at any time during the year Rs.
2,838.51 million; Previous year: Rs. 250.21 million)
e) Rs. 4,510.16 million (Previous year: Rs. 186.07 million) due from
Edelweiss Commodities Limited (maximum amount due at any time during
the year Rs. 13,955.10 million; Previous year: Rs. 5,296.67 million)
f) Rs. 546.42 million (Previous year: Rs. 147.03 million) due from ECap
Equities Limited (maximum amount due at any time during the year Rs.
4,527.62 million; Previous year: Rs. 3,178.81 million)
g) Rs. 63.08 million (Previous year: Rs. 50.10 million) due from Edel
Commodities Limited (maximum amount due at any time during the year Rs.
975.99 million; Previous year: Rs. 50.10 million)
h) Rs. 1,341.44 million (Previous year: Rs. 176.05 million) due from
Edelcap Securities Limited (maximum amount due at any time during the
year Rs. 4,573.42 million; Previous year: Rs. 3,043.01 million)
1.11 Disclosure of loans and advances pursuant to clause 32 of listing
agreement. (Continued)
i) Rs. 1,496.41 million (Previous year: Rs. 1,520.40 million) due from
Edelweiss Finance & Investments Limited (maximum amount due at any time
during the year Rs. 3,912.42 million; Previous year: Rs. 5,490.08
million)
j) Rs. 2.85 million (Previous year: Rs. Nil) due from Edel Land Limited
(maximum amount due at any time during the year Rs. 5.30 million;
Previous year: Rs. Nil)
k) Rs. 4,709.41 million (Previous year: Rs. 2,545.12 million) due from
Edelweiss Securities Limited (maximum amount due at any time during the
year Rs. 12,129.62 million; Previous year: Rs. 6,869.21 million)
l) Rs. Nil (Previous year: Rs. Nil) due from Edelweiss Capital Services
Limited (maximum amount due at any time during the year Rs. 0.70
million; Previous year: Rs. Nil)
m) Rs. 0.50 million (Previous year: Rs. 0.01 million) due from
Edelweiss Trustee Services Limited (maximum amount due at any time
during the year Rs. 0.50 million; Previous year: Rs. 0.39 million)
n) Rs. Nil (Previous year: Rs. 164.80 million) due from Edelweiss
Financial Products & Solutions Limited (maximum amount due at
any time during the year Rs. 751.56 million; Previous year: Rs. 355.75
million) o) Rs. 1,444.05 million (Previous year: Rs. 424.82 million)
due from Edelweiss Employees Welfare Trust (maximum amount due at any
time during the year Rs.1,451.80 million; Previous year: Rs. 424.82
million)
p) Rs. 130.20 million (Previous year: Rs. Nil) due from Edelweiss
Employees Incentive and Welfare Trust (maximum amount due at any time
during the year Rs. 130.20 million; Previous year: Rs. Nil)
q) Rs. 534.55 million (Previous year: Rs. Nil) due from EC
International Limited (maximum amount due at any time during the year
Rs. 2,838.51 million; Previous year: Rs. Nil)
r) Rs. 510.18 million (Previous year: Rs. 114.89 million) due from ECL
Finance Limited (maximum amount due at any time during the year Rs.
7,317.55 million; Previous year: Rs. 2,787.98 million)
s) Rs. 32.11 million (Previous year: Rs. 38.06 million) due from
Edelweiss Insurance Brokers Limited (maximum amount due at any time
during the year Rs. 45.74 million; Previous year: Rs. 38.99 million)
t) Rs. Nil (Previous year: Rs. 0.54 million) due from Edelweiss Asset
Reconstruction Company Limited (maximum amount due at any
time during the year Rs. 21.11 million; Previous year: Rs. 0.54
million) u) Rs. Nil (Previous year: Rs. 0.79 million) due from
Edelweiss Real Estate Advisors Private Limited (maximum amount due at
any time during the year Rs. 3.55 million; Previous year:
Rs. 11.06 million) All the above loans are repayable on demand except
for loan of Rs. 482.50 million and Rs. 1,304.80 million to Edelweiss
Finance & Investments Limited and Edelcap Securities Limited
respectively where repayment is as per contracted terms. Of the above
loans, items a) to p) are at the interest rate below the rate
specified in the section 372A
1.12 Cost sharing
Edelweiss Capital Limited, being the holding company incurs expenditure
like common senior management compensation cost, advertisement cost,
rent expenditure, etc. which is for the common benefit of itself and
certain subsidiary companies. This cost so expended is recovered as
reimbursement from the subsidiaries on the basis of number of
employees, area occupied, time spent by employees for other companies,
actual identifications etc. On the same lines, operational cost
expended by the CompanyÃs Subsidiary for the benefit of the Company is
reimbursed by the Company. Accordingly, and as identified
appropriately, the expenditure heads in Schedule 18 and schedule 19 are
net of these reimbursements.
1.13 Schedule VI disclosures
Disclosures under Schedule VI to the Companies Act, 1956 has been made
to the extent applicable to the Company.
1.14 Prior period comparatives
Previous year figures have been regrouped and rearranged wherever
necessary.
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