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 Company’s 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 “ Employee Costs” – 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 – Rent – Schedule 19, in the profit
 and loss account.
 
 1.5 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 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 valuer’s 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) – Rs.Nil (Previous year: Rs. Nil)
 
 1.7 Contingent liability
 
 (a) Taxation matters in respect of which appeal is pending – 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 Company’s 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.