1. Indiabulls Securities Limited (IBSL or the Company) carries on
the business as stock and share brokers on the National Stock Exchange
of India Limited and Bombay Stock Exchange Limited; depository
participants and other related ancillary services. On February 1, 1996
IBSL received a certificate of registration from the Securities and
Exchange Board of India (SEBI) under sub-section 1 of section 12 of
the Securities and Exchange Board of India Act, 1992 to carry on the
business as a stock broker. Accordingly, all provisions of the
Securities and Exchange Board of India Act, 1992, and rules and
regulations relating thereto are applicable to IBSL. On April 2, 2008
the equity shares of the Company were listed on National Stock Exchange
of India Limited (NSE)and Bombay Stock Exchange Limited (BSE) after the
demerger of the Company from Indiabulls Financial Services Limited.
2. Contingent liabilities not provided for in respect of:
(Amount in Rs.)
As at As at
March 31,2011 March 31, 2010
Credit facilities availed from banks 3,750,000,000 5,000,000,000
Others — 300,000
- Claims against the Company not
acknowledged as debts in respect of:
Penalty for syncronised trading under
SEBI regulations* 1,500,000 1,500,000
Arbitration matters 2,415,706 7,732,045
Capital Commitments 3,062,554 3,560,258
- Corporate guarantee for bank
guarantees availed by subsidiary 100,000,000 170,000,000
* During the year, the Securities Appellate Tribunal (SAT) has passed
an order dated October 26, 2010 in favour of the Company setting aside
the penalty imposed by SEBI. However, subsequent to the year end, SEBI
has preferred an appeal at the Honourable Supreme Court of India
against the judgment of the SAT.
The Company is involved in various legal proceedings as respondents /
defendants for various claims including those related to matters
relating to conduct of its business. In respect of these claims, the
Company believes, these claims do not constitute material litigation
matters and with its meritorious defenses the ultimate disposition of
these matters will not have material adverse effect on its Financial
Statements / Position.
3. During the previous year, the Company had redeemed 9,966,667 10%
Cumulative, Non-convertible Preference Shares of face value Rs. 4.61
per share amounting to Rs. 45,946,335, held by Oberon Limited.
Consequently, the paid-up Preference Share Capital of the Company stood
4. Employee Stock Option Schemes:
Indiabulls Employees''Welfare Trust:
During the year, pursuant to the approval accorded at an Extraordinary
General Meeting of the members of the Company held on September 30,
2010, the Indiabulls Employees''Welfare Trust (Trust) has been
formed on October 04, 2010 with an initial corpus of Rs. 50,000,
contributed equally by the Company and four other listed Settlor
entities, to administer and implement the Settlor entities'' current
ungranted Employee Stock Option Schemes (ESOP) and any future ESOP /
Employee Stock Purchase Schemes. The Company being one of the Settlor
entities of the Trust, has contributed its share of Rs. 10,000 as its
initial contribution towards the corpus of the said Trust. The Trust is
administered by Independent Trustees. In terms of the Trust Deed,
Equity shares of the Settlor entities are purchased by the Trust to the
extent permissible in terms of the ESOP scheme as approved by the
Members of the Company for the purposes of allotment of the same to
eligible Employees of settlor companies and their subsidiaries, upon
exercise of options granted by the Compensation Committee of those
companies, at a price to be determined by the Trust based on its
carrying cost. During the year, there has been no new grants made by
the Company which is required to be administered by the Trust.
Employees Stock Option Scheme-2008
Pursuant to resolution passed by the shareholders on January 19, 2009
the Company had cancelled and withdrawn the existing Employee Stock
Option Scheme-2007, covering 15,000,000 stock options and established
a new Employee Stock Option Scheme titled Employee Stock Option
Scheme-2008 in accordance with the provisions of the Securities and
Exchange Board of India (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999 (SEBI Guidelines). Under the
Scheme, the Company was authorised to grant 20,000,000 equity settled
options to eligible employees including its directors (other than
promoter directors) and employees of its subsidiary companies including
their directors. All options under the Scheme are exercisable for
equity shares of the Company. Employees covered by the plan were
granted an option to purchase shares of the Company subject to the
requirements of vesting.
A Compensation Committee constituted by the Board of Directors of the
Company administered the plan. The Compensation Committee at its
meeting held on January 24, 2009, had granted, under the Indiabulls
Securities Limited Employees StockOption Scheme-2008(IBSL
ESOP-2008), 20,000,000 StockOptions representing an equal number of
equity shares of face value Rs. 2 each in the Company, to the Eligible
Employees, at an exercise price of Rs. 17.40, being the latest
available closing market price on the National Stock Exchange of India
Ltd., as on January 23, 2009 following the intrinsic method of
accounting as is prescribed in the Guidance Note issued by the
Institute of Chartered Accountants of India on Accounting for Employees
Share based Payments (the Guidelines). As the options have been
granted at intrinsic value, there is no employee stock compensation
expense on account of the same. The Stock Options so granted, shall
vest in the eligible employees over a period of 10 years beginning from
January 25, 2010 being the first vesting date. The options granted
under each of the slabs, can be exercised by the grantees within a
period of five years from the relevant vesting date.
Employees Stock Option Scheme-2009
The Shareholders of the Company at their Annual General Meeting held on
September 30, 2009 have authorised the Board of Directors to grant
20,000,000 options, representing equivalent number of Equity shares of
face value Rs. 2 each in one or more tranches, pursuant to a new
employee stock option scheme titled as ''Indiabulls Securities Limited
Employees Stock Option Scheme-2009'' (IBSL ESOP-2009). The options
covered under the Scheme would be granted, at a price and on such terms
and conditions as may be decided by the Compensation Committee, to the
eligible employees of the Company and its subsidiaries.
The Compensation Committee constituted by the Board of Directors of the
Company, at its meeting held on December 1, 2009, granted, under the
Indiabulls Securities Limited Employees Stock Option Scheme- 2009
(IBSL ESOP - 2009) 10,000,000 Stock Options representing an equal
number of equity shares of face value Rs. 2 each in the Company, at an
exercise price of Rs. 35.25, being the latest available closing market
price on the National Stock Exchange of India Ltd., as on November 30,
2009. The Stock Options so granted, shall vest uniformly within 10
years beginning from December 2, 2010 being the first vesting date. The
option granted under each of the slabs, can be exercised within a
period of five years from the relevant vesting date.
Further, the Compensation Committee constituted by the Board of
Directors of the Company has, at its meeting held on April 12, 2010,
granted, under the Indiabulls Securities Limited Employees Stock
Option Scheme - 2009 (IBSL ESOP - 2009) 2,050,000 Stock Options
representing an equal number of equity shares of face value Rs. 2 each
in the Company, at an exercise price of Rs. 31.35, being the latest
available closing market price on the National Stock Exchange of India
Ltd., as on April 9, 2010. The Stock Options so granted, shall vest
uniformly within 10 years beginning from April 13, 2011 being the first
vesting date. The options granted under each of the slabs, can be
exercised .vithin a period of five years from the relevant vesting
5. During the year ended March 31, 2009, the Shareholders of the
Company by means of Special Resolution passed through the postal ballot
with requisite majority, authorised on March 06, 2009 the buy-back of
the Company''s fully paid-up Equity Shares of face value Rs. 2 each from
the open market through stock exchanges, at a price not exceeding Rs.
33 per share up to a maximum amount of Rs. 831,796,227, being 25% of
the total paid-up equity capital and free reserves as per the audited
Balance Sheet of the Company as at March 31,2008, to be financed out of
the Company''s free reserves and surplus and balance in the Profit and
Loss Account. The Company had proposed to buybackupto 39,281,000 of its
fully paid up Equity Shares and minimum number of 5,000,000 of its
fully paid up Equity Shares at a price not exceeding Rs. 33 per Equity
Subsequently, during the year ended March 31, 2010, the Company had
completed the said buy back on March 5, 2010 and had bought back
23,486,341 Equity Shares of face value of Rs. 2 each utilising an
aggregate amount of Rs. 741,909,192 from General Reserve, Securities
Premium and Profit & Loss Account.
6. Secured Loans:
a) Vehicles Loans of Rs. 8,143,586 (Previous Year Rs. 4,589,805) are
secured against hypothecation of the Vehicles purchased.
b) Working Capital loans of Rs. 250,000,000 (Previous Year Rs.
500,000,000) and Bank Overdraft of Rs. 1,720,567,925 (Previous Year Rs.
1,148,019,728) are secured against Fixed Deposits placed with Banks.
8. Fixed deposits includes:
a. Rs. 1,884,173,628 (Previous Year Rs. 2,500,562,281) pledged with
the banks against bank guarantees issued by banks for base capital and
additional base capital to National Stock Exchange of India, Bombay
Stock Exchange of India and National Securities Clearing Corporation
b. Rs. 250,000,000 (Previous Year Rs. 500,000,000) pledged against
working capital loan taken from bank.
c. Rs. 172,400,000 (Previous Year Rs. 376,900,000) pledged with
National Stock Exchange of India, Bombay Stock Exchange of India and
National Securities Clearing Corporation Limited for the purpose of
base capital and additional base capital.
d. Rs. 1,914,500,000 (Previous Year Rs. 1,310,000,000) pledged with
banks for overdraft facilities.
e. Rs. 22,138,193 (Previous Year Rs. 18,675,079) pledged for
f. Rs. 25,000 (Previous Year Rs. 25,000) pledged with State
Commission, New Delhi for appeal filed by the Company in a consumer
10. The loss on squaring off of erroneous transactions on account of
trading in securities amounting to Rs. 864,630 (Net) (Previous Year
loss Rs. 7,071,519 (Net)) has been adjusted to Profit and Loss Account.
11. Segment Reporting:
Segment information for the period from April 01, 2010 to March 31,
2011 as per AS -17''Segment Reporting'' as notified under the Companies
(Accounting Standard^) Rules, 2006:
(b) The Company operates solely in one Geographic segment namely
Within lndiaand hence no separate information for Geographic segment
wise disclosure is required.
(c) The Company''s primary Business segment is reflected based on
principal business activities carried on by the Company. The Company''s
primary business activity is to carry on business of stock and share
broker on National Stock Exchange of India Limited and Bombay Stock
Exchange Limited and other related ancillary services.
(d) Others business segment constitutes Investment and dealing in
tradable securities and arbitrage transaction in securities. This not
being the normal business activity of the Company, the same is shown as
(e) Segment revenue, results, assets and liabilities include amounts
identifiable to each segment and amounts allocated on a reasonable
(f) The accounting policies adopted for segment reporting are in line
with the accounting policies adopted for preparation of financial
information as disclosed in (A) above.
12. Disclosures in respect of AS-18 ''Related Party Disclosures''as
notified under the Companies (Accounting Standards) Rules, 2006:
(a) Related parties where control exists:
Nature of Relationship Name of the Party
Subsidiary Companies Indiabulls Commodities Limited
India Ethanol and Sugar Limited (a 100% subsidiary of Indiabulls
Devata Trade link Limited
Indiabulls Brokerage Limited
Indiabulls Distribution Services Limited
(b) Other Related Parties:
Nature of Relationship Name of the Party
Key Management Personnel Mr. Divyesh B. Shah, Director
Mr. Ashok Sharma, Director
Mr. Sameer Gehlaut, person exercising significant influence
Mr. Rajiv Rattan, person exercising significant influence
Mr. Saurabh K. Mittal, person exercising significant influence
13. Disclosure in respect of AS - 20 ''Earnings Per Share'' as notified
under the Companies (Accounting Standards) Rules, 2006:
The basic earnings per share is computed by dividing the net profit
attributable to equity shareholders for the year by the weighted
average number of equity shares outstanding during the reporting year.
Diluted earnings per share are computed using the weighted average
number of equity shares and also the weighted average number of equity
shares that could have been issued on the conversion of all dilutive
potential equity shares. The dilutive potential equity shares are
adjusted for the proceeds receivable, had the shares been actually
issued at fair value.
Dilutive potential equity shares are deemed converted as of the
beginning of the year, unless they have been issued at a later date.
The number of equity shares and potential diluted equity shares are
adjusted for stock split, bonus shares and the potential dilutive
effect of employee stock option plan as appropriate.
15. Employee Benefits:
Provident Fund, Gratuity and Long Term Compensated Absences -
disclosures as per Accounting Standard (AS) 15 (Revised)-Employee
Benefits as notified by the Companies (Accounting Standards) Rules,
Contributions are made to Government Provident Fund and Family Pension
Fund and other statutory funds which cover all regular employees
eligible under the respective acts. Both the employees and the Company
make predetermined contributions to the Provident Fund. The
contributions are normally based on a certain proportion of the
employee''s salary. The Company has recognised an amount of Rs.
1,096,978 (Previous year Rs. 1,080,933) towards Employer''s Contribution
for the above mentioned funds.
Provision for unfunded Gratuity and Long Term Compensated Absences for
eligible employees is based upon actuarial valuation carried out at the
end of every financial year. Major drivers in actuarial assumptions,
typically, are years of service and employee compensation. Commitments
are actuarially determined using the''Projected Unit Credit'' method.
Gains and losses on changes in actuarial assumptions are accounted for
in the Profit and Loss Account.
16. During the year, the Company has invested an additional amount of
Rs. 20,000,000 (Previous Year Rs. 500,000) in its wholly owned
subsidiary Indiabulls Brokerage Limited (Previous year - Indiabulls
Distribution Services Limited).
17. During the year, personnel cost amounting to Rs. 156,026,787
(Previous Year Rs. 120,551,408) was apportioned to the Company from its
subsidiary - Indiabulls Commodities Limited.
21. Derivative Instruments:
The Company does not have any foreign currency exposures towards
receivables, payables or any other derivative instrument that have not
22. Disclosures under the Micro, Small and Medium Enterprises
Development Act, 2006:
(a) An amount of Rs. Nil (Previous Year Rs. Nil) and Rs. Nil (Previous
Year Rs. Nil) was due and outstanding to suppliers as at the end of the
accounting year on account of Principal and Interest respectively.
(b) No interest was paid during the year in terms of section 16 of the
Micro, Small and Medium Enterprises Development Act, 2006 no amount was
paid to the supplier beyond the appointed date.
(c) No interest is payable at the end of the year other than interest
under Micro, Small and Medium Enterprises Development Act, 2006.
(d) No amount of interest was accrued and unpaid at the end of the
The above information and that given in Schedule H-Current Liabilities
and Provisions regarding Micro, Small and Medium Enterprises has been
determined to the extent such parties have been identified on the basis
of information available with the Company. This has been relied upon by
23. No borrowing cost has been capitalised during the year.
24. Information under paragraphs 3 and 4 of Part II to Schedule VI of
the Companies Act, 1956 is stated to the extent applicable to the
25. Provision for Current Tax includes provision for Wealth Tax of Rs.
456,448 (Previous year Rs. 526,854).
26. During the year ended March 31,2009, the Company had advanced a
sum of Rs. 1,809,300,000 by way of loan to one of its wholly owned
subsidiary-viz Devata Tradelink Limited (DTL). During that financial
year, DTL had incurred / provided for losses aggregating to Rs.
1,562,932,320 in respect of dealing in securities. Based upon the
availability of resources as at that year end to repay those loans and
considering the erosion of the networth of the subsidiary, the Company
had written off loans given to DTL aggregating to Rs. 1,809,300,000 as
bad loans / advances written off. Investments made by the Company in
the equity share capital of DTL amounting to Rs. 500,000 though
considered as strategic and long term in nature, considering the losses
suffered by this subsidiary, diminution in the value of the investment
is considered as other than temporary in nature and accordingly
provision for diminution in value amounting to Rs. 500,000 was made in
books of account in that financial year.
27. As at March 31,2011, the Company holds 100% of the equity share
capital of Indiabulls Distribution Services Limited (IDSL) at a cost
of Rs. 500,000. Based on the audited financials of IDSL as at and for
the year ended March 31, 2011, there has been an erosion in the value
of investment made in IDSL as the operations in IDSL are in the process
of being set up. Considering the investment in IDSL as strategic and
long term in nature, the Company considers the losses suffered by IDSL
as temporary in nature and accordingly no provision for diminution in
value has been made in books of account.
28. As per the best estimate of the management, no provision is
required to be made as per Accounting Standard (AS) 29-Provisions,
Contingent Liabilities and Contingent Assets as notified under the
Companies (Accounting Standards) Rules, 2006, in respect of any present
obligation as a result of a past event that could lead to a probable
outflow of resources, which would be required to settle the obligation.
29. In respect of amounts as mentioned under Section 205C of the
Companies Act, 1956, there were no dues required to be credited to the
Investor Education and Protection Fund as at March 31, 2011.
30. interim dividend of Re. 1 per equity share (50% of the face value
of Rs. 2 per equity share) amounting to Rs. 231,084,236 (excluding
corporate dividend tax thereon) was approved at the meeting of the
Board of Directors of the Company held on October 18, 2010 and was
transferred by the Company on October 22, 2010 into the designated
Dividend Account. Corporate dividend tax thereon aggregating to Rs.
38,380,203 was paid on November 01, 2010.
31. Previous year''s figures have been re-grouped/re-arranged wherever
considered necessary to conform to current year''s groupings and