The Director have pleasure in presenting the Sixteenth Annual Report
along with the audited statements of accounts of your Company for the
financial year ended March 31, 2011.
I FInancIal Results
A snapshot of the financial performance of the Company and its major
subsidiaries for the financial year 2010-11 is as under:
Rs mn
Name of Company Revenues Profit before Profit after
tax
interest,
depreciation and
tax
Aggregate 14,739.4 6,067.5 2,147.3
India Infoline Limited 7,995.5 2,832.4 1,223.6
India Infoline
Investment Services
Limited 4,519.1 3,254.4 826.6
Moneyline Credit
Limited 314.8 108.4 32.3
India Infoline
Distribution
Company Limited 67.0 6.2 (0.6)
India Infoline
Housing Finance
Limited 294.0 181.1 64.2
India Infoline
Marketing Services
Limited 930.1 151.9 (51.2)
India Infoline
Insurance Services
Limited 89.5 37.1 0.8
India Infoline
Insurance Broker
Limited 609.7 70.0 45.6
India Infoline
Commodities Limited 468.7 90.0 30.5
India Infoline
Media and Research
Services Limited 202.0 193.2 16.1
IIFL Realty Limited 364.9 358.7 (9.8)
IIFL Wealth Management
Limited 1,134.4 426.0 250.6
IIFL (Asia) Pte.
Limited (53.8) (69.9) (79.2)
IIFL Inc. 60.9 1.6 0.4
IIFL Securities Ceylon
(Pvt) Limited 18.4 5.7 3.3
India Infoline Venture
Capital Fund 4.0 (102.6) (103.1)
India Infoline Trustee
Company Limited - (0.5) (0.3)
India Infoline Asset
Management Company
Limited 2.0 (14.1) (10.4)
India Infoline
Commodities DMCC - (20.1) (20.4)
IIFL Capital Pte.
Limited 60.2 (25.4) (17.9)
IIFL Securities Pte.
Limited 207.9 10.2 32.5
Inter Company
Adjustments (2,609.6) (1,463.9) (117.4)
Other Subsidiaries 59.7 37.1 31.1
The consolidated financial performance is as under:
Rs mn
2010-11 2009-10
1
Gross total income 14,739.4 11,238.8
Profit before interest depreciation
and taxation 6,067.5 4,373.1
Interestb and financial charges 2,35.7.9 291.4
Depreciation 5,81.7 534.6
Profit before tax 3,127.9 3,547.1
Taxation - Current 1,073.6 1,201.1
- Deferred (127.7) (3.74)
- Short or excess provision
for income tax 34.7 42.9
net profit for the year 2,147.3 2,340.5
Less: Minority interest (35.9) (20.6)
net Profit after minority interest 2,111.4 2,319.9
Less: Appropriations
Interim dividend 860.4 852.0
Dividend distribution tax 147.3 144.8
Transfer to general reserve 206.0 152.1
Transfer;to special reserve 185.5 102.4
net Profit after Tax and appropriation 712.2 1068.6
Less: Adjustments for Interest
and Fair Value 190.4 672.6
Add: Balance brought forward from
the previous year 2483.1 2,087.1
Balance to be carried 3,004.9 2,483.1
Segment wise information is as under:
Rs mn
2010-11 2009-10
Equity brokerage and related income 6,697.3 7,018.1
Financing..an.d..Investing income 6,180.5 2,917.8
Marketing and distribution income 1,842.7 1,293.1
Other income 19.0 9.8
Balance to be carried 14,739.4 11,238.8
A snapshot of the stand-alone financial performance of India Infoline
Limited is as under:
Rs mn
2010-11 2009-10
Gross total income 79,955.5 6,981.9
Profit before interest, depreciation
and taxation 2,832.4 2,754.2
Interes and financial charges 859.0 1.02.5
Depreciation 240.8 318.6
Profit before tax 1,732.6 2,333.1
Taxation.- Current 512.3 831.6
- Deferred (10.9) (5.8.2)
-Short or excess provision for Income tax 7.6 39.6
net profit for the year 1,223.6 1,520.1
Less: Appropriations - -
Interim dividend 859.2 852.0
Dividend distribution tax 127.6 144.8
Transfer to general reserve 123.0 152.0
Add: Balance brought forward 1,623.4 1,252.1
Balance to be;..carried...forward 1,737.2 1,623.4
II REVIEW OF OPERATIONS
On a consolidated basis, the Companys income increased by 31.1% to Rs
14.74 bn and EBITDA increased by 38.7% to Rs 6.07 bn. The income growth
was primarily driven by credit and financing business. With significant
increase in cost as well as quantum of borrowings, interest cost was Rs
2.36 bn in the year under review, as compared to Rs 291.36 mn in the
previous year. Consequently profit before and after tax was a shade
lower in the year. Profit after tax before minority interest decreased
by 8.3% to Rs 2.14 bn.
Income from equity broking and related activities decreased marginally
by 4.6% and stood at Rs 6.70 bn. Income from Financing and Investing
significantly increased by 111.8% and stood at Rs 6.18 bn. Marketing and
distribution income increased by 42.5% to Rs 1,842.7 mn. Other income
increased to Rs 19.0 mn.
III KEY INITIATIVES
IIFL Mutual Fund
During the year under review, IIFL Mutual Fund, sponsored by your
Company, received final regulatory approval from the Securities and
Exchange Board of India (SEBI) to commence operations. This will enable
commencement of mutual fund business and launching of mutual fund
schemes in due couriere.
IIFL, with its distribution reach spanning over 500 cities/towns, is
well placed to take the mutual fund penetration wider and deeper. Your
Company sees an opportunity for mutual fund mobilization in tier-II and
tier-III cities. We aim to leverage upon our indepth undertanding of
technology and reach to offer retail investor a variety of products
with minimal expense ratio and encourage them to invest for the long
term.
Asia Expansion
During the year, on the global financial services business, the
Companys Singapore subsidiary received the final approval from
Singapore Stock Exchange for its equity broking business. The
subsidiary commenced its broking operations from December 2010.
Similarly the Companys subsidiary in Sri Lanka received the approval
from Colombo Stock Exchange and SEC, Sri Lanka for undertaking broking
business in July 2010, thereby becoming the first Indian broking Company
to set up broking business in Sri Lanka. We expect both these
subsidiaries to scale up their business substantially during the
current year and going forward.
other International Initiatives
Under the advisory, wealth management and distribution business, the
Company has set up subsidiaries in UK and Dubai and received approvals
from the overseas regulator during the year. We expect these
subsidiaries to commence business during the current year.
New Memberhips
Your Company has received Trading and Clearing memberhip of Currency
Derivative Segment of United Stock Exchange of India Limited. Further
IIFL Capital Limited, the wholly owned subsidiary received Trading and
Clearing memberhip from National Stock Exchange of India Limited,
Bombay Stock Exchange Limited and MCX Stock Exchange Limited.
Investor conferences
Your Companys institutional and retail research products have been
well appreciated by the target audience. “Enterprising India-II, your
Companys second Global investor Conference, held in February 2011 at
Mumbai had participation from leading corporate and eminent
leader/speaker and received an overwhelming response from investor.
IIFLs Global Investor Conference, Discover Sri Lanka held in Colombo
in July 2010 had an encouraging participation from more than 50 leading
global and local investor and several leading Sri Lankan corporates
along with a number of heads of government undertakings, banks and
government officials. IIFL conducted several investor meets and camps
across India, on its own as well as with leading media house ET Now to
spread financial literacy and awareness about risk- return of various
financial products, aspects of financial planning and undertanding of
investor rights.
Employee skill Upgradation
Your Company had taken several steps to train its employees. It has
introduced various training modules covering functional knowledge as
well as skill set development. These modules are delivered through
internet e-learning platform as well as classroom sessions followed by
tests. The training programme will cover all sales and customer
relationship manager to clear the test in a time bound manner.
Financial literacy campaign
Your Company has taken a pionnering intiative to spread fInancial
literacy. It launched a comprehensive financial education and awareness
initiative, FLAME Rs Financial Literacy Agenda for Mass Empowerment on
February 18, 2011. FLAME was launched by Dr K C Chakrabarty, Deputy
Governor, RBI and Mr Deepak S Parekh, Chairman, HDFC at a function
attended by the leading luminaries from the financial services space.
Under this initiative IIFL Group has launched a series of
advertisements in leading newspaper on financial literacy and also
plans to conduct seminar and issue training materials to the public for
spreading financial literacy.
IV AWARDS AND RECOGNITIONS
Your Company has been awarded the Best Equity Broker of the Year at
the Bloomberg UTV Financial leadership Awards, 2011. The award was
presented by the Honble Finance Minister of India, Shri Pranab
Mukherjee on March 26, 2011.
V BUYBACK
Puruant to the resolution passed by the Board of Director of the
Company and in accordance with the provisions of the Companies Act,
1956 and the Securities and Exchange Board of India (Buyback of
securities) Regulations, 1998, the Company made a public announcement
on December 24, 2010, to buy-back the Companys equity shares at a
price not exceeding Rs 99.0 per share, aggregating to Rs 1.04 bn. The
Buyback was successfully completed and the Company bought back
12,999,877 equity shares and utilised maximum offer size of Rs 1.04 bn.
VI DIVIDEND ON EQUITY SHARES
During the year 2010-11, the Company declared and paid interim dividend
of 150% i.e. Rs 3 per share (face value of Rs 2 per share). The same is
considered as final. The total dividend paid in 2009-10 was Rs 3 per
share. The total outflow on account of dividend payout (including
dividend distribution tax and surcharge) was Rs 986.8 mn (previous year
Rs 996.8 mn).
VII TRANSFER TO RESERVE
The Company proposes to transfer Rs 123 mn to the General Reserve and
retain Rs 113.79 mn to the profit and loss account.
VIII ALLOTMENT OF SHARES
During the year 2010-11, your Company allotted 14,194,925 equity shares
of Rs 2 each on exercise of stock options under the Employee Stock
Option Schemes of the Company. Towards the said allotments, the
Company received a total consideration ofRs 605.4 mn including premium
of Rs 577 mn.
IX DEPOSITS
During the year 2010-11, your Company did not accept/ renew any
deposits within the meaning of Section 58A of the Companies Act, 1956
and the rules made there under and as such, no amount of principal or
interest was outstanding as on the balance-sheet date.
X SUBSIDIARY COMPANIES
The Company had 22 subsidiaries at the beginning of the year. 7
subsidiaries namely
1) IIFL Trustee Services Limited
2) Finest Wealth manager Private Limited
3) IIFL Securities Ceylon (Pvt) Limited
4) IIFL Private Wealth Hong Kong Limited
5) IIFL Capital Ceylon Limited
6) IIFL Private Wealth (Mauritius) Limited and
7) IIFL Private Wealth Management (Dubai) Limited
have been set up/acquired during the year 2010-11. Consequently, the
total number of subsidiaries as on March 31, 2011 is 29.
Pursuant to the general exemption granted by the Ministry of Corporate
Affair vide circular dated February 8, 2011, the Board of Director had
at their meeting held on May 7, 2011 approved attaching the
consolidated financials of all the subsidiaries of the Company along
with that of the Company. The copies of the Balance Sheet, Profit and
Loss Account, Report of the Board of Director and Report of the Auditor
of each of the subsidiary Companies are not attached to the accounts of
the Company for financial year 2010-11. The Company will make available
these documents/details upon request by any member of the Company.
These documents/details will also be available for inspection by any
member of the Company at its registered office and also at the
registered offices of the concerned subsidiaries. The Annual Report of
all the subsidiaries shall be uploaded upon the website of the Company.
As required by Accounting Standard - 21 (AS-21) issued by the Institute
of Chartered Accountants of India, the Companys consolidated financial
statements included in this Annual Report incorporates the accounts of
its subsidiaries. A summary of key financials of the Companys
subsidiaries is also included in this Annual Report.
XI MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report for 2010-11, as required
under Clause 49 of the Listing Agreement, is given as a separate
statement in the Annual Report.
XII DISCLOSURE OF EMPLOYEE STOCK OPTIONS
During the year 2010-11, the Company granted 250,000 stock options to
the employees under its Employee Stock Option Scheme 2008. Details as
per the Securities and Exchange Board of India (Employees Stock Option
Scheme and Employee Stock Option Purchase Scheme) Guidelines, 1999, are
attached as an annexure.
XIII DIRECTOR
The Board at its meeting held on May 7, 2011, elevated the existing
Executive Director, Mr. R Venkataraman as “Managing Director, and
consequently the existing Chairman and Managing Director, Mr. Nirmal
Jain has been re-designated as the “Executive Chairman subject to
necessary approvals.
In accordance with Sections 255 and 256 of the Companies Act of 1956
read with Article 137 of the Articles of Association of the Company,
Mr. A. K. Purwar, retires by rotation and being eligible, offer himself
for reappointment at the ensuing Annual General Meeting of the Company.
Mr. Sat Pal Khattar, Non Executive Director of the Company, resigned
with effect from October 27, 2010. The Board places on record sincere
appreciation of Mr. Sat Pal Khattars contribution towards growth of
your Company over the last decade.
XIV DIRECTOR RESPONSIBILITY STATEMENT
As required by Section 217(2AA) of the Companies Act, 1956, your
Director confirm that:
(a) In the preparation of the annual accounts, the applicable
accounting standards were followed;
(b) Appropriate accounting policies were selected and applied
consistently and that judgments and estimates made were reasonable and
prudent so as to give a true and fair view of the state of affair of
your Company as at March 31, 2011, and of its profit for the year ended
on that date;
(c) Proper and sufficient care was taken to maintain adequate
accounting records in accordance with the provisions of the Companies
Act, 1956 for safeguarding the assets of your Company and for
preventing and detecting fraud and other irregularities;
(d) The annual accounts were prepared on an ongoing concern basis.
XV CONSERVATION OF ENERGY, TECHNOLOGY
ABSORPTION, FOREIGN EXCHANGE OUTGO
The additional information required in accordance with sub- section
(1)(e) of Section 217 of the Companies Act, 1956, read with the
Companies (Disclosure of Particular in the Report of the Board of
Director) Rules,1988, is appended to and forms part of this Report.
XVI CORPORATE GOVERNANCE REPORT
The Securities and Exchange Board of India (SEBI) prescribed Corporate
Governance standards. Your Director reaffirm their commitment to these
standards and this Annual Report carries a section on Corporate
Governance.
A certificate from the Statutory Auditor, M/s Sharp & Tannan
Associates, Chartered Accountants, regarding compliance with the
conditions of Corporate Governance as stipulated under clause 49 of the
listing agreement is annexed herewith.
XVII Particular OF EMPLOYEES
In accordance with the provisions of Section 217(2A) of the Companies
Act, 1956 and the rules framed thereunder, the names and other
Particular of employees are set out in the annexure to the Director
Report. In terms of the provisions of Section 219(1)(b)(iv) of the
Companies Act, 1956, the Director Report is being sent to all the
shareholder of the Company excluding the aforesaid information. The
annexure is available for inspection at the registered office of the
Company. Any shareholder interested in the said information may write
to the Company Secretary at the registered office of the Company.
XVIII STATUTORY Auditor
M/s. Sharp & Tannan Associates, Chartered Accountants, Mumbai, retire
at the ensuing Annual General Meeting and being eligible offer
themselves for re-appointment. M/s Sharp & Tannan Associates have
sought re-appointment and confirmed that their re-appointment shall be
within the limits of Section 224(1B) of the Companies Act, 1956. The
necessary eligibility certificate under Section 224(1B) of the
Companies Act, 1956 was received from them. The Audit Committee and
Board of Director recommend the appointment of M/s Sharp & Tannan
Associates, Chartered Accountants as the Statutory Auditor of the
Company.
The notes to the accounts referred to in the Auditor Report are
self-explanatory and therefore do not call for any further comments.
XIX APPRECIATION
Your Director place on record their sincere appreciation for the
assistance and guidance provided by the government, regulator, stock
exchanges, other statutory bodies, and Companys banker for the
assistance, cooperation and encouragement extended to the Company.
Your Companys employees are instrumental in your Company scaling new
heights, year after year. Their commitment and contribution is deeply
acknowledged. Your involvement and support as shareholder is also
greatly valued. Your Director look forward to your continuing trust in
us.
On behalf of the Board
Nirmal Jain
Chairman
Dated: May 7, 2011
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