The Directors have pleasure in presenting the Seventeenth Annual
Report along with the audited statements of accounts of your Company
for the financial year ended March 31, 2012.
I. Financial results
A snapshot of the financial performance of the Company and its major
subsidiaries for the financial year 2011-12 is as under:
Company Revenues Profit before
interest, Profit after tax
Aggregate 18,864.7 7,840.5 1,360.7
Infoline Ltd 6,390.0 1,431.5 633.0
Finance Ltd 9,103.7 6,195.4 1,018.5
Finance Ltd 431.3 239.1 35.9
Services Ltd 54.6 33.6 1.6
Brokers Ltd 857.9 41.4 26.5
Commodities Ltd 1,031.9 110.3 28.5
Services Ltd 424.6 79.8 15.8
Ltd 574.6 449.2 (40.0)
Management Ltd 1,070.0 277.5 147.6
Capital Fund (0.5) (43.2) (43.8)
IIFL Inc 70.3 (3.7) 1.4
Company Ltd 10.4 (16.2) (23.0)
Private Ltd 24.4 13.6 9.1
Ltd 26.3 5.5 3.9
Ltd 1.5 (33.2) (33.4)
(Mauritius) Ltd 37.9 0.8 0.7
(UK) Ltd 14.8 (1.4) (1.4)
Pte. Ltd - (268.6) (178.0)
Pte. Ltd 35.1 (35.5) (39.2)
Pte Ltd 215.5 (38.3) (43.6)
Adjustments (1,525.8) (591.2) (143.6)
Subsidiaries 16.2 (5.9) (15.7)
A snapshot of the consolidated financial performance of your Company is
Gross total income 18,864.7 14,739.4
Profit before interest, depreciation
and taxation 7,840.5 6,067.5
Interest and financial charges 5,043.1 2,357.9
Depreciation 802.2 581.7
Profit before tax 1,995.2 3,127.9
Taxation - Current 835.2 1,073.6
- Deferred (207.9) (127.7)
- Short or excess provision for
income tax 7.2 34.7
Net profit for the year 1,360.7 2,147.3
Less: Exceptional item (net of tax) - -
Net profit before minority interest 1,360.7 2,147.3
Less: Minority interest (40.0) (35.9)
Interim dividend (433.6) (860.4)
Dividend distribution tax (70.3) (147.3)
Transfer to general reserve (65.2) (206.0)
Transfer to special reserve (216.3) (185.5)
Debenture Redemption Reserve (630.0) -
Adjustments for Minority Interest
and fair value 69.7 (190.4)
Add: Balance brought forward from
the previous year 3,004.9 2,483.1
Balance to be carried forward 2,979.9 3,004.9
A snapshot of the standalone financial performance of your Company is
Gross total income 6,390.0 7,995.5
Profit before interest, depreciation
and taxation 1,440.2 2,834.9
Interest and financial charges 378.6 861.5
Depreciation 314.4 240.8
Profit before tax 747.2 1,732.6
Taxation - Current 142.7 512.3
- Deferred (29.1) (10.9)
- Short or excess provision for income tax 0.6 7.6
Net profit for the year 633.0 1,223.6
Less: Appropriations - -
Interim dividend 433.6 859.2
Dividend distribution tax 70.3 127.6
Transfer to general reserve 65.2 123.0
Add: Balance brought forward from the
previous year 1,737.2 1,623.4
Balance to be carried forward 1,801.1 1,737.2
II. Review of operations
On a consolidated basis, in the current year, your Company''s income
increased by 28% to Rs. 18.9 billion and EBIDTA increased by 29.2% to Rs.
7.8 billion. However with higher interest outgo, Profit before tax
declined by 36.2% and Profit after tax before minority interest
decreased by 36.6% to Rs. 1.4 billion.
Due to sluggish capital markets, equity broking and related income
decreased by 18.5% to Rs. 5.5 billion. Our Credit and Finance business
gained momentum and increased by 76.4% to Rs. 10.9 billion, contributing
58% to total revenues, in the current year. Marketing and distribution
income also grew by 31.9% to Rs. 2,430.7 million. The other income stood
at Rs. 71.9 million.
III. Key initiatives
Maiden NCD issue by NBFC subsidiary
During the year under review, India Infoline Finance Limited, the NBFC
subsidiary, successfully completed Initial Public Offering of Secured
Redeemable Non-Convertible Debentures (NCDs) of Rs. 3.75 billion with
green shoe option to retain additional Rs. 3.75 billion. The issue
received an overwhelming response and was oversubscribed and the
Company could retain Rs. 7.5 billion subscription. These NCDs are listed
and traded on the National Stock Exchange and Bombay Stock Exchange.
Launch of IIFL Real Estate Fund
India Infoline Venture Capital Fund (IIFL VCF), the venture capital arm
of India Infoline Group (IIFL), successfully completed the launch of
its Real Estate Fund - ''IIFL Real Estate Fund (Domestic) Series 1'' in
January, 2012. The fund was fully subscribed with total commitment of Rs.
5 billion with green shoe option of Rs. 2.5 billion. The fund is focused
on the real estate sector in India by investing in equity, debt and
equity-linked instruments of promising real estate development projects
and companies involved in projects predominantly located in Tier-I
cities which have significant growth potential.
IIFL Mutual Fund
Subsequent to SEBI approval to mutual fund business, IIFL Mutual Fund
launched its first New Fund Offer IIFL Nifty ETF in September, 2011 and
received an encouraging response from investors. IIFL Nifty ETF ranked
second in most traded Equity ETF''s on NSE and has a high level of
retail investors of over 7,000. IIFL Mutual Fund also launched 3 series
of debt schemes under IIFL Fixed Maturity Plan. The total net assets
under management of IIFL Mutual Fund as on March 31, 2012 was Rs. 1,711.3
New products introduced by IIFL Wealth Management IIFL Wealth
Management introduced new products structured on the fixed income side
including NCDs, NABARD,
Structured Notes and Introduced Family Office, a multi- manager
investment platform offering a complete wealth structuring solution and
inter-generational transfer solution to clients. The total assets under
wealth advisory crossed Rs. 200 billion during the year.
During the year, the Company set up wholly owned subsidiaries in Hong
Kong, Mauritius and Dubai to undertake financial advisory and
Global investor conference
Your Company''s institutional research products have been well
appreciated by the target audience. Enterprising India- III, your
Company''s third Global Investors Conference, held in February, 2012 at
Mumbai had participation from leading corporates and eminent leaders /
speakers. The Conference received an overwhelming response from global
investors and institutional participants.
Corporate Social Initiative - Financial Literacy
As a part of its Corporate Social Responsibility initiative, your
Company launched a comprehensive financial education and awareness
initiative, FLAME - Financial Literacy Agenda for Mass Empowerment, in
Under this initiative your Company has successfully completed over 250
FLAME workshops for investors and students. Over 45 schools covering
5,500 students have enrolled for the Fin-Lites distance learning
Our other initiatives include a comprehensive mass media campaign on
financial literacy, dedicated portal and helpline and effective use of
social media platforms like Twitter and Facebook to answer queries and
books and publications.
Corporate Social Initiative - Helping the underprivileged and
IIFL sponsored Swadhaar Finaccess (SFA), an NGO to impart financial
education to women living in slum communities through a specially
designed Financial Education Programme (FEP).
IIFL has also tied up with KJ Somaiya Institute of Management Studies &
Research (SIMSR) to impart basic financial knowledge to underprivileged
sections and physically handicapped sections of the society. The
programmes covers lessons on savings, budgeting, banking, credit
management, microfinance and self-help groups (SHGs).
Awards and Recognitions:
Your Company was conferred the following awards during 2011-12:
- Best Broking House with Global Presence'' awarded by D&B Equity
Broking Awards 2011
- Awarded ''Best Broker - India'' by Finance Asia Country Awards for
- IIFL''s Wealth Management subsidiary bagged Euro money awards for Best
Fixed Income Portfolio Management &
Best Commodities Investment in India 2012 and ''Best Wealth Management
House - India'' by The Asset Triple A 2011
IV. Merger of subsidiary
India Infoline Marketing Services Limited (IIMSL), a wholly- owned
subsidiary was merged with the Company with effect from April 1, 2011.
The Scheme of Amalgamation was sanctioned by the Hon''ble High Court of
Judicature at Bombay vide order dated April 27, 2012. Pursuant to the
Scheme, the Authorised Share Capital of the Company increased to Rs. 1200
million. Similarly, Moneyline Credit Limited, step down NBFC subsidiary
was merged with, India Infoline Finance Limited, direct NBFC
subsidiary. This enabled consolidation of all lending and investments
businesses (except housing loans) under one NBFC subsidiary and ensures
better operations and control.
V. Dividend on equity shares
During 2011-12, the Company declared and paid an interim dividend of Rs.
1.5 per share (face value of Rs. 2 per share). The same is considered as
final. The total dividend paid in 2010- 11 was Rs. 3 per share.
VI. Allotment of shares
During 2011-12, your Company allotted 2,613,380 equity shares of Rs. 2
each on exercise of stock options under the Employee Stock Option
Schemes of the Company.
During 2011-12, 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.
VIII. Subsidiary companies
As on March 31, 2012, the Company has 29 subsidiaries located in India
and overseas. Pursuant to the general exemption granted by the Ministry
of Corporate Affairs vide circular dated February 8, 2011, the Board of
Directors had at their meeting held on May 15, 2012 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 Directors and Report of the
Auditors of each of the subsidiary companies are not attached to the
accounts of the Company for financial year 2011-12. Your 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
Company''s consolidated financial statements included in this Annual
Report incorporates the accounts of its subsidiaries. A summary of key
financials of the Company''s subsidiaries is also included in this
IX. Management Discussion and Analysis
The Management Discussion and Analysis Report for 2011- 12, as required
under Clause 49 of the Listing Agreement is given as a separate
statement in the Annual Report.
X. Disclosure of Employee Stock Options
During 2011-12, the Company granted 5,200,000 stock options to the
employees under its Employee Stock Option Scheme 2007 and 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.
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. Nilesh Vikamsey, retires by rotation and being eligible, offers
himself for reappointment at the ensuing Annual General Meeting of the
Mr. Sunil Kaul has been appointed as an Additional Director of the
Company by the Board with effect from November 5, 2011. As per the
provisions of Section 260 of the Companies Act, 1956, (Act), Mr. Kaul
holds the position till the date of the forthcoming Annual General
Meeting of the Company. The Company has received notice in writing
from a member under Section 257 of the Act, proposing appointment of
Mr. Kaul as a Director of the Company.
Mr. Chandran Ratnaswami has been appointed as an Additional Director of
the Company by the Board with effect from May 15, 2012. As per the
provisions of Section 260 of the Companies Act, 1956, (Act), Mr.
Chandran holds the position till the date of the forthcoming Annual
General Meeting of the Company. The Company has received notice in
writing from a member under Section 257 of the Act, proposing
appointment of Mr. Chandran as a Director of the Company.
The proposals for appointment of Mr. Sunil Kaul and Mr. Chandran
Ratnaswami as Directors of the Company are recommended for shareholders
XII. Directors'' Responsibility Statement
As required by Section 217 (2AA) of the Companies Act, 1956, your
Directors 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 affairs of
your Company as at March 31, 2012, 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
XIII. Conservation of energy, technology absorption, foreign exchange
earnings and 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 Particulars in the Report of the Board of
Directors) Rules,1988, is appended to and forms part of this Report.
XIV. Corporate Governance Report
The Corporate Governance Report giving the details as required under
Clause 49 of the Listing Agreement in the stock exchanges is given
separately and forms part of the Director''s Report to shareholders.
A certificate from the Statutory Auditors, 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 also attached.
With respect to the Corporate Governance Voluntary Guidelines, 2009
issued by the Ministry of Corporate Affairs, Government of India, your
Company is broadly complying with many of the requirements of the
guidelines and is also in the process of implementing the remaining
suggestions. The gist of major compliance with the said guidelines is
a) Separation of offices of Chairman and Chief Executive:
The roles and offices of Chairman and Chief Executive are separated.
Mr. Nirmal Jain is a Chairman of the Company and Mr. R Venkataraman is
the Managing Director of the Company.
b) Remuneration of Directors: The Independent Directors on the Board
are paid sitting fees for attending the meeting of the Board and / or
any Committee thereof. Further, Independent Directors are paid
commission as approved by the Board within the overall limit approved
by the shareholders of the Company.
c) Independent Directors: Independent Directors are not involved in the
day-to-day management of the Company.
d) Number of companies in which an individual may become a Director:
The Company has appraised its board members about the restriction on
number of other directorships.
e) Internal Auditors: The Company has an internal audit department
which carries out audits in designated areas.
f) Internal Control: The Board ensures the effectiveness of the
Company''s system of internal controls including financial, operational
and compliance controls and risk management systems.
XV. Particulars of employees
In accordance with the provisions of Section 217(2A) of the Companies
Act, 1956 and the rules framed there under, the names and other
particulars of employees are set out in the annexure to the Directors''
Report. In terms of the provisions of Section 219 (1) (b) (iv) of the
Companies Act, 1956, the Directors'' Report is being sent to all the
shareholders 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.
XVI. Statutory Auditors
M/s. Sharp & Tannan Associates, Chartered Accountants, Mumbai, retire
at the ensuing Annual General Meeting and being eligible offers
themselves for reappointment. M/s Sharp & Tannan Associates have sought
reappointment and confirmed that their reappointment 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 Directors
recommend the re- appointment of M/s Sharp & Tannan Associates,
Chartered Accountants as the Auditors of the Company.
Your Directors place on record their sincere appreciation for the
assistance and guidance provided by the government, regulators, stock
exchanges, other statutory bodies and Company''s bankers for the
assistance, cooperation and encouragement extended to the Company.
Your Company''s employees are instrumental in your Company scaling new
heights, year after year. Their commitment and contribution is deeply
acknowledged. Your involvement as shareholders is also greatly valued.
Your Directors look forward to your continued support.
On behalf of the Board
Dated: May 15, 2012 Chairman