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Indiabulls Ventures

BSE: 532960|NSE: IBVENTURES|ISIN: INE274G01010|SECTOR: Finance - Investments
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Notes to Accounts Year End : Mar '18

Note – 1

Corporate information:

Indiabulls Ventures Limited (“IBVL” or “the Company”, CIN: L74999DL1995PLC069631) carries on the business as stock broker on the National Stock Exchange of India Limited (“NSE”) and the BSE Limited (“BSE”); depository participants and renders other related ancillary services. On February 1, 1996 IBVL 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 the Company. On April 2, 2008 the Equity shares of the Company were listed on the NSE and the BSE after the demerger of the Company from Indiabulls Financial Services Limited (erstwhile holding company) vide Scheme of Arrangement.

i. Rights, preferences and restrictions attached to the equity shares:

a. The Company has only one class of equity shares having a face value of Rs. 2 per share. Each holder of fully paid up equity share is entitled to one vote per share. Voting rights of each holder of partly paid up equity share is proportionate to the paid up amount of such share. The final dividend proposed by the Board of Directors, if any, is subject to the approval of the shareholders in the ensuing Annual General Meeting.

b. 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.

c. Holders of Global Depository Receipts (‘GDRs’) will be entitled to receive dividends, subject to the terms of the deposit agreement, to the same extent as the holders of equity shares, less the fees and expenses payable under such deposit agreement and any Indian tax applicable to such dividends. Holders of GDRs don’t have voting rights with respect to the deposited shares. The GDRs can not be transferred to any person located in India including Indian residents or ineligible investors except as permitted by Indian laws and regulations.

iii. Shares reserved for issue under options:

30,300,366 equity shares (Previous year 20,829,316 equity shares) of face value of Rs. 2 each are reserved under various option schemes of the Company (refer note - 31).

33,800,000 equity shares ((Previous year 33,650,000 equity shares) of face value of Rs. 2 each are reserved towards share warrants of the Company (refer note - 5 (i)).

Note 2

(i) Pursuant to the notification dated December 29, 2011 issued by the Ministry of Corporate Affairs amending Accounting Standard 11 - ‘Accounting for the Effects of Changes in Foreign Exchange Rates’ the Company has exercised the option as per Paragraph 46A inserted in the said Accounting Standard for amortisation of foreign exchange gain/loss on long-term monetary items over the remaining life of the concerned monetary items. Consequently, an amount of Rs. 4,904,878 (Previous year Rs. 7,932,645) is carried forward in the foreign exchange monetary item translation difference account as on March 31, 2018, net of forex gain amounting to Rs. 2,475,304 (Previous year Rs. 3,813,806) amortised in the Statement of Profit and Loss and Rs. 773,128 (Previous year Rs. Nil) utilised towards the partial amount received from the Escrow Account through Statement of Profit and Loss.

Note 3

(i) During the year ended March 31, 2017, the Board of Directors had resolved to create, offer, issue and allot up to 58,300,000 warrants, convertible into 58,300,000 equity shares of Rs. 2 each on a preferential allotment basis at a conversion price of Rs. 19.75 per equity share to the certain promoter entities and to an executive director (“the warrant holders”).

Terms of the issue:

a. 25% application money is payable upfront at the time of allotment.

b. warrants were to be converted into equivalent number of equity shares on payment of the balance amount at any time on or before February 9, 2018.

c. In the event the warrants are not converted into equity shares within the said period, the Company is eligible to forfeit the amounts received towards the warrants.

During the year ended March 31, 2017, the Company had allotted 24,650,000 equity shares on conversion of equivalent number of warrants in accordance with the terms of the issue. Further, during the year ended March 31, 2018, the Company has allotted 33,650,000 equity shares on conversion of equivalent number of warrants in accordance with the terms of the issue.

(ii) During the year ended March 31, 2018, the Board of Directors had resolved to create, offer, issue and allot up to 33,800,000 warrants, convertible into 33,800,000 equity shares of Rs. 2 each on a preferential allotment basis at a conversion price of Rs. 43.75 per equity share of the Company to the certain promoter entities (“the warrant holders”).

Terms of the issue:

a. 25% application money is payable upfront at the time of allotment.

b. warrants were to be converted into equivalent number of equity shares on payment of the balance amount at any time on or before October 28, 2018.

c. In the event the warrants are not converted into equity shares within the said period, the Company is eligible to forfeit the amounts received towards the warrants.

Note 4

(i) Term loan of Rs. 1,500,000,000 is secured against receivables and current assets (including cash and cash equivalents and investments). The loan carries interest rate of 3 months MIBOR plus spread equivalent to 9.42% p.a. as at March 31, 2018 and is repayable in one bullet payment in April 2019.

(ii) Term loans of Rs. 4,172,125 (including current maturities amounting to Rs. 811,741) are secured against hypothecation of the vehicles purchased. The rate of interest of such term loans ranges between 8.50% to 8.75% p.a. The term loans are repayable in equated monthly installments of 5 years.

Note 5

(i) During the year ended March 31, 2018, the Company has invested Rs. 500,000,000 in the equity share capital of Indiabulls Asset Reconstruction Company Limited.

(ii) During the year ended March 31, 2018, the Company has acquired 100% holding in equity shares of IVL Finance Limited (formerly known as Shivshakti Financial Services Limited) from Indiabulls Distribution Services Limited (a wholly owned subsidiary of the Company) for consideration of Rs. 2,176,323,000. Subsequent to this, the Company has further invested Rs. 10,027,659,115 in the equity share capital of IVL Finance Limited.

Note – 6

Deferred tax assets

In compliance with Accounting Standard 22 - ‘Accounting for Taxes on Income’, deferred tax (net) of Rs. 26,255,756 has been debited (Previous year credited Rs. 1,276,437) to the Statement of Profit and Loss for the year ended March 31, 2018. The breakup of deferred tax into major components is as under:

Note – 7

(i) During the year ended March 31, 2012, the Company had sold 586,193 shares held by it in Copal Partners Limited to Moody’s Group UK LTD for the consideration of Rs. 231,992,806 vide the Share Purchase Deed. Out of the total consideration of Rs. 231,992,806 receivable from Moody’s Group UK LTD, Rs. 52,705,971 (excluding foreign exchange gain of Rs. 17,137,818) [Previous year Rs. 59,369,946 (excluding foreign exchange gain of Rs. 19,056,103)] is outstanding as at March 31, 2018 in the form of Loan Notes of the Moody’s Group UK LTD and Escrow account which will be due in FY 2020-21 and FY 2019-20 respectively. During the year ended March 31, 2018, the Company had received partial amount of Rs. 6,663,975 (excluding foreign exchange gain of Rs. 2,087,549) (Previous year Rs. Nil) towards Escrow Account.

Note - 8

Earnings per equity share (EPS)

Disclosure in respect of Accounting Standard – 20 ‘Earnings Per Share’ :

The basic earnings per equity 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. Partly paid-up equity shares are treated as a fraction of an equity share to the extent they are entitled to participate in dividend relative to a fully paid-up equity share during the reporting period. Diluted earnings per equity share is computed by considering 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 dilutive equity shares are adjusted for the potential dilutive effect of employee stock option plan and warrants as appropriate.

Note – 9

Leases

The Company has taken office premises on operating lease at various locations in India and lease rent in respect of the same amounting to Rs. 13,510,351 (Previous Year Rs. 15,551,570) net of apportionment has been charged to the Statement of Profit and Loss. (refer note - 27(i) & (ii)). The agreements are executed for a period ranging from 11 months to 10 years with a renewable clause and in many cases, it also provides for termination at will by either party giving a prior notice period between 30 to 90 days. The minimum lease rental outstanding are as under:

Note – 10

i. During the year ended March 31, 2011, the Securities Appellate Tribunal (“SAT”) had passed an order dated October 26, 2010 in favour of the Company setting aside the penalty imposed by SEBI. However, during the year ended March 31, 2012, SEBI had preferred an appeal against the judgment of the SAT before the Honorable Supreme Court of India. During the year ended March 31, 2018, the Honorable Supreme Court of India has passed order in favor of the Company.

ii. The Company is involved in various legal proceedings as respondents/ defendants for various claims including those related 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.

Note – 11

Employee stock option schemes:

a) Employees Stock Option Scheme - 2008

During the financial year ended March 31, 2009, the Company had issued an 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 had granted, under the “Indiabulls Ventures Limited Employees Stock Option Scheme - 2008” (“IBVL ESOP - 2008”), 20,000,000 stock options 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 Limited, as on January 23, 2009. 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.

Further, during the year ended March 31, 2017, the Compensation Committee had regranted 9,700,000 stock options (surrendered and lapsed options eligible for regrant) 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. 24.15, being the latest available closing market price on the National Stock Exchange of India Limited, as on June 30, 2016. 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 uniformly over a period of 5 years beginning from July 2, 2017, the first vesting date. The options vested under each of the slabs, can be exercised within a period of five years from the relevant vesting date.

Further, during the year ended March 31, 2018, the Compensation Committee has regranted 500,000 and 880,600 stock options (surrendered and lapsed options eligible for regrant) 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. 219.65 and Rs. 254.85 respectively, being the latest available closing market price on the National Stock Exchange of India Limited, as on August 31, 2017 and March 23, 2018 respectively. 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 uniformly over a period of 5 years beginning from September 2, 2018 and March 25, 2019 respectively, the first vesting date, the options vested under each of the slabs, can be exercised within a period of five years from the relevant vesting date.

b) Employees Stock Option Scheme – 2009

During the financial year ended March 31, 2010, the Company had issued Employee Stock Option Scheme titled as ‘Indiabulls Ventures Limited Employees Stock Option Scheme - 2009’ (“IBVL ESOP - 2009”). Under the Scheme, the Company was authorised to grant 20,000,000 options, representing equivalent number of equity shares of face value Rs. 2 each in one or more tranches 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.

During the year ended March 31, 2010, the Compensation Committee constituted granted 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 Limited, as on November 30, 2009. The stock options so granted, shall vest uniformly over 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.

During the year ended March 31, 2011, the Compensation Committee had further granted 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 Limited, as on April 9, 2010. 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 uniformly over 10 years beginning from April 13, 2011 being the first vesting date. The options granted under each of the slabs, can be exercised within a period of five years from the relevant vesting date.

During the year ended March 31, 2016, the Compensation Committee had regranted under the IBVL ESOP – 2009 10,000,000 stock options (surrendered and lapsed options eligible for regrant) representing an equal number of equity shares of face value of Rs. 2 each in the Company, at an exercise price of Rs. 27.45, being the latest available closing market price on the National Stock Exchange of India Limited, as on August 24, 2015. 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 uniformly over a period of 5 years beginning from August 26, 2016, the first vesting date. The options vested under each of the slabs, can be exercised within a period of five years from the relevant vesting date. During the year ended March 31, 2017, the Company had received the request from various option holders to surrender 10,000,000 stock options, which has been accepted by the Company.

During the year ended March 31, 2017, the Compensation Committee had further regranted 9,500,000 and 10,000,000 Stock Options (surrendered and lapsed options eligible for regrant) 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. 16.00 and Rs. 24.15 respectively, being the latest available closing market price on the National Stock Exchange of India Limited, as on May 11, 2016 and June 30, 2016. 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 uniformly over a period of 5 years beginning from May 13, 2017 and July 2, 2017 respectively, the first vesting date. The options vested under each of the slabs, can be exercised within a period of five years from the relevant vesting date. During the year ended March 31, 2017, the Company has received the request from various option holders to surrender 10,000,000 stock options, which has been accepted by the Company.

During the year ended March 31, 2018, the Compensation Committee has regranted 10,000,000 and 669,400 Stock Options (surrendered and lapsed options eligible for regrant) 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. 219.65 and Rs. 254.85 respectively, being the latest available closing market price on the National Stock Exchange of India Limited, as on August 31, 2017 and March 23, 2018 respectively. 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 uniformly over a period of 5 years beginning from September 2, 2018 and March 25, 2019 respectively, the first vesting date, the options vested under each of the slabs, can be exercised within a period of five years from the relevant vesting date.

Note – 12

Segment reporting

The Company operates in one reportable business segment i.e., “Broking & related activities” and operates in one reportable geographical segment, i.e. “within India”. Hence, no separate information for segment wise disclosure is required in accordance with the requirements of Accounting Standard (AS) 17 - “Segment Reporting” .

Note – 13

In accordance with the provisions of section 135 of the Companies Act 2013, the Board of Directors of the Company had constituted a Corporate Social Responsibility (CSR) Committee. In terms with the provisions of the said Act, the Company was to spend a sum of Rs. 7,129,000 (previous year Rs. 7,529,000) towards CSR activities during the year ended March 31, 2018. The details of amount actually spent by the Company are:

Note – 14

The Company has not entered into any derivative contract for hedging any foreign currency exposure. The year end foreign currency exposures that have not been hedged by derivative instruments or otherwise are given below :

Note – 15

As per the best estimate of the Management, no provision is required to be made as per Accounting Standard 29 - ‘Provisions, Contingent Liabilities and Contingent Assets’ , 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.

Note – 16

Previous year’s figures have been regrouped / reclassified wherever necessary to correspond with the current year’s classification/ disclosures.

Source : Dion Global Solutions Limited
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