IDFC SECURITIES LIMITED...IDFC seCurItIes lImIteD | 57 Board’s Report to tHe members Your Directors have pleasure in presenting the Twenty Second Annual Report together with the

56 | I D F C A n n u A l r e p o r t 2 0 1 4 – 2 0 1 5

IDFC seCurItIes lImIteD

CIN U99999MH1993PLC071865

DIRECTORS Mr. Vikram Limaye - chairman Mr. Tara Sankar Bhattacharya Mr. Sunil Kakar Mr. Sadashiv S. Rao Dr. Rajeev Uberoi Mr. Yuvraj Narayan* *Resigned on April 7, 2015 subject to approval of Stock Exchanges.

AUDITORS Deloitte Haskins & Sells Chartered Accountants

PRINCIPAL BANKERS HDFC Bank Limited

REGISTERED OFFICE Naman Chambers C-32,G-Block Bandra-Kurla Complex Bandra (East) Mumbai 400 051 tel +91 22 4222 2000 fax +91 22 2654 0354 website www.idfc.com email id [email protected]

IDFC SECURITIES LIMITED

I D F C s e C u r I t I e s l I m I t e D | 57

Board’s Reportto tHe membersYour Directors have pleasure in presenting the Twenty Second Annual Report together with the audited financial statements for the financial year ended March 31, 2015.

FINANCIAL RESuLTS(Amount In `)

PARTICULARS For tHe yeAr enDeD mArCH 31, 2015

For tHe yeAr enDeD mArCH 31, 2014

Total Income 1,293,001,521 781,850,575

Less: Total Expenses 731,332,854 499,187,190

Profit before Tax 561,668,667 282,663,385

Less: Provision for Tax 142,876,404 63,295,290

Profit after Tax 418,792,263 219,368,095

OPERATIONAL REVIEW AND FuTuRE OuTLOOkInstitutional brokingWith a decisive election mandate, FY15 proved to be an exciting year for the Indian capital markets and India emerged as the top destination for FII inflows (>US$ 40bn in the fiscal year in domestic equity and bond markets). With a marked improvement in investor sentiment, expectation of reforms and some pick-up in industrial activity and GDP growth, Sensex (the benchmark index at BSE) rose 25% in the fiscal year – the highest returns since FY10 (15% returns in FY14). In this backdrop, Institutional Broking team also gave a commendable performance – while market volumes were up ~65% during the year, our firm also saw a 25% improvement in its market share led by deeper mining of existing clients, new client additions and entry into new geographies.The outlook for FY16 remains healthy as GDP growth is expected to accelerate further with a decline in stalled projects and pick-up in capex cycle. With critical macro indicators like current account deficit, fiscal deficit and even inflation being in the comfort zone, the Reserve Bank of India has already reduced repo rate by 0.75%. With an expected pick-up in demand/ consumption, continued softness in input prices and lower interest rates, it will be sooner than later that India Inc’s performance turns a corner for the better.With our ideas-driven research, constant improvement in talent and further widening / deepening of client relationships, the Company is well-poised to benefit from the improving investment climate.

InVEStMEnt bAnKInGThe year gone by saw a turnaround in the Investment Banking industry. FY15 fee based revenues increased by 61% year on year on the back of a strong rebound across equity capital markets. The pace of corporate fund raising across debt and equity was hectic as the liquidity environment improved. With a positive turnaround in fund raising activity across sectors, we closed the fiscal year 2014-15 with revenues of ` 97.54 crores which were significantly better than ` 60.54 crores in FY14. We saw an equal mix of PE/M&A deals along with capital market (IPO/QIP) deals which reflected positively on the firm’s expertise across various product offerings. Our continued focus on non-infra sector over past 3 years also saw successful deal closures in pharma, agri, cement, industrials, etc. Revenues however, were boosted significantly by surge in the fund-raising activity in the infrastructure sector. The competitive intensity in our industry continues to rise as a number of well capitalized investment banks enter the domestic market. Fees and margins will be under pressure. While selective hiring done last fiscal has helped us build a robust deal pipeline across sectors and products including focused PE coverage, Capital Market coverage (IPOs, QIPs, Block trades) etc, the environment for fund raising is expected to be volatile in FY15 and determined by macro trends across global equities.With the improvement in the sentiment expected to improve and keeping in mind India’s political scenario in coming 6-9 months, we are gearing up to capture the market share. We are positive of the coming year given our strategic focus around capital markets, continued diversification across sectors, client-centricity, working with international clients/alliance partners; our deal pipeline is a reflection of these initiatives.

AMOuNT TO BE CARRIED FORWARD TO RESERVESThe details of amount transferred to reserves are given in note no. 04 of the Notes forming part of the financial statements.

DIVIDENDYour Directors are pleased to recommend a dividend `105/- per equity shares of ` 10 each (i.e.1050%) for the year ended March 31, 2015.

PARTICuLARS OF EMPLOYEESThe Company had 100 employees as on March 31, 2015.

PuBLIC DEPOSITSDuring the year under review, your Company has neither invited nor accepted any Public Deposits.


PARTICuLARS OF LOANS, GuARANTEES AND INVESTMENTSThere were no loans or guarantee or investments made by the Company under the provisions of Section 186 of the Companies Act, 2013.

VIGIL MECHANISM/WHISTLE BLOWER POLICYPursuant to provisions of Section 177(9) of the Companies Act, 2013, read with the Companies (Meetings of Board and its Powers) Rules, 2014 (“the Rules”), the Board approved and adopted “Whistle Blower Policy”, which had already been adopted by IDFC Limited, the holding Company so as to establish vigil mechanism, including reporting to the Management instances of unethical behaviour, actual or suspected fraud or violation of the Company’s Code of Conduct or Ethics Policy. The Group General Counsel & Head - Legal & Compliance was appointed as the Whistle Officer for the purpose of this Policy. The Audit Committee directly oversees the Vigil Mechanism.The details of Whistle Blower Policy/Vigil mechanism are posted on the website of the Company.

FOREIGN EXCHANGE EXPENDITuRE AND EARNINGSThe particulars regarding foreign exchange expenditure and earnings are furnished in Note no. 27 in the Notes forming part of the Financial Statements.

PARTICuLARS REGARDING CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTIONSince the Company does not own any manufacturing facility, the disclosure of information on matters required to be disclosed in terms of Section 134(3)(m) are not applicable and hence not given.

DIRECTORS / kEY MANAGERIAL PERSONNELIn accordance with the Articles of Association of the Company and pursuant to the provisions of Section 152 of the Companies Act, 2013, Mr. Vikram Limaye (DIN – 00488534) would retire by rotation at the ensuing AGM and being eligible, offers himself for re-appointment.The Board of Directors recommends re-appointment of Mr. Vikram Limaye (DIN - 00488534), as a Director at the ensuing AGM.The Ministry of Corporate Affairs had, vide its circular no. 14/2014 dated June 9, 2014 clarified that the appointment of the existing Independent Directors shall be made expressly under Section 149 (10)/(11) of the Act read with Schedule IV of the Act within one year from April 1, 2014 subject to compliance with eligibility and other prescribed conditions. Subject to the approval of the Members at the AGM, the Board of Directors of the Company at its meeting held on October 22, 2014, accorded its consent to re-appoint Mr. Tara Sankar Bhattacharya (DIN - 00157305) and Mr. Yuvraj Narayan (DIN - 00306652) as Independent Directors (“IDs”) of the Company under the Companies Act, 2013, for a period of two (2) consecutive years to hold office till the conclusion of the Twenty Third AGM of the Company for FY16. The Shareholders of the Company at the Extra Ordinary General Meeting held on October 22, 2014 approved the appointment of Mr. Tara Sankar Bhattacharya (DIN - 00157305) and Mr. Yuvraj Narayan (DIN - 00306652) as IDs of the Company. All IDs have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013.Mr. Yuvraj Narayan (DIN - 00306652) resigned as an ID as on April 7, 2015, subject to approval of the stock exchanges. The Board places on record its sincere appreciation for the services rendered by him during his tenure. The Board at its meeting held on October 22, 2014 identified the following officials as Key Managerial Personnel pursuant to Section 203 of the Companies Act, 2013:1. Mr. Anish Damania – Co – CEO2. Mr. Rajesh Jain – Co – CEO3. Mr. Hitesh Desai – Chief Financial Officer4. Mr. Amol Ranade – Company Secretary

BOARD AND AuDIT COMMITTEEDuring the year, four Board meetings and four Audit Committee meetings were convened and held. The gap between the two meetings was within the limits prescribed under the Companies Act, 2013.The Audit Committee of the Company comprises of the following members:1. Mr. Tara Sankar Bhattacharya (DIN - 00157305) - ID - Chairman2. Mr. Yuvraj Narayan (DIN - 00306652)* - ID3. Mr. Sunil Kakar (DIN - 03055561)*Mr. Yuvraj Narayan resigned from the Board of Directors on April 7, 2015, subject to approval of stock exchanges.All the recommendations made by the Audit Committee during the year were accepted by the Board.

Board’s Report


NOMINATION AND REMuNERATION COMMITTEEDuring the year, Nomination and Remuneration Committee was constituted to comply with the provisions of the section 178 of the Companies Act, 2013 comprising of the following:1. Mr. Sunil Kakar (DIN - 03055561) - Chairman2. Mr. Tara Sankar Bhattacharya (DIN - 00157305) - ID3. Mr. Yuvraj Narayan (DIN - 00306652)* - ID4. Mr. Vikram Limaye (DIN - 00488534)*Mr. Yuvraj Narayan resigned from the Board of Directors on April 7, 2015, subject to approval of stock exchanges.

REMuNERATION POLICYThe Company has a policy in place for identification of Independence, qualifications and positive attributes of Directors. The Company is in the process of developing a Remuneration Policy for the Directors, Key Managerial Personnel, Senior Management and Other Employees.

AuDITORSThe Shareholders of the Company at their meeting held on September 29, 2014 had approved the appointment of M/s. Deloitte Haskins & Sells, Chartered Accountants, (Registration No. 117365W) Statutory Auditors for a period of 1 year to hold office from the conclusion of the Twenty First Annual General Meeting up to the conclusion of the Twenty Second Annual General Meeting of the Company.M/s. Deloitte Haskins & Sells, Chartered Accountants, Ahmedabad (Registration No. 117365W) Statutory Auditors of the Company will retire at the conclusion of the ensuing AGM.The Board recommends the reappointment of M/s. Deloitte Haskins & Sells, Chartered Accountants, as the Statutory Auditors of the Company.

SuBSIDIARY COMPANIES / JOINT VENTuRES / ASSOCIATE COMPANIESAt the beginning of the financial year, the Company had Four direct wholly owned subsidiary companies – IDFC Capital (USA) Inc., IDFC Capital (Singapore) Pte. Limited, IDFC Fund of Funds Limited and IDFC Securities Singapore Pte. Limited.As part of IDFC Group Restructuring, on December 12, 2014, an application for winding up of IDFC Fund of Funds Limited was filed with the concerned regulatory authorities and the same was dissolved. On March 26, 2015, entire equity stake of IDFC Capital (Singapore) Pte. Limited was transferred from the Company to IDFC Alternatives Limited.In view of the above changes, the Company had two direct wholly -owned subsidiaries namely IDFC Securities Singapore Pte. Limited and IDFC Capital (USA) Inc. at the end of the Financial Year.The Company does not have any Joint Venture and Associate Company.A statement containing salient features of the financial statement and all other requisite details of all the subsidiary companies in the format AOC-I is appended as Annexure I.

RISk MANAGEMENTThe Audit Committee of the Company endeavors to review the risk register at every meeting held during the year. The members of the Audit Committee ensure the measurement and control of risk factors and advice on the same to the Management of the Company.

INSTANCES OF FRAuD, IF ANY REPORTED BY THE AuDITORSThere have been no instances of fraud reported by the Auditors under Section 143(12) of the Companies Act, 2013.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGuLATORS/COuRTS/TRIBuNALThere are no significant material orders passed by the Regulators/Courts/Tribunal which would impact the going concern status of the Company and its future operations.

MATERIAL CHANGES/ COMMITMENTSAs per Section 134(3)(l) of Companies Act, 2013, there have been no reportable changes and commitments, affecting the financial position of the Company that has occurred during the period from March 31, 2015 till the date of this report.

INFORMATION REQuIRED uNDER SEXuAL HARASSMENT OF WOMEN AT WORkPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013:There were no instances of Sexual Harassment that were reported under the Prevention of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

AuDITOR’S REPORTThere was no qualifications, reservations or adverse remarks or disclaimers made by the Statutory Auditors in their report.

Board’s Report

60 | I D F C A N N U A L R E P O R T 2 0 1 4 – 2 0 1 5

DIRECTORS’ RESPONSIBILITY STATEMENTThe Directors confirm that:(a) in the preparation of the annual financial statements for the year ended March 31,2015, the applicable accounting standards have been

followed along with proper explanation relating to material departures,if any;(b) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable

and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2015 and of the profit and loss of the Company for that period;

(c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) the Directors had prepared the annual financial statements on a going concern basis; and(e) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were

adequate and operating effectively.

EXTRACT OF ANNUAL RETURNThe details forming part of the extract of the Annual Return in form MGT-9 are appended as annexure ii.

CORPORATE SOCIAL RESPONSIBILITYCorporate Social Responsibility Committee was constituted during the year consisting of:1. Mr. Sunil Kakar (DIN - 03055561) - Chairman2. Mr. T. S. Bhattacharya (DIN - 00157305) - ID3. Dr. Rajeev Uberoi (DIN - 01731829)The CSR Policy of the Company has been put up on the website of the Company. The disclosure of contents of Corporate Social Responsibility Policy as prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014 is appended as annexure iii.

RELATED PARTY TRANSACTIONIn all related party transactions that were entered into during the financial year, an endeavour was made consistently that they were on an arm’s length basis and were in the ordinary course of business. IDFC Group has always been committed to good corporate governance practices, including matters relating to Related Party Transactions.Pursuant to the provisions of Companies Act, 2013 and Rules made there under and in the back-drop of the Company’s philosophy on such matters, on the recommendation of the Audit Committee the Board approved “Policy on Related Party Transactions” at it’s meeting held on January 22, 2015. The said policy is also uploaded on the website of the Company.Since all related party transactions entered into by the Company were in the ordinary course of business and were on an arm’s length basis, Form AOC-2 is not applicable to the Company.

ACKNOWLEDGEMENTSThe Board wishes to thank the clients, custodians, Securities and Exchange Board of India, Stock Exchanges, Banks and other statutory and regulatory authorities for their support to your Company.We would like to express our deep sense of appreciation for the hard work and efforts put in by the employees at all levels of the Company.The Directors also express their gratitude for the unstinted support and guidance received from IDFC Limited and other group companies.

For and on BEHalF oF tHE Board oF dirEctors

vikram limayE

Chairman

Mumbai, June 30, 2015

Board’s Report


[pursuant to first proviso to sub-section (3) of section 129 read with rule 5 of Companies (Accounts) rules, 2014]

Statement containing salient features of the financial statement of subsidiaries/associate companies/joint ventures

PART “A”: SuBSIDIARIES(Information in respect of each subsidiary to be presented with amounts in ` )

1 CIN – –

2 Name of the subsidiary IDFC Securities Singapore Pte. Ltd IDFC Capital (USA) Inc.

3 Reporting period for the subsidiary concerned, if different from the holding company’s reporting period

April 1, 2014 to March 31, 2015 April 1, 2014 to March 31, 2015

4 Reporting currency and Exchange rate as on the last date of the relevant Financial year in the case of foreign subsidiaries.

INRConversion rate: 62.591

INRConversion rate: 62.591

5 Share capital 114,514,045 46,240,000

6 Reserves & surplus (70,763,095) 11,211,039

7 Total assets 45,276,252 60,440,692

8 Total Liabilities 45,276,252 60,440,692

9 Investments – –

10 Turnover 2,935,013 32,051,279

11 Profit before taxation (42,462,838) 1,832,801

12 Provision for taxation – (506,959)

13 Profit after taxation (42,462,838) 2,339,760

14 Proposed Dividend – –

15 % of shareholding 100% 100%

During the year, IDFC Capital (Singapore) Pte. Ltd. ("ICSPL") ceased to be the subsidiary of the Company as the entire equity stake in ICSPL was sold to IDFC Alternatives Limited, a wholly owned subsidiary of IDFC Limited.

PART “B”: ASSOCIATES AND JOINT VENTuRESStatement pursuant to Section 129 (3) of the Companies Act, 2013 related to Associate Companies and Joint Ventures

NAmE OF ASSOCIATES/jOINT vENTURES

1. Latest audited Balance Sheet Date

2. Shares of Associate/joint ventures held by the company on the year end

No.

Amount of Investment in Associates/Joint Venture

Extend of Holding %

3. Description of how there is significant influence NOT APPLICABLE

4. Reason why the associate/joint venture is not consolidated

5. Net worth attributable to Shareholding as per latest audited Balance Sheet

6. Profit / Loss for the year

i. Considered in Consolidation

ii. Not Considered in Consolidation

Form AOC-I aNNEXURE I

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC SECURITIES LImITED

vIKRAm LImAyE

ChairmanSUNIL KAKAR

Director

Mumbai, April 23, 2015HITESH DESAI

Chief Financial OfficerAmOL RANADE

Company Secretary


Form No. MGT-9 Extract of Annual Return aNNEXURE II

As on the financial year ended on march 31, 2015[Pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014]

I. REGISTRATION AND OTHER DETAILS:i) CIN U99999MH1993PLC071865

ii) Registration Date 07/05/1993

iii) Name of the Company IDFC SECURITIES LIMITED

iv) Category / Sub-Category of the Company Company Limited by sharesIndian Non-Government Company

v) Address of the Registered office and contact details Naman Chambers, C-32, G-Block, Bandra Kurla Complex, Bandra East, Mumbai – 400 051.Tel.: +91 22 4222 2000, Fax: +91 22 2654 0354

vi) Whether listed company Yes / No No

vii) Name, Address and Contact details of Registrar and Transfer Agent, if any

Sharepro Services (India) Pvt. Ltd.* 13, AB Samhita Warehousing Complex, 2nd Floor, Telephone Exchange Lane, Saki Naka, Andheri (E), Mumbai - 400 072. Contact No. +91 22 6772 0300 / 400

* Sharepro Services (India) Pvt. Ltd. provides connectivity services with depositories for the equity shares of the Company.

II. PRINCIPAL BuSINESS ACTIVITIES OF THE COMPANY All the business activities contributing 10 % or more of the total turnover of the company shall be stated:-

SR. NO.

NAmE AND DESCRIPTION OF mAIN PRODUCTS / SERvICES

NIC CODE OF THE PRODUCT / SERvICE % TO TOTAL TURNOvER OF THE COmPANy

1. Institutional Broking 6612 39%

2. Investment Banking 6619 61%

III. PARTICuLARS OF HOLDING, SuBSIDIARY AND ASSOCIATE COMPANIES SR. NO.

NAmE AND ADDRESS OF THECOmPANy

CIN/GLN HOLDING/ SUBSIDIARy/ASSOCIATE

% OF SHARES HELD

APPLICABLE SECTION

1. IDFC Limited L65191TN1997PLC037415 Holding 100% Section 2(46)

2. IDFC Securities Singapore Pte Ltd – Subsidiary 100% Section 2(87)

3. IDFC Capital (USA) Inc. – Subsidiary 100% Section 2(87)

IV. SHARE HOLDING PATTERN (EQuITY SHARE CAPITAL BREAkuP AS PERCENTAGE OF TOTAL EQuITY) i) Category-wise Share Holding

CATEGORy OF SHAREHOLDERS

NO. OF SHARES HELD AT THE BEGINNING OF THE yEAR

NO. OF SHARES HELD AT THE END OF THE yEAR

% CHANGE DURING THE

yEAR

DEmAT PHySICAL TOTAL % OF TOTAL

SHARES


SHARES

A. Promoters

(1) Indian

a) Individual/ HUF NIL NIL NIL NIL NIL NIL NIL NIL NIL

b) Central Govt NIL NIL NIL NIL NIL NIL NIL NIL NIL

c) State Govt (s) NIL NIL NIL NIL NIL NIL NIL NIL NIL

d) Bodies Corp. 14,137,200 NIL 14,137,200 100% 14,137,200 NIL 14,137,200 100% NIL

e) Banks/FI NIL NIL NIL NIL NIL NIL NIL NIL NIL

f) Any Other.. NIL NIL NIL NIL NIL NIL NIL NIL NIL

Sub-total (A) (1):- 14,137,200 NIL 14,137,200 100% 14,137,200 NIL 14,137,200 100% NIL



CATEGORy OF SHAREHOLDERS

NO. OF SHARES HELD AT THE BEGINNING OF THE yEAR

NO. OF SHARES HELD AT THE END OF THE yEAR

% CHANGE DURING THE

yEAR


SHARES


SHARES

(2) Foreign NIL NIL NIL NIL NIL NIL NIL NIL NIL

a) NRIs - Individuals

b) Other - Individuals

c) Bodies Corp.

d) Banks / FI

e) Any Other

Sub-total (A) (2):- NIL NIL NIL NIL NIL NIL NIL NIL NIL

Total shareholding of Promoter (A) = (A)(1)+(A)( 2)

14,137,200 NIL 14,137,200 100% 14,137,200 NIL 14,137,200 100% NIL

B. Public Shareholding NIL NIL NIL NIL NIL NIL NIL NIL NIL

1. Institutions

a) Mutual Funds

b) Banks/FI

c) Central Govt

d) State Govt(s)

e) Venture Capital Funds

f) Insurance Companies

g) FIIs

h) Foreign Venture Capital Funds

i) Others (specify)

Sub-total (B)(1):- NIL NIL NIL NIL NIL NIL NIL NIL NIL

2. Non-Institutions

a) Bodies Corp.

i) Indian

ii) Overseas

b) Individuals

i) Individual shareholders holding nominal share capital upto ` 1 lakh

ii) Individual shareholders holding nominal share capital in excess of ` 1 lakh

c) Others (specify)

Sub-total (B)(2):- NIL NIL NIL NIL NIL NIL NIL NIL NIL

Total Public Shareholding (B) = (B)(1) + (B)(2)

NIL NIL NIL NIL NIL NIL NIL NIL NIL

C. Shares held by Custodian for GDRs & ADRs

NIL NIL NIL NIL NIL NIL NIL NIL NIL

Grand Total (A+B+C) 14,137,200 NIL 14,137,200 100% 14,137,200 NIL 14,137,200 100% NIL


(ii) Shareholding of Promoters

SR. NO.

SHAREHOLDER’S NAmE SHAREHOLDING AT THE BEGINNING OF THE yEAR

SHARE HOLDING AT THE END OF THE yEAR

NO. OF SHARES

% OF TOTAL SHARES OF

THE COmPANy

%OF SHARES PLEDGED/

ENCUmBERED TO TOTAL

SHARES

NO. OF SHARES

% OF TOTAL SHARES OF THE

COmPANy

%OF SHARES PLEDGED/

ENCUmBERED TO TOTAL

SHARES

% CHANGE IN SHARE HOLDING

DURING THE yEAR

1. IDFC Limited 14,137,194 100% NIL 14,137,194 100% NIL NIL

2. Rajiv B. Lall* 1 0% NIL 1 0% NIL NIL

3. Vikram Limaye* 1 0% NIL 1 0% NIL NIL

4. Santosh Parab* 1 0% NIL 1 0% NIL NIL

5. Bipin Gemani* 1 0% NIL 1 0% NIL NIL

6. Mahendra N. Shah* 1 0% NIL 1 0% NIL NIL

7. Mayuri Chhichhiya* 1 0% NIL 1 0% NIL NIL

Total 14,137,200 100% NIL 14,137,200 100% NIL NIL

* beneficial interest of Equity share is in the name of IDFC Limited

(iii) Change in Promoters’ Shareholding ( please specify, if there is no change)

SR. NO.

SHAREHOLDING AT THE BEGINNING OF THE yEAR CUmULATIvE SHAREHOLDING DURING THE yEAR

NO. OF SHARES % OF TOTAL SHARES OF THE COmPANy

NO. OF SHARES % OF TOTAL SHARES OF THE COmPANy

1 At the beginning of the year

NO CHANGE

Date wise Increase/ Decrease in Promoters Share holding during the year specifying the reasons for increase/decrease (e.g. allotment/transfer/bonus/ sweat equity etc):

At the end of the year

(iv) Shareholding Pattern of top ten Shareholders (other than Directors, Promoters and Holders of GDRs and ADRs):

SR. NO.

SHAREHOLDING AT THE BEGINNING OF THE yEAR

CHANGES IN THE SHAREHOLDING DURING THE yEAR

SHAREHOLDING AT THE END OF THE yEAR

FOR EACH OF THE TOP 10 SHAREHOLDERS

NO. OF SHARES


COmPANy

INCREASE DECREASE NO. OF SHARES


COmPANy

1. At the beginning of the year

NOT APPLICABLE

2. Date wise Increase / Decrease in Share holding during the year specifying the reasons for increase / decrease (e.g. allotment / transfer / bonus / sweat equity etc):

3. At the end of the year (or on the date of separation, if separated during the year)



(v) Shareholding of Directors and Key Managerial Personnel:

SR. NO.

SHAREHOLDING AT THE BEGINNING OF THE yEAR

CHANGES IN THE SHAREHOLDING DURING THE yEAR

SHAREHOLDING AT THE END OF THE yEAR

FoR EACH oF tHE DIRECtoRS AnD KMP

NO. OF SHARES


COmPANy

INCREASE DECREASE NO. OF SHARES


COmPANy

1. At the beginning of the year

NIL

2. Date wise Increase / Decrease in Share holding during the year specifying the reasons for increase / decrease (e.g. allotment / transfer / bonus / sweat equity etc):

3. At the end of the year (or on the date of separation, if separated during the year)

V. INDEBTEDNESS Indebtedness of the Company including interest outstanding/accrued but not due for payment

IN `

SECuRED LoAnS ExCLuDInG

DEPoSItS

unSECuRED LoAnS

DEPoSItS totAL InDEbtEDnESS

Indebtedness at the beginning of the financial year

i) Principal Amount NIL 1,250,000,000 NIL 1,250,000,000

ii) Interest due but not paid NIL - NIL -

iii) Interest accrued but not due NIL - NIL -

Total (i+ii+iii) NIL 1,250,000,000 NIL 1,250,000,000

Change in Indebtedness during the financial year

• Addition NIL 2,005,000,000 NIL 2,005,000,000

• Reduction NIL (3,255,000,000) NIL (3,255,000,000)

Net Change NIL (1,250,000,000) NIL (1,250,000,000)

Indebtedness at the end of the financial year NIL NIL NIL NIL

i) Principal Amount

ii) Interest due but not paid

iii) Interest accrued but not due

Total (i+ii+iii) NIL NIL NIL NIL

VI. REMuNERATION OF DIRECTORS AND kEY MANAGERIAL PERSONNEL:

A. Remuneration to Managing Director, Whole-time Directors and/or Manager: IN `

SR. NO.

PARTICULARS OF REmUNERATION NAmE OF mD/WTD/ mANAGER TOTAL AmOUNT

1. Gross salary

NIL

(a) Salary as per provisions contained in section 17(1) of the Income-tax Act, 1961

(b) Value of perquisites u/s 17(2) Income-tax Act, 1961(c) Profits in lieu of salary under section 17(3) Income-

tax Act, 19612. Stock option3. Sweat Equity4. Commission

- as % of profit- others, specify...

5. others, please specifytotal (A)Ceiling as per the Act



b. Remuneration to other directors:IN `

SR. NO.

PARTICULARS OF REmUNERATION

NAmE OF DIRECTORS TOTAL AmOUNT

vIKRAm LImAyE T. S. BHATTACHARyA

SUNIL KAKAR SADASHIv S. RAO

RAjEEv UBEROI yUvRAj NARAyAN

1. Independent DirectorsFee for attending board committee meetings

NIL 160,000 NIL NIL NIL NIL 160,000

Commission NIL NIL NIL NIL NIL NIL NILOthers, please specify NIL NIL NIL NIL NIL NIL NILTotal (1) NIL 160,000 NIL NIL NIL NIL 160,000

2. Other Non-Executive Directors

NIL NIL NIL NIL NIL NIL NIL

Fee for attending board committee meetingsCommissionOthers, please specifyTotal (2) NIL NIL NIL NIL NIL NIL NILTotal (B) = (1 + 2) NIL 160,000 NIL NIL NIL NIL 160,000Overall Ceiling as per the Act Refer Note

Note: In terms of the provisions of the Companies Act, 2013, the remuneration payable to Directors other than executive Directors shall not exceed 1% of the net profit of the Company. The remuneration paid to the Directors is well within the said limit.

C. Remuneration to Key Managerial Personnel other than MD/Manager/WtD.IN `

SR. NO.

PARTICULARS OF REmUNERATION KEy mANAGERIAL PERSONNELCO-CEO CO-CEO COmPANy

SECRETARyCFO TOTAL

1. Gross salary(a) Salary as per provisions contained in section 17(1) of the

Income-tax Act, 196117,503,640 17,040,276 NIL 4,015,008 38,558,924

(b) Value of perquisites u/s 17(2) Income-tax Act, 1961 NIL 500,000 NIL 32,400 532,400(c) Profits in lieu of salary under section 17(3)

Income- tax Act, 1961NIL NIL NIL NIL NIL

2. Stock option NIL NIL NIL NIL NIL3. Sweat Equity NIL NIL NIL NIL NIL4. Commission NIL NIL NIL NIL NIL

- as % of profit- others, specify...

5. others, please specify NIL NIL NIL NIL NIL

Total (A) 17,503,640 17,540,276 NIL 4,047,408 39,091,324

VII. PENALTIES/PuNISHMENT/COMPOuNDING OF OFFENCES:TyPE SECTION OF THE

COmPANIES ACTBRIEF

DESCRIPTIONDETAILS OF PENALTy/

PUNISHmENT/ COmPOUNDING FEES ImPOSED

AUTHORITy [RD/NCLT/COURT]

APPEAL mADE, IF ANy (GIvE

DETAILS)A. COmPANy

NIL

Penalty

PunishmentCompoundingB. DIRECTORSPenaltyPunishmentCompoundingC. OTHER OFFICERS IN DEFAULTPenaltyPunishmentCompounding



[Pursuant to clause (o) of sub-section (3) of section 134 of the Act and Rule 9 of the Companies (Corporate Social Responsibility) Rules, 2014]` IN LAC

SR. NO

CSR PROjECT OR ACTIvITy IDENTIFIED SECTOR IN WHICH THE PROjECT IS COvERED (CLAUSE NO. OF SCHEDULE vII TO THE COmPANIES ACT, 2013, AmENDED)

PROjECTS OR PROGRAmS (1) LOCAL AREA OR OTHER (2) SPECIFy THE STATE AND DISTRICT WHERE PROjECTS OR PROGRAmS WAS UNDERTAKEN

AmOUNT OUTLAy (BUDGET) PROjECT OR PROGRAmS WISE

AmOUNT SPENT ON THE PROjECTS OR PROGRAmS SUB HEADS: (1) DIRECT ExPENDITURE ON PROjECTS OR PROGRAmS (2) OvER HEADS

CUmULATIvE ExPENDITURE UP TO THE REPORTING PERIOD

AmOUNT SPENT: DIRECT OR THROUGH ImPLEmENTING AGENCy

1 Improvement in the learning environment in night schools - which cater to underprivileged students.

Cl.(ii) promoting education

Maharashtra-Mumbai 0.26 0.26 0.26

IMP

LE

ME

NT

ING

AG

EN

CY

- I

DF

C F

OU

ND

AT

ION

*

2 Improvement in access to maternal and neo-natal health services for poor slum dwellers by strengthening the linkages with existing public health systems

Cl.(i) promoting health care including preventive health care

Maharashtra-Mumbai 0.48 0.44 0.44

3 Improvement in learning outcomes through pedagogical interventions for children attending anganwadi centers set up under the Integrated Child Development Scheme of the Govt. of India.


Uttarakhand - Dehradun, Nanital, Haridwar, Udham Singh Nagar and Tehri.

0.57 0.46 0.46

4 Promoting infrastructure development for livelihood support to achieve aspired quality of life for the people of Meghalaya through appropriate institutional mechanisms and programmes including a demonstration solar street lighting project in Mawlynnong Village

Cl.(ii) livelihood enhancement projects; Cl. (iv) ensuring environmental sustainability; Cl. (x) rural development projects.

Meghalaya - Across State Meghalaya - East Khasi Hills

1.06 0.60 0.60

5 Improvement in learning outcomes and universalization of primary education for a set of 60 schools in the backward blocks of Ramgarh and Kishangarh through an identified set of interventions and infrastructure improvements.


Rajasthan - Alwar 1.36 0.38 0.38

6 Development of frameworks/ projects for re-development of slums, operations and maintenance of night shelters and use of mobile bio-toilets in slum clusters

Cl.(xi) slum area development

Delhi 0.18 0.09 0.09

7 Preparation of the India Rural Development Report identifying the reasons for regional differences in various parameters so as to enable appropriate policy responses; Preparation of the India Infrastructure Report on the theme of Health identifying the critical areas of need and policy responses to achieve universal healthcare for the population in the shortest possible time frame.

Cl. (i) promoting health care; Cl. (x) rural development projects.

All India coverage 0.66 0.60 0.60

8 Other programmes being formulated for newer geographies - for which disbursable would be made in the coming years

Various clauses of Schedule VII

All India coverage 15.44 0.99 0.99

Total Direct Expense 20.00 3.82 3.82

Total Indirect Expense - 0.49 0.49

Grand Total 20.00 4.31 4.31

*IDFC Foundation, a not for profit company within the meaning of Section 8 of Companies Act, 2013 (erstwhile Section 25 company of the Companies Act, 1956) has a comprehensive approach towards promoting the development of livelihoods, rural areas, social Infrastructure such as healthcare and education and other infrastructure that would meet the objectives of Inclution and environmental sustainability such as water supply, sanitation, sustainable urbanization, public transport systems, renewable energy, slum re-development and affordable housing.

We confirm that the implementation and monitoring of CSR Policy, is in compliance with CSR objectives and Policy of the Company.

Corporate Social Responsibility aNNEXURE III


1. A brief outline of the Company’s CSR policy, including overview of projects or programs proposed to be undertaken and a reference to the web-link to the CSR policy and projects or programs.

The CSR policy is to ensure that CSR activities are not performed in silos and that it be skillfully and inextricably woven into the fabric of the Company’s business strategy for overall value creation for all stakeholders. IDFC believes that profitability must be complemented by a sense of responsibility towards all stakeholders with a view to make a material, visible and lasting difference to the lives of disadvantaged sections of the people, preferably in the immediate vicinity in which the Company operates but at the same time ensure widespread spatial distribution of its CSR activities Pan-India befitting its status as a conscientious corporate citizen.

Section 135 of Companies Act, 2013 (“the Act”) read with Companies (Corporate Social Responsibility Policy) Rules 2014 requires IDFC to mandatorily spend on CSR.

IDFC would continue to carry out CSR activities through its wholly owned subsidiary company, namely, IDFC Foundation, a not-for-profit Company within the meaning of Section 8 of the Companies Act, 2013 (earlier Section 25 of the Companies Act, 1956).

The object of the CSR activities would seek to –

(a) serve the poor, marginalised and underprivileged

(b) promote inclusion

(c) be sustainable

(d) meet needs of the larger community and society

IDFC Foundation, as implementing agency on behalf of IDFC Limited and its group companies, would undertake the following CSR activities fall within the ambit of the activities listed in Schedule VII of the Companies Act, 2013 for promoting the development of –

(a) livelihoods

(b) rural areas

(c) social infrastructure such as healthcare and education; and

(d) other infrastructure that would meet the objectives of Inclusion and environmental sustainability such as water supply, sanitation, sustainable urbanization, public transport systems, renewable energy, slum re-development and affordable housing.

2. the Composition of the CSR Committee: Mr. Sunil Kakar (DIN - 03055561) - Chairman Mr. T. S. Bhattacharya (DIN - 00157305) Dr. Rajeev Uberoi (DIN - 01731829)

3. Average net profit of the company for last three financial years: ` 10.00 crore

4. Prescribed CSR Expenditure (two per cent of the amount as in item 3 above): ` 20.00 Lac

5. Details of CSR spent during the financial year: ` 20.00 Lac

(a) Total amount to be spent for the financial year: ` 20.00 Lac

(b) Amount unspent, if any: NIL

Corporate Social Responsibility aNNEXURE III


Independent Auditors' Reportto tHe members oF IDFC seCurItIes lImIteD

Report on the Financial Statements

We have audited the accompanying financial statements of IDFC SECuRItIES LIMItED (“the Company”), which comprise the Balance Sheet as at March 31, 2015, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the financial statements.

opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2015, and its profit and its cash flows for the year ended on that date.

Report on other Legal and Regulatory Requirements1. As required by the Companies (Auditor’s Report) Order, 2015 (“the order”) issued by the Central Government in terms of Section 143(11) of

the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order.2. As required by Section 143 (3) of the Act, we report that: a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the

purposes of our audit. b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of

those books. c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the

books of account. d) In our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with

Rule 7 of the Companies (Accounts) Rules, 2014. e) On the basis of the written representations received from the directors as on March 31, 2015 taken on record by the Board of Directors,

none of the directors is disqualified as on March 31, 2015 from being appointed as a director in terms of Section 164 (2) of the Act.


f) With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company does not have any pending litigations which would impact its financial position. ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable

losses. iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

FOR DELOITTE HASKINS & SELLS

Chartered Accountants(Registration No. 117365W)

ZUBIN SHEKARy

Partner(Membership No. 48814)

Mumbai, April 23, 2015

Independent Auditors' Report


Annexure to the Independent Auditors’ Report(Referred to in paragraph 1 under ‘Report on other Legal and Regulatory Requirements’ section of our report of even date)i. In respect of the Company’s fixed assets: (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. (b) The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification

which, in our opinion, provides for physical verification of the fixed assets at reasonable intervals. According to the information and explanation given to us, no material discrepancies were noticed on such verification.

ii. According to the information and explanations given to us, the nature of the Company’s business is such that it is not required to hold any inventories. Therefore, the provisions of paragraph 3(ii) of the Order are not applicable to the Company.

iii. The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the Register maintained under Section 189 of the Act.

iv. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of fixed assets and the sale of services. During the course of our audit, we have not observed any major weakness in such internal control system.

v. In our opinion and according to the information and explanations given to us, the Company has not accepted deposits. Therefore, the provisions of the clause 3 (v) of the Order are not applicable to the Company.

vi. The provisions of clause (3)(vi) of the Order are not applicable to the Company as the Company is not covered by the Companies (Cost Records and Audit) Rules, 2014.

vii. According to the information and explanations given to us, in respect of statutory dues: (a) The Company has been regular in depositing undisputed statutory dues, including provident fund, employees’ state insurance, income

tax, service tax, Cess and other material statutory dues applicable to it with the appropriate authorities. (b) There were no undisputed amounts payable in respect of provident fund, employees’ state insurance, income tax, service tax, Cess and

other material statutory dues in arrears as at March 31, 2015 for a period of more than six months from the date they became payable. (c) Details of dues of income tax, sales tax, service tax and value added tax which have not been deposited as at March 31, 2015 on account

of disputes are given below:

nAme oF tHe stAtute nAture oF Dues Forum wHere DIspute Is penDIng

perIoD For wHICH tHe Amount relAtes

Amount InvolveD (`)

Income Tax Act, 1961 Income Tax Income Tax Officer A. Y. 1997-98 160,000

A. Y. 1998-99 107,396

A. Y. 1999-00 87,500

A. Y. 2007-08 100,807

A. Y. 2008-09 1,084,599

A. Y. 2009-10 1,360,137

A. Y. 2010-11 2,934,304

A. Y. 2011-12 24,357,713

A. Y. 2012-13 134,170

Commissioner Appeal A. Y. 2012-13 32,738,420

High Court A. Y. 2008-09 9,277,612

Service Tax Service Tax The Commissioner of Service Tax

For the period Jul 12 - Mar 13 10,636,201

for the Financial Year 2013-14 14,291,421

For the period Apr 09 - Feb 10 1,902,134

(d) There were no amounts which were required to be transferred to the Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made thereunder by the Company.

viii. The Company does not have accumulated losses. The Company has not incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

ix. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to a bank. Further, in our opinion and according to information and explanations given to us, the Company did not have any amount outstanding to financial institutions or debenture holders.

x. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions. Therefore, the provisions of paragraph 3(x) of the Order are not applicable to the Company.


xi. According to the information and explanations given to us, during the year, the Company has not availed of any term loan from financial institutions. Therefore, the provisions of paragraph 3(xi) of the Order are not applicable to the Company.

xii. To the best of our knowledge and belief and according to the information and explanations given to us, no fraud by the Company and no material fraud on the Company has been noticed or reported during the year.



ZUBIN SHEKARy


Mumbai, April 23, 2015

Annexure to the Independent Auditors’ Report


IN TERmS OF OUR REPORT ATTACHED





ZUBIN SHEKARy


vIKRAm LImAyE

ChairmanSUNIL KAKAR

Director

Mumbai | April 23, 2015HITESH DESAI


Company Secretary

Balance Sheet AS AT MARCH 31, 2015

notes As At mArCH 31, 2015

`

As At mArCH 31, 2014

`

EqUITy AND LIABILITIES

SHAREHOLDERS’ FUNDS

(a) Share capital 3 141,372,000 141,372,000

(b) Reserves and surplus 4 1,056,802,562 2,424,611,672

1,198,174,562 2,565,983,672NON-CURRENT LIABILITIES

(a) Long -term borrowings 5 – 1,250,000,000

(b) Other long-term liabilities 6 176,541 176,541

176,541 1,250,176,541CURRENT LIABILITIES

(a) Trade payables 7 35,166,020 42,510,182

(b) Other current liabilities 8 16,996,887 18,562,846

(c) Short-term provisions 9 2,018,843,424 111,562,193

2,071,006,331 172,635,221

TOTAL 3,269,357,434 3,988,795,434

ASSETS

NON-CURRENT ASSETS

(a) Fixed assets

Tangible assets 10 16,023,847 12,768,173

Intangible assets 11 4,184,700 3,982,409

Capital work-in-progress 629,216 669,195

20,837,763 17,419,777

(b) Non-current investments 12 160,764,045 1,938,743,383

(c) Deferred tax asset 13 19,300,000 10,100,000

(d) Long-term loans and advances 14 233,498,473 348,615,667

(e) Other non-current assets 15 42,130,465 12,597,882

476,530,746 2,327,476,709CURRENT ASSETS

(a) Current investments 16 2,284,249,976 990,209,313

(b) Trade receivables 17 75,888,577 51,192,884

(c) Cash and Cash equivalents 18 385,104,634 588,504,785

(d) Short-term loans and advances 14 29,911,145 13,864,223

(e) Other current assets 15 17,672,356 17,547,520

2,792,826,688 1,661,318,725

TOTAL 3,269,357,434 3,988,795,434

See accompanying notes forming part of the financial statements.


Statement of Income and Expenditure FOR THE YEAR ENDED MARCH 31, 2015



Chartered Accountants (Registration No. 117365W)



ZUBIN SHEKARy


vIKRAm LImAyE

ChairmanSUNIL KAKAR

Director



Company Secretary

notes For tHe yeAr enDeD mArCH 31, 2015

`


`

I INCOmE

Revenue from operations 19 941,915,895 678,329,364

Other income 20 351,085,626 103,521,211

TOTAL INCOmE (I) 1,293,001,521 781,850,575

II ExPENSES

Operating expenses 21 43,081,296 47,570,256

Employee benefits expenses 22 500,787,961 288,908,671

Finance costs 23 6,705,219 3,536,020

Depreciation and amortisation expense 10, 11 9,709,306 6,339,548

Other expenses 24 142,115,939 152,233,341

Provisions and contingencies 28,933,133 599,354

TOTAL ExPENSES (II) 731,332,854 499,187,190

III PROFIT BEFORE TAx (I-II) 561,668,667 282,663,385

Iv TAx ExPENSE

Current tax 125,000,000 84,400,000

Deferred tax 13 (9,200,000) 150,000

Current tax expense relating to prior years 27,076,404 (21,254,710)

TOTAL TAx ExPENSE 142,876,404 63,295,290

v PROFIT FOR THE yEAR FROm CONTINUING OPERATIONS (III-Iv) 418,792,263 219,368,095

Earnings per equity share (nominal value of share ` 10) 31

Basic (`) 29.62 15.52

Diluted (`) 29.62 12.24

See accompanying notes forming part of the financial statements.


Cash Flow Statement YEAR ENDED MARCH 31, 2015


`


`

CASH FLOW FROm OPERATING ACTIvITIES

PROFIT BEFORE TAx 561,668,667 282,663,385

Adjustments for

Depreciation and amortisation expense 9,709,306 6,339,548

Provisions and contingencies 28,933,133 599,354

Interest on bank deposits (33,987,257) (36,746,349)

Finance costs 6,705,219 3,536,020

Dividend from investments (2,063,935) (5,638,523)

(Profit)/loss on sale of fixed assets (net) (61,771) 8,323

Gain on sale of current investment (94,029,343) (51,904,175)

Gain on sale of long-term investment (20,138,742) –

Gain on sale of subsidiary (197,595,258) –

(302,528,648) (83,805,802)

OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 259,140,019 198,857,583

CHANGES IN WORKING CAPITAL:

Adjustments for (increase) / decrease in operating assets:

Trade receivables (50,456,849) 177,296,661

Short-term loans and advances (16,046,924) 2,041,226

Long-term loans and advances 19,075,268 (231,050)

Other current assets (6,421,857) 6,734,710

Adjustments for increase / (decrease) in operating liabilities:

Short-term provision 109,400,000 (603,386)

Trade payables (7,344,161) 38,291,247

Other current liabilities (1,565,959) (46,798,228)

Other long-term liabilities – 22,632

46,639,518 176,753,812

CASH GENERATED FROm OPERATIONS 305,779,537 375,611,395

Net income taxes paid (45,781,628) (107,214,049)

NET CASH FROm OPERATING ACTIvITIES (A) 259,997,909 268,397,346

CASH FLOW FROm INvESTING ACTIvITIES

Capital advances 1,027,008 (623,165)

Proceeds from sale of fixed assets 1,493,055 80,073

Bank balances not considered as cash and cash equivalents

- Placed (354,945,828) (487,900,637)

- Matured 505,900,637 378,450,000

Purchase of fixed assets (14,558,575) (9,973,273)

Purchase of investments - others (17,169,390,791) (4,171,474,780)

Investments in subsidiaries (1,901,292,625) (159,246,223)

Proceeds from transfer of subsidiaries 3,856,282,162 -

Proceeds from sale of current investments 15,969,379,471 4,187,916,748

Proceeds from sale of other investments 40,723,802 –

Interest received on bank deposits 35,479,717 38,302,726

Dividend received on investments 2,063,935 5,638,523



`


`

NET CASH USED IN INvESTING ACTIvITIES (B) 972,161,968 (218,830,008)

CASH FLOW FROm FINANCING ACTIvITIES

Buy back of debentures (1,250,000,000) -

Finance costs (6,705,219) (3,536,020)

NET CASH FROm /(USED IN) FINANCING ACTIvITIES (C) (1,256,705,219) (3,536,020)

net decrease in cash and cash equivalents (A+b+C) (24,545,342) 46,031,318

Cash and cash equivalents as at the beginning of year (see note 18) 82,604,148 32,662,318

Cash and cash equivalents of the merged companies – 3,910,512

Cash and cash equivalents as at the end of year (see note 18) 58,058,806 82,604,148

(24,545,342) 46,031,318






ZUBIN SHEKARy


vIKRAm LImAyE

ChairmanSUNIL KAKAR

Director



Company Secretary

Cash Flow Statement (Contd.) YEAR ENDED MARCH 31, 2015

Notes forming part of the Financial Statements AS AT AND For The yeAr eNDeD MArch 31, 2015


01 BackgroundIDFC Securities Limited ('the Company') is a wholly owned subsidiary of IDFC Limited, (the 'Holding Company') incorporated in India and regulated by the Securities Exchange Board of India (SEBI) as a stock broking company.The Company is engaged in the business of share and stock broking for both cash segment and derivatives segment and is a member of the National Stock Exchange of India Limited (NSE) and the Bombay Stock Exchange Limited (BSE). The activities of the Company include providing equity research and stock broking services to Foreign Institutional Investors (FIIs) & Domestic Institutional Investors (DIIs).The Company is also registered with Security and Exchange Board of India (SEBI) as category – I, Merchant Banker, engaged in providing Investment Banking services like Advisory services, IPO Underwriting, Qualified Institutional Placement (QIP), fund raising and Debt Syndication.

02 Significant accounting policies(a) basis of accounting and preparation of financial statementsThe financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 (“the 2013 Act”) / Companies Act, 1956 (“the 1956 Act”), as applicable. The financial statements have been prepared on accrual basis under the historical cost convention except for categories of fixed assets acquired before April 1, 2014, that are carried at revalued amount. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year except for change in the accounting policy for depreciation as more fully described in Note 2e.

(b) use of estimatesThe Company adopts the accrual concept in the preparation of the accounts. The preparation of financial statements in conformity with Indian GAAP requires the management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the difference between the actual results and the estimates are recognised in the period in which the results are known/materialise.

(c) revenue recognition (a) Income from brokerage activities is recognised on trade-date basis and is net of statutory payments. (b) Income from fee-based activities is recognised on the basis of terms of contracts with the clients and when reasonable right of recovery is

established and is accounted net of service tax. (c) Interest income is recognised on an accrual basis. (d) Dividend is recognised when the right to receive is established as at the Balance sheet date.

(d) Fixed assets and intangible assetsFixed assets are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated depreciation. Intangible assets comprising of system software are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated amortisation. Any technology support cost or annual maintenance cost for such software is charged annually to the Statement of Profit and Loss. Consideration paid for transfer of tenancy rights is capitalised as an intangible asset.The Company has regular programme of evaluating useful life of its assets.

(e) Depreciation and Amortisation

tangible assets Depreciation on tangible fixed assets is provided on straight line method, at the rates prescribed in Part C of Schedule II to the Companies

Act, 2013. Certain electronic items and vehicles are depreciated over a period of two years and four year respectively on a straight-line method based on the Management’s estimate of the useful life of these assets. Depreciation on additions during the year is provided on a pro-rata basis. Assets costing less than ` 5,000 each are fully depreciated in the year of capitalisation.

Having regard to the Part C of Schedule II of the Companies Act, 2013 during the quarter ended June 30, 2014, the Company has reviewed its policy of providing for depreciation on its tangible fixed assets and also reassessed their useful lives. On and from April 1, 2014, the straight line method is being used to depreciate all classes of tangible fixed assets. Previously, straight line method was used for depreciating certain office equipment while other tangible fixed assets were depreciated using written down value method.

Intangible assets Intangible assets comprising of computer software are stated at cost of acquisition, including any cost attributable for bringing the asset to

its working condition, less accumulated amortisation. Any technology support cost or annual maintenance cost for such software is charged



annually to the Statement of Profit and Loss. Intangible assets are being amortised over a period of three years on a straight-line method. Tenancy rights are amortised over a period of 10 years by using Straight-line method.

(f) InvestmentsInvestments which are readily realisable and intended to be held for not more than one year from the date on which such investments are made are classified as current investments in accordance with Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014. All other investments are classified as long-term investments.All investments are initially recorded at cost. The cost of an investment includes purchase price, directly attributable acquisition charges and reduced by recovery of costs, if any. On disposal of an investment, the difference between its carrying amount and the net disposal proceeds is charged or credited to the Statement of Profit and Loss.Long Term Investments' are carried at acquisition cost. A provision is made for diminution other than temporary on an individual basis. Current Investments' are carried at the lower of cost or fair value on an individual basis.

(g) Cash and cash equivalents (for purposes of Cash Flow statement)Cash and cash equivalents for the purpose of the Cash Flow Statement comprises cash on hand, cash in bank, fixed deposits and other short-term highly liquid investments with an original maturity of three months or less that are readily convertible into known amount of cash and which are subject to an insignificant risk of change in value.

(h) Cash flow statementCash flows are reported using the indirect method whereby cash flows from operating, investing and financing activities of the Company are segregated and profit before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments.

(i) misdeal stockMisdeal stock comprises of stock that has devolved on the Company due to erroneous execution of trades on behalf of the institutional clients in the normal course of business. These securities are valued at lower of cost or market value/ realisable value on an individual basis. Any valuation loss based on the above is debited to the Statement of Profit and Loss.

(j) employee benefits –

Defined contribution plans n The Company’s contribution to provident fund is considered as defined contribution plan and is charged to the Statement of Profit and

Loss as they fall due based on the amount of contribution required to be made as and when services are rendered by the employees. n The Company participates in the holding company’s superannuation policy for future payments of superannuation and the Company’s

contribution paid / payable during the year is charged to the Statement of Profit and Loss every year.

Defined benefit plan n The net present value of the Company’s obligation towards gratuity to employees is funded and actuarially determined as at the Balance

Sheet date based on the projected unit credit method. Actuarial gains and losses are recognised in the Statement of Profit and Loss for the period in which they occur.

other benefits n Based on the leave rules of the Company, employees are not permitted to accumulate leave. Any unavailed privilege leave to the extent

encashable is paid to the employees and charged to the Statement of Profit and Loss for the year.

(k) Income - taxThe accounting treatment for income-tax in respect of the Company's income is based on the Accounting Standard 22 on 'Accounting for Taxes on Income' as specified u/s 133 of Companies Act, 2013 read with rule 7 of the Companies (Accounts) Rules, 2014. The provision made for income-tax in the accounts comprises both the current tax and the deferred tax. The deferred tax assets and liabilities for the year arising on account of timing differences are recognised in the Statement of Profit and Loss and the cumulative effect thereof is reflected in the Balance Sheet. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax asset is recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the Company has unabsorbed depreciation or carried forward losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that the same can be realised against future taxable profits.



(l) earnings per shareBasic earnings per share is computed by dividing the profit / (loss) after tax by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax as adjusted for expense or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.

(m) provisions and contingenciesA provision is recognised when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent liabilities if any are disclosed in the notes. The Company does not account for Contingent assets

(n) Foreign currency transactionsForeign currency transactions are accounted at the exchange rates prevailing on the date of the transaction. Foreign currency monetary items outstanding as at the Balance Sheet date are reported using the closing rate. Gains and losses resulting from the settlement of such transactions and translation of monetary assets and liabilities denominated in foreign currencies are recognised in the Statement of Profit and Loss.

(o) Insurance ClaimsInsurance claims are accounted for on the basis of claims admitted/expected to be admitted and to the extent that there is no uncertainty in receiving the claims.

(p) service tax input creditService tax input credit is accounted in the period in which the underlying services are received and when there is no uncertainty in availing/utilising the credits.

(q) operating CycleBased on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.

03 Share CapitalAs At mArCH 31, 2015 As At mArCH 31, 2014

NUmBER ` NUmBER `

AUTHORISED

Equity shares of ` 10 each 52,000,000 520,000,000 52,000,000 520,000,000

ISSUED, SUBSCRIBED AND FULLy PAID UP SHARES

Equity shares of ` 10 each 14,137,200 141,372,000 14,137,200 141,372,000

(All the above equity shares are held by IDFC Limited, the Holding Company and its nominees)

TOTAL 141,372,000 141,372,000

a reconciliation of the number of equity shares outstanding at the beginning and at the end of the year.

As At mArCH 31, 2015 As At mArCH 31, 2014

NUmBER ` NUmBER `

Outstanding at the beginning of the year 14,137,200 141,372,000 14,137,200 141,372,000

Issued during the year – – – –

Outstanding at the end of the year 14,137,200 141,372,000 14,137,200 141,372,000



b terms/rights attached to equity sharesThe Company has only one class of equity shares having a par value of ` 10 per share. Each holder of equity share is entitled to one vote per share. During the year ended March 31,2015 dividend of ` 105 per share ( Previous year ` Nil per share ) is recognised as amount distributable to equity shareholders.In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amounts. However, no such preferential amounts exists currently. The distribution will be in proportion to the number of equity shares held by the Shareholders.

c Details of shareholders holding more than 5% of the shares in the company


EqUITy SHARES NUmBER % OF HOLDING NUmBER % OF HOLDING

IDFC Limited and its nominees 14,137,200 100 14,137,200 100

04 Reserves and surplusAs At mArCH 31,2015

`

As At mArCH 31,2014`

(A) SECURITIES PREmIUm ACCOUNT 142,578,000 142,578,000

(B) GENERAL RESERvE

Opening balance 355,628,577 55,628,577

Add:- Debenture redemption reserve transferred on amalgamation – 300,000,000

Closing balance 355,628,577 355,628,577

(C) CAPITAL RESERvE 38,147,550 38,147,550

(D) DEBENTURE REDEmPTION RESERvE

Opening balance 625,000,000 312,500,000

Add:- Transferred from surplus in statement of Profit and Loss – 312,500,000

Less:- Transferred to surplus in statement of Profit and Loss (625,000,000) –

Closing balance – 625,000,000

Debenture redemption reserve has been reversed for ` 625,000,000 (Previous year ` Nil). The Company has buy-back privately placed Zero Coupon Optionally Convertible Debentures (“ZCoCDS”) from IDFC Limited and paid ` 1,250,000,000, during the year

(E) SURPLUS IN THE STATEmENT OF PROFIT AND LOSS

Opening balance 1,263,257,545 485,445,521

Add: Profit for the year 418,792,263 219,368,095

Add: On amalgamation – 870,943,929

Add: Transfer from debenture redemption reserve 625,000,000 –

Less: Transfer to debenture redemption reserve – (312,500,000)

Less: Dividend proposed to be distributed to equity shareholder (1,484,406,000) –

[` 105 per share (Previous year Nil per share)]

Less: Tax on dividend (302,195,373) –

Closing balance 520,448,435 1,263,257,545

TOTAL 1,056,802,562 2,424,611,672



05 Long-term borrowingsAs At mArCH 31, 2015

`

As At mArCH 31, 2014`

Zero coupon optionally convertible debentures (Unsecured)* (see note 29) – 1,250,000,000

TOTAL – 1,250,000,000

* The Company had issued 1250 ZCOCD with face value of ` 1,000,000/- each amounting to ` 1,250,000,000 to IDFC Limited for the tenure of 5 years and can be renewed as may be mutually agreed upon by both the parties. The debentures are convertible into 3,786,961 equity shares at price of ` 330.08/- anytime after one year at the option of the investor. At March 31, 2015 the debentures were prematurely redeemed by mutual consent. In the current year the Company has prematurely redeemed the above debentures.

06 Other long - term liabilitiesAs At mArCH 31, 2015

`


Others * 176,541 176,541

TOTAL 176,541 176,541

* Represents amounts withheld from erstwhile promoters in terms of the Share Purchase Agreement.

07 Trade payablesAs At mArCH 31, 2015

`


Provision for expenses (see note 29) 19,672,443 19,907,919

Payable to vendors 15,493,577 22,602,263

TOTAL 35,166,020 42,510,182

No amount is payable to “Suppliers” registered under Micro Small and Medium Enterprises Development Act, 2006. No interest has been paid / is payable by the Company during the year to the “suppliers” covered under the Micro, Small and Medium Enterprises Development Act, 2006. The above information takes into account only those suppliers who have responded to inquiries made by the Company for this purpose.

08 Other current liabilitiesAs At mArCH 31, 2015

`


Payable to gratuity fund (see note 26) (net of gratuity receivable, current year ` Nil (Previous year ` 661,963)

– 5,130,452

Amount received in advance 1,656,370 –

Statutory dues 15,340,517 13,432,394

TOTAL 16,996,887 18,562,846

09 Short-term provisionsAs At mArCH 31, 2015

`


Provision for employee benefit expense 174,900,000 65,500,000

Provision for income tax[net of advance tax ` 153,070,239 (Previous year ` 43,556,491)]

57,327,051 46,047,193

Provision for fringe benefit tax[net of advance tax ` 905,000 (Previous year ` 905,000)]

15,000 15,000

Provision for proposed equity dividend 1,484,406,000 –

Provision for tax on proposed dividend 302,195,373 –

TOTAL 2,018,843,424 111,562,193



10 Tangible assetsGROSS BLOCK DEPRECIATION AND AmORTISATION NET BLOCK

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` ` ` ` ` ` ` ` ` ` ` ` `Furniture and fixtures 532,236 – – – 532,236 322,471 – 53,224 (30,085) – 345,610 186,626 209,765(Previous year) (385,000) (94,867) (52,369) (14,200) (518,036) (271,057) (20,664) (30,750) (14,200) (308,271) (209,765) (113,943)Office equipment 7,350,588 – 1,474,220 266,767 8,558,041 5,039,116 – 1,239,466 1,201,732 224,408 7,255,906 1,302,135 2,311,472(Previous year) (5,123,062) (1,911,775) (712,980) (383,029) (7,364,788) (3,200,446) (1,379,609) (823,870) (350,609) (5,053,316) (2,311,472) (1,922,616)Computers 27,483,393 – 4,060,633 73,200 31,470,826 21,834,733 – 2,781,646 (118,619) 16,579 24,481,181 6,989,645 5,648,660(Previous year) (23,067,720) (4,800,885) (2,283,337) (2,668,549) (27,483,393) (17,888,505) (3,774,408) (2,784,393) (2,612,573) (21,834,733) (5,648,660) (5,179,215)Vehicles 5,757,356 – 6,467,575 1,833,331 10,391,600 1,159,080 – 2,198,213 (10,107) 501,027 2,846,159 7,545,441 4,598,276(Previous year) – (1,575,433) (4,181,923) – (5,757,356) – (257,258) (901,822) – (1,159,080) (4,598,276) –TOTAL 41,123,573 – 12,002,428 2,173,298 50,952,703 28,355,400 – 6,272,549 1,042,921 742,014 34,928,856 16,023,847 12,768,173(Previous year) (28,575,782) (8,382,960) (7,230,609) (3,065,778) (41,123,573) (21,360,008) (5,431,939) (4,540,835) – (2,977,382) (28,355,400) (12,768,173) (7,215,774)

11 Intangible assets -Other than internally generatedGROSS BLOCK DEPRECIATION AND AmORTISATION NET BLOCK

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` ` ` ` ` ` ` ` ` ` ` ` `Tenancy rights 1,083,200 – – – 1,083,200 551,987 – 108,320 297 – 660,604 422,596 531,213(Previous year) (1,083,200) – – – (1,083,200) (443,667) – (108,320) – – (551,987) (531,213) (639,533)Computer software 16,236,414 – 2,596,127 – 18,832,541 12,785,218 – 2,217,230 67,989 – 15,070,437 3,762,104 3,451,196(Previous year) (12,179,387) (1,314,363) (2,742,664) – (16,236,414) (9,889,838) (1,204,988) (1,690,393) – – (12,785,218) (3,451,196) (2,289,549)TOTAL 17,319,614 – 2,596,127 – 19,915,741 13,337,205 – 2,325,550 68,286 – 15,731,041 4,184,700 3,982,409(Previous year) (13,262,587) (1,314,363) (2,742,664) – (17,319,614) (10,333,505) (1,204,988) (1,798,713) – – (13,337,205) (3,982,409) (2,929,082)TOTAL TANGIBLE AND INTANGIBLE ASSETS

58,443,187 – 14,598,555 2,173,298 70,868,444 41,692,605 – 8,598,099 1,111,207 742,014 50,659,897 20,208,547 16,750,582

(Previous year) (41,838,369) (9,697,323) (9,973,273) (3,065,778) (58,443,187) (31,693,513) (6,636,927) (6,339,548) – (2,977,382) (41,692,605) (16,750,582) (10,144,856)

Note: Represent the cost of fixed assets and balance of provision for depreciation of IDFC Capital Limited as at November 1, 2013 (date of merger)

12 Non-current investmentsAs At mArCH 31, 2015 As At mArCH 31, 2014

FACE vALUE ` qUANTITy ` qUANTITy `

TRADE INvESTmENTS (vALUED AT COST UNLESS STATED OTHERWISE)UNqUOTED EqUITy SHARES (FULLy PAID)

INvESTmENT IN SUBSIDIARIES

IDFC Capital (USA) INC. USD 0.01 100,000,000 46,240,000 100,000,000 46,240,000IDFC Capital (Singapore) Pte Ltd (see note 29) SGD1 – – 17,475,000 653,176,070IDFC Fund of Funds Limited (see note 29) USD 1 – – 23,298,763 1,181,470,208IDFC Securities Singapore Pte Ltd (see note 29) SGD1 2,400,001 114,514,045 800,001 37,262,045

160,754,045 1,918,148,323OTHERS

BSE Limited (erstwhile Bombay Stock Exchange Limited)

1 130,000 10,000 130,000 10,000

SSIPL Retail Private Limited 10 – – 121,840 20,585,060Epsilon Advisers Private Limited 10 1,250,000 15,135,000 1,250,000 15,135,000Provision for diminution in value of investments (15,135,000) (15,135,000)

10,000 20,595,060TOTAL 160,764,045 1,938,743,383



13 Deferred tax assetAs At mArCH 31, 2015

`


Tax effects of items constituting deferred tax assets

(a) On difference between book balance and tax balance of fixed assets 3,950,000 3,950,000

(b) Provision for doubtful debtors and investments 15,350,000 6,150,000

TOTAL 19,300,000 10,100,000

As per Accounting Standard 22 on 'Accounting for Taxes on Income' as specified u/s 133 of Companies Act, 2013 read with rule 7 of the Companies (Accounts) Rules, 2014, the Company has taken credit of ` 9,200,000 (previous year charge ` 150,000) in the Statement of Profit and Loss towards deferred tax asset on account of timing differences.

14 Loans and advances (unsecured, considered good)


NON-CURRENT PORTION

CURRENT PORTION

NON-CURRENT PORTION

CURRENT PORTION

` ` ` `

Capital advances – – 1,027,008 –

Security deposits

- Deposits with stock exchanges 30,502,200 – 29,852,200 –

- Other deposits 725,920 20,000,000 20,675,920 –

Loan and advances to employees – 496,353 – 672,410

Prepaid expenses 459,891 4,746,420 235,159 7,364,670

Advance payment of income tax 196,895,837 – 291,910,755 –

[net of provision for tax of ` 922,594,561 (Previous year ` 1,079,448,167)]

Advance payment of fringe benefit tax 4,914,625 – 4,914,625 –

[net of provision for tax of ` 6,625,000(Previous year ` 6,625,000)]

Balances with government authorities

- Service tax credit receivable – 143,944 – 2,659,057

Advances to suppliers – 4,524,428 – 3,168,086

TOTAL 233,498,473 29,911,145 348,615,667 13,864,223

15 Other assets (considered good, unless stated otherwise)


NON-CURRENT PORTION

CURRENT PORTION

NON-CURRENT PORTION

CURRENT PORTION

` ` ` `

Bank deposit (see note 18) 39,800,000 – 11,900,000 –

Interest accrued on bank deposits 2,330,465 11,204,101 697,882 14,329,143

Gratuity receivable (see note below) – 2,775,969 – –

Expenses recoverable (considered good) – 3,692,286 – 3,218,377

Expenses recoverable (considered doubtful) – 3,310,581 – 946,804

Less:- Provisions – (3,310,581) – (946,804)

TOTAL 42,130,465 17,672,356 12,597,882 17,547,520

Note : Represents amount paid by the fund but lying in the IDFC Capital Limited employee group gratuity scheme account. The fund from the said account was transferred in the books of the company subsequent to March 31, 2015



16 Current investments (Valued at lower of cost and fair value, unless stated otherwise)


FACE vALUE ` qUANTITy ` qUANTITy `

mUTUAL FUNDS (UNqUOTED)

IDFC Cash Fund - Growth scheme (Direct plan) 1000 1,344,101.430 2,284,249,976 542,647.906 845,077,077IDFC Dynamic Bond Fund- Regular Plan B- Growth 10 – – 6,884,675.570 139,632,236IDFC Fixed Term Plan Series 54 Direct Plan- Growth

10 – – 550,000.000 5,500,000

TOTAL 2,284,249,976 990,209,313Aggregate amount of investments in unquoted mutual fundsCost 2,284,249,976 990,209,313Market Value 2,285,754,429 990,865,816

Market value of investment in unquoted mutual funds represents the repurchase price of the units issued by the mutual funds.

17 Trade receivables (unsecured) (considered good unless stated otherwise)



Outstanding for a period less than six months from the date they are due for payment 68,616,273 25,535,456

Outstanding for a period more than or equal to six months from the date they are due for payment

7,272,304 25,657,428

Considered doubtful outstanding for a period exceeding six months from the date they are due for payment

25,761,157 1,978,903

Provision for doubtful debts (25,761,157) (1,978,903)

TOTAL 75,888,577 51,192,884

18 Cash and Cash equivalentsAs At mArCH 31, 2015 As At mArCH 31, 2014

NON-CURRENT PORTION

CURRENT PORTION

NON-CURRENT PORTION

CURRENT PORTION

` ` ` `

Cash and cash equivalents

Cash on hand – 5,616 – 15,379

Balances with banks:

- In current accounts – 58,053,190 – 82,588,769

Total Cash and cash equivalents (For cash flow purpose ) – 58,058,806 – 82,604,148

Others

Balances with banks:

- In deposit accounts [see note (a) and (b)] 39,800,000 327,045,828 11,900,000 505,900,637

Total Others 39,800,000 327,045,828 11,900,000 505,900,637

Amount disclosed under “other assets” (see note 15) (39,800,000) – (11,900,000) –

TOTAL – 385,104,634 – 588,504,785

(a) Balances with banks include deposits amounting to ` 249,450,000 (Previous year ` 249,450,000) which have an original maturity of more than 12 months.

(b) Balances with banks include deposits amounting to ` 366,845,828 (Previous year ` 357,800,637) which are under lien. The Company has created the lien on bank deposits for availing bank guarantee and overdraft facility for exchange margin funding. The bank guarantee are issued by bank in favour of National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) for exchange margin in both cash and derivatives segment.



19 Revenue from operationsFor tHe yeAr enDeD

mArCH 31, 2015`


`

Brokerage (see note 29) 368,146,099 240,835,996

Advisory Fee income (see note 27 and 29) 573,769,796 437,493,368

TOTAL 941,915,895 678,329,364

20 Other incomeFor tHe yeAr enDeD

mArCH 31, 2015`


`

Dividend from long-term investments 775,864 520,000

Dividend from current investments 1,288,071 5,118,523

Interest on bank deposit 33,987,257 36,746,349

Gain on sale of current investment 94,029,343 51,904,175

Gain on sale of subsidiary 197,595,258 –

Gain on sale of long term investment 20,138,742 –

Interest on income-tax refund 2,931,265 9,212,164

Other Interest 212,055 –

Profit on sale of fixed assets 61,771 –

Miscellaneous income 66,000 20,000

TOTAL 351,085,626 103,521,211

21 Operating expensesFor tHe yeAr enDeD

mArCH 31, 2015`


`

Membership and subscription (see note 27) 40,438,820 41,881,263

Clearing house maintenance charges 158,774 157,234

Depository charges 359,997 319,999

Loss on sale of misdeal stock (net) 1,973,534 4,414,739

Others 150,171 797,021

TOTAL 43,081,296 47,570,256

22 Employee benefit expensesFor tHe yeAr enDeD

mArCH 31, 2015`


`

Salaries and bonus (see note 30) 467,360,211 257,997,780

Contribution to provident and other funds (see note 26) 29,224,653 27,254,305

Staff welfare expenses 4,203,097 3,656,586

TOTAL 500,787,961 288,908,671



23 Finance costsFor tHe yeAr enDeD

mArCH 31, 2015`


`

Interest on temporary overdraft 4,086,732 487,288

Bank guarantee charges 2,605,240 3,034,965

Bank charges 13,247 13,767

TOTAL 6,705,219 3,536,020

The bank guarantee facilities were availed from the nationalised/scheduled banks and were submitted to BSE/NSE (Exchanges) as margin deposit. The temporary borrowings are taken in the normal course of broking business.

24 Other expensesFor tHe yeAr enDeD

mArCH 31, 2015`


`

Repairs and maintenance

- Equipment 1,618,650 855,438

- Others 1,257,598 747,152

Insurance charges 916,125 711,843

Travelling and conveyance (see note 27) 32,965,561 29,043,852

Printing and stationery 3,051,982 8,214,483

Postage, telephone and fax 8,214,783 7,869,243

Advertising and publicity 20,526,650 1,319,454

Professional fees (see note 27 and 29) 42,649,013 64,086,323

Loss on sale / discarding of fixed assets (net) – 8,323

Loss on foreign exchange fluctuation 310,737 110,928

Service tax credit written off 1,922,708 5,101,622

Miscellaneous expenses 1,012,566 2,155,356

Donation 2,150,000 –

Bad debts 901,654 240,673

Directors' fees 160,000 239,877

Auditor's remuneration* 2,795,000 1,912,168

Shared services costs (see note 29) 21,662,912 29,616,606

TOTAL 142,115,939 152,233,341

* Break up of Auditor's remuneration:

Audit fee 1,100,000 1,100,000

Tax audit fee 200,000 200,000

Taxation matters 100,000 –

Other services 1,395,000 611,057

Out of pocket expenses – 1,111

Service Tax 141,522 75,664

TOTAL 2,936,522 1,987,832

Less:- Service tax set off claimed 141,522 75,664

TOTAL 2,795,000 1,912,168



25 Contingent liabilities not provided for in respect of:(a) Contingent liability table

pArtICulArs As At mArCH 31, 2015`


Claims not acknowledged as debts in respect of :

Income-tax demands disputed by the Company, (net of amount provided). The matters in dispute are under appeal. The demands have been partly paid/adjusted and will be received as refund if the matter is decided in favour of the Company.

99,403,605 40,912,264

Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for :

Tangible assets 1,699,236 5,135,164

Intangible assets 770,784 2,550,000

(b) there are no litigations claims made by the Company or pending on the Company

(c) Provisions for onerous contracts are recognised when the expected benefits to be derived by the Company from a contract are lower than the unavoidable costs of meeting the future obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognises any impairment loss on the assets associated with that contract.

26 Employee benefits (i) In accordance with the Accounting Standard 15 on 'Employee Benefits' as specified u/s 133 of Companies Act, 2013 read with rule 7 of the

Companies (Accounts) Rules, 2014, the following disclosures have been made: The Company has recognised the following amounts in the Statement of Profit and Loss towards contribution to defined contribution plans

which are included under contribution to provident and other funds:



Provident fund 14,863,040 11,817,674

Superannuation fund 758,745 642,796

Pension fund 1,246,582 1,113,324

ii) The details of the Company’s post-retirement benefit plans for gratuity for its employees are given below which is certified by the actuary and relied upon by the auditors.

pArtICulArs As At mArCH 31, 2015

`


`

CHANGE IN THE BENEFIT OBLIGATIONS:

Liability at the beginning of the year 44,108,257 45,907,570

Current service cost 9,258,587 10,935,319

Interest cost 4,194,895 4,343,553

Actuarial loss /(gain) 3,032,815 3,623,829

Benefits paid (8,196,109) (20,702,014)

Liability at the end of the year 52,398,445 44,108,257FAIR vALUE OF PLAN ASSETS:

Fair value of plan assets at the beginning of the year 38,315,842 45,709,123

Expected return on plan assets 2,904,115 3,825,873

Contributions 18,148,701 8,136,537

Actuarial gain on plan assets 1,225,896 1,346,323

Benefits paid (8,196,109) (20,702,014)

Fair value of plan assets at the end of the year 52,398,445 38,315,842

Total actuarial gain to be recognised 1,806,919 2,277,506




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`

ACTUAL RETURN ON PLAN ASSETS:

Expected return on plan assets 2,904,115 3,825,873

Actuarial gain on plan assets 1,225,896 1,346,323

Actual return on plan assets 4,130,011 5,172,196AmOUNT RECOGNISED IN THE BALANCE SHEET:

Liability at the end of the year 52,398,445 44,108,257

Fair value of plan assets at the end of the year 52,398,445 38,315,842

Amount recognised in the balance sheet under “Other current liabilities- Payable to gratuity fund” – 5,792,415ExPENSES RECOGNISED IN THE STATEmENT OF PROFIT AND LOSS UNDER "EmPLOyEE BENEFIT ExPENSES"

Current service cost 9,258,587 10,935,319

Interest cost 4,194,895 4,343,553

Expected return on plan assets (2,904,115) (3,825,873)

Net actuarial loss to be recognised 1,806,919 2,277,506

Past service cost – 176,623

Expense recognised in the Statement of Profit and Loss under “Employee benefit expenses” 12,356,286 13,680,511

Expense recognised in Reserves on Amalgamation – 226,617RECONCILIATION OF THE LIABILITy RECOGNISED IN THE BALANCE SHEET

Opening net liability 5,792,415 21,824

Expense recognised in the Statement of Profit and Loss under “Employee benefit expenses”

12,356,286 13,680,511

Expense recognised in Reserves on Amalgamation – 226,617

Contribution by the Company 18,148,701 8,136,537

Amount recognised in the Balance Sheet under “Other current liabilities- Payable to gratuity fund” – 5,792,415

Expected employer’s contribution next year 10,000,000 10,000,000


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`


`


`

Experience adjustments

Defined benefit obligation 52,398,445 44,108,257 45,907,570 45,245,851 36,260,754

Plan assets 52,398,445 38,315,842 45,709,123 21,225,319 29,143,408

Deficit – (5,792,415) (198,447) (24,020,532) (7,117,346)

Experience adjustment on plan liabilities 461,439 3,410,174 (6,027,279) (115,526) (4,466,768)

Experience adjustment on plan assets 1,225,896 1,346,323 5,380,092 (1,553,720) (895,205)

pArtICulArs As At mArCH 31, 2015%

As At mArCH 31, 2014%

Investment pattern

Insurer managed fund 100 100

Principal assumptions

Discount rate 7.90 9.05

Return on plan assets 9.00 8.00

Salary escalation rate 8.00 8.00

As the Gratuity fund is managed by Life Insurance Company details of investments are not available with the Company.

The estimates of future salary increase, considered in the actuarial valuation takes account of inflation, seniority, promotion and other relevant factors.



27 Expenditure in foreign currencies (on payment basis) :pArtICulArs As At mArCH 31, 2015

`


Professional fees 24,844,865 35,909,691

Directors fees – 79,877

Others 18,740,199 12,399,303

TOTAL 43,585,064 48,388,871

Earnings in foreign currencies :



Advisory fee income 73,902,898 14,997,398

TOTAL 73,902,898 14,997,398

28 Segment reporting:The Company has identified business segments as its primary segment and geographical segments as its secondary segment. Business segments comprise of Stock broking services and Investment banking services. Revenues and expenses directly attributable to segments are reported under each reportable segment. Expenses which are not directly identifiable to each reportable segment have been allocated on the basis of associated revenues of the segment and manpower efforts. All other expenses which are not attributable or allocable to segments have been disclosed as unallocable expenses. Assets and liabilities that are directly attributable or allocable to segments are disclosed under each reportable segment. All other assets and liabilities are disclosed as unallocable. Fixed assets that are used interchangeably amongst segments are not allocated to primary and secondary segments. The Company does not have any reportable geographic segment.


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`

SEGmENT OPERATING REvENUE

(a) Stock broking 409,255,775 265,833,394

(b) Investment banking 532,660,120 412,495,970

TOTAL 941,915,895 678,329,364

SEGmENT RESULTS

(a) Stock broking (35,721,911) (91,437,360)


(c) Unallocated 315,032,369 66,829,745

Profit before tax 561,668,667 282,663,385

Less: Provision for tax 142,876,404 63,295,290

Profit after tax 418,792,263 219,368,095

SEGmENT ASSETS

(a) Stock broking 462,372,708 641,301,907


(c) Unallocated 2,724,327,233 3,280,097,526

TOTAL 3,269,357,434 3,988,795,434

SEGmENT LIABILITIES

(a) Stock broking 124,494,210 109,471,762


(c) Unallocated 1,852,192,058 1,302,381,496

TOTAL 2,071,182,872 1,422,811,762




`


`

CAPITAL EmPLOyED

(a) Stock broking 337,878,498 531,830,145

(b) Investment banking (11,839,111) 56,437,497

(c) Unallocated 872,135,175 1,977,716,030

TOTAL 1,198,174,562 2,565,983,672

CAPITAL ExPENDITURE (INCLUDING CAPITAL WORK-IN-PROGRESS)

(a) Stock broking 18,694,483 14,559,603


TOTAL 20,837,763 17,419,777

DEPRECIATION AND AmORTISATION

(a) Stock broking 7,877,071 5,664,221

(b) Investment banking 1,832,235 675,327

TOTAL 9,709,306 6,339,548

SIGNIFICANT NON CASH ExPENSES OTHER THAN DEPRECIATION AND AmORTISATION

(a) Stock broking 2,024,250 –

(b) Investment banking 26,908,883 599,354

TOTAL 28,933,133 599,354

29 Related party disclosures:In accordance with the Accounting Standard 18 on ‘Related Party Disclosures’ as specified u/s 133 of Companies Act, 2013 read with rule 7 of the Companies (Accounts) Rules, 2014, the related parties of the Company are as follows:

i. Holding company:

IDFC Limited

ii. Subsidiary companies:

IDFC Capital (USA) INC.

IDFC Securities Singapore Pte Ltd

IDFC Capital Limited (merged w.e.f.November 1, 2013)

IDFC Fund of Funds Limited (upto December 12, 2014)

IDFC Capital (Singapore) Pte Ltd (upto March 25, 2015)

iii. Fellow subsidiary companies:

IDFC Foundation

iv. Key management personnel:

name of employees Designation

Mr. Rajesh Jain Head Investment Banking

Mr. Anish Damania Head Institutional Equities

Mr. Hitesh Desai Chief Financial Officer



The nature and volume of transactions carried out with the above related parties in the ordinary course of business:

nAme oF relAteD pArty AnD nAture oF relAtIonsHIp

pArtICulArs As At mArCH 31, 2015( ` )

As At mArCH 31, 2014( ` )

(A) HOLDING COmPANy

IDFC Limited Inter corporate deposits placed and redeemed 2,005,000,000 –

Interest paid on inter corporate deposits 3,596,192 –

Zero coupon optionally convertible debentures – 1,250,000,000

Buy back of zero coupon optionally convertible debentures

1,250,000,000 –

Fees Income 143,480,000 –

Shared service costs 21,662,912 29,616,606

Brokerage received 2,189,847 642,134

Professional fees 345,000 115,000

(B) SUBSIDIARy COmPANy

IDFC Capital Limited Fees Income – 10,000,000

Deputation charges recovered – 4,683,633

Professional fees paid – 780,963

IDFC Capital (USA) INC Professional fees paid 32,409,705 45,394,640

Provision for expenses 7,564,840 9,484,950

IDFC Fund of Funds Limited Subscription to equity shares 15,050,625 25,674,223

Redemption of equity shares 1,394,116,092 –

IDFC Capital (Singapore) Pte Ltd. Subscription to equity shares 1,808,990,000 –

Transfer of equity shares 2,462,166,070 –

IDFC Securities (Singapore) Pte Ltd. Subscription to equity shares 77,252,000 –

(C) FELLOW SUBSIDIARy COmPANy

IDFC Foundation Donation paid 2,000,000 –

(D) KEy mANAGEmENT PERSONNEL

Mr. Rajesh Jain Remuneration paid 18,741,998 –

Mr. Anish Damania Remuneration paid 18,652,496 –

Mr. Hitesh Desai Remuneration paid 4,716,949 –

Mr. Tapasije Mishra Remuneration paid – 17,903,226

30 Leases:In accordance with the Accounting Standard 19 on ‘Leases’ as specified u/s 133 of Companies Act, 2013 read with rule 7 of the Companies (Accounts) Rules, 2014, the following disclosures in respect of operating leases are made:

i. The Company has taken vehicles for certain employees under operating leases, which shall expire between April 3, 2015 and December 19, 2018. Salaries include gross rental expenses of ` 1,233,069 (previous year ` 1,326,741). The committed lease rentals in the future are:



Not later than one year 453,841 1,202,261

Later than one year and not later than five years 80,529 534,370

ii. The Company has taken a residential flat for its employee under leave and license, which shall expire on August 16, 2016. Salaries include gross rental expenses of ` 275,000 (previous year ` 125,000). The committed lease rentals in the future are:



Not later than one year 162,500 300,000

Later than one year and not later than five years – 433,903



31 Earnings per share :In accordance with the Accounting Standard 20 on ‘Earnings Per Share’ as specified u/s 133 of Companies Act, 2013 read with rule 7 of the Companies (Accounts) Rules, 2014, the earning per share has been computed as under:

PARTICULARS As At mArCH 31, 2015`


Net profit attributable to equity shareholders 418,792,263 219,368,095

Number of equity shares issued 14,137,200 14,137,200

Basic Earnings Per Share (EPS) 29.62 15.52

Diluted Earnings Per Share (EPS) 29.62 12.24

The reconciliation between the basic and the diluted earnings per share is as follows:

PARTICULARS As At mArCH 31, 2015`


Basic Earnings Per Share 29.62 15.52

Effect of Zero coupon optionally converted debenture – (3.28)

Diluted Earnings Per Share 29.62 12.24

pArtICulArs As At mArCH 31, 2015 As At mArCH 31, 2014

Weighted average number of shares for computation of basic earning per share 14,137,200 14,137,200

Dilutive effect of conversion of Zero coupon optionally converted debentures – 3,786,961

Weighted average number of shares for computation of diluted earning per share 14,137,200 17,924,161

32 Prior year's figures:Previous year's figures have been regrouped/reclassified wherever necessary to correspond with the current year's classification/disclosure.






ZUBIN SHEKARy


vIKRAm LImAyE

ChairmanSUNIL KAKAR

Director



Company Secretary

IDFC SECURITIES LIMITED...IDFC seCurItIes lImIteD | 57 Board’s Report to tHe members Your Directors have pleasure in presenting the Twenty Second Annual Report together with the

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