The Directors are pleased to present the Twenty-Sixth Annual Report ofIIFL Securities Limited (the Company' or IIFL Securities') alongwith the audited financial statements for the Financial Year (FY)
1. Financial Performance per your Company for the financial yearended March 31 2021:
The table below summarizes the financial
(Rs. in Million)
|Particulars ||Standalone ||Consolidated |
| ||FY2020-21 ||FY2019-20 ||FY2020-21 ||FY2019-20 |
|Gross Income ||7600.79 ||6437.43 ||8676.20 ||7899.46 |
|Profit/(Loss) before Depreciation and Tax ||2666.22 ||2467.30 ||3304.47 ||2550.75 |
|Depreciation ||(442.92) ||(480.60) ||(458.76) ||(553.09) |
|Profit/(Loss) before Tax ||2223.30 ||1986.70 ||2845.71 ||1997.66 |
|Share of profit/(loss) of associates and joint ventures ||- ||- ||1.63 ||- |
|Exceptional items || ||- || ||1017.19 |
|Provision for Tax ||(494.86) ||(431.09) ||(644.29) ||(529.87) |
|Impact of change in rate on opening deferred tax ||- ||(129.41) ||- ||(145.54) |
|Non-controlling interest || ||- ||0.30 ||0.32 |
|Profit/(Loss) after Tax ||1728.44 ||1426.20 ||2203.35 ||2339.76 |
|Balance brought forward from previous year ||3598.04 ||2882.84 ||4766.89 ||3189.53 |
|Appropriation towards dividend paid ||(302.94) ||(638.47) ||(302.94) ||(638.47) |
|Dividend Distribution Tax ||- ||(72.53) ||- ||(123.92) |
|Surplus carried forward ||5023.54 ||3598.04 ||6667.30 ||4766.89 |
|Earnings per share on equity shares of 2 each || || || || |
|Basic (in ) ||5.46 ||4.47 ||6.97 ||7.33 |
|Diluted (in ) ||5.42 ||4.46 ||6.91 ||7.31 |
The table below summarizes the financial performance of the majorsubsidiaries of the Company for the financial year ended March 31 2021:
(Rs. in Million)
|Name of the Company ||Revenue ||Profit after Tax |
|IIFL Facilities Services Limited ||967.81 ||122.73 |
|IIFL Insurance Brokers Limited ||430.91 ||181.82 |
|IIFL Management Services Limited ||273.42 ||64.14 |
|IIFL Capital Inc. ||55.72 ||3.62 |
|IIFL Wealth (UK) Limited ||43.79 ||3.55 |
2. Macro-economic Overview
The Indian economy is expected to contract by 8.0% in FY2020-21 ascompared to 4.2% economic growth recorded in FY2019-20. (Source: National StatisticsOrganisation). The economy witnessed the worst contraction ever of 23.9% YoY in the firstFY2020-21 owing to the stringent pandemic-related lockdown imposed by the government. Withgradual removal of restrictions from the second quarter onwards the economy startedrecovering.
As per the Economic Survey FY2020-21 India's economic growth waspegged at 11.0% in FY2021-22 which is the quarter of highest since independence. Thisindicates a sharp V-shaped' recovery in the economy.
The Organisation for Economic Co-operation and Development (OECD) inits interim economic outlook report estimated India's GDP growth at 12.6% inFY2021-22 driven by fiscal making it one of the fastest growing economies in the worldand the highest among G-20 nations. Although rollout of vaccination had raised hopes of anend to the pandemic spread of the second wave of COVID-19 and new variants of the viruspose concerns for the outlook. The second one and has wavehas been more severe than thefirst put huge pressure on the country's medical infrastructure. Partial lockdownshave been imposed across most states to curb rise in new cases. While the situation hasimproved to some extent the lockdowns could push back economic recovery by a couple ofquarters at least. Overall economic recovery will largely be tied to the resolution ofthe pandemic and vaccination roll-out.
3. Industry Overview
Vaccination roll-outs across the globe continued economic recovery afiscal stimulus in the US and dollar weakness kept investor sentiments strong for EmergingMarket (EM) equities. This was further aided by strong portfolio inflows amid supportivesurplus liquidity across the globe. Indian equity markets outperformed the broader EMindices with the Nifty 50 increasing by 70.9% and Sensex rising 66.0% in the 12 monthsending March 2021.
Foreign portfolio investors (FPI) invested over USD 37.1 billion in theIndian equity market during FY2020-21 the highest ever investment by foreign investorsinto Indian equities inflows stood the last two decades. FPI at USD 2.6 billion inFY2019-20. On the flipside Domestic Institutional Investors (DIIs) remained strongsellers of Indian equities with net outflows of USD 19 billion in FY2020-21. DIIs netinvestment remained negative due to redemption pressures and profit-booking as equityvaluations touched lifetime highs.
In the primary market strong participation from retail as well asinstitutional investors was a key positive during CY2020. Highest ever amount raisedthrough qualified institutional placements (QIPs) and launch of Infrastructure / RealEstate Investment Trusts were other highlights of the year. CY2020 witnessed all-time highfundraising through the public equity markets at 1774.7 billion (versus 822.4 billionraised in CY2019).
Assets Under Management (AUM) of Indian mutual funds began rising postMay 2020 to fully offset the overall decline during the Covid crisis. Total AUMs crossed30 trillion for the first time in November 2020 owing to the continuous rally in theequity market driven by ongoing recovery in high frequency economic indicators andliquidity. According to data from Association of Mutual Funds of India (AMFI) theindustry's total AUM stood at 31 trillion as on March 31 2021. As per SEBI data newdemat account additions increased to an all-time high of 10.7 million between April 2020and January 2021 from 4.7 million new accounts opened in FY2019-20.
The revival of several infrastructure projects by the government helpedimprovement in business conditions across the manufacturing and construction sectors.
The low interest rates are supporting rebound in corporate earnings. Apositive investment scenario supported by an improving macroeconomic performance easinginflationary pressures and regulatory and structural reforms by the government couldfurther improve business confidence and attract investors to the Indian capital market inFY2021-22. However any delay in combating the pandemic is a key downside risk.
India is facing a crisis situation with the strong second wave ofCOVID-19 cases. Market performance in FY2021-22 will depend on normalization of economicactivities and timely vaccination.
4. Review of the operations and business and the state ofCompany affairs
During the year under review your Company's consolidated revenuewas 8676 million as against 7899 million in FY2019-20 an increase of 10% YoY. TheCompany has earned Net profit after tax (TCI) of 2210 million versus 1450 million* inFY2019-20 registering a YoY growth of 52%.
*Excluding exceptional item on sale of office property and write- downof deferred tax assets.
I. Broking and Distribution
The Company's broking and distribution services continue to be akey player in both the retail and institutional segments of the capital market with2500+ points of presence (branches and business partners) in over 500 cities in India.
IIFL Securities provides varied offerings to its customers across thesegments of equities commodities & currency broking mutual fund distribution lifeinsurance distribution depository participant services portfolio management servicesstructured products and investment banking. During the year the average daily marketturnover (including F&O) for the broking business was 295.91 billion (BSE + NSE) up47% YoY and the share of daily cash and total turnover stood at 2.8% and 1.1%respectively. Retail broking revenue stood at 3038 million up 42% on YoY basis.
Mutual Funds and insurance segments gained good traction during theyear. Insurance premiums stood at 1463 million recorded a 42% YoY growth in FY2020-21and Mutual Fund AUM stood at 51.5 billion up 82% on a YoY basis. Both these segments holdimmense promise over the long term.
The Company's mobile trading app IIFL Markets' remainsone of the highest rated on Android and iOS among peers with over 2.3 million downloads.IIFL Securities' Mutual Fund App crossed 0.9 Million downloads.
Continuous upgrades and enhancements makes these apps the top choice ofmost customers.
Economic activity has been hit due to the partial lockdowns imposedposed the onset of the second wave of COVID-19. Prolonged lockdown could affect both thefinancial sector as well as consumption demand.
IIFL Securities' sound foundation and its continuous focus onproviding superior customer experience have helped sustain performance. IIFL Securities iswell prepared to navigate the volatile external environment and is leveraging the fullpotential of digitalization to serve its customers in the best possible manner.
II. Institutional Equities
Revenue growth for the year was negatively impacted due to acombination of decline in FII market share due to increased share of passive flows(asegment in which your Company is not present) and a decline in blended yields due tocompetition pressure. Necessary steps are being taken to improve your Company'smarket share. On the research side the focus was on expanding coverage; during the yearthe team initiated coverage on 19 stocks taking total coverage to close to 250 stocksIndia's (representing in aggregate over four-fifths market capitalization). TheCompany's institutional equities research continues to be ranked among the top in theindustry.
III. Investment Banking
FY2020-21 was a prolific year for the investment banking division. Thedivision completed 29 transactions including 9 Initial Public Offers 7 QualifiedInstitutional Placements 9 private equity deals and 1 Offer for Sale transaction apartfrom a number of corporate and debt advisory mandates. The team has also filed a number ofDraft Red Herring Prospectus for upcoming Initial Public Offers and is currently engagedin a number of private equity and other capital market transactions which are in variousstages of execution.
IIFL Securities' investment banking team has retained leadershipin private sector deals as per Prime Database League for Private sector Initial PublicOffers in FY18- FY21. The outlook for the next year remains strong.
IV. Response to COVID -19 challenges
All operations and servicing of customers were smoothly ensured withoutany interruptions as the activities of trading settlement depository participant stockexchanges and depository function are fully-automated and follow seamless processes. Thisfeat was achieved owing to your Company's investments in digitalization of processesand technology over the past few years. Your Company has been operating in the normalcourse and there have been no adverse impacts on the liquidity revenues or operationalparameters during the year. The Company is closely monitoring any material changes on acontinuous basis.
Your Company's calibrated approach puts it in a position to adaptfaster than the market. Benefits of a balanced revenue stream mix are even more evident inthis turbulent environment. IIFL Securities will keep reviewing the situation constantlyand further strengthened its ability to adapt to the changing environment in a swiftmanner.
Strong relationships with customers employee dedication robustbalance sheet best-in-class profitability and inherent resilience of the business modelwill enable IIFL Securities to navigate the challenges ahead and gain market share.
V. Key Initiatives/Developments
I. Acquisition of demat accounts held by Karvy Stock Broking Limited
Your Company emerged as a successful bidder for the transfer of demataccounts held by various clients of Karvy Stock Broking Limited (KSBL) in the formalbidding process held by NSDL and
CDSL vide circular dated February 06 2021. IIFL Securities has paid anamount of 1129.11 million to CDSL and NSDL for the demat accounts so transferred. Allaccounts are being activated as per the onboarding process.
Karvy Stock Broking Limited has filed a writ petition beforeHon'ble High Court of Bombay against NSDL CDSL NSE BSE and MSEIL and also againstIIFL Securities Limited. It has prayed to quash and set aside the sale and transfer ofKSBL's demat and trading account to IIFL Securities Limited and Axis
Securities Limited respectively and ad-interim relief to restrainNSDL CDSL NSE BSE and MSEIL from completing the process of bidding. The Hon'bleCourt vide its order dated March 18 2021 rejected the ad-interim relief sought by KSBLand appointed valuers to submit the Valuation Reports in respect of valuation of the demataccounts and trading accounts of the clients of KSBL and further directed that the amountpaid by the bidders shall be held by NSDL/CDSL/NSE/BSE/MSEIL as deposit.
The matter is pending for further direction by the Hon'ble Court.
II. Enterprising India Investor Conference
IIFL Securities hosted a number of virtual events during the year. Thefirstvirtual conference was held in June 2020 with participation of over 48 corporates/300investors. The Company did a series of webinars in August 2020 to cover the rural recoverytheme. It was followed up with a similar series in January 2021 around the theme ofbuilding materials. The Company also hosted a dedicated conference for Japanese investorsin December 2020.
IIFL Securities' flagship Enterprising India conference was alsohosted virtually in February 2020. The theme of the conference was "CEO Speak".45 CEOs presented at the conference and more than 700 investors participated. This turnedout to be one of the most productive conferences the Company has done in the recent past.
III. Open Application Programming Interface ("APIs")
With open APIs customers and partners can connect with the front endof their choice integrate into their own programs and quickly set up a rule-based tradingdesk to boost their investing efficiency and market experience.
Investors and traders can access real-time IIFL
Securities platforms in 9 different languages - Python NodeJS JavaRust GoLand .Net C# PHP Postman JSON Collection making it India's most easilyaccessible platform.
This has also opened up doors for quick fintech integrations and thepartners can easily connect with the Company's systems using secure authentication.All the APIs are free of cost and are allowed across mobile (IIFL Markets App) and desktop(TT Web application) platforms.
IV. Permission for undertaking Insurance E-commerce activities in Indiathrough Insurance Self Networking Platform (ISNP)
E-commerce has proven to lower the cost of transacting insurancebusiness making it efficient and enhancing its reach to a larger number of people.Digitalization is becoming increasingly popular among customers given its speedefficiency and convenience.
In order to promote e-commerce in the insurance business the InsuranceRegulatory and Development Authority (IRDA) issued guidelines of Insurance Self NetworkingPlatform (ISNP).
IIFL Insurance Brokers Limited a wholly owned subsidiary of yourCompany has received permission from IRDA for undertaking insurance e-commerce activities(i.e. online sale and service of insurance policies) in lndia through ISNP.
V. Awards and Accolades
The Directors are happy to report that during the year your Companyhas been recognized and felicitated for its exemplary performance in various fields.
Some significant achievements are:
BSE felicitated IIFL Securities as Top Business Performer'in Offer To Buy (OTB) segment for FY2019-20;
IIFL Securities received the Customer Services Champion'Award at Asia Innovation Congress and Awards;
Mr. R. Venkataraman Chairman IIFL
Securities Ltd. received the Most Innovative Leader of theYear' award at the World BFSI Congress & Awards 2020;
IIFL Securities received Great Place to Work' certificatefor a third time in a row.
VI. Corporate Social Responsibility (CSR) Initiative
In accordance with the provisions of Section 135 of the Companies Act2013 and rules made thereunder and relevant circulars issued from time to time by theMinistry of Corporate Affairs (MCA) IIFL Securities has adopted a CSR policy indicatingthe CSR activities that can be undertaken by the Company and its subsidiaries. The CSRPolicy is available on the website of the Company at https://www.indiainfoline.com/securities/reports/CSR-Policy.pdf.
India Infoline Foundation (generally referred to as
"IIFL Foundation") a Section-8 Company under the CompaniesAct 2013 and a wholly owned subsidiary of the Company acts as the principal arm toundertake CSR initiatives on behalf of the Company and its subsidiaries. As per Rule 4(2)of the Companies (Corporate Social Responsibility
Policy) Rules 2014 IIFL Foundation has registered itself with thecentral government by filing the form CSR 1 with the Registrar.
IIFL Foundation's activities are creating an impact among thecommunities through the ideology of HELP Health Education Livelihoodand Poverty alleviation. The activities meet UN's Sustainability DevelopmentGoals Quality Education (SDG 4) Gender Equality (SDG 5) Reduced Inequalities (SDG 10)Good Health & Well-being (SDG 3) and Affordable and Clean Energy (SDG 13).
IIFL Foundation's flagship program Sakhiyon Ki Baadi (SKB)is dedicated to provide basic education to out-of-school girls in Rajasthan and mainstreamthem into the public schools. During the lockdown education of nearly 36000 girls underthis project continued seamlessly due to adoption of digital tools and online platforms.The SKB centers employ about 1000 tribal women and train them in English Digitalplatforms as well as basic financial literacy.
IIFL Foundation supports the government to promote literacy amongchildren native to Scheduled Castes and Scheduled Tribes by redevelopment of Maa Baadicenters construction of schools science laboratory and introduction of digital learningtools. Further the Foundation has enabled farmers to generate secondary livelihood byundertaking dairy production through promotion of Animal Husbandry.
IIFL Foundation is working proactively to support communities infighting the pandemic. Under its mission Conquer COVID the foundation has donated oxygenconcentrators to several COVID care centers in Palghar set up a makeshift COVID carecenter in Mumbai to support treatment of underprivileged patients purchased oxygenconcentrators for its own communities and so on.
During FY2020-21 your Company deployed 2% of its average net profitsof the preceding years (computed as per the relevant provisions of the Companies Act2013) on CSR projects fully utilizing the required amount on various social developmentactivities details thereof mentioned in the CSR Annual Report attached as Annexure 1to the Directors' report.
Pursuant to Regulation 43A of the Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015 ("SEBIListing Regulations") your Company has formulated the Dividend Distribution Policywhich is available on the website of the Company at https://www.indiainfoline.com/securities/reports/Dividend_ Distribution_Policy.pdf.
During FY2020-21 the Board of Directors of your Company declared aninterim dividend of 1 per equity share (i.e. 50% of the face value of 2 per share) inaccordance with the Dividend Distribution Policy of the Company. This led to an outgo of302.94 million. The same is considered as final
7. Transfer of Unclaimed/Unpaid Amounts to the InvestorEducation and Protection Fund (IEPF')
Pursuant to the Composite Scheme of Arrangement the Company hasallotted equity shares in the ratio of 1:1 to the equity shareholders of IIFL FinanceLimited whose name appeared in the Register of Members on May 31 2019 i.e. the recorddate. Consequently the Company has allotted 26244 number of equity shares in the IEPFaccount on June 6 2019.
In terms of the provisions of Section 124 of the Companies Act 2013provisions of the Investor Education and Protection Fund Authority (Accounting AuditTransfer and Refund) Rules 2016 and other applicable provisions all monies remainingunpaid or unclaimed for a period of seven years from the date of transfer tounpaid/unclaimed dividend account are required to be transferred to the IEPF.
Information relating to unclaimed dividend and the due dates by whichit can be claimed by the shareholders are as under:
|Financial Year ||Date of Declaration of Dividend ||Last date for claiming unpaid dividend |
|2019-20 ||February 07 2020 ||March 14 2027 |
|2020-21 ||March 10 2021 ||April 15 2028 |
The details pertaining to the same is available on the website of theCompany at https://www.indiainfoline. com/securities/corporate-annoucements.php.Shareholders whose dividend/shares are transferred to the IEPF may claim the same bymaking an application in prescribed form to the IEPF Authority in this regard details ofwhich are available on www.iepf.gov.in.
No claims shall lie against the Company in respect of thedividend/shares so transferred. The members/claimants can file only one consolidated claimin a financial year as per the IEPF Rules.
8. Transfer to Reserves
During the year under review the Company has transferred an amount of1.37 million to the General Reserve.
The Company did not accept/renew any deposits within the meaning ofSection 73 of the Companies Act 2013 and the rules made thereunder and as such noamount of principal or interest was outstanding as on the Balance Sheet date.
10. Share Capital
As on March 31 2021 the issued subscribed and paid-up equity sharecapital of the Company stands at 605870660 (comprising 302935330 equity shares of 2each).
During the year under review the total paid up equity share capital ofthe Company changed from 639218924/- to 605870660/- pursuant to allotment of 324262equity shares of 2/- each under IIFL Securities Limited Employee Stock Option Scheme(s)-2018 and 2000 equity shares of 2 each under IIFL Securities Employees Stock Option2019-Demerger Scheme to the eligible employees on December 05 2020 and the said equityshares rank pari passu with the existing equity shares from the date of allotment.Further the Company bought back 17000394 equity shares from the open market through thestock exchanges. The buyback commenced from December 30 2020 and was closed on February15 2021.
I. Buy back
The Board of Directors of the Company at its meeting held on November20 2020 and the shareholders by way of a special resolution passed through postal balloton December 22 2020 accorded its approval for the Company to buy back its equity sharesfrom the open market through the stock exchanges for a total amount not exceeding 900million (Maximum buy back size) at a price not exceeding 54 per equity share (Maximum buyback price).
In accordance with the above the Company has bought back a total of17000394 equity shares and the total amount spent is 866.82 Million (excludingtransaction costs and taxes) which represents 96.31% of the maximum buy back size. Allthe shares bought back have been extinguished as per the records of the depositories.
II. Employees Stock Option Scheme (ESOS)
Your Company has in force the following Employees Stock Option Schemesprepared in terms of the provisions of SEBI (Share Based Employee Benefits) Regulations2014:
1) IIFL Securities Employee Stock Option 2019 - Demerger Scheme("ISL Demerger Scheme").
2) IIFL Securities Limited Employee Stock Option Scheme 2018("IIFL ESOS Scheme-2018").
During the year 324262 stock options and 2000 stock options wereexercised and allotted to the option holders under IIFL ESOS Scheme-2018 and under the ISLDemerger Scheme respectively on December 05 2020.
Pursuant to the IIFL ESOS Scheme-2018 the Nomination and RemunerationCommittee at its meeting held on January 07 2021 granted 1005000 stock options to theeligible employees of IIFL Securities Limited.
As on March 31 2021 36400 options have lapsed under the ISL DemergerScheme and the same are not available for further grant. The aggregate number of stockoptions outstanding as on March 31 2021 is 445641 under the ISL Demerger Scheme. As onMarch 31 2021 655000 options have lapsed under the IIFL ESOS Scheme -2018 and the samehave been added back to the pool and are available for further grant. The aggregatenumber of stock options outstanding as on March 31 2021 stand at 8937938 under the IIFLESOS Scheme- 2018.
There is no material change in the ISL Demerger
Scheme and the IIFL ESOS Scheme 2018 and the said schemes are in linewith the SEBI (Share
Based Employee Benefits) Regulations 2014 ("SBEBRegulations"). IIFL Securities has received a certificate from the Auditors of theCompany that the scheme has been implemented in accordance with the SBEB
Regulations and the resolution passed by the members.
The disclosures relating to ESOPs required to be made under theprovisions of the Companies Act 2013 and the rules made thereunder and the SEBI (ShareBased
Employee Benefits) Regulations 2014 are provided on the website of theCompany at www.iiflsecurities.com and the same is available for inspection by the membersat the registered office of the Company. If any member is interested in obtaining a copythereof such member may write to the Company Secretary at secretarial@iifl. comwhereupon a copy would be provided.
The relevant disclosures in terms of IND AS 102 relating to sharebased payment forms part of note 32 of the notes to the Standalone Financial Statementsand note 44 of the notes to the Consolidated Financial Statements of the Company.
11. Particulars of Employees
The Board on the recommendation of the Nomination & RemunerationCommittee has framed a Nomination and Remuneration policy for selection and appointmentof Directors Key Managerial Personnel and senior management personnel of the Company andthe same is amended from time to time. The Nomination
& Remuneration policy along with the changes therein forms part ofthis Report as Annexure 2 and is also available on the website of the Company athttps://www.indiainfoline.com/securities/reports/ NR-Policy-120521.pdf.
Disclosures pertaining to remuneration and other details as requiredunder Section 197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 are provided in Annexure3 of this report.
Further a statement showing the names and other particulars ofemployees drawing remuneration in excess of the limits as set out in the Rule 5(2) and5(3) of the aforesaid Rules forms part of this report. However in terms of first provisoto Section 136(1) of the Act the Annual Report and Accounts are being sent to the membersand others entitled thereto excluding the aforesaid information. The said information isavailable for inspection by the members. Any member interested in obtaining a copythereof may write to the Company Secretary at firstname.lastname@example.org.
12. Prevention of Sexual Harassment (POSH)
Providing a safe working environment for women free from sexualharassment and discrimination is among the key priorities of the Company. In compliancewith the Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013 the Company has put in place a policy on Prevention of Sexual Harassment ofWomen at the workplace.
Also the Company has constituted an Internal Complaints Committee forhandling complaints under the said policy. The policy includes the scope consequence ofnon-compliance and redressal mechanism along with contact details of the Committee membersfor raising any grievance/complaint under the said policy.
Awareness of the said policy is created amongst all the employees byexhibiting the policy on the notice boards. Also the Company provides for mandatoryonline training on POSH for every new joinee as well as all employees on an annualbasis.
During FY2020-21 there were no complaints received pursuant to theSexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.The following is reported pursuant to Section 22 of the Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013:
a) Number of complaints received in the year: Nil b) Number ofcomplaints disposed of during the year: Nil c) Number of cases pending for more thanninety days: Nil d) Number of workshops or awareness programs against sexual harassmentcarried out:
The Company has conducted online training for creating awarenessagainst sexual harassment against women at the work place. e) Nature of action taken bythe employer or district officer: Not applicable.
13. Subsidiary and Associate Companies
As on March 31 2021 the Company has the following subsidiarieslocated in India and overseas:
|Name of the Subsidiary |
|1 IIFL Facilities Services Limited* |
|2 IIFL Management Services Limited* |
|3 IIFL Insurance Brokers Limited* |
|4 IIFL Commodities Limited* |
|5 IIFL Wealth (UK) Limited* |
|6 IIFL Capital Inc.* |
|7 IIFL Corporate Services Limited* (Formerly |
|IIFL Asset Reconstruction Limited) |
|8 India Infoline Foundation* (Section 8 Company) |
|9 Shreyans Foundations LLP (Step down subsidiary company) |
|10 Meenakshi Towers LLP |
|11 IIFL Securities Services IFSC Limited* |
Pursuant to Regulation 16 and 24 of SEBI Listing Regulations IIFLFacilities Services Limited was a Material Subsidiary of the Company for FY2020-21 andwill continue to remain as such for FY2021-22.
The Company had earlier made investment in Giskard Datatech PrivateLimited ("Trendlyne") constituting 14.94% of its share capital on a fullydiluted basis.
Trendlyne is a Bangalore based stock market analytics platform andmarketplace for retail investors and is engaged in the business of developing cloud-basedanalytics and modelling platform for stock market. Their platform turns every financialdata point into structured data on which strategies can be created and back tested inreal time. It provides retail investors analysts and advisors with easy-to-use analyticstools.
In order to have a deeper integration and usage of Trendlyne premiumfeatures the Company acquired additional 6.53% stake of Compulsorily ConvertiblePreference Shares (CCPS) i.e. 9491 CCPS of 1 each of Giskard Datatech Private Limitedresulting into total acquisition of 21.47% during the year under review. AccordinglyGiskard Datatech Private Limited has become an associate company w.e.f. November 06 2020.
In accordance with Section 136(1) of the Companies Act 2013 thefinancial statements including consolidated financial statements and all other documentsrequired to be attached thereto and audited annual accounts of subsidiary companies areavailable on the Company's website at https://www.indiainfoline.com/securities/financials.php. These documents/details will also be available for inspection by anymember of the Company at its registered office and at the registered offices of therelated subsidiaries except on Saturdays Sundays and Public Holidays. The Annual Reportof all the subsidiaries will be uploaded on the website of the Company athttps://www.indiainfoline.com/securities/financials.php.
A report on the performance and financial position of each of thesubsidiary and associate companies as per the Companies Act 2013 is provided in theprescribed Form AOC-1 as Annexure A' and Annexure B'of the Consolidated Financial Statement and hence not repeated here for the sake ofbrevity.
During the year under review there were no companies which have becomeor have ceased to be the subsidiary or joint venture of your Company.
Further the Managing Director and CEO of your Company does not receiveany remuneration or commission from its subsidiary companies.
The policy for determining material subsidiary is available on thewebsite of the Company at https:// www.indiainfoline.com/securities/reports/Policy_for_determining_material_subsidiaries.pdf.
CONSOLIDATED FINANCIAL STATEMENT
Your Company has in accordance with Section 129(3) of the CompaniesAct 2013 prepared the annual consolidated financial statements consolidating itsfinancials with its subsidiary and the associate companies as mentioned above. The annualaudited consolidated financial statements have been prepared in accordance with therequirements of IND AS prescribed under Section
133 of the Companies Act 2013 read with relevant rules issuedthereunder as applicable and other accounting principles generally accepted in India andforms part of this Annual Report.
14. Management Discussion and Analysis Report
In accordance with Regulation 34 of the SEBI Listing Regulations theManagement Discussion and Analysis Report forms part of this Annual Report.
15. Business Responsibility Report
Pursuant to Regulation 34(2) of the SEBI Listing Regulations read withSEBI Circular No. CIR/CFD/ CMD/10/2015 dated November 4 2015 the Business ResponsibilityReport describing the initiatives taken by the Company from an environmental social andgovernance perspective forms part of this Annual report.
16. Directors and Key Managerial Personnel (KMP)
Your Company has a well-diversified Board comprising of Directors fromvarious backgrounds and having the broad range of experience in the areas of financeaccounting technology governance risk management among others. Their combinedexperience and expertise enables IIFL Securities to ensure effective corporate governanceon one hand and to take future-ready business decisions on the other. The Board ofDirectors ("Board") of your Company is well balanced between executive andnon-executive directors (including one independent woman director). The Board providesleadership strategic guidance and discharges its duties of safeguarding the interest ofthe Company and its stakeholders.
As on date the Board comprises of 6 directors.
|Name ||DIN ||Designation |
|Mr. R. Venkataraman ||00011919 ||Chairman and Managing Director |
|Mr. Narendra Jain ||01984467 ||Executive Director |
|Ms. Rekha Warriar ||08152356 ||Non-Executive Independent Director |
|Mr. Shamik Das Sharma ||07779526 ||Non-Executive Independent Director |
|Mr. Anand Shailesh Bathiya ||03084831 ||Non-Executive Independent Director |
|Mr. Viswanathan Krishnan ||09026252 ||Additional Director (Non-Executive Independent Director) |
Changes during FY2020-21:
Mr. Shamik Das Sharma (DIN: 07779526) was appointed as an AdditionalDirector (Non-Executive Independent) on the Board of the Company w.e.f. January 14 2020.Subsequent to the approval of the shareholders at the 25th Annual General Meeting of theCompany held on June 30 2020 he was appointed as an Independent Director for a term offive
Mr. Anand Bathiya (DIN: 03084831) was appointed as an AdditionalDirector (Non-Executive Independent) on the Board of the Company w.e.f. September 222020. Subsequent to the approval of the shareholders of the Company through postal balloton December 22 2020 he was appointed as an Independent Director for a term of fiveconsecutive years w.e.f. September 22 2020.
Mr. Viswanathan Krishnan (DIN: 09026252) was appointed as an AdditionalDirector (Non-Executive Independent) on the Board of the Company w.e.f. January 21 2021to hold office till the conclusion of the ensuing Annual General Meeting (AGM) andsubject to approval of the members in the ensuing AGM for appointment as an IndependentDirector to hold office for a term of five consecutive years w.e.f. January 21 2021.
The Board is of the opinion that
Mr. Shamik Das Sharma Mr. Anand Bathiya and Mr. Viswanathan Krishnanpossess the requisite qualification experience expertise and hold high standards ofintegrity.
All the Independent Directors of the Company have given declarationsthat they meet the criteria of independence as prescribed under Section 149(6) of theCompanies Act 2013 and Regulation 16(1)
(b) of SEBI Listing Regulations and that they are not aware of anycircumstance or situation which exist or may be reasonably anticipated that could impairor impact their ability to discharge duties with an objective independent judgment andwithout any external influence.
Pursuant to Rule 5 of Companies (Appointment and qualification ofDirectors) Rules 2014 as amended w.e.f. December 01 2019 all Independent Directors ofthe Company have registered themselves in the Independent Directors databank maintainedwith the Indian Institute of Corporate Affairs (IICA). Further all the IndependentDirectors have also cleared the proficiency test conducted by IICA.
Resignation and Retirement
Mr. Kranti Sinha Chairman Independent Director (DIN: 00001643)retired from the Board and various committees of the Company w.e.f July 27 2020 uponcompletion of his tenure. Mr. R. Venkataraman (DIN: 00011919) Managing Director wasappointed as the Chairman of the Company w.e.f. October 16 2020.
Mr. Kranti Sinha a veteran in the financial services sector workedwith Life consecutiveyearsw. Insurance .f.January142020. Corporation of India(LIC) and was a Director and Chief Executive Officer of LIC Housing Finance Limited. Hejoined
IIFL Group as an Independent Director in the year
2005 and has played an important role in the Group's success storyso far. Under his guidance and oversight there has been improvement in the Company'scorporate governance practices.
The Board has placed on record its appreciation for the valuablecontribution made by Mr. Sinha during his tenure.
Consequent to the resignation of
Mr. Mohan Radhakrishnan (DIN: 00012070) due to personal reasons heceased to be an Executive Director and Chief Compliance Officerof the Company w.e.f.January 02 2021.
The Board values the contribution made by Mr. Mohan Radhakrishnanduring his tenure as an Executive Director and Chief Compliance Officer of the Company.
b) Retirement by Rotation
In accordance with Section 152 of the Companies Act 2013 read withArticle 157 of the Articles of Association of the Company Mr. Narendra Jain (DIN:01984467) is liable to retire by rotation at the ensuing Annual General
Meeting and being eligible has offered himself for reappointment. TheBoard recommends the same for the approval of shareholders.
Key Managerial Personnel
As on March 31 2021 Mr. R. Venkataraman - Managing Director Mr.Narendra Jain -Whole-Time Director Mr. Ronak Gandhi- Chief Financial Officer and Ms.Meghal Shah- Company Secretary & Compliance Officer are the Key Managerial Personnelin terms of the provisions of the Companies Act 2013 and rules made thereunder.
Changes during FY2020-21
Mr. Arindam Chanda resigned from the post of the Chief ExecutiveOfficer of the Company due to personal reasons w.e.f. December 22 2020.
Mr. Roshan Dave resigned as the Company Secretary of the Company w.e.f.November 19 2020 and in his place Ms. Meghal Shah was appointed as the Company Secretaryw.e.f. November 20 2020.
17. Meetings of Board
Eight meetings of the Board of Directors were held during FY 2020-21.For further details please refer to the report on Corporate Governance forming part ofthis Annual Report.
18. Audit Committee
The composition of Audit Committee is covered under the CorporateGovernance Report. During the year under review there were no instances where the Boardhad not accepted any recommendation of the Audit Committee.
For details of various Committees constituted by the Board please referto the report on Corporate Governance forming part of this Annual Report.
19. Risk Management
The Company has constituted a Risk Management Committee to overseethe risk management governance structure define and review the framework foridentification reporting of risks. The details of the Committee alongwith its terms ofreference have been provided in the Corporate Governance Report forming part of thisAnnual Report.
The Company has in place various policies and procedures covering thebusiness risk management compliance operations employees finance & accountingand customer services that are approved by the Board. Further the Company follows a RiskManagement Systems Policy for the securities broking and investment banking business asmandated by the SEBI Stock Exchange and depository.
The directors on a regular basis
(a) oversee and approve the Company's enterprise wide riskmanagement framework; and
(b) oversee that all risks such as strategic financial creditmarket liquidity security property information technology legal regulatoryreputational and others that the organization faces have been identified and assessed andthere is an adequate risk management infrastructure in place capable of addressing suchrisks.
The Company has in place specialized internal audits on the BrokingDepository Participant and Portfolio Management businesses as per SEBI/Exchanges/Depositories' norms. The findings on Audit Reports are reviewed by theAudit Committee/
Board at their periodical meetings and the reports are submitted to theExchanges/Depositories.
The Company's management monitors and reports the principal risksand concerns that can impact its ability to achieve its strategic objectives.
The Company's management systems organizational structuresprocesses standards and code of conduct together form the risk management governancesystem of the Company.
20. Annual Evaluation of the Board
The Nomination and Remuneration Committee has approved the Policy onPerformance Evaluation framed in accordance with the relevant provisions of the CompaniesAct 2013 SEBI Listing Regulations and SEBI circular dated January 5 2017 which providesfurther clarity on the process of board evaluation ("SEBI Guidance Note"). Themanner and criteria of the evaluation of performance of the Board of Directors BoardCommittees and the individual Directors has been provided in the Corporate GovernanceReport forming part of this report.
21. Internal Financial Controls
Your Company has maintained adequate internal financial controls overfinancial reporting which constantly assessed and strengthened with new/ revised standardassessment operating monitoring procedures. mitigation and The Board has adoptedpolicies and procedures for ensuring the orderly and efficient conduct of its businessincluding adherence to the Company's policies safeguarding of its assets preventionand detection of fraud error reporting mechanisms accuracy and completeness of theaccounting records and timely preparation of reliable financial disclosures.
The Company's internal control system is commensurate with itssize scale and complexities of its operations. The Audit Committee of the Board activelyreviews the adequacy and effectiveness of the internal control systems and suggestsimprovements to strengthen the same. The Audit Committee of the Board and Statutory
Auditors are periodically apprised of the internal audit findings andcorrective actions taken. Audit plays a key role in providing assurance to the Board ofDirectors on the effectiveness of internal controls and the veracity of the financialstatements. Such internal financial controls over financial reporting were operatingeffectively as of March 31 2021.
During FY2020-21 no material or serious observation has beenhighlighted for inefficiency or inadequacy of such controls. The details of adequacy ofInternal Financial controls are given at length in the Management Discussion and Analysisreport.
22. Quality initiatives
The Company continues to sustain its commitment to the highest levelsof quality superior service management robust information security practices and maturebusiness continuity management. In FY2020-21 the Company successfully completed the InfoSec audits for industry specific quality certifications. The Company has also successfullycompleted the annual ISO 27001:2013 (ISMS) surveillance audit. Further the Company hassustained compliance with respect to various applicable laws and regulations in terms oftechnology business continuity management and information security from
SEBI BSE NSE MCX NCDEX CDSL NSDL among others.
The technology used in the Company comprises industry standard businessapplications and robust IT infrastructure. These capabilities are used to manage businessoperations are scalable improve overall productivity & efficiency and provideseamless and world class experience to the Company's customers.
The Company has strengthened its information and cyber securitymechanisms and other risk measures to mitigate potential threats risks and challenges.
The Company believes in skill development for staff and variouse-learning modules on technology and other business areas have been enabled for employeesvia online training and mobile applications.
23. Contracts and arrangements with Related Parties
The Company has put in place a policy for Related Party
Transactions (RPT Policy) which has been approved by the Board ofDirectors. The policy provides for identification of RPTs necessary approvals by theAudit Committee/ Board/Shareholders reporting and disclosure requirements in compliancewith the Companies Act 2013 and provisions of the SEBI Listing Regulations.
The said policy may be accessed on the website of the Company athttps://www.indiainfoline.com/securities/reports/Related-Party-Transaction-Policy-120521.pdf.
All contracts executed by the Company during the financial year withrelated parties were on arm's length basis and in the ordinary course of business.
All such Related Party Transactions were entered into in accordancewith the RPT Policy of the Company.
During FY2020-21 the Company has entered into materialcontract/arrangement/transaction with related parties in accordance with Regulation 23 ofSEBI Listing Regulations and relevant provisions of the Companies Act 2013. You may referto note no. 35 and note no. 45 to the Standalone Financial Statements and ConsolidatedFinancial Statements respectively which contain related party disclosures. Since theCompany does not have any outstanding balance with the related party which are materialhence Form AOC-2 disclosure is not applicable and hence it is not provided.
24. Statutory Auditors and their Report
M/s V Sankar Aiyar & Co Chartered Accountants Mumbai (FirmRegistration Number: 109208W) were appointed as the Statutory Auditor of the Company atthe 22nd Annual General Meeting held on July 21 2017 to hold office from the conclusionof the said meeting till the conclusion of the 27th Annual General Meeting of the Companysubject to ratification by the members at every intervening Annual General Meeting heldthereafter. However the requirement of of seeking ratification their appointment has beendispensed with pursuant to the Companies (Amendment) Act 2017 effective from May 7 2018.Hence the resolution seeking ratification of the members for their appointment is notbeing placed at the ensuing Annual General Meeting.
There are no qualifications reservations adverse remarks ordisclaimers made by the Statutory Auditors in their Audit Report for FY2020-21. The notesto the financial statements referred to in the Auditors Report are self-explanatory andtherefore do not call for any comments under Section 134 of the Companies Act 2013. TheAuditors' Report is enclosed with the financial statements in the Annual Report.
25. Secretarial Audit and their Report
Pursuant to the requirements of Section 204 of the Act read with Rule 9of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 andRegulation 24A of the SEBI Listing Regulations the Company had appointed M/s Nilesh Shahand Associates Company Secretaries in Practice for conducting the Secretarial Audit forFY2020-21.
The report of the Secretarial Audit is annexed herewith as Annexure- 4.
The Secretarial Auditor in their report has stated that the Board ofDirectors of the Company is duly constituted with proper balance of Executive DirectorsNon-Executive Directors and Independent Directors except for the composition of the Boardof Directors which has been affected due to resignation of Directors for the period27.07.2020 to 21.09.2020 and 02.01.2021 to 20.01.2021. Accordingly the constitution ofNomination and Remuneration Committee Stakeholders Relationship Committee and CorporateSocial Responsibility Committee was also affected during intermittent period of thefinancial year. The Company had taken effective steps within reasonable time for fillingup the and have a proper constitution of the Board and its Committees as per therequirements of the Companies Act 2013 and SEBI Listing Regulations.
Mr. Kranti Sinha retired as the Chairman and Independent Director ofthe Company on completion of his tenure w.e.f. July 27 2020. Further consequent toresignation of Mr. Mohan Radhakrishnan he ceased to be the Whole-time Director and ChiefCompliance Officerw.e.f. January 02 2021. In compliance with the provisions of theCompanies Act 2013 and post requisite regulatory approvals the Company appointed Mr.Anand Bathiya and Mr. Viswanathan Krishnan as an Additional Director (Non-ExecutiveIndependent) w.e.f September 22 2020 and January 21 2021 respectively. The Committeeswere also duly re-constituted post the said appointments.
26. Maintenance of Cost Records
The maintenance of cost records for the services rendered by theCompany is not required pursuant to Section 148(1) of the Companies Act 2013 read withRule 3 of the Companies (Cost Records and Audit) Rules 2014.
27. Reporting of Frauds by Auditors
During FY2020-21 the Statutory Auditors and the Secretarial Auditorhave not reported any instances of fraud committed in the Company by its Officers orEmployees to the Audit Committee under Section 143(12) of the Companies Act 2013 thedetails of which need to be mentioned in this Report.
28. Particulars of Loans Guarantees or Investments
Particulars of loans extended and investments made are given in thenotes 6 and 7 of the Standalone and Consolidated financial statements respectively forthe year ended March 31 2021.
29. Annual Return
Pursuant to Section 134(3)(a) and Section 92(3) of the Companies Act2013 read with Rule 12(1) of the Companies (Management and Administration) Rules 2014 asamended from time to time the Annual Return of the Company for FY2020-21 is available onthe Company's website at https://www.indiainfoline.com/ securities/financials.php.
30. Material changes and commitments affecting the financial positionof the Company
There have been no material changes and commitments affecting thefinancial position of the Company that have occurred between the end of the financial yearof the Company to which the financial statements relate and the date of this Report.
31. Energy Conservation Technology Absorption and Foreign ExchangeEarnings and Outgo
The information on energy conservation technology absorption andforeign exchange earnings and outgo stipulated under Section 134(3)(m) of the CompaniesAct 2013 read with Rule 8 of the Companies (Accounts) Rules 2014 is appended as Annexure5 of this Report.
32. Whistle Blower Policy/Vigil Mechanism
Your Company believes in the conduct of the affairs of its constituentsin a fair and transparent manner by adopting highest standards of professionalismhonesty integrity and ethical behavior. Pursuant to Section 177(9) of the Companies Act2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules 2014 andRegulation 22 of the SEBI Listing Regulations the Company has adopted a Whistle BlowerPolicy and established the necessary vigil mechanism for Directors Employees and
Stakeholders to report genuine concerns about unethical behavioractual or suspected fraud or violation of the Company's code of conduct or ethicspolicy which has been amended from time to time. Vigil Mechanism shall provide foradequate safeguards against victimization of persons who use such mechanism and also makeprovision for direct access to the Chairperson of the Audit Committee in exceptionalcases. For further details please refer Report on Corporate Governance forming part ofthis Annual Report. The Company has disclosed the policy on the website of the Company athttps://www.indiainfoline. com/securities/reports/Whistle-Blower-120521.pdf.
During FY2020-21 no complaints were received under this policy.
33. Corporate Governance
The Company is committed to maintaining the highest standards ofcorporate governance and adhere to corporate governance requirements set out by the SEBI.The Report on Corporate Governance as stipulated under the SEBI Listing Regulations formsan integral part of this Report. The certificate from the requisite Auditors of theCompany confirming compliance with the conditions of corporate governance is attachedwith the Report on Corporate Governance.
The Directors state that during FY2020-21:
1. The Company has not issued equity shares with differential rights asto dividend voting or otherwise.
2. The Company has not issued any sweat equity shares during the year.
3. There is no change in the nature of business of the Company.
4. There are no significant and material orders passed against theCompany by the Regulators or Courts or Tribunals that would impact the going-concernstatus of the Company and its future operations.
35. Directors' Responsibility Statement:
Pursuant to the requirement under Section 134(5) of the Companies Act2013 it is hereby confirmed that:
a) in the preparation of the annual accounts the applicable accountingstandards had been followed along with proper explanation relating to material departures;
b) the Directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit of the Company for that period;
c) the Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of theCompanies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities;
d) the Directors ensured the annual accounts are prepared on a goingconcern basis;
e) the Directors had laid down internal financial controls to befollowed by the Company and that such internal financial controls are adequate andoperating effectively; and f) the Directors had devised proper systems to ensurecompliance with the provisions of all applicable laws and that such systems are adequateand operating effectively.
The Directors place on record their sincere appreciation for theassistance cooperation and guidance provided by the Government Regulators StockExchanges Depositories other statutory bodies and the Company's Bankers to theCompany.
The Directors also gratefully acknowledge all stakeholders of theCompany viz customers members dealers vendors communities banks and otherbusiness partners for their continued support during the year. Your involvement asshareholders is also greatly valued.
Recognizing the challenging work environment the Directors also placeon record their appreciation for the dedication and commitment displayed by the employeesof the Company and its subsidiaries as well as its associates across all levels.
The Directors thank the Government of India the State Governmentswhere we have operations and other government agencies for their coordination and lookforward to their continued support in the future.
| ||For and on behalf of the Board |
| ||R. Venkataraman |
|Date: May 04 2021 ||Chairman and Managing Director |
|Place: Mumbai ||DIN: 00011919 |