The Directors of the Company are pleased to present their Thirty FourthAnnual Report together with the annual audited consolidated and standalone financialstatements for the financial year ended March 31 2019.
I. Financial Highlights
The summary of the consolidated and standalone financial results forthe financial year ended March 31 2019 and the previous financial year ended March 312018 is given below:
र in Crore
|Particulars ||Consolidated || ||Standalone || |
| ||2018-19 ||2017-18 ||2018-19 ||2017-18 |
|Gross income ||3578.65 ||3096.60 ||271.88 ||426.17 |
|Profit before depreciation and amortisation expense finance costs and tax expenses ||2756.11 ||2330.00 ||137.12 ||269.25 |
|Less: Depreciation and amortisation expenses ||27.11 ||26.17 ||1.86 ||1.87 |
|Finance costs ||1446.21 ||1138.99 ||19.56 ||34.73 |
|Profit before tax ||1282.79 ||1164.84 ||115.70 ||232.65 |
|Current tax ||489.23 ||454.06 ||6.66 ||21.24 |
|Deferred tax ||(42.49) ||(69.75) ||(2.59) ||22.47 |
|Tax adjustments of earlier years (net) ||(0.43) ||(2.54) ||0.33 ||(2.75) |
|Net Profit afterfitax but before share in profit of associate ||836.48 ||783.07 ||111.30 ||191.69 |
|Add: Share in profit of associate ||0.57 ||1.79 ||- ||- |
|Net Profit after tax and share in profit of associate ||837.05 ||784.86 ||111.30 ||191.69 |
|Other Comprehensive Income ||7.82 ||1.79 ||(0.04) ||(0.11) |
|Total Comprehensive Income ||844.87 ||786.65 ||111.26 ||191.58 |
|Net Profit Attributable to: || || || || |
|Owners of the Company ||572.18 ||600.86 || || |
|Non-controlling Interest ||264.87 ||184.00 || || |
|Total Comprehensive Income Attributable to: || || || || |
|Owners of the Company ||580.11 ||602.63 || || |
|Non-controlling Interest ||264.76 ||184.02 || || |
Note: The Group has adopted Indian Accounting Standards (Ind AS)with effect from April 1 2018 with comparative figures being restated to make themcomparable. The financial statements have been prepared in accordance with the recognitionand measurement principles laid down in Ind AS notified under Section 133 of the CompaniesAct 2013 read with relevant Rules issued thereunder and other accounting principlesgenerally accepted in India.
The following appropriations have been made from the available profitsof the Company:
र in Crore
|_Particulars ||Consolidated || ||Standalone || |
| ||2018-19 ||2017-18 ||2018-19 ||2017-18 |
|Net Profit ||572.18 ||600.86 ||111.30 ||191.69 |
|Add: Other Comprehensive Income ||(0.44) ||0.10 ||(0.04) ||(0.11) |
|Add: Balance profit brought forward from previous year ||2271.69 ||1956.34 ||870.62 ||803.61 |
|Add/(Less): Pursuant to the scheme of arrangement* ||- ||(17.69) ||- ||7.00 |
|Add: On loss of control in subsidiary trusts transferred from ||4.27 ||- ||- ||- |
|Capital reserve on consolidation || || || || |
|Less: Transferred to Non-Controlling interest ||- ||(0.04) ||- ||- |
|Profit available for appropriation ||2847.70 ||2539.57 ||981.88 ||1002.19 |
|Less: Appropriations || || || || |
|Interim dividend ||41.99 ||55.84 ||41.99 ||55.84 |
|Final dividend ||92.26 ||67.69 ||92.26 ||67.69 |
|Dividend distribution tax ||28.25 ||25.15 ||5.56 ||8.04 |
|Tax on buy back of shares in a subsidiary company ||- ||1.18 ||- ||- |
|Transfer to Statutory reserve ||126.53 ||112.22 ||- ||- |
|Transfer to Capital Redemption Reserve ||- ||5.80 ||- ||- |
|Transfer to Debenture Redemption Reserve ||33.76 ||- ||- ||- |
|Surplus carried to balance sheet ||2524.91 ||2271.69 ||842.07 ||870.62 |
II. Consolidated Financial Performance
Consolidated Financial Statements prepared in accordance with Section133 of the Companies Act 2013 (hereinafter referred to as "the Act") read withthe rules made thereunder and applicable Ind AS along with the Auditor's Report formspart of the Thirty Fourth Annual Report. The Consolidated Financials reflect thecumulative performance of the Company together with its various subsidiary and associatecompanies. Detailed description about the business carried on by these entities includingthe Company is contained in the Management Discussion and Analysis Report forming part ofthis Annual Report. The Consolidated Gross Income of the Company for the financial yearended March 31 2019 is र 3578.65 Crore vis--vis र 3096.60 Crore in theprevious year thereby registering a growth of 15.57%. Consolidated Net Profit for thefinancial year ended March 31 2019 is ` 572.18 Crore as compared to ` 600.86 Crore in theprevious year registering a decrease of 4.77%.
III. Standalone Financial Performance
The Gross Income of the Company stood at र 271.88 Crore for theyear ended March 31 2019 as against
र 426.17 Crore in the previous year primarily on account ofdecline in deal closures in the investment banking business and mark to market impact ofinvestment. The Company made a Net Profit of ` 111.30 Crore for the year ended March 312019 as compared to the Net Profit of र 191.69 Crore in the previous year.
The Directors have recommended final dividend of ` 0.50 per share ofthe face value of र 1/- each for the financial year 2018-19 (previous year र1.10 per share). During the year under review an interim dividend of ` 0.50 per equityshare of the face value of र 1/- each (previous year ` 0.70 per share) was declaredand paid by the Company. With the above recommendation the total dividend for thefinancial year 2018-19 is र 1.00 per share (previous year
र 1.80 per share). The total outgo on account of interim and finaldividend amounts to ` 83.99 Crore for the financial year 2018-19 as against र 148.10Crore for the previous year. The Directors have recommended lower dividend as compared tothe previous year to conserve the capital/provide for growth capital for variousbusinesses in light of the liquidity situation in the market and cost effectiveavailability of funding. The final dividend if declared at this Annual General Meetingwill be paid to those Members whose names appear on the Register of Members/beneficialholders' list at the close of business hours on Monday May 13 2019.
Pursuant to Regulation 43A of Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements)
Regulations 2015 (hereinafter referred to as "the ListingRegulations") the Board of Directors of the Company has formulated the DividendDistribution Policy. The Policy is available on the website of the Company at www.jm_.com.
During the financial year 2018-19 an aggregate of 2051205 equityshares were issued and allotted to the eligible employees upon exercise of stock optionsby them under the Company's Employees' Stock Option Scheme Series 4 toSeries 10.
As on March 31 2019 the issued subscribed and paid-up equity sharecapital of the Company stands at र 839931463 (comprising 839931463 equityshares of र 1/- each) as against र 837880258 as at the end of the previousfinancial year (comprising 837880258 equity shares of र 1/- each).
Employees' Stock Option Scheme
The Employees' Stock Option Scheme is in compliance with theSecurities and Exchange Board of India (Share Based Employee Benefits) Regulations 2014("SBEB Regulations") and SEBI Circulars issued thereon. Deloitte Haskins &Sells LLP has certified that the Company's Employees' Stock Option Scheme hasbeen implemented in accordance with the SBEB Regulations. Up to March 31 2019 anaggregate of 26645379 stock optionshavebeenexercisedbytheEmployeesand15187816 stockoptions have lapsed. The aggregate number of stock options outstanding as on March 312019 are 4355624. The Nomination and Remuneration Committee of the Board at its meetingheld on April 18 2019 has granted 662130 stock options to the eligible employees underthe Employees' Stock Option Scheme Series 12.
Information required under SBEB Regulations read with SEBI Circular No.CIR/CFD/POLICY CELL/2/2015 dated June 16 2015 is appended to this Report as Annexure Aand also uploaded on the website of the Company at www.jm_.com. The relevant disclosuresin terms of the Ind AS 102 relating to share based payment forms part of Note 34 of theNotes to the Standalone Financial Statements and Note 42 of the Notes to the ConsolidatedFinancial Statements of the Company.
During the year under review the Company has neither invited noraccepted any deposits from the public within the meaning of Section 73 of the Act readwith the Companies (Acceptance of Deposits) Rules 2014.
Subsidiary and Associate Entities
As on March 31 2019 the Company has 15 subsidiaries (including stepdown subsidiaries) a partnership firm and an associate company. Details of thesubsidiaries partnership firm and associate are as under:
1. JM Financial Institutional Securities Limited (formerly known as JM FinancialSecurities Limited)
2. JM Financial Services Limited
3. JM Financial Capital Limited
4. JM Financial Commtrade Limited
5. JM Financial Overseas Holdings Private Limited (Mauritius)
6. JM Financial Singapore Pte Limited (Singapore)
7. JM Financial Securities Inc. (Delaware - United States of America)
8. Infinite India Investment Management Limited
9. JM Financial Properties and Holdings Limited
10. CR Retail Malls (India) Limited
11. JM Financial Products Limited
12. JM Financial Credit Solutions Limited
13. JM Financial Home Loans Limited
14. JM Financial Asset Reconstruction Company Limited
15. JM Financial Asset Management Limited
Astute Investments a partnership firm in which JM Financial ServicesLimited and JM Financial Properties and Holdings Limited the wholly owned subsidiaries ofthe Company are partners.
JM Financial Trustee Company Private Limited.
Details of business activities of the subsidiaries and associate theirperformance and financial position are stated at length in the Management Discussion andAnalysis Report which forms part of this Annual Report.
In accordance with Section 129(3) of the Act and Regulation 34 ofListing Regulations the consolidated financial statements of the Company and all itssubsidiary/associate companies have been prepared and are forming part of this AnnualReport. A statement containing salient features of the financial statements of subsidiaryand associate companies is stated in Form AOC-1 forming part of this Annual Report.
The Annual Report of the Company containing inter alia itsstandalone and the consolidated financial statements will be uploaded on the website ofthe Company viz. www.jm_.com in accordance with Section 136 of the Act.
The audited financial statements of each of the subsidiaries have alsobeen placed on the website of the Company. Members interested in obtaining a copy of theaudited financial statements of subsidiary companies may write to the Company Secretary atthe Company's Registered Office. The Company will make available the auditedfinancial statements and related information of its subsidiaries to those Members whowish to have copies of the same and these documents will also be kept open for inspectionby the Members at the Registered Office of the Company on all working days exceptSaturdays between 2.00 p.m. and 4.00 p.m. up to the date of this Annual General Meeting.
Awards and Recognition
|2019 ||Banking Financial Services and Insurance Awards 2019 presented by ET NOW ||JM Financial Limited was awarded the best Investment Bank. JM Financial Institutional Securities Limited was awarded the best Equity Advisor. |
|2019 ||Mint India Investment Summit 2019 - Hall of Fame Award ||Mr. Nimesh Kampani the Non- executive Chairman conferred with_ the Mint India Investment _Summit - Hall of Fame Award for his outstanding contribution to Investment Banking. |
|2018 ||The Asset Triple A Country Awards 2018 ||JM Financial Limited was awarded Best M&A adviser. JM Financial Limited was awarded for the Best M&A deal (Tata Chemicals US$ 400 million sale of the urea business to Yara International) as one of the financial advisors. |
|2018 ||BSE Awards 2018 ||JM Financial Services Limited has been recognised amongst the Top Performers in the Equity Broking Segment (Retail Trading). JM Financial Services Limited has been recognised amongst the Top Performers in Primary Market Segment (Equity IPO/FPO Bids - Members). JM Financial Services Limited has been recognised amongst the Top Performers in Offer to Buy (OTB) Segment. |
|2018 ||The Great Place To Work ||JM Financial Limited ranked amongst the Top 50 in India's Great Mid-Size Workplaces. JM Financial Asset Management Limited ranked amongst the Top 50 in India's Great Mid-Size Workplaces. |
|2018 ||The Great Place To Work ||JM Financial Group has been accredited as Great Place to Work- Certified by the Great Place to Work Institute. JM Financial Services Limited ranked amongst the Top 100 in India's Best Companies to Work For 2018'. |
Board of Directors and Key Managerial Personnel
In accordance with the provisions of Section 152 of the Act and theArticles of Association of the Company
Mr. Nimesh Kampani (DIN 00009071) Non-Executive Director of theCompany retires by rotation at this Annual General
Meeting of the Company. Being eligible Mr. Kampani has offered himselffor re-appointment as a Director. During the year the Special Resolutions have beenpassed with requisite majority through postal ballot process for continuation ofdirectorships of Mr. E A Kshirsagar Mr. Darius E Udwadia and Dr. Vijay Kelkar who areabove the age of 75 years beyond April 1 2019 till the expiry of their existing termviz. July 2 2019. This was done as the Members are aware in accordance with theamendments made by SEBI in the Listing Regulations.
The Members have also passed the Special Resolutions with requisitemajority through postal ballot re-appointing
Mr. E A Kshirsagar Mr. Darius E Udwadia Dr. Vijay Kelkar Mr. PaulZuckerman and Mr. Keki Dadiseth as Independent
Directors of the Company for a term not exceeding three yearscommencing from July 3 2019.
Mr. Vishal Kampani Managing Director Mr. Prashant Choksi
Company Secretary and Mr. Manish Sheth Chief Financial
Officer are the Key Managerial Personnel (KMP) within the meaning ofSection 2(51) read with Section 203(1) of the Act.
Declarations by Independent Directors
All the Independent Directors have confirmed to the Board that theymeet the criteria of independence as specified under Section 149(6) of the Act and thatthey qualify to be independent directors pursuant to the Rule 5 of the Companies(Appointment and Qualification of Directors) Rules 2014. They have also confirmed thatthey meet the requirements of Independent Director' as mentioned underRegulation 16(1)(b) of the Listing Regulations.
During the year six (6) meetings of the Board of Directors were held.Details about the Board meetings and committee meetings are given in report on CorporateGovernance which forms part of this Report.
Policies on Appointment of Directors and their Remuneration
Pursuant to sub-section (3) of Section 178 of the Act and Regulation19(4) of the Listing Regulations the Board has formulated Policies on Directors'appointment and remuneration. This Policy includes criteria for selection of Directorsdetermining their qualifications positive attributes remuneration and independence ofDirectors evaluation process for performance of Directors key evaluation criteria andother matters. In accordance with the applicable provisions of the Act and the ListingRegulations these Policies are uploaded on the website of the Company viz. www.jm_.com.
Evaluation of Board of Directors
The Board carried out annual evaluation of its own performance and thatof its Committees viz. the Audit Committee Stakeholders' Relationship CommitteeNomination and Remuneration Committee (the NRC) and Corporate Social ResponsibilityCommittee. The Board also carried out the performance evaluation of all the individualdirectors. Additionally the NRC also carried out the evaluation of the performance of allthe individual directors Chairman of the Company and the Managing Director of theCompany. The performance evaluation was carried out by way of obtaining feedback from theDirectors through a structured questionnaire prepared in accordance with the policyadopted by the Board and also taking into consideration the Guidance Note on BoardEvaluation issued by SEBI.
The structured questionnaire prepared to evaluate the performance ofindividual directors including the Chairman and the Managing Director inter aliacontained parameters such as professional conduct roles and functions discharge ofduties and their contribution to Board/Committees/Senior Management. The questionnaireprepared for evaluation of the Board as a whole and its Committees also covered variousaspects such as structure and composition effectiveness of the board processinformation roles and responsibilities and functioning of the Board and its Committeesestablishment and determination of responsibilities of Committees the quality ofrelationships between the Board and the management and professional development. TheNon-Executive Chairman of the Board and the Chairman of the NRC reviewed the feedbackreceived from all the individual directors and conducted one-on-one meetings with all theDirectors to provide the feedback received. The performance evaluation of thenon-independent Directors viz. the Chairman the Managing Director and the Board as awhole was carried out by the Independent Directors at their separate meeting held on March18 2019 taking into account the views of the executive director and the non-executivedirectors.
During the year under review the Company has constituted the RiskManagement Committee pursuant to the provisions of Regulation 21 of Listing Regulations.
Details of all the following Committees constituted by the Board alongwith their composition terms of reference and meetings held during the year are providedin the Report on Corporate Governance which forms part of this Report:
1. Audit Committee
2. Stakeholders' Relationship Committee
3. Nomination and Remuneration Committee
4. Corporate Social Responsibility Committee
5. Allotment Committee
6. Risk Management Committee (constituted on January 23 2019)
Directors' Responsibility Statement
Pursuant to Section 134(3)(c) read with Section 134(5) of the Act withrespect to Directors' Responsibility Statement the Directors hereby confirm that:(a) in the preparation of the annual accounts the applicable accounting standards havebeen followed and that no material departure has been made in following the same; (b)appropriate accounting policies have been selected and applied consistently and judgementsand estimates made are reasonable and prudent so as to give a true and fair view of thestate of affairs of the Company at the end of the financial year and of the profit of theCompany for that period; (c) proper and sufficient care for maintenance of adequateaccounting records in accordance with the provisions of Act have been taken forsafeguarding the assets of the Company and for preventing and detecting frauds and otherirregularities; (d) the annual accounts have been prepared on a going concern basis; (e)internal financial controls to be followed by the Company had been laid down and suchinternal financial controls are adequate and are operating effectively; and (f) propersystems have been devised to ensure compliance with the provisions of all applicable lawsand that such systems are adequate and operating effectively.
In terms of Section 139 of the Act Deloitte Haskins & Sells LLPChartered Accountants were appointed as statutory auditors of the Company for a period offive years from the conclusion of the Thirty Second Annual General Meeting until theconclusion of the Thirty Seventh Annual General Meeting subject to the rati_cation oftheir appointment by the Members every year. Members may note that the first provision toSection 139 of the Act which required rati_cation of the appointment of the statutoryauditors by the Members at every annual general meeting has been omitted by the Companies(Amendment) Act 2017. Accordingly matter for rati_cation has not been placed at theensuing Annual General Meeting. Members are requested to authorize the Board of Directorsof the Company to fix the Statutory Auditors' remuneration for the remainder of theirterm for which necessary proposal has been included in the Notice convening this AnnualGeneral Meeting.
There are no qualifications reservations adverse remarks ordisclaimers made by the Statutory Auditors in their Audit Report for the financial year2018-19. The Statutory Auditors have not reported any incident of fraud to the AuditCommittee of the Company during the financial year 2018-19.
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 Listing Regulations the Company had appointed M/s. N L Bhatia &Associates Company Secretaries in Practice for conducting Secretarial Audit. TheSecretarial Audit Report for the financial year ended March 31 2019 is appended to thisReport as Annexure B. There are no qualifications reservations adverse remarks ordisclaimers made by Secretarial Auditors in their Audit Report.
The Company has complied with the applicable Secretarial Standardsissued by the Institute of Company Secretaries of India.
Corporate Social Responsibility
The Board has constituted Corporate Social Responsibility (CSR)Committee in accordance with Section 135 of the Act. The CSR Policy of the Company interalia list the activities that can be undertaken or supported by the Company for CSRcomposition and meetings of CSR Committee details of existing Charitable trust(s) withinthe JM Financial Group annual allocation for CSR activities areas of CSR projectscriteria for selection of CSR projects modalities of execution/implementation of CSRactivities and the monitoring mechanism of CSR activities/projects. The details of CSRactivities are given in Annexure C appended to this Report.
The Company has a well-defined risk management framework in place androbust structure for managing and mitigating risks. The Board of Directors of the Companyhas constituted Risk Management Committee to monitor and review the risk management planincluding functions related to cyber security assess the risks and measures to mitigatethe risks. Details about development and implementation of risk management policy havebeen covered in the Management Discussion and Analysis Report.
Internal Financial Control Systems and its Adequacy
The Board has adopted accounting policies which are in line withSection 133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015.The internal financial control system of the Company is supplemented with internal auditsregular reviews by the management and checks by external auditors. The Audit Committeemonitors this system and ensures adequacy of the same. The Statutory Auditors of theCompany also provides their opinion on the internal financial control framework of theCompany. During the year under review 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.
Material Changes and Commitments affecting the Financial Position ofthe Company
There have been no material changes and commitments affecting thefinancial position of the Company which have occurred between the end of the financialyear to which the financial statements relate and the date of this Report.
Significant and Material Orders
During the financial year 2018-19 there were no significant andmaterial orders passed by the Regulators or Courts or Tribunals impacting the goingconcern status and the Company's operations in future.