IIISL Annual Report Final

7/27/2019 IIISL Annual Report Final

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Lets Explore the Loan Zone with IIISL...

For you, from IIISL. Retail Loans, Professional Loans,

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hesitations when exploring loan possibilities; giving you

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Whether you need a loan against your property or for your

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Call us, well get you on your way, an easy, trouble-free

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Standalone Financial Statements20 Auditors Report 25 Balance Sheet 26 Profit and Loss Account 27 Schedules

45 Cash Flow Statement 47 Balance Sheet Abstract 48 Statement Relating to Subsidiary Companies

Consolidated Financial Statements49 Auditors Report 50 Balance Sheet 51 Profit and Loss Account 52 Schedules

66 Cash Flow Statement

Statutory Reports13 Board of Directors 15 Directors Report

An Overview01 Performance Highlights 2010-11 03 Chairmans Message 05 Corporate Identity

07 Financial Literacy Campaign

Business Discussion09 Industry Overview 12 Performance Overview

INSIDE THIS REPORT

INDIA INFOLINE INVESTMENT SERVICES LIMITED (IIISL)

ANNUAL REPORT 2010-11


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PERFORMANCE HIGHLIGHTS (Consolidated) 2010-11

India Infoline Investment Services Limited

Annual Report 2010-11

(` bn)

1.6

07-08 08-09 09-10 10-11

2.4 2.3

5.2

Revenue

(` mn)

Net Interest Income

07-08 08-09 09-10

781.3

1,847.81,957.0

10-11

2,505.1

(` mn)

922.5

Profit after Tax

239.4

07-08 08-09 09-10 10-11

691.2

537.9

(` bn)

07-08 08-09 09-10

11.4

12.1

12.6

Net Worth

10-11

13.4

1


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(`) (`)

Earning per Share

1.6

2.9

2.3

3.9

07-08 08-09 09-10 10-11

Book Value per Share

07-08 08-09 09-10 10-11

47.9

51.1

53.3

56.6

Loan Outstanding

(` bn) (%)

Mar 31`08 Mar 31 09` Mar 31 10` Mar 31 11`

9.4 9.6

16.3

32.9

NPA

07-08 08-09 09-10 10-11

0.90

0.08

0.60

0.44

0.71

-0.09

0.45

0.36

2

Gross NPA

Net NPA


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CHAIRMANS MESSAGE

The Indian economy recorded a robust 8.5% growth in 2010-

11, driven by 9.4% growth in services sector. Manufacturing and

agriculture also witnessed growth rates of 8.3% and 6.6%

respectively. After a fast recovery from the global credit crisis of2008, India remains one of the fastest growing economies in the

world. Growth is driven primarily by domestic consumption,

high savings and high investment spending. To counter rising

inflation, RBI has resorted to a series of interest rate hikes.

Repo and Reverse repo rates have risen from 5% and 3.5% to

6.75% and 5.7% respectively over the last 12 months. Interest

rates however, continue under upward pressure.

The confidence in India's future growth is founded on

favourable demographics-a rapidly expanding young

population with a propensity to earn more and spend well

With a large number of new young wage earners, there is a bi

latent demand for credit as well, due to changing mindset and

availability of opportunities.

NBFCs, which serve the v ital credit needs of under-served

sectors like small and medium enterprises, emerged more o

less unscathed in the financial turmoil of 2008, thanks to a robus

framework in which they operate. In fact, the NBFCs have

witnessed healthy growth after the crisis faced by the entire secto

in the late 90s, which led to a revamp in the regulatory framework

of the sector.

This sector plays a complementary role in distribution o

credit to various segments of the population and geographies

where banks are under-penetrated. Most of the NBFCs havecreated a cost effective structure for distribution of credit. Over the

years, they have developed their own credit evaluation skills and

have put in place robust risk management systems as well as asset

liability management. NBFCs also have the unique ability to handle

small amounts of cash disbursals and cash collections. For the

economy which is on rapid growth path, the need for financing

different types of risks will continue. Given their size, scale and

complexity, NBFCs play a nation-building role as it facilitates

various economic activities by making credit available.



NBFCs also have the unique

ability to handle small amounts

of cash disbursals and cash

collections. For the economy

which is on rapid growth path,

the need for financing different

types of risks will continue.

Given their size, scale and

complexity, NBFCs play a nation-

building role as it facilitates

various economic activities by

making credit available.

A. K. Purwar, Non-Executive Chairman, IIISL


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Compared to banks, the cost of funds for NBFCs is higher,

because they do not have access to low cost deposits, and

therefore they specialize in meeting the requirements ofrelatively higher risk assets. NBFCs play the role of the

intermediary where they originate their assets that meet

required specifications and complement the bank's efforts to

reach out to deliver the credit at an affordable cost, bringing

about an all-round economic development starting from the

bottom of the pyramid; and all this at affordable rates. Any

regulatory framework must afford flexibility to the system to

meet these objectives in a systematic and prudent manner.

Last year, your Company doubled its loan portfolio, which rose

from `16.3 bn as on March 31, 2010 to 32.9 bn as on March

31, 2011. Home loans/ loans against property contributed

about 60% of the portfolio while loan against shares/ marginfinancing contributed 35%. Unsecured loans, which we

discontinued in 2008, was about 1% of portfolio, the balance

was contributed by our newly launched gold loans and

medical equipment loans. Our focus will remain on secured

lending, going ahead and we hope to add new lines like loans

to education sector.

In the Indian context, for the next two decades, sectors that

will require flow of debt capital on a large scale include

infrastructure, education and healthcare. The variety,

enormity and complexity of projects in these verticals will

require assistance from the entire financial system, comprising

not just banks but also complemented by NBFCs. Here,

education and healthcare should get covered as infrastructure

as is happening for the Banking system which will allow

certain tax concessions and external borrowing to ensure

rapid and healthy growth of these vital sectors. These

investments have to be made for the country to enjoy the

demographic dividend of a young population.

`

I believe that demand for housing in India will remain robust

for many years, with the overall standard of living improving

and rapid growth expected to continue. Every Indian deservesa pakka house over his head and it is sad that penetration of

pakka houses is just about 17%. A house goes a long way in

building not only a physically healthy community but also an

emotionally secure one.

The risk of real estate sector needs to be carefully evaluated.

Prices have doubled only in certain pockets of Mumbai and

Delhi. In the rest of the country, the real estate prices remain

reasonable and affordable and in fact quite competitive. The

real estate sector is important to meet the requirements of

affordable housing as well as for key social infrastructure

facilities and healthcare. It is important to take a wholistic

view on the investment flow to real estate which goes towardssecurity purpose and social purposes.

In our endeavours to grow our portfolio, we will not

compromise on risk. Your company has built the asset book

steadily without taking undue risk and instead focusing on our

core strength of retail distribution. Our risk management

techniques have been robust and are reflected in the net NPA

being less than 1% of the overall portfolio. We will continue to

invest in risk management, audit and training of our most

important asset, our people.

In spite of short term challenges of rising interest rates, the

long term potential of our business is immense and we will

take all steps to ensure that we grow our book with focus on

building a quality asset portfolio and thus enhance

shareholder's value.

Chairman

A. K. Purwar

The confidence in India's future growth is founded on favourable demographics - a

rapidly expanding young population with a propensity to earn more and spendwell. With a large number of new young wage earners, there is a big latent demand

for credit as well, due to changing mindset and availability of opportunities.


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CORPORATE IDENTITY



VISIONTo become the Most Respected Company in the financial services space in India.

Team IIFL adheres to a set of values that can be summarized as GIFTS, namely, Growth, Integrity, Fairness, Transparency and Service

VALUES

GROWTH

We are driven to grow faster than the rest of the industry. The

culture therefore encourages calculated risks and

empowerment at all levels.

We ensure utmost honesty and integrity, in letter and in spirit,

in all our dealings with people internal or external.

We believe in fair dealings, devoid of any fear or favor, with all

stakeholders including employees, customers and vendors.

INTEGRITY

FAIRNESS

TRANSPARENCY

We believe in as much transparency as practically possible, wit

our stakeholders, media and public at large.

We are a service organization, committed to delight ou

customers with superior advice and service, delivered wit

humility and sincerity.

SERVICE

IIFL Group

3000+Business locations

across India

1+million customers

across various

businesses

10,000+India Infoline team

as on March 31, 2011

COMPREHENSIVE PORTFOLIO

Retail Broking Institutional Equities Commodities and Currency Broking Credit and Finance

Wealth Advisory Asset Management Financial Products Distribution Investment Banking


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IIISL OverviewIIISL, a subsidiary of India Infoline Limited (IIFL) is registered with Reserve Bank of India as a Non Banking Finance Company

FILINGS AND LISTINGS

IIFL subsidiaries India Infoline Investment Services and Moneyline Credit Limited are registered with the RBI as non-deposit taking,

non-banking financial services companies. India Infoline Housing Finance Ltd, the housing finance arm, is registered with the National

Housing Bank.

Received RBI license for

undertaking NBFC activities and

commenced business

Launched Gold loans

2010

- IIISL became a public

limited company

- IIISL acquired Moneyline

Credit Limited, an NBFC and

commenced consumer

loan business

- Acquired registration for Housing

Finance business from NHB

- Mr A K Purwar, ex-SBI chairman

joined the Board and appointed as

Chairman of IIISL

- Preferential Allotment to Orient

Global Tamarind Fund Pte. Ltd.,

Singapore, an FII

2009

200720052004IIFL incorporated India Infoline

Investment Services Limited as a

private limited company to

undertake financing activities

2011Launched Medical Equipment

financing

SO FAR...

PRODUCT PORTFOLIOHome Loans, Loans against Property

Tenure: home loans upto 20 years, loans

against property upto 15 years

Upto 80% of value available for home loans,

65% for loans against property

Repayment through EMIs, or other specially

customised repayment schemes

Balance transfers of existing loans obtainable, with

additional cash in hand

Healthcare Finance

Loans upto 85% of the cost of equipment,starting at ` 500,000. Tenure from 12 to 72

months

Funding for medical and ancillary equipment

Project finance and receivable financing available

Hospital construction and infrastructure finance

Leasing and advisory services. Choice of personal loans for

doctors

Loans against Shares

Loans upto ` 180 crores. Tenure: 3 to 12

months. Competitive interest rates,

Funding against both diversified and

concentrated securities

Upto 600 approved Securities and Mutual Fund units

Margins vary from 25% to 50% depending on securities

Flexible margin financing and IPO funding schemes also

available

Gold Loan

Cash against gold in 5 minutes flat

Loans from ` 10,000 to 1,000,000

Attractive interest rates

Choice of EMIs, or interest service options

Flexible tenure, according to your requirements

`


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SPREADING THE LIGHT OF FINANCIAL LITERACY



SPREADING THE LIGHT OF FINANCIAL LITERACY



FLAME

(Financial Literacy Agenda for Mass Empowerment)

a. Financial awareness workshops across cities an

towns all over India

FLAME is IIFL's unique CSR initiative disseminating knowledg

for financial literacy among the masses. Financial literacy ca

aid financial inclusion, which can result in long term

sustainable growth and poverty alleviation. FLAME wa

launched by Dr K C Chakrabarty, Deputy Governor, RBI and M

Deepak S Parekh, Chairman, HDFC at a function attended by

the leading luminaries from the financial service space. As

part of the FLAME initiative, IIFL has planned an elaborate seof activities, which comprise:

As a part of this initiative, IIFL has been organizin

financial awareness workshops all over India. Here ou

expert speakers spread financial literacy by disseminatin

knowledge about various financial products and th

associated risks and returns.

Dr. K C Chakrabarty, Deputy Governor, RBI

Launch of FLAME Campaign by FLAME

Mr. Deepak Parekh, Chairman, HDFC

Launch of the FLAME book

FLAME - An IIFL Group Initiative


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b. A comprehensive mass media campaign

c. Books and publications

d. Financial awareness helpline

The idea is to convey the various concepts which are a part

of the literacy drive in an easy-to-grasp way. A daily

campaign using cartoon illustrations, facilitating faster

comprehension and assimilation is underway in leading

publications.

Multiple publications are planned which would seek to

highlight the various concepts of finance as a part of this

initiative. Our first book called '108 mantras for Financial

Success' targeted at small investors is now available at

multiple bookstores across the nation. The publication is

also distributed at the workshops held is various cities.

IIFL will setup a helpline, in our own call center, where anyone

can call up and get answers to their queries pertaining to

financial services. This helpline, manned by IIFL's trained

professionals, will provide a solution to such queries. We are

also using sms and social media to reach out to people all

over the country and address their queries.

e. FLAME portal - www.flame.org.in,

f. Tie-ups with educational institutes

g. Leaderspeak

is a dedicated to the

cause of spreading financial literacy. This portal carries

concepts of financial literacy and awareness and is equipped

with innovative features like 'chat with a FLAME-bearer'

where users can direct their queries to IIFL's financial

experts for resolution. The website is rapidly becoming

popular by virtue of its rich content.

IIFL will tie-up with educational institutes including B -

Schools across the country to deliver guest lectures. The

objective of this is to educate the investors of tomorrow, today.

These will be financial awareness workshops where we will

get industry luminaries to interact with the audience to

explain the various concepts in the field of finance and

investing.

Financial Literacy Campaign in leading newspapers IIFL publication - 108 Mantras for Financial Success

IIFL FLAME Meet at Bhavnagar, GujaratFLAME portal www.flame.org.in is dedicated

to the cause of spreading financial literacy


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BUSINESS DISCUSSION



Credit and Finance

INDIAN CONSUMER LENDING MARKETDespite the rapid growth of the financial services, India

remains an under-penetrated market in terms of credit

penetration.

India has a large and rapidly growing middle class with

increasing levels of discretionary income available for

consumption and investment purposes. As investments

among Indian consumers increase, the available credit in India

has correspondingly increased. The last five years have seen

not only a great expansion of the Indian economy but also a

great expansion of consumer lending. Previously, Indian

consumers were averse to the concept of using credit to fund

purchases and preferred to save prior to spending. Today, with

a variety of consumer credit products being widely available,Indian consumers are more willing to acquire assets through

borrowing.

The consumer credit market in India has undergone a

significant transformation over the last decade and

experienced rapid growth due to consumer credit becoming

cheaper, more widely available and increasingly a more

acceptable avenue of funding for consumers. The market has

changed dramatically due to the following factors:

1. Increasing desire by customers to acquire assets such as

cars, consumer durables and houses on credit.

2. Fast emerging middle class and growing number of

households who are credit worthy.

3. Improved terms of credit as interest rates in India fell

sharply during early and mid-2000s and further reduced

interest rates offerings for sophisticated products.

4. Legislative changes that offer greater protection to lenders

against fraud and potential default increasing the incentive

to lend.

5. Growth in assignment and securitisation arrangements

for consumer loans has enabled non-deposit basedentities to access wholesale funding and compete in the

market based on ability to originate, underwrite and

service consumer loans.

Despite high loan growth in consumer financing, it remains an

under-penetrated market. We believe demand for consume

loans will increase going forward in view of household gearingremaining low and disposable income continues to rise rapidly

Commercial banks play a dominant role in the financia

services landscape by virtue of their wide distribution set up

ability to raise cheap retail deposits through brand identity

However, a majority of the commercial banks have maintained

their focus in lending on industrial and corporate loans. As a

result, lending to small business and consumer has alway

remained a smaller share of their overall lending portfolio

Lending by Banks to small business and consumer declined

from 32% in FY08 to 27% in Fy11.

Commercial banks share in business and

consumer lending

3334 34

3230

27 27

FY05 FY06 FY07 FY08 FY09 FY10 FY11

(in %) Source: RB

NON-BANKING FINANCE COMPANIES

(NBFCS)Under-penetrated and rapidly growing opportunities in smal

business and consumer lending has lead to heralding a new se


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of players in the non-banking financial services

space. Non-banking financial companies asset base

have grown rapidly over the last few years (27%CAGR between FY07 and FY11). A rapidly growing

economy is likely to create strong demand for credit

from small businesses and consumers. A

combination of growing demand and lack of

adequate focus from commercial banks on these

banks is likely to create significant growth

opportunity for NBFC.

NBFCs are an integral part of the country's financial

system, catering to a large market of niche

customers, and have emerged as one of the major

purveyors of retail and SME credit in India. It is aheterogeneous group of institutions (other than

commercial and co-operative banks) performing

financial intermediation in a variety of ways, such

as accepting deposits, making loans and advances,

providing leasing/hire purchase services, among

others. There are over 12,000 NBFCs in India,

(Source: Reserve Bank of India, Annual Report,

August 2009) mostly in the private sector.

Opportunity landscape for NBFC spans across

many products ranging from secured to unsecured

products. Opportunity within each segment

remains significantly large given the current level of

penetration (ranging from


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BUSINESS DISCUSSION



LOAN AGAINST CAPITAL MARKET

INSTRUMENTS

GOLD LOAN MARKET

Loan against security is yet another avenue for lending to

corporates, HNIs, individuals for financing their capital market

exposures as well as households to tide over their financing

gaps that arise from time to time. Potentially, this could be a

significant opportunity given that many small and medium

enterprises aspire to grow large. This product effectively serves

the purpose of providing bridge financing for asset acquisition

as well as infusion of capital into new ventures. There is no

estimate of potential market available, however, given the role

that small businesses play in the overall economic

development, this would likely be a huge opportunity.

India is one of the largest markets for gold. The organised gold

loan market has grown from ` 416 bn in 2009 to ` 616 bn in

RETAIL FINANCE DISBURSEMENTS

Car finance Utility vehicles 2 Wheelers CVs

Mortgages Credit cards Personal loans Consumer durables

` 2.5 tn55.3%

8.2%

3.2%0.7%

12.6%

3.7%

3.5%12.8%

` 4.2 tn 55.5%

8.4%

2.7%0.9%

12.9%

3.9%

3.2%12.5%

FY10 FY12E

2010. It is expected to witness a 35% CAGR between 2009

12. (Source: IDFC Indian Retail Finance). Indian consumer

have a strong preference for gold that emanates from culturafactors. Further, low level of financial inclusion and poor access

to financial products and services make gold a safe and

attractive investment proposition.

Driven by various catalysts such as increasing population

rising income levels, changing demographics, and illness

profiles with a shift from chronic to lifestyle diseases

Healthcare industry is expected to witness a strong growth

of 23% p.a. to become a US$ 77 Bn industry by 2012

(Source: Yes Bank ASSOCHAM: Healthcare Services in India

2012: The path ahead)

HEALTHCARE FINANCING MARKET

Source: IDFC Research Report


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BRIEF SNAPSHOTIndia Infoline Investment Services Ltd (a 98.82% subsidiary of IIFL) and its subsidiaries provide a wide array of secured loan products. The

Company offers home loans, loans against property and loans against shares / debentures. The Company has recently launched gold loans

and medical equipment financing.

IIFL's robust credit and risk management processes have resulted in less than 1% NPAs. The Company has deployed proprietary loan-processing software that enables stringent credit checks and fast application processing.

`32.9 bnLoan book doubledduring the year


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BOARD OF DIRECTORS



Mr. A. K. Purwar (Non Executive

Chairman)

Mr. Nirmal Jain (Director)

Mr. Purwar is the Chairman ofIndiaVenture Advisors Pvt. Ltd.,

IL&FS Renewable Energy Limited and

India Infoline Investment Services

Ltd. He is working as an Independent

Director in leading companies in

Telecom, Steel, Textiles, Power, Auto

components, Renewable Energy,

Engineering Consultancy, Financial Services and Healthcare

Services. He is an Advisor to Mizuho Securities in Japan and is

also a member of Advisory Board for Institute of Indian

Economic Studies (IIES), Waseda University, Tokyo, Japan.

Mr. Purwar was the Chairman of State Bank of India, the largest

bank in the country from November '02 to May '06 and held

several important and critical positions like Managing Director

of State Bank of Patiala, CEO of the Tokyo branch, covering

almost the entire range of commercial banking operations in

his illustrious career at the bank from 1968 to 2006. Mr.

Purwar also worked as Chairman of Indian Bank Association

during 2005 2006.

He is also the recipient of several awards like CEO of the year

Award from the Institute for Technology & Management

(2004); Outstanding Achiever of the year Award from IndianBanks' Association (2004); Finance Man of the Year Award

by the Bombay Management Association in 2006.

Mr. Nirmal Jain is the founder and

Chairman of India Infoline Ltd. He is a

PGDM (Post Graduate Diploma in

Management) from IIM (Indian

Institute of Management) Ahmedabad,

a Chartered Accountant and a Cost

Accountant. His professional track

record is equally outstanding. Hestarted his career in 1989 with

Hindustan Lever Limited, the Indian

arm of Unilever. During his stint with Hindustan Lever, he

handled a variety of responsibilities, including export and trading

in agro-commodities. He contributed immensely towards the

rapid and profitable growth of Hindustan Lever's commodity

export business, which was then the nation's as well as theCompany's top priority.

He founded Probity Research and Services Pvt. Ltd. (later re

christened IIFL) in 1995; perhaps the first independent equity

research Company in India. His work set new standards fo

equity research in India. Mr. Jain was one of the first

entrepreneurs in India to seize the internet opportunity, with

the launch of www. indiainfoline.com in 1999. Under hi

leadership, your Company not only steered through the

dotcom bust and one of the worst stock market downtrend

but also grew from strength to strength.

R Venkataraman, Co-promoter and

Managing Director of IIFL Group, has

over two decades of experience in the

financial services space. A B.Tech

( E l e c t r o n i c s a n d E l e c t r i c a l

Communications Engineering, IIT

Kharagpur) and an MBA (IIM

Bangalore), he previously held senior

managerial positions in ICICI Group,

BZW, Taib Capital and GE Capital

India, before joining the India Infoline board in July 1999. Hespear-headed India Infoline Ltd's entry into the online broking

space in 2000 and has today steered the company to become

one of the leading players in the Indian financial services space

Mr. Nilesh Vikamsey - Board Membe

since February 2005 - is a practicing

Chartered Accountant for 25 year

and Senior Partner at M/s Khimj

Kunverji & Co. Chartered Accountants

a member firm of HLB International, a

wor l d-wide o rg an izat ion o

professional accounting firms and

business advisers, ranked amongs

the top 12 accounting groups in the world.

Mr. R. Venkataraman (Director)

Mr. Nilesh Vikamsey (Independen

Director)


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He is elected member of the Central Council of Institute of

Chartered Accountant of India (ICAI), the Apex decision

making body of the second largest accounting body in theworld, 20102013. He is Chairman of its Research Committee,

Vice Chairman of its Corporate Laws & Corporate Governance

Committee and member of its various other committees.

He is Representative of the ICAI on the Committee for

Improvement in Transparency, Accountability and Governance

(ITAG) of South Asian Federation of Accountants (SAFA) and

also on Committee constituted by Ministry of Corporate

Affairs (MCA) on issues of applicability of Foreign Investments

in LLPs.

He is member of Review, Reforms & RationalizationCommittee (IMC), Member of Legal Affairs Committee of

Bombay Chamber of Commerce and Industry (BCCI), member

of Accounting and Auditing Committee of Bombay Chartered

Accountant Society (BCAS) and also on its Core Group,

Corporate Members Committee of The Chamber of Tax

Consultants (CTC) and a Regular Contributor to WIRC Annual

Referencer on "Bank Branch Audit".

Mr. Vikamsey is also a Director of India Infoline Investment

Services Limited, Rodium Realty Limited, ICAI Accounting

Research Foundation and few private limited companies and

Trustee in Sayagyi U Ba Khin Memorial Trust (Vipassana

International Academy) and a few Trusts focusing on

education.

Mr. Mahesh Narayan Singh is an

Independent Director of India

Infoline Investment Services Limited.

He holds a Post-Graduate degree in

Physics from Banaras Hindu

University. Mr. Singh Joined the

'Indian Police Service' in 1967. He hasworked as the chiefs of the crime

branch of Mumbai Police, State CID

and Anti-Corruption Bureau. Mr. Singh received his initial

training at the National Academy of Administration,

Mr. Mahesh Narayan Singh,

(Independent Director)

Mussoorie and the National Police Academy, Mount Abu.

Subsequently, government deputed him for a course in 'Senior

Command Management' in UK and a training programme in'Disaster Management' in USA. In his long years of service

under the government, Mr. Singh held many important

positions in the police as well as in the ministry and acquired

rich experience in public administration, law enforcement and

corporate management. Mr. Singh has vast experience in

handling all types of crimes, especially organized crime,

economic offences and international terrorism. He has worked

closely with the Central Agencies at the head of 'Special Task

Force' to investigate serious crimes having national and

international ramifications. Mr. Singh also had a long stint in

the government as a Joint Secretary and as Managing Director

of Police Housing Corporation.

Mr. Singh retired from the highest rank of Director General of

Police at the end of a distinguished career in public service

spanning over a period of 35 years. His services were

recognized by the Government of India with the award of

'Indian Police Medal' for meritorious services and 'President's

Police Medal' for distinguished services.

Ms. Pratima Ram is a Whole Time

Director of our Company. She joined

the Board of our Company in May

2011. She holds a Masters Degree in

Arts from University of Virginia.

Prior to joining our Company, she

held various senior management

positions in State Bank of India

including those of country head of State Bank of India's

United States Operations based in New York. She has

worked as CEO of South Africa Operations of SBI, based in

Johannesburg. She has also headed Mergers & Acquisitions

at SBI Capital Markets and has worked with Punj Loyyds asGroup President - Finance.

Ms. Pratima Ram, (Wholetime

Director & Chief Executive

Officer)


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DIRECTORS REPORT



Dear Members,

Your Directors have pleasure in presenting the Seventh Annual Report of your Company with the audited financial statements for th

financial year ended March 31, 2011

Standalone Financial Results

Consolidated Financial Results

(` )in mn

Particulars 2010 2011 2009 2010

Gross Total Income 5194.9 2,339.6

Less: Expenditure (3854.5) (1,573.6)

Profit /(Loss) Before Taxation 1340.5 766.0

Less: Taxation - Current 427.6 210.1

- Deferred (22.3) 14.6

- Short Provision of Tax for earlier year 12.7 3.4

Net Profit / (Loss) After Tax 922.5 537.9

(` )in mn

Directors Report

Review of Business

Your Company's product offerings include margin funding, loan

against shares, promoter funding, loan against commercial and

residential property, gold loans and healthcare equipment

financing.

Your Company's loan book doubled during the year to `32.9 bn

from `16.3 bn in 2009-10. Home loans and loan against property

contributed 60% of the loan portfolio, while capital market

products contributed 35%. Our unsecured portfolio of

personal loans, which was discontinued in 2008, stood at 1%

of our total portfolio.

On a consolidated basis, your Company's income significantly

increased by 122.04% to `5194.9 mn and profit after tax increased

by 71.5% to `922.5 mn during the year.

The growth in loan book in the current year was driven by the

Company's capability to originate retail and wholesale assets

against collateral of property through its nationwide distribution

network and quick turnaround in the economic and credit

environment. The loan against securities book tends to be more

volatile depending on capital market sentiment.

During the year, your Company launched healthcare financing

which includes project financing for brown field health projects

medical equipment and ancillary equipment finance and refinanc

on existing equipment. The loans are given to doctors, clinics

nursing homes, diagnostic centers and hospitals. Your Company

also launched gold loans during the year. Going forward, you

Company expects to expand the recently launched healthcare

and gold loans portfolio and strengthen customer relationship

for upsell and cross sell opportunities.

Compared to other NBFCs in the peer group, your Company's

balance sheet is relatively under- leveraged and hence has capacity

to meet funds requirement for growth in the near future withou

resorting to fresh equity capital.

Transfer to Reserve

During the year 2010-11, your Company transferred 20% of the

net profit amounting to ` 166 mn to Special Reserve as required

under the provisions of Section 45 IC of The Reserve Bank of Indi

Act, 1934. Further, your Company proposes to transfer `83 mn to

the General Reserve out of the amount available for appropriation

pursuant to Companies (Transfer of Profit to Reserves), 1975.

Particulars 2010 2011 2009 2010

Gross Total Income 4519.0 1,650.4

Less: Expenditure (3324.6) (987.9)

Profit /(Loss) Before Taxation 1194.4 662.5

Less: Taxation - Current 380.5 185.9

- Deferred (22.9) (1.6)

- Short Provision of Tax for earlier year 10.2 2.7

Net Profit / (Loss) After Tax 826.6 475.5


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Dividend

During the year 2010-11, your Company declared and paid

interim dividend of `5 per equity share (face value of `10each). The total outflow on account of dividend payout

(including dividend distribution tax and surcharge) was

`13.82 crore. The same is considered as final.

Bonus Shares

During the 2010-11, your Company issued 9 (nine) bonus

shares of 10 each for every 1 (one) share held. As a result the

paid up equity share capital of your Company had increased to

`237,15,40,300 divided into 23,71,54,030 equity shares of

`10 each.

Deposits

Your Company has not accepted any Deposits within themeaning of Section 58A of the Companies Act, 1956 and the

Rules made thereunder.

Risk Management & Internal Controls

Your Company has a multi level Credit & Investment

Committees consisting of directors of the board/ HODs to

consider credit and investment proposals. The major credit

proposals are formally evaluated and approved by various

committees. We have in place the Risk Management

Committee and Asset Liability Management Committee

(ALCO) consisting of directors and senior officials which

regularly meets and reviews the policies, systems, controls

and positions of credit and finance business. The risk

committee reviews the risk management processes covering

credit and underwriting controls, operations, technology,

compliance risks, etc. The ALCO committee involves in

balance sheet planning from risk return perspective including

the strategic management of interest rate and liquidity risk.

Towards this end, the ALCO committee reviews product

pricing for various loans and advances, desired maturity profile

and mix of the incremental asset and liabilities. It reviews the

funding policies of your Company in the light of interest rate

movements and desired fund mixes particularly fixed/ floating

rate funds, wholesale/ retail funds, money market funding etc.

from time to time.

Your Company has invested in ensuring that its internal audit

and control systems are adequate and commensurate with the

nature of our business and the size of our operations. Your

Company has retained a reputed global firm Ernst & Young as

its Group Internal Auditor. Your Company also retains a few

specialized Audit firms to carry out specific/ concurrent audit

of some critical functions such as KYC process, branches

audits, loan documentations audits etc. Your Company also

has an internal team of professionals at head office in Mumbai,

supported by regional teams at zonal offices. The internal

team undertakes some special situation audits and follows up

on implementation of Internal Auditors' recommendations.The Audi tors ' report s and recommendations and

rectifications/ implementations are reviewed by the top

management and Audit Committee at regular intervals. The

internal processes have been designed to ensure adequate

checks and balances at every stage. The processes are

reviewed periodically by Internal Auditors as well as Audit

Committee and amended as required. Your Company also has

to comply with several specific audits that are required by

regulatory authorities and the reports are submitted to the

regulators periodically.

Corporate GovernanceYour Company has fully complied with the Corporate

Governance Guidelines for NBFCs issued by Reserve Bank of

India vide circular No. DNBS (PD) CC No. 94/ 03.10.042/

2006-07 dated May 8, 2007. In accordance with the said

Corporate Governance Guidelines, your Company has put in

place the following committees and ensures best corporate

practices to increase the investors and other stakeholders

confidence.

Audit Committee

a) Mr Nilesh Vikamsey (Chairman & Independent Director)

b) Mr M N Singh (Independent Director)

c) Ms Pratima Ram

d) Mr Kapil Krishan

Nomination Committee

a) Mr M N Singh (Independent Director)

b) Mr Nilesh Vikamsey (Independent Director)

c) Mr Nirmal Jain

d) Mr R Venkataraman

Risk Management Committee

a) Mr A K Purwar (Non Executive Chairman)

b) Mr Nilesh Vikamsey (Independent Director)

c) Mr Nirmal Jain

d) Mr L P Aggarwal

Assets and Liabilities Committee

a) Mr A K Purwar (Non Executive Chairman)

b) Mr Nirmal Jain

c) Ms Pratima Ram

d) Mr L P Aggarwal

e) Mr Kapil Krishan

All the above Committees regularly meets and reviews the

policies and status.


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DIRECTORS REPORT



Regulatory Compliance

Your Company has complied with all the applicable guidelines

prescribed by RBI for NBFCs regarding accounting standards,income recognition, capital adequacy, guidelines on Corporate

Governance etc.

Capital Adequacy

As a result of the increased net worth, your Company was able

to enhance the Capital to Risk Assets Ratio (CRAR) to 29.95%

as on March 31, 2011, which is well above CRAR of 15%

prescribed by the Reserve Bank of India.

Directors

In accordance with the provisions of Section 255 and 256 of

the Companies Act, 1956 and in terms of applicable provisions

of the Articles of Association of the Company, Mr. Nilesh

Vikamsey, Director of your Company retires by rotation and

being eligible, offers himself for re-appointment.

Pursuant to the provisions of Section 260 and in terms of

Section 269 and other applicable provisions of the Companies

Act, 1956, Mr. Kapil Krishan was appointed as an Additional

Director designated as Whole Time Director on October 23,

2010. Your Company has received a notice from a Member

under Section 257 of the Companies Act, 1956, proposing the

name of Mr. Kapil Krishan for appointment as a Whole Time

Director of your Company for a period of five years. Also, Ms.

Pratima Ram was appointed as a Whole Time Director

designated as Whole Time Director & Chief Executive Officer

on May 07, 2011.

A proposal to seek your approval for appointment of Ms.

Pratima Ram as Whole Time Director & Chief Executive Officer

and Mr. Kapil Krishan as Whole time Director is provided in the

Notice of the forthcoming Annual General Meeting.

Directors' Responsibility Statement

As required under the Section 217(2AA) of the Companies

Act, 1956, your Directors declare and certifies that: -

(a) in the preparation of the annual accounts, the applicable

accounting standards, have been followed(b) the Board of Directors have selected the 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 at the end of the financial year and of the Profit of

the company for that period.

c) the Board of Directors have taken proper and sufficient care

for the maintenance of adequate accounting records in

accordance with the provisions of the Companies Act,

1956 for safeguarding the assets of your company and

preventing and detecting fraud and other irregularities.

(d) the Board of Directors have prepared the annual account

on a going concern basis

Auditors

M/s Sharp & Tannan Associates, Chartered Accountants

Statutory Auditors of your Company retire at the conclusion o

the ensuing Annual General Meeting and being eligible offers

themselves for re-appointment. Certificate under Section

224(1B) has been obtained from M/s Sharp & Tannan

Associates, to the effect that they are eligible to be appointed

as the Statutory Auditors of your Company.

Your Board and Audit Committee recommends appointment o

M/s Sharp & Tannan Associates as the Statutory Auditors o

the Company to hold office from this Annual General Meeting

to the next Annual General Meeting.

Subsidiaries

As on March 31, 2011, your Company has following three

subsidiaries:

a) India Infoline Housing Finance Limited

b) Moneyline Credit Limited

c) India Infoline Distribution Company Limited

Pursuant to the general exemption granted by the Ministry o

Corporate Affairs vide circular dated February 8, 2011, theBoard of Directors had at their meeting held on May, 7, 201

approved attaching the consolidated financials of all the

subsidiaries of the Company along with that of the Company

The copies of the Balance Sheet, Profit and Loss Account

Report of the Board of Directors and Report of the Auditors o

each of the subsidiary Companies are not attached to the

accounts of the Company for financial year 2010-11. You

Company will make available these documents/details upon

request by any member of the Company. These

documents/details will also be available for inspection by any

member of the Company at its registered office and also at the

registered offices of the concerned subsidiaries. As required byAccounting Standard - 21 (AS-21) issued by the Institute o

Chartered Accountants of India, the Company's consolidated

financial statements included in this Annual Repor

incorporates the accounts of its subsidiaries.

Conservation of Energy, Technology Absorption and

Foreign Exchange Earnings and Outgo

The Disclosure of Information on Conservation of Energy

Technology Absorption etc, required to be disclosed in term


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of section 217 (I) (e) of the Companies Act, 1956 read with the

Companies (Disclosure of Particulars in the Report of the

Board of Directors) Rules, 1988 have not been given since yourCompany is engaged in financial services industry, and has not

carried on any manufacturing activity. The operations of the

Company are not energy intensive. However it is the policy of

the management to keep itself abreast of technological

developments in the field in which the Company is operating

and to ensure that the Company uses the most suitable

technology.

The Company had no foreign exchange earnings and outgo

during the year.

Particulars of Employees

In terms of provisions of Section 217 (2A) of the CompaniesAct, 1956, read with the Companies (Particulars of

Employees) Rules, 1975, the names and other particulars of

employees are set out in the Annexure to the Directors'

Report.

Acknowledgements

Your Directors take this opportunity to thank the Reserve Bank

of India, Banks and Financial Institutions and other

stakeholders for their continued support and assistance

during the period under review. Your Directors would also like

to thank the employees for their dedication towards the

growth of the Company.

For and on behalf of the Board

A K Purwar

Non Executive Chairman

Dated: May 07, 2011

Place: Mumbai


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Standalone Financial Statements20 Auditors Report 25 Balance Sheet 26 Profit and Loss Account 27 Schedules

45 Cash Flow Statement 47 Balance Sheet Abstract 48 Statement Relating to Subsidiary Companies

Consolidated Financial Statements

49 Auditors Report 50 Balance Sheet 51 Profit and Loss Account 52 Schedules66 Cash Flow Statement

FINANCIAL STATEMENTS


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To


We have audited the attached Balance Sheet of India Infoline

Investment Services Limited as on March 31, 2011, the Profit

and Loss Account and also the Cash Flow Statement for the

period ended on that date annexed thereto. These financial

statements are the responsibility of the Companys

management. Our responsibility is to express an opinion on

these financial statements based on our audit.

We have conducted our audit in accordance with the auditing

standards generally accepted in India. Those standards require

that we plan and perform the audit to obtain reasonable

assurance about whether the financial statements are free of

material misstatement. An audit includes examining, on a test

basis, evidence supporting the amounts and disclosures in the

financial statements. An audit also includes assessing the

accounting principles used and significant estimates made by

management, as well as evaluating the overall financial

statement presentation. We believe that our audit provides a

reasonable basis for our opinion. In accordance with the

provisions of Section 227 of the Companies Act, 1956, we

report that:

1. As required by the Companies (Auditors Report) Order,

2003, issued by the Central Government of India under

sub-section (4A) of Section 227 of the Companies Act,

1956, and on the basis of such checks of books and records

of the Company as we considered appropriate and

according to the information and explanations given to us,

we enclose in the Annexure a statement on the matters

specified in paragraphs 4 and 5 of the said Order.

2. Further to our comments in the Annexure referred to

above, we report that:

i) We have obtained all the information andexplanations, which to the best of our knowledge and

belief were necessary for the purpose of our audit;

ii) In our opinion, proper books of account as required by

law have been kept by the company so far as appears

from our examination of the books;

iii) The Balance Sheet, Profit and Loss account and also

The Members,

Auditors Report

the agreement with the books of account;

iv) In our opinion, the balance sheet, profit and loss

account and also the cash flow statement dealt with

by this report comply with the accounting standards

referred to in sub-section (3C) of Section 211 of the

Companies Act, 1956;

v) On the basis of written representations received by the

company from its Directors as on March 31, 2011 and

taken on record by the Board of Directors, we report

that none of the director is disqualified as on March 31,

2011 from being appointed as a Director in terms of

the clause (g) of sub-section (1) of Section 274 of theCompanies Act, 1956. In our opinion, and to the best

of our information and according to the explanations

given to us, the said accounts, read together with the

significant accounting policies and notes to accounts,

give the information required by the Companies Act,

1956, in the manner so required and give a true and fair

view in conformity with the accounting principles

generally accepted in India;

a. in case of balance sheet, of the state of affairs of

the company as at March 31, 2011;

b. in case of profit and loss account, of the profit forthe year ended on that date; and

c. in case of the Cash Flow Statement, of the cash

flows for the year ended on that date.

Sharp & Tannan Associates

Chartered Accountants

ICAI Registration No.109983W

By the hand of

Tirtharaj Khot

Place: Mumbai Partner

Date: May 07, 2011 Membership No.: 37457

Cash Flow statement dealt with by this report are in

20


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Standalone Financial Statements of


AnnexureReferred to in paragraph 1 of our report dated May 7, 2011 to the members of India Infoline Investment Services Limited

1. (a) The Company has maintained adequate records toshow full particulars, including quantitative details

and situation of the fixed assets.

(b) The Company has formulated a programme of physical

verification of its fixed assets in a phased manner. In

accordance with this program, a physical verification

of certain fixed assets has been carried out by

management during the year and there are no material

discrepancies observed between assets physically

verified and book balances. In our opinion, the

periodicity of verification is reasonable having regard

to the size of the company and the nature of its assets.

(c) The Company has not disposed of any substantial part

of its fixed assets so as to affect its going concern

status.

2. The Company is not carrying on any manufacturing or

trading activity. Therefore, the provisions of sub clause

(a), (b) and (c) of clause (ii) of paragraph 4 of the Order

are not applicable to the Company.

3. (a) The Company has granted loan to three companies

covered under register maintained under Section 301

of the Companies Act, 1956. The maximum amount

involved during the year was ` 3,643,034,393/- andthe year, end balance of the loan granted to such

Company was `1,702,300,003/-

(b) In our opinion, the rate of interest and other terms and

condition of such loan are not, prima facie, prejudicial

to the interest of the Company.

(c) There are no stipulation as to repayment of principal

and interest amount.

(d) There is no overdue amount in excess of 100,000 in

respect of loan granted to Company listed in the

register maintained under Section 301 of theCompanies Act,1956, since repayment schedule is not

stipulated.

(e) The Company has not taken any loans from the

companies, firms or other parties covered in the

register maintained under Section 301 of the

companies Act, 1956. As the Company has not taken

any loans, the provisions of sub clause (e), (f), and (g)

of clause (iii) of paragraph 4 of the Order are noapplicable to the Company.

4. In our opinion and according to the information an

explanations given to us, there are adequate interna

control systems commensurate with the size of th

Company and nature of its business, for the purchas

of fixed assets and sale of services. Further, on the

basis of our examination of the books and records o

the Company, and according to the information and

explanations given to us, we have neither come acros

nor have we been informed of any continuing failure to

correct major weaknesses in the aforesaid interna

control systems.

5. (a) In our opinion and according to the information an

explanations given to us, the particulars of contract

or arrangements that need to be entered into

Register in pursuance of Section 301 of the Companie

Act, 1956 and those brought to our notice, have been

so entered.

(b) In our opinion and according to the information an

explanations given to us, the transactions i

pursuance of such contracts or arrangements entered

in the register maintained under Section 301 of th

Companies Act,1956 and exceeding the value o

` 500,000 in respect of any party during the year, hav

been made at prices which are not comparable since

the prevailing market prices of such services, in view o

the management, are not readily available.

6. The Company has not accepted any deposits from th

public of the nature which attracts the provisions o

Section 58A, 58AA or any other relevant provisions o

the Companies Act, 1956 and the rules made ther

under. Therefore, the provision of clause (vi) o

paragraph 4 of the Order is not applicable to th

Company.

7. In our opinion, the Company has an internal audi

system commensurate with its size and nature of it

business.

8. As per the information and explanations given to us, i

respect of the class of industry the Company fall

under, the maintenance of cost records has not been

21


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prescribed by the Central Government under Section209 (1) (d) of the Companies Act, 1956. Therefore, the

provision of clause (viii) of paragraph 4 of the Order is

not applicable to the Company.

9. (a) According to the information and explanations given

to us, and as per the records of the Company, in our

opinion the Company is generally regular in depositing

undisputed statutory dues including Provident Fund,

Investor Education and Protection Fund, Employees

State Insurance, Income tax, Sales tax, Wealth tax,

Service tax, Customs duty, Excise duty, Cess and other

material statutory dues with the appropriate

authorities, where applicable. Based on the

information furnished to us, there are no undisputed

statutory dues as on March 31, 2011, which are

outstanding for a period exceeding six months from

the date they became payable.

(b) According to the information and explanations givento us, there are no cases of non-deposit with the

appropriate authorities of disputed dues of sales tax/

income tax/ customs tax/ wealth tax/ service tax/

excise duty and cess as at March 31, 2011 which have

been not deposited on account of dispute pending,

and amount involve and the forum where disputes is

pending as under :

10. At the end of the financial year, the Company has no

accumulated losses exceeding fifty percent of its net

worth. Further, the Company has not incurred cash

loss during the financial year covered by our audit, and

has not incurred cash losses during the financial year

immediately preceding financial year.

11. Based on our audit procedures and according to the

information and explanations given to us, we are of the

Name of Nature of the Amount (`) of Tax

the Statute Disputed Dues Which The Forum Where

Amount Dispute is

Relates Pending

` 4,469,700/-

Income Tax Disallowance u/s 14(A) amount of Commissioner of

Act,1961 of IT act. outstanding demand income tax appeal

paid

Period to

A.Y. 2007-2008

opinion that the Company has not defaulted in repayment of

its dues to its financial institution, bank and debenture

holders.

12. In our opinion, and according to the information and

explanations given to us, the Company has

maintained adequate records in cases of loans and

advances granted on the basis of security by way of

pledge of shares, debentures or other securities.

13. The Company is not a chit fund or a nidhi/ mutual

benefit fund/ society. Therefore, the provisions of sub

clause (a), (b), (c) and (d) of clause (xiii) of paragraph 4

of the Order are not applicable to the Company.

14. Based on our examination of the records and

evaluation of the related internal controls, the

Company has maintained proper records of transactions and

contracts in respect of its dealing or trading in shares,

securities, debentures and other investments, as

applicable, and timely entries have been made therein.

The aforesaid securities have been held by the

Company in its own name, except to the extent of the

exemption granted under Section 49 of the Companies

Act, 1956.

15. According to the information and explanations given

to us, the Company has not granted any guarantee for

loans taken by others from bank or financial

institutions. Therefore, the provision of clause (xv) of

paragraph 4 of the Orders not applicable to the

Company.

16. In our opinion, and according to the information and

22


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explanation given to us, the term loans have beenapplied for which they were raised.


to us and on an overall examination of the balance

sheet of the Company, we report that no funds raised

on short-term basis have been used for long-term

investments.


to us, during the year the Company has not made

preferential allotment of shares to parties and

companies covered in the register maintained under

Section 301 of the Companies Act, 1956.


to us, during the period covered by our audit report,

the Company had issued debentures. The Company

has created security in respect of debentures issued.

20. The Company has not raised any money through a

public issue during the period. Therefore, the provision

of clause (xx) of paragraph 4 of the Order is not

applicable to the Company.

21. During the course of our examination of the books anrecords of the Company, carried out in accordanc

with the generally accepted auditing practices in India

and according to the information and explanation

given to us, we have neither come across any instance

of material fraud on or by the Company, noticed o

reported during the year nor have we been informed o

such case by management.




By the hand o

Tirtharaj Khot

Place: Mumbai Partne


23


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To


As required by the Non-Banking Financial Companies

Auditors Report (Reserve Bank) Directions, 2008

(hereinafter referred to as the Direction) issued by the

Reserve Bank of India vide Notification No. DNBS (PD) 201/DG

(VL)/2008 dated September 18, 2008, in exercise of the

powers conferred by the sub section (IA) of section 45MA of

the Reserve Bank of India Act, 1934 (2 of 1934) and based on

the books and records verified by us and according to the

information and explanations given to us during the normalcourse of the audit for the year ended March 31, 2011, we

report as under:

1. a. In our opinion the Company is engaged in the business

of Non-banking Financial Institution and it has

received the Certificate of Registration (CoR) No.

13.01792 dated May 12, 2005 from Reserve Bank of

India (hereinafter referred to as the Bank).

b. In our opinion, the Company is entitled to continue to

hold such COR in terms of its asset/finance pattern as

on March 31, 2011.

2. In our opinion, based on the business carried on by the

Company during the year it is not an Asset Finance

Company (AFC) as defined in Non-Banking Financial

Companies Acceptance of Public Deposits (Reserve Bank)

Directions, 1998.

3. The Board of Directors of the Company at their meeting

held on April 24, 2010, have passed a resolution for

nonacceptance of public deposit.

4. The Company has not accepted any deposit from public

during the year ended March 31, 2011.

5. In our opinion, the Company has complied with

prudential norms relating to income recognition,

accounting standards, asset classification and

provisioning for bad and doubtful debts, as applicable, to

it in terms of Non-Banking Financial (Non-Deposit

Accepting or Holding) Companies Prudential Norms

(Reserve Bank) Directions, 2007 for the year ended March

31, 2011.

The Board of Directors,

Auditors ReportPursuant to NBFCs Auditors Report (Reserve Bank) Directions, 2008

6. a. The capital adequacy ratio as disclosed in the return forthe year ended March 31, 2011 submitted to the Bank

in form NBS-7 has been correctly arrived at and is in

compliance with the minimum CRAR prescribed by the

Bank.

b. The Company has furnished to the Bank the annual

statement of capital funds, risk assets/exposures and

risk asset ratio (NBS-7) within the stipulated period,

for the year ended March 31, 2011.




By the hand of

Tirtharaj Khot

Place: Mumbai Partner


24


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Balance Sheetas at March 31, 2011

SOURCES OF FUNDS

APPLICATION OF FUNDS

Shareholders Funds

Share Capital A 2,371,540,300 237,154,030

Reserves And Surplus B 10,858,789,813 13,230,330,113 12,321,369,967 12,558,523,997

Loan Funds C

Secured Loans 11,898,409,110 2,615,100,000

Unsecured Loans 8,932,000,000 20,830,409,110 6,590,000,000 9,205,100,000

Total 34,060,739,223 21,763,623,997

Fixed Assets D

Gross Block 122,996,100 3,280,790

Less: Depreciation 9,577,914 1,067,498

Net Block 113,418,186 2,213,292

Capital Work-in-progress 37,250,464 150,668,650 - 2,213,292

Investments E 4,417,764,091 3,376,748,400

Deferred Tax 30,046,072 7,161,447

(refer Note Of B-12 Of Schedule L)

Current Assets, Loans And Advances F

Cash And Bank Balances 312,859,962 1,015,599,411

Closing Stock 223,833,262 113,693,188

Loans And Advances 31,018,638,841 17,389,692,717

31,555,332,065 18,518,985,316Less: Current Liabilities & Provisions G

Current Liabilities 2,021,195,453 141,484,458

Provisions 71,876,202 -

2,093,071,655 141,484,458

Net Current Assets 29,462,260,410 18,377,500,858

Total 34,060,739,223 21,763,623,997

Significant accounting policies and notes L

to accounts

ScheduleAs at

March 31, 2011 As atMarch 31, 2010

(Amount in `

As per our attached report of even date

For Sharp & Tannan Associates For India Infoline Investment Services Limited


ICAI Registration No. 109983W

By the hand of

Tirtharaj Khot Kapil Krishan R Venkataraman Binoy K Parikh

Partner Whole Time Director Director Company Secretary

Membership No. 37457

Place : Mumbai

Dated : May 07, 2011

25


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Profit & Loss Accountfor the year ended March 31, 2011

INCOME

Expenditure

Income from operations H 4,255,588,321 1,623,921,387

Other income 263,470,890 26,428,595

Total 4,519,059,211 1,650,349,982

Direct cost I 231,639,584 176,147,288

Employee cost J 600,707,503 365,252,120

Administration & other expense K 432,276,623 253,697,204

Interest & finance changes 2,051,502,916 192,163,296

Depreciation D 8,510,416 634,405

Total 3,324,637,042 987,894,313Profit before tax 1,194,422,169 662,455,669

Provision for taxation

- Current tax 380,494,244 185,849,934

- Deferred tax (22,884,625) (1,586,360)

- Short provision of Income Tax 10,235,259 2,687,804

Profit after tax 826,577,291 475,504,291

Appropriations

Dividend

Interim dividend 118,577,015 -

Dividend distribution tax 19,694,160 -

Transfer to special reserve 166,000,000 97,106,337

Transfer to general reserve 83,000,000 -

Balance of profit brought forward 1,207,289,524 828,891,570

Balance of profit carried forward 1,646,595,640 1,207,289,524

Earning per share - basic (`) 3.49 2.01

Earning per share - diluted (`) 3.40 1.93

Face value per share (`) 10.00 10.00

Significant accounting policies and notes L

to accounts

Schedule 2010 - 2011 2009 - 2010

(Amount in `)

As per our attached report of even date

For Sharp & Tannan Associates For India Infoline Investment Services Limited


ICAI Registration No. 109983W

By the hand of

Tirtharaj Khot Kapil Krishan R Venkataraman Binoy K Parikh

Partner Whole Time Director Director Company Secretary

Membership No. 37457

Place : Mumbai

Dated : May 07, 2011

26


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Schedules forming part of the Balance Sheetas at March 31, 2011

As at

March 31, 2011

As at

March 31, 2010

(Amount in `)

Schedule A: Share Capital

Schedule B: Reserves And Surplus

Authorised :

300,000,000 (Previous Year 50,000,000) Equity Shares of 10/- each 3,000,000,000 500,000,000

Issued, Subscribed and Paid Up:

237,154,030 (Previous Year 23,715,403) Equity Shares of 10/- each fully paid-up 2,371,540,300 237,154,030

Includes 213,438,627 (Previous Year Nil) equity shares alloted by way of bonus as

fully paid up shares by capitalisation of securities premium account

(Out of above 182,000,000 (Previous Year 18,200,000) equity shares are held by its

Holding Company India Infoline Limited and 52,838,700 (Previous Year 5,283,870)

shares held by its fellow subsidiary)

Total 2,371,540,300 237,154,030

Securities Premium Account:

Opening Balance 10,808,374,106 10,808,374,106

Addition during the year - -

Deduction during the year, for issue of bonus shares and (2,150,886,270) -

adjustment of share issue expenses

Closing Balance 8,657,487,836 10,808,374,106

General Reserve

Opening Balance - -

Addition during the year 83,000,000 -

Closing Balance 83,000,000 -

Special Reserve*

Opening Balance 305,706,337 208,600,000

Addition during the year 166,000,000 97,106,337

Closing Balance 471,706,337 305,706,337

*Pursuant to Section 45 1C of Reserve Bank of India Act, 1934

Profit and Loss Account 1,646,595,640 1,207,289,524

Total 10,858,789,813 12,321,369,967

Schedule C: Loan Funds

SECURED LOAN

Loans from banks ( Secured against receivables ) 8,500,109,110 2,000,000,000

Non Convertible Debentures (Secured against immovable property, stock & book debts) 3,398,300,000 615,100,000

Total 11,898,409,110 2,615,100,000

(refer note B-3 of Schedule L )

UNSECURED LOAN

Non Convertible Debentures 272,000,000 5,190,000,000

Commercial Papers 8,660,000,000 1,400,000,000

Total 8,932,000,000 6,590,000,000

Total* 20,830,409,110 9,205,100,000

*The above include `10,370,442,444 (Previous Year 7,840,000,000) due within one year`

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SchedulesformingpartoftheBalanceSheet

asatMarch31,

2011

(A

mountin`)

ScheduleD:FixedAssets

GrossBlock

Depreciation

NetBlo

ck

Assets

Asat

A

dditions

Deductions

Asat

Asat

Fortheyear

Deductions

Uptoat

Asat

Asat

31.03.2010

31.03.2011

31.03.2010

31.03.2011

31.03.2011

31.03.2010

Premises

145,0

00

-

-

145,00

0

16,3

11

7,2

50

-

23,5

62

121,4

39

128,6

90

Computer

-

9,6

42,6

69

-

9,6

42,66

9

-

1,0

20,8

04

-

1,0

20,8

04

8,6

21,8

65

-

Electrical

676,6

87

2

0,7

86,7

96

-

21,4

63,48

3

221,8

93

1,1

31,1

82

-

1,3

53,0

74

20,1

10,4

08

454,7

94

Equipment

Office

201,7

69

1

9,2

30,1

57

-

19,4

31,92

6

151,3

32

757,8

40

-

909,1

72

18,5

22,7

54

50,4

37

Equipment

Air

415,2

75

2,6

16,6

29

-

3,0

31,90

4

124,8

28

192,0

99

-

316,9

27

2,7

14,9

77

290,4

47

Conditions

Furniture&

1,8

42,0

59

6

7,4

39,0

60

-

69,2

81,11

9

553,1

34

5,4

01,2

42

-

5,9

54,3

76

63,3

26,7

43

1,2

88,9

25

Fixture

TOTAL

3,280,790

119,715,310

-

122,996,10

0

1,067,497

8,510,416

-

9,577,914

113,418,186

2,213,293

PreviousYear

3,280,790

-

-

3,280,79

0

433,093

634,405

-

1,067,498

2,213,292

CapitalWork

37,2

50,4

64

-

inProgress

150,668,650

2,213,293

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Schedules forming part of the Balance Sheet as at March 31, 2011as at March 31, 2011

Number Amount

(Amount in `)

AmountNumberFace Value March 31, 2011 March 31, 2010

Schedule E: Investments

a.Long Term Investments

Unquoted, Trade, Long Term (Valued at cost)

Investment in Subsidiaries

Equity Shares

India Infoline Distribution Company Limited 10 1,400,100 85,126,000 1,400,100 85,126,000

Moneyline Credit Limited 100 1,450,000 1,536,929,000 1,450,000 1,536,929,000

India Infoline Housing Finance Limited 10 10,900,000 1,005,000,000 7,500,000 325,000,000

Preference Shares

India Infoline Housing Finance Limited 10 20,000,000 300,000,000 20,000,000 300,000,000

2,927,055,000 2,247,055,000Unquoted, Non-Trade, Long Term (Valued at cost) 100,000 3,850 385,000,000 1,950 195,000,000

Units of India Infoline Venture Capital Fund

(IIFL Opportunity Fund )

Arch Pharmalabs Limited 10 263,028 105,211,200 - -

490,211,200 195,000,000

b.Current Investments

Quoted , Non - Trade , Current - - - 234,607,988

(Valued at cost or market whichever is less)

(refer note B-14 of Schedule L ) - 234,607,988

Unquoted, Non-Trade, Current(Valued at cost or market whichever is less)

Reliance Mutual Fund

Reliance Liquidity fund 10 - - 49,983,628 500,066,208

Axis Mutual Fund

Axis Liquid Fund 1,000 - - 200,019 200,019,204

DWS Mutual Fund

DWS Short Maturity Fund- 10 87,860,573 1,000,497,891 - -

Institutional Growth Plan

(refer note B-4 of Schedule L ) 1,000,497,891 700,085,412

Total 4,417,764,091 3,376,748,400

Aggregate cost of Mutual Fund Units 1,000,497,891 700,085,412

Aggregate cost of Quoted investments - 234,607,988

Aggregate cost of Unquoted investments 3,417,266,200 2,442,055,000

NAV of Mutual Fund Units 1,030,358,506 700,085,412

Aggregate Market value of Quoted investments - 252,421,955

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Schedule F: Current Assets, Loans & Advances

a.Cash And Bank Balance

Cash on Hand 55 -

Bank Balances

With Scheduled Banks:

- In Current Accounts 162,859,907 1,015,599,411

- In Fixed deposits 150,000,000 -

Total 312,859,962 1,015,599,411

#

b) STOCK ON HAND (QUOTED) Qty (CY/PY) Face Value As at As at 31.03.2011 31.03.2010

Equity Shares

Selan Exploration Technology Limited - / 212,000 10 - 78,549,241

HDFC Bank Limited 130,000 / - 10 87,352,207 -

Reliance Industries Limited 52,000 / - 10 53,113,780 -

United Phospherous Limited 184,000 / - 2 27,498,412 -

Stock on Hand - Options* Qty (CY/PY) Strike Price

Nifty Call 27-12-2012 14,900 / 14,900 5,000 14,423,200 14,423,200

Nifty Call 28-06-2012 6,900 / - 4,100 9,936,000 -

Nifty Call 27-12-2012 1,400/ 6,500 5,100 1,488,000 5,850,000

Nifty Call 28-06-2012 - / 1,800 5,100 - 1,508,400

Nifty Call 28-06-2012 24,800/ 8,500 5,200 984,000 8,041,000

Nifty Call 27-12-2012 24,800/ - 5,200 10,121,413 -

Nifty Call 27-06-2013 24,800/ - 5,200 13,597,500 -

Nifty Call 27-12-2012 5,750/ 5,750 5,300 5,318,750 5,321,347

*Held to cover possible payout in respect of certain Non- Convertible Debentures

Total 223,833,262 113,693,188

Aggregate market value-stock on hand-Quoted 245,294,050 126,195,450#CY= Current Year, PY= Previous Year

As atMarch 31, 2011 As atMarch 31, 2010

(Amount in `)

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Schedule F (Contd.)

Schedule G: Current Liabilities And Provisions

Schedule H: Income From Operations

c) Loans & Advances

(Unsecured, Considered Good, unless otherwise stated)

Loans to Group Companies 1,702,300,002 2,722,441,505

Advance Income Tax & Tax Deducted at source (net of provisions) 49,843,534 72,276,360

Loans 28,587,161,938 14,303,252,606

Other Advances 699,460,927 312,387,636

Less : Prov for doubtful loans 20,127,560 20,665,390

Total 31,018,638,841 17,389,692,717

Total 31,555,332,065 18,518,985,316

a)Current Liabilities

Sundry Creditors

i) Outstanding dues of micro and small enterprises. - -

ii) Others 12,599,906 -

Others Liabilities 2,008,595,548 141,484,458

2,021,195,453 141,484,458b)Provisions

Contingent provision against standard assets 71,501,232 -

Provision for leave encashment 374,970 -

71,876,202 -

Total 2,093,071,655 141,484,458

Income from financing activities 4,013,920,347 1,364,879,729

Profit from sale of Investments and trading activities 193,319,092 140,579,407

Dividend income 48,348,882 118,462,251Total 4,255,588,321 1,623,921,387

(Amount in `)

As atMarch 31, 2011As atMarch 31, 2010

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Schedules forming part of Profit and Loss accountfor the year ended March 31, 2011

Schedule I: Direct Cost

Schedule J: Employee Cost

Schedule K: Administration and Other Expenses

Investment and Financing Cost 65,839,504 140,508,094

Provision for Doubtful Loans (537,830) 4,398,890

Provision for Standard Loans 71,501,232 -

Marketing Expenses 94,836,678 31,240,304

Total 231,639,584 176,147,288

Salaries and bonus 572,849,031 352,579,632

Contribution to provident and other funds 10,544,130 5,628,978

Gratuity 2,439,484 -

Staff Welfare Expenses 14,874,858 7,043,510

Total 600,707,503 365,252,120

Advertisement 64,116,587 62,838,733

Bank Charges 1,256,175 152,380

Communication 25,966,239 22,120,183

Electricity 18,595,798 13,244,268

Legal & Professional Fees 63,076,949 41,205,962Miscellaneous Expenses 4,390,966 5,637,228

Office expenses 26,469,543 14,420,261

Postage & Courier 12,644,484 7,102,773

Printing & Stationary 16,625,743 6,824,795

Rent 141,343,422 60,680,725

Repairs & Maintenance

- Computer 499,136 217,890

- Others 8,882,562 9,381,698 4,292,657

Remuneration to Auditors :

Audit Fees 225,000 225,000

Certification Expenses 31,000 -

Out Of Pocket Expenses 8,950 264,950 -

Software Charges 16,115,972 2,727,112

Travelling & Conveyance 32,028,097 12,007,237

Total 432,276,623 253,697,204

(Amount in `)

As atMarch 31, 2011As at

March 31, 2010

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SCHEDULE L

Significant Accounting Policies and Notes forming part of the Balance Sheet as at March

31, 2011 and Profit and Loss Account for the Year ended March 31, 2011.

1. Basis of preparation of financial statements:

2. Use of Estimates:

3. Fixed Assets and Depreciation:

4. Revenue Recognition:

A. SIGNIFICANT ACCOUNTING POLICIES:

The financial statements have been prepared under historical cost convention on an accrual basis in compliance with al

material aspects of the applicable Accounting Standards in India and the relevant provisions of the Companies Act, 1956

The accounting policies have been consistently applied by the Company.

The presentation of financial statements in conformity with the generally accepted accounting principles requires the

management to make estimates and assumptions that affect the reported amount of assets and liabilities on the date of the

financial statements and the reported amount of revenues and expenses during the reporting period. Difference betweenthe actual result and estimates are recognized in the period in which the results are known/ materialized.

Fixed assets are stated at cost of acquisition less accumulated depreciation and impairment loss, if any thereon

Depreciation is charged using the straight line method based on the useful life of fixed assets as estimated by the

management as specified below, or the rates specified in accordance with the provisions of schedule XIV of the Companie

Act, 1956, whichever is higher. In the case of transfer of used fixed assets from group companies, depreciation is charged

over the remaining useful life of the asset.

Depreciation is charged from the month in which new assets are put to use. No depreciation is charged from the month in

which assets are sold. Individual assets/ group of similar assets costing upto ` 5,000/- has been depreciated in full, in the

year of purchase.

Estimated useful life of the assets is as under:

Buildings 20 years

Computers 3 years

Electrical & Office equipment 5 years

Furniture and fixtures 5 years

Vehicles 5 years

Software 3 years

The Company complies, in all material respects, with the Prudential Norms relating to income recognition, accounting

standards, asset classification and the minimum provisioning for bad and doubtful debts, specified in the directions issued

by the Reserve Bank of India as applicable to it, and

Interest Income is recognised on the time proportionate basis as per agreed terms.

Interest income on non-performing assets is recognised on cash basis.

Dividend income is recognised when the right to receive payment is established.

In respect of the other heads of income, the Company accounts the same on accrual basis.

Processing fees received from customers is recognised as income on receipt basis.

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5. Preliminary Expenses

6. Retirement Benefits:

7. Provisions, Contingent Liabilities and Contingent Assets:

8. Taxes on Income:

9. Operating Leases:

10. Investments:

11. Stock in Trade:

Preliminary Expenses is written off in same financial year in which they are incurred.

The company's contribution towards Provident Fund and Family Pension Fund, which are defined contribution, are

accounted for on an accrual basis and recognised in the Profit & loss account.

The Company has provided Compensated Absences on the basis of actuarial valuation.

Gratuity is post employment benefit and is in the nature of Defined Benefit Plan. The Liability recognized in the Balance

Sheet in respect of gratuity is the present value of defined benefit obligation at the balance sheet date together with the

adjustments for unrecognized actuarial gain or losses and the past service costs. The defined benefit obligation is

calculated at or near the balance sheet date by an independent actuary using the projected unit credit method.

The Company creates a provision when there is present obligation as a result of a past event that probably requires an

outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent

liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an

outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of

outflow of resources is remote, no provision or disclosure is made.

Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer

probable that the outflow of resources would be required to settle the obligation, the provision is reversed.

Contingent Assets are neither recognized nor disclosed in the financial statements.

Provision for current tax is computed based on estimated tax liability computed after adjusting for allowance, disallowance

and exemptions in accordance with the applicable tax laws.

Deferred tax is re

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