Upload
deven-zanjarkiya
View
92
Download
7
Embed Size (px)
Citation preview
1
13th Annual Report 2006-2007
Board of Directors
Shri. A.P.Kurian ChairmanShri. C.J.George Managing DirectorShri. Jiji Thomson Nominee (KSIDC Ltd.)Shri. P.C.CyriacShri. Mahesh VyasShri. Rakesh JhunjhunwalaShri. R.BupathyShri. Punnoose George
Company SecretaryShri. T.Jayaraj
AuditorsDeloitte Haskins and SellsChartered AccountantsKochi - 682 016
BankersUTI Bank Ltd.HDFC Bank Ltd.Dhanalakshmi Bank Ltd.Federal Bank Ltd.Canara Bank Ltd.IDBI Bank Ltd.Karur Vysya Bank Ltd.CitiBank N.A.
Registrar & Share Transfer AgentsS.K.D.C. Consultants LimitedP.B.No.2979, No.7, Seth Narayandoss Layout,Street No.1, West Power House Road,Coimbatore - 641 012
Listed atNational Stock Exchange of India LimitedBombay Stock Exchange Limited
Registered Office5th Floor, Finance Towers,Kaloor, Kochi – 682 017.
2
13 thANNUAL REPORT
Page
Geojit Financial Services LimitedFrom the Chairman’s Desk 5Directors’ Report 6Corporate Governance Report 13Management Discussion and Analysis 21Auditors’ Report 23Balance Sheet 26Profit and Loss Account 27Cash Flow Statement 28Schedules to Accounts 29
Subsidiary Companies:
Geojit Commodities LimitedDirectors’ Report 48Auditors’ Report 50Balance Sheet 53Profit and Loss Account 54Cash Flow Statement 55Schedules to Accounts 56
Geojit Technologies (P) Limited 71
Geojit Financial Distribution (P) Limited 93
Geojit Financial Management Services (P) Limited 107
Sigma Systems International FZ LLC 117
Consolidated Financial StatementsAuditors’ Report 127Balance Sheet 126Profit and Loss Account 127Cash Flow Statement 128Schedules to Accounts 129
C � O � N � T � E � N � T � S
3
FIVE YEARS IN REVIEW
CONSOLIDATED FINANCIAL SUMMARY
Particulars 2006-07 2005-06 2004-05 2003-04 2002-03
Income from Operations 13,353 10,103 5,337 3,893 1,755
Other Income 257 93 106 122 55
Total Income 13,610 10,196 5,443 4,015 1,810
Total Expenditure 9,832 6,885 3,860 2,575 1,775
Profit Before Tax 3,778 3,311 1,583 1,440 35
Taxation 1,338 1,068 541 517 8
Profit After Tax 2,440 2,243 1,042 923 27
Add:Share of Profit in Associate 81 28 - - -
Total Profit After Tax 2,521 2,271 1,042 923 27
Equity 2,090 1,522 1,522 600 600
Reserves 19,975 3,333 1,756 903 209
Networth 22,064 4,855 3,278 1,503 809
Face value (Rs.) 1 10 10 10 10
Book Value (Rs.) 14.22 31.90 23.32* 25.05 13.49
EPS (Rs.) 1.63 14.92 7.19 6.41 (0.36)
Dividend 40% 40% 20%* 25% 5%
Return on Networth 33% 47% 31% 58% -
(Rs. in Lakhs)
* On capital enhanced by issue of bonus shares in the ratio of 1:1
4
13 thANNUAL REPORT
Clients
Financial Year
No
. of C
lien
ts
1234123412341234123412341234123412341234123412341234123412341234123412341234123412341234123412341234
123412341234123412341234123412341234123412341234123412341234123412341234123412341234
123412341234123412341234123412341234123412341234123412341234
1234123412341234123412341234123412341234
123412341234123412341234
2002-03 2003-04 2004-05 2005-06 2006-07
500,000
400,000
300,000
200,000
100,000
0
438,134
372,871
253,673
158,614
94,438
Employees
Financial Year
123412341234123412341234123412341234123412341234123412341234123412341234123412341234123412341234
1234123412341234123412341234123412341234123412341234123412341234123412341234
123412341234123412341234123412341234123412341234
123123123123123123123123123
123123123123123123123
2002-03 2003-04 2004-05 2005-06 2006-07
2,500
2,000
1,500
1,000
500
0
2,162
1,665
1,032
750
538
No
. of E
mp
loye
es
Offices
Financial Year
1234123412341234123412341234123412341234123412341234123412341234123412341234123412341234
1234123412341234123412341234123412341234123412341234123412341234123412341234
12341234123412341234123412341234123412341234
12341234123412341234123412341234
123412341234123412341234
2002-03 2003-04 2004-05 2005-06 2006-07
450
400
350
300
250
200
150
100
50
0
392
332
179
11992
Networth
Financial Year
1234123412341234123412341234123412341234123412341234123412341234123412341234123412341234123412341234
123412341234123412341234
12341234123412341234
123123123
123123
2002-03 2003-04 2004-05 2005-06 2006-07
25,000
20,000
15,000
10,000
5,000
0
22,064
4,8553,278
1,503809
Ru
pee
s in
Lak
hs
No
. of O
ffic
es
GROWING OPERATIONS
FIVE YEARS IN REVIEW
5
From the Chairman’s Desk
It gives me great pleasure to welcome you all to this 13th Annual General Body Meeting.
During the fiscal year 2006-07 the Indian economy registered a healthy growth of nearly
9 percent. India has emerged as an important investment destination of an increasingnumber of countries, reflecting the confidence of the nations on the potentiality andstrength of the Indian economy. In the background of strong growth momentum of the
economy, the undertone of the share market was buoyant during the year but with thehigh degree of volatility. The last quarter of the year witnessed a melt down in the stockprices and consequent fall in the trading volume.
I am happy to report that your Company has grown further this year, with the consolidated revenue registering anincrease of 33 percent to Rs.136.11 Crores and profit after tax by 11 percent to Rs.25.21 Crores as against 22.71 Crores
last year. While the brokerage income remains the major contributor of overall income and profits, the income fromcommodity business, and that from distribution registered impressive growth. However, the fall in the equity brokerageincome during the last quarter has depressed the overall net profit position, which resulted in marginal increase of only
11 percent in the net profit. This has compelled the Board not to recommend any further dividend, as a prudent financialpolicy. The 40 percent interim dividend declared in January 2007, we believe, is a reasonable reward for the investors,particularly in the context of the growth of over 72 percent in the market price of Geojit’s share during the year.
A memorable landmark during the year was the company partnering with BNP Paribas, the Paris headquarteredfinancial conglomerate, which is the 17th largest corporate in the world. The partnership with BNP Paribas acquiringupto 33.50 percent of the Company’s capital has contributed to the substantial growth in the net worth of the Company
to over Rs.210 Crores. This partnership would facilitate your company to increase the product offerings, adopt the latestworld class technology and place Geojit, a Kerala based Pan India Company in the world map to serve not only NRIs butalso citizens across the world. Your Company is thus getting equipped fully to play a major role in the financial markets.
The year also witnessed another major development. Your Company has established its footprint in the Kingdom ofSaudi Arabia – the first Indian brokerage firm to provide broking facilities to the Saudi citizens and also to the NRIs there.With our presence in Dubai, Abu Dhabi, Muscat, Sharjah and Doha and now with our new set up in Saudi Arabia, your
Company is well positioned to serve the growing market in the Gulf region.
Yet another event that merits a mention here was the completion of two decades of the original company established by
Mr.C.J.George in 1987, which transformed itself into Geojit Securities in 1994 and now on the launching pad to goglobal as Geojit BNP Paribas Financial Services. The Company is well poised to expand its business and profitability inthe coming years.
In this long journey of ours we have greatly benefited from the encouragement and support of our clients, associates,bankers and shareholders and convey our appreciation to all of them. To our employees, for their commitment anddedication, we are indeed grateful. Let us together take this Company forward with standards and ethics of practices
that match with the best elsewhere.
Wishing you all the very best,
Yours sincerely,
A.P.Kurian
6
13 thANNUAL REPORT
DIRECTORS’ REPORT
On behalf of the Board of Directors, I have great pleasure inpresenting the 13th Annual Report on the business andoperations of the Company for the financial year ended31st March 2007 along with the Audited Statement ofAccounts.
Performance Highlights
Total Income 109.88 87.98
Profit Before Tax 31.67 28.04
Less : Provision for Taxation 10.62 9.60
Profit After Tax 21.05 18.44
Balance brought forward 18.34 8.69
Profit available for appropriation 39.39 27.13
Appropriations :
Transfer to General Reserve 2.10 1.84
Dividend on equity shares 6.94 6.94
(including dividend tax)
Balance carried to Balance Sheet 30.35 18.35
ParticularsFor the year ended31st March 2007
(Rs in Crores)
Review of Performance
Your Company has recorded a total income of Rs.109.88Crores for the year ended 31st March 2007 compared toRs. 87.98 Crores in the previous year, demonstrating a growthof 25 %. The Profit before tax grew by 13 % to Rs.31.67Crores from Rs.28.04 Crores in the previous year. Afterproviding Rs.10.62 Crores for tax, Net Profit is Rs.21.05Crores, an increase of 14.15% over the previous year.Earnings per share works out to Rs.1.36 compared toRs.1.21 for the previous year.
The Company continued with its strategy of growth andinvested in and expanded the ground presence to 392offices, thus adding 37 offices during the year.
The performance of the Company and its subsidiaries, itsbusiness activities have been comprehensively covered inthe Management Discussion and Analysis Report.
Dividend
Considering the good results, the Directors, at the BoardMeeting held on 27th January 2007, declared an interimdividend of 40% (total dividend in the previous year is 40%)for the year 2006-07. The Board do not recommend anyfinal dividend.
The total cash outgo on account of dividend and tax thereonamounts to Rs.6.94 Crores.
Sub-division And Alteration of Capital
During the year, your Company had sub-divided its equityshares from Rs.10/- each to Re.1/- each. Your Companyhad also cancelled its authorised preference share capitalof Rs.5 Crores and increased the authorised equity sharecapital from Rs.20 Crores to Rs.25 Crores during the year.
Change In The Name of The Company
We are pleased to inform you that the name of theCompany is proposed to change to ‘Geojit BNP ParibasFinancial Services Limited’ subject to necessary statutoryapprovals. The necessary resolution for seeking theapproval of the members for the change of name isproposed in the Notice of ensuing Annual General Meeting.
Directors
Sheikh Sultan Bin Saud Al Qassemi, an independentDirector on the Board resigned during the year underreview. The Board of Directors places on record its sincereappreciation for the valuable services rendered by himduring his tenure.
In accordance with the requirements of the Companies Act,1956, and the Company’s Articles of Association,Shri. A.P.Kurian and Shri. Punnoose George retire byrotation and being eligible have offered themselves forre-appointment. The necessary disclosures as requiredunder Clause 49 VI of the Listing Agreement entered intowith the Stock Exchanges are provided in the CorporateGovernance Report forming part of this Report as well as inthe notice of the ensuing Annual General Meeting beingsent to the shareholders along with the Annual Report.
Consolidated Financial Statements
The Consolidated Financial Results represent those ofGeojit Financial Services Limited, its wholly ownedsubsidiary, Geojit Commodities Limited, its AssociateCompany, Geojit Credits Private Limited and its jointventure, Barjeel Geojit Securities L.L.C., prepared inaccordance with the relevant accounting standards issuedby the Institute of Chartered Accountants of India.
Your Company has recorded a consolidated total incomeof Rs.136.11 Crores for the year ended 31st March 2007 ascompared to Rs.101.96 Crores in the previous financial year.Consolidated net profit after tax of the Group increased toRs.25.21Crores from Rs.22.71 Crores, an increase of 11%over the previous year.
For the year ended31st March 2006
7
Subsidiary Companies, Associate Company & JointVenture
For the Financial Year ended 31st March 2007, theCompany’s subsidiaries, on an aggregate basis, havesignificantly improved on their financial performance andprofitability.
Total revenue of Geojit Commodities Limited, a whollyowned subsidiary, increased to Rs.23.90 Crores fromRs.10.11 Crores in the previous period, a growth of 136%.The Profit After Tax increased by 142% from Rs.1.88 Croreto Rs.4.57 Crores in the current period. The Company is amember of National Commodities and DerivativesExchange of India Limited, Multi Commodities Exchange ofIndia Limited and National Multi Commodities Exchange ofIndia Limited.
Total revenue of Geojit Credits Private Limited, anassociate company engaged in non banking financialactivities, increased to Rs.3 Crores from Rs.1.16 Crores inthe previous period, a growth of 158%. The Profit After Taxincreased by 183% from Rs.57.12 Lacs to Rs.161.76 Lacsin the current period. Geojit Credits Private Limited hasbecome a subsidiary of the Company during April 2007, byway of acquisition of additional shares upto 51%.
The revenue from software business of GeojitTechnologies Private Limited, a step down subsidiary, grewby 128% to Rs.195.70 Lacs from Rs.85.98 Lacs in theprevious year. The Company recorded a net profit after taxof Rs.1.16 Lacs in the previous year.
Another step down subsidiary viz, Geojit FinancialDistribution Private Limited has recorded a net profit ofRs.32.81 Lacs, an increase of 399% over the previous year.
The Audited Statement of Accounts for the period ended31st March 2007 of all these subsidiaries together with theReport of Directors and Auditors are attached as requiredby the provisions of section 212 of the Companies Act, 1956.
Barjeel Geojit Securities L.L.C., a joint venture in Dubaireturned excellent performance and has recorded a NetProfit of Rs.6.59 Crores during the previous year.
Change of Management – Entry of BNP Paribas
The Financial year 2006-07 was spent convertingaspiration of going global, a reality. After obtaining theapproval of members at the Extra- Ordinary GeneralMeeting held on 22nd November 2006 and other statutoryapprovals, the Board of Directors of the Company, at itsmeeting held on 13th March, 2007, allotted 5,68,04,870Equity Shares of Re.1/- each at a premium of Rs.25/- pershare and 2,28,26,300 Warrants convertible into EquityShares of Re.1/- each at a price of Rs.26/- per Warrant toBNP Paribas S.A. With this investment, BNP Paribas
became the single largest shareholder in the Company with27.18 % of the paid up equity share capital of the Company(after conversion of warrants, assuming full conversion, theshareholding of BNP Paribas will become 33.50%).
BNP Paribas is the sixth most admired global bankingbrand and operates in over 85 countries. This oldestforeign bank in India is the 17th largest company in theworld with Euro 27.9 billion revenue for 2006. A newwindow of opportunity has opened with the entry of BNPParibas.
This additional capital is proposed to be utilised forexpansion of business in India and the Middle East. “GeojitBNP Paribas” will be able to combine the expanding branchnetwork, technology and management capabilities with thebrand image, international experience and product profileof BNP Paribas.
In connection with the above mentioned investment, theCompany has entered into a Share SubscriptionAgreement and Shareholders’ Agreement) with theInvestor and Current Promoters. As per the saidShareholders Agreement, BNP Paribas made an OpenOffer to the shareholders of the Company to acquire upto20% of the post preferential allotment equity share capitalin compliance with the SEBI (Substantial Acquisition ofShares and Takeovers) Regulations, 1997. The Open Offerwas made in March 2007 at a price of Rs.27.50 per share.
New Developments
Aloula Geojit Brokerage Company, the joint venture with AlJohar Group in Saudi Arabia received the license fromCapital Market Authority, the licensing authority for brokingoperations in Saudi Arabia to start broking operations. ThisJoint Venture will invest an initial capital of SR 100 Million(Approx. Rs.120 Crores) in the project and is targeting a10% market share in Saudi Arabia, which is the 3rd largestcapital market in the world. It is the first time that an IndianStock Broking Company is going to do business for thelocal population in a foreign country. The Companyproposes to invest in upto 30% of the share capital and willalso manage the operations of this joint venture.
Awards And Recognitions
Bombay Stock Exchange Limited included Geojit’s sharesin the BSE 500 list in December 2006. This indexrepresents all 20 major industries of the Indian economy.
Depository System
As the members are aware, your Company’s shares aretradable compulsorily in electronic form and your Companyhas established connectivity with both the Depositories i.e.,National Securities Depository Limited and CentralDepository Services (India) Limited.
8
13 thANNUAL REPORT
In view of the numerous advantages offered by theDepository System, members are requested to avail of thefacility of dematerialisation of the Company’s shares oneither of the Depositories aforesaid. 98% of the shares ofthe Company are in dematerialised form as on date.
Insurance
The properties of the Company are adequately insured.The Company has also taken Brokers Indemnity Insuranceto cover the exposure arising from operations.
Fixed Deposits
Your company has not accepted any fixed deposits fromthe public. As such, no amount of principle or interest isoutstanding as of the balance sheet date.
Human Resource Management
The Company is strengthening its human resources in tunewith its growth plans. Education and training inputs arespecifically designed and imparted based on organisationalobjectives and individual development and performanceneeds. Harmonious employee relations continued toprevail in the Company. The number of employees hasgrown beyond 2000 during the year.
Social Responsibility
The Company has been actively involved in supportingvarious social organisations for the welfare activitiesundertaken by them. During 2006-07, the Company joinedhands with ‘Rajagiri – Community Aided SponsorshipProgramme’ to extend educational support to underprivileged children of two selected panchayaths in Kerala.The Scheme takes a holistic view and supports the wellbeing of the students’ families also. The Company has beenconducting investor awareness programmes with anobjective of enhancing the investor base in the country andto encourage the common man to reap the benefits of thecapital market. In the previous year we have appointed 28fulltime trained teachers who conducted 1950 suchprogrammes for higher secondary and college students,which covered 515 Institutions and 89,000 students.
ESOP
Details of the shares issued under ESOP 2005, as also thedisclosures in compliance with Clause 12 of the SEBI(Employees Stock Options Scheme and Employees StockPurchase Scheme) Guidelines, 1999 are set out inAnnexure I to this Report.
Particulars of Employees
Information as per Section 217 (2A) of the Companies Act,1956, read with the Company’s (Particulars of Employees)Rules, 1975 is annexed (Annexure II) and forms part of thisReport.
Directors Responsibility Statement
As required under Section 217 (2AA) of the Companies Act,1956, your Directors confirm having :
a) followed in preparation of the Annual Accounts, theapplicable standards with proper explanation relatingto material departures, where applicable;
b) selected such accounting policies and applied themconsistently and made judgements and estimates thatare reasonable and prudent so as to give a true and fairview of the state of affairs of your Company at the end ofthe financial year and of the profit of your Company forthat period;
c) taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with theprovisions of the Companies Act, 1956 for safeguardingthe assets of your Company and for preventing anddetecting fraud and other irregularities; and
d) Prepared the Annual Accounts on a going concernbasis.
Conservation of Energy, Technology Absorption,Foreign Exchange Earnings and Outgo
The Company has nothing to report in respect ofinformation on conservation of energy and technologyabsorption as required under section 217(1) of theCompanies Act, 1956 read with Companies (Disclosure ofParticulars in the Report of Board of Directors) Rules, 1988since the Company is not engaged in manufacturing orprocessing business. The details regarding foreignexchange earnings and outgo are given as Annexure III tothis report.
Corporate Governance
Your Company has complied with the CorporateGovernance norms as stipulated under the provisions ofthe Listing Agreement entered into with the StockExchanges. A detailed Report on Corporate Governance isgiven as Annexure IV to this Report. A certificate ofStatutory Auditor confirming compliance of the CorporateGovernance requirements by the Company is attached tothe Report on Corporate Governance.
Management Discussion And Analysis Report
A detailed review of operations, performance and futureoutlook of the Company is given separately under the headManagement Discussion and Analysis Report appendedhereto.
Auditors
M/s. Deloitte Haskins & Sells, Chartered Accountants wereappointed as statutory auditors of your company to conductthe audit of accounts for the year ended 31st March 2007.
9
Place : MumbaiDate : 19th May, 2007
A.P. KurianChairman
Their term of appointment expires at the conclusion of theforthcoming annual general meeting. Your Directors haveproposed them for reappointment at the forthcoming AGM.
Acknowledgements
Your Directors are grateful for the co-operation and unstinedsupport from KSIDC, Reserve Bank of India and ourBankers, Securities and Exchange Board of India & other
Regulatory authorities, State Government and CentralGovernment, our clients and business partners. We lookforward to receiving their continued support andencouragement. The Board of Directors wishes to expressits gratitude and record its sincere appreciation of thededicated efforts and commitment of all the employees. TheDirectors are thankful to the esteemed shareholders for theirsupport and the confidence reposed in the Company.
For and on behalf of the Board of Directors
10
13 thANNUAL REPORT
ANNEXURE TO THE DIRECTORS’ REPORT 2007
Annexure I
Disclosure pursuant to the provisions of Securities and Exchange Board of India (Employee Stock Option Schemeand Employee Stock Purchase Scheme) Guidelines, 1999 in respect of Employee Stock Option Plan 2005 (ESOP2005)
Sl. Particulars ESOP 2005No. (Granted during 2005-06)
1 Options granted 69,89,400 options representing equal number of shares.
2 The pricing formula. As per Note 1
3 Options vested upto 31.03.2007. Nil
4 Options exercised upto 31.03.2007. Nil
5 The total number of shares arisingas a result of exercise of option. NA
6 Options lapsed (as at March 31, 2007) 5,89,500
7 Variation of terms of options. The Compensation Committee, at its meeting held on 18.05.2006,decided to amend the Plan to remove the lock-in period, thatwas applicable earlier. Approval of the members has beenobtained for the same at the Annual General Meeting held on31.08.2006. The Compensation Committee has also adjustedthe number and price of options to give effect to the sub-divisionof face value of shares, at its meeting held on 27.10.2006.
8 Money realised by exercise of options. NA
9 Total number of options in force as at 31.03.2007. 63,99,900
10 Employee wise details of options granted to :-(i) senior managerial personnel including Directors. As per Note 2
(ii) any other employee who receives a grant in any oneyear of option amounting to 5% or more of optiongranted during that year. Nil
(iii) Identified employees who were granted option,during any one year, equal to or exceeding 1% ofthe issued capital (excluding outstanding warrants andconversions) of the Company at the time of grant. Nil
11 Diluted Earnings Per Share (EPS) pursuant to issueof shares on exercise of option calculated in accordancewith Accounting Standard (AS) 20 – Earnings per share. Rs.1.29
12 (i) Method of calculation of employee compensation cost. The Company has calculated the employee compensation costusing the intrinsic value method of accounting to account foroptions issued under the ESOP 2005 Plan.
(ii) Difference between the employee compensation costso computed at (i) above and the employee compensationcost that shall have been recognised if it had usedthe fair value of the options. Rs. 109.66 Lacs (decrease)
(iii) Identified employees who were granted option, duringany one year, equal to or exceeding 1% of the issuedcapital (excluding outstanding warrants andconversions) of the Company at the time of grant.
(ii) any other employee who receives a grant in any oneyear of option amounting to 5% or more of option grantedduring that year.
Diluted Earnings Per Share (EPS) pursuant to issue ofshares on exercise of option calculated in accordancewith Accounting Standard (AS) 20 – Earnings per share.
ii) Difference between the employee compensation costso computed at (i) above and the employeecompensation cost that shall have been recognised ifit had used the fair value of the options.
11
(iii) The impact of this difference on profits Profit After Tax as reported Rs. 2105.41 Lacsand on EPS of the Company. Add Intrinsic Value Compensation Cost Rs. 40.61 Lacs
Less Fair value Compensation Cost Rs. 150.27 Lacs (Black Scholes Model)Adjusted Profit After Tax Rs. 1995.75 Lacs
Earnings per share (Basic)As reported Rs.1.36As adjusted Rs.1.29
Earnings per share (Diluted)
As reported Rs.1.34As adjusted Rs.1.27
13 (i) weighted average exercise price of options For options issued to Directors Rs. 18.86Managers & above Rs. 17.75Other employees Rs. 17.94
(ii) weighted average fair values of options For options issued to Directors Rs. 6.25Managers & above Rs. 6.28Other employees Rs. 6.30
14 Fair value of options based on Black Scholesmethodology – Assumptions used :(i) risk –free interest rate 6.00%
(ii) expected life of options 2 to 4 years
(iii) expected volatility 199%
(iv) expected dividends 35%
(v) Closing market price of share on the date of option grant Rs.19.86
Note 1 : ESOP 2005 – Eligibility criteria and Pricing formula
(a) Eligibility Criteria and No. of options :
Independent Directors holding less than 10 % of the equity and Employees of the Company and its subsidiaries as on 31st
Dec.2005.
(b) The pricing formula :
The exercise price is determined on the basis of the market price prior to the date of the meeting of the Board of Directorsgranting the options. Discount on market price to be offered, subject to the price not going below the face value of Re.1, asbelow:
Options
Option for 2000 shares for each year of completedservice
Option for number of shares equal to 10% of theirannual direct salary (excluding incentives) roundedoff to he nearest hundred.
Option for 60000 shares each
Criteria
1. All employees who have put in not lessthan 2 years as on 31-12-2005
2. All employees in Salary Group I(Managers) and above irrespective of theirservice duration
3. Eligible Directors
(iii) The impact of this difference on profits and on EPSof the Company.
12
13 thANNUAL REPORT
Name Designation No. of options granted
Mr.A.P.Kurian Non-executive Chairman 60000
Mr.P.C.Cyriac Non-executive Director 60000Mr.Mahesh Vyas Non-executive Director 60000Mr.Punnoose George Non-executive Director 60000Mr.Satish Menon Chief Operating Officer 80900Mr.A.Balakrishnan Chief Technology Officer 80500Mr.Binoy Varghese Samuel Chief Financial Officer 60600Mrs.Jaya Jacob Alaxander Chief Human Resources 43700
The number and price of stock options, discount offered, fair value of options and market price of shares wherever itappears, were adjusted to show the effect of sub-division of equity shares from Rs.10 per equity share to Re.1 per equityshare w.e.f. 26.09.2006.
Annexure II
STATEMENT PURSUANT TO SECTION 217 (2A) OF THE COMPANIES ACT, 1956 READ WITH COMPANIES(PARTICULARS OF EMPLOYEES) RULES, 1975, AND FORMING PART OF THE DIRECTORS REPORT FOR THEPERIOD ENDED THE 31ST MARCH, 2007.
Name andQualification
Mr.C.J.George,M.Com., CFP
Age inyears
48
Designation
Managing Director
Remunerationreceived
Rs.57,05,679/-
Date ofEmployment
24.11.1994
Last Employment
Proprietor, Geojit & Co.
Annexure III
STATEMENT OF FOREIGN EXCHANGE EARNING AND OUTGO
Particulars 2006-07 2005-06
Foreign Exchange Earnings Rs.1,50,75,377/- NIL
Foreign Exchange Outgo Rs.47,96,429/- Rs.85,35,477/-
For Criteria 1 :
Managers & above - 20 paise for each year of completed serviceJr. Executives to AM - 40 paise for each year of completed serviceOffice Assistants & others - 50 paise for each year of completed service
For Criteria 2 & 3 :
Directors - Re.1.00
GM & above - Re.1.50
SM to AGM - Re.2.00
Managers - Re.2.50
Note 2 : Options granted to Directors & Senior Managerial Personnel under ESOP 2005
13
Annexure IV
CORPORATE GOVERNANCE REPORT(Pursuant to Clause 49 of the Listing Agreement)
1. COMPANY’S PHILOSOPHY ON CORPORATE GOVERNANCE
The basic philosophy of Corporate Governance at ‘Geojit’ is to achieve business excellence and to create andenhance the value for its Stakeholders, Customers, Employees and Business Associates and thereby to make asignificant contribution to the Economy. The Company endeavours to achieve the highest levels of transparency,accountability, integrity and responsibility by following the best practices in Corporate Governance.
2. BOARD OF DIRECTORS
The Board of Directors comprises 1 Executive and 7 Non-executive Directors of which 4 are Independent. Except forthe Managing Director and the Nominee Director, all other directors are liable to retire by rotation as per the provisionsof the Companies Act, 1956.
During the year ended 31st March 2007, 7 Board Meetings were held on 18.05.2006, 29.07.2006, 22.10.2006,28.10.2006, 27.01.2007, 10.03.2007 & 13.03.2007.
The composition of the Board of Directors and their attendance at the Board Meetings during the year and at the lastAnnual General Meeting as also the number of other directorships and memberships of committees are given below:
C: Chairman; NED : Non-Executive Director; I : Independent Director; MD : Managing Director; ND : NomineeDirector; P : Promoter
Sheikh Sultan Bin Saud Al Qassemi, a Non- executive Independent Director resigned from the Board with effect from10th October, 2006. He had not attended any Board Meeting during the previous year.
Other Directorships do not include Alternate Directorships, Directorships of Private Limited Companies which areneither a subsidiary nor a holding company of a Public Company, Companies under Section 25 of the CompaniesAct, 1956 and of companies incorporated outside India.
Chairmanship / Membership of Board Committees include Chairmanship / Membership of Audit Committee andShareholders’ / Investors’ Grievance Committee only as clarified by SEBI. The Membership / Chairmanship ofBoard Committees of Private Limited Companies, Foreign Companies and Companies under Section 25 of theCompanies Act, 1956 are excluded for the purpose.
Mr.A.P.Kurian C, NED & I 3,02,000 6 Yes 4 4 Nil
Mr.C.J.George MD & P 4,06,06,760 6 Yes 4 Nil Nil
Mr.Jiji Thomson ND & NED Nil 4 No 1 Nil Nil
Mr.P.C.Cyriac NED & I Nil 7 No 3 1 Nil
Mr.Mahesh Vyas NED & I Nil 2 No Nil Nil Nil
Mr.Rakesh Jhunjhunwala NED 1,80,00,000 1 No 11 1 Nil
Mr.R.Bupathy NED & I Nil 6 Yes Nil Nil Nil
Mr.Punnoose George NED 90,60,000 7 Yes Nil Nil Nil
Name of Director Category Number of sharesheld in theCompany
Attendance at Directorships and Chairmanship /Membership of Board Committees inOther Companies as on 31.03.2007
BoardMeetings
Last AGM Director CommitteeMember
CommitteeChairman
14
13 thANNUAL REPORT
Reappointment of Directors
The Directors, Mr. A.P. Kurian and Mr. Punnoose George shall retire by rotation at the ensuing Annual GeneralMeeting and are eligible for reappointment. The brief resumes and information relating to these directors as requiredunder clause 49 of listing agreement with the Stock Exchanges is furnished as part of the Notice convening theAnnual General Meeting.
3. AUDIT COMMITTEE
The Company’s Audit Committee consists of three Non–Executive and Independent Directors and one Non-ExecutiveDirector. The qualification of the members of the Committee, its composition and terms of reference are as per therequirements of Clause 49 of the Listing Agreement. The Chairman of the Audit Committee, Mr.R.Bupathy hasexpert knowledge of finance and accounting.
During the year ended 31st March 2007, the Committee met 4 times on 17.05.2006, 28.07.2006, 27.10.2006 &26.01.2007.
The Audit Committee Meetings are attended by invitation by the Managing Director, Chief Operating Officer, ChiefFinancial Officer and Representative of the Statutory Auditors. The Company Secretary acts as the Secretary of theAudit Committee.
Name of Members of Audit Committee Designation No. of meeting attended
Mr.R.Bupathy Chairman, Non – Executive &Independent Director 4
Mr.Jiji Thomson Member & Non – Executive Director 3
Mr.Mahesh Vyas Member, Non – Executive &Independent Director Nil
Mr.P.C.Cyriac Member, Non – Executive &Independent Director 4
4. REMUNERATION COMMITTEE
The company has not constituted the Remuneration Committee, as it is a non-mandatory item. The Committee willbe constituted as and when the requirement arises.
Remuneration to Managing Director
The remuneration structure of the Managing Director comprises of salary, commission, perquisites and allowances,contribution to Provident Fund and Gratuity. The service contract is for a period of 5 years w.e.f.24.11.2004.
The details of remuneration paid / payable to the Managing Director for the year 2006-07 is given below –
a) Salaries - Rs. 13,65,000b) Perquisites - Rs. 6,679c) Commission - Rs. 43,34,000d) Stock option - Nil
Remuneration to Non-Executive Directors
The Non-Executive Directors do not draw any remuneration from the Company except sitting fees which were paidat the rate of Rs.5,000/- for each meeting of the Board / Committee of the Board attended by them. The sitting fee forattending the Audit Committee meeting was enhanced to Rs.10,000/- for each meeting, by the Board at its meetingheld on 18.05.2006, effective from next meeting. The total amount of sitting fees paid during the period was Rs.2,85,000as follows –
15
Mr.A.P.Kurian 60000 30,000 NA NA
Mr.Jiji Thomson Nil 20,000 30,000 NA
Mr.P.C.Cyriac 60000 35,000 35,000 10,000
Mr.Mahesh Vyas 60000 10,000 NA NA
Mr.Rakesh Jhunjhunwala Nil 5,000 NA NA
Mr.R.Bupathy Nil 30,000 35,000 10,000
Mr.Punnoose George 60000 35,000 NA NA
Name of Director No. of Stock Optionsgranted underESOP 2005*
For Board Meeting For AuditCommittee Meeting
For EmployeeCompensation
Committee Meeting
Details of sitting fee paid (In Rs.)
* These stock options were granted during the year 2005-06 at a discount of Rs.10/- on the market price prevailingon the day before the date of grant. The options vest over a period of 4 years and can be exercised before the expiryof 5 years from the date of grant, based on continued directorship with the Company. The number of Stock Optionsgranted were adjusted to reflect the sub-division of equity shares with effect from 26.09.2006.
5. SHAREHOLDERS / INVESTORS GRIEVANCE COMMITTEE
The Investors Grievance Committee reviews and redresses shareholder grievances / complaints. The Committeeoversees the performance of the Registrars and Share Transfer Agents and recommends measures for overallimprovement of the quality of investor services. The members of the Committee are Mr. P.C.Cyriac, Non – Executive& Independent Director, Chairman of the Committee and Mr.Punnoose George, Non – Executive Director. There areno pending legal cases, where claims have been made against the company. Mr. T. Jayaraj, Company Secretary,acts as the Secretary to the Committee and as the Compliance Officer.
Given below is the position of investor queries / complaints and other correspondences received and attended toduring 2006-07 :
Nature of complaints / queries No. of complaints
For non-receipt of dividend, shares lodged for transfer, issue of duplicate share certificates. 9
Queries / Complaints redressed 9
Pending queries / complaints as on 31.03.2007 Nil
Other letters received from shareholders and replied 65
Every letter received from the investors is replied generally within one week of receipt unless the issues involvedrequire investigation or looking into very old records to be retrieved from godowns or information is to be obtainedfrom banks or others.
The shares of the Company are traded in dematerialised form. A table showing the requests received fordematerialisation / transfer during 2006-07 is given below –
Transfers Demats
No. of requests No. of shares No. of requests No. of shares
Lodged 43 55800 89 215500
Processed 34 38900 78 201800
Objections 9 14000 11 13700
Pending as on 31.03.2007 Nil Nil Nil Nil
16
13 thANNUAL REPORT
6. GENERAL BODY MEETINGS
The last three Annual General Meetings of the Company were held as under :
Year Location Date Time No. of Special Resolutionsapproved at the AGM
2003-04 Hotel International, Veekshanam Road, Cochin - 35 14.08.2004 10.00 a.m. 2
2004-05 -do- 29.07.2005 10.00 a.m. 1
2005-06 -do- 31.08.2006 10.00 a.m. 3
During the year 2006-2007, two Extra- Ordinary General Meetings were held on 22nd November 2006 and 29th
January 2007 at Hotel International, Veekshanam Road, Cochin – 35 at 10.00 a.m. for the following purposes –
Resolutions passed at the meeting
22.11.2006 Special resolution under section 81(1A) of the Companies Act, 1956 to issue 5,68,04,870Equity shares and 2,28,26,300 Warrants convertible into Equity Shares of Re.1 each to BNPParibas S.A. on preferential basis at a price of RS.26 each per share and warrant.
29.01.2007 Special Resolution to alter the Capital clause of the Memorandum of Association of theCompany i.e., to cancel the unissued Preference Share Capital of Rs.5 Crores and to increasethe Authorised Equity Share Capital from Rs.20 Crores to Rs.25 Crores.
Date of ExtraOrdinary General
Meeting
No special resolutions were put through postal ballot during the last year and at the forthcoming Annual GeneralMeeting there is no item on the agenda that needs approval by Postal Ballot, as required under the provisions ofSection 192 A of the Companies Act, 1956.
7. DISCLOSURES
Related party disclosures are provided in Note 20 to the Notes forming part of the accounts in accordance with theprovisions of Accounting Standard 18 – “Related Party Disclosures” issued by the Institute of Chartered Accountantsof India.
In the opinion of the Board, the transactions entered into by the Company with the related parties were not in conflictwith the interest of the Company.
No penalties or strictures were imposed by Stock Exchanges or SEBI or any other statutory authority on the companyin any matter related to capital markets during the last three years.
Non-mandatory disclosures are not being complied with for the time being.
Code of Conduct:
The Company has posted the Code of Conduct for Directors and Senior Management on its website.
CEO / CFO Certification :
Mr.C.J.George, Managing Director and Mr.Binoy Varghese Samuel, Chief Financial Officer have given CEO/CFOCertificate to the Board. The Board noted the said CEO/CFO certificate, as per the format given under clause 49(v),at its meeting held on 19th May, 2007.
8. MEANS OF COMMUNICATION
The quarterly, half-yearly and annual results are published in ‘Economic Times/BusinessLine’ and ‘Deepika’. Theresults are also posted on the web site of the company viz. www.geojit.com and also on the Electronic DataInformation Filing and Retrieval (EDIFAR) web site viz, www.sebiedifar.nic.in, maintained by SEBI. The company’sweb site also displays all official news releases as well as the presentation made to the institutional investors /analysts, if any.
17
9. GENERAL SHAREHOLDERS’ INFORMATION
Annual General Meeting
Date and time : 29th June 2007 - 10.00. a.m.
Venue : Hotel International,Veekshanam Road, Cochin – 682 035.
Financial Calendar 2007-08
The company follows April – March as the Financial Year. The results of every quarter beginning from 1st April aredeclared in the month following the quarter and in respect of last quarter, within 2 months from the end of the quarter.
Code of Insider Trading
The Company has adopted and implemented a Code of Conduct pursuant to SEBI (Prohibition of Insider Trading)Regulations,1992. The Code lays down the guidelines, which include procedures to be followed and disclosures tobe made by the Insiders, Directors, Officers and Designated Employees while dealing in shares of the Company.
Dates of book closure : 27th June 2007 to 29th June 2007(Both days inclusive)
Listing on Stock Exchange : Bombay Stock Exchange Limited & National Stock Exchange of India Limited
Stock Code : GEOJIT (NSE) & 532285 (BSE)
Demat ISIN Number : INE007B01023
Market Price data : Market price of the equity shares of the Company during 2006-07 is given in thetable below:
NSE BSE
High (Rs.) Low (Rs.) High (Rs.) Low (Rs.)
April 2006 26.29 20.09 26.30 20.05
May 2006 26.50 18.70 26.30 19.50
June 2006 21.04 15.50 21.15 14.10
July 2006 19.59 15.97 19.90 16.00
August 2006 23.60 18.12 22.75 18.50
September 2006 29.00 20.00 29.70 19.90
October 2006 31.55 24.20 31.55 24.25
November 2006 30.60 26.70 30.40 26.30
December 2006 36.45 26.65 36.50 27.50
January 2007 42.65 34.15 42.65 34.00
February 2007 42.40 34.60 42.60 34.50
March 2007 39.00 30.90 39.95 30.10
18
13 thANNUAL REPORT
Distribution of shareholding as on 31.03.2007, pursuant to clause 35 of the Listing Agreement is as under :
Shareholding of nominal value of Rs. No. of Shareholders % of Shareholders Amount of Share Capital in Rs. % of Shareholding
Upto 5,000 14535 94.99 97,41,430 4.66
5,001 – 10,000 339 2.22 26,54,735 1.27
10,001 – 20,000 192 1.25 29,44,884 1.41
20,001 – 30,000 58 0.38 14,57,645 0.70
30,001 – 40,000 52 0.34 19,68,113 0.94
40,001 – 50,000 10 0.07 4,58,782 0.22
50,001 – 1,00,000 50 0.33 35,51,992 1.70
1,00,001 and above 65 0.42 18,62,13,289 89.10
Total 15301 100.00 20,89,90,870 100.00
Share Price performance compared with broad based indices:
Registrar and Transfer Agents : S.K.D.C. Consultants Limited, P.B.No.2979, No.11, SethNarayandoss Layout, Street No.1(West Power HouseRoad), Coimbatore – 641 012
Share Transfer System : Application for transfer of shares held in physical formare received at the office of the Registrars and ShareTransfer Agents of the company. The share certificates inphysical format are returned within a period of 10 to 15days from the date of receipt, subject to the documentsbeing valid and complete in all respects. Shares held indematerialised form are electronically traded and theRegistrars and Share Transfer Agents of the Companyperiodically receive from the Depository, the beneficiaryholdings so as to enable them to update their records.Physical shares received for dematerialisation areprocessed and completed within a period of 15 days fromthe date of receipt, provided they are in order in everyrespect.
19
Distribution of the shareholding on the basis of categories of shareholders as on 31.03.2007 is as under:
(A) Shareholding of Promoter and Promoter Group
(1) Indian
(a) Individuals 2 4,86,06,760 23.26
(b) Bodies Corporate 1 2,00,00,000 9.57
Sub-Total (A)(1) 3 6,86,06,760 32.83
(2) Foreign
(a) Bodies Corporate 1 5,68,04,870 27.18
Sub-Total (A)(2) 1 5,68,04,870 27.18
Total shareholding of Promoter and Promoter 4 12,54,11,630 60.01Group (A) =(A)(1)+(A)(2)
(B) Public Shareholding
(1) Institutions
(a) Mutual Funds 3 57,26,924 2.74
(b) Foreign Institutional Investors 2 39,72,650 1.90
Sub-Total (B)(1) 5 96,99,574 4.64
(2) Non-Institutions
(a) Bodies Corporate 353 97,71,716 4.68
(b) Individuals
i. Individual shareholders holding 14355 1,84,54,919 8.83 nominal share capital upto Rs.1 Lakh.
ii. Individual shareholders holding 28 84,31,232 4.03 nominal share capital in excess of Rs.1 Lakh.
(c) Directors & their relatives 5 2,93,62,000 14.05
(d) Non resident Indians 415 71,19,510 3.41
(e) Clearing members 39 3,91,921 0.19
(f) Hindu undivided families 97 3,48,368 0.17
Sub-Total (B)(2) 15292 7,38,79,666 35.35
Total Public Shareholding (B)=(B)(1)+(B)(2) 15297 8,35,79,240 39.99
TOTAL (A) +(B) 15301 20,89,90,870 100.00
CategoryCode
Category of shareholder Percentage tototal shares
Total no. ofshares
No. ofshareholders
Dematerialisation of shares and liquidity : More than 98% of the Company’s paid-up equity sharecapital has been dematerialised as on date. Trading inequity shares of the company is permitted only indematerialised form.
Outstanding ADRs / GDRs / Warrants and :convertible instruments, conversion dateand likely impact on equity.
2,28,26,300 Warrants convertible into Equity Shares ofRe.1/- each were pending convertion as on 31st March2007, which was allotted to BNP Paribas during the year2006-07. These warrants are convertible within a period of18 months from the date of allotment ie. on or before12th September 2008, at the option of the allottee.
20
13 thANNUAL REPORT
Investor Correspondence : For any assistance regarding dematerialisation of shares,share transfers, transmission, change of address, non-receipt of dividend or any other query relating to shares orfor any generation correspondence, contact:
1) S.K.D.C. Consultants LimitedP.B.No.2979, No.7, Seth Narayandoss Layout,Street No.1, West Power House Road,Coimbatore - 641 012Tel: 0422 - 5549995, Fax : 0422 - 2499574Email : [email protected]
2) Mr.T. JayarajCompany Secretary,Geojit Financial Services Limited,5th Floor, Finance Towers, Kaloor,Cochin – 682 017.Tel: 0484-2405501/02 Fax : 0484 - 2405618Email : [email protected] toll free Helpline No: 1800 4255501
DECLARATION ON CODE OF CONDUCT
As required by Clause 49 (ID) of the Listing Agreement, it is hereby affirmed that all the Board members and SeniorManagement personnel have complied with the Code of Conduct of the Company.
Place : Kochi C.J.George Date : 19th May, 2007 Managing Director
CERTIFICATE
TO THE MEMBERS OF
GEOJIT FINANCIAL SERVICES LIMITED
We have examined the compliance of conditions of corporate governance by Geojit Financial Services Limited for theyear ended on 31st March, 2007, as stipulated in clause 49 of the Listing Agreement of the said company with stockexchange(s).
The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination waslimited to a review of the procedures and implementation thereof, adopted by the Company for ensuring compliance ofthe conditions of Corporate Governance as stipulated in the said clause. It is neither an audit nor an expression ofopinion on the financial statements of the Company.
In our opinion, and to the best of our information and according to the explanations given to us and the representationsmade by the directors and management, we certify that the Company has complied with the conditions of CorporateGovernance as stipulated in Clause 49 of the above mentioned Listing Agreement.
We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiencyor effectiveness with which the management has conducted the affairs of the Company.
For Deloittee Haskins & Sells Chartered Accountant
M. RamachandranPlace : Kochi PartnerDate : 21st May, 2007 Membership No.16399
21
In economic terms 2006-07 was a remarkable year. Thestock market indices surpassed all expectations, achievingone all time high after another. Global investor interest inemerging markets like India, in particular listed equities,reached unprecedented levels. The Indian Stock Markethas been witnessing a sustained upward movement in thelast few years. The momentum has been particularly strongduring the last 2 financial years. Some of the positivefactors are robust growth in corporate earnings, relativelyattractive valuation and a widely perceived positive outlookon India. The mutual fund industry also attracted very largeinflows. The financial services industry also benefited fromthe buoyant economic conditions in the last year. And yetthere was a feeling of uneasiness about all of this aspositive developments are counter balanced by a growinginflation rate, which reached the highest level during theend of the year. However the situation was improvedtowards the end of April 2007.
The growth curve of Indian Economy provides a strongfoundation for sustainable growth across our businesssegments. Each of our business areas is moving in the rightdirection and we believe we are set for a continued growth.
Review of operations
a) Brokerage services
Brokerage revenue of the Company was Rs.87.83 Croresduring the year. This is higher by 20% compared to theprevious year. Significant improvement was made in thevolume of online trading. The revenue from online tradingincreased significantly. The number of internet clientsincreased from 9207 to 17487, an increase of 90%. Inaddition to increasing the office network in South India, wehave added a significant number of offices during the yearin the other parts of the Country.
b) Depository operations
Depository operations contributed revenue of Rs.5.80 Croresduring the year. The number of depository accountsincreased to 2,24,680 accounts as at the end of the yearcompared to 1,95,100 accounts in the previous year. Thevalue of holdings maintained by us at the end of the yearwas almost Rs.4500 Cr.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
c) Distribution of financial products
Sensing the big growth in demand for mutual funds andinsurance products, the Company had increasedsignificantly the number of employees for doing thedistribution business. Hightened business volumes in themutual funds market increased the revenue fromdistribution services. The revenue from distribution ofMutual Funds and IPOs increased to Rs.6.27 Crores duringthe year from Rs.4.94 Crores during the previous year.Another encouraging development is the growth in LifeInsurance agency business. Going forward, we seesignificant potential for adding clients and generatingrevenues from this activity.
d) Portfolio Management Services
The assets under management increased to more thanRs.50 Crores. We have earned an amount of Rs.2.08 Croresfrom management fees, an increase of 30% over theprevious year.
e) Overseas operations
Our joint venture in UAE, Barjeel Geojit Securities,continued to return excellent performance. They continuedto procure clients for Indian equities. The joint venture wasalso very successful in the mutual fund distributionbusiness. Our share of profits considered for consolidationin the current year’s accounts is Rs.1.97 Crores comparedto Rs.1.77 Crores in the previous year.
f) Commodity futures
Commodity futures trading provided by our wholly ownedsubsidiary, Geojit Commodities Ltd, showed very goodresults with a brokerage revenue of Rs.17.49 Crores (lastyear 8.15 Crores), an increase of 114%. The Companyexpanded the trading terminals from 239 to 308. The numberof clients increased by more than 75% to 15775. Thenumber of products traded also increased to 61 differentcommodities through all the three online commodity futuresexchanges in the country.
22
13 thANNUAL REPORT
Outlook 2007-08
A significant portion of the Company’s income arises frombroking operations, which are largely dependent on theconditions of the stock market. The Stock market showed afurther upsurge, after the significant correction in thebeginning of the period, the sensex has reached to all timehigh levels in the year. Even though there is a revival ofinterest from retail investors, most of them rightly preferredto route their funds through mutual funds. The outlook forthe year 2007 is positive and the most important factor is thecontinuation of global capital inflows in the Indian stockmarkets. With continued strong growth of the economy, yourcompany’s overall performance and operating results areexpected to improve further.
Opportunities & Threats
The Indian Financial Market has a very high growthpotential. The entry of domestic players along with jointventures with International players only confirm thispotential. The macro economic fundamentals are sound toallow the economy to make rapid strides. Economicexpansion will result in greater disposable incomes andlarger number of investors. There is a significant growthopportunity for your Company in this scenario.
The stock broking industry has recently witnessed intensecompetition, falling brokerage rates and the entry of severalbig players. Your company continues to achieve costefficiencies through the application of technology. Howeverwith the infusion of funds and the skill sets of BNP Paribas,we are hopeful that the Company will be able to take theopportunities of the increasing economy.
Risks and Concerns
Market conditions, in particular the performance of theequity markets, contribute substantially to Geojit’s growthand will impact on our ability to repeat or improve on theearnings.
The Capital market industry in which your Company isoperating is subject to extensive regulation. The Companyhas a proper and adequate system of internal controldesigned to ensure regulatory compliances.
Changes in technology may render the Company’s currenttechnologies obsolete or require it to make substantialcapital investments. The Company evaluates thetechnological obsolescence and the associated risk andmakes investment accordingly.
Internal Control Systems
The Company has an adequate system of internal controlsto ensure accuracy of accounting records, compliance withall laws & regulations and compliance with all rules,procedures & guidelines prescribed by the management.An extensive internal audit is carried out by independentfirms of Chartered Accountants. Post audit reviews are alsocarried out to ensure follow up on the observations made.The Audit Committee of the Board reviews the scope of theinternal audit on a regular basis.
Human Resources
The company is making conscious efforts on the humanresources front. The company has been improving the skillset of the employees through various training programs.The company believes in rewarding its employees basedon performance & potential hence the company has beendeclaring incentives to its employees not only as a rewardbut also to ensure commitment through financialmotivation. All employees are encouraged and incentivisedto get themselves certified in relevant industry standardcertifications such as NCFM & AMFI. Majority of theemployees have obtained such certification.
Cautionary Note
Statements in this Report, describing the Company’sobjectives, projections, estimates and expectations mayconstitute “forward looking statements” within the meaningof applicable laws and regulations. Forward lookingstatements are based on certain assumptions andexpectations of future events. These statements are subjectto certain risks and uncertainties. The Company cannotguarantee that these assumptions and expectations areaccurate or will be realised. The actual results may bedifferent from those expressed or implied since theCompany’s operations are affected by the many externaland internal factors, which are beyond the control of themanagement. Hence the Company assumes noresponsibility in respect of forward-looking statements thatmay be amended or modified in future on the basis ofsubsequent developments, information or events.
23
AUDITORS’ REPORT
To the Members ofGeojit Financial Services Limited
1. We have audited the attached Balance Sheet of Geojit Financial Services Limited (“the Company”) as at 31st
March, 2007, the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on thatdate, both annexed thereto. These financial statements are the responsibility of the Company’s management. Ourresponsibility is to express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial statementsare free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amountsand disclosures in the financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by the management, as well as evaluating the overall financial statement presentation.We believe that our audit provides a reasonable basis for our opinion.
3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government of India in termsof Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure, a statement on the matters specifiedin paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:
(a) we have obtained all the information and explanations, which to the best of our knowledge and belief werenecessary for the purposes of our audit;
(b) in our opinion, proper books of account as required by law have been kept by the Company, so far as appearsfrom our examination of those books;
(c) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are inagreement with the books of account;
(d) in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by thisreport are in compliance with the Accounting Standards referred to in Section 211 (3C) of the Companies Act,1956;
(e) on the basis of written representations received from the directors, as on 31st March, 2007, and taken on recordby the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2007, from beingappointed as a director under Section 274(1)(g) of the Companies Act, 1956;
(f) in our opinion, and to the best of our information and according to the explanations given to us, the saidaccounts read together with the Notes thereon, give the information required by the Companies Act, 1956, inthe manner so required and give a true and fair view in conformity with the accounting principles generallyaccepted in India:
(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2007;
(ii) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and
(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.
For DELOITTE HASKINS & SELLSChartered Accountants
M. RamachandranPartner
Membership No. 16399Place : KochiDate : 21.05.2007
24
13 thANNUAL REPORT
ANNEXURE TO THE AUDITORS’ REPORT
(Referred to in paragraph 3 of our report of even date)
i) In respect of its fixed assets:
(a) The Company has maintained proper records showing full particulars, including quantitative details and situationof fixed assets.
(b) As explained to us, the Company has a programme of verification of assets and all assets, in accordance withthe programme, were verified during the year. According to the information and explanations given to us, nomaterial discrepancies were noticed on such verification.
(c) In our opinion, the fixed assets disposed off during the year were not material so as to affect the going concernstatus of the Company.
ii) The Company does not have any inventories.
iii) (a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in theregister maintained under Section 301 of the Companies Act, 1956.
(b) During the year, the Company had taken unsecured loans amounting to Rs. 18.30 crores from a company coveredin the register maintained under section 301 of the Companies Act, 1956. The maximum amount outstanding duringthe year of the loans taken was Rs.12.30 crores and the balance outstanding at the year-end was Rs. Nil.
(c) According to the information and explanations given to us, the rate of interest and other terms and conditions ofthe unsecured loans taken from a company covered in the register maintained under section 301 of theCompanies Act, 1956 are not, prima facie, prejudicial to the interest of the Company.
(d) According to the information and explanations given to us, as the repayment terms of principal and interest ofthe unsecured loans taken from a company, covered in the register maintained under section 301 of theCompanies Act, 1956, are not specified, it is not possible to determine the regularity of repayment of principaland interest amounts.
iv) In our opinion, and according to the information and explanations given to us, there are adequate internal control systemscommensurate with the size of the Company and the nature of its business for the purchase of fixed assets and withregard to sale of services. During the course of our audit, we have not observed any continuing failure to correct majorweaknesses in internal control system.
v) (a) To the best of our knowledge and belief, and according to the information and explanations given to us, we areof the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Companies Act,1956 have been entered in the register required to be maintained under that section.
(b) According to the information and explanations given to us, transactions made in pursuance of such contracts orarrangements entered in the register maintained under Section 301 of the Companies Act, 1956, have been madeat prices which are reasonable having regard to the prevailing market prices at the relevant time.
vi) According to the information and explanations given to us, the Company has not accepted any deposits from public.
vii) In our opinion, and according to the information and explanations given to us, the Company has an internal auditsystem commensurate with the size and nature of its business.
viii) The Central Government has not prescribed the maintenance of cost records under clause (d) of sub-section (1) ofsection 209 of the Companies Act, 1956, in respect of the service activities carried on by the Company.
ix) In respect of statutory dues:
25
(a) In our opinion, and according to the information and explanations given to us, the Company has been generallyregular in depositing undisputed statutory dues including Provident Fund, Investor Education and ProtectionFund, Employees’ State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, ExciseDuty, Cess and any other statutory dues applicable to it with appropriate authorities during the year, and noundisputed amounts were in arrears, as at 31st March 2007, for a period of more than six months from the datethey became payable.
(b) In our opinion, and according to the information and explanations given to us, except for non-deposit ofdisputed Service Tax demands aggregating to Rs.448,298/-, pending before Customs, Excise and Service TaxAppellate Tribunal, there are no disputed Income tax, Sales Tax, Wealth Tax, Customs Duty, Excise Duty orCess demands for which deposit has not been made.
x) The Company does not have accumulated losses. The Company has not incurred cash losses during the financialyear covered by our audit and the immediately preceding financial year.
xi) In our opinion, and according to the information and explanations given to us, the Company has not defaultedduring the year in the repayment of dues to a bank from which working capital facilities have been availed.
xii) According to the information and explanations given to us, the Company has not granted loans and advances onthe basis of security by way of pledge of shares, debentures and other securities during the year.
xiii) In our opinion, and according to the information and explanations given to us, the Company is not a chit fund or anidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditors’ Report)Order, 2003, are not applicable to the Company.
xiv) In our opinion, and according to the information and explanations given to us, the Company has maintainedproper records for its transactions of dealing or trading in shares and securities, and timely entries have beenmade therein. The shares, securities and other investments are also held by the Company in its own name.
xv) According to the information and explanations given to us, the Company has not given any guarantee for loanstaken by others from banks or financial institutions.
xvi) During the period covered by our audit report, the Company has not availed term loan from any institution.
xvii) According to the information and explanations given to us, and on an overall examination of the Balance Sheet ofthe Company, we report that funds raised on short-term basis have, prima facie, not been used during the year forlong-term investment.
xviii) During the period covered by our audit report, the Company has not made any preferential allotment of shares toparties and companies covered in the register maintained under Section 301 of the Companies Act, 1956.
xix) During the period covered by our audit report, the Company has not issued any debentures.
xx) During the period covered by our audit report, the Company has not raised any money by public issues.
xxi) To the best of our knowledge and belief, and according to the information and explanations given to us, no fraudon or by the Company has been noticed or reported during the year.
For DELOITTE HASKINS & SELLSChartered Accountants
M. RamachandranPartner
Membership No. 16399Place : KochiDate : 21.05.2007
26
13 thANNUAL REPORT
GEOJIT FINANCIAL SERVICES LIMITED
BALANCE SHEET AS ON 31st MARCH 2007(In Rupees)
For Deloitte Haskins & Sells For and on behalf of the Board of DirectorsChartered Accountants
M. Ramachandran A.P. Kurian C.J. GeorgePartner Chairman Managing Director
Place : Mumbai Place : Mumbai Jayaraj T.Date : 19.05.2007 Date : 19.05.2007 Company Secretary
Particulars As at As at31st March 2007 31st March 2006
SOURCES OF FUNDS
Shareholders' FundsShare Capital 1 208,990,870 152,186,000
Monies Pending Allotment (Note 5 of Schedule 18) 85,370,362 - Employee Stock Options Outstanding 2 4,345,987 284,591 Reserves and Surplus 3 1,808,603,580 271,544,635
2,107,310,799 424,015,226
Deferred Tax Liability (Net) (Note 22 of Schedule 18) 22,021,222 18,198,432
2,129,332,021 442,213,658 APPLICATION OF FUNDS
Fixed Assets 4Gross Block 358,155,407 295,197,544 Less : Depreciation 130,250,595 94,750,303 Net Block 227,904,812 200,447,241
Investments 5 423,026,825 139,693,041
Current Assets, Loans & AdvancesSundry Debtors 6 315,938,805 289,026,985 Cash & Bank Balances 7 1,679,322,112 391,587,330 Other Current Assets 8 6,412,728 878,626 Loans & Advances 9 779,734,935 824,372,418
2,781,408,580 1,505,865,359 Less : Current Liabilities & ProvisionsLiabilities 10 1,059,546,830 1,223,732,016 Provisions 11 243,461,366 180,059,967
1,303,008,196 1,403,791,983
Net Current Assets 1,478,400,384 102,073,376
2,129,332,021 442,213,658
Significant Accounting Policies & Notes on Accounts 18
Sch No.
Schedules 1 to 18 form an integral part of the AccountsAs per our Report of even date attached.
27
GEOJIT FINANCIAL SERVICES LIMITED
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31st MARCH 2007(In Rupees)
Schedules 1 to 18 form an integral part of the Accounts.As per our Report of even date attached.
( p )
Particulars Sch For the year ended For the year ended
No. 31st March 2007 31st March 2006
INCOME Income from operations 12 1,047,825,723 872,053,690Other income 13 50,991,631 7,704,604
1,098,817,354 879,758,294 EXPENDITUREPayments to and provision for employees 14 212,610,760 147,433,650Operating expenses 15 333,584,359 258,951,059Establishment & Other expenses 16 188,460,608 156,764,408Interest 17 1,670,457 34,061Depreciation / Amortisation 4 45,707,195 36,171,586
782,033,379 599,354,764
PROFIT BEFORE TAX 316,783,975 280,403,530 Provision for tax - Current 97,500,000 88,099,000 - Deferred 3,822,790 5,714,580 - Fringe benefit 2,720,000 2,147,000 - Earlier years 2,200,000 -
PROFIT AFTER TAX 210,541,185 184,442,950
Balance brought forward from previous year 183,456,500 86,869,584
PROFIT AVAILABLE FOR APPROPRIATION 393,997,685 271,312,534APPROPRIATIONS:Transfer to General Reserve 21,055,000 18,444,000 Interim Dividend on Equity Share Capital 60,874,400 26,632,550 Proposed Dividend on Equity Share Capital - 34,241,850 Dividend Tax Thereon 8,537,635 8,537,634
90,467,035 87,856,034
BALANCE CARRIED TO BALANCE SHEET -Schedule 3 303,530,650 183,456,500
Earnings Per Share (Equity shares of face value Re.1/- each) (Note 21 of Schedule 18):Basic 1.36 1.21 Diluted 1.34 1.21
Significant Accounting Policies & Notes on Accounts 18
For Deloitte Haskins & Sells For and on behalf of the Board of DirectorsChartered Accountants
M. Ramachandran A.P. Kurian C.J. GeorgePartner Chairman Managing Director
Place : Mumbai Place : Mumbai Jayaraj T.Date : 19.05.2007 Date : 19.05.2007 Company Secretary
28
13 thANNUAL REPORT
GEOJIT FINANCIAL SERVICES LIMITED
CASH FLOW STATEMENT
For Deloitte Haskins & Sells For and on behalf of the Board of DirectorsChartered Accountants
M. Ramachandran A.P. Kurian C.J. GeorgePartner Chairman Managing Director
Place : Mumbai Place : Mumbai Jayaraj T.Date : 19.05.2007 Date : 19.05.2007 Company Secretary
p2006-07 2005-06
CASH FLOWS FROM OPERATING ACTIVITIESProfit before tax 316,783,975 280,403,530 Add/(Less):Depreciation / Amortisation 45,707,195 36,171,586 Employee stock option compensation expense amotised 4,061,396 284,591 Provision for doubtful debts & advances 6,813,453 3,707,045 Interest 1,670,457 34,061 Loss on sale / write off of fixed assets 1,477,914 1,490,334 Dividend from non-trade long-term investments (35,148,577) - Dividend from non-trade current investments (2,900,295) (2,985,328) Profit on sale of non-trade current investments (198,356) (1,435,231) Interest earned on fixed deposits (9,477,644) (2,110,087) Cash flow before changes in Working Capital 328,789,518 315,560,501 Working capital changes:(Increase)/Decrease in debtors (33,725,273) (149,300,187) (Increase)/Decrease in loans & advances 161,952,890 (392,489,697) Increase/(Decrease) in current liabilities (165,189,689) 686,111,135 Increase/(Decrease) in provisions 25,668 372,122 Cash generated from Operations 291,853,114 460,253,874 Income tax including fringe benefit tax paid (net of refunds) (117,315,407) (94,959,505) Cash flows from Operating Activities 174,537,707 365,294,369
CASH FLOWS FROM INVESTING ACTIVITIESPurchase of fixed assets (75,709,962) (115,213,733) Sale of fixed assets 773,453 208,699 (Increase)/Decrease in capital advances 293,829 1,521,032 Purchase of investments (653,019,678) (361,111,000) Investment in associate company - (101,227,920) Investment in joint venture (1,659,200) (5,563,360) Investment in subsidiary company ( 8,000,000) - Sale of investments 379,543,450 465,717,525 Dividend received on long-term non-trade investments 35,148,577 - Dividend received on current non-trade investments 2,900,295 2,985,328 (Increase)/Decrease in fixed deposit with banks (1,199,140,890) 4,780,899 Interest received on fixed deposits 3,943,542 1,967,591 Cash used in Investing Activities (1,514,926,584) (105,934,939)
CASH FLOWS FROM FINANCING ACTIVITIESProceeds from preferential issue of equity shares 56,804,870 - Share premium received on preferential issue of equity shares 1,395,929,795 - Application money received on preferential issue of warrants 85,370,362 - Dividend paid on equity share capital ( 94,111,747) (56,368,711) Corporate dividend tax paid (13,340,054) (8,106,066) Interest paid (1,670,457) (34,061) Cash flow from/(used in) Financing Activities 1,428,982,769 (64,508,838)
Net Increase in Cash and Cash Equivalents 88,593,892 194,850,592
Opening Cash & Bank balances # $ 356,445,673 161,595,081
Closing Cash & Bank balances # $ 445,039,565 356,445,673 # - Includes client's balances in current accounts with banks.
$ - Includes balances in unclaimed dividend bank accounts, which are not available for use by the company.
As per our Report of even date attached.
(In Rupees)
29
GEOJIT FINANCIAL SERVICES LIMITED
SCHEDULES FORMING PART OF ACCOUNTS FOR THE YEAR ENDED 31st MARCH 2007(In Rupees)p
Particulars As at As at31st March 2007 31st March 2006
Schedule 1: Share Capital
Authorised 250,000,000 Equity Shares of Re.1/- each 250,000,000 200,000,000 (Previous Year: 20,000,000 Equity Shares of Rs.10/- each)
500,000 14.5% Redeemable Cumulative Preference Shares ofRs.100/- each (Re-designated as 50,000,000 Equity Shares of - 50,000,000 Re.1/- each during the year)
250,000,000 250,000,000
Issued, Subscribed and Paid-up208,990,870 Equity Shares of Re.1/- each, fully paid up
(Previous Year:15,218,600 Equity Shares of Rs.10/- each) 208,990,870 152,186,000 Includes:(a) 106,093,000 Equity Shares issued as fully paid bonus shares
by capitalisation of General Reserve and Securities Premium.(b) 56,804,870 Equity Shares issued during the year on preferentialbasis (Note 3 of Schedule 18)
208,990,870 152,186,000 Schedule 2: Employee Stock Options Outstanding(Note 6 of Schedule18)Employee stock options outstanding 11,291,028 13,660,350 Less:Deferred employee compensation expense 11,006,437 (13,660,350) Less: Employee compensation expense amortised 4,061,396 (6,945,041) 284,591
4,345,987 284,591 Schedule 3: Reserves & Surplus
Securities PremiumAs per last Balance Sheet 18,644,483 18,644,483 Add:Received on preferential issue of equity shares during the year 1,420,121,750 - Less:Expenses related to the preferential issue (24,191,955) 1,395,929,795 -
1,414,574,278 18,644,483
Capital Redemption ReserveAs per last Balance Sheet 42,000,000 42,000,000
General ReserveAs per last Balance Sheet 27,443,652 8,999,652 Add: Transfer from Profit and Loss Account 21,055,000 18,444,000
48,498,652 27,443,652
Profit and Loss Account 303,530,650 183,456,500
1,808,603,580 271,544,635
30
13 thANNUAL REPORT
pP
arti
cula
rs A
s at
31s
t M
arch
200
6 A
dd
itio
ns
Del
etio
ns
As
at 3
1st
Mar
ch 2
007
Up
to 3
1st
Mar
ch 2
006
Fo
r th
e Y
ear
Del
etio
ns
Up
to 3
1st
Mar
ch 2
007
As
at 3
1st
Mar
ch 2
007
As
at 3
1st
Mar
ch 2
006
Tan
gib
le A
sset
s:La
nd6,
057,
336
-
-
6,05
7,33
6
-
-
-
-
6,
057,
336
6,05
7,33
6
6,
057,
336
-
-
6,05
7,33
6
-
-
-
-
6,
057,
336
6,
057,
336
Bui
ldin
gs2,
049,
950
-
-
2,04
9,95
0
19
6,09
9
33,4
14
-
229,
513
1,
820,
437
1,85
3,85
1
2,
049,
950
-
-
2,04
9,95
0
16
2,68
5
33
,414
-
196,
099
1,85
3,85
1
1,88
7,26
5
Impr
ovem
ents
to le
aseh
old
prem
ises
34,6
84,5
25
10
,984
,872
-
45,6
69,3
97
12,7
21,6
75
7,20
6,08
7
-
19
,927
,762
25
,741
,635
21
,962
,850
20
,651
,822
14,6
48,4
14
61
5,71
1
34,6
84,5
25
8,07
8,07
2
5,14
7,70
1
504,
098
12,7
21,6
75
21,9
62,8
50
12,5
73,7
50
Ele
ctric
al e
quip
men
ts10
,173
,023
426,
941
2,62
1
10,5
97,3
43
2,79
5,88
3
70
1,32
3
2,61
8
3,
494,
588
7,10
2,75
5
7,
377,
140
8,13
3,63
4
2,12
7,64
4
88,2
55
10
,173
,023
2,
037,
924
78
4,75
2
26
,793
2,
795,
883
7,
377,
140
6,
095,
710
Offi
ce e
quip
men
ts32
,489
,076
13,6
00,0
47
56
4,82
6
45,5
24,2
97
6,30
6,86
8
2,
643,
594
151,
881
8,
798,
581
36,7
25,7
16
26,1
82,2
08
17,0
13,3
91
15
,999
,685
524,
000
32
,489
,076
4,
922,
720
1,
518,
868
13
4,72
0
6,
306,
868
26
,182
,208
12
,090
,671
Fur
nitu
re &
Fitt
ings
18,6
33,9
29
6,
226,
059
11
9,65
8
24,7
40,3
30
10,8
27,0
85
3,30
5,98
7
98
,626
14
,034
,446
10
,705
,884
7,
806,
844
11,1
92,6
58
7,
514,
460
73
,189
18,6
33,9
29
7,15
0,41
2
3,74
4,02
4
67,3
51
10,8
27,0
85
7,80
6,84
4
4,04
2,24
6
Com
pute
rs &
Acc
esso
ries
102,
383,
946
27,7
88,9
63
10
,535
,518
119,
637,
391
29
,854
,069
18
,722
,980
9,
625,
098
38,9
51,9
51
80,6
85,4
40
72,5
29,8
77
76,9
34,7
02
43
,074
,206
17,6
24,9
62
10
2,38
3,94
6
30
,821
,346
15
,526
,845
16
,494
,122
29
,854
,069
72
,529
,877
46
,113
,356
VS
AT
equ
ipm
ents
10,1
54,5
15
1,
911,
400
-
12
,065
,915
2,
401,
125
2,25
3,75
0
-
4,
654,
875
7,41
1,04
0
7,
753,
390
4,69
2,27
0
5,46
2,24
5
-
10,1
54,5
15
974,
860
1,42
6,26
5
-
2,
401,
125
7,
753,
390
3,
717,
410
Veh
icle
s4,
092,
592
2,
666,
764
1,
235,
647
5,52
3,70
9
82
5,30
0
412,
711
32
8,68
0
909,
331
4,
614,
378
3,26
7,29
2
4,
084,
697
7,
895
-
4,
092,
592
435,
716
389,
584
-
82
5,30
0
3,
267,
292
3,
648,
981
Inta
ng
ible
Ass
ets:
Com
pute
r so
ftwar
es47
,951
,954
12,1
04,9
16
-
60
,056
,870
13
,130
,818
8,
516,
728
-
21,6
47,5
46
38,4
09,3
24
34,8
21,1
36
21,5
72,7
70
26
,379
,184
-
47,9
51,9
54
7,27
2,55
6
5,85
8,26
2
-
13
,130
,818
34
,821
,136
14
,300
,214
Mem
bers
hip
right
s in
Sto
ck E
xcha
nges
23,8
61,8
01
-
-
23,8
61,8
01
15,6
91,3
81
1,91
0,62
1
-
17
,602
,002
6,
259,
799
8,17
0,42
0
23
,861
,801
-
-
23
,861
,801
13
,949
,510
1,
741,
871
-
15,6
91,3
81
8,17
0,42
0
9,91
2,29
1
292,
532,
647
75,7
09,9
62
12
,458
,270
355,
784,
339
94
,750
,303
45
,707
,195
10
,206
,903
13
0,25
0,59
5
22
5,53
3,74
4
19
7,78
2,34
4
Cap
ital a
dvan
ces
2,66
4,89
7
2,37
1,06
8
2,66
4,89
7
2,
371,
068
-
-
-
-
2,37
1,06
8
2,
664,
897
4,18
5,92
9
2,66
4,89
7
4,18
5,92
9
2,
664,
897
-
-
-
-
2,66
4,89
7
4,18
5,92
9
Gra
nd
To
tal
295,
197,
544
78,0
81,0
30
15
,123
,167
358,
155,
407
94
,750
,303
45
,707
,195
10
,206
,903
13
0,25
0,59
5
22
7,90
4,81
2
20
0,44
7,24
1
Pre
viou
s Y
ear
200,
430,
960
117,
878,
630
23,1
12,0
46
29
5,19
7,54
4
75
,805
,801
36
,171
,586
17
,227
,084
94
,750
,303
20
0,44
7,24
1
12
4,62
5,15
9
Not
e: P
revi
ous
year
figu
res
are
show
n in
ital
ics.
Net
Blo
ckG
ross
Blo
ckD
epre
ciat
ion
/ A
mo
rtis
atio
n
GE
OJ
IT F
INA
NC
IAL
SE
RV
ICE
S L
IMIT
ED
SC
HE
DU
LE
S F
OR
MIN
G P
AR
T O
F A
CC
OU
NT
S F
OR
TH
E Y
EA
R E
ND
ED
31s
t MA
RC
H 2
007
Sch
edu
le 4
: F
ixed
Ass
ets
(In
Rup
ees)
31
GEOJIT FINANCIAL SERVICES LIMITED
SCHEDULES FORMING PART OF ACCOUNTS FOR THE YEAR ENDED 31st MARCH 2007(In Rupees)p
Particulars As at As at31st March 2007 31st March 2006
Schedule 5: Investments
Long Term Investments - At cost
Unquoted, non-tradeIn wholly owned Subsidiary Company:-4,000,000 (Previous Year: 800,000) equity shares of Rs.10/- each,fully paid up, in Geojit Commodities Ltd.(Includes 2,400,000 equity 16,000,000 8,000,000 shares of Rs.10/- each, fully paid-up, received during the year as bonus shares)(Purchased during the year: 800,000 equity shares)
In Joint Venture:-1,500 (Previous Year: 1,364) equity shares of Arab Emirates Dirham(AED) 1000 each in Barjeel Geojit Securities LLC, United Arab Emirates 19,138,560 17,479,360 (Purchased during the year - 136 equity shares)
In Associate Company:-50,606,120 equity shares of Rs.2/- each, fully paid up, in Geojit CreditsPrivate Limited 101,227,920 101,227,920
In others:-400 'C' class shares of Rs.500/- each in Muvattupuzha Co-Operative 200,000 200,000 Super Speciality Hospital Limited
10,000 equity shares of Re.1/- each, fully paid up, in Bombay Stock 10,000 10,000 Exchange Ltd.
100 equity shares of Rs.10/- each, fully paid up, in Cochin StockExchange Ltd. 1,000 1,000
136,577,480 126,918,280 Current Investments - At lower of cost and net asset / fair value
Unquoted, non-tradeIn Mutual Funds & Government Securities 286,449,345 12,774,761 (Note 8 of Schedule 18)
423,026,825 139,693,041 Aggregate cost of unquoted investments 423,026,825 139,693,041 Aggregate net asset / market value of mutual fund investments 286,697,413 12,798,729
Schedule 6: Sundry Debtors - Unsecured, unless stated otherwise
Considered goodClient balances outstanding for a period exceeding six months 15,291,162 9,830,639 Other Client balances 129,188,194 130,963,661
Client balances - Margin Funding Loan Receivable (Secured) 65,166,838 24,347,372 Dues from Stock Exchanges 106,292,611 123,885,313
315,938,805 289,026,985 Considered doubtful Client balances outstanding for a period exceeding six months 10,499,345 9,654,521 Other Client balances 820,624 1,862,314
11,319,969 11,516,835 Less: Provision for doubtful debts (Note 9 of Schedule 18) 11,319,969 11,516,835
- - 315,938,805 289,026,985
32
13 thANNUAL REPORT
GEOJIT FINANCIAL SERVICES LIMITED
SCHEDULES FORMING PART OF ACCOUNTS FOR THE YEAR ENDED 31st MARCH 2007(In Rupees)p
Particulars As at As at31st March 2007 31st March 2006
Schedule 7: Cash & Bank Balances
Cash in hand 295,518 363,839 Balances with Scheduled Banks:
- in Current Accounts 38,336,419 13,909,751
- in Current Accounts - Clients 404,273,733 341,042,691 - in Current Accounts - Unclaimed Dividends 2,133,895 1,129,392 - in Fixed Deposit Accounts 1,234,282,547 35,141,657
(* - Fixed deposits includes Rs.38,982,545/- (Previous year: Rs.35,141,657/-) pledged with banks as security margin for guarantees issued by them infavour of Stock Exchanges)
1,679,322,112 391,587,330
Schedule 8: Other Current Assets
Interest accrued on fixed deposits 6,412,728 878,626
Schedule 9: Loans & Advances - Unsecured and considered good,unless otherwise stated
Advances recoverable in cash or in kind or for value to be received 14,469,916 18,036,902 Advances to staff 227,192 628,589 Advance income tax- Current year 104,744,677 86,538,938 Advance income tax- Previous years 138,849,698 52,310,760 Advance fringe benefit tax 4,443,404 2,053,509 Income tax paid under protest, pending in appeal 14,611,581 4,430,746
277,346,468 163,999,444 Deposits:Deposits & Margins with Stock Exchanges 465,323,901 631,796,028 Deposits with government authorities 880,366 612,756 Other deposits: - Considered good 36,184,200 27,964,190 - Considered doubtful 60,000 60,000
36,244,200 28,024,190 Less: Provision for doubtful deposits (Note 9 of Schedule 18) 60,000 60,000
36,184,200 27,964,190 502,388,467 660,372,974
779,734,935 824,372,418
33
GEOJIT FINANCIAL SERVICES LIMITED
SCHEDULES FORMING PART OF ACCOUNTS FOR THE YEAR ENDED 31st MARCH 2007(In Rupees)
Particulars As at As at31st March 2007 31st March 2006
Schedule 10: Current Liabilities
Sundry Creditors:
- Clients 950,045,701 1,108,511,565
- Stock Exchanges - -
- Others (Notes 10 & 11 of Schedule 18) 59,056,399 75,466,332
Security deposit from Business Associates 15,871,496 17,299,265
Statutory liabilities 10,276,591 11,835,559
Investor Education & Protection Fund shall be credited by the
following amount:
- Unpaid dividend (Note 12 of Schedule 18) 2,133,895 1,129,392
Other liabilities 5,465,727 3,948,121
Overdrawn Scheduled Bank Current Accounts 16,697,021 5,541,782
1,059,546,830 1,223,732,016
Schedule 11: Provisions
Leave encashment (Note 24 of Schedule 18) 634,198 621,747
Income tax:
- For the year 97,500,000 88,099,000
- For earlier years 140,430,000 50,131,000
Fringe Benefit Tax 4,867,000 2,147,000
Wealth Tax 30,168 16,951
Proposed dividend on:
- Equity share capital - 34,241,850
- Corporate dividend tax - 4,802,419
243,461,366 180,059,967
p
34
13 thANNUAL REPORT
GEOJIT FINANCIAL SERVICES LIMITED
SCHEDULES FORMING PART OF ACCOUNTS FOR THE YEAR ENDED 31st MARCH 2007(In Rupees)
Particulars For the year ended For the year ended 31st March 2007 31st March 2006
Schedule 12: Income from operations
Brokerage 878,332,924 733,316,155 Depository services 58,053,452 61,095,409 Financial products distribution 62,707,829 49,463,727 Portfolio management services 20,835,611 15,985,287 Interest from margin funding 7,036,352 181,191Miscellaneous income 20,859,555 12,011,921
1,047,825,723 872,053,690 Schedule 13: Other income
Dividend income from non-trade long-term investments 35,148,577 - (includes Rs. 20,000,000/- received from a subsidiary company andRs. 15,075,377/- received from the joint venture)Interest earned on fixed deposits 9,477,644 2,110,087
[Tax deducted at source:- Rs.2,128,261/- (Previous Year: Rs.471,908/-)] Dividend income from non-trade current investments 2,900,295 2,985,328 Profit on sale of non-trade current investments 198,356 1,435,231 Miscellaneous income 3,266,759 1,173,958
50,991,631 7,704,604
Schedule 14: Payments to and provision for employees
Salaries, Allowances & Bonus (Notes 13 & 15 of Schedule 18) 194,437,428 134,265,211 Contribution to Provident & Other funds 9,403,317 7,049,084 Staff welfare expenses 8,770,015 6,119,355
212,610,760 147,433,650 Schedule 15: Operating expenses
Business associates' commission 118,105,843 108,203,384 Marketing incentive 64,469,580 49,919,066Depository expenses 13,405,575 14,275,961 Connectivity charges 39,863,310 23,711,849 Marketing fees 45,191,400 30,432,000 Research expenses 11,904,717 10,598,678 Business associates' commission - Financial products distribution 11,226,029 10,752,298 Loss on sale of stock-in-error 8,324,881 2,253,429 Postage charges - Contract Notes 6,034,989 3,809,829 Transaction charges 3,720,296 749,787 Insurance - NSE, BSE & NSDL 1,554,393 480,310 Registration fee - SEBI 1,305,966 109,221 Registration & Renewal fees 835,287 434,100 Miscellaneous expenses 7,642,093 3,221,147
333,584,359 258,951,059
35
GEOJIT FINANCIAL SERVICES LIMITED
SCHEDULES FORMING PART OF ACCOUNTS FOR THE YEAR ENDED 31st MARCH 2007(In Rupees)p
Particulars For the year ended For the year ended31st March 2007 31st March 2006
Schedule 16: Establishment & Other Expenses
Rent for premises 34,193,491 24,366,263 Telephone expenses 25,272,195 19,702,666 Postage 11,981,934 11,651,737 Advertisement 11,556,490 18,128,374 Electricity charges 13,622,010 10,085,728 Software charges 16,807,719 14,436,068 Repairs & Maintenance: - Leasehold building 762,136 577,130 - Others 9,437,964 6,246,358 Printing & Stationery 10,635,513 9,667,405 Travel & Conveyance expenses - Directors 1,863,865 2,244,679
- Others 7,784,627 5,523,015 Legal & Professional fees (Note 16 of Schedule 18) 7,850,615 6,603,215 Office expenses 8,007,967 6,804,479 Provision for doubtful debts & advances (Net of write backs) 6,813,453 3,707,045 (Note 9 of Schedule 18)Bad debts (Note 9 of Schedule 18 for write offs against provision 309,556 123,793 for doubtful debts)Business promotion expenses 4,348,216 3,156,721 Other communication expenses 4,399,289 2,860,165 Bank guarantee commission 1,127,621 1,077,703 Meeting & Seminar expenses 2,177,506 976,470 Rates & Taxes 2,046,785 1,111,280 Subscriptions 2,055,532 1,622,013 Website charges 1,387,444 1,524,170 Bank charges 896,907 781,018 Loss on sale / write off of fixed assets 1,477,914 1,490,334 Insurance - others 413,760 888,919 Sitting fees to directors 285,000 190,000 Donations 145,450 152,061
Custody fees - Depository 33,274 33,183 Listing fees 122,512 65,850 Registrar & Transfer expenses 327,674 194,968 Miscellaneous expenses 316,189 771,597
188,460,608 156,764,408 Schedule 17: Interest
On other than fixed loans:On loan from Geojit Credits Private Limited 731,314 34,061 On temporary overdrafts 939,143 -
1,670,457 34,061
36
13 thANNUAL REPORT
GEOJIT FINANCIAL SERVICES LIMITED
SCHEDULES FORMING PART OF ACCOUNTS FOR THE YEAR ENDED 31ST MARCH 2007
SCHEDULE 18:SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS
A. Significant Accounting Policies
Basis of Preparation
The financial statements are prepared under the historical cost convention using accrual basis of accounting and inaccordance with the Accounting Standards issued by The Institute of Chartered Accountants of India, specified inSection 211 (3C) of the Companies Act, 1956.
Use of Estimates
The preparation of the financial statements in conformity with the accounting standards generally accepted in Indiarequires, the management to make estimates that affect the reported amount of assets and liabilities, disclosure ofcontingent liabilities as at the date of the financial statement and reported amounts of revenues and expenses for theyear. Actual results could differ from these estimates.
Fixed Assets and Depreciation
Fixed assets are stated at cost less accumulated depreciation. Cost includes cost of purchase and other costsattributable to bringing the assets to working condition for intended use.
Improvements to leased office premises are depreciated over a period of 5 years irrespective of the lease period, onthe assumption that lease agreements will be renewed and the premises will be occupied for a minimum period offive years. If the premises are vacated before the expiry of five-year period, the un-amortised leasehold improvementcosts are fully written off in the year of vacation. V-Sat equipments are depreciated over a period of 5 years. Depreciationon all other fixed assets is provided under the Straight Line Method (SLM) at the rates specified in Schedule XIV ofthe Companies Act, 1956.
Additions to fixed assets are depreciated from the date of addition and deletions are depreciated upto the date ofsale, on pro-rata basis.
Intangible Assets and Amortisation
Stock Exchange membership rights and computer software are considered as intangible assets. Stock Exchangemembership rights are amortized over a period of 10 years and computer software are amortised over a period of 6years.
Investments
Investments are classified as long-term or current based on their nature and intended holding period. Long-terminvestments are stated at cost and provision is made only if the diminution in value is permanent. Current investmentsare stated at lower of cost and market value / net asset value.
Income
Brokerage income is recognized on the trade date of transaction, upon confirmation of the transactions by stockexchanges and clients. Depository and portfolio management service incomes are recognised on the basis ofagreements entered into with clients. Commission income from financial products distribution is recognised on thebasis of agreement entered with principals and when the right to receive the income is established. Dividend incomeis recognised when the right to receive the income is established.
37
Retirement Benefits
The Company’s contributions to provident and family pension funds, which are defined contribution schemes, arecharged to Profit and Loss Account of the period to which they relate.
The Company also provides gratuity benefit to its employees, which is in the nature of defined benefit scheme. Theliability for gratuity is funded with Life Insurance Corporation of India and the annual contributions are charged toProfit and Loss Account. At each balance sheet date, the Company obtains an actuarial valuation from the saidCorporation and the shortfall, if any, in the fund balance on that date is also charged to Profit and Loss Account.
Leave Encashment
Leave encashment liability, as at the balance sheet date, is determined and accounted on the basis of leave to thecredit of the employees as per the leave encashment policy of the Company.
Taxes on Income
Current tax is determined as the amount of tax payable in respect of taxable income for the period under theprovisions of the Income Tax Act, 1961.
Deferred tax is recognised, subject to the consideration of prudence, on timing differences, being the differencebetween taxable income and accounting income that originate in one period and are capable of reversal in one ormore subsequent periods. Deferred tax assets are recognised and carried forward only to the extent there is reasonablecertainty that sufficient future taxable income will be available against which such asset items can be realised.
Provisions
A provision is recognised when there is a present obligation as a result of a past event, it is probable that an outflowof resources will be required to settle the obligation and in respect of which reliable estimate can be made. Provisionis not discounted to its present value and is determined based on the best estimate required to settle the obligationat the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the best currentestimate.
Employee Stock Option
The employee share based compensation cost under the Employee Stock Option Scheme is accounted under theintrinsic value method. Under the intrinsic value method, the difference between the market price of the share on thegrant date or as near thereto and exercise price is considered as intrinsic value of options and amortised on straight-line basis over the vesting period as employee share based compensation cost.
Securities Issue Expenses
Equity share issue expenses are adjusted against Securities Premium.
B. Notes on Accounts
1. Contingent Liability:
Particulars As at 31.03.2007 As at 31.03.2006(Rs.) (Rs.)
Claims against the Company not acknowledged as debts:Legal suits filed against the Company / Matters under arbitration 12,570,914 1,790,701
Income tax demands, pending in appeal 14,611,581 8,572,440
Service tax demands, pending in appeal 448,298 -
2. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances):Rs. 1,077,459/- (Previous Year: Rs. 6,665,347/-).
38
13 thANNUAL REPORT
3. The Shareholders of the Company, at the Extra-ordinary General Meeting held on 22nd November, 2006, authorizedthe Board of Directors to allot equity shares of face value Re.1/- each on preferential basis to BNP Paribas S.A.as follows:
Name of the Allottee No. of Shares Price per Share (Rs.) Amount (Rs.)
BNP Paribas S.A. 56,804,870 26.00 1,476,926,620
The shares were allotted on 13th March 2007.4. Utilisation of the proceeds from the allotment of equity shares to BNP Paribas S.A. on preferential basis during the
year is as follows:
Particulars Amount (Rs.)
Proceeds from the allotment of equity shares 1,476,926,620
Utilisation upto 31st March 2007:
Refund of temporary overdraft from a bank 30,871,105
Amount used in operations 71,055,515
Balance pending utilization as on 31st March 2007, which is: 1,375,000,000
Total 1,476,926,620
Amount pending utilisation as on 31st March 2007 is invested as follows:
In fixed deposits with banks 1,110,000,000
In mutual funds 265,000,000
Total 1,375,000,000
5. The Shareholders of the Company, at the Extra-ordinary General Meeting held on 22nd November, 2006, authorizedthe Board of Directors to allot 22,826,300 warrants to BNP Paribas S.A. on preferential basis. Each warrantentitles the holder to subscribe for and be allotted one equity share of Re.1/- each, fully paid, at a price of Rs.26/- pershare. The warrants were allotted on 13th March 2007 and are convertible at the sole option of the warrant holderat any time within a period of 18 months from that date. The Company has received Rs. 85,370,362/- as warrantapplication money @ Rs. 3.74 per warrant, of which Rs. 85,300,000/- is kept in fixed deposits with banks and thebalance of Rs. 70,362/- in warrant application bank account as on 31st March 2007.This is disclosed as ‘MoniesPending Allotment’ in the Balance Sheet.
6. (a) The Company introduced Employee Stock Option Plan-2005 (ESOP-2005) during 2005-06, under whichoptions for 6,989,400 equity shares of Re. 1/- each were granted to eligible permanent employees and non-executive directors, including independent directors but excluding promoters, of the Company and itsSubsidiaries. The scheme was approved by the Shareholders at the Extra-ordinary General Meeting held on7th March 2006 and by the Compensation Committee of Directors on 7th March 2006. The options will vest overa period of 4 years from the date of grant, viz., 7th March 2006, as follows:
End of Year Date of Vesting % of options granted
II 7th March 2008 30%
III 7th March 2009 30%
IV 7th March 2010 40%
The exercise period commences from the date of vesting and will expire not later than 5 years from the date ofgrant, viz., 7th March 2011. The exercise price has been computed by giving discounts, based on the grade andnumber of years of service rendered by the employees and directors, to the market price on the date prior to grantdate. The equity shares allotted against options exercised will be under lock-in for a period of one year from thedate of allotment.
The Company adopts intrinsic value method for accounting employee share based compensation cost. Underthe intrinsic value method, the difference between market price of the share on the grant date or as near theretoand exercise price is considered as intrinsic value of options and amortised on straight-line basis over thevesting period as employee share based compensation cost.
39
The intrinsic value of 6,989,400 options granted by the Company (i.e., the difference between market price ondate of grant and exercise price), to be amortised on straight-line basis over the vesting period of four years netof expected forfeiture @ 6% per annum, is Rs.11,291,028/- and the proportionate amount amortised during theyear is Rs.4,061,396/-. The additional charge on the Profit and Loss Account and Earnings Per Share for the year,had the Company followed Fair Value Method of accounting for ESOP compensation cost, is Rs.10,965,594/- andRs. (0.07) respectively.
(b) Further disclosures on ESOP-2005 are given below:
(i) Grantee-wise details of ESOPs granted:
Class of Grantees Directors Managers and Above Other Employees
Date of grant 07.03.2006 07.03.2006 07.03.2006
Number of options granted 300,000 2,599,400 4,090,000
Contractual life:
30% of 6,989,400 2 years 2 years 2 years
30% of 6,989,400 3 years 3 years 3 years
40% of 6,989,400 4 years 4 years 4 years
Vesting conditions Continuation in the services of the Company and such other conditions asmay be formulated by the Compensation Committee from time to time.
Method of settlement In Cash In Cash In Cash
(ii) Movement in ESOPs granted:
Class of Grantees Directors Managers and Above Other Employees
No. of optionsoutstandingat year beginning 300,000 18.86 2,599,400 17.75 4,090,000 17.94
No. of options granted - - - - - -
No. of options forfeited - - 441,500 17.75 148,000 17.94
No. of options exercised - - - - - -
No. of options outstanding at year end 300,000 18.86 2,157,900 17.75 3,942,000 17.94
No. of optionsexercisable at year end 300,000 18.86 2,157,900 17.75 3,942,000 17.94
(c) The estimated fair values of each stock option are as follows:
Class of Grantees Weighted Average Fair Values (Rs.)
Directors 6.25
Managers and Above 6.28
Other Employees 6.30
The fair values were calculated using Black-Scholes Options Pricing Model. The model inputs were the shareprice at grant date of Rs. 19.86, weighted average exercise price as per (b) above, volatility in the market price (ofthe Company’s share over the one year prior to the date of grant) of 199% (computed with reference to the oneyear high and low of the market price), expected dividends (weighted average of past three years including year
No. ofWeighted
Avg.Exercise
No. of WeightedAvg.
ExerciseNo. of
WeightedAvg.
Exercise
40
13 thANNUAL REPORT
of grant) of 35%, contractual life of two to four years, as the case may be, and a risk-free interest rate of 6%. It isassumed that employees would exercise the options immediately on vesting. The historical volatility, including theearly years of the Company’s life, is higher than the volatility of 199% considered above and the Company expectsthe volatility of its share price to reduce as it matures.
7. The Company has contracted working capital facilities of Rs. 50,000,000/- (Previous Year: Rs.10,000,000/-) (fundbased) and Rs. 75,000,000/- (Previous Year: Rs.30,000,000/-) (non-fund based, viz., bank guarantee) from a bank,which are secured by a charge on the current assets of the Company, both present and future, personal guaranteeof the Managing Director of the Company and counter guarantee of the Company. The balance outstanding in thefund based and non-fund based working capital facilities are Rs. Nil (Previous Year: Rs. Nil) and Rs. 75,000,000/-(Previous Year: Rs. 30,000,000/-) respectively at the balance sheet date.
8. (a) Details of Current Investments –Unquoted & Non-trade (stated at lower of cost or market price / net asset value):
I. In Government Securities:
a. 10.71% Government of India Securities–2016 30 3,000 30 3,000
Total 3,000 3,000
II. In Mutual Funds:
a. Can Liquid Fund (20,784,245 units werepurchased and 16,782,831 units were soldduring the year) 4,001,414 40,178,195 - -
b. Can Fixed Maturity Plan(purchased during the year) 1,000,000 10,000,000 - -
c. Templeton India Money Market Fund(purchased during the year) 50,176,061 50,176,061 - -
d. Prudential ICICI Fixed Maturity Plan(purchased during the year) 1,500,000 15,000,000 - -
e. HDFC Liquid Fund (5,005,781 units werepurchased and 2,993,594 units were soldduring the year) 2,012,187 20,154,656 - -
f. Reliance Monthly Interval Fund(purchased during the year) 2,000,000 20,000,000 - -
g. Reliance Fixed Horizon Fund - Yearly(purchased during the year) 1,000,000 10,000,000 - -
h. SBI Insta-Cash Fund (25,577,678 units werepurchased and 17,285,970 units were soldduring the year) 9,500,812 100,937,433 1,209,104 12,771,761
i. SBI Fixed Maturity Plan(purchased during the year) 2,000,000 20,000,000 - -
Total 286,446,345 12,771,761
Grand Total 286,449,345 12,774,761
9. The movement in provision for bad and doubtful debts / advances / deposits during the year is as follows:
Particulars 2006-07(Rs.) 2005-06(Rs.)Opening Balance 11,576,835 9,678,257Add: Provision made 6,813,453 3,707,045Less: Bad debts written off against provision 7,010,319 1,808,467Closing Balance 11,379,969 11,576,835
Book Valueas on
31.03.2006Rs.
No. of unitsas on
31.03.2006
Book Valueas on
31.03.2007Rs.
No. of unitsas on
31.03.2007SecuritySl.
41
10. Sundry Creditors – Others include:
Particulars 31.03.2007(Rs.) 31.03.2006(Rs.)
Amount payable to Managing Director 1,189,902 804,863
Maximum amount payable at any time during the year 1,189,902 804,863
Amount payable to Geojit Technologies Limited, wholly ownedsubsidiary of Geojit Commodities Ltd. 964,272 3,749,167
11. There are no amounts payable to small-scale industrial undertakings as at the balance sheet date. This disclosureis based on the information available with the Company.
The Company has not received any intimation from its vendors regarding their status under Micro, Small andMedium Enterprises Development Act, 2006 and hence disclosures, if any, required under the said Act have notbeen made.
12. The total amount of unclaimed dividends lying in separate bank accounts as at the balance sheet date is Rs.2,133,895/- (Previous Year: Rs.1,129,392/-). There is no amount due and outstanding as at the balance sheet date tobe credited to the Investor Education and Protection Fund.
13. Remuneration to Managing Director:
Particulars 2006-07(Rs.) 2005-06(Rs.)
Salaries 13,65,000 1,365,000
Perquisites 6,679 11,218
Commission 4,334,000 4,343,000
Total 5,705,679 5,719,218
Note: Provisions for / contributions to employee retirement benefits, which are based on actuarial valuations donefor the Company as a whole, is excluded from the above.
14. Payments to other directors:
Particulars 2006-07(Rs.) 2005-06(Rs.)
Sitting fees 285,000 190,000
15. Computation of net profit in accordance with section 309(5) of the Companies Act, 1956 and commission payable tothe Managing Director:
Particulars 2006-07(Rs.) 2005-06(Rs.)
Profit before tax 316,783,975 280,403,530
Add: Depreciation / Amortisation, considered separately 45,707,195 36,171,586
Managerial remuneration (as above) 5,705,679 5,719,218
Directors sitting fees 285,000 190,000
Provision for doubtful debts / advances 6,813,453 3,707,045
Loss on sale/write off of fixed assets 1,477,914 1,490,334
Less: Depreciation / Amortisation (45,707,195) (36,171,586)
Bad debts / advances written off against provision (7,010,319) (1,808,467)
Dividend from long term investments (35,148,577) -
Premium on transfer of branches - (200,000)
Net Profit 288,907,125 289,501,660
42
13 thANNUAL REPORT
Maximum remuneration payable to Managing Director – 5% of the net profit 14,445,356 14,475,083
Commission payable @ 1.5% of Net Profit 4,334,000 4,343,000
Note: The remuneration paid / payable to the Managing Director for the year is within the limits specified in Section198 / 309 of the Companies Act, 1956.
16. Legal and professional fees include:
a) Remuneration to Statutory Auditors (excld. service tax):
Particulars 2006-07(Rs.) 2005-06(Rs.)
For Audit 500,000 500,000
For Tax Audit 100,000 100,000
For Certifications 73,000 52,500
For Quarterly Limited Reviews 120,000 120,000
Out-of-pocket Expenses 8,675 7,741
Total 801,675 780,241
b) Remuneration to Internal Auditors (excld. service tax):
Particulars 2006-07(Rs.) 2005-06(Rs.)
For Audit 1,830,763 1,222,609
Out-of-pocket Expenses 201,201 168,999
Total 2,031,964 1,391,608
17. Expenditure in Foreign Currency:
Particulars 2006-07(Rs.) 2005-06(Rs.)
Foreign Travel 123,485 302,138
Marketing Incentive 310,662 181,213
Software Charges 3,929,737 8,052,126
Annual Maintenance Charges 432,545 -
Total 4,796,429 8,535,477
18. Earnings in Foreign Currency:
Particulars 2006-07(Rs.) 2005-06(Rs.)
Dividend 15,075,377 -
19. Advances due from companies under the same management, within the meaning of section 370(1B) of the CompaniesAct, 1956:
Particulars 2006-07(Rs.) 2005-06(Rs.)
Geojit Commodities Limited 2,631,880 5,334,776
43
20. Related Party Disclosures
I) Nature of relationship and related parties:
Nature of Relationship Name of Related Party
Subsidiary Companies (Wholly owned) : Geojit Commodities LimitedGeojit Technologies LimitedGeojit Financial Management Services Pvt. Ltd.Geojit Financial Distribution Pvt. Ltd.
Associate Company : Geojit Credits Pvt Ltd.
Joint Venture : Barjeel Geojit Securities LLC, United Arab Emirates
Key Management Personnel : Mr. C.J. George, Managing Director
Relatives of Key Management Personnel : Ms. Shiny George, Wife
II) Transactions with related parties during the year and balance outstanding at the end of the year:
Note: No amounts pertaining to related parties were written off or written back during the year.
2005-062006-072005-062006-072005-062006-072005-062006-072005-06
Relatives of KeyManagement
Personnel
Key ManagementPersonnel
Joint VentureAssociateCompany
SubsidiaryCompanies
2006-07
Nature
oftransaction
(In Rupees)
II. Balances at year end:
Debtors /Receivable 2,631,880 5,334,776 - - - - - - - -
Creditors /Payable 964,272 3,749,167 - - 10,982,229 8,880,420 1,189,902 804,863 - -
Transactions during the year:
MarketingFee - - - - 45,191,400 30,432,000 - - - -
Software servicesavailed 8,685,680 6,430,000 - - - - - - - -
SoftwarePurchased 1,300,000 - - - - - - - - -
AMC Paid 443,348 - - - - - - - - -
Purchase ofinvestments 8,000,000 - - 101,227,920 1,659,200 5,563,360 - - - -
Salary andbenefits - - - - - - 5,705,679 5,719,218 - -
Dividend paid - - - - - - 25,379,225 7,106,183 5,012,047 1,410,031
Dividend received 20,000,000 - - - 15,075,377 - - - - -
Loan availed - - 183,000,000 4,500,000 - - - - - -
Loan repaid - - 183,000,000 4,500,000 - - - - - -
Interest paidon loan - - 731,314 34,061 - - - - - -
Expensesrecovered 29,237,051 7,267,996 121,956 1,137,164 2,234,030 1,679,851 - - - -
Expensesreimbursed 2,846,203 3,935,643 - - 98,725 112,558 - - - -
44
13 thANNUAL REPORT
21. Earnings per share are computed as follows:
Particulars 2006-07 2005-06
Net profit after tax – In Rs. 210,541,185 184,442,950
Profit attributable to Equity Shareholders – In Rs. (A) 210,541,185 184,442,950
Total number of equity shares outstanding at balance sheet date 208,990,870 152,186,000
Weighted average number of equity shares outstanding,considered for the purpose of computing Basic EPS (B) 155,142,966 152,186,000
Add: Number of potential equity shares to be issued underEmployee Stock Option Plan 2005 and on conversion ofwarrants issued to BNP Paribas S.A. on preferential basis 2,101,822 -
Weighted average number of equity shares outstanding,considered for the purpose of computing Diluted EPS (C) 157,244,788 152,186,000
Basic Earnings Per Share – In Rs. (A/B) 1.36 1.21
Diluted Earnings Per Share – In Rs. (A/C) 1.34 1.21
Nominal value of Equity Shares – In Re. 1.00 1.00
22. Components of Deferred Tax Liability (Net) shown in the Balance Sheet is as follows:
Particulars As at 31.03.2006 For the year As at 31.03.2007(Rs.) (Rs.) (Rs.)
Liability Items:
Depreciation 22,229,263 5,176,120 27,405,383
Asset Items:
Provision for bad &doubtful debts / advances (4,030,831) 27,410 (4,003,421)
ESOP compensation cost - (1,380,740) (1,380,740)
Deferred Tax Liability (Net) 18,198,432 3,822,790 22,021,222
23. The details of Company’s interest as a venturer in a jointly controlled entity:
Name Country of Incorporation Percentage of ownershipinterest as on
31.03.2007 31.03.2006
Barjeel Geojit Securities LLC United Arab Emirates 30 % 27.27 %
The Company’s interest in the joint venture is reported as long-term investment and stated at cost. However, theCompany’s share in the assets and liabilities as at the Balance Sheet date and in the incomes and expenses(each without elimination of the effect of transactions between the Company and the joint venture) for the year isas follows:
Particulars 2006-07(Rs.) 2005-06(Rs.)
ASSETS
Fixed & Intangible Assets (Net Block) 2,050,407 2,439,550
Current Assets, Loans and Advances:
Sundry Debtors 6,176,070 11,639,933
Cash & Bank balances 35,005,456 26,950,010
Loans & Advances 10,606,508 6,008,916
45
LIABILITIES
Current Liabilities & Provisions:
Liabilities 10,559,467 10,950,869
Provisions 1,200,691 564,754
INCOME
Income from operations 50,978,071 43,804,320
Other income 3,328,810 895,224
EXPENDITURE
Payment to and provision for employees 20,354,943 15,724,361
Operating expenses 1,115,343 307,634
Establishment & Other expenses 11,977,036 10,218,277
Depreciation / Amortisation 1,101,431 676,983
CONTINGENT LIABILITY
Bank Guarantees 415,935 300,436
24. Disclosure under Accounting Standard 29 ‘Provisions, Contingent Liabilities and Contingent Assets’ issued by TheInstitute of Chartered Accountants of India:
Opening Balance Provision made Payments / Reversals Closing BalanceNature of Provision as on 01.04.2006 during the year during the year on 31.03.2007
(Rs.) (Rs.) (Rs.) (Rs.)
Leave Encashment 621,747 634,198 621,747 634,198
25. The details of assets under the Portfolio Management Scheme are as follows:
Particulars As on 31.03.2007 As on 31.03.2006(Rs.) (Rs.)
Number of clients 404 400
Original cost of assets under management 502,740,412 472,697,174
Represented by:
(a) Bank balances 101,218,805 35,045,862
(b) Cost of securities 401,521,607 437,651,312
Total 502,740,412 472,697,174
Net asset value of assets under management 612,241,702 685,008,000
26. Previous year’s figures have been regrouped / reclassified wherever necessary to conform to current year’sclassification.
Signatures to Schedules 1 to 18
For Deloitte Haskins & Sells For and on behalf of the Board of DirectorsChartered Accountants
M. Ramachandran A.P. Kurian C.J. GeorgePartner Chairman Managing Director
Place : Mumbai Place : Mumbai Jayaraj T.Date : 19.05.2007 Date : 19.05.2007 Company Secretary
46
13 thANNUAL REPORT
01: REGISTRATION DETAILSRegistration No: 09-08403State Code : 09Balance Sheet Date : 31/03/2007
02: CAPITAL RAISED DURING THE YEAR (AMOUNT IN Rs. THOUSANDS)Public Issue NILRights Issue NILBonus Issue NILPrivate Placement 56,805
03: POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN Rs.THOUSANDS)
Total Liabilities 2,129,332 Total Assets 2,129,332
SOURCES OF FUNDS
Paid up Capital 208,991 Monies Pending Allotment 85,370 Reserves and Surplus 1,808,604 Secured Loans NILDeferred Income Tax liability 22,021
Others 4,346
APPLICATION OF FUNDS
Net Fixed Assets 227,905 Investments 423,027 Capital work-in-Progress NILNet Current Assets 1,478,400 Accumulated Loss NIL
04: PERFORMANCE OF THE COMPANY (AMOUNT IN Rs. THOUSANDS)
Turnover/Other Income 1,098,817 Total Expenditure 782,033 Profit before Tax 316,784 Profit after Tax 210,541 Earnings Per Share(Rs.) 1.36 Dividend Rate (interim) 40%
05: GENERIC NAMES OF THREE PRINCIPAL PRODUCTS/SERVICES OF THE COMPANY (AS PER MONETARY TERMS)
Item Code No.(ITC Code) : 80803
Product Description :
PART IV OF SCHEDULE VI OF THE COMPANIES ACT 1956.BALANCE SHEET ABSTRACT AND COMPANY'S GENERAL BUSINESS PROFILE
Stock & Share Broking Depository Services Portfolio Management
GEOJIT FINANCIAL SERVICES LIMITED
Stock & Share BrokingDepository ServicesPortfolio Management
47
GEOJIT FINANCIAL SERVICES LIMITEDSTATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956,
RELATING TO SUBSIDIARY COMPANY
Name of subsidiary company : Geojit Commodities Limited
The financial year of subsidiary company ended on : 31st March, 2007
Number of shares in the subsidiary company held by
Geojit Financial Services Ltd. and its nominees in the : 40,00,000 equity shares of Rs.10/- each fully paid upSubsidiary as at March 31, 2007.
Extent of interest of Geojit Financial Services Limited in the : 100%
Capital of the Subsidiary.
The net aggregate of profits of the subsidiary company
so far as these concern the members of Geojit FinancialServices Limited
(i) dealt with in the accounts of Geojit Financial
Services Ltd. amounted to:
(a) for the subsidiary’s financial year ended on Nil31st March, 2007 :
(b) for the previous financial years of the : Nilsubsidiary company since it becamesubsidiary of Geojit Financial Services Ltd.
(ii) not dealt with in the accounts ofGeojit Financial Services Ltd. amounted to:
(a) for the subsidiary’s financial year ended on Profit of Rs.1,83,07,690/-
31st March, 2007. :(b) for the previous financial years of the subsidiary : Profit of Rs.3,39,77,363/-
company since it became subsidiary
of Geojit Financial Services Ltd.
For and on behalf of the Board of Directors
Place : Mumbai A.P.Kurian C.J.George T.JayarajDate : 19th May 2007 Chairman Managing Director Company Secretary
48
13 thANNUAL REPORT
GEOJIT COMMODITIES LIMITED
DIRECTORS REPORT
Your Directors have great pleasure in presenting the 12th
Directors Report of the Company together with the AuditedAnnual Accounts for the Year ended March 31st 2007.
Financial Performance
The performance of the Company for the financial yearended 31st March, 2007 is summarised below:
The Company has earned a Profit After Tax of Rs.4.57Crores during the year, an increase of 143% to the lastyears Profit After Tax of Rs.1.88 Crores. The total incomeof the Company during the year is Rs.23.90 Crores, anincrease of 136% compared to last year’s income ofRs.10.11 Crores.
Operations
The volume of Geojit in all the three national LevelExchanges recorded steady growth during the period.Gold, Pepper and Rubber were the most tradedcommodities, apart from Crude, silver, Zinc, Jeera, Chillietc. Value added services like Customized finance andstructured credit facilities in association with Geojit CreditsPrivate Limited, etc had its impact in the volume buildingexercise. In line with the growth of Industry turn over, Geojithas also maintained its growth track.
During this year the Company collected Rs.17.49 Croresas brokerage against Rs.8.15 Crores in the correspondingperiod last year. The added focus given to the insuranceagency business also yielded encouraging results. TheCompany generated commission of Rs.2.66 Crores duringthe year, an increase of 81% over the previous year.
We could achieve this growth mainly through massiveCommodity branch expansion, which is now 308 innumbers with trading terminals.
Subsidiary Companies
Geojit Technologies Private Limited, a wholly ownedsubsidiary recorded a Net Profit of Rs.1.16 Lacs during theperiod from software development and maintenance.Another subsidiary viz, Geojit Financial Distribution PrivateLimited recorded a net profit of Rs.32.81 Lacs, an increaseof 399% over the previous year.
The Audited Statement of Accounts for the period endedMarch 31, 2007 of these subsidiaries together with theReport of Directors and Auditors, as required pursuant tothe provisions of section 212 of the Companies Act, 1956are attached.
The Consolidated Financial Results represent those ofGeojit Commodities Limited and its wholly ownedsubsidiaries, viz. Geojit Technologies Private Limited,Geojit Financial Distribution Private Limited, GeojitFinancial Management Services Private Limited and thestep down subsidiary, Sigma Systems International FZ LLC.
Board of Directors
The Board of Directors of the Company consists ofMr. C.J.George, Mr. P.C. Cyriac, Mr. A. Balakrishnan,Lt. Col.(Retd.) Mr. A.V.Viswanathan and Mrs. Sally Sampath.
In accordance with the principle of Retirement of Directorsby rotation, Mr.C.J.George and Mr.A.V.Viswanadhan retiresat the ensuing Annual General Meeting and being eligibleoffers themselves for re-appointment.
Auditors
M/s Varma & Varma, Chartered Accountants, Kochi,Statutory Auditors of the Company, retire at the conclusionof the ensuing Annual General Meeting. They haveexpressed their unwillingness to be re-appointed asauditors of the Company. The Company has received aspecial notice from a shareholder of the Company, in termsof the provisions of the Companies Act, 1956, signifyingthe intention to propose the appointment of DeloitteHaskins & Sells, Kochi as statutory auditor of the Companyfrom the conclusion of the ensuing Annual General Meetingtill the conclusion of next Annual General Meeting. Theyhave expressed their willingness to act as auditors of theCompany, if appointed, and have further confirmed thatthe said appointment would be in conformity with theprovisions of Section 224(1B) of the Companies Act, 1956.
Particulars Year ended Year ended31st March, 2007 31st March, 2006
Total Income 2390.99 1011.29
Profit before Tax 712.86 280.77
Income Tax & Deferred Tax 255.73 92.42
Profit After Tax 457.13 188.35
Balance brought forward 339.77 151.42
Profit available for appropriation 796.90 339.77
Appropriations :
Transfer to General Reserve 46.00 Nil
Utilised for Bonus Issue 240.00 Nil
Dividend on equity shares 228.05 Nil(Including dividend tax)
Balance carried to Balance Sheet 282.85 339.77
Rs. in Lacs
49
Necessary resolution alongwith explanatory statementthereto are included in the Notice of ensuing AnnualGeneral Meeting.
Dividend
The sound earnings performance in the period enabledthe Board to declare a first interim dividend of 50% duringthe year. The Board do not recommend any final dividend.
Increase in share capital
After getting the approval of members, the Board ofDirectors of the Company at its meeting held on 01.09.2006have allotted bonus shares at the rate of 3 : 1, i.e. threeadditional equity share for every one existing equity shareof the Company. An additional 80,00,000 shares wereallotted to holding company during this period as approvedby the members at the Annual General Meeting held on30.08.2006. With the allotment of bonus shares and theadditional issue, the paid up share capital of the Companyincreased to Rs.4 Crores.
Conservation of Energy and Technology Absorption
The Company has nothing to report in respect ofinformation on conservation of energy and technologyabsorption as required under section 217(1) of theCompanies Act, 1956 read with Companies (Disclosuresof Particulars in the Report of Board of Directors) Rules,1988 since the Company is not engaged in manufacturingor processing business. There was no foreign exchangeearnings or expenditure during the period.
Particulars of Employees
None of the employees was covered by the provision ofsection 217(2A) of the Companies Act, 1956, read withCompanies (Particulars of Employees) Rules, 1975.
Directors Responsibility Statement
As required under Section 217 (2AA) of the CompaniesAct, 1956, your Directors confirm having :
a) followed in preparation of the Annual Accounts, theapplicable standards with proper explanation relatingto material departures, where applicable;
b) selected such accounting policies and applied themconsistently and made judgements and estimates thatare reasonable and prudent so as to give a true andfair view of the state of affairs of your Company at theend of the financial year and of the profit of yourCompany for that period;
c) taken proper and sufficient care for the maintenanceof adequate accounting records in accordance withthe provisions of the Companies Act, 1956 forsafeguarding the assets of your Company and forpreventing and detecting fraud and other irregularities;and
d) Prepared the Annual Accounts on a going concernbasis.
Acknowledgement
The Board of Directors acknowledges the significantcontribution and co-operation made by the employees ofthe company and for the co-operation from bankers,government and other bodies.
For and on behalf of the Board of Directors
Place : Kochi C.J. George A BalakrishnanDate : 18th May 2007 Director Director
50
13 thANNUAL REPORT
For VARMA AND VARMAChartered Accountants
Vijay Narayan GovindPartner
Membership No. 203094Place : KochiDate : 18.05.2007
AUDITORS’ REPORT
The Members,Geojit Commodities Limited,Kochi.
1. We have audited the attached Balance Sheet of GEOJIT COMMODITIES LIMITED, as at 31st March 2007, the Profitand Loss Account and the Cash Flow Statement for the year ended on that date, annexed thereto. These financialstatements are the responsibility of the Company’s management. Our responsibility is to express an opinion onthese financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial statementsare free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amountsand disclosures in the financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial statement presentation. Webelieve that our audit provides a reasonable basis for our opinion.
3. As required by the Companies (Auditors’ Report) Order, 2003 issued by the Central Government of India in terms ofSection 227 (4A) of the Companies Act, 1956, we give in the Annexure, a statement on the matters specified inparagraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:
i. We have obtained all the information and explanations, which to the best of our knowledge and belief werenecessary 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 appearsfrom our examination of those books;
iii. The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by the report are in agreementwith the books of accounts;
iv. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this reportcomply 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 from directors, as on 31st March, 2007, and taken on record bythe Board of Directors, we report that none of the directors is disqualified as on 31st March 2007, from beingappointed as a Director in terms of clause (g) of sub- section 1 of Section 274 of the Companies Act, 1956;
vi. In our opinion and to the best of our information and according to the explanations given to us, the said accountsgive the information required by the Companies Act,1956,in the manner so required and give a true and fairview in conformity with the accounting principles generally accepted in India:
i. in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2007;
ii. in the case of the Profit and Loss Account, of the profit for the year ended on that date; and
iii. in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.
51
ANNEXURE REFERRED TO IN PARAGRAPH 1 OF OUR AUDITREPORT OF EVEN DATE
1. a) The Company is maintaining proper records showing full particulars including quantitative details and situationof fixed assets.
b) We are informed that major items of the fixed assets have been physically verified by the management at theend of the year, which, in our opinion is reasonable having regard to the size of the company and the nature ofits assets and that no material discrepancies have been noticed on such verification.
c) According to the information and explanations given to us, there has been no significant disposal of fixed assetsduring the year.
2. a) We are informed that the physical verification of inventory has been conducted by the management at the end ofthe year, the frequency of which in our opinion is reasonable having regard to the size of the company and thenature of its business.
b) In our opinion and according to the explanations given to us, the procedures for physical verification of inventoryfollowed by the management are generally reasonable and adequate in relation to the size of the company andthe nature of its business.
c) The company is maintaining proper records of inventory and no material discrepancies were noticed on physicalverification, by the management.
3. a) The company has not granted any loans secured or unsecured to companies, firms or other parties listed in theregister maintained under section 301 of the Companies Act, 1956
b) The Company has taken an unsecured loan from a company listed in the register maintained under section 301 ofthe Companies Act, 1956. The amount of loan received during the year was Rs.2912.58 lakhs, out of which Rs.1.29lakhs is outstanding as at Balance Sheet date. Except the above, the company has not taken any loans, secured orunsecured from companies, firms or other parties listed in the register maintained under Section 301 of the CompaniesAct, 1956
c) In our opinion, the rate of interest and other terms and conditions of the above loan taken by the Company was notprima facie prejudicial to the interest of the Company.
d) The Company has been regular in repayment of principal amount and interest.
4. In our opinion and according to the information and explanations given to us, there are adequate internal controlprocedures commensurate with the size of the Company and nature of its business for the purchase of inventoryand fixed assets and for sale of goods and services. During the course of our audit no major weakness has beennoticed in the internal control system in respect of these areas.
5. a) According to the information and explanations given to us, we are of the opinion that the particulars of contractsor arrangements that need to be entered in the register maintained under section 301 of the Companies Act,1956, have been so entered.
b) In our opinion and according to the information and explanations given to us, the transactions made in pursuanceof such contract or arrangements with parties referred to in (a) above, have been made at prices which arereasonable having regard to the prevailing market prices at the relevant time.
6. The Company has not accepted any deposits from the public during the year and hence the directives issued by theReserve Bank of India and the provisions of sections 58A, 58AA or any other relevant provisions of the CompaniesAct, 1956 and the rules framed thereunder are not applicable.
52
13 thANNUAL REPORT
7. In our opinion, the company has an internal audit system, the scope and coverage of which is commensurate withits size of the Company and the nature of its business.
8. To the best of our knowledge and according to the information and explanations given to us, the Central Governmenthas not prescribed the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 for theproducts and services of the Company;
9. a) As per the information and explanations given to us, the company has been generally regular in depositingundisputed statutory dues including Provident Fund, Employees State Insurance, Income Tax, Sales/ValueAdded Tax, Service Tax and Cess and other material statutory dues as applicable, with the appropriate authoritiesduring the year.
b) According to the information and explanations given to us and the records of the Company, examined by us,there are no disputed amounts of taxes that have not been deposited with the authorities as at 31st March 2007.
10. The Company has no accumulated losses at the end of the financial year and has not incurred cash losses in thecurrent or in the immediately preceding financial year.
11. According to the information and explanations given to us and the records of the Company examined by us, theCompany has no dues to the financial institutions and banks.
12. The Company has not given any loans or advances on the basis of security by way of pledge of shares and othersecurities.
13. The Company is not a chit fund/nidhi/mutual benefit fund/society and hence the provisions thereof are not applicable.
14. In our opinion the Company has maintained proper records of transactions and contracts in respect of its dealing ininvestments and timely entries have been made therein. The investments are held by the company in its own name.
15. According to the information and explanations given to us and the records of the company examined by us, thecompany has not given any guarantee for loans taken by others from banks or financial institutions.
16. The Company has not availed any term loans and hence the relative reporting requirements are not applicable.
17. According to the information and explanations given to us and the records of the company examined by us, thefunds raised on short-term basis have not been used for long- term investment.
18. The company has not made any preferential allotment of shares to parties and companies covered in the registermaintained under Section 301 of the Companies Act 1956, during the year.
19. The company has not issued any debentures during the year.
20. The company has not raised any money by public issues during the year.
21. According to the information and explanations given to us and the records of the company examined by us, no fraudeither on or by the company, has been noticed or reported during the year.
For VARMA AND VARMAChartered Accountants
Vijay Narayan GovindPartner
Membership No. 203094Place : KochiDate : 18.05.2007
53
GEOJIT COMMODITIES LIMITED
BALANCE SHEET AS AT 31st MARCH 2007(In Rupees)
For Varma & Varma For and on behalf of the Board of Directors ofChartered Accountants Geojit Commodities Limited
Vijay Narayan Govind A. Balakrishnan C.J. GeorgePartner Director Director
Place : Kochi Place : KochiDate : 18.05.2007 Date : 18.05.2007
Schedules 1 to 11 and 19 form an integral part of the Balance SheetThis is the Balance Sheet referred to in our report of even date.
Sch No.
As at 31st March 2007
As at 31st March 2006
SOURCES OF FUNDS
Shareholders' FundsShare Capital 1 40,000,000 8,000,000 Reserves and Surplus 2 32,885,053 33,977,363
Deferred Tax Liability (Net) 1,920,000 431,000
Total 74,805,053 42,408,363
APPLICATION OF FUNDS
Fixed AssetsGross Block 3 25,083,000 18,440,285 Less: Accumulated Depreciation 9,009,508 4,901,430
Net Block 16,073,492 13,538,855
Investments 4 18,575,000 1,575,000
Current Assets, Loans & AdvancesInventories 5 11,250,000 972,930 Sundry Debtors 6 82,949,793 50,170,720 Cash and Bank Balances 7 108,892,357 67,890,898 Other Current Assets 8 - 142,243 Loans and Advances 9 329,914,352 131,331,484
533,006,502 250,508,275
Current Liabilities and ProvisionsCurrent Liabilities 10 492,848,984 223,213,767 Provisions 11 957 -
492,849,941 223,213,767
Net Current Assets 40,156,561 27,294,508
Total 74,805,053 42,408,363
Significant Accounting Policies and Notes on Accounts 19
( p )
54
13 thANNUAL REPORT
GEOJIT COMMODITIES LIMITED
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31st MARCH 2007(In Rupees)( p )
Sch No. For the year ended 31st March, 2007
For the year ended 31st March, 2006
INCOME Sales - Commodities (Own trade) 11,638,659 - Trading-Commodities (for Clients)
Sales 1,706,326,987 1,056,942,626 Closing Inventory - 972,930
1,706,326,987 1,057,915,556 Less : Purchases 1,705,354,057 1,056,119,006 Less:Opening Inventory 972,930 1,796,550
- - - Stock Differential 12 11,250,000 (23,072) Income from Operations 13 210,079,164 100,451,536 Other Income 14 6,131,323 700,650
239,099,146 101,129,114 EXPENDITURE
Purchases -Commodities (Own trade) 23,160,901 - Payments to and Provisions for Employees 15 40,906,444 25,875,484 Operating Expenses 16 70,213,951 30,982,178 Establishment & Other Expenses 17 28,765,590 13,727,877 Finance Charges 18 658,083 82,245 Depreciation 4,108,078 2,384,418
167,813,047 73,052,202
Profit Before Tax 71,286,099 28,076,912 Provision for Tax
-Current Tax 23,800,000 9,595,000 -Deferred Tax 1,489,000 (502,850) -Fringe Benefit Tax 271,000 150,000
-Income Tax prior years 13,409 -
Profit After Tax for the year 45,712,690 18,834,762
AppropriationsInterim Dividend 20,000,000 - Dividend Tax 2,805,000 - Transfer to General Reserve 4,600,000 -
Balance carried to Balance Sheet 18,307,690 18,834,762 Earnings Per Share (Basic and Diluted)(See Note No:9) 12.91 5.89
Significant Accounting Policies and Notes on Accounts
19
For Varma & Varma For and on behalf of the Board of Directors ofChartered Accountants Geojit Commodities Limited
Vijay Narayan Govind A. Balakrishnan C.J. GeorgePartner Director Director
Place : Kochi Place : KochiDate : 18.05.2007 Date : 18.05.2007
Schedules 12 to 19 form an integral part of the Profit & Loss Account.This is the Profit & Loss Account referred to in our report of even date.
55
GEOJIT COMMODITIES LIMITED
CASH FLOW STATEMENT FOR THE YEAR ENDED 31st MARCH 2007(In Rupees)
A. CASH FLOW FROM OPERATING ACTIVITIES:Profit before tax 71,286,099 28,076,912 Add/(Less): Non operating expensesa) Depreciation 4,108,078 2,384,418 b) Preliminary expenses written off - 144,595 c) Dividend from Investments (5,000) (110,667) d) Profit on sale of investments (419,887) (63,871) e) Provision for doubtful debts 4,192,450 3,128,134 f) Bad debts written off 852,491 52,084 g) Interest on IT refund (62,844) - h) Debit balances in Creditors written off 84,040 -
Cash flow before changes in Working Capital 80,035,427 33,611,605
Adjustments for changes in Working capital(Increase)/Decrease in Inventory (10,277,070) 823,620 (Increase)/Decrease in Debtors (37,824,014) (35,621,285) (Increase)/Decrease in Loans/Advances (197,497,566) (58,216,815) Increase/(Decrease) in Current Liabilities 269,551,177 63,286,464 Increase/(Decrease) in Provisions - - Total 23,952,527 (29,728,016) Income tax paid (net of refunds) (24,963,667) (10,588,024) Cash from Operations 79,024,287 (6,704,435)
B. CASH FLOW FROM INVESTING ACTIVITIES:Purchase of Fixed Assets (6,642,715) (7,222,947) Purchase of Investments (71,000,000) (17,000,000) Investment in Subsidiary Companies (7,000,000) - Sale of Investments 61,419,887 21,174,537 Dividend Received 5,000 -
Cash from Investing Activities (23,217,828) (3,048,410)
C. CASH FLOW FROM FINANCING ACTIVITIESProceeds from issue of share capital 8,000,000 - Dividend Paid (20,000,000) - Corporate Dividend Tax Paid (2,805,000) -
Cash from Financing Activities (14,805,000) -
Net Increase in Cash and Cash Equivalents 41,001,459 (9,752,845)
Opening Cash & Bank balances 67,890,898 77,643,743 Closing Cash & Bank balances 108,892,357 67,890,898
2006-07 2005-06
As per our Report of even date attached.
For Varma & Varma For and on behalf of the Board of Directors ofChartered Accountants Geojit Commodities Limited
Vijay Narayan Govind A. Balakrishnan C.J. GeorgePartner Director Director
Place : Kochi Place : KochiDate : 18.05.2007 Date : 18.05.2007
56
13 thANNUAL REPORT
GEOJIT COMMODITIES LIMITED
SCHEDULES FORMING PART OF ACCOUNTS FOR THE YEAR ENDED 31st MARCH 2007(In Rupees)
SCHEDULE - 1SHARE CAPITAL
Authorised Capital5,000,000 Equity Shares ( Previous year: 5,000,000) of Rs.10/- each 50,000,000 50,000,000
Issued, Subscribed and Paid Up Capital4,000,000 Equity Shares 40,000,000 8,000,000 ( Previous year : 800,000 Equity Shares of Rs. 10/- each)
Of the above shares:a) 4,000,000 Equity Shares (Previous Year 800,000 Equity Shares) of Rs. 10 /- each are held by the Holding Company - Geojit Financial Services Limitedb) 169,467 Equity Shares (Previous Year 169,467) of Rs. 10 each are allotted for consideration other than cash.c) 2,400,000 Equity Shares (Previous Year Nil) of Rs 10/- each were issued as Bonus Shares by Capitalisation of Reserves.
40,000,000 8,000,000
SCHEDULE - 2RESERVES & SURPLUS
General ReserveAs per Last year Balance Sheet - - Add: Transferred from Profit and Loss Account 4,600,000 -
4,600,000 -
Surplus in Profit and Loss Account As per Last year Balance Sheet 33,977,363 15,142,601 Less: Utilised for Bonus Issue (24,000,000) - Add: Surplus Profit for the year 18,307,690 18,834,762
28,285,053 33,977,363
32,885,053 33,977,363
As at 31st March, 2007
As at 31st March, 2006
57
GE
OJI
T C
OM
MO
DIT
IES
LIM
ITE
DS
CH
ED
UL
ES
FO
RM
ING
PA
RT
OF
AC
CO
UN
TS
FO
R T
HE
YE
AR
EN
DE
D 3
1st M
AR
CH
200
7
Sch
edu
le 3
: F
ixed
Ass
ets
(In
Rup
ees)
()
As
at01
.04.
2006
Ad
dit
ion
s d
uri
ng
th
e ye
ar
Del
etio
ns
As
at31
.03.
2007
A
s at
01.0
4.20
06
Fo
r th
e ye
ar
As
at31
.03.
2007
A
s at
31.0
3.20
07
As
at31
.03.
2006
I. T
ang
ible
Ass
ets
Impr
ovem
ents
to L
ease
hold
P
rem
ises
1,21
5,74
2
74
,800
-
1,29
0,54
2
40
1,79
2
342,
612
744,
404
54
6,13
8
81
3,95
0
Ele
ctric
al E
quip
men
ts42
8,90
8
7,94
9
-
436,
857
46
,427
21
,141
67
,568
369,
289
382,
481
O
ffice
Equ
ipm
ent
1,81
4,15
9
89
,528
-
1,90
3,68
7
26
5,00
1
156,
795
421,
796
1,
481,
891
1,
549,
158
Fur
nitu
re &
Fitt
ings
719,
542
52
,344
-
771,
886
40
6,33
1
76,3
11
482,
642
28
9,24
4
31
3,21
1
Com
pute
rs a
nd A
cces
sorie
s9,
880,
954
4,00
2,54
5
-
13
,883
,499
2,
929,
727
1,98
7,92
1
4,91
7,64
8
8,
965,
851
6,
951,
227
VS
AT
Equ
ipm
ents
2,59
2,18
0
26
0,58
9
-
2,85
2,76
9
52
8,68
1
761,
091
1,28
9,77
2
1,
562,
997
2,
063,
499
II. In
tan
gib
le A
sset
s U
ser
Acc
ess
Lice
nce
1,78
8,80
0
2,
154,
960
-
3,94
3,76
0
32
3,47
1
762,
207
1,08
5,67
8
2,
858,
082
1,
465,
329
To
tal
18,4
40,2
85
6,64
2,71
5
-
25
,083
,000
4,
901,
430
4,10
8,07
8
9,00
9,50
8
16
,073
,492
13,5
38,8
55
Pre
viou
s Y
ear
11,2
17,3
38
7,22
2,94
7
-
18
,440
,285
2,
517,
012
2,38
4,41
8
4,90
1,43
0
13
,538
,855
8,70
0,32
6
DE
PR
EC
IAT
ION
NE
T B
LO
CK
Par
ticu
lars
GR
OS
S B
LO
CK
AT
CO
ST
58
13 thANNUAL REPORT
GEOJIT COMMODITIES LIMITED
SCHEDULES FORMING PART OF ACCOUNTS FOR THE YEAR ENDED 31st MARCH 2007(In Rupees)( p )
As at 31st March, 2007
As at 31st March, 2006
SCHEDULE - 4INVESTMENTSa) Long Term Investments - At Cost
Unquoted -TradeIn Wholly owned Subsidiary companies :
Geojit Technologies Private Limited 7,500,000 500,000 750,000 (50,000) Equity Shares of Rs 10/-(Rs.10 /- ) each fully paid
Geojit Financial Distribution Private Limited 500,000 500,000 50,000 (50,000) Equity Shares of Rs 10/-(Rs.10 /-) each fully paid
Geojit Financial Management Services Private Limited 500,000 500,000 50,000 (50,000) Equity Shares of Rs 10/-(Rs.10 /-) each fully paid
In other Companies:5 (Previous Year - 5) Shares of Rs. 10,000 each in First Commodities Exchange of India Ltd. 75,000 75,000
b) Current Investments - At Lower of Cost or Net Asset Value
Quoted Non - Trade
Investments in units of Mutual Funds:-Canbank Mutual Fund 10,000,000 - Aggregate Market value of quoted investments is Rs. 10,007,173/- ( Nil)
18,575,000 1,575,000
SCHEDULE - 5INVENTORIES
Commodities 11,250,000 972,930
11,250,000 972,930
SCHEDULE - 6SUNDRY DEBTORSUnsecureda) Considered Good:Outstanding for a period exceeding six months 8,016,169 503,858 Outstanding for a period less than six months:
Due from Clients : 55,649,547 45,141,130 Others : 19,284,077 4,525,732
b) Considered DoubtfulOutstanding for a period exceeding six months 3,188,749 1,868,986 Others 1,003,701 1,259,148
4,192,450 3,128,134 Less: Provision 4,192,450 3,128,134
- -
82,949,793 50,170,720
::
59
GEOJIT COMMODITIES LIMITED
SCHEDULES FORMING PART OF ACCOUNTS FOR THE YEAR ENDED 31st MARCH 2007(In Rupees)( p )
As at 31st March, 2007
As at 31st March, 2006
SCHEDULE - 7CASH and BANK BALANCES:
Cash balance in hand 66,698 39,481 Balances with scheduled banks:-
In Current Accounts 7,176,462 2,717,171 In Current Accounts - (Clients) 92,605,073 61,134,246 Fixed Deposit Accounts 9,044,124.00 4,000,000
(The fixed deposit has been provided as security for the guarantee issued by the Bank in favour of Commodity Exchanges and Sales Tax deposits)
108,892,357 67,890,898
SCHEDULE-8OTHER CURRENT ASSETS
Interest accrued on fixed deposits - 142,243 - 142,243
SCHEDULE - 9LOANS AND ADVANCES(Unsecured, considered good)
Advances recoverable in cash or in kind or for value to be received
Subsidiary Company :Geojit Technologies Private Limited 3,774,400 6,036,399 Geojit Financial Distribution Pvt. Ltd 5,123 - Staff Loan 2,000 76,828
Others 5,428,237 620,050
9,209,760 6,733,277 DepositsDeposits and Margin Money with Commodity Exchanges 318,526,397 122,139,762 Other Deposits 725,727 694,720
319,252,124 122,834,482
Income Tax Advance Tax Paid 25,252,468 11,358,725 Less: Provision for Income Tax 23,800,000 9,595,000
1,452,468 1,763,725
329,914,352 131,331,484
SCHEDULE - 10CURRENT LIABILITIES Sundry Creditors - - Clients 119,713,948 66,310,324 - Commodity Exchanges 20,834,400 3,352,533 - Holding Company - (Geojit Financial Services Limited) 2,631,880 5,334,776 - Others (Other than SSI undertakings) 20,582,918 9,612,001 Client Margin Accounts 320,073,216 133,477,599 Security Deposits 2,884,937 2,684,000 Other Liabilities 6,127,685 2,442,534
492,848,984 223,213,767
SCHEDULE - 11PROVISIONSProvision for Fringe Benefit tax 271,000 150,000 Less: Advance Tax Paid 270,043 150,000
957 -
60
13 thANNUAL REPORT
GEOJIT COMMODITIES LIMITED
SCHEDULES FORMING PART OF ACCOUNTS FOR THE YEAR ENDED 31st MARCH 2007(In Rupees)( p )
For the year ended 31st March, 2007
For the year ended 31st March, 2006
SCHEDULE - 12STOCK DIFFERENTIAL
Closing Inventory:Commodities - (Own Trade) 11,250,000 - Shares - -
11,250,000 - Opening Inventory :Commodities - (Own Trade) - Shares - 23,072
- 23,072 11,250,000 (23,072)
SCHEDULE - 13INCOME FROM OPERATIONS
Brokerage (TDS -Rs.780,579.50 (Rs.123,369/-)) 174,992,864 81,557,045 Insurance Commission (TDS-Rs.6,185,254/-(Rs.2,752,515/-)) 26,657,562 14,721,857 Software Consultancy - 1,578,750 Exchange Charges (Net) 6,143,562 1,690,463 Sundries 2,285,176 903,421
210,079,164 100,451,536
SCHEDULE - 14OTHER INCOME
Profit on sale of Investments 419,887 63,871 Dividend received 5,000 110,667 Interest received (TDS -Rs.125,096/- (Rs.31,893/-)) 453,690 179,496 Income from Commodity Hedging 3,111,540 - Others (TDS-Rs.61,538.09) 2,141,206 346,616
6,131,323 700,650
SCHEDULE - 15PAYMENTS TO AND PROVISIONS FOR EMPLOYEES
Directors' Remuneration - 1,104,107 Salary and Allowances 37,860,752 22,470,348 Contribution to Provident fund and other funds 1,605,677 1,459,062 Staff Welfare Expenses 1,440,015 841,967
40,906,444 25,875,484
SCHEDULE-16OPERATING EXPENSES
Business Associates Commission 62,728,032 27,769,260 Connectivity Charges 2,942,955 2,430,110 Sundries (See Note No. 6) 992,909 303,942 Subscription charges 916,615 478,866 Postage Charges - Contract Note 1,879,907 - Commodity Trading Charges 753,533 -
70,213,951 30,982,178
61
GEOJIT COMMODITIES LIMITED
SCHEDULES FORMING PART OF ACCOUNTS FOR THE YEAR ENDED 31st MARCH 2007(In Rupees)( p )
For the year ended 31st March, 2007
For the year ended 31st March, 2006
SCHEDULE-17ESTABLISHMENT & OTHER EXPENSESPostage & Telephone Expenses 3,534,498 1,302,013 Travelling and Conveyance 679,756 964,118 Electricity Charges 2,865,927 1,214,075 Printing and Stationery 885,147 635,911 Repairs and Maintenance 3,096,345 628,960 Rent 5,156,754 1,374,002 Rates and Taxes 3,021,135 - Professional Charges 551,147 564,721 Insurance Charges 206,398 17,307 Office Expenses 1,230,183 1,526,761 Sitting Fee 18,000 20,000 Bank Charges 1,387,437 617,958 Miscellaneous Expenses 1,087,922 1,537,238 Provision for Bad and Doubtful Debts 4,192,450 3,128,134 Bad debts written off 852,491 52,084 Preliminary Expenses Written Off - 144,595
28,765,590 13,727,877
SCHEDULE-18FINANCIAL CHARGES
Interest on Loans other than Fixed Loans 658,083 82,245
658,083 82,245
62
13 thANNUAL REPORT
GEOJIT COMMODITIES LIMITED
SCHEDULES ATTACHED TO AND FORMING PART OF ACCOUNTS FOR THEYEAR ENDED 31st MARCH 2007
SCHEDULE – 19SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS
I. Significant Accounting Policies:
A. Basis of Accounting:
The financial statements are prepared under the historical cost convention on accrual basis in accordance with theapplicable Accounting Standards specified in Section 211(3C) of the Companies Act 1956.
B. Use of Estimates:
The preparation of the financial statements in conformity with generally accepted accounting principles requiresmanagement to make estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of financial statements and reported amounts of income and expenditurefor the year. Actual results could differ from these estimates. Any revision in accounting estimates are recognised inthe period in which the results are known / materialised.
C. Revenue Recognition:
(a) Income from Brokerage is recognised on a daily trade basis for business transacted at the various commodityfutures exchanges of which the company is a member.
(b) Commission income from insurance business is recognised on completion of policy formalities in all aspectsbased on intimation from the principal.
D. Inventory:
Inventory of Commodities as at the year-end is valued at lower of cost (on the basis of the specific identificationmethod) or net realisable value.
E. Fixed Assets:
Fixed Assets are stated at cost less depreciation. Cost includes cost of purchase, tax, duty, installation charges andother costs attributable for bringing the assets to the working condition for intended use.
Improvements made to Leasehold Premises, which have an enduring life, are treated as Fixed Assets.
Impairment in value of assets, if any determined, is adjusted.
F. Depreciation:
Depreciation on Fixed Assets is provided on Straight-Line Method at the rates specified in the Schedule XIV of theCompanies Act, 1956 except in the case of:
a. VSAT Equipments are written off in a period of 5 years.
b. Improvements made to Leasehold Premises are written off over five years as per the Company’s policy irrespectiveof the period of the arrangement. If the premises are vacated prior to the 5-year period, the unamortizedleasehold improvements are fully written off in the year of vacation.
Depreciation on assets added / disposed off during the year is charged on pro-rata basis with reference to the dateof addition/disposal.
63
G. Intangible Assets
User Access License Fee paid for the purchase of license to use the terminals of the Commodity Exchanges aretreated as Intangible Assets and are amortised over a period of 6 years.
H. Retirement Benefits:
a. Provident Fund Contribution:
The Company’s contribution to Provident Fund is charged to the Profit and Loss Account of the period to whichthey relate.
b. Gratuity:
The annual contribution to the Group Gratuity cum Life Assurance Scheme of Life Insurance Corporation ofIndia, determined on the basis of the actuarial valuation by the said Corporation is charged to Profit and LossAccount. The short fall, if any, in the fund balance as determined by the actuarial valuation by the above saidCorporation at the Balance Sheet date, is also charged to the Profit and Loss Account.
c. Leave Encashment:
Leave Encashment liability as at the Balance Sheet date, is determined and accounted on the basis of leave tothe credit of the employees on that date as per the leave and leave encashment policies of the Company.
I. Investments:
Investments are classified as long term or current based on their nature and intended holding period. Long-terminvestments are carried at Cost. Provision is created for any permanent diminution in the value of these Investments.Current Investments are valued at lower of Cost or Net Asset Value.
J. Accounting for Taxes on Income:
a. Provision for current income tax is made at the current tax rates based on the assessable income.
b. Deferred Tax Liability/Asset is computed in accordance with Accounting Standard-22 issued by the Institute ofChartered Accountants of India. Deferred tax Assets are recognised and carried forward to the extent there isreasonable/virtual certainty that sufficient future taxable income will be available against which such assetitems can be realised.
c. Provision for Fringe Benefit Tax is made in accordance with the provisions of the Income Tax Act, 1961.
K. Derivative Instruments:
The company uses commodity futures contracts to hedge the risk of movement in commodity prices.
The company recognises gain/loss on commodity futures contracts used as hedge, on settlement of such contracts.
II. Notes on Accounts
1. Contingent Liability
Particulars As at 31.03.2007 As at 31.03.2006
Counter Guarantee given to bank 850.00 400.00
Estimated amount of contracts remaining to be executedon Capital Account and not provided for (net of advances) Nil Nil
(Rs. in lacs.)
64
13 thANNUAL REPORT
2. Disclosure of Current Investments:
Particulars As at 31-03-2007 As at 31-03-2006
No. of units Book Value No. of units Book Value
(Rs.) (Rs.)
• Canbank Mutual Fund(5,308,505.7309 units werepurchased duringthe year and 4,576,505.6138units were sold during the year) 732,000.1171 10,000,000 Nil Nil
3. Related party Disclosures:
A. Enterprises where control exists:
1) A) Nature Of Relationship
a) Subsidiary Companies • Geojit Technologies Private Limited
• Geojit Financial Distribution Private Limited.
• Geojit Financial Management Services Private Limited.
b) Subsidiary of Subsidiary Company • Sigma Systems International FZ L.L.C
c) Holding Company • Geojit Financial Services Limited.
d) Associate of the Holding Company • Geojit Credits Private Limited.
e) Joint Venture of the Holding Company. • Barjeel Geojit Securities L.L.C.
B) Details of the transactions with above parties during the year and balance outstanding as at 31-03-2007
Joint Venture ofHolding Company
Associate Enterpriseof the Holding
CompanyHolding CompanySubsidiaryParticulars
SoftwareIncome NIL NIL NIL NIL NIL NIL NIL 300,000
Purchase ofInvestments 7,000,000 NIL NIL NIL NIL NIL NIL NIL
Fresh Issue ofcapital NIL NIL 32,000,000 NIL NIL NIL NIL NIL
ExpensesRecovered 192,277 4,501,379 1,750,148 5,769,801 NIL NIL NIL NIL
ExpensesReimbursed 2,091,991 890,000 28,979,340 12,895,946 NIL NIL NIL NIL
Advance forFixed Asset NIL NIL NIL 391,960 NIL NIL NIL NIL
Loan availed NIL NIL NIL NIL 291,258,150 54,000,000 NIL NIL
Loan repaid NIL NIL NIL NIL 291,258,150 54,000,000 NIL NIL
Current Account-Advances (net) NIL 2,425,020 NIL NIL NIL NIL NIL NIL
Interest on loans NIL NIL NIL NIL 672,895 95,861 NIL NIL
Profit on commodityhedging transferred NIL NIL NIL NIL 1,756,316 NIL NIL NIL
2007
Transactions During the year
Rs.2006Rs.
2007Rs.
2006Rs.
2007Rs.
2006Rs.
2007Rs.
2006Rs.
65
Balances outstanding as at the year end
2007 2006 2007 2006 2007 2006 2007 2006
Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.
Receivable 3,779,523 6,036,399 NIL NIL NIL NIL NIL 225,000
Payable NIL NIL 2,631,880 5,334,776 129,389 2,121 NIL NIL
B. Key Managerial Personnel
1. Remuneration paid to Directors:
Particulars 2006-07 2005-06
Sitting Fees 18,000 20,000
4. Segment Information
The Company is primarily engaged in the business of Commodity trading as a member / broker of various exchangesfor the clients and the business of Life Insurance agency. The revenue / results of the Company from the activities ofCommodity Broking and insurance agency exceed 10% of the aggregate revenue/results. Hence these are treatedas Reportable Business Segments as per Accounting Standard 17 – “Segment Reporting” issued by the Institute ofChartered Accountants of India.
Compositions of the Business Segments are as follows: (Rs. in lacs)
Particulars Commodity Trading/ InsuranceBroking Agency Total
Segment Revenue –(including sales from Commodity Trading) 19,181.01 266.58 19,447.59
Segment Expenses –(including cost of sales from Commodity Trading) 18,433.33 161.07 18,594.40
Unallocated Income 6.68
Unallocated Expenditure 147.00
Profit before Taxation 747.68 105.51 712.87
Segment Asset 5,285.35 36.10 5,321.45
Unallocated Assets 355.10
Total 5,285.35 36.10 5,676.55
Segment Liabilities 4,859.57 26.73 4,886.31
Unallocated Liabilities 790.24
Total 4,859.57 26.73 5,676.55
Segment Assets/Liabilities and Capital Employed are not capable of being fully stated separately segment wise,since many assets / liabilities are held jointly for the Business Segments.
The Business transacted by the Company is based in India only and hence there are no Geographical ReportingSegments for the Company.
5. Leave encashment liability is provided at the amount based on leave to the credit of the employees, the amount ofwhich is not material.
(In Rupees)
66
13 thANNUAL REPORT
6. Sundries under Operating Expenses in Schedule –16 represents the amount of Loss in Error Account that are notrecoverable from the clients due to erroneous trade execution / updation of the client transactions- Rs.992,909/-(Rs. 303,942 /-).
7. Expenses under Payments and Provisions for Employees, Operating Expenses and also Establishment and Otherexpenses includes amounts charged by the Holding company (Geojit Financial Services Limited).
8. Deferred tax liability (Net) as on 31.03.2007 represents:
Particulars As at 31.03.2007 As at 31.03.2006
Deferred tax liabilities:
Excess of net book value overwritten down value offixed assets as per Income Tax Act, 1961 2,282,000 1,484,000
Deferred Tax Assets
Provision allowable on actual write offs 362,000 1,053,000
Net Deferred Tax Liability 1,920,000 431,000
9. Details of Earnings Per Share as at 31st March 2007
Particulars As at 31.03.2007 As at 31.03.2006
Earnings Per Share
Profit After Tax for the year 45,712,690 18,834,762
Weighted average number of Equity shares of Rs. 10/-(Rs. 10/-) each fully paid up 3,541,918 3,200,000
Earnings Per Share (Basic and Diluted) 12.91 5.89
The number of shares has been raised during the year on account of fresh issue of 800,000 shares and 2,400,000shares as bonus shares. Earnings per share of the previous year has been re-computed based on the number ofshares including bonus shares.
10. As per the information available with the Management there are no dues exceeding 30 days to Small ScaleIndustrial Undertaking as at the Balance Sheet Date.
11. Particulars required to be disclosed as additional information pursuant to the requirements of Part II to Schedule VIof the Companies Act, 1956 (to the extent applicable).
I. Quantitative Details (in Tonnes)
a. Own Trade
ValueQuantity (MT)Description
Sl.No. ValueQuantity (MT)
Previous YearCurrent Year
Pepper
A. Opening Stock - - - -
B. Purchases 202.85 23,160,901 - -
C. Sales 99.94 11,638,659 - -
D. Wastage 2.91 - - -
E. Closing Stock 100.00 11,250,000 - -
(In Rupees)
(In Rupees)
67
b. Trading for Clients
A. Opening Stock
Rubber - - 35.00 1,796,550
Pepper 15.00 972,930 - -
Cardamom - - - -
Copra - - - -
B. Purchases
Rubber 10,476.00 971,056,980 6,480.00 449,149,870
Pepper 6,945.59 708,886,681 9,253.00 594,369,638
Cardamom 798.00 24,844,938 50.00 12,599,498
Copra 16.00 565,460 - -
C. Sales
Rubber 10,476.00 971,056,980 6,515.00 450,934,882
Pepper 6,960.53 709,859,611 9,238.00 593,396,709
Cardamom 798.00 24,844,936 50.00 12,311,035
Copra 16.00 565,460 - -
D. Wastage
Rubber - - - -
Pepper 0.06 - - -
Cardamom - - - -
Copra - - - -
E. Closing Stock
Rubber - - - -
Pepper - - 15.00 972,930
Cardamom - - - -
Copra - - - -
II. Expenditure in Foreign Currency. (In Rupees)
Particulars 2006-07 2005-06
Expenditure in Foreign Currency- Travelling Expense - 9,690
ValueQuantity (MT)Description
Sl.No. ValueQuantity (MT)
Previous YearCurrent Year
68
13 thANNUAL REPORT
12. Legal and professional fees include:
Remuneration to Statutory Auditors:
Particulars 2006-07 2005-06
For audit 165,000 125,000
For Tax Audit 40,000 25,000
For Certifications 5,000 -
Total 210,000 150,000
13. Details of Commodity Futures Contracts outstanding as at 31st March 2007:
Sl.no. Nature of Contract Purpose of Contract Contract Value (in Rs)
1. Sell Contract with NCDEX- To hedge price risk of 85 MTDelivery in May 2007 of pepper held in stock 10,594,750.00
2. Sell Contract with NCDEX- To hedge price risk of 15 MTDelivery in June 2007 of pepper held in stock 1,912,500.00
In accordance with the accounting policy followed, the gain/loss arising from the above hedge contracts will berecognised only on settlement of the contracts. Accordingly, the mark to market loss on the above contracts as on31.03.2007 of Rs.18.92 Lakhs, which will get adjusted on settlement of the above contracts is carried over underAdvances Recoverable in the Balance Sheet.
14. Figures in the brackets represent figures for the previous year. Previous year’s figures have been regroupedwherever necessary to suit current year’s layout.
(In Rupees)
For Varma & Varma For and on behalf of the Board of Directors ofChartered Accountants Geojit Commodities Limited
Vijay Narayan Govind A. Balakrishnan C.J. GeorgePartner Director Director
Place : Kochi Place : KochiDate : 18.05.2007 Date : 18.05.2007
69
GEOJIT COMMODITIES LIMITED
PART IV OF SCHEDULE VI OF THE COMPANIES ACT 1956BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE
01: REGISTRATION DETAILS
Registration No: 09-08606State Code : 09Balance Sheet Date : 31-03-2007
02: CAPITAL RAISED DURING THE YEAR(AMOUNT IN Rs. THOUSANDS)
Public Issue NILRights Issue 8,000Bonus Issue 24,000Private Placement NIL
03: POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS(AMOUNT IN Rs.THOUSANDS)
Total Liabilities 74,805Total Assets 74,805
SOURCES OF FUNDS
Paid up Capital 40,000Reserves and Surplus 32,885Secured Loans NILDeferred Income Tax liability 1,920
APPLICATION OF FUNDS
Net Fixed Assets 16,073Investments 18,575Capital work-in-Progress NILNet Current Assets 40,157Accumulated Loss NIL
04: PERFORMANCE OF THE COMPANY(AMOUNT IN Rs. THOUSANDS)Turnover/Other Income 239,099Total Expenditure 167,813Profit before Tax 71,286Profit after Tax 45,713Earnings Per Share(Rs.) 12.91Dividend Rate 50%
05: GENERIC NAMES OF THREE PRINCIPAL PRODUCTS/SERVICES OF THECOMPANY (AS PER MONETARY TERMS)
Item Code No.(ITC Code) :Product Description : Commodity Online Trading,
Financial Services
70
13 thANNUAL REPORT
GEOJIT COMMODITIES LIMITEDSTATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 RELATING TO SUBSIDIARY COMPANIES
PARTICULARS
1. The Financial Year of the SubsidiaryCompany ended on
2. (a) The No. of Equity Shares held by GeojitCommodities Ltd. and its nominees inthe Subsidiary as at March 31, 2007
(b) Extent of interest of Geojit CommoditiesLimited in the Capital of the Subsidiary.
3. Net aggregate amount of the Profits/Lossesof the Subsidiary so far it concerns themembers of Geojit Commodities Limited asis not dealt with the Company’s Accounts :
(a) Profit/Loss for the year ended March 31,2007 of the Subsidiaries
(b) Profits/Losses for the previous FinancialYear of the Subsidiaries, since itbecame a Subsidiary of GeojitCommodities Limited
4. Net aggregate amount of the Profits/Lossesof the Subsidiary so far as deal with orprovision is made for those losses in GeojitCommodities Limited’s Accounts :
(a) For the Subsidiary’s Financial Yearended March 31, 2007.
(b) For the previous Financial Year of theSubsidiaries, since it became aSubsidiary of Geojit CommoditiesLimited
31.03.2007
7,50,000 Equity Shares ofRs.10/- each fully paid upamounting to Rs.75 Lacs
100%
Profit of Rs.1,16,300/-
Profit of Rs. 24,22,415/-
Nil
Nil
31.03.2007
50,000 Equity Shares ofRs.10/- each fully paid upamounting to Rs.5 Lacs
100%
Loss of Rs. 14,136/-
Loss of Rs.27,024/-
Nil
Nil
31.03.2007
50,000 Equity Shares ofRs.10/- each fully paid upamounting to Rs.5 Lacs
100%
Profit of Rs.32,80,890/
Profit of Rs. 6,50,263/-
Nil
Nil
NAME OF THE SUBSIDIARIES
GEOJITTECHNOLOGIES
PVT. LTD.
GEOJIT FINANCIALMANAGEMENT
SERVICES PVT. LTD.
GEOJITFINANCIAL
DISTRIBUTIONPVT. LTD.
For and on behalf of the Board of Directors
Place : Kochi C.J.George A.BalakrishnanDate : 18th May.2007 Director Director
71
GEOJIT TECHNOLOGIES PRIVATE LIMITEDDIRECTORS REPORT
Your Directors have great pleasure in presenting the 3rd Directors’ Report of the Company together with the AuditedAnnual Accounts for the Year ended March 31st 2007.
Financial Performance and Operations
Revenues for the year from software development and services were Rs.195.56 Lacs, an increase of 127% over theprevious year’s income of Rs.85.96 Lacs. The Company recorded a Profit Before Tax of Rs.3.86 Lacs during the yearand the Net Profit After Tax for the period is Rs.1.16 Lacs.
The Company has set up facility for marketing in the UAE and also acquired a Company for the purpose. The costsrelating to this has impacted the profit. Your directors are confident that these steps will benefit the Company in theyears to come.
Board of Directors
The Board of Directors consists of Mr.A.Balakrishnan, Managing Director and Mr.C.J.George, Director. In accordancewith the principle of retirement of Directors by rotation, Mr.C.J.George retires at the ensuing Annual General Meetingand being eligible offers himself for re-appointment.
Auditors
The auditors M/s. Varma & Varma, Chartered Accountants, Kochi retire at the end of ensuing Annual General Meeting,being eligible offer themselves for re-appointment.
Secretarial Compliance Certificate
A certificate from the Company Secretary in Practice certifying compliance of provisions of the Companies Act,1956 asrequired under section 383A of the said Act is annexed hereto as Annexure - I
Conservation of Energy and Technology Absorption, etc.
The Company has nothing to report in respect of information on conservation of energy and technology absorption asrequired under section 217(1) of the Companies Act, 1956 read with Companies (Disclosures of Particulars in theReport of Board of Directors) Rules, 1988 since the Company is not engaged in manufacturing or processing business.Foreign exchange earnings during the period is Rs.13.06 Lacs. The amount of foreign exchange expenditure duringthe period is Rs.28.13 Lacs.
Personnel
None of the employees was covered by the provision of section 217(2A) of the Companies Act, 1956, read withCompanies (Particulars of Employees) Rules, 1975.
Directors Responsibility Statement
As required under Section 217 (2AA) of the Companies Act, 1956, your Directors confirm having :
a) followed in preparation of the Annual Accounts, the applicable standards with proper explanation relating tomaterial departures, where applicable;
b) selected such accounting policies and applied them consistently and made judgements and estimates that arereasonable and prudent so as to give a true and fair view of the state of affairs of your Company at the end of thefinancial year and of the profit of your Company for that period;
c) taken proper and sufficient care for the maintenance of adequate accounting records in accordance with theprovisions of the Companies Act, 1956 for safeguarding the assets of your Company and for preventing anddetecting fraud and other irregularities; and
d) Prepared the Annual Accounts on a going concern basis.
For and on behalf of the Board of Directors
Place : Kochi A.Balakrishnan C.J.GeorgeDate : 18th May 2007 Managing Director Director
72
13 thANNUAL REPORT
Annexure-I
SECRETARIAL COMPLIANCE CERTIFICATE
CIN - U72900KL2004PTC017332Nominal Capital: Rs.One Crore
To
The Members,
Geojit Technologies Private Limited
We have examined the registers, records, books and papers of GEOJIT TECHNOLOGIES PRIVATE LIMITED, (“theCompany”) as required to be maintained under the Companies Act, 1956, (“the Act”) and the rules made thereunderand also the provisions contained in the Memorandum and Articles of Association of the Company for the financial yearended 31st March 2007 (“financial year”). In our opinion and to the best of our information and according to theexaminations carried out by us and explanations furnished to us by the Company, its officers and agents, we certify thatin respect of the aforesaid financial year: -
1. The Company has kept and maintained all registers as stated in Annexure ‘A’ to this certificate, as per theprovisions of the Act and the rules made thereunder and all entries therein have been duly recorded.
2. The Company has duly filed the forms and returns as stated in Annexure‘B’ to this certificate, with the Registrar ofCompanies, Kerala. The Company has not filed any forms or returns with Regional Director, Central Government,Company Law Board or other authorities within the time prescribed under the Act and the rules made thereunder.
3. The Company being a Private Limited Company has the minimum prescribed paid-up capital and its maximumnumber of members during the said financial year was two excluding its present and past employees and theCompany during the year under scrutiny:
(i) has not invited public to subscribe for its shares or debentures; and
(ii) has not invited or accepted any deposits from persons other than its members, directors or their relatives.
The Company is a wholly owned subsidiary of a public limited company, Geojit Commodities Limited.
4. The Board of Directors duly met six times respectively on 16.05.2006, 28.07.2006, 04.09.2006, 26.10.2006,26.01.2007 & 18.03.2007 in respect of which meetings proper notices were given and the proceedings wereproperly recorded and signed in the Minutes Book maintained for the purpose.
5. The Company has not closed its Register of Members during the financial year.
6. The Annual General Meeting for the financial year ended on 31st March,2006 was held on 29.08.2006, aftergiving due notice to the members of the Company and the resolutions passed thereat were duly recorded in theMinutes Book maintained for the purpose.
7. According to the information and explanations given to us, the Company has not advanced loans to its directorsand/or persons or firms or companies referred in the Section 295 of the Act during the year under scrutiny.
8. The Company has not entered any contracts falling within the purview of section 297 of the Act.
9. According to the information and explanation given to us, there are no contracts or arrangements that need to beentered in the register required to be maintained under section 301 of the Act.
10. As there were no instances, falling within the purview of Section 314 of the Act, the Company has not obtained anyapprovals from the Board of Directors, members and the Central Government.
11. The company has not issued any duplicate share certificates during the financial year.
12. During the year:
(i) Delivered all certificates on allotment of securities. There was no transfer/transmission of securities duringthe financial year. During the year there was a transfer of beneficial interest on 24,999 shares each toHolding Company, Geojit Commodities Limited by Mr. C J. George and Mr. A Balakrishanan.
73
(ii) The Company was not required to deposit any amount of dividend in a separate bank account as no dividendwas declared during the financial year.
(iii) The company was not required to post warrants to any member of the Company as no dividend was declaredduring the financial year.
(iv) The Company was not required to transfer the amounts in unpaid dividend account, application money duefor refund, matured deposits, matured debentures and the interest accrued thereon which have remainedunclaimed or unpaid for a period of seven years to Investor Education and Protection Fund since thisprovision was not applicable during the year.
(v) The Company has duly complied with the requirements of Section 217 of the Act.
13. The Board of Directors of the Company is duly constituted and the appointments of Directors and AdditionalDirectors during the financial year have been duly made.
14. The Company has appointed Mr.A.Balakrishnan as Managing Director w.e.f. 16.05.2006 for which approval of themembers was obtained at the Annual General Meeting held on 29.08.2006.
15. The Company has not appointed any sole selling agents during the financial year.
16. The Company was not required to obtain any approvals of the Central Government, Company Law Board, RegionalDirector and/or such authorities prescribed under the various provisions of the Act during the financial year.
17. The directors have disclosed their interest in other firms/companies to the Board of Directors pursuant to theprovisions of the Act and the rules made thereunder.
18. The Company has issued 7,00,000 Equity Shares to the holding company, Geojit Commodities Limited and thenecessary returns were filed with the Registrar of Companies in this regard.
19. The Company has not bought back any shares during the financial year.
20. There was no redemption of preference shares or debentures during the financial year.
21. There were no transactions necessitating the company to keep in abeyance the rights to dividend, rights sharesand bonus shares pending registration of transfer of shares.
22. The Company has not invited/accepted any deposit including any unsecured loans falling within the purview ofSection 58A of the Act during the financial year.
23. The Company has not made any borrowing during the financial year ended 31.03.2007.
24. According to the information and explanation given to us, the Company has not made any loans or advances orgiven guarantees or provided securities to other bodies corporate.
25. The Company has not altered the provisions of the Memorandum with respect to situation of the Company’sRegistered Office from one State to another during the year under scrutiny.
26. The Company has not altered the provisions of the Memorandum with respect to the objects of the Companyduring the year under scrutiny.
27. The Company has not altered the provisions of the Memorandum with respect to name of the Company during theyear under scrutiny.
28. The Company has altered the provisions of the Memorandum with respect to share capital of the Company duringthe year under scrutiny and complied with the provisions of the Act.
29. The Company has altered its Articles of Association after obtaining approval of the members at the GeneralMeeting and the amendment to Articles has been duly filed with Registrar of Companies, Kerala.
30. There was/were no prosecution initiated against or show cause notices received by the Company, and no fines orpenalties or any other punishment was imposed on the Company during the financial year, for offences under the Act.
31. The Company has not received any money as security from its employees during the financial year.
74
13 thANNUAL REPORT
Place : Kochi For Satheesh & RameshDated : 18th May, 2007 Company Secretaries
N. Satheesh KumarPartnerC.P. No.6607
32. The Company has deposited both employee’s and employer’s contribution to provident fund with prescribedauthorities.
Place : Kochi For Satheesh & RameshDated : 18th May,2007 Company Secretaries
N SATHEESH KUMARC.P. No.6607
Annexure ARegisters as maintained by the Company1) Register of Members u/s. 150.2) Minutes Book of Board Meeting u/s. 1933) Minutes Book of General Meeting u/s. 193.4) Books of Accounts u/s. 209.5) Register of Disclosure of Interest by Directors u/s. 301(3).6) Register of Directors, Managing Director, etc. u/s. 303.7) Register of Directors Shareholding u/s. 307.8) Register of Directors / Members attendance at Meetings.
Annexure BForms and Returns as filed by the Company with Registrar of Companies during the financial year ended 31st
March, 2007.
1 Form No.23 192 Filing of special resolutionpassed at Annual General Meettng 25.09.2006 Yes NA
2 Form No.5 97 Increasing the Authorisedshare capital of the Company 25.09.2006 Yes NA
3 Form No.23 AC 220 Balance sheet and& 23 ACA Profit and Loss Account. 25.09.2006 Yes NA
4 Form No.25C 269(2) Appointment ofMr. A. Balakrishnan asManaging Director 26.09.2006 No Yes
5 Form No.20B 159 Annual Return 2006-07 20.10.2006 Yes NA
6 Form No.2 75(1) Allotment of 7,00,000Equity Shares 22.11.2006 Yes NA
7 Form No.22B 187C Disclosure of beneficial interest 22.12.2006 Yes NA
8 Form DIN 3 266D Intimation of allotment of DIN. 28.03.2007 Yes NA
Sl. No. Form / Return Filedundersection
For Date of Filing Whether filed withinthe prescribed time
(Yes / No)
If delay in filing whetheradditional fee paid
(Yes / No)
75
AUDITORS’ REPORT
The Members,Geojit Technologies Private LimitedKochi.
1. We have audited the attached Balance Sheet of GEOJIT TECHNOLOGIES PRIVATE LIMITED, as at 31st March2007, the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto.These financial statements are the responsibility of the Company’s management. Our responsibility is to express anopinion on these financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial statementsare free of material misstatement. An audit includes, examining on a test basis, evidence supporting the amountsand disclosures in the financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial statement presentation. Webelieve that our audit provides a reasonable basis for our opinion.
3. As required by the Companies (Auditors’ Report) Order, 2003 issued by the Central Government of India in terms ofSection 227 (4A) of the Companies Act, 1956, we give in the Annexure, a statement on the matters specified inParagraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to above, we report that:
i. We have obtained all the information and explanations, which to the best of our knowledge and belief werenecessary 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 appearsfrom our examination of those books;
iii. The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by the report are in agreementwith the books of accounts;
iv. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this reportcomply 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 from directors as on 31st March, 2007 and taken on record bythe Board of Directors, we report that none of the directors is disqualified as on 31st March 2007, from beingappointed as a Director in terms of clause (g) of sub- section 1 of Section 274 of the Companies Act, 1956.
vi. In our opinion and to the best of our information and according to the explanations given to us, the said accountsread together with the accounting policies and notes attached thereto give the information required by theCompanies Act,1956,in the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India:
i. in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2007;
ii. in the case of the Profit and Loss Account, of the profit for the year ended on that date; and
iii. in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.
For VARMA AND VARMAChartered Accountants
Vijay Narayan GovindPartner
Membership No. 203094Place : KochiDate : 18.05.2007
76
13 thANNUAL REPORT
ANNEXURE REFERRED TO IN PARAGRAPH 1 OF OUR AUDITREPORT OF EVEN DATE
1. a) The Company is maintaining proper records showing full particulars including quantitative details and situationof fixed assets.
b) We are informed that major items of the fixed assets have been physically verified by the management at theend of the year, which, in our opinion is reasonable having regard to the size of the company and the nature ofits assets and that no material discrepancies have been noticed on such verification.
c) According to the information and explanations given to us, there has been no significant disposal of fixedassets during the year.
2. The Company does not have any inventory and hence the reporting requirements thereof are not applicable.
3. a) The company has not granted any loans secured or unsecured to companies, firms or other parties requiring to beentered in the register in terms of Section 301 of the Companies Act, 1956.
b) The company has not taken any loans, secured or unsecured from companies, firms or other parties requiring to beentered in the register in terms of Section 301 of the Companies Act, 1956.
4. In our opinion and according to the information and explanations given to us, there are adequate internal controlprocedures commensurate with the size of the Company and nature of its business for the purchase of fixed assetsand for sale of goods and services. During the course of our audit no major weakness has been noticed in theinternal control system in respect of these areas.
5. According to the information and explanations given to us, there are no contracts or arrangements that need to beentered in the register required to be maintained under section 301 of the Companies Act and hence the reportingrequirements thereof are not applicable.
6. The Company has not accepted any deposits from the public during the year and hence the directives issued by theReserve Bank of India and the provisions of sections 58A, 58AA or any other relevant provisions of the CompaniesAct, 1956 and the rules framed thereunder are not applicable.
7. The company not being a listed company or having paid up capital and reserves exceeding Rs.50 lakhs at thecommencement of the financial year and not having an average annual turnover exceeding five crore rupees for aperiod of three consecutive preceding financial years, does not have a formal internal audit system.
8. To the best of our knowledge and according to the information and explanations given to us, the Central Governmenthas not prescribed the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 for theproducts and services of the Company;
9. a) As per the information and explanations given to us, except for certain delays in remittance of service tax andincome tax deducted at source, the company has been generally regular in depositing undisputed statutorydues including Provident Fund, Employees State Insurance, Income Tax, Sales /Value Added Tax, Service Taxand Cess and other material statutory dues as applicable, with the appropriate authorities during the year.
b) According to the information and explanations given to us and the records of the Company examined by us,there are no disputed amounts of taxes that have not been deposited with the authorities as at 31st March 2007.
10. The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in thecurrent and in the immediately preceding financial year.
11. According to the information and explanations given to us and the records of the Company examined by us, theCompany has no dues to the financial institutions and banks.
77
12. The Company has not given any loans or advances on the basis of security by way of pledge of shares and othersecurities.
13. The Company is not a chit fund/nidhi/mutual benefit fund/society and hence the provisions thereof are not applicable.
14. In our opinion the Company has maintained proper records of transactions and contracts in respect of its dealing ininvestments and timely entries have been made therein. The investments are held by the company in its own name.
15. According to the information and explanations given to us and the records of the company examined by us, thecompany has not given any guarantee for loans taken by others from banks or financial institutions.
16. The Company has not availed any term loans and hence the relative reporting requirements are not applicable.
17. According to the information and explanations given to us and the records of the company examined by us, thefunds raised on short term basis have not been used for long- term investment.
18. The company has not made any preferential allotment of shares to parties and companies covered in the registermaintained under Section 301 of the Companies Act 1956, during the year.
19. The company has not issued any debentures during the year.
20. The company has not raised any money by public issues during the year.
21. According to the information and explanations given to us and the records of the company examined by us, no fraudeither on or by the company, has been noticed or reported during the year.
For VARMA AND VARMAChartered Accountants
Vijay Narayan GovindPartner
Membership No. 203094Place : KochiDate : 18.05.2007
78
13 thANNUAL REPORT
( p )
Sch. No. As at 31st March,
2007 As at 31st March,
2006
SOURCES OF FUNDS
Shareholders' Funds Share Capital 1 7,500,000 500,000 Reserves & Surplus 2 2,538,715 2,422,415
Deferred Tax Liability (Net) 183,000 14,000
Total 10,221,715 2,936,415
APPLICATION OF FUNDS
Fixed Assets: 3 Gross Block 8,099,616 3,981,061 Less: Accumulated Depreciation 928,229 7,978 Net Block 7,171,387 3,973,083
Investments 4 2,850,000 400,000
Current Assets, Loans and Advances
Sundry Debtors 5 3,060,481 4,784,055 Cash and Bank Balances 6 1,766,179 386,511 Loans and Advances 7 2,368,509 844,251
7,195,169 6,014,817
Less: Current Liabilities and Provisions Current Liabilities 8 6,973,802 7,451,485 Provisions 9 21,039 -
Net Current Assets 200,328 (1,436,668)
Total 10,221,715 2,936,415
Significant Accounting Policies and Notes to Accounts 12
GEOJIT TECHNOLOGIES PRIVATE LIMITED
BALANCE SHEET AS AT 31st MARCH 2007
Schedules 1 to 9 and 12 form an integral part of the Balance SheetThis is the Balance Sheet referred to in our report of even date.
(In Rupees)
For Varma & Varma For and on behalf of the Board of Directors ofChartered Accountants Geojit Technologies Private Limited
Vijay Narayan Govind A. Balakrishnan C.J. GeorgePartner Managing Director Director
Place : Kochi Place : KochiDate : 18.05.2007 Date : 18.05.2007
79
GEOJIT TECHNOLOGIES PRIVATE LIMITED
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31st MARCH 2007(In Rupees)
Schedules 10 to 12 form an integral part of the Profit and Loss Account.This is the Profit and Loss Account referred to in our report of even date.
( p )
Sch. No. For the year ended
31st March, 2007 For the year ended
31st March,2006
INCOME Software Income (TDS Rs.766,578) 19,556,038 8,596,039 Other Income 14,119 2,229
19,570,157 8,598,268
EXPENDITURE Payments to & Provisions for Employees 10 13,798,533 4,101,251 Establishment and Other Expenses 11 4,464,573 709,709 Depreciation 920,251 7,978
19,183,357 4,818,938
Profit Before Tax 386,800 3,779,330
Taxes on Income Current Tax 36,100 1,306,000 Deferred Tax 169,000 14,000 Fringe Benefit Tax 65,400 30,000
Profit After Tax for the year 116,300 2,429,330
Balance Carried to Balance Sheet 116,300 2,429,330
Earnings per share (Basic and Diluted) 0.22 48.59 (See Note No: 6)
Significant Accounting Policies and Notes to Accounts 12
For Varma & Varma For and on behalf of the Board of Directors ofChartered Accountants Geojit Technologies Private Limited
Vijay Narayan Govind A. Balakrishnan C.J. GeorgePartner Managing Director Director
Place : Kochi Place : KochiDate : 18.05.2007 Date : 18.05.2007
80
13 thANNUAL REPORT
GEOJIT TECHNOLOGIES PRIVATE LIMITED
CASH FLOW STATEMENT FOR THE YEAR ENDED 31st MARCH 2007(In Rupees)
As per our Report of even date attached.
Cash flow from operationsProfit before tax 386,800 3,779,330 Add/(Less): Non operating expensesa) Depreciation 920,251 7,978 b) Preliminary expenses written off - 14,000 c) Exchange Rate Difference 11,135 -
Cash flow before changes in Working Capital 1,318,186 3,801,308
Adjustments for changes in Working capital(Increase)/Decrease in Debtors 1,712,439 (4,784,055) (Increase)/Decrease in Loans/Advances 71,127 (15,344) Increase/(Decrease) in Current Liabilities (477,683) 7,420,570 Increase/(Decrease) in Provisions - - Total 1,305,883 2,621,171 Income tax paid (net of refunds) (1,675,846) (2,164,907) Cash from Operations 948,223 4,257,572
Cash flow from Investing ActivitiesPurchase of Fixed Assets (7,378,455) (3,981,061) (Increase)/Decrease in Capital Advance 3,259,900 - Purchase of Investments - - Investment in Subsidiary Companies (2,450,000) - Sale of Investments - -
Cash used in Investing Activities (6,568,555) (3,981,061)
Cash flow from Financing ActivitiesAllotment of Equity shares to Holding Company 7,000,000 -
Cash from Financing Activities 7,000,000 -
Net Increase in Cash and Cash Equivalents 1,379,668 276,511
Opening Cash & Bank balances 386,511 110,000 Closing Cash & Bank balances 1,766,179 386,511
2006 - 2007 2005 - 2006
For Varma & Varma For and on behalf of the Board of Directors ofChartered Accountants Geojit Technologies Private Limited
Vijay Narayan Govind A. Balakrishnan C.J. GeorgePartner Managing Director Director
Place : Kochi Place : KochiDate : 18.05.2007 Date : 18.05.2007
81
GEOJIT TECHNOLOGIES PRIVATE LIMITED
SCHEDULES ATTACHED TO AND FORMING PART OF BALANCE SHEET(In Rupees)( p )
As at 31st March, 2007
As at 31st March, 2006
SCHEDULE-1
SHARE CAPITAL
Authorised Capital1,000,000 Equity Shares (Previous Year- 50,000) of Rs. 10 each 10,000,000 500,000
Issued, Subscribed and Paid Up Capital750,000 Equity Shares (Previous Year- 50,000) of Rs. 10 each 7,500,000 500,000 The above shares are held by the Holding Company, Geojit Commodities Limited
7,500,000 500,000
SCHEDULE-2
RESERVES AND SURPLUS
Profit and Loss AccountAs per last year Balance Sheet 2,422,415 (6,915) Add: Transfer from Profit and Loss Account 116,300 2,429,330
2,538,715 2,422,415
82
13 thANNUAL REPORT
GE
OJ
IT T
EC
HN
OL
OG
IES
PR
IVA
TE
LIM
ITE
DS
CH
ED
UL
ES
AT
TAC
HE
D T
O A
ND
FO
RM
ING
PA
RT
OF
BA
LA
NC
E S
HE
ET
(In
Rup
ees)
(p
)
Des
crip
tio
n
GR
OS
S B
LO
CK
AT
CO
ST
DE
PR
EC
IAT
ION
NE
T B
LO
CK
As
at
01.0
4.20
06
Ad
dit
ion
s d
uri
ng
th
e ye
ar
Del
etio
ns/
A
dju
stm
ents
A
s at
31
.03.
2007
A
s at
01
.04.
2006
F
or
the
year
O
n s
ales
/ A
dju
stm
ents
A
s at
31
.03.
2007
A
s at
31
.03.
2007
A
s at
31
.03.
2006
Tan
gib
le A
sset
s
Com
pute
rs &
Acc
esso
ries
165,
160
3,
250,
649
-
3,41
5,80
9
1,
977
476,
039
-
47
8,01
6
2,93
7,79
3
16
3,18
3
Fur
nitu
re &
Fitt
ings
6,00
1
2,
089,
642
-
2,09
5,64
3
6,
001
315,
480
-
32
1,48
1
1,77
4,16
2
-
Offi
ce E
quip
men
ts-
25
5,49
3
-
255,
493
-
14
,356
-
14
,356
24
1,13
7
-
Ele
ctric
al F
ittin
gs-
87
4,67
1
-
874,
671
-
46
,241
-
46
,241
82
8,43
0
-
Mot
or C
ar-
74
8,00
0
-
748,
000
-
41
,468
-
41
,468
70
6,53
2
-
To
tal
171,
161
7,
218,
455
-
7,38
9,61
6
7,
978
893,
584
-
90
1,56
2
6,48
8,05
4
16
3,18
3
Inta
ng
ible
Ass
ets
Sof
twar
e-
16
0,00
0
-
160,
000
-
26
,667
-
26
,667
13
3,33
3
-
To
tal
-
160,
000
-
16
0,00
0
-
26,6
67
-
26,6
67
133,
333
-
Cap
ital A
dvan
ces
3,80
9,90
0
2,
603,
620
5,86
3,52
0
55
0,00
0
-
-
-
-
550,
000
3,
809,
900
To
tal
3,80
9,90
0
2,
603,
620
5,86
3,52
0
55
0,00
0
-
-
-
-
550,
000
3,
809,
900
Gra
nd
To
tal
3,98
1,06
1
9,
982,
075
5,86
3,52
0
8,
099,
616
7,97
8
92
0,25
1
-
928,
229
7,
171,
387
3,97
3,08
3
Pre
vio
us
Yea
r-
3,
981,
061
-
3,98
1,06
1
-
7,
978
-
7,97
8
3,
973,
083
-
Sch
edu
le 3
: F
ixed
Ass
ets
83
( p ) As at 31st March,
2007 As at 31st March,
2006 SCHEDULE- 4
INVESTMENTSLong Term Investment
Unquoted-TradeInvestment in Shares of Subsidiary Companies
2,450,000 -
Quoted- Non TradeInvestments in Units of Mutual Funds:
400,000 400,000
2,850,000 400,000 SCHEDULE-5SUNDRY DEBTORS(Unsecured, Considered Good)
Outstanding for a period: More than 6 months 390,296 - Less than 6 months 2,670,185 4,784,055
3,060,481 4,784,055
SCHEDULE-6CASH & BANK BALANCESCash Balance in Hand 12,300 - Bank Balances: With Scheduled Banks 1,753,879 386,511 With others - -
1,766,179 386,511
SCHEDULE- 7
LOANS AND ADVANCES(Unsecured, Considered Good)
Income Tax Advance/ Refund 1,631,485 2,164,907 Less: Provision for tax 36,100 1,336,000
1,595,385 828,907 Staff Loan 22,413 - Others 750,711 15,344
2,368,509 844,251
Advances recoverable in cash or in kind or for value to be received
Sigma Systems International: 70 equity shares (Previous Year-Nil) of AED 1,000 each fully paid
SBI Mutual Fund: 27,523 units (Previous year-27,523 units) of Rs. 10 each. Net Asset Value of Quoted Investments as on 31.03.2007 is Rs.462,970 (Previous Year- Rs.432,581.50)
GEOJIT TECHNOLOGIES PRIVATE LIMITED
SCHEDULES ATTACHED TO AND FORMING PART OF BALANCE SHEET(In Rupees)
84
13 thANNUAL REPORT
GEOJIT TECHNOLOGIES PRIVATE LIMITED
SCHEDULES ATTACHED TO AND FORMING PART OF BALANCE SHEET(In Rupees)
As at 31st March, 2007
As at 31st March, 2006
SCHEDULE-8CURRENT LIABILITIES
Sundry CreditorsHolding Company (Geojit Commodities Limited) 3,774,400 6,036,399 Advances from Customers 860,000 - Others 1,961,495 1,395,700
Other Liabilities 377,907 19,386 6,973,802 7,451,485
SCHEDULE-9
PROVISIONSProvision for Fringe Benefit Tax 65,400 - Less: Advance Fringe Benefit Tax 44,361 -
21,039 -
85
GEOJIT TECHNOLOGIES PRIVATE LIMITED
SCHEDULES ATTACHED TO AND FORMING PART OF PROFIT AND LOSS ACCOUNT(In Rupees)( p )
For the year ended 31st March, 2007
For the year ended 31st March,2006
SCHEDULE-10
Payments to and Provisions for Employees
Salary and Other Allowances 12,662,103 4,013,977
Contribution to Provident and Other Funds 508,034 -
Staff Welfare Expenses 628,396 87,274
13,798,533 4,101,251
SCHEDULE-11
Establishment and Other Expenses
Advertisement Expenses 352,138 -
Bank Charges 42,999 -
Consultancy Charges 476,641 50,138
Electricity Charges 528,247 -
Interest (Other than on fixed loans) 39,482 -
Printing & Stationery 17,626 3,000
Professional Charges 294,512 16,836
Rates and Taxes 339,606 -
Rent 584,543 124,984
Telephone Expenses 83,935 16,439
Travel and Conveyance 511,907 395,011
Miscellaneous Expenditure 1,192,937 89,301
Preliminary Expenses written off - 14,000
4,464,573 709,709
86
13 thANNUAL REPORT
GEOJIT TECHNOLOGIES PRIVATE LIMITED
SCHEDULES ATTACHED TO AND FORMING PART OF ACCOUNTSFOR THE YEAR ENDED 31st MARCH 2007
SCHEDULE - 12SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS
I. Significant Accounting Policies
A. Basis of Accounting:
The financial statements are prepared under the historical cost convention on accrual basis in accordance with theapplicable Accounting Standards specified in Section 211(3C) of the Companies Act 1956.
B. Use of Estimates:
The preparation of the financial statements in conformity with generally accepted accounting principles requiremanagement to make estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of financial statements and reported amounts of income and expenditurefor the year. Actual results could differ from these estimates. Any revision in accounting estimates are recognized inthe period in which the results are known / materialized.
C. Revenue Recognition:
Revenue from software development is recognized on completion of different stages of software development.
D. Fixed Assets:
Fixed Assets are stated at cost less depreciation. Impairment in value of assets, if any determined, is adjusted.
E. Depreciation:
Depreciation has been provided on straight-line method at the rates prescribed under Schedule XIV of the CompaniesAct, 1956.
F. Intangible Assets
Intangible Assets comprise of computer software, amortized over a period of 6 years.
G. Retirement Benefits:
a. Provident Fund Contribution:
The Company’s Contribution to Provident Fund is charged to the Profit and Loss Account of the period to whichthey relate.
b. Gratuity:
The annual contribution to the Group Gratuity cum Life Assurance Scheme of Life Insurance Corporation ofIndia, determined on the basis of actuarial valuation by the said Corporation is charged to Profit and LossAccount. The shortfall, if any, in the fund balance as determined by the above said Corporation at the BalanceSheet date, is also charged to the Profit and Loss Account.
c. Leave Encashment:
Leave Encashment liability as at the Balance Sheet date, is determined and accounted on the basis of leave tothe credit of the employees on that date as per the leave and leave encashment policies of the Company.
87
H. Foreign Currency Transaction/ Translation:
Transactions in foreign currency are recorded at the exchange rates prevailing at the date of transaction. Monetaryitems in foreign currency at the year-end are translated at year-end rates. The exchange difference arising onsettlement/translation are recognized in the revenue accounts, except those pertaining to the fixed assets acquiredfrom outside India, which are adjusted to the cost of such fixed assets.
I. Investments:
Investments are classified as long term or current based on their nature and intended holding period. Long-terminvestments are carried at Cost. Provision is created for any permanent diminution in the value of these Investments.Current Investments are valued at lower of Cost or Net Asset Value.
J. Accounting for Taxes on Income:
a) Provision for current income tax is made at the current tax rates based on the assessable income.b) Deferred tax assets and liabilities representing timing differences between accounting income and taxable
income are recognised to the extent considered capable of being reversed in subsequent years.c) Provision for Fringe Benefit Tax is made in accordance with the provisions of the Income Tax Act, 1961.
II. Notes On Accounts
1. There are no Contingent Liabilities to be disclosed.
2. Related Party Transactions :
A. Enterprises where control exists:
Nature Of Relationship
a) Subsidiary Company • Sigma Systems International FZ L.L.C.
b) Subsidiaries of the Holding Company • Geojit Financial Distribution Private Limited·Geojit Financial Management Services Private Ltd.
c) Holding Company • Geojit Commodities Limited.
d) Holding Company of the Holding Company • Geojit Financial Services Limited.
e) Associate of the Holding Company of theHolding Company • Geojit Credits Private Limited
f) Joint Venture of the Holding Companyof the Holding Company • Barjeel Geojit Securities L.L.C.
88
13 thANNUAL REPORT
2006
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Join
t Ven
ture
of
Hol
ding
C
ompa
ny o
f the
H
oldi
ng
Com
pany
2007
792,
857
Nil
Nil
469,
905
Nil
Nil
Nil
Nil
322,
952
Nil
2006
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Ass
ocia
te
Ent
erpr
ise
of th
e H
oldi
ng C
ompa
ny
of th
e H
oldi
ng
Com
pany
2007
494,
896
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
2006
890,
000
Nil
Nil
4,50
1,37
9
Nil
3,42
5,02
0
1,00
0,00
0
Nil
Nil
6,03
6,39
9
Hol
ding
Com
pany
2007
1,79
3,63
2 Nil
131,
615
Nil
7,00
0,00
0
Nil
Nil
Nil
Nil
3,77
4,40
0
2006
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Sub
sidi
ary
2007
Nil
2,93
0,37
6
Nil
Nil
Nil
Nil
Nil
516,
257
516,
257
Nil
2006
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Sub
sidi
arie
s of
th
e H
oldi
ng
Com
pany
2007
50,0
00
Nil
Nil
Nil
Nil
Nil
Nil
Nil
51,6
00
Nil
2006
6,43
0,00
0
Nil
Nil
Nil
Nil
Nil
Nil
Nil
3,74
9,16
7
Nil
Hol
ding
Com
pany
of t
he
Hol
ding
Com
pany
2007
11,3
95,9
88
Nil
1,09
6,05
5
257,
711
Nil
Nil
Nil
Nil
964,
272
Nil
Par
ticul
ars
Tran
sact
ions
Dur
ing
the
year
(in
Rs.
)
Sof
twar
e In
com
e
Pur
chas
e of
In
vest
men
ts
Exp
ense
s R
ecov
ered
Exp
ense
s R
eim
burs
ed
Fre
sh is
sue
of c
apita
l
Loan
ava
iled
Loan
rep
aid
Cur
rent
A
ccou
nt -
Adv
ance
s (n
et)
Bal
ance
s ou
tsta
ndin
g as
at t
he y
ear
end
(in R
s.)
Rec
eiva
ble
Pay
able
B.
Det
ails
of
the
tran
sact
ions
with
abo
ve p
artie
s du
ring
the
year
and
bal
ance
out
stan
ding
as
at 3
1-03
-200
7
89
3. The Company is engaged in the business of software development/consultancy and has only a single reportablesegment as per Accounting Standard 17- “Segment Reporting” issued by the Institute of Chartered Accountants ofIndia.
4. Leave encashment liability is provided at the amount based on leave to the credit of the employees, the amount ofwhich is not material.
5. Deferred tax liability (Net) as on 31.3.2007 represents:
Particulars 31.03.2007 31.03.2006
Deferred tax liabilities:
Excess of net book value over written down value of fixed assetsas per Income Tax Act, 1961 529,000 14,000
Total Deferred tax liability 529,000 14,000
Deferred Tax Assets:
Unabsorbed Depreciation 272,000 -
Expenditure under Section 43B of the Income Tax Act 66,000 -
Others 8,000 -
Total Deferred Tax Asset 346,000 -
Net Deferred Tax Liability 183,000 14,000
6. The Details of Earnings Per Share are as follows:
Particulars For the year ended For the year ended31st March, 2007 31st March, 2006
Profit after Tax for the year 116,300 2,429,330
Weighted Average Number of Equity shares of Rs. 10/- (Rs. 10/-) each fully paid up 521,780 50,000
Earnings Per Share (Basic and Diluted) 0.22 48.59
7. As per the information available with the Management there are no dues exceeding 30 days to Small Scale IndustrialUndertaking as at the Balance Sheet Date.
8. Expenditure in Foreign Currency: (In Rupees)
Particulars 31.03.2007 31.03.2006
Salary 1,528,239 Nil
Travel & Conveyance 85,876 Nil
Business Promotion Expenses 164,649 Nil
Legal/Professional Charges 554,753 Nil
Others 480,376 Nil
(In Rupees)
90
13 thANNUAL REPORT
9. F.O.B. Value of Exports:
Particulars 31.03.2007 31.03.2006
Software Income 1,306,089 Nil
10. Legal and professional fees include:
Remuneration to Statutory Auditors:
Particulars 2006-07 2005-06
For audit 25,000 15,000
For Tax Audit 15,000 -
For Certifications 1,500 -
Total 41,500 15,000
11. Figures in the brackets represent figures for the previous year. Previous year’s figures have been regroupedwherever necessary to suit current year’s layout.
(In Rupees)
(In Rupees)
For Varma & Varma For and on behalf of the Board of Directors ofChartered Accountants Geojit Technologies Private Limited
Vijay Narayan Govind A. Balakrishnan C.J. GeorgePartner Managing Director Director
Place : KochiDate : 18.05.2007
91
GEOJIT TECHNOLOGIES PRIVATE LIMITED
PART IV OF SCHEDULE VI OF THE COMPANIES ACT 1956BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE
01: REGISTRATION DETAILSRegistration No: U6 7200 KL 2004 PTCO 17332State Code : 9Balance Sheet Date : 31/03/2007
02: CAPITAL RAISED DURING THE YEAR (AMOUNT IN Rs. THOUSANDS)Public Issue NILRights Issue 7,000.00Bonus Issue NILPrivate Placement NIL
03: POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS(AMOUNT IN Rs.THOUSANDS)Total Liabilities 10,221.72Total Assets 10,221.72
SOURCES OF FUNDSPaid up Capital 7,500.00Reserves and Surplus 2,538.72Secured Loans NILDeferred Income Tax liability 183.00
APPLICATION OF FUNDSNet Fixed Assets 7,171.39Investments 2,850.00Capital work-in-Progress NILNet Current Assets 200.33Accumulated Loss NIL
04: PERFORMANCE OF THE COMPANY (AMOUNT IN Rs. THOUSANDS)Turnover/Other Income 19,570.16Total Expenditure 19,183.36Profit before Tax 386.80Profit after Tax 116.30Earnings Per Share(Re.) 0.22Dividend Rate NIL
05: GENERIC NAMES OF THREE PRINCIPAL PRODUCTS/SERVICES OF THECOMPANY (AS PER MONETARY TERMS)
Item Code No.(ITC Code) :Product Description : Software Development and Information Technology,
Distribution of Insurance, Mutual Fund and similarProducts
92
13 thANNUAL REPORT
GEOJIT TECHNOLOGIES PRIVATE LIMITEDSTATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956,
RELATING TO SUBSIDIARY COMPANY
Name of subsidiary company : Sigma Systems International FZ LLC
The financial year of subsidiary company ended on : 31st March, 2007
Number of shares in the subsidiary company held by
Geojit Technologies Private Ltd. and its nominees in the : 70 equity shares of AED 1000/- each fully paid upSubsidiary as at March 31, 2007.
Extent of interest of Geojit Technologies Private Ltd. in the : 100%
Capital of the Subsidiary.
The net aggregate of profits of the subsidiary company
so far as these concern the members of Geojit TechnologiesPrivate Ltd.
(i) dealt with in the accounts of Geojit Technologies
Private Ltd. amounted to:
(a) for the subsidiary’s financial year ended on Nil31st March, 2007 :
(b) for the previous financial years of the : Nilsubsidiary company since it becamesubsidiary ofGeojit Technologies Private Ltd.
(ii) not dealt with in the accounts ofGeojit Technologies Private Ltd. amounted to:
(a) for the subsidiary’s financial year ended on Loss of Rs2,63,878/-
31st March, 2007. :(b) for the previous financial years of the subsidiary : Nil
company since it became subsidiary
of Geojit Technologies Private Ltd.
For and on behalf of the Board of Directors
Place : Kochi A.Balakrishnan C.J.GeorgeDate : 18th May 2007 Managing Director Director
93
GEOJIT FINANCIAL DISTRIBUTION PRIVATE LIMITED
DIRECTORS REPORT
Your Directors have great pleasure in presenting the 3rd Directors’ Report of the Company together with the AuditedAnnual Accounts for the Year ended March 31st 2007.
Financial Performance
Revenues for the year from distribution of insurance products were Rs.61.58 Lacs. The Company recorded a ProfitBefore Tax of Rs.50.11 Lacs during the year and the profit after tax is Rs.32.80 Lacs.
Board of Directors
The Board of Directors consists of Mr.C. J. George and Mr. A. Balakrishnan. In accordance with the principle of retirementof Directors by rotation, Mr.C.J.George retires at the ensuing Annual General Meeting and being eligible offers himselffor re-appointment.
Auditors
The auditors M/s. Varma & Varma, Chartered Accountants, Kochi retire at the end of ensuing Annual General Meeting,being eligible offer themselves for re-appointment.
Conservation of Energy and Technology Absorption, etc.
The Company has nothing to report in respect of information on conservation of energy and technology absorption asrequired under section 217(1) of the Companies Act, 1956 read with Companies (Disclosures of Particulars in theReport of Board of Directors) Rules, 1988 since the Company is not engaged in manufacturing or processing business.There are no foreign exchange earnings and outgo during the year under report.
Personnel
None of the employees was covered by the provision of section 217(2A) of the Companies Act, 1956, read withCompanies (Particulars of Employees) Rules, 1975.
Directors Responsibility Statement
As required under Section 217 (2AA) of the Companies Act, 1956, your Directors confirm having :
a) followed in preparation of the Annual Accounts, the applicable standards with proper explanation relating to materialdepartures, where applicable;
b) selected such accounting policies and applied them consistently and made judgements and estimates that arereasonable and prudent so as to give a true and fair view of the state of affairs of your Company at the end of thefinancial year and of the profit of your Company for that period;
c) taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisionsof the Companies Act, 1956 for safeguarding the assets of your Company and for preventing and detecting fraud andother irregularities; and
d) Prepared the Annual Accounts on a going concern basis.
For and on behalf of the Board of Directors
Place : Kochi A.Balakrishnan C.J.GeorgeDate : 18th May 2007 Director Director
94
13 thANNUAL REPORT
AUDITORS’ REPORT
The Members,Geojit Financial Distribution Private LimitedKochi.
1. We have audited the attached Balance Sheet of GEOJIT FINANCIAL DISTRIBUTION PRIVATE LIMITED, as at 31st
March 2007, the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexedthereto. These financial statements are the responsibility of the Company’s management. Our responsibility is toexpress an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial statementsare free of material misstatement. An audit includes, examining on a test basis, evidence supporting the amountsand disclosures in the financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial statement presentation. Webelieve that our audit provides a reasonable basis for our opinion.
3. The reporting requirements contained in the Companies (Auditors’ Report) Order, 2003 issued by the Governmentof India in terms of Section 227 (4A) of the Companies Act, 1956, are not applicable to the company at this stage.
4. Further to the above, we report that:
i. We have obtained all the information and explanations, which to the best of our knowledge and belief werenecessary 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 appearsfrom our examination of those books;
iii. The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by the report are in agreementwith the books of accounts;
iv. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this reportcomply 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 from directors as on 31st March, 2007 and taken on record bythe Board of Directors, we report that none of the directors is disqualified as on 31st March 2007, from beingappointed as a Director in terms of clause (g) of sub- section 1 of Section 274 of the Companies Act, 1956.
vi. In our opinion and to the best of our information and according to the explanations given to us, the said accountsread together with the accounting policies and notes attached thereto give the information required by theCompanies Act,1956,in the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India:
i. in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2007;
ii. in the case of the Profit and Loss Account, of the profit for the year ended on that date; and
iii. in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.
For VARMA AND VARMAChartered Accountants
Vijay Narayan GovindPartner
Membership No. 203094Place : KochiDate : 18.05.2007
95
GEOJIT FINANCIAL DISTRIBUTION PRIVATE LIMITED
BALANCE SHEET AS AT 31st MARCH 2007(In Rupees)
Schedules 1 to 9 and 12 form an integral part of the Balance Sheet This is the Balance Sheet referred to in our report of even date.
SOURCES OF FUNDS
Shareholders' FundsShare Capital 1 500,000 500,000 Reserves & Surplus 2 3,931,153 650,263
Deferred Tax Liability (Net) 2,000 -
TOTAL 4,433,153 1,150,263
APPLICATION OF FUNDS
Fixed AssetsGross Block 3 50,000 - Less: Accumulated Depreciation 8,333 -
Net Block 41,667 -
Investments 4 3,454,270 400,000
Current Assets, Loans & Advances
Sundry Debtors 5 1,065,465 426,720 Cash and Bank Balances 6 618,614 542,660 Loans and Advances 7 190,059 -
1,874,138 969,380
Current Liabilities and ProvisionsCurrent Liabilities 8 936,922 11,224 Provisions 9 - 207,893
936,922 219,117
Net Current Assets 937,216 750,263
TOTAL 4,433,153 1,150,263
Significant Accounting Policies and Notes on Accounts 12
( p )
As at 31st March 2007
As at 31st March 2006
Sch No.
For Varma & Varma For and on behalf of the Board of Directors ofChartered Accountants Geojit Financial Distribution Private Limited
Vijay Narayan Govind A. Balakrishnan C.J. GeorgePartner Director Director
Place : Kochi Place : KochiDate : 18.05.2007 Date : 18.05.2007
96
13 thANNUAL REPORT
GEOJIT FINANCIAL DISTRIBUTION PRIVATE LIMITED
PROFIT AND LOSS ACCOUNT FOR THE PERIOD ENDED 31st MARCH, 2007
Schedules 10 to 11 and 12 form an integral part of the Profit & Loss account. This is the Profit & Loss account referred to in our report of even date.
(In Rupees)
Sch No.
For the year ended 31st March 2007
For the year ended 31st March 2006
INCOME Insurance Income (TDS - Rs. 1,602,602/- ) 6,158,193 986,195 Other Income 338,004 31,450
6,496,197 1,017,645
EXPENDITURE Operating Expenses 10 1,443,598.00 - Establishment & Other Expenses 11 32,476.00 27,024 Depreciation 8,333.00 -
1,484,407 27,024
Profit Before Tax 5,011,790 990,621
Taxes on Income-Current Tax 1,680,000 333,443
-Deferred Tax 2,000 - -Income tax prior years 48,900 -
Profit After Tax for the year 3,280,890 657,178
Balance carried to Balance Sheet 3,280,890 657,178
Earnings Per Share (Basic and Diluted) 65.62 13.14 (See Note No. 6)
Significant Accounting Policies and Notes on Accounts 12
( p )
For Varma & Varma For and on behalf of the Board of Directors ofChartered Accountants Geojit Financial Distribution Private Limited
Vijay Narayan Govind A. Balakrishnan C.J. GeorgePartner Director Director
Place : Kochi Place : KochiDate : 18.05.2007 Date : 18.05.2007
97
GEOJIT FINANCIAL DISTRIBUTION PRIVATE LIMITED
CASH FLOW STATEMENT FOR THE YEAR ENDED 31st MARCH 2007(In Rupees)
A. CASH FLOW FROM OPERATING ACTIVITIES:Profit before tax 5,011,790 990,621 Add/(Less): Non operating expensesa) Depreciation 8,333 - b) Preliminary expenses written off - 14,000 c) Profit on sale of investments (4,270) -
Cash flow before changes in Working Capital 5,015,853 1,004,621
Adjustments for changes in Working capital(Increase)/Decrease in Debtors (638,745) (426,720) Increase/(Decrease) in Current Liabilities 925,698 (19,691) Total 286,953 (446,411) Income tax paid (net of refunds) (2,126,852) (125,550) Cash from Operations 3,175,954 432,660
B. CASH FLOW FROM INVESTING ACTIVITIES:Purchase of Fixed Assets (50,000) - Purchase of Investments (3,400,000) - Sale of Investments 350,000 -
Cash from Investing Activities (3,100,000) -
C. CASH FLOW FROM FINANCING ACTIVITIESProceeds from issue of share capital - - Dividend Paid - - Corporate Dividend Tax Paid - -
Cash from Financing Activities - -
Net Increase in Cash and Cash Equivalents 75,954 432,660
Opening Cash & Bank balances 542,660 110,000 Closing Cash & Bank balances 618,614 542,660
2006-07 2005-06
For Varma & Varma For and on behalf of the Board of Directors ofChartered Accountants Geojit Financial Distribution Private Limited
Vijay Narayan Govind A. Balakrishnan C.J. GeorgePartner Director Director
Place : Kochi Place : KochiDate : 18.05.2007 Date : 18.05.2007
As per our Report of even date attached
98
13 thANNUAL REPORT
GEOJIT FINANCIAL DISTRIBUTION PRIVATE LIMITED
SCHEDULES ATTACHED TO AND FORMING PART OF BALANCE SHEET(In Rupees)( p )
SCHEDULE - 1SHARE CAPITAL
Authorised Capital50,000 Equity Shares ( Previous year: 50,000) of Rs.10/- each 500,000 500,000
Issued, Subscribed and Paid Up Capital50,000 Equity Shares ( Previous year : 50,000) of Rs. 10/- each fully paid up 500,000 500,000 The above shares are held by the Holding Company - Geojit Commodities Limited
500,000 500,000 SCHEDULE - 2RESERVES & SURPLUS
Surplus in Profit and Loss AccountAs per Last year Balance Sheet 650,263 - Add:Transfer from Profit and Loss Account 3,280,890 650,263
3,931,153 650,263
As at 31st March 2007
As at 31st March 2006
99
GE
OJI
T F
INA
NC
IAL
DIS
TR
IBU
TIO
N P
RIV
AT
E L
IMIT
ED
SC
HE
DU
LE
S A
TTA
CH
ED
TO
AN
D F
OR
MIN
G P
AR
T O
F B
AL
AN
CE
SH
EE
T
(In
Rup
ees)
Sch
edu
le 3
: F
ixed
Ass
ets
(p
)
As
at01
.04.
2006
Ad
dit
ion
s d
uri
ng
th
e ye
ar
Del
etio
ns
As
at31
.03.
2007
As
at01
.04.
2006
Fo
r th
e ye
ar
As
at31
.03.
2007
As
at31
.03.
2007
As
at31
.03.
2006
I. In
tan
gib
le A
sset
s
Sof
twar
e-
50,0
00
-
50,0
00
-
8,33
3
8,
333
41,6
67
-
To
tal
-
50
,000
-
50
,000
-
8,
333
8,33
3
41
,667
-
Pre
viou
s Y
ear
-
-
-
-
-
-
-
-
-
DE
PR
EC
IAT
ION
NE
T B
LO
CK
Par
ticu
lars
GR
OS
S B
LO
CK
100
13 thANNUAL REPORT
GEOJIT FINANCIAL DISTRIBUTION PRIVATE LIMITED
SCHEDULES ATTACHED TO AND FORMING PART OF BALANCE SHEET(In Rupees)
SCHEDULE - 4INVESTMENTS
a) Long Term Investments - At Cost
Quoted Non - TradeInvestments in units of Mutual Funds:-SBI - Mutual Fund - Magnum Insta Cash Fund - Cash Option 400,000 400,000 27,523 (Previous year 27,523) units of SBI Mutual Funds. Net Asset Value of quoted investments as on 31.03.2007 is Rs 462,966.68 (previous year - Rs. 432,581.50)
b) Current Investments - At Lower of Cost or Net Realisable Value
Quoted Non - Trade
Investments in units of Mutual Funds:-Canbank Mutual Fund - NLFG CANLIQUID Fund - Growth 3,054,270 - 265,591 (Previous year Nil) of Rs 10 each. Net Asset Value of quoted investments as on 31.03.2007 is Rs 3,094,693(previous year - Nil)
3,454,270 400,000 SCHEDULE - 5SUNDRY DEBTORSSundry Debtors- Unsecured
a) Considered Good:Outstanding for a period exceeding six months - - Outstanding for a period less than six months 1,065,465 426,720
b) Considered Doubtful:Outstanding for a period exceeding six months - - Others - -
Less: Provision - - 1,065,465 426,720
SCHEDULE-6CASH and BANK BALANCES:Balances with scheduled banks:-
In Current Accounts 618,614 542,660 618,614 542,660
SCHEDULE - 7Advances recoverable in cash or in kind or for value to be received
Income Tax Income/ Fringe Benefit Tax Advance 1,870,059 - Less: Provision for Income Tax 1,680,000 -
190,059 -
As at 31st March 2007
As at 31st March 2006
101
As at 31st March 2007
As at 31st March 2006
SCHEDULE - 8CURRENT LIABILITIES
Sundry Creditors - - Holding Company - (Geojit Commodities Ltd) 5,123 - - Co - Subsidiary (Geojit Technologies Private Ltd) 50,800 - - Others (Other than SSI undertakings) 851,597 11,224 Other Liabilities 29,402 -
936,922 11,224
SCHEDULE - 9PROVISIONSProvision for Tax - 333,443 Less : Advance Income Tax Paid - 125,550
- 207,893
GEOJIT FINANCIAL DISTRIBUTION PRIVATE LIMITED
SCHEDULES ATTACHED TO AND FORMING PART OF BALANCE SHEET(In Rupees)
102
13 thANNUAL REPORT
GEOJIT FINANCIAL DISTRIBUTION PRIVATE LIMITED
SCHEDULES ATTACHED TO AND FORMING PART OF PROFIT AND LOSS ACCOUNT(In Rupees)( p )
SCHEDULE-10
OPERATING EXPENSES
Incentive on Insurance 1,230,182 - Commission 213,416 -
1,443,598 - SCHEDULE-11
ESTABLISHMENT & OTHER EXPENSES
Printing and Stationery 800 - Professional Charges 23,572 11,224 Filing Fees 1,679 - Office Expenses 123 1,800 Bank Charges 30 - Miscellaneous Expenses 272 - Promotional Expense 6,000 - Preliminary Expense written off - 14,000
32,476 27,024
As at 31st March 2007
As at 31st March 2006
103
GEOJIT FINANCIAL DISTRIBUTION PRIVATE LIMITED
SCHEDULES ATTACHED TO AND FORMING PART OF ACCOUNTS
FOR THE YEAR ENDED 31st MARCH 2007
SCHEDULE - 12
SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS
I. Significant Accounting Policies
A. Basis of Accounting:
The financial statements are prepared under the historical cost convention on accrual basis in accordance withthe applicable Accounting Standards specified in Section 211 (3C) of the Companies Act 1956.
B. Use of Estimates:
The preparation of the financial statements in conformity with generally accepted accounting principles requiremanagement to make estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of financial statements and reported amounts of income andexpenditure for the year. Actual results could differ from these estimates. Any revision in accounting estimates arerecognized in the period in which the results are known / materialized.
C. Revenue Recognition:
Commission income from insurance business is recognised on completion of policy formalities in all aspectsbased on intimation from the principal.
D. Intangible Assets
Intangible Assets comprise of computer software, amortized over a period of 6 years.
E. Investments:
Investments are classified as long term or current based on their nature and intended holding period. Long-terminvestments are carried at Cost. Provision is created for any permanent diminution in the value of these Investments.Current Investments are valued at lower of Cost or Net Asset Value.
F. Accounting for Taxes on Income
a) The provision for current income tax is based on the assessable profit as computed by the company in accordancewith the Income Tax Act, 1961.
b) Deferred Tax Liability/Asset is computed in accordance with Accounting Standard–22 issued by the Institute ofChartered Accountants of India. Deferred Tax Assets are recognised and carried forward to the extent there isreasonable / virtual certainty that sufficient future taxable income will be available against which such asset itemscan be realized.
II. Notes On Accounts
1. There are no Contingent Liabilities to be disclosed.
2. Related Party Transactions
A. Enterprises where control exists:
I) Nature of Relationship
a) Holding Company • Geojit Commodities Ltd
b) Subsidiary of Holding Company • Geojit Technologies Pvt Ltd
104
13 thANNUAL REPORT
B. Details of the transactions with above party during the year and balance outstanding as at 31.03.2007
Particulars Holding Company Subsidiary of Holding Company
Transactions during the year
2007 2006 2007 2006Rs Rs Rs Rs
Expenses Reimbursed 5,123 NIL 50,800 NIL
Particulars Holding Company Subsidiary of Holding Company
Balances outstanding as at the year end
2007 2006 2007 2006Rs Rs Rs Rs
Payable 5,123 NIL 50,800 NIL
3. Professional Charges include
Remuneration to Statutory Auditors
Particulars 2006-07 2005-06
For audit 15,000 10,000
For Tax Audit 5,000 NIL
4. The Company is engaged in the business of insurance agency in India, and has only a single reportable segment asper AS – 17 “Segment Reporting” issued by Institute of Chartered Accountants of India.
5. Deferred tax liability (Net) as on 31.03.2007 represents:
Particulars As at 31.03.2007 As at 31.03.2006
Deferred Tax Liabilities
Excess of net book value over written down value offixed assets as per the Income Tax Act,1961 2,000 NIL
6. The details of Earnings Per Share for the year ended 31st March 2007.
Particulars For the Year Ended For the Year Ended31st March 2007 31st March 2006
Profit after Tax for the year 3,280,890 657,178Number of Equity shares of Rs. 10/- (Rs. 10/-) each fully paid up 50,000 50,000
Earnings Per Share (Basic and Diluted) 65.62 13.14
7. Disclosure of Current Investments
Particulars As at 31.03.2007 As at 31.03.2007
No. of Units Book Value No. of Units Book Value
Rs. Rs.
Canbank Mutual Fund 226,591.2597 3,054,270 Nil Nil(252,298.2006 units werepurchased during the year and25,706.9409 untis were soldduring the year)
(In Rupees)
(In Rupees)
(In Rupees)
105
8. As per the information available with the Management there are no dues exceeding 30 days to Small Scale IndustrialUndertaking as at the Balance Sheet Date.
9. There are no additional particulars to be disclosed in accordance with Part II to Schedule VI of the Companies’ Act,1956.
10. Figures in the brackets represent figures for the previous year. Previous year’s figures have been regrouped wherevernecessary to suit current year’s layout.
For Varma & Varma For and on behalf of the Board of Directors ofChartered Accountants Geojit Financial Distribution Private Limited
Vijay Narayan Govind A. Balakrishnan C.J. GeorgePartner Director Director
Place : KochiDate : 18.05.2007
106
13 thANNUAL REPORT
01: REGISTRATION DETAILSRegistration No: U6 7200 KL 2004 PTCO 17331State Code : 9Balance Sheet Date : 31/03/2007
02: CAPITAL RAISED DURING THE YEAR (AMOUNT IN Rs. THOUSANDS)
Public Issue NILRights Issue NILBonus Issue NILPrivate Placement NIL
03: POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN Rs.THOUSANDS)
Total Liabilities 4,433.15 Total Assets 4,433.15
SOURCES OF FUNDS
Paid up Capital 500.00 Reserves and Surplus 3,931.15 Secured Loans NILDeferred Income Tax liability 2.00
APPLICATION OF FUNDS
Net Fixed Assets 41.67 Investments 3,454.27 Capital work-in-Progress NILNet Current Assets 937.22 Accumulated Loss NIL
04: PERFORMANCE OF THE COMPANY (AMOUNT IN Rs. THOUSANDS)
Turnover/Other Income 6,496.20 Total Expenditure 1,484.41 Profit before Tax 5,011.79 Profit after Tax 3,280.89 Earnings Per Share(Rs.) 65.62 Dividend Rate -
05: GENERIC NAMES OF THREE PRINCIPAL PRODUCTS/SERVICES OF THE COMPANY (AS PER MONETARY TERMS)
Item Code No.(ITC Code) :Product Description : Distribution of Insurance, Mutual
Fund and Similar products
PART IV OF SCHEDULE VI OF THE COMPANIES ACT 1956.BALANCE SHEET ABSTRACT AND COMPANY'S GENERAL BUSINESS PROFILE
GEOJIT FINANCIAL DISTRIBUTION PRIVATE LIMITED
::
107
GEOJIT FINANCIAL MANAGEMENT SERVICES PRIVATE LIMITEDDIRECTORS REPORT
Your Directors have great pleasure in presenting the 3rd Directors’ Report of the Company together with the AuditedAnnual Accounts for the Year ended March 31st 2007.
Financial Performance
The Company recorded a net loss of Rs.14,136/- during the period.
Board of Directors
The Board of Directors consists of Mr.C. J. George and Mr. A. Balakrishnan. In accordance with the principle of retirementof Directors by rotation, Mr.C.J.George retires at the ensuing Annual General Meeting and being eligible offers himselffor re-appointment.
Auditors
The auditors M/s. Varma & Varma, Chartered Accountants, Kochi retire at the end of ensuing Annual General Meeting,being eligible offer themselves for re-appointment.
Conservation of Energy and Technology Absorption, etc.
The Company has nothing to report in respect of information on conservation of energy and technology absorption asrequired under section 217(1) of the Companies Act, 1956 read with Companies (Disclosures of Particulars in theReport of Board of Directors) Rules, 1988 since the Company is not engaged in manufacturing or processing business.There are no foreign exchange earnings and outgo during the year under report.
Personnel
None of the employees was covered by the provision of section 217(2A) of the Companies Act, 1956, read withCompanies (Particulars of Employees) Rules, 1975.
Directors Responsibility Statement
As required under Section 217 (2AA) of the Companies Act, 1956, your Directors confirm having :
a) followed in preparation of the Annual Accounts, the applicable standards with proper explanation relating to materialdepartures, where applicable;
b) selected such accounting policies and applied them consistently and made judgements and estimates that arereasonable and prudent so as to give a true and fair view of the state of affairs of your Company at the end of thefinancial year and of the profit of your Company for that period;
c) taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisionsof the Companies Act, 1956 for safeguarding the assets of your Company and for preventing and detecting fraud andother irregularities; and
d) Prepared the Annual Accounts on a going concern basis.
For and on behalf of the Board of Directors
Place : Kochi A.Balakrishnan C.J.GeorgeDate : 18th May 2007 Director Director
108
13 thANNUAL REPORT
AUDITORS’ REPORT
The Members,Geojit Financial Management Services Private LimitedKochi.
1. We have audited the attached Balance Sheet of GEOJIT FINANCIAL MANAGEMENT SERVICES PRIVATE LIMITED,as at 31st March 2007, the Profit and Loss Account and the Cash Flow Statement for the year ended on that dateannexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibilityis to express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial statementsare free of material misstatement. An audit includes, examining on a test basis, evidence supporting the amountsand disclosures in the financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial statement presentation. Webelieve that our audit provides a reasonable basis for our opinion.
3. The reporting requirements contained in the Companies (Auditors’ Report) Order, 2003 issued by the CentralGovernment of India in terms of Section 227 (4A) of the Companies Act, 1956, are not applicable to the company atthis stage.
4. Further to the above, we report that:
i. We have obtained all the information and explanations, which to the best of our knowledge and belief werenecessary 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 appearsfrom our examination of those books;
iii. The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by the report are in agreementwith the books of accounts;
iv. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this reportcomply 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 from directors as on 31st March, 2007 and taken on record bythe Board of Directors, we report that none of the directors is disqualified as on 31st March 2007, from beingappointed as a Director in terms of clause (g) of sub- section 1 of Section 274 of the Companies Act, 1956.
vi. In our opinion and to the best of our information and according to the explanations given to us, the said accountsread together with the accounting policies and notes attached thereto give the information required by theCompanies Act,1956,in the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India:
i. in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2007;
ii. in the case of the Profit and Loss Account, of the loss for the year ended on that date; and
iii. in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.
For VARMA AND VARMAChartered Accountants
Vijay Narayan GovindPartner
Membership No. 203094Place : KochiDate : 18.05.2007
109
GEOJIT FINANCIAL MANAGEMENT SERVICES PRIVATE LIMITED
BALANCE SHEET AS ON 31st MARCH 2007(In Rupees)
SOURCES OF FUNDS
Shareholders' FundsShare Capital 1 500,000 500,000
Total 500,000 500,000
APPLICATION OF FUNDS
Investments 2 400,000 400,000
Current Assets, Loans & Advances
Cash and Bank Balances 3 75,185 77,285
75,185 77,285
Current Liabilities and Provisions 4Current Liabilities 23,260 11,224
23,260 11,224
Net Current Assets 51,925 66,061
Miscellaneous Expenditure 5(to the extent not written off / adjusted )
Profit and Loss Account 48,075 33,939 Total 500,000 500,000
Significant Accounting Policies and Notes on Accounts 7
As at 31st March 2007
As at 31st March 2006
Sch No.
For Varma & Varma For and on behalf of the Board of Directors ofChartered Accountants Geojit Financial Management Services Pvt. Ltd
Vijay Narayan Govind A. Balakrishnan C.J. GeorgePartner Director Director
Place : Kochi Place : KochiDate : 18.05.2007 Date : 18.05.2007
Schedules 1 to 5 and 7 form an integral part of the Balance Sheet.This is the Balance Sheet referred to in our report of even date.
110
13 thANNUAL REPORT
GEOJIT FINANCIAL MANAGEMENT SERVICES PRIVATE LIMITED
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31st MARCH 2007(In Rupees)
Sch No.
For the year ended 31st March 2007
For the year ended 31st March 2006
INCOME
Income from operations - -
- -
EXPENDITURE
Establishment & Other Expenses 6 14,136 27,024
14,136 27,024
Profit / (Loss) Before Tax (14,136) (27,024)
Taxes on Income-Current Tax - -
Profit/(Loss) After Tax for the year (14,136) (27,024)
Balance carried to Balance Sheet (14,136) (27,024)
Earnings Per Share (Basic and Diluted) (0.28) (0.54) (See Note No. 5)
Significant Accounting Policies and Notes on Accounts 7
( p )
For Varma & Varma For and on behalf of the Board of Directors ofChartered Accountants Geojit Financial Management Services Pvt. Ltd
Vijay Narayan Govind A. Balakrishnan C.J. GeorgePartner Director Director
Place : Kochi Place : KochiDate : 18.05.2007 Date : 18.05.2007
Schedules 6 to 7 form an integral part of the Profit & Loss Account.This is the Profit & Loss account referred to in our report of even date.
111
GEOJIT FINANCIAL MANAGEMENT SERVICES PRIVATE LIMITED
CASH FLOW STATEMENT FOR THE YEAR ENDED 31st MARCH 2007(In Rupees)
As per our Report of even date attached.
( p )
A. CASH FLOW FROM OPERATING ACTIVITIES:
Profit / (Loss) before tax (14,136) (27,024) Add/(Less): Non operating expensesPreliminary expenses written off - 14,000
Cash flow before changes in Working Capital (14,136) (13,024)
Adjustments for changes in Working capitalIncrease/(Decrease) in Current Liabilities 12,036 (19,691) Total 12,036 (19,691) Income tax paid (net of refunds)Cash from Operations (2,100) (32,715)
B. CASH FLOW FROM INVESTING ACTIVITIES:
Cash from Investing Activities - -
C. CASH FLOW FROM FINANCING ACTIVITIES
Cash from Financing Activities - -
Net Increase in Cash and Cash Equivalents (2,100) (32,715)
Opening Cash & Bank balances 77,285 110,000 Closing Cash & Bank balances 75,185 77,285
2006-07 2005-06
For Varma & Varma For and on behalf of the Board of Directors ofChartered Accountants Geojit Financial Management Services Pvt. Ltd
Vijay Narayan Govind A. Balakrishnan C.J. GeorgePartner Director Director
Place : Kochi Place : KochiDate : 18.05.2007 Date : 18.05.2007
112
13 thANNUAL REPORT
GEOJIT FINANCIAL MANAGEMENT SERVICES PRIVATE LIMITED
SCHEDULES ATTACHED TO AND FORMING PART OF BALANCE SHEET(In Rupees)( p )
Rs. Rs.SCHEDULE - 1SHARE CAPITAL
Authorised Capital 500,000 500,000 50,000 Equity Shares ( Previous year: 50,000) of Rs.10/- each
Issued, Subscribed and Paid Up Capital50,000 Equity Shares (Previous year : 50,000) of Rs. 10/- each fully paid up 500,000 500,000 The above shares are held by the Holding Company - Geojit Commodities Limited
500,000 500,000
SCHEDULE - 2INVESTMENTS
Long Term Investments - At Cost
Quoted Non - Trade
Investments in units of Mutual Funds:-SBI - Mutual Fund-Magnum Insta Cash Fund Cash Option 400,000 400,000 27,523 (Previous year 27,523) units of SBI Mutual Funds of Rs 10 each. Net Asset Value of quoted investments as on 31.03.2007 is Rs 462,966.68 (previous year - Rs 432,581.50)
400,000 400,000
SCHEDULE - 3
CASH and BANK BALANCES:Balances with scheduled banks:-
In Current Accounts 75,185 77,285 75,185 77,285
SCHEDULE - 4CURRENT LIABILITIES AND PROVISIONS
Sundry Creditors - - Co-Subsidiary (Geojit Technologies Private Ltd) 800 - - Others (Other than due to SSI undertakings) 22,460 11,224
23,260 11,224
SCHEDULE - 5MISCELLANEOUS EXPENDITURE(To the extent not written off / Adjusted)Preliminary Expenses - 14,000 Less : Written Off - 14,000
- -
As at 31st March 2007
As at 31st March 2006
113
GEOJIT FINANCIAL MANAGEMENT SERVICES PRIVATE LIMITED
SCHEDULES ATTACHED TO AND FORMING PART OF PROFIT AND LOSS ACCOUNT
(In Rupees)( p )
SCHEDULE-6ESTABLISHMENT & OTHER EXPENSESOffice Expenses 2,200 1,800 Professional Charges 11,936 11,224 Preliminary Expense written off - 14,000
14,136 27,024
For the year ended 31st March 2007
For the year ended 31st March 2006
114
13 thANNUAL REPORT
GEOJIT FINANCIAL MANAGEMENT SERVICES PRIVATE LIMITED
SCHEDULES ATTACHED TO AND FORMING PART OF ACCOUNTS
FOR THE YEAR ENDED 31st MARCH 2007
SCHEDULE - 7
SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS
I. Significant Accounting Policies
A. Basis of Accounting:
The financial statements are prepared under the historical cost convention on accrual basis in accordance with theapplicable Accounting Standards specified in section 211 (3C) of the Companies Act 1956.
B. Use of Estimates:
The preparation of the financial statements in conformity with generally accepted accounting principles requiremanagement to make estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of financial statements and reported amounts of income and expenditurefor the year. Actual results could differ from these estimates. Any revision in accounting estimates are recognized inthe period in which the results are known / materialized.
C. Investments:
Investments are classified as long term or current based on their nature and intended holding period. Long-terminvestments are carried at Cost. Provision is created for any permanent diminution in the value of these Investments.Current Investments are valued at lower of Cost or Net Asset Value.
D. Deferred Income Tax:
No item pertaining to timing differences as specified under Accounting Standard 22- “Accounting for Taxes onIncome”, issued by Institute of Chartered Accountants of India, that are capable of being reversed in the subsequentyear are identified and hence no Deferred Income Tax Asset or Liability has been created in the books of accounts.
II. Notes On Accounts
1. There are no Contingent Liabilities to be disclosed.
2. Related Party Transactions
A. Enterprises where control exists
Nature of Relationship
Subsidiary of Holding Company • Geojit Technologies Private Limited
B. Details of the transactions with above party during the year and balance outstanding as at 31.03.2007
Particulars Subsidiary of Holding Company
Transactions during the year
2007 (Rs.) 2006 (Rs.)
Expenses Reimbursed 800 NIL
Particulars Subsidiary of Holding Company
Balances outstanding as at the year end
2007 (Rs.) 2006 (Rs.)
Payable 800 NIL
115
3. Professional charges include Audit fees for audit – Rs 10,000/- (Previous year Rs. 10,000/-)
4. The Company has not commenced any business activities and hence there are no reportable segments as perAccounting Standard 17- “Segment Reporting” issued by Institute of Chartered Accountants of India.
5. The details of Earnings per Share for the year ended 31st March 2007.
Particulars For the Year Ended For the Year Ended31st March 2007 31st March 2006
Profit/(Loss) after Tax for the year (14,136) (27,024)
Number of Equity shares of Rs. 10/- (Rs. 10/-) each fully paid up 50,000 50,000
Earnings Per Share (Basic and Diluted) (0.28) (0.54)
6. As per the information available with the Management there are no dues exceeding 30 days to Small Scale IndustrialUndertaking as at the Balance Sheet Date.
7. There are no additional particulars to be disclosed in accordance with Part II to Schedule VI of the Companies’ Act,1956.
8. Figures in the brackets represent figures for the previous year. Previous year’s figures have been regrouped wherevernecessary to suit current year’s layout.
For and on behalf of the Board of Directors of For Varma & VarmaGeojit Financial Management Services Pvt. Ltd Chartered Accountants
A. Balakrishnan C.J. George Vijay Narayan GovindDirector Director Partner
Place: KochiDate : 18.05.2007
116
13 thANNUAL REPORT
01: REGISTRATION DETAILSRegistration No: U6 7200 KL 2004 PTCO 17330State Code : 9Balance Sheet Date : 31/03/2007
02: CAPITAL RAISED DURING THE YEAR (AMOUNT IN Rs. THOUSANDS)Public Issue NILRights Issue NILBonus Issue NILPrivate Placement NIL
03: POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN Rs.THOUSANDS)
Total Liabilities 500.00 Total Assets 500.00
SOURCES OF FUNDS
Paid up Capital 500.00 Reserves and Surplus NILSecured Loans NILDeferred Income Tax liability
APPLICATION OF FUNDS
Net Fixed Assets NILInvestments 400.00 Capital work-in-Progress NILNet Current Assets 51.93 Accumulated Loss 48.08
04: PERFORMANCE OF THE COMPANY (AMOUNT IN Rs. THOUSANDS)
Turnover/Other Income NILTotal Expenditure 14.14 Profit before Tax (14.14) Profit after Tax (14.14) Earnings Per Share(Rs.) (0.28) Dividend Rate NIL
05: GENERIC NAMES OF THREE PRINCIPAL PRODUCTS/SERVICES OF THE COMPANY (AS PER MONETARY TERMS)
Item Code No.(ITC Code) :Product Description :
PART IV OF SCHEDULE VI OF THE COMPANIES ACT 1956.BALANCE SHEET ABSTRACT AND COMPANY'S GENERAL BUSINESS PROFILE
Distribution of Insurance, Mutual Fund and Similar products
GEOJIT FINANCIAL MANAGEMENT SERVICES PVT LTD.
117
SIGMA SYSTEMS INTERNATIONAL F.Z. L.L.C.DIRECTORS REPORT
Your Directors have pleasure in presenting the Directors’ Report and Unaudited financial statements for the Year endedMarch 31st 2007.
Performance
The Company recorded a net loss of Rs.2.63 Lacs during the period.
Board of Directors
The Board of Directors consists of Mr.C. J. George and Mr. A. Balakrishnan.
Auditors
Since the volume of operations are not material, the Company has decided not to appoint any auditor for the financialyear 2006-07 as permitted by the local regulations in U.A.E. The unaudited financial statements presented were dulycertified by the Board.
For and on behalf of the Board of Directors
Place : Kochi C.J.George A.BalakrishnanDate : 18th May 2007 Director Director
118
13 thANNUAL REPORT
SIGMA SYSTEMS INTERNATIONAL FZ L.L.C.
BALANCE SHEET AS AT 31st MARCH,2007(In Rupees)
Sch.No. As at 31st March,
2007 As at 31st March,
2006
SOURCES OF FUNDS
Shareholders' Funds Equity Share Capital 1 860,475 - Reserves & Surplus 2 (13,227) -
TOTAL 847,248 -
APPLICATION OF FUNDS
Fixed Assets 3 Gross Block 186,915 - Less: Accumulated Depreciation 8,215 - Net Block 178,700 -
Current Assets, Loans & Advances Cash & Bank Balances 61,091 - Loans and Advances 4 112,948 -
174,039 -
Less: Current Liabilities & Provisions Current Liabilities 5 516,257 -
516,257 -
Net Current Assets (342,218)
Profit and Loss Account 6 1,010,766 -
TOTAL 847,248 -
119
SIGMA SYSTEMS INTERNATIONAL FZ L.L.C.
PROFIT AND LOSS ACCOUNT FOR THE PERIOD ENDED 31st MARCH 2007(In Rupees)( )
Sch.No.For the period ended
31st March 2007 For the period ended
31st March 2006
INCOME Software Income 94,160 -
94,160 -
EXPENDITURE Establishment and Other Expenses 7 349,823 - Depreciation 8,215 -
358,038 -
Profit/ (Loss) Before Tax (263,878) -
Taxes on income - -
Profit/ (Loss) After Tax (263,878) -
Balance carried to Balance Sheet (263,878) -
120
13 thANNUAL REPORT
SIGMA SYSTEMS INTERNATIONAL FZ L.L.C.
SCHEDULES ATTACHED TO AND FORMING PART OF BALANCE SHEET(In Rupees)( )
As at 31st March,2007
As at 31st March,2006
SCHEDULE-1
Authorised Capital70 equity shares of AED 1,000 each 860,475 -
860,475 -
Issued, Subscribed and Paid Up Capital70 equity shares of AED 1,000 each 860,475 -
860,475 -
SCHEDULE-2
Reserves and SurplusForeign Currency Translation Reserve:As per Last year Balance Sheet - - Exchange differences arising during the year (Net) (13,227) -
(13,227) -
(All the above shares are held by the Holding Company, Geojit Technologies Private Limited)
121
SIG
MA
SY
ST
EM
S IN
TE
RN
AT
ION
AL
FZ
L.L
.C.
SC
HE
DU
LE
S A
TTA
CH
ED
TO
AN
D F
OR
MIN
G P
AR
T O
F B
AL
AN
CE
SH
EE
T
Sch
edu
le 3
: F
ixed
Ass
ets
(In
Rup
ees)
()
As
at
12.1
2.20
06
Ad
dit
ion
s d
uri
ng
th
e ye
ar
Del
etio
ns/
A
dju
st-
m
ents
As
at
31.0
3.20
07
As
at
12.1
2.20
06
Fo
r th
e ye
ar
On
sal
es/
Ad
just
-
men
ts
As
at
31.0
3.20
07
As
at
31.0
3.20
07
As
at
31.0
3.20
06
Com
pute
rs &
Acc
esso
ries
-
159,
398
-
15
9,39
8
-
7,78
7
-
7,
787
151,
611
-
Offi
ce E
quip
men
ts-
20
,327
-
20
,327
-
29
1
-
291
20
,036
-
Fur
nitu
re &
Fix
ture
s-
7,
190
-
7,19
0
-
13
7
-
137
7,
053
-
To
tal
-
186,
915
-
18
6,91
5
-
8,21
5
-
8,
215
178,
700
-
NE
T B
LO
CK
Des
crip
tio
nG
RO
SS
BL
OC
K A
T C
OS
TD
EP
RE
CIA
TIO
N
122
13 thANNUAL REPORT
( ) As at 31st March,2007
As at 31st March,2006
SCHEDULE-4
Loans and Advances
Rent Advance 58,901 - Jacob George 54,047 -
112,948 -
SCHEDULE-5
Current Liabilities and Provisions
Sundry Creditors
516,257 - 516,257 -
SCHEDULE-6
Profit and Loss AccountLoss as per last Balance sheet 746,888 - Add:Loss for the year 263,878 -
1,010,766 -
Holding Company (Geojit Technologies Private Limited)
SIGMA SYSTEMS INTERNATIONAL FZ L.L.C.
SCHEDULES ATTACHED TO AND FORMING PART OF BALANCE SHEET(In Rupees)
123
SIGMA SYSTEMS INTERNATIONAL FZ L.L.C.
SCHEDULES ATTACHED TO AND FORMING PART OF THE PROFIT AND LOSS ACCOUNT(In Rupees)( )
For the period ended 31st March,2007
For the period ended 31st March,2006
SCHEDULE-7
Establishment and Other Expenses
Rent 181,623 - Bank Charges 4,975 - License Fee 6,191 - Office Expenses 1,577 - Travel and Conveyance 27,364 - Visa Charges 128,093 -
349,823 -
124
13 thANNUAL REPORT
1010.77
SIGMA SYSTEMS INTERNATIONAL FZ L.L.CPART IV OF SCHEDULE VI OF THE COMPANIES ACT 1956.
BALANCE SHEET ABSTRACT AND COMPANY'S GENERAL BUSINESS PROFILE
01: REGISTRATION DETAILSRegistration No: NAState Code : NABalance Sheet Date : 31/03/2007
02: CAPITAL RAISED DURING THE YEAR (AMOUNT IN Rs. THOUSANDS)Public Issue NILRights Issue NILBonus Issue NILPrivate Placement NIL
03: POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN Rs.THOUSANDS)
Total Liabilities 847.25 Total Assets 847.25
SOURCES OF FUNDS
Paid up Capital 860.48 Reserves and Surplus (13.22) Secured Loans NILDeferred Income Tax liability NIL
APPLICATION OF FUNDS
Net Fixed Assets 178.70 Investments NILCapital work-in-Progress NILNet Current Assets (342.22) Accumulated Loss 110.77
04: PERFORMANCE OF THE COMPANY (AMOUNT IN Rs. THOUSANDS)
Turnover/Other Income 94.16 Total Expenditure 358.04 Profit before Tax (263.88) Profit after Tax (263.88) Earnings Per Share(Rs.) (3,769.69) Dividend Rate NIL
05: GENERIC NAMES OF THREE PRINCIPAL PRODUCTS/SERVICES OF THE COMPANY (AS PER MONETARY TERMS)
Item Code No.(ITC Code) : Software Development and Information TechnologyProduct Description :
1010.77
:: Software Development and
Information Technology
125
AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS
To the Board of Directors ofGeojit Financial Services Limited
1. We have audited the attached Consolidated Balance Sheet of Geojit Financial Services Limited (“the Company”)and its subsidiaries (the Company and its subsidiaries constitute “the Group”) as at 31st March 2007, and also theConsolidated Profit and Loss Account and the Consolidated Cash Flow Statement for the year ended on that date,both annexed thereto. These financial statements are the responsibility of the Company’s management. Ourresponsibility is to express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with the auditing standards generally accepted in India. These Standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial statementsare free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amountsand disclosures in the financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial statement presentation. Webelieve that our audit provides a reasonable basis for our opinion.
3. The consolidated financial statements includes the un-audited financial statements of a foreign subsidiary, whichreflect total assets of Rs.352,739/- as at 31st March, 2007, total revenues of Rs.94,160/-, and cash flows of Rs.60,411/- for the year then ended. In the opinion of the management, the assets, revenues and cash flows of the subsidiarydoes not have a material impact on the consolidated financial statements.
4. We did not audit the financial statements of the subsidiaries, the associate and the joint venture, whose financialstatements reflect total assets of Rs.575,772,169/-, Rs.527,141,653/- and Rs.179,461,464/- respectively as at 31st
March 2007, total revenues of Rs.265,259,660/-, Rs.30,036,412/- and Rs.181,022,937/- respectively and cashflows of Rs.42,516,072/-, Rs.4,374,547/- and Rs.21,371,434/- respectively for the year then ended. These financialstatements and other financial information, except that of the subsidiary referred to paragraph 3 above, have beenaudited by other auditors, whose reports have been furnished to us, and our opinion, in so far as it relates to theamounts included in respect of these subsidiaries, associate and joint venture, is based solely on the report of theother auditors.
5. Subject to our remark in paragraph 3 above:
(i) We report that the Consolidated Financial Statements have been prepared in accordance with the requirementsof Accounting Standard (AS) 21, ‘Consolidated Financial Statements’, Accounting Standard (AS) 23, ‘Accountingfor Investments in Associates in Consolidated Financial Statements’ and Accounting Standard (AS) 27, ‘FinancialReporting of Interests in Joint Ventures’ issued by The Institute of Chartered Accountants of India, and on thebasis of the separate audited/un-audited financial statements of the Company and its subsidiaries, associateand joint venture;
(ii) On the basis of the information, and according to the explanations given to us, and on consideration of theseparate audit reports on the financial statements of the Company, its subsidiaries, associate and joint venture,in our opinion, the Consolidated Financial Statements give a true and fair view in conformity with the accountingprinciples generally accepted in India:
(a) in the case of the consolidated balance sheet, of the state of affairs of the Group as at 31st March 2007;
(b) in the case of the consolidated profit and loss account, of the profit of the Group for the year ended on thatdate; and
(c) in the case of the consolidated cash flow statement, of the cash flows of the Group for the year ended on thatdate.
For DELOITTE HASKINS & SELLSChartered Accountants
M. RamachandranPartner
Membership No. 16399Place : KochiDate : 21.05.2007
126
13 thANNUAL REPORT
GEOJIT FINANCIAL SERVICES LIMITEDCONSOLIDATED BALANCE SHEET AS ON 31st MARCH 2007
(In Rupees)
Schedules 1 to 20 form an integral part of the Accounts.As per our Report of even date attached.
For Deloitte Haskins & Sells For and on behalf of the Board of DirectorsChartered Accountants
M. Ramachandran A.P. Kurian C.J. GeorgePartner Chairman Managing Director
Place : Mumbai Place : Mumbai Jayaraj T.Date : 19.05.2007 Date : 19.05.2007 Company Secretary
Particulars Sch No.
As at 31st March 2007
As at 31st March 2006
SOURCES OF FUNDS
Shareholders' FundsShare Capital 1 208,990,870 152,186,000 Monies pending allotment (Note 4 of Schedule 20) 85,370,362 - Employee Stock Options Outstanding 2 4,345,987 284,591 Reserves & Surplus 3 1,907,736,977 333,049,560
2,206,444,196 485,520,151
Deferred Tax Liability (Net) (Note 9 of Schedule 20) 24,126,222 18,643,432
2,230,570,418 504,163,583 APPLICATION OF FUNDS
Goodwill on consolidation of Joint Venture 2,536,347 3,828,751 Goodwill on consolidation of Foreign Subsidiary 2,260,978 -
Fixed Assets 4Gross Block 396,339,752 321,515,832 Less : Depreciation 143,136,653 101,334,471 Net Block 253,203,099 220,181,361
Investments 5 413,137,923 118,322,695
Current Assets, Loans & AdvancesInventories 6 11,250,000 972,930 Sundry Debtors 7 408,525,871 352,299,245 Cash & Bank Balances 8 1,825,740,994 487,434,694 Other Current Assets 9 6,412,728 1,020,869 Loans & Advances 10 1,139,051,742 959,970,512
3,390,981,335 1,801,698,250 Less : Current Liabilities & ProvisionsLiabilities 11 1,561,034,707 1,447,828,310 Provisions 12 270,514,557 192,039,164
1,831,549,264 1,639,867,474
Net Current Assets 1,559,432,071 161,830,776
Miscellaneous Expenditure (to the extent not written off) 13 - -
2,230,570,418 504,163,583
Significant Accounting Policies & Notes on Accounts 20
127
GEOJIT FINANCIAL SERVICES LIMITEDCONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31st MARCH 2007
(In Rupees)p
INCOME Income from operations 14 1,312,448,249 1,010,272,144Sale of Commodities (Own Trade) 11,638,659 - Trading in Commodities for Clients:Sales 1,706,326,987 1,056,942,626Add: Closing Inventory - 972,930
1,706,326,987 1,056,119,006 Less:Purchases 1,705,354,057 1,796,550Less: Opening Inventory 972,930 - - Stock differential 11,250,000 - Other income 15 25,728,510 9,334,157
1,361,065,418 1,019,606,301EXPENDITUREPurchase of Commodities (Own trade) 23,160,901 23,072Payments to and provision for employees 16 287,670,680 194,142,211Operating expenses 17 391,883,216 281,181,196Establishment & Other expenses 18 226,295,177 173,720,298Interest 19 2,328,540 116,306Depreciation / Amortisation 4 51,853,503 39,088,915Preliminary expenses written off 13 - 186,595
983,192,017 688,458,593 PROFIT BEFORE TAX 377,873,401 331,147,708 Provision for tax - Current 123,016,100 99,333,443 - Deferred 5,482,790 5,225,730 - Fringe benefit 3,056,400 2,327,000 - Earlier years 2,262,309 - PROFIT AFTER TAX 244,055,802 224,261,535 Add: Share of profit in Associate 8,086,374 2,808,414 TOTAL PROFIT AFTER TAX 252,142,176 227,069,949 Balance brought forward from previous year 241,285,051 104,652,290 Foreign exchange translation adjustment 637,849 (7,092)PROFIT AVAILABLE FOR APPROPRIATION 494,065,076 331,715,147APPROPRIATIONS:Transfer to General Reserve 25,655,000 18,444,000 Interim Dividend on Equity Share Capital 60,874,400 26,632,550 Proposed Dividend on Equity Share Capital - 34,241,850 Dividend Tax Thereon 11,342,635 8,537,634 Transfer to Statutory Reserve - Share in Joint Venture 1,841,135 1,725,540 Share of profit to Co-venturer 702,315 848,522
100,415,485 90,430,096
BALANCE CARRIED TO BALANCE SHEET - Schedule 3 393,649,591 241,285,051
Earnings Per Share (Equity shares of face value Re.1/- each)(Note 8 of Schedule 20):
Basic 1.63 1.49 Diluted 1.60 1.49
Significant Accounting Policies & Notes on Accounts 20
For the year ended 31st March 2007
For the year ended 31st March 2006
Sch No.Particulars
Schedules 1 to 20 form an integral part of the Accounts.As per our Report of even date attached.
For Deloitte Haskins & Sells For and on behalf of the Board of DirectorsChartered Accountants
M. Ramachandran A.P. Kurian C.J. GeorgePartner Chairman Managing Director
Place : Mumbai Place : Mumbai Jayaraj T.Date : 19.05.2007 Date : 19.05.2007 Company Secretary
128
13 thANNUAL REPORT
GEOJIT FINANCIAL SERVICES LIMITEDCONSOLIDATED CASH FLOW STATEMENT
For Deloitte Haskins & Sells For and on behalf of the Board of DirectorsChartered Accountants
M. Ramachandran A.P. Kurian C.J. GeorgePartner Chairman Managing Director
Place : Mumbai Place : Mumbai Jayaraj T.Date : 19.05.2007 Date : 19.05.2007 Company Secretary
As per our Report of even date attached.
(In Rupees)p
Particulars 2006-07 2005-06
CASH FLOWS FROM OPERATING ACTIVITIESProfit before tax 377,873,401 331,147,708 Add/(Less):Depreciation / Amortisation 51,853,503 39,088,915 Provision for doubtful debts & advances 11,005,903 6,835,179 Deferred employee compensation written off 4,061,396 -Interest 2,328,540 116,306 Loss on sale / write off of Fixed Assets 1,477,914 1,490,334 Preliminary expenses written off - 186,595 Dividend income from non-trade current investments (2,905,295) (3,095,995) Profit on sale of non-trade current investments (622,513) (1,499,102) Interest earned on fixed deposits (9,931,334) (2,289,583) Dividend income from non-trade long-term investments (73,200) - Cash flow before changes in Working Capital 435,068,315 371,980,357 Working capital changes:(Increase)/Decrease in Inventories (10,277,070) 846,692 (Increase)/Decrease in Debtors (67,232,529) (195,332,055) (Increase)/Decrease in Loans & Advances (46,496,589) (438,470,937) Increase/(Decrease) in Current Liabilities 112,201,894 749,941,509 Increase/(Decrease) in Provisions 661,605 568,653 Cash generated from Operations 423,925,626 489,534,219 Income tax including fringe benefit tax paid (144,061,393) (107,837,986) Cash flows from Operating Activities 279,864,233 381,696,233
CASH FLOWS FROM INVESTING ACTIVITIESPurchase of fixed assets (90,521,884) (124,982,637) Sale of fixed assets 773,453 214,519 (Increase)/Decrease in capital advances 3,553,729 (2,288,868) Purchase of investments (727,419,678) (378,111,000) Goodwill on consolidation of subsidiary (2,260,978) - (Increase)/Decrease in fixed deposits with banks (1,204,185,014) 1,480,899 Investment in associate company - (101,227,920) Sale of investments 441,313,337 486,781,395 Dividend income from non-trade current investments 2,905,295 3,095,995 Dividend income from non-trade long-term investments 73,200 - Interest received on fixed deposits 4,539,475 2,006,881 Cash used in Investing Activities (1,571,229,065) (113,030,736)
CASH FLOWS FROM FINANCING ACTIVITIESProceeds from preferential issue of equity shares 56,804,870 -Share premium received on preferential issue of equity shares 1,395,929,795 - Application money received on preferential issue of warrants 85,370,362 - Dividend paid on equity share capital (94,111,747) (56,368,711) Corporate dividend tax paid (16,145,054) (8,106,066) Interest paid (2,328,540) (116,306) Cash flow from/ (used in) Financing Activities 1,425,519,686 (64,591,083)
Net Increase in Cash and Cash Equivalents 134,154,854 204,074,414 Add: Opening Cash & Cash Equivalents # $ 448,293,037 244,074,325 Add / (Less): Foreign Currency Translation Adjustment (33,568) 144,298 Closing Cash & Cash Equivalents # $ 582,414,323 448,293,037
# - Includes clients' balances in current accounts with banks.$ - Includes balances in unclaimed dividend bank accounts, which are not available for use by the Company.
129
GEOJIT FINANCIAL SERVICES LIMITEDSCHEDULES FORMING PART OF CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED 31st MARCH 2007
(In Rupees)pAs at As at
31st March 2007 31st March 2006Schedule 1: Share Capital
Authorised
250,000,000 Equity Shares of Re.1/- each(Previous Year: 20,000,000 Equity Shares of Rs. 10/- each) 250,000,000 200,000,000
500,000 14.5% Redeemable Cumulative Preference Shares of Rs.100/- each - 50,000,000 (Re-designated as 50,000,000 Equity Shares of Re.1/- each during the year)
250,000,000 250,000,000 Issued, Subscribed and Paid-up208,990,870 Equity Shares of Re.1/- each
(Previous Year: 15,218,600 Equity Shares of Rs.10/- each) 208,990,870 152,186,000 Includes:(a) 106,093,000 Equity Shares issued as fully paid bonus sharesby capitalisation of General Reserve and Securities Premium.(b) 56,804,870 Equity Shares issued during the year on preferentialbasis (Note 4 of Schedule 18)
208,990,870 152,186,000 Schedule 2: Employee Stock Options Outstanding(Note 5 of Schedule 20)Employee Stock Options Outstanding 11,291,028 13,660,350 Less:Deferred employee compensation expense 11,006,437 (13,660,350) Less: Employee compensation expense amortised 4,061,396 (6,945,041) 284,591
4,345,987 284,591 Schedule 3: Reserves & Surplus
Securities Premium
As per last Balance Sheet 18,644,483 18,644,483 Add:Received on preferential issue of equity shares during the year 1,420,121,750 - Less:Expenses related to the preferential issue (24,191,955) 1,395,929,795 -
1,414,574,278 18,644,483
Capital Redemption ReserveAs per last Balance Sheet 42,000,000 42,000,000
Statutory Reserve - Share in Joint Venture (Note E of Schedule 20)
As per last Balance Sheet 2,301,039 555,282
Add: Restatement of opening balance 149,454 20,217
Add: Transfer from Profit and Loss Account 1,841,135 1,725,540
4,291,628 2,301,039 Capital Reserve on Consolidation of AssociateAs per last Balance Sheet 25,600 25,600
Foreign Currency Translation Reserve
As per last Balance Sheet 1,349,735 782,438
Translation adjustment for the year (1,252,507) 567,297
97,228 1,349,735
General Reserve
As per last Balance Sheet 27,443,652 8,999,652
Add: Transfer from Profit and Loss Account 25,655,000 18,444,000 53,098,652 27,443,652
Profit and Loss Account 393,649,591 241,285,051
1,907,736,977 333,049,560
130
13 thANNUAL REPORT
GE
OJ
IT F
INA
NC
IAL
SE
RV
ICE
S L
IMIT
ED
SC
HE
DU
LE
S F
OR
MIN
G P
AR
T O
F C
ON
SO
LID
AT
ED
AC
CO
UN
TS
FO
R T
HE
YE
AR
EN
DE
D 3
1ST
MA
RC
H 2
007
Sch
edu
le 4
: F
ixed
Ass
ets
(In
Rup
ees)
p
Par
ticu
lars
Gro
ss B
lock
Dep
reci
atio
n/A
mo
rtis
atio
n
Net
Blo
c k
As
at 3
1st
Mar
ch 2
006
Ad
dit
ion
s/
Ad
just
men
ts
Del
etio
ns
As
at 3
1st
Mar
ch 2
007
Up
to 3
1st
Mar
ch 2
006
Fo
r th
e Y
ear
D
elet
ion
s U
pto
31
st
Mar
ch 2
007
As
at 3
1st
Mar
ch 2
007
As
at 3
1st
Mar
ch 2
006
Tan
gib
le A
sset
s:La
nd6,
057,
336
-
-
6,05
7,33
6
-
-
-
-
6,
057,
336
6,05
7,33
6
6,05
7,33
6 -
-
6,05
7,33
6 -
-
-
-
6,05
7,33
6
6,05
7,33
6
Bui
ldin
gs2,
049,
950
-
-
2,04
9,95
0
19
6,09
9
33,4
14
-
229,
513
1,
820,
437
1,85
3,85
1
2,
049,
950
-
-
2,
049,
950
16
2,68
5
33
,414
-
19
6,09
9
1,
853,
851
1,
887,
265
Impr
ovem
ents
to le
aseh
old
prem
ises
35,9
00,2
67
11,0
59,6
72
-
46,9
59,9
39
13,1
23,4
66
7,54
8,69
9
-
20
,672
,165
26
,287
,774
22
,776
,801
21
,867
,564
14
,648
,414
61
5,71
1
35
,900
,267
8,
236,
717
5,
390,
849
50
4,09
8
13
,123
,466
22
,776
,801
13
,630
,847
Ele
ctric
al e
quip
men
ts10
,601
,931
1,
309,
561
2,62
1
11
,908
,871
2,
842,
310
768,
705
2,
618
3,60
8,39
7
8,
300,
474
7,75
9,62
1
8,
562,
542
2,
127,
644
88
,255
10
,601
,931
2,
064,
865
80
4,23
8
26
,793
2,
842,
310
7,
759,
621
6,
497,
677
Offi
ce e
quip
men
ts34
,303
,235
13
,965
,395
56
4,82
6
47,7
03,8
04
6,57
1,87
0
2,
815,
036
151,
881
9,
235,
025
38,4
68,7
79
27,7
31,3
65
18,4
27,7
08
16,3
99,5
27
524,
000
34,3
03,2
35
5,08
6,34
0
1,62
0,25
0
134,
720
6,57
1,87
0
27,7
31,3
65
13,3
41,3
68
Fur
nitu
re &
Fitt
ings
19,3
59,4
72
8,37
5,23
5
11
9,65
8
27,6
15,0
49
11,2
39,4
17
3,69
7,91
5
98
,626
14
,838
,706
12
,776
,343
8,
120,
055
11,6
94,2
67
7,73
8,39
4
73,1
89
19,3
59,4
72
7,45
6,65
0
3,85
0,11
8
67,3
51
11,2
39,4
17
8,12
0,05
5
4,23
7,61
7
Com
pute
rs &
Acc
esso
ries
112,
950,
061
35,2
01,5
55
10,5
35,5
18
137,
616,
098
32,8
97,7
76
21,1
94,7
27
9,62
5,09
8
44
,467
,405
93
,148
,693
80
,052
,285
83
,587
,555
46
,987
,468
17
,624
,962
11
2,95
0,06
1
32
,497
,53 5
16,8
94,3
63
16,4
94,1
22
32,8
97,7
76
80,0
52,2
85
51,0
90,0
20
VS
AT
equ
ipm
ents
12,7
46,6
95
2,17
1,98
9
-
14
,918
,684
2,
929,
806
3,01
4,84
1
-
5,
944,
647
8,97
4,03
7
9,
816,
889
5,69
6,18
0
7,05
0,51
5
-
12,7
46,6
95
1,16
0,24
0
1,76
9,56
6
-
2,92
9,80
6
9,81
6,88
9
4,53
5,94
0
Veh
icle
s4,
092,
592
3,41
4,76
4
1,
235,
647
6,27
1,70
9
82
5,29
9
454,
179
32
8,68
0
950,
798
5,
320,
911
3,26
7,29
3
4,
084,
697
7,
895
-
4,09
2,59
2
435,
715
389,
584
-
825,
299
3,26
7,29
3
3,64
8,98
2
Inta
ng
ible
Ass
ets:
Com
pute
r so
ftwar
es48
,282
,753
14
,469
,876
-
62
,752
,629
12
,621
,653
9,
313,
935
-
21,9
35,5
88
40,8
17,0
41
35,6
61,1
00
20,6
34,7
69
27,6
47,9
84
-
48,2
82,7
53
6,70
3,97
4
5,91
7,67
9
-
12,6
21,6
53
35,6
61,1
00
13,9
30,7
95
Mem
bers
hip
right
s in
Sto
ck E
xcha
nges
23,8
61,8
01
-
-
23,8
61,8
01
15,6
91,3
81
1,91
0,62
1
-
17
,602
,002
6,
259,
799
8,17
0,42
0
23
,861
,801
-
-
23
,861
,801
13
,949
,510
1,
741,
871
-
15
,691
,381
8,
170,
420
9,
912,
291
310,
206,
093
89,9
68,0
47
12,4
58,2
70
38
7,71
5,87
0
98
,939
,079
50,7
52,0
72
10,2
06,9
03
13
9,48
4,24
6
24
8,23
1,62
4
21
1,26
7,01
6
Cap
ital a
dvan
ces
6,47
4,79
7
4,
974,
688
8,52
8,41
7
2,
921,
068
-
-
-
-
2,92
1,06
8
6,
474,
797
4,18
5,92
9
6,47
4,79
7
4,18
5,92
9
6,47
4,79
7
-
-
-
-
6,47
4,79
7
4,18
5,92
9
Sha
re in
Joi
nt V
entu
re (
Not
e E
of S
ch 2
0)4,
834,
942
867,
872
#
-
5,70
2,81
4
2,
395,
392
1,10
1,43
1
(1
55,5
84)
#3,
652,
407
2,05
0,40
7
2,
439,
550
2,38
4,68
7
2,46
1,62
2
11,3
67
4,83
4,94
2
1,66
3,39
4
676,
983
(55,
015)
2,
395,
392
2,
439,
550
72
1,29
3
G
ran
d T
ota
l32
1,51
5,83
2
95
,810
,60 7
20
,986
,687
396,
339,
752
101,
334,
471
51,8
53,5
03
10,0
51,3
19
14
3,13
6,65
3
25
3,20
3,09
9
22
0,18
1,36
3
P
revi
ous
Yea
r21
3,09
4,98
5
13
1,54
4,26
0
23
,123
,413
32
1,51
5,83
2
79
,417
,625
39
,088
,915
17
,172
,069
10
1,33
4,46
9
22
0,18
1,36
3
13
3,67
7,36
0
Not
e: P
revi
ous
year
figu
res
are
show
n in
ital
ics.
# -
Incl
udes
fore
ign
exch
ange
fluc
tuat
ion
diffe
renc
e on
res
tate
men
t of o
peni
ng b
alan
ce o
f joi
nt v
entu
re a
s pe
r re
vise
d A
ccou
ntin
g S
tand
ard
11 "
The
Effe
cts
of C
hang
es in
For
eign
Exc
hang
e R
ates
".
131
GEOJIT FINANCIAL SERVICES LIMITEDSCHEDULES FORMING PART OF CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED 31st MARCH 2007
(In Rupees)p
Particulars As at
31st March 2007 As at
31st March 2006 Schedule 5: Investments
Long Term Investments - At cost
Unquoted, non-tradeIn Associate Company:-50,606,120 equity shares of Rs.2/- each, fully paid-up, in GeojitCredits Private Limited 112,148,308 104,061,934
In others:-400 'C' class shares of Rs.500/- each in Muvattupuzha Co-operative Super Speciality Hospital Limited 200,000 200,000
5 shares of Rs.10,000/- each in First Commodities Exchange of India Ltd. 75,000 75,000
82,568 units of Rs.10/- each in SBI Mutual Fund - Magnum Insta-cash Fund 1,200,000 1,200,000
10,000 equity shares of Re.1/- each, fully paid up, in Bombay StockExchange Ltd. 10,000 10,000
100 equity shares of Rs.10/- each, fully paid up, in Cochin StockExchange Ltd. 1,000 1,000
113,634,308 105,547,934 Current Investments - At lower of cost and net asset / fair value
Unquoted, non-tradeIn Mutual Funds & Government Securities 299,503,615 12,774,761
413,137,923 118,322,695 Aggregate cost of unquoted investments 413,137,923 118,322,695 Aggregate net asset / market value of mutual fund investments 301,188,180 14,096,475
Schedule 6: Inventories
Commodities 11,250,000 972,930
Schedule 7: Sundry Debtors - Unsecured, unless stated otherwise
Considered goodClient balances outstanding for a period exceeding six months 23,697,627 10,334,497 Other Client balances 207,192,725 182,092,130
Client balances - Margin Funding Loan Receivable (Secured) 65,166,838 24,347,372 Dues from Stock Exchanges 106,292,611 123,885,313
402,349,801 340,659,312 Considered Doubtful Client balances outstanding for a period exceeding six months 13,688,094 11,523,507 Other Client balances 1,824,325 3,121,462
15,512,419 14,644,969 Less: Provision for doubtful debts 15,512,419 14,644,969
- - Share in Joint Venture (Net) (Note E of Schedule 20) 6,176,070 11,639,933
408,525,871 352,299,245
132
13 thANNUAL REPORT
GEOJIT FINANCIAL SERVICES LIMITEDSCHEDULES FORMING PART OF CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED 31st MARCH 2007
(In Rupees)p
Particulars As at 31st March 2007
As at 31st March 2006
Schedule 8: Cash & Bank Balances
Cash in hand 374,516 403,320 Balances with Scheduled Banks:
- in Current Accounts 47,960,559 17,633,378
- in Current Accounts - Clients 496,878,806 402,176,937 - in Current Accounts - Unclaimed Dividends 2,133,895 1,129,392 - on Fixed Deposit Accounts 1,243,326,671 39,141,657
Balances with Other Banks - Emirates Bank International 61,091 -
Share in Joint Venture (Note E of Schedule 20) 35,005,456 26,950,010 1,825,740,994 487,434,694
Schedule 9: Other Current Assets
Interest accrued on fixed deposits 6,412,728 1,020,869
Schedule 10: Loans & Advances - Unsecured and considered good,unless otherwise stated
Advances recoverable in cash or in kind or for value to be received 18,129,932 13,337,521 Advance to staff 251,605 705,417 Advance income tax 272,348,387 152,517,786 Advance fringe benefit tax 4,757,808 2,184,603 Income tax paid under protest, pending in appeal 14,611,581 4,430,746
310,099,313 173,176,073 Deposits:Deposits & Margins with Stock & Commodity Exchanges 783,850,298 753,935,790 Deposits with government authorities 880,366 612,756 Other deposits: - Considered good 36,909,927 28,658,910 - Considered doubtful 60,000 60,000
36,969,927 28,718,910 Less: Provision for doubtful deposits 60,000 60,000
36,909,927 28,658,910 821,640,591 783,207,456
Share in Joint Venture (Note E of Schedule 20) 7,311,838 3,586,983 1,139,051,742 959,970,512
133
GEOJIT FINANCIAL SERVICES LIMITEDSCHEDULES FORMING PART OF CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED 31st MARCH 2007
(In Rupees)
ParticularsAs at
31st March 2007 As at
31st March 2006
Schedule 11: Current Liabilities
Sundry Creditors: - Clients 1,389,832,865 1,308,299,488 - Stock/Commodity Exchanges 20,834,400 3,352,533 - Others 80,040,200 80,302,933 Security deposit from Business Associates 18,756,433 19,983,265 Statutory liabilities 10,276,591 11,835,559 Investor Education & Protection Fund shall be credited by the following amount: - Unpaid dividend 2,133,895 1,129,392 Other liabilities 12,000,721 6,432,489 Overdrawn Scheduled Bank Current Accounts 16,697,021 5,541,782
Share in Joint Venture (Note E of Schedule 20) 10,462,581 10,950,869 1,561,034,707 1,447,828,310
Schedule 12: Provisions
Leave encashment 634,198 621,747 Income tax 263,446,100 149,464,443 Fringe Benefit Tax 5,203,400 2,327,000 Wealth Tax 30,168 16,951 Proposed dividend on: - Equity share capital - 34,241,850 - Corporate dividend tax - 4,802,419
Share in Joint Venture (Note E of Schedule 20) 1,200,691 564,754 270,514,557 192,039,164
Schedule 13: Miscellaneous Expenditure(to the extent not written off / adjusted)Preliminary Expenses:As per last Balance Sheet - 186,595 Less: Written off during the year - 186,595
- -
134
13 thANNUAL REPORT
(In Rupees)
GEOJIT FINANCIAL SERVICES LIMITEDSCHEDULES FORMING PART OF CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED 31st MARCH 2007
For the year ended For the year ended 31st March 2007 31st March 2006
Schedule 14: Income from operations
Brokerage 1,053,325,788 814,873,200 Depository services 58,053,452 61,095,409 Financial products distribution 95,523,584 65,171,779 Portfolio management services 20,835,611 15,985,287
Software consultancy & development 10,964,518 2,854,789 Interest from margin funding 7,036,352 181,191 Miscellaneous income 29,288,293 14,605,805 Share in Joint Venture (Note E of Schedule 20) 37,420,651 35,504,684
1,312,448,249 1,010,272,144 Schedule 15: Other incomeDividend income from non-trade long-term investments 73,200 - Dividend income from non-trade current investments 2,905,295 3,095,995 Profit on sale of non-trade current investments 622,513 1,499,102 Interest earned on fixed deposits 9,931,334 2,289,583
[Tax deducted at source: Rs.2,253,357/- (Previous Year: Rs.503,801/-)] Income from commodity hedging 3,111,540 - Miscellaneous income 5,755,818 1,554,253 Share in Joint Venture (Note E of Schedule 20) 3,328,810 895,224
25,728,510 9,334,157 Schedule 16: Payments to and provision for employees
Salaries, Allowances & Bonus 244,960,283 163,012,771 Contribution to Provident & Other funds 11,517,028 8,508,146 Staff welfare expenses 10,838,426 6,896,933 Share in Joint Venture (Note E of Schedule 20) 20,354,943 15,724,361
287,670,680 194,142,211 Schedule 17: Operating expenses
Business associates' commission 182,277,473 133,768,748 Marketing incentive 64,469,580 49,919,066 Depository charges 13,405,575 14,275,961 Connectivity charges 42,806,265 25,391,959 Marketing fees 31,633,980 22,132,364 Research expenses 11,904,717 10,598,678 Business associates' commission - Financial products distribution 11,226,029 12,956,194 Loss on sale of stock-in-error 9,317,790 2,253,429 Postage charges - Contract Notes 7,914,896 3,809,829 Transaction charges 4,473,829 749,787 Registration fee - SEBI 1,305,966 109,221 Insurance - NSE, BSE & NSDL 1,554,393 480,310 Registration & Renewal fees 835,287 902,927 Miscellaneous expenses 7,642,093 3,525,089 Share in Joint Venture (Note E of Schedule 20) 1,115,343 307,634
391,883,216 281,181,196
Particulars
135
GEOJIT FINANCIAL SERVICES LIMITEDSCHEDULES FORMING PART OF CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED 31st MARCH 2007
(In Rupees)p
Schedule 18: Establishment & Other Expenses
Rent for premises 40,116,411 24,637,497 Telephone expenses 28,890,628 20,726,091 Postage 11,981,934 11,651,737 Advertisement 11,556,490 18,128,375 Electricity charges 17,016,184 10,657,948 Repairs & Maintenance: - Leasehold building 762,136 577,130 - Others 12,534,309 6,542,622 Printing & Stationery 11,539,086 10,206,089 Travel & Conveyance expenses - Directors 1,863,865 2,244,679 - Others 9,131,747 6,690,272 Legal & Professional fees 9,210,623 7,257,358 Office expenses 9,238,150 6,804,479 Software charges 8,122,039 14,436,068 Provision for doubtful debts & advances (Net of write backs) 11,005,903 6,835,179 Business promotion expenses 4,348,216 3,156,721 Bank guarantee commission 1,127,621 1,477,703 Bank charges 2,332,348 999,197 Other communication expenses 4,399,289 2,860,165 Loss on sale / write off of fixed assets 1,477,914 1,490,334 Meeting & Seminar expenses 2,177,506 976,470 Rates & Taxes 5,407,526 1,111,280 Subscriptions 2,972,147 1,622,014 Website charges 1,387,444 1,524,170 Bad debts 1,162,047 175,877 Insurance - others 620,158 888,919 Sitting fees to directors 303,000 210,000 Donations 145,450 152,061
Custody Fee -Depository 33,274 33,183Listing fees 122,512 65,850 Registrar & Transfer expenses 327,674 194,968 Miscellaneous expenses 3,004,510 (832,415) Share in Joint Venture (Note E of Schedule 20) 11,977,036 10,218,277
226,295,177 173,720,298
Schedule 19:Finance chargesInterest on loans other than fixed loans 2,328,540 116,306
For the year ended 31st March 2006
For the year ended 31st March 2007
Particulars
136
13 thANNUAL REPORT
GEOJIT FINANCIAL SERVICES LIMITED
SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTSFOR THE YEAR ENDED 31ST MARCH 2007
SCHEDULE 20:SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS
A. Principles of Consolidation
The Consolidated Financial Statements of Geojit Financial Services Limited Group (hereinafter referred to as “theGroup”) have been prepared in accordance with Accounting Standard 21 (AS 21) “Consolidated FinancialStatements”, Accounting Standard 23 (AS 23) “Accounting for Investments in Associates in Consolidated FinancialStatements” and Accounting Standard 27 (AS 27) “Financial Reporting of Interests in Joint Ventures” issued by TheInstitute of Chartered Accountants of India (“ICAI”).
The financial statements of the subsidiaries, associate and joint venture used in the consolidation are drawn uptothe same reporting dates as that of the Company, viz., 31st March 2007.
The consolidated financial statements have been prepared applying uniform accounting policies for like transactionsand events in similar circumstances and appropriate adjustments are made if the differences in accounting policieshave a material impact.
The financial statements of the Company and its subsidiaries have been combined on a line-by-line basis byadding together the book values of like items of assets, liabilities, incomes and expenses, after fully eliminatingintra-group balances and transactions resulting in unrealized profit / loss. The company’s investment in an associatecompany has been accounted under Equity Method, which requires the investment to be initially recorded at costidentifying any goodwill/capital reserve arising at the time of acquisition and the carrying amount is increased ordecreased to recognize the investor’s share in the profits / losses of the investee after the date of acquisition.Distributions received from the investor are reduced from the carrying amount of investment. The interest of theCompany in a jointly controlled entity has been consolidated under proportionate consolidation method, whichrequires the venturer’s share of assets and liabilities, and incomes and expenses in such entities to be included inthe Consolidated Balance Sheet and Consolidated Profit and Loss Account respectively as separate line items.
The excess of cost of investment over the Company’s share in the net assets of a subsidiary, associate or jointlycontrolled entity at the date on which investment is made is recognised as ‘goodwill’ and the excess of Company’sshare in the net assets of a subsidiary or jointly controlled entity over the cost of investment at the date on whichinvestment is made is recognised as ‘capital reserve’, as the case may be, and is separately disclosed in theconsolidated financial statements.
B. Significant Accounting Policies
Basis of Preparation
The financial statements are prepared under the historical cost convention using accrual basis of accounting andin accordance with the Accounting Standards issued by The Institute of Chartered Accountants of India, specified inSection 211 (3C) of the Companies Act, 1956.
Use of Estimates
The preparation of the financial statements in conformity with the accounting standards generally accepted in Indiarequires, the management to make estimates that affect the reported amount of assets and liabilities, disclosure ofcontingent liabilities as at the date of the financial statement and reported amounts of revenues and expenses forthe year. Actual results could differ from these estimates.
137
Fixed Assets and Depreciation
Fixed assets are stated at cost less accumulated depreciation. Cost includes cost of purchase and other costs attributableto bringing the assets to working condition for intended use.
Improvements to leased office premises are depreciated over a period of 5 years irrespective of the lease period, on theassumption that lease agreements will be renewed and the premises will be occupied for a minimum period of fiveyears. If the premises are vacated before the expiry of five-year period, the un-amortised leasehold improvement costsare fully written off in the year of vacation. V-Sat equipments are depreciated over a period of 5 years. Depreciation onall other fixed assets is provided under the Straight Line Method (SLM) at the rates specified in Schedule XIV of theCompanies Act, 1956.
Additions to fixed assets are depreciated from the date of addition and deletions are depreciated upto the date of sale,on pro-rata basis.
Intangible Assets and Amortisation
Stock Exchange membership rights and computer software are considered as intangible assets. Stock Exchangemembership rights are amortized over a period of 10 years and computer software are amortised over a period of 6years.
Investments
Investments are classified as long-term or current based on their nature and intended holding period. Long-terminvestments are stated at cost and provision is made only if the diminution in value is permanent. Current investmentsare stated at lower of cost and market value / net asset value.
Inventories
Inventory of Commodities as at the year-end is valued at cost (on the basis of specific identification method) or netrealizable value.
Income
Brokerage income is recognized on the trade date of transaction, upon confirmation of the transactions by stock /commodity exchanges and clients. Depository and portfolio management service incomes are recognised on the basisof agreements entered into with clients. Commission income from financial products distribution is recognised on thebasis of agreement entered with principals and when the right to receive the income is established. Dividend income isrecognised when the right to receive the income is established. Software development revenue is recognised oncompletion of different stages of software development.
Retirement Benefits
The Company’s contributions to provident and family pension funds, which are defined contribution schemes, arecharged to Profit and Loss Account of the period to which they relate.
The Company also provides gratuity benefit to its employees, which is in the nature of defined benefit scheme. Theliability for gratuity is funded with Life Insurance Corporation of India and the annual contributions are charged to Profitand Loss Account. At each balance sheet date, the Company obtains an actuarial valuation from the said Corporationand the shortfall, if any, in the fund balance on that date is also charged to Profit and Loss Account.
Leave Encashment
Leave encashment liability, as at the balance sheet date, is determined and accounted on the basis of leave to the creditof the employees as per the leave encashment policy of the Company.
138
13 thANNUAL REPORT
Taxes on Income
Current tax is determined as the amount of tax payable in respect of taxable income for the period under theprovisions of the Income Tax Act, 1961.
Deferred tax is recognised, subject to the consideration of prudence, on timing differences, being the differencebetween taxable income and accounting income that originate in one period and are capable of reversal in one ormore subsequent periods. Deferred tax assets are recognised and carried forward only to the extent there isreasonable certainty that sufficient future taxable income will be available against which such asset items can berealised.
Derivative Instruments
The Company uses commodity futures contracts to hedge the risk of movement in commodity prices. The Companyrecognizes gain / loss on commodity futures contracts used as hedge, on settlement of such contracts.
Provisions
A provision is recognised when there is a present obligation as a result of a past event, it is probable that an outflowof resources will be required to settle the obligation and in respect of which reliable estimate can be made. Provisionis not discounted to its present value and is determined based on the best estimate required to settle the obligationat the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the best currentestimate.
Employee Stock Option
The employee share based compensation cost under the Employee Stock Option Scheme is accounted under theintrinsic value method. Under the intrinsic value method, the difference between the market price of the share on thegrant date or as near thereto and exercise price is considered as intrinsic value of options and amortised onstraight-line basis over the vesting period as employee share based compensation cost.
Securities Issue Expenses
Equity share issue expenses are adjusted against Securities Premium.
C. Details of subsidiaries included in the consolidated financial statements:
Geojit Commodities Ltd India 100 % 100% Geojit Financial Services Ltd
Geojit Technologies Pvt Ltd India 100 % 100% Geojit Commodities Ltd
Geojit FinancialDistribution Pvt Ltd. India 100 % 100% Geojit Commodities Ltd
Geojit Financial ManagementServices Pvt Ltd. India 100 % 100% Geojit Commodities Ltd
Sigma SystemsInternational FZ LLC United Arab Emirates 100% - Geojit Technologies Pvt Ltd
D. Details of Associate included in the consolidated financial statements:
Name of Associate Company Country of incorporation Share in ownership & voting power
2006-07 2005-06
Geojit Credits Private Limited India 49.98% 49.98%
Names of SubsidiaryCompanies
Shares held byShare in
ownership &voting power
Country ofincorporation
2006-07 2005-06
139
E. Details of Joint Venture included in the consolidated financial statements:
(a) Interest in Joint Venture:
Name of Joint Venture Country of incorporation Share in ownership & voting power
2006-07 2005-06
Barjeel Geojit Securities LLC United Arab Emirates 30% 27.27%
(b) The Company’s interest in the joint venture is reported as long-term investment and stated at cost in thestandalone financial statements. The Company’s share in the assets and liabilities as at the Balance Sheet dateand in the incomes and expenses, after elimination of the effect of transactions between the Company and thejoint venture, for the year is as follows:
Particulars 2006-07(Rs.) 2005-06(Rs.)
ASSETS
Fixed & Intangible Assets (Net Block) 2,050,407 2,439,550
Current Assets, Loans and Advances:
Sundry Debtors 6,176,070 11,639,933
Cash & Bank balances 35,005,456 26,950,010
Loans & Advances 7,311,839 3,586,983
LIABILITIES
Reserves & Surplus
Profit and Loss Account 20,998,554 18,221,404
Statutory Reserve 4,291,628 2,301,039
Foreign Currency Translation Reserve 1,85,890 1,349,735
Current Liabilities & Provisions:
Liabilities 10,462,582 10,950,869
Provisions 1,200,691 564,754
INCOME
Income from operations 37,420,651 35,504,684
Other income 3,328,810 895,224
EXPENDITURE
Payment to and provision for employees 20,354,943 15,724,361
Operating expenses 1,115,343 307,634
Establishment & Other expenses 11,977,036 10,218,277
Interest & Financial charges - -
Depreciation 1,101,431 676,983
CONTINGENT LIABILITY
Bank Guarantees 415,935 300,436
140
13 thANNUAL REPORT
(c) The joint venture company, Barjeel Geojit Securities LLC (‘Barjeel Geojit’), has entered into a joint venture agreementwith Global Financial Investments S.A.O.G., Muscat, Sultanate of Oman, on 20th July 2004, wherein Barjeel Geojithas 65% interest. The Profit and Loss Account of Barjeel Geojit includes the results of operation of the said jointventure. The “Share of profit to Co-venturer” in the Profit and Loss Account represents the 35% interest of GlobalFinancial Investments S.A.O.G. in the results of operation of the said joint venture during the year.
(d) The Company has adopted the revised Accounting Standard 11, “The Effects of Changes in Foreign ExchangeRates” issued by The Institute of Chartered Accountants of India for consolidating its interest in the joint venture. Asrequired by the Standard, the exchange gain / loss on translation of financial statements of the joint venture for thepurpose of consolidation is taken to Foreign Currency Translation Reserve and disclosed separately in theConsolidated Balance Sheet.
F. Notes on Accounts
1. Contingent Liability:
Particulars As at 31.03.2007 As at 31.03.2006(Rs.) (Rs.)
Claims against the Company not acknowledged as debts:Legal suits filed against the Company / Matters under Arbitration 12,570,914 1,790,701
Income tax demands, pending in appeal 14,611,581 8,572,440
Service tax demands, pending in appeal 448,298 -
2. The Shareholders of the Company, at the Extra-ordinary General Meeting held on 22nd November, 2006, authorizedthe Board of Directors to allot equity shares of face value Re.1/- each on preferential basis to BNP Paribas S.A. asfollows:
Name of the Allottee No. of Shares Price per Share (Rs.) Amount (Rs.)
BNP Paribas S.A. 56,804,870 26.00 1,476,926,620
The shares were allotted on 13th March 2007.
3. Utilisation of the proceeds from the allotment of equity shares to BNP Paribas S.A. on preferential basis during theyear is as follows:
Particulars Amount (Rs.)
Proceeds from the allotment of equity shares 1,476,926,620
Utilisation upto 31st March 2007:
Refund of temporary overdraft from a bank 30,871,105
Amount used in operations 71,055,515
Balance pending utilization as on 31st March 2007, which is: 1,375,000,000
Total 1,476,926,620
Amount pending utilisation as on 31st March 2007 is invested as follows:
In fixed deposits with banks 1,110,000,000
In mutual funds 265,000,000
Total 1,375,000,000
141
4. The Shareholders of the Company, at the Extra-ordinary General Meeting held on 22nd November, 2006, authorizedthe Board of Directors to allot 22,826,300 warrants to BNP Paribas S.A. on preferential basis. Each warrant entitlesthe holder to subscribe for and be allotted one equity share of Re.1/- each, fully paid, at a price of Rs.26/- per share.The warrants were allotted on 13th March 2007 and are convertible at the sole option of the warrant holder at anytime within a period of 18 months from that date. The Company has received Rs. 85,370,362/- as warrant applicationmoney @ Rs. 3.74 per warrant, of which Rs. 85,300,000/- is kept in fixed deposits with banks and the balance of Rs.70,362/- in warrant application bank account as on 31st March 2007.This is disclosed as ‘Monies Pending Allotment’in the Balance Sheet.
5. (a) The Company introduced Employee Stock Option Plan-2005 (ESOP-2005) during 2005-06, under which optionsfor 6,989,400 equity shares of Re. 1/- each were granted to eligible permanent employees and non-executivedirectors, including independent directors but excluding promoters, of the Company and its Subsidiaries. Thescheme was approved by the Shareholders at the Extra-ordinary General Meeting held on 7th March 2006 andby the Compensation Committee of Directors on 7th March 2006. The options will vest over a period of 4 yearsfrom the date of grant, viz., 7th March 2006, as follows:
End of Year Date of Vesting % of options granted
II 7th March 2008 30%
III 7th March 2009 30%
IV 7th March 2010 40%
The exercise period commences from the date of vesting and will expire not later than 5 years from the date of grant,viz., 7th March 2011. The exercise price has been computed by giving discounts, based on the grade and number ofyears of service rendered by the employees and directors, to the market price on the date prior to grant date. Theequity shares allotted against options exercised will be under lock-in for a period of one year from the date ofallotment.
The Company adopts intrinsic value method for accounting employee share based compensation cost. Under theintrinsic value method, the difference between market price of the share on the grant date or as near thereto andexercise price is considered as intrinsic value of options and amortised on straight-line basis over the vestingperiod as employee share based compensation cost.
The intrinsic value of 6,989,400 options granted by the Company (i.e., the difference between market price on dateof grant and exercise price), to be amortised on straight-line basis over the vesting period of four years net ofexpected forfeiture @ 6% per annum, is Rs.11,291,028/- and the proportionate amount amortised during the yearis Rs.4,061,396/-. The additional charge on the Profit and Loss Account and Earnings Per Share for the year, had theCompany followed Fair Value Method of accounting for ESOP compensation cost, is Rs.10,965,594/- and Rs. (0.07)respectively.
(b) Further disclosures on ESOP-2005 are given below:
(i) Grantee-wise details of ESOPs granted:
Class of Grantees Directors Managers and Above Other Employees
Date of grant 07.03.2006 07.03.2006 07.03.2006
Number of options granted 300,000 2,599,400 4,090,000
Contractual life:30% of 6,989,400 2 years 2 years 2 years30% of 6,989,400 3 years 3 years 3 years40% of 6,989,400 4 years 4 years 4 years
Vesting conditions Continuation in the services of the Company and such other conditionsas may be formulated by the Compensation Committee from time to time.
Method of settlement In Cash In Cash In Cash
142
13 thANNUAL REPORT
(ii) Movement in ESOPs granted:
Class of Grantees Directors Managers and Above Other Employees
No. of optionsoutstanding at yearbeginning 300,000 18.86 2,599,400 17.75 4,090,000 17.94
No. of options granted - - - - - -
No. of options forfeited - - 441,500 17.75 148,000 17.94
No. of options exercised - - - - - -
No. of optionsoutstanding at year end 300,000 18.86 2,157,900 17.75 3,942,000 17.94
No. of optionsexercisable at year end 300,000 18.86 2,157,900 17.75 3,942,000 17.94
(c) The estimated fair values of each stock option are as follows:
Class of Grantees Weighted Average Fair Values (Rs.)
Directors 6.25
Managers and Above 6.28
Other Employees 6.30
The fair values were calculated using Black-Scholes Options Pricing Model. The model inputs were the share priceat grant date of Rs. 19.86, weighted average exercise price as per (b) above, volatility in the market price (of theCompany’s share over the one year prior to the date of grant) of 199% (computed with reference to the one year highand low of the market price), expected dividends (weighted average of past three years including year of grant) of35%, contractual life of two to four years, as the case may be, and a risk-free interest rate of 6%. It is assumed thatemployees would exercise the options immediately on vesting. The historical volatility, including the early years ofthe Company’s life, is higher than the volatility of 199% considered above and the Company expects the volatility ofits share price to reduce as it matures.
6. The Company’s operations predominantly relate to one segment, viz., stock / commodity broking, and depositoryservices, which constitutes more than 82% of the total revenues / results / assets of all segments combined. Otheractivities, which are incidental to the main business of stock / commodity broking, and depository services, do notindividually constitute 10% or more of the total revenues or results or assets of the Company. Therefore, separatebusiness segment information is not disclosed. Besides, the Company’s operations are located only in India andhence, separate secondary geographical segment information is not disclosed.
7. Related Party Disclosures:
I) Nature of relationship and related parties:
Nature of Relationship Name of Related Party
Key Management Personnel : Mr. C.J. George, Managing Director
Relatives of Key Management Personnel : Ms. Shiny George, Wife
No. ofOptions
WeightedAvg.
ExercisePrice (Rs.)
No. ofOptions
WeightedAvg.
ExercisePrice (Rs.)
No. ofOptions
WeightedAvg.
ExercisePrice (Rs.)
143
II) Transactions with Related Parties during the year and balance outstanding at the end of the year:(In Rupees)
Nature of transaction Key Management Relatives of KeyPersonnel Management Personnel
2006-07 2005-06 2006-07 2005-06
I. Transactions during the year:
Salary and benefits 5,705,679 5,719,218 - -
Dividend paid 25,379,225 7,106,183 5,012,047 1,410,031
II. Balances at year end:
Debtors / Receivable - - - -
Creditors / Payable 1,189,902 804,863 - -
Note: No amounts pertaining to Related Parties were written off or written back during the year.
8. Earnings per share are computed as follows:
Particulars 2006-07 2005-06
Net profit after tax – In Rs. 252,142,176 227,069,949
Profit attributable to Equity Shareholders – In Rs. (A) 252,142,176 227,069,949
Total number of equity shares outstanding at balance sheet date 208,990,870 152,186,000
Weighted average number of equity shares outstanding,considered for the purpose of computing Basic EPS (B) 155,142,966 152,186,000
Add: Number of potential equity shares to be issued underEmployee Stock Option Plan 2005 and on conversion of warrantsissued to BNP Paribas S.A. on preferential basis 2,101,822 -
Weighted average number of equity shares outstanding,considered for the purpose of computing Diluted EPS (C) 157,244,788 152,186,000
Basic Earnings Per Share – In Rs. (A/B) 1.63 1.49
Diluted Earnings Per Share – In Rs. (A/C) 1.60 1.49
Nominal value of Equity Shares – In Re. 1.00 1.00
9. Components of Deferred Tax Liability (Net) shown in the Consolidated Balance Sheet is as follows:
Particulars As at 31.03.2006 For the year As at 31.03.2007
Liability Items:
Depreciation 23,727,263 6,491,120 30,218,383
Asset Items:
Provision for bad & doubtful debts / advances (5,083,831) 718,410 (4,365,421)
ESOP Compensation cost - (1,380,740) (1,380,740)
Unabsorbed depreciation - (272,000) (272,000)
Others - (74,000) (74,000)
Deferred Tax Liability (Net) 18,643,432 5,482,790 24,126,222
(In Rupees)
144
13 thANNUAL REPORT
10. Details of Commodity Futures Contracts outstanding as at 31st March 2007:
Nature of Contract Purpose of Contract Contract Value(in Rs.)
Sell Contract with NCDEX - To hedge price risk of 85 MTDelivery in May 2007 of pepper held in stock. 10,594,750
Sell Contract with NCDEX - To hedge price risk of 15 MTDelivery in June 2007 of pepper held in stock. 1,912,500
In accordance with the accounting policy followed, the gain/ loss arising from the above hedge contracts will berecognized only on settlement of the contracts. Accordingly, the mark to market loss on the above contracts as on31.03.2007 of Rs.18.92 lakhs, which will get adjusted on settlement of the above contracts, is carried over underLoans & Advances in Balance Sheet.
11. Previous year’s figures have been regrouped / reclassified / recast wherever necessary to conform to current year’sclassification.
Signatures to Schedules 1 to 20
For Deloitte Haskins & Sells For and on behalf of the Board of DirectorsChartered Accountants
M. Ramachandran A.P. Kurian C.J. GeorgePartner Chairman Managing Director
Place : Mumbai Place : Mumbai Jayaraj T.Date : 19.05.2007 Date : 19.05.2007 Company Secretary