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Notes to Accounts of Motilal Oswal Financial Services Ltd.
Mar 31, 2025
2.13 Provisions and contingencies:
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result
of a past event, it is probable that an outflow of resources embodying economic benefits will be required
to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are
measured at the best estimate of the expenditure required to settle the present obligation at the reporting
date.
Provisions are determined by discounting the expected future cash flows (representing the best estimate of
the expenditure required to settle the present obligation at the balance sheet date) at a pre-tax rate that
reflects current market assessments of the time value of money and the risks specific to the liability. The
unwinding of the discount is recognized as finance cost. Expected future operating losses are not provided
for.
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence
of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events
not wholly within the control of the Company or a present obligation that arises from past events where it is
either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate
of the amount cannot be made. Contingent assets are neither recognised nor disclosed in the financial
statements.
2.14 Employee benefits
(i) Short-term obligations
Short-term employee benefits are recognized as an expense at the undiscounted amount in the
Statement of Profit and Loss for the year in which the related services are rendered. The Company
recognises the costs of bonus payments when it has a present obligation to make such payments as
a result of past events and a reliable estimate of the obligation can be made.
Compensated absences
The Company does not have a policy of encashment of unavailed leaves for its employees but are
permitted to carry forward subject to a prescribed maximum day. Provision is made on actual basis for
expected cost of accumulating compensated absences as a result of unused leave entitlement which
has accumulated as at the balance sheet date.
(ii) Post-employment obligations
Defined contribution plan:
Contribution paid/payable to the recognised provident fund and Employee State Insurance Corporation,
which is a defined contribution scheme, is charged to the Statement of Profit and Loss in the period in
which they occur.
Defined benefits plan:
Gratuity is post-employment benefit and is in the nature of defined benefit plan. The liability recognised
in the Balance Sheet in respect of gratuity is the present value of defined benefit obligation at the
Balance Sheet date together with the adjustments for unrecognised actuarial gain or losses and the
past service costs. The defined benefit obligation is calculated at or near the Balance Sheet date by
an independent actuary using the projected unit credit method. Actuarial gains and losses comprise
experience adjustment and the effects of changes in actuarial assumptions are recognized in the period
in which they occur, directly in other comprehensive income. They are included in retained earnings in
the statement of changes in equity and in the balance sheet.
National Pension Scheme and Employee State Insurance Corporation:
Contribution paid/payable to the recognised NPS and ESIC, which is a defined contribution scheme, is
charged to the Statement of Profit and Loss in the period in which they occur.
(iii) Other long-term employee benefits obligations
Heritage club benefit:
Heritage club benefits are recognised as liability at the present value of defined benefits obligation as
at the Balance Sheet date. The defined obligation benefit is calculated at the Balance Sheet date by
an independent actuary using the projected unit credit method.
2.15 Share-based payments
Employee Stock Option Scheme (ESOS)
The Employees Stock Options Scheme ("the Scheme") has been established by the Company. The Scheme
provides that employees are granted an option to subscribe to equity share of the Company that vests
on the satisfaction of vesting conditions. The fair value of options granted under ESOS is recognized as an
employee benefits expense with a corresponding increase in equity. The total amount to be expensed is
determined reference to the fair value of the options granted excluding the impact of any service conditions.
Information about the valuation techniques and inputs used in determining the sale value of assets and
liabilities disclosed in note 53.
The total expense is recognized over the vesting period, which is the period over which all of the specified
vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number
of options that are expected to vest based on the service conditions. It recognizes the impact of the revision
to original estimates, if any, in Statement of profit and loss, with a corresponding adjustment to equity.
The stock options of the Subsidiary Company, granted to employees pursuant to the Company''s Stock
Options Schemes, are measured at the fair value of the options at the grant date as per Black and Scholes
model. The fair value of the options is treated as discount and accounted as employee compensation cost,
with a corresponding increase in other equity, over the vesting period on a straight line basis. The amount
recognised as expense in each year is arrived at based on the number of grants expected to vest. If a grant
lapses after the vesting period, the cumulative discount recognised as expense, with a corresponding increase
in other equity, in respect of such grant is transferred to the General reserve within other equity.
2.16 Foreign currency translation
(i) Functional and presentation currency
Items included in financial statements of the Company are measured using the currency of the primary
economic environment in which the Company operates (''the functional currency''). The financial
statements are presented in Indian rupee (INR), which is MOFSL''s functional and presentation currency.
(ii) Translation and balances
Foreign currency transactions are translated into the functional currency using the exchange rates
at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of
such transactions and from the translation of monetary assets and liabilities denominated in foreign
currencies at year end exchange rates are recognized in Statement of profit and loss.
Non-monetary items that are measured at fair value in a foreign currency are translated using the
exchange rates at the date when the fair value was determined. Translation differences on assets and
liabilities carried at fair value are reported as part of the fair value gain or loss. For example, translation
differences on non - monetary assets and liabilities such as equity instruments held at fair value through
profit or loss are recognized in Statement of profit and loss as part of the fair value gain or loss and
translation differences on non-monetary assets such as equity investments classified as FVOCI are
recognized in other comprehensive income.
2.17 Dividends
Provision is made for the amount of any dividend declared, being appropriately authorized and no longer
at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of
the reporting period.
2.18 Earnings per share
a) Basic earnings per share
Basic earnings per share is calculated by dividing the net profit for the period (excluding other
comprehensive income) attributable to equity share holders of the Company by the weighted average
number of equity shares outstanding during the financial year, adjusted for bonus element in equity
shares issued during the year.
b) Diluted earnings per share
Diluted earnings per share is computed by dividing the net profit for the period attributable to equity
shareholders by the weighted average number of shares outstanding during the period as adjusted
for the effects of all diluted potential equity shares except where the results are anti-dilutive.
2.19 Borrowing Costs
Expenses related to borrowing cost are accounted using effective interest rate. Borrowing costs are interest
and other costs (including exchange differences relating to foreign currency borrowings to the extent that
they are regarded as an adjustment to interest costs) incurred in connection with the borrowing of funds.
Borrowing costs directly attributable to acquisition or construction of an asset which necessarily take a
substantial period of time to get ready for their intended use are capitalised as part of the cost of that asset.
Other borrowing costs are recognised as an expense in the period in which they are incurred. The difference
between the discounted amount mobilised and redemption value of commercial papers is recognised in
the statement of profit and loss over the life of the instrument using the EIR.
2.20Rounding of amounts
All amounts disclosed in the financial statements and notes have been rounded off to the nearest lakhs as
per the requirements.
2.21 Events after reporting date
Where events occurring after the balance sheet date provide evidence of conditions that existed at the end
of the reporting period, the impact of such events is adjusted within the financial statements. Otherwise,
events after the balance sheet date of material size or nature are only disclosed.
3. KEY ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of financial statements requires management to make judgments, estimates and assumptions in
the application of accounting policies that affect the reported amounts of assets, liabilities, income and expenses.
Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on ongoing
basis. Any changes to accounting estimates are recognized prospectively.
Information about critical judgments in applying accounting policies, as well as estimates and assumptions
that have the most significant effect on the amounts recognised in the financial statements are included in the
following notes:
(a) Business Model Assessment:
Classification and measurement of financial assets depends on the results of the SPPI (Solely Payments of
Principal and Interest) and the business model test. The Company determines the business model at a level
that reflects how groups of financial assets are managed together to achieve a particular business objective.
This assessment includes judgement reflecting all relevant evidence including how the performance of the
assets is evaluated and their performance measured, the risks that affect the performance of the assets
and how these are managed. The Company monitors financial assets measured at amortised cost or fair
value through other comprehensive income that are derecognised prior to their maturity to understand the
reason for their disposal and whether the reasons are consistent with the objective of the business for which
the asset was held. Fair value through profit or loss (FVTPL), where the assets are managed in accordance
with an approved investment strategy that triggers purchase and sale decisions based on the fair value of
such assets. Such assets are subsequently measured at fair value, with unrealised gains and losses arising
from changes in the fair value being recognised in the standalone statement of profit and loss in the period
in which they arise.
(b) Provision and contingent liability:
On an ongoing basis, Company reviews pending cases, claims by third parties and other contingencies. For
contingent losses that are considered probable, an estimated loss is recorded as an accrual in financial
statements. Loss Contingencies that are considered possible are not provided for but disclosed as Contingent
liabilities in the financial statements. Contingencies the likelihood of which is remote are not disclosed in the
financial statements. Gain contingencies are not recognized until the contingency has been resolved and
amounts are received or receivable.
(c) Effective Interest Rate (EIR) Method:
The Company''s EIR methodology, recognises interest income / expense using a rate of return that represents
the best estimate of a constant rate of return over the expected behavioral life of loans given / taken and
recognises the effect of potentially different interest rates at various stages and other characteristics of the
financial instruments.
This estimation, by nature, requires an element of judgment regarding the expected behavior and life-cycle
of the instruments, as well expected changes to India''s base rate and other fee income/ expense that are
integral parts of the instrument.
(d) Allowance for impairment of financial asset:
The Company applies expected credit loss model (ECL) for measurement and recognition of impairment
loss. The Company recognises lifetime expected losses for all contract assets and / or all trade receivables
that do not constitute a financing transaction. At each reporting date, the Company assesses whether
the loans have been impaired. The Company is exposed to credit risk when the customer defaults on his
contractual obligations. For the computation of ECL, the loan receivables are classified into three stages
based on the default and the aging outstanding. The Company recognises life time expected credit loss
for trade receivables and has adopted simplified method of computation as per Ind AS 109. The Company
considers outstanding overdue for more than 90 days for calculation of expected credit loss.
(e) Recognition of deferred tax assets:
Deferred tax assets are recognised for unused tax-loss carry forwards and unused tax credits to the extent
that realisation of the related tax benefit is probable. The assessment of the probability with regard to the
realisation of the tax benefit involves assumptions based on the history of the entity and budgeted data for
the future.
(f) Defined benefit plans:
The cost of defined benefit plans and the present value of the defined benefit obligations are based on
actuarial valuation using the projected unit credit method. An actuarial valuation involves making various
assumptions that may differ from actual developments in the future. These include the determination of the
discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation
and its long - term nature, a defined benefit obligation is highly sensitive to changes in these assumptions.
All assumptions are reviewed at each reporting date.
(g) Share based payment:
The Company account for share based payment by measuring and recognizing as compensation expense
the fair value of all share-based payment awards made to employees based on estimated grant date
fair values. The determination of fair value involves a number of significant estimates. The Company uses
the Black Scholes option pricing model to estimate the value of employee stock options which requires a
number of assumptions to determine the model inputs. These include the expected volatility of Company''s
stock and employee exercise behavior which are based on historical data as well as expectations of future
developments over the term of the option. As stock-based compensation expense is based on awards
ultimately expected to vest. Management''s estimate of exercise is based on historical experience but actual
exercise could differ materially as a result of voluntary employee actions and involuntary actions which would
result in significant change in our share based compensation expense amounts in the future.
(h) Property, plant and equipment and Intangible Assets:
Management reviews the estimated useful lives and residual values of the assets annually in order to
determine the amount of depreciation to be recorded during any reporting period. The useful lives and
residual values as per schedule II of the Companies Act, 2013 or are based on the Company''s historical
experience with similar assets and taking into account anticipated technological changes, whichever is
more appropriate.
(i) Leases:
The Company evaluates if an arrangement qualifies to be a lease as per IND AS 116.
- The Company determines lease term as a non-cancellable period of a lease, together with both the
period covered by an option to extend the lease if the Company is reasonably certain to exercise lessee
options.
- The determination of the incremental borrowing rate used to measure lease liabilities.
4. RECENT ACCOUNTING DEVELOPMENTS
Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under
Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended March 31, 2025,
MCA has not notified any new standards or amendments to the existing standards applicable to the Company.
* Term loans from financial institutions are secured against loans (Margin trading facility) of the Company,
repayable on maturity dated 08 April 2025 (rate of interest is 9.15%).
**Demand loans from banks are secured against the property, plant and equipment, investments, fixed
deposits, loans(Margin trading facility) and trade receivables of the Company.
Rate of interest is ranging from 8.15 % to 9.90%"
# Rate of interest is ranging from 11.00 % to 13.00 % (Repayable on demand)
Note:
i) During the year the company has not defaulted in repayment of principal and interest.
ii) There are no borrowings (other than debt securities) which are at FVTPL or are designated at FVTPL.
24.1 Terms/rights attached to shares
Equity shares :
The Company has one class of equity shares having a par value of Re. 1 each (previous year: having a par
value of Re. 1 each). Each holder of equity shares is entitled to one vote per share. In the event of liquidation
of the Company, the holder of the equity shares will be entitled to receive any of the remaining assets of the
Company, after distribution of all the preferential amounts. However, no such preferential amounts exists
currently. The distribution will be in proportion to the number of equity shares held by the shareholders. The
Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is
subject to the approval of shareholders in the ensuing Annual General Meeting.
During the year ended 31 March 2025, dividend recognized as distribution to equity shareholders was r 5 per
share for year ended 31 March 2025. The total dividend appropriated amounts to r29,964 lakhs (Previous
Year: r25,233 lakhs).
24.5 i) Pursuant to the approval of the Board of Directors and Shareholders of the Company vide their Resolutions
dated April 26, 2024 and May 30, 2024, respectively, the Finance Committee of the Board of Directors of
the Company at their Meeting held on June 11, 2024 had allotted 44,77,82,709 Bonus Equity Shares to the
eligible Shareholders of the Company, in the ratio of 3:1 i.e. 3 (Three) new fully paid-up Equity Shares of Re.
1/- (Rupee One Only) each for every 1 (One) existing fully paid-up Equity Share of Re. 1/- (Rupee One Only)
each.Consequent to the increase in the Paid-up Share Capital, the Earnings Per Share (Basic and Diluted)
have been adjusted for the previous year and presented in accordance with IND AS 33 - Earnings Per Share.
ii) In the financial year 2022-23 the Company has bought back 14,54,545 fully paid-up shares by
capitalisation of securities premium.
iii) In the financial year 2020-21 the Company has bought back 19,09,144 fully paid-up shares by capitalisation
of securities premium. Further, 18,68,445 shares were alloted for consideration other than cash and also
8,63,74,063 shares were reissued pursuant to the Scheme of Arrangement.
Capital Redemption reserve
The capital redemption reserve is created to be utilised towards redemption of preference shares and it also
includes addition arising on account of buyback of shares. The reserve will be utilised in accordance with
provision of the Companies Act, 2013.
Capital reserve
Capital reserve is created by capital profits of the company which is not kept for distribution to the
shareholders in the form of dividend. It has been created during the Business Combinations in earlier periods.
Securities Premium
Security premium account is use to record the premium received on issue of shares and it also includes
transfer from ESOS reserve when the options are exercised . The reserve will be utilised in accordance with the
provisions of the Companies Act, 2013.
Share based payment reserve
Share based payment expense pertains to outstanding portion of the option not yet exercised.
General reserve
The general reserve is used from time to time to transfer profits from retained earnings for appropriation
purposes. As the general reserve is created by a transfer from one component of equity to another and is
not an item of other comprehensive income, items included in the general reserve will not be reclassified
subsequently to statement of profit and loss.
Retained earnings
Retained earnings represents surplus/accumulated earnings of the Company and are available for distribution
to shareholders.
Other comprehensive income
Other comprehensive income consist of gain /(loss) of equity instruments carried through FVTOCI.
(a) Guarantees and securities given
The Company has provided bank guarantees aggregating to r 2,97,245 lakhs (Previous year: r 2,80,003 lakhs)
as on 31 March 2025 for the following purposes to:
i) National Stock exchange - r 2,37,265 lakhs (Previous year: r 2,24,143 lakhs) for meeting margin requirements.
ii) NCDEX -r Nil (Previous year: r 2,500 lakhs) for meeting margin requirements.
iii) MCX - r 59,900 lakhs (Previous year: r 51,800 lakhs) for meeting margin requirements.
iv) Hindalco Industries Limited - r Nil (Previous year: r 1,500 lakhs) for margin deposit.
v) Municipal Corporation of Greater Mumbai - r 25 lakhs (Previous year: r5 lakhs) for security deposit.
vi) Bombay High Court - r55 Lakhs (Previous year: 55 lakhs) for security deposit
(b) Demand in respect of income tax matters for which appeal is pending is r 4,479 lakhs (Previous year: ri,919
lakhs).This is disputed by the Company and hence not provided for in the books of accounts. The Company
has paid demand by way of deposit (this amount doesn''t include Income Tax refund adjusted against
demand raised) of ri92 lakhs (Previous year r 192 lakhs) till date. Above liability does not include interest and
penalty, if any as it depends on the outcome of the demand, which are not ascertainable at present.
The Company is contesting the demands and the management believes that its position will likely be upheld
in the appellant process. No tax expenses has been accrued in the financial statement for the tax demand
raised. The management believes that ultimate outcome of this proceeding will not have a material adverse
effect on the Company''s financial position and results of operations.
NOTE 53: DISCLOSURE RELATING TO EMPLOYEE STOCK OPTION PURCHASE PLAN
Details of stock options : The Company has five employees stock option schemes
Motilal Oswal Financial Services Limited -Employees Stock Option Scheme -V (ESOS-V)
The Scheme was approved by Board of Directors on 18 October 2007 and by the shareholders on 4 December 2007
by postal ballot and is for issue of 25,00,000 options representing 25,00,000 Equity shares of Re. 1 each. Further,
pursuant to the Bonus Issue approved by the Board of Directors on 26 April 2024 and by the Shareholders on 30
May 2024 through Postal Ballot, the Stock Exchages has issued additional in-principle approval for issuance of
51,750 Options representing 51,750 Equity Shares of Re. 1 each.
Motilal Oswal Financial Services Limited -Employees Stock Option Scheme -VI (ESOS-VI)
"The Scheme was approved by Board of Directors on 21 April 2008 and by the shareholders in AGM dated 08 July
2008 and is for issue of 50,00,000 options representing 50,00,000 Equity shares of Re. 1 each.
Further, pursuant to the Bonus Issue approved by the Board of Directors on 26 April 2024 and by the Shareholders
on 30 May 2024 through Postal Ballot, the Stock Exchages has issued additional in-principle approval for issuance
of 2,20,155 Options representing 2,20,155 Equity Shares of Re. 1 each"
Motilal Oswal Financial Services Limited -Employees Stock Option Scheme -VII (ESOS-VII)
"The Scheme was approved by Board of Directors on 19 July 2014 and by the shareholders in AGM dated 22 August
2014 and is for issue of 25,00,000 options representing 25,00,000 Equity shares of Re. 1 each.
Further, pursuant to the Bonus Issue approved by the Board of Directors on 26 April 2024 and by the Shareholders
on 30 May 2024 through Postal Ballot, the Stock Exchages has issued additional in-principle approval for issuance
of 10,29,300 Options representing 10,29,300 Equity Shares of Re. 1 each"
Motilal Oswal Financial Services Limited -Employees Stock Option Scheme -VIII (ESOS-VIII)
"The Scheme was approved by Board of Directors on 27 April 2017 and by the shareholders in AGM dated 27 July
2017 and is for issue of 30,00,000 options representing 30,00,000 Equity shares of Re. 1 each.
Further, pursuant to the Bonus Issue approved by the Board of Directors on 26 April 2024 and by the Shareholders
on 30 May 2024 through Postal Ballot, the Stock Exchages has issued additional in-principle approval for issuance
of 55,20,825 Options representing 55,20,825 Equity Shares of Re. 1 each"
Motilal Oswal Financial Services Limited -Employees Stock Option Scheme -IX (ESOS-IX)
"The Scheme was approved by Board of Directors on 29 April 2021 and by the shareholders in AGM dated 09
August 2021 and is for issue of 30,00,000 options representing 30,00,000 Equity shares of Re. 1 each.
Further, pursuant to the Bonus Issue approved by the Board of Directors on 26 April 2024 and by the Shareholders
on 30 May 2024 through Postal Ballot, the Stock Exchages has issued additional in-principle approval for issuance
of 71,05,788 Options representing 71,05,788 Equity Shares of Re. 1 each"
Motilal Oswal Financial Services Limited -Employees Stock Option Scheme -X (ESOS-X)
The Scheme was approved by Board of Directors on 26 April 2024 and by the shareholders on 30 May 2024 thorugh
Postal Ballot for issue of 30,00,000 options representing 30,00,000 Equity shares of Re. 1 each.Further, pursuant to
the Bonus Issue approved by the Board of Directors on 26 April 2024 and by the Shareholders on 30 May 2024
through Postal Ballot, the Stock Exchages has issued additional in-principle approval for issuance of 1,20,00,000
Options representing 1,20,00,000 Equity Shares of Re. 1 each.
The Company pays taxes according to the rates applicable in India. Most taxes are recorded in the income
statement and relate to taxes payable for the reporting period (current tax), but there is also a charge or credit
relating to tax payable for future periods due to income or expenses being recognised in a different period for tax
and accounting purposes (deferred tax). Tax is charged to equity when the tax benefit exceeds the cumulative
income statement expense on share plans. The Company provides for current tax according to the tax laws of
India using tax rates that have been enacted or substantively enacted by the balance sheet date. Management
periodically evaluates positions taken in tax returns in respect of situations in which applicable tax regulation is
subject to interpretation. It establishes provisions, where appropriate, on the basis of amounts expected to be
paid to the tax authorities. Deferred tax is provided, using the liability method, on temporary differences at the
reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting
purposes. Deferred tax is recognised in respect of all temporary differences that have originated but not reversed
at the balance sheet date, where transactions or events that result in an obligation to pay more tax in the future
or a right to pay less tax in the future have occurred at the balance sheet date. A deferred tax asset is recognised
when it is considered recoverable and therefore recognised only when, on the basis of all available evidence, it
can be regarded as probable that there will be suitable taxable profits against which to recover carried forward
tax losses and from which the future reversal of underlying temporary differences can be deducted. Deferred tax
is measured at the average tax rates that are expected to apply in the periods in which the temporary differences
are expected to reverse, based on tax rates and laws that have been enacted or substantively enacted by the
balance sheet date.
Level 1: The fair value of financial instruments traded in active markets (such as publicly traded derivatives,
and equity securities) is based on quoted market prices at the end of the reporting period. The quoted market
price used for financial assets held by the group is the current bid price. These instruments are included in
level 1.
Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-
the-counter derivatives) is determined using valuation techniques which maximise the use of observable
market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair
value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is
included in level 3. This is the case for unlisted equity securities and investment in private equity funds, real
estate funds.
II. Valuation techniques used to determine fair value
Specific valuation techniques used to value financial instruments include :
⢠Quoted equity investments - Quoted closing price on stock exchange
⢠Mutual fund - net asset value of the scheme
⢠Alternative investment funds - net asset value of the scheme
⢠Unquoted equity investments - price multiples of comparable companies.
⢠Private equity investment fund - NAV of the audited financials of the funds.
⢠Real estate fund - net asset value, based on the independent valuation report or financial statements
of the company."
III. Financial instruments not measured at fair value
Financial assets not measured at fair value includes cash and cash equivalents, trade receivables, loans
and other financial assets. These are financial assets whose carrying amounts approximate fair value, due
to their short-term nature.
Additionally, financial liabilities such as trade payables and other financial liabilities are not measured at
FVTPL, whose carrying amounts approximate fair value, because of their short-term nature.
Fair value measurements using significant unobservable inputs (level 3)
Company has operations in India. Whilst risk is inherent in the Company''s activities, it is managed through
an integrated risk management framework, including on-going identification, measurement and monitoring,
subject to risk limits and other controls. This process of risk management is critical to the Company''s continuing
profitability and each individual within the Company is accountable for the risk exposures relating to his or her
responsibilities. The Company is exposed to credit risk, liquidity risk and market risk. It is also subject to various
operating and business risks.
A. Credit risk
Credit risk is the risk that the Company will incur a loss because its customers or counterparties fail to
discharge their contractual obligation. The Company manages and controls credit risk by setting limits on
the amount of risk it is willing to accept for individual counterparties, and by monitoring exposures in relations
to such limits.
The maximum exposure to credit risk for each class of financial instruments is the carrying amount of that
class of financial instruments presented in the financial statements. The Company''s major classes of financial
assets are cash and cash equivalents, loans, investment in mutual fund units, term deposits, trade receivables
and security deposits.
Deposits with banks are considered to have negligible risk or nil risk, as they are maintained with high rated
banks/financial institutions as approved by the Board of directors.
Investments primarily include investment in liquid mutual fund units that are marketable securities of eligible
financial institutions for a specified time period with high credit rating given by domestic credit rating agencies.
The management has established accounts receivable policy under which customer accounts are regularly
monitored. The Company has a dedicated risk management team, which monitors the positions, exposures
and margins on a continuous basis."
Following provides exposure to credit risk for trade receivables and Loans.
The financial instruments covered within the scope of ECL include financial assets measured at amortised
cost such as trade receivables and loans.
Trade Receivables :
The loss allowance has been measured using lifetime ECL except for financial assets on which there has been
no significant increase in credit risk since initial recognition. At each reporting date, the Company assesses
whether financial assets carried at amortised cost is credit-impaired. A financial asset is credit- impaired
when one or more events that have a detrimental impact on the estimated future cash flows of the financial
asset have occurred since initial recognition.
A simplified approach has been considered for measuring expected credit losses (ECLs) of trade receivables
at an amount equal to lifetime ECLs. The ECLs on trade receivables are calculated based on actual historic
credit loss experience over the preceding three to five years on the total balance of trade receivables. For
the purpose of computation of ECL, the term default implies an event where amount due towards margin
requirement and / or mark to market losses for which the client was unable to provide funds / collaterals to
bridge the shortfall, the same is termed as margin call triggered.
Based on the Industry practices and business environment in which the entity operates, Management
considers unsecured receivables as default if the payment is overdue for more than 90 days for direct
customer. For franchisee customers, Aggregate of unsecured receivables as reduced by Franchisee deposit/
future brokerages are considered as default. Management would also consider balance in client''s family
accounts and collaterals in form other than the securities while considering the secured position of the
client. Management would also consider impairment on client balance which are unsecured and overdue
for less than 90 days on case to case basis, based on their scope of recoverability. For litigation cases,
management could provide enhanced provision if the probability of outflow of economic resource is higher.
If there are specific cases which are overdue for more than 90 days and the management is very confident
of its recovery in near future, impairment loss would not be provided for such cases based on the approval
of business head for each reporting period. Probability of default (pd) on these receivables is considered at
100% and treated as credit impaired.
Loans:
Loans includes Margin Trading Facility(MTF), Loans to staff and loans to subsidiaries for which staged approach
is taken into consideration for determination of ECL.
Stage 1.
All positions in the MTF loan book are considered as stage 1 asset for computation of expected credit loss.
For exposures where there has not been a significant increase in credit risk since initial recognition and that
is not credit impaired upon origination. Margin trading facility, Loans to subsidiaries and loans to staff are
considered in stage 1 for determination of ECL. Exposure to credit risk in stage 1 is computed considering
historical probability of default, market movements and macro-economic environment.
Stage 2.
Exposures under stage 2 include overdues up to 90 days pertaining to principal amount, interest and any
other charges on the MTF loan book which are unsecured. While arriving at the secured position of the
client, management would also consider balance in client''s family accounts, securities in other segment
and collaterals in form other than the securities while considering the secured position of the client. At
each reporting date, the Company assesses whether there has been a significant increase in credit risk for
financial assets since initial recognition. In determining whether credit risk has increased significantly since
initial recognition, the Company uses days past due information and other qualitative factors to assess
deterioration in credit quality of a financial asset.
For credit exposures where there has been a significant increase in credit risk since initial recognition but
that are not credit impaired, a lifetime ECL is recognised.
Stage 3.
Exposures under stage 3 include overdues past 90 days pertaining to principal amount, interest and any
other charges on MTF loan book which are unsecured.
Financial assets are assessed as credit impaired when one or more events that have a detrimental impact
on the estimated future cash flows of the asset have occurred. For financial assets that have become credit
impaired, a lifetime ECL is recognised.
Following table provide information about exposure to credit risk and ECL on Margin Trading Facility loans.
B. Liquidity risk
Liquidity risk is the risk that the entity will encounter difficulty in meeting the obligations associated with its
financial liabilities that are settled by delivering cash or another financial asset. The entity''s approach to
managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when
they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking
damage to the entity''s reputation.
Prudent liquidity risk management requires sufficient cash and marketable securities and availability of
funds through adequate committed credit facilities to meet obligations when due and to close out market
positions.
The Company has a view of maintaining liquidity with minimal risks while making investments. The Company
invests its surplus funds in short term liquid assets in bank deposits and liquid mutual funds. The Company
monitors its cash and bank balances periodically in view of its short term obligations associated with its
financial liabilities.
Refer Note 58 For analysis of maturities of financial assets and financial liabilities.
C. Market Risk
Market risk is the risk that the fair value or future Cash flows of a financial instrument will fluctuate because
of changes in market prices. The objective of market risk management is to manage and control market
risk exposures within acceptable parameters, while optimizing the return.
(i) Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate
because of changes in foreign exchange rates.
Foreign currency risk management
In respect of the foreign currency transactions, the company does not hedge the exposures since the
management believes that the same is insignificant in nature and will not have a material impact on
the Company.
The company''s exposure to foreign currency risk at the end of reporting period is shown in note 49
(ii) Interest rate risk
The Company is exposed to Interest risk if the fair value or future cash flows of its financial instruments
will fluctuate as a result of changes in market interest rates. Fair value interest rate risk is the risk of
changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates.
The Company''s interest rate risk arises from interest bearing deposits with bank and loans given to
customers. Such instruments exposes the Company to fair value interest rate risk. Management believe
that the interest rate risk attached to this financial assets are not significant due to the nature of this
financial assets.
Interest rate risk exposure
The exposure of the Company''s borrowing to interest rate changes at the end of the reporting period
are as follows:
Sensitivity
Profit or loss is sensitive to higher/lower interest expense from borrowings as a result of changes in
interest rates.
The following table demonstrates the sensitivity to a reasonably possible change in interest rates (all
other variables being constant) of the Company''s statement of profit and loss and equity.
NOTE 57: CAPITAL MANAGEMENT
Risk management
The company''s objectives when managing capital are to:
⢠Safeguard their ability to continue as a going concern, so that they can continue to provide returns for
shareholders and benefits for other stakeholders, and
⢠Maintain an optimal capital structure to reduce the cost of capital."
The capital composition is as follows:
NOTE 59: REVENUE FROM CONTRACT WITH CUSTOMERS
The Company derives revenue primarily from the share broking business. Its other major revenue sources are
the Portfolio management fees and comm/ission income and Interest income.
1. Disaggregate revenue information
The table below presents disaggregate revenues from contracts with customers for the year ended 31 March
2025 and 31 March 2024. The Company believes that this disaggregation best depicts how the nature, amount,
timing and uncertainty of revenue and cash flows are affected by market and other economic factors.
Nature of Services
(a) Broking Income - Income from services rendered as a broker is recognised upon rendering of the services,
in accordance with the terms of contract.
(b) Portfolio management fees and commission income - Fees for subscription based services are received
periodically but are recognised as earned on a pro-rata basis over the term of the contract. Commissions
from distribution of financial products are recognised upon allotment of the securities to the applicant
or as the case may be. Commissions and fees recognised as aforesaid are exclusive of goods and
service tax, securities transaction tax, stamp duties and other levies by SEBI and stock exchanges.
(c) Interest Income - Interest is earned on delayed payments from clients and amounts funded to them as
well as term deposits with banks..Interest income is recognised on a time proportion basis taking into
account the amount outstanding from customers or on the financial instrument and the rate applicable.
(d) Depository Income-Income from services rendered on behalf of depository is recognised upon rendering
of the services, in accordance with the terms of contract."
Nature, timing of satisfaction of the performance obligation and significant payment term:.
(i) Income from services rendered as a broker is recognised upon rendering of the services.
(ii) Fees for subscription based services are received periodically but are recognised as earned on a pro¬
rata basis over the term of the contract.
(iii) Commissions from distribution of financial products are recognised upon allotment of the securities to
the applicant or as the case may be, on issue of the insurance policy to the applicant.
(iv) Interest is earned on delayed payments from clients and amounts funded to them as well as term
deposits with banks.
(v) Interest income is recognised on a time proportion basis taking into account the amount outstanding
from customers or on the financial instrument and the rate applicable.
(vi) Income from services rendered on behalf of depository is recognised upon rendering of the services, in
accordance with the terms of contract.
The above services are point in time in nature, and no performance obligation remains once the transaction
is executed.
Fees for subscription based services are received periodically but are recognised as earned on a pro-rata
basis over the term of the contract, and are over the period in nature.
The Company received Corporate Agency (CA) License from the Insurance Regulatory and Development
Authority of India (IRDAI) on 11 July 2018.The Company entered into agreements with various insurance partners
as a Corporate Agent and commission income during the year as disclosed above.
NOTE 62 : DISCLOSURE PERTAINING TO QUARTELY STATEMENT FILED WITH BANKS OR FINANCIAL
INSTITUTIONS
The Company has availed of the facility (Secured Borrowings) from the lenders interalia on the condition that,
the company shall provide or create or arrange to provide or have created, security interest by way of a first pari
passu charge of the receivables and loans.
Details reported in the quarterly statement / revised quarterly returns and as per the books of
accounts in the financial year 2024 - 2025
The Company had made quarterly submissions to banks or financial institutions or debenture trustees, however, no
discrepancies were noticed between the quarterly statements / revised returns filed and the financial statements
of the respective quarter.
Notes:
1. The Company undertakes the following activities in the nature of Corporate social responsibility (CSR):
a. Promoting education, including special education and employment enhancing vocational skills, especially
among children, women, and elderly, contribution to COVID relief program, PM cares fund;
b. Promotion of health care, including preventive health care and sanitation;
c. Measures for the benefit of armed forces veterans, war widows, and their dependents;
d. Ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare,
agroforestry, conservation of natural resources.
2. Contribution of r587 lakhs (Previous year r 552 lakhs ) to Motilal Oswal Foundation which is classified as
related party under Ind AS 24- " Related Party Disclosures"
3. As represented by Motilal Oswal foundation, Amount of r 613 lakhs (Previous Year : r 311 lakhs) has been spent
by the Company for the construction/ acquisition of a new asset.
NOTE 64.
No proceedings have been initiated or pending against the Company for holding any benami property under the
Benami Transactions (Prohibition) Act, 1988 and rules made thereunder, as at 31 March 2025 and 31 March 2024.
NOTE 65.
The Company has not been declared wilful defaulter by any bank or financial Institution or other lender, in
accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India, during the year ended
31 March 2025 and 31 March 2024.
NOTE 66:
Below are the deatails of transactions entered with the companies struck off under section 248 of Companies
Act, 2013 or section 560 of Companies Act, 1956 during the year ended 31 March 2025. There were no transaction
during the year ended 31 March 2024.
NOTE 67:
Additional regulatory information required under (wb) (xvi) of Division III of Schedule III amendment, disclosure
of ratios, is not applicable to the Company as it is in broking business and not an NBFC registered under Section
45-IA of Reserve Bank of India Act, 1934.
NOTE 68:
The Company has not advanced or loaned or invested (either from borrowed funds or share premium or any
other sources or other kind of funds) to or in any other person or entity, including foreign entity ("Intermediaries"),
with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or indirectly
lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company
("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
The Company has not received any funds (which are material either individually or in the aggregate) from any
person or entity, including foreign entity ("Funding Parties"), with the understanding, whether recorded in writing
or otherwise, that the Company shall, directly or indirectly, lend or invest in other persons or entities identified in
any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee,
security or the like on behalf of the Ultimate Beneficiaries."
NOTE 69:
The Company has no satisfaction of charges which are pending to be filed with ROC.
NOTE 70:
The Board has approved the withdrawal of the Scheme of Arrangement entered between Motilal Oswal Financial
Services Ltd., Motilal Oswal Broking and Distribution Ltd. and Motilal Oswal Wealth Ltd., which was previously approved
by the Board in its Meeting held on July 27, 2023. The object of this Scheme was to align the Company''s holding and
business structure in terms of requirement of Rule 8(l)(f) & 8(3)(f) of the Securities Contracts (Regulation) Rules,
1957 ("SCRR"). However, the Department of Economic Affairs ("DEA"), Government of India has issued a Consultation
Paper in the month of September 2024 with respect to proposed amendment under Rule 8 of the SCRR allowing
the investments made by a broker in any Group Company out of retained earnings. Further, the said Consultation
Paper ''inter-alia'' states that ''Prohibiting the making of any investments by a broker, including in Group Companies,
may place unreasonable fetters on its ability to use its retained earnings as per its commercial prudence''. Now,
the DEA may notify the said proposed amendment under Rule 8 of the SCRR. In view of the above, the Board has
approved the withdrawal of the existing Scheme and will review & reconsider to file revised Scheme (including
updated Financials), if required, basis publication of final amendments by the DEA, in this regard.
NOTE 71:
Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under
Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended March 31, 2025,
MCA has not notified any new standards or amendments to the existing standards applicable to the Company.
NOTE 72:
The amounts reflected as "0" in the financial information are values with less than rupees fifty thousands
NOTE 73:
Previous year figures have been regrouped/reclassified wherever necessary.
As per our report of even date
For Singhi & Co. For and on behalf of the Board of Directors
Chartered Accountants Motilal Oswal Financial Services Limited
Firm Registration No. 302049E CIN: L67190MH2005PLC153397
Sd/- Sd/- Sd/-
Amit Hundia Motilal Oswal Raamdeo Agarawal
Partner Managing Director and Chief Executive Officer Non-Executive Chairman
Membership Number: 120761 DIN : 00024503 DIN : 00024533
Sd/- Sd/-
Shalibhadra Shah Kailash Purohit
Chief Financial Officer Company Secretary
Place : Mumbai Place : Mumbai
Date : 25 April 2025 Date : 25 April 2025
Mar 31, 2024
Estimation of fair value
The fair value of investment property have been determined by an independent registered valuer, who has professional experience as well as adequate expertise in the location and category of the investment property. The value is determined based on the rate prescribed by government authorities for commercial property. The resultant fair value estimates for investment property is included in level 2.
#Commercial Paper
Rate of interest is ranging from 7.99% to 9.24% for commercial paper outstanding.
Terms of repayment:
The aforesaid commercial papers are repayable on maturity and the tenure is 85 days to 365 days.
**Market Linked Debenture (mld)
Series M-1/ F.Y.22/ F.Y.24 - 1,580 Lakhs, Redemption date - 14th March 2024, XIRR - 7.25% PA (Above MLD were redeemed during the Current Year.)
Series M-1/ F.Y.23/ F.Y.25 - 2,840 Lakhs, Redemption date - 07th February 2025, XIRR - 7.50% PA Coupon rate is linked to performance of underlying/reference index (NIFTY 50 Index)
Assets Cover available in case of Market Linked Debenture :
The Debentures will be secured by first pari - passu charge on all present and future Margin trading facility receivables of the Company with a minimum cover of 1.00 times of the MLD outstanding and Interest/ coupon due on the MLDs
* Term loans from financials institutions are secured against loans(Margin trading facility) of the Company, repayable on maturity dated 05 April 2025. Demand loans from banks are secured against the property, plant and equipment, investments, fixed deposits, loans(Margin trading facility) and trade receivables of the Company. Rate of interest is ranging from 8.30 % to 9.90%
# Rate of interest is ranging from 11.00 % to 13.00 %.
Note:
i) During the year, the Company had made quarterly submissions to banks or financial institutions or debenture trustees; however, there were no material discrepancies noted between the quarterly statements / revised returns filed and the financial statements of the respective quarter.(Refer Note 60)
ii) During the year under audit, the company has not defaulted in repayment of principal and interest.
23.1 Terms/rights attached to shares Equity shares :
The Company has one class of equity shares having a par value of Re. 1 each (previous year: having a par value of Re. 1 each). Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holder of the equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all the preferential amounts. However, no such preferential amounts exists currently. The distribution will be in proportion to the number of equity shares held by the shareholders. The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of shareholders in the ensuing Annual General Meeting.
During the year ended 31 March 2024, dividend recognized as distribution to equity shareholders was H17.00 per share consisting of final dividend of H3.00 per share for previous year ended 31 March 2023 and interim dividend of H14 per share for year ended 31 March 2024. The total dividend appropriated amounts to H25,233 lakhs (Previous Year: H14,823 lakhs).
23.5 i) In the financial year 2022-23 the Company has bought back 14,54,545 fully paid-up shares by capitalisation of securities premium.
ii) In the financial year 2020-21 the Company has bought back 19,09,144 fully paid-up shares by capitalisation of securities premium. Further, 18,68,445 shares were alloted for consideration other than cash and also 8,63,74,063 shares were reissued pursuant to the Scheme of Arrangement.
Capital Redemption reserve
The capital redemption reserve is created to be utilised towards redemption of preference shares and it also includes addition arising on account of buyback of shares. The reserve will be utilised in accordance with provision of the Companies Act, 2013.
Capital reserve
Capital reserve is created by capital profits of the company which is not kept for distribution to the shareholders in the form of dividened. It has been created during the Business Combinations in earlier periods.
Securities Premium
Security premium account is use to record the premium received on issue of shares and it also includes transfer from ESOS reserve when the options are exercised . The reserve will be utilised in accordance with the provisions of the Companies Act, 2013.
Share based payment reserve
Share based payment expense pertains to outstanding portion of the option not yet exercised.
(All amounts are in INR Lakhs, unless otherwise stated)
General reserve
The general reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reserve will not be reclassified subsequently to statement of profit and loss. General reserve is used to transfer to debenture redemption reserve.
Retained earnings
Retained earnings represents surplus/accumulated earnings of the Company and are available for distribution to shareholders.
Other comprehensive income
Other comprehensive income consist of gain /(loss) of equity instruments carried through FVTOCI.
(a) Guarantees and securities given
The Company has provided bank guarantees aggregating to Rs 2,80,003 lakhs (Previous year :Rs 3,23,380 lakhs) as on 31 March 2024 for the following purposes to:
i) National Stock exchange - H2,24,143 lakhs (Previous year : Rs.2,87,375 lakhs) for meeting margin requirements.
ii) NCDEX -H2,500 lakhs (Previous year: Rs.4,500 lakhs) for meeting margin requirements.
iii) MCX - H51,800 lakhs (Previous year: H30,000 lakhs) for meeting margin requirements.
iv) Hindalco Industries Limited - Rs.1,500 lakhs (Previous year: H1,500 lakhs) for margin deposit.
v) Municipal Corporation of Greater Mumbai - H5 lakhs (Previous year: Rs.5 lakhs) for security deposit.
vi) Bombay High Court - Rs.55 lakhs (Previous year: Nil) for security deposit.
(b) Demand in respect of income tax matters for which appeal is pending is Rs.1,919 lakhs (Previous year: Rs.1,920 lakhs).This is disputed by the Company and hence not provided for in the books of accounts. The Company has paid demand by way of deposit (It doesn''t include Income Tax refund adjusted against demand raised) of Rs.192 lakhs (Previous year H451 lakhs) till date. Above liability does not include interest u/s 234B and 234C as the same depends on the outcome of the demand.
The Company is contesting the demands and the management believes that its position will likely be upheld in the appellant process. No tax expenses has been accrued in the financial statement for the tax demand raised. The management believes that ultimate outcome of this proceeding will not have a material adverse effect on the Company''s financial position and results of operations.
(All umuunLs uie in ink lum is, unless uu leivvise siuieuj
The Company has taken various office premises on operating lease for the period which ranges from 12 months to 108 months with an option to renew the lease by mutual consent on mutually agreeable terms.
Note 45: Due to Micro and Small Enterprises
The Company has sent letters to vendors to confirm whether they are covered under Micro, Small and Medium Enterprise Development Act 2006 as well as they have filed required memorandum with prescribed authority. Based on and to the extent of the information received by the Company from the suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) and relied upon by the auditors, the relevant particulars as at the year end are furnished below:
There were no significant events after the end of the reporting period which require any adjustment or disclosure in the financial statements other than as stated below:
The Board of Directors at its meeting held on 26 April 2024 have recommended Issuance of 3 Bonus Shares on 1 fully paid-up Equity Share having face value of ssH 1/- each, subject to approval of the Shareholders of the Company.
Defined benefit plan:
The Company provides for gratuity benefit which is a defined benefit plan covering all its eligible employees. This plan is unfunded. The gratuity benefits are subject to a maximum limit of up to H20,00,000.
The following table set out the status of the gratuity plan as specified under section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules 2014 (as amended) under Ind AS 19 "Employee benefits "and the reconciliation of opening and closing balances of the present value of the defined benefit obligation.
Note 52 : Disclosure relating to Employee Stock Option Purchase Plan
Details of stock options : The Company has five employees stock option schemes Motilal Oswal Financial Services Limited -Employees Stock Option Scheme -V (ESOS-V)
The Scheme was approved by Board of Directors on 18 October 2007 and by the shareholders on 4 December
2007 by postal ballot and is for issue of 2,500,000 options representing 2,500,000 Equity shares of Re. 1 each
Motilal Oswal Financial Services Limited -Employees Stock Option Scheme -VI (ESOS-VI)
The Scheme was approved by Board of Directors on 21 April 2008 and by the shareholders in AGM dated 08 July
2008 and is for issue of 5,000,000 options representing 5,000,000 Equity shares of Re. 1 each
Motilal Oswal Financial Services Limited -Employees Stock Option Scheme -VII (ESOS-VII)
The Scheme was approved by Board of Directors on 19 July 2014 and by the shareholders in AGM dated 22 August 2014 and is for issue of 2,500,000 options representing 2,500,000 Equity shares of Re. 1 each
Motilal Oswal Financial Services Limited -Employees Stock Option Scheme -VIII (ESOS-VIII)
The Scheme was approved by Board of Directors on 27 April 2017 and by the shareholders in AGM dated 27 July 2017 and is for issue of 30,00,000 options representing 30,00,000 Equity shares of Re. 1 each
Motilal Oswal Financial Services Limited -Employees Stock Option Scheme -IX (ESOS-IX)
The Scheme was approved by Board of Directors on 29 April 2021 and by the shareholders in AGM dated 09 August 2021 and is for issue of 30,00,000 options representing 30,00,000 Equity shares of Re. 1 each
Exercise Pricing Formula Scheme V
Exercise price shall be the closing price of the Company''s equity shares quoted on the BSE immediately preceding the date of Grant of the Stock Options, which for this purpose shall be the date on which the Committee grant the Stock Options, discounted by such percentage as may be determined by the Committee in the best interest of the various stakeholders in the prevailing market conditions
Scheme VI
Exercise price shall be the closing price of the Company''s Equity Shares, prior to the date of grant of the Options, on the Stock Exchanges where the highest trading volume is recorded, discounted/increased by such percentage as may be determined by the Committee.
(All amounts are in INR Lakhs, unless otherwise stated)
Scheme VII
Exercise price shall be the closing price of the Company''s Equity Shares, prior to the date of grant of the Options, on the Stock Exchanges where the highest trading volume is recorded, discounted/increased by such percentage as may be determined by the Committee.
Scheme VIII
Exercise price shall be the closing price of the Company''s Equity Shares, prior to the date of grant of the Options, on the Stock Exchanges where the highest trading volume is recorded, discounted/increased by such percentage as may be determined by the Committee.
Scheme IX
Exercise price shall be the closing price of the Company''s Equity Shares, prior to the date of grant of the Options, on the Stock Exchanges where the highest trading volume is recorded, discounted/increased by such percentage as may be determined by the Committee.
The Company pays taxes according to the rates applicable in India. Most taxes are recorded in the income statement and relate to taxes payable for the reporting period (current tax), but there is also a charge or credit relating to tax payable for future periods due to income or expenses being recognised in a different period for tax and accounting purposes (deferred tax). Tax is charged to equity when the tax benefit exceeds the cumulative income statement expense on share plans. The Company provides for current tax according to the tax laws of India using tax rates that have been enacted or substantively enacted by the balance sheet date. Management periodically evaluates positions taken in tax returns in respect of situations in which applicable tax regulation is subject to interpretation. It establishes provisions, where appropriate, on the basis of amounts expected to be paid to the tax authorities. Deferred tax is provided, using the liability method, on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax is recognised in respect of all temporary differences that have originated but not reversed at the balance sheet date, where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date. A deferred tax asset is recognised when it is considered recoverable and therefore recognised only when, on the basis of all available evidence, it can be regarded as probable that there will be suitable taxable profits against which to recover carried forward tax losses and from which the future reversal of underlying temporary differences can be deducted. Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the temporary differences are expected to reverse, based on tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
Level 1: The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and equity securities) is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the group is the current bid price. These instruments are included in level 1.
Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities and investment in private equity funds, real estate funds.
II. Valuation techniques used to determine fair value
Specific valuation techniques used to value financial instruments include :
> Quoted equity investments - Quoted closing price on stock exchange
> Mutual fund - net asset value of the scheme
> Alternative investment funds - net asset value of the scheme
> Unquoted equity investments - price multiples of comparable companies.
> Private equity investment fund - Net Asset Value of the audited financials of the funds.
> Real estate fund - Net Asset Value, based on the independent valuation report or financial statements of the company.
III. Financial instruments not measured at fair value
Financial assets not measured at fair value includes cash and cash equivalents, trade receivables, loans and other financial assets. These are financial assets whose carrying amounts approximate fair value, due to their short-term nature.
Additionally, financial liabilities such as trade payables and other financial liabilities are not measured at FVTPL, whose carrying amounts approximate fair value, because of their short-term nature.
Fair value measurements using significant unobservable inputs (level 3)
Note 55:Financial Risk Management
Company has operations in India. Whilst risk is inherent in the Company''s activities, it is managed through an integrated risk management framework, including on-going identification, measurement and monitoring, subject to risk limits and other controls. This process of risk management is critical to the Company''s continuing profitability and each individual within the Company is accountable for the risk exposures relating to his or her responsibilities. The Company is exposed to credit risk, liquidity risk and market risk. It is also subject to various operating and business risks.
A. Credit risk
Credit risk is the risk that the Company will incur a loss because its customers or counterparties fail to discharge their contractual obligation. The Company manages and controls credit risk by setting limits on the amount of risk it is willing to accept for individual counterparties, and by monitoring exposures in relations to such limits. The maximum exposure to credit risk for each class of financial instruments is the carrying amount of that class of financial instruments presented in the financial statements. The Company''s major classes of financial assets are cash and cash equivalents, loans, investment in mutual fund units, term deposits, trade receivables and security deposits.
Deposits with banks are considered to have negligible risk or nil risk, as they are maintained with high rated banks/financial institutions as approved by the Board of directors.
Investments primarily include investment in liquid mutual fund units that are marketable securities of eligible financial institutions for a specified time period with high credit rating given by domestic credit rating agencies. The management has established accounts receivable policy under which customer accounts are regularly monitored. The Company has a dedicated risk management team, which monitors the positions, exposures and margins on a continuous basis.
Trade Receivables :
The loss allowance has been measured using lifetime ECL except for financial assets on which there has been no significant increase in credit risk since initial recognition. At each reporting date, the Company assesses whether financial assets carried at amortised cost is credit-impaired. A financial asset is credit- impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred since initial recognition.
A simplified approach has been considered for measuring expected credit losses (ECLs) of trade receivables at an amount equal to lifetime ECLs. The ECLs on trade receivables are calculated based on actual historic credit loss experience over the preceding three to five years on the total balance of trade receivables. For the purpose of computation of ECL, the term default implies an event where amount due towards margin requirement and / or mark to market losses for which the client was unable to provide funds / collaterals to bridge the shortfall, the same is termed as margin call triggered.
Based on the Industry practices and business environment in which the entity operates, Management considers unsecured receivables as default if the payment is overdue for more than 90 days for direct customer. For franchisee customers, Aggregate of unsecured receivables as reduced by Franchisee deposit/ future brokerages are considered as default. Management would also consider balance in client''s family accounts and collaterals in form other than the securities while considering the secured position of the client. Management would also consider impairment on client balance which are unsecured and overdue for less than 90 days on case to case basis, based on their scope of recoverability. For litigation cases, management could provide enhanced provision if the probability of outflow of economic resource is higher. If there are specific cases which are overdue for more than 90 days and the management is very confident of its recovery in near future, impairment loss would not be provided for such cases based on the approval of business head for each reporting period. Probability of default (pd) on these receivables is considered at 100% and treated as credit impaired.
Loans:
Loans includes Margin Trading Facility(MTF), Loans to staff and loans to subsidiaries for which staged approach is taken into consideration for determination of ECL.
Stage 1.
All positions in the MTF loan book are considered as stage 1 asset for computation of expected credit loss. For exposures where there has not been a significant increase in credit risk since initial recognition and that is not credit impaired upon origination. Margin trading facility, Loans to subsidiaries and loans to staff are considered in stage 1 for determination of ECL. Exposure to credit risk in stage 1 is computed considering historical probability of default, market movements and macro-economic environment.
Stage 2.
Exposures under stage 2 include overdues up to 90 days pertaining to principal amount, interest and any other charges on the MTF loan book which are unsecured. While arriving at the secured position of the client, management would also consider balance in client''s family accounts, securities in other segment and collaterals in form other than the securities while considering the secured position of the client. At each reporting date, the Company assesses whether there has been a significant increase in credit risk for financial assets since initial recognition. In determining whether credit risk has increased significantly since initial recognition, the Company uses days past due information and other qualitative factors to assess deterioration in credit quality of a financial asset. For credit exposures where there has been a significant increase in credit risk since initial recognition but that are not credit impaired, a lifetime ECL is recognised.
Stage 3.
Exposures under stage 3 include overdues past 90 days pertaining to principal amount, interest and any other charges on MTF loan book which are unsecured.
Financial assets are assessed as credit impaired when one or more events that have a detrimental impact on the estimated future cash flows of the asset have occurred. For financial assets that have become credit impaired, a lifetime ECL is recognised.
B. Liquidity risk
Liquidity risk is the risk that the entity will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The entity''s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the entity''s reputation.
Prudent liquidity risk management requires sufficient cash and marketable securities and availability of funds through adequate committed credit facilities to meet obligations when due and to close out market positions.
The Company has a view of maintaining liquidity with minimal risks while making investments. The Company invests its surplus funds in short term liquid assets in bank deposits and liquid mutual funds. The Company monitors its cash and bank balances periodically in view of its short term obligations associated with its financial liabilities.
Refer Note 57 For analysis of maturities of financial assets and financial liabilities.
C. Market Risk
Market risk is the risk that the fair value or future Cash flows of a financial instrument will fluctuate because of changes in market prices. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.
(i) Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates.
Foreign currency risk management
In respect of the foreign currency transactions, the company does not hedge the exposures since the management believes that the same is insignificant in nature and will not have a material impact on the Company.
The company''s exposure to foreign currency risk at the end of reporting period is shown in note 48
(ii) Interest rate risk
The Company is exposed to Interest risk if the fair value or future cash flows of its financial instruments will fluctuate as a result of changes in market interest rates. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates.
The Company''s interest rate risk arises from interest bearing deposits with bank and loans given to customers. Such instruments exposes the Company to fair value interest rate risk. Management believe that the interest rate risk attached to this financial assets are not significant due to the nature of this financial assets.
Note 58: Revenue from Contract with Customers
The Company derives revenue primarily from the share broking business. Its other major revenue sources are the Portfolio management fees and commission income and Interest income.
Disaggregate revenue information
The table below presents disaggregate revenues from contracts with customers for the year ended 31 March 2024 and 31 March 2023. The Company believes that this disaggregation best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by market and other economic factors.
(a) Broking Income - Income from services rendered as a broker is recognised upon rendering of the services, in accordance with the terms of contract.
(b) Portfolio management fees and commission income - Fees for subscription based services are received periodically but are recognised as earned on a pro-rata basis over the term of the contract.
Commissions from distribution of financial products are recognised upon allotment of the securities to the applicant or as the case may be. Commissions and fees recognised as aforesaid are exclusive of goods and service tax, securities transaction tax, stamp duties and other levies by SEBI and stock exchanges.
(c) Interest Income - Interest is earned on delayed payments from clients and amounts funded to them as well as term deposits with banks..Interest income is recognised on a time proportion basis taking into account the amount outstanding from customers or on the financial instrument and the rate applicable.
(d) Depository Income-Income from services rendered on behalf of depository is recognised upon rendering of the services, in accordance with the terms of contract.
Nature, timing of satisfaction of the performance obligation and significant payment term:
(i) Income from services rendered as a broker is recognised upon rendering of the services.
(ii) Fees for subscription based services are received periodically but are recognised as earned on a prorata basis over the term of the contract.
(iii) Commissions from distribution of financial products are recognised upon allotment of the securities to the applicant or as the case may be, on issue of the insurance policy to the applicant.
(iv) I nterest is earned on delayed payments from clients and amounts funded to them as well as term deposits with banks.
(v) Interest income is recognised on a time proportion basis taking into account the amount outstanding from customers or on the financial instrument and the rate applicable.
(vi) Income from services rendered on behalf of depository is recognised upon rendering of the services, in accordance with the terms of contract.
The above services are point in time in nature, and no performance obligation remains once the transaction is executed.
Fees for subscription based services are received periodically but are recognised as earned on a prorata basis over the term of the contract, and are over the period in nature.
Note 60 : Disclosure pertaining to quartely statement filed with Banks or Financial Institutions
The Company has availed of the facility (Secured Borrowings) from the lenders interalia on the condition that, the company shall provide or create or arrange to provide or have created, security interest by way of a first pari passu charge of the receivables and loans.
1. The Company undertakes the following activities in the nature of Corporate social responsibility (CSR):
a. Promoting education, including special education and employment enhancing vocational skills, especially among children, women, and elderly, contribution to COVID relief program, PM cares fund;
b. Promotion of health care, including preventive health care and sanitation;
c. Measures for the benefit of armed forces veterans, war widows, and their dependents;
d. Ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources.
2. Contribution of Rs.552 lakhs (Previous year H881 lakhs ) to Motilal Oswal Foundation which is classified as related party under Ind AS 24- " Related Party Disclosures"
3. As represented by Motilal Oswal foundation, Amount of H311 lakhs (Previous Year : H853 lakhs) has been spent by the Company for the construction/ acquisition of a new asset.
No proceedings have been initiated or pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 and rules made thereunder, as at 31 March 2024 and 31 March 2023.
The Company has not been declared wilful defaulter by any bank or financial Institution or other lender, in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India, during the year ended 31 March 2024 and 31 March 2023.
The Company does not have any transactions with the companies struck on under section 248 of Companies Act, 2013 or section 560 of Companies Act, 1956 during the year ended 31 March 2024 and 31 March 2023.
Additional regulatory information required under (wb) (xvi) of Division III of Schedule III amendment, disclosure of ratios, is not applicable to the Company as it is in broking business and not an NBFC registered under Section 45-IA of Reserve Bank of India Act, 1934.
The Company has not advanced or loaned or invested (either from borrowed funds or share premium or any other sources or other kind of funds) to or in any other person or entity, including foreign entity ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
The Company has not received any funds (which are material either individually or in the aggregate) from any person or entity, including foreign entity ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
The Company has no satisfaction of charges which are pending to be filed with ROC.
The Company has filed Prospectus dated 09 April 2024 for Public Issuance of Secured, Rated, Listed, Redeemable Non-Convertible Debentures of face value of E 1,000 each ("NCDs") for an amount aggregating up to E 500 Crore ("Base Issue Size") with an option to retain oversubscription up to E 500 Crore ("Green Shoe Option") aggregating up to 1,00,00,000 NCDs for an amount up to E 1,000 Crore ("Issue Size" or "Issue Limit") (hereinafter referred to as the "Issue"). The Issue is open for subscription on 23 April 2024 ("Issue Opening date") and is scheduled to close on 07 May 2024 ("Issue Closing date").
The Board of Directors of the Company at their Meeting held on July 27, 2023 has, inter-alia, subject to approval of Shareholders of the Company and other applicable statutory & regulatory approvals including the approval of the Hon''ble National Company Law Tribunal ("NCLT"), Mumbai Bench, approved the Scheme of Arrangement between Motilal Oswal Financial Services Limited ("the Transferor Company " or "the Resulting Company" or "MOFSL") and Motilal Oswal Broking and Distribution Limited (formerly Glide Tech Investment Advisory Private Limited & converted into Public Limited Company) ("the Transferee Company " or "MOBDL") and Motilal Oswal Wealth Limited ("the Demerged Company" or "MOWL") and their respective Shareholders ("the Scheme"), under Sections 230-232 of the Companies Act, 2013. The appointed date subject to approval of the NCLT is April 01, 2023.
Further, pursuant to the provisions of Regulation 37 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has filed the Scheme along with necessary documents with Stock Exchange(s). Post receipt of shareholder''s approval, this event will be considered as highly probable for the purposes of disclosure requirement under IND AS 105 "Non-Current Assets held for sale in discontinued operations.
Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended March 31, 2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.
The amounts reflected as "0" in the financial information are values with less than rupees fifty thousands.
Previous year figures have been regrouped/reclassified wherever necessary.
Mar 31, 2023
Pursuant to the Order dated 11 March 2022 passed by the Hon''ble National Company Law Tribunal, Mumbai Bench ("NCLT"), the Scheme of Arrangement between Passionate Investment Management Private Limited ("the Transferor Company 1" or "PIMPL'') and MOPE Investment Advisors Private Limited ("the Transferee Company 2" or "the Demerged Company 1" or "the Transferor Company 3" or "MOPE") and Motilal Oswal Real Estate Investment Advisors Private Limited ("the Transferor Company 2" or "MORE") and Motilal Oswal Real Estate Investment Advisors II Private Limited ("the Demerged Company 2" or "the Transferor Company 4" or "MORE II") and MO Alternate Investment Advisors Private Limited ("the Resulting Company" or "MO Alternate") and Motilal Oswal Financial Services Limited ("the Transferee Company 1" or "the Holding Company of the Resulting Company" or "MOFSL'') and their respective Shareholders (''the Scheme'') was made effective on March 30, 2022. Further, the Company had allotted new 18,68,445 equity shares to the shareholders of the transferor Companies on March 30, 2022. The said shares were pending as on 31 March 2022 for listing and were forming part of Public category. Subsequently it got listed on 17 May 2022.
Issued capital is net off of buyback of shares, shares acquired and cancelled in the scheme of arrangement and reissuance of shares.
23.1 Terms/rights attached to sharesEquity shares :
The Company has one class of equity shares having a par value of Re. 1 each (previous year: having a par value of Re. 1 each). Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holder of the equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all the preferential amounts. However, no such preferential amounts exists currently. The distribution will be in proportion to the number of equity shares held by the shareholders. The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of shareholders in the ensuing Annual General Meeting.
During the year ended 31 March 2023, dividend recognized as distribution to equity shareholders was Rs. 10.00 per share consisting of final dividend of Rs. 3.00 per share for previous year ended 31 March 2022 and interim dividend of Rs. 7 per share for year ended 31 March 2023. The total dividend appropriated amounts to Rs.14,823 lakhs (Previous Year: Rs.7,365 lakhs)
23.5 i) During financial year 2022-23 the Company has bought back 14,54,545 fully paid-up shares by capitalisation of securities premium.
ii) In the financial year 2020-21 the Company has bought back 19,09,144 fully paid-up shares by capitalisation of securities premium. Further, 18,68,445 shares were alloted for consideration other than cash and also 8,63,74,063 shares were reissued pursuant to the Scheme of Arrangement.
# As per Para 78 of scheme of arrangement, all costs, charges, taxes including duties, levies and all other expenses, if any (save as expressly otherwise agreed) arising out of or incurred in carrying out and implementing Part B of the Scheme and matters incidental thereto shall be borne by the Promoters of the Transferor Company 1 i.e. Passionate Investment Management Private Limited/Transferor Company 1 and no cost shall be incurred by public shareholders of the Transferee Company 1 i.e.; Motilal Oswal Financial Services Limited.
In line with above paragraph, Transferor Company 1 has created a provision for stamp duty payable of Rs 3,000 lakhs on the transfer of shareholding from PIMPL to its shareholders and simultaneously claiming Deferred tax benefit of Rs 755 lakhs thereon. The said expense has not been routed through Profit and Loss statement but utilized from reserves of PIMPL and corresponding FD has been created to give the effect. Thus there is no impact on the profit and loss account of the merged entity and is cashflow neutral to the shareholders of the transferor and transferee company with respect to the restrospective accounting.
Thus, Transferor Company 1 (PIMPL) has created sufficient Free Reserve pursuant to scheme of merger against which the Stamp duty net of taxes of Rs. 2,245 lakhs can be reduced to that extent.
The capital redemption reserve is created to be utilised towards redemption of preference shares and it also includes addition arising on account of buyback of shares. The reserve will be utilised in accordance with provision of the Act.
It has been created during the Business Combinations in earlier periods.
Security premium account is use to record the premium received on issue of shares and it also includes transfer from ESOS reserve when the options are exercised . The reserve will be utilised in accordance with the provisions of the Act.
Share based payment expense pertaining to outstanding portion of the option not yet exercised.
The general reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reserve will not be reclassified subsequently to statement of profit and loss. General reserve is used to transfer to debenture redemption reserve.
These reserve represent the identity of reserves transferred on merger from PIMPL.
Retained earnings represents surplus/accumulated earnings of the Company and are available for distribution to shareholders.
Other comprehensive income consist of gain /(loss) of equity instruments carried through FVTOCI.
|
Note 38: Contingent liability and commitment (to the extent not provided for) |
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|
Particulars |
As at 31 March 2023 |
As at 31 March 2022 |
|
Contingent liabilities: |
||
|
(i) Guarantees / securities given (Refer note a) (ii) Demand in respect of income tax matters for which appeal is pending (Refer note b) |
3,23,380 1,920 |
1,28,258 2,982 |
|
(iii) Claim against the company (Refer note c) |
992 |
725 |
|
Capital & other commitments: |
||
|
(i) Estimated amount of contracts remaining to be executed on capital account (Net of advances) |
4,406 |
2,123 |
|
(ii) Uncalled liability on shares and other investments partly paid: |
||
|
1) India Business Excellence Fund III |
- |
381 |
|
2) India Realty Excellence Fund IV |
- |
140 |
|
3) India Business Excellence Fund IV |
270 |
450 |
|
4) India Realty Excellence Fund V |
130 |
365 |
(a) Guarantees and securities given
1) The Company has provided bank guarantees aggregating to Rs 3,23,380 lakhs (Previous year :Rs 1,28,258 lakhs) as on 31 March 2023 for the following purposes to:
i) National Stock exchange - Rs. 2,87,375 lakhs (Previous year : Rs.1,26,668 lakhs) for meeting margin requirements.
ii) NCDEX -Rs. 4,500 lakhs (Previous year: Nil) for meeting margin requirements.
iii) MCX - Rs. 30,000 lakhs (Previous year: Nil) for meeting margin requirements.
iv) Unique Identification Authority - Rs. Nil (Previous year: Rs.25 lakhs) for security deposit.
v) Hindalco Industries Limited - Rs.1,500 lakhs (Previous year: Rs. 1,500 lakhs) for margin deposit.
vi) Municipal Corporation of Greater Mumbai - Rs. 5 lakhs (Previous year: Rs.5 lakhs) for security deposit.
vii) Bombay High Court - Rs. Nil (Previous year: Rs.55 lakhs) for security deposit.
viii) Bank of Maharashtra - Rs. Nil (Previous year: Rs.5 lakhs) for security deposit.
(b) Demand in respect of income tax matters for which appeal is pending is Rs.1,920 lakhs (Previous year: Rs.2,982 lakhs).This is disputed by the Company and hence not provided for in the books of accounts. The Company has paid demand by way of deposit (It doesn''t include Income Tax refund adjusted against demand raised) of Rs.451 lakhs (Previous year Rs. 451 lakhs) till date. Above liability does not include interest u/s 234B and 234C as the same depends on the outcome of the demand
The Company is contesting the demands and the management believes that its position will likely be upheld in the appellant process. No tax expenses has been accrued in the financial statement for the tax demand raised. The management believes that ultimate outcome of this proceeding will not have a material adverse effect on the Company''s financial position and results of operations.
Note :
The proceedings/ Appeals held at Supreme court/ High court/District court are considered as "Civil cases".
As per IND AS 108 para 4, Segment has been disclosed in Consolidated financial statement, hence no separate disclosure has been given in standalone financial statements of the Company.
The Company has taken various office premises on operating lease for the period which ranges from 12 months to 106 months with an option to renew the lease by mutual consent on mutually agreeable terms.
Information about leases for which the company is a lessee are presented below:
The Company has sent letters to vendors to confirm whether they are covered under Micro, Small and Medium Enterprise Development Act 2006 as well as they have filed required memorandum with prescribed authority. Based on and to the extent of the information received by the Company from the suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) and relied upon by the auditors, the relevant particulars as at the year end are furnished below:
The company provides business support to its subsidiaries for activities like finance, accounting, human resources, information technology, back office operations, corporate planning, administrative services and various other services for which it recovers business support charges.
There were no significant events after the end of the reporting period which require any adjustment or disclosure in the financial statements other than as stated below:
The Board of Directors at its meeting held on 27 April 2023 has declared final dividend of Rs. 3/- per equity share (on face value of Rs.1/- per equity share) for the financial year 2022-23. Payment of the final dividend is subject to its approval by the shareholders, in the ensuing Annual General Meeting of the Company.
The Company provides for gratuity benefit which is a defined benefit plan covering all its eligible employees. This plan is unfunded. The gratuity benefits are subject to a maximum limit of up to Rs. 20,00,000.
The following table set out the status of the gratuity plan as specified under section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules 2014 (as amended) under Ind AS 19 "Employee benefits" and the reconciliation of opening and closing balances of the present value of the defined benefit obligation.
Exercise Pricing Formula Scheme V
Exercise price shall be the closing price of the Company''s equity shares quoted on the BSE immediately preceding the date of Grant of the Stock Options, which for this purpose shall be the date on which the Committee grant the Stock Options, discounted by such percentage as may be determined by the Committee in the best interest of the various stakeholders in the prevailing market conditions
Exercise price shall be the closing price of the Company''s Equity Shares, prior to the date of grant of the Options, on the Stock Exchanges where the highest trading volume is recorded, discounted/increased by such percentage as may be determined by the Committee.
Exercise price shall be the closing price of the Company''s Equity Shares, prior to the date of grant of the Options, on the Stock Exchanges where the highest trading volume is recorded, discounted/increased by such percentage as may be determined by the Committee.
Exercise price shall be the closing price of the Company''s Equity Shares, prior to the date of grant of the Options, on the Stock Exchanges where the highest trading volume is recorded, discounted/increased by such percentage as may be determined by the Committee.
Exercise price shall be the closing price of the Company''s Equity Shares, prior to the date of grant of the Options, on the Stock Exchanges where the highest trading volume is recorded, discounted/increased by such percentage as may be determined by the Committee.
The Company pays taxes according to the rates applicable in India. Most taxes are recorded in the income statement and relate to taxes payable for the reporting period (current tax), but there is also a charge or credit relating to tax payable for future periods due to income or expenses being recognised in a different period for tax and accounting purposes (deferred tax). Tax is charged to equity when the tax benefit exceeds the cumulative income statement expense on share plans. The Company provides for current tax according to the tax laws of India using tax rates that have been enacted or substantively enacted by the balance sheet date. Management periodically evaluates positions taken in tax returns in respect of situations in which applicable tax regulation is subject to interpretation. It establishes provisions, where appropriate, on the basis of amounts expected to be paid to the tax authorities. Deferred tax is provided, using the liability method, on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax is recognised in respect of all temporary differences that have originated but not reversed at the balance sheet date, where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date. A deferred tax asset is recognised when it is considered recoverable and therefore recognised only when, on the basis of all available evidence, it can be regarded as probable that there will be suitable taxable profits against which to recover carried forward tax losses and from which the future reversal of underlying temporary differences can be deducted. Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the temporary differences are expected to reverse, based on tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
Level 1: The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and equity securities) is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the group is the current bid price. These instruments are included in level 1.
Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities and investment in private equity funds, real estate funds.
III. Financial instruments not measured at fair value
Financial assets not measured at fair value includes cash and cash equivalents, trade receivables, loans and other financial assets. These are financial assets whose carrying amounts approximate fair value, due to their short-term nature.
Additionally, financial liabilities such as trade payables and other financial liabilities are not measured at FVTPL, whose carrying amounts approximate fair value, because of their short-term nature.
Note 55:Financial risk management
Company has operations in India. Whilst risk is inherent in the Company''s activities, it is managed through an integrated risk management framework, including on-going identification, measurement and monitoring, subject to risk limits and other controls. This process of risk management is critical to the Company''s continuing profitability and each individual within the Company is accountable for the risk exposures relating to his or her responsibilities. The Company is exposed to credit risk, liquidity risk and market risk. It is also subject to various operating and business risks.
Credit risk is the risk that the Company will incur a loss because its customers or counterparties fail to discharge their contractual obligation. The Company manages and controls credit risk by setting limits on the amount of risk it is willing to accept for individual counterparties, and by monitoring exposures in relations to such limits.
The maximum exposure to credit risk for each class of financial instruments is the carrying amount of that class of financial instruments presented in the financial statements. The Company''s major classes of financial assets are cash and cash equivalents, loans, investment in mutual fund units, term deposits, trade receivables and security deposits.
Deposits with banks are considered to have negligible risk or nil risk, as they are maintained with high rated banks/financial institutions as approved by the Board of directors.
Investments primarily include investment in liquid mutual fund units that are marketable securities of eligible financial institutions for a specified time period with high credit rating given by domestic credit rating agencies.
The management has established accounts receivable policy under which customer accounts are regularly monitored. The Company has a dedicated risk management team, which monitors the positions, exposures and margins on a continuous basis.
The financial instruments covered within the scope of ECL include financial assets measured at amortised cost such as trade receivables and loans.
The loss allowance has been measured using lifetime ECL except for financial assets on which there has been no significant increase in credit risk since initial recognition. At each reporting date, the Company assesses whether financial assets carried at amortised cost is credit-impaired. A financial asset is credit- impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred since initial recognition.
A simplified approach has been considered for measuring expected credit losses (ECLs) of trade receivables at an amount equal to lifetime ECLs. The ECLs on trade receivables are calculated based on actual historic credit loss experience over the preceding three to five years on the total balance of trade receivables. For the purpose of computation of ECL, the term default implies an event where amount due towards margin requirement and / or mark to market losses for which the client was unable to provide funds / collaterals to bridge the shortfall, the same is termed as margin call triggered.
Based on the Industry practices and business environment in which the entity operates, Management considers unsecured receivables as default if the payment is overdue for more than 90 days for direct customer. For franchisee customers, Aggregate of unsecured receivables as reduced by Franchisee deposit/ future brokerages are considered as default. Management would also consider balance in client''s family accounts and collaterals in form other than the securities while considering the secured position of the client. Management would also consider impairment on client balance which are unsecured and overdue for less than 90 days on case to case basis, based on their scope of recoverability. For litigation cases, management could provide enhanced provision if the probability of outflow of economic resource is higher. If there are specific cases which are overdue for more than 90 days and the management is very confident of its recovery in near future, impairment loss would not be provided for such cases based on the approval of business head for each reporting period. Probability of default (PD) on these receivables is considered at 100% and treated as credit impaired.
Loans includes Margin Trading Facility(MTF), Loans to staff and loans to subsidiaries for which staged approach is taken into consideration for determination of ECL.
Stage 1.
All positions in the MTF loan book are considered as stage 1 asset for computation of expected credit loss. For exposures where there has not been a significant increase in credit risk since initial recognition and that is not credit impaired upon origination. Margin trading facility, Loans to subsidiaries and loans to staff are considered in stage 1 for determination of ECL. Exposure to credit risk in stage 1 is computed considering historical probability of default, market movements and macro-economic environment.
Stage 2.
Exposures under stage 2 include overdues up to 90 days pertaining to principal amount, interest and any other charges on the MTF loan book which are unsecured. While arriving at the secured position of the client, management would also consider balance in client''s family accounts, securities in other segment and collaterals in form other than the securities while considering the secured position of the client. At each reporting date, the Company assesses whether there has been a significant increase in credit risk for financial assets since initial recognition. In determining whether credit risk has increased significantly since initial recognition, the Company uses days past due information and other qualitative factors to assess deterioration in credit quality of a financial asset. For credit exposures where there has been a significant increase in credit risk since initial recognition but that are not credit impaired, a lifetime ECL is recognised.
Stage 3.
Exposures under stage 3 include overdues past 90 days pertaining to principal amount, interest and any other charges on MTF loan book which are unsecured.
Financial assets are assessed as credit impaired when one or more events that have a detrimental impact on the estimated future cash flows of the asset have occurred. For financial assets that have become credit impaired, a lifetime ECL is recognised.
Liquidity risk is the risk that the entity will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The entity''s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the entity''s reputation.
Prudent liquidity risk management requires sufficient cash and marketable securities and availability of funds through adequate committed credit facilities to meet obligations when due and to close out market positions.
The Company has a view of maintaining liquidity with minimal risks while making investments. The Company invests its surplus funds in short term liquid assets in bank deposits and liquid mutual funds. The Company monitors its cash and bank balances periodically in view of its short term obligations associated with its financial liabilities.
Refer Note 57 For analysis of maturities of financial assets and financial liabilities.
Market risk is the risk that the fair value or future Cash flows of a financial instrument will fluctuate because of changes in market prices. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates.
Foreign currency risk management
In respect of the foreign currency transactions, the company does not hedge the exposures since the management believes that the same is insignificant in nature and will not have a material impact on the Company.
The company''s exposure to foreign currency risk at the end of reporting period is shown in note 49
The Company is exposed to Interest risk if the fair value or future cash flows of its financial instruments will fluctuate as a result of changes in market interest rates. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates.
The Company''s interest rate risk arises from interest bearing deposits with bank and loans given to customers. Such instruments exposes the Company to fair value interest rate risk. Management believe that the interest rate risk attached to this financial assets are not significant due to the nature of this financial assets.
Profit or loss is sensitive to higher/lower interest expense from borrowings as a result of changes in interest rates.
The following table demonstrates the sensitivity to a reasonably possible change in interest rates (all other variables being constant) of the Company''s statement of profit and loss and equity.
The Company is exposed to market price risk, which arises from FVTPL and FVOCI investments. The management monitors the proportion of these investments in its investment portfolio based on market indices. Material investments within the portfolio are managed on an individual basis and all buy and sell decisions are approved by the appropriate authority.
The company''s objectives when managing capital are to:
⢠Safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and
⢠Maintain an optimal capital structure to reduce the cost of capital.
Note 58: Revenue from contract with customers
The Company derives revenue primarily from the share broking business. Its other major revenue sources are the Portfolio management fees and commission income and Interest income.
Disaggregate revenue information
The table below presents disaggregate revenues from contracts with customers for the year ended 31 March 2023 and 31 March 2022. The Company believes that this disaggregation best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by market and other economic factors.
(a) Broking Income - Income from services rendered as a broker is recognised upon rendering of the services, in accordance with the terms of contract.
(b) Portfolio management fees and commission income - Fees for subscription based services are received periodically but are recognised as earned on a pro-rata basis over the term of the contract. Commissions from distribution of financial products are recognised upon allotment of the securities to the applicant or as the case may be. Commissions and fees recognised as aforesaid are exclusive of goods and service tax, securities transaction tax, stamp duties and other levies by SEBI and stock exchanges.
(c) Interest Income - Interest is earned on delayed payments from clients and amounts funded to them as well as term deposits with banks..Interest income is recognised on a time proportion basis taking into account the amount outstanding from customers or on the financial instrument and the rate applicable.
(d) Depository Income - Income from services rendered on behalf of depository is recognised upon rendering of the services, in accordance with the terms of contract.
Nature, timing of satisfaction of the performance obligation and significant payment term:
(i) Income from services rendered as a broker is recognised upon rendering of the services.
(ii) Fees for subscription based services are received periodically but are recognised as earned on a pro-rata basis over the term of the contract.
(iii) Commissions from distribution of financial products are recognised upon allotment of the securities to the applicant or as the case may be, on issue of the insurance policy to the applicant.
(iv) Interest is earned on delayed payments from clients and amounts funded to them as well as term deposits with banks.
(v) Interest income is recognised on a time proportion basis taking into account the amount outstanding from customers or on the financial instrument and the rate applicable.
(vi) Income from services rendered on behalf of depository is recognised upon rendering of the services, in accordance with the terms of contract.
The above services are point in time in nature, and no performance obligation remains once the transaction is executed.
Fees for subscription based services are received periodically but are recognised as earned on a pro-rata basis over the term of the contract, and are over the period in nature.
1. Investments, Trade receivables, Loans and Property, plant and equipments are pledge with Banks and NBFCs to against borrowing facilities taken by the Group.
2. The margin of two times cover is provided against the loan facilities for pledge of MF/Shares/PMS Investments and 1.33 times for Trade receivables and Property, plant and equipment.
The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period
Note 60 : Business CombinationsCompliance with approved Scheme of Arrangements
The Board of Directors of the Company at its Meeting held on 24 December 2020 has, inter-alia, subject to approval of shareholders of the Company and other applicable statutory and regulatory approvals including the approval of Hon''ble National Company Law Tribunal, Mumbai Bench ("NCLT"), approved the Scheme of Arrangement between Passionate Investment Management Private Limited (Ultimate Holding Company of Motilal Oswal Financial Services Limited) ("the Transferor Company 1") and MOPE Investment Advisors Private Limited ("the Transferee Company 2" or "the Demerged Company 1" or "the Transferor Company 3") and Motilal Oswal Real Estate Investment Advisors Private Limited ("the Transferor Company 2") and Motilal Oswal Real Estate Investment Advisors II Private Limited ("the Demerged Company 2" or "the Transferor Company 4") and MO Alternate Investment Advisors Private Limited (erstwhile Motilal Oswal Fincap Private Limited) ("the Resulting Company") and Motilal Oswal Financial Services Limited ("the Transferee Company 1" or "the Holding Company of the Resulting Company" or "the Company") and their respective shareholders ("the Scheme") under Sections 230-232 of the Companies Act, 2013. Further, pursuant to the provisions of Regulation 37 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has received No Objection Certificate from Stock Exchanges and the Company has filed an application with Hon''ble NCLT. Pursuant to the directions issued by Hon''ble NCLT, the Meeting of equity shareholders was scheduled on 16 December 2021 and the Scheme was approved by shareholders with requisite majority. Consequently, the Hon''ble NCLT approved the Scheme of Arrangement vide order dated 11 March 2022. The effect of the said Scheme was given on 30 March 2022 from the appointed date of 01 April 2020 by restating the financial statement for the year ended 31 March 2021.
(b) The accounting treatment of the said Scheme given in the books of accounts is in accordance with the Scheme and in conformity with the accounting standards prescribed under section 133 of the Companies Act, 2013. Further, figures for the year ended 31 March 2021 as shown above are the restated figures based on the audited accounts of the Transferor, Transferee and Resulting Company.
Accounting treatment given in the books for the Scheme:
1. Amalgamation And Vesting Of Assets And Liabilities And Entire Business Of The Transferor Company 1
1.1 The Transferee Company 1 shall give effect to the amalgamation in its books of accounts as per the applicable accounting principles prescribed under the Companies (Indian Accounting Standards) Rules, 2015 (Ind AS) notified under Section 133 of the Companies Act, 2013, as may be amended from time to time and on the date determined in accordance with applicable Ind AS.
1.2 Upon effectiveness of the Scheme, the net assets of the Transferor Company 1 (excluding shares of the Transferee Company 1 held by the Transferor Company 1 which shall get cancelled) will be reflected at fair value as at the Effective Date.
1.3 The inter-company deposits/ inter-company loans and advances, if any, in the books of accounts of the Transferee Company 1 and the Transferor Company 1 shall stand cancelled as at the Effective Date.
1.4 The difference, if any, being excess or deficit arising pursuant to the amalgamation, after giving effect to the above adjustments, shall be accounted based on generally adopted accounting principles under Ind AS.
1.5 The Transferee Company 1 shall without any application or deed, issue and allot equity shares of face value of Re. 1/- each, credited as fully paid up, to the extent indicated below, to the equity shareholders holding fully paid up equity shares of the Transferor Company 1 and whose name appear in the register of members of the Transferor Company 1 on the Record Date or to such of their respective heirs, executors, administrators or other legal representatives or other successors in title as may be recognized by the Board of Directors of the Transferor Company 1/ the Transferee Company 1.
2. Amalgamation And Vesting Of Assets And Liabilities And Entire Business Of The Transferor Company 2
The Transferee Company 2 shall account for the amalgamation in its books/ financial statements as per "Pooling
of Interests Method" under Appendix C of "Indian Accounting Standard (Ind-AS)"103, Business Combinations
and any other relevant Ind AS notified under the Companies (Indian Accounting Standards) Rules, 2015, as
amended from time to time including as provided herein below:
2.1 The Transferee Company 2 shall record the assets and liabilities of the Transferor Company 2, transferred to and vested in it at their respective carrying values as appearing in the books of the Transferor Company 2 in accordance with Para 9(iii) of Appendix C of Ind AS 103.
2.2 The T ransferee Company 2 shall preserve the identity of the reserves of the T ransferor Company 2 transferred to and vested in it and shall record in its books in the same form in which they appear in the books of the Transferor Company 2 and it shall be aggregated with the corresponding balance appearing in the financial statements of the Transferee Company 2.
2.3 The shares held by the Transferee Company 2 in the Transferor Company 2 on the Effective Date shall be cancelled.
2.4 Loans and advances, receivables, payables and other dues outstanding between the Transferor Company 2 and the Transferee Company 2 will stand cancelled and there shall be no further obligation / outstanding in that behalf.
2.5 The difference between the net assets transferred to the Transferee Company 2 pursuant to Clause 2.1 as reduced by Reserves recorded in the Transferee Company 2 pursuant to Clause 2.2 and after giving effect Clause 2.3 and 2.4, the difference shall be adjusted against Capital Reserve of the Transferee Company 2.
2.6 In case of any difference in accounting policy between the Transferor Company 2 and the Transferee Company 2, the accounting policies followed by the Transferee Company 2 shall prevail and the difference till the Appointed Date will be quantified and adjusted as per Ind AS, to ensure that the financial statements of Transferee Company 2 reflects the financial position on the basis of consistent accounting policy.
2.7 The Transferor Company 2 is a wholly owned subsidiary of the Transferee Company 2 and therefore on amalgamation of the Transferor Company 2 into the Transferee Company 2 there shall be no issue of shares by the Transferee Company 2 in this regard as consideration.
3. Demerger of The Fund Management Undertaking 1 From The Demerged Company 1 Into The Resulting Company
3.1 The Demerged Company 1 shall account for the Scheme from the Appointed Date in its books/ financial statements upon receipt of all relevant/ requisite approvals for the Scheme, in accordance with applicable Indian Accounting Standards (Ind-AS) notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time including as provided herein below:
Accounting treatment in the books of the Demerged Company 1
3.1.1 The Demerged Company 1 shall reduce the carrying value of assets and liabilities pertaining to the Fund Management Undertaking 1, transferred to and vested in the Resulting Company from the carrying value of assets and liabilities as appearing in its books.
3.1.2 Loans and advances, receivables, payables and other dues outstanding between the Demerged Company 1 and the Resulting Company relating to the Fund Management Undertaking 1 will stand cancelled and there shall be no further obligation / outstanding in that behalf.
3.1.3 The Demerged Company 1, as on the Appointed Date, shall transfer the balances of all the reserves to the Resulting Company, in the proportion of the net assets transferred to the Resulting Company and the net assets retained by the Demerged Company 1 ("Transferred Reserves").
3.1.4 The difference, being the excess of carrying value of assets over the carrying value of liabilities transferred pursuant to Clause 3.1.1 and after giving effect to clause 3.1.2 and clause 3.1.3 above shall be adjusted to the other equity of the Demerged Company 1.
Accounting treatment in the books of the Holding Company of the Resulting Company
3.1.5 The Holding Company of the Resulting Company shall credit its share capital with the aggregate face value of the equity shares issued and corresponding debit shall be made to Investment in Resulting Company Account.
4. Amalgamation Of The Transferor Company 3 With The Transferee Company 1
The Transferee Company 1 shall account for the amalgamation in its books/ financial statements as per "Pooling of Interests Method" under Appendix C of "Indian Accounting Standard (Ind-AS)" 103, Business Combinations and any other relevant Ind AS notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time including as provided herein below:
4.1 The Transferee Company 1 shall record the assets and liabilities of the Transferor Company 3, transferred to and vested in it at their respective carrying values as appearing in the books of the Transferor Company 3 in accordance with Para 9(iii) of Appendix C of Ind AS 103.
4.2 The T ransferee Company 1 shall preserve the identity of the reserves of the T ransferor Company 3 transferred to and vested in it and shall record in its books in the same form in which they appear in the books of the Transferor Company 3 and it shall be aggregated with the corresponding balance appearing in the financial statements of the Transferee Company 1.
4.3 The shares held by the Transferee Company 1 in the Transferor Company 3 on the Effective Date shall be cancelled.
4.4 The Transferee Company 1 shall credit to its share capital in its books the aggregate face value of the equity shares issued by it to shareholders of the Transferor Company 3.
4.5 Loans and advances, receivables, payables and other dues outstanding between the Transferor Company 3 and the Transferee Company 1 will stand cancelled and there shall be no further obligation / outstanding in that behalf.
4.5.1 The difference between the net assets transferred to the Transferee Company 1 pursuant to Clause 4.1 as reduced by Reserves recorded in the Transferee Company 1 pursuant to Clause 4.2 and after giving effect to Clause 4.3 to 4.5, the difference shall be adjusted against Capital Reserve of the Transferee Company 1.
4.6 In case of any difference in accounting policy between the Transferor Company 3 and the Transferee Company 1, the accounting policies followed by the Transferee Company 1 shall prevail and the difference till the Appointed Date will be quantified and adjusted as per Ind AS, to ensure that the financial statements of Transferee Company 1 reflects the financial position on the basis of consistent accounting policy.
4.7 Upon the Scheme becoming effective and upon the amalgamation of the Transferor Company 3 with the Transferee Company 1 in terms of this Scheme, the Transferee Company 1 shall without any application or deed, issue and allot New Equity Shares of face value of Re. 1/- each, credited as fully paid up, to the extent indicated below, to the equity shareholders holding fully paid up equity shares of the Transferor Company 3 (except shares held by the Transferee Company 1) and whose name appear in the register of members of the Transferor Company 3 on the Record Date or to such of their respective heirs, executors, administrators or other legal representatives or other successors in title as may be recognized by the Board of Directors of the Transferee Company.
5. Demerger Of The Fund Management Undertaking 2 From The Demerged Company 2 Into The Resulting
Company
5.1. The Demerged Company 2 shall account for the Scheme from the Appointed Date in its books/ financial statements upon receipt of all relevant/ requisite approvals for the Scheme, in accordance with applicable Indian Accounting Standards (Ind-AS) notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time including as provided herein below:
Accounting treatment in the books of the Demerged Company 2
5.1.1 The Demerged Company 2 shall reduce the carrying value of assets and liabilities pertaining to the Fund Management Undertaking 2, transferred to and vested in the Resulting Company from the carrying value of assets and liabilities as appearing in its books.
5.1.2 Loans and advances, receivables, payables and other dues outstanding between the Demerged Company 2 and the Resulting Company relating to the Fund Management Undertaking 3 will stand cancelled and there shall be no further obligation / outstanding in that behalf.
5.1.3 The Demerged Company 2, as on the Appointed Date, shall transfer the balances of all the reserves to the Resulting Company, in the proportion of the net assets transferred to the Resulting Company and the net assets retained by the Demerged Company 2 ("Transferred Reserves").
5.1.4 The difference, being the excess of carrying value of assets over the carrying value of liabilities transferred pursuant to Clause 5.1.1 and after giving effect to clause 5.1.2 and clause 5.1.3 above shall be adjusted to the other equity of the Demerged Company 2.
5.2 The Holding Company of the Resulting Company shall account for the Scheme in its respective books/ financial statements upon receipt of all relevant/ requisite approvals for the Scheme, in accordance with applicable Indian Accounting Standards (Ind-AS) notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time including as provided herein below:
Accounting treatment in the books of the Holding Company of the Resulting Company
The Holding Company of the Resulting Company shall credit its share capital with the aggregate face value of the equity shares issued pursuant to Clause 52 of this Scheme and corresponding debit shall be made to Investment in Resulting Company Account.
5.3 Upon the Scheme becoming effective, i.e., on amalgamation of the Transferor Company 3 with the Transferee Company 1, the Demerged Company 2 will become a subsidiary of the Holding Company of the Resulting Company.
Upon the Scheme becoming effective and upon the demerger of the Fund Management Undertaking 2 of the Demerged Company 2 into the Resulting Company in terms of this Scheme, the Holding Company of the Resulting Company shall without any application or deed, issue and allot New Equity Shares of face value of Re. 1/- each, credited as fully paid up, to the extent indicated below, to the equity shareholders holding fully paid up equity shares of the Demerged Company 2 (except shares held by the Holding Company of the Resulting Company) and whose name appear in the register of members of the Demerged Company 2 on the Record Date or to such of their respective heirs, executors, administrators or other legal representatives or other successors in title as may be recognized by the Board of Directors of the Demerged Company 2/ the Holding Company of the Resulting Company.
6. Amalgamation Of The Transferor Company 4 With The Transferee Company 1
The Transferee Company 1 shall account for the amalgamation in its books/ financial statements as per "Pooling of Interests Method" under Appendix C of "Indian Accounting Standard (Ind-AS)" 103, Business Combinations and any other relevant Ind AS notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time including as provided herein below:
6.1. The Transferee Company 1 shall record the assets and liabilities of the Transferor Company 4, transferred to and vested in it at their respective carrying values as appearing in the books of the Transferor Company 4 in accordance with Para 9(iii) of Appendix C of Ind AS 103.
6.2. The Transferee Company 1 shall preserve the identity of the reserves of the Transferor Company 4 transferred to and vested in it and shall record in its books in the same form in which they appear in the books of the Transferor Company 4 and it shall be aggregated with the corresponding balance appearing in the financial statements of the Transferee Company 1.
6.3. The shares held by the Transferee Company 1 in the Transferor Company 4 on the Effective Date shall be cancelled.
6.4. The Transferee Company 1 shall credit to its share capital in its books the aggregate face value of the equity shares issued by it to shareholders of the Transferor Company 4 pursuant to Clause 62 of this Scheme.
6.5. Loans and advances, receivables, payables and other dues outstanding between the Transferor Company 4 and theTransfereeCompany1willstandcanceNedandthereshaNbenofurtherobligation/outstandinginthatbehalf.
6.6. The difference between the net assets transferred to the Transferee Company 1 pursuant to Clause 6.1 as reduced by Reserves recorded in the Transferee Company 1 pursuant to Clause 5.6 and after giving effect to Clause 6.3 to 6.5, the difference shall be adjusted against Capital Reserve of the Transferee Company 1.
6.7. In case of any difference in accounting policy between the Transferor Company 4 and the Transferee Company 1, the accounting policies followed by the Transferee Company 1 shall prevail and the difference till the Appointed Date will be quantified and adjusted as per Ind AS, to ensure that the financial statements of Transferee Company 1 reflects the financial position on the basis of consistent accounting policy.
6.8. Upon the Scheme becoming effective, i.e., on amalgamation of the Transferor Company 3 with the Transferee Company 1, the Transferor Company 4 will become a subsidiary of the Transferee Company 1. Upon the Scheme becoming effective and upon the amalgamation of the Transferor Company 4 with the Transferee Company 1 in terms of this Scheme, the Transferee Company 1 shall without any application or deed, issue and allot New Equity Shares of face value of Re. 1/- each, credited as fully paid up, to the extent indicated below, to the equity shareholders holding fully paid up equity shares of the Transferor Company 4 (except shares held by the Transferee Company 1) and whose name appear in the register of members of the Transferor Company 4 on the Record Date or to such of their respective heirs, executors, administrators or other legal representatives or other successors in title as may be recognized by the Board of Directors of the Transferee Company 1.
Additional disclosuresa) Voting interest acquired
⢠Amalgamation of Passionate Investment Management Private Limited (PIMPL) with Motilal Oswal Financial Services Limited ("the Company") and consequently equity shares were issued by the Company to the shareholders of PIMPL.
⢠Post the demerger of MOPE Investment Advisors Private Limited (MOPE) it got merged with the Company and consequently equity shares were issued by the Company to the shareholders of MOPE
⢠Post the demerger of Motilal Oswal Real Estate Investment Advisors II Private Limited (MORE II) it got merged with the Company and consequently equity shares were issued by the Company to the shareholders of MORE II.
b) Reason for business combination
⢠Business Combination will lead to clear cut and straight forward shareholding structure and eliminating needless layers of shareholding tiers and at the same time demonstrate the Promoter Group''s direct commitment and engagement and improve the confidence of all shareholders.
⢠Concentrated management focus on the business in a more professional manner.
⢠Develop combined long-term corporate strategies and financial policies.
⢠Operational rationalization, organizational efficiency and optimal utilization of resources.
⢠From a governance perspective and keeping in mind amendments as per Section 2(87) and Section 186 of the Companies Act, 2013, group intends to reduce the three-layers and simplify the corporate structure.
⢠Reduced layer of entities shall enhance flexibility to incorporate subsidiaries and/or acquire companies or any other body corporates with controlling stake as per their business strategies.
c) Acquisition date & date of control:- 01 April 2020d) Consideration transferred
⢠To the shareholders of the Passionate Investment Management Private Limited -
8,49,21,363 fully paid up equity shares of the face value of Re. 1/- each of Motilal Oswal Financial Services Limited shall be issued and allotted to the equity shareholders of the Passionate Investment Management Private Limited in the proportion of their holding in the Company.
⢠To the shareholders of the MOPE Investment Advisors Private Limited -
14,72,445 fully paid up equity shares at Rs.636.10/- each of the Company shall be issued and allotted to the equity shareholders of MOPE Investment Advisors Private Limited
⢠To the shareholders of the Motilal Oswal Real Estate Investment Advisors II Private Limited -
3,96,000 fully paid up equity shares at Rs.636.10/- each of Motilal Oswal Financial Services Limited shall be issued and allotted to the equity shareholders of Motilal Oswal Real Estate Investment Advisors II Private Limited
ii) Not recognised as an expense in the statement of P&L
Transferor Company 1 i.e. Provision for stamp duty amounting to Rs. 3,000 lakhs towards the issuance of shares to the shareholders of PIMPL (i.e. promoters) has been adjusted (net of income tax benefit of Rs. 2,245 lakhs) from the free reserves of the Company. This treatment has been carried out in the financial statements as per the requirement of para 37 of Ind AS 32 "Financial Instruments: Presentation", which states that the transaction costs of an equity transaction are accounted for as a deduction from equity (net of any related income tax benefit).
Amount of Non-controlling interest in the acquiree at the acquisition date is Rs.11,885 lakhs. The Discounted Cash Flow (DCF) technique was used for valuation of Non controlling interest. All identified assets acquired, and liabilities assumed on the date of merger were recorded at their fair value.
1. The Company undertakes the following activities in the nature of Corporate social responsibility (CSR):
a. Promoting education, including special education and employment enhancing vocational skills, especially among children, women, and elderly, contribution to COVID relief program, PM cares fund;
b. Promotion of health care, including preventive health care and sanitation;
c. Measures for the benefit of armed forces veterans, war widows, and their dependents;
d. Ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources.
2. Contribution of Rs. 881 lakhs (Previous year Rs. 616 lakhs ) to Motilal Oswal Foundation which is classified as related party under Ind AS 24- "Related Party Disclosures"
3. As represented by Motilal Oswal foundation, Amount of Rs. 853 lakhs (Previous Year : Rs. Nil) has been spent by the Company for the construction/ acquisition of a new asset.
Note 62. No proceedings have been initiated or pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 and rules made thereunder, as at 31 March 2023 and 31 March 2022.
Note 63. The Company has not been declared wilful defaulter by any bank or financial Institution or other lender, in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India, during the year ended 31 March 2023 and 31 March 2022.
Note 64: The Company does not have any transactions with the companies struck off under section 248 of Companies Act, 2013 or section 560 of Companies Act, 1956 during the year ended 31 March 2023 and 31 March 2022.
Note 65: Additional regulatory information required under (WB) (xvi) of Division III of Schedule III amendment, disclosure of ratios, is not applicable to the Company as it is in broking business and not an NBFC registered under Section 45-IA of Reserve Bank of India Act, 1934.
Note 66: The Company has not advanced or loaned or invested (either from borrowed funds or share premium or any other sources or other kind of funds) to or in any other person or entity, inclu
Mar 31, 2022
''Pursuant to the Order dated March 11, 2022 passed by the Hon''ble National Company Law Tribunal, Mumbai Bench ("NCLT"), the Scheme of Arrangement between Passionate Investment Management Private Limited ("the Transferor Company 1" or "PIMPL'') and MOPE Investment Advisors Private Limited ("the Transferee Company 2" or "the Demerged Company 1" or "the Transferor Company 3" or "MOPE") and Motilal Oswal Real Estate Investment Advisors Private Limited ("the Transferor Company 2" or "MORE") and Motilal Oswal Real Estate Investment Advisors II Private Limited ("the Demerged Company 2" or "the Transferor Company 4" or "MORE II") and MO Alternate Investment Advisors Private Limited ("the Resulting Company" or "MO Alternate") and Motilal Oswal Financial Services Limited ("the Transferee Company 1" or "the Holding Company of the Resulting Company" or "MOFSL'') and their respective Shareholders (''the Scheme'') was made effective on March 30, 2022. Further, the Company had allotted new 18,68,445 equity shares to the shareholders of the transferor Companies on March 30, 2022. The said shares are pending for listing and are forming part of Public category.
Issued capital is net off of buyback of shares, shares acquired and cancelled in the scheme of arrangement and reissuance of shares.
23.1 Terms/rights attached to sharesEquity shares :
The Company has one class of equity shares having a par value of Re. 1 each (previous year: having a par value of Re. 1 each). Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holder of the equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all the preferential amounts. However, no such preferential amounts exists currently. The distribution will be in proportion to the number of equity shares held by the shareholders.The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of shareholders in the ensuing Annual General Meeting.
During the year ended 31 March 2022, dividend recognized as distribution to equity shareholders was Rs. 12.00 per share consisting of final dividend of Rs. 5.00 per share for previous year ended 31 March 2021 and interim dividend of Rs. 7 per share for year ended 31 March 2022. The total dividend appropriated amounts to Rs. 7,365 lakhs (Previous Year: Rs. 3,081 lakhs)
The Company has only one class of preference shares having a par value of Rs. 100 each and there are no preference shares issued and subscribed as on 31 March 2022 and 31 March 2021.
23.2 Reconciliation of number of shares outstanding
#As per Para 78 of scheme of arrangement, all costs, charges, taxes including duties, levies and all other expenses, if any (save as expressly otherwise agreed) arising out of or incurred in carrying out and implementing Part B of the Scheme and matters incidental thereto shall be borne by the Promoters of the Transferor Company 1 i.e. Passionate Investment Management Private Limited/Transferor Company 1 and no cost shall be incurred by public shareholders of the Transferee Company 1 i.e.; Motilal Oswal Financial Services Limited.
In line with above paragraph, Transferor Company 1 has created a provision for stamp duty payable of Rs 3,000 lakhs on the transfer of shareholding from PIMPL to its shareholders and simultaneously claiming Deferred tax benefit of Rs 755 lakhs thereon. The said expense has not been routed through Profit and Loss statement but utilized from reserves of PIMPL and corresponding FD has been created to give the effect. Thus there is no impact on the profit and loss account of the merged entity and is cashflow neutral to the shareholders of the transferor and transferee company with respect to the restrospective accounting.
The capital redemption reserve is created to be utilised towards redemption of prefrence shares. The reserve will be utilised in accordance with provision of the Act.
It has been created during the Business Combinations in earlier periods.
Securities premium reserve is used to record the premium on issue of shares. The reserve is utilised in accordance with the provision of the Companies Act, 2013.
Share based payment expense pertaining to outstanding portion of the option not yet exercised.
The general reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reserve will not be reclassified subsequently to statement of profit and loss. General reserve is used to transfer to debenture redemption reserve.
These reserve represent the identity of reserves transferred on merger from PIMPL Retained earnings
Retained earnings represents surplus/accumulated earnings of the Company and are available for distribution to shareholders.
Other comprehensive income consist of remeasurement gains/ losses on defined benefit plans, gain /(loss) of equity instruments carried through FVTOCI.
(a) Gurantees and securities given
1) The Company has given Corporate Guarantees of Rs. Nil (Previous year: Rs. 74,339 lakhs) to Banks and NCD holders for its subsidiary Motilal Oswal Home Finance Limited.
2) The Company has provided bank guarantees aggregating to Rs 1,28,258 lakhs (Previous year : Rs.28,090) as on 31 March 2022 for the following purposes to:
i) National Stock exchange - Rs.1,26,668 lakhs (Previous year : Rs. 12,500 lakhs) for meeting margin requirements.
ii) Bombay Stock exchange - Nil (Previous year: Rs.10,000 lakhs) for meeting margin requirements.
iii) MCX - Nil(Previous year: Rs.4,000 lakhs) for meeting margin requirements.
iv) Unique Identification Authority - Rs.25 lakhs (Previous year: Rs. 25 lakhs) for security deposit.
v) Hindalco Industries Limited - Rs.1,500 lakhs(Previous year: Rs. 1,500 lakhs) for margin deposit.
vi) Municipal Corporation of Greater Mumbai - Rs. 5 lakhs(Previous year: Rs.5 lakhs) for security deposit.
vii) Bombay High Court - Rs. 55 lakhs (Previous year: Rs.55 lakhs) for security deposit.
viii) Bank of Maharashtra - Rs. 5 lakhs(Previous year: Rs.5 lakhs) for security deposit.
The Company has pledged fixed deposits with banks aggregating of Rs 64,844 lakhs (Previous yesr Rs. 14,868 lakhs)for obtaining bank guarantee and for meeting margin requirements.
(b) Demand in respect of income tax matters for which appeal is pending is Rs.2,982 lakhs (Previous year Rs. 2,761 lakhs). This is disputed by the Company and hence not provided for in the books of accounts. The Company has paid demand by way of deposit of Rs. 451 lakhs (Previous year Rs. 484 lakhs) till date. Above liability does not include interest u/s 234B and 234C as the same depends on the outcome of the demand.
The Company is contesting the demands and the management believes that its position will likely be upheld in the appellant process. No tax expenses has been accrued in the financial statement for the tax demand raised. The management believes that ultimate outcome of this proceeding will not have a material adverse effect on the Company''s financial position and results of operations.
The proceedings/ Appeals held at Supreme court/ High court/District court are considered as "Civil cases".
(d) The Hon''ble Supreme Court has in its recent decision dated 28 February 2019, ruled that special allowance would form part of basic wages for computing the Provident Fund (PF) contribution. While the Company is evaluating the implications of the order, the company taken impact of its PF contribution prospectively and would record any further effect in its financial statements, on receiving additional clarity on the subject.
As per IND AS 108 para 4, Segment has been disclosed in Consolidated financial statement, hence no separate
disclosure has been given in standalone financial statements of the Company.
The Company has sent letters to vendors to confirm whether they are covered under Micro, Small and Medium Enterprise Development Act 2006 as well as they have filed required memorandum with prescribed authority. Based on and to the extent of the information received by the Company from the suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) and relied upon by the auditors, the relevant particulars as at the year end are furnished below:
The company provides business support to its subsidiaries, fellow subsidiaries for activities like finance, accounting, human resources, information technology, back office operations, corporate planning, administrative services and various other services for which it recovers business support charges.
There were no significant events after the end of the reporting period which require any adjustment or disclosure in the financial statements other than as stated below:
The Board of Directors at its meeting held on 28 April 2022 has declared an final dividend of Rs. 3/- per equity share (on face value of Rs.1/- per equity share) for the financial year 2021-22. Payment of the final dividend is subject to its approval by the shareholders, in the ensuing Annual General Meeting of the Company.
The Company provides for gratuity benefit which is a defined benefit plan covering all its eligible employees. This plan is unfunded. The gratuity benefits are subject to a maximum limit of upto Rs. 20,00,000.
The following table set out the status of the gratuity plan as specified under section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules 2014 (as amended) under Ind AS 19 "Employee benefits" and the reconciliation of opening and closing balances of the present value of the defined benefit obligation.
# India Business Excellence Fund III was associate till 29 September 2020 only and therefore no amount is disclosed for the current year ended 31 March 2022.
Note 52 : Disclosure relating to Employee Stock Option Purchase Plan
Details of stock options : The Company has four employees stock option schemes Motilal Oswal Financial Services Limited -Employees Stock Option Scheme -V (ESOS-V)
The Scheme was approved by Board of Directors on 18 October 2007 and by the shareholders on 4 December 2007 by postal ballot and is for issue of 2,500,000 options representing 2,500,000 Equity shares of Re. 1 each
Motilal Oswal Financial Services Limited -Employees Stock Option Scheme -VI (ESOS-VI)
The Scheme was approved by Board of Directors on 21 April 2008 and by the shareholders in AGM dated 08 July 2008 and is for issue of 5,000,000 options representing 5,000,000 Equity shares of Re. 1 each
Motilal Oswal Financial Services Limited -Employees Stock Option Scheme -VII (ESOS-VII)
The Scheme was approved by Board of Directors on 19 July 2014 and by the shareholders in AGM dated 22 August 2014 and is for issue of 2,500,000 options representing 2,500,000 Equity shares of Re. 1 each
Motilal Oswal Financial Services Limited -Employees Stock Option Scheme -VIII (ESOS-VIII)
The Scheme was approved by Board of Directors on 27 April 2017 and by the shareholders in AGM dated 27 July 2017 and is for issue of 30,00,000 options representing 30,00,000 Equity shares of Re. 1 each
Motilal Oswal Financial Services Limited -Employees Stock Option Scheme -IX (ESOS-IX)
The Scheme was approved by Board of Directors on 29 April 2021 and by the shareholders in AGM dated 09 August 2021 and is for issue of 30,00,000 options representing 30,00,000 Equity shares of Re. 1 each
Exercise Pricing Formula Scheme V
Exercise price shall be the closing price of the Company''s equity shares quoted on the BSE immediately preceding the date of Grant of the Stock Options, which for this purpose shall be the date on which the Committee grant the Stock Options, discounted by such percentage as may be determined by the Committee in the best interest of the various stakeholders in the prevailing market conditions.
Exercise price shall be the closing price of the Company''s Equity Shares, prior to the date of grant of the Options, on the Stock Exchanges where the highest trading volume is recorded, discounted/increased by such percentage as may be determined by the Committee.
Exercise price shall be the closing price of the Company''s Equity Shares, prior to the date of grant of the Options, on the Stock Exchanges where the highest trading volume is recorded, discounted/increased by such percentage as may be determined by the Committee.
Exercise price shall be the closing price of the Company''s Equity Shares, prior to the date of grant of the Options, on the Stock Exchanges where the highest trading volume is recorded, discounted/increased by such percentage as may be determined by the Committee.
Exercise price shall be the closing price of the Company''s Equity Shares, prior to the date of grant of the Options, on the Stock Exchanges where the highest trading volume is recorded, discounted/increased by such percentage as may be determined by the Committee.
The Company pays taxes according to the rates applicable in India. Most taxes are recorded in the income statement and relate to taxes payable for the reporting period (current tax), but there is also a charge or credit relating to tax payable for future periods due to income or expenses being recognised in a different period for tax and accounting purposes (deferred tax). Tax is charged to equity when the tax benefit exceeds the cumulative income statement expense on share plans. The Company provides for current tax according to the tax laws of India using tax rates that have been enacted or substantively enacted by the balance sheet date. Management periodically evaluates positions taken in tax returns in respect of situations in which applicable tax regulation is subject to interpretation. It establishes provisions, where appropriate, on the basis of amounts expected to be paid to the tax authorities. Deferred tax is provided, using the liability method, on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax is recognised in respect of all temporary differences that have originated but not reversed at the balance sheet date, where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date. A deferred tax asset is recognised when it is considered recoverable and therefore recognised only when, on the basis of all available evidence, it can be regarded as probable that there will be suitable taxable profits against which to recover carried forward tax losses and from which the future reversal of underlying temporary differences can be deducted. Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the temporary differences are expected to reverse, based on tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
Level 1: The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and equity securities) is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the group is the current bid price. These instruments are included in level 1.
Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities and investment in private equity funds, real estate funds.
II. Valuation techniques used to determine fair value
Specific valuation techniques used to value financial instruments include :
¦ Quoted equity investments - Quoted closing price on stock exchange
¦ Mutual fund - net asset value of the scheme
¦ Alternative investment funds - net asset value of the scheme
¦ Unquoted equity investments - price multiples of comparable companies.
¦ Private equity investment fund - NAV of the audited financials of the funds.
. Real estate fund - net asset value, based on the independent valuation report or financial statements of the company income approach or market approach based on the independent valuation report.
IN. Financial instruments not measured at fair value
Financial assets not measured at fair value includes cash and cash equivalents, trade receivables, loans and other financial assets. These are financial assets whose carrying amounts approximate fair value, due to their short-term nature.
Additionally, financial liabilities such as trade payables and other financial liabilities are not measured at FVTPL, whose carrying amounts approximate fair value, because of their short-term nature.
Fair value measurements using significant unobservable inputs (level 3)
Note 55:Financial risk management
Company has operations in India. Whilst risk is inherent in the Company''s activities, it is managed through an integrated risk management framework, including on-going identification, measurement and monitoring, subject to risk limits and other controls. This process of risk management is critical to the Company''s continuing profitability and each individual within the Company is accountable for the risk exposures relating to his or her responsibilities. The Company is exposed to credit risk, liquidity risk and market risk. It is also subject to various operating and business risks.
Credit risk is the risk that the Company will incur a loss because its customers or counterparties fail to discharge their contractual obligation. The Company manages and controls credit risk by setting limits on the amount of risk it is willing to accept for individual counterparties, and by monitoring exposures in relations to such limits. The maximum exposure to credit risk for each class of financial instruments is the carrying amount of that class of financial instruments presented in the financial statements. The Company''s major classes of financial assets are cash and cash equivalents, loans, investment in mutual fund units, term deposits, trade receivables and security deposits.
Deposits with banks are considered to have negligible risk or nil risk, as they are maintained with high rated banks/financial institutions as approved by the Board of directors.
Investments primarily include investment in liquid mutual fund units that are marketable securities of eligible financial institutions for a specified time period with high credit rating given by domestic credit rating agencies.
The management has established accounts receivable policy under which customer accounts are regularly monitored. The Company has a dedicated risk management team, which monitors the positions, exposures and margins on a continuous basis.
The financial instruments covered within the scope of ECL include financial assets measured at amortised cost such as trade receivables and loans.
The loss allowance has been measured using lifetime ECL except for financial assets on which there has been no significant increase in credit risk since initial recognition. At each reporting date, the Company assesses whether financial assets carried at amortised cost is credit-impaired. A financial asset is credit- impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred since initial recognition.
A simplified approach has been considered for measuring expected credit losses (ECLs) of trade receivables at an amount equal to lifetime ECLs. The ECLs on trade receivables are calculated based on actual historic credit loss experience over the preceding three to five years on the total balance of trade receivables. For the purpose of computation of ECL, the term default implies an event where amount due towards margin requirement and / or mark to market losses for which the client was unable to provide funds / collaterals to bridge the shortfall, the same is termed as margin call triggered.
Based on the Industry practices and business environment in which the entity operates, Management considers unsecured receivables as default if the payment is overdue for more than 90 days for direct customer. For franchisee customers, Aggregate of unsecured receivables as reduced by Franchisee deposit/ future brokerages are considered as default. Management would also consider balance in client''s family accounts and collaterals in form other than the securities while considering the secured position of the client. Management would also consider impairment on client balance which are unsecured and overdue for less than 90 days on case to case basis, based on their scope of recoverability. For litigation cases, management could provide enhanced provision if the probability of outflow of economic resource is higher. If there are specific cases which are overdue for more than 90 days and the management is very confident of its recovery in near future, impairment loss would not be provided for such cases based on the approval of business head for each reporting period. Probability of default (PD) on these receivables is considered at 100% and treated as credit impaired.
Loans includes Margin Trading Facility(MTF), Loans to staff and loans to subsidiaries for which staged approach is taken into consideration for determination of ECL.
Stage 1.
All positions in the MTF loan book are considered as stage 1 asset for computation of expected credit loss. For exposures where there has not been a significant increase in credit risk since initial recognition and that is not credit impaired upon origination. Margin trading facility, Loans to subsidiaries and loans to staff are considered in stage 1 for determination of ECL. Exposure to credit risk in stage 1 is computed considering historical probability of default, market movements and macro-economic environment.
Stage 2.
Exposures under stage 2 include overdues up to 90 days pertaining to principal amount, interest and any other charges on the MTF loan book which are unsecured. While arriving at the secured position of the client, management would also consider balance in client''s family accounts, securities in other segment and collaterals in form other than the securities while considering the secured position of the client.
At each reporting date, the Company assesses whether there has been a significant increase in credit risk for financial assets since initial recognition. In determining whether credit risk has increased significantly since initial recognition, the Company uses days past due information and other qualitative factors to assess deterioration in credit quality of a financial asset.
For credit exposures where there has been a significant increase in credit risk since initial recognition but that are not credit impaired, a lifetime ECL is recognised.
Stage 3.
Exposures under stage 3 include overdues past 90 days pertaining to principal amount, interest and any other charges on MTF loan book which are unsecured.
Financial assets are assessed as credit impaired when one or more events that have a detrimental impact on the estimated future cash flows of the asset have occurred. For financial assets that have become credit impaired, a lifetime ECL is recognised.
Liquidity risk is the risk that the entity will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The entity''s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the entity''s reputation.
Prudent liquidity risk management requires sufficient cash and marketable securities and availability of funds through adequate committed credit facilities to meet obligations when due and to close out market positions.
The Company has a view of maintaining liquidity with minimal risks while making investments. The Company invests its surplus funds in short term liquid assets in bank deposits and liquid mutual funds. The Company monitors its cash and bank balances periodically in view of its short term obligations associated with its financial liabilities.
Refer Note 57 For analysis of maturities of financial assets and financial liabilities.
Market risk is the risk that the fair value or future Cash flows of a financial instrument will fluctuate because of changes in market prices. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates.
Foreign currency risk management
In respect of the foreign currency transactions, the company does not hedge the exposures since the management believes that the same is insignificant in nature and will not have a material impact on the Company.
The company''s exposure to foreign currency risk at the end of reporting period is shown in note 49
The Company is exposed to Interest risk if the fair value or future cash flows of its financial instruments will fluctuate as a result of changes in market interest rates. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates.
The Company''s interest rate risk arises from interest bearing deposits with bank and loans given to customers. Such instruments exposes the Company to fair value interest rate risk. Management believe that the interest rate risk attached to this financial assets are not significant due to the nature of this financial assets.
Note 58: Revenue from contract with customers
The Company derives revenue primarily from the share broking business. Its other major revenue sources are the
Portfolio management fees and commission income and Interest income .
Disaggregate revenue information
The table below presents disaggregate revenues from contracts with customers for the year ended 31 March 2022
and 31 March 2021. The Company believes that this disaggregation best depicts how the nature, amount, timing and
uncertainty of revenue and cash flows are affected by market and other economic factors.
(a) Broking Income - Income from services rendered as a broker is recognised upon rendering of the services, in accordance with the terms of contract.
(b) Portfolio management fees and commission income - Fees for subscription based services are received periodically but are recognised as earned on a pro-rata basis over the term of the contract. Commissions from distribution of financial products are recognised upon allotment of the securities to the applicant or as the case may be. Commissions and fees recognised as aforesaid are exclusive of goods and service tax, securities transaction tax, stamp duties and other levies by SEBI and stock exchanges.
(c) Interest Income - Interest is earned on delayed payments from clients and amounts funded to them. Interest income is recognised on a time proportion basis taking into account the amount outstanding from customers or on the financial instrument and the rate applicable.
(d) Depository Income-Income from services rendered onbehalf of depository is recognised upon rendering of the services, in accordance with the terms of contract.
3. Nature, timing of satisfaction of the performance obligation and significant payment terms.
(i) Income from services rendered as a broker is recognised upon rendering of the services.
(ii) Fees for subscription based services are received periodically but are recognised as earned on a pro-rata basis over the term of the contract.
(iii) Commissions from distribution of financial products are recognised upon allotment of the securities to the applicant or as the case may be, on issue of the insurance policy to the applicant.
(iv) Interest is earned on delayed payments from clients and amounts funded to them as well as term deposits with banks.
(v) Interest income is recognised on a time proportion basis taking into account the amount outstanding from customers or on the financial instrument and the rate applicable.
(vi) Income from services rendered onbehalf of depository is recognised upon rendering of the services, in accordance with the terms of contract.
The above services are point in time in nature, and no performance obligation remains once the transaction is executed.
Fees for subscription based services are received periodically but are recognised as earned on a pro-rata basis over the term of the contract, and are over the period in nature.
1. Investments, Trade receivables, Loans and Property, plant and equipments are pledge with Banks and NBFCs to against borrowing facilities taken by the Group.
2. The margin of two times cover is provided against the loan facilities for pledge of MF/Shares/PMS Investments and 1.33 times for Trade receivables and Property, plant and equipment.
The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory
period
Note 60 : Business CombinationsCompliance with approved Scheme of Arrangements
(a) The Board of Directors of the Company at its Meeting held on 24 December 2020 has, inter-alia, subject to approval of shareholders of the Company and other applicable statutory and regulatory approvals including the approval of Hon''ble National Company Law Tribunal, Mumbai Bench ("NCLT"), approved the Scheme of Arrangement between Passionate Investment Management Private Limited (Ultimate Holding Company of Motilal Oswal Financial Services Limited) ("the Transferor Company 1") and MOPE Investment Advisors Private Limited ("the Transferee Company 2" or "the Demerged Company 1" or "the Transferor Company 3") and Motilal Oswal Real Estate Investment Advisors Private Limited ("the Transferor Company 2") and Motilal Oswal Real Estate Investment Advisors II Private Limited ("the Demerged Company 2" or "the Transferor Company 4") and MO Alternate Investment Advisors Private Limited (erstwhile Motilal Oswal Fincap Private Limited) ("the Resulting Company") and Motilal Oswal Financial Services Limited ("the Transferee Company 1" or "the Holding Company of the Resulting Company" or "the Company") and their respective shareholders ("the Scheme") under Sections 230-232 of the Companies Act, 2013. Further, pursuant to the provisions of Regulation 37 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has received No Objection Certificate from Stock Exchanges and the Company has filed an application with Hon''ble NCLT. Pursuant to the directions issued by Hon''ble NCLT, the Meeting of equity shareholders was scheduled on 16 December 2021 and the Scheme was approved by shareholders with requisite majority. Consequently, the Hon''ble NCLT approved the Scheme of Arrangement vide order dated 11 March 2022. The effect of the said Scheme was given on 30 March 2022 from the appointed date of 01 April 2020 by restating the financial statement for the year ended 31 March 2021.
(b) The accounting treatment of the said Scheme given in the books of accounts is in accordance with the Scheme and in conformity with the accounting standards prescribed under section 133 of the Companies Act, 2013. Further, figures for the year ended 31 March 2021 as shown above are the restated figures based on the audited accounts of the Transferor, Transferee and Resulting Company.
Accounting treatment given in the books for the Scheme:1. Amalgamation And Vesting Of Assets And Liabilities And Entire Business Of The Transferor Company 1
1.1 The Transferee Company 1 shall give effect to the amalgamation in its books of accounts as per the applicable accounting principles prescribed under the Companies (Indian Accounting Standards) Rules, 2015 (Ind AS) notified under Section 133 of the Companies Act, 2013, as may be amended from time to time and on the date determined in accordance with applicable Ind AS.
1.2 Upon effectiveness of the Scheme, the net assets of the Transferor Company 1 (excluding shares of the Transferee Company 1 held by the Transferor Company 1 which shall get cancelled) will be reflected at fair value as at the Effective Date.
1.3 The inter-company deposits/ inter-company loans and advances, if any, in the books of accounts of the Transferee Company 1 and the Transferor Company 1 shall stand cancelled as at the Effective Date.
1.4 The difference, if any, being excess or deficit arising pursuant to the amalgamation, after giving effect to the above adjustments, shall be accounted based on generally adopted accounting principles under Ind AS.
1.5 The Transferee Company 1 shall without any application or deed, issue and allot equity shares of face value of Re. 1/- each, credited as fully paid up, to the extent indicated below, to the equity shareholders holding fully paid up equity shares of the Transferor Company 1 and whose name appear in the register of members of the Transferor Company 1 on the Record Date or to such of their respective heirs, executors, administrators or other legal representatives or other successors in title as may be recognized by the Board of Directors of the Transferor Company 1/ the Transferee Company 1.
2. Amalgamation And Vesting Of Assets And Liabilities And Entire Business Of The Transferor Company 2
The Transferee Company 2 shall account for the amalgamation in its books/ financial statements as per ''â''Pooling
of Interests Method"" under Appendix C of ''â''Indian Accounting Standard (Ind-AS)"" 103, Business Combinations
and any other relevant Ind AS notified under the Companies (Indian Accounting Standards) Rules, 2015, as
amended from time to time including as provided herein below:
2.1 The Transferee Company 2 shall record the assets and liabilities of the Transferor Company 2, transferred to and vested in it at their respective carrying values as appearing in the books of the Transferor Company 2 in accordance with Para 9(iii) of Appendix C of Ind AS 103.
2.2 The T ransferee Company 2 shall preserve the identity of the reserves of the T ransferor Company 2 transferred to and vested in it and shall record in its books in the same form in which they appear in the books of the Transferor Company 2 and it shall be aggregated with the corresponding balance appearing in the financial statements of the Transferee Company 2.
2.3 ThesharesheldbytheTransfereeCompany2intheTransferorCompany2ontheEffectiveDateshallbecancelled.
2.4 Loans and advances, receivables, payables and other dues outstanding between theTransferor Company 2 and theTransfereeCompany 2 will stancancelledand there shall be no further obligation / outstanding in that behalf.
2.5 The difference between the net assets transferred to the Transferee Company 2 pursuant to Clause 2.1 as reduced by Reserves recorded in the Transferee Company 2 pursuant to Clause 2.2 and after giving effect Clause 2.3 and 2.4, the difference shall be adjusted against Capital Reserve of the Transferee Company 2.
2.6 In case of any difference in accounting policy between the Transferor Company 2 and the Transferee Company 2, the accounting policies followed by the Transferee Company 2 shall prevail and the difference till the Appointed Date will be quantified and adjusted as per Ind AS, to ensure that the financial statements of Transferee Company 2 reflects the financial position on the basis of consistent accounting policy.
2.7 The Transferor Company 2 is a wholly owned subsidiary of the Transferee Company 2 and therefore on amalgamation of the Transferor Company 2 into the Transferee Company 2 there shall be no issue of shares by the Transferee Company 2 in this regard as consideration."
3. Demerger of The Fund Management Undertaking 1 From The Demerged Company 1 Into The Resulting Company
3.1 The Demerged Company 1 shall account for the Scheme from the Appointed Date in its books/ financial statements upon receipt of all relevant/ requisite approvals for the Scheme, in accordance with applicable Indian Accounting Standards (Ind-AS) notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time including as provided herein below:
Accounting treatment in the books of the Demerged Company 1
3.1.1 The Demerged Company 1 shall reduce the carrying value of assets and liabilities pertaining to the Fund Management Undertaking 1, transferred to and vested in the Resulting Company from the carrying value of assets and liabilities as appearing in its books.
3.1.2 Loans and advances, receivables, payables and other dues outstanding between the Demerged Company 1 and the Resulting Company relating to the Fund Management Undertaking 1 will stand cancelled and there shall be no further obligation / outstanding in that behalf.
3.1.3 The Demerged Company 1, as on the Appointed Date, shall transfer the balances of all the reserves to the Resulting Company, in the proportion of the net assets transferred to the Resulting Company and the net assets retained by the Demerged Company 1 (""Transferred Reserves"").
3.1.4 The difference, being the excess of carrying value of assets over the carrying value of liabilities transferred pursuant to Clause 3.1.1 and after giving effect to clause 3.1.2 and clause 3.1.3 above shall be adjusted to the other equity of the Demerged Company 1.
Accounting treatment in the books of the Holding Company of the Resulting Company
3.1.5 The Holding Company of the Resulting Company shall credit its share capital with the aggregate face value of the equity shares issued and corresponding debit shall be made to Investment in Resulting Company Account.
4. Amalgamation Of The Transferor Company 3 With The Transferee Company 1
The Transferee Company 1 shall account for the amalgamation in its books/ financial statements as per ''â''Pooling of Interests Method"" under Appendix C of ''â''Indian Accounting Standard (Ind-AS)"" 103, Business Combinations and any other relevant Ind AS notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time including as provided herein below:
4.1 The Transferee Company 1 shall record the assets and liabilities of the Transferor Company 3, transferred to and vested in it at their respective carrying values as appearing in the books of the Transferor Company 3 in accordance with Para 9(iii) of Appendix C of Ind AS 103.
4.2 The T ransferee Company 1 shall preserve the identity of the reserves of the T ransferor Company 3 transferred to and vested in it and shall record in its books in the same form in which they appear in the books of the Transferor Company 3 and it shall be aggregated with the corresponding balance appearing in the financial statements of the Transferee Company 1.
4.3 The shares held by the Transferee Company 1 in the Transferor Company 3 on the Effective Date shall be cancelled.
4.4 The Transferee Company 1 shall credit to its share capital in its books the aggregate face value of the equity shares issued by it to shareholders of the Transferor Company 3.
4.5 Loans and advances, receivables, payables and other dues outstanding between the Transferor Company 3 and the Transferee Company 1 will stand cancelled and there shall be no further obligation / outstanding in that behalf.
4.5.1 The difference between the net assets transferred to the Transferee Company 1 pursuant to Clause 4.1 as reduced by Reserves recorded in the Transferee Company 1 pursuant to Clause 4.2 and after giving effect to Clause 4.3 to 4.5, the difference shall be adjusted against Capital Reserve of the Transferee Company 1.
4.6 In case of any difference in accounting policy between the Transferor Company 3 and the Transferee Company 1, the accounting policies followed by the Transferee Company 1 shall prevail and the difference till the Appointed Date will be quantified and adjusted as per Ind AS, to ensure that the financial statements of Transferee Company 1 reflects the financial position on the basis of consistent accounting policy.
4.7 Upon the Scheme becoming effective and upon the amalgamation of the Transferor Company 3 with the Transferee Company 1 in terms of this Scheme, the Transferee Company 1 shall without any application or deed, issue and allot New Equity Shares of face value of Re. 1/- each, credited as fully paid up, to the extent indicated below, to the equity shareholders holding fully paid up equity shares of the Transferor Company 3 (except shares held by the Transferee Company 1) and whose name appear in the register of members of the Transferor Company 3 on the Record Date or to such of their respective heirs, executors, administrators or other legal representatives or other successors in title as may be recognized by the Board of Directors of the Transferee Company.
5. Demerger Of The Fund Management Undertaking 2 From The Demerged Company 2 Into The Resulting
Company
5.1. The Demerged Company 2 shall account for the Scheme from the Appointed Date in its books/ financial statements upon receipt of all relevant/ requisite approvals for the Scheme, in accordance with applicable Indian Accounting Standards (Ind-AS) notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time including as provided herein below:
Accounting treatment in the books of the Demerged Company 2
5.1.1 The Demerged Company 2 shall reduce the carrying value of assets and liabilities pertaining to the Fund Management Undertaking 2, transferred to and vested in the Resulting Company from the carrying value of assets and liabilities as appearing in its books.
5.1.2 Loans and advances, receivables, payables and other dues outstanding between the Demerged Company 2 and the Resulting Company relating to the Fund Management Undertaking 3 will stand cancelled and there shall be no further obligation / outstanding in that behalf.
5.1.3 The Demerged Company 2, as on the Appointed Date, shall transfer the balances of all the reserves to the Resulting Company, in the proportion of the net assets transferred to the Resulting Company and the net assets retained by the Demerged Company 2 (""Transferred Reserves"").
5.1.4 The difference, being the excess of carrying value of assets over the carrying value of liabilities transferred pursuant to Clause 5.1.1 and after giving effect to clause 5.1.2 and clause 5.1.3 above shall be adjusted to the other equity of the Demerged Company 2.
5.2 The Holding Company of the Resulting Company shall account for the Scheme in its respective books/ financial statements upon receipt of all relevant/ requisite approvals for the Scheme, in accordance with applicable Indian Accounting Standards (Ind-AS) notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time including as provided herein below:
Accounting treatment in the books of the Holding Company of the Resulting Company
The Holding Company of the Resulting Company shall credit its share capital with the aggregate face value of the equity shares issued pursuant to Clause 52 of this Scheme and corresponding debit shall be made to Investment in Resulting Company Account.
5.3 Upon the Scheme becoming effective, i.e., on amalgamation of the Transferor Company 3 with the Transferee Company 1, the Demerged Company 2 will become a subsidiary of the Holding Company of the Resulting Company.
Upon the Scheme becoming effective and upon the demerger of the Fund Management Undertaking 2 of the Demerged Company 2 into the Resulting Company in terms of this Scheme, the Holding Company of the Resulting Company shall without any application or deed, issue and allot New Equity Shares of face value of Re. 1/- each, credited as fully paid up, to the extent indicated below, to the equity shareholders holding fully paid up equity shares of the Demerged Company 2 (except shares held by the Holding Company of the Resulting Company) and whose name appear in the register of members of the Demerged Company 2 on the Record Date or to such of their respective heirs, executors, administrators or other legal representatives or other successors in title as may be recognized by the Board of Directors of the Demerged Company 2/ the Holding Company of the Resulting Company."
6. Amalgamation Of The Transferor Company 4 With The Transferee Company 1
The Transferee Company 1 shall account for the amalgamation in its books/ financial statements as per ''â''Pooling of Interests Method"" under Appendix C of ""Indian Accounting Standard (Ind-AS)"" 103, Business Combinations and any other relevant Ind AS notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time including as provided herein below:
6.1. The Transferee Company 1 shall record the assets and liabilities of the Transferor Company 4, transferred to and vested in it at their respective carrying values as appearing in the books of the Transferor Company 4 in accordance with Para 9(iii) of Appendix C of Ind AS 103.
6.2. The T ransferee Company 1 shall preserve the identity of the reserves of the T ransferor Company 4 transferred to and vested in it and shall record in its books in the same form in which they appear in the books of the Transferor Company 4 and it shall be aggregated with the corresponding balance appearing in the financial statements of the Transferee Company 1.
6.3. The shares held by the Transferee Company 1 in the Transferor Company 4 on the Effective Date shall be cancelled.
6.4. The Transferee Company 1 shall credit to its share capital in its books the aggregate face value of the equity shares issued by it to shareholders of the Transferor Company 4 pursuant to Clause 62 of this Scheme.
6.5. Loans and advances, receivables, payables and other dues outstanding between the Transferor Company 4 and the Transferee Company 1 will stand cancelled and there shall be no further obligation / outstanding in that behalf.
6.6. The difference between the net assets transferred to the Transferee Company 1 pursuant to Clause 6.1 as reduced by Reserves recorded in the Transferee Company 1 pursuant to Clause 5.6 and after giving effect to Clause 6.3 to 6.5, the difference shall be adjusted against Capital Reserve of the Transferee Company 1."
6.7. I n case of any difference in accounting policy between the Transferor Company 4 and the Transferee Company 1, the accounting policies followed by the Transferee Company 1 shall prevail and the difference till the Appointed Date will be quantified and adjusted as per Ind AS, to ensure that the financial statements of Transferee Company 1 reflects the financial position on the basis of consistent accounting policy.
6.8. Upon the Scheme becoming effective, i.e., on amalgamation of the Transferor Company 3 with the Transferee Company 1, the Transferor Company 4 will become a subsidiary of the Transferee Company 1.
Upon the Scheme becoming effective and upon the amalgamation of the Transferor Company 4 with the Transferee Company 1 in terms of this Scheme, the Transferee Company 1 shall without any application or deed, issue and allot New Equity Shares of face value of Re. 1/- each, credited as fully paid up, to the extent indicated below, to the equity shareholders holding fully paid up equity shares of the Transferor Company 4 (except shares held by the Transferee Company 1) and whose name appear in the register of members of the Transferor Company 4 on the Record Date or to such of their respective heirs, executors, administrators or other legal representatives or other successors in title as may be recognized by the Board of Directors of the Transferee Company 1."
Additional disclosuresc) Voting interest accquired
⢠Amalgamation of Passionate Investment Management Private Limited (PIMPL) with Motilal Oswal Financial Services Limited ("the Company") and consequently equity shares were issued by the Company to the shareholders of PIMPL.
⢠Post the demerger of MOPE Investment Advisors Private Limited (MOPE) it got merged with the Company and consequently equity shares were issued by the Company to the shareholders of MOPE
⢠Post the demerger of Motilal Oswal Real Estate Investment Advisors II Private Limited (MORE II) it got merged with the Company and consequently equity shares were issued by the Company to the shareholders of MORE II.
d) Reason for business combination
⢠Business Combination will lead to clear cut and straight forward shareholding structure and eliminating needless layers of shareholding tiers and at the same time demonstrate the Promoter Group''s direct commitment and engagement and improve the confidence of all shareholders.
⢠Concentrated management focus on the business in a more professional manner.
⢠Develop combined long-term corporate strategies and financial policies.
⢠Operational rationalization, organizational efficiency and optimal utilization of resources.
⢠From a governance perspective and keeping in mind amendments as per Section 2(87) and Section 186 of the Companies Act, 2013, group intends to reduce the three-layers and simplify the corporate structure.
⢠Reduced layer of entities shall enhance flexibility to incorporate subsidiaries and/or acquire companies or any other body corporates with controlling stake as per their business strategies.
e) Acquistion date & date of control:- 01 April 2020f) Consideration transferred
⢠To the shareholders of the Passionate Investment Management Private Limited -
8,49,21,363 fully paid up equity shares of the face value of Re. 1/- each of Motilal Oswal Financial Services Limited shall be issued and allotted to the equity shareholders of the Passionate Investment Management Private Limited in the proportion of their holding in the Company.
⢠To the shareholders of the MOPE Investment Advisors Private Limited -
14,72,445 fully paid up equity shares at Rs.636.10/- each of the Company shall be issued and allotted to the equity shareholders of MOPE Investment Advisors Private Limited
⢠To the shareholders of the Motilal Oswal Real Estate Investment Advisors II Private Limited -
3,96,000 fully paid up equity shares at Rs.636.10/- each of Motilal Oswal Financial Services Limited shall be issued and allotted to the equity shareholders of Motilal Oswal Real Estate Investment Advisors II Private Limited
ii) Not recognised as an expense in the statement of P&L
TransferorCompanyl i.e. Provision for stamp duty amountingto Rs. 3,000 lakhs towards the issuanceof shares to the shareholders of PIMPL (i.e. promoters) has been adjusted (net of income tax benefit of Rs. 2,245 lakhs) from the free reserves of the Company. This treatment has been carried out in the financial statements as per the requirement of para 37 of Ind AS 32 "Financial Instruments: Presentation", which states that the transaction costsofanequitytransactionareaccountedforasadeductionfromequity(netofanyrelatedincometaxbenefit).
Amount of Non-controlling interest in the acquiree at the acquisition date is Rs.11,885 lakhs. The Discounted Cash Flow (DCF) technique was used for valuation of Non controlling interest. All identified assets acquired, and liabilities assumed on the date of merger were recorded at their fair value.
a. Promoting education, including special education and employment enhancing vocational skills, especially among children, women, and elderly, contribution to COVID relief program, PM cares fund;
b. Promotion of health care, including preventive health care and sanitation;
c. Measures for the benefit of armed forces veterans, war widows, and their dependents;
d. Ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources.
2. Amount of Rs. Nil (Previous Year : Rs.400 lakhs) has been spent by the Company for the construction/ acquisition of a new asset.
3. Contribution of Rs. 616 lakhs (Previous year Rs. 788 lakhs ) to Motilal Oswal Foundation which is classified as related party under Ind AS 24- " Related Party Disclosures"
Note 62. The Company does not have any material transactions with the companies struck off under section 248 of Companies Act, 2013 or section 560 of Companies Act, 1956 during the year ended 31 March 2022 and 31 March 2021.
Note 63: Additional regulatory information required under (WB) (xvi) of Division III of Schedule III amendment, disclosure of ratios, is not applicable to the Company as it is in broking business and not an NBFC registered under Section 45-IA of Reserve Bank of India Act, 1934.
Note 64: Negative price settlement of Futures April West Texas Intermediate(WTI) Contract
Exceptional item in the year ended 31 March 2021 comprises of bad debts of Rs. 8,810 Lakhs on account of outstanding dues from client towards settlement obligation. MCX vide its circular dated 21 April 2020 has considered the negative price for settlement of futures contract on expiry. Thus the customers who entered on the buy side of the contract had to settle for negative price on expiry. While entering into the contract, the customers were required to pay only the margin as was required by the exchange including mark to market losses. Since MCX has effected the settlement of such contract upon expiry at negative price, the client''s account was debited with above amount as settlement obligation on account of negative price settlement in respect of its outstanding contract. Since the client have defaulted to honour the settlement obligation required by MCX, Company has paid the said amount to MCX on behalf of its clients. For recovering the said amount from client, Company has filed an arbitration claim for recovery of outstanding dues, aga
Mar 31, 2019
Note :
The proceedings held at exchange level are considered as "Arbitration"
The proceedings/Appeals held at Supreme court / High court/District court are considered as "Civil cases".
The proceedings held at consumer court are considered as "Consumer cases".
(d) The Hon''ble Supreme Court has, in a recent decision dated 28 February 2019, ruled that special allowance would form part of basic wages for computing the Provident Fund (PF) contribution. While the Company is evaluating the implications of the order, the company taken impact of its PF contribution prospectively and would record any further effect in its financial statements, on receiving additional clarity on the subject.
NOTE 1: LEASE Leases as lessee
The Company has taken various premises under leave and license agreements. For these branches, the rent and escalations depend upon the lease by Group Company. In other instances the Company has generally entered into a lease of 3 - 5 years, with escalation of fifteen percent after every three years. The Company has given refundable interest free security deposits under certain agreements.
Lease payments are recognized in the Statement of Profit and Loss under ''Other expenses'' in Note no. 37. Rent expenses of RS,1,024 lakhs (Previous year - RS,884 lakhs) in respect of obligation under operating leases.
Leases as lessor
The company has given office premises and lease for the period of 1 year to 5 years. Agreement is cancellable, by giving prior notice of 30 days by either of the parties. Lease rentals are charged on the basis of agreed terms.
Lease receipts are recognized in the Statement of Profit and Loss under ''Rental Income'' in Note no. 27. Rental Income of RS,2,482 lakhs (Previous year - RS,2,351 lakhs) in respect of obligation under operating leases.
NOTE 2 : RATINGS ASSIGNED BY CREDIT RATING AGENCIES
1) Crisil Limited reaffirmed the Credit Rating of "CRISIL A1 " (pronounced ''CRISIL A One Plus'') to the Commercial Paper Programme of RS,1,30,000 lakhs (Previous yeaRs,25,000 lakhs) of the Company.
2) India Ratings and Research affirmed the Credit Rating of "IND A1 " (pronounced ''IND A One Plus'') to the Commercial Paper Programme of RS,1,30,000 lakhs (Previous year: not applicable) of the Company.
3) ICRA has reaffirmed the rating of "ICRA AA" rating with stable outlook (pronounced ICRA double A rating with stable outlook'') to the long term debt programme of the Company for RS,35,000 lakhs in the current year (previous year RS,15,000 lakhs).
These ratings indicate strong degree of safety regarding timely servicing of financial obligations
NOTE 3 : DUE TO MICRO, SMALL AND MEDIUM ENTERPRISES
The Company has sent letters to vendors to confirm whether they are covered under Micro, Small and Medium Enterprise Development Act 2006 as well as they have filed required memorandum with prescribed authority. Based on and to the extent of the information
NOTE 4 : BUSINESS SUPPORT
The company provides business support to its subsidiaries, fellow subsidiaries for activities like finance, accounting, human resources, information technology, back office operations, corporate planning, administrative services and various other services for which it recovers business support charges.
NOTE 5 : RELATED PARTY DISCLOSURE
As per nd AS 24 - Related Party Disclosures, specified under section 133 of the Companies Act, 2013, read with The Companies (Indian Accounting Standards) Rules, 2015, the name of related party where control exists / able to exercise significant infulence along with the transactions and year end balances with them as identified and certified by the management are as follows:
I. List of related parties and their relationship
a) Holding Company
- Passionate Investment Management Private Limited
b) Subsidiary / Step-down subsidiaries companies
- Motilal Oswal Investment Advisors Limited (formerly known as Motilal Oswal Investment Advisors Private Limited)
- MOPE Investment Advisors Private Limited
- Motilal Oswal Commodities Broker Private Limited
- Motilal Oswal Finvest Limited (formerly known as Motilal Oswal Capital Markets Limited)
- Motilal Oswal Wealth Management Limited
- Motilal Oswal Fincap Private Limited (formerly known as Motilal Oswal Insurance Brokers Private Limited)
- Motilal Oswal Asset Management Company Limited
- Motilal Oswal Asset Management (Mauritius) Private Limited
- Motilal Oswal Trustee Company Limited
- Motilal Oswal Capital Market (Hong Kong) Private Limited
- Motilal Oswal Capital Markets (Singapore) Pte. Limited
- Motilal Oswal Securities International Private Limited
- Motilal Oswal Real Estate Investment Advisors Private Limited
- Motilal Oswal Real Estate Investment Advisors II Private Limited
- Aspire Home Finance Corporation Limited
- India Business Excellence Management Company
- Motilal Oswal Capital Limited
c) Associate enterprises
- India Realty Excellence Fund II LLP
d) Key management personnel
- Mr. Motilal Oswal Chairman and Managing Director
- Mr. Raamdeo Agarawal Joint Managing Director
- Mr. Navin Agarwal Managing Director
- Mr. Ajay Menon Whole time Director
- Mr. Praveen Tripathi Independent Director
- Mr. Vivek Paranjpe Independent Director
- Mrs. Rekha Utsav Shah Independent Director
- Mrs. Sharda Agarwal Independent Director
e) Relatives of Key management personnel
- Vimla Oswal - Spouse of Chairman and Managing Director
- Vimaladevi Salecha - Sister of Chairman and Managing Director
- Rajendra Gopilal Oswal - Brother of Chairman and Managing Director
- Suneeta Agarawal - Spouse of Joint Managing Director
- Dr. Karoon Ramgopal Agarawal - Brother of Joint Managing Director
- Vinay R. Agrawal - Brother of Joint Managing Director
- Sukhdeo Ramgopal Agarawal - Brother of Joint Managing Director
- Govinddeo R. Agarawal - Brother of Joint Managing Director
- Satish Agrawal - Brother of Joint Managing Director
- Suman Agrawal - Sister of Joint Managing Director
- Anita Anandmurthy Agrawal - Sister of Joint Managing Director
f) Enterprises in which Key Managerial personnel have control
- OSAG Enterprises LLP
g) Enterprises in which Key Managerial personnel and their relatives exercise significant influence
- Raamdeo Agarawal (HUF )
- Navshital Consultants LLP
- Textile Exports Private Limited
- Motilal Oswal Foundation (Trust)
- Motilal Oswal HUF
- Like Minded Wealth Creation Trust
NOTE 6 : DISCLOSURE RELATING TO EMPLOYEE STOCK OPTION PURCHASE PLAN
Details of stock options : The Company has four employees stock option schemes
Motilal Oswal Financial Services Limited -Employees Stock Option Scheme -III (ESOS-III)
The Scheme was approved by Board of Directors on 23 January 2006 and by the shareholders in EGM dated 03 February 2006 and EGM dated 28 April 2006 and is for issue of 1,167,275 options representing 1,167,275 Equity shares of RS,2 each.
Motilal Oswal Financial Services Limited -Employees Stock Option Scheme -V (ESOS-V)
The Scheme was approved by Board of Directors on 18 OctobeRs,2007 and by the shareholders on 4 DecembeRs,2007 by postal ballot and is for issue of 2,500,000 options representing 2,500,000 Equity shares of RS,1 each
Motilal Oswal Financial Services Limited -Employees Stock Option Scheme -VI (ESOS-VI)
The Scheme was approved by Board of Directors on 21 April 2008 and by the shareholders in AGM dated 08 July 2008 and is for issue of 5,000,000 options representing 5,000,000 Equity shares of RS,1 each
Motilal Oswal Financial Services Limited -Employees Stock Option Scheme -VII (ESOS-VII)
The Scheme was approved by Board of Directors on 19 July 2014 and by the shareholders in AGM dated 22 August 2014 and is for issue of 2,500,000 options representing 2,500,000 Equity shares of RS,1 each
Motilal Oswal Financial Services Limited -Employees Stock Option Scheme -VIII (ESOS-VIII)
The Scheme was approved by Board of Directors on 27 April 2017 and by the shareholders in AGM dated 27 July 2017 and is for issue of 30,00,000 options representing 30,00,000 Equity shares of RS,1 each
Exercise pricing Formula
Scheme V
Exercise price shall be the closing price of the Company''s equity shares quoted on the BSE immediately preceding the date of Grant of the Stock Options, which for this purpose shall be the date on which the Committee grant the Stock Options, discounted by such percentage as may be determined by the Committee in the best interest of the various stakeholders in the prevailing market conditions
Scheme VI
Exercise price shall be the closing price of the Company''s Equity Shares, prior to the date of grant of the Options, on the Stock Exchanges where the highest trading volume is recorded, discounted / increased by such percentage as may be determined by the Committee.
Scheme VII
Exercise price shall be the closing price of the Company''s Equity Shares, prior to the date of grant of the Options, on the Stock Exchanges where the highest trading volume is recorded, discounted / increased by such percentage as may be determined by the Committee.
Scheme VIII
Exercise price shall be the closing price of the Company''s Equity Shares, prior to the date of grant of the Options, on the Stock Exchanges where the highest trading volume is recorded, discounted / increased by such percentage as may be determined by the Committee.
NOTE 7 : TAX EXPENSE
The Company pays taxes according to the rates applicable in India. Most taxes are recorded in the income statement and relate to taxes payable for the reporting period (current tax), but there is also a charge or credit relating to tax payable for future periods due to income or expenses being recognized in a different period for tax and accounting purposes (deferred tax). Tax is charged to equity when the tax benefit exceeds the cumulative income statement expense on share plans. The Company provides for current tax according to the tax laws of India using tax rates that have been enacted or substantively enacted by the balance sheet date. Management periodically evaluates positions taken in tax returns in respect of situations in which applicable tax regulation is subject to interpretation. It establishes provisions, where appropriate, on the basis of amounts expected to be paid to the tax authorities. Deferred tax is provided, using the liability method, on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax is recognized in respect of all temporary differences that have originated but not reversed at the balance sheet date, where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date. A deferred tax asset is recognized when it is considered recoverable and herefore recognized only when, on the basis of all available evidence, it can be regarded as probable that there will be suitable taxable profits against which to recover carried forward tax losses and from which the future reversal of underlying temporary differences can be deducted. Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the temporary differences are expected to reverse, based on tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
Level 1: The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and equity securities) is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the group is the current bid price. These instruments are included in level 1.
Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities and investment in private equity funds, real estate funds.
II. Valuation techniques used to determine fair value
Specific valuation techniques used to value financial instruments include :
- Quoted equity investments - Quoted closing price on stock exchange
- Mutual fund - net asset value of the scheme
- Alternative investment funds - net asset value of the scheme
- Unquoted equity investments - price multiples of comparable companies.
- Private equity investment fund - NAV of the audited financials of the funds.
- Real estate fund - net asset value, based on the independent valuation report or financial statements of the company income approach or market approach based on the independent valuation report.
III. Financial instruments not measured at fair value
Financial assets not measured at fair value includes cash and cash equivalents, trade receivables, loans and other financial assets. These are financial assets whose carrying amounts approximate fair value, due to their short-term nature.
Additionally, financial liabilities such as trade payables and other financial liabilities are not measured at FVTPL, whose carrying amounts approximate fair value, because of their short-term nature.
Fair value measurements using significant unobservable inputs (level 3)
The following table presents the changes in level 3 items for the periods ended 31 March 2019 and 31 March 2018:
NOTE 8: FINANCIAL RISK MANAGEMENT
Company has operations in India. Whilst risk is inherent in the Company''s activities, it is managed through an integrated risk management framework, including ongoing identification, measurement and monitoring, subject to risk limits and other controls. This process of risk management is critical to the Company''s continuing profitability and each individual within the Company is accountable for the risk exposures relating to his or her responsibilities. The Company is exposed to credit risk, liquidity risk and market risk. It is also subject to various operating and business risks.
A. Credit risk
Credit risk is the risk that the Company will incurr a loss because its customers or counterparties fail to discharge their contractual obligation. The Company manages and controls credit risk by setting limits on the amount of risk it is willing to accept for individual counterparties, and by monitoring exposures in relations to such limits.
The maximum exposure to credit risk for each class of financial instruments is the carrying amount of that class of financial instruments presented in the financial statements. The Company''s major classes of financial assets are cash and cash equivalents, loans, investment in mutual fund units, term deposits, trade receivables and security deposits.
Deposits with banks are considered to have negligible risk or nil risk, as they are maintained with high rated banks / financial institutions as approved by the Board of directors.
The management has established accounts receivable policy under which customer accounts are regularly monitored. The Company has a dedicated risk management team, which monitors the positions, exposures and margins on a continuous basis."
Expected Credit Loss (ECL):
The Company applies the Ind AS 109 simplified approach to measuring expected credit losses (ECLs) for trade receivables at an amount equal to lifetime ECLs. The ECLs on trade receivables as well as on margin trade funding (MTF) loans are calculated based on actual historic credit loss experience over the preceding three to five years on the total balance of non-credit impaired trade receivables.
For the purpose of computation of ECL, the term default implies an event where amount due towards margin requirement and / or mark to market losses for which the client was unable to provide funds/collaterals to bridge the shortfall, the same is termed as margin call triggered. When a trade receivable or MTF loans is credit impaired, it is written off against respective financial assets and the amount of the loss is recognized in the income statement. Subsequent recoveries of amounts previously written off are credited to the income statement.
The movement in expected credit loss
For determination of ECL on MTF loans, a staged approach is followed as below :
Stage 1 : All open positions in the MTF loan book are considered as stage 1 assets for computation of expected credit loss
Stage 2 : Exposures under stage 2 include dues up to 30 days pertaining to principal amount on closed positions and interest on all open positions of MTF loan book which are unsecured.
Stage 3 : Exposures under stage 3 include dues past 30 days pertaining to principal amount on closed positions and interest on all open positions of MTF loan book which are unsecured.
The company does not have any loan book which may fall under stage 2 or stage 3.
B. Liquidity risk
Liquidity risk is the risk that the entity will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The entity''s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the entity''s reputation.
Prudent liquidity risk management requires sufficient cash and marketable securities and availability of funds through adequate committed credit facilities to meet obligations when due and to close out market positions.
The Company has a view of maintaining liquidity with minimal risks while making investments. The Company invests its surplus funds in short term liquid assets in bank deposits and liquid mutual funds. The Company monitors its cash and bank balances periodically in view of its short term obligations associated with its financial liabilities.
Refer Note no. 60 For analysis of maturities of financial assets and financial liabilities.
C. Market Risk
Market risk is the risk that the fair value or future Cash flows of a financial instrument will fluctuate because of changes in market prices. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.
(i) Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates.
Foreign currency risk management
In respect of the foreign currency transactions, the company does not hedge the exposures since the management believes that the same is insignificant in nature and will not have a material impact on the Company.
The company''s exposure to foreign currency risk at the end of reporting period is shown in note no.
(ii) Interest rate risk
The Company is exposed to Interest risk if the fair value or future cash flows of its financial instruments will fluctuate as a result of changes in market interest rates. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates.
The Company''s interest rate risk arises from interest bearing deposits with bank and loans given to customers. Such instruments exposes the Company to fair value interest rate risk. Management believe that the interest rate risk attached to this financial assets are not significant due to the nature of this financial assets.
(iii) Market price risks
The Company is exposed to market price risk, which arises from FVTPL and FVOCI investments. The management monitors the proportion of these investments in its investment portfolio based on market indices. Material investments within the portfolio are managed on an individual basis and all buy and sell decisions are approved by the appropriate authority.
NOTE 9: CApITAL MANAGEMENT Risk management
The company''s objectives when managing capital are to
- safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and
- maintain an optimal capital structure to reduce the cost of capital.
The company monitors its capital by using gearing ratio, which is net debt to total equity. Net debt includes non-current borrowings net of cash and bank balances and total equity comprises of Equity share capital, security premium, share options outstanding account and retained earnings. Further, the company also manages its capital and return to shareholders by adequately investing in mutual funds.
NOTE 10: REVENUE FROM CONTRACT WITH CUSTOMERS
The Company derives revenue primarily from the share broking business. Its other major revenue sources are the Portfolio management fees and commission income and Interest income .
Disaggregate revenue information
1 The table below presents disaggregate revenues from contracts with customers for the year ended 31 March 2019 and 31 March 2018. The Company believes that this disaggregation best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by market and other economic factors.
Nature of Services
(a) Broking Income - Income from services rendered as a broker is recognized upon rendering of the services, in accordance with the terms of contract.
(b) Portfolio management fees and commission income - Fees for subscription based services are received periodically but are recognized as earned on a pro-rata basis over the term of the contract. Commissions from distribution of financial products are recognized upon allotment of the securities to the applicant or as the case may be. Commissions and fees recognized as aforesaid are exclusive of goods and service tax, securities transaction tax, stamp duties and other levies by SEBI and stock exchanges.
(c) Interest Income - Interest is earned on delayed payments from clients and amounts funded to them. Interest income is recognized on a time proportion basis taking into account the amount outstanding from customers or on the financial instrument and the rate applicable.
(d) Depository Income-Income from services rendered on behalf of depository is recognized upon rendering of the services, in accordance with the terms of contract.
11. Nature, timing of satisfaction of the performance obligation and significant payment terms.
(i) Income from services rendered as a broker is recognized upon rendering of the services.
(ii) Fees for subscription based services are received periodically but are recognized as earned on a pro-rata basis over the term of the contract.
(iii) Commissions from distribution of financial products are recognized upon allotment of the securities to the applicant or as the case may be, on issue of the insurance policy to the applicant.
(iv) Interest is earned on delayed payments from clients and amounts funded to them as well as term deposits with banks.
(v) Interest income is recognized on a time proportion basis taking into account the amount outstanding from customers or on the financial instrument and the rate applicable.
(vi) Income from services rendered on behalf of depository is recognized upon rendering of the services, in accordance with the terms of contract.
The above services are point in time in nature, and no performance obligation remains once the transaction is executed.
Fees for subscription based services are received periodically but are recognized as earned on a pro-rata basis over the term
of the contract, and are over the period in nature.
Terms and conditions:
1. Investments, Trade receivables, Loans and Property, plant and equipments are pledge with Banks and NBFCs to against borrowing facilities taken by the Group.
2. The margin of two times cover is provided against the loan facilities for pledge of Investments and Trade receivables and 1.67 times for Property, plant and equipment.
a) Reconciliations between previous GAAp and Ind AS
Ind AS 101 requires a first time adopter to reconcile equity, total comprehensive income and cash flows for prior periods. The following tables represent the reconciliations from previous GAAP to Ind AS.
b) Notes to first-time adoption:
The Company has prepared opening Balance Sheet as per Ind AS as of April 1, 2017 (transition date) by recognising all assets and liabilities whose recognition is required by Ind AS, derecognising items of assets or liabilities which are not permitted to be recognized by Ind AS, reclassifying items from I-GAAP to Ind AS as required, and applying Ind AS to measure the recognized assets and liabilities.
i) Fair valuation of investments
Under the previous Indian GAAP, investments in equity instruments, debentures, preference shares, mutual funds, venture capital funds were classified as long-term investments or current investments based on the intended holding period and reliability. Long-term investments were carried at cost less provision for other than temporary decline in the value of such investments. Current investments were carried at lower of cost and fair value. Under Ind AS, these investments are required to be measured at fair value. The resulting fair value changes of these investments have been recognized in other equity as at the date of transition and subsequently in the profit or loss / other comprehensive income for the year ended March 31, 2018. This increased the other equity by RS,49,869 Lakhs as at March 31, 2018 (April 01, 2017 - RS,41,244 Lakhs). Profit before tax and other comprehensive income before tax for the year ended 31 March 2018 decreased by RS,8,624 Lakhs and RS,11,026 lakhs respectively.
ii) Deferred tax
Indian GAAP requires deferred tax accounting using the profit and loss approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under Indian GAAP.
In addition, the various transitional adjustments have lead to temporary differences. Deferred tax adjustments are recognized in correlation to the underlying transaction either in retained earnings or a separate component of equity.
iii) Employee stock option expense
Under the previous GAAP, the company has used the intrinsic value method to account for the compensation cost of stock to the employees. Intrinsic value is the amount by which the quoted market price of the underlying share on the date, prior to the date of the grant, exceeds the exercise price of the option. Under Ind AS 102, the grant date fair value of the employee stock options should be recognized over the vesting period by debiting the ''Employee benefit expense'' in the statement of profit and loss and crediting ''Share option outstanding reserve'' under other equity.
iv) Remeasurement of post-employment benefit obligations
Under Ind AS, remeasurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognized in other comprehensive income instead of profit or loss under the previous GAAP. As a result of this change, the profit for the year ended March 31, 2018 increased by RS,472 lakhs. There is no impact on the total equity as at 31 March 2018.
v) Other comprehensive income
Under Ind AS, all items of income and expense recognized in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognized in profit or loss but are shown in the statement of profit and loss as ''other comprehensive income'' includes remeasurements of defined benefit plans and fair value of investment. The concept of other comprehensive income did not exist under previous GAAP.
vi) Exemptions availed by the company
The exemptions availed by the Company under Ind AS 101 are as follows:
(i) The Company has adopted the carrying value determined in accordance with I-GAAP for all of its property plant & equipment and investment property as deemed cost of such assets at the transition date.
(ii) Ind AS 102 Share-based Payment has not been applied to equity instruments in share-based payment transactions that vested before April 1, 2017.
The estimates as at April 1, 2017 and at March 31, 2018 are consistent with those made for the same dates in accordance with I-GAAP.
NOTE 12 : SCHEME OF AMALGAMATION
(i) Pursuant to the Scheme of Amalgamation and Merger (the ''Scheme'') entered into between erstwhile subsidiary company, Motilal Oswal Securities Limited (''the Transferor Company'') and the Company, as approved by the NCLT, the Transferor Company has been merged with the Company as per accounting prescribed under the scheme which is in line with the accounting principles given under Appendix C to Ind AS 103 applicable to common control business combinations. Accordingly, opening balance sheet as at 1 April 2017, comparative financial information for the year ended 31 March 2018 and the accompanying standalone financial statements for the year ended 31 March 2019 have been adjusted to account for the aforesaid merger.
(ii) Motilal Oswal Securities Limited (''the Transferor Company'') is a debt listed public limited company domiciled in India. It is a wholly owned subsidiary of Motilal Oswal Financial Services Limited. The registered office of the Company is Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025. The Transferor Company acts as a stock broker and executes stock trades on behalf of its clients which include retail customers (including high net worth individuals), mutual funds, foreign institutional investors, financial institutions and corporate clients. Besides stock broking, it also offers a bouquet of financial products and services to its client base. It is also one of the leading distributors of portfolio management schemes, mutual funds, private equity and systematic investment plans.
(iii) The Scheme of amalgamation will benefit the Transferor Company and Transferee Company. The rational and reasons for proposed Scheme of Arrangement, inter alia, are summarized below:
(a) Consolidation of operations within the Transferee Company leading to greater synergies.
(b) Stronger balance sheet and net worth to meet capital needs of subsidiaries for future growth and expansion.
(c) Free flow of funds and ease limits of investments / loans by the Transferee Company for expansion of business activities.
(d) Board of Transferee Company to have greater oversight over the consolidated business operations of subsidiaries.
(e) Merger and consolidation of fund based investment activities of the Group into one entity.
(f) Exposure of shareholders of the Transferee Company to the larger business activities of the flagship broking and related business activities of the Group.
(g) Cost savings through legal entity rationalisation and elimination of intra group transactions.
(iv) The amalgamation is accounted for as per the accounting treatment mentioned in the Scheme approved i.e. as per the pooling of interest method.
(v) Pursuant to Scheme :
(a) All assets and liabilities appearing in the books of the transferor company have been recorded by the transferee company at their respective book values in opening balance sheet as at 01 April 2017.
(b) The difference between net assets taken over & investment in the books of the Transferee Company have been debited to general reserve.
NOTE 13
The Company has derecognized the opening accumulated Minimum Alternative Tax (MAT) credit balance as at 31 March 2017 of RS,530 lakhs on account of uncertainty around the time frame within which income tax will be payable under the normal provisions against which the MAT credit can be utilised.
NOTE 14 : CORPORATE SOCIAL RESPONSIBILITY
The Ministry of Corporate Affairs has notified Section 135 of the Companies Act, 2013 on Corporate Social Responsibility with effect from 1 April 2014. As per the provisions of the said section, the Company has undertaken the following CSR initiatives during the financial yeaRs,2018-19. CSR initiatives majorly includes supporting under privileged in education, medical treatments, etc and various other charitable and noble aids.
a) Gross amount required to be spent by the Company during the year RS,446 lakhs (Previous year RS,319 lakhs)
(c) Above includes a contribution of RS,409 lakhs (Previous year RS,250 lakhs) to Motilal Oswal Foundation which is classified as related party under Ind AS 24- " Related Party Disclosures"
Mar 31, 2018
*Borrowings from Non-Banking Financial Company is secured against units of mutual funds and approved list of shares and securities. It consists of loan of Rs 15,000 lakhs from Bajaj Financial Services Limited and Rs 5,000 Lakhs from Aditya Birla Finance Limited carrying interest rate of 8.75% p.a. and 9% p.a. respectively which are repayable on demand
#The bank overdraft is secured against Mutual Funds / Fixed deposits / Property pledged with the banks (includes Motilal Oswal Tower) / hypothecated against book debts.
Of the above balance Rs 16,875 lakhs as on 31 March 2018 and Rs 25,759 lakhs as on 31 March 2017 has been considered fro discontinuing operations (refer note 56)"
*Of the above balance of Current maturity of long term borrowing Rs 2651 lakhs as on 31 March 2017 has been considered for discontinuing operations (refer note 56).
AOf the above, book overdraft of V 288 lakhs as on 31 March 2018 and V Nil as on 31 March 2017 has been considered for discontinuing operations (Refer note 56).
* Part of the premises have been given on lease.
@ As at 31 March 2018, the Company has mortgaged its Immovable Property ''Motilal Oswal Tower'' (Gross block Rs 26,113 lakhs [Previous year Rs 16,942 lakhs] and Net Value Rs 19,684 lakhs [Previous year Rs 13,526 lakhs] as at 31 March 2018) to HDFC Bank Limited for the banking facilities availed by transferor company.
Of the above assets , assets of value Rs 4 lakhs as on 31 March 2018 and Rs 3 lakhs as on 31 March 2017 have been considered fro discontinuing operations
*Employee benefit expenses in relation to discontinuing operations of Rs 1,008 Lakhs and Rs 806 Lakhs for the year ended 31 March, 2018 and 31 March, 2017 respectively has been shown separately under Note No. 56 on discontinuing operations.
*Depreciation and amortization expenses in relation to discontinuing operations of Rs 2 Lakhs for the year ended 31 March, 2018 and 31 March, 2017 has been shown separately under Note No. 56 on discontinuing operations.
*Other expenses in relation to discontinuing operations of Rs 726 lakhs and Rs 594 lakhs for the year ended 31 March, 2018 and 31 March, 2017 respectively has been shown separately under Note No. 56 on discontinuing operations.
(a) The Company has given corporate guarantees of Rs 500 lakhs (Previous year: Rs 500 lakhs) to a bank for its subsidiary Motilal Oswal Commodity Brokers Private Limited. In the previous year 2016-17, the Company had pledged units of mutual funds of Rs 18,750 lakhs for loan taken by transferor company of Rs 15,672 lakhs inclusive of accrued interest.
The Company has provided bank guarantees aggregating to Rs 1,075 lakhs as on 31 March 2018 for the following purposes to:
1) BSE Limited â Rs 550 lakhs for meeting margin requirements.
2) National Stock exchange â Rs 500 lakhs for meeting margin requirements.
3) Unique Identification Authority - Rs 25 lakhs for security deposit
The Company has pledged fixed deposits with banks aggregating of Rs 550 lakhs for obtaining bank guarantee.
(b) Demand in respect of income tax matters for which appeal is pending is Rs 3,388 lakhs (Previous year Rs 468 lakhs). This is disputed by the Company and hence not provided for in the books of accounts. The Company has paid demand by way of deposit / adjustment of refund of Rs 1,018 lakhs (Previous year Rs 127 lakhs) till date. Above liability does not include interest u/s 234B and 234C as the same depends on the outcome of the demand.
The Company is contesting the demands and the management believes that its position will likely be upheld in the appellant process. No tax expenses has been accrued in the financial statement for the tax demand raised. The management believes that ultimate outcome of this proceeding will not have a material adverse effect on the Company''s financial position and results of operations.
(c) In respect of the legal matters in dispute, the Company is hopeful of succeeding in appeals and does not expect any significant liabilities to materialize.
(d) Claims against the Company:
Note 1: Segment reporting
As per AS 17 para 4, Segment has been disclosed in Consolidated financial statement, Hence no separate disclosure has been given in standalone financial statements of the Company.
Note 2:
Revenue from operations includes Rs 1111 lakhs (Previous year: Nil) towards partnership gain, which is based on management accounts of India Realty Excellence Fund II LLP.
Note 3:
Vide notification OFC (COC) number 99 ED (JRP)/97, dated 6 December 1997 issued by Reserve Bank of India under section 45NC of the Reserve Bank of India Act, 1934, provisions of sections 45IA, 45IB, 45IC, 45MB and 45MC of the Reserve Bank of India Act, 1934 does not apply to the Transferor company as it is doing the business of a Stock Broker and holding a valid certificate of registration obtained under Section 12 of Securities Exchange Board of India Act, 1992.
For Transferee company
The Transferee company has given office premises and lease for the period of 1 year to 5 years. Agreement is cancellable, by giving prior notice of 30 days by either of the parties.
For Transferor company
i) Lease rentals are charged on the basis of agreed terms
ii) Office premises are given on lease for a period of 5 years
iii) The Transferor company has entered into lease/license agreement in respect of immovable properties with a party. It contain escalation clause related to lease rentals/license fees with 15% from the 4th year in case of non cancelable lease. However, in case of cancellable lease, the same can be terminated by giving prior notice of 30 days.
During the year Rs 2,350 lakhs (Previous year Rs 1,721 lakhs) has been recognized as rent income in the statement of profit and loss under the head "Income from Operations".
Note 4 :
The Transferee company gives secured loans to its customers, wherein towards such loan the customers give their owned securities (shares) as a security to the Company which are either pledged in favour of the Company or are transferred to Company''s Depositary participant account. Such shares are kept by the Transferee company in a separate depositary participant account maintained by the Transferee company for all such purposes.
Note 5 : Ratings assigned by credit rating agencies
1) Crisil Limited reaffirmed the Credit Rating of ""CRISIL A1 "" (pronounced ''CRISIL A One Plus'') to the Commercial Paper Programme of Rs 1,30,000 lakhs (Previous year 25,000 lakhs) of the Company.
2) India Ratings and Research affirmed the Credit Rating of ""IND A1 "" (pronounced ''IND A One Plus'') to the Commercial Paper Programme of Rs 1,30,000 lakhs (Previous year: not applicable) of the Company.
3) ICRA has reaffirmed the rating of ""ICRA AA"" rating with stable outlook (pronounced ICRA double A rating with stable outlook'') to the long term debt programme of the Company for Rs 20,000 lakhs in the current year (previous year Rs 15,000 lakhs ). These ratings indicate strong degree of safety regarding timely servicing of financial obligations "
Note 6 : Due to Micro, small and medium enterprises
The Company has sent letters to vendors to confirm whether they are covered under micro, small and medium enterprise development act 2006 as well as they have filed required memorandum with prescribed authority. Out of the letter sent to the party, only one confirmation have been received till the date of finalization of balance sheet. Based on and to the extent of the information received by the Company from the suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) and relied upon by the auditors, the relevant particulars as at the yearend are furnished below:"
Note 7: Business support:
The Transferor company provides business support to its subsidiaries, fellow subsidiaries and holding Company for activities like finance, accounting, human resources, information technology, back office operations, corporate planning, administrative services and various other services for which it recovers business support charges.
Note 8:
During the current year, the Transferee Company has made / (reversed) a provision R(6 Lakhs) (Previous year R 53 lakhs) being 0.40% (previous year 0.35%) of its standard assets as per the Notification No. RBI/DNBR2016-17/45 dated 1 September 2016) issued by RBI.
(b) Defined benefit plan
The Company provides for gratuity benefit which is a defined benefit plan covering all its eligible employees. This plan is unfunded. The gratuity benefits are subject to a maximum limit of up to Rs 20 lakhs.
The following table set out the status of the gratuity plan as specified under section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules 2014 (as amended) under Accounting Standard 15 "Employee benefits" and the reconciliation of opening and closing balances of the present value of the defined benefit obligation.
Note : Experience history of last five years in case of other long term benefits is not applicable since, provision for the same is made from financial year 2016-17
Note 9 : Related Party Disclosure :
As per Accounting Standard 18 - Related Party Disclosures, specified under section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules 2014 (as amended), the name of related party where control exists / able to exercise significant influence along with the transactions and year end balances with them as identified and certified by the management are as follows:
I. List of related parties and their relationship a) Holding Company
- Passionate Investment Management Private Limited
b) Subsidiary / Step-down subsidiaries companies
- Motilal Oswal Investment Advisors Limited (formerly known as Motilal Oswal Investment Advisors Private Limited)
- MOPE Investment Advisors Private Limited
- Motilal Oswal Commodities Broker Private Limited
- Motilal Oswal Capital Markets Limited (formerly known as Motilal Oswal Capital Markets Private Limited)
- Motilal Oswal Wealth Management Limited
- Motilal Oswal Fincap Private Limited (formerly known as Motilal Oswal Insurance Brokers Private Limited)
- Motilal Oswal Asset Management Company Limited
- Motilal Oswal Asset Management (Mauritius) Private Limited
- Motilal Oswal Trustee Company Limited
- Motilal Oswal Capital Market (Hong Kong) Private Limited
- Motilal Oswal Capital Markets (Singapore) Pte. Limited
- Motilal Oswal Securities International Private Limited
- Motilal Oswal Real Estate Investment Advisors Private Limited
- Motilal Oswal Real Estate Investment Advisors II Private Limited
- Aspire Home Finance Corporation Limited
- India Business Excellence Management Company
- Motilal Oswal Capital Limited
c) Fellow subsidiaries
- Nagori Agro and Cattle Feeds Private Limited
d) Associate enterprises
- India Realty Excellence Fund II LLP
e) Key management personnel
- Mr. Motilal Oswal - Chairman and Managing Director
- Mr. Raamdeo Agarawal - Joint Managing Director
f) Relatives of Key management personnel
- Vimla Oswal - Spouse of Chairman and Managing Director
- Vimaladevi Salecha - Sister of Chairman and Managing Director
- Rajendra Gopilal Oswal - Brother of Chairman and Managing Director
- Suneeta Agarawal - Spouse of Joint Managing Director
- Dr. Karoon Ramgopal Agarawal - Brother of Joint Managing Director
- Vinay R. Agrawal - Brother of Joint Managing Director
- Sukhdeo Ramgopal Agarawal - Brother of Joint Managing Director
- Govinddeo R. Agarawal - Brother of Joint Managing Director
- Satish Agrawal - Brother of Joint Managing Director
- Suman Agrawal - Sister of Joint Managing Director
- Anita Anandmurthy Agrawal - Sister of Joint Managing Director
g) Enterprises in which Key Managerial Personnel have control
- OSAG Enterprises LLP
- VISU Associates - Partnership firm (Dissolved from 31 March 2017)
h) Enterprises in which Key Managerial Personnel and their relatives exercise significant influence
- Raamdeo Agarawal (HUF )
- Jain International Trade Organisation
- Textile Exports Private Limited
- Motilal Oswal Foundation (Trust)
- Motilal Oswal HUF
Note 10 : Disclosure relating to Employee Stock Option Purchase Plan Details of stock options
The Company has four employees stock option schemes
Motilal Oswal Financial Services Limited -Employees Stock Option Scheme -III (ESOS-III)
The Scheme was approved by Board of Directors on 23 January 2006 and by the shareholders in EGM dated 03 February 2006 and EGM dated 28 April 2006 and is for issue of 1,167,275 options representing 1,167,275 Equity shares of Rs 2 each.
Motilal Oswal Financial Services Limited -Employees Stock Option Scheme -V (ESOS-V)
The Scheme was approved by Board of Directors on 18 October 2007 and by the shareholders on 4 December 2007 by postal ballot and is for issue of 2,500,000 options representing 2,500,000 Equity shares of RS, 1 each
Motilal Oswal Financial Services Limited -Employees Stock Option Scheme -VI (ESOS-VI)
The Scheme was approved by Board of Directors on 21 April 2008 and by the shareholders in AGM dated 08 July 2008 and is for issue of 5,000,000 options representing 5,000,000 Equity shares of RS, 1 each
Motilal Oswal Financial Services Limited -Employees Stock Option Scheme -VII (ESOS-VII)
The Scheme was approved by Board of Directors on 19 July 2014 and by the shareholders in AGM dated 22 August 2014 and is for issue of 2,500,000 options representing 2,500,000 Equity shares of V 1 each
Motilal Oswal Financial Services Limited -Employees Stock Option Scheme -VIII (ESOS-VIII)
The Scheme was approved by Board of Directors on 27 April 2017 and by the shareholders in AGM dated 27 July 2017 and is for issue of 30,00,000 options representing 30,00,000 Equity shares of V 1 each
Employees'' Stock Options Scheme (ESOS) :
During the year, Nil Employee Stock Options have been granted to the employees of the Company and its subsidiary Companies (Previous year 9,40,975).
Effective 1 April 2017, the Company has changed its accounting policy for ESOPs valuation from intrinsic value method to fair value method for more appropriate presentation of financial statements . The change is applied retrospectively, accordingly accumulated expense of Rs 1838 Lakhs has been debited to the Statement of profit and loss of the year ended 31 March 2018. Had the Company continued to use the earlier method of accounting profit before tax would have been higher by Rs1838 Lakhs for the year ended 31 March 2018.
Exercise Pricing Formula Scheme III
The Committee shall have the authority to determine the Exercise Price having regard to the valuation report of an independent practicing chartered accountant that may be based on such valuation method, as may be considered suitable by him, including but not restricted to the Net asset value method, discounted cash flow method, earnings capitalization method, dividend yield model, etc. and may also rely upon the future projections of the Company which would be prepared by the management from time to time having regard to the future potential and prospects of the Company. The Committee shall in its absolute discretion, have the authority to grant the Options at such discount as it may deem fit.
Scheme V
Exercise price shall be the closing price of the Company''s equity shares quoted on the BSE immediately preceding the date of Grant of the Stock Options, which for this purpose shall be the date on which the Committee grant the Stock Options, discounted by such percentage as may be determined by the Committee in the best interest of the various stakeholders in the prevailing market conditions
Scheme VI
Exercise price shall be the closing price of the Company''s Equity Shares, prior to the date of grant of the Options, on the Stock Exchanges where the highest trading volume is recorded, discounted/increased by such percentage as may be determined by the Committee.
Scheme VII
Exercise price shall be the closing price of the Company''s Equity Shares, prior to the date of grant of the Options, on the Stock Exchanges where the highest trading volume is recorded, discounted/increased by such percentage as may be determined by the Committee.
Scheme VIII
Exercise price shall be the closing price of the Company''s Equity Shares, prior to the date of grant of the Options, on the Stock Exchanges where the highest trading volume is recorded, discounted/increased by such percentage as may be determined by the Committee.
Note 11:
All the figures presented in the disclosures as per guidelines for NBFC-ND-SI as regards to capital adequacy, liquidity and other disclosure norms, have been presented based on the financial statement of the Transferee company without giving effect to the Scheme of Merger.
Disclosures as per guidelines for NBFC-ND-SI as regards capital adequacy, liquidity and disclosure norms
*Provision for depreciation includes provision for diminution in value of Investment.
C. Derivatives
The Company has no transactions/exposure in derivative during the current and previous year.
The Company has no unheeded foreign currency exposure as on March 31, 2018 (Previous Year: Nil)
D. Disclosures relating to securitization
(i) The Company has not entered into securitization transactions during the current and previous year.
(ii) Details of financial assets sold to securitization/reconstruction company for asset reconstruction: The Company has not sold any financial assets to securitization/reconstruction company for asset reconstruction in the current and previous year."
(iii) Details of assignment transactions: There are no assignment transaction during the current and previous year
(iv) Details of non-performing financial assets purchased/sold - The Company has not purchased/sold any non-performing financial asset during the current and previous year.
Note:
1. The above maturity pattern is determined on management estimation.
2. Borrowing does not include accrued interest on borrowings
3. The Company does not accepts public deposits.
4. Terms and conditions of the advances does not have any repayment schedule. They are repayable on demand. Hence the categorization of advances over various maturity patterns as shown above is as per the past trends, which has been identified by the management and relied upon by the auditors.
F.3 Details of financing of parent Company products: Nil (Previous year Nil) F.4 Details of Single borrower limits (SBL) / Group borrower limit (GBL) exceeded by the applicable NBFC
The Company has not exceeded the Single Borrower Limit (SBL) or Group Borrower Limit (GBL) as defined in RBI (Previous year : Nil).
F.5 Unsecured advances
During the year, the Company has not given any advance against collateral of rights, licenses, authority, etc. (Previous year : Nil).
G Miscellaneous G.1 Registration obtained from other financial sector regulators
No registration has been obtained from other financial sector regulators.
G.2 Penalties or Fines imposed by Reserve Bank of India
During the Financial year 2017-18, no penalties or fines have been imposed by Reserve Bank of India (Previous year : Nil).
G.3 Related Party Transactions
Refer note no. 50 for transaction with related parties
G.4 Ratings assigned by credit rating agencies and migration of ratings during the year
1) Crisil Limited reaffirmed the Credit Rating of ""CRISIL A1 "" (pronounced ''CRISIL A One Plus'') to the Commercial Paper Programme of Rs 25,000 lakhs (Previous year 25,000 lakhs) of the Company.
2) India Ratings and Research affirmed the Credit Rating of ""IND A1 "" (pronounced ''IND A One Plus'') to the Commercial Paper Programme of Rs 25,000 lakhs (Previous year: not applicable) of the Company.
3) ICRA has reaffirmed the rating of ""ICRA AA"" rating with stable outlook (pronounced ICRA double A rating with stable outlook'') to the long term debt programme of the Company of Rs 15,000 lakhs in previous year (current year: not applicable).
These ratings indicate strong degree of safety regarding timely servicing of financial obligations "
Notes:
1. Provisioning norms shall be applicable as prescribed in Systemically Important Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2015 whichever is applicable.
2. All Accounting Standards and Guidance Notes issued by ICAI are applicable including for valuation of investments and other assets as also assets acquired in satisfaction of debt.
3. In respect of investment in subsidiaries, Net Asset value is computed on the basis of book value.
4. In respect of investment in Private Equity fund, unquoted debentures and Investment in property, book value has been taken as fair value due to unavailability of fair value and for investment in mutual funds, NAV has been taken for calculation of fair value.
5. Lease assets include the value of Fixed Assets at Written Down Value.
6. The figures are not netted with provision against standard assets as it is not a specific provision.
7. Exposure to related party by way of demand loans are considered at the closing balance of the demand loan as on 31 March 2018.
Note 12:
The Company has derecognized the opening accumulated Minimum Alternative Tax (MAT) credit balance as at 31 March 2017 of Rs 530 lakhs on account of uncertainty around the time frame within which income tax will be payable under the normal provisions against which the MAT credit can be utilized.
Note 13 : Corporate social responsibility
The Ministry of Corporate Affairs has notified Section 135 of the Companies Act, 2013 on Corporate Social Responsibility with effect from 1 April 2014. As per the provisions of the said section, the Company has undertaken the following CSR initiatives during the financial year 2017-18. CSR initiatives majorly includes supporting under privileged in education, medical treatments, etc and various other charitable and noble aids."
a) Gross amount required to be spent by the Company during the year Rs 319 lakhs (Previous year Rs 58 lakhs)
(c) Above includes a contribution of Rs 250 lakhs (Previous year Rs 52 lakhs) to Motilal Oswal Foundation which is classified as related party under Accounting Standard 18- "Related Party Disclosures".
(d) The Company has provision for corporate social responsibility expenses of R Nil (Previous year Rs 7 lakhs) which is already paid through Motilal Oswal Foundation.
Note 14 :
Previous year figures have been regrouped/reclassified wherever necessary. Due to the merger of Transferor Company with the Transferee Company from appointed date of 1 April 2017, the figures of the current year will not be comparable to the corresponding figures of the previous year.
Note 15 : Discontinuing Operations
The Board vide resolution passed by circulation on 10 January 2018 has made partial modification to resolution dated 4 November 2017, so as to transfer the Company''s lending business to existing wholly owned subsidiary of the Company, namely, Motilal Oswal Capital Markets Limited ("MOCML"). The Company has transferred the lending business by way of a slump sale on a going concern basis to MOCML as contemplated in the Business Transfer Agreement ("BTA") dated 20 August 2018 for a consideration of Rs, 5,000 lakhs (subject to usual post completion adjustments).
Accordingly, all the assets, liabilities, income, expenses and cash flow relating to lending business as identified by the management and relied upon by the auditors, has been disclosed as discontinuing operations.
Mar 31, 2017
Note 1 : Corporate Information:
Motilal Oswal Financial Services Limited (âthe Companyâ) is a Non-banking Financial Company registered with the Reserve Bank of India (âRBIâ) under section 45-IA of the Reserve Bank of India Act, 1934 and primarily engaged in lending and related activities. The Company received the Certificate of Registration from the RBI on 5th April, 2006, enabling the Company to carry on business as a Non-banking Finance Company.
In accordance with the provisions of section 45-IC of the RBI Act, 1934, the Company has created a Reserve Fund & during the year, the Company has transferred an amount ofRS.1,725.94 lakhs (Previous Year RS.934.95 lakhs) to Reserve Fund, being 20% of the Profit After Tax.
Note 2 : Segment Reporting
As per AS 17 Para 4, Segment has been disclosed in Consolidated Financial Statement, Hence no separate disclosure has been given in standalone financial statement of the Company.
Lease Payments Company as Lessee
The company has taken office premises and rented flat on lease for a period upto 3 years.
Note 3:
The Company gives secured loans to its customers, wherein towards such loan the customers give their owned securities (shares) as a security to the Company which are either pledged in favour of the Company or are transferred to Companyâs Depositary Participant account. Such shares are kept by the Company in a separate Depositary Participant account maintained by the Company for all such purposes.
Note 4 :
1) CRISIL Limited reaffirmed the Credit Rating of âCRISIL A1 â (pronounced âCRISIL A One Plusâ) to the Short Term Debt Programme of 25,000 lakhs (previous year 25,000 lakhs) of the Company. The rating indicates very strong degree of safety regarding timely servicing of financial obligations.
2) ICRA has re-affirmed the rating of ICRA AA rating with stable outlook (pronounced ICRA double A rating with Stable Outlookâ) to the Long Term Debt Programme of the Company for RS.15,000 lakhs (previous year RS.15,000 lakhs). The rating indicates strong degree of safety regarding timely servicing of financial obligations.
The Company has sent letters to vendors to confirm whether they are covered under micro, small and medium enterprise development act 2006 as well as they have filed required memorandum with prescribed authority. Out of the letter sent to the party, some confirmations have been received till the date of finalisation of balance sheet. Based on the confirmation received, the outstanding amounts payable to the vendors under Micro, Small and Medium Enterprises Development Act 2006 are given below :
Note 5 :
During the current year, Company has made / (reversed) a provision RS.53.07 lakhs (previous year RS.59.32 lakhs) being 0.35% (previous year 0.30%) of its standard assets as per the Notification No. RBI/DNBR2016-17/45 dated 1st September, 2016) issued by RBI.
Note 6 :
Disclosures of Employee Benefits in accordance with Accounting Standard 15 (Revised)
The Company has classified various benefits provided to employee benefits as under:
Note 7 : Related Party Disclosure
I. Names of Related Parties (as certified by Management) :-
A) Holding Company
- Passionate Investment Management Private Limited
B) Subsidiary / Step-down subsidiaries companies
- Motilal Oswal Securities Limited
- Motilal Oswal Investment Advisors Limited (formerly known as Motilal Oswal Investment Advisors Private Limited)
- MOPE Investment Advisors Private Limited
- Motilal Oswal Commodities Broker Private Limited
- Motilal Oswal Capital Markets Private Limited
- Motilal Oswal Wealth Management Limited
- Motilal Oswal Insurance Brokers Private Limited
- Motilal Oswal Asset Management Company Limited
- Motilal Oswal Asset Management (Mauritius) Pvt Ltd
- Motilal Oswal Trustee Company Limited
- Motilal Oswal Capital Market (Hongkong) Private Limited
- Motilal Oswal Capital Markets (Singapore) Pte. Limited
- Motilal Oswal Securities International Private Limited
- Motilal Oswal Real Estate Investment Advisors Private Limited
- Motilal Oswal Real Estate Investment Advisors II Private Limited
- Aspire Home Finance Corporation Limited
- India Business Excellence Management Company
- Motilal Oswal Capital Limited
- Carnation Township Management LLP (Upto 29th March, 2016)
C) Fellow Subsidiaries
- Nagori Agro & Cattle Feeds Private Limited
D) Associate Enterprises
- India Reality Excellance Fund II LLP
E) Key Management Personnel
- Mr.Motilal Oswal - Chairman & Managing Director
- Mr.Raamdeo Agarawal - Joint Managing Director
F) Relatives of Key Management Personnel
- Vimla Oswal - Spouse of Chairman & Managing Director
- Vimladevi Salecha - Sister of Chairman & Managing Director
- Rajendra Gopilal Oswal - Brother of Chairman & Managing Director
- Sunita Agarawal - Spouse of Joint Managing Director
- Dr.Karoon Ramgopal Agarawal â Brother of Joint Managing Director
- Vinay R.Agrawal - Brother of Joint Managing Director
- Sukhdeo Ramgopal Agarawal â Brother of Joint Managing Director
- Govinddeo R.Agarawal - Brother of Joint Managing Director
- Satish Agrawal - Brother of Joint Managing Director
- Suman Agrawal - Sister of Joint Managing Director
- Anita Anandmurthy Agrawal â Sister of Joint Managing Director
G) Enterprises in which Key Managerial Personnel have control
- OSAG Enterprises LLP
- VISU Associates - Partnership firm (Dissolved from 31st March, 2017)
H) Enterprises in which Key Managerial Personnel and their relatives exercise significant influence
- Raamdeo Agarawal(HUF)
- Motilal Oswal Foundation (Trust)
- Motilal Oswal HUF
Details of Stock options
The company has four Stock option Schemes
Motilal Oswal Financial Services Limited -Employeesâ Stock Option Scheme -IIIâ(ESOS-III)
The Scheme was approved by Board of Directors on 23.01.2006 and by the shareholders in EGM dated 03.02.2006 and EGM dated 28.04.2006 and is for issue of 1,167,275 options representing 1,167,275 Equity shares of RS.2 each.
Motilal Oswal Financial Services Limited -Employeesâ Stock Option Scheme -Vâ (ESOS-V)
The Scheme was approved by Board of Directors on 18.10.2007 and by the shareholders on 4.12.2007 by postal ballot and is for issue of 2,500,000 options representing 2,500,000 Equity shares of RS.1 each
Motilal Oswal Financial Services Limited -Employeesâ Stock Option Scheme -VIâ (ESOS-VI)
The Scheme was approved by Board of Directors on 21.04.2008 and by the shareholders in AGM dated 08.07.08 and is for issue of 5,000,000 options representing 5,000,000 Equity shares of RS.1 each
Motilal Oswal Financial Services Limited -Employeesâ Stock Option Scheme -VIIâ (ESOS-VII)
The Scheme was approved by Board of Directors on 19.07.2014 and by the shareholders in AGM dated 22.08.14 and is for issue of 2,500,000 options representing 2,500,000 Equity shares of RS.1 each
The activity in the (ESOS-III), (ESOS-V) ,(ESOS-VI) and ESOS (VII) during the year ended 31st March 2017 and 31st March 2016 is set below:
Employeesâ Stock Options Scheme (ESOS):
During the year 9,40,975 Employee Stock Options have been granted to the employees of the Company and its subsidiary Companies (Previous Year 18,30,000).
The Company has adopted intrinsic value method of accounting Employee Compensation Cost in respect of ESOS. The intrinsic value of shares is excess of market price of the shares under ESOS over the exercise price. Employee Compensation Cost is accounted for by amortizing the intrinsic value on the straight line basis over the vesting period. The total amount to be amortized as at March 31, 2017 over the balance vesting period is V NIL (Previous year- Nil)
The weighted average share price at the date of exercise for stock options exercised during the year was RS.520.76 (previous year RS.284.89)
Exercise Pricing Formula
Scheme I
Compensation Committee is authorised to determine the Exercise Price having regard to the valuation report of an independent practising chartered accountant that may be based on such valuation method, as may be considered suitable by him. Compensation Committee, in its absolute discretion, have the authority to grant the Options at such discount as it may deem fit.
Scheme II
Exercise Price shall be the closing price of the Companyâs Equity Shares quoted on the Bombay Stock Exchange Limited immediately preceding the date of Grant of the Stock Options, which for this purpose shall be the date on which the Committee grant the Stock Options, discounted by such percentage as may be determined by the Committee in the best interest of the various stakeholders in the prevailing market conditions
Scheme III
Exercise Price shall be the closing price of the Companyâs Equity Shares, prior to the date of grant of the Options, on the Stock Exchanges where the highest trading volume is recorded, discounted/increased by such percentage as may be determined by the Committee.
Scheme IV
Exercise Price shall be the closing price of the Companyâs Equity Shares, prior to the date of grant of the Options, on the Stock Exchanges where the highest trading volume is recorded, discounted / increased by such percentage as may be determined by the Committee
Note 8 :
Disclosures as per guidelines for NBFC-ND-SI as regards capital adequacy, liquidity and disclosure norms
A) Penalties or Fines imposed by Reserve Bank of India
During the Financial Year 2016-17, no Penalties or Fines have been imposed by Reserve Bank of India.
B) i) Schedule to the Balance Sheet of âMotilal Oswal Financial Services Limitedâ as at 31st March, 2017 (as required in terms of paragraph 13 of Systemically Important Non-Banking Financial (Non- Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2015
C) i) Schedule to the Balance Sheet of âMotilal Oswal Financial Services Limitedâ as at 31st March, 2016 (as required in terms of paragraph 13 of Systemically Important Non-Banking Financial (Non- Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2015
Recognizing the responsibilities towards society, as a part of on-going activities, the Company has contributed towards various Corporate Social Responsibility initiatives.
a) Gross amount required to be spent by the Company during the year RS.58.30 lakhs (Previous Year RS.46.50 lakhs)
b) Amount spent during the period ended 31st March 2017 on:
(c) Above includes a contribution of RS.52.42 lakhs (Previous year RS.47.30 lakhs) to Motilal Oswal Foundation which is classified as related party under Accounting Standard 18- âRelated Party Disclosuresâ.
(d) The company has provision for Corporate social responsibility expenses of RS.6.50 Lakhs (Previous Year NIL) which is already paid through Motilal Oswal Foundation.
Note 9:
Previous year figures have been regrouped/reclassified wherever necessary to make them comparable.
Mar 31, 2014
Note 1 : Nature of Business:
The Company is a Non-banking Financial Company registered with the
Reserve Bank of India ("RBI") under section 45-IA of the Reserve Bank
of India Act, 1934 and primarily engaged in lending and related
activities. The Company received the certificate of Registration from
the RBI on 5th April, 2006, enabling the Company to carry on business
as a Non-banking Finance Company.
In accordance with the provisions of section 45- IC of the RBI Act,
1934, the Company has created a Reserve Fund & during the year, the
Company has transferred an amount of R 78.62 in mn (Previous Year R
77.50 in mn) to Reserve Fund, being 20% of the profit After Tax.
Note 2 : Segment Reporting
The Company is engaged in single segment of Fund based activities and
there are no separate reportable segments as defi ned in AS Â 17.
Note 3: Operating Lease
During the year, Rs 0.19 mn (P.Y Rs 0.46 mn) has been recognised as Lease
Payments in the Statement of profit and Loss under the head "Rents".
During the year, Rs 35.85 mn (P.Y Rs 27.98 mn) has been recognised as
Rent income in the Statement of profit and Loss under the head "Other
operating revenue".
NOTE 4 :
Exceptional items comprises of amount of Rs 12.95 mn provided by the
company in respect of its Loan given to client in respect of the
client''s exposure to commodities transactions on National Spot Exchange
Limited (NSEL).
The Exceptional items for the previous year ended 31st March, 2013
represents ''Provision and write off for doubtful non performing assets
of Rs 51.30 mn & Rs 112.50 mn respectively.
NOTE 5 :
During the year, the Company has mortgaged its Immovable property
"Motilal Oswal Tower" to HDFC Bank Limited for the banking facilities
availed by its subsidiary Motilal Oswal Securities Limited.
NOTE 6 :
During the year, the Company has started applying principles of
Accounting Standard -30 "Financial Instruments : Recognition and
Measurement" to the arbitrage / proprietary trading transactions
entered into as against earlier accounting policy of recognizing these
transactions on the principles of prudence as enunciated in Accounting
Statndard-1 "Disclosure of Accounting Policies." Accordingly in respect
of these transactions, the company has designated the Financial assets
of Equity / Currency and Commodities, and its Corresponding Derivatives
positions entered at "fair value through profit or loss". Such
designations are considered by the Company to eliminate / signifi
cantly reduce measurement / recognition inconsistency. These
instruments and all other derivative contracts including embedded
derivatives are measured at fair value and changes therein are
recognized in the statement of profit or loss. As a result of this
change, profit before tax for the current year has increased by R 8.54
mn.
NOTE 7 :
No debenture redemption reserve is being created for issue of 2,500
Principal Protected Secured Redeemable Non-Convertible Debentures of Rs
100,000/- each. The Ministry of Company Affairs has vide General
Circular No. 9/2000 No. 6/3/20001-CL.V dated April, 18th, 2002 clarifi
ed that NBFCs need not create a debenture redemption reserve as specifi
ed under section 117C of the Companies Act, 1956 in respect of
privately placed debentures.
NOTE 8 :
1) During the year, Crisil Limited reaffirmed the Credit Rating of
"CRISIL A1 " (pronounced ''CRISIL A One Plus'') to the Short Term Debt
Programme of Rs 1500 mn of the Company. The rating indicates very strong
degree of safety regarding timely servicing of financial obligations.
2) During the year, ICRA Limited assigned the credit rating of
"PP-MLD[ICRA] AA-" Rating with a stable outlook to the long term debt
programme of Rs 250 mn of the company. The rating indicates very strong
degree of safety regarding timely servicing of financial obligations.
NOTE 9 :
There is no amount outstanding for more than thirty days to any Small
Scale Industrial Undertaking as at the Balance Sheet date. There are no
Micro, Small and Medium Enterprises to whom the Company owes dues,
which are outstanding for more than forty five days as at the Balance
Sheet date. The Micro, Small and Medium Enterprises have been identifi
ed on the basis of the information provided by the vendors to the
Company.
NOTE 10 :
During the current year, Company has made a provision Rs 0.94 mn
(Previous Year Rs 2.06 mn) being 0.25% of Standard Assets as per the
Notifi cation No DNBS.222/CGM(US)-2011 dated 17th January, 2011 issued
by RBI.
NOTE 11 :
In the opinion of the Board of Directors, all current assets, loans &
advances would be realizable at least of an amount equal to the amount
at which they are stated in the balance sheet.
There is no impairment loss recognised on fixed assets.
Note 12 : Contingent Liability and Commitment (To the Extent Not
Provided For)
12.1 Contingent Liabilities:
The company has given corporate guarantees of Rs 110 mn (Previous Year:
Rs 51.25 mn Net of Margins) to various banks for its subsidiary Motilal
Oswal Commodity Brokers Pvt. Ltd.
Demand in respect of Income Tax matters for which appeal is pending is
Rs 19.94 mn (Previous Year Rs 10.30 mn). This is disputed by the Company
and hence not provided for in the books of accounts.The Company has
paid demand of Rs 5.03 mn till date.
12.2 Capital Commitment (to the extent not provided for)
1. The company has given capital commitment of 10% (subject to maximum
limit of Rs 450 mn) in respect of total capital commitment of Business
Excellence Trust, the Trust sponsored by the Company under the Indian
Trust Act, 1982. Till date, the Company has contributed an amount of Rs
438.75 mn (Previous year: Rs 438.75 mn) towards its capital contribution
as per the draw down intimations received from the Fund. During the
year, company has received back Nil (Previous Year: 28.95 mn) towards
the capital return from the fund.
2. The company has given a capital commitment of Rs 565 mn (Previous
Year: Rs 550 mn) in respect of Business Excellence Trust II, the Trust
sponsored by the Company under the Indian Trust Act, 1982. The Company
has contributed an amount of Rs 114.05 mn (Previous Year: Rs 110 mn) as
per the draw down intimations received from the Fund.
3. The Company has given a capital commitment of an amount of Rs 170 mn
(Previous Year: 170 mn) to India Realty Excellence Fund launched by
Realty Excellence Trust. In respect to this, the Company has
contributed an amount of Rs 170 mn (Previous Year : Rs 170 mn) as per
the draw down intimations received from the Fund. During the year
company has received back Rs 65.45 mn (Previous Year: Rs 33.05 mn)
towards the capital return from the fund.
4. Estimated amount of contracts remaining to be executed on Capital
Account and not provided for (Net of advances) is Rs 75.90 mn (Previous
Year: Rs 24.89 mn).
NOTE 13 : Related Party Disclosure :
I. Names of Related Parties :- (as certified by Management)
A) Holding Company: Â Passionate Investment Management Private Limited
B) Enterprises where control exists Subsidiary companies: Â Motilal
Oswal Securities Limited  Motilal Oswal Investment Advisors Private
Limited
 MOPE Investment Advisors Private Limited (Formerly known as Motilal
Oswal Private Equity Advisors Private Limited)
 Motilal Oswal Commodities Broker Private Limited
 Motilal Oswal Capital Markets Private Limited
 Motilal Oswal Wealth Management Limited (Formerly known as Motilal
Oswal Wealth Management Private Limited)
 Motilal Oswal Insurance Brokers Private Limited
 Motilal Oswal Asset Management Company Limited
 Motilal Oswal Trustee Company Limited
 Motilal Oswal Capital Market (Hongkong) Private Limited
 Motilal Oswal Capital Markets (Singapore) Pte. Limited
 Motilal Oswal Securities International Private Limited
 Motilal Oswal Real Estate Investment Advisors Private Limited
 Motilal Oswal Real Estate Investment Advisors II Private Limited
 Aspire Home Finance Corporation Limited
 India Business Excellence Management Company
C) Enterprises in which Key Managerial Personnel exercises Significant
Influence:  Motilal Oswal Foundation  Motilal Oswal-HUF  Raamdeo
Agarwal (HUF)
D) Key Management Personnel: Mr. Motilal Oswal  Chairman & Managing
Director Mr. Raamdeo Agarawal  Joint Managing Director
E) Relatives of Key Management Personnel:
a) Sunita Agrawal  Spouse of Joint Managing Director
b) Vimla Oswal  Spouse of Chairman & Managing Director
NOTE 14 :
Disclosure as per guidelines for NBFC-ND-SI as regards capital
adequacy, liquidity and disclosure norms
NOTE 15 : Corporate Social Responsibility
Recognizing the responsibilities towards society, as a part of on-going
activities, the company has contributed towards various Corporate
Social Responsibility initiatives like supporting underprivileged in
education, medical treatments, etc and various other charitable and
noble aids.
NOTE 16 :
Previous year figures have been regrouped/reclassified wherever
necessary to make them comparable.
Mar 31, 2013
Note 1 : Nature Of Business:
The Company is a Non-banking Financial Company registered with the
Reserve Bank of India ("RBI") under section 45-IA of the Reserve
Bank of India Act, 1934 and primarily engaged in lending and related
activities. The Company received the Certificate of Registration from
the RBI on 5th April, 2006, enabling the Company to carry on business
as a Non-banking Finance Company.
In accordance with the provisions of section 45- IC of the RBI Act,
1934, the Company has created a Reserve Fund & during the year, the
Company has transferred an amount of R 77.50 in millions (Previous Year
R 112.59 in millions ) to Reserve Fund, it being 20% of the Profit
After Tax.
Note 2 : Segment Reporting
The Company is engaged in single segment of Fund based activities and
there are no separate reportable segments as defined in AS - 17.
NOTE 3 :
The Exceptional items for the year ended 31st March, 2013 represents
''Provision for doubtful non performing assets" & "Write off of
doubtful non performing asset" of R 51.30 millions (Previous Year :
23.14 millions) & R 112.50 millions respectively.
NOTE 4 :
During the year company has issued 2,500 Principal Protected Secured
Redeemable Non-Convertible Debentures by way of private placement,
details of the same are as under: and are secured in favor of debenture
trustees against loans receivables of the company. The Investor have
the Put Option to Redeem the Debenture in Part/Full on any Business day
after 18 Month from the date of allotment."
NOTE 5 :
With effect from October 5th, 2012 the Passionate Investment Management
Private Limited, promoter of the company, became the holding company of
the company due to inter-se transfer of the shares between the
promoter''s group.
NOTE 6 :
During the year company has received income distribution of R 81.48
millions from India Business Excellence Fund and the same has been
included in the Statement of Profit & Loss of the Company for the year
ended 31st March, 2013.
NOTE 7 :
No debenture redemption reserve is being created for issue of 2,500
Principal Protected Secured Redeemable Non-Convertible Debentures of R
100,000/- each. The Ministry of Company Affairs has vide General
Circular No. 9/2000 No. 6/3/20001-CL.V dated April, 18th, 2002
clarified that NBFCs need not create a debenture redemption reserve as
specified under section 117C of the Companies Act, 1956 in respect of
privately placed debentures.
NOTE 8 :
1) During the year, Crisil Limited reaffirmed the Credit Rating of
"CRISIL A1 " (pronounced ''CRISIL A One Plus'') to the Short Term
Debt Programme of 1,500 millions of the Company. The rating indicates
very strong degree of safety regarding timely servicing of financial
obligations.
2) During the year, ICRA Limited assigned the credit rating of
"PP-MLD[ICRA] AA-" Rating with a stable outlook to the long term
debt programme of 250 millions of the company. The rating indicates
very strong degree of safety regarding timely servicing of financial
obligations.
NOTE 9 :
The Company has not received any intimation from "suppliers"
regarding their status under the Micro, Small and Medium Enterprises
Development Act, 2006 and hence disclosures, if any, relating to
amounts unpaid as at the year end together with interest paid / payable
as required under the said Act have not been given.
NOTE 10 :
During the current year, Company has made a provision R 2.06 millions
(previous year R8.28 in millions) being 0.25% of its standard assets as
per the Notification No DNBS.222/CGM(US)-2011 dated 17th January, 2011
issued by RBI.
NOTE 11 :
In the opinion of the board of directors, all current assets, loans &
advances would be realizable at least of an amount equal to the amount
at which they are stated in the balance sheet. Hence no impairment loss
recognised on fixed assets.
NOTE 12 : Related Party Disclosure :
I. Names of Related Parties : (as certified by Management)
A) Holding Company:
- Passionate Investment Management Private Limited (From 5th
October,2012)
B) Enterprises where control exists:
Subsidiary companies:
- Motilal Oswal Securities Limited
- Motilal Oswal Investment Advisors Private Limited
- Motilal Oswal Private Equity Advisors Private Limited
- Motilal Oswal Commodities Broker Private Limited
- Motilal Oswal Capital Markets Private Limited
- Motilal Oswal Wealth Management Private Limited
- Motilal Oswal Insurance Brokers Private Limited
- Motilal Oswal Asset Management Company Limited
- Motilal Oswal Trustee Company Limited
- Motilal Oswal Capital Market (Hongkong) Private Limited
- Motilal Oswal Capital Markets (Singapore) Pte. Limited
- Motilal Oswal Securities International Private Limited
C) Enterprises in which Key Managerial Personnel exercise Significant
Influence:
- Nagori Agro & Cattle Feeds Private Limited
- Rishabh Securities Private Limited
- Windwell Securities Private Limited
- Textile Exports Private Limited
- Raamdeo Agarawal (HUF )
- VISU Associates - Partnership firm
- OSAG Enterprises LLP
- Motilal Oswal Foundation
D) Key Management Personnel:
Mr. Motilal Oswal - Chairman & Managing Director
Mr. Raamdeo Agarawal - Joint Managing Director
E) Relatives of Key Management Personnel:
Mrs. Sunita Agrawal - Spouse of Joint Managing Director Mrs. Vimla
Oswal - Spouse of Chairman & Managing Director
Note 13 : Contingent Liability and Commitment (To the Extent Not
Provided For)
13.1 Contingent Liabilities:
The company has given corporate guarantees (Net of Margins) of R 51.25
millions (Previous Year: R Nil) to various banks for its subsidiary
Motilal Oswal Commodity Brokers Pvt. Ltd.
Demand in respect of Income Tax matters for which appeal is pending is
R 9.54 millions (Previous Year R 4.10 millions). This is disputed by
the Company and hence not provided for in the books of accounts.
13.2 Capital Commitment
1. The company has given capital commitment of 10% (subject to maximum
limit of R 450 millions) in respect of total capital commitment of
Business Excellence Trust, the Trust sponsored by the Company under the
Indian Trust Act, 1 982. The Company has contributed an amount of R
438.75 millions (Previous year: R 438.75 millions) towards its capital
contribution as per the draw down intimations received from the Fund.
During the year company has received back R 28.95 millions (Previous
Year: 57.35 millions) towards the capital return from the fund.
2. The company has given a capital commitment of R 550 millions
(Previous Year: 400 millions) in respect of Business Excellence Trust
II, the Trust sponsored by the Company under the Indian Trust Act,
1982. The Company has contributed an amount of R 110 millions (Previous
Year: 40 millions) as per the draw down intimations received from the
Fund.
3. The Company has given a capital commitment of an amount of R 170
millions (Previous Year: 170 millions) to India Realty Excellence Fund
launched by Realty Excellence Trust. In respect to this, the Company
has contributed an amount of R 170 millions (Previous Year: 136
millions) as per the draw down intimations received from the Fund .
During the year company has received back R 33.05 millions (Previous
Year: Nil) towards the capital return from the fund.
4. Estimated amount of contracts remaining to be executed on Capital
Account and not provided for (Net of advances) is R 24.89 millions
(Previous Year: R 86.96 millions).
NOTE 14:
During the current finacial year the company has classified the office
premises of R 164.42 millions which has been leased out to other
subsidiaries as Investment in Property under Non Current Investment.
The Tranfer has been done on WDV on the date on which the premises were
leased out.
NOTE 15 : Corporate Social Responsibility
Recognizing the responsibilities towards society, as a part of on
-going activities, the company has contributed towards various
Corporate Social Responsibility initiatives like supporting
underprivileged in education ,medical treatments, etc and various other
charitable and noble aids.
NOTE 16 :
Previous year figures have been regrouped/reclassified wherever
necessary to make them comparable.
Mar 31, 2011
1.1 Nature of Business:
The Company is Non-banking Financial Company registered with the
Reserve Bank of India ("RBI") under Section 45-IA of the Reserve Bank
of India Act, 1934 and primarily engaged in lending and related
activities. The Company received the Certificate of Registration from
the RBI on 5th April, 2006, enabling the Company to carry on business
as a Non-banking Finance Company.
In accordance with the provisions of Section 45-IC of the RBI Act,
1934, the Company has created a Reserve Fund & during the year, the
Company has transferred an amount of Rs. 85,319.31 in thousands
(Previous Year Rs. 84,791.21 in thousands) to Reserve Fund, it being
20% of the Profit After Tax.
1.2 Contingent Liabilities:
The company has given corporate guarantees (Net of Margins) of Rs.
12,500.00 in thousands. (Previous Year: Rs. 47,250.00 in thousands) to
various banks for its subsidiary Motilal Oswal Commodity Brokers Pvt.
Ltd. & Rs. Nil (Previous Year: Rs. 150,000.00 in thousands) to Punjab
National Bank for its subsidiary Motilal Oswal Securities Limited.
Demand in respect of Income Tax matters for which appeal is pending is
Rs. 656.17 in thousands (Previous Year Rs. 2,498.56 in thousands). This
is disputed by the Company and hence not provided for in the books of
accounts.
2.3 Employees Stock Options Scheme (ESOS) :
During the year the Company has granted 2,044,000 (Previous Year
1,747,500) Employee Stock Options to various employees of the Company
and its subsidiary Companies.
The Company has adopted intrinsic value method of accounting Employee
Compensation Cost in respect of ESOS. The intrinsic value of shares is
excess of market price of the shares under ESOS over the exercise
price. Employee Compensation Cost is accounted for by amortizing the
intrinsic value on the straight line basis over the vesting period. The
total amount to be amortized as at March 31, 2011 over the balance
vesting period is Rs. 255.01 in thousands (Previous Year- Rs. 492.77 in
thousands).
2.4 Commercial paper & Non-convertible debentures:
The maximum balance outstanding during the year in respect of
commercial paper & Non convertible debentures was Rs. 3,250,000.00 in
thousands (Rs. 1,000,000.00 in thousands in the previous year) & Rs.
1,450,000.00 in thousands (Rs. 1,100,000.00 in thousands in the
previous year) respectively.
2.8 Related Party Disclosure :
I. Names of Related Parties :- (as certified by Management)
A) Enterprises where control exists: Subsidiary companies:
a) Motilal Oswal Securities Limited
b) Motilal Oswal Investment Advisors Private Limited
c) Motilal Oswal Private Equity Advisors Private Limited
d) Motilal Oswal Commodities Broker Private Limited
e) Motilal Oswal Capital Market Private Limited
f) Antop Traders Private Limited
g) Motilal Oswal Insurance Brokers Private Limited
h) Motilal Oswal Asset Management Company Limited
i) Motilal Oswal Trustee Company Limited
B) Enterprises in which Key Managerial Personnel exercise Significant
Influence:
a) Passionate Investment Management Private Limited
b) Nagori Agro & Cattle Feeds Private Limited
c) Rishabh Securities Private Limited
d) Windwell Securities Private Limited
e) Textile Exports Private Limited
f) Raamdeo Agrawal (HUF)
C) Key Management Personnel:
Mr. Motilal Oswal - Chairman & Managing Director
Mr. Raamdeo Agrawal - Joint Managing Director
D) Relatives of Key Management Personnel:
a) Suneeta Agrawal - Wife of Joint Managing Director
b) Vimla Oswal - Wife of Chairman & Managing Director
2.9 Segment Reporting:
The Company is engaged in single segment of Fund based activities and
there are no separate reportable segments as defined in AS Ã 17.
2.13 Initial Margin:
Initial margin for open positions in respect of Futures and Options is
Rs. 31,482.14 in thousands (Previous Year Rs. 2,75,997.56 in thousands)
which includes non-cash component (i.e. collateral).
2.14 The company pledges Stock in Trade towards margin requirement for
trading / arbitrage in equity / derivatives.
2.15 During the year, CRISIL Limited assigned the Credit Rating of
P1+ (pronounced P One Plus) to the Short Term Debt Programme of Rs.
4,000,000.00 in thousands of the Company.
2.17 Capital Commitment:
1. Out of the capital commitment of 10% (subject to maximum limit of
Rs. 450,000.00 in thousands) is given by the Company in respect of
total capital commitment of Business Excellence Trust, the Trust
sponsored by the Company under the Indian Trust Act, 1982. The Company
has contributed an amount of Rs. 405,000.00 in thousands towards its
capital contribution as per the draw down intimations received from the
Fund & an advance of Rs. 3,375.00 in thousands against future draw
down.
2. During the year, the Company has given total capital commitment of
Rs. 250,000.00 in thousands in respect of Business Excellence Trust II,
the Trust sponsored by the Company under the Indian Trust Act, 1982.
3. The Company has given a capital commitment of an amount of Rs.
150,000.00 in thousands to India Realty Excellence Fund launched by
Realty Excellence Trust. In respect to this, the Company has
contributed an amount of Rs. 90,000.00 in thousands as per the draw
down intimations received from the Fund & an advance of Rs. 1,000.00 in
thousands against future draw down.
4. During the year, the Company has given total capital commitment of
Rs. 250,000.00 in thousands to India Realty Excellence Fund II launched
by Reality Excellence Trust.
5. Estimated amount of contracts remaining to be executed on Capital
Account and not provided for (Net of advances) is Rs. 259,087.53 in
thousands (Previous Year: Rs. 25,467.34 in thousands).
6 Disclosures, relating to amounts unpaid as at the year end together
with interest paid / payable as required under the Micro, Small and
Medium Enterprise Development Act, 2006 have been given to the extent
Group has received intimation from "Suppliers" regarding their status
under the said Act.
7 Company, jointly with its subsidiary company (Motilal Oswal
Securities Limited), had acquired land & building situated at
Prabhadevi, Mumbai. The company continued constructing additional
building space (jointly with its subsidiary company) on the existing
land/building structure for its corporate office. The Company has,
during the year, capitalized interest of Rs. 43,298.77 (Previous Year
Rs. 35,425.79 in thousands) in thousands attributed to capital
work-in-progress, which is in accordance with Accounting Standard on
Borrowing Costs (AS-16) issued by the Institute of Chartered
Accountants of India. The said Accounting Standard specifies that
interest on funds that are borrowed generally (for working capital) and
used for the purpose of obtaining a qualifying asset are costs that are
eligible for capitalisation. The amount of borrowing costs (interest)
attributable to the qualifying asset is determined by applying the
weighted average rate of borrowings outstanding to the asset
expenditures (qualifying assets).
8 During the current year, Company has made a provision Rs. 7,392.11 in
thousands being 0.25% of its standard assets as per the Notification
No. DNBS.222/CGM(US)-2011 dated 17th January, 2011 issued by RBI.
2.19 In the opinion of the board of directors, all current assets,
loans & advances would be realizable at least of an amount equal to the
amount at which they are stated in the Balance Sheet. Hence no
impairment loss recognised on fixed assets.
2.23 Previous years figures have been regrouped, rearranged,
reclassified to the extent considered necessary.
Mar 31, 2010
1 Nature of Business:
The Company is Non-banking Financial Company registered with the
Reserve Bank of India ("RBI") under section 45-IA of the Reserve Bank
of India Act, 1934 and primarily engaged in lending and related
activities. The Company received the Certificate of Registration from
the RBI on 5th April, 2006, enabling the Company to carry on business
as a Non-banking Finance Company. In accordance with the provisions of
section 45- IC of the RBI Act, 1934, the Company has created a Reserve
Fund & during the year, the Company has transferred an amount of Rs.
84,791 (in thousands) (Previous Year Rs. 90,623 in thousands) to
Reserve Fund, it being 20% of the Profit After Tax.
2 Contingent Liabilities:
The Company has given corporate guarantees of Rs. 92,000 (in thousands)
(Previous Year: Rs. 47,000 in thousands) to various banks for its
subsidiary Motilal Oswal Commodity Brokers Pvt. Ltd. & Rs. 300,000 (in
thousands) (Previous Year: Rs. NIL) to Pun|ab National Bank for its
subsidiary Motilal Oswal Securities Limited.
Demand in respect of Income Tax matters for which appeal is pending is
Rs. 2,499 (in thousands) (Previous Year: Rs. Nil). This is disputed by
the Company and hence not provided for in the books of accounts.
3. Employees Stock Options Scheme (ESOS) :
During the year the Company has granted 1,747,500 Employee Stock
Options to various employees of the Company and its subsidiary
Companies.
The Company has adopted intrinsic value method of accounting Employee
Compensation Cost in respect of ESOS. The intrinsic value of shares is
excess of market price of the shares under ESOS over the exercise
price. Employee Compensation Cost is accounted for by amortizing the
intrinsic value on the straight line basis over the vesting period. The
total amount to be amortized as at March 3 1, 2010 over the balance
vesting period is Rs 493 (in thousands) (Previous year - Rs. 772 in
thousands)
3.1 Commercial paper & Non-convertible debentures:
The maximum balance outstanding during the year in respect of
commercial paper & Non convertible debentures was Rs. 1,000,000 (in
thousands) (PY Rs. 2,000,000 in thousands) & Rs. 1,100,000 (in
thousands) (PY Rs. Nil) respectively.
3.2 During the year Motilal Insurance Brokers Pvt. Ltd. became the
Subsidiary of Motilal Oswal Financial Services Limited by virtue of
acquiring of 99% stake & Motilal Oswal Asset Management Company Limited
& Motilal Oswal Trustee Company Limited became the subsidiary of
Motilal Oswal Securities Limited (Subsidiary of Motilal Oswal Financial
Services Limited) by virtue of acquiring of 100% stake.
3.3 Related Party Disclosure :
Names of Related Parties :- (as certified by Management)
A) Enterprises where control exists Subsidiary comparies:
a) Motilal Oswal Securities Limited
b) Motilal Oswal Investment Advisors Private Limited
c) Motilal Oswal Private Equity Advisors Private Limited
d) Motilal Oswal Commodities Broker Private Limited
e) Motilal Oswal Capital Market Private Limited
f) Antop Trade-s Private Limited
g) Motilal Oswal Insurance Brokers Private Limited
h) Motilal Oswal Asset Management Company Limited i) Motilal Oswal
Trustee Company Limited
B) Enterprises in which Key Managerial Personnel exercise Significant
Influence :
1. Passionate Investment Management Private Limited
2. Nagori Agro & Cattle Feeds Private Limited
3. Rishabh Securities Private Limited
4. Windwell Securities Private Limited
5. Textile Exports Private Limited
C) Key Management Personnel:
Mr. Motilal Oswal - Chairman & Managing Director Mr. Raamdeo Agrawal -
Joint Managing Director
3.4 Arbitrage transactions:
The arbitrage transactions of the Company, encompass of purchase / sale
of equity shares/securities and equity derivatives which comprise a
portfolio. In view of this, during the year the company has accounted
the arbitrage transactions on portfolio basis instead of scrip basis
and is marked to market. The transactions of cash segment are valued on
weighted average basis as done for Derivatives segment as against
first-in-first-out followed earlier year. Accordingly, if the net
difference is loss (being an unrealized loss), provision is made in the
Profit & Loss Account and if the net difference is a gain (being an
unrealized gain), credit is lot taken for the same on the principle of
prudence.
Pursuant to above change, profit for the year ended 3 1st March, 2010
is increased by Rs. 8,891/- (in thousands).
3.5 The company pledges Stcck in Trade towards margin requirement for
trading/arbitrage in equity/derivatives.
3.6 During the year, CRISIL Limited assigned the Credit Rating of PI
+ (pronounced P One Plus) to the Short Term Debt Programme of Rs.
4,000,000 (in thousands) of the Company.
3.7 Capital Commitment:
1. Out of the capital commitment of 10% (subject to maximum limit of
Rs. 450,000 in thousands) given by the Company in respect of total
capital commitment of Business Excellence Trust, the Trust sponsored by
the Company under the Indian Trust Act, 1982, the Company has
contributed an amount of Rs. 337,500 (in thousands) towards its capital
contribution as per the draw down intimations received from the Fund.
2. During the year, the Company settled Realty Excellence Trust (RET).
The Company has given a capital commitment of an amount of Rs. 150,000
(in thousands) to India Realty Excellence Fund launched by RET In
respect of this, the Company has contributed an amount of Rs. 37,500
(in thousands) as per the draw down intimations received from the Fund.
3. Estimated amount of contracts remaining to be executed on Capital
Account and not provided for (Net of advances) is Rs. 25,467 (in
thousands) (Previous Year: Rs Nil).
3.8 Disclosures, relating to amounts unpaid as at the year end
together with interest paid / payable as required under the Micro,
Small and Medium Enterprise Development Act, 2006 have been given to
the extent Group has received intimation from "Suppliers" regarding
their status under the said Act.
3.9 During the year, the Company jointly with subsidiary Company
(Motilal Oswal Securities Limited) has acquired land & building
situated at Prabhadevi, Mumbai. The Company is constructing additional
building space (jointly with its subsidiary company) on the existing
land/building structure for its corporate office. The Company has,
during the year, capitalized interest of Rs. 35,426 (in thousands)
attributed to capital work-in- progress, which is in accordance with
Accounting Standard on Borrowing Costs (AS-16) issued by the
Institute of Chartered Accountants of India. The said Accounting
Standard specifies that interest on funds that are borrowed generally
(for working capital) and used for the purpose of obtaining a
qualifying asset are costs that are eligible for capitalisation. The
amount of borrowing costs (interest) attributable to the qualifying
asset is determined by applying the weighted average rate of borrowings
outstanding to the asset expenditures (qualifying assets).
3.10 In the opinion of the board of directors, all current assets,
loans & advances would be realizable at least of an amount equal to the
amount at which they are stated in the Balance Sheet. Hence no
impairment loss recognised on fixed assets.
3.11 Previous years figures have been regrouped, rearranged,
reclassified to the extent considered necessary.
3.12 Schedule to the Balance 5heet of NBFC as required in terms of
Paragraph I 3 of Non-Banking Financial (Non-Deposit Accepting or
Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007)
given in "Annexure - I", to the Balance Sheet.
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