1. Corporate Information
Emkay Global Financial Services Limited (“the Company”) was incorporated in 1995 and got listed in 2006. The Company is engaged in the business of providing Stock Broking Services, Investment Banking, Depository Participant Services and Distribution of Third Party Financial Products.
a: Terms/ Rights attached to Equity Shares
The Company has only one class of equity shares having par value of Rs.10/- per share. Each holder of equity share is entitled to one vote per share. The Company declares and pay dividends in Indian Rupees. The dividend proposed if any, by the Board of Directors is subject to the approval of shareholders in the ensuing Annual General Meeting except interim dividend.
In the event of liquidation of the Company, the holders of Equity shares will be entitled to receive remaining assets of the Company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
c: Shares Reserved for issue under Options:
The Company has reserved issuance of Rs. 22,45,045 (Previous Year Rs. 23,50,925) Equity Shares of Rs. 10/- each for offering to eligible employees of the Company and its subsidiaries under Employees Stock Option Schemes. The Options would vest over a maximum period of four years or such other period as may be decided by the Board/Remuneration Committee subject to the applicable law.
d: Share Application Money Pending Allotment represents application money received on account of exercise of Employees Stock Options (ESOP’S).
Note :
(1) Overdraft from Bank of Rs. NIL (P.Y. Rs. 188,108,349/-) is secured by equitable mortgage of office premises.
(2) Short Term Loan is secured by way of margin money with bank.
* There is no amount due and outstanding to be transferred to the Investor Education and Protection Fund (IEPF) as on March 31, 2018. Unclaimed Dividend, if any, shall be transferred to IEPF as and when they become due.
2. Employees Stock Option Schemes
(i) Disclosure in connection with Company’s Employees Stock Option Schemes:-
a) The Company has granted Employee Stock Options (ESOP) to its employees and employees of its subsidiaries. During the year ended 31st March, 2018, following schemes were in operation:
* Options granted under ESOP - 2007 includes 120,000 options to employees of Subsidiary Companies.
** Closing market price prior to the date of grant.
b) The Company introduced ESOP-2010 Scheme during the year 2010-11 and consequently set up “Emkay Employees Welfare Trust (ESOP Trust)” to administer and implement the said Scheme in accordance with recommendations of the Nomination, Remuneration and Compensation Committee of the Company. Consequent to various Circulars and Notifications issued by SEBI from January 2013 onwards (including Notification of Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 on 28.10.2014 and subsequent amendments thereof), the Company first modified its Employee Stock Option Plan 2010 (ESOP-2010) on 20.12.2013 vide Members Resolution whereby the said ESOP Trust can only subscribe to the shares of the Company and no secondary market purchases were allowed. Subsequently, the company for the second time modified its Employee Stock Option Plan 2010 by passing members special resolution through postal ballot process on 9th March 2016 whereby ESOP Trust is authorized to purchase shares of the Company from the secondary market, some changes made in the definition of employee(s), number of shares held by the ESOP Trust from secondary market acquisition not to exceed 5% of the paid up equity capital so as to be in complete compliance with Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 including any subsequent amendments thereof.
d) The Company has accounted Compensation Cost for the Stock Options granted using intrinsic value method. Had the Company used the fair value method for calculating compensation cost for Stock Options granted, the impact on the Company’s net profit and earnings per share would have been as per the Proforma amounts indicated below:
e) The Fair Value and other disclosures and assumptions have been determined by an independent consultant and relied upon by the Auditors.
(ii) The Company has provided interest free loan to “Emkay Employees Welfare Trust” an independent ESOP Trust which is administrating ESOP 2010 Scheme of the Company and the loan outstanding as at 31st March, 2018 is Rs. NIL (Previous Year Rs. 374 Lacs). As on 31st March, 2018, the trust has 125,767 (net of 261,363 equity shares sold during financial year 2017-2018 in the secondary market) equity shares of the Company purchased from the market (having cost of acquisition amounting to Rs. 98.14 lacs) during the period commencing from September 2010 to July 2011 for Stock Options granted/to be granted from time to time to the eligible employees. The said holding of 125,767 equity shares comprises of 110,267 equity shares of the Company for which Options are yet to be granted (which includes
Options lapsed due to employees leaving the Company) herein after called “Un-appropriated Options” and 15,500 equity shares against which Options are already granted to the eligible employees.
From the date of notification of SEBI (Share based Employee Benefits) Regulations,2014 i.e. 28.10.2014, the Company had a choice to either appropriate the Un- appropriated Options within one year i.e. by 27.10.2015 or to sell in the secondary market within five years i.e. by 27.10.2019. Since the Company could not appropriate the Un-appropriated Options by 27.10.2015, the Company had sold 261,363 equity shares during the FY 2017-18 in the secondary market and the remaining Un-appropriated Options representing 110,267 equity shares shall be sold in the secondary market on or before 27.10.2019.
The Company introduced ESOP-2018 Scheme during the year ended 31.03.2018. The said scheme was approved by the shareholders of the Company on 21.03.2018 through postal ballet process. Consequently, the Company filed the said ESOP Scheme to the two stock exchanges where the equity shares of the company are presently listed namely, Bombay Stock Exchange Limited and National Stock Exchange of India Limited for in-principle approval.
National Stock Exchange of India Limited granted in-principle on 18.04.2018 and Bombay Stock Exchange Limited on 26.04.2018. Under this ESOP Scheme approval for listing of maximum 2,453,403 equity shares of Rs. 10/- each of the Company has been obtained.
No ESOP’s under the said scheme have been granted by the Company to its employees or to the employees of it’s wholly owned subsidiary companies during the financial year ended 31.03.2018.
2. Defined Benefit Plan
Disclosure on retirement benefits as required in Accounting Standard 15 (AS -15) on “Employee Benefits” is given below:
The details of the Company’s post-retirement benefit plan for gratuity for its employees in conformity with the principles set out in AS -15 which has been determined by an Actuary appointed for the purpose and relied upon by the Auditors are given below :
3. a) Shares (i) received from Clients/ Remissiers/ Sub-brokers as collateral for Margins/ Security Deposits, (ii) of Clients, withheld against their outstanding balances, are held by the Company in its own name in a fiduciary capacity. Depending upon business needs of the Company, some of these shares are lodged with the Exchanges towards Additional Base Capital/ Exposure.
(b) Client Fixed Deposits are kept as collateral for their margin requirements are lien marked directly in favor of stock exchanges through their Clearing Corporations / Professional Clearing Member and are utilized towards Additional Base Capital/ Exposure/ Margin requirement of the Company.
4. Payment to Auditors includes amounts paid to previous auditors for the following Rs. NIL (P.Y. 6,874/-) in Audit Fees, Rs. NIL (P.Y. 500/-) in Tax Audit Fees, Rs. 350/- (P.Y. 1,221/-) in Taxation Matter, Rs. 2412/- (P.Y. 1,763/-) in Other Services towards Swachh Bharat Cess. Further, Payment to Auditors include Rs. 80,500/- in Taxation Matter and Rs. 555,000/- in Other Services, paid to previous Auditors of the Company.
5. Other Current Liabilities includes Rs. 1,640,778/- (P.Y. Rs. 1,068,147/-) being aggregate amount of deposits in Company’s bank accounts made directly by Clients whose details are awaited.
6. Expenses includes Nil (P.Y. 1,296,663/-) pertaining to earlier year.
7. Disclosure on Specified Bank Notes (SBNs):-
a) The requirements for the disclosure regarding details of SBNs held and transacted during 8th November, 2016 to 30th December, 2016 were applicable for financial year ended 31st March 2017 and hence no disclosure has been made in the current year. Corresponding amounts as appearing in the audited standalone financial statement for the year ended 31st March, 2017 have been disclosed in (b) herein below.
b) Details of Specified Bank Notes (SBN) held and transacted during the period from 8th November, 2016 to 30th December, 2016 as follows:-
8. Assets taken on Operating Leases
(a) The Company has taken various commercial premises on operating leases. These lease arrangements are normally renewable on expiry. The rental expenses (net of recovery) in respect of above operating leases is Rs. 18,928,002/-(P.Y. Rs. 16,929,548/-)
(b) The future minimum lease payments in respect of non-cancellable operating leases are as follows:-
9. Segment information
(a) Primary Segment:
The Company’s operations relate to one reportable business segment namely “Advisory and Transactional Services” comprising of Broking & Distribution of Securities, Investment Banking and other related Financial Intermediation Services therefore primary business segment reporting as required by Accounting Standard 17 “Segment Reporting” is not applicable.
(b) Secondary Segment:
The Company operates in India and hence there are no reportable Geographical Segments.
10. Pursuant to section 135 of Companies Act, 2013 and Rules thereunder, the Company was required to spend Rs. 3.48 Lacs towards Corporate Social Responsibility (CSR) related activities during the financial year ended 31.03.2018. The Company has given contribution to Emkay Charitable Foundation, a section 8 company as per the Companies Act, 2013. Refer Annexure to the Directors report namely “Annual Report on Corporate Social Responsibility (‘CSR’) activities for the financial year 2017-18” for the disclosure of the activities undertaken by Emkay Charitable Foundation on behalf of the Company.
11. a) Detailed information in respect of Equity Index / Stock Futures contracts outstanding and held for trading purpose (Open Interest) :
b) Detailed information in respect of Equity Index / Stock Options contracts outstanding and held for trading purpose (Open Interest):-
12. Detailed information in respect of Securities traded in :-
13. Provision for taxation has been made considering the provisions of Section 115JB of the Income Tax Act 1961.
14. Exceptional Items
15. Contribution as Sponsor in Emkay Emerging Stars Fund and Emkay Emerging Stars Fund-II Company has committed a sum of Rs. 100,000,000/- as sponsor for Emkay Emerging Stars Fund, first scheme of Emkay Emerging Stars Trust, a determinate Trust, organized under the Indian Trusts Act, 1882 and registered as a Category III Alternative Investment Fund by SEBI under the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012. A sum of Rs. 35,000,000/has been contributed by the Company during the financial year ended 31.03.2018. Balance sum of Rs. 65,000,000/- shall be contributed as and when draw down notice shall be received by the Company from Emkay Emerging Stars Fund.
Further, Company has also committed a sum of Rs. 22,500,000/- as sponsor for Emkay Emerging Stars Fund-II, second scheme of Emkay Emerging Stars Trust, a determinate Trust, organized under the Indian Trusts Act, 1882 and registered as a Category III Alternative Investment Fund by SEBI under the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012. A sum of Rs. 7,875,000/- has been contributed by the Company during the financial year ended 31.03.2018. Balance sum of Rs.14,625,000/- shall be contributed as and when draw down notice shall be received by the Company from Emkay Emerging Stars Fund-II.
16. The Board of Directors at their meeting held on May 28, 2018 proposed a dividend of Rs. 1.50 per share and one time special dividend of Rs. 0.50 per share for the year ended March 31, 2018, subject to the approval of the members at the ensuing Annual General Meeting. In terms of revised Accounting Standard (AS) 4 “Contingencies and Events occurring after the Balance Sheet date”, the Company is not required to provide for dividend proposed/ declared after the Balance Sheet date. Consequently, no provision has been made in respect of the aforesaid dividend proposed by the Board of Directors for the year ended March 31, 2018. If approved, the total liability arising to the Company would be Rs. 591.54 Lacs including dividend tax.
17. (i) Additional information required pursuant to Part II of Schedule III to the Companies Act, 2013:
(ii) Other additional information required pursuant to Part II of Schedule III of the Companies Act, 2013 are not applicable to the Company.
18. The financial statements of the Company for the year ended March 31, 2017, included in these standalone financial statements, have been audited by the predecessor auditor
19. Previous year figures have been regrouped / reclassified, where necessary, to conform to this year’s classification.
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