Contents€¦ · Sandhya R. Nair auditors Rahul Gautam Divan & Associates Chartered Accountants, 134, Mittal Tower, C Wing, Nariman Point, Mumbai - 400 021 Bankers Axis Bank ... Stock

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AnnuAl RepoRt 2011-12

Corporate Information ............................................................1

Notice .........................................................................................2

Directors’ Report ......................................................................4

Corporate Governance ............................................................9

Management Discussion and Analysis ...............................19

Auditors’ Report ....................................................................23

Balance Sheet ..........................................................................26

Statement of Profit & Loss ....................................................27

Cash Flow Statement .............................................................28

Notes to Accounts ..................................................................29

Consolidated Financial Statements ............................... 47-69

Corporate information

Board of direCtorsKumar Nair - (Chairman & Managing Director)James PothenJose Thomas PolachiraU. Ramachandran

Company secretarySandhya R. Nair

auditorsRahul Gautam Divan & AssociatesChartered Accountants,134, Mittal Tower, C Wing, Nariman Point, Mumbai - 400 021

BankersAxis BankBank of BarodaCanara BankFederal BankHDFC BankICICI BankSouth Indian BankState Bank of IndiaState Bank of Travancore

registered offiCeThottathil Towers, 2nd Floor,Market Road, Ernakulam,Kochi – 682 018Tel. No. 0484-2384848Fax No. 0484-2394209e-mail id : [email protected]

Corporate offiCe403, Regent ChambersNariman Point, Mumbai 400 021Tel. No. 91-022-6630 6090/91Fax No. 91-022-66306655e-mail id : [email protected]

registrars & transfer agentsM/s. Link Intime India Pvt. Ltd C-13, Pannalal Silk Mills Compound LBS Marg, Bhandup (West), Mumbai 400 078 Tel. No. 022-2596 3838 Fax No. 022-2592 6969 e-mail id : [email protected]

Contents

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Vertex SecuritieS Limited

Notice is hereby given that the 19th Annual General Meeting of the Shareholders of VerteX seCurities Limited will be held on Wednesday, 18th July, 2012 at 9.30 AM at The International Hotel, Veekshanam Road, Ernakulam, Kochi-682 031, to transact the following business:

ordinarY Business

1. To receive, consider and adopt the audited Balance Sheet as at 31st March, 2012 and Statement of Profit and Loss for the year ended as on that date and the report of Directors and Auditors thereon.

2. To appoint a Director in place of Mr. James Pothen, who retires by rotation, and is eligible for re-appointment.

3. To appoint auditors to hold office from the conclusion of this Annual General Meeting until the conclusion of the next Annual General Meeting and to fix their remuneration. M/s. Rahul Gautam Divan & Associates, Chartered Accountants, Mumbai are eligible for re-appointment.

speCiaL Business

4. To consider and, if thought fit, to pass, with or without modification/s, the following resolution as a Special Resolution:

“resoLVed tHat pursuant to the provisions of Section 81(1A) and all other applicable provisions, of the Companies Act, 1956 , the provisions contained in the Securities and Exchange Board of India (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999 (“the Guidelines”) (including any statutory amendment, modification or re-enactment to the Act or the Guidelines for the time being in force) and the Memorandum and Articles of Association of the Company and subject to such approvals, permissions, sanctions and subject to such conditions and modifications as may be prescribed or imposed while granting such approvals, permissions and sanctions, approval and consent of the Company be and is hereby accorded to the Board of Directors (hereinafter referred to as “the Board” which term shall be deemed to include any Committee including Remuneration & Compensation Committee of the Board) to re-price the “VERTEX EMPLOYEES’ STOCK OPTION PLAN, 2010”( Plan) as detailed in the explanatory statement to this notice, and offer, issue and allot stock options under the said Plan at any time to or for the benefit of employees at such price, in such manner and on such terms and conditions as may be fixed or determined by the Board in accordance with the Guidelines or other applicable provisions of any law as may be prevailing at that time.”

“resoLVed furtHer tHat, the Company shall be entitled to recover from the employee any tax that may be levied upon or in relation to the re-priced options.”

By Order of the Board of Directors,For VerteX seCurities Limited

sandhya r. nair Place: Kochi–18 Company Secretary Date: 15.05.2012

notes:

1. a memBer entitLed to attend and Vote at tHe meeting is entitLed to appoint a proXY to attend tHe meeting and tHe proXY need not Be a memBer of tHe CompanY. a proXY sHaLL not HaVe anY rigHt to speak at tHe meeting and sHaLL not Vote eXCept on a poLL.

2. The instrument appointing the proxy must be deposited at the Registered Office of the Company not less than 48 hours before the commencement of the Meeting.

3. Members / Proxies should bring the Attendance Slip duly filled in for attending the meeting.

4. The Register of Members and Share Transfer Registers will remain closed from 12th July, 2012 to 18th July, 2012 (both days inclusive).

5. Members requiring information on audited accounts at the meeting are requested to send the queries in writing so as to reach the Registered Office of the Company at least Ten (10) days before the meeting.

eXpLantorY statement pursuant to tHe proVisions of seCtion 173(2) of tHe Companies aCt, 1956

item no. 4:

The Company evolved the “VERTEX EMPLOYEES’ STOCK OPTION PLAN, 2010 (“Plan”) to reward the employees for their past association and performance as well as to motivate them to contribute to the growth and profitability of the Company. The Company also intends to use this scheme to attract and reward talent and performance in the organization. The Company views employee stock options as an instrument that would enable the employee to share the value they would create and contribute to the Company in the years to come.

This Plan was formulated by the Compensation Committee of the Board of Directors of the Company and approved by it in its meeting held on 21st April, 2010. The Company has granted ESOP under this scheme to eligible employees on various dates. Subsequently, the stock market is on a downward trend. Hence the scheme has become unattractive to some of the employees who have been granted ESOP at much higher price.

Under Regulation 7.5 of Securities and Exchange Board of India (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999, a Company may re-price the options which are not exercised (whether or not they have been vested) if ESOP were rendered unattractive due to fall in the price of the shares in the market, provided that, the Company ensures that such re-pricing shall not be detrimental to the interest of employees and approval of the shareholders in general meeting has been obtained for such re-pricing.

notiCe

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Accordingly, since the Company’s Plan has become unattractive due to the present market price and keeping the objective of the scheme intact, the Company proposed to re-price the Stock option at ` 5.46 (closing price of shares on 14.05.2012 on BSE where the shares of the Company are listed) to the Employees who have been granted ESOP at a much higher price than the current price subject to approval of shareholders at the ensuing General Meeting.

In compliance with the said guidelines the following information is provided additionally:

1. The Company has not varied the terms of the ESOP 2010 in any manner which may be detrimental to the interest of the employees.

2. The Company shall by special resolution in a general meeting vary the terms of ESOP offered pursuant to an earlier resolution of a general body but not yet exercised by the employee provided such variation is not prejudicial to the interest of the option holder.

3. The Company shall comply with Clause 6.3 if applicable to such variation of terms as they do to the original grant of option.

4. Detailed disclosure:

i) Variation – Re-pricing of the option.

ii) Rationale - Price was rendered unattractive due to fall in the price of the shares in the market.

iii) All the employees who have been granted Stock Options above the current market price are beneficiaries of such variations and are available on the records.

Pursuant to the amendment to the ESOP Guidelines, 2003 and all other applicable provisions consent of the members is being sought to re-pricing of the options.

None of the Directors of the Company and the Directors of the Subsidiary Companies is in any way, concerned or interested in the resolution, except to the extent of their shareholding in the Company and /or the securities that may be offered to them under the Scheme.

additionaL information pursuant to CLause 49 of tHe Listing agreement WitH regard to direCtor seeking appointment / re-appointment at tHe 19tH annuaL generaL meeting:Name of Director Mr. James PothenDate of Birth 26.11.1951Date of appointment of Board

10.01.2009

Qualification - M.Sc.- Post Graduate Certificate in Personnel

Management and Organisational Behaviour from the Indian Institute of Science, Bangalore.

- Post Graduate Certificate in Programme Evaluation and Rating Techniques from the Indian Institute of Science, Bangalore.

- Certificate in “Company Director’s Course in Corporate Governance” from the Commonwealth Secretariat and Commonwealth Association for Corporate Governance, London.

- Underwent more than 25 senior level specialized courses / training programmes (in India and abroad) in the field of Banking, Finance, Foreign Exchange, Infrastructure Development and Financing, Management and related areas.

Experience in Specific

Having close to three (3) decades of experience in various Senior capacities in Reserve Bank of India

No. of Shares held 12,500 Equity SharesOther Directorship Vertex Commodities And Finpro Private Limited

By Order of the Board of Directors,For VerteX seCurities Limited

sandhya r. nair Place: Kochi–18 Company Secretary Date: 15.05.2012

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To The MembersVertex Securities Limited

Your Directors have pleasure in presenting before you the 19th Annual Report of the Company. The Standalone Statement of Profit & Loss and Balance Sheet for the year ended 31st March, 2012 as audited and reported by the Auditors of the Company and also Consolidated Accounts incorporating the Statement of Profit &

Loss and Balance Sheet of the Subsidiary Company, M/s. Vertex Commodities And Finpro Private Limited as required under the Listing Agreement are also attached herewith.

finanCiaL resuLts:

The Financial highlights of the Company for the year ended 31st March, 2012 with corresponding figures of the previous year are given below:-

direCtors’ report

(` in Lacs)

financial results standalone

2011-12 2010-11

Total Revenue 872.60 942.45

Profit before Depreciation, Taxation

and Prior period items (87.74) 6.59

Depreciation and Preliminary Expenses 40.22 44.62

Profit / (Loss) before Tax (127.96) (38.03)

Profit/ (Loss) after Tax (96.96) (25.67)

Profit/(Loss) carried forward to Reserves (96.96) (25.67)

Business

During the year ended 31st March, 2012 your Company earned consolidated revenue of ` 1,111.84 Lacs as compared to ` 1,084.43 Lacs in the previous year. The consolidated operations have recorded a net loss of ` 168.04 Lacs as compared to a net loss of ` 76.80 Lacs in the previous year. The net loss suffered is being carried out in the Balance Sheet.

Detailed information on operational and financial performance, etc. of the Company for the financial year is given in the Management Discussion and Analysis which is set out as Annexure to the Directors’ Report.

diVidend

No dividend is recommended during the year due to inadequacy of profits.

direCtors

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Mr. James Pothen is liable to retire by rotation and is eligible for re-appointment.

The resolution for appointment of Mr. James Pothen is being placed before the ensuing Annual General Meeting for approval.

Pursuant to Clause 49(g) (1) of the Listing Agreement with the Stock Exchange, brief resume of the Directors proposed for re-appointment has been given in the Notice convening the Annual General Meeting.

suB-diVision/ stoCk spLit of eQuitY sHares:

During the year under review, with the consent of the Members through Postal Ballot the Company sub- divided Equity Shares of the face value of ̀ 10/ - (Rupees Ten ) each into five (5) Equity Shares of the face value of ` 2/- (Rupees Two) each as per the provision of Section 94 of Companies Act, 1956. The rationale of splitting the shares was to make the stock affordable to retail investors, thus driving buying interest. Also, liquidity would improve, which could drive the interest of large funds/investors.

reCLassifiCation of autHorised CapitaL:

During the year under review your Directors have, pursuant to the Scheme of Amalgamation of Transwarranty Capital Private Limited with the company as approved by the Hon’ble High Courts at Bombay and Kerala approved conversion of 26,38,261 of 0.5% Fully Convertible Preference Shares out of 83,00,715, 0.5% Fully Convertible Preference Shares by issue and allotment of 26,38,261 Equity Shares of ` 10/- each fully paid up at par for each Fully Convertible Preference Shares.

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Corporate goVernanCe

The Securities and Exchange Board of India (SEBI) prescribed Corporate Governance standards. Your Directors reaffirm their commitment to these standards and this Annual Report carries a section on Corporate Governance.

direCtors’ responsiBiLitY statement

Your Directors hereby confirm:–

a) That in the preparation of the Annual Accounts for the year ended 31st March, 2012, applicable Accounting Standards have been followed along with proper explanation relating to material departures, wherever necessary.

b) That the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair

view of the state of affairs of the Company at the end of the financial year and the loss of the Company for the year ended 31st March, 2012.

c) That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

d) That the Directors have prepared the annual accounts on an ongoing concern basis.

ConsoLidated aCCounts

The Consolidated Statement of Profit and Loss for the year ended 31st March, 2012 and the Balance Sheet as on that date as required under Listing Agreement is also attached herewith.

sHare CapitaL struCture

as at 31.03.2012 (`)

as at 31.03.2011 (`)

autHorised CapitaL:

67,291,305 Equity Shares of ` 2/- each

(P.Y. 10,820,000 Equity Shares of ` 10/- each) 134,582,610 108,200,000

59,81,739 0.5% Fully Convertible Preference Shares of ` 10/- each

(P.Y. 8,620,000 0.5% Fully Convertible Preference Shares of ` 10/- each) 5,98,17,390 86,200,000

40,000 15% Non-Cumulative Redeemable Preference Shares of ` 100/- each 40,00,000 40,00,000

issued, suBsCriBed and paid up CapitaL :

A. 43,848,980 Equity Shares of ` 2/- each (P.Y. 59,98,951 Equity Shares of ` 10/- each) 87,697,960 59,989,510

- 26,38,261 0.5% Fully Convertible Preference Shares of ̀ 10/- each converted into Equity Shares of ` 2/- each

- 1, 28,690 Equity Shares of ` 2/- each issued pursuant to ESOP

- 1,57,500 Equity Shares of ̀ 2/- each issued to the shareholders of erstwhile Transwarranty Capital Private Limited as per the scheme of amalgamation.

- 3,76,730 Equity Shares of ̀ 2/- each issued to the shareholders of erstwhile Transwarranty Capital Private Limited pursuant to Chapter VII of SEBI (Issue of Capital and Disclosure Requirements) Regulation, 2010 [ICDR].

B. 59,80,954 0.5% Fully Convertible Preference Shares of ` 10/- each fully paid

- (3,18,500 Preference Shares of ` 10 each issued to the share holders of erstwhile Transwarranty Capital Private Limited as per the scheme of amalgamation)

C. 27,758 15% Non Cumulative Redeemable Preference Shares of ` 100/- each 2,775,800 2,775,800

totaL 150,283,300 145,772,460

After the said conversion instead of increasing the Authorized Share Capital of the Company, it was considered prudent to reclassify part of the existing Authorised Capital in Preference Shares into Equity Shares of the Company. The consent of the Members for

the Reclassification of Authorised Capital of the Company was obtained through Postal Ballot as per Section 192A of Companies Act, 1956 and the Companies (Passing of the Resolution by Postal Ballot) Rules, 2001.

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operations of suBsidiarY

During the year ended 31st March, 2012 the subsidiary company Vertex Commodities And Finpro Private Limited had total revenue of ` 361.22 Lacs and loss of ` 71.08 Lacs as against ` 237.03 Lacs and loss of ` 51.13 Lacs respectively in the previous year.

In accordance with the general circular issued by the Ministry of Corporate Affairs, Government of India, the Balance Sheet, Statement of Profit and Loss and other documents of the subsidiary company are not being attached with the Balance Sheet of the Company. The Company will make available the Annual Accounts of the subsidiary company and the related detailed information to any member of the Company who may be interested in obtaining the same. The annual accounts of the subsidiary company will also be kept open for inspection at the Registered Office of the Company and that of the Subsidiary Company.

The Consolidated Financial Statements presented by the Company include the financial results of its subsidiary company.

partiCuLars of empLoYees’ u/s 217 (2a) of tHe Companies aCt, 1956

Information as per Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, is available at the registered office of your Company. However, as per the provisions of Section 219(1)(b)(iv) of the said Act, the Report and Accounts are being sent to all shareholders of the Company and others entitled thereto excluding the aforesaid information. Any shareholder interested in obtaining a copy of this statement may write to the Company Secretary / Compliance Officer at the Corporate Office or Registered Office address of the Company.

disCLosure of empLoYee stoCk options

During 2011-12, the Company granted 1,013,750 Stock Options to the employees under its Employee Stock Option Plan 2010. Details as per the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, are set out in the Annexure to this Report.

management disCussion and anaLYsis

The Management Discussion and Analysis Report for 2011-12, as required under Clause 49 of the Listing Agreement, is given as a separate statement in the Annual Report.

disCLosure of additionaL partiCuLars

In view of the nature of activities which are being carried on by the Company, the particulars prescribed under Section 217(1) (e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 regarding Conservation of Energy & Technology Absorption are not applicable to the Company.

auditors

M/s. Rahul Gautam Divan & Associates, Chartered Accountants, Mumbai will retire at the ensuing Annual General Meeting and have confirmed their eligibility and willingness for re-appointment. Your Directors recommend their appointment.

Listing partiCuLars

The Company’s Equity Shares continue to be listed in Bombay Stock Exchange.

repLies to auditors’ oBserVations

Referring to Para No. 4 (i) of the observation of the auditors, it is clarified that as stated in notes forming part of accounts the management has evaluated long term investments and conform that there exist no circumstances which warrant any provision in the accounts for a possible diminution in the value.

Referring to Para No. 4 (ii) it is clarified that as the company has initiated legal actions for the recovery of the dues, and it will not be prudent to make any provisions as the cases are in various stages in different Courts.

aCknoWLedgement

Your Directors would like to express their gratitude to the officials of National Stock Exchange of India Limited, Bombay Stock Exchange Limited, Cochin Stock Exchange Limited, Over the Counter Exchange of India, National Securities Depository Limited, Central Depository Services (India) Limited and also to the Shareholders and Bankers. Your directors also express their deep appreciation of the valuable services of the Officers and Staff Members of the Company.

For and on behalf of the Board of Directors,

Place: Mumbai kumar nair Date : 16.05.2012 Chairman

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annexure a forming part of the directors report:

Disclosure in compliance with Clause 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme) and (Employees Stock Purchase Scheme) Guidelines, 1999, as amended, are set below:

no particulars 2011-12 2010-11

1 Total number of Options under plan 10,00,000 10,00,000

2 Option granted during the year 1,013,750 6,55,000

3 The Pricing formula Exercise price considered is the closing market price as on the day preceding the date of the grant on Bombay Stock Exchange Limited (BSE) where the shares are listed

Exercise price considered is the closing market price as on the day preceding the date of the grant on Bombay Stock Exchange Limited (BSE) where the shares are listed

4 Options Vested 131,565 Nil

5 Options exercised 128,690 of ` 2/- each at a premium of ` 11.80/-

N.A.

6 Total No. of shares arising as a result of Options N.A. N.A.

7 Options Forfeited 1,013,250 31,500

8 Variation of terms of Options Nil Through postal ballot resolution dated 31.03.2011 for re-pricing the Vertex Employees Stock Option Plan, 2010 at ` 145.50/- to the employees who have been granted ESOP at much higher price than the current price.

9 Money realized by exercisable Options ` 17,75,922/- N.A.

10 Total No. of Options in force 2,680,315 6,23,500

11 Employee wise details of Options granted

(a) Senior Management Personnel during the year Nil Mr. U Ramachandran-25,000

Mr. James Pothen-25,000

Mr. Jose Polachira- 25,000

Mr. Ashok Mittal- 1,00,000

Mr. Abraham K Jacob – 50,000

(b) Employees holding 5% or more of the total number of Option granted during the year

Nil Nil

(c) Employees who were granted Options during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant

Nil Mr. Ashok Mittal- 1,00,000

12 Diluted Earnings Per Share (EPS) pursuant to issue of Shares on Exercise of Options calculated in accordance with (“Accounting Standard (AS) 20” Earning per share

` 0.25 ` 0.80

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no particulars 2011-12 2010-11

Where your Company has calculated the employee compensation cost using the intrinsic value of the Stock Options, the difference between the employees compensation cost so computed and the employees compensation cost that shall have been recognized if it had used the fair value of the Options, shall be disclosed. The impact of this difference on profits and on EPS of your Company shall also be disclosed.

Had fair value method been used, the compensation cost would have been higher by ` 75.77 Lakhs (Previous Year ` 89.37 lakhs) Loss after tax would have been higher by ` 75.77 Lakhs (Previous year ̀ 89.37 lakhs ) and EPS basic would have been (` 0.43) per share (Previous Year (` 1.92) per share and Diluted EPS would have been (` 0.25) per share (Previous Year (` 0.80).

Had fair value method been used, the compensation cost would have been higher by ` 89.37 Lakhs (Previous Year ` Nil) Loss after tax would have been higher by ` 89.37 Lakhs (Previous year ` Nil) and EPS basic would have been (` 1.92) per share (Previous Year ` Nil ) per share and Diluted EPS would have been (` 0.80) per share (Previous Year ` Nil).

Weighted average exercise prices and weighted average fair values of Options shall be disclosed separately for Options whose exercise price either equals or exceeds or is less than the market price of the stock

Weighted Average Exercise Price is ` 13.80

Nil

A description of the method and significant assumptions used during the year to estimate the fair values of Options including the following weighted average information:

1. risk free interest rate 8.09% 8.32%

2. expected life 5 yrs 5 yrs

3. expected volatility 58.97% – 55.23% 76.00%

4. expected dividend yield 3.22% 3.22%

5. the price of the underlying shares in market at the time of option grant

Grant price of options is the closing market price on Bombay Stock Exchange Limited (BSE) where the shares are listed as on the day preceding the date of the grant, hence the price of underlying shares is same as the grant price.

Grant price of options is the closing market price on Bombay Stock Exchange Limited (BSE) where the shares are listed as on the day preceding the date of the grant, hence the price of underlying shares is same as the grant price.

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report on Corporate goVernanCe

mandatory requirements:

1. CompanY’s pHiLosopHY on Code of Corporate goVernanCe:

Your Company is committed to achieve and maintain highest standards of Corporate Governance on a sustained basis so as to be an exemplary corporate citizen. It believes that Corporate Governance is not a destination but a continuous journey with an upward moving target. It firmly deems that good corporate governance does not mean a mere drafting a code of corporate governance but practising it in the true spirit. Corporate Governance aims at fairness, transparency, accountability and responsibility in the functioning of the Company with the ultimate objective of realising and enhancing shareholders’ values.

The Company has already put in place systems and procedures and is fully compliant with Clause 49 of the Listing Agreement.

2. Board of direCtors:

Composition of the Board:

The Board of Directors of the Company is a balanced one, comprising of a Managing Director and Non-Executive Directors which includes independent professionals with vast experience in various fields. As on 31st March, 2012 the Board consists of four (4) members, of which one (1) is Managing Director, two (2) Independent Directors and one (1) Non-executive Director.

Board Meetings:

The Meetings of the Board of Directors are scheduled well in advance and generally held at Kochi. The notice confirming the meeting and the detailed agenda are sent well in advance to all the Directors. A business review presentation is made by the Senior Management team at each Board Meeting to apprise the Directors about the performance of the Company. The Board provides strategic direction and guidance in improving the performance of the Company. Business plans, annual operating and capital expenditure budgets, are also placed and reviewed by the Board along with the senior management team of the Company. The Board meets at least once a quarter to review the quarterly performance and approves the financial results.

There were four (4) Board Meetings during the financial year ended 31st March, 2012, namely on 20.05.2011, 20.07.2011, 11.10.2011 and 16.01.2012.

Membership, Attendance & Other Directorships:

Membership and Attendance of each Director at the Board of Directors Meetings held during the year and the last Annual General Meeting and the number of other Directorship and Chairmanship/Membership of Board Committees as on 31st March, 2012:

Name of Director Category No. of Board meetings attended

Last AGM attendance

No of other Directorships

Membership/ Chairmanship of

Board Committees

Mr. Kumar Nair Chairman 4 Yes 7 1

Mr. U. Ramachandran Non-Executive Director 4 Yes 6 2

Mr. Jose Thomas Polachira Independent 4 Yes 1 3

Mr. James Pothen Independent 4 Yes 1 3

No Director of the Company is a member of more than ten (10) or Chairman of more than five (5) specified committees across all the companies in which he is a director.

Reappointment of Director:

Mr. James Pothen will retire at the ensuing Annual General Meeting and is eligible for re-appointment. He is M.Sc., having close to three (3) decades of experience in various Senior capacities in Reserve Bank of India.

3. Board Committees:

To enable better and more focused attention on the affairs of the Company, the Board delegates particular matters to Committees of the Board set up for the purpose. These Committees prepare the groundwork for decision making and report at the subsequent Board Meeting.

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Audit Committee:

In Compliance with the provisions of Section 292A of the Companies Act, 1956 and in accordance with the provisions of Clause 49 of the Listing Agreement, the Company is having a qualified and independent Audit Committee at the Board level.

Terms of Reference:

The Audit Committee, inter alia, reviews and reports to the Board on the following:

i) Oversight of the Company’s financial reporting.

ii) Reviewing the quarterly/annual financial results, financial statements before submission to the Board for approval, with particular reference to accounting policies & procedures, major accounting policies, related party transactions etc.

iii) Recommending to the Board the appointment / re-appointment of Statutory Auditors and Internal Auditors and fixation of audit fees.

iv) Approving internal audit plan and reviewing efficacy of internal control systems / function.

The powers and terms of reference of the Audit Committee are in accordance with the provisions of Clause 49 of the Listing Agreement.

The Chairman of the Audit Committee is an Independent Director. All the members of the Audit Committee are financially literate and all of them have accounting and related financial management expertise.

Compositionandattendanceduringthefinancialyearended31stMarch,2012:

The Audit Committee comprises of three (3) Directors, two (2) of whom are Independent Directors. During the financial year the Committee met four (4) times on 20.05.2011, 20.07.2011, 11.10.2011 and 16.01.2012. All the members of the Committee are financially literate.

name of director designation no. of meetings attendedMr. James Pothen Chairman 4Mr. U. Ramachandran Member 4Mr. Jose Thomas Polachira Member 4

ShareTransfer&ShareholdersGrievanceCommittee:

Terms of Reference:

The Company has constituted a Share Transfer & Shareholders Grievance Committee to approve transfer of shares, splitting and consolidation of shares, issue of duplicate share certificates and any grievances received from the shareholders.


The Share Transfer & Shareholders Grievance Committee comprises of three (3) Directors, two (2) of whom are Independent Directors. During the financial year the Committee met three (3) times on 20.05.2011, 20.07.2011 and 16.01.2012.

name of director designation no. of meetings attendedMr. Jose Thomas Polachira Chairman 3Mr. U. Ramachandran Member 3Mr. James Pothen Member 3

Remuneration Committee:

Terms of Reference:

The Committee reviews and recommends to the Board the remuneration payable to Executive Directors/ Whole time Directors, Directors and other Managerial Persons. The Committee recommends the remuneration package after considering factors such as experience, expertise, position, responsibilities to be shouldered by the individual, leadership qualities, the volume of Company’s business and profits earned by it. The Company has formulated Employees Stock Option Plans in order to attract, reward and retain talented and qualified personnel and to create a sense of belonging among them.


The Remuneration Committee comprises of three (3) directors, two (2) of whom are independent directors. During the financial year the Remuneration Committee met once on 20.05.2011.

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name of director designation no. of meetings attended

Mr. James Pothen Chairman 1

Mr. Jose Thomas Polachira Member 1

Mr. Kumar Nair Member 1

4. manageriaL remuneration:

Mr. Kumar Nair was appointed as Managing Director for the period 01.04.2010 to 31.03.2013 on remuneration of ` 66,000 per month. However, no remuneration was paid or provided in the accounts for the year ended 31st March, 2012 as the Managing Director has opted not to receive any remuneration.

The Company pays ` 5,000 to Independent Directors towards sitting fees for each Board Meeting and ` 2,000 for each Committee Meeting respectively attended by them.

5. Code of ConduCt:

The Board of Directors of the Company has laid down a Code of Conduct for the Board of Directors and Senior Management Personnel of the Company. All the Directors and Senior Management Personnel have affirmed compliance with the Code of Conduct as on 31st March, 2012 and a declaration to this effect signed by the Managing Director forms part of this report.

6 a. generaL BodY meetings:

Details of Annual General Meetings during the last three (3) years:

financial year day, date and time Venue special resolutions passed, if any

2008-09 Thursday, 10/09/2009 11.00 AM

Thottathil Towers, 2nd Floor, Market Road, Kochi, Kerala – 682 018

Yes, for change in name of Company from Vertex Securities Limited To Transwarranty Shares & Derivatives Broking Limited

2009-10 Tuesday, 14/09/2010 11.30 AM

Conference Hall, Hotel Abad Plaza, M.G. Road, Ernakulam, Cochin-682 035

Yes, for change in the title of the ESOPs Scheme

2011-12 Wednesday, 20/07/2011 9.30 AM

Sharon Hall, The International Hotel, M.G. Road, Ernakulam, Kochi-682 031

No

B. eXtra ordinarY generaL BodY meetings:

No Extra Ordinary General Body Meeting was held during the financial year ended 31st March, 2012.

C. postaL BaLLot:

For the financial year ended 31st March, 2012, the following special resolutions were passed by the Company’s Shareholders through Postal Ballot.

Postal Ballot Notice dated 20th July, 2011, in respect of the following matters:

Special Resolution: For sub- dividing Equity Shares of face value of ` 10/- (Rupees Ten) each into 5 (Five) Equity Shares of the face value of ` 2/- (Rupees Two) each and Reclassification of Authorised Share Capital.

Special Resolution: To amend Clause V of the Memorandum of Association of Company.

Special Resolution: To alter Article 3 of the Articles of Association of Company.

Special Resolution: Increasing Limits for investment by FIIs and NRIs.

Mr. K.P. Gopi Mohan, Practising Company Secretary, Scrutinizer appointed by the Board has submitted his report. Accordingly, the following result of the Postal Ballot was declared on 4th October, 2011.

12


particulars of postal Ballot total Ballots received and are

valid

total votes for the resolution

total votes against the resolution

% to the total votes received for the

resolutionno. no. of shares

no. no. of shares

no. no. of shares

Special Resolution pursuant to the provisions of Section 94 of the Companies Act, 1956 for sub- dividing Equity Shares of face value of ` 10/- (Rupees Ten) each into 5 (Five) Equity Shares of the face value of ` 2/- (Rupees Two) each and Reclassification of Authorised Share Capital.

48 50,12,858 48 50,12,858 Nil Nil 58.04%

Special Resolution pursuant to the provisions of Section 16 of the Companies Act, 1956 to amend Clause V of the Memorandum of Association of Company.

47 50,12,848 47 50,12,848 Nil Nil 58.04%

Special Resolution pursuant to Section 31 of the Companies Act, 1956 to alter Article 3 of the Articles of Association of Company.

47 50,12,848 47 50,12,848 Nil Nil 58.04%

Special Resolution for Increasing Limits for Investment by FIIs and NRIs

47 50,12,848 47 50,12,848 Nil Nil 58.04%

No special resolution is proposed to be conducted through postal ballot as on date.

7. disCLosures:

There were no transactions of material nature with the Promoters, Directors or the Management, their Subsidiaries or relatives during the period that may have potential conflict with the interest of the Company at large.

There were no non-compliances by the Company during the year. No penalties or strictures have been imposed on the Company by Stock Exchange or SEBI or any statutory authorities on any matter related to the capital markets during the previous three financial years.

The Board has adopted a Code of Conduct including Business Ethics Policy for its Directors and Senior Management.

The Managing Director has submitted before the Board a declaration of compliance with the Code of Conduct by the Directors during the financial year ended 31st March, 2012.

The Company follows the Accounting Standards issued by the National Advisory Board on Accounting Standards and in the preparation of the financial statement, the Company has not adopted a treatment different from the prescribed by any accounting standard.

Risk assessment and minimization of procedures are periodically reviewed by the Audit Committee and the Board of Directors of the Company.

The Managing Director has certified to the Board of Directors in compliance of Clause 49 (V) of the Listing Agreement with the Stock Exchange in the prescribed format. This has been reviewed by the Audit Committee and taken on record by the Board of Directors.

The Company has complied with all mandatory requirements under Clause 49 of the Listing Agreement with the Stock Exchange. The adoption of non-mandatory requirements has been dealt with in this Report.

8. means of CommuniCation:

Quarterly un-audited financial results are published in leading English and Vernacular newspapers and are being regularly placed on the website of the Company. Half yearly report is not sent separately to the shareholders. Annual Reports are sent to the Shareholders at their registered address with the Company and is being regularly placed on the website of the Company.

13


14. generaL sHareHoLders information:

Annual General Meeting : 19th Annual General Meeting

Date : 18th July, 2012

Time : 9.30 A.M.

Venue : The International Hotel,

Veekshanam Road,

Ernakulam, Kochi-682031.

financial Calendar (tentative)

Financial reporting for the quarter ending 30th June, 2012 : Last week of July, 2012

Financial reporting for the quarter ending 30th September, 2012 : Last week of October, 2012

Financial reporting for the quarter ending 31st December, 2012 : Last week of January, 2013

Financial reporting for the quarter ending 31st March, 2013 : Last week of May, 2013

Annual General Meeting for the year ended 31st March, 2013 : August/September, 2013

Date of Book Closure : 12th July, 2012 to 18th July, 2012 (both days inclusive)

Listing of Shares : Bombay Stock Exchange Limited

Stock Code : 531950

Payment of Listing Fees : Listing fee for the financial year 2012-2013 has been paid

Demat ISIN for NSDL & CDSL : INE316DO1024

10. stoCk performanCe:

Market Price Data during the year ended 31st March, 2012:

month High Low Bse sensex (High)

Apr-11 270.00 169.65 19,811.14

May-11 315.00 237.30 19,253.87

Jun-11 328.00 243.10 18,873.39

Jul-11 347.00 282.00 19,131.70

Aug-11 300.00 164.65 18,440.07

Sep-11 246.50 160.00 17,211.80

Oct-11 287.90 44.95* 17,908.13

Nov-11 46.50 20.00 17,702.26

Dec-11 19.05 9.10 17,003.71

Jan-12 19.08 13.33 17,258.97

Feb-12 13.89 11.98 18,523.78

Mar-12 14.10 7.67 18,040.69

* The face value of one (1) Equity Share of `10/- (Rupees Ten) each was sub-divided into five (5) Equity Shares of the face value of ` 2/- (Rupees Two) each vide postal ballot resolution of the Shareholders dated 04.10.2011.

14


registrars & transfer agents : m/s. Link intime india pVt. Ltd. C-13, Pannalal Silk Mills Compound LBS Marg, Bhandup (West), Mumbai 400 078 Contact person : Mr. Joy Varghese

Contact No. : 022-25963838

Fax No. : 022-25926969

Email id : [email protected]

share transfer system

• Securities lodged for transfer at the Registrar’s Office are normally processed within fifteen (15) days from the date of lodgment, if the documents are clear in all respects. All requests for dematerialization of securities are processed and the confirmation is given to the depositories within fifteen (15) days. Mr. K. J. Thomas, Manager – Legal & Secretarial is empowered to transfer of shares and other investor related matters. Grievances received from investors and other miscellaneous correspondence on change of address, mandates, etc are processed by the Registrars within thirty (30) days.

• Pursuant to Clause 47(c) of the Listing Agreement with the Stock Exchanges, certificates, on half-yearly basis, have been issued by a Company Secretary-in-Practice for due compliance of share transfer formalities by the Company. Pursuant to SEBI (Depositories and Participants) Regulations, 1996, certificates have also been received from a Company Secretary-in-Practice for timely dematerialization of the shares of the Company and for conducting a Secretarial Audit on a quarterly basis for reconciliation of the Share Capital of the Company.

sens

ex

15,500.00

16,000.00

16,500.00

17,000.00

17,500.00

18,000.00

18,500.00

19,000.00

19,500.00

20,000.00

20,500.00

0.00

50.00

100.00

150.00

200.00

250.00

300.00

350.00

400.00

High Low BSE Sensex (High)

Ver

tex

Hig

h

months

Bse senseX Vs. VerteX

Note: Shares of face value ` 10 were sub- divided into ` 2 each w.e.f October 2011 . However, the market value of shares were considered on the basis ` 10 each

15


distribution of shareholding as on 31st march, 2012:

no. of equity shares held

no. of shareholders

percentage of shareholders

total no of shares held

percentage of shares held

1 - 500 763 46.92 1,59,188 0.37

501 - 1000 280 17.22 2,27,631 0.52

1001 - 2000 137 8.43 2,17,515 0.50

2001 - 3000 135 8.30 3,39,956 0.78

3001 - 4000 30 1.85 1,04,889 0.24

4001 - 5000 58 3.57 2,76,554 0.64

5001 - 10000 93 5.72 7,01,615 1.61

10001 and above 130 8.00 4,14,44,902 95.34

totaL 1626 100 4,34,72,250 100.00

shareholding pattern as on 31st march, 2012:

sl. no. Category no. of shares % of Holding

1 Promoters & Persons acting in Concert 3,12,69,215 71.93

2 Mutual funds / UTI / Banks / FIs NIL NIL

3 Private Corporate Bodies 68,38,866 15.73

4 Clearing Member 3,22,858 0.74

5 NRIs / OCBs 1,99,160 0.46

6 Indian Public 48,42,151 11.14

grand totaL 4,34,72,250 100.00

16


Dematerialization of Shares 99.45% of the shares have been dematerialize

Outstanding GDRs/ADRs/Warrants or any convertible/instruments, conversion data and likely impact on equity

The Company has issued and allotted 59,80,954 Redeemable Cumulative Preference Shares which are compulsorily convertible to Equity Shares within a period of five (5) years from the date of issue.

Plant location Not applicable

Address for Correspondence VerteX seCurities LimitedThottathil Towers,2nd Floor, Market Road, Kochi, Kerala – 682 018Phone: 91-484-2384848

Contact Person Ms. Sandhya R. Nair, [email protected]

Shri. K. J. Thomas, [email protected]

Members holding shares in dematerialized mode should address all their correspondence to their respective Depository Participant.

non-mandatorY reQuirements:

1) Chairman of the Board – Separate office is maintained for the Executive Chairman.

Mr. Jose Thomas Polachira and Mr. James Pothen are Independent Directors on the Board of the Company. No specific period has been specified for these Directors. All the directors have requisite qualification and experience and in the opinion of the Company this would enable them to contribute effectively to the Company in their capacity as Independent Directors.

2) Shareholders Right – The Company has not sent half yearly financial performance including summary of the significant events to each household of the shareholders, since the results were published in two (2) newspapers, one (1) in Vernacular and one (1) in English newspaper.

3) Training of Board Members – The Board consists of eminent, qualified and well experienced Directors. Therefore, training of Board Members is not required.

4) Mechanism for evaluation of Non-Executive Board Members – The evaluation process is yet to be formulated by the Board.

17


deCLaration

In accordance with Clause 49 of the Listing Agreement with the Stock Exchange, I hereby confirm that, all Board Members and Senior Management personnel of the Company have affirmed compliance with the Code of Conduct and Ethics during the financial year ended 31st March, 2012.

Place : Mumbai kumar nair Date: 16.05.2012 Chairman and Managing Director

Ceo/ Cfo CertifiCation:

We hereby certify to the Board that:

a) We have reviewed the financial statements and the cash flow statements for the year and to the best of our knowledge and belief:

(i) These statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading

(ii) These statements together present a true and fair view of the company’s affairs and are in compliance with existing accounting standards, applicable laws and regulations.

b) There are to the best of our knowledge and belief, no transactions entered into by the Company during the year which are fraudulent, illegal or violate the Company’s Code of Conduct.

c) We accept the responsibility for establishing and maintaining internal controls for financial reporting and that, we have evaluated the effectiveness of the internal control systems of the Company pertaining to the financial reporting and have disclosed to the auditors and the Audit Committee, deficiencies in the design or operation of such internal controls, if any of which we are aware and the steps we have taken or propose to take steps to rectify these deficiencies.

d) We further certify that:

i) There have been no significant changes in internal control during the year;

ii) There have been no significant changes in accounting policies during the year, except the Company has adopted Accounting Standard 15 – Employees Benefits (Revised 2005) issued by the Institute of Chartered Accountants of India; and

iii) To the best of our knowledge, there have been no instances of fraud, involving managements or an employee having a significant role in the Company’s internal control systems.

For Vertex securities Limited

Place: Mumbai kumar nair Date: 16.05.2012 Chief Executive Officer

18


CompLianCe CertifiCate

To

The Members of

VERTEX SECuRITIES LIMITED

We have examined the compliance of conditions of Corporate Governance by M/s. Vertex Securities Limited for the year ended March 31, 2012, as stipulated in Clause 49 of the Listing Agreement of the said Company with Stock Exchanges.

The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, we certify that the company has complied with the conditions of Corporate Governance as stipulated In the above mentioned Listing Agreement.

We state that in respect of investor grievances received during the year ended March, 31, 2012, no investor grievances are pending for a period exceeding one month against the company as per the records maintained by the Company.

We further state that such compliance is neither an assurance as to the further viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company.

(k. p. gopimoHan) Practising Company Secretary

Place : Kochi (C.P. No.2912)

Date : 14.05.2012

19


Vertex Securities Ltd (Vertex) is engaged in the following businesses: -

1. Vertex and its Subsidiary Company are engaged in the business of broking with close to 250 offices PAN India with strong footprint in Southern and Western India. The business caters to Retail, HNI and Institutional Clients.

The Company currently provides brokerage services in Equity, Equity Derivatives and Currency Derivatives Segments.

2. Commodity Broking Service is provided through its Subsidiary Company, Vertex Commodities and Finpro Pvt Ltd (VCFPL).

3. Merchant banking.

Vertex has membership of: -

a. National Stock Exchange of India Ltd., (NSE)

b. Bombay Stock Exchange Ltd., (BSE)

c. Cochin Stock Exchange Ltd., (CSE)

d. OTC Exchange of India (OTCEI)

e. NSDL (for depository services)

f. SEBI registration as a Merchant Banker.

g. MCX Stock Exchange Ltd., (currency segment)

VCFPL has membership of following commodity exchanges: -

a. Multi Commodity Exchange of India (MCX)

b. National Commodity and Derivative Exchange (NCDEX)

c. National Multi Commodity Exchange (NMCE)

d. National Spot Exchange of India (NSEIL)

VerteX seCurities Limited

During the year ended 31st March, 2012, your Company earned consolidated revenue of ` 1,111.84 Lacs as compared to ` 1,084.43 Lacs in the previous year. The operations have recorded a net loss of ` 168.04.80 Lacs as compared to a net loss of ` 76.80 Lacs in the previous year.

trust

Building the brand “Vertex” is high on the agenda and there is a concerted effort towards this. Key Company Officials have been appearing regularly on the electronic and print media. The Company is conducting a series of educational seminars on Capital Market, Investment Strategies, Technical and Fundamental Analysis in various parts of the country. All the employees are put through training programs and are expected to be certified professionals in Equity Markets. The brand Vertex is being positioned to represent a Company, where “knowledge creates value” on the 4 pillars of “Trust”, “Talent”, “Transparency” and “Technology”.

talent & team

As per the strategy, the Company continues to focus on consolidating its talent pool and evolving as a preferred employer in the business.

The Company will continue with its talent acquisition strategy for middle & senior level managers and branch managers for sales and business development activities, which should yield results in the coming years.

The institutional empanelment, which requires yearly renewal, is progressing well and most of the empanelment should get renewed this year with some new ones too.

The Company believes that its human resources would be the key differentiator to provide the competitive edge and accordingly has a very progressive human resources policy. All high performing employees are rewarded with attractive incentives and generous ESOPs.

The Company strives to provide the right ecosystem for talent to thrive and morph into successful teams.

“Coming together is a beginning. Keeping together is progress. Working together is success.” – Henry Ford.

transparency

Vertex follows a very high level of corporate governance, where the Board of Directors is involved in every strategic decision, impacting the Company. The CEO manages the Company with a clearly defined framework laid down by the Board including annual business plan, where every aspect of the business is well defined. All the Managers meet together to debate, discuss and finalize the business plan. The operational decisions are taken by the CEO and the Senior Management Team. Monthly MIS reports are discussed with the MD.

Every quarter, the CEO presents the MIS to the Board with variance analysis and action taken report.

technology

The Company recognizes that technology would be another key differentiator and continuously makes investments to upgrade its technology capabilities.

Business

For FY 2012-13, the Company shall continue to focus on the same geographical areas with plan to expand and open few more branches and franchisees in different locations and also strengthen its presence in western India. The Company would increase its focus on institutions, corporate clients, high net worth individuals and family offices to grow the business.

VerteX Commodities and finpro pVt Ltd

For the year ended 31st March, 2012, the subsidiary Company, Vertex Commodities And Finpro Private Limited had total revenue

management disCussion and anaLYsis

20


of ̀ 361.22 lacs and loss after tax of ̀ 71.,08 Lacs as against ̀ 237.03 Lacs and loss of ` 51.13 Lacs respectively in the previous year.

As mentioned above, considering the high business potential in commodities segment, the Company groomed talent in this segment to drive not only retail business at the branches, but also High Net Worth Individuals (HNI) and corporate business. The Company facilitates HNI / Corporate clients to invest in risk free arbitrage opportunities between the exchanges and physical market.

Broking industry:

economy:

In 2011-12, India faced two major challenges: managing growth and price stability. The Indian economy grew by 6.9% in 2011-12 as compared to growth of over 8% in the preceding two years giving indications of slowdown. Inflation was a major concern throughout the year and measured on the basis of wholesale price index (WPI), remained very high. The non-food inflation remained a cause of concern and driver of WPI, where as food inflation remained marginally steady. The monetary policy of Reserve Bank of India (RBI) remained tight during the year to control inflation, which impacted growth. The rising cost, low manufacturing activity, higher expenditure outgo resulted in expanding gap in fiscal deficit. The overall global economic scenario and depreciation of rupee against major currency further added to the fiscal deficit. These concerns coupled with delay in roll out of major policies resulted in withdrawal of FII investments from India and slow down of fresh inflow.

Capital & Commodity market:

Indian financial and capital markets, over the years, have matured with greater depth and liquidity. Reforms since 1991 have created strong linkages and integration of Indian economy with global economy. Hence, uncertainties and weak global economy have had major impact on the emerging market economies. Greece sovereign debt crisis and sovereign risk concerns over the other countries in the euro zone have further impacted other economies, India being no exception. This has led to very high volatility.

There has been decline in the capital market indices and the turnover on both the exchanges in India. The markets, in terms of NIFTY indices, stood 10.92 percent down from the peak level during the year and 9.23 percent year-on-year basis. The combined volume in cash segment at both the exchanges declined by 25.72 percent on year-on-year basis; and derivatives segment on NSE grew only by 7.19 percent on year-on-year basis. The downward trend is largely attributable to the following factors:

• Subdued FIIs inflow;

• Weak market sentiments due to moderation in growth rate caused by global uncertainties;

• Downgrade by rating agencies.

The Government / RBI, did undertake steps to increase the inflows from foreign investors and in January, 2012 allowed Qualified Foreign Investor (QFIs) to directly invest into the capital market with the objective to reduce volatility, curb rupee depreciation and widen class of investors. This is yet to show any material result.

While the volumes in equity cash segment (NSE and BSE) have

Below is the graphic presentation on growth of markets in india: - nse Cash segment growth: 18.44% Cagr from 2001-02 to 2011-12

21


nse derivatives segment growth: 68.31% Cagr from 2003-04 to 2011-12

Commodity derivatives segment growth (mCX & nCdeX): 155.17% Cagr from 2003-04 to 2011-12

22


dropped by 25.72% in 2011-12; the market witnessed growth of 7.27% in F&O segment with higher focus on options side. At the same time commodities market volumes continued to grow at very fast pace due to increase in prices of commodities and higher participation. As per Exchanges (MCX & NCDEX) data, the segment grew by about 54.7% when compared to last year although highest contributing commodities remained bullion, base metals and energy products. The volume in agri commodities witnessed steady growth.

Currency derivatives segment

MCX Stock Exchange Limited (MCX-SX) and National Stock Exchange of India Limited (NSE) offers platforms for trading in currency futures. The currency derivatives segments operate under the regulatory control of the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI). With a large number of banks, corporates, and brokerage houses as trading members, both the exchanges have been providing the desired liquidity and depth for all categories of users. Further, the exchanges guarantee settlement of all transactions that will enhance safety by eliminating counterparty risk.

Currency futures are a linear product. It means that the losses as well as profits for the buyer and the seller of a futures contract are unlimited.

As the date of expiration comes near, the basis reduces - there is a convergence of the futures price towards the spot price. On the date of expiration, the basis is zero. If it is not, then there is an arbitrage opportunity. Arbitrage opportunities can also arise when the basis (difference between spot and futures price) or the spreads (difference between prices of two futures contracts) during the life of a contract are incorrect.

In determining profits and losses in futures trading, it is essential to know both the contract size (the number of currency units being traded) and also the value of tick. A tick is the minimum trading increment or price differential at which traders are able to enter bids and offers. Tick values differ for different currency pairs and different underlying.

Futures markets were designed to solve the problems that exist in forward markets. A futures contract is an agreement between two parties to buy or sell an asset at a certain time in the future at a certain price. But unlike forward contracts, the futures contracts are standardized and exchange traded. To facilitate liquidity in the futures contracts, the exchange specifies certain standard features of the contract. A futures contract is standardized contract with standard underlying instrument, a standard quantity and quality of the underlying instrument that can be delivered, (or which can be used for reference purposes in settlement) and a standard timing of such settlement. A futures contract may be offset prior to maturity by entering into an equal and opposite transaction.

The volumes in currency derivatives (NSE and MCX SX) have grown by 10% in 2011-12 on account of higher participation and volatility.

Vertex securities Limited and its parent company, Transwarranty Finance Limited, together represent a full service, Investment Banking, Brokerage and Financial Services Group. Excellent domain expertise combined with a strong client and institutional relationship network nurtured over 20 years has ensured that both the companies are well poised to unlock value for its shareholders in the fast evolving financial landscape in India.

internal control systems and their adequacy

The CEO/CFO certification provided in the report discusses the adequacy of our internal control systems and procedures.

Human resource development

The most important asset of the Company is its Human Resources. The Company has implemented attractive ESOP scheme for sharing of wealth with employees.

Cautionary statements

Statements in the Management Discussion and Analysis describing the Company’s objectives, projections, estimates, expectation may be forward looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied.

23


auditor’s report

ToThe Members,VERTEX SECuRITIES LIMITED

1. We have audited the attached Balance Sheet of Vertex Securities Limited as on 31 March 2012, the Profit and Loss Account and also the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003, as amended, issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order.

4. Further to our comments in the Annexure referred to in Paragraph 3 above, we report that:

i) Attention is invited to Notes on Accounts No.33, regarding evaluation of long term investment by the management. We have relied upon the confirmation by the management in the absence of independent external evaluation.

ii) As stated in Notes on Accounts No. 27, sundry debtors under the head current assets include old outstanding dues. The sundry debtors outstanding for more than six months amounts to ` 18.59 million. Further out of the total sundry debtors, for a sum of ` 10.37 million, the Company has initiated legal and recovery actions, the proceedings of which are in different stages.

In view of the above, the quantum of realisability of old outstanding sundry debtors/ legally initiated debts is not ascertainable at this stage.

iii) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

iv) In our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

v) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;

vi) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 to the extent applicable;

vii) On the basis of representations received from the directors as on 31 March, 2012 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31 March 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

viii) Subject to our comments in paragraphs 4(i) and (ii) above, in our opinion and to the best of our information and according to the explanations given to us, the said accounts together with the notes thereon give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2012;

b) in the case of the Profit and Loss Account, of the loss for the year ended on that date; and

c) In the case of Cash Flow Statement, of the cash flows for the year ended on that date.

For and on behalf ofrahul gautam divan & associates

Chartered Accountants (ICAI Reg. No: 120294W)

rahul divan Place: Mumbai Partner Date: May 15, 2012 Membership No: 100733

24


i) (a) The company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

(b) All the assets have been physically verified by the management at the end of the year and, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) There was no substantial disposal of fixed assets during the year.

ii) The company had no inventory during the year. Since the company has no inventory, clauses 4 (ii) (a), (b) & (c) of the Order are not applicable.

iii) a) The company has granted interest-free unsecured loans and deposits to companies covered under Section 301 of the Companies Act, 1956 during the year. The maximum amount granted during the year was ̀ 46,356,378 and the year end balance of the loans granted is ` 46,356,378.

b) In our opinion the rate of interest and other terms and conditions of said interest-free unsecured loans were not, prima facie, prejudicial to the interest of the company.

c) The company was regular in receiving the principal amount as per the terms and conditions of the agreement.

d) There is no overdue amount of loans granted by the company.

e) The company has taken interest-free unsecured loan from a company covered under Section 301 of the Companies Act, 1956. The year end balance of the loan taken is ` 16,395,345.

f) In our opinion the rate of interest and other terms and conditions of said interest-free unsecured loans were not, prima facie, prejudicial to the interest of the company.

g) The company was regular in paying the principal amount as per the terms and conditions of the agreement.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the

company and the nature of its business with regard to purchase of fixed assets and sale of services. During the course of our audit, no major weakness has been noticed in the internal control systems in these areas.

(v) (a) According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered in the register maintained under section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) In our opinion and according to the information and explanations given to us the company has not accepted deposits from the public.

(vii) In our opinion and according to the information and explanation given to us, the company has an internal audit system commensurate with the size and nature of its business.

(viii) The maintenance of cost records have not been prescribed by the Central Government under section 209(1)(d) of the Companies Act, 1956 for the year under report.

(ix) (a) According to the records of the Company and information and explanations given to us, the Company has been regularly depositing with the appropriate authorities undisputed statutory dues including Provident Fund, Employee State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Customs Duty Excise Duty, Cess and any other statutory dues applicable to it. There are no undisputed statutory dues as referred to above as at 31 March 2012 outstanding for a period of more than six months from the date they become payable.

(b) According to the information and explanation given to us and the records of the Company examined by us, disputed amounts of taxes have not been deposited with the authorities as at 31 March 2012 as per details given below:

anneXure to tHe auditor’s report(Annexure referred to in paragraph 3 of the Auditors’ Report of even date to the

Members of Vertex Securities Limited on the accounts for the year ended 31 March 2012)

Nature of Stuate Nature of dues Amount `

Period to which amount relates

Forum where the dispute is pending

The Income Tax Act, 1961 Tax/Interest 1,111,000 AY 2007-08 The Commissioner of (Appeals)

Finance Act Tax/Penalty 622,000 2006-07 to 2009-10 The Customs, Excise and Service tax Appellate Tribunal.

25


(x) In our opinion the company has accumulated losses at the end of the financial year. The company has incurred a cash loss during the financial year. No cash loss was incurred in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues to a financial institutions, banks or debenture holders.

(xii) Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that since the company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities, it is not required to maintain records in respect thereof.

(xiii) The Company is not a chit fund/nidhi/mutual benefit fund/society to which the provisions of special statue relating to chit fund are applicable. Accordingly paragraph 4(xiii) of the Order is not applicable.

(xiv) In respect of shares, securities etc. held as investments by the company, proper records have been maintained of the transactions and contracts and timely entries have been made by the company therein and the said investments have been held by the company in its own name.

(xv) In our opinion and according to the information and explanations given to us, the terms and conditions on which the company had given guarantees for loans taken by its subsidiary company and others from banks were not prejudicial to the interest of the company. The outstanding guarantees at the end of the year were ` 50 million which are shown as an contingent liabilities.

(xvi) In our opinion, the term loans have been applied for the purpose for which they were raised.

(xvii) According to the information and explanations given to us and an overall examination of the Balance Sheet and Cash Flows of the company as at 31 March 2012, we report that funds raised on short term basis have not been used for long term investment.

(xviii) During the year, the Company has not made preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, paragraph 4(xviii) of the Order is not applicable.

(xix) The Company has not issued any debentures during the year ended 31 March 2012. Accordingly, paragraph 4(xix) of the Order is not applicable.

(xx) During the year ended 31 March 2012, the Company has not raised money by way of public issue. Accordingly, paragraph 4(xx) of the Order is not applicable.

(xxi) Based on the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit for the year ended 31 March 2012.




26


particulars note no. as at 31.03.2012

(`)

as at 31.03.2011

(`)i. eQuitY and LiaBiLities

1 shareholders funda) Share Capital 2 150,283,300 149,272,460 b) Reserves and Surplus 3 12,989,910 4,439,941

163,273,210 153,712,401 2 share application money pending allotment - 17,480,272 3 non - Current Liabilities

a) Long Term Borrowings 4 23,904,256 35,579,213 b) Deferred Tax Liabilities (Net) 5 - 1,756,318 c) Other Long Term Liabilities 6 2,539,036 1,213,344

26,443,292 38,548,875 4 Current Liabilities

a) Short Term Borrowings 7 18,634,893 5,000,000 b) Trade Payables 8 63,774,349 74,697,010 c) Other Current Liabilities 9 6,729,301 9,346,328 d) Short Term Provisions 10 1,175,769 90,314,312 1,381,881 90,425,219

totaL eQuitY and LiaBiLities 280,030,814 300,166,767 ii. assets

1. non Current assets a) Fixed Assets

i) Tangible Assets 11 18,301,179 19,250,929 ii) Intangible Assets 12 4,358,090 5,564,755

b) Non Current Investments 13 58,410,100 58,410,100 c) Deferred Tax Assets (Net) 14 1,343,617 -

82,412,986 83,225,784 2. Current assets

a) Trade Receivables 15 37,899,678 35,525,369 b) Cash and Cash Equivalents 16 42,235,228 85,336,287 c) Short Term Loans and Advances 17 117,482,922 96,079,327

197,617,828 216,940,983 totaL assets 280,030,814 300,166,767

The Note No.1 to 36 are an integral part of these Financial Statements

As per our attached report of even date for rahul gautam divan & associates For and on behalf of Board of DirectorsChartered Accountants

rahul divan kumar nair James pothen Jose thomas polachira Partner Chairman and Managing Director Director Director

Mumbai Kochi-18 u. ramachandran sandhya r. nairMay 15, 2012 May 15, 2012 Director Company Secretary

BaLanCe sHeet AS AT 31st MARCH, 2012

27


particulars note no. for the year ended 31-03-2012

(`)

for the year ended 31-03-2011

(`)

reVenue

Revenue From Operations 18 62,527,100 72,443,627

Other Income 19 24,733,257 21,800,931

totaL reVenue 87,260,357 94,244,558

eXpenses

Employee Benefits Expense 20 40,226,998 35,729,113

Finance Costs 21 5,718,588 2,508,384

Depreciation and Amortisation Expense 4,021,898 4,461,866

Other Expenses 22 49,749,459 54,988,676

totaL eXpenses 99,716,943 97,688,039

Loss Before exceptional and extraordinary items and tax (12,456,586) (3,443,481)

Exceptional Items :-

Loss on Sale of Assets 338,926 359,610

Loss Before extra ordinary items and tax (12,795,513) (3,803,091)

Extraordinary Items - -

Loss Before tax (12,795,513) (3,803,091)

tax expense

Current Tax - -

Deferred Tax (3,099,936) (1,235,982)

Loss for the year from Continuing operations (9,695,577) (2,567,109)

Profit / (Loss) from Discontinuing Operations - -

Tax Expenses of Discontinuing Operations - -

Profit / (Loss) from Discontinuing Operations After Tax - -

Loss for tHe Year (9,695,577) (2,567,109)

Basic Earning Per Share of ` 2/- each ( In Rupees) 24 (0.24) (0.43)

Diluted Earning Per Share of ` 2/- each ( In Rupees) (0.14) (0.18)





statement of profit and Loss FOR THE YEAR ENDED 31st MARCH, 2012

28


CasH fLoW statement FOR THE YEAR ENDED 31ST MARCH, 2012

particulars 2011-12(`)

2010-11(`)

a. CasH fLoW from operating aCtiVities Net Profit (Loss) Before taxation (12,795,513) (3,803,091)Adjustments for: Add/(Less):

Depreciation/Amortisation 4,021,898 4,461,866 Loss on assets sold/ written off 338,926 359,610 Interest Paid & Bank Guarantee Expense 5,718,588 2,508,384 Interest Received (7,489,212) (3,846,160)Bad debts written off - 167,525

Operating Profit before Working Capital Changes (10,205,313) (151,865)Adjustments for Changes in Working Capital

Trade & Other Receivable-Decrease/(Increase) (2,374,308) 7,767,986 Inventories-Decrease/(Increase) - 84,827 Loans & Advances(Net)-Decrease/(Increase) (21,039,685) 25,452,195 Trade payables-(Decrease)/Increase (9,431,879) 4,815,438 Other payables-(Decrease)/Increase (2,957,644) 260,455

Cash generated from operations (46,008,829) 38,229,036 Income Tax and Fringe Benefit Tax paid (363,910) (432,699)Net Cash flow from Operating Activities (A) (46,372,739) 37,796,337

B. CasH fLoW from inVesting aCtiVities Purchase of Fixed Assets (2,342,268) (2,752,985)Investments in Subsidiary Company - (30,002,400)Sale of Fixed Assets 137,860 47,551 Interest Received Less Accrued 7,489,212 3,846,160 Inter Corporate Deposit (4,415,076) 3,345,000

net Cash used in investing activities (B) 869,728 (25,516,674)C. CasH fLoW from finanCing aCtiVities:

Share Application Money - 17,480,272 Share Application Money- ESOP Allottment 1,776,113 - Receipt/Repayment of Secured Loans(net) 5,850,655 (8,408,523)Interest Paid & Bank Guarantee Expense (5,718,588) (2,508,384)Dividend paid - (330,221)Un-secured loan 493,772 18,554,001

net Cash used in financing activities (C) 2,401,952 24,787,145 net increase/(decrease) in Cash & Cash equivalents (a+B+C) (43,101,059) 37,066,809 Cash & Cash equivalents as at the beginning of the year 85,336,287 48,269,478 Cash & Cash equivalents as at the end of the year 42,235,228 85,336,287




29


notes to aCCounts FOR THE YEAR ENDED 31 MARCH 2012. (All amounts mentioned are in Rupees)

1. signifiCant aCCounting poLiCies

a) Basis of presentation of financial statements:

The Financial Statements are prepared under historical cost convention, on an accrual basis of accounting in conformity with the accounting principles generally accepted in India and comply with the Accounting Standards referred to in section 211 (3C) of the Companies Act, 1956.

b) use of estimates

The preparation of financial statements in conformity with the generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as at the date of financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Any revision to accounting estimates is recognised prospectively in the current and future periods.

c) fixed assets and depreciation:

i) Fixed assets are stated at cost less accumulated depreciation and adjusted for impairment if any.

ii) The company provides Depreciation on straight line method (SLM) at the rate specified in schedule XIV of the Companies Act, 1956.

iii) Depreciation on additions to fixed assets is provided on pro-rata basis from the date of addition.

d) intangible assets:

Intangible assets comprise of Membership rights of Stock Exchanges, Computer software and Software licenses. The Stock Exchange rights and Software Licenses are amortized over a period of 10 years and the Computer software is amortized over a period of 5 years on Straight Line basis.

e) inventories - shares:

The shares are valued at lower of cost or net realizable value.

f) income:

Brokerage income is recognized on the date of the transaction, upon confirmation of the trade by client. Interest on Suit filed debtors are accounted on receipt basis since there is significant uncertainty in collection. Dividend income is recognised when right to receive the same is established. Service income is recognised as per the terms of the contract/agreement entered into with the customers when the related services are performed.

g) Employee Benefits:

Long Term Employee Benefits

i. Defined Contribution plan

The company has defined contribution plans for employees comprising of Provident Fund and Employees State Insurance. The contributions paid/payable to these plans are charged to Profit & Loss Account for the period to which they are related.

ii. Defined Benefit Plan

The company makes contributions to Employees’ Group Gratuity-cum-Life Assurance Scheme of Life Insurance Corporation of India. The net present value of the obligation for gratuity benefits as determined on actuarial valuation, conducted annually using the projected unit credit method, as adjusted for unrecognized past service cost if any and as reduced by fair value of plan assets, is recognized in the accounts. Actuarial gains and losses are recognized in full in the Profit & Loss Account for the period in which they occur.

iii. Other Long term Employee Benefits

The company has a scheme of Leave Encashment for eligible employees. Company’s liability as at the balance sheet date for such benefits is provided for on the basis of actuarial valuation under Projected unit Cost Method, done by an independent actuary. Actuarial gains and losses comprise experience adjustments and effects of changes in actuarial assumptions and are recognized in the profit & loss account as income or expense.

30


iv. Short Term Employee Benefits

All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits and recognised in the period in which the employee renders the related service.

h) income tax

Income tax is accounted in accordance with Accounting Standard on Accounting for Taxes on Income (AS 22), which includes current taxes and deferred taxes. Deferred tax assets/liabilities representing timing differences between accounting income and taxable income are recognised to the extent considered capable of being reversed in subsequent years. Deferred tax assets are recognised only to the extent there is reasonable certainty that sufficient future taxable income will be available, except that deferred tax assets arising due to unabsorbed depreciation and losses are recognised if there is a virtual certainty that sufficient future taxable income will be available to realise the same.

i) investments

Long term investments are stated at cost less provision for permanent diminution in their values, if any. Current investments are stated at lower of cost and net realisable value.

j) provisions and Contingent liabilities

Provisions are recognised when the company has a present obligation as a result of past events, for which it is probable that a cash outflow will be required and reliable estimate can be made of the amount of obligation. Provisions are not discounted to their present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect current management estimates.

k) earnings per share

Basic and diluted earnings per share is computed by dividing the net profit attributable to equity shareholders for the year by the weighted average number of equity shares outstanding during the year.

l) Leases

Disclosures as required by Accounting Standard 19, “Leases” issued by the Institute of Chartered Accountants of India, are given below:

(i) The Company has taken various offices under leave and license agreements. These are generally non- cancelable and range between 11 months and 5 years and are renewable by mutual consent on mutually agreeable terms.

(ii) Lease payments are recognized in the Profit & Loss account under “Rent”.

31


particulars as at 31.03.2012

(`)

as at 31.03.2011

(`)

2 sHare CapitaL

autHorised CapitaL:

1) 67,291,305 EQuITY Shares of ` 2/- each (P.Y. 10,820,000 Equity Shares of ` 10/- each) 134,582,610 108,200,000

2) 5,981,739 Preference shares of ` 10/- each (P.Y. 8,620,000 Preference Shares of ` 10/- each) 59,817,390 86,200,000

3) 40,000 Non-Cumulative Redeemable Preference shares of ` 100/- each (P.Y. 40,000 Non Cumulative Redeemable Preference Shares of ` 100/- each) 4,000,000 4,000,000

198,400,000 198,400,000


43,848,980 (P.Y 5,998,951 Equity shares of ` 10/- each) Equity Shares of ` 2/- each fully paid up 87,697,960 59,989,510

5,980,954 (P.Y. 8,300,715) 0.5% Fully Convertible Preference shares of ` 10/- each fully paid up. 59,809,540 83,007,150

27,758 15% Non Cumulative Redeemable Preference Shares of ` 100/- each 2,775,800 2,775,800

totaL (a) 150,283,300 145,772,460

sHare CapitaL suspense aCCount

Nil (P.Y. 31,500) Equity Shares of `10 each to be issued as fully paid up to the share holders of erstwhile Transwarranty Capital (P) Ltd as per the scheme of amalgamation

- 315,000

Nil (P.Y. 318,500) Preference Shares of ` 10 each to be issued as fully paid up to the share holders of erstwhile Transwarranty Capital (P) Ltd. as per the scheme of Amalgamation

- 3,185,000

totaL (B) - 3,500,000

totaL (a+B) 150,283,300 149,272,460

Notes

1) reconciliation of the shares outstanding at the beginning and at the end of the reporting period

a) equity shares

particulars 2011-12 2010-11number amount number amount

At the beginning of the year 5,998,951 59,989,510 5,998,951 59,989,510 Preference Shares converted to Equity Shares 2,638,261 26,382,610 - -total no of shares 8,637,212 86,372,120 -Shares split from ` 10/- to ` 2/- 43,186,060 86,372,120 -Allotment for ESOP 128,690 257,380 - -Shares issued against Share Capital Suspense Account (31,500 Shares of ̀ 10/- Split into ̀ 2/- i.e.1,57,500 Shares ) 157,500 315,000 - -

Additional Equity Shares Issued 376,730 753,460 - -outstanding at the end of the year 43,848,980 87,697,960 5,998,951 59,989,510

32


B) 0.5 % fully Convertible preference shares

particulars 2011-12 2010-11

number amount number amount

At the beginning of the year 8,300,715 83,007,150 8,300,715 83,007,150

Less:- Converted to Equity Shares 2,638,261 26,382,610 - -

Add:- Shares Issued against Share Capital Suspense Account 318,500 3,185,000

outstanding at the end of the year 5,980,954 59,809,540 8,300,715 83,007,150

C) 15 % non-Cumulative redeemable preference shares

particulars 2011-12 2010-11

number amount number amount

At the beginning of the year 27,758 2,775,800 27,758 2,775,800

Issued/ deducted during the year - - - -

outstanding at the end of the year 27,758 2,775,800 27,758 2,775,800

2) terms and rights attached to shares.

a) equity shares.

1) The company has only one class of Equity share having a Par Value of ` 2/- each. Each holder of equity share is entitled for one vote per share. The company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to approval by the share holders in the ensuring Annual General Meeting.

2) In the event of liquidation of the company, the holder 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.

B) 0.5% fully Convertible preference shares.

1) Each Fully Convertible Preference Share shall be compulsorily converted into five equity share of ` 2/- each fully paid up at par, at any time from the end of first year to the end of fifth year from the date of allotment.

2) Preference share holders are entitled to get dividend only when the company has distributable profits.

3) In the event of winding up or repayment of capital, Preference share holders have the preferential right to be repaid the amount of capital paid up.

C) 15%, non Cumulative redeemable preference shares.

1) Each Fully Convertible Preference Share shall be redeemable with in a period of 1 to 3 year from the date of issue i.e. 19/05/2010



3) shares held by Holding company- transwarranty finance Limited

particulars 31st march 2012 31st march 2011

equity shares

Equity shares @ ` 2/- each Fully Paid 24,318,110 17,683,490

preference shares

0.5% Fully Convertible Preference share of ` 10/- each 3,228,003 4,732,000

15 % Non Cumulative Redeemable Preference Shares of ` 100/- each 6,863 6,863

33


4) aggregate number of shares allotted as fully paid up without payment being received in cash during a period of 5 Years preceding the date at which the Balance sheet is prepared.

particulars no of shares Class of shares

Equity Shares of ̀ 2/- each fully paid up issued to share holders of “Transwarranty Capital Pvt. Ltd. as per scheme of amalgamation in F.Y. 2009-10 4,262,250 Equity Shares

0.5% Fully convertible Preference Share of ` 10/- each issued to share holders of "Transwarranty Capital Pvt. Ltd. as per scheme of amalgamation in F.Y. 2009-10 8,619,215 Preference Shares

15% Non Cumulative Redeemable Preference Shares of ` 100/- each reissued to share holders redeemable with in a period of 1 to 3 year from the date of issue i.e. 19/05/2010

27,758 Preference Shares

5) details of shares holders holding more than 5% shares in the Company.

a) equity shares of ` 2 /- fully paid up.

particulars 31 march 2012 31 march 2011

number % of Holdings number % of Holdings

Transwarranty Finance Limited 24,318,110 55.46 3,536,698 58.96

Kumar Nair 5,973,320 13.62

Religare Finvest Limited - - 309,792 5.16

B) 0.5 % preference shares of ` 10/- fully paid up.



Transwarranty Finance Limited 3,228,003 53.97 4,732,000 57.00

Kumar Nair 2,095,097 35.03 3,071,248 36.99

Pravin Khatau 318,500 5.32 - -

C) 15% preference shares of ` 100/- fully paid up.



Transwarranty Finance Limited 6,863 24.72 6,863 24.72

Transwarranty Private Limited 17,750 63.94 17,750 63.94

Transwarranty Advisors Private Limited 3,145 11.34 3,145 11.34

As per records of the company, including its register of share holders/ members and other declarations received from the shareholders regarding beneficial interest, the above represents both legal and beneficial ownership of shares.

The Company had issued and allotted 376,730 equity shares of ` 2/- each on 16-01-2012, pursuant to Chapter VII of SEBI (Issue of Capital and Disclosure Requirements) Regulation, 2010 (ICDR) . Although the listing approval from BSE is received on 09-05-2012 the above shares have been included in the above shareholding pattern.

6) employees stock option scheme

a) The “Vertex Employee Stock Option Plan 2010” has been approved by the Board Of Directors of the company on 10th March, 2008.

b) The vesting period is over five years from the date of grant, commencing after one year from the date of grant.

c) Exercise Period would commence one year from date of grant and will expire on completion of five years from the date of vesting.

d) The options will be settled in equity shares of the company.

e) The company used the intrinsic value method to account for ESOPs.

34


f) the exercise price has been determined as follows.

grant options (face Value of

` 10/- per share)

price per

option `

options (split to face value of ` 2/-

per share)

price per option after

share splitting `

Grant -I 462,500 69.00 2,312,500 13.80

Grant -II 50,000 145.50 250,000 29.10

Grant -III 17,500 145.50 87,500 29.10

Grant-IV 25,000 145.50 125,000 29.10

Grant-V 100,000 145.50 500,000 29.10

Grant-VI - - 1,013,750 29.10

g) Consequently, no compensation cost has been recognized by the company in accordance with the “Guidance Note on Accounting for Employee Share-Based payments” issued by the Institute of Chartered Accountants of India”.

h) details of movement of options

particulars as at31st march, 2012

nos.

as at31st march, 2011

nos.

Options outstanding at the beginning of the year ( Face Value of ` 10/-) 623,500 Nil

Options outstanding at the beginning of the year split to face Value of ` 2/- share 3,117,500 Nil

Options granted during the year 1,013,750 655,000

Options vested during the year 131,565 Nil

Options exercised during the year 128,690 Nil

Options forfeited during the year 1,013,250 31,500

Options lapsed /surrendered during the year 437,685 Nil

Options outstanding at the end of the year 2,680,315 623,500

i) Had fair value method been used , the compensation cost would have been higher by ̀ 75.77 Lakhs (Previous Year ̀ 89.37 Lakhs Loss after tax would have been higher by ` 75.77 Lakhs (Previous year ` 89.37 Lakhs) and Basic EPS would have been ` (0.43) Per share (Previous Year ` (1.92 ) Per share) and Diluted EPS would have been ` (0.25) (Previous Year ` (0.80) ).

35


particulars as at 1st april 2011

additions/ Created during

the Year

deductionsduring

the Year

as at 31st march, 2012

3 reserVes and surpLus

Reserve on Amalgamation Accounts 6,078,892 - - 6,078,892

Surplus as per Statement of Profit and Loss ( Refer Note below) (1,638,950) (9,695,577) - (11,334,527)

Securities Premium Reserve - 18,245,545 - 18,245,545

total reserves and surplus 4,439,942 8,549,968 12,989,910



the Year

deductionsduring

the Year


reserVes and surpLus


Surplus as per Statement of Profit and Loss ( Refer Note below) 928,159 (2,567,109) - (1,638,950)

Securities Premium Reserve - - - -

total reserves and surplus 7,007,050 (2,567,109) 4,439,941

particulars 2011-2012 2010-2011

note :-

Profit / Loss for the Year (9,695,577) (2,567,109)

Less:- Appropriations - -

(9,695,577) (2,567,109)

36



`


`

non- Current LiaBiLities

4 Long term BorroWings

a) seCured

term Loans from Banks:-

-Vehicle Loan from HDFC Bank(Secured by hypothecation of vehicle - Motor Car-Skoda) 353,748 607,401

NOTE: The loan from HDFC was taken for purchase of Skoda Car, during the year 2010-11. The loan carried an interest rate @9.75% and is repayable in 60 installment. The loan is against hypothecation of the Car Purchased.

B) unseCured

a) Loans and Advances from Related PartiesInter-Corporate Deposits 16,718,087 28,633,163

b) Other Loans and AdvancesSecurity Deposit from Franchises 6,832,421 6,338,649

23,904,256 35,579,213

5 deferred taX

1) The Deferred Tax Liability ( Net) at the year end comprises of timing differences arising on account of :-

deferred tax Liability:-

Depreciation - 2,863,213

deferred tax asset:-

Unabsorbed Business loss - 578,613

Other Provision allowable u/s 43B of the Income tax only on payment - 528,282

Deferred Tax Liabilities (Net) - 1,756,318

6 otHer Long term LiaBiLities

a) trade payables

Amount due to Clients and Exchanges 2,103,735 612,953

b) others

Other Creditors 435,301 600,391

2,539,036 1,213,344

37



`


`

Current LiaBiLities

7 sHort term BorroWings

a) from Banks

seCured

Overdraft Account- Catholic Syrian Bank (Secured against pledge/ lien of Fixed Deposit of ` 6.29 Million) 4,134,893 -

Short Term Loan- Catholic Syrian Bank (Secured against pledge/ lien of Fixed Deposit of ` 2.5 Million) 2,000,000 -

B) from otHers

unseCured

Inter Corporate Deposits 12,500,000 5,000,000

18,634,893 5,000,000

8 trade paYaBLes

a) Amount due to Micro, Small & Medium Enterprises - -

b) Other Creditors

Amount due to Clients and Exchanges 63,774,349 74,697,010

63,774,349 74,697,010

9 otHer Current LiaBiLities

a) Current Maturities of Long Term Debt 253,653 260,764

b) unpaid Dividend 9,166 9,166

c) Other Payables

- Book Overdraft 279 443,996

- Statutory Payables 952,310 983,988

- Creditors for Expenses 5,513,892 7,648,415

6,729,301 9,346,328

10 sHort term proVision

a) Provision For employee Benefits

Provision for Leave Encashment 520,484 633,490

b) others

Provision for Preference Share dividend 156,911 156,911

Other Provision 498,374 591,480

1,175,769 1,381,881

38

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`


`

non -Current asset

13 non- Current inVestments (at Cost)

other investments

1) investments in equity investments

a) Quoted

Motul Mafatlal Ltd ( 100 Shares @ ` 10/- each fully paid) 370 370

Prudential Sugar ( 100 Shares @ ` 10/- each fully paid) 700 700

usha India ( 320 Shares @ ` 10 Each fully paid) 304 304

Odyssey Video Co ( 100 Shares @ ` 10/- fully paid) 1,432 1,432

2,806 2,806

Less: diminution in the value of shares 2,806 2,806

market Value of Quoted investments - -

B) un Quoted

1) subsidiaries

Vertex Commodities & Finpro Pvt Ltd ( Subsidiary Company) 38,402,400 38,402,400

3,840,240 Equity Shares @ ` 10/- each)

2) others

- Cochin Stock Exchange Ltd ( 905 Equity Shares @ ` 10/- each fully paid) 2,507,700 2,507,700

- Nawani Corp ( India ) Ltd. (3,500,000 Equity shares @ ` 10/- each) 17,500,000 17,500,000

58,410,100 58,410,100

14 deferred taX assets (net)

1) The Deferred Tax Assets ( Net) at the year end comprises of timing differences arising on account of :-

deferred tax asset :-

Unabsorbed Business loss 3,497,338 -

Other Provision allowable u/s 43B of the Income tax only on payment 367,462 -

totaL (a) 3,864,801 -

deferred tax Liability :-

Depreciation 2,521,183 -

totaL (B) 2,521,183 -

deferred tax assets (net) totaL (a) - (B) 1,343,617 -

40



`


`

15 trade reCeiVaBLes

Unsecured Considered Good

Debts outstanding for a period exceeding six months 18,585,113 20,015,724

Other Debts 19,314,564 15,509,645

37,899,677 35,525,369

16 CasH & CasH eQuiVaLents

Balance with Banks

- In Current Accounts 13,919,747 44,915,963

- In Deposits Accounts

Less Than 12 Months Maturity 27,035,143 39,097,676

More than 12 Months Maturity 1,240,427 1,315,341

(Fixed Deposit of ` 8.79 Million (P.Y. ` 6.29 Million) pledged against Short Term Borrowings and

Fixed Deposit of ` 13.25 Million ( P.Y. ` 17.05 Million) are pledged against Bank Guarantees.)

Cash On Hand 39,912 7,308

42,235,228 85,336,287

17 sHort term Loans & adVanCes

unsecured Considered good

Advance to subsidiary company 39,143 -

others

Advance Receivable 5,377,836 5,673,197


Advance Income Tax ( Net of Provision ) 2,169,476 1,805,566

Advance Gratuity 552,164 346,201

Deposits 62,987,925 58,234,085

117,482,922 96,079,327

41


particulars for the year ended 31st march, 2012

`

for the year ended 31st march, 2011

`

18 reVenue from operations

sale of services

Brokerage Income 57,899,383 68,405,554

Income from Merchant Banking 1,667,316 1,606,397

Income from DP Operations 2,960,401 2,431,676

net sales 62,527,100 72,443,627

19 otHer inCome

a) Interest Income 7,489,212 3,846,160

b) Other Non Operating Income

- Late Payment Charges 1,897,810 1,941,899

- Software & AMC Charges Recovered 1,547,155 1,437,488

- Vsat Recurring Charges Recovered 265,404 743,700

- Recovery on Shared Services 8,962,755 9,504,000

- Miscellaneous Income 4,570,919 4,327,685

24,733,257 21,800,931

20 empLoYees Benefit eXpenses

Salaries & Allowances 37,541,957 33,202,723

Contribution to Provident Fund & Other Funds 1,791,537 1,778,598

Staff Welfare Expenses 893,504 747,792

40,226,998 35,729,113

21 finanCe Cost

a) Interest Expense 5,499,250 1,727,760

b) Other Borrowing Cost

- Bank Charges 110,358 103,761

- Bank Guarantee Expenses 108,980 676,863

5,718,588 2,508,384

42



`


`

22 otHer eXpensesAnnual Fee to Depository / Exchanges 257,572 347,709 AMC Charges 2,322,397 2,196,880 Clients Meet & Business Promotion Expenses 593,511 358,519 Consultation fee 446,410 657,338 Connectivity Charges 6,577,043 3,803,296 Depository Charges 454,623 691,791 Error Rectification 6,397 (54,811)Investor Protection Fund 377 669 Marketing fee/Commission paid 14,818,896 24,294,337 Sub Brokerage 5,261,630 1,867,938 SEBI Turnover Charges 149,109 141,822 Stock Exchange Charges (279,999) 555,146 VSAT Charges 727,607 794,000 Advertisement, Publicity and Business Promotion 400,489 720,709 Auditor's Remuneration

- Statutory Audit Fees 100,000 60,000 - Income Tax Audit Fees 25,000 15,000 - Other Services 48,300 44,500

Bad debts Written off - 167,525 Books & Periodicals 64,142 50,089 Communication Expenses 1,345,697 1,536,459 Data Entry expenses 621,798 480,621 Diminution in value of shares - 25,350 Demerger Expenses - Merchant Banking division 102,000 Insurance Premium 45,105 113,476 Legal Expenses and Filing Fees 94,105 258,037 Listing Fee 25,000 13,366 Misc. Charges & Expenses 500,878 71,992 Office Maintenance 475,350 693,212 Postage & Courier Charges 736,005 843,011 Power Charges 2,197,128 2,184,093 Printing & Stationery 553,234 570,850 Professional and Legal Fees 1,283,170 1,209,262 Rates and Taxes 87,007 903,602

Rent 7,316,699 5,635,288 Repairs & Maintenance 685,275 1,096,833 Meeting Expenses 14,746 97,857 Sitting Fees to Directors 112,000 184,000 Training & Conference Expense 203,955 183,658 Travelling and Conveyance Expenses 1,328,257 2,126,428 Vehicle Running and Maintenance Expenses 48,546 48,823

totaL 49,749,459 54,988,676

43



`


`

23 Contingent LiaBiLities

1. Counter guarantee issued in favour of the banker for guarantee given by them to NSE for margin requirement 36,500,000 34,000,000

2. Guarantee given on behalf of subsidiary company Vertex Commodities & Finpro (P) Limited 50,000,000 60,000,000

3. Claims against the company not acknowledged as debts:-

a. Tax demand in respect of which:-

- Company's Appeal is pending before the first appellate

Authority (Income Tax) for the Assessment Year 2007-08 1,111,000 1,111,000

- Service Tax orders for FY 2006-07 to 2009-10 622,000 497,000

88,233,000 95,608,000

24 earnings per sHare

I. Profit/ ( Loss) after tax as per Statement of Profit & Loss (9,695,577) (2,567,109)

II. Weighted Average number of equity shares for Earnings per share computation

A) For Basic Earnings per share of ` 2/- each (No's) 40,041,975 6,030,451

B) For Diluted Earnings per share of ` 2/- each (No's)

No of Shares for Basic EPS as per II A (No's) 40,041,975 6,030,451

Add:- Weighted Average outstanding for convertible preference shares 29,904,770 8,619,215

No of shares for Diluted Earnings per Share of ` 2/- Each 69,946,745 14,649,666

III. Earnings Per Share ( Face Value of ` 2/- each)

Basic ( ` ) (0.24) (0.43)

Diluted ( ` ) (0.14) (0.18)

44


25 disCLosure as reQuired under aCCounts standard 15 on empLoYee Benefits for gratuitY and LeaVe enCasHment is as under

particulars gratuity Leave encashment (unfunded)2011-12 2010-11 2011-12 2010-11

Change in the benefit Obligations:Present value of obligations as on 01. 04. 2011 1,555,445 1,087,007 633,490 613,367

Current Service Cost 318,607 364,317 424,720 458,908

Past Service Cost - - - -

Interest Cost 122,283 84,651 31,346 26,230

Actuarial (Gain)/Loss on obligation (546,853) 77,206 (85,735) 105,979

Benefits Paid (53,803) (57,736) (483,337) (570,994)

present value of obligations as on 31.03.2012 1,395,679 1,555,445 520,484 633,490

Change in plan assets:Fair Value of Plan Assets as on 01.04.2011 1,901,646 1,403,222 - -

Adjustment to the opening balance - - - -

Expected Return on Plan Assets 173,227 141,911 - -

Employer's Contributions 100,000 404,868 483,337 570,994

Benefits Paid (53,803) (57,736) (483,337) (570,994)

Actuarial Gain/(Loss) on Plan Assets (173,227) 9,381 - -

fair Value of plan assets as on 31.03.2012 1,947,843 1,901,646 - -

net (asset) Liability (i) - (ii) : (552,164) (346,201) 520,484 633,490

net Cost for the year ended 31.03.2012



Interest Cost 122,283 84,651 31,346 26,230

Expected Return on plan Assets (173,227) (141,911) - -

Actuarial (Gain)/ Loss recognised during the year (373,626) 67,825 (85,735) 105,979

Adjustment (Gain) to opening value of planned assets - - -

Net Cost (105,963) 374,882 370,331 591,117

Amount recognised in the Balance sheet (Asset) / Liability (552,164) (346,201) 520,484 633,490

Amount recognised in the Profit and Loss Account(Gain)/Loss (105,963) 374,882 370,331 591,117

principal actuarial assumptions:-Discount rate 8.00% 8.00% 8.00% 8.00%

Expected Return on plan assets 9.00% 9.00% -- --

Salary Escalation Rate 5.00% 5.00% 5.00% 5.00%

Attrition Rate 15.00% 15.00% 15.00% 15.00%

demographic assumptions:Retirement age 58 Year

Mortality rate LIC (1994-96)

Unlimited

45


26 reLated partY disCLosures

As per Accounting Standard (AS-18) on Related Party Disclosures issued by the Institute of Chartered Accountants of India, the disclosure of transactions with the related party as defined in the Accounting Standard are given below:-

name of the party relation

Kumar Nair Chairman & Managing Director

Ashok Mittal Chief Executive Officer (CEO) (Till 31/07/2011)

Transwarranty Finance Limited Holding Company

Vertex Commodities and Finpro (P) Limited. Subsidiary Company

Transwarranty Private Limited Associated Company

Transwarranty Advisors Private Limited Associated Company

(II) Summary of Transactions ( Previous year figures in Bracket below )

particulars Chairman & managing director

associated Company

Holding Company

subsidiary Company

Ceo

Brokerage Collected 12,152 480,172 (30,100) (106,471)

Remuneration Paid - 1,337,802 (801,364) (2,518,458)

Expenses on shared services 8,962,755 (9,504,000)

Reimbursement of Expenses - (169,247)

Interest Received 3,236,469 (1,075,542)

ICD Received 1,130,466 29,021,000 299,075,000 (930,900) (40,505,622) (30,694,533)

ICD Paid 17,466,566 34,422,413 299,075,000 (4,143,096) (26,951,622) (30,694,533)

Balance as on 31.03.2012Amount Payable - 16,395,345

(95,807) (28,633,163)Amount Receivable - 46,356,378 -

(30,020,278)

46


27 Sundry debtors include old outstanding debts amounting to ` 10,370,458 (` 11,790,892) in respect of which Company has initiated legal and other recovery actions, the proceedings of which are in different stages of progress. No provision for doubtful debts has been made in the accounts during the year since the management is confident that the debts are good and recoverable.

28 In the opinion of Directors, the current assets and deposits have the value as stated in the Balance Sheet, if realized in the ordinary course of business.

29 During the year the company has purchased and sold securities due to trade mistakes and failure of delivery of shares by clients. The profit or loss thus incurred along with other mistakes due to operational and communication problems are recognised under the head Operating Expenses as Error Rectification.

30 The company is maintaining DEMAT beneficiary account with own Depository Services. The stock is transferred to the respective clients’ accounts only when the company receives a written request from the clients and after confirming that they have enough credit / margin in their account.

31 Lien has been marked in favour of ICICI Bank Ltd in respect of Bank Deposits worth ̀ Nil (P.Y ̀ 3.80 Million) and in favour of HDFC Bank ` 8.25 million (P.Y. ` 13.25) and in favour of Axis bank ` 5 Million ( P.Y. ` Nil) together with accumulated interest thereon, against bank guarantees issued by them on account of the Company.

32 Based on the guiding principles given in Accounting Standard on “Segment Reporting” (AS – 17) issued by the Institute of Chartered Accountants of India, the Company’s primary business segment is share broking. All other activities of the company revolve around the main business. As the company’s business activity falls within a single primary business segment, the disclosure requirements of AS – 17 in this regard are not applicable.

33 The management has evaluated the long term investments and confirms that there exist no circumstances which warrant provision on account of permanent diminution in the value of investments.

34 No provision for dividend on Preference Shares and dividend tax there on has been made in the financial statement in the absence of distributable profits during the year.

35 a) The Company has vide resolution passed at the meeting of Board of Directors dated 11th October, 2011 and 16th January, 2012 decided to demerge its Merchant Banking division into a new company in the name and style of Transwarranty Capital Market Services Private Limited

b) As per the requirement of the Clause 24(f) of the Listing Agreement, company has made an application to the Bombay Stock Exchange Limited (BSE) which is pending for approval.

c) Appointed date of the proposed scheme of demerger is January 1, 2012 also the currert financials of the company includes the financials of the Merchant Banking division.

36 Previous year figures have been re-grouped/reclassified/re-arranged/recast wherever necessary to suit the current year’s classification. Previous year figures are unless otherwise stated given in bracket.




47


ConsoLidated finanCiaL statementsauditor’s report

ToTo The Members of VERTEX SECuRITIES LIMITED

1. We have audited the attached Consolidated Balance Sheet of Vertex Securities Limited and its subsidiary as on 31 March, 2012, and also the Consolidated Profit and Loss Account and the Consolidated Cash Flow Statement for the year ended on that date annexed thereto. These consolidated financial statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these consolidated statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. We report that the consolidated financial statements have been prepared by the management of Vertex Securities Limited in accordance with the requirements of Accounting Standard (AS) 21- Consolidated Financial Statements, issued by the Institute of Chartered Accountants of India and on the basis of the separate audited financial statements of the Company and the audited financial statements of its subsidiary included in the consolidated financial statements.

4. Attention is invited to Notes on Accounts No.35, regarding evaluation of long term investment by the management. We have relied upon the confirmation by the management in the absence of independent external evaluation.

5. As stated in Notes on Accounts No.29, sundry debtors under the head current assets include old outstanding dues. The sundry

debtors outstanding for more than six months amounts to ` 26.22 million. Further out of the total sundry debtors, for a sum of ` 16.45 million, the Company has initiated legal and recovery actions, the proceedings of which are in different stages.

In view of the above, the quantum of realisability of old outstanding sundry debtors/ legally initiated debts is not ascertainable at this stage.

6. Subject to our comments in paragraph 4 and 5 above, we report that, on the basis of the information and explanations given to us and on the consideration of the separate audit reports on individual financial statements of the Company and its subsidiary, we are of the opinion that the said consolidated financial statements give a true and fair view in conformity with the accounting principles generally accepted in India.

a. in the case of the Consolidated Balance Sheet, of the state of affairs of the Company as at 31 March, 2012

b. in the case of the Consolidated Profit & Loss Account, of the consolidated results of operations for the year ended on that date; and

c. in the case of the Consolidated Cash Flow Statement, of the consolidated results of operations for the year ended on that date.




48

Vertex SecuritieS Limited (consolidated)

ConsoLidated BaLanCe sHeet AS AT 31ST MARCH, 2012

particulars note no. as at 31.03.2012 as at 31.03.2011(`) (`)

i. eQuitY and LiaBiLities 1. shareholders fund : a) Share Capital 2 150,283,300 149,272,460 - b) Reserves & Surplus 3 4,884,401 3,403,682 -

- 155,167,701 - 152,676,142 2. share application money pending allotment 17,480,272 3. minority interest 166,686 205,7824. non - Current Liabilities

a) Long Term Borrowings 4 28,573,817 40,090,205 b) Deferred Tax Liabilities (Net) 5 - 807,175 c) Other Long Term Liabilities 6 3,114,844 1,597,405

31,688,661 42,494,7855. Current Liabilities

a) Short Term Borrowings 7 18,634,893 5,000,000 b) Trade Payables 8 208,503,294 295,648,952 c) Other Current Liabilities 9 11,637,568 40,359,851 d) Short Term Provisions 10 1,295,673 240,071,428 1,466,281 342,475,084

totaL eQuitY and LiaBiLities 427,094,476 555,332,065ii. assets 1. non Current assets

a) Fixed Assets i) Tangible Assets 11 22,019,709 23,164,499 ii) Intangible Assets 12 7,683,831 9,022,557

b) Non Current Investments 13 20,007,700 20,007,700 c) Deferred Tax Assets (Net) 14 2,894,267 -

52,605,507 52,194,7562. Current assets

a) Trade Receivables 15 141,902,937 176,511,262 b) Cash and Cash Equivalents 16 74,032,264 122,522,987 c) Short Term Loans and Advances 17 158,553,768 204,103,060

374,488,969 503,137,309 totaL assets 427,094,476 555,332,065

The Note No.1 to 38 are integral part of these Financial Statements




49


ConsoLidated satement of profit and Loss FOR THE YEAR ENDED 31ST MARCH, 2012

particulars note no. for the Year ended 31-03-2012

(`)

for the Year ended 31-03-2011

(`)

reVenue

Revenue From Operations 18 92,370,735 93,440,132

Other Income 19 18,812,806 15,003,286

totaL reVenue 111,183,541 108,443,418

eXpenses

Employee Benefits Expense 20 50,249,394 38,691,084

Finance Costs 21 7,857,680 4,462,077

Depreciation and Amortisation Expense 11&12 5,188,486 5,366,185

Other Expenses 22 67,974,266 69,352,490

totaL eXpenses 131,269,826 117,871,836

Loss Before exceptional and extraordinary items and tax (20,086,285) (9,428,418)

Exceptional Items :-

Loss on Sale of Fixed Assets 419,081 359,610

Loss Before extra ordinary items and tax (20,505,366) (9,788,028)

Extraordinary Items:- - -

Loss Before tax (20,505,366) (9,788,028)

tax expense

Current Tax - -

Deferred Tax (3,701,444) (2,107,725)

- -

Loss for the year from Continuing operations (16,803,922) (7,680,303)

Profit / (Loss) from Discontinuing Operations - -

Tax Expenses of Discontinuing Operations - -

Profit / (Loss) from Discontinuing Operations After Tax - -

Loss for the year (16,803,922) (7,680,303)

Basic Earning Per Share of ` 2/- each ( In Rupees) 24 (0.42) (1.28)

Diluted Earning Per Share of ` 2/- each ( In Rupees) 24 (0.24) (0.53)





50


ConsoLidated CasH fLoW statement FOR THE YEAR ENDED 31 ST MARCH, 2012

Particulars 2011-2012 (`)

2010-2011 (`)

a. CasH fLoW from operating aCtiVities Net Profit Before taxation (20,505,366) (9,788,028) Adjustments for: Add/(Less): Depreciation/Amortisation 5,188,486 5,366,185 Loss on assets sold/ written off 419,081 359,610 Miscellaneous expenditure written off - - Interest Paid & Bank Guarantee Expense 11,094,149 4,462,076 Interest Received (11,795,895) (4,635,900) Bad debts written off - 167,525 Operating profit before working Capital Changes (15,599,545) (4,068,532)Adjustments for Increase / (-)Decrease in : Trade & Other Receivable - Decrease/(Increase) 34,608,325 (124,127,468) Inventories - Decrease/(Increase) - 84,827 Trade & Other payables - (Decrease)/ Increase (85,472,514) 245,254,246 Other payables/ Provisions -(Decrease)/ Increase (29,018,010) 268,343 Loans & Advances(Net) - Decrease/(Increase) 46,130,701 (10,160,985) Cash Generated from operations (49,351,043) 107,250,431 Income Tax and Fringe Benefit Tax paid (581,409) (529,246)Net Cash flow from Operating Activities (a) (49,932,452) 106,721,185

B. CasH fLoW from inVesting aCtiVities Purchase of Fixed Assets (3,316,910) (5,127,913) Sale of Fixed Assets 192,860 47,551 Interest Received Less Accrued 11,795,895 4,635,900 Investments in Subsidiary Company - (2,400) Inter corporate deposit (4,415,076) (60,020,278) Net Cash used in Investing Activities (B) 4,256,769 (60,467,142)

C. CasH fLoW from finanCing aCtiVities: Share Application Money - ESOP Allottment 1,776,113 - Share application Money - 17,480,272 Receipt/Repayment of Vehicle Loans(net) (284,238) - Receipt of Secured Loans(net) 6,134,893 (8,408,523) Dividend and Corporate Div. Tax - (339,505) Interest Paid & Bank Guarantee Expense (11,094,149) (4,462,076) unsecured loan received/(paid) 652,341 17,759,547 Net Cash used in Financing Activities (C) (2,815,040) 22,029,715 net increase/(decrease) in Cash & Cash equivalents (a+B+C) (48,490,722) 68,283,761 Cash & Cash equivalents as at the beginning of the year 122,522,986 54,239,225 Cash & Cash equivalents as at the end of the year 74,032,264 122,522,986




51


notes to aCCounts FOR THE YEAR ENDED 31 MARCH 2012. (All amounts are mentioned in Rupees)

1. signifiCant aCCounting poLiCies

1. Investments other than in Subsidiaries have been accounted as per Accounting Standard-13 “Accounting for Investments.”

2. Other Significant Accounting Policies are set out under “Significant Accounting Policies” as given in the standalone financial statements of the parent company.

particulars as at 31.03.2012

(`)

as at 31.03.2011

(`)

2 sHare CapitaL

autHorised CapitaL:

1) 67,291,305 Equity Shares of ` 2/- each (P.Y. 10,820,000 Equity Shares of ` 10/- each) 134,582,610 108,200,000

2) 5,981,739 0.5 % Fully Convertible Preference shares of ` 10/- each (P.Y. 8,620,000 0.5% Fuly convertible Preference Shares of ` 10/- each) 59,817,390 86,200,000

3) 40,000 15% Non-Cumulative Redeemable Preference shares of ` 100/- each 4,000,000 4,000,000

198,400,000 198,400,000


43,848,980 (P.Y 5,998,951 Equity shares of ` 10/- each) Equity Shares of ` 2/- each fully paid up 87,697,960 59,989,510

5,980,954 (P.Y. 8,300,715) 0.5% Fully Convertible Preference shares of ` 10/- each fully paid up. 59,809,540 83,007,150

27,758 15% Non Cumulative Redeemable Preference Shares of ` 100/- each 2,775,800 2,775,800

totaL (a) 150,283,300 145,772,460

sHare CapitaL suspense aCCount

Nil (P.Y. 31,500) Equity Shares of ` 10 each to be issued as fully paid up to the share holders of erstwhile Transwarranty Capital (P) Ltd as per the scheme of amalgamation

- 315,000

Nil (P.Y. 318,500) Preference Share shares of ̀ 10 each to be issued as fully paid up to the share holders of erstwhile Transwarranty Capital (P) Ltd. as per the scheme of Amalgamation

- 3,185,000

totaL (B) - 3,500,000

totaL (a+B) 150,283,300 149,272,460

52


notes

1) reconciliation of the shares outstanding at the beginning and at the end of the reporting period

a) equity shares


At the beginning of the year 5,998,951 59,989,510 5,998,951 59,989,510 Preference Shares converted to Equity Shares 2,638,261 26,382,610 - total no of shares 8,637,212 86,372,120 Shares split from ` 10/- to ` 2/- 43,186,060 86,372,120 Allotment for ESOP 128,690 257,380 - Shares issued against Share Capital Suspense Account

(31,500 Shares of ` 10/- Split into ` 2/- i.e.1,57,500 Shares 157,500 315,000

Equity Shares Issued against Share Application Money 376,730 753,460 - outstanding at the end of the year 43,848,980 87,697,960 5,998,951 59,989,510

B) 0.5 % fully Convertible preference shares


At the beginning of the year 8,300,715 83,007,150 8,300,715 83,007,150 Less:- Converted to Equity Shares 2,638,261 26,382,610 - - Add:- Shares Issued against Share Capital Suspense Account 318,500 3,185,000 - -

outstanding at the end of the year 5,980,954 59,809,540 8,300,715 83,007,150

C) 15 % non-Cumulative redeemable preference shares


At the beginning of the year 27,758 2,775,800 27,758 2,775,800 Issued/ deducted during the year - - - - outstanding at the end of the year 27,758 2,775,800 27,758 2,775,800

2) terms and rights attached to shares.

a) equity shares.

1) The company has only one class of Equity share having a Par Value of ` 2/- each. Each holder of equity share is entitled for one vote per share. The company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to approval by the share holders in the ensuring Annual General Meeting.

2) In the event of liquidation of the company, the holder of equity shares will be entitled to receive remaining assets of the company, after distributi on of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

B) 0.5% fully Convertible preference shares.

1) Each Fully Convertible Preference Share shall be compulsorily converted into five equity share of ` 2/- each fully paid up at par, at any time from the end of first year to the end of fifth year from the date of allotment.



53


C) 15%, non Cumulative redeemable preference shares.

1) Each Fully Convertible Preference Share shall be redeemable with in a period of 1 to 3 years from the date of issue i.e. 19/05/2010.

2) Preference share holders are entitled to get dividend only when the company have distributable profits.


3) shares held by Holding company- transwarranty finance Limited

particulars 31st march 2012 31st march 2011equity sharesEquity shares @ ` 2/- each Fully Paid 24,318,110 17,683,490 preference shares0.5% Fully Convertible Preference share of ` 10/- each 3,228,003 4,732,000 15 % Non Cumulative Redeemable Preference Shares of ` 100/- each 6,863 6,863

4) aggregate number of shares allotted as fully paid up without payment being received in cash during a period of 5 Years preceding the date at which the Balance sheet is prepared.

particulars no of shares Class of sharesEquity Shares of ̀ 2/- each fully paid up issued to share holders of “Transwarranty Capital Pvt. Ltd. as per scheme of amalgamation in F.Y. 2009-10 4,262,250 Equity Shares

0.5% Fully convertible Preference Share of ` 10/- each issued to share holders of “Transwarranty Capital Pvt. Ltd. as per scheme of amalgamation in F.Y. 2009-10 8,619,215 Preference Shares

15% Non Cumulative Redeemable Preference Shares of ` 100/- each reissued to share holders redeemable with in a period of 1 to 3 year from the date of issue i.e. 19/05/2010

27,758 Preference Shares

5) details of shares holders holding more than 5% shares in the Company

a) equity shares of ` 2 /- fully paid up.

particulars 31 march 2012 31 march 2011number % of Holdings number % of Holdings

Transwarranty Finance Limited 24,318,110 55.46 3,536,698 58.96Kumar Nair 5,973,320 13.62Religare Finvest Ltd. 309,792 5.16

B) 0.5% fully Convertible preference shares of ` 10/- fully paid up.


Transwarranty Finance Limited 3,228,003 53.97 4,732,000 57.00Kumar Nair 2,095,097 35.03 3,071,248 36.99Pravin Khatau 318,500 5.32

C) 15% non Cumulative redeemable preference shares of ` 100/- fully paid up.


Transwarranty Finance Limited 6,863 24.72 6,863 24.72Transwarranty Private Limited 17,750 63.94 17,750 63.94Transwarranty Advisors Private Limited 3,145 11.34 3,145 11.34

54


As per records of the company, including its register of share holders/ members and other declarations received from the shareholders regarding beneficial interest, the above represents both legal and beneficial ownership of shares.

The Company had issued and allotted 376,730 equity shares of ` 2/- each on 16-01-2012, pursuant to Chapter VII of SEBI (Issue of Capital and Disclosure Requirements) Regulation, 2010 (ICDR) . Although the listing approval from BSE is received on 09-05-2012 the above shares have been included in the above shareholding pattern.

6) employees stock option scheme

a) The “Vertex Employee Stock Option Plan 2010” has been approved by the Board Of Directors of the company on 10th March, 2008.

b) The vesting period is over five years from the date of grant, commencing after one year from the date of grant.

c) Exercise Period would commence one year from date of grant and will expire on completion of five years from the date of vesting.

d) The options will be settled in equity shares of the company.

e) The company used the intrinsic value method to account for ESOPs.

f) The exercise price has been determined as follows

grant options (face Value of

` 10/- per share)

price per

option `

options (split to face value of ` 2/-

per share)

price per option after

share splitting `

Grant -I 462,500 69.00 2,312,500 13.80

Grant -II 50,000 145.50 250,000 29.10

Grant -III 17,500 145.50 87,500 29.10

Grant-IV 25,000 145.50 125,000 29.10

Grant-V 100,000 145.50 500,000 29.10

Grant-VI - - 1,013,750 29.10

g) Consequently, no compensation cost has been recognized by the company in accordance with the “Guidance Note on Accounting for Employee Share-Based payments” issued by the Institute of Chartered Accountants of India”.

h) details of movement of options


nos


nosOptions outstanding at the beginning of the year ( Face Value of ` 10/-) 623,500 Nil Options outstanding at the beginning of the year split to face Value of ` 2/- share 3,117,500 - Options granted during the year 1,013,750 655,000 Options vested during the year 131,565 Nil Options exercised during the year 128,690 Nil Options forfeited during the year 1,013,250 31,500 Options lapsed /surrendered during the year 437,685 Nil Options outstanding at the end of the year 2,680,315 623,500

i) Had fair value method been used , the compensation cost would have been higher by ̀ 75.77 Lakhs (Previous Year ̀ 89.37 Lakhs Loss after tax would have been higher by ` 75.77 Lakhs (Previous year ` 89.37 Lakhs) and Basic EPS would have been ` (0.43) Per share (Previous Year ` (1.92 ) Per share) and Diluted EPS would have been ` (0.25) (Previous Year ` (0.80) ).

55




the Year

deductionsduring

the Year


3 reserVes and surpLus

General Reserve 269,212 - - 269,212

Capital Reserve on consolidation (net) 3,779,600 - - 3,779,600


Surpuls as per Statement of Profit and Loss (Refer Note below) (6,724,021) (16,764,826) - (23,488,847)

Securities Premium Reserve - 18,245,545 - 18,245,545

total reserves and surplus 3,403,682 1,480,719 - 4,884,401



the Year

deductionsduring

the Year


reserVes and surpLus

General Reserve 269,212 - - 269,212

Capital Reserve on consolidation (net) 3,779,600 - - 3,779,600


Surpuls as per Statement of Profit and Loss (Refer Note below) 4,583,861 (11,307,882) - (6,724,021)

total reserves and surplus 14,711,563 (11,307,882) 3,403,681

particulars 2011-2012 2010-2011

note :-

Profit / Loss for the Year (16,803,922) (7,680,303)

Less:- - -

Minority Share (39,096) (28,123)

Consolidation adjustments due to change in - 3,655,702

Share holding in Subsidiary

(39,096) 3,627,579

(16,764,826) (11,307,882)

56


particulars as at 31st march, 2012

`


`

non- Current LiaBiLities

4 Long term BorroWings

a) seCured

term Loans from Banks:-

-Vehicle Loan from HDFC Bank(Secured by hypothecation of vehicle - Motor Car-Skoda) 353,748 607,401

NOTE: The loan from HDFC was taken for purchase of Scoda Car, during the year 2010-11 the loan carried an interest rate @ 9.75% and is rapayable in 60 installment. The loan is against hypothecation of the Car Purchased

B) unseCured

a) Loans and Advances from Related PartiesInter-Corporate Loan 16,718,087 28,633,163

b) Other Loans and AdvancesSecurity Deposit from Franchises 8,510,310 7,857,969

Inter corporate loan 2,991,672 2,991,672

28,573,817 40,090,205

5 deferred taX

1) The Deferred Tax Asset ( Net) at the year end comprises of timing differences arising on account of :-

deferred tax Liability:-

Depreciation - 3,808,918

deferred tax asset:-

Unabsorbed Business loss - 2,447,381

Other Provision allowable u/s 43B of the Income tax only on payment - 554,362

Deferred Tax Asset (Net) - 807,175

6 otHer Long term LiaBiLities

a) trade payables

Amount due to Clients and Exchanges 2,525,302 852,159

b) others

Other Creditors 589,542 745,246

3,114,844 1,597,405

57



`


`

Current LiaBiLities

7 sHort term BorroWings

a) from Banks

seCured

Overdraft Account- Catholic Syrian Bank (Secured against pledge/ lien of Fixed Deposit of ` 6.29 Million) 4,134,893 -

Short Term Loan- Catholic Syrian Bank (Secured against pledge/ lien of Fixed Deposit of ` 2.5 Million) 2,000,000 -

B) from otHers

unseCured


18,634,893 5,000,000

8 trade paYaBLes

a) Amount due to Micro, Small & Medium Enterprises - -

b) Other Creditors

Amount due to Clients and Exchanges 208,503,294 295,648,951

208,503,294 295,648,951

9 otHer Current LiaBiLities

a) Current Maturities of Long Term Debt 253,653 260,764

b) Interest Accrued but not due on borrowings 186,778 186,778

c) unpaid Dividend 9,166 9,166

d) Other Payables

- Book Overdraft 1,380,389 26,648,178

- Statutury Payables 2,159,295 1,231,844

- Creditors for Expenses 7,648,287 12,023,121

11,637,568 40,359,851

10 sHort term proVision

a) Provision For employee Benefits

Gratuity 36,976 5,040

Provision for Leave Encashment 551,773 661,211

b) others

Provision for Preference Share dividend 156,911 156,911

Other Provision 550,013 643,119

1,295,673 1,466,281

58

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60



`


`

non -Current assets

13 non- Current inVestments (at Cost)

other investments

1) investments in equity investments

a) Quoted

Motul Mafatlal Ltd ( 100 Shares @ ` 10/- each fully paid) 370 370

Prudential Sugar ( 100 Shares @ ` 10/- each fully paid) 700 700

usha India ( 320 Shares @ ` 10 each fully paid) 304 304

Odyssey Video Co ( 100 Shares @ ` 10/- fully paid) 1,432 1,432

2,806 2,806

Less: diminution in the value of shares 2,806 2,806

market Value of Quoted investments nil Nil

B) un Quoted

1) others

Cochin Stock Exchange Ltd ( 905 Equity Shares @ ` 10/- each fully paid) 2,507,700 2,507,700

Nawani Corp( India ) Ltd. (3,500,000 Equity shares @ ` 10/- each) 17,500,000 17,500,000

20,007,700 20,007,700

14 deferred taX assets (net)

1) The Deferred Tax Assets ( Net) at the year end comprises of timing differences arising on account of :-

deferred tax asset :-

Unabsorbed Business loss 5,938,651 -

Other Provision allowable u/s 43B of the Income tax only on payment 404,512 -

totaL (a) 6,343,163 -

deferred tax Liability :-

Depreciation 3,448,896 -

totaL (B) 3,448,896 -

deferred tax assets (net) totaL (a) - (B) 2,894,267 -

61



`


`

Current assets

15 trade reCeiVaBLes


Debts outstanding for a period exceeding six months 26,215,636 27,587,482

Other Debts 115,687,301 148,923,780

141,902,937 176,511,262

16 CasH & CasH eQuiVaLents

Balance with Banks

- In Current Accounts 19,087,404 51,532,558

- In Deposits Accounts

Less Than 12 Months Maturity 53,223,519 69,612,450

More than 12 Months Maturity 1,665,427 1,365,341

(Fixed Deposit of ` 8.79 Million (P.Y. ` 6.29 Million) pledged against Short Term Borrowings and

Fixed Deposit of ` 38.25 Million ( P.Y. ` 47.05 Million) are pledged against Bank Guarantees.)

Cash On Hand 55,914 12,638

74,032,264 122,522,987

17 sHort term Loans & adVanCes


others

Advance Receivable 6,423,620 6,633,777

Inter Corporate Deposit 76,356,378 60,020,278

Advance Income Tax ( Net of Provision ) 2,544,390 1,962,981

Advance Gratuity 552,164 346,201

Advance Service tax - 478,949

Deposits 72,677,216 134,660,874

158,553,768 204,103,060

62



`


`

18 reVenue from operations

sale of services

Brokerage Income 87,743,018 89,402,059

Income from Merchant Banking 1,667,316 1,606,397

Income from DP Operations 2,960,401 2,431,676

net sales 92,370,735 93,440,132

19 otHer inCome

a) Interest Income 8,559,426 4,635,900

b) Other Non Operating Income

- Late Payment Charges 1,897,810 1,941,899

- Software & AMC Charges Recovered 1,889,441 1,693,416

- V.sat Recurring Charges Recovered 380,538 1,055,724

- Misc. Income - Others 6,085,591 5,676,347

18,812,806 15,003,286

20 empLoYees Benefit eXpenses

Salaries, Bonus & Allowances 47,033,191 35,987,380

Contribution to Provident Fund & Other Funds 2,292,861 1,909,378

Staff Welfare Expenses 923,342 794,326

50,249,394 38,691,084

21 finanCe Cost

a) Interest Expense 5,591,160 3,397,763

b) Other Borrowing Cost

- Bank Charges 174,489 130,652

- Bank Guarantee Expenses 2,092,031 933,662

7,857,680 4,462,077

63



`


`

22 otHer eXpensesAnnual Fee to Depository / Exchanges 505,659 496,202 AMC Charges 2,809,574 2,570,729 Clients Meet & Business Promotion Expenses 908,304 395,844 Consultation fee 546,870 683,461 Connectivity Charges 7,231,516 4,319,472 Depository Charges 490,784 713,471 Error Rectification 53,462 2,414 Investor Protection Fund 377 669 Marketing fee/Commission paid 26,000,633 34,601,437 Sub Brokerage 5,261,630 1,867,938 SEBI Turnover Charges 149,109 141,822 Software Subscription Charges 74,927 39,900 Stock Exchange Charges 65,951 721,493 VSAT Charges 845,408 841,927 Advertisement, Publicity and Business Promotion 620,511 1,004,726 Auditor's Remuneration

- Statutory Audit Fees 110,000 70,000 - Income Tax Audit Fees 30,000 20,000 - Other Services 48,300 44,500

Bad debts Written off - 167,525 Books & Periodicals 65,610 52,231 Communication Expenses 1,763,025 1,670,912 Data Entry expenses 621,798 480,621 Diminution in value of shares - 25,350 Demerger Expenses - Merchant Banking division 102,000 - Insurance Premium 63,090 128,777 Legal Expenses and Filing Fees 829,053 532,384 Listing Fee 25,000 13,366 Misc. Charges & Expenses 500,878 82,000 Office Maintenance 586,614 799,373 Postage & Courier Charges 766,962 870,283 Power Charges 2,697,460 2,472,578 Printing & Stationery 628,395 589,712 Professional and Legal Fees 1,283,170 1,209,262

Rates and Taxes 93,047 1,123,464 Rent 8,901,699 6,387,245 Repairs & Maintenance 848,745 1,223,977 Meeting Expenses 292,889 103,454 Sitting Fees to Directors 112,000 184,000 Training & Conference Expense 214,854 187,658 Travelling and Conveyance Expenses 1,710,861 2,407,329 Vehicle Running and Maintenace Expenses 114,101 104,984

totaL 67,974,266 69,352,490

64



`


`

23 Contingent LiaBiLities

1. Counter guarentee issued in favour of the banker for guarentee given by then to NSE/NCDEX for margin requirement 46,500,000 94,000,000

2. Guarentee given on behalf of subsidiary company Vertex Commodities & Finpro (P) Limited 50,000,000 60,000,000

3. Counter guarantee issued in favour of the banker for guarantee given by then to MCX for margin requirement

40,000,000 -

4. Claims against the company not acknowledged as debts:-

a. Tax demand in respect of which:-

- Company's Appeal is pending before the first appellate

Authority (Income Tax) for the Assessment Year 2007-08 1,111,000 1,111,000

- Service Tax orders for FY 2006-07 to 2009-10 622,000 497,000

138,233,000 155,608,000

24 earnings per sHare

I. Profit/ ( Loss) after tax as per Statement of Profit & Loss (16,803,922) (7,652,180)

II. Weighted Average number of equity shares for Earnings per share computation

A) For Basic Earnings per share of ` 2/- each (No's) 40,041,975 6,030,451

B) For Diluted Earnings per share of ` 2/- each (No's)

No of Shares for Basic EPS as per II A (No's) 40,041,975 6,030,451

Add:- Weighted Average outstanding for convertible preference shares 29,904,770 8,619,215

No of shares for Diluted Earnings per Share of ` 2/- Each 69,946,745 14,649,666

III. Earnings Per Share ( Face Value of ` 2/- each)

Basic ( ` ) (0.42) (1.27)

Diluted ( ` ) (0.24) (0.52)

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25 Disclosure as required under Accounts Standard 15 on employee benefits for gratuity and leave encashment is as under

particulars gratuity Leave encashment (unfunded)

2011-12 2010-11 2011-12 2010-11

Change in the benefit Obligations:

Present value of obligations as on 01. 04. 2011 1,562,260 1,105,708 661,211 636,039



Interest Cost 122,828 85,280 31,918 26,864

Actuarial (Gain)/Loss on obligation (545,766) 82,559 (80,634) 107,538

Benefits Paid (53,803) (79,408) (524,480) (600,456)

present value of obligations as on 31.03.2012 1,432,655 1,562,260 551,773 661,211

Change in plan assets:

Fair Value of Plan Assets as on 01.04.2011 1,901,646 1,403,222 -

Adjustment to the opening balance - - -

Expected Return on Plan Assets 173,227 141,911 -

Employer's Contributions 100,000 404,868 483,337 570,994

Benefits Paid (53,803) (57,736) (524,480) (570,994)

Actuarial Gain/(Loss) on Plan Assets (173,227) 9,381 - -

fair Value of plan assets as on 31.03.2012 1,947,843 1,901,646 - -

net (asset) Liability (i) - (ii) : (515,188) (339,386) 551,773 661,211

net Cost for the year ended 31.03.2012



Interest Cost 122,828 85,280 31,918 26,864

Expected Return on plan Assets (173,227) (141,911) - -

Actuarial (Gain)/ Loss recognised during the year (372,539) 73,178 (80,634) 107,538

Adjustment (Gain) to opening value of planned assets - - -

Net Cost (75,802) 384,668 415,042 625,628

Amount recognised in the Balance sheet (Asset) / Liability (515,188) (353,016) 551,773 605,769

Amount recognised in the Profit and Loss Account(Gain)/Loss (75,802) 384,668 415,042 625,628

principal actuarial assumptions:-

Discount rate 8% 8% 8% 8%

Expected Return on plan assets 9% 9% -- --

Salary Escalation Rate 5% 5% 5% 5%

Attrition Rate 15% 15% 15% 15%

demographic assumptions:

Retirement age 58 Year

Mortality rate LIC (1994-96)

Unlimited

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26 reLated partY disCLosures

As per Accounting Standard (AS-18) on Related Party Disclosures issued by the Institute of Chartered Accountants of India, the disclosure of transactions with the related party as defined in the Accounting Standard are given below:-

name of the party relation

Transwarranty Finance Limited Holding Compnay

Kumar Nair Chairman & Managing Director

Ashok Mittal Chief Executive Officer (CEO) (till 31/07/2011)

Transwarranty Private Limited Associated Company

Transwarranty Advisors Private Limited Associated Company

(II) Summary of Transactions ( Previous year figures in Bracket below )

particulars Chairman & managing director

associated Company

Holding Company

Ceo

Brokerage Collected 12,152 480,172

(30,100) (106,471)

Remuneration Paid - 1,337,802

(801,364) (2,518,458)

Reimbursement of Expenses -

(169,247)

Interest on ICD -

(781,295)

ICD Received - 1,130,466 29,021,000

(10,000,000) (30,930,900) (30,694,533)

ICD Paid 17,466,566 34,422,413

(10,000,000) (4,143,096) (30,694,533)

Balance as on 31.03.2012

Amount Payable - 16,395,345

(95,807) (28,633,163)

Amount Receivable 76,356,378

(60,020,278)

67


27 principles of Consolidation:

The Consolidated financial statements of Vertex Securities Limited,(Parent Company) have been prepared in accordance with the Accounting Standard 21 (AS 21) “Consolidated Financial Statements” issued by The Institute of Chartered Accountants of India.

The financial statements of the Subsidiary used in the consolidation are drawn on the same reporting dates as that of the Parent Company, ie. 31st March 2012.

The Consolidated financial statements have been prepared applying uniform accounting policies for like transactions and events in similar circumstances and appropriate adjustment have been made where the accounting policies are not uniform.

The financial statements of the Company and its subsidiary have been combined on a line-by-line basis by adding together the book value of like items of assets, liabilities, incomes and expenses, after fully eliminating intra-group balances and transactions resulting in unrealized Profit/Loss.

The value of investment over the cost to the Company’s share in the net assets of the subsidiary at the date on which investment is made, is recognized as Capital Reserve and is separately disclosed in the consolidated financial statements.

28 Details of Subsidiary included in the consolidated financial statements:

name of the subsidiary Company Country of incorporation share in ownership shares held by

Vertex Commodities & Finpro (P) Limited India 99.45% (P.Y. 99.44%) Vertex Securities Limited

29 Sundry debtors include old outstanding debts amounting to ` 16,451,028 (` 19,427,697) in respect of which Company has initiated legal and other recovery actions, the proceedings of which are in different stages of progress. No provision for doubtful debts has been made in the accounts during the year since the management is confident that the debts are good and recoverable.

30 In the opinion of Directors, the current assets and deposits have the value as stated in the Balance Sheet, if realized in the ordinary course of business.

31 During the year the company has purchased and sold securities due to trade mistakes and failure of delivery of shares by clients. The profit or loss thus incurred along with other mistakes due to operational and communication problems are recognised under the head Operating Expenses as Error Rectification.

32 The company is maintaining DEMAT beneficiary account with own Depository Services. The stock is transferred to the respective clients’ accounts only when the company receives a written request from the clients and after confirming that they have enough credit / margin in their account.

33 Lien has been marked in favour of ICICI Bank Ltd in respect of Bank Deposits worth ̀ Nil (P.Y ̀ 3.80 Million) and in favour of HDFC Bank ` 28.25 Million (P.Y. ` 38.25 Million) and in favour of Axis bank ` 10 Million ( P.Y. ` 5 Million) together with accumulated interest thereon, against bank guarantees issued by them on account of the Company.

34 Based on the guiding principles given in Accounting Standard on “Segment Reporting” (AS – 17) issued by the Institute of Chartered Accountants of India, the Company’s primary business segment is share broking. All other activities of the company revolve around the main business. As the company’s business activity falls within a single primary business segment, the disclosure requirements of AS – 17 in this regard are not applicable.

68


35 The management has evaluated the long term investments and confirms that there exist no circumstances which warrant provision on account of permanent diminution in the value of investments.

36 No provision for dividend on Preference Shares and dividend tax there on has been made in the financial statement in the absence of distributable profits during the year.

37 Some of the debtors, creditors, advances and security deposits are subject to confirmation, reconciliation and adjustments. The management does not expect any material difference affecting the current year’s financial statements.

38 Previous year figures have been re-grouped/reclassified/re-arranged/recast wherever necessary to suit the current year’s classification.Previous year figures are unless otherwise stated given in bracket.

As per our attached report of even date

for rahul gautam divan & associates For and on behalf of Board of DirectorsChartered Accountants



69


statement pursuant to seCtion 212 of tHe Companies aCt, 1956, reLating to suBsidiarY CompanY for tHe finanCiaL Year 2011-12.

1. Name of Subsidiary Company : VERTEX COMMODITIES AND FINPRO PRIVATE LIMITED

2. The financial year of subsidiary company ended on : 31st March, 2012

3. Number of shares in the subsidiary company held : 3,840,240 Equity shares of ` 10/- each by Vertex Securities Limited at the above date fully Paid up

4. The net aggregate of profits/losses of the subsidiary company. So far as these concern the members of Vertex Securities Limited.

(i) dealt within the account of Vertex Securities Limited amounted to :

a. for subsidiary’s financial year ended on 31-03-2012 : ` (7,069,248)

b. for previous financial years of the Subsidiary Company : ` (5,085,071) since this became subsidiary of Vertex Securities Limited.

(ii) not dealt within the accounts of Vertex Securities Limited amounted to:

a. for subsidiary’s financial year ended on 31-03-2012 : ` (39,096)

b. to previous financial years of the Subsidiary Company : ` (28,123) since this became subsidiary of Vertex Securities Limited.

statement pursuant to seCtion 212 (8) of tHe Companies aCt, 1956, reLating to suBsidiarY CompanY for tHe Year ended marCH 31, 2012. in accordance with the general Circular issued by the ministry of Corporate affairs, government of india.

sr. no. particulars Vertex Commodities and finpro pvt. Ltd (in rupees)A Capital 38,615,000 B Reserves & Surplus (8,151,424)C Total Assets 185,505,204 D Total Liabilities 185,505,204

E Details of Investment Nil (Except in case of investment in subsidiaries)

F Turnover 36,122,410 G Profit Before Taxation (7,709,852)H Provision for taxation (Deferred Tax) (601,508)I Profit after Taxation (7,108,344)J Proposed Dividend Nil

For and on behalf of Board of Directors

kumar nair James pothen Jose thomas polachira Chairman and Managing Director Director Director

Kochi-18 u. ramachandran sandhya r. nair May 15, 2012 Director Company Secretary

This pag

e is k

ept in

tentio

nally blan

k

VERTEX SECURITIES LIMITEDRegd. Office: Thottathil Towers, 2nd Floor, Market Road, Ernakulam, Kochi - 682 018

attendanCe sLip

(Shareholders attending the Meeting in person or by proxy are requested to complete the attendance slip and hand it over at the entrance of the meeting hall).

I,____________________________________________________________________hereby record my presence at the 19TH ANNuAL GENERAL MEETING of the Company being held at the The International Hotel, Veekshanam Road, Ernakulam, Kochi-682 031 at 9.30 AM on Wednesday, 18th July, 2012.

______________________________________________________________________________ ______________________________________________________________________________ Full name of the Share holder Signature (in BLOCK Capitals)

Folio No. _____________________________________________________ DP ID* ________________________________________________

CLIENT ID* ___________________________________________________ No. of Shares ___________________________________________

______________________________________________________________________________ ______________________________________________________________________________ Full name of the Share holder Signature

*Applicable for shares held in electronic form.

____________________________________________________________________________________________________________________________________________________________________________________________________________________________________

VERTEX SECURITIES LIMITEDRegd. Office: Thottathil Towers, 2nd Floor, Market Road, Ernakulam, Kochi - 682 018

proXY form

I/We______________________________________________________________of ________________________________________________being

a Member/Members of VERTEX SECuRITIES LIMITED (Folio Number____________________ DP ID*______________________

Client ID* ___________________hereby appoint _______________________________________________________________________

of_________________________________or failing him ________________________________of ____________________________________as

my/our proxy in my/our absence to attend and vote for me/us, and on my/our behalf, at the 19th Annual General Meeting of the

Company, to be held on Wednesday, 18th July, 2012 and at any adjournment thereof.

Signed this _________________________________ day of ___________________________ 2012.

NOTES:

1. The proxy need not be a member.2. The member should sign across the stamp as per specimen signature registered with the Company.3. The proxy form duly executed should reach the Registered Office of the Company not less than 48

hours before the time of meeting.

*Applicable for shares held in electronic form

Affix Re.1

Revenue Stamp

Shareholder

Documents

Contents€¦ · Sandhya R. Nair auditors Rahul Gautam Divan & Associates Chartered Accountants, 134, Mittal Tower, C Wing, Nariman Point, Mumbai - 400 021 Bankers Axis Bank ... Stock