DIRECTORS REPORT

TO,

THE MEMBERS,

The Directors of the Company are pleased to present their Thirty First Annual Report together with the annual audited financial statements for the financial year ended March 31, 2016.

FINANCIAL PERFORMANCE

Consolidated

The consolidated turnover of JM Financial Group was higher by 20% at Rs. 1,684.66 Crore for the financial year ended March 31, 2016 as against Rs. 1,403.04 Crore during the previous financial year. The Group made a consolidated net profit of Rs. 400.46 Crore for the year ended March 31, 2016 as compared to the net profit of Rs. 330.52 Crore in the previous year registering an increase of 21%.

The consolidated financials reflect the cumulative performances of JM Financial Limited along with its various subsidiaries and associates. Detailed description about the business carried on by these entities is contained in the Management Discussion and Analysis report.

Standalone

Being a Core Investment Company, most of the Company’s investments are in the securities of subsidiary & associate companies. Accordingly most of its revenue on standalone basis is in nature of dividend income on investments in subsidiary companies.

The gross revenue of the Company stood at Rs. 157.77 Crore for the year ended March 31, 2016 as against Rs. 104.54 Crore in the previous year. The Company made a net profit of Rs. 112.25 Crore for the year ended March 31, 2016 as compared to the net profit of Rs. 78.10 Crore in the previous year.

DIVIDEND

The Directors are pleased to recommend a final dividend of Rs. 0.85 per share of the face value of Rs. 1/- each for the financial year 2015-16 (previous year Rs. 0.80 per share). The Company also paid an interim dividend of Rs. 0.60 per equity share of the face value Rs. 1/- each (Previous year Rs. 0.55 per share). With the above recommendation, the total dividend works out to Rs. 1.45 per share (Previous year Rs. 1.35 per share). The total outgo on account of interim and final dividend would be Rs. 114.45 Crore for the financial year 2015-16 as against Rs. 106.15 Crore in the previous year.

The final dividend, if declared, at the Thirty First Annual General Meeting, will be paid on and from August 4, 2016 to the eligible members.

SHARE CAPITAL

Issue of shares arising out of Employees' Stock Option Scheme

During the financial year 2015-16, an aggregate of 52,61,959 equity shares have been allotted upon exercise of stock options by the eligible employees ('the Employees') under the Employees' Stock Option Scheme - Series 1, Series 4, Series 5, Series 6 and Series 7.

Consequent to the allotment made to the Employees as above, the paid-up equity share capital of the Company has increased to Rs. 78,89,85,636 (comprising 78,89,85,636 equity shares of Rs. 1/-each) as on March 31, 2016 as against Rs. 78,37,23,677 as at the end of the previous financial year (comprising 78,37,23,677 equity shares of Rs. 1/- each).

Additionally, an aggregate of 6,03,381 equity shares have been allotted on May 12, 2016 to the Employees on exercise of stock options by them under Series 5, 6, 7 and 8. Subsequent to the said allotment, the paid-up equity share capital of the Company has increased post March 31, 2016 to Rs. 78,95,89,017 representing 78,95,89,017 equity shares of the face value of Rs. 1/- each.

EMPLOYEES' STOCK OPTION SCHEME

The Nomination and Remuneration Committee of the Board granted 14,44,440 stock options to the eligible employees ('the Employees') under the Employees' Stock Option Scheme - Series 8 on April 16, 2015. Out of the total number of stock options so far granted under Series 1 to 8, an aggregate of 1,58,22,258 (up to March 31, 2016) stock options have been exercised by the Employees and 1,44,82,165 stock options have lapsed. The aggregate number of stock options outstanding as on March 31, 2016 is 1,04,61,226.

The Nomination and Remuneration Committee, at its meeting held on May 12, 2016, has further granted 12,55,515 stock options to the Employees under the Employees' Stock Option Scheme -Series 9.

The disclosures required to be made under applicable SEBI Regulations/Guidelines and Section 62(1) of the Companies Act, 2013 ('the Act') read with Rule 12(2) of the Companies (Share Capital and Debentures) Rules, 2014 are covered in Annexure I to this Report.

DEPOSITS

During the year, the Company has neither invited nor accepted any deposits from the public.

SUBSIDIARIES AND ASSOCIATES

As on March 31, 2016, the Company had 16 subsidiaries (including step down subsidiaries) and 2 associates. These subsidiaries are; JM Financial Institutional Securities Limited, JM Financial Services Limited, JM Financial Commtrade Limited, JM Financial Overseas Holdings Private Limited (Mauritius), JM Financial Singapore Pte Limited (Singapore), JM Financial Securities, Inc. (Delaware - United States of America), JM Financial Products Limited, JM Financial Credit Solutions Limited, JM Financial Capital Limited, JM Financial Investment Managers Limited, Infinite India Investment Management Limited, JM Financial Asset Management Limited, JM Financial Properties and Holdings Limited, CR Retail Malls (India) Limited, JM Financial Insurance Broking Private Limited and Astute Investments, a partnership firm in which JM Financial Services Limited and JM Financial Commtrade Limited, subsidiaries of the Company are partners.

The Company's associates as on March 31, 2016 are JM Financial Asset Reconstruction Company Private Limited and JM Financial Trustee Company Private Limited.

JM Financial Capital Limited was promoted by the Company's subsidiary, JM Financial Services Limited during the financial year 2015-16. The main business of JM Financial Capital Limited will be to provide funding facility to their brokerage and wealth clients.

The process of winding up of PT JM Financial Securities, Indonesia, a step down subsidiary was completed during the year.

In accordance with Section 129(3) of the Act and Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the consolidated financial statements of the Company and all its subsidiary/associate companies have been prepared and form part of the Annual Report. A statement containing salient features of the financial statements of the subsidiary and associate companies is also included in the Annual Report at page no. 145 and 146.

The Annual Report of the Company, containing, inter alia, its standalone and the consolidated financial statements has been placed on the website of the Company viz., www.jmfl.com in accordance with third proviso to Section 136(1) of the Act. Further, the audited financial statements of each of the subsidiary  companies have also been placed on the website of the Company. Members interested in obtaining a copy of the audited financial statements of the subsidiary companies may write to the Company Secretary at the Company's registered office.

The Company shall make available, the audited financial statements and related information of its subsidiaries, to those members who wish to have copies of the same and these documents will also be kept open for inspection by members at the registered office of the Company between 2.00 p.m. and 4.00 p.m. on any working day (Monday to Friday), up to the date of the Thirty First Annual General Meeting.

AWARDS AND RECOGNITIONS

Various subsidiaries of the Company were conferred the following awards and recognitions during the year:

JM Financial Institutional Securities Limited

> At the Asset's Triple A Country Awards 2015, JM Financial Institutional Securities Limited received the award for the 'Best Corporate and Institutional Bank-Domestic' and 'Best Equity House'.

> At the SKOCH BSE Award For Aspiring India, JM Financial Institutional Securities Limited was included in the Order of Merit list receiving the award for Highest Independent Honour in India for Institutional Leadership.

JM Financial Services Limited

> At the UTI MF & CNBC-TV18's Financial Advisor Awards 2015, JM Financial Services Limited received the award for Best Performing National Financial Advisor (Institutional).

> At the Great Places to Work for 2015 conducted by The Great Place to Work Institute, India in partnership with The Economic Times, JM Financial Services Limited received the following awards:

• Ranked amongst "India's 100 Best Companies to Work For 2015"- Overall

• Ranked 1st in the Investment Industry Category in "India's 100 Best Companies to Work For 2015".

JM Financial Asset Management Limited

At the Great Places To Work For 2015 conducted by The Great Place to Work Institute, India in partnership with The Economic Times,

JM Financial Asset Management Limited received the following awards:

• Ranked amongst "India's 100 Best Companies to Work for  2015"

• Ranked 5th best in the Industry (Financial Services) in "India's Best Companies To Work For 2015".

JM Financial Singapore Pte. Ltd.

At the Acquisition International 2015 M&A Awards, JM Financial Singapore Pte. Ltd. was awarded as the Dealmaker of the year for the transaction "Altran Acquisition of Foliage Inc" where JM Financial Singapore Pte. Ltd. advised Foliage Inc.

CHANGE OF REGISTRARS & SHARE TRANSFER AGENTS

The Company has appointed Karvy Computershare Private Limited as its Registrars & Share Transfer Agents in place of Sharepro Services (India) Private Limited (Sharepro Services).

Sharepro Services and some of its employees had committed certain irregularities in the share related operations and wrongful encashment of dividends in respect of the equity shares of various companies including the Company. Consequent on this, the Company had intimated Securities and Exchange Board of India (SEBI) and Stock Exchanges about the irregularities and terminated its share registry agreement with Sharepro Services.

SEBI has also passed an Interim Order dated March 22, 2016 restraining Sharepro Services, its promoters, directors, some of its employees and other persons from dealing in securities market and associating themselves with the securities market till further orders. In accordance with the directions in SEBI Interim Order, the Company has appointed Deloitte Touche Tohmatsu India LLP to conduct a thorough review of the records and systems of Sharepro Services with respect to Company's share operations handled by them, which is currently being done by them.

The findings of the said report will be submitted to SEBI.

BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

Pursuant to the recommendation of the Nomination and Remuneration Committee, the Board of Directors appointed Mr. Vishal Kampani as an Additional (Non-Executive) Director of the Company with efect from February 3, 2016. Mr. Kampani holds office as an Additional Director until the Thirty First Annual

General Meeting, and is eligible for appointment as a Director as provided under Article 132 of the Articles of Association of the Company. Mr. Kampani is a relative (son) of Mr. Nimesh Kampani, Chairman & Managing Director. The Company has received a notice under Section 160 of the Act from a member with requisite deposit signifying her intention to propose the candidature of Mr. Kampani for the office of a Director. A brief profile of Mr. Vishal Kampani is given as an Additional Information in the notice convening the Thirty First Annual General Meeting.

Mr. Nimesh Kampani, Chairman and Managing Director, though appointed as the Managing Director for a fixed term of 5 years with efect from April 1, 2012, will retire by rotation as a Director, to enable compliance by the Company with the provisions of Section 152 of the Act.

As on March 31, 2016, the Board of Directors of the Company comprised eight Directors, one of whom is the Chairman & Managing Director. Out of the remaining seven Directors, one is Non-Executive Director and six are Independent Directors.

Mr. Nimesh Kampani, the Chairman & Managing Director is the Key Managerial Personnel (KMP) within the meaning of Section 203(1) of the Act.

Mr. Prashant Choksi and Mr. Manish Sheth are the other KMPs designated as the Company Secretary and the Chief Financial Oficer (CFO) respectively.

DECLARATIONS GIVEN BY INDEPENDENT DIRECTORS

All the Independent Directors have confirmed to the Board that they meet the criteria of independence as specified under Section 149(6) of the Act and that they qualify to be independent directors pursuant to the Rule 5 of the Companies (Appointment and Qualification of Directors) Rules, 2014. They have also confirmed that they meet the requirements of 'Independent Director' as mentioned under Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The confirmations were placed before and noted by the Board.

BOARD MEETINGS

The Board meets at regular intervals to discuss and take a view on the Company's policies and strategy apart from other Board matters. The tentative annual calendar of the Board and Committee meetings is circulated in advance to facilitate the Directors to plan their schedule and to ensure participation in the meetings. The notice for the board meetings is also given well in advance to all the Directors.

The Board of Directors met seven times in the financial year  2015-16 viz., May 29, 2015; July 30, 2015; September 22, 2015; October 29, 2015; December 11, 2015; February 3, 2016 and March 29, 2016. The maximum time period between the two board meetings did not exceed 120 days.

POLICIES ON DIRECTORS' APPOINTMENT AND REMUNERATION

The Policies of the Company on Directors' appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a Director and other matters provided under sub-section (3) of Section 178 of the Act, are appended as Annexure II(a) and II(b) to this Report.

EVALUATION OF BOARD OF DIRECTORS

The Board carried out formal annual evaluation of its own performance and that of its Committees viz., the Audit Committee, Stakeholders' Relationship Committee, Nomination & Remuneration Committee (NRC), Corporate Social Responsibility Committee and Allotment Committee. The Board also carried out the evaluation of all the individual directors. Additionally, NRC also carried out the evaluation of the performance of all the individual directors of the Company. The performance evaluation was carried out by way of obtaining feedback from the Directors through a structured questionnaire prepared separately for individual directors, for the Board as a whole and its various Committees.

The structured questionnaire prepared to evaluate the performance of individual directors contained inter alia, parameters such as professional conduct, roles and functions, discharge of duties, and their contribution to Board/ Committee/ Senior Management. The questionnaire prepared for evaluation of the Board and its Committees, inter alia, covered various aspects such as structure and composition, effectiveness of board process, information and functioning of the Board and its Committees, establishment and determination of responsibilities of Committees, the quality of relationship between the board and the management.

The feedback received from the Directors in the above forms was reviewed by the Chairman & Managing Director and the Chairman of the NRC and then discussed at the meetings of the Board and NRC. The performance evaluation of the Chairman & Managing Director and the Board as a whole was carried out by  the Independent Directors at their separate meeting held on December 11, 2015.

BOARD COMMITTEES

The Board of Directors has constituted five Committees, viz.,

1. Audit Committee

2. Stakeholders' Relationship Committee

3. Nomination and Remuneration Committee

4. Corporate Social Responsibility Committee

5. Allotment Committee

Details of all the Committees along with their composition, terms of reference and meetings held during the year are provided in Report on Corporate Governance.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirements under Section 134(3)(c) read with Section 134(5) of the Act with respect to Directors' Responsibility Statement, the Directors hereby confirm that:

(a) in the preparation of the annual accounts, the applicable accounting standards have been followed and that no material departures have been made in following the same;

(b) appropriate accounting policies have been selected and applied consistently and judgements and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;

(c) proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of Act have been taken for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities, if any;

(d) the annual accounts have been prepared on a going concern basis;

(e) internal financial controls to be followed by the Company have been laid down and that such internal financial controls are adequate and were operating effectively; and

(f) proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating efectively.

STATUTORY AUDITORS

M/s. Khimji Kunverji & Co., Chartered Accountants, who are the Statutory Auditors of the Company, hold ofice, in accordance with the provisions of the Act, for a period of three years from the conclusion of the Twenty Ninth Annual General Meeting until the conclusion of the Thirty Second Annual General Meeting (AGM). As per Section 139 (2) of the Act and the applicable rules, the appointment of Statutory Auditors needs to be ratified by the members at every AGM.

The Company has received a confirmation from M/s. Khimji Kunverji & Co. that their appointment, if ratified, at the Thirty First AGM will be in accordance with Sections 139 and 141 of the Act and rules made there under. Accordingly, the members are requested to ratify the appointment of the Statutory Auditors at the Thirty First AGM.

SECRETARIAL AUDIT

Pursuant to the requirements of Section 204(1) of the Act and Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. Naren Shr of & Associates, Company Secretary in Practice to conduct the secretarial audit for the financial year 2015-16.

The Secretarial Audit Report as received from M/s. Naren Shroff & Associates is appended as Annexure III to this Report.

COMMENTS ON AUDITORS' REPORT

There are no qualifications, reservations, adverse remarks or disclaimers made by the Statutory Auditors, in their Audit Report and by M/s. Naren Shroff & Associates, Company Secretary in Practice, in his Secretarial Audit Report. The Statutory Auditors have not reported any incident of fraud to the Audit Committee of the Company during the financial year 2015-16.

CORPORATE SOCIAL RESPONSIBILITY

The Board has constituted a Corporate Social Responsibility (CSR) Committee in accordance with Section 135 of the Act. The CSR Policy of the Company, inter alia, lists the activities that can be undertaken or supported by the Company for CSR, composition and meetings of CSR Committee, details of existing Charitable trusts within the JM Financial group, annual allocation for CSR activities, areas of CSR projects, criteria for selection of CSR projects, modalities of execution/implementation of CSR activities and the monitoring mechanism of CSR activities/projects. The details of CSR activities undertaken by the Company are described in the prescribed format appended as Annexure IV to this Report.

RISK MANAGEMENT AND INTERNAL CONTROLS

The Company has a well-defined risk management framework in place. Further, it has established procedures to periodically place before the Board, the risk assessment and management measures.

The details of the risks faced by the Company and the mitigation thereof are discussed in detail in the Management Discussion and Analysis report.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There have been no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of this Report.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS

During the financial year 2015-16, there were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future.

REPORTS ON CORPORATE GOVERNANCE AND  MANAGEMENT DISCUSSION & ANALYSIS

The reports on Corporate Governance and Management Discussion and Analysis for the year under review, as stipulated under Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 form part of this Report. The certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance is annexed to the Report on Corporate Governance.

PARTICULARS OF EMPLOYEES AND RELATED INFORMATION

In accordance with the provisions of Section 197(12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement containing the disclosures pertaining to remuneration and other details as required under the Act and the above Rules are provided in the Annual Report. The disclosures as specified under Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, have been appended to this Report as Annexure V.

As per the provisions of Section 136 (1) of the Act, the reports and accounts are being sent to all the Members of the Company excluding the information regarding employee remuneration as required pursuant to Rule 5(2) and Rule 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The same is available for inspection by Members at the registered office of the Company between 2.00 p.m. and 4.00 p.m. on any working day (Monday to Friday), up to the date of the Thirty First Annual General Meeting. Any Member interested in obtaining such information may write to the Company Secretary and the same will be furnished on such request.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The particulars of loans, guarantees or investments under Section 186 of the Act are not furnished since the provisions of Section 186 of the Act are not applicable to the Company pursuant to sub-section 11 thereof.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

The particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Act, as prescribed in Form AOC - 2 are appended as Annexure VI to this Report.

EXTRACT OF ANNUAL RETURN

Pursuant to the requirements under Section 92(3) and Section 134(3) of the Act read with Rule 12 of Companies (Management and Administration) Rules, 2014, an extract of Annual Return in prescribed Form MGT-9 is appended as Annexure VII to this Report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars regarding Conservation of Energy and Technology Absorption are not furnished since they are not applicable to the Company.

During the year, the Company has not earned any foreign exchange on standalone basis; the details of the amount spent in foreign exchange is provided at note number 2.31 of the notes to the standalone financial statements which forms part of the audited annual accounts.

VIGIL MECHANISM/WHISTLE BLOWER POLICY

The Company has established a vigil mechanism to provide appropriate avenues to the Directors and employees to bring to the attention of the Management, their genuine concerns about behaviour of employees, the details of which are included in the Report on Corporate Governance.

During the financial year 2015-16, no cases under this mechanism were reported in the Company and any of its subsidiaries/ associates.

POLICY FOR PREVENTION, PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

The Company's policy against sexual harassment is embodied both in the Code of Conduct of JM Financial Group as also in  a specifically written policy in accordance with The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

During the financial year 2015-16, no cases in the nature of sexual harassment were reported at any workplace of the Company and any of its subsidiaries/associates.

CEO & CFO CERTIFICATION

Certificate from Mr. Nimesh Kampani, Chairman & Managing Director and Mr. Manish Sheth, Chief Financial Officer, pursuant to Regulation 17(8) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, for the financial year 2015-16 was placed before the Board of Directors of the Company at its meeting held on May 13, 2016 and also forms part of Report on Corporate Governance.

ACKNOWLEDGEMENTS

The Directors wish to place on record their sincere gratitude to the Reserve Bank of India, Securities and Exchange Board of India, BSE Limited, National Stock Exchange of India Limited, Ministry of Finance, Ministry of Corporate Affairs, Registrar of Companies, National Securities Depository Limited, Central Depository Services (India) Limited, Forward Markets Commission, Metropolitan Stock Exchange of India Limited, National Commodity and Derivatives Exchange Limited, other government and regulatory authorities, lenders, financial institutions and the bankers of JM Financial group for the continuous support provided by them.

The Directors also place on record their sincere appreciation for the continued support extended by the Company's stakeholders and trust reposed by them in the Company. The Directors sincerely appreciate the commitment displayed by the employees of the Company and its subsidiaries/associates across all levels, resulting in satisfactory performance during the year.

For and on behalf of the Board of Directors

Nimesh Kampani

Chairman & Managing Director

Date: May 13, 2016

Place: Mumbai