Prudence and Simplicity

Transcription

1 Prudence and Simplicity Global Investment Opportunities Fund Limited ANNUAL REPORT

2 BOARD OF DIRECTORS : MR. ABDOOL AZIZE OWASIL, MR. LOUIS DIDIER MERLE, MR. SOW MAN AH YUK SHING, MR. RAVI LOCHAN POLA, MR. RIAD AUBDOOL, MR. RUCHIT PURI Directors Report Commentary of the Directors to the Shareholders of GLOBAL INVESTMENT OPPORTUNITIES FUND LIMITED The directors present their report and the audited financial statements of Global Investment Opportunities Fund Limited (the "Company") for the year ended 31 March Principal activities The principal objective of the Company is to seek capital appreciation by investing in portfolio of securities comprising principally of shares of companies incorporated in India and elsewhere and debt instruments. Results and dividend The directors do not recommend the payment of dividend for the year under review (2012: nil). Statement of directors responsibilities in respect of the financial statements The Board of Directors is responsible for the preparation and fair presentation of the financial statements, comprising the statement of financial position at 31st March 2013, statement of comprehensive income, statement of changes in net assets attributable to participating shareholders and statement of cash flows for the year then ended, and the notes to the financial statements, which include a summary of significant accounting policies and other explanatory notes, in accordance with International Financial Reporting Standards and the Mauritius Companies Act The Board of Directors responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of these financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. The Board of Directors has made an assessment of the Company s ability to continue as a going concern and has no reason to believe that the business will not be a going concern in the year ahead. Directors interests (a) (b) (c) (d) There are no service contracts in existence between the Company and any of its directors, nor are any such contracts proposed. None of the directors have any interests either beneficial or non-beneficial, in the share capital of the Company. There are no existing or proposed contracts of service between any of its directors and the Company. Abdool Azize Owasil and Riad Aubdool are officers of Cim Fund Services Limited. Abdool Azize Owasil is Head of Fund Services of Cim Global Services Ltd. Riad Aubdool is a Senior Manager of Fund Services at Cim Fund Services Ltd. Ruchit Puri, is a director of Kotak Mahindra (UK) Limited, Kotak India Focus Fund II, Kotak WM India Fund Limited, Indian Multi Cap Fund (Mauritius) Limited, Kotak International Funds, PCC, India Midcap Fund (Mauritius) Ltd, India Infrastructure & Realty Fund (Mauritius) Ltd, India Bluechip Fund Ltd, K Fixed Opportunities Fund Ltd, Kotak India Consumption Fund and Kotak India Focus Fund. By Order of the Board CORPORATE SECRETARY Cim Fund Services Limited 33, Edith Cavell Street Port Louis Mauritius Date: 25 th April, 2013 Annual Report

3 INDEPENDENT AUDITORS REPORT To The Members of Global Investment Opportunities Fund Limited. The financial statements of Global Investment Opportunities Fund Limited as at 31 st March 2013, being a company registered in the Mauritius, are audited by KPMG, Licensed Auditors, Mauritius and we have been furnished with their audit report dated 23 rd April, We are presented with the accounts in Indian Rupees prepared on the basis of aforesaid accounts to comply with requirements of section 212 of the Companies Act We give our report hereunder: Report on the Financial Statements We have audited the accompanying financial statements of Global Investment Opportunities Fund Limited, which comprise the Balance Sheet as at 31 st March 2013, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information. s Responsibility for the Financial Statements is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the 2 GLOBAL INVESTMENT OPPORTUNITIES FUND Limited

4 appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act 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 st March 2013; (b) in the case of the Statement of Profit and Loss, of the Profit for the year ended on that date; and (c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date. Report on Other Legal and Regulatory Requirements In view of the facts specified in Para 1 and 2 herein above, the requirements of Companies (Auditor s Report) Order, 2003, report under section 227(3) of the Act, report on directors disqualification in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956 and payment of cess under section 441A of the Companies Act, 1956 are not applicable. For V.C. Shah & Co. Chartered Accountants Firm Registration No W A.N Shah. Place: Mumbai Partner Date: 27 April, 2013 Membership No.: Annual Report

5 PART I Form of BALANCE SHEET GLOBAL INVESTMENT OPPORTUNITIES FUND LIMITED Balance Sheet as at 31st March 2013 Particulars I. EQUITY AND LIABILITIES Note No. As at 31st March 2013 As at 31st March 2012 Class Accounts Class Accounts 1 Shareholders funds (a) Share capital 3.1 9,594 1,332,737 1,342,331 9,594 1,397,683 1,407,277 (b) Reserves and surplus 3.2 1,557 4,097,055,651 4,097,057, ,458,798,204 4,458,799,039 2 Current liabilities (a) Trade payables - 2,744,866 2,744,866-2,625,404 2,625,404 (b) Other current liabilities , ,988-1,221,865 1,221,865 TOTAL 11,151 4,102,083,242 4,102,094,393 10,429 4,464,043,156 4,464,053,585 II. ASSETS 1 Current assets (a) Current investments 3.4-4,041,171,261 4,041,171,261-4,346,352,797 4,346,352,797 (b) Cash and bank balance ,151 58,477,842 58,488,993 10, ,690, ,700,788 (c) Other current assets 3.6-2,434,139 2,434, TOTAL 11,151 4,102,083,242 4,102,094,393 10,429 4,464,043,156 4,464,053,585 Significant accounting policies and notes to the financial statements 2 & 3 In terms of our report of even date For V. C. Shah & Co. Chartered Accountants For and on behalf of the Board of Directors A. N. Shah Abdool Azize Owasil Riad Aubdool Partner Director Director Dated: 27 April April, Dated: 25 April GLOBAL INVESTMENT OPPORTUNITIES FUND Limited

6 Particulars Note As at 31st March 2013 As at 31st March 2012 No. Class Accounts Class Accounts I. Revenues from operations a) Profit/ (loss) on sale of Derivative contracts ,110,402 1,110,402 b) Writeback of Provision on investments - 249,070, ,070, II. Other income ,546,379 2,546,379 III. Revenue (I + II) 249,070, ,070,735 3,656,781 3,656,781 IV. Expenses: Realised loss on sale of investments - 82,692,138 82,692, ,275, ,275,465 Foreign Exchange loss on investments - 84,100,779 84,100, Provision for diminution in value of investments ,085, ,085,734 Other expenses ,505,793 19,505,793-30,006,112 30,006,112 expenses - 186,298, ,298, ,367, ,367,311 V. PROFIT BEFORE TAX - 62,772,025 62,772,025 - (625,710,530) (625,710,530) VI. Tax expense VII. PROFIT FOR THE PERIOD - 62,772,025 62,772,025 - (625,710,530) (625,710,530) Significant accounting policies and notes to the financial statements 2 & 3 GLOBAL INVESTMENT OPPORTUNITIES FUND LIMITED Statement of Profit and loss for the year ended 31st March 2013 In terms of our report of even date For V. C. Shah & Co. Chartered Accountants For and on behalf of the Board of Directors A. N. Shah Abdool Azize Owasil Riad Aubdool Partner Director Director Mumbai Dated: 27 April, 2013 Dated: 25 April 2013 Annual Report

7 GLOBAL INVESTMENT OPPORTUNITIES FUND LIMITED Cash Flow Statement for the year ended 31st March, 2013 Particulars For the year ended For the year ended 31st March, st March, 2012 Cash Flow from Operating Activities Net Profit before taxation 62,772,025 (625,710,530) Adjustments for: - Net realised (gain)/loss on sale of investments 82,692, ,165,063 - Change in unrealised (gain)/loss on revaluation of investments (249,070,735) 453,085,734 - Dividend Income (2,546,379) - Exchange Adjustments 300,281, ,967,746 Operating Profit before Working Capital Changes 196,674, ,961,634 Adjustments for: (Increase) / Decrease in short Term Loans and Advances - 3,643,144 (Increase) / Decrease in Trade Receivables - 2,187,920 (Increase) / Decrease in Other current assets (2,434,139) Increase / (Decrease) in Current Liabilities (271,878) (2,134) Increase / (Decrease) in Trade Payables 119,462 (6,376,855) Cash Generated from Operations 194,087, ,413,709 Direct taxes paid - - NET CASH FLOW FROM OPERATING ACTIVITIES (A) 194,087, ,413,709 Cash Flow from Investing Activities Purchase of Investments (1,014,071,569) (1,768,768,699) Proceeds from sale of Investment 1,485,631,702 1,333,847,903 Dividend Income - 2,546,379 NET CASH FLOW FROM INVESTING ACTIVITIES (B) 471,560,133 (432,374,417) Cash Flow from Financing Activities Proceeds from issue of shares 478,095,870 1,765,197,373 Redemption of shares capital (1,202,955,679) (1,997,354,071) NET CASH FLOW USED IN FINANCING ACTIVITIES (C) (724,859,809) (232,156,698) Net Increase in Cash and Cash Equivalents (A + B + C) (59,211,795) (85,117,406) Cash and Cash Equivalents at the beginning of the year 117,700, ,818,194 Cash and Cash Equivalents at the end of the year 58,488, ,700,788 (59,211,795) (85,117,406) Notes: 1. The Cash Flow Statement has been prepared under the 'Indirect Method' as set out in the Accounting Standard -3 on Cash Flow Statements notified pursuant to the Companies (Accounting Standards) Rules, 2006, as amended. 2. Figures in brackets indicate cash outflow. 3. The previous year's figures have been re-grouped, wherever necessary in order to conform to current year's presentation. This is the Cash Flow Statement referred to in our report of even date In terms of our report of even date For V. C. Shah & Co. Chartered Accountants For and on Behalf of the Board of Directors A. N. Shah Abdool Azize Owasil Riad Aubdool Partner Director Director Mumbai Dated: 27 April, 2013 Dated: 25 April GLOBAL INVESTMENT OPPORTUNITIES FUND Limited

8 1 Organisation and Nature of business Global Investment Opportunities Fund Limited (the Company ) was previously incorporated under the name of Kotak Mahindra Investment Company Limited, PCC as a private company limited by shares with a protected cell company status on 31 January 2001 in the Republic of Mauritius. On 13 June 2003, the Company has by a special resolution converted itself into a public company and on 25 July 2003 changed its name to Global Investment Opportunities Fund Limited. The Company as a holder of a Category 1 Global Business Licence under the Companies Act 2001 and the Financial Services Act 2007 is required to carry on its business in a currency other than the Mauritian rupee. Since the Company operates in an international environment and conducts most of its transactions in foreign currencies the Company has chosen to retain the United States dollar ( USD ) as its reporting currency. SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS 2 Summary of Significant Accounting policies The following accounting policies have been consistently applied in dealing with items which are considered material in relation to the company s financial statements. i. Basis of preparation The financial statements have been prepared under the historical cost convention on accrual basis. ii. Use of estimates The preparation of financial statements requires the management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. believes that the estimates used in preparation of the financial statements are prudent and reasonable. Actual results could differ from these estimates. iii. Conversion to Indian Rupees The transactions are in US Dollars, which have been converted into Indian currency for reporting purposes. All income and expense items are converted at the average rate of exchange applicable for the period. All assets and liabilities are translated at the closing rate as on the Balance Sheet date. Share Capital is carried forward at the rate of exchange prevailing on the transaction date. The resulting exchange difference on account of translation at the year end is being treated transferred to Translation Reserve Account and the said account is being treated as Reserves and Surplus. Annual Report

9 iv. Revenue recognition Revenue is recognised to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Commission, fees and other revenue invoiced are recognised on an accrual basis. Interest income is recognised in the Profit and Loss account as accrued. Dividend income relating to listed long equity securities are recognized in the income statement on the ex-dividend date. v. Share capital On issue of participating shares, the difference between the issue price and the nominal value is credited to the share premium account. On redemption, the nominal value is debited to the share capital account and any excess to share premium and retained earnings account. vi. Investments The Company classified its investments in equity securities / futures and options as current investments. Investments are initially recognised at cost, including transaction costs. Investments are subsequently carried at cost or market value, whichever is lower on an overall category basis, based on the quoted bid and offer prices, respectively. When current bid and offer prices are unavailable, the price of the most recent transaction is used. All investment transactions are recorded on a trade date basis and costs of investments are determined on an average cost basis. vii. Cash and Cash Equivalents For the purposes of the cash flow statement, cash and cash equivalent consists of cash in hand, bank balances and short-term, deposits with an original maturity of three months or less. viii. Taxation Income tax on the profit or loss for the year comprises current and deferred tax. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted at the Balance Sheet date, and any adjustment to tax payable in respect of prior years. Deferred tax is provided using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted at the Balance Sheet date. 8 GLOBAL INVESTMENT OPPORTUNITIES FUND Limited

10 3 Notes to the accounts 3.1 (A) Share Capital Share Capital Issued, Subscribed and fully Paid up 205 (Previous year 205) shares of USD 1 each 92,230 (Previous year 115,489) Class A Participating shares 94,691 (Previous year 105,482) Class C Participating shares 115,697 (Previous year 115,507) Class I Participating shares 1,366 (Previous year 800) Class A (series 1) Participating shares 2,680,888 (Previous year 1,287,821) Kotak Fund of Funds As at 31st March 2013 As at 31st March 2012 Class Accounts Class Accounts ` ` ` ` ` ` 9,594 9,594 9,594 9,594 30,517 30,517 40,362 40,362 25,743 25,743 37,274 37,274 22,040 22,040 65,066 65,066 1,295 1, ,253,142 1,253,142 1,254,339 1,254,339 9,594 1,332,737 1,342,331 9,594 1,397,683 1,407,277 (B) Equity shares As at 31st March 2013 As at 31st March 2012 Quantity Amount (`) Quantity Amount (`) Number of shares at the beginning 205 9, ,594 Issued during the period Number of shares at the end 205 9, ,594 (C) Terms/rights attached to equity shares The shares shall not be class shares. All proceeds of allotment of shares shall be kept separately identifiable from class portfolio. The management shares are not reddemable and do not participate in the dividends of the Company. They are classified as equity. shares shall confer on the holders thereof: (a) voting rights in any members meeting other than class meetings of holders of class shares. Each share shall carry one vote. (b) the right to participate in so much only of the profits and assets of the Company as are attributable to the shares; and (c) in a winding up the right set out in Article 52 of the Constitution. Participating shares No shares shall at any time be held otherwise than by the subscribers set out in the first schedule to the Constitution or such person as may be approved by an unanimous resolution of the Board of Directors. The shares are currently held by Kotak Mahindra Bank Limited and Kotak Mahindra (International) Limited. (a) be issued in respect of a specifically designated class, at a price not below the nominal value of the shares or at such higher price as the Directors may determine from time to time; (b) carry a right to class dividend; and (c) confer upon the holders thereof in a winding up to the rights set out in Article 52 of the Constitution. The Participating shares consist of class A to S shares, and shares: The Participating shares shall be divided into such number of classes as the Board may from time to time determine. On or before the issue or allotment of a Participating share, the Directors shall Annual Report

11 (D) held by holding/ultimate holding company and/or their subsidiaries/associates Out of equity and preference shares issued by the company, shares held by its holding company, ultimate holding company and their subsidiaries/ associates are as below: As at 31 March As at 31 March Kotak Mahindra Bank Limited, the holding company Kotak Mahindra (International) Ltd, subsidiary of Kotak Mahindra Bank Limited (E) Details of shareholders holding more than 5% shares in the company Equity shares of USD 1 fully paid up As at 31 March 2013 As at 31 March 2012 Number of Number of shares % holding shares % holding Kotak Mahindra Bank Limited, holding company Kotak Mahindra (International) Ltd, subsidiary of Kotak Mahindra Bank Limited Reserves & Surplus As at 31 March 2013 As at 31 March 2012 Class Accounts Class Accounts ` ` ` ` ` ` a. Securities Premium Account Opening Balance 1,850,226,440 1,850,226,440 2,082,938,788 2,082,938,788 Add : Securities premium credited on Share issue (724,794,863) (724,794,863) (232,712,348) (232,712,348) Add : Transfer from retained earnings 480,385, ,385, Closing Balance - 1,605,817,433 1,605,817,433 1,850,226,440 1,850,226,440 b. Translation Reserve Opening Balance Additions during the year Adjustments during the year Closing Balance ,261, ,262,618 (452) 184,295, ,294, ,280, ,281,008 1, ,966, ,967, ,557 1,094,542,069 1,094,543, ,261, ,262,618 c. Surplus in the statement of profit and loss Opening balance 1,814,309,981 1,814,309,981 2,440,020,511 2,440,020, (+) Net Profit/(Net Loss) For the current year 62,772,025 62,772,025 (625,710,530) (625,710,530.00) (-) Transfer to securities premium (480,385,857) (480,385,857) Closing Balance - 1,396,696,149 1,396,696,149-1,814,309,981 1,814,309, ,557 4,097,055,651 4,097,057, ,458,798,204 4,458,799, Other current liabilities As at 31 March 2013 As at 31 March 2012 Class Accounts Class Accounts ` ` ` ` ` ` Expenses payable to group companies ,221,865 1,221,865 Other liabilities - 949, , , ,988-1,221,865 1,221, GLOBAL INVESTMENT OPPORTUNITIES FUND Limited

12 3.4 Investments Script Name As at 31 March 2013 As at 31 March 2012 Quantity Book Value Quantity Book value Qty ` Qty ` Current Investments Equity and other similar funds (Quoted) Birla Sunlife Frotline Equity Fund - Plan A - Growth ,495 25,674,120 Canara Robeco Equity Diversified-Growth - - 1,212,911 66,656,578 Fidelity Equity Fund-Growth Option - - 4,468, ,000,190 Franklin India Bluechip Fund-Growth 1,041, ,819, , ,999,631 HDFC Midcap Opportunities Fund Growth 4,596,526 83,016,108 6,902, ,641,976 HDFC Top 200 Fund Growth 538, ,940, , ,021,042 ICICI Prudential Discovery Fund - Growth 1,547,188 84,719,799 2,272, ,471,850 ICICI Prudential Focused Bluechip Equity Fund Retain Growth 15,189, ,352,447 9,632, ,020,838 Kotak Nifty ETF , ,529,678 SBI MSFU Emerging Businesses Fund - Growth 1,374,429 73,894, UTI - Equity Fund-Growth Option 4,410, ,499, ,025 45,393,778 28,698,496 1,151,242,131 27,302,335 1,185,409,682 Less: Provision for dminution in value of investments ,910,704 : Equity and other similar funds (Quoted) 28,698,496 1,151,242,131 27,302,335 1,084,498,978 Equity and other similar funds (Unquoted) Kotak Funds - India Blue chip Fund Limited 3,309,478 1,813,085,165 3,973,963 2,045,431,207 Kotak Funds - India Blue chip Fund Limited - SERIES ,748 29,743,458 Kotak Funds - India Midcap Fund 2,352,023 1,341,605,798 2,914,367 1,566,856,136 5,661,501 3,154,690,963 6,945,078 3,642,030,800 Less: Provision for dminution in value of investments - 264,761, ,176,980 : Equity and other similar funds (Unquoted) 5,661,501 2,889,929,130 6,945,078 3,261,853,820 Current Investments 34,359,997 4,041,171,261 34,247,413 4,346,352,797 Aggregate value of quoted investment 1,151,242,131 1,084,498,978 Aggregate market value of quoted investment 1,151,242,131 1,084,498,978 Aggregate value of unquoted investment 3,154,690,963 3,642,030,800 investments 4,041,171,261 4,346,352,797 Annual Report

13 3.5 Cash and bank balances As at 31 March 2013 As at 31 March 2012 Class Accounts Class Accounts ` ` ` ` ` ` Cash and cash equivalents Balances with banks: On current accounts 11,151 58,477,842 58,488,993 10, ,690, ,700,788 11,151 58,477,842 58,488,993 10, ,690, ,700, Other current assets As at 31 March 2013 As at 31 March 2012 Class Accounts Class Accounts ` ` ` ` ` ` Receivable from fellow subsidiary - 2,434, ,434, Other income As at 31 March 2013 As at 31 March 2012 Class Class Accounts Accounts ` ` ` ` ` ` Dividend income ,546,379 2,546, ,546,379 2,546, Other expenses As at 31 March 2013 As at 31 March 2012 Class Class Accounts Accounts ` ` ` ` ` ` Exchange loss 1,555,886 1,555,886 3,068,256 3,068,256 Auditors remuneration 870, , , ,132 Investment Advisory and facilitator fees 8,570,861 8,570,861 15,558,138 15,558,138 Legal and Professional fees 3,843,099 3,843,099 3,717,392 3,717,392 Transaction and Custody Charges 405, , , ,558 Upfront Placement fees 1,480,387 1,480,387 4,958,791 4,958,791 Service charges 407, , , ,707 Directorship fees 163, , , ,741 Miscellaneous expenses 2,208,775 2,208, , ,397-19,505,793 19,505,793-30,006,112 30,006, GLOBAL INVESTMENT OPPORTUNITIES FUND Limited

14 3.9 The Company is a subsidiary of Kotak Mahindra Bank Limited (KMBL). The accounts have been prepared and audited to attach with the accounts of KMBL, the holding company to comply with the provisions of the Indian Companies Act, Derivatives There are no open derivative contracts as at 31st March 2013 and Taxation The company is subject to income tax in Mauritius at the rate of 15%. However, it is entitled to a tax credit equivalent to the higher of the actual foreign tax suffered and 80% of the Mauritian tax on its foreign source income Related party transactions During the year ended 31st March, 2013, the company s transactions with related party are as follows: Related Parties Kotak Mahindra (UK) Limited Nature of Relationship Fellow Subsidiary Nature of Transactions (all figures in ) 31 st March st March st March st March 2012 fee 8,570,861 12,840,850 Regulatory & administrative services fee Volume of transaction for the period ended All related party transactions entered during the year by the Company are priced on commercial terms and conditions Previous year figures have been regrouped and reclassified wherever necessary to conform to current year s presentation. - 2,717,335 Debit / (credit) balance at 2,434,139 (1,221,865) In terms of our report of even date For V. C. Shah & Co. Chartered Accountants Dated: 25 April 2013 For and on Behalf of the Board of Directors A. N. Shah Abdool Azize Owasil Riad Aubdool Partner Director Director Mumbai Dated: 27 April, Dated: 25 April 2013 Annual Report

15