IDFC INVESTMENT MANAGERS (MAURITIUS) Ltd.

Transcription

1 IDFC INVESTMENT MANAGERS (MAURITIUS) Ltd. BOARD OF DIRECTORS Mr. Riad Muhammad Aubdool Mr. Mahmood Bashir Nabeebokus AUDITORS Ernst & Young 9Th Floor, Nexteracom Tower 1 Cybercity, Ebene, Mauritius BANKER Deutsche Bank (Mauritius) Limited SECRETARY & ADMINISTRATOR Cim Fund Services Ltd 3rd Floor, Rogers House, 5 President John Kennedy Street Port Louis, Mauritius REGISTERED OFFICE C/o Multiconsult Limited 3rd Floor, Rogers House, 5 President John Kennedy Street Port Louis, Mauritius

2 Corporate Governance Report General Information IDFC Investment Managers (Mauritius) Ltd. (the Company ) was incorporated on September 13, 2010 as a private company limited by shares and holds a Category 1 Global Business Licence Company issued by the Financial Services Commission. The Company is licenced to operate as a CIS Manager pursuant to Section 98 of the Securities Act 2005 and the Financial Services (Consolidated Licensing and Fees) Rules The Company provides investment management services to India Infrastructure Opportunities Fund Limited and The India Hybrid Infrastructure Fund Limited, funds incorporated in Mauritius. The Company holds standards of corporate governance through awareness of business ethics and supervision of its management team by the Board of directors. The main objects and functions of the Board as regards Corporate Governance are to: determine, agree and develop the Company s general policy on corporate governance in accordance with the applicable Code of Corporate Governance; select candidates for eventual Board appointments; and review the terms and conditions of all service agreements between the Company and service providers. The Board is satisfied that it has discharged its responsibilities for the year in respect of Corporate Governance. The Board of Directors The directors have been selected based on their professional background and expertise to positively contribute to the Board s activities. The Board is currently made up of two resident directors. Directors Resident Mr. Riad Aubdool Mr. Bashir Nabeebokus The Board is responsible for directing the affairs of the Company in the best interests of shareholders, in conformity with legal and regulatory framework, and consistent with its constitution and best governance practices. The Directors profile Mr. Riad Muhammad Aubdool Riad Aubdool is a Senior Manager of Cim Fund Services Ltd. He is a fellow member of the Association of Chartered Certified Accountants. He is also registered with the Mauritius Institute of Professional Accountants as both a professional and a public accountant and with the Mauritius Institute of Directors. Riad has over 17 years of professional experience in fund/company set up, structuring and administration, secretarial, accounting, international tax planning, compliance issues, legal tax compliance, auditing and consulting. Prior to joining Cim Fund Services Ltd, Riad has spent 9 years with PricewaterhouseCoopers, when he left as audit Manager. He acts as a director for several client companies of Cim Fund Services Ltd, including Collective Investment Schemes, both listed and unlisted. Directorship in listed entities: Threadneedle India Fund Limited (Irish Stock Exchange) Global Investment Opportunities Fund Limited (Stock Exchange of Mauritius) Kotak Investment Opportunities Fund Limited (Stock Exchange of Mauritius) Mr. Mahmood Bashir Nabeebokus Bashir has joined Multiconsult Limited on 29 August 2009 as Senior Manager - Fund Administration. He is a fellow member of the Association of Chartered Certified Accountants, UK and holds a B.Sc (Hons) Economics from the University of Mauritius. He is also a member of the Mauritius Institute of Professional Accountants, Mauritius Institute of Directors and Panel Member of ACCA Mauritius office. Bashir has been in the global business sector for over 11 years and has an enriched exposure in fund/company set up, structuring and administration, company secretarial, accounting, international tax planning, compliance issues and customer due diligence checks among others. He acts as director for several client companies of Cim Fund Services Ltd including collective investment schemes. Prior to joining Multiconsult, Bashir spent 9 years with one of the leading licensed management company in Mauritius. Constitution The Constitution of the Company was adopted on 19 August IDFC INVESTMENT MANAGERS (MAURITIUS) LTD. 331

3 Corporate Governance Report Board Meetings The Board has at least one scheduled meeting each year during which it: 1. examines all statutory matters; 2. approves the audited financial statements and reviews important accounting issues; 3. reviews the Company s performance; 4. ensures compliance of the Company with the legislations; and 5. takes note of changes in the legislations which may affect the Company. In addition, the Board meets whenever necessary to discuss urgent business. The Board papers are usually sent to the directors one week in advance, except where urgent meetings are convened. The Board promotes, encourages and expects open and frank discussions at meetings. Board meetings provide a forum for challenging and constructive debate. Board Committees The Board of Directors collectively considers the measures in respect of the Code of Corporate Governance issues. Due to the size of the Board, no sub-committees (Audit Committees, The Corporate Governance Committee, Board Risk Committee, Remuneration Committee and the Nomination Committee) have been established. Statement of remuneration policy The Director fee is 4,000 per annum per officer of the Administrator serving as Director. Identification of key risks for the Company The Board is ultimately responsible for the Company s system of internal control and for reviewing its effectiveness. The Board confirms that there is an ongoing process for identifying, evaluating and managing the various risks faced by the Company. Financial risk factors The financial risk factors have been set out in note 14 of these financial statements. Related party transactions The related party transactions have been set out in note 13 of these financial statements. Code of Ethics, Health and Safety and Social issues These issues are not applicable to the Company given the nature of activities of the Company and the fact that the Company has no employees. The Company is managed under service agreements with third parties detailed in the Corporate Data section. Environment Due to the nature of its activities, the Company has no adverse impact on the environment. Corporate social responsibility and donations During the year, the Company has not made any donations. Nature of business The principal activity of the Company is that of a CIS Manager. Auditors Report and financial statements The auditors report is set out on pages 8 and 9 and the statement of comprehensive income is set out on page 11 of this financial statements. Audit fees Audit fees payable to Ernst & Young (Mauritius) for the year amounted to 4,000 (excluding VAT and any disbursements). Appreciation The Board expresses its appreciation and gratitude to all those involved for their contribution during the year. 332 IDFC ANNUAL REPORT

4 Commentary of Directors FOR THE YEAR ENDED MARCH 31, 2013 The directors present their commentary, together with the audited financial statements of IDFC Investment Managers (Mauritius) Ltd. for the year ended 31 March STATUS AND PRINCIPAL ACTIVITY IDFC Investment Managers (Mauritius) Ltd. (the Company ) was incorporated on 13 September 2010 in the Republic of Mauritius and obtained its Category 1 Global Business License on 14 September The principal activity of the Company is to provide investment management services to India Infrastructure Opportunities Fund Limited and The India Hybrid Infrastructure Fund Limited, funds incorporated in Mauritius. RESULTS The Company s loss for the year under review is 54,385 (2012: profit 115,058). The directors do not recommend the payment of a dividend for the year under review. DIRECTORS' RESPONSIBILITY IN RESPECT OF THE FINANCIAL STATEMENTS The Company s directors are responsible for the preparation and fair presentation of the financial statements, comprising the Company s statement of financial position at 31 March 2013, and the statement of comprehensive income, the statement of changes in equity 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 in compliance with the requirements of the Companies Act The directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and in compliance with the requirements of the Companies Act 2001, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error and applying appropriate accounting policies; and making account estimates that are reasonable in the circumstances. The directors have made an assessment of the Company s ability to continue as a going concern and have no reason to believe the business will not be a going concern in the year ahead as detailed out under note 6 of these financial statements. AUDITORS The auditors, Ernst & Young, have indicated their willingness to continue in office. IDFC INVESTMENT MANAGERS (MAURITIUS) LTD. 333

5 Secretary s Certificate Under Section 166 (D) of the Companies Act 2001 We, Cim Fund Services Ltd, certify, to the best of our knowledge and belief, that we have filed with the Registrar of Companies all such returns as are required for IDFC Investment Managers (Mauritius) Ltd. under the Companies Act 2001 for the financial year ended 31 March For and on behalf of Cim Fund Services Ltd SECRETARY April 23, IDFC ANNUAL REPORT

6 Independent Auditors' Report TO THE MEMBERS OF IDFC INVESTMENT MANAGERS (MAURITIUS) LTD Report on the Financial Statements We have audited the financial statements of IDFC Investment Managers (Mauritius) Ltd (the "Company") on pages 10 to 25 which comprise the statement of financial position as at March 31, 2013 and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended and a summary of significant accounting policies and other explanatory notes. Directors' Responsibility for the Financial Statements The directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and in compliance with the requirements of the Companies Act, 2001, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance 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 auditors' judgement, 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 auditors consider 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, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, 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, the financial statements on pages 10 to 25 give a true and fair view of the financial position of the Company as at March 31, 2013 and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards and comply with the Companies Act, Emphasis of Matter Without qualifying our opinion, we draw attention to Note 6 in the financial statements, which indicates that the Company had a net loss for the year ended March 31, 2013 of 54,385 and that the Company has lost its main income generating capacity in the immediate future. These conditions, along with other matters as set forth in Note 6, indicate the existence of a material uncertainty which may cast significant doubt about the Company's ability to continue as a going concern. Other Matter This report, including the opinion, has been prepared for and only for the Company's member in accordance with Section 205 of the Companies Act 2001 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or any other person to whom this report is shown or into whose hands it may come save where expressely agreed by our prior concerned in writing. Report on Other Legal and Regulatory requirements Companies Act 2001 We have no relationship with or interests in the Company other than in our capacity as auditors and dealings in the ordinary course of business. We have obtained all the information and explanation we have required. In our opinion, proper accounting records have been kept by the Company as far as it appears from our examination of those records. ernst & YOUNG Ebene, MAURITIUS ROGER de chazal, a.c.a LICENSED by frc April 23, 2013 IDFC INVESTMENT MANAGERS (MAURITIUS) LTD. 335

7 Statement of Financial Position AS AT MARCH 31, 2013 Notes ASSETS Current assets Other receivables and prepaid expenses 7 86,328 64,578 Cash and cash equivalents 8 41, ,982 TOTAL ASSETS 128, ,560 EQUITY AND LIABILITIES Equity and reserves Stated capital 9 57,290 57,290 Retained earnings 61, ,963 Shareholder s funds 118, ,253 Current liabilities Other payables and accrued expenses 10 9,404 19,307 TOTAL EQUITY AND LIABILITIES 128, ,560 These financial statements have been approved and authorised for issue by the Board of Directors on April 23, 2013 and signed on its behalf by: Riad AubDOOL Director bashir Nabeebokus Director The notes on pages 14 to 25 form an integral part of these financial statements. Independent Auditors' report on pages 8 and IDFC ANNUAL REPORT

8 Statement of Comprehensive Income FOR THE YEAR ENDED MARCH 31, 2013 Notes INCOME Management fees 11(i)&13(a) 42, ,358 Realised gain on foreign exchange Total income 43, ,358 EXPENSES Advisory fees 11(ii)&13(d) 36, ,882 Audit fees 5,270 3,815 Administration fees 5,000 5,000 Licence and annual registration fees 3,765 3,740 Disbursement Professional fees 11,162 12,586 Bank charges Insurance cover 5,595 5,798 Management fees written-off - 34,128 Loan waived 13(c) 29,157 - Total expenses 97, ,741 Operating (loss)/profit for the year (54,385) 118,617 Income tax expenses 12 - (3,559) (Loss)/profit for the year (54,385) 115,058 Other comprehensive income Total comprehensive (loss)/income for the year, net of tax - - (54,385) 115,058 The notes on pages 14 to 25 form an integral part of these financial statements. Independent Auditors' report on pages 8 and 9 IDFC INVESTMENT MANAGERS (MAURITIUS) LTD. 337

9 Statement of Changes in Equity FOR THE YEAR ENDED MARCH 31, 2013 Stated capital Retained earnings Total At 01 April , ,195 Profit for the year - 115, ,058 Other comprehensive income for the year Total comprehensive income for the year - 115, ,058 At 31 March , , ,253 Loss for the year - (54,385) (54,385) Other comprehensive income for the year Total comprehensive loss for the year - (54,385) (54,385) At 31 March ,290 61, ,868 The notes on pages 14 to 25 form an integral part of these financial statements. Independent Auditors' report on pages 8 and IDFC ANNUAL REPORT

10 Statement of Cash Flows FOR THE YEAR ENDED MARCH 31, 2013 Note Operating activities (Loss)/profit before tax (54,385) 118,617 Working capital adjustments: (Increase)/decrease in other receivables and prepaid expenses (21,750) 970 (Decrease)/increase in other payables and accrued expenses (9,903) 7,180 Cash flows (used in)/generated by operating activities (86,038) 126,767 Tax paid 12 - (4,770) Net cash flows (used in)/generated by operating activities (86,038) 121,997 Net (decrease)/increase in cash and cash equivalents (86,038) 121,997 Cash and cash equivalents at 01 April 127,982 5,985 Cash and cash equivalents at 31 March 41, ,982 The notes on pages 14 to 25 form an integral part of these financial statements. Independent Auditors' report on pages 8 and 9 IDFC INVESTMENT MANAGERS (MAURITIUS) LTD. 339

11 Notes to the Financial Statements For the year ended March 31, Corporate information IDFC Investment Managers (Mauritius) Ltd. (the Company ) is a private company limited by shares, incorporated in the Republic of Mauritius on the 13 September 2010, with registered address C/o Cim Fund Services Ltd, 33, Edith Cavell Street, Port Louis, Mauritius. The Company holds a Category 1 Global Business Licence and is regulated by the Financial Services Commission (FSC). The principal activity of the Company is to provide investment management services to India Infrastructure Opportunities Fund Limited and The India Hybrid Infrastructure Fund limited, funds incorporated in Mauritius. 02 Basis of preparation Statement of compliance The financial statements are prepared in accordance with and comply with International Financial Reporting Standards ( IFRS ) as issued by the International Accounting Standards Board ( IASB ). The financial statements of the Company are prepared under the historical cost convention. The preparation of financial statements in accordance with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting year. Although these estimates are based on management's knowledge of current events and actions, actual results ultimately may differ from those estimates. The financial statements are presented in United States Dollar () and all values are rounded to the nearest, except when otherwise indicated. The principal accounting policies applied in the preparation of these financial statements are set out below. 03 Summary of significant accounting policies Foreign currency translation Functional and presentation currency The Company s functional currency is the, which is the currency of the primary economic environment in which it operates. The Company s performance is evaluated and its liquidity is managed in. Therefore, the is considered as the currency that most faithfully represents the economic effects of the underlying transactions, events and conditions. The Company s presentation currency is also in. Transactions and balances Foreign currency transactions are accounted for at the exchange rates prevailing at the date of the transactions. Monetary assets and liabilities are translated at the spot rate of exchange ruling at the reporting date. Gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rate at the date when the fair value was determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition gain or loss on change in fair value of the item (i.e. translation differences are recognised in other comprehensive income or profit or loss). Financial assets Initial recognition and measurement Financial assets within the scope of IAS 39 are classified as financial assets at fair value through profit or loss, loans and receivables, held-tomaturity investments, available-for-sale financial assets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Company determines the classification of its financial assets at initial recognition. All financial assets are recognised initially at fair value plus transaction costs. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset. Subsequent measurement Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate method (EIR), less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation and the losses arising from impairment are recognised in profit or loss. Impairment The Company assesses, at each reporting date, whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred loss event ) and that loss event has an impact 340 IDFC ANNUAL REPORT

12 Notes to the Financial Statements For the year ended March 31, 2013 on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and when observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. Derecognition A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised when: the rights to receive cash flows from the asset have expired; or the Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a pass-through arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Company s continuing involvement in the asset. Financial liabilities Initial recognition and measurement Financial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through profit or loss, loans and borrowings, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Company determines the classification of its financial liabilities at initial recognition. All financial liabilities are recognised initially at fair value and in the case of loans and borrowings, net of directly attributable transaction costs. The Company s financial liability includes other payables and accrued expenses only. Subsequent measurement The measurement of financial liabilities depends on their classification as follows: Other payables and accrued expenses Other payables and accrued expenses are stated at fair value. Derecognition A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in profit or loss. Stated capital Ordinary shares are classified as equity. Provision A provision is recognised when and only when there is a present obligation (legal or constructive) as a result of a past event, and it is probable that an outflow embodying economic benefits will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. Cash and cash equivalents Cash and cash equivalents comprise cash at bank. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value. Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when payment is being made. Revenue is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, and sales taxes or duty. - Management fees are accounted for on an accrual basis. Related parties Parties are considered to be related to the Company if they have the ability, directly or indirectly, to control the Company or exercise significant influence over the Company in making financial and operating decisions, or vice versa, or where the Company is subject to common control or common significant influence. Related parties may be individuals or other entities. IDFC INVESTMENT MANAGERS (MAURITIUS) LTD. 341

13 Notes to the Financial Statements For the year ended March 31, 2013 Taxes Current income tax Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date. Deferred taxation Deferred tax is provided, using the liability method, for all temporary differences arising between the tax bases of assets and liabilities and their carrying values for financial reporting purposes. Currently enacted tax rates are used to determine deferred tax. The principal temporary differences arise from provisions for bad debts and unrealised exchange differences. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. 04 Changes in accounting policies and disclosures NEW AND AMENDED STANDARDS AND INTERPRETATIONS The accounting policies adopted are consistent with those of the previous financial year, except for the following amendments to IFRS effective as of 01 April 2012: IAS 12 Income Taxes (Amendment) Deferred Taxes: Recovery of Underlying Assets IFRS 1 First-Time Adoption of International Financial Reporting Standards (Amendment) Severe Hyperinflation and Removal of Fixed Dates for First-Time Adopters IFRS 7 Financial Instruments: Disclosures (Amendments) IFRS 7 Financial Instruments : Disclosures Enhanced Derecognition Disclosure Requirements The adoption of the standards or interpretations is described below: IAS 12 Income Taxes (Amendment) Deferred Taxes: Recovery of Underlying Assets The amendment clarified the determination of deferred tax on investment property measured at fair value and introduces a rebuttable presumption that deferred tax on investment property measured using the fair value model in IAS 40 should be determined on the basis that its carrying amount will be recovered through sale. It includes the requirement that deferred tax on non-depreciable assets that are measured using the revaluation model in IAS 16 should always be measured on a sale basis. The amendment is effective for annual periods beginning on or after 01 January 2012 and has been no effect on the Company s financial position, performance or its disclosures. IFRS 1 First-Time Adoption of International Financial Reporting Standards (Amendment) Severe Hyperinflation and Removal of Fixed Dates for First-Time Adopters The IASB provided guidance on how an entity should resume presenting IFRS financial statements when its functional currency ceases to be subject to hyperinflation. The amendment is effective for annual periods beginning on or after 01 July The amendment had no impact to the Company. IFRS 7 Financial Instruments: Disclosures Enhanced Derecognition Disclosure Requirements The amendment requires additional disclosure about financial assets that have been transferred but not derecognised to enable the user of the Company s financial statements to understand the relationship with those assets that have not been derecognised and their associated liabilities. In addition, the amendment requires disclosures about the entity s continuing involvement in derecognised assets to enable the users to evaluate the nature of, and risks associated with, such involvement. The amendment is effective for annual periods beginning on or after 01 July The Company does not have any assets with these characteristics so there has been no effect on the presentation of its financial statements. 05 Standards issued but not yet effective Standard issued but not yet effective up to the date of issuance of the Company s financial statements are listed below. However, the Company has disclosed on those applicable. IFRS 7 Financial Instruments: Disclosures Common disclosure requirements were issued that are intended to help investors and other users to better assess the effect or potential effect of offsetting arrangements on a company's financial position. The new requirements are set out in Disclosures-Offsetting Financial Assets and Financial Liabilities (Amendments to IFRS 7). As part of that project the IASB also clarified aspects of IAS 32 Financial Instruments: Presentation. The amendments address consistencies in current practice when applying the requirements. The amendments will not impact the Company s financial position or performance and become effective for annual periods beginning on or after 01 January IFRS 9 Financial Instruments: Classification and Measurement IFRS 9, as issued, reflects the first phase of the IASB s work on the replacement of IAS 39 and applies to classification and measurement of financial assets and financial liabilities as defined in IAS 39. The standard was initially effective for annual periods beginning on or after 01 January 2013, but Amendments to IFRS 9 Mandatory Effective Date of IFRS 9 and Transition Disclosures, issued in December 2011, moved the mandatory effective 342 IDFC ANNUAL REPORT

14 Notes to the Financial Statements For the year ended March 31, 2013 date to 01 January In subsequent phases, the IASB will address hedge accounting and impairment of financial assets. The adoption of the first phase of IFRS 9 will have an effect on the classification and measurement of the Company s financial assets, but will not have an impact on classification and measurements of financial liabilities. The Company will quantify the effect in conjunction with the other phases, when the final standard including all phases is issued. IFRS 13 Fair Value Measurement The Standard defines fair value, sets out in a single IFRS a framework for measuring fair value and requires disclosures about fair value measurements. IFRS 13 applies when other IFRSs require or permit fair value measurements. It does not introduce any new requirements to measure an asset or a liability at fair value, change what is measured at fair value in IFRSs or address how to present changes in fair value. The Company is currently assessing the impact that this standard will have on the financial position and performance, but based on the preliminary analyses, no material impact is expected. The new requirements are effective for annual periods beginning on or after 01 January 2013, with earlier application permitted. IAS 1 Presentation of Items in Other Comprehensive Income - Amendments to IAS 1 The amendments to IAS 1 change the grouping of items presented in OCI. Items that could be reclassified (or recycled ) to profit or loss at a future point in time (for example, upon derecognition or settlement) would be presented separately from items that will never be reclassified. The amendment affects presentation only and has there no impact on the Company s financial position or performance. The amendment becomes effective for annual periods beginning on or after 01 July The amendment has no impact on the Company. IAS 32 Financial Instruments: Presentation - Offsetting Financial Assets and Financial Liabilities The amendments clarify the meaning of currently has a legally enforceable right of set-off ; and that some gross settlement systems may be considered equivalent to net settlement. The amendments are effective for annual periods beginning on or after 01 January 2014 and are required to be applied retrospectively. These amendments are not expected to impact the Company s financial position or performance. Annual Improvements May 2012 These improvements will not have an impact on the Company, but include: IFRS 1 First-time Adoption of International Financial Reporting Standards This improvement clarifies that an entity that stopped applying IFRS in the past and chooses, or is required, to apply IFRS, has the option to re-apply IFRS 1. If IFRS 1 is not re-applied, an entity must retrospectively restate its financial statements as if it had never stopped applying IFRS. IAS 1 Presentation of Financial Statements This improvement clarifies the difference between voluntary additional comparative information and the minimum required comparative information. Generally, the minimum required comparative information is the previous period. IAS 32 Financial Instruments, Presentation This improvement clarifies that income taxes arising from distributions to equity holders are accounted for in accordance with IAS 12 Income Taxes. IAS 34 Interim Financial Reporting The amendment aligns the disclosure requirements for total segment assets with total segment liabilities in interim financial statements. This clarification also ensures that interim disclosures are aligned with annual disclosures. These improvements are effective for annual periods beginning on or after 01 January Significant accounting judgements, estimates and assumptions The preparation of the Company s financial statements requires management to make judgements, estimates and assumptions that affect the amounts recognised in the financial statements. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in future periods. Going concern The Company has provided investment management services to India Infrastructure Opportunities Fund Limited ( IIOFL ) since 14 March 2011 and The India Hybrid Infrastructure Fund ( TIHIF ) since 8 February Whilst IIOFL had an average Asset Under Management ( AUM ) of 5 million during the year, as at 31 March 2013 its AUM reduced to zero due to the redemption by the sole investor in February Moreover, the Company has not earned any management fees from TIHIF to date as TIHIF has not yet had its Initial Close. As a result, the Company incurred a net loss for the year ended 31 March 2013 of 54,385 (2012: profit of 115,058) and, as at that date, its assets amounted to 128,272 (2012: 192,560) and its liabilities to 9,404 (2012: 19,307). Furthermore, the Company has lost its main income generating capacity in the immediate future. However, as explained in Note 17, the promoters have initiated procedures for the proposed restructuring of IIOFL with a revised investment strategy and mandate, whereby it would be investing in Indian listed securities/indian mutual fund. TIHIF will be converted into a feeder fund with the objective to invest directly into an existing India Fund. TIHIF is expected to receive new flows through dividend income from investments or funds by new investors. IDFC INVESTMENT MANAGERS (MAURITIUS) LTD. 343

15 Notes to the Financial Statements For the year ended March 31, 2013 The Company is therefore expecting new inflows of income in terms of management fees from both IIOFL and TIHIF. However, these income flows are dependent on the successful launch of these funds. These conditions nevertheless give rise to a material uncertainty which may cast significant doubt about the Company s ability to continue as a going concern and, therefore that it may be unable to realise its assets and discharge its liabilities in the normal course of business. However, the directors are confident that the Company will have sufficient funds to meets its day to day expenses in the next twelve months. Moreover, should the Company not be able to meet its day to day expenses, it will have recourse to the holding company, IDFC Asset Management Company Limited, which has sufficient resources to enable it to continue its operations and to pay its obligations as they become due in the foreseeable future. The financial statements have therefore been prepared on the basis of accounting policies applicable to a going concern. This basis presumes that the Company will receive the support of its holding company when required and that the realisation of assets and settlement of liabilities will occur in the ordinary course of business. Determination of functional currency The determination of the functional currency of the Company is important since recording of transactions and exchange differences arising there from are dependent on the functional currency selected. As described in note 3, the directors have considered those factors described therein and have determined that the functional currency of the Company in the. 07 Other receivables and prepaid expenses Amount receivable from related companies (note 13) 80,576 58,525 Prepaid Expenses: - Professional Indemnity Cover 3,750 4,346 - Activity licence fees Annual registration fees Financial Services Commission licence fees Tax paid in excess (note 12) ,328 64, Cash and Cash Equivalents Cash at bank 41, , Stated Capital 57,290 ordinary shares at 1 each 57,290 57, IDFC ANNUAL REPORT

16 Notes to the Financial Statements For the year ended March 31, Other payables and accrued expenses Other payables - 7,804 Accrued expenses: - Audit fees 4,600 3,700 - Director fees 2,000 2,000 - Money Laundering Reporting Officer fees 1,554 4,553 - Administration fees 1,250 1,250 9,404 19, Management and advisory fees (i) Management fees As per the Management Agreement entered between the Company and the Fund on 14 March 2011, the Company being the investment manager to the Fund, is entitled to receive the following management fees: The Fund will pay the Company a management fee ( Management fee ) varying between one to two percent (1% to 2 %) per annum, calculated and payable quarterly in advance (prior to any accrual for or payment or allocation of the Performance Fee (if any) or redemptions effected as of such date), of the Net Asset Value ( NAV ) of the Fund on December 31, March 31, June 30 and September 30 each year. For the year under review, the management fees amounted to 42,830 (2012: 418,358). (ii) Advisory fees The Company and IDFC Investment Advisors Limited ("Investment Advisor"), had agreed that, for the performance of the Investment Advisor's duties under the investment Advisory Agreement dated 14 March 2011, the Company would pay the Investment Advisor such advisory fees as shall be agreed between both parties from time to time and at such frequency as shall be agreed between the Company and the Investment Advisor. For the year under review, the advisory fees amounted to 36,561 (2012: 233,882). 12 Taxation The Company has received a Tax Residence Certificate from the Mauritius Revenue Authority, which entitles it to certain reliefs pursuant to the treaties concluded between countries for the avoidance of double taxation. The tax residence certification is renewable on an annual basis, subject to the tax residency conditions being satisfied. Gains from the sale of units and securities are exempted from Mauritius tax and any dividends paid by the Company to its shareholders are exempt in Mauritius from any withholding tax. The Company is subject to income tax in Mauritius at the rate of 15% (2012: 15%). It is, however, entitled to a tax credit equivalent to the higher of the foreign tax or 80% (2012: 80%) of the Mauritian tax on its foreign source income. The Company had tax losses of 25,228 for the year ended 31 March 2013 (2012: NIL). At 31 March 2013, the Company does not have a tax liability (2012: 833 tax paid in excess). A numerical reconciliation between accounting (loss)/profit and tax charge is shown below: (a) Statement of comprehensive income: (Loss)/profit for the year (54,385) 118,617 Add: Loan waived 29,157 - Adjusted loss/income (25,228) 118,617 Chargeable income - 118,617 Tax at 15% (3,784) 17,792 Less: Foreign tax credit - (14,234) Deferred tax not recognised 3,784 - Income tax expense - 3,559 IDFC INVESTMENT MANAGERS (MAURITIUS) LTD. 345

17 Notes to the Financial Statements For the year ended March 31, 2013 (b) Statement of financial position: At 01 April (832) 379 Income tax expense - 3,559 Tax paid under APS - (4,770) At 31 March (832) (832) 13 Related party disclosures The Company had the following related party transaction during the year. Name of related company Nature of transactions Relationship Management fees Investment Manager (a) India Infrastructure Opportunities Fund Ltd ( IIOF ) At 01 April - 34,128 Management fees during the year 42, ,702 Receipts during the year (42,830) (439,702) Write-off - (34,128) At 31 March - - There is no management fees receivable from IIOF that needs to be settled within the 12 months. Name of related company Nature of transactions Relationship Expenses paid on behalf of the TIHIF Investment Manager (b) The India Hybrid Infrastructure Fund Limited ("TIHIF") At 01 April 47,876 25,765 Additions during the year 32,700 22,111 At 31 March 80,576 47,876 It is repayable on demand. In view of the proposed re-structuring process, TIHIL will be converted into a feeder Fund with the objective to invest directly into the existing India Fund as and when it opens up for subscription for Indian residents. TIHIL is expected to receive new flows through dividend income from investments or funds by new investors. The management believes that the amount receivable from TIHIL will be fully recoverable in the near future. Name of related company Nature of transactions Relationship (c) Hybrid India Listed Ltd.("HIL") Expenses paid on behalf of the TIHIF Sister company At 01 April 10,649 - Additions during the year 18,508 10,649 Amount waived during the year (29,157) 10,649 At 31 March - 10,649 It is repayable on demand. During the year, the sole shareholder of HILL has approved its winding up since the latter has ceased its operations. Therefore, the Company has waived off the amount receivable from HIL as it will not be recovered. 346 IDFC ANNUAL REPORT

18 Notes to the Financial Statements For the year ended March 31, 2013 Name of related company Nature of transactions Relationship Advisory fees Investment Advisor (d) IDFC Investment Advisors Limited ( IDFC IAL ) At 01 April 7,804 - Additions during the year 36, ,882 Payment during the year 44,153 (226,078) Foreign exchange gain arising on (212) - settlement of INR invoices At 31 March - 7,804 During the year, 44,153 has been paid towards advisory fees to IDFC IAL (2012: 226,078) in relation to the professional services rendered to the Company. 14 Financial risk management objectives and policies Fair values The carrying amounts of cash and cash equivalents, other receivables and prepaid expenses and other payables and accrued expenses approximate their fair values. Financial risk factors The Company's activities expose it to a variety of financial risks such as market risk, credit risk, interest rate risk, foreign exchange risk, price risk and liquidity risk. The Company's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company's financial performance. Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Company s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. Interest rate risk The Company's financial assets are non-interest bearing. As a result, the Company is not subject to significant amounts of risk due to fluctuations in the prevailing levels of market interest rates. Foreign exchange risk The Company has no exposure to currency risk as all its financial assets and liabilities are in. Price risk Equity price risk is the risk that the fair values of equities decrease as a result of changes in the levels of the equity indices and the values of individual stocks. The Company is exposed to equity price risk indirectly as its management fees are calculated based on the Net asset value (NAV) of India Infrastructure Opportunities Fund, whose listed investment are subject to equity price risk. The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was: Amount receivable from related companies 80,576 58,525 Cash and cash equivalents 41, , , ,507 IDFC INVESTMENT MANAGERS (MAURITIUS) LTD. 347

19 Notes to the Financial Statements For the year ended March 31, 2013 Liquidity risk The Company maintains and manages liquidity risk through the ability to close out market position. Residual and discounted contractual maturities of financial liabilities are presented below: 2013 On demand Total Other payables and accrued expenses 9,404 9, On demand Total Other payables and accrued expenses 19,307 19, Capital risk management The Company is acting as Investment Manager to India Infrastructure Opportunities Fund Ltd and The India Infrastructure Fund Limited. The capital management process is determined and managed at group level. 16 Holding and ultimate holding company The directors consider IDFC Asset Management Company Limited, a company incorporated in India, as the holding and ultimate holding company. 17 Events after reporting date There have been no material events after the reporting year which would require disclosure or adjustment to the 31 March 2013 financial statements apart from: the proposed restructuring of IIOFL to a fund with new investment mandate (open ended fund) with limited liability. The objective will be to invest into all cap securities (listed) into India/Indian mutual fund. the proposed conversion of TIHIF into a feeder fund with the objective to invest directly into an existing India Fund Management believes that the restructuring of both IIOFL and TIHIF will attract fresh investments. 348 IDFC ANNUAL REPORT