Independent Auditor s Report

Transcription

1 Independent Auditor s Report To the members of Kotak Forex Brokerage Limited Report on the Financial Statements We have audited the accompanying financial statements of Kotak Forex Brokerage Limited (the Company ), which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information, which we have signed under reference to this report. Management s Responsibility for the Financial Statements The Company s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ( the Act ) with respect to 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 principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, 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. Auditors Responsibility Our responsibility is to express an opinion on these standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. 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 the 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 financial control relevant to the Company s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company s 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 on the financial statements. Opinion In our opinion, and to the best of our information and according to the explanations given to us, the aforesaid 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, of the state of affairs of the Company as at 31st March, 2015, and its loss and its cash flows for the year ended on that date. Report on Other Legal and Regulatory Requirements As required by the Companies (Auditor s Report) Order, 2015, issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act (hereinafter referred to as the Order ), and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order. 1

2 As required by Section 143(3) of the Act, we report that: (a) (b) (c) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit. In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books. The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account. (d) In our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, (e) (f) On the basis of written representations received from the directors as on 31st March, 2015 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2015, from being appointed as a director in terms of Section 164(2) of the Act. With respect to the other matters to be included in the Auditor s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us: i. The Company does not have any pending litigations which would impact its financial position. ii. iii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company. For V.C.Shah & Co. Chartered Accountants Firm Registration No W V.C.Shah Partner Mumbai, 24th April, Membership No.: ANNUAL REPORT

3 Annexure to Independent Auditors Report (Referred to in paragraph under Report on Other Legal and Regulatory Requirements of our report of even date to the members of Kotak Forex Brokerage Limited for the period ended 31st March, 2015) i. (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. (b) The fixed assets of the Company have been physically verified by the management at reasonable intervals and according to the information and explanations given to us, no material discrepancies were noticed on such verification. ii. iii. iv. The Company, being engaged in foreign exchange broking business, does not have any inventory. Hence, the requirements of sub-clauses (a), (b) and (c) of clause (ii) paragraph 3 of the Order, are not applicable. The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 189 of the Act. Hence, clause (iii) of paragraph 3 of the Order is not applicable to the Company during the period under report. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to services rendered. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control systems. v. The Company has not accepted any deposits from the public within the meaning of Sections 73 to 76 of the Act and the rules framed there under. vi. The provisions of section 148 (1) of the Act, in respect of maintenance of cost records as may be prescribed by the Central Government, are not applicable to the Company. vii. (a) The Company has generally been regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees state insurance, income tax, sales tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues, if any, applicable to it. viii. ix. (b) (c) According to the information and explanations given to us, there were no undisputed amounts payable in respect of provident fund, employees state insurance, income-tax, sales-tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues in arrears as at 31stMarch, 2015 for a period of more than six months from the date they became payable. According to the information and explanations given to us, there are no dues of income tax, sales tax, wealth tax, service tax, excise duty and cess which have not been deposited on account of any dispute except as follows: Name of Statute Nature of dues Amount ` Assessment Year Forum where dispute is pending The Income Tax Act, 1961 Income Tax 3, Commissioner of Income Tax (Appeals) According to the information and explanations given to us, the company is not required to transfer any amount to investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made thereunder. In our opinion, the accumulated losses of the Company at the end of the financial year are more than fifty percent of its net worth. The Company has incurred cash loss of ` 27,97,135/- in the current financial year and ` 7,87,849/- in the immediately preceding financial year; In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to debenture holders. There were no dues payable by the Company to financial institutions or banks during the period. x. According to the information and explanations given to us, during the year the Company has not given any guarantee for loans taken by others from banks or financial institutions. xi. xii. In our opinion and according to the information and explanation given to us, the Company has not availed of any term loans during the year. Hence, clause (xi) of paragraph 3 of the Order is not applicable. According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the year under report. For V.C.Shah & Co. Chartered Accountants Firm Registration No W V.C.Shah Partner Mumbai, 24th April, Membership No.:

4 Balance Sheet as at 31st March, 2015 Particulars Note No. 31st March, st March, 2014 I. EQUITY AND LIABILITIES 1 Shareholders funds (a) Share capital 4 48,000,000 48,000,000 (b) Reserves and surplus 5-40,487,503-37,666,800 2 Non-current liabilities (a) Long-term borrowings 6 1,000,000 1,000,000 (b) Other long term liabilities 7 296, ,042 (c) Long-term provisions 8 1,243, ,013 3 Current liabilities (a) Trade payables 520, ,506 (b) Other current liabilities 9 598, ,648 (c) Short-term provisions 10 70,396 58,349 TOTAL 11,240,649 13,339,758 II. ASSETS Non-current assets 1 (a) Fixed assets 11 (i) Tangible assets 19,655 43,223 (ii) Intangible assets - - (b) Non-current investments (c) Long-term loans and advances 13 1,964,857 1,948,998 (d) Other non-current assets 14-5,139,562 2 Current assets (a) Trade receivables , ,274 (b) Cash and bank balance 16 6,025,518 3,503,021 (c) Short-term loans and advances , ,920 (d) Other current assets 18 2,044,578 1,498,759 TOTAL 11,240,649 13,339,758 See accompanying notes to the financial statements As per our attached report of even date For V. C. Shah & Co. Chartered Accountants For and on behalf of the Board of Directors V. C. Shah Dipak Gupta KVS Manian Partner Director Director Membership No Place : Mumbai Dated: 24th April, ANNUAL REPORT

5 Statement of Profit and loss for the year ended 31st March 2015 Particulars Note No. Year ended 31st March, 2015 Year ended 31st March, 2014 I. Revenue Revenue from operations 19 4,663,728 5,393,590 Other Income , ,696 Total Revenue 5,384,141 6,236,286 II. Expenses: Employee Benefits Expense 21 4,556,836 3,515,191 Finance Costs , ,082 Depreciation and Amortization Expense 23,568 35,572 Other expenses 23 3,502,986 3,399,862 Total expenses 8,193,390 7,059,707 III. Profit/(Loss) before tax -2,809, ,421 IV. Tax expense: (1) Current tax - - (2) Current tax relating to prior years 11,454 - (3) Deferred tax - - V. Profit/(Loss) for the Year (2,820,703) (823,421) VI. Earnings per equity share: Basic and Diluted earnings per share (Refer Note no.27) See accompanying notes to the financial statements As per our attached report of even date For V. C. Shah & Co. Chartered Accountants For and on behalf of the Board of Directors V. C. Shah Dipak Gupta KVS Manian Partner Director Director Membership No Place : Mumbai Dated: 24th April,

6 Cash Flow statement for the year ended 31st March, 2015 Particulars Year ended 31st March, 2015 Year ended 31st March, 2014 CASH FLOW FROM OPERATING ACTIVITIES Net Loss after taxation (2,820,703) (823,421) Adjustments for : Depreciation 23,568 35,572 Interest on Debentures 110, ,082 Profit on sale of fixed assets - (500) Interest on fixed deposits (617,142) (779,194) Operating Profit/(Loss) Before Working Capital Changes (3,304,277) (1,458,461) Adjustments for : (Increase)/Decrease in Trade Receivables 85, ,722 Increase / (Decrease) in Trade Payables 281,743 (98,154) Increase / (Decrease) in Other Current Liabilities (80,480) 312,662 Increase / (Decrease) in Provisions 421,331 86,459 (Increase) / Decrease in Short term Loans & Advances (65,190) (54,280) Increase / (Decrease) in Other Long term liabilities 99,000 98,174 (Increase)/ Decrease in Other Current Assets (545,819) 430,187 Cash flow Used In Operations (3,108,348) (543,691) Income Taxes paid /(Refund Received) (15,859) (223,349) Net Cash flow Used in Operating Activities (A) (3,124,207) (767,040) CASH FLOW FROM INVESTING ACTIVITIES Purchase of Fixed Assets - (24,135) Proceeds from sale of Fixed assets Fixed Deposits (Placed) / Redeemed 1,717, ,438 Interest on fixed deposits 617, ,194 Net Cash flow from Investing Activities (B) 2,334,179 1,615,997 CASH FLOW FROM FINANCING ACTIVITIES Interest on Debentures (110,000) (109,082) Net Cash flow Used in Financing Activities (C) (110,000) (109,082) 6 ANNUAL REPORT

7 Cash Flow statement for the year ended 31st March, 2015 Particulars Year ended 31st March, 2015 Year ended 31st March, 2014 NET INCREASE/( DECREASE) IN CASH & CASH EQUIVALENTS (A + B + C) -900, ,875 CASH & CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 953, ,146 CASH & CASH EQUIVALENTS AT THE END OF THE YEAR 52, ,021 Notes : 1. Cash and cash equivalents include : -900, ,875 Balances with bank in current account 52, ,021 Total cash and cash equivalents 52, , The Cash Flow statement has been prepared under the 'Indirect Method' as set out in the Accounting Standard -3 on Cash Flow Statement specified under section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, The corresponding amounts of previous year have been re-grouped, wherever necessary. As per our attached report of even date For V. C. Shah & Co. Chartered Accountants For and on behalf of the Board of Directors V. C. Shah Dipak Gupta KVS Manian Partner Director Director Membership No Place : Mumbai Dated: 24th April,

8 1. Corporate Information Kotak Forex Brokerage Limited (the company) is a public company domiciled in India and incorporated under the provisions of the Companies Act, The company is engaged in foreign exchange broking services. 2. BASIS OF ACCOUNTING AND PREPARATION OF FINANCIAL STATEMENTS The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 ( the 2013 Act ) / Companies Act, 1956 ( the 1956 Act ), as applicable. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year. 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. Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Actual results could differ from these estimates. 3. SIGNIFICANT ACCOUNTING POLICIES A. REVENUE RECOGNITION Revenue is recognised if it is measurable and no uncertainty exists regarding its ultimate collection. a. Brokerage is recognized as income on accrual basis. b. Interest Income is accounted on accrual basis. B. FIXED ASSETS a. Fixed assets including Intangible assets have been stated at cost inclusive of incidental expenses less accumulated depreciation/ amortisation.gain or losses arising from the retirement or disposal of a fixed asset / intangible asset are determined as the difference between the net disposal proceeds and the carrying amount of assets and recognized as income or expense in the Statement of Profit and Loss. b. Depreciation/Amortization Policy Deprecation is provided on a pro-rata basis on a Straight Line Method over the estimated useful life of the assets at rates which are higher than the rates prescribed under Schedule II of the Companies Act, 2013 in order to reflect the actual usage of the assets. A rebuttable presumption that the useful life of an Intangible asset will not exceed 10 years from the date the asset is available for use is considered by the Management.The estimates of useful lives of the assets, based on a technical evaluation, have not under gone a change on account of transition to the Companies Act, Estimated useful lives over which assets are depreciated / amortised are as follows: Asset Type Useful Life in Years Computers 3 Office Equipment 5 Furniture & Fixture 6 Forex Broking Business Rights 10 Goodwill 5 Assets costing less than ` 5,000 are fully depreciated in the year of purchase. C. INVESTMENTS Investments are classified into long term investments and current investments. Investments which are intended to be held for more than one year are classified as long term investments and investments, which are intended to be held for less than one year, are classified as current investments. Long term investments are accounted at cost and any decline in value, other than temporary is provided for. Current investments are valued at cost (calculated by applying weighted average cost method) or fair value whichever is lower. Brokerage, stamping and additional charges paid are included in the cost of investments. In case of investments in units of mutual fund, the net asset value is considered as the fair value. 8 ANNUAL REPORT

9 D. EMPLOYEE BENEFITS i. Provident Fund Defined Contribution Plan: Contribution as required by the Statute made to the Government Provident Fund is debited to the Statement of Profit and Loss when incurred. ii. iii. iv. Gratuity Defined Benefit Plan: The Company accounts for the liability for future gratuity benefits based on an actuarial valuation conducted by an independent actuary. The gratuity obligation is wholly unfunded. The net present value of the Company s obligation towards the same is actuarially determined based on the projected unit credit method as at the Balance Sheet date. Actuarial gains/losses are recognised immediately in the Statement of Profit and Loss and are not deferred. The amount of short-term employee benefits expected to be paid in exchange for the services rendered by employee is recognized during the period when the employee renders the service. These benefits include performance incentives. v. Compensated Absences - Other Long-Term Employee Benefits: The Company accrues the liability for compensated absences based on the actuarial valuation as at the Balance Sheet date conducted by an independent actuary. The net present value of the Company s obligation is determined based on the projected unit credit method as at the Balance Sheet date. vi. Long Service Award - Other Long-Term Employee Benefits: As per the Company policy, employees of the Company are eligible for an award after completion of a specified number of years of service with the Company. The obligation is measured at the Balance Sheet date on the basis of an actuarial valuation using the projected unit credit method conducted by actuary of Life Insurance fellow subsidiary. E. TAXES ON INCOME The Income Tax expense comprises Current tax and Deferred tax. Current tax is measured at the amount expected to be paid in respect of taxable income for the year in accordance with the Income tax Act, Deferred tax adjustments comprises of changes in the deferred tax assets and liabilities. Deferred tax assets and liabilities are recognised for the future tax consequences of timing differences being the difference between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets arising mainly on account of carry forward losses and unabsorbed depreciation under tax laws are recognised only if there is virtual certainty of its realisation, supported by convincing evidence. Deferred tax assets on account of other timing differences are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. Deferred tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantially enacted at the balance sheet date. Changes in deferred tax assets / liabilities on account of changes in enacted tax rates are given effect to in the Statement of Profit and Loss in the period of the change. The carrying amount of deferred tax assets are reviewed at each balance sheet date. The Company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realised. F. BORROWING COST Borrowing costs are recognised as an expense in the period in which they areincurred. G. SEGMENTAL ACCOUNTING a. Segment revenue includes income directly attributable / allocable to the segment. b. Expenses that are directly attributable / allocable to segments are considered for determining the Segment Results. The expenses which relate to the Company as a whole and are not allocable to segments are included under Un-allocable expenses. c. Segment assets and liabilities include those directly identifiable with the respective segments. Un-allocable corporate assets and liabilities represent the assets and liabilities that relate to the Company as a whole and not allocable to any segment. Unallocated assets mainly comprise of Advance payment of taxes and tax deducted at source (net of provision for taxation). 9

10 H. EARNINGS PER SHARE Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting preference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the period. Partly paid equity shares are treated as a fraction of an equity share to the extent that they were entitled to participate in dividends relative to a fully paid equity share during the reporting period. The weighted average number of equity shares outstanding during the period is adjusted for events of bonus issue; bonus element in a rights issue to existing shareholders; share split; and reverse share split (consolidation of shares). For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares. I. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS Provisions involving substantial degree of estimation in measurement are recognised when there is present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognised but disclosed in the notes. Contingent assets are neither recognised nor disclosed in financial statements. J. IMPAIRMENT OF ASSETS The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. 10 ANNUAL REPORT

11 31st March st March 2014 Note 4 - Share Capital Authorised 41,50,000 Equity Shares of ` 10/- each 41,500,000 41,500, % Preference Shares of ` 5,00,000/- each 7,000,000 7,000,000 48,500,000 48,500,000 Issued, Subscribed and fully Paid up 41,00,000 Equity Shares of ` 10/- each 41,000,000 41,000, % Non-Cummulative Redeemable Preference Shares of ` 5,00,000/- each 7,000,000 7,000,000 Total 48,000,000 48,000,000 a. Equity shares Reconciliation of number of shares and equity share capital 31st March st March 2014 No. of shares No. of shares Outstanding at the beginning of the year 4,100,000 41,000,000 4,100,000 41,000,000 Add: Issued during the year Less: Bought back during the year Outstanding at the end of the year 4,100,000 41,000,000 4,100,000 41,000,000 b. Preference shares Reconciliation of number of shares and equity share capital 31st March st March 2014 No. of shares No. of shares Outstanding at the beginning of the year 14 7,000, ,000,000 Add: Issued during the period Less: Bought back during the year Outstanding at the end of the year 14 7,000, ,000,000 c. Terms/rights attached to equity shares The company has only one class of equity shares having a par value of ` 10 per share. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders. d. Terms/rights attached to preference shares The Company had issued one class of preference shares of ` 5,00,000/- each fully paid up, redeemable at par at the end of 10 years with a Put / Call option to redeem them earlier, after completion of 3 years from the date of issue being 31st December The dividend proposed by the Board of Directors is subject to approval of the shareholders in the ensuing Annual General Meeting. Each holder of the preference shares is entitled to one vote per share only on the resolution placed before the company which directly affect the rights attached to Preference Shares. e. Shares held by holding/ultimate holding company and/or their subsidiaries/associates Out of shares issued by the company, shares held by its holding company, ultimate holding company and their subsidiaries are as below: Number of Shares 31st March st March 2014 Kotak Mahindra Bank Limited, the holding company : Equity Shares of ` 10/- each 4,100,000 4,100,000 Preference shares of ` 5,00,000/- each

12 f. Details of Equity shareholders holding more than 5% shares in the company Equity shares of ` 10 fully paid up 31st March st March 2014 No. of shares % holding No. of shares % holding Kotak Mahindra Bank Limited, holding company 4,100, ,100, Details of Preference shareholders holding more than 5% shares in the company Preference shares of ` 5,00,000/- fully paid up 31st March st March 2014 No. of shares % holding No. of shares % holding Kotak Mahindra Bank Limited st March st March 2014 Note 5 - Reserves and Surplus a. Capital Redemption Reserve Balance as at the beginning and the end of the year 1,900,000 1,900,000 b. Debenture Redemption Reserve Balance as at the beginning of the year 250, ,347 Add: Amount transferred from Profit of the current year - - Balance as at the end of the year 250, ,347 c. Deficit in the Statement of Profit and Loss Balance as at the beginning of the year -39,817,147-38,993,726 Add: Net Profilt / (Loss) for the current year -2,820, ,421 Less:Amount transferred to Debenture Redemption Reserve - - Balance as at the end of the year -42,637,850-39,817,147 Total -40,487,503-37,666,800 Note 6 - Long Term Borrowings Unsecured 2 (P.Y. 2) Debentures fully paid, privately placed 1,000,000 1,000,000 Total 1,000,000 1,000,000 Notes: The Company had issued 2 Non - Convertible Debentures of ` 5,00,000/- each fully paid up, at Kotak Mahindra Bank Limited Base rate plus 1% (Currently 10% +1%) (Redeemable at par on or before 23rd March 2018, at the exercise of put or call option exercisable after 1 year from the date of allotment after giving 15 days notice, being 23rd March 2013). Note 7 - Other Long Term Liabilities Others Interest accrued but not due on borrowings 296, ,042 Total 296, ,042 Note 8 - Long Term Provisions (a) Provision for employee benefits Provision for Gratuity 952, ,002 Provision for Compensated absences 230, ,011 Provision for Long Service Awards 60,575 - Total 1,243, , ANNUAL REPORT

13 31st March st March 2014 Note 9 - Other current liabilities Book Overdraft with Banks 263,390 - Other liabilities including statutory dues 334, ,648 Total 598, ,648 Note 10 - Short-term Provisions Provision for Gratuity 39,431 32,850 Provision for Compensated Absences 30,965 25,499 Total 70,396 58,349 Note 11 - Fixed Assets DESCRIPTION GROSS BLOCK DEPRECIATION NET BLOCK Balance as at 1st April 2014 Additions during the year Disposals Balance during as at 31st the year March 2015 Balance as at 1st April 2014 Depreciation Charge for the year On Disposals Balance as at 31st March st March st March 2014 a Tangible Assets Furniture and Fixtures 85, ,355 85, , Office equipment 978, , ,548 10, ,628 13,643 23,723 Computers 314, , ,876 13, ,364 6,012 19,500 Total (A) 1,378, ,378,002 1,334,779 23,568-1,358,347 19,655 43,223 b Intangible Assets - - Goodwill 18,840, ,840,000 18,840, ,840, Forex Broking Business Rights 38,300, ,300,000 38,300, ,300, Total (B) 57,140,000-57,140,000 57,140, ,140, Total (A+B) 58,518, ,518,002 58,474,779 23,568-58,498,347 19,655 43,223 Previous Year 58,507,267 24,135 13,400 58,518,002 58,452,607 35,572 13,400 58,474,779 43,223 54,660 31st March st March 2014 Note 12 - Non Current Investments Investments in debentures: (Non-trade, at cost) Unquoted and fully paid up debentures 1,567 Debuntures of Kitply Industries Ltd. (Face Value ` 10,000) 1 1 Total 1 1 Aggregate amount of unquoted investments - at cost 1 1 Note 13 - Long term Loans and Advances Security Deposit Unsecured, considered good 94,500 94,500 Other loans and advances Advance Taxes paid and tax deducted at source 1,870,357 1,854,498 (Net of Provision for Taxes ` Nil (P.Y. ` 83,128)) Total 1,964,857 1,948,998 13

14 Note 14 - Other Non-Current Assets Other Bank Balances 31st March st March 2014 Fixed Deposits (with residual maturity of more than 12 months)* - 5,139,562 Total - 5,139,562 *Fixed Deposits with scheduled banks include Nil (Previous year ` 50,00,000/-) which is under lien of Foreign Exchange Dealers Association of India. Note 15 - Trade Receivables Unsecured, considered good - Outstanding for a period of more than six months - 13,803 - Others 847, ,471 Total 847, ,274 Note 16 - Cash and cash equivalents Cash and cash equivalents Balances with banks: In current accounts 52, ,021 Other bank balances Deposits with residual maturity of less than 12 months 5,972,525 2,550,000 Total 6,025,518 3,503,021 * Fixed Deposits with scheduled banks include ` 50,00,000/- (Previous year ` Nil) which is under lien of Foreign Exchange Dealers Association of India. Notes 17 - Short-term loans and advances Other loans and advances Unsecured, considered good 194, ,629 Cenvat credit receivable (Unsecured, considered good) 143,982 12,291 Total 338, ,920 Note 18 - Other current assets Unsecured, considered good Interest accrued on Fixed Deposits 7,508 49,233 Unbilled Revenue 2,037,070 1,449,526 Total 2,044,578 1,498, ANNUAL REPORT

15 For the year ended 31st March 2015 For the year ended 31st March 2014 Note 19 - Revenue from Operations Brokerage Income (Gross) 9,052,708 7,288,526 Less: Sub-brokerage and discounts (4,388,980) (1,894,936) Total 4,663,728 5,393,590 Note 20 - Other Income Interest on Employee loans 13,078 13,124 Interest on Tax refunds 86,118 49,868 Interest income on fixed deposits 617, ,194 Miscalleneous Income 4, Total 720, ,696 Note 21 - Employee Benefits Expense Salaries, allowances and bonus 4,272,023 3,222,395 Contribution to provident fund and other funds 216, ,435 Reimbursement of Expense on Employee Stock Option Scheme 13,498 38,196 Staff welfare expenses 54,385 76,165 Total 4,556,836 3,515,191 Note 22 - Finance Costs Interest on Debentures 110, ,082 Total 110, ,082 Note 23 - Other expenses Rent 1,440,000 1,440,000 Rates and taxes 44,947 16,540 Communication expenses 188, ,962 Business Promotion 218, ,222 Membership and Subscription 1,061,475 1,068,422 Repairs and maintenance - others 143, ,414 Travelling and Conveyance 22,922 26,160 Electricity 71, ,095 Legal and Professional charges 110,501 90,842 Payments to the Auditors: as Statutory audit fees 60,000 60,000 as Tax audit fees 25,000 25,000 for Certification Work 3,500 4,760 for Reimbursement of Expenses 3,821 5,338 Filing Fees 26,000 4,022 Common Establishment Expenses - Reimbursements 36,996 30,996 Miscellaneous expenses 46,041 28,089 Total 3,502,985 3,399,862 15

16 24. CONTINGENT LIABILITIES AND COMMITMENTS: Contingent Liabilities: Contingent Liability in respect of demands from Income Tax authorities of ` 3,901 (P.Y. ` 3,901). 25. Employee Benefits Gratuity In accordance with Payment of Gratuity Act, the Company provides for gratuity, a defined benefit retirement plan covering all employees. The plan provides a lump sum payment to vested employees at retirement or termination of employment based on the respective employee s salary and the years of employment with the Company subject to maximum of ` lakhs. The gratuity benefit is provided through unfunded plan. Under the scheme, the settlement obligation remains with the Company. Reconciliation of opening and closing balance of the present value of the defined benefit obligation for gratuity benefits is given below. As of 31st March, 2015 As of 31st March, 2014 Change in Unfunded defined benefit obligations Present value of unfunded benefit obligations, 1st April , ,657 Current Service cost 61,215 58,388 Interest cost 68,429 53,137 Benefits paid - - Actuarial (gain)/loss on obligations 174,483 (23,330) Present Value of unfunded benefits obligations 991, ,852 Reconciliation of present value of the obligation and the fair value of the plan assets Fair value of plan assets Present value of unfunded benefit obligations 991, ,852 Net liability 991, ,852 Cost recognised for the period Current service cost 61,215 58,388 Interest cost 68,429 53,137 Benefits Paid - - Actuarial (gain)/loss 174,483 (23,330) Net gratuity cost 304,127 88,195 Actuarial assumptions used Discount rate 7.98% 9.34% Salary escalation rate 8.50% 8.50% The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market. Experience adjustments Amounts for the current and previous four years are as follows: Gratuity Year ended 31st March, Defined benefit obligation 991, , , , ,812 Plan assets Surplus / (deficit) (991,979) (687,852) (599,657) (501,701) (461,812) Experience adjustments on plan liabilities 90,190 34,377 (25,326) (36,200) 14,063 Experience adjustments on plan assets ANNUAL REPORT

17 Provident fund In accordance with Indian regulations, employees of the Company are entitled to receive benefits under the provident fund, a defined contribution plan, in which, both the employee and the Company contribute monthly at a determined rate. These contributions are made to a recognized provident and administered by a Board of Trustees. The employee contributes 12% of his or her basic salary and the Company contributes an equal amount. The investments of the funds are made according to rules prescribed by the Government of India. Accumulated Compensated Absences The Company provides for accumulated compensated absences as at the balance sheet date on the basis of an actuarial valuation. Long Service Award The Company provides for long service awards as at the balance sheet date on the basis of an actuarial valuationusing the projected unit credit method conducted by actuary of Life Insurance fellow subsidiary. 26. Related Party Disclosures: Parties where control exists: Nature of relationship Holding Company Related Party Kotak Mahindra Bank Limited holds 100% ( P.Y. 100%) of the equity share capital along with its nominees Uday S. Kotak along with relatives and entities controlled by him holds 39.95% (P.Y.43.58%) of the equity share capital of Kotak Mahindra Bank Limited as on 31st March, Other related parties: Fellow Subsidiary Kotak Mahindra Capital Company Limited The following transactions were carried out with the related parties in the ordinary course of business: Nature of Transaction Holding Company Fellow Subsidiary Shares issued Kotak Mahindra Bank Limited 48,000,000 (48,000,000) Borrowings Debentures outstanding Kotak Mahindra Capital Company Limited 1,000,000 (1,000,000) Liabilities Outstandings payable 5,636 (12,110) Interest accrued but not due 296,042 Kotak Mahindra Capital Company Limited (197,042) Term Deposits Term Deposits placed/renewed 1,000,000 (6,500,000) Term Deposits redeemed 2,150,000 (11,000,000) Outstandings Balance in Current accounts 6,798 (899,409) Term Deposit 400,000 (2,550,000) Interest receivable onterm Deposits placed 7,508 (49,233) 17

18 Nature of Transaction Holding Company Fellow Subsidiary Income Interest on Fixed Deposits 136,072 (633,924) Brokerage Income 577,050 (76,200) Expenses Rent Paid 1,440,000 (1,440,000) Demat Charges 1,100 (850) Interest on Debentures Kotak Mahindra Capital Company Limited 110,000 (109,082) Other Transactions Expense Reimbursements to companies 307,646 (304,155) Figures in bracket indicate previous year figures. 27. Earnings Per Share (EPS) The numerators and denominators used to calculate Basic and Diluted Earnings Per Share: Particulars For the year ended 31st March 2015 For the year ended 31st March 2014 Profit/ (Loss) attributable to the Equity Shareholders (`) (A) (2,820,766) (823,421) Weighted average number of equity shares outstanding during the period (B) 4,100,000 4,100,000 Nominal Value of Equity Share (`) (C ) Basic and Diluted Earnings Per Share (`) D = (A) / (B ) (0.69) (0.20) 28. Segment Reporting In accordance with Accounting Standard 17 on Segment Reporting issued by the Institute of Chartered Accountants of India and notified under the Companies (Accounting Standard) Rules, 2006 as amended, the Company has determined one geographical segment, i.e. India and one business segments with principal activity as of Broking in Forex Markets and other related activities. 29. The Company has taken office premise under operating lease.the same is cancellable and renewable by mutual consent on mutually agreeable terms. Lease payments recognized in the Statement of Profit and Loss under the head Rent Expenses ` 14,40,000/-(P.Y. ` 14,40,000/-). 30. At the General Meetings of the holding company, Kotak Mahindra Bank Limited ( the Bank ), the shareholders of the Bank had unanimously passed Special Resolutions on 5th July,2007 and 21st August,2007, to grant options to the Eligible Employees of the Bank and its subsidiary companies. Pursuant to these resolutions, Kotak Mahindra Equity Option Scheme 2007 had been formulated and adopted. Consequent to the above, the Bank has granted stock options to employees of the Company in accordance with the SEBIGuidelines and the guidance note on Accounting for Employee Share-based Payments, the excess, if any, of the market price of the share, preceding the date of grant of the option under ESOSs over the exercise price of option is amortized on a straight-line basis over the vesting period. The Company has reimbursed the Bank ` 13,498(Previous year ` 38,196) during the year on account of such costs and the same is forming part of employee cost and included under the head Reimbursement of Expense on Employee Stock Option Scheme under Note 21 Employee Benefits Expense. Had the company recorded the compensation cost computed on the basis of fair valuation method instead of intrinsic value method, employee compensation cost would have been higher by ` 6,315(Previous year ` 16,642) and the Lossafter tax would have been higher by ` 6,315(Previous year Lossafter tax would have been higherby ` 16,642). Consequently the basic and diluted EPS would have been ` (0.69)(Previous year ` (0.20)) 18 ANNUAL REPORT

19 31. The Company has not received any intimation from suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures, if any, relating to amounts unpaid as at the year end together with interest paid/payable as required under the said Act have not been given. 32. There was no expenditure and/ or earnings in foreign currency during the year. 33. Previous year s figures have been regrouped / reclassified wherever necessary to conform to figures of the current year. As per our attached report of even date For V. C. Shah & Co. Chartered Accountants For and on behalf of the Board of Directors V. C. Shah Dipak Gupta KVS Manian Partner Director Director Membership No Place : Mumbai Dated: 24th April,