Prudence and Simplicity

Transcription

1 Prudence and Simplicity Kotak Mahindra (International) Limited ANNUAL REPORT

2 BOARD OF DIRECTORS : MR. LOUIS DIDIER MERLE, MR. SOW MAN AH YUK SHING, MR. SOMEY MASSEY, MR. RAJIV GUJJALU, MR. VISWANATHAN VARADARAJAN, MR. BILAL IBRAHIM SASSA, MR. GIJO JOSEPH, MR. DEVEN COOPOOSAMY, Directors Report To the shareholders of Kotak Mahindra (International) Limited Directors Report to the shareholders The directors present their report and the audited financial statements of Kotak Mahindra (International) Limited (the "Company") for the year ended 31st March Principal activity The Company s principal activity is to carry on business in financial services, corporate advisory services, underwriting services, investment in shares, bonds and other securities. It acts as distributor for schemes/products of various Kotak funds and is an investment manager of various Kotak funds. Results and dividend The Company s profit for the financial year ended 31st March 2013 amounted to INR 266,546,345. (2012: Loss of INR 33,527,293). The directors did not recommend the payment of any 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 as at 31st March 2013, statement of comprehensive income, 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 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. Auditors The auditors, KPMG, have indicated their willingness to continue in office. By order of the Board Cim Fund Services Ltd Date : 25th April 2013 Company secretary Annual Report

3 To The Members of Kotak Mahindra (International) Limited. INDEPENDENT AUDITORS REPORT The financial statements of Kotak Mahindra (International) 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 22 nd 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 Kotak Mahindra (International) 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. Management s Responsibility for the Financial Statements Management 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 2 Kotak MAHINDRA (INTERNATIONAL) Limited

4 procedures that are appropriate in the circumstances. An audit also includes evaluating the 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 the 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.:109818W A.N. Shah Place: Mumbai Partner Date: 27 April, 2013 Membership No Annual Report

5 Kotak Mahindra (International) Limited Balance Sheet as at 31st March 2013 I. EQUITY AND LIABILITIES Note No. As at 31 March 2013 As at 31 March Shareholders funds (a) Share capital ,597, ,597,644 (b) Reserves and surplus 3.2 2,353,491,764 1,948,955,902 3 Current liabilities (a) Short-term borrowings 3.3 4,157,470, ,163,213 (b) Trade payables 10,262,974 15,493,317 (c) Other current liabilities 3,4 2,355,716 2,912,115 (d) Short-term provisions 3.5 1,678,004 6,278,990 TOTAL 6,686,856,562 2,843,401,181 II. ASSETS Non-current assets 1 (a) Fixed assets Tangible assets , ,520 (b) Non-current investments 3.7 1,790,768, ,578,810 (c) Long-term loans and advances ,610,491 20,422,660 2 Current assets (a) Current investments 3.7 3,927,264,432 1,538,667,121 (b) Trade receivables ,940,484 98,894,803 (c) Cash and bank balance ,100, ,791,813 (d) Short-term loans and advances ,047,290 2,683,989 (e) Other current assets ,883,309 16,977,465 TOTAL 6,686,856,562 2,843,401,181 Significant Accounting Policies and Notes to Accounts 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 Partner Rajiv Gujjalu Director Louis Didier Merle Director Mumbai Dated: 27 April, 2013 Dated: 25 April Kotak MAHINDRA (INTERNATIONAL) Limited

6 Kotak Mahindra (International) Limited Statement of Profit and loss for the year ended 31st March 2013 I. Revenues from operations Refer Note No. For the year ended 31 March 2013 For the year ended 31 March 2012 (a) Income from Services (net) 208,174, ,408,245 (b) Income from Investments (net) 142,658,905 - II. Other income ,947,617 80,034,918 III. Total Revenue 365,781, ,443,163 IV. Expenses: Employee cost ,813,630 13,311,942 Finance charges ,693,687 25,005,626 Depreciation and Amortization , ,113 Other expenses ,153,921 37,245,357 Loss on Investment (net) - 235,496,516 Total expenses 91,843, ,204,554 V. PROFIT BEFORE TAX 273,937,349 (26,761,391) VI. Tax expense: Current tax (7,391,004) (6,765,902) (7,391,004) (6,765,902) VII. PROFIT FOR THE PERIOD 266,546,345 (33,527,293) VIII. Earnings per equity share: Basic and Diluted (8.21) 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 Partner Rajiv Gujjalu Director Louis Didier Merle Director Mumbai Dated: 25 April 2013 Dated: 27 April April, Annual Report

7 KOTAK MAHINDRA (INTERNATIONAL) LIMITED For the year ended 31st For the year ended 31st CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2013 March, 2013 March, 2012 Cash Flow from Operating Activities Net Profit before taxation 273,937,349 (26,761,391) Adjustments for: Depreciation 182, ,113 Dividend Income (585,917) (1,800,603) Interest Income (91,091,326) (394,447) Interest and other Financial Charges 20,693,687 25,005,626 Exchange Adjustments 137,963, ,745,736 Amortisation of premium/ accretion of discount on bonds and convertible bonds 25,730,178 (8,545,652) Unrealised loss/(gain) on investments (152,006,452) (168,974) Realised loss/ (gain) on investments 32,702,924 17,477,778 Realised loss/ (gain) on disposal of available-for-sale investments 62,963,285 63,465,711 OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 310,489, ,168,897 Adjustments for: (Increase) / Decrease in Loans and advances - Long term (1,187,831) 1,087,164 (Increase) / Decrease in Loans and advances - Short term (363,301) 3,732,849 (Increase) / Decrease in Trade receivables (91,045,681) 8,504,552 (Increase) / Decrease in current assets Increase / (Decrease) in Trade payables (5,230,343) (32,284,878) Increase / (Decrease) in Other current liabilities (556,400) 490,704 Increase / (Decrease) in Short term provision 419, ,773 CASH GENERATED FROM OPERATIONS 212,525, ,960,061 Income taxes paid (12,411,453) (4,953,316) NET CASH FLOW FROM OPERATING ACTIVITIES (A) 200,114, ,006,745 CASH FLOW FROM INVESTING ACTIVITIES Purchase of current investments (244,202,244) (1,849,756,623) Purchase of AFS investments and other investment (12,685,168,170) (8,433,844,893) Sale of current investments 396,011, ,775,338 Proceeds from conversion 103,139, ,883,499 Proceeds from sale of available-for-sale investments 8,572,655,042 9,831,620,001 Proceeds from sale of FCCB Conversion 152,387, ,765,795 Deposits placed with Banks (273,122,229) - Purchase of fixed assets (14,071) (111,528) Loans granted to related party - (15,760,692) Dividend Received 585,917 1,800,603 Interest Received 41,185,482 10,744,182 NET CASH FLOW (USED IN) / FROM INVESTING ACTIVITIES (B) (3,936,541,598) 1,413,115,682 CASH FLOW FROM FINANCING ACTIVITIES Movement in share capital Short term loan accepted 3,449,307,247 - Short term loan repaid - (1,102,785,932) Interest and other Financial Charges Paid (20,693,687) (25,005,626) NET CASH FLOW (USED IN) / FROM FINANCING ACTIVITIES (C) 3,428,613,560 1,127,791,558 NET INCREASE /(DECREASE) IN CASH AND CASH EQUIVALENTS (A + B + C) (307,813,994) 591,330,870 CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 721,791, ,460,943 CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 413,977, ,791,813 (307,813,994) 591,330,870 Notes: The Cash Flow Statement has been prepared under the 'Indirect Method' as set out in the Accounting Standard -3 on Cash Flow Statements 1 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 this year's presentation. This is the Cash Flow Statement referred to in our report of even date For V. C. Shah & Co. Chartered Accountants For and on Behalf of the Board of Directors A. N. Shah Rajiv Gujjalu Louis Didier Merle Partner Director Director Mumbai Dated: 27 April, 2013 Dated: 25 April Kotak MAHINDRA (INTERNATIONAL) Limited

8 1. Organisation and Nature of Business Kotak Mahindra (International) Limited ( KMIL or the Company ) which was incorporated on 29 March 1994 in Mauritius as a private company with limited liability holds a Category 1 Global Business Licence and is regulated by the Financial Services Commission. The Company has by special resolution converted itself into a public company on 12 TH June The Company s principal activity is to carry on business in financial services, corporate advisory services, underwriting services, investment in shares, bonds and other securities. It acts as distributor for schemes/products of various Kotak funds and is an investment manager of various Kotak funds. The Company operates a Representative office (the Representative office ) in Abu Dhabi, United Arab Emirates and has an associate and fellow subsidiary in the United Kingdom, Kotak Mahindra (UK) Limited ( KMUK ). SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS 2. Summary of significant accounting policies 2.1 Basis of Preparation The accounts are prepared in accordance with accounting principles generally accepted in India. The Company follows accrual method of accounting. 2.2 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. The Share Capital and investments in associate/ fellow subsidiary are 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 as translation reserve and transferred to Translation Reserve Account and the said account is being treated as Reserves and Surplus. 2.3 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. Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Actual results could differ from these estimates. 2.4 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. Commission, fees and other revenues are invoiced and recognised on an accrual basis to the extent there is a reasonable certainty of its ultimate realization/corrections and the revenue can be reliably measured. Interest income is recognized in statement of profit and loss, using effective interest method. The effective interest rate is the rate that exactly discounts the estimated future cash payments and receipts through the expected life of the financial instrument (or, when appropriate, a shorter period) to the carrying amount of the financial instrument. When calculating the effective interest rate, the Company estimates future cash flows considering all contractual terms of the financial instrument but not the future credit losses. Dividend income is recognised in profit or loss on the date that the right to receive payment is established. For quoted securities this is usually the ex-dividend date. For unquoted equity securities this is usually the date when the shareholders have approved the payment of a dividend. Annual Report

9 2.5 Fixed assets Fixed assets are stated at cost less accumulated depreciation. Cost includes expenditure that is directly attributable to the acquisition of the asset. Depreciation is calculated so as to write off the cost of the fixed assets on a straightline basis over the expected useful lives of such assets. The estimated useful life over which assets are depreciated are as follows: Office Equipment Computers 4 years 3 years Gains and losses on disposal of property, plants and equipments are determined by reference to the written down value and are included in determining operating profits. Depreciation methods, useful lives and residual values are reviewed at each reporting date. 2.6 Investments Investments in Associate/ fellow subsidiaries are stated at cost. The Company has classified its investments in equity securities and debt securities as current investment. Investments are initially recognised at cost, including transaction costs. The equity securities are subsequently carried at cost or market value whichever is less. The market values are based on the quoted prices. When quoted prices are unavailable, the price of the most recent transaction is used. The debt securities are subsequently measured at amortized cost using the effective interest method or market value, whichever is less. All derivative financial instruments are classified as held for trading. Derivative financial instruments are initially recognised at cost and subsequently measured at cost or market value whichever is less with net unrealised losses being recognised in the Statement of Profit and loss. Futures contracts are collateralised by cash and changes in the futures contracts values are settled with the exchange on a daily basis. The fair values of open positions in futures contracts are calculated as the difference between the contract prices and the settlement prices established each day by the exchange on which the contracts are traded. All investment transactions are recognised using trade date accounting. In case of unlisted open-ended investments funds, the net asset value per share as reported by the administrator of such funds is considered market value. 2.7 Employee benefits Provision for employees end of service benefits represents the liability that would arise if the employment of all eligible staff of the representative office were terminated as of the balance sheet date and is calculated in accordance with the UAE Federal Labour Law. 2.8 Operating lease payments 2.9 Taxes Leases of assets under which the lessor effectively retains all the risks and rewards of ownership are classified as operating leases. Payments made under operating leases are recognised in the profit or loss on a straight-line basis over the term of the lease. Current tax is expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantially enacted at the balance sheet date and any adjustments payable in respect of previous years. Deferred tax is recognized, subject to the consideration of prudence, on timing differences, being the differences between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. 8 Kotak MAHINDRA (INTERNATIONAL) Limited

10 2.10 Earnings per share Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the period. 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 Provisions A provision is recognised when there is a present obligation as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and in respect of which reliable estimate can be made. Provision is not discounted to its present value and is determined based on the best estimate required to settle the obligation at the year end date. These are reviewed at each year end date and adjusted to reflect the current best estimate. Contingent liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognised nor disclosed in the financial statements 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. Annual Report

11 3.1 (a) Share Capital As at 31 March 2013 As at 31 March 2012 Authorised shares 4,081,650 (31st March 2012: 4,081,650) equity shares of USD 1 each $4,081,650 $4,081,650 Issued, Subscribed and fully Paid up 4,081,650 (31st March 2012: 4,081,650) equity shares of USD 1 each 161,597, ,597,644 Total 161,597, ,597,644 (b) Equity shares Reconciliation of number of shares As at 31st March 2013 As at 31st March 2013 As at 31st March 2012 As at 31st March 2012 Quantity Quantity Share capital outstanding at the beginning of the y 4,081, ,597,644 4,081, ,597,644 Issued during the period Number of shares at the end 4,081, ,597,644 4,081, ,597,644 (c) Terms/rights attached to equity shares The company has only one class of equity shares having a par value of USD 1 per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividends in USD. 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) Shares held by holding/ultimate holding company and/or their subsidiaries/associates Out of equity 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 Number of shares Kotak Mahindra Bank Limited, the holding company 2,081,650 2,081,650 Kotak Mahindra Capital Company Limited, subsidiary of Kotak Mahindra Bank Limited 2,000,000 2,000,000 (e) Details of shareholders holding more than 5% shares in the company Equity shares of USD 1 fully paid up Kotak Mahindra Bank Limited, holding company Kotak Mahindra Capital Company Limited, subsidiary of Kotak Mahindra Bank Limited As at 31 March 2013 As at 31 March 2012 Number of shares % holding Number of shares % holding 2,081, ,081, ,000, ,000, Kotak MAHINDRA (INTERNATIONAL) Limited

12 3.2 Reserves and Surplus As at 31 March 2013 As at 31 March 2012 Translation reserve Opening Balance 253,358,116 (7,431,376) Add: amount transferred from surplus balance in the statement of profit and loss 137,989, ,789,492 Closing Balance 391,347, ,358,116 Surplus in the statement of profit and loss Opening balance 1,695,597,786 1,729,125,079 (+) Net Profit/(Net Loss) For the current year 266,546,345 (33,527,293) Closing Balance 1,962,144,131 1,695,597,786 Total 2,353,491,764 1,948,955, Short-term borrowings Unsecured borrowings As at 31 March 2013 As at 31 March 2012 Loan from fellow subsidiary 135,712, ,187,500 Secured borrowings Banks 4,021,757, ,975,713 Total 4,157,470, ,163, Other current liabilities As at 31 March 2013 As at 31 March 2012 MTM provisions - Derivatives 2,355,716 2,912,115 Total 2,355,716 2,912, Short-term provisions As at 31 March 2013 As at 31 March 2012 Provision for income tax (net of advance tax 6,441,621 (Previous year 2,600,934) 934,572 5,955,021 Provision for employee benefit (gratuity) 743, ,969 Total 1,678,004 6,278,990 Annual Report

13 3.6 Fixed Assets Balance as at 1st April, 2012 Additions Gross Block Depreciation Net Block Deductions / Adjustments* Balance as at 31st March, 2013 Balance as at 1st April, 2012 For the Period Deductions / Adjustments* Balance as at 31st March, 2013 Balance as at 31st March, 2013 Balance as at 31st March, 2012 Tangible Assets Office Equipment 525,308-35, , , ,735 17, , , ,943 Computers 629,410 14,071 42, , ,833 72,749 33, ,541 70, ,577 Vehicles 371,540 - (371,540) - 371,540 - (371,540) Total 1,526,258 14, (294,143) 1,246,186 1,141, , (320,283) 1,003, ,520 Previous year 1,240, , ,641 1,526, , , ,885 1,141, ,520 * Deductions/ adjustments include effect of translation reserve 12 Kotak MAHINDRA (INTERNATIONAL) Limited

14 3.7 Investments Script Name Quantity Book Value as Quantity Book Value as at 31st March, st March 2012 Non-trade Investments (Fully paid, cost) Investment in equity instruments (unquoted) Associate Kotak Mahindra (UK) Limited 470,000 26,287, ,000 26,287,575 Fellow Subsidiary Kotak Mahindra, INC Kotak Mahindra Financial Services Ltd. 250,000 13,740, Global Investment Opportunities Fund 100 4, ,818 Total 40,033,313 26,292,438 Non convertible debentures VGN Developers Pvt. Ltd ,023, Marathon Realty Pvt. Ltd ,023, ,046,058 - Equity and other similar funds (Unquoted) and deb funds Kotak India Focus Fund (Class B) , ,522,614 Kotak India Focus Fund II 250, ,712, ,000 89,031,250 Kotak India Venture Fund I 1,000 54,285 1,000 50,875 Seaf India Investment and Growth Fund 69, ,729 69, ,190 Alps Kotak India Growth Fund 46,226 24,971,099 46,226 23,402,500 Kotak India Real Estate Fund I , ,824 Kotak India Private Equity Fund Ltd 1,000 54,285 1,000 50,875 Kotak Deposit Fund I Segregated Portfolio 2,000,000 1,085,700, Kotak Fixed Term Plan I Segregated Portfolio 80,000 43,428, Kotak Fixed Maturity Plan (FMP) - II , ,750,000 Kotak Fixed Maturity Plan (FMP) - III , ,362,500 Total 1,290,349, ,572,628 Less: Provision for diminution 39,660, ,286,256 Equity and other similar funds (Unquoted) and deb 1,250,688, ,286,372 funds Total Non-current Investments 1,790,768, ,578,810 Aggregate value of unquoted investments 1,790,768, ,578,810 Current Investments Non-trade Investments (Fully paid, cost) Investment in equity instruments Quoted Equity Bajaj Corp 10,000 2,211, Cummins India Ltd 5,000 2,495, National Buldings Construction Corporation 12,500 1,177, Oil India Limited 5,000 2,553, Oracle Financial Services Software Limited 2,500 6,401, Rallis India Ltd. 10,000 1,154, Sobha Developers Ltd 10,000 3,450, Spicejet Limited 50,000 1,332, Dr Reddy s Ltd. -ADR - - 6,193 10,887,141 ICICI Bank Ltd ADR ,550 20,347,750 Infosys Technologies Ltd ADR - - 3,450 9,817,733 Sterlite Industries Ltd. ADR ,837 32,553,089 Tata Comm. Ltd. Sponsored ADR ,185 24,851,999 Tata Motors ADR ,500 14,047,435 Wipro Ltd. ADR ,700 7,476,699 Godrej Consumer Products Ltd - - 5,000 1,949,083 Prestige Estates Products Ltd ,000 1,044,650 Standard Chartered PLC Idr ,000 4,026,211 Arvind Ltd ,000 12,531,619 Bharti Airtel Ltd - - 4,000 1,311,769 Housing Development and Infra Ltd ,000 14,272,576 Lanco Infratech Ltd ,000 12,650,976 Orchid Chemicals and Pharmaceuticals Ltd ,000 11,284,006 Petronet LNG Ltd ,000 5,007,530 Reliance Industries Ltd ,500 12,332,923 Reliance Power Ltd ,000 9,757,516 The South Indian Bank Ltd ,000 7,540,437 Total 20,777, ,691,142 Less: Provision for diminution - 15,830,455 Total Quoted 20,777, ,860,687 Annual Report

15 Bonds and Convertible Bonds (Quoted) Foreign Currency Convertible Bonds ZC 3I Infotech 7/27/ ,000 66,737,410 ZC 3I Infotech Limited 04/03/ ,067,440 75,791,777 Total Foreign Currency Convertible Bonds - 142,529,187 Foreign Currency Bonds % ICICI Bank 02/10/ ,792, ,834,441 ICICI Bank Var 07/18 20, ,901 20, , % State Bank of India 10/23/2014 7,000, ,639,464 7,000, ,179,455 Sesa Goa Ltd 5% 10/31/14 1,000,000 51,366, Tata Steel Ltd 4.5% 11/21/14 1,000,000 52,985, Vedanta Resources 8.75% 4,445, ,020, Bank of India 4.75% 09/30/15 10,000, ,891, Bank of India 6.1/4% 02/16/21 2,000, ,243, Bank of India 3.625% 09/21/ ,000 27,069, Axis Bank 5.25% 09/30/15 5,885, ,693, Indian Oil Corp. 4.75% 01/22/15 3,372, ,249, Exim Bank 4.375% 3,180, ,048, Bank of Baroda 4.75% 10/07/15 11,520, ,774, Bank of Baroda 5% 08/24/16 1,910, ,554, RECL 4.1/4% 01/25/16 395,000 21,970, Union Bank of India 4.5/8% 02/11/16 1,000,000 56,694, Indian Overseas 5% 10/19/16 2,000, ,391, Syndicate Bank /06/16 3,350, ,605, Canara Bank London % 09/09/16 1,000,000 58,040, AE ROTOR Holding 4.969% 03/28/18 6,500, ,896, Bharti Airtel IN ,290, ,970, Daily Range Accrual Notes - - 1,500,000 76,312,500 Total Foreign Currency Bonds 3,839,088, ,233,486 Total 3,839,088, ,762,673 Less: Provision for diminution - 72,512,489 Total Bonds and Convertible Debentures 3,839,088, ,250,184 Equity and other similar funds (Unquoted) Kotak India Focus Fund (Class B) 332, ,994, Kotak Infinity Fund FMP Feeder Fund Series R , ,556,250 Total 107,994, ,556,250 Less: Provision for diminution 40,596,022 - Total Current Investments 3,927,264,432 1,538,667,121 Aggregate value of quoted investment 3,859,866,068 1,012,110,871 Aggregate market value of quoted investments 3,859,866,068 1,012,110,871 Aggregate value of unquoted investment 67,398, ,556,250 Total investments 5,718,032,693 1,982,245,931 * Date format MM/DD/YYYY 14 Kotak MAHINDRA (INTERNATIONAL) Limited

16 3.8 Long Term Loans and Advances As at 31 March As at 31 March a. Security Deposits Unsecured, considered good 1,199,874 1,088,125 1,199,874 1,088,125 b. Loans and advances to related parties Unsecured, considered good 20,410,617 19,334,535 20,410,617 19,334,535 Total 21,610,491 20,422, Trade Receivables As at 31 March 2013 As at 31 March 2012 Unsecured, considered good Trade receivables outstanding for a period less than six months from the date they are due for payment 189,940,484 98,894,803 Total 189,940,484 98,894, Cash and bank balances As at 31 March 2013 As at 31 March 2012 Cash and cash equivalents Cash on hand 58, ,842 Balances with banks: On current accounts 29,398, ,127,907 Deposits with original maturity of less than three months 384,521, ,547,064 Other Bank balances Other deposits with remaining maturity of less than twelve months 273,122,229 - Total 687,100, ,791, Short-term loans and advances Prepaid expenses As at 31 March 2013 As at 31 March 2012 Unsecured, considered good 3,047,290 2,683,989 Total 3,047,290 2,683, Other Current Assets As at 31 March 2013 As at 31 March 2012 Interest accrued on loan 740,719 83,630 Interest accrued on Bonds 54,718,598 16,602,525 Interest accrued on Deposits 11,423, ,310 Total 66,883,309 16,977,465 Annual Report

17 For the year ended 31 March 2013 For the year ended 31 March Other income Interest Income on Fixed Deposit 14,294, ,354 Interest income on Loans 652, ,447 Foreign Exchange Loss/(Gain) - 79,366,117 Total 14,947,617 80,034, Employee cost Salaries, bonus and allowances 16,206,064 12,983,024 Reimbursement of employee stock option expenses 31,594 44,308 Staff welfare expenses 575, ,610 Total 16,813,630 13,311, Finance charges Bank Guarantee Charges - 3,249,639 Interest on borrowings 3,952,675 4,423,798 Interest on OD 16,741,012 17,332,189 Total 20,693,687 25,005, Other expenses Auditor s remuneration 1,937,361 1,533,930 Bank Charges 842, ,268 Communication expenses 638, ,244 Custodial Charges 584, ,588 Foreign Exchange Loss (net) 13,149,652 - Legal & professional charges 15,339,955 16,692,459 Miscellaneous expenses 18,430,445 14,907,968 Rent 1,782,629 1,766,528 Travel expenses 1,446, ,899 Business Promotion Expenses 1,336 20,473 Total 54,153,921 37,245, 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, Contingent Liability Guarantee secured against margin deposit in Dubai amounted to 266,594 (previous year 239,876) 3.19 Capital Commitment The Company has made a total commitment of 135,712,500 (Previous year 127,187,500) of which 135,712,500 (Previous year approx 89,031,250) was called upon by Kotak Indian Focus Fund II till 31st March, The Company will be called upon later date to pay NIL (Previous year approx 38,156,250) to meet its total commitment in Kotak India Focus Fund II. The Company has made a total commitment of 542,850,000 of which Nil was called upon by Core Infrastructure India Pte. Ltd. till 31st March The Company will be called upon at a later date to pay 542,850,000 to meet its total commitment in Core Infrastructure India Pte. Ltd Short-term borrowings The loan from Kotak Mahindra Inc, with a term of 90 days, bears an interest rate of 2% to 3% per annum (Previous year between 2% to 3% per annum). The Company has a banking facility of 1,519,980,000 (Previous year approx 1,424,500,000) of which 1,357,125,000 (Previous year 1,271,875,000) is against floating charge on the assets of the company. The assets that are subject to the floating charge shall have book value of at least 1.5 times of the total outstanding amounts at all times during the currency of any such borrowings by the Company from the bank. Interest is payable on the amounts drawn at LIBOR plus 1.0% to 2.5%. The amount outstanding as at 31 March 2013 was 338,256,001 (2012: USD Nil). The short term loans from JP Morgan International Bank Ltd and United Bank of Switzerland are for a term of up to 30 days and bear an interest rate of 0.80% to 1% per annum (Previous year between 0.80% to 1.20% per annum) The Company is subject to income tax in Mauritius at 15%. It is entitled, however, to a tax credit equivalent to the higher of the actual foreign tax suffered and 80% of the Mauritius tax on its foreign source income. 16 Kotak MAHINDRA (INTERNATIONAL) Limited

18 3.22 Derivatives The open futures contracts as at 31st March, 2013 are as follows: Scrip Name Buy/(Sell) Expiry Quantity Price at 31st March, 2013 Aurobindo Pharma Ltd. Buy 25-Apr-13 24, Cipla Ltd. Buy 25-Apr-13 10, Dr. Reddy's Laboratories Ltd. Buy 25-Apr-13 1,500 1, HDFC Bank Ltd. Buy 25-Apr-13 10, ICICI Bank Ltd. Buy 25-Apr-13 2,500 1, Infosys Ltd. Buy 25-Apr-13 2,000 2, Larsen & Tuobro Ltd. Buy 25-Apr-13 3,000 1, Maruti Suzuki India Ltd. Buy 25-Apr-13 2,000 1, Oil & Natural Gas Corporation Ltd. Buy 25-Apr-13 25, Reliance Industries Ltd. Buy 25-Apr-13 5, State Bank of India Buy 25-Apr-13 2,500 2, The open futures contracts as at 31st March, 2012 are as follows: Scrip Name Buy/(Sell) Expiry Quantity Price at 31st March, 2012 Lanco Infratech Ltd (Sell) 26-Apr-12 (552,000) Sterlite Industries (India) Ltd. (Sell) 26-Apr-12 (272,000) The South Indian Bank Ltd. (Sell) 26-Apr-12 (260,000) Housing Development and Infra. Ltd. (Sell) 26-Apr-12 (144,000) Arvind Ltd (Sell) 26-Apr-12 (124,000) Tata Communications Ltd (Sell) 26-Apr-12 (106,000) Reliance Power Limited (Sell) 26-Apr-12 (76,000) Orchid Chemicals And Pharmaceuticals Ltd (Sell) 26-Apr-12 (58,000) Tata Motors Ltd. (Sell) 26-Apr-12 (42,000) Petronet LNG Ltd. (Sell) 26-Apr-12 (28,000) ICICI Bank Ltd (Sell) 26-Apr-12 (21,000) Wipro Ltd (Sell) 26-Apr-12 (19,000) Reliance Industries Ltd (Sell) 26-Apr-12 (14,500) Dr. Reddys Laboratories Ltd. (Sell) 26-Apr-12 (6,250) 1, Bharti Airtel Ltd (Sell) 26-Apr-12 (4,000) Infosys Ltd. (Sell) 26-Apr-12 (3,375) 2, Jindal Steel And Power Ltd. Buy 26-Apr-12 2, Larsen And Toubro Ltd. Buy 26-Apr-12 2,500 1, Cummins India Ltd. Buy 26-Apr-12 5, Indusind Bank Ltd Buy 26-Apr-12 5, Sobha Developers Ltd Buy 26-Apr-12 5, Tata Steel Ltd Buy 26-Apr-12 10, Jaiprakash Associates Ltd Buy 26-Apr-12 20, Zee Entertainment Enterprises Ltd Buy 26-Apr-12 20, Annual Report

19 Currency forwards During the year, the Company has entered into various currency forwards, both deliverable and non-deliverable, and currency options in order to hedge its investments in Indian Rupee. The details of outstanding contracts and the corresponding mark to market are shown below: 31st March, 2013 Non deliverable forwards Currency Pair Unrealised Gain/(Loss) Notional Contract Value USD USD USD-INR (29,354) Long: 11,500,000 Short: (1,500,000) 31st March, 2012 Non deliverable forwards Currency Pair Unrealised Gain/(Loss) Notional Contract Value USD USD USD-INR 1,595,267 Long: 28,950,000 Short: (17,307,129) USD-EURO 34,600 Long: 1,334,000 Short: (1,334,000) Reporting period Unrealised Notional Contract Gain/(Loss) Value USD USD 31st March, 2013 (142,598) (15,000,000) 31st March, 2012 NIL NIL Unrealised Notional Contract Reporting period Gain/(Loss) Value USD USD 31st March, ,055 Long: 880,209 31st March, ,738 Long: 472,962 Short: (3,868,778) Reporting period Unrealised Notional Contract Gain/(Loss) Value USD USD 31st March, 2013 (28,454) Short: (1,031,688) 3.23 Leases The details of outstanding Credit Default Swaps and the corresponding mark to market are shown below: The details of outstanding Listed Equity Futures Contracts and the corresponding mark to market are shown below: The details of outstanding Listed Equity Index Options and the corresponding mark to market are shown below: 31st March, 2012 (39,930) Short: (1,002,893) There is no long-term lease agreement. Hence, there are no material non-cancellable operating lease rentals. 18 Kotak MAHINDRA (INTERNATIONAL) Limited

20 3.24 Earnings per equity share As at 31 March As at 31 March Earnings / (loss) used in the computation of basic and diluted earnings per share (A) 266,546,345 (33,527,293) Weighted average number of equity shares used in computation of basic earnings per share (B) 4,081,650 4,081,650 Nominal value of Equity shares $1 $1 Basic and diluted earnings / (loss) per share () A/B (8.21) 3.25 Stock Option Scheme Kotak Mahindra Bank Limited, the Parent Company of Kotak Mahindra (International) Limited has formulated and adopted the following Employee Stock Option Schemes (ESOS) in accordance with the SEBI (Employee Stock Option Scheme) Guidelines, 1999 issued by the Securities and Exchange Board of India (SEBI). a. Kotak Mahindra Equity Option Scheme 2005 b. Kotak Mahindra Equity Option Scheme 2007 These schemes provide for the grant of options to employees of the Bank and its subsidiaries to acquire equity shares of the Bank that vest in a graded manner and that are to be exercised within a specified period. In accordance with the SEBI guidelines, the excess, if any, of the market price of the share at the date of the grant of the option under ESOS over the exercise price of the option is amortised on a straight line basis over the vesting period and is recovered from the subsidiary to the extent that it pertains to its employees. These options are accounted for as being equity settled in the consolidated accounts of the Parent. Had the Company recorded the compensation cost computed on the basis of fair value method instead of Intrinsic value method, employee compensation cost would have been higher by 27,156 (Previous Year 11,950) and the profit after tax would have been lower by the same amount. Annual Report

21 3.26 Related Party Transactions Related Parties Nature of relationship Nature of transactions Volume of transaction for the period ended Debit/(credit) Balance as at 31st March, st March, st March, st March, 2012 Kotak Mahindra (UK) Limited Associate and Fellow Subsidiary Facilitation charges/ Brokerage 12,544,382 17,332, Interest Expense - 785, Referral Fees (43,401,625) (33,279,153) - - Subordinated loan - - 4,125,117 4,072,035 Current account - - 6,111,970 8,864,562 Advisory Fees 79,942,466 81,076, Kotak Investment Fellow Subsidiary Advisors Limited Kotak Securities Fellow Subsidiary Derivatives Brokerage Limited 1,965,547 2,904,295 (84,055) (241,707) Referral Fees - - (101,750) Kotak Mahindra, INC. Fellow Subsidiary Loan - (135,712,500) (127,187,500) Referral Fees 9,691,917 8,510,305 (924,608) (712,097) Interest Expense 3,952,675 3,531,870 (316,662) (328,653) Investment Manager Kotak India Private Equity Fund Kotak Mahindra Bank Limited Kotak India Realty Fund Kotak India Venture (Offshore) Limited Kotak Mahindra Financials Services Limited Holding Company Investment Manager Investment Manager Fellow Subsidiary Investment Management Fee & Fund Expense (80,260,632) (71,046,583) - - Clearing Charges & Share-based Payments Ttransactions 1,184,623 2,040,648 (11,130) (7,224) Bank Balances - 93,188, ,677,992 Investment Management Fee (143,190,736) (168,382,078) - - Investment Management fee & (10,569,570) (9,403,946) - - fund expense Interest Income - (315,608) - - Transfer of assets - - 4,755,588 4,450,794 Loan ,285,500 15,262,500 Interest Income (652,728) (78,762) 740,719 83,630 Referral Fees - 4,156,437 - (127,809) Capital infusion ,571,250 - Current year Previous year Directors remuneration included in Employee cost 5,195,769 4,249,235 During the year compensation to Key Managerial Personnel was 5,195,769 (Previous year 4,249,235) The loan from Kotak Mahindra, Inc. is priced on commercial terms and conditions Previous years figures have been regrouped, reclassified wherever necessary to conform with figures of the current year. 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 Partner Rajiv Gujjalu Director Louis Didier Merle Director Mumbai Dated: 27 April April, 2013 Dated: 25 April Kotak MAHINDRA (INTERNATIONAL) Limited

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