Kotak Forex Brokerage Limited. Bigger. Bolder. Better.

Transcription

1 Kotak Forex Brokerage Limited Bigger. Bolder. Better.

2 Directors Report To the Members of KOTAK FOREX BROKERAGE LIMITED The Directors to present their Twenty Sixth Annual Report together with the audited accounts of the Company for the year ended 31st March FINANCIAL RESULTS AND OPERATIONS During the year under review, the total income of the Company was ` 62,36,286/- as compared to ` 73,58,494/- in the previous year. The Company incurred a loss of ` 823,421/- in the year as compared to profit made of ` 250,347/- in the previous year. DIVIDEND In view of the losses, no dividend is recommended. OPERATIONS The Company continues its efforts to improve its revenue. DIRECTORS Mr. Mohan Shenoi retires by rotation and being eligible, offers himself for re-appointment. AUDITORS The Company s Auditors, Messrs. V. C. Shah & Co., Chartered Accountants, Mumbai, retire at the ensuing Annual General Meeting and are eligible for re-appointment. You are requested to re-appoint them and fix their remuneration. COMPLIANCE CERTIFICATE As required by proviso to Section 383A of the Companies Act, 1956, a copy of the Compliance Certificate is being enclosed with this Report. STATUTORY INFORMATION The Company did not have any employees falling within the scope of sub-section (2A) of Section 217 of the Companies Act, 1956, nor did it accept any deposits from the public during the year. There were no earnings or outgo of foreign exchange and the other requirements pursuant to the Companies (Disclosure of Particulars in Report of Board of Directors) Rules, 1988, do not apply since the company is not a manufacturing company. DIRECTORS RESPONSIBILITY STATEMENT In pursuance of Section 217 (2AA) of the Companies Act, 1956, the Directors state, as an averment of their responsibility, that: i) the Company has, in the preparation of the annual accounts, followed the applicable accounting standards along with proper explanation relating to material departures, if any. ii) iii) iv) the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March 2014 and of the loss of the Company for the financial year ended 31st March 2014; the Directors have taken proper and sufficient care to the best of their knowledge and ability, for the 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 fraud and other irregularities; and the Directors have prepared the annual accounts on a going concern basis. For and on behalf of the Board of Directors Dipak Gupta Director Mohan Shenoi Director Place: Mumbai Dated: 23rd April Annual Report

3 Compliance Certificate Company Identification Number: U65910MH1988PLC Nominal Capital: 4,85,00,000/-. To, The Members, KOTAK FOREX BROKERAGE LIMITED, Bakhtawar, 1st Floor, 229, Nariman Point, Mumbai I have examined the registers, records, books and papers of KOTAK FOREX BROKERAGE LIMITED (hereinafter referred to as the Company ) as required to be maintained under the applicable provisions of Companies Act, 1956 and Companies Act, 2013 and the rules made there under and also the provisions contained in the Memorandum and Articles of Association of the Company for the financial year ended on 31st March, In my opinion and to the best of my information and according to the examinations carried out by me and explanations furnished to me by the Company, its officers and agents, I certify that in respect of the aforesaid financial year: 1. The Company has kept and maintained all registers as stated in Annexure A to this certificate, as per the provisions of Companies Act,1956 and the rules made there under and all entries therein have been duly recorded. 2. The Company has duly filed all the forms and returns as stated in Annexure B to this certificate, with the Registrar of Companies, Regional Director, Central Government, Company Law Board or other authorities within the time prescribed under Companies Act, 1956 and the rules made there under. 3. The Company, being a public limited company has the prescribed minimum paid up capital. 4. The Board of Directors duly met 5 (Five) times respectively on 24th April 2013, 16th July 2013, 21st October 2013, 18th January 2014 and 26th March 2014 and in respect of which meetings proper notices were given and the proceedings were properly recorded and signed in the Minutes Book maintained for the purpose. There were no circular resolutions passed during the financial year. 5. The Company was not required to close its Register of Members or Debenture holders during the financial year. 6. The annual general meeting for the financial year ended on 31st March, 2013 was held on 30th July, 2013 after giving due notice to the members of the company and other concerned and the resolutions passed thereat were duly recorded in Minutes Book maintained for the purpose. 7. No extra ordinary general meeting was held during the financial year. 8. The Company has not advanced any loan to its directors and/or persons or firms or companies referred in the section 180 of Companies Act, The company has not entered into any contracts falling within the purview of section 297 of Companies Act, The company was not required to make any entries in the register maintained under section 301 of Companies Act, As there were no instances falling within the purview of section 314 of Companies Act, 1956, the company has not obtained any approvals from the Board of directors, members or Central Government. 12. The company has not issued any duplicate share certificates during the financial year. 13. The Company: (i) (ii) has not allotted any shares during the year and it has delivered all the certificates on lodgement thereof for transfer in accordance with the provisions of Companies Act, has not deposited any amount in a separate Bank Account as no dividend was declared during the financial year. (iii) has not posted warrants to any member of the company as no dividend was declared during the financial year. (iv) was not required to transfer any amount to Investor Education and Protection Fund, since there were no amounts in unpaid dividend account and there was no application money due for refund, matured deposits, matured debentures and the interest accrued thereon which have remained unclaimed or unpaid for a period of seven years. (v) has duly complied with the requirements of section 217 of Companies Act, The Board of directors of the company is duly constituted. There was no appointment of Directors, additional directors, alternate directors or directors to fill casual vacancy during the financial year. 15. The Company has not appointed any Managing Director/Whole-time Director/Manager during the financial year. 16. The company has not appointed any sole selling agents during the financial year. 2 Kotak Forex Brokerage Limited

4 17. The company was not required to obtain any approvals of the Central Government, Company Law Board, Regional Director, Registrar and/or such authorities prescribed under the various provisions of Companies Act, 1956 during the financial year. 18. The directors have disclosed their interest in other firms/companies to the Board of Directors pursuant to the provisions of Companies Act, 1956 and the rules made there under. 19. The company has not issued any shares, debentures or other securities during the financial year. 20. The company has not bought back any shares during the financial year. 21. There was no redemption of preference shares/debentures during the financial year. 22. There were no transactions necessitating the company to keep in abeyance rights to dividend, right shares and bonus shares pending registration of transfer of shares. 23. The company has not invited/accepted or renewed any deposits including any unsecured loans falling within the purview of section 58A of Companies Act, 1956 during the financial year. 24. The Company has not made any borrowings during the financial year ended 31st March, The company has not made any loans or advances or given guarantees or provided securities to other bodies corporate. 26. The company has not altered the provisions of the Memorandum with respect to situation of the company s registered office from one state to another during the year under scrutiny. 27. The company has not altered the provisions of the Memorandum with respect to the objects of the company during the year under scrutiny. 28. The company has not altered the provisions of the Memorandum with respect to name of the company during the year under scrutiny. 29. The company has not altered the provisions of the Memorandum with respect to share capital of the company during the year under scrutiny. 30. The company has not altered its Articles of Association during the financial year. 31. As per the information and explanations given by officers of the Company, there was no prosecution initiated against or show cause notices received by the company and no fines or penalties or any other punishment was imposed on the company during the financial year for offences under Companies Act, 1956 or Companies Act, The company has not received any money as security from its employees during the financial year. 33. As per the information and explanations given by officers of the Company, the Company is not required to make any contribution under the Provident Fund Act. However the company has voluntarily made contribution to the Provident Fund and has deposited both employees and employers contribution to Provident Fund with prescribed authorities pursuant to the provisions of section 418 of Companies Act, Place: Mumbai. Dated: 22nd April, Sd/- Rupal D. Jhaveri Company Secretary FCS: 5441 CP: 4225 Annual Report

5 Annexure A REGISTERS AS MAINTAINED BY THE COMPANY AS PER COMPANIES ACT, 1956: STATUTORY REGISTERS: 1. Register of Members u/s Register of debenture holders u/s Register of Directors u/s Register of Directors Shareholding u/s Minutes Book of meetings of the Board of Directors u/s Minutes Book of General Meetings of the members u/s Books of Accounts u/s Register of Particulars of Contracts in which Directors are interested u/s 301. OTHER REGISTERS 1. Register of Transfers. ANNEXURE B Forms and Returns as filed by the Company with Registrar of Companies, Regional Director, Central Government or other authorities during/for the financial year ending 31st March, Sr. No. Form No/ Return 1. Annual Return with Form 20B 2. Balance Sheet with Form 23AC & 23ACA Xbrl 3. Compliance Certificate With Form 66 Filed under Section as per Companies Act, 1956 For Date of filing Whether filed within prescribed time Yes/No. If delay in filing whether requisite additional fee paid 159(1) /09/2013 Yes N.A /08/2013 Yes N.A. 383A /08/2013 Yes N.A 4 Kotak Forex Brokerage Limited

6 Independent Auditors Report To the members of Kotak Forex BrokerageLimited 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, 2014, 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, which we have signed under reference to this report. Management s Responsibility for the Financial Statements The Company s 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, 1956 ( the Act )read with the General Circular 15 / 2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of section 133 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. Auditors 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 auditors 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 spreparation 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 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 accompanying 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 31stMarch, 2014; (b) (c) in the case of the Statement of Profit and Loss, of the loss for the year ended on that date; and in the case of the Cash Flow Statement, of the cash flows for the year ended on that date. Report on Other Legal and Regulatory Requirements As required by the Companies (Auditor s Report) Order, 2003( the Order ), as amended, issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act (hereinafter referred to as the Order ), we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order. As required by section 227(3) of the Act, we report that: (a) (b) (c) We have 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 appears from our examination of those books; The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this Report are in agreement with the books of account; (d) In our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956 ( the Act ) read with the General Circular 15 / 2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013; (e) On the basis of written representations received from the directors as on 31st March, 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Act. For V.C.Shah & Co. Chartered Accountants Firm Registration No W V.C.Shah Partner. Mumbai, 23rd April, Membership No.: Annual Report

7 Annexure to the 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 year ended 31st March, 2014) i. (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. (b) (c) 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. The fixed assets disposed off during the yeardo not constitute a substantial part of the fixed assets of the Company and such disposal hasnot affected the going concern status of the Company. 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 4 of the Order, are not applicable. The Company has neither granted nor taken any loans, secured or unsecured, to / from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, Hence, clause (iii) of paragraph 4 of the Order is not applicable to the Company during the year under report. In our opinion and according to the information and explanations given to us, the Company has an adequate internal control system commensurate with the size of the Company and the nature of its business, with regards to purchase of fixed assets and services rendered. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control systems. v. (a) The particulars of contracts or arrangements referred to in section 301 of the Act that needed to be entered in the register maintained under the said section, have been so entered. (b) Where each of such transaction is in excess of ` 5 lakhs in respect of any party, the transactions have been made at prices which are,prima facie, reasonable having regard to the prevailing market prices at the relevant time, other than certain purchases which are of special nature for which comparable quotations are not available and in respect of which we are, therefore, unable to comment. vi. vii. According to the information and explanations given to us, the Company has not accepted any deposits from the public during the year under report. In our opinion, the Company has an internal audit system commensurate with its size and nature of its business. viii. The provisions of section 209 (1) (d) of the Companies Act, 1956 in respect of maintenance of cost records as may be prescribed by the Central Government, are not applicable to the Company. ix. (a) The Company is generally been regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues, if any, applicable to it. According to the information and explanations given to us, there were no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Income-tax, Sales-tax, Wealth tax, Service tax and other material statutory dues in arrears as at 31st March, 2014 for a period of more than six months from the date they became payable. (b) According to the information and explanations given to us, there are no dues of sales tax, income tax, custom duty, 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) x. 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 ` 7,87,849/- in the current financial year, however, there were no cash losses in the immediately preceding financial year; xi. xii. 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. The company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities during the year under report. xiii. The Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor s Report) Order, 2003 are not applicable to the Company. xiv. According to the information and explanations given to us, the Company has not entered into transactions and contracts in respect of dealing or trading in shares, securities, debentures or other investments during the year. Hence clause (xiv) of paragraph 4 of the Order is not applicable to the Company for the year. 6 Kotak Forex Brokerage Limited

8 xv. According to the information and explanations given to us,the Company has not given any guarantee for loans taken by others from banks or financial institutions. xvi. 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 (xvi) of paragraph 4 of the Order is not applicable. xvii. According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that no funds raised on short term basis havebeen used for long term investments. xviii. During the year under report, the Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Act. xix. The Company has not issued any secured debentures during the year under report.hence, clause (xix) of paragraph 4 of the Order is not applicable to the Company. xx. The Company has not raised any money by public issues, during the year under report.hence, clause (xx) of paragraph 4 of the Order is not applicable to the Company. xxi. 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, 23rd April, Membership No.: Annual Report

9 Balance Sheet as at 31st March, 2014 Particulars Note No. As at 31st March 2014 I. EQUITY AND LIABILITIES 1 Shareholders funds As at 31st March 2013 (a) Share capital 4 48,000,000 48,000,000 (b) Reserves and surplus 5 (37,666,800) (36,843,379) 2 Non-current liabilities (a) Long-term borrowings 6 1,000,000 1,000,000 (b) Other long term liabilities 7 197,042 98,868 (c) Long-term provisions 8 834, ,920 3 Current liabilities (a) Trade payables 238, ,660 (b) Other current liabilities 9 678, ,986 (c) Short-term provisions 10 58,349 49,983 TOTAL 13,339,758 13,764,039 II. ASSETS 1 Non-current assets (a) Fixed assets 11 (i) Tangible assets 43,223 54,660 (ii) Intangible assets - - (b) Non-current investments (c) Long-term loans and advances 13 1,948,998 1,725,649 (d) Other non-current assets 14 5,139,562 1,500,000 2 Current assets (a) Trade receivables ,274 1,072,996 (b) Cash and bank balance 16 3,503,021 7,263,146 (c) Short-term loans and advances , ,640 (d) Other current assets 18 1,498,759 1,928,946 TOTAL 13,339,758 13,764,039 See accompanying notes to the financial statements As per our attached report of even date For V.C.Shah & Co. For and on behalf of the Board of Directors Chartered Accountants V.C.Shah Dipak Gupta Mohan Shenoi Partner Director Director Membership No Mumbai Dated : 23rd April, Kotak Forex Brokerage Limited

10 Statement of Profit and loss for the year ended 31st March 2014 Particulars Note No. Year ended 31st March, 2014 Year ended 31st March, 2013 I. Revenue Revenue from operations 19 5,393,590 6,996,319 Other Income , ,175 Total Revenue 6,236,286 7,358,494 II. Expenses: Employee Benefits Expense 21 3,515,191 3,613,161 Finance Costs , ,449 Depreciation and Amortization Expense 35,572 37,732 Other expenses 23 3,399,862 3,349,805 Total expenses 7,059,707 7,108,147 III. Profit/(Loss) before tax (823,421) 250,347 IV. Tax expense: (1) Current tax - - (2) Deferred tax - - V. Profit/(Loss) for the Year (823,421) 250,347 VI. Earnings per equity share: Basic and Diluted earnings per share (0.20) 0.06 (Refer Note no.26) See accompanying notes to the financial statements As per our attached report of even date For V.C.Shah & Co. For and on behalf of the Board of Directors Chartered Accountants V.C.Shah Dipak Gupta Mohan Shenoi Partner Director Director Membership No Mumbai Dated : 23rd April, 2014 Annual Report

11 Cash Flow Statement for the year ended 31st March, 2014 Particulars Year ended 31st March, 2014 Year ended 31st March, 2013 CASH FLOW FROM OPERATING ACTIVITIES Net Loss before taxation (823,421) 250,347 Adjustments for : Depreciation 35,572 37,732 Interest on Debentures 109, ,449 Profit on sale of fixed assets (500) - Interest on fixed deposits (779,194) (351,422) Operating Profit Before Working Capital Changes (1,458,461) 44,106 Adjustments for : (Increase)/Decrease in Trade Receivables 139,722 (232,847) Increase / (Decrease) in Trade Payables (98,154) 272,279 Increase / (Decrease) in Other Current Liabilities 312, ,803 Increase / (Decrease) in Provisions 86,459 90,585 (Increase) / Decrease in Short term Loans & Advances (54,280) (10,786) Increase / (Decrease) in Other Long term liabilities 98,174 96,704 (Increase)/ Decrease in Other Current Assets 430,187 (793,628) Cash flow Used In Operations (543,690) (426,783) Income Taxes paid /(Refund Received) (223,349) (911,424) Net Cash flow (Used in)/ from Operating Activities (A) (767,039) (1,338,207) CASH FLOW FROM INVESTING ACTIVITIES Purchase of Fixed Assets (24,135) - Proceeds from sale of Fixed assets Fixed Deposits (Placed) / Redeemed 860,438 (5,825,000) Interest on fixed deposits 779, ,422 Net Cash flow (Used in)/ from Investing Activities (B) 1,615,997 (5,473,578) CASH FLOW FROM FINANCING ACTIVITIES Proceeds from issue of Preference Shares - 7,000,000 Interest on Debentures (109,082) (107,449) Net Cash flow (Used in)/ from Financing Activities (C) (109,082) 6,892, Kotak Forex Brokerage Limited

12 Particulars Year ended 31st March, 2014 Year ended 31st March, 2013 NET INCREASE/( DECREASE) IN CASH & CASH EQUIVALENTS (A + B + C) 739,875 80,766 CASH & CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 213, ,380 CASH & CASH EQUIVALENTS AT THE END OF THE YEAR 953, ,146 Notes : 1. Cash and cash equivalent include : 739,875 80,766 Balances with bank on current account 953, ,146 Total cash and cash equivalents 953, , The Cash Flow statement has been prepared under the Indirect Method as set out in the Accounting Standard -3 on Cash Flow Statement notified under the Companies (Accounting Standards) Rules, 2006, (as amended) 3. 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. For and on behalf of the Board of Directors Chartered Accountants V.C.Shah Dipak Gupta Mohan Shenoi Partner Director Director Membership No Mumbai Dated : 23rd April, 2014 Annual Report

13 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 have been prepared on historical cost basis of accounting. The company adopts the accrual system of accounting. 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 notified under Section 211(3C) of the Companies Act, 1956 ( the 1956 Act ) (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 ( the 2013 Act ) in terms of General Circular 15/2013 dated 13 September, 2013 of the Ministry of Corporate Affairs) and the relevant provisions of the 1956 Act/ 2013 Act, as applicable. 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. Dividend on investments is recognised when the right to receive payment is established. c. Interest Income is accounted on accrual basis. B. FIXED ASSETS a. Fixed assets/intangible assets have been stated at cost inclusive of incidental expenses less accumulated depreciation/amortisation. b. Depreciation/Amortization Policy (i) The Company adopts the Straight Line Method of depreciation at rates higher than those prescribed in Schedule XIV to the Companies Act, 1956, based on the management s estimates of useful life of the assets as follows: C. INVESTMENTS Asset Type Useful Life in Years Computers 3 Office Equipment 5 Furniture & Fixture 6 Assets costing less than ` 5,000 are fully depreciated in the year of purchase. 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. D. EMPLOYEE BENEFITS i. Provident Fund Defined Contribution Plan: ii. Contribution as required by the Statute made to the Government Provident Fund is debited to the Statement of Profit and Loss when incurred. 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. 12 Kotak Forex Brokerage Limited

14 iii. iv. 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. 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). 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. Annual Report

15 Note 4 - Share Capital As at 31st March 2014 As at 31st March 2013 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 As at 31st March 2014 As at 31st March 2013 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 As at 31st March 2014 As at 31st March 2013 No. of shares No. of shares Outstanding at the beginning of the year 14 7,000,000-7,000,000 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 has 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. 14 Kotak Forex Brokerage Limited

16 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 As at 31st March, 2014 Kotak Mahindra Bank Limited, the holding company : As at 31st March, 2013 Equity Shares of ` 10/- each 4,100,000 2,110,294 Preference shares of ` 5,00,000/- each 14 - Kotak Securities Limited, subsidiary of Kotak Mahindra Bank Limited : Equity Shares of ` 10/- each - 1,989,706 Preference shares of ` 5,00,000/- each - 14 f. Details of Equity shareholders holding more than 5% shares in the company Equity shares of ` 10 fully paid up As at 31st March 2014 As at 31st March 2013 No. of shares % holding No. of shares % holding Kotak Mahindra Bank Limited, holding company 4,100, ,110, Kotak Securities Limited, subsidiary of Kotak Mahindra Bank Limited Details of Preference shareholders holding more than 5% shares in the company Preference shares of ` 5,00,000/- fully paid up - - 1,989, As at 31st March 2014 As at 31st March 2013 No. of shares % holding No. of shares % holding Kotak Mahindra Bank Limited Kotak Securities Limited Note 5 - Reserves and Surplus As at 31st March 2014 As at 31st March 2013 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 - 250,347 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 (38,993,726) (38,993,726) Add: Net Profilt / (Loss) for the current year (823,421) 250,347 Less:Amount transferred to Debenture Redemption Reserve - (250,347) Balance as at the end of the year (39,817,147) (38,993,726) Total (37,666,800) (36,843,379) Annual Report

17 Note 6 - Long Term Borrowings As at 31st March 2014 As at 31st March 2013 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 197,042 98,868 Total 197,042 98,868 Note 8 - Long Term Provisions (a) Provision for employee benefits Provision for Gratuity 655, ,295 Provision for Compensated absences 179, ,625 Total 834, ,920 Note 9 - Other current liabilities Other liabilities including statutory dues 678, ,986 Total 678, ,986 Note 10 - Short-term Provisions Provision for Gratuity 32,850 26,362 Provision for Compensated Absences 25,499 23,621 Total 58,349 49, Kotak Forex Brokerage Limited

18 Note 11 - Fixed Assets a DESCRIPTION GROSS BLOCK DEPRECIATION NET BLOCK Tangible Assets Balance as at 1st April 2013 Additions during the year Disposals during the year Balance as at 31st March 2014 Balance as at 1st April 2013 Depreciation Charge for the year On Disposals Balance as at 31st March 2014 As at 31st March 2014 As at 31st March 2013 Furniture and Fixtures 85, ,355 85, , Office equipment 978,771 12,900 13, , ,360 7,588 13, ,548 23,723 18,411 Computers 303,141 11, , ,892 27, ,876 19,500 36,249 Total (A) 1,367,267 24,135 13,400 1,378,002 1,312,607 35,572 13,400 1,334,779 43,223 54,660 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) 58,507,267 24,135 13,400 58,518,002 58,452,607 35,572 13,400 58,474,779 43,223 54,660 Previous Year 58,507, ,507,267 58,414,875 37,732-58,452,607 54,660 92,393 Note 12 - Non Current Investments As at 31st March 2014 Investments in debentures: (Non-trade, at cost) Unquoted and fully paid up debentures As at 31st March ,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 1,854,498 1,631,149 (Net of Provision for Taxes ` 83,128 (P.Y. ` 83,128)) Total 1,948,998 1,725,649 Note 14 -Other Non-Current Assets Other Bank Balances Fixed Deposits (with residual maturity of more than 12 months)* 5,139,562 1,500,000 Total 5,139,562 1,500,000 *Fixed Deposits with scheduled banks include ` 51,39,562/- (Previous year ` 15,00,000/-) which is under lien of Foreign Exchange Dealers Association of India. Annual Report

19 Note 15 - Trade Receivables As at 31st March 2014 As at 31st March 2013 Unsecured, considered good - Outstanding for a period of more than six months 13, Others 919,471 1,072,996 Total 933,274 1,072,996 Note 16 - Cash and bank balances Cash and cash equivalents Balances with banks: In current accounts 953, ,146 Other bank balances Deposits with residual maturity of less than 12 months 2,550,000 7,050,000 Total 3,503,021 7,263,146 Notes 17 - Short-term loans and advances Other loans and advances Unsecured, considered good 260, ,852 Cenvat credit receivable (Unsecured, considered good) 12,291 45,788 Total 272, ,640 Note 18 - Other current assets Unsecured, considered good Interest accrued on Fixed Deposits 49, ,149 Unbilled Revenue 1,449,526 1,787,797 Total 1,498,759 1,928, Kotak Forex Brokerage Limited

20 Particulars For the year ended 31st March 2014 Note 19 - Revenue from Operations For the year ended 31st March 2013 Brokerage Income (Gross) 7,288,526 9,539,804 Less: Sub-brokerage and discounts (1,894,936) (2,543,485) Total 5,393,590 6,996,319 Note 20 - Other Income Interest on Employee loans 13,124 10,753 Interest on Tax refunds 49,868 - Interest income on fixed deposits 779, ,422 Others Total 842, ,175 Note 21 - Employee Benefits Expense Salaries, allowances and bonus 3,222,395 3,221,806 Contribution to provident fund and other funds 178, ,241 Reimbursement of Expense on Employee Stock Option Scheme 38,196 72,995 Staff welfare expenses 76, ,119 Total 3,515,191 3,613,161 Note 22 - Finance Costs Interest on Debentures 109, ,449 Total 109, ,449 Note 23 - Other expenses Rent 1,440,000 1,440,000 Rates and taxes 16,540 26,500 Communication expenses 181, ,265 Business Promotion 103, ,488 Membership & Subscription 1,068, ,878 Repairs and maintenance - others 134, ,726 Travelling and Conveyance 26,160 22,120 Electricity 180, ,688 Legal and Professional charges 90,842 66,533 Auditor s remuneration Statutory audit fees 60,000 60,000 Tax audit fees 25,000 25,000 Other Services 4,760 23,750 Out of pocket expenses 5,338 3,036 Filing Fees 4,022 19,540 Common Establishment Expenses - Reimbursements 30,996 31,965 Miscellaneous expenses 28,089 43,316 Total 3,399,862 3,349,805 Annual Report

21 24. Employee Benefit Scheme Reconciliation of opening and closing balance of the present value of the defined benefit obligation for gratuity benefits is given below. Change in Unfunded defined benefit obligations As of 31st March, 2014 As of 31st March, 2013 () () Present value of unfunded benefit obligations, 1st April , ,701 Current Service cost 58,388 59,652 Interest cost 53,137 48,849 Benefits paid - (41,097) Actuarial (gain)/loss on obligations (23,330) 30,552 Present value of unfunded benefit obligations 687, ,657 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 687, ,657 Net liability 687, ,657 Cost recognised for the period Current service cost 58,388 59,652 Interest cost 53,137 48,849 Benefits Paid - (41,097) Actuarial (gain)/loss (23,330) 30,552 Net gratuity cost 88,195 97,956 Actuarial assumptions used Discount rate 9.34% 8.24% 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 687, , , , ,414 Plan assets Surplus / (deficit) (687,852) (599,657) (501,701) (461,812) (343,414) Experience adjustments on plan liabilities 34,377 (25,326) (36,200) 14,063 21,552 Experience adjustments on plan assets 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. 20 Kotak Forex Brokerage Limited

22 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. 25. Related Party Disclosures: Parties where control exists: Nature of relationship Holding Company Related Party Kotak Mahindra Bank Limited holds 100% ( P.Y %) of the equity share capital along with its nominees Uday S. Kotak along with relatives and entities controlled by him holds 43.58% (P.Y.44.96%) of the equity share capital of Kotak Mahindra Bank Limited as on 31st March, Fellow Subsidiary Kotak Securities Limited holds 0% (P.Y.48.53%) of the equity share capital Other related parties: Fellow Subsidiaries 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 Subsidiaries Shares issued Kotak Mahindra Bank Limited 48,000,000 (21,102,940) Kotak Securities Limited -- (26,897,060) Borrowings Debentures outstanding Kotak Mahindra Capital Company Limited 1,000,000 (1,000,000) Liabilities Outstandings payable 12,110 (25,807) Interest accrued but not due Kotak Mahindra Capital Company Limited 197,042 (98,868) Term Deposits Term Deposits placed 6,500,000 (7,250,000) Term Deposits redeemed 11,000,000 (675,000) Annual Report

23 () Nature of Transaction Holding Company Fellow Subsidiaries Outstandings Balance in Current accounts 899,409 (157,883) Term Deposit 2,550,000 (7,050,000) Interest receivable onterm Deposits placed 49,233 (132,330) Income Interest on Fixed Deposits 633,924 (228,373) Expenses Rent Paid 1,440,000 (1,440,000) Demat Charges 850 (600) Interest on Debentures Kotak Mahindra Capital Company Limited 109,082 (107,449) Other Transactions Expense Reimbursements to companies 304,155 (454,858) Figures in bracket indicate previous year figures. 26. Earnings Per Share (EPS) The numerators and denominators used to calculate Basic and Diluted Earnings Per Share: Particulars For the year ended 31st March, 2014 For the year ended 31st March, 2013 Profit/ (Loss) attributable to the Equity Shareholders (`) (A) (823,421) 250,348 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 ) (0.20) Segment Reporting In accordance with Accounting Standard 17 on Segment Reporting issued by the Institute of Chartered Accountants of India, 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. 22 Kotak Forex Brokerage Limited

24 28. 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/-). 29. 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 SEBI Guidelines 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 ` 38,196 (Previous year ` 72,995) 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 ` 16,642(Previous year ` 27,711) and the Lossafter tax would have been higher by ` 16,642(Previous year Profit after tax would have been lower by ` 27,711). Consequently the basic and diluted EPS would have been ` (0.20)(Previous year ` 0.05) 30. 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. 31. 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. For and on behalf of the Board of Directors Chartered Accountants V.C.Shah Dipak Gupta Mohan Shenoi Partner Director Director Membership No Mumbai Dated : 23rd April, 2014 Annual Report

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