Kotak Mahindra (International) Limited. Bigger. Bolder. Better.

Transcription

1 Kotak Mahindra (International) Limited Bigger. Bolder. Better.

2 Directors Report To the shareholders of KOTAK MAHINDRA (INTERNATIONAL) LIMITED 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 2014 amounted to INR 393,237,738 (2013: profit of INR 266,546,345). The company declared and paid a dividend of INR 117,697,990 (2013: Nil) during the year ended 31st March 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 31 March 2014, statement of profit or loss and other 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 : 22nd April 2014 Company secretary Annual Report

3 Independent Auditors Report To The Members of Kotak Mahindra (International) Limited. The financial statements of Kotak Mahindra (International) Limited (the Company ) as at 31st March, 2014, being a company registered in Mauritius, are audited by KPMG, Licensed Auditors, Mauritius and we have been furnished with their audit report dated 21st 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 31st March 2014, 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 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 September 13, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013 and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances 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 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 31st March 2014; (b) (c) in the case of the Statement of Profit and Loss, of the profit 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 In view of the facts specified in Para 1 and 2 herein above, the requirements of Companies (Auditor s Report) Order, 2003, report under section 227(3) of the Act,report on directors disqualification in terms of clause (g) of sub section (1) of section 274 of the Companies Act, 1956 and payment of cess under section 441A of the Companies Act, 1956 are not applicable. For V.C. Shah & Co. Chartered Accountants Firm Registration No W A.N Shah. Place: Mumbai Partner Date: 23rd April, 2014 Membership No.: Kotak Mahindra (International) Limited

4 Balance Sheet as at 31st March, 2014 Particulars Note No. 31st March, 2014 I. EQUITY AND LIABILITIES 31st March, Shareholders funds (a) Share capital ,597, ,597,644 (b) Reserves and surplus 3.2 2,880,487,155 2,353,491,764 2 Current liabilities (a) Short-term borrowings 3.3 3,601,882,960 4,157,470,460 (b) Trade payables 66,373,795 10,262,974 (c) Other current liabilities 3,4 23,209,458 2,355,716 (d) Short-term provisions 3.5 9,368,991 1,678,004 TOTAL 6,742,920,003 6,686,856,562 II. ASSETS 1 Non-current assets (a) Fixed assets Tangible assets , ,247 Capital Work-in-Progress 1,133,538 - (b) Non-current investments ,536,709 1,790,768,261 (c) Long-term loans and advances ,448,894 21,610,491 2 Current assets (a) Current investments 3.7 4,675,085,301 3,927,264,432 (b) Trade receivables ,283, ,940,484 (c) Cash and bank balance ,504, ,100,048 (d) Short-term loans and advances ,039,652 3,047,290 (e) Other current assets ,801,895 66,883,309 TOTAL 6,742,920,003 6,686,856,562 Significant Accounting Policies and Notes to Accounts 2&3 In terms of our report of even date For V. C. Shah & Co. For and on Behalf of the Board of Directors Chartered Accountants A.N. Shah Louis Didier Merle Doomraj Sooneelall Partner Director Director Mumbai Dated: 23rd April, 2014 Dated: 22nd April, 2014 Annual Report

5 Statement of Profit and loss for the year ended 31st March 2014 Particulars Note No. For the year ended 31 March 2014 For the year ended 31 March 2013 I. Revenues from operations (a) Income from Services (net) 325,431, ,174,549 (b) Income from Investments (net) 251,788, ,658,905 II. Other income ,543,170 14,947,617 III. Total Revenue 587,763, ,781,071 IV. Expenses: Employee cost ,578,969 16,813,630 Finance charges ,862,434 20,693,687 Depreciation and Amortization , ,484 Other expenses ,966,345 54,153,921 Total expenses 162,591,216 91,843,722 V. PROFIT/(LOSS) BEFORE TAX 425,172, ,937,349 VI. Tax expense: Current tax (31,934,483) (7,391,004) (31,934,483) (7,391,004) VII. PROFIT/(LOSS) FOR THE YEAR 393,237, ,546,345 VIII. Earnings/(loss) per equity share (in Rs.) : Basic & Diluted Significant accounting policies and notes to the financial statements 2&3 In terms of our report of even date For V. C. Shah & Co. For and on Behalf of the Board of Directors Chartered Accountants A.N. Shah Louis Didier Merle Doomraj Sooneelall Partner Director Director Mumbai Dated: 23rd April, 2014 Dated: 22nd April, Kotak Mahindra (International) Limited

6 Cash Flow Statement for the year ended 31st March, 2014 For the year ended 31st March, 2014 For the year ended 31st March, 2013 Cash Flow from Operating Activities Net Profit before taxation 425,172, ,937,349 Adjustments for: Depreciation 183, ,484 Dividend Income (625,258) (585,917) Interest Income (316,896,335) (91,091,326) Interest and other Financial Charges 38,862,434 20,693,687 Exchange Adjustments 251,428, ,963,378 Amortisation of premium/ accretion of discount on bonds and convertible bonds 76,885,601 25,730,178 Unrealised loss/(gain) on investments (81,425,740) (152,006,452) Realised loss/ (gain) on investments (13,464,123) 32,702,924 Realised loss/ (gain) on disposal of available-for-sale investments 81,658,737 62,963,285 OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 461,779, ,489,590 Adjustments for: (Increase) / Decrease in Loans and advances - Long term (2,838,403) (1,187,831) (Increase) / Decrease in Loans and advances - Short term 821,713 (363,301) (Increase) / Decrease in Trade receivables (618,343,397) (91,045,681) (Increase) / Decrease in current assets (527,252) - Increase / (Decrease) in Trade payables 56,110,821 (5,230,343) Increase / (Decrease) in Other current liabilities 20,853,742 (556,400) Increase / (Decrease) in Short term provision 237, ,463 CASH GENERATED FROM OPERATIONS (81,905,737) 212,525,497 Income taxes paid (27,294,671) (12,411,453) NET CASH FLOW FROM OPERATING ACTIVITIES (A) (109,200,408) 200,114,044 CASH FLOW FROM INVESTING ACTIVITIES Purchase of investments (274,296,206) (244,202,244) Purchase of AFS investments and other investment (9,951,928,467) (12,685,168,170) Invetment in associate (12,157,500) - Sale of investments 308,206, ,011,492 Proceeds from conversion - 103,139,292 Proceeds from sale of available-for-sale investments 10,240,931,891 8,572,655,042 Proceeds from sale of FCCB Conversion - 152,387,891 Deposits (placed) / redeemed with Banks 273,122,229 (273,122,229) Purchase of fixed assets (1,133,538) (14,071) Dividend Received 625, ,917 Interest Received 308,505,001 41,185,482 Annual Report

7 Cash Flow Statement for the year ended 31st March, 2014 For the year ended 31st March, 2014 For the year ended 31st March, 2013 NET CASH FLOW (USED IN) / FROM INVESTING ACTIVITIES (B) 891,875,158 (3,936,541,598) CASH FLOW FROM FINANCING ACTIVITIES Movement in share capital Short term loan accepted (555,587,500) 3,449,307,247 Dividend paid during the year (117,697,990) - Interest and other Financial Charges Paid (38,862,434) (20,693,687) NET CASH FLOW (USED IN) / FROM FINANCING ACTIVITIES (C) (712,147,924) 3,428,613,560 NET INCREASE /(DECREASE) IN CASH AND CASH EQUIVALENTS (A + B + C) 70,526,826 (307,813,994) CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 413,977, ,791,813 CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 484,504, ,977,819 70,526,826 (307,813,994) Notes: 1 The Cash Flow Statement has been prepared under the Indirect Method as set out in the Accounting Standard -3 on Cash Flow Statements notified pursuant to the Companies (Accounting Standards) Rules, 2006, as amended. 2 Figures in brackets indicate cash outflow. 3 The previous year s figures have been re-grouped, wherever necessary in order to conform to this year s presentation. This is the Cash Flow Statement referred to in our report of even date For V. C. Shah & Co. For and on Behalf of the Board of Directors Chartered Accountants A.N. Shah Louis Didier Merle Doomraj Sooneelall Partner Director Director Mumbai Dated: 23rd April, 2014 Dated: 22nd 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 12th 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. The Company has an associate and fellow subsidiary in the United Kingdom, Kotak Mahindra (UK) Limited ( KMUK ) and also an associate and fellow subsidiary in Dubai, Kotak Mahindra Financial Services Limited ("KMFSL"). SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS 2. Summary of significant accounting policies 2.1 Basis of Preparation 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. 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. 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 straight-line 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. Annual Report

9 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 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. 2.9 Taxes 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 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. 8 Kotak Mahindra (International) Limited

10 3 Notes to accounts 3.1 (a) Share capital 31 March March 2013 Authorised shares 4,081,650 (31st March 2013: 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 2013: 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 31 March March March March 2013 Quantity Quantity Share capital outstanding at the beginning of the year 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: Number of shares 31 March March 2013 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 31 March March 2013 number of shares % holding number of shares % holding Kotak Mahindra Bank Limited, holding company 2,081, ,081, Kotak Mahindra Capital Company Limited, subsidiary of Kotak Mahindra Bank Limited 2,000, ,000, Annual Report

11 3.2 Reserves and Surplus Particulars 31 March March 2013 Translation reserve Opening Balance 391,347, ,358,116 Additions/(deductions) during the year 251,455, ,989,517 Closing Balance 642,803, ,347,633 Surplus in the statement of profit and loss Opening balance 1,962,144,131 1,695,597,786 (+) Net Profit/(Net Loss) For the current year 393,237, ,546,345 Less: Appropriation Dividend on equity shares 117,697,990 - Closing Balance 2,237,683,879 1,962,144,131 Total 2,880,487,155 2,353,491, Short-term borrowings Unsecured borrowings Loan from fellow subsidiary 89,872, ,712,500 Secured borrowings (against floating charge on the assets) Banks 3,512,010,460 4,021,757,960 Total 3,601,882,960 4,157,470, Other current liabilities MTM provisions - Derivatives 147,662 2,355,716 Income received in advance 23,061,796 - Total 23,209,458 2,355, Short-term provisions Provision for income tax (net of advance tax 10,213,590 (Previous year 6,441,621)) 8,388, ,572 Provision for employee benefit (gratuity) 980, ,432 Total 9,368,991 1,678, Kotak Mahindra (International) Limited

12 3.6 Fixed Assets Fixed Assets Gross Block Accumulated Depreciation Net Block Tangible Assets Balance as at 1st April, 2013 Additions Deductions / Adjustments* Balance as at 31st March, 2014 Balance as at 1st April, 2013 For the Period Deductions / Adjustments* Balance as at 31st March, 2014 Balance as at 31st March, 2014 Balance as at 31st March, 2013 Office Equipment 560,518-58, , , ,530 92, ,794 33, ,120 Computers 685,668-71, , ,541 79,938 9, ,209 51,571 70,127 Capital Work-In- Progress - 1,133,538-1,133, ,133,538 - Total 1,246,186 1,133, ,305 2,509,029 1,003, , ,596 1,290,003 1,219, ,247 Previous year 1,526,258 14,071 (294,143) 1,246,186 1,141, ,484 (320,283) 1,003, ,247 * Deductions/ adjustments include effect of translation reserve 3.7 Investments Script Name Quantity Book Value as at Quantity Book Value as at 31st March, st March, st March st March, 2013 Non-trade Investments (Fully paid, cost) Investment in equity instruments (unquoted) Associate Kotak Mahindra (UK) Limited 470,000 26,287, ,000 26,287,575 Kotak Mahindra Financial Services Limited 450,000 25,898, ,000 13,740,875 Fellow Subsidiary Kotak Mahindra, Inc Global Investment Opportunities Fund Limited ,818 Total 52,185,995 40,033,313 Non convertible debentures VGN Developers Pvt. Ltd ,104, ,023,029 Marathon Realty Pvt. Ltd ,098, ,023, ,202, ,046,058 Equity and other similar funds (Unquoted) and deb funds Kotak India Focus Fund II 157,933 94,625, , ,712,500 Kotak India Venture Fund I 1,000 59,915 1,000 54,285 Seaf India Investment and Growth Fund 69, ,593 69, ,729 Alps Kotak India Growth Fund 46,426 27,655,385 46,250 24,971,099 Kotak India Real Estate Fund I , ,231 Kotak Debt Opportunities Fund II 3,000 1,797, Annual Report

13 Script Name Quantity Book Value as at Quantity Book Value as at 31st March, st March, st March st March, 2013 Kotak India Private Equity Fund Ltd 1,000 59,915 1,000 54,285 Kotak Deposit Fund I Segregated Portfolio - - 2,000,000 1,085,700,000 Kotak Fixed Term Plan I Segregated Portfolio ,000 43,428,000 Core Infrastracture India Pte. Ltd 302,000 18,094, Core Infrastracture India Pte. Ltd- Class B 1,000 59, Total 142,826,011 1,290,349,129 Less: Provision for diminution 11,677,752 39,660,239 Equity and other similar funds (Unquoted) and deb funds 131,148,259 1,250,688,890 Total Non-current Investments 668,536,709 1,790,768,261 Aggregate value of unquoted investments 668,536,709 1,790,768,261 Current Investments Investment in equity instruments (unquoted) Fellow Subsidiary Global Investment Opportunities Fund Limited 100 4, Non-trade Investments (Fully paid, cost) Investment in equity instruments Quoted Equity Bajaj Corp ,000 2,211,704 Cummins India Ltd - - 5,000 2,495,230 National Buldings Construction Corporation ,500 1,177,291 Oil India Limited - - 5,000 2,553,985 Oracle Financial Services Software Limited - - 2,500 6,401,340 Rallis India Ltd ,000 1,154,106 Sobha Developers Ltd ,000 3,450,890 Spicejet Limited ,000 1,332,623 Sesa Sterlite Ltd Adr-Cmn 6,000 4,315, Total 4,315,795 20,777,169 Total Quoted 4,315,795 20,777,169 Bonds and Convertible Bonds (Quoted) Foreign Currency Convertible Bonds Sesa Goa Ltd 5% 10/31/14 1,000,000 58,674,604 1,000,000 51,366,333 Tata Steel Ltd 4.5% 11/21/14 1,000,000 59,336,599 1,000,000 52,985,199 Total Foreign Currency Convertible Bonds 118,011, ,351,532 Foreign Currency Bonds ICICI Bank Var 07/ , , % State Bank of India 10/23/2014 2,900, ,237,751 7,000, ,639, Kotak Mahindra (International) Limited

14 Script Name Quantity Book Value as at Quantity Book Value as at 31st March, st March, st March st March, 2013 Vedanta Resources 8.75% - - 4,445, ,020,802 Bank of India 4.75% 09/30/15 12,000, ,359,340 10,000, ,891,567 Bank of India 6.1/4% 02/16/ ,000, ,243,073 Bank of India 3.625% 09/21/ ,000 27,069,388 Axis Bank 5.25% 09/30/15 5,835, ,580,803 5,885, ,693,298 Indian Oil Corp. 4.75% 01/22/15 800,000 48,855,997 3,372, ,249,929 Exim Bank 4.375% 3,180, ,778,319 3,180, ,048,990 Bank of Baroda 4.75% 10/07/15 8,743, ,093,486 11,520, ,774,919 Bank of Baroda 5% 08/24/16 2,497, ,576,662 1,910, ,554,663 RECL 4.1/4% 01/25/16 395,000 24,048, ,000 21,970,949 Union Bank of India 4.5/8% 02/11/16 8,688, ,737,053 1,000,000 56,694,225 Indian Overseas 5% 10/19/16 3,084, ,469,317 2,000, ,391,577 Syndicate Bank /06/16 2,550, ,143,981 3,350, ,605,802 Canara Bank London % 09/09/16 4,711, ,566,271 1,000,000 58,040,286 AE ROTOR Holding 4.969% 03/28/ ,500, ,896,270 Bharti Airtel IN ,290, ,970,264 AXIS BANK LIMITED 4.3/4% 05/02/16 4,250, ,053, ICICI Bank /25/15 1,500,000 92,148, ICICI BANK LTD 5% 01/15/16 3,560, ,197, ST BK INDIA LON 4.1/2% 07/27/15 1,000,000 61,579, EX-IM Bank of India 4.4% 04/21/15 2,500, ,618, IDBI BANK DIFC 4.3/4% 02/05/16 2,465, ,859, HDFCB 3% 11/30/16 2,360, ,139, Total Foreign Currency Bonds 4,506,043,251 3,734,737,367 Total 4,624,054,454 3,839,088,899 Less: Provision for diminution - - Total Bonds and Convertible Debentures 4,624,054,454 3,839,088,899 Equity and other similar funds (Unquoted) Kotak India Focus Fund (Class B) , ,994,386 Kotak Fixed Term Plan I Segregated Portfolio 77,961 46,710, Total 46,710, ,994,386 Less: Provision for diminution 40,596,022 Total Current Investments 4,675,085,296 3,927,264,432 Aggregate value of quoted investment 4,628,370,249 3,859,866,068 Aggregate market value of quoted investments 4,667,537,269 3,907,880,961 Aggregate value of unquoted investment 46,710,229 67,398,364 Total investments 5,343,622,005 5,718,032,693 Annual Report

15 3.8 Long Term Loans and Advances 31 March 2014 a. Security Deposits 31 March 2013 Unsecured, considered good 1,482,875 1,199,874 b. Loans and advances to related parties Unsecured, considered good 22,966,019 20,410,617 Total 24,448,894 21,610, Trade Receivables Unsecured, considered good Trade receivables outstanding for a period less than six months from the date they are due for payment 808,283, ,940,484 Considered doubtful 749,353 - Less: Provision for doubtful debts (749,353) - Total 808,283, ,940, Cash and bank balances Cash and cash equivalents Cash on hand 65,992 58,292 Balances with banks: On current accounts 53,452,272 29,398,314 Deposits with original maturity of less than three months 430,986, ,521,213 Other Bank balances Other deposits with remaining maturity of less than twelve months - 273,122,229 Total 484,504, ,100, Short-term loans and advances Prepaid expenses Unsecured, considered good 2,225,577 3,047,290 Income tax paid in advance 2,814,075 - Total 5,039,652 3,047, Other Current Assets Interest accrued on loan 659, ,719 Interest accrued on Bonds 73,834,415 54,718,598 Interest accrued on Deposits 781,163 11,423,992 Income receivable 527,252 - Total 75,801,895 66,883, Other income Interest Income on Fixed Deposit 8,607,981 14,294,889 Interest income on Loans 1,935, ,728 Total 10,543,170 14,947, Kotak Mahindra (International) Limited

16 3.14 Employee cost 31 March March 2013 Salaries, bonus and allowances 17,741,826 16,206,064 Stock appreciation rights 50,948 - Reimbursement of employee stock option expenses 14,256 31,594 Staff welfare expenses 771, ,972 Total 18,578,969 16,813, Finance charges Interest on borrowings 2,842,161 3,952,675 Interest on OD 36,020,273 16,741,012 Total 38,862,434 20,693, Other expenses Auditor s remuneration 2,467,209 1,937,361 Bank Charges 1,757, ,949 Communication expenses 683, ,776 Custodial Charges 2,081, ,328 Foreign Exchange Loss (net) 33,207,194 13,149,652 Legal & professional charges 27,684,536 15,339,955 Miscellaneous expenses 33,780,831 18,430,445 Rent 2,102,381 1,782,629 Travel expenses 1,201,278 1,446,490 Business Promotion Expenses - 1,336 Total 104,966,345 54,153, 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 294,243 (previous year 266,594) 3.19 Capital Commitment The Company has made a total commitment of 599,150,000 (Previous year 542,850,000) of which 18,094,330 was called upon by Core Infrastructure India Pte. Ltd. till 31st March The Company will be called upon at a later date to pay 581,055,670 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 1,497,875,000 (Previous year 1,357,125,000) which 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 2014 was 102,325,114 (2013: 338,256,023). The loans from JP Morgan International Bank Ltd., with terms of up to 30 days bear an interest rate of 0.8% to 1% per annum (2013 : between 0.8% to 1% per annum). The loans from United Bank of Switzerland AG with terms of up to 30 days bear interest rates between 0.80% to 0.90% 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. Annual Report

17 3.22 Derivatives The open futures contracts as at 31st March, 2014 are as follows: Scrip Name Buy/(Sell) Expiry Quantity Price at 31st March, 2014 Sesa Goa Limited (Sell) 24-Apr-14 24, 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, 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, 2014 Non deliverable forwards Currency Pair Unrealised Gain/ (Loss) Notional Contract Value USD USD USD-INR (224,118) Long: 11,531,509 USD-SGD (14,786) Long: 1,590,457 Short: (1,590,457) 31st March, 2013 Non deliverable forwards Currency Pair Unrealised Gain/ (Loss) USD Notional Contract Value USD USD-INR (29,354) Long: 11,500,000 Short: (1,500,000) 16 Kotak Mahindra (International) Limited

18 The details of outstanding Credit Default Swaps and the corresponding mark to market are shown below: Reporting period Unrealised Gain/ (Loss) Notional Contract Value USD USD 31st March, 2014 (209,435) (16,000,000) 31st March, 2013 (142,598) (15,000,000) The details of outstanding Interest rate swap and the corresponding mark to market are shown below: 31st March, 2014 (290,148) (35,000,000) 31st March, The details of outstanding Total Return swap and the corresponding mark to market are shown below: 31st March, 2014 (66,840) 8,003,978 31st March, The details of outstanding Listed Equity Futures Contracts and the corresponding mark to market are shown below: Reporting period Unrealised Gain/ (Loss) Notional Contract Value USD USD 31st March, 2014 (2,465) Short: (75,859) 31st March, ,055 Long: 880,209 The details of outstanding Listed Equity Index Options and the corresponding mark to market are shown below: Reporting period Unrealised Gain/ (Loss) USD Notional Contract Value USD 31st March, st March, 2013 (28,454) Short: (1,031,688) 3.23 Leases There is no long-term lease agreement. Hence, there are no material non-cancellable operating lease rentals Earnings per equity share Particulars 31 March March 2013 Earnings / (loss) used in the computation of basic and diluted earnings per share (A) 393,237, ,546,345 Weighted average number of equity shares used in computation of basic earnings per share 4,081,650 4,081,650 (B) Nominal value of Equity shares $1 $1 Basic and diluted earnings / (loss) per share () A/B 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 Annual Report

19 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 10,814 (Previous Year higher by 27,102) and the profit after tax would have been lower (Previous Year lower) by the same amount Related Party Transactions Particulars Related Parties Kotak Mahindra (UK) Limited Kotak Investment Advisors Limited Kotak Securities Limited Kotak Mahindra, INC. Kotak India Private Equity Fund Kotak Mahindra Bank Limited Kotak India Realty Fund Kotak India Venture (Offshore) Limited Kotak Mahindra Financials Services Limited Nature of relationship Associate and Fellow Subsidiary Nature of transactions Volume of transaction for the period ended 31st March, st March, 2013 Debit/(credit) 31st March, 2014 Balance as at 31st March, 2013 Facilitation charges/ 15,755,520 12,544, Brokerage Referral Fees (54,050,431) (43,401,625) - - Subordinated loan - - 4,991,519 4,125,117 Current account ,947,699 6,111,970 Fellow Subsidiary Advisory Fees 88,816,470 79,942, Expense Reimbursement , Fellow Subsidiary Derivatives Brokerage 8,007,205 1,965,547 (889,019) (84,055) Fellow Subsidiary Loan 60,417,600-89,872,500 (135,712,500) Investment Manager Holding Company Investment Manager Investment Manager Associate and Fellow Subsidiary Referral Fees 12,891,968 9,691,917 (1,361,508) (924,608) Interest Expense 2,842,165 3,952,675 (205,209) (316,662) Investment Management (85,232,196) (80,260,632) 572,068 - Fee & Fund Expense Clearing Charges & 7,619,686 1,184,623 (4,761,864) (11,130) Share-based payments transactions & outsourcing expenses Loss on foreign currency 29,189, forward Bank Balances ,917,469 93,188,908 Investment Management (126,031,053) (143,190,736) 2,119,194 - Fee Investment Management (9,634,613) (10,569,570) - - fee & fund expense Transfer of assets - - 5,248,794 4,755,588 Loan - 17,974,500 16,285,500 Interest Income (725,011) (652,728) 659, ,719 Capital infusion 12,157,500-26,961,750 13,571,250 Current year Previous year Directors remuneration included in Employee cost 211,462 5,195, Kotak Mahindra (International) Limited

20 During the year compensation to Key Managerial Personnel was Nil (Previous year 5,195,769) The loan from Kotak Mahindra, Inc. is priced on commercial terms and conditions Events after reporting date Further to a meeting held on 27 December 2013, the board of Global Investment Opportunities Fund limited had approved the transfer of 100 management shares held by Kotak Mahindra (International) Limited (the transferor ) to Premier Equity Promoters Limited (the transferee ) subject to approval received from the Financial Services Commission ( FSC ). Approval from the FSC was received on 11 April 2014 to transfer the 100 management shares to PEPL for a period not exceeding 6 months after which same would be transferd to another entity as deemed acceptable by the FSC 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. For and on Behalf of the Board of Directors Chartered Accountants A.N. Shah Louis Didier Merle Doomraj Sooneelall Partner Director Director Mumbai Dated: 23rd April, 2014 Dated: 22nd April, 2014 Annual Report

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