bigger. bolder. better. - kotak.com mahindra...(referred to in paragraph 6 under ‘report on other...

Bigger. Bolder. Better.

Kotak Mahindra Trusteeship Services Limited

Annual Report 2013-14 1

DIRECTORS’ REPORTTo the Members of

KOTAK MAHINDRA TRUSTEESHIP SERVICES LIMITED

The Directors have pleasure in presenting their Fourteenth Annual Report together with the audited accounts of the Company for the year ended 31st March 2014.

FINANCIAL RESULTS

(` in Lakhs)

Particulars For the year ended 31st March 2014

For the year ended 31st March 2013

Gross Income 367.99 269.87

Profit before Tax 149.21 195.88

Profit after Tax 107.12 134.25

Add: Surplus brought forward from the previous year 491.05 356.80

Amount available for appropriation 598.17 491.05

Surplus carried to the Balance Sheet 598.17 491.05

DIVIDEND

The Directors do not recommend any dividend for the year ended on 31st March 2014.

OPERATIONS

The Company acts as trustee to domestic venture capital / private equity and realty funds operating in the alternate assets domain. The aggregate corpus as on 31st March 2014, across domestic funds where the Company acts as trustee, is ~ ` 3,080 crores. During the year ended 31st March 2014, certain funds for which the Company acts as trustee made distributions to investors aggregating to ~ ` 571.06 crores comprising of income and divestment proceeds.

The estate planning business of the Company which is engaged in rendering trusteeship services to private trusts which have been set up for the clients, has also seen growth in the year ended 31st March 2014. The Company has, till date been appointed as trustee for 64 such private trusts and 1 testamentary trust. The Company is also appointed as executor for 4 wills. During the financial year ended on 31st March 2014, the Company has been appointed as the trustee of 20 private trusts.

The Company’s total income was ` 3.68 crores for the year ended 31st March 2014 as compared to ` 2.70 crores for the previous year. The earnings per share of the Company were ` 214 per share for the year ended 31st March 2014 as compared to ` 268.50 per share during the previous year.

DIRECTORS

Mr. Shivaji Dam and Mr. Chetan Desai retire by rotation at the ensuing Annual General Meeting and, being eligible, offer themselves for re-appointment.

NOMINATION COMMITTEE

The Nomination Committee consists of (1) Mr. K. M. Gherda and (2) Mr. Shivaji Dam.

During the year ended 31st March 2014, one meeting of the Nomination Committee was held on 18th April 2013.

AUDITORS

The Company’s Auditors, Messers Deloitte Haskins & Sells (Regn No. 117364W), Baroda, retiring at the ensuing Annual General Meeting (“AGM”), has expressed their unwillingness for their reappointment.

Messers Deloitte Haskins & Sells LLP (Regn. No. 117366W/W-100018), have expressed their willingness to be appointed as the Auditors of the Company.

As per Section 139 of the Companies Act, 2013 (“Co Act, 2013”), every company shall, at the first AGM after the enactment of Co Act, 2013, appoint an individual or a firm as Auditor who shall hold the office from the conclusion of that meeting till the conclusion of its sixth AGM, subject to ratification of such appointment by the Members in second and each subsequent AGMs, during this period. Accordingly, Directors are proposing the appointment of Messers Deloitte Haskins & Sells LLP (Regn. No. 117366W/W-100018), Mumbai, as statutory auditors of the Company in the ensuing AGM of the Company.

Kotak Mahindra Trusteeship Services Limited2

STATUTORY INFORMATION

The Company did not have any employee in receipt of the remuneration not less than the limits prescribed under Section 217(2A) of the Companies Act, 1956 during the year nor did it accept any deposits during the year. It had no foreign exchange earnings and out go, during the year. The other particulars prescribed under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are not applicable since the Company is not a manufacturing company.

EMPLOYEES

As on 31st March 2014, the Company had 6 employees for its business of Estate Planning Services.

DIRECTORS’ RESPONSIBILITY STATEMENT

Based on the representations of the operational management of Kotak Investment Advisors Limited, who is entrusted with the maintenance of the books of accounts of the Company, the Directors confirm that in pursuance of Section 217 (2AA) of the Companies Act, 1956:

a. the Company has, in the preparation of the annual accounts for the year ended 31st March 2014, followed the applicable accounting standards along with proper explanations relating to material departures, if any;

b. they 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 profit of the Company for the financial year ended 31st March 2014;

c. they 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

d. the annual accounts have been prepared on a going concern basis.

ACKNOWLEDGEMENTS

We thank our employees, members, investors of funds for which the Company acts as trustee, Securities and Exchange Board of India and bankers for their continued support during the year.

For and on behalf of the Board of Directors

K. M. GherdaChairman

21st April 2014Mumbai


Independent Auditors’ Report To the Members of Kotak Mahindra Trusteeship Services Limited

Report on the Financial Statements

1. We have audited the accompanying financial statements of KOTAK MAHINDRA TRUSTEESHIP SERVICES LIMITED (“the Company”), which comprise the Balance Sheet as at 31st March, 2014, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

2. 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 notified under the Companies Act, 1956 (“the Act”) (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs) 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.

Auditors’ Responsibility

3. 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.

4. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal 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 the accounting policies used and the reasonableness of the accounting estimates made by the 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

5. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2014;

(b) in the case of the Statement of Profit and Loss, of the profit of the Company for the year ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

Report on Other Legal and Regulatory Requirements

6. As required by the Companies (Auditor’s Report) Order, 2003 (“the Order”) issued by the Central Government in terms of Section 227(4A) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

7. As required by Section 227(3) of the Act, we report that:

(a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books

(c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

(d) In our opinion, the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards notified under the Act (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs).

(e) On the basis of the written representations received from the directors as on 31st March, 2014 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 Section 274(1) (g) of the Act.

For DELOITTE HASKINS & SELLSChartered Accountants(Firm’s Registration No. 117364W)

Ketan Vora(Partner)(Membership No. 100459)

MUMBAI, 21st April, 2014


ANNEXURE TO THE AUDITORS’ REPORT(Referred to in paragraph 6 under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date on the accounts of Kotak Mahindra Trusteeship Services Limited)

(i) Having regard to the nature of the Company’s business/activities/results during the year, clauses (ii), (viii), (xi), (xiii), (xiv), and (xix) of CARO are not applicable to the Company.

(ii) In respect of its fixed assets:

(a) The Company has maintained proper records showing full particulars, including quantitative details and situation of the fixed assets.

(b) The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

(c) None of the Fixed Assets were disposed off during the year. Hence, the going concern status of the company is not affected.

(iii) The Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956. In view of what has been stated above, clauses (b), (c), (d), (e), (f) and (g) of clause (iii) of paragraph 4 of the Order are not applicable to the company for the year.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of fixed assets and for sale of services. During the course of our audit, we have not observed any major weakness in such internal control system.

(v) According to the information and explanations given to us, there are no parties covered under section 301 of the Companies Act, 1956. Hence clause (v) of Para 4 of the Order is not applicable to the Company for the year.

(vi) According to the information and explanations given to us, the Company has not accepted any deposit from the public during the year hence the requirements of clause (vi) of paragraph 4 of the order are not applicable to the company for the year.

(vii) In our opinion, the internal audit function carried out during the year by a firm of Chartered Accountants appointed by the Management have been commensurate with the size of the Company and the nature of its business.

(viii) According to the information and explanations given to us in respect of statutory dues:

(a) The Company has been regular in depositing undisputed 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 applicable to it with the appropriate authorities.

(b) There were no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess 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.

(c) There are no dues of Income-tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and Cess which have not been deposited as on 31st March, 2014 on account of disputes.

(ix) The company has no accumulated losses as at March 31, 2014 and has not incurred any cash loss during the financial year ended on that date and in the immediately preceding financial year.

(x) According to information and explanations given to us, the Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities and hence the requirements of clause (xii) of paragraph 4 of the order are not applicable to the company for the year.

(xi) According to information and explanations given to us, the Company has not given any guarantees for loans taken by others from banks and financial institution and hence the requirements of clause (xv) of paragraph 4 of the order are not applicable to the company for the year.

(xii) To the best of our knowledge and belief and according to the information and explanation given to us, the Company has not availed of any term loans and hence the requirements of clause (xvi) of paragraph 4 of the order are not applicable to the company for the year.

(xiii) According to the information and explanations given to us and on an overall examination of the Balance Sheet and other records of the company, we report that no funds have been raised on short term basis and hence the reporting requirement under clause (xvii) of Paragraph 4 of the order is not applicable to the company.


(xiv) The company has not made any preferential allotment of shares during the year to parties and companies covered in the Register maintained under section 301 of the Companies Act, 1956 and hence the requirements of clause (xviii) of paragraph 4 of the order are not applicable to the company for the year.

(xv) The company has not raised any money by public issues during the year and hence the requirements of clause (xx) of paragraph 4 of the order are not applicable to the company for the year.

(xvi) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no fraud on or by the Company has been noticed or reported during the year.

For DELOITTE HASKINS & SELLSChartered Accountants(Registration No.117364W)

Ketan VoraPartner(Membership No. 100459)

MUMBAI, 21st April, 2014


Balance Sheet as at March 31, 2014 ` in Lacs

Note As atMarch 31 2014

As atMarch 31 2013

I Equity and Liabilities

1 Shareholders’ funds

a) Share capital 3 5.00 5.00

b) Reserves and surplus 4 598.17 491.05

2 Non-current liabilities

a) Long term provisions 5 12.38 8.88

3 Current liabilities

a) Trade Payables 6 4.96 4.44

b) Other Current liabilities 7 15.54 5.35

c) Short-term provisions 8 7.07 4.32

Total 643.12 519.04

II Assets

1 Non-current assets

a) Fixed assets 9

Tangible assets 1.09 4.63

b) Deferred Tax Assets (net) 10 1.93 0.02

c) Long-term loans and advances 11 0.01 0.01

2 Current assets

a) Current investments 12 - 300.00

b) Trade receivables 13 66.87 35.45

c) Cash and bank balances 14 571.16 177.24

d) Short Term Loans and Advances 15 0.52 1.47

e) Other current assets 16 1.54 0.22

TOTAL 643.12 519.04

See accompanying notes to the financial statements.

In terms of our report attached

For Deloitte Haskins& SellsChartered Accountants


Ketan VoraPartner

K M GherdaChairman

Chetan DesaiDirector

MumbaiDated: April 21 2014


See accompanying notes to the financial statements.




Ketan VoraPartner

K M GherdaChairman



Statement of Profit and Loss for the Year ended March 31, 2014 ` in Lacs

Note March 31 2014 March 31 2013

Revenue from operations 17 301.83 257.62

Other income 18 66.16 12.25

Total Revenue 367.99 269.87

Expenses

Employee Benefits Expense 19 157.53 21.58

Depreciation 9 3.54 0.30

Other Expenses 20 57.71 52.11

Total Expenses 218.78 73.99

Profit before tax 149.21 195.88

Tax expense

1) Current tax expense 39.50 61.65

2) Short Provision for Tax Relating to Prior Years 4.50 -

3) Net Current Tax Expense 44.00 61.65

4) Deferred Tax (Asset)/Liability (1.91) (0.02)

42.09 61.63

Profit for the year from continuing operations 107.12 134.25

Earnings per equity share (`)

Basic and Diluted ( Face Value of ` 10/-) (Refer Note 23 of Notes to the Financial Statements )

214.24 268.50


Cash Flow Statement For The Year Ended March 31, 2014 ` in Lacs

PARTICULARS 2013-14 2012-13

Cash Flow From Operating Activities

Net Profit After Taxes 107.12 134.25

Adjustment For

Depreciation 3.54 0.30

Dividend Income from Mutual Funds (15.58) (4.75)

Profit on Sale of Mutual Fund (Net) (26.56) -

Income Tax Expense 42.09 61.63

Operating Profit Before Working Capital Changes 110.61 191.43

Adjustments For

Increase/ (Decrease) In Current Liabilities 11.77 4.80

Increase/ (Decrease) In Non Current Liabilities 3.50 8.88

(Increase) / Decrease in Other Current Assets (1.32) 4.98

(Increase) / Decrease in Trade Receivable (31.42) (19.66)

(Increase) / Decrease In Loans and Advances 0.95 (0.26)

Cash Generated From Operating Activities 94.09 190.17

Income Taxes Paid (Net of Refund) (42.31) (61.46)

Net Cash From Operating Activities (A) 51.78 128.71

Cash Flow From Investing Activities

Dividend Income from Mutual Funds 15.58 4.75

Purchase of Fixed Asset (Net) - (4.93)

Purchase of Investment (1,145.58) (782.75)

Sale Of Investment 1,472.14 482.75

Net Cash From / (Used In) Investment Activities (B) 342.14 (300.18)

Net Cash Flow From Financing Activities (C) NIL NIL

Net Increase In Cash and Cash Equivalents (A + B + C) 393.92 (171.47)

Cash and Cash Equivalents At The Beginning of The Year 177.24 348.71

Cash and Cash Equivalents At The End of The Year 571.16 177.24

Notes

1. Cash and cash equivalent include

Balances with the Banks

- Current Account 531.16 141.18

- Deposit Account 40.00 36.06

Total cash and cash equivalents 571.16 177.24

2. The Cash Flow statement has been prepared under the ‘Indirect Method’ as set out in the Accounting Standard 3 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.

3. The corresponding amounts of previous year have been re-grouped, wherever necessary.




Ketan VoraPartner

K M GherdaChairman




Notes to the Financial Statements for the year ended 31st March 2014

1. General Information

Kotak Mahindra Trusteeship Services Limited (KMTSL or the Company)

The Company acts as trustee to domestic venture capital / private equity and realty funds operating in the alternate assets domain.

The estate planning business of the Company is engaged in forming trusts for various clients and rendering trusteeship services to trusts which have been set up for the clients.

2. Summary of Significant Accounting Policies

i) BASIS 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.

ii) 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 on 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.

iii) REVENUE RECOGNITION

Revenue is recognized when no significant uncertainty as to measurability or collectability exists. Interest income is accounted on accrual basis. Dividend income is accounted when the right to receive is established.

iv) FIXED ASSETS AND DEPRECIATION

Fixed assets have been stated at cost inclusive of incidental expenses less accumulated depreciation.

Depreciation:

The Company has adopted the Straight Line Method of depreciation so as to write off 100% of the cost of the assets at rates higher than those prescribed under Schedule XIV to the Companies Act, 1956 for all assets based on the Management’s estimate of useful lives of these assets. Estimated useful lives over which assets are depreciated are as follows:

Asset Type Useful life in years

Computers 3

Vehicles 4

Note: Assets costing less than ` 5,000 are fully depreciated in the year of purchase.

v) INVESTMENTS

Investments are classified into long term investments and current investments. Investments, which are intended to be held for more than one year, are classified as long term investments and investments, which are intended to be held for less than one year, are classified as current investments. Long term investments are accounted at cost and any decline in value, other than temporary is provided for. Current investments are valued at cost calculated by applying weighted average cost method or market / fair value whichever is lower. Brokerage, stamping and additional charges paid are included in the cost of investments.

vi) 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, 1961. 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 and liabilities are measured using tax rates and tax laws that have been enacted or substantially enacted before 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 realized.

vii) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provision is recognised when there is a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognised nor disclosed in the financial statements.

viii) EARNING 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.

ix) EMPLOYEE BENEFITS

Long Term Employee Benefits

Defined Contribution Plan

Contribution as required by the Statute made to the Government Provident Fund is debited to the Statement of Profit and Loss when services are rendered by the employees

Defined Benefit Plan

The Company accounts for the liability for future gratuity benefits based on an actuarial valuation. 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 conducted by an independent actuary.

Actuarial gains/losses are immediately recognised in the statement of profit and loss and are not deferred.

Other Long –term Employee Benefit

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.

Stock Appreciation Rights

The cost of cash-settled transactions (stock appreciation rights) is measured initially using intrinsic value method at the grant date taking into account the terms and conditions upon which the instruments were granted. This intrinsic value is amortised on a straight-line basis over the vesting period with a recognition of corresponding liability. This liability is remeasured at each Balance Sheet date up to and including the settlement date with changes in intrinsic value recognised in the Statement of Profit and Loss in ‘Employee Benefits Expense’.



` in Lacs

As atMarch 31 2014

As atMarch 31, 2013

3

a Share Capital

Authorised

50,000 Equity Shares of ` 10 each 5.00 5.00

Issued, Subscribed & Paid up

50,000 Equity Shares of ` 10/- Each, Fully Paid Up 5.00 5.00

Total 5.00 5.00

Reconciliation Statement

Shares outstanding at the beginning of the year (50,000 Equity Shares of ` 10/- Each, Fully Paid Up)

5.00 5.00

Shares Issued during the year - -

Shares bought back during the year - -

Shares outstanding at the end of the year(50,000 Equity Shares of ` 10/- Each, Fully Paid Up)

5.00 5.00

b Terms / Rights attached to Equity Shares

Equity Shares: The Company has one class of equity shares having a par value of `10 per share. Each shareholder is eligible for one vote per share held. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors, if any, is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

c Shares held by holding company

Kotak Mahindra Bank Limited 5.00 5.00

50,000 Equity Shares of ` 10/- Each, Fully Paid Up

(of the above 60 Shares are held jointly with its nominees)

d Details of shares held by shareholders holding more than 5% of the aggregate shares in the company

Kotak Mahindra Bank Limited 5.00 5.00

50,000 Equity Shares of ` 10/- Each, Fully Paid Up(of the above 60 Shares are held jointly with its nominees)

4 Reserves and Surplus

Surplus in the Statement of Profit and Loss

Balance as at the beginning of the year 491.05 356.80

Add: Net profit for the current year 107.12 134.25

Balance as at the end of the year 598.17 491.05

5 Long Term Provisions

Provision for employee benefits

Gratuity 6.23 5.18

Stock Appreciation Rights Scheme 0.77 -

Compensated Absences 5.38 3.70

Total 12.38 8.88



` in Lacs

As atMarch 31 2014

As atMarch 31, 2013

6 Trade Payables

(Refer Note 25 of Notes to Financial Statements) 4.96 4.44

Total 4.96 4.44

7 Other Current Liabilities

Other payables

Statutory Liabilities

- Salary Payable - 0.31

- Leave Travel Allowance 0.48 1.52

- Employee Benefits Payable 11.15 -

- Statutory dues including Provident Fund, Professional Tax & Tax deducted at Source” 3.91 3.52

Total 15.54 5.35

8 Short Term Provisions

(a) Provision for employee benefits

Gratuity 1.19 0.85

Stock Appreciation Rights Scheme 0.40 -

Compensated Absences 0.86 0.54

(b) Others

Provision for Tax 4.62 2.93

(Net of Advance Tax ` 168.25 Lacs ; Previous Year ` 125.94 Lacs)

Total 7.07 4.32

9 Fixed Assets

` in Lacs

Descriptions Gross Block (At Cost) Depreciation Net Block

April 01, 2013

Additions Disposal March 31 2014

April 01, 2013

For the year

Disposal / Adjustment

March 31 2014

March 31 2014

March 31, 2013

Tangible Assets

Vehicles 4.22 - - 4.22 0.27 3.19 - 3.46 0.76 3.95

(-) (4.22) (-) (4.22) (-) (0.27) (-) (0.27)

Computers 0.71 - - 0.71 0.03 0.35 - 0.38 0.33 0.68

(-) (0.71) (-) (0.71) (-) (0.03) (-) (0.03)

TOTAL 4.93 - - 4.93 0.30 3.54 - 3.84 1.09 4.63

Previous Year - (4.93) - (4.93) - (0.30) - (0.30) (4.63)



` in Lacs

As at March 31 2014

As at March 31, 2013

10 Deferred Tax Assets (Net)

Deferred Tax Liability

Depreciation - 0.07

Deferred Tax Assets

Depreciation 0.83 -

Provision for gratuity 1.10 0.09

Total 1.93 0.02

11 Long Term Loans and Advances

Advance Income Tax 0.01 0.01

(Net of Provision for Taxation ` 36.30 Lacs; Previous Year ` 36.30 Lacs)

Total 0.01 0.01

12 Current Investment

Investments in Mutual Funds

(Non trade, quoted, fully paid - up, at lower of cost and fair value)

Kotak Fmp Series 87 - Growth

Nil (Previous year 3,000,000) units of Face Value of ` 10 Each - 300.00

Total - 300.00

13 Trade Receivable

(Unsecured, considered good)

Trade receivables outstanding for less than six months 66.87 35.45

Total 66.87 35.45

14 Cash and Bank Balances

Balances with Banks-

-In Current Account 531.16 141.18

Other Bank Balances

Deposits with residual maturity of less than 12 months ( other than under lien, margin money or any other restricted deposit )

40.00 36.06

Total 571.16 177.24

15 Short - Term Loans and Advances

(Unsecured considered good)

Service Tax Input Credit 0.34 1.33

Employee Advance 0.05 -

Prepaid Expenses 0.13 0.14

Total 0.52 1.47

16 Other Current Assets

Interest accrued on Fixed Deposits 1.54 0.22

Total 1.54 0.22



` in Lacs

March 31 2014 March 31, 2013

17 Revenue from Operations

Trusteeship Fees 301.83 257.62

Total 301.83 257.62

18 Other Income

Interest Income 21.55 6.00

Dividend Income 15.58 4.75

Profit on Sale of Mutual Fund Units ( Net) 26.56 -

Other Income 2.47 1.50

Total 66.16 12.25

19 Employee Benefits Expense

Salary and Wages 147.36 20.71

Expense on Employee Stock Option Scheme (ESOP) (Refer note 24) 0.15 -

Contribution to provident and other Funds (Refer note 21) 8.82 0.58

Gratuity (Refer note 21) 1.20 0.29

Total 157.53 21.58

20 Other Expenses

Sharing of Common Group Expenses - 33.67

Rent Office Premises 29.38 -

Rates and Taxes 0.06 -

Director’s Fees and Expenses 1.70 1.10

Statutory Auditors’ Fees 1.50 1.50

Legal and Professional Charges 15.29 14.76

Other Expenses 8.38 1.08

Bad Debts Written Off 1.40 -

Total 57.71 52.11

21. Employee benefits

a. The Company has recognised the following amounts in the Statement of Profit and Loss towards contributions to Provident Fund and Other Funds.

Provident Fund ` 10.02 lacs(Previous Year ` 0.87 lacs) (Refer Note 19)

b. Gratuity

Reconciliation of opening and closing balance of the present value of the defined benefit obligation for gratuity benefits is given below.

` in Lacs

Change in Defined Benefit Obligation : As at March 31,2014

As at March 31,2013

Liability at the beginning of the Period as at April 1, 2013 6.03 -

Current Service Cost 1.51 0.29

Interest Cost 0.59 -

Benefits Paid (0.06) -

Actuarial (gain) / loss on obligation (0.90) -



` in Lacs

Change in Defined Benefit Obligation : As at March 31,2014

As at March 31,2013

Liabilities Assumed on Acquisition 0.26 5.73

Liability at the end of the Period as at March 31,2014 7.42 6.03

Expenses recognized in the Income Statement:

Current Service Cost 1.51 0.29

Interest Cost 0.59 -

Expected Return on Plan Asset - -

Net Actuarial (Gain) /Loss to be Recognized (0.90) -

Expense Recognized in P & L 1.20 0.29

Actuarial Assumption:

Discount Rate Current Period 9.34% 8.24%

Rate of Return on Plan Assets Current Period - -

Salary Escalation Current Period 8.50% 8.50%

Major categories of plan assets as percentage of total plan

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors.

The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.

Experience adjustments

Amounts for the current year:

` in Lacs

Gratuity As at March 31, 2014

As at March 31, 2013

Defined benefit obligation 7.42 6.03

Plan assets - -

Surplus / (deficit) (7.42) (6.03)

Exp. Adj. on Plan Liabilities 0.11 -

The company has taken employees on payrolls from financial year 2012-2013,hence the disclosures for experience adjustment have been made for 2 years.

Compensated absences

The actuarially determined liability for compensated absences of accumulated leaves of the employees of the Group is given below:

March 31, 2014 March 31, 2013

Total actuarial liability (` in Lacs) 6.24 4.24

Assumptions:

Discount rate 9.34%p.a. 8.24% p.a.

Salary escalation rate 8.50%p.a 8.50% p.a.



22 Related Party Disclosure: Parties where control exists:

Holding Company Kotak Mahindra Bank Limited holds 100 % of the share capital along with its nominees.

Individuals owning directly or indirectly interest in the voting power of the reporting enterprise

Uday S. Kotak along with his relatives and entities controlled by him holds 43.58 % of the equity share capital of Kotak Mahindra Bank Limited as on March 31, 2014

Enterprise where the Company exercises control by virtue of being the trustee

Kotak SEAF India Fund and it’s scheme India Growth Fund

Kotak Mahindra Realty Fund and it’s schemes -

Kotak India Real Estate Fund – I, Kotak India Real Estate Fund - IV and Kotak India Real Estate Fund - V

Kotak Alternate Opportunities (India) Fund

Kotak India Venture Fund I

Kotak India Growth Fund II

Fellow Subsidiary Kotak Mahindra Old Mutual Life Insurance Limited

The following transactions were carried out with related parties in the ordinary course of the business:

` in Lacs

Nature of Transaction Holding Company Enterprise where the Company exercises control by virtue of

being the trustee

Fellow Subsidiary

Kotak Life Insurance Limited

I) Income

-Interest on Fixed Deposits 21.55 Nil Nil

(6.00) (Nil) (Nil)

II) Income - Trustee Fees

Kotak SEAF India Fund and it’s scheme Nil 15.00 Nil

- India Growth Fund (Nil) (15.00) (Nil)

Kotak Mahindra Realty Fund and it’s schemes

-Kotak India Real Estate Fund – I Nil 15 Nil

(Nil) (15.00) (Nil)

-Kotak India Real Estate Fund IV Nil 15 Nil

(Nil) (15.00) (Nil)

-Kotak India Real Estate Fund – V Nil 10 Nil

(Nil) (10.00) (Nil)

Kotak Alternate Opportunities (India) Fund Nil 15 Nil

(Nil) (15.00) (Nil)

Kotak India Venture Fund I Nil 10 Nil

(Nil) (10.00) (Nil)

Kotak India Growth Fund II Nil 15 Nil

(Nil) (15.00) (Nil)

III) Expenses

Sharing of Common Expenses Nil Nil Nil

(33.67) (Nil) (Nil)

Payment of premium Nil Nil 0.13

(Nil) (Nil) (0.14)



` in Lacs

Nature of Transaction Holding Company Enterprise where the Company exercises control by virtue of

being the trustee

Fellow Subsidiary

Kotak Life Insurance Limited

Other Operating Expenses 6.47 Nil Nil

Nil (Nil) (Nil)

Rent Premises 29.38 Nil Nil

(Nil) (Nil) (Nil)

IV) Investments

Deposits with Kotak Mahindra Bank Ltd. 1540.74 Nil Nil

(4.63) (Nil) (Nil)

Deposits matured during the year 1536.8 Nil Nil

(282.61) (Nil) (Nil)

V) Assets / Liabilities transferred during the year

Transfer of fixed assets from Kotak Mahindra Bank Ltd. Nil Nil Nil

(4.93) (Nil) (Nil)

Transfer of employee Liabilities by Kotak Mahindra Bank Ltd. 0.23 Nil Nil

(12.58) (Nil) (Nil)

VI) Receivables

Fixed Deposits 40 Nil Nil

(36.06) (Nil) (Nil)

VIII) Payable 0.54 Nil Nil

(0.15) (Nil) (Nil)

(Figures in brackets represent previous year’s figures)

23 Earnings Per Share (EPS)

The numerators and denominators used to calculate basic and diluted earnings pershare

Ref For the year ended March 31, 2014

For the year ended March 31, 2013

Profit attributable to the Equity Shareholders(` in Lacs) A 107.12 134.25

Weighted Average number of Equity Shares outstanding during the year B 50,000 50,000

Nominal Value of Equity Share (`) C 10 10

Basic and Diluted Earnings Per Share (`) D = (A) / (B) 214.24 268.50

24 Equity Settled Options

a) 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 the option is amortised on a straight-line basis over the vesting period. The Company has reimbursed the Bank ` 0.15 Lacs(Previous Year ` Nil) during the year on account of such costs and the same is forming part of Employee costs and included under the head “Reimbursement of expense on ESOP Scheme” under Note 19 Employee Benefit Expenses.



b) Stock appreciation rights (SARs)

During the year, the management had approved (SARs) to be granted to eligible employees as and when deemed fit. The SARs are to be settled in cash and will vest in the manner as provided in the scheme / grant letters to employees.

The contractual life (which is equivalent to the vesting period) of the SARs ranges from 1.39 years to 3.65 years.

Detail of activity under SARs is summarized below:

Number of SARs

Year Ended March 31,2014

Outstanding at the beginning of the year Nil

Granted during the year 1,712

Exercised during the year 1,287

Outstanding at the end of the year 425

Effect of grant of SARs to employees on the Statement of Profit and Loss and on its financial position

` in Lacs

Year Ended March 31, 2014

Total Employee Compensation Cost pertaining to share-based payment plans 10.58

Closing balance of liability for cash-settled options 1.17

c) Impact of Equity settled options and SARs.

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 Rs 1.15 Lakhs,(Previous year Rs Nil) and the profit after tax would have been lower by 0.78 Lakhs (Previous year ` Nil Lakhs). Consequently the basic and diluted EPS would have been Rs 212.68 (Previous Year Rs 268.50).

25 As per the information available with the Company, none of the creditors have confirmed that they are registered under the Micro, Small and Medium Enterprise Development Act, 2006.Accordingly no disclosure has been made under the said provisions.

26 The Company has not entered into any derivative instrument during the year. The Company does not have any foreign currency exposures towards receivables, payables or any other derivative instrument that have not been hedged.

27 Segment Reporting

The Company operates in a single business and geographical segment namely “providing trusteeship services to venture capital funds, private equity funds and other private trusts including estate planning trusts. “. As such there are no reportable primary business segments. The Company caters only to the domestic market where there are no differing risks and returns and there are no reportable geographical segments.

28 The corresponding amounts of previous year have been re-grouped, wherever necessary.

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