kmpl annual report fy2012

7/31/2019 KMPL Annual Report FY2012

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ANNUAL

REPORT

2011-12

KOTAK MAHINDRA

PRIME LIMITED


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ANNUAL REPORT 2011-12

To the Members of

KOTAK MAHINDRA PRIME LIMITED

The Directors present their Sixteenth Annual Report together with audited accounts of your Company for the year ended 31 st March 2012.

FINANCIAL RESULTS

Rupees in Lakhs

31st March 2012 31st March 2011

Gross Income 180,511.06 137,312.88

Profit before Depreciation and Tax 57,221.83 48,372.92

Depreciation 187.99 184.49

Profit before Tax 57,033.84 48,188.43

Provision for Tax 18,546.26 16,402.16

Profit after Tax 38,487.58 31,786.27

Balance of Profit from previous years 68,672.42 43,243.49

Amount available for appropriation 107,160.00 75,029.76

Appropriations:

Proposed Dividend on Preference Shares 10.00 0.08

Corporate Dividend Tax 1.62 0.01

Special Reserve u/s 45IC of the RBI Act, 1934. 7,697.52 6,357.25

Surplus carried forward to the Balance Sheet 99,450.86 68,672.42

DIVIDEND

With a view to conserve your Companys resources, the Directors do not recommend any Dividend on Equity Shares (Previous Year: Nil).

Dividend recommended on Redeemable, Non Cumulative Non Convertible Preference Shares is 1 per share (Previous Year: 0.008 per share).

ISSUE OF TIER II BONDS

During the year, the Company issued Unsecured, Redeemable Non Convertible Subordinated Debt Bonds amounting to 13,060 lakhs as part

of Tier II Capital in order to improve its capital adequacy ratio.

DEBENTURES

Pursuant to various circulars issued by the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) from time to time,

the Company continues to list all debentures issued, having maturity of greater than 364 days on the Bombay Stock Exchange Limited underInformation Memorandums issued by the Company from time to time. The Company has appointed IDBI Trusteeship Services Limited, Asian

Building, Ground Floor, 17 R Kamani Marg, Ballard Estate, Mumbai 400 001 as Debenture Trustees to the issues.

CAPITAL ADEQUACY

The Capital to Risk Assets Ratio (CRAR) of your Company as on 31 st March 2012 was at 16.3%.

CREDIT RATING

The Companys long-term borrowings have been upgraded by both CRISIL and ICRA in July and August 2011 respectively from AA to

AA+ (with Stable Outlook). The Companys short-term borrowing program from CRISIL continued to enjoy the highest rating of A1+.

CRISILs assessment of your Companys risk profile strengthens the confidence placed by a large pool of investors in your Company. Further

the Tier II Subordinated Debts are issued dual rated by CRISIL and ICRA with a rating of AA+.

AA+ indicates high degree of safety regarding timely servicing of financial obligations and carries a very low credit risk.

Directors Report

VALUE CREATION WITH STABILITY FINANCIAL STATEMENTS REPORTS

DIRECTORS REPORT


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KOTAK MAHINDRA PRIME LIMITED2

FINANCE

Your Company continues to be a Non Deposit Accepting company. Your Company continued its strategy of diversified funding. Your

Company has a diversified and large pool of lenders comprising of Public Sector Banks, Private and MNC Banks, Mutual Funds, Insurance

Companies, Financial Institutions, Foreign Institutional Investors (FII) and Corporates. Your Company introduced new investors and continued

to borrow through instruments like Debentures (NCDs), Commercial papers, Securitization transactions, etc. Your Company continued to

make use of derivative products like interest rate / foreign currency swaps to manage its Asset / Liability GAP and optimize borrowings costs.

During Financial Year 2011-12 the trends in the financial markets witnessed a volatile interest rate environment amid uncertain global

scenario.

Domestically, inflation management remained a key concern for Central Bank through the year though growth concerns did surface during

the latter part of the year. Interest rates in the system remained high and liquidity remained negative for most part of the year.

Globally, financial markets were on high vigilance during the financial year due to the unfolding Euro debt crises.

Your Company with its established treasury philosophies and practices remains well geared to meet the challenges of a dynamic interest rate

and liquidity environment.

MANAGEMENT DISCUSSION AND ANALYSIS

Company Business

Your Company is primarily into car finance, engaged in financing of retail customers of passenger cars and multi-utility vehicles and inventory

and term funding to car dealers. Your Company finances new and used cars under retail loan, hire purchase and lease contracts.

The main streams of income for your Company are retail income, dealer finance income and fee based income. Your Company also receives

income from loans against securities, securitization transactions, purchase of non performing assets, personal loans, corporate loans and

developer funding. The major expenses for your Company are interest expense, business sourcing expense and cost of running operations.

During the Financial Year 2011-12, your Companys retail vehicle disbursements were at 567,715 lakhs as against 510,672 lakhs in the

previous year. During the year under review, gross advances stood at 1,341,769 lakhs as against 1,120,807 lakhs in the previous year.

The Financial Year 2011-12 witnessed a benign interest rate environment. The pressure of maintaining the margins in the retail car finance

business continued during the year. Your Company continued to focus on cost control and credit losses, while improving its positioning in

the car finance market by scaling up the business. Your Companys good relationships with key stake holders viz. manufacturers, dealers and

customers helped it to substantially grow disbursement volumes by 11%.

As detailed in the Financial Results section above, Gross Income of your Company increased from `137,312.88 lakhs in 2010-11 to`180,511.06 lakhs in 2011-12. Profit before Tax was at `57,033.84 lakhs in 2011-12 as compared to `48,188.43 lakhs in 2010-11, an increase

of 18%. The credit loss ratio of your Company was maintained at 0.08 % in a very challenging year.

There have been certain instances of misappropriation of vehicles or use of deception to obtain vehicle loans by some of the customers and

sharing of brokerage by Direct Marketing Agents with an employee involving an aggregate amount of 232.86 lakhs, also reported in

annexure to auditors report. The said instances are inherent in the nature of business of the Company and adequate provision in respect

thereof has been made in the accounts for the year.

Industry Scenario

The passenger car market in India saw a growth of 3% for the Financial Year 2011-12 as compared to a growth of 32% for 2010-11. Total

unit sales of cars and MUVs crossed 25.51 lakh units in financial year 2011-12.

Prospects

Passenger car sales are likely to grow in single digit at about 7 to 8%. Your Company has, carved out a niche for itself in the car-financing

segment focusing on distribution and relationship management across manufacturers, dealers, channel partners and customers. Fee basedincome is an important initiative of your Company. Dedicated infrastructure is in place to give a further impetus to the growth of fee based

income with a twin objective of offering value added services to customers and leveraging the large existing customer database to generate

further fee based income.

Customer knowledge, easy accessibility through its wide network of branches and a firm commitment to deliver superior customer service are

key drivers for your Companys performance.

Internal Audit

The Internal Audit department of Kotak Mahindra Bank Limited, the parent company, regularly conducts a review to assess the financial and

operating controls at various locations of your Company including Head Office functions and at branches. Reports of the audits conducted by

the Internal Audit department are presented to the Audit Committee. Representatives of the statutory auditors are permanent invitees to the

Audit Committee.


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Human Resources

The Company is professionally managed with key management personnel having relatively long tenure with the Company. Your Company

follows a policy of building strong teams of talented professionals. Your Company encourages and facilitates long term careers with your

Company through carefully designated management development programs and performance management systems.

Information Technology

Your Company uses the operating system CORE which is owned and managed by Kotak Mahindra Bank Limited and is used for its retail

assets division since 2003 and uses ORACLE as its Financial system. The CORE system has the latest technology platform and also has

capacity to scale based on business requirements. The modular nature of the system supports efficiency in operations coupled with strong

systems and operational controls. The system is robust to cater to efficient customer service and support marketing initiatives at reasonable

cost.

Cautionary Note

Certain statements in the Management Discussion and Analysis section may be forward-looking and are stated as may be required by

applicable laws and regulations. Many factors may affect the actual results, which could be different from what the Directors envisage in

terms of future performance and outlook. Your Company does not undertake to update these statements.

DIRECTORS

Mr. C. Jayaram, Ms. Shanti Ekambaram and Mr. Dipak Gupta, retire by rotation at the Sixteenth Annual General Meeting and being eligible,have offered themselves for re-appointment.

Mr. Sumit Bali was appointed as an Additional Director of the Company with effect from 1 st June 2011 and, pursuant to the proviso to

Section 260 of the Companies Act, 1956, holds office as a Director up to the date of this Annual General Meeting but is eligible to be

appointed as a Director. In terms of Section 257 of the Companies Act, 1956 the Company has received notice in writing from a member

along with a requisite deposit of 500 proposing the candidature of Mr. Sumit Bali for his appointment as a Director.

Mr. Sumit Bali has done his Post Graduate Diploma in Management from IIM Ahmedabad. He has been the Chief Executive Officer of your

Company for over 5 years and has over 20 years of experience, of which 16 years have been with Kotak Group. Currently, Mr. Sumit Bali is

the Executive Vice President Retail Personal Assets of Kotak Mahindra Bank Limited.

EXECUTIVE MANAGEMENT

During the year Mr. Vyomesh Kapasi was appointed as the Chief Executive Officer and Manager of your Company with effect from 1 st June

2011. Mr. Sumit Bali was the Chief Executive Officer and Manager of your Company till 31 st May 2011 and has subsequently moved to Kotak

Mahindra Bank Limited.

COMMITTEES

(a) AUDIT COMMITTEE

The Audit Committee was reconstituted by the Board on 15 th July 2011. The reconstituted Audit Committee consists of Mr. Dipak

Gupta, Mr. Arvind Kathpalia, Mr. Jaimin Bhatt, Mr. K.V.S. Manian and Mr. Sumit Bali. The quorum comprises of any two members.

During the year, five meetings of the Committee were held on 26 th April 2011, 20th July 2011, 22nd October 2011, 15th December 2011

and 21st January 2012. Mr. Dipak Gupta, Mr. Jaimin Bhatt and Mr. K. V. S. Manian attended all the meetings. Mr. Arvind Kathpalia

attended two meetings and Mr. Sumit Bali attended three meetings of the Committee.

The First Tier Audit Committee was reconstituted by the Board on 15 th July 2011. The reconstituted Committee consists of Mr. Sumit

Bali, Mr. Vyomesh Kapasi, Mr. Harish Shah and Ms. Suman Sidana. The Committee screens the matters entrusted to the Audit

Committee and also the routine matters such as overseeing the programme of inspections and compliance of inspection reports.

(b) REMUNERATION COMMITTEE

The Remuneration Committee consists of Mr. Dipak Gupta and Mr. C Jayaram and has been formed to approve the remuneration

payable to the Whole-time Director/Manager of the Company, as required under the amended Part II in Section II of Schedule XIII of

the Companies Act, 1956.

During the year, two meetings of the Committee were held on 31 st May 2011 and 15th June 2011. Both the meetings were attended

by both the members of the Committee.

(c) NOMINATION COMMITTEE

The Nomination Committee consists of Mr. Uday Kotak, Mr. Dipak Gupta and Mr. C. Jayaram.

During the year, two meetings of the Committee were held on 25 th April 2011 and 23rd May 2011 and all the members attended both

the meetings. Subsequently, one meeting of the Committee was held on 23rd April 2012 and was attended by all members.


DIRECTORS REPORT


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(d) COMMITTEE OF THE BOARD OF DIRECTORS

The Committee of the Board of Directors was re-constituted by the Board on 25 th August 2011. The reconstituted Board Committee

consists of Mr. Dipak Gupta, Mr. Arvind Kathpalia, Mr. K.V.S. Manian and Mr. Sumit Bali. The quorum comprises of any two members.

The Committee looks into the routine transactions of Company which inter alia include authorizing opening, operation & closure of

bank accounts of the Company, authorizing officials of the Company to execute various documents/agreements, issuing power of

attorney for representing the Company in various Court of Laws and before various Statutory Authorities and borrowing of money

within the delegated limit.

During the year, forty one meetings of the Committee were held. Mr. Dipak Gupta attended all the meetings, Mr. C. Jayaram attended

eleven meetings, Mr. Arvind Kathpalia attended twenty eight meetings, Mr. K.V.S. Manian attended fifteen meetings and Mr. Sumit

Bali attended fourteen meetings.

(e) RISK MANAGEMENT COMMITTEE

The Company has a two level structure for the Risk Management Committee. The Tier I level Committee was re-constituted by the

Board on 15th July 2011 and consists of three members, namely Mr. Vyomesh Kapasi, Ms. Suman Sidana and Mr. Harish Shah. The

quorum comprises of any two members. During the year, four meetings of the Tier I level Committee were held. Mr. Vyomesh Kapasi,

Mr. Harish Shah and Ms. Suman Sidana attended three meetings and Mr. Sumit Bali attended one meeting.

The Tier II level (supervisory level) was re-constituted by the Board on 15th July 2011 and consists of four Directors of the Board, namelyMr. Dipak Gupta, Mr. Arvind Kathpalia, Mr. K.V.S. Manian and Mr. Sumit Bali. The quorum comprises of any two members. During the

year, four meetings of the Tier II level Committee were held. Mr. K.V. S. Manian and Mr. Sumit Bali attended three meetings and Mr.

Arvind Kathpalia attended one meeting.

(f) ASSET LIABILITY COMMITTEE (ALCO)

The ALCO was re-constituted by the Board on 15 th July 2011 and consists of Mr. Mohan Shenoi, Mr. Arvind Kathpalia, Mr. K.V.S.

Manian, Mr. Sumit Bali, Mr. Vyomesh Kapasi and Ms. Suman Sidana. The quorum comprises of any three members. Members of ALCO

meet every month to discuss various issues for the effective management of the assets and liabilities of the Company.

During the year, twelve meetings of the Committee were held. Mr. Sumit Bali attended eleven meetings, Mr. K.V. S. Manian and Mr.

Vyomesh Kapasi attended ten meetings, Mr. Mohan Shenoi and Ms. Suman Sidana attended nine meetings and Mr. Arvind Kathpalia

attended five meetings.

AUDITORS

The Companys auditors Messrs. Deloitte Haskins & Sells, Chartered Accountants, Baroda, retire at the Sixteenth Annual General Meeting.

Messrs. Deloitte Haskins & Sells, Chartered Accountants, Baroda, have consented to act as Auditors of the Company and are eligible for

reappointment.

STATUTORY INFORMATION

The particulars of employees as required under Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of

Employees) Rules, 1975, is annexed.

During the year under review, your Company did not accept any deposits from the public. There are no deposits due and outstanding as on

31st March 2012.

Your Companys foreign exchange outgo was 4387.87 lakhs. It had no foreign exchange earnings. The other particulars prescribed under

the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are not applicable since your Company is not amanufacturing company.

DIRECTORS RESPONSIBILITY STATEMENT

Based on representations from the Operational Management, the Directors state, in pursuance of Section 217 (2AA) of the Companies Act,

1956, that:

i) the Company has, in the preparation of the annual accounts for the year ended 31st March 2012, followed the applicable accounting

standards along with proper explanations relating to material departures, if any;

ii) 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 2012 and of the profit

of the Company for the financial year ended 31st March 2012;


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iii) 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

iv) the Directors have prepared the annual accounts on a going concern basis.

ACKNOWLEDGEMENTS

The Directors thank the shareholders, dealers and their staff for the strong support that they have continued to extend to your Company. The

Board also takes this opportunity to place on record its appreciation of the outstanding performance and dedication of your Companys

employees at all levels, without whose commitment, the achievement of results as indicated above could not have been possible. The Board

also acknowledges the faith reposed in the Company by the Companys lending institutions.

For and on behalf of the Board of Directors

Uday Kotak

Chairman

Mumbai, 25thApril 2012


DIRECTORS REPORT


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Auditors ReportTO THE MEMBERS OF

KOTAK MAHINDRA PRIME LIMITED

1. We have audited the attached Balance Sheet of KOTAK MAHINDRA PRIME LIMITED (the Company) as at 31st March, 2012,

the Statement of Profit and Loss and the Cash Flow Statement of the Company for the year ended on that date, both annexed

thereto. These financial statements are the responsibility of the Companys Management. Our responsibility is to express an opinion

on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we

plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material

misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial

statements. An audit also includes assessing the accounting principles used and the significant estimates made by the Management,

as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our

opinion.

3. As required by the Companies (Auditors Report) Order, 2003 (CARO) issued by the Central Government in terms of Section

227(4A) of the Companies Act, 1956, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the

said Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report as follows:

(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 dealt with by this report are in

compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956;

(e) in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the

information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2012;

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

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

5. On the basis of the written representations received from the Directors as on 31st March, 2012 and taken on record by the Board of

Directors, none of the Directors is disqualified as on 31st March, 2012 from being appointed as a director in terms of Section 274(1)(g)

of the Companies Act, 1956.

For DELOITTE HASKINS & SELLS

Chartered Accountants

(Registration No.117364W)

R. SALIVATIPartner

(Membership No.34004)

MUMBAI, 25th April, 2012


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Annexure to the Auditors Report(Referred to in paragraph 3 of our report of even date)

(i) Having regard to the nature of the Companys business/activities/result, clauses 4(ii), 4(viii), 4(x), 4(xiii), 4(xviii) and 4(xx) of CARO arenot applicable.

(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 explanation given to us, no material discrepancies were noticed on such verification.

(c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the

Company and such disposal has, in our opinion, not affected the going concern status of the Company.

(iii) (a) According to the information and explanations given to us, the company has not granted any loans, secured or unsecured, to

Companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956.

In view of what has been stated above, sub-clause (b) regarding terms and conditions of such loans, sub-clause (c) regarding

receipt of principal amount and interest and sub-clause (d) regarding steps for recovery of overdue amount of clause 4(iii) of the

Companies (Auditors Report) Order, 2003 are not applicable to the company.

(b) According to the information and explanations given to us, the company had taken secured loan of Rs.26,000.00 lakhs (by way of

issue of Non-Convertible Debentures) from a company covered in the register maintained under section 301 of the Companies Act,

1956. At the year-end, the outstanding balance of such loans taken was Rs.26,000.00 lakhs (which is represented by the Non-

Convertible Debentures) and the maximum amount involved during the year was Rs.61,874.00 lakhs.

(c) The rate of interest and other terms and conditions of such loans are, in our opinion, prima facienot prejudicial to the interests of

the Company.

(d) The payments of principal amounts and interest in case of the aforesaid loan are as per stipulations.

(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 with regard to purchase of fixed assets and for the sale of goods and

services. The company does not purchase inventory nor does it sell any goods (other than repossessed automobile assets) in theordinary course of business. During the course of our audit, we have not observed any major weakness in such internal control system.

(v) In respect of contracts or arrangements entered in the Register maintained in pursuance of Section 301 of the Companies Act, 1956, to

the best of our knowledge and belief and according to the information and explanations given to us:

(a) The particulars of contracts or arrangements referred to in Section 301 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 Rs.5 lakhs in respect of any party, the transactions have been made at prices which

are prima faciereasonable having regard to the prevailing market prices at the relevant time except in respect of certain purchases

for which comparable quotations are not available and in respect of which we are unable to comment.

(vi) According to the information and explanations given to us, the Company has not accepted any deposit from the public during the year.

(vii) In our opinion, the Company has an adequate internal audit system commensurate with the size 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 generally 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, Cess and other material statutory dues applicable

to it with the appropriate authorities.

(b) There were no undisputed amounts payable in respect of Income-tax, Wealth Tax, Cess and other material statutory dues in

arrears as at 31st March, 2012 for a period of more than six months from the date they became payable.

(c) According to the information and explanation given to us, there are no dues of sales tax, income tax, customs duty, wealth tax,

excise duty and cess which have not been deposited on account of any dispute.

(ix) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues

to banks, financial institutions and debenture holders.


AUDITORS REPORT


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(x) In our opinion, the Company has maintained adequate records where it has granted loans and advances on the basis of security

by way of pledge of shares and other securities.

(xi) Based on our examination of the records and evaluations of the related internal controls, the Company has maintained proper

records of the transactions and contracts in respect of its dealing in shares, securities, debentures and other investments and

timely entries have been made therein. The aforesaid securities have been held by the Company in its own name.

(xii) According to the information and explanations given to us, the company has not given any guarantee for the loans taken by

others from banks or financial institutions during the year.

(xiii) In our opinion and according to the information and explanations given to us, the term loans have been applied for the purposes

for which they were obtained, other than temporary deployment pending application.

(xiv) In our opinion and according to the information and explanations given to us and on an overall examination of the Balance Sheet,

we report that funds raised on short-term basis have not been used during the year for long- term investment.

(xv) According to the information and explanations given to us, during the period covered by our audit report, the Company had issued

Rs 359,680 lakhs debentures of Rs.10,00,000/- each and Rs 5,510 lakhs of debentures of Rs 5,00,000/- each. The Company has

created security in respect of the debentures issued.

(xvi) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no

material fraud on the Company has been noticed or reported during the year, except that there have been instances ofmisappropriation of vehicles or use of deception to obtain vehicle loans by some of the customers and sharing of brokerage by

Direct Marketing agents with an employee. The aggregate amount on account of the above frauds of Rs.232.86 lakhs. However,

as informed to us, such instances are inherent in the nature of business of the company and adequate provision in respect thereof

has been made in the accounts for the year.

For DELOITTE HASKINS & SELLS


(Registration No.117364W)

R. SALIVATI

Partner

(Membership No.34004)

MUMBAI, 25th April, 2012


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Balance Sheetas at 31st March 2012(`in lakhs)

Particulars As at As at

Note No. 31st March 2012 31st March 2011

A EQUITY AND LIABILITIES

1 Shareholders funds

(a) Share capital 3 449.52 449.52

(b) Reserves and surplus 4 191,784.00 153,308.04

192,233.52 153,757.56

2 Non-current liabilities

(a) Long-term borrowings 5 610,105.90 393,111.53

(b) Other long-term liabilities 6 3,562.72 9,741.46

(c) Long-term provisions 7 1,773.40 818.89

615,442.02 403,671.88

3 Current liabilities(a) Short-term borrowings 8 284,280.47 275,843.25

(b) Trade payables 9 26,708.79 23,571.75

(c) Other current liabilities 10 406,489.11 330,420.16

(d) Short-term provisions 11 2,387.46 4,597.05

719,865.83 634,432.21

TOTAL 1,527,541.37 1,191,861.65

B ASSETS

1 Non-current assets

(a) Fixed assets

(i) Tangible assets 12.A 2,795.06 2,771.25

(ii) Intangible assets 12.B 0.83 5.53

(b) Non-current investments 13 10,048.88 12,289.63(c) Deferred tax assets (net) 27.7 1,942.09 3,923.34

(d) Long-term loans and advances 14 595,497.13 507,779.35

(e) Other non-current assets 15 11,122.91 7,907.94

621,406.90 534,677.04

2 Current assets

(a) Current investments 16 65,185.07 25,468.98

(b) Trade receivables 17 258.19 202.26

(c) Cash and bank balances 18 80,433.47 14,168.34

(d) Short-term loans and advances 19 744,681.28 609,127.03

(e) Other current assets 20 15,576.46 8,218.00

906,134.47 657,184.61

TOTAL 1,527,541.37 1,191,861.65

See accompanying notes forming part of the financial statements

In terms of our report attached

For DELOITTE HASKINS & SELLS For and on behalf of the Board of Directors


R. Salivati Dipak Gupta Jaimin Bhatt

Partner Director Director

Harish Shah

Place : Mumbai Company Secretary

Date : April 25, 2012


BALANCE SHEET AND P&L A/c


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Statement of Profit and Loss for the year ended 31 March, 2012

` in lakhs

Particulars Note No. For the For the

year ended year ended

31 March, 2012 31 March, 2011

1 Revenue from operations 21 170,347.51 133,285.93

2 Other income 22 10,163.55 4,026.95

3 Total revenue (1+2) 180,511.06 137,312.88

4 Expenses

(a) Employee benefits expense 23 4,513.72 4,330.80

(b) Finance costs 24 100,252.11 67,256.23

(c) Depreciation and amortisation expense 12.C 187.99 184.49

(d) Other expenses 25 18,523.40 17,352.93

Total expenses 123,477.22 89,124.45

5 Profit before tax (3 - 4) 57,033.84 48,188.43

6 Tax expense:

(a) Current tax expense for current year 16,610.00 16,960.00

(b) Current tax provision in respect of prior years written back (Net) (44.98) -

(c) Net current tax expense 16,565.02 16,960.00

(d) Deferred tax charge / (credit) 1,981.24 (557.84)

18,546.26 16,402.16

7 Profit for the year (5 - 6) 38,487.58 31,786.27

8 Earnings per share (of ` 10/- each):

(a) Basic 27.6.a 1,100.82 909.42

(b) Diluted 27.6.b 1,100.82 909.42

See accompanying notes forming part of the financial statements






Harish Shah




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Cash Flow Statementfor the year ended 31st March 2012(` in lakhs)

2011-12 2010-11

Cash flows from operating activities

Profit before tax 57,033.84 48,188.43

Add/(Less) : Adjustment for

Depreciation and amortization expense 187.99 184.49

Profit on sale of current investments (1,581.13) (722.12)

Profit / (Loss) on sale of non current investments (706.65) 0.36

Dividend on current investments (3.84) -

Dividend on non current investments (6.89) (1,022.84)

Interest income on current investments (7,904.43) (903.57)

Profit on sale of fixed assets (9.35) (7.12)

Provision for long term employee benefits (261.70) 126.69

Provision for short term employee benefits (41.73) 73.82

Provision for doubtful debts, receivables and advances (3,016.60) (467.09)

Provision for standard assets 657.98 405.50

-

Operating profit before working capital changes 44,347.49 45,856.55

-

Increase in Receivables under Financing Activity (220,962.85) (282,940.45)

Increase in Loans and Advances (12,212.65) (3,904.55)

Increase in Current Liabilities 7,839.48 13,923.66

Cash used in operations (225,336.02) (272,921.34)

Income Tax paid (net of refunds) (17,064.25) (19,609.87)

Net cash used in operating activities A (198,052.78) (246,674.66)

Cash flows from investing activities

Purchase of Fixed assets (222.63) (131.19)

Sale of Fixed assets 24.89 14.18

Dividend on current investments 3.84 -

Dividend on non current investments 6.89 1,022.84

Interest income on current investments 7,904.43 903.57

Fixed deposits with banks - not considered as

cash and cash equivalents 1,043.04 807.37

Purchase of Investments (2,829,059.54) (2,007,322.45)

Sale of Investments 2,793,762.07 1,981,656.47

Net cash used in investing activities B (26,537.01) (23,049.21)


CASH FLOW STATEMENT


13/104


Cash flows from financing activities

Increase in Deep Discount Debentures 92,571.48 52,208.19

Increase in Non Convertible Debentures 21,793.48 81,960.79

Increase in Short Term Borrowings 35,837.22 26,680.41

Increase in other Loans and Advances 140,417.16 91,108.93

Dividend paid and Corporate Dividend Tax on preference shares (0.09) -

Issue of Preference Shares / Premium on preference shares - 10,000.00

Net cash from financing activities C 290,619.25 261,958.32

Net increase / (decrease) in cash and cash equivalents A+B+C 66,029.46 (7765.55)

Cash and cash equivalents at the beginning of the year 13,360.97 21,126.52

Cash and cash equivalents at the end of the year 79,390.43 13,360.97

Notes:

1. Cash and cash equivalents as per Note 18 - Cash and Bank balances

2. The Cash Flow Statement has been prepared under the `Indirect Method as set out in the Accounting Standard - 3 on Cash

Flow Statements issued by the Institute of Chartered Accountants of India.

3. The components of Cash and cash equivalents have been changed to exclude bank deposits with original maturity more than

three months.

Consequently, the Cash flow from Investing activity is higher by ` 1,043.04 lakhs (Previous Year ` 807.37 lakhs) (Refer Note

18)

4. The previous years figures have been regrouped wherever necessary in order to conform to this years presentation.






Harish Shah



(` in lakhs)

2011-12 2010-11


14/104


Notes forming part of the financial statements

Note 3 Share capital

Particulars As at 31 March, 2012 As at 31 March, 2011

Number of Number ofshares ` in lakhs shares ` in lakhs

(a) Authorised

Equity shares of ` 10 each with voting rights 3,500,000 350.00 3,500,000 350.00

Redeemable preference shares of `10 each 3,000,000 300.00 3,000,000 300.00

(b) Issued



(c) Subscribed and fully paid up



Total 449.52 449.52

Refer Notes (i) to (iv) below

Notes:

(i) Reconciliation of the number of shares and amount outstanding at the beginning and at the end of the reporting period:

Particulars Opening Fresh Bonus ESOP Conversion Buy back Closing

Balance issue Balance

Equity shares with voting rights

Year ended 31 March, 2012

- Number of shares 3,495,200 - - - - - 3,495,200

- Amount (` in lakhs) 349.52 - - - - - 349.52


- Number of shares 3,495,200 - - - - - 3,495,200

- Amount (` in lakhs) 349.52 - - - - - 349.52

Redeemable preference shares


- Number of shares 1,000,000 - - - - - 1,000,000

- Amount (` in lakhs) 100.00 - - - - - 100.00


- Number of shares 1,000,000 - - - - - 1,000,000

- Amount (` in lakhs) 100.00 - - - - - 100.00

Notes:

(ii) The Equity shares of Rs.10 each, fully paid up have equal voting rights. The 10% Redeemable, Non Cumulative, Non Convertible

Preference shares are isued at a premium of Rs.990 per share. These shares will be redeemed at Rs.990 per share plus a premium of 7%

on the said amount by April 15, 2016 with the earliest put / call option date being July 15, 2012.

(iii) Details of shares held by the holding company and its subsidiaries:


ACCOUNTING POLICIES & NOTES


15/104


Notes forming part of the financial statements(Continued)Note 3 Share capital (contd.)

Particulars Equity shares Equity shares Compulsorily Optionally Redeemable

with voting with convertible convertible preferencerights differential preference preference shares

voting rights shares shares

Number of shares

As at 31 March, 2012

Kotak Mahindra Bank Limited, the holding

company 1,782,600 - - - -

Kotak Securities Limited, subsidiary of the holding

company 1,712,600 - - - -

Kotak Mahindra Capital Company Limited,

subsidiary of the holding company - - - - 500,000

Kotak Mahindra Asset Management Company Limited,


Kotak Investment Advisors Limited, subsidiary of the

holding company - - - - 250,000

As at 31 March, 2011

Kotak Mahindra Bank Limited, the holding company 1,782,600 - - - -

Kotak Securities Limited, subsidiary of the holding

company 1,712,600 - - - -

Kotak Mahindra Capital Company Limited, subsidiary

of the holding company - - - - 500,000

Kotak Mahindra Asset Management Company Limited,


Kotak Investment Advisors Limited, subsidiary of the

holding company - - - - 250,000

(iv) Details of shares held by each shareholder holding more than 5% shares:

Class of shares / Name of shareholder As at 31 March, 2012 As at 31 March, 2011

Number of % holding in Number of % holding in

shares held that class shares held that class

of shares of shares

Equity shares with voting rights

Kotak Mahindra Bank Limited 1,782,600 51 1,782,600 51

Kotak Securities Limited 1,712,600 49 1,712,600 49

Redeemable preference shares

Kotak Mahindra Capital Company Limited 500,000 50 500,000 50

Kotak Mahindra Asset Management Company Limited 250,000 25 250,000 25

Kotak Investment Advisors Limited 250,000 25 250,000 25


16/104


Notes forming part of the financial statements(Continued)Note 4 Reserves and surplus


`in lakhs

`in lakhs

(a) Securities premium account

Opening balance 67,009.66 57,109.66

Add : Premium on shares issued during the year - 9,900.00

Closing balance 67,009.66 67,009.66

(b) Special Reserve u/s 45 IC of the RBI Act, 1934


Add:Transferred from surplus in Statement of Profit and Loss 7,697.52 6,357.25


(c) General reserve

Opening balance 182.54 182.54

Add: Transferred from surplus in Statement of Profit and Loss - -

Closing balance 182.54 182.54

(d) Surplus in Statement of Profit and Loss


Add: Profit for the year 38,487.58 31,786.27

Less: Dividends proposed to be distributed to preference shareholders

(Re 1 per share) 10.00 0.08

Tax on dividend 1.62 0.01

Transferred to:

Special Reserve u/s 45 IC of the RBI Act, 1934 7,697.52 6,357.25


Total 191,784.00 153,308.04

Note 5 Long-term borrowings


` in lakhs ` in lakhs ` in lakhs

(a) Bonds / debentures (Refer Note (i) below)

Non Convertible DebenturesSecured 198,830.00 112,870.00

Index Linked Debentures

Secured 26,145.00 28,595.00

Less:Unamortised Discount 2,090.10 2,650.34

24,054.90 25,944.66

Deep Discount Debentures

Secured 139,630.00 49,800.00

Less: Discount not written off 21,288.30 5,050.58

118,341.70 44,749.42

Debentures issued at discount

Secured 32,500.00 15,000.00

Less: Discount not written off 251.52 84.57

32,248.48 14,915.43

Non Convertible Debentures - Subordinated Debts

Unsecured 45,670.00 32,610.00

(b) Term loans from Banks (Refer Note (ii) below)

Secured 190,241.79 161,477.55

(c) Loan/Lease Deposits

Unsecured 719.03 544.47

Total 610,105.90 393,111.53

Note (i)

The Debentures are redeemable at par.The Non Convertible Debentures, Index Linked Debentures, Deep Discount Debentures and Debentures

issued at Discount are secured by way of a first and pari passu mortgage in favour of the Security Trustee on the Companys immovable

property of ` 18.07 lakhs and further secured by way of hypothecation of charged assets such as receivables arising out of loan, lease

and hire purchase, book debts and current assets (other than investments).




17/104


1) The details of Non Convertible Debentures are as under :

As at 31st March, 2012 As at 31st March, 2011

Particulars Rate of Int Maturity Date Secured Unsecured Secured Unsecured

2500 debentures of Rs. 1,000,000 each 10.50% 22-Nov-16 25,000.00 - - -

1300 debentures of Rs. 1,000,000 each 10.05% 15-Mar-15 13,000.00 - - -

1500 debentures of Rs. 1,000,000 each 10.05% 5-Mar-15 15,000.00 - - -

300 debentures of Rs. 1,000,000 each 10.20% 20-Sep-14 3,000.00 - - -


500 debentures of Rs. 1,000,000 each 10.35% 8-Aug-14 5,000.00 - - -

500 debentures of Rs. 1,000,000 each 10.50% 27-Jul-14 5,000.00 - - -





500 debentures of Rs. 1,000,000 each 11.00% 11-Jul-14 5,000.00 - - -50 debentures of Rs. 1,000,000 each 10.45% 30-Jun-14 500.00 - - -

200 debentures of Rs. 1,000,000 each 10.65% 10-Jun-14 2,000.00 - - -

300 debentures of Rs. 1,000,000 each 11.05% 30-May-14 3,000.00 - - -


100 debentures of Rs. 1,000,000 each 10.90% 28-Apr-14 1,000.00 - - -

50 debentures of Rs. 1,000,000 each 10.90% 27-Mar-14 500.00 - - -

20 debentures of Rs. 1,000,000 each 10.25% 14-Feb-14 200.00 - 200.00 -

50 debentures of Rs. 1,000,000 each 10.25% 16-Jan-14 500.00 - 500.00 -

150 debentures of Rs. 1,000,000 each 10.15% 13-Dec-13 1,500.00 - - -



600 debentures of Rs. 1,000,000 each 10.45% 24-Oct-13 6,000.00 - - -


25 debentures of Rs. 1,000,000 each 10.15% 13-Sep-13 250.00 - - -




80 debentures of Rs. 1,000,000 each 9.10% 2-Sep-13 800.00 - 800.00 -

50 debentures of Rs. 1,000,000 each 10.00% 26-Aug-13 500.00 - - -

250 debentures of Rs. 1,000,000 each 10.00% 12-Aug-13 2,500.00 - - -



28 debentures of Rs. 1,000,000 each 10.25% 19-Jul-13 280.00 - 280.00 -



250 debentures of Rs. 1,000,000 each 11.10% 7-Jun-13 2,500.00 - - -

700 debentures of Rs. 1,000,000 each 8.35% 30-May-13 7,000.00 - 7,000.00 -





18/104









350 debentures of Rs. 1,000,000 each 8.60% 1-Apr-13 3,500.00 - 3,500.00 -

200 debentures of Rs. 1,000,000 each 10.30% 29-Mar-13 - - 2,000.00 -

18 debentures of Rs. 1,000,000 each 10.58% 6-Mar-13 - - 180.00 -

465 debentures of Rs. 1,000,000 each 11.03% 15-Feb-13 - - 4,650.00 -

250 debentures of Rs. 1,000,000 each 10.50% 8-Feb-13 - - 2,500.00 -

60 debentures of Rs. 1,000,000 each 10.25% 30-Jan-13 - - 600.00 -

250 debentures of Rs. 1,000,000 each 8.50% 11-Jan-13 - - 2,500.00 -500 debentures of Rs. 1,000,000 each 8.30% 11-Jan-13 - - 5,000.00 -

22 debentures of Rs. 1,000,000 each 10.05% 10-Jan-13 - - 220.00 -

500 debentures of Rs. 1,000,000 each 9.55% 30-Nov-12 - - 5,000.00 -



250 debentures of Rs. 1,000,000 each 8.50% 22-Oct-12 - - 2,500.00 -



150 debentures of Rs. 1,000,000 each 8.65% 25-Sep-12 - - 1,500.00 -

50 debentures of Rs. 1,000,000 each 8.85% 20-Sep-12 - - 500.00 -

250 debentures of Rs. 1,000,000 each 9.00% 30-Aug-12 - - 2,500.00 -

250 debentures of Rs. 1,000,000 each 8.50% 30-Jul-12 - - 2,500.00 -



100 debentures of Rs. 1,000,000 each 10.00% 26-Jun-12 - - 1,000.00 -





500 debentures of Rs. 1,000,000 each 8.25% 29-May-12 - - 5,000.00 -



176 debentures of Rs. 1,000,000 each 10.60% 24-Apr-12 - - 1,760.00 -



53 debentures of Rs. 1,000,000 each 10.25% 19-Apr-12 - - 530.00 -


55 debentures of Rs. 1,000,000 each 10.25% 3-Apr-12 - - 550.00 -

198,830.00 - 112,870.00 -




19/104


100 debentures of Rs. 500,000 each Linked to NSE Nifty 25-Feb-15 438.42 - - -1 debenture of Rs. 500,000 each Linked to NSE Nifty 25-Feb-15 4.38 - - -

1 debenture of Rs. 500,000 each Linked to NSE Nifty 25-Feb-15 4.38 - - -


4 debentures of Rs. 500,000 each Linked to NSE Nifty 25-Feb-15 17.54 - - -























100 debentures of Rs. 500,000 each Linked to NSE Nifty 5-Jan-15 444.61 - - -

1 debenture of Rs. 500,000 each Linked to NSE Nifty 26-Nov-14 4.50 - - -



2 debentures of Rs. 500,000 each Linked to NSE Nifty 26-Nov-14 9.00 - - -











2) The details of Index Linked Debentures are as under :




20/104





2 debentures of Rs. 500,000 each Linked to NSE Nifty 26-Nov-14 9.00 - - -1 debenture of Rs. 500,000 each Linked to NSE Nifty 26-Nov-14 4.50 - - -












































21/104





1 debenture of Rs. 500,000 each Linked to NSE Nifty 22-Oct-14 4.06 - - -1 debenture of Rs. 500,000 each Linked to NSE Nifty 22-Oct-14 4.06 - - -

1 debenture of Rs. 500,000 each Linked to NSE Nifty 22-Oct-14 4.06 - - -





2 debentures of Rs. 500,000 each Linked to NSE Nifty 22-Oct-14 8.11 - - -




































22/104





4 debentures of Rs. 500,000 each Linked to NSE Nifty 22-Oct-14 16.23 - - -1 debenture of Rs. 500,000 each Linked to NSE Nifty 22-Oct-14 4.06 - - -





160 debentures of Rs. 500,000 each Linked to NSE Nifty 22-Sep-14 697.50 - - -

1 debenture of Rs. 500,000 each Linked to NSE Nifty 22-Sep-14 4.36 - - -






































23/104





1 debenture of Rs. 500,000 each Linked to NSE Nifty 12-Sep-14 4.06 - - -1 debenture of Rs. 500,000 each Linked to NSE Nifty 12-Sep-14 4.06 - - -










































24/104





































2 debentures of Rs. 500,000 each Linked to NSE Nifty 8-Aug-14 9.10 - - -

1 debenture of Rs. 500,000 each Linked to NSE Nifty 8-Aug-14 4.55 - - -












25/104





1 debenture of Rs. 500,000 each Linked to NSE Nifty 8-Aug-14 4.55 - - -2 debentures of Rs. 500,000 each Linked to NSE Nifty 8-Aug-14 9.10 - - -










































26/104





2 debentures of Rs. 500,000 each Linked to NSE Nifty 8-Aug-14 9.10 - - -1 debenture of Rs. 500,000 each Linked to NSE Nifty 21-Apr-14 4.72 - 4.59 -

1 debenture of Rs. 500,000 each Linked to NSE Nifty 21-Apr-14 4.72 - 4.59 -

2 debentures of Rs. 500,000 each Linked to NSE Nifty 21-Apr-14 9.44 - 9.17 -










































27/104





1 debenture of Rs. 500,000 each Linked to NSE Nifty 21-Apr-14 4.72 - 4.59 -1 debenture of Rs. 500,000 each Linked to NSE Nifty 21-Apr-14 4.72 - 4.59 -



































10 debentures of Rs. 500,000 each Linked to NSE Nifty 21-Apr-14 47

kmpl annual report fy2012

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