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IDFC SUBSIDIARIES ANNUAL REPORT 2013-2014 IDFC SUBSIDIARIES ANNUAL REPORT
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IDFC SUBSIDIARIES ANNUAL REPORT · idfc subsidiaries annual report 2013-2014 ... idfc project equity company limited 22 ... n hdfc bank limited registered office

Apr 03, 2018

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Page 1: IDFC SUBSIDIARIES ANNUAL REPORT · idfc subsidiaries annual report 2013-2014 ... idfc project equity company limited 22 ... n hdfc bank limited registered office

CORPORATE OFFICE

Naman Chambers, C-32, G-BlockBandra-Kurla ComplexBandra (East)Mumbai 400 051

TEL +91 (22) 4222 2000FAX +91 (22) 2654 0354

IDFC LIMITEDwww.idfc.com | [email protected]

REGISTERED OFFICE

KRM Tower, 8th floorNo.1, Harrington RoadChetpetChennai 600 031

TEL +91 (44) 4564 4000FAX +91 (44) 4564 4022

I D F C S U B S I D I A R I E S

A N N U A L R E P O R T

2 0 1 3 - 2 0 1 4

IDF

C S

UB

SID

IAR

IES

AN

NU

AL

RE

PO

RT

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Printed at Repro India Ltd.

CONTENTS

TEN YEARS’ HIGHLIGHTS

CHAIRMAN’S STATEMENT COMPANY INFORMATION INFRASTRUCTURE REVIEW

DIRECTORS’ REPORT

MANAGEMENT DISCUSSION& ANALYSIS

CORPORATE GOVERNANCEREPORT

ADDITIONAL SHAREHOLDERINFORMATION

CEO & CFO CERTIFICATE

AUDITORS’ CERTIFICATE

BUSINESS RESPONSIBILITYREPORT

CONSOLIDATED GROUP ACCOUNTSWITH AUDITORS’ REPORT

STANDALONE ACCOUNTSWITH AUDITORS’ REPORT

02

04

06

08

20

28

40

54

59

60

62

77

115

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CONTENTS

IDFC ALTERNATIVES LIMITED 02

IDFC PROJECT EQUITY COMPANY LIMITED 22

IDFC TRUSTEE COMPANY LIMITED 40

IDFC SECURITIES LIMITED 54

IDFC FUND OF FUNDS LIMITED 81

IDFC CAPITAL (SINGAPORE) PTE. LIMITED 92

IDFC SECURITIES SINGAPORE PTE. LIMITED 111

IDFC CAPITAL (USA) INC. 127

IDFC ASSET MANAGEMENT COMPANY LIMITED 137

IDFC AMC TRUSTEE COMPANY LIMITED 161

IDFC INVESTMENT ADVISORS LIMITED 175

IDFC INVESTMENT MANAGERS (MAURITIUS) LIMITED 196

IDFC PROJECTS LIMITED 214

IDFC FINANCE LIMITED 231

IDFC PRIMARY DEALERSHIP COMPANY LIMITED 245

IDFC FOUNDATION 265

IDFC HOUSING FINANCE COMPANY LIMITED 284

IDFC INFRA DEBT FUND LIMITED 296

NEOPRO TECHNOLOGIES PRIVATE LIMITED 308

GALAXY MERCANTILES LIMITED 330

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BOARD OF DIRECTORS n Dr. Rajiv B. Lall – Chairman n Mr. Gautam Kaji n Mr. Bharat Shah n Mr. Vikram Limaye n Mr. Sunil Kakar n Mr. Sadashiv S. Rao n Dr. Rajeev Uberoi

AUDITORS n Deloitte Haskins & Sells LLP Chartered Accountants

PRINCIPAL BANKER n HDFC Bank Limited

REGISTERED OFFICENaman Chambers, C-32, G-Block Bandra-Kurla Complex, Bandra (East)Mumbai 400 051Tel: +91 22 4222 2000Fax: +91 22 2654 [email protected]: U67190MH2002PLC137798

01 IDFC ALTERNATIVES LIMITED

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I D F C A LT E R N A T I V E S L I M I T E D | 3

Directors' ReportTO THE MEMBERSYour Directors have pleasure in presenting the Twelfth Annual Report together with the audited accounts for the year ended March 31, 2014.

FINANCIAL RESULTS

PARTICULARSFOR THE YEAR ENDED

MARCH 31, 2014 `

FOR THE YEAR ENDED MARCH 31, 2013

`

Total Income 659,016,534 666,232,531Less: Total Expenses 406,705,384 299,634,910Profit before Tax 252,311,150 366,597,621Less: Provision for Tax 63,992,000 94,832,000Profit after Tax 188,319,150 271,765,621Add: Balance Brought Forward 291,001,605 376,715,796Total Available for Appropriation 479,320,755 648,481,417APPROPRIATIONS:

Transfer to General Reserve 188,319,150 271,765,621Interim Dividend 75,000,000 240,000,000Tax on Dividend 1,699,500 35,303,250Proposed Equity Dividend – 55,000,000Balance Carried Forward 383,789,340 291,001,605

OPERATIONAL REVIEW Your Company continues to be one of the leading multi-asset class fund managers in India, committed to the development of infrastructure in the country. During the year, your Company acted as fund manager for a total of five funds - India Development Fund, IDFC Private Equity Fund II and IDFC Private Equity Fund III under the private equity asset class, India Infrastructure Fund II under the infrastructure equity asset class and IDFC Real Estate Yield Fund, under the real estate asset class.The year was very eventful from multiple viewpoints. In October 2013, your Company announced the successful exit of our iconic India Development Fund, returning a multiple of capital of ~2.6x to investors at a net fund IRR of 32%. The Fund was of 2004 vintage with a total corpus of ` 8.4 billion and had made investments during the 2004-2008 period. With this event behind us, we now belong to the elite club of fund-houses in India who have seen the full lifecycle of a fund: fund-raising, investing, nurturing and exiting. During the year, private equity team made 5 complete exits and 1 partial exit, aggregating to a total of ` 3,386 millon. As on date, the private equity team has made a total of 41 investments across 36 companies.During the year, your Company had also launched its second infrastructure fund, the India Infrastructure Fund II, with a target size of ` 55 billion and has received commitments of ~` 47 billion till date in a very challenging fund raising environment. This has been the largest (and the fastest) fund-raising exercise by a domestic fund house in recent times and the fact that several key investors of the previous fund decided to re-up their commitments in the second fund is a testimony of the faith that investors repose in our investment abilities.Additionally, in February 2014, your Company announced the first close of ` 2.9 billion for its maiden domestic real estate fund, the IDFC Real Estate Yield Fund. The Fund has been entirely raised from retail investors and focuses on making opportunistic investments in the residential real estate segment in India. As on date, the fund has made investments in two properties situated at Pune and Bengaluru, respectively.The year also witnessed the closure of the commitment period of IDFC Private Equity Fund III. The fund has invested in 12 companies and the team would now focus it's attention on monitoring the assets and securing attractive exits for the investments.

DIVIDENDAt the Board Meeting held on July 26, 2013, the Board had approved interim dividend amounting to ` 7.50 crore at the rate of 15,000% i.e. ` 1,500/- per equity share. Your Directors have not recommended any further dividend and recommends confirmation of the said interim dividend as final dividend for the year.

COMPANIES ACT, 2013Most of the provisions of the Companies Act, 2013 and the Rules notified by the Ministry of Corporate Affairs ("MCA") in this regard, have come into force with effect from April 1, 2014. MCA issued a General Circular no. 8/2014 dated April 4, 2014 which clarified that the Financial Statements, Auditors' Report and the Board’s Report in respect of the previous year ended March 31, 2014 will be in accordance with the Companies Act, 1956 and Rules made there under. Your Company shall comply with the provisions of the Companies Act, 2013, as applicable.

SUBSIDIARY COMPANYYour Company has one wholly owned subsidiary company namely, IDFC Project Equity Company Limited.

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Directors' ReportAs required under the provisions of Section 212 of the Companies Act, 1956, a statement of holding company’s interest in the subsidiary company and the Annual Report of such subsidiary company have been attached to this report.

DIRECTORSMr. Sunil Kakar (DIN-03055561) and Mr. Sadashiv S. Rao (DIN-01245772) would retire at the ensuing Annual General Meeting ("AGM") and being eligible, offer themselves for reappointment.The Board of Directors recommends reappointment of the above retiring directors at the ensuing AGM.

AUDIT COMMITTEE The Audit Committee of the Company comprises of Mr. Sunil Kakar (DIN-03055561), Mr. Sadashiv S. Rao (DIN-01245772) and Dr. Rajeev Uberoi (DIN-01731829) as its members. The Audit Committee met four times during the year.

AUDITORSDeloitte Haskins & Sells LLP, Chartered Accountants (Registration No. 117366W / W-100018) Statutory Auditors of the Company will retire at the conclusion of the ensuing AGM. The Board recommends the reappointment of Deloitte Haskins & Sells LLP, Chartered Accountants, as the Statutory Auditors of the Company.

PUBLIC DEPOSITSThe Company has not accepted any public deposits during the year under review.

PARTICULARS REGARDING CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTIONSince the Company does not own any manufacturing facility, the disclosure of information on other matters required to be disclosed in terms of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1998, are not applicable and hence not given.

FOREIGN EXCHANGE EARNINGS AND EXPENDITUREThe Company has no earnings in Foreign Exchange. The particulars regarding foreign exchange expenditure are furnished at Item No. 18 in the Notes forming part of the Financial Statements.

PERSONNEL AND OTHER MATTERSYour Company had 34 employees as on March 31, 2014. As required by the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of employees are set out in Annexure to the Directors’ Report.

DIRECTORS’ RESPONSIBILITY STATEMENTThe Directors confirm that:

n the applicable accounting standards have been followed in preparation of annual accounts and there are no material departures; n 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 March 31, 2014 and the profit of the Company for the year ended on that date;

n they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

n they have prepared the annual accounts on a going concern basis.

ACKNOWLEDGEMENTSThe Board acknowledges the invaluable support extended to the Company by the investors of Funds, the Ministry of Finance, the Reserve Bank of India and the Securities and Exchange Board of India. The Board would like to express its gratitude for the unstinted support and guidance received from IDFC Limited and also from other group companies.The Board would also like to express it's sincere thanks and appreciation to all the employees for their contribution made during the year.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS

RAJIV B. LALL

Chairman

Mumbai, April 23, 2014

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I D F C A LT E R N A T I V E S L I M I T E D | 5

TO THE MEMBERS OF IDFC ALTERNATIVES LIMITED

Report on the Financial StatementsWe have audited the accompanying financial statements of IDFC ALTERNATIVES LIMITED (“the Company”), which comprise the Balance Sheet as at March 31, 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 StatementsThe 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 September 13, 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’ ResponsibilityOur 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 the 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 the disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, 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 the internal controls 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 controls. 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.

OpinionIn 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 March 31, 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 Requirements1. 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. 2. 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 September 13, 2013 of the Ministry of Corporate Affairs).

(e) On the basis of the written representations received from the directors as on March 31, 2014 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014 from being appointed as a director in terms of Section 274(1) (g) of the Act.

FOR DELOITTE HASKINS & SELLS LLP

Chartered Accountants(Registration No. 117366W/W-100018)

Z. F. BILLIMORIA

Partner(Membership No. 42791)

Mumbai, April 23 , 2014

Independent Auditors' Report

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(Referred to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date)(i) Having regard to the nature of the Company’s business/ activities/ result/ transactions, etc. Clauses (ii), (vi), (viii), (x), (xi), (xii), (xiii), (xv), (xvi),

(xvii), (xviii), (xix), and (xx) of CARO are not 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 explanations 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) The Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956.

(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 services. During the course of our audit, we have not observed any continuing failure to correct major weakness in such internal control system.

(v) To the best of our knowledge and belief and according to the information and explanations given to us, there were no contracts or arrangements that needed to be entered in the Register maintained under Section 301 of the Companies Act, 1956.

(vi) In our opinion, the internal audit functions 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.

(vii) According to the information and explanations given to us in respect of statutory dues: (a) The Company has been generally regular in depositing undisputed statutory dues, including Provident Fund, Income-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 Provident Fund, Income-tax, Service Tax, Cess and other material statutory dues

in arrears as at March 31, 2014 for a period of more than six months from the date they became payable. (c) Details of dues of Income-tax which have not been deposited as on March 31, 2014 on account of disputes are given below:

STATUTE NATURE OF DUES FORUM WHERE DISPUTE IS PENDING

PERIOD TO WHICH THE AMOUNT RELATES

AMOUNT INVOLVED (AMOUNT IN `)

Income-tax Act, 1961 Income Tax DY. CIT(A) A.Y. 2011-12 668,825

(viii) Based on our examination of the records and evaluation of the related internal controls, the Company has maintained proper records of the transactions and contracts in respect of its dealing in mutual fund investments and timely entries have been made therein. The aforesaid securities have been held by the Company in its own name.

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

FOR DELOITTE HASKINS & SELLS LLP

Chartered Accountants(Registration No. 117366W/W-100018)

Z. F. BILLIMORIA

Partner(Membership No. 42791)

Mumbai, April 23, 2014

Annexure to the Auditors' Report

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I D F C A LT E R N A T I V E S L I M I T E D | 7

IN TERMS OF OUR REPORT ATTACHED.

FOR DELOITTE HASKINS & SELLS LLP

Chartered AccountantsFOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC ALTERNATIVES LIMITED

Z. F. BILLIMORIA SUNIL KAKAR RAJEEV UBEROIPartner Director Director

Mumbai | April 23, 2014

AS AT MARCH 31, 2014

AS AT MARCH 31, 2013

NOTES ` `

EQUITY AND LIABILITIES

SHAREHOLDERS’ FUNDS

(a) Share capital 3 500,000 500,000 (b) Reserves and surplus 4 588,329,061 476,709,411 NON-CURRENT LIABILITIES

(a) Deferred tax liability 5 36,605,000 32,931,000 CURRENT LIABILITIES

(a) Trade payables 6 132,047,684 86,334,999 (b) Other current liabilities 7 96,972,975 120,848,185 (c) Short-term provisions 8 680,830 72,223,921 TOTAL 855,135,550 789,547,516

ASSETS

NON-CURRENT ASSETS

(a) Fixed assetsi) Tangible assets 9a 414,861,075 434,437,190 ii) Intangible assets 9b 45,909 299,453

414,906,984 434,736,643 (b) Non-current investments 10 57,939,934 51,767,085 (c) Long-term loans and advances 11 109,564,207 83,730,623 CURRENT ASSETS

(a) Cash and bank balance 12 259,304,284 211,934,295 (b) Short-term loans and advances 11 8,002,419 4,185,956 (c) Other current assets 13 5,417,722 3,192,914 TOTAL 855,135,550 789,547,516

See accompanying notes forming part of the financial statements.

Balance Sheet AS AT MARCH 31, 2014

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IN TERMS OF OUR REPORT ATTACHED.

FOR DELOITTE HASKINS & SELLS LLP

Chartered AccountantsFOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC ALTERNATIVES LIMITED

Z. F. BILLIMORIA SUNIL KAKAR RAJEEV UBEROIPartner Director Director

Mumbai | April 23, 2014

FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2013

NOTES ` `

I INCOME

Revenue from operations 14 580,692,293 566,605,921 Other income 15 78,324,241 99,626,610 TOTAL INCOME (I) 659,016,534 666,232,531

II EXPENSES

Employee benefit expenses 16 282,615,342 221,289,487 Depreciation and amortisation expense 9 24,158,137 24,646,516 Other expenses 17 99,931,905 53,698,907 TOTAL EXPENSES (II) 406,705,384 299,634,910

III PROFIT BEFORE TAX (I - II) 252,311,150 366,597,621

IV TAX EXPENSE

Current tax 60,318,000 83,760,000 Deferred tax 5 3,674,000 11,072,000 TOTAL TAX EXPENSE 63,992,000 94,832,000

V PROFIT FOR THE YEAR FROM CONTINUING OPERATIONS (III - IV) 188,319,150 271,765,621

Earnings per share (nominal value of ` 10 per share) 24(a) Basic 3,766.38 5,435.31 (b) Diluted 3,766.38 5,435.31

See accompanying notes forming part of the financial statements.

Statement of Profit and Loss FOR THE YEAR ENDED MARCH 31, 2014

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I D F C A LT E R N A T I V E S L I M I T E D | 9

IN TERMS OF OUR REPORT ATTACHED.

FOR DELOITTE HASKINS & SELLS LLP

Chartered AccountantsFOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC ALTERNATIVES LIMITED

Z. F. BILLIMORIA SUNIL KAKAR RAJEEV UBEROIPartner Director Director

Mumbai | April 23, 2014

FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2013

` `

A. CASH FLOW FROM OPERATING ACTIVITIESNET PROFIT BEFORE TAX 252,311,150 366,597,621 Adjustments for: Depreciation and amortisation expenses 24,158,137 24,646,516 Loss on sale / write off of fixed assets – 64,094 Interest income on bank deposits (2,635,684) (14,203,706)Dividend received from subsidiary company (65,000,000) (80,000,000)Profit on sale of current investments (10,638,885) – Dividend income on current investments (49,672) (5,422,904)Operating profit before working capital changes 198,145,046 291,681,621 Changes in working capital:Adjustments for (increase) / decrease in operating assets: Long-term loans and advances (298,878) (11,697) Short-term loans and advances (3,816,463) 2,728,699 Other current assets (2,262,960) (2,954,830)Adjustments for increase / (decrease) in operating liabilities: Long-term provisions – (13,610,321) Short-term provisions – (1,523,116) Trade payables 45,712,685 (24,276,553) Other current liabilities (23,875,210) (23,238,037)Cash generated from operations 213,604,220 228,795,766 Net income tax paid (93,048,547) (74,296,171)NET CASH FROM OPERATING ACTIVITIES 120,555,673 154,499,595

B. CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of fixed assets (4,386,124) (3,721,490)Proceeds from sale of fixed assets 57,646 – Bank balances not considered as cash and cash equivalents Matured – 150,000,000 Purchase of current investments (672,549,672) (668,941,463)Sale proceeds of current investments 683,188,557 668,941,463 Investment in subsidiary company – (37,895,070)Purchase of non-current investments (6,172,849) (2,263,026)Proceeds from sale of non-current investments – 1,297,304 Interest income on bank deposits 2,673,836 14,196,853 Dividend received from subsidiary company 65,000,000 80,000,000 Dividend income on current investments 49,672 5,422,904 NET CASH FROM INVESTING ACTIVITIES 67,861,066 207,037,475

C. CASH FLOWS FROM FINANCING ACTIVITIES

Interim dividend paid (including dividend distribution tax) (141,046,750) (265,956,000)NET CASH USED IN FINANCING ACTIVITIES (141,046,750) (265,956,000)Net increase in cash and cash equivalents (A+B+C) 47,369,989 95,581,070 Cash and cash equivalents at the beginning of the year (see note 12) 211,934,295 116,353,225 Cash and cash equivalents at the end of the year (see note 12) 259,304,284 211,934,295

47,369,989 95,581,070

Cash Flow Statement FOR THE YEAR ENDED MARCH 31, 2014

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

01 BackgroundIDFC Alternatives Limited ("Company") is a wholly owned subsidiary of IDFC Limited ("IDFC"), Incorporated in India, providing Investment Management and Advisory Services and was the Investment Manager to IDFC Infrastructure Fund of which India Development Fund is a unit scheme (“IDF”) upto December 24, 2013. The Company is Investment Manager to IDFC Infrastructure Fund 2 of which IDFC Private Equity Fund II is a unit scheme (“Fund II”) and IDFC Infrastructure Fund 3 of which IDFC Private Equity Fund III is a unit scheme (“Fund III”) all of which are domestic venture capital funds registered under the Securities and Exchange Board of India (Venture Capital Funds) Regulations, 1996. During the current year, the Company was appointed as the Investment Manager to the India Infrastructure Fund 2 registered under the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012 as a category I Alternative Investment Fund from September 18, 2013 and IDFC Real Estate Yield Fund registered under the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012 as a category II Alternative Investment Fund from December 9, 2013 .

02 Significant Accounting Policies(a) Basis of PreparationThe 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 September 13, 2013 of the Ministry of Corporate Affairs) and the relevant provisions of the 1956 Act / 2013 Act, as applicable. The financial statements have been prepared on accrual basis under the historical cost convention

(b) Use of estimatesThe Company adopts the accrual concept in the preparation of the accounts. 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. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.

(c) Cash and cash equivalentsCash and cash equivalents for the purpose of the Cash Flow Statement comprises cash on hand, cash in bank, fixed deposits and other short-term highly liquid investments with an original maturity of three months or less that are readily convertible into known amount of cash and which are subject to an insignificant risk of change in value.

(d) Cash flow statementsCash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

(e) InflationAssets and liabilities are recorded at historical cost to the Company. These costs are not adjusted to reflect the changing value in the purchasing power of money.

(f) Revenue recognition i. Management fees are recognised on accrual basis as per the terms of the agreement. ii. Interest and other dues are accounted on accrual basis. iii. Dividend is accounted when the right to receive is established.

(g) Fixed assetsFixed assets are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated depreciation.

(h) Intangible assetsIntangible Assets comprising of system software are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated amortisation. Any expenses on such software for support and maintenance payable annually are charged to the Statement of Profit and Loss.

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I D F C A LT E R N A T I V E S L I M I T E D | 1 1

Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

(i) Depreciation and amortisationTangible assetsDepreciation for all Fixed Assets, excluding certain electronic items, is provided on the written down value method, at the rates prescribed by Schedule XIV of the Companies Act, 1956. Certain electronic items are depreciated over a period of two years on a straight-line method based on the Management’s estimate of useful life of assets. Depreciation on additions during the year is provided on a pro-rata basis. Assets costing less than ` 5,000/- each are written off in the year of capitalisation.

Intangible assetsIntangible assets consisting of computer software are being amortised over a period of three years on the straight-line method.

(j) Investments Non-current investments are carried at acquisition cost. A provision is made for diminution other than temporary on an individual basis. Current investments are carried at the lower of cost or fair value on an individual basis.

(k) Employee benefitsDefined contribution plansThe contribution to provident fund, superannuation fund and pension fund are considered as defined contribution plans and are charged as an expense as they fall due based on the amount of contribution required to be made.

Defined benefit planThe net present value of the Company’s obligation towards Gratuity to employees is funded and actuarially determined as at the Balance Sheet date based on the projected unit credit method. Actuarial gains and losses are recognised in the Statement of Profit and Loss for the year.

Compensated absences Employees are not permitted to accumulated leave. Based on the leave rules unavailed privilege leave to the extent encashable is paid to the employees and charged to the Statement of Profit and Loss for the year.

(l) Operating leasesLeases of assets under which all the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the Statement of Profit and Loss on a straight-line basis over the lease term in accordance with Accounting Standard 19 on ‘Leases’ as notified by the Companies (Accounting Standard) Rules, 2006. Initial direct cost incurred specifically for operating leases are recognised as expense in the year in which they are incurred.

(m) Earnings per shareBasic earnings per share is computed by dividing the profit / (loss) after tax by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax as adjusted for expense or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.

(n) Income-taxThe accounting treatment for income-tax in respect of the Company’s income is based on the Accounting Standard 22 on ‘Accounting for Taxes on Income’ as notified by the Companies (Accounting Standards) Rules, 2006. The provision made for income-tax in the accounts comprises both the current tax and the deferred tax. The deferred tax assets and liabilities for the year arising on account of timing differences are recognised in the Statement of Profit and Loss and the cumulative effect thereof is reflected in the Balance Sheet. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax asset is recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax asset can be realised. In situations where the Company has unabsorbed depreciation or carried forward losses deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that the same can be realised against future taxable profits.

(o) Provisions and contingenciesA provision is recognised when the Company has a present obligation as a result of past events and 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 their present value and are determined based on the 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 disclosed in the Notes.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

(p) Foreign currency transactionsForeign currency transactions are accounted at the exchange rates prevailing on the date of the transaction. Foreign currency monetary items outstanding as at the Balance Sheet date are reported using the closing rate. Gains and losses resulting from the settlement of such transactions and translation of monetary assets and liabilities denominated in foreign currencies are recognised in the Statement of Profit and Loss.

(q) Impairment of assetsThe carrying amount of assets at each Balance Sheet date are reviewed for impairment. If any indication of impairment based on internal / external factors exists, the recoverable amount of such assets is estimated and impairment is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the net selling price and its value in use, which is arrived at by discounting the future cash flows to their present value, based on an appropriate discounting factor. If at the Balance sheet date, there is a indication that previously recognised impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount, subject to a maximum of the depreciable historical cost and reversal of such impairment loss is recognised in the Statement of Profit and Loss, except in case of revalued assets.

(r) Service tax input creditService tax input credit is accounted for in the books in the period in which the underlying service received is accounted and when there is no uncertainty in availing / utilising the credits.

(s) Operating cycleBased on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.

03 Share capital

PARTICULARS AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NUMBER ` NUMBER `

(A) AUTHORISED

Equity shares of ` 10 each 5,000,000 50,000,000 5,000,000 50,000,000 (B) ISSUED, SUBSCRIBED & FULLY PAID UP

Equity shares of ` 10 each 50,000 500,000 50,000 500,000 (All the above equity shares are held by IDFC Limited, the Holding Company and its nominees.)

TOTAL ISSUED, SUBSCRIBED & FULLY PAID UP SHARE CAPITAL

50,000 500,000 50,000 500,000

(a) Terms / rights attached to equity shares The Company has only one class of equity share having a par value of ` 10 each. Each holder of equity share is entitled to one vote per share.In the event of liquidation of Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of preferential amount. However, no such preferential amount exists currently. The distribution will be in proportion to the number of equity shares held by the shareholder.

(b) Details of the Shareholders holding more than 5% of the Share capital

NAME OF SHAREHOLDER AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NO. OF SHARES HELD

% OF HOLDING NO. OF SHARES HELD

% OF HOLDING

IDFC Limited and its nominees 50,000 100% 50,000 100% 50,000 100% 50,000 100%

(c) During the year ended March 31, 2014, the Board of Directors, in the meeting held on July 26, 2013 had declared interim dividend of ` 1,500 per equity share (Previous Year ` 4,800 per equity share in the meeting held on October 25, 2012).Also during the year ended March 31, 2014, the Board of Directors have proposed dividend of ` Nil (Previous Year ` 1,100) per share. The total dividend appropriation amounted to ` 76,699,500 (Previous Year ` 330,303,250) including dividend distribution tax of ` 1,699,500 (Previous Year ` 35,303,250).

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I D F C A LT E R N A T I V E S L I M I T E D | 1 3

Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

04 Reserves and surplus AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

(A) GENERAL RESERVE

Opening balance 185,707,806 158,531,244 Add: Transferred from surplus in Statement of Profit and Loss 18,831,915 27,176,562 Closing balance 204,539,721 185,707,806

(B) SURPLUS IN STATEMENT OF PROFIT AND LOSS

Opening balance 291,001,605 376,715,796 Add: Profit for the year 188,319,150 271,765,621 Less: Interim dividend (see note 22) (75,000,000) (240,000,000) Proposed equity dividend (see note 22) – (55,000,000) Tax on equity dividend (see note below) (1,699,500) (35,303,250) Transfer to General reserve (18,831,915) (27,176,562)Closing balance 383,789,340 291,001,605 TOTAL 588,329,061 476,709,411

Dividend distribution tax for the year is net of dividend distribution tax of ` 11,046,750 (Previous Year ` 12,978,000) paid by the subsidiary company under Section 115-O of the Income-tax Act, 1961.

05 Deferred tax liability AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

TAX EFFECT OF ITEMS CONSTITUTING DEFERRED TAX LIABILITY

On difference between book balance and tax balance of fixed assets 36,605,000 32,931,000 Deferred tax liability 36,605,000 32,931,000

In compliance with Accounting Standard 22 on ‘Accounting for Taxes on Income’ as notified by the Companies (Accounting Standards) Rules, 2006, ` 3,674,000 (Previous Year ` 11,072,000) has been debited to the Statement of Profit and Loss towards deferred tax on account of timing differences.

06 Trade payables AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Payable to vendors 19,158,259 –Provision for expenses 112,889,425 86,334,999 TOTAL 132,047,684 86,334,999

No amount is payable in the current year to 'Suppliers' under the Micro, Small and Medium Enterprises Development Act, 2006.No interest has been paid / payable by the Company during the year to the ‘Suppliers’ covered under the Micro, Small and Medium Enterprises Development Act, 2006. The above information takes into account only those suppliers who have responded to inquiries made by the Company for this purpose.

07 Other current liabilities AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Fees received in advance 90,996,815 117,185,547 Payable to employee benefit funds (net of receivable of ` 1,344,866) 1,480,345 –Others Statutory remittances 4,495,815 3,662,638 TOTAL 96,972,975 120,848,185

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

08 Short-term provisions AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Provision for income tax (net of taxes paid ` 75,703,201 (Previous Year ` 152,267,360)) 296,799 7,492,640 Provision for fringe benefit tax (net of taxes paid ` 14,876,617 (Previous Year ` 14,876,617)) 384,031 384,031 Proposed equity dividend (see note 3(c)) – 55,000,000 Tax on proposed equity dividend – 9,347,250 TOTAL 680,830 72,223,921

09 Fixed assetsGROSS BLOCK DEPRECIATION / AMORTISATION NET BLOCK

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A TANGIBLE ASSETS Buildings 523,563,116 – – 523,563,116 97,996,117 21,278,350 – 119,274,467 404,288,649 425,566,999 (Previous Year) (523,563,116) – – (523,563,116) (75,597,854) (22,398,263) – (97,996,117) (425,566,999)Computer hardware 7,232,754 601,976 – 7,834,730 6,235,765 531,949 – 6,767,714 1,067,016 996,989 (Previous Year) (7,553,905) (140,431) (461,582) (7,232,754) (6,047,107) (639,632) (450,974) (6,235,765) (996,989)Furniture and fixtures 2,905,810 – 57,646 2,848,164 1,124,770 309,382 – 1,434,152 1,414,012 1,781,040 (Previous Year) (1,732,278) (1,173,532) – (2,905,810) (865,544) (259,226) – (1,124,770) (1,781,040)Office equipment 11,733,990 338,161 – 12,072,151 5,641,828 985,812 – 6,627,640 5,444,511 6,092,162 (Previous Year) (9,490,263) (2,407,527) (163,800) (11,733,990) (4,771,880) (980,263) (110,315) (5,641,828) (6,092,162)Vehicles – 3,389,941 – 3,389,941 – 743,054 – 743,054 2,646,887 – (Previous Year) – – – – – – – – – TOTAL (A) 545,435,670 4,330,078 57,646 549,708,102 110,998,480 23,848,547 – 134,847,027 414,861,075 434,437,190 Previous Year (542,339,562) (3,721,490) (625,382) (545,435,670) (87,282,385) (24,277,384) (561,289) (110,998,480) (434,437,190)

B INTANGIBLE ASSETS- OTHER THAN INTERNALLY GENERATED Computer software 4,474,051 56,046 – 4,530,097 4,174,598 309,590 – 4,484,188 45,909 299,453 (Previous Year) (4,474,051) – – (4,474,051) (3,805,466) (369,132) – (4,174,598) (299,453)TOTAL (B) 4,474,051 56,046 – 4,530,097 4,174,598 309,590 – 4,484,188 45,909 299,453 Previous Year (4,474,051) – – (4,474,051) (3,805,466) (369,132) – (4,174,598) (299,453)TOTAL (A) + (B) 549,909,721 4,386,124 57,646 554,238,199 115,173,078 24,158,137 – 139,331,215 414,906,984 434,736,643 Total of Previous Year (546,813,613) (3,721,490) (625,382) (549,909,721) (91,087,851) (24,646,516) (561,289) (115,173,078) (434,736,643)

10 Non-current investments (unquoted)(cost)

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

INVESTMENT IN EQUITY SHARES (TRADE)SUBSIDIARY COMPANY

IDFC Project Equity Company Limited 37,895,070 37,895,070 50,000 equity shares of ` 10 each fully paid upOTHERS

Aavantika Gas Limited 25,000 –2,500 equity shares of ` 10 each fully paid upINVESTMENTS IN VENTURE CAPITAL UNITS (NON-TRADE)

IDFC Infrastructure Fund 3- IDFC Private Equity Fund III - Class C 13,528,748 10,135,770 2,550,000 (Previous Year 2,550,000) units of ` 10 each, ` 6.25 (Previous Year ` 4.92) paid up per unit, commitment restricted to ` 7.143 per unitIDFC Infrastructure Fund 3- IDFC Private Equity Fund III - Class F 6,491,116 3,736,245 728,535 (Previous Year 728,535) units of ` 10 each, ` 8.90 (Previous Year ` 5.12) paid up per unitTOTAL 57,939,934 51,767,085

The above investments in venture capital units are subject to restrictive covenants.

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I D F C A LT E R N A T I V E S L I M I T E D | 1 5

Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

11 Loans and advances (unsecured, considered good)

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NON-CURRENT PORTION

CURRENT PORTION

NON-CURRENT PORTION

CURRENT PORTION

` ` ` `

Security deposits 88,191 – 90,191 – Prepaid expenses 216,575 4,935,422 15,697 2,906,024 Supplier Advance – – – 47,146 Balances with government authoritiesService tax credit receivable – 2,949,989 – 857,558 Advance payment of income tax (net provision for tax ` 1,205,793,407 (pervious year ` 1,061,715,407))

109,159,441 – 83,624,735 –

Others 100,000 117,008 – 375,228 TOTAL 109,564,207 8,002,419 83,730,623 4,185,956

12 Cash and bank balances AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

CASH AND CASH EQUIVALENTS

Cash on hand 9,486 12,887 Balances with banks in current accounts 29,294,798 1,921,408 in deposit accounts 230,000,000 210,000,000 TOTAL 259,304,284 211,934,295

13 Other current assets AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Interest accrued on term deposits with banks 199,932 238,084 Expenses recoverable 5,217,790 2,954,830 TOTAL 5,417,722 3,192,914

14 Revenue from operationsFOR THE YEAR ENDED

MARCH 31, 2014FOR THE YEAR ENDED

MARCH 31, 2013

` `

Management fees 580,692,293 566,605,921 TOTAL 580,692,293 566,605,921

15 Other incomeFOR THE YEAR ENDED

MARCH 31, 2014FOR THE YEAR ENDED

MARCH 31, 2013

` `

Dividend income from subsidiary company (see note 22) 65,000,000 80,000,000 Interest income on bank deposits 2,635,684 14,203,706 Dividend income from current investments 49,672 5,422,904 Profit on sale of current investments 10,638,885 –TOTAL 78,324,241 99,626,610

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

16 Employee benefit expensesFOR THE YEAR ENDED

MARCH 31, 2014FOR THE YEAR ENDED

MARCH 31, 2013

` `

Salaries and bonus (see note 23) 256,976,239 201,072,325 Contribution to provident and other funds (see note 20) 22,488,283 18,052,656 Staff welfare expenses 3,150,820 2,164,506 TOTAL 282,615,342 221,289,487

17 Other expensesFOR THE YEAR ENDED

MARCH 31, 2014FOR THE YEAR ENDED

MARCH 31, 2013

` `

Rent – 28,800 Rates and taxes 2,860,813 2,860,813 Repairs and maintenance Building – 127,360 Equipment 103,864 699 Others 1,516,922 1,695,279 Insurance charges 1,987,979 2,233,670 Travelling and conveyance (see note 18) 17,611,986 11,330,557 Realised loss on foreign currency transactions 22,890 2,125 Printing and stationery 742,844 466,618 Postage, telephone and fax 873,773 843,468 Advertisement and publicity 14,853,259 6,597,740 Professional fees (see note 18) 14,742,489 11,626,976 Directors’ fees (see note 18) 140,000 140,000 Auditors’ remuneration (see note (a) below) 1,585,000 1,575,000 Shared service cost (see note (b) below) (see note 22) 5,742,026 10,792,752 Fund organisational expenses 11,959,278 – Distribution fees 20,187,935 – Loss on sale of fixed assets – 64,094 Miscellaneous expenses 5,000,847 3,312,956 TOTAL 99,931,905 53,698,907

(a) Break up of auditors’ remuneration:

FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2013

` `

Audit fees 750,000 750,000 Tax audit fees 175,000 175,000 Other services 660,000 650,000 Service tax 66,126 194,670 TOTAL 1,651,126 1,769,670 Less: Service tax set off claimed 66,126 194,670

TOTAL 1,585,000 1,575,000

(b) Shared service cost of ` 5,742,026 (Previous Year ` 10,792,752) represents cost allocated by the Holding Company under a service level agreement.

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I D F C A LT E R N A T I V E S L I M I T E D | 1 7

Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

18 Expenditure in foreign currency (on payment basis)

FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2013

` `

Travelling expenses 172,452 116,270 Professional fees 3,781,057 2,138,320 Director sitting fees 60,000 80,000 Others 2,945,010 442,945

19 Earnings in foreign currencies:There are no earnings in foreign currencies

20 Employee benefitsIn accordance with the Accounting Standard 15 on ‘Employee Benefits’ as notified by the Companies (Accounting Standards) Rules, 2006, the following disclosures have been made:The Company has recognised the following amounts in the Statement of Profit and Loss towards contribution to defined contribution plans which are included under contribution to provident and other funds:

FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2013

` `

Provident fund 7,904,266 5,841,859 Pension fund 2,543,827 2,382,673 Superannuation fund 1,813,301 1,836,632

The details of the Company’s post – retirement benefit plans for gratuity for its employees are given below which is certified by the actuary and relied upon by the auditors:

FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2013

` `

CHANGE IN THE DEFINED BENEFIT OBLIGATIONS:

Liability at the beginning of the year 22,759,846 15,133,437 Current service cost 4,270,841 3,486,949 Interest cost 2,118,976 1,496,570 Benefits paid (1,344,866) (365,083)Actuarial loss 1,975,437 3,007,973 Liability assumed on acquisition 3,157,453 – Liability at the end of the year 32,937,687 22,759,846 FAIR VALUE OF PLAN ASSETS:

Fair value of plan assets at the beginning of the year 22,759,846 – Expected return on plan assets 1,898,474 – Contributions 8,449,644 23,124,929 Benefits paid (1,344,866) (365,083)Actuarial loss on plan assets (602,656) – Fair value of plan assets at the end of the year 31,160,442 22,759,846 Total actuarial loss to be recognised 2,578,093 3,007,973 ACTUAL RETURN ON PLAN ASSETS:

Expected return on plan assets 1,898,474 – Actuarial loss on plan assets (602,656) – Actual return on plan assets 1,295,818 – AMOUNT RECOGNISED IN THE BALANCE SHEET:

Liability at the end of the year 32,937,687 22,759,846 Fair value of plan assets at the end of the year 31,160,442 22,759,846 Amount recognised in the Balance Sheet under “Other current liabilities”- Payable to employee benefit funds (Net of receivable of ` 1,344,866)

1,777,245 –

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2013

` `

EXPENSE RECOGNISED IN THE STATEMENT OF PROFIT AND LOSS:

Current service cost 4,270,841 3,486,949 Interest cost 2,118,976 1,496,570 Expected return on plan assets 1,898,474 –Net actuarial loss to be recognised 2,578,093 3,007,973 Liability assumed on acquisition 3,157,453 –Expense recognised in the Statement of Profit and Loss under “Employee benefit expenses” 10,226,889 7,991,492 RECONCILIATION OF THE LIABILITY RECOGNISED IN THE BALANCE SHEET:

Opening net liability – 15,133,437 Expense recognised 10,226,889 7,991,492 Contribution by the Company (8,449,644) (23,124,929)Amount recognised in the Balance Sheet under “Other current liabilities”- Payable to employee benefit funds (Net of receivable of ` 1,344,866)

1,777,245 –

EXPECTED EMPLOYER’S CONTRIBUTION FOR THE NEXT YEAR 4,000,000 4,000,000

Experience adjustments: FOR THE YEAR ENDED

MARCH 31, 2014 MARCH 31, 2013 MARCH 31, 2012 MARCH 31, 2011 MARCH 31, 2010

IN `

Defined benefit obligation 32,937,687 22,759,846 15,133,437 12,855,573 9,255,401 Plan assets 31,160,442 22,759,846 – – – Surplus / (deficit) (1,777,245) – (15,133,437) (12,855,573) (9,255,401)Experience adjustment on plan liabilities 4,355,447 2,298,723 (618,889) 3,897,432 (708,140)Experience adjustment on plan assets (602,656) – – – –

FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2013

% %

INVESTMENT PATTERN:

Insurer managed funds Government securities 34.27 37.41 Deposit and money market securities 14.32 29.58 Debentures / bonds 51.41 33.01 PRINCIPAL ASSUMPTIONS:

Discount rate (per annum) 8.95 8.05 Expected rate of return on assets (per annum) 8.00 8.00 Salary escalation rate (per annum) 8.00 8.00

The estimate of future salary increases takes into account inflation, seniority, promotion and other relevant factors.

21 Segment reportingThe Company’s main business is to provide asset management services. All other activities revolve around the main business. The Company does not have any geographic segments. As such, there are no separate reportable segments as per Accounting Standard 17 on ‘Segment Reporting’ as notified by the Companies (Accounting Standards) Rules, 2006.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

22 Related party disclosuresIn accordance with the Accounting Standard 18 on ‘Related Party Disclosures’ as notified by the Companies (Accounting Standards) Rules, 2006, the related parties of the Company are as follows:

I Holding Company: IDFC Limited

II Subsidiary Company IDFC Project Equity Company Limited (w.e.f. May 17, 2012)The nature and volume of transactions carried out with the above related parties in the ordinary course of business are as follows:

FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2013

% %

NAME OF THE RELATED PARTY AND NATURE OF THE RELATIONSHIP

(a) Holding Company IDFC Limited Shared services cost 5,742,026 10,792,752

Interim dividend 75,000,000 240,000,000 Final dividend paid (2012-13) 55,000,000 – Purchase of investment – 37,800,000

(b) Subsidiary Company IDFC Project Equity Company Limited Interim dividend received 65,000,000 80,000,000

23 Lease disclosureIn accordance with the Accounting Standard 19 on ‘Leases’ as notified by the Companies (Accounting Standards) Rules, 2006, the following disclosures in respect of operating leases are made:The Company has taken vehicles for certain employees under operating leases, which expires between May 2015 to January 2016 (Previous Year May 2015 to January 2016). Salaries include gross rental expenses of ` 1,283,233 (Previous Year ` 1,283,233).The committed lease rentals in the future are:

FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2013

` `

Not later than one year 1,283,233 1,283,233 Later than one year and not later than five years 594,847 1,878,080

24 Earnings per shareIn accordance with the Accounting Standard 20 on ‘Earnings Per Share’ as notified by the Companies (Accounting Standards) Rules, 2006, the earning per share has been computed as under:

FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2013

` `

Net profit after tax for the year (`) 188,319,150 271,765,621 Weighted average number of equity shares (nos) 50,000 50,000 Par value per share (`) 10 10 Earnings per share - Basic (`) 3,766.38 5,435.31 Earnings per share - Diluted (`) 3,766.38 5,435.31

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

25 Provision and contingencies

FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2013

% %

1) CONTINGENT LIABILITIES

Claims against the Company not acknowledged as debt in respect of:Income-tax demands disputed by the Company, net of amount paid. The matter in dispute is under appeal. The demand have been paid / adjusted and will be received as refund if the matter is decided in favour of the Company.

668,825 –

Other claims 14,052,000 14,052,000 2) COMMITMENTS

Uncalled liability on shares and other investments partly paid 1,771,734 7,919,583 16,492,559 21,971,583

26 Prior years figuresPrevious Year’s figures have been regrouped / reclassified wherever necessary to correspond with the current year’s classification / disclosure.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC ALTERNATIVES LIMITED

SUNIL KAKAR RAJEEV UBEROIMumbai | April 23, 2014 Director Director

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I D F C A LT E R N A T I V E S L I M I T E D | 2 1

Statement Pursuant to Section 212 OF THE COMPANIES ACT, 1956

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC ALTERNATIVES LIMITED

SUNIL KAKAR RAJEEV UBEROIMumbai | April 23, 2014 Director Director

NAME OF SUBSIDIARY COMPANY IDFC PROJECT EQUITY COMPANY LIMITED

1 Financial year of the Subsidiary Companies ended on March 31, 20142 Equity Shares of ` 10 each

a) Number of Shares 50,000Shares of `10 each

b) Extent of Holding 100%3 Net aggregate amount of Profit / (Losses) of the Subsidiary, so far as they

concern members of IDFC Alternatives Limitedi. For the Financial Year of the Subsidiary a) Dealt with in the accounts of the Holding Company. 65,000,000 b) Not dealt with in the accounts of the Holding Company. 12,991,984 ii. For the previous financial years of the Subsidiary since it became the Holding Company’s Subsidiary. a) Dealt with in the accounts of the Holding Company. 80,000,000 b) Not dealt with in the accounts of the Holding Company. 72,855,918

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BOARD OF DIRECTORS n Dr. Rajiv B. Lall – Chairman n Mr. Sunil Kakar n Mr. Sadashiv S. Rao n Dr. Rajeev Uberoi

AUDITORS n Deloitte Haskins & Sells LLP Chartered Accountants

PRINCIPAL BANKER n HDFC Bank Limited

REGISTERED OFFICENaman Chambers, C-32, G-Block Bandra-Kurla Complex, Bandra (East)Mumbai 400 051Tel: +91 22 4222 2000Fax: +91 22 2654 [email protected]: U51103MH2007PLC167611

02 IDFC PROJECT EQUITY COMPANY LIMITED

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Directors' ReportTO THE MEMBERSYour Directors have pleasure in presenting the Eighth Annual Report together with the audited accounts for the year ended March 31, 2014.

FINANCIAL RESULTS

PARTICULARSFOR THE YEAR ENDED

MARCH 31, 2014 `

FOR THE YEAR ENDED MARCH 31, 2013

`

Total Income 523,508,184 586,337,596Less: Total Expenses 410,648,680 363,112,678Profit / (Loss) before Tax 112,859,504 223,224,918Less: Provision for Tax 34,867,520 70,369,000Profit / (Loss) after Tax 77,991,984 152,855,918Add: Profit / (Loss) brought forward 26,391,436 5,412,518Profit Available for Appropriation 104,383,420 158,268,436APPROPRIATIONS

Transfer to General Reserve 7,800,000 15,500,000Interim Dividend 45,000,000 80,000,000Proposed Dividend – 20,000,000Dividend Tax on Interim Dividend 7,647,750 16,377,000Profit / (Loss) carried forward 43,935,670 26,391,436

OPERATIONAL REVIEWYour Company continues to be committed to the development of infrastructure in the country and manage capital commitments of ` 38.37 billion through India Infrastructure Fund (“Fund”).During the year, your Company closed two new investments and one exit for the Fund. Your Company devoted efforts on portfolio management and generating distributions from some of the operating assets.Your Company sponsored / participated in various infrastructure focused events and conferences across the globe during the year.

DIVIDENDAt the Board Meeting held on July 26, 2013, your Board had approved interim dividend amounting to ` 4.50 crore at the rate of 9,000% i.e. ` 900/- per equity share.Your Directors have not recommended any further dividend and recommend confirmation of the said interim dividend as final dividend for the year.

COMPANIES ACT, 2013Most of the provisions of the Companies Act, 2013 and the Rules notified by the Ministry of Corporate Affairs ("MCA") in this regard, have come into force with effect from April 1, 2014. MCA issued a General Circular no. 8/2014 dated April 4, 2014 which clarified that the Financial Statements, Auditors' Report and the Board’s Report in respect of the previous year ended March 31, 2014 will be in accordance with the Companies Act, 1956 and Rules made there under. Your Company shall comply with the provisions of the Companies Act, 2013, as applicable.

DIRECTORS During the year, Mr. Vikram Limaye (DIN-00488534) resigned as a director with effect from March 26, 2014. The Board placed on record its appreciation for the valuable contribution made by Mr. Vikram Limaye during his tenure as Director of the Company. Dr. Rajeev Uberoi (DIN-01731829) and Mr. Sadashiv S. Rao (DIN-01245772) would retire at the ensuing Annual General Meeting ("AGM") and being eligible, offer themselves for reappointment.The Board of Directors recommends reappointment of the above retiring Directors at the ensuing AGM.

AUDITORSDeloitte Haskins & Sells LLP, Chartered Accountants (Registration No. 117366W / W-100018), Statutory Auditors of the Company will retire at the conclusion of the ensuing AGM. The Board recommends the reappointment of Deloitte Haskins & Sells LLP, Chartered Accountants, as the Statutory Auditors of the Company.

PUBLIC DEPOSITSDuring the year under review, your Company has not accepted public deposits.

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Directors' ReportPARTICULARS REGARDING CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION Since the Company does not own any manufacturing facility, the disclosure of information on other matters required to be disclosed in terms of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1998, are not applicable and hence not given.

FOREIGN EXCHANGE EARNINGS AND EXPENDITUREThe particulars regarding foreign exchange expenditure are furnished in Note No. 19 of Notes forming part of the Financial Statements. There was no foreign currency income earned during the year.

PERSONNEL AND OTHER MATTERSYour Company had 20 employees as on March 31, 2014. As required by the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of employees are set out in Annexure to the Directors’ Report.

DIRECTORS’ RESPONSIBILITY STATEMENTThe Directors confirm that:

n the applicable accounting standards have been followed in preparation of annual accounts and there are no material departures; n 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 March 31, 2014 and the profit or loss of the Company for the year ended on that date;

n they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

n they have prepared the annual accounts on a going concern basis.

ACKNOWLEDGEMENTS The Directors thank the investors of India Infrastructure Fund, the Reserve Bank of India and the Securities and Exchange Board of India for their continued support to the Company.The Directors also express their gratitude for the unstinted support and guidance received from IDFC Limited and other group companies.The Directors would also like to express their sincere thanks and appreciation to all the employees for their commendable teamwork, exemplary professionalism and enthusiastic contribution during the year.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS

RAJIV B. LALL

Chairman

Mumbai, April 23, 2014

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TO THE MEMBERS OF IDFC PROJECT EQUITY COMPANY LIMITED

Report on the Financial StatementsWe have audited the accompanying financial statements of IDFC PROJECT EQUITY COMPANY LIMITED (“the Company”), which comprise the Balance Sheet as at March 31, 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 StatementsThe 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 September 13, 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’ ResponsibilityOur 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 the 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 the disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, 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 the internal controls 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 controls. 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.

OpinionIn 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 March 31, 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 Requirements1. 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. 2. 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 September 13, 2013 of the Ministry of Corporate Affairs).

(e) On the basis of the written representations received from the directors as on March 31, 2014 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014 from being appointed as a director in terms of Section 274(1) (g) of the Act.

FOR DELOITTE HASKINS & SELLS LLP

Chartered Accountants(Registration No. 117366W/W-100018)

Z. F. BILLIMORIA

Partner(Membership No. 42791)

Mumbai, April 23, 2014

Independent Auditors' Report

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(Referred to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date)(i) Having regard to the nature of the Company’s business/ activities/ result/ transactions, etc. Clauses (i)(c), (ii), (vi), (viii), (x), (xi), (xii), (xiii), (xv),

(xvi), (xvii), (xviii), (xix), and (xx) of CARO are not 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 explanations given to us, no material discrepancies were noticed on such verification.

(iii) The Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956.

(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 services. During the course of our audit, we have not observed any continuing failure to correct major weakness in such internal control system.

(v) To the best of our knowledge and belief and according to the information and explanations given to us, there were no contracts or arrangements that needed to be entered in the Register maintained under Section 301 of the Companies Act, 1956.

(vi) In our opinion, the internal audit functions 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.

(vii) According to the information and explanations given to us in respect of statutory dues: (a) The Company has been generally regular in depositing undisputed statutory dues, including Provident Fund, Income-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 Provident Fund, Income-tax, Service Tax, Cess and other material statutory dues

in arrears as at March 31, 2014 for a period of more than six months from the date they became payable. (c) Details of dues of Income-tax which have not been deposited as on March 31, 2014 on account of disputes are given below:

STATUTE NATURE OF DUES FORUM WHERE DISPUTE IS PENDING

PERIOD TO WHICH THE AMOUNT RELATES

AMOUNT INVOLVED (AMOUNT IN `)

Income-tax Act, 1961 Income Tax DCIT(A) A.Y. 2010-11 1,250,300

(viii) Based on our examination of the records and evaluation of the related internal controls, the Company has maintained proper records of the transactions and contracts in respect of its dealing in mutual fund investments and timely entries have been made therein. The aforesaid securities have been held by the Company in its own name.

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

FOR DELOITTE HASKINS & SELLS LLP

Chartered Accountants(Registration No. 117366W/W-100018)

Z. F. BILLIMORIA

Partner(Membership No. 42791)

Mumbai, April 23, 2014

Annexure to the Auditors' Report

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IN TERMS OF OUR REPORT ATTACHED.

FOR DELOITTE HASKINS & SELLS LLP

Chartered AccountantsFOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC PROJECT EQUITY COMPANY LIMITED

Z. F. BILLIMORIA SUNIL KAKAR RAJEEV UBEROIPartner Director Director

SANJAY AJGAONKARMumbai | April 23, 2014 Company Secretary

NOTES AS AT MARCH 31, 2014

AS AT MARCH 31, 2013

` `

EQUITY AND LIABILITIES

SHAREHOLDERS’ FUNDS

(a) Share capital 3 500,000 500,000 (b) Reserves and surplus 4 99,058,670 73,714,436

99,558,670 74,214,436 CURRENT LIABILITIES

(a) Trade payables 5 164,491,355 123,175,961 (b) Other current liabilities 6 84,483,828 113,057,630 (c) Short-term provisions 7 – 23,399,000

248,975,183 259,632,591 TOTAL 348,533,853 333,847,027

ASSETS

NON-CURRENT ASSETS

(a) Fixed assets(i) Tangible assets 8 6,099,545 1,889,499 (ii) Intangible assets 8 25,888 10,736

6,125,433 1,900,235 (b) Deferred tax asset 9 225,957 205,957 (c) Long-term loans and advances 10 132,984,506 111,468,849

139,335,896 113,575,041 CURRENT ASSETS

(a) Cash and bank balances 11 192,842,904 195,689,839 (b) Short-term loans and advances 12 14,989,276 21,364,515 (c) Other current assets 13 1,365,777 3,217,632

209,197,957 220,271,986 TOTAL 348,533,853 333,847,027

See accompanying notes forming part of the financial statements.

Balance Sheet AS AT MARCH 31, 2014

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IN TERMS OF OUR REPORT ATTACHED.

FOR DELOITTE HASKINS & SELLS LLP

Chartered AccountantsFOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC PROJECT EQUITY COMPANY LIMITED

Z. F. BILLIMORIA SUNIL KAKAR RAJEEV UBEROIPartner Director Director

SANJAY AJGAONKARMumbai | April 23, 2014 Company Secretary

NOTES FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2013

` `

I INCOME

Revenue from operations 14 511,506,479 575,508,582 Other income 15 12,001,705 10,829,014 TOTAL REVENUE (I) 523,508,184 586,337,596

II EXPENSES

Employee benefit expenses 16 264,338,358 233,533,511 Finance cost 17 2,810 50,990 Depreciation and amortisation expense 8 1,158,770 887,061 Other expenses 18 145,148,742 128,641,116 TOTAL EXPENSES (II) 410,648,680 363,112,678

III PROFIT BEFORE TAX (I - II) 112,859,504 223,224,918

IV TAX EXPENSES:

Current tax 34,419,000 65,523,000 Deferred tax 9 (20,000) 4,846,000 Provision for tax for earlier year 468,520 –

V PROFIT AFTER TAX (III - IV) 77,991,984 152,855,918

Earnings per share (nominal value of ` 10 per share) 25Basic (`) 1,559.84 3,057.12 Diluted (`) 1,559.84 3,057.12

See accompanying notes forming part of the financial statements.

Statement of Profit and Loss FOR THE YEAR ENDED MARCH 31, 2014

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IN TERMS OF OUR REPORT ATTACHED.

FOR DELOITTE HASKINS & SELLS LLP

Chartered AccountantsFOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC PROJECT EQUITY COMPANY LIMITED

Z. F. BILLIMORIA SUNIL KAKAR RAJEEV UBEROIPartner Director Director

SANJAY AJGAONKARMumbai | April 23, 2014 Company Secretary

FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2013

` `

A. CASH FLOW FROM OPERATING ACTIVITIES

Profit before taxation 112,859,504 223,224,918 Adjustments for: Depreciation and amortisation expense 1,158,770 887,061 Loss on sale of current investments 26,446 – Dividend income on current investment (11,653,890) (10,505,987)Interest income on bank deposits (347,815) (322,224)Operating profit before working capital changes 102,043,015 213,283,768 Changes in working capital:Decrease in short-term loans and advances 6,375,239 73,110,518 Increase in long- term loans and advances – (55,000,000)Decrease / (increase) in other current assets 1,819,292 (2,876,003)Increase / (decrease) in trade payables 41,315,394 (5,544,208)Increase in other current liabilities (28,573,802) 1,281,939 Decrease in long-term provisions – (13,162,573)Decrease in short-term provisions (23,399,000) (1,401,185)Cash generated from operations 99,580,137 209,692,256 Net income tax paid (56,403,177) (65,616,669)NET CASH FROM OPERATING ACTIVITIES (A) 43,176,960 144,075,587

B. CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of fixed assets (5,383,968) (847,412)Sale proceeds of current investments 692,127,447 714,005,991 Dividend received on current investments 11,653,890 10,505,987 Purchase of current investments (692,153,892) (714,005,991)Interest received on bank deposits 380,378 229,987 NET CASH FROM INVESTING ACTIVITIES (B) 6,623,855 9,888,562

C. CASH FLOWS FROM FINANCING ACTIVITIES

Interim equity dividend paid (including dividend distribution tax) (52,647,750) (92,978,000)NET CASH USED IN FINANCING ACTIVITIES (C) (52,647,750) (92,978,000)

Net increase / (decrease) in cash and cash equivalents (A+B+C) (2,846,935) 60,986,149 Cash and cash equivalents at the beginning of the year (see note 11) 195,689,839 134,703,690 Cash and cash equivalents at the end of the year (see note 11) 192,842,904 195,689,839

(2,846,935) 60,986,149

Cash Flow Statement FOR THE YEAR ENDED MARCH 31, 2014

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

01 BackgroundIDFC Project Equity Company Limited (“the Company”) was incorporated on February 06, 2007. The Company has entered into an Investment Management Agreement with IDFC Trustee Company Limited on March 11, 2008 to act as the Investment Manager of the India Infrastructure Fund (“Fund”) – a domestic venture capital fund registered under the Securities and Exchange Board of India (Venture Capital Funds) Regulations, 1996. In accordance with the agreement, the Company is entitled to receive an investment management fee for managing the Fund beginning from the Initial Closing of the Fund.

02 Significant Accounting Policies(a) Basis of PreparationThe 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 September 13, 2013 of the Ministry of Corporate Affairs) and the relevant provisions of the 1956 Act/ 2013 Act, as applicable. The financial statements have been prepared on accrual basis under the historical cost convention.

(b) Use of estimatesThe Company adopts the accrual concept in the preparation of the accounts. 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. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates.

(c) Cash and cash equivalentsCash and cash equivalents for the purpose of the Cash Flow Statement comprises cash on hand, cash in bank, fixed deposits and other short-term highly liquid investments with an original maturity of three months or less that are readily convertible into known amount of cash and which are subject to an insignificant risk of changes in value.

(d) Cash flow statementsCash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

(e) InflationAssets and liabilities are recorded at historical cost to the Company. These costs are not adjusted to reflect the changing value in the purchasing power of money.

(f) Revenue recognition i. Management Fees are recognised on accrual basis as per the terms of the agreement. ii. Interest and other dues are accounted on accrual basis. iii. Dividend is accounted when the right to receive is established.

(g) Fixed assetsFixed assets are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated depreciation.

(h) Intangible assetsIntangible Assets comprising of system software are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated amortisation. Any expenses on such software for support and maintenance payable annually are charged to the Statement of Profit and Loss.

(i) Depreciation and amortisationTangible assetsDepreciation for all Fixed Assets, excluding certain electronic items, is provided on the written down value method, at the rates prescribed by Schedule XIV of the Companies Act, 1956. Certain electronic items are depreciated over a period of two years on a straight-line method based on the Management’s estimate of useful life of assets. Depreciation on additions during the year is provided on a pro-rata basis. Assets costing less than ` 5,000/- each are written off in the year of capitalisation.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

Intangible assetsIntangible assets consisting of computer software are being amortised over a period of three years on the straight-line method.

(j) Investments Non-current investments are carried at acquisition cost. A provision is made for diminution other than temporary on an individual basis. Current investments are carried at the lower of cost and fair value on an individual basis.

(k) Employee benefitsDefined contribution plansThe company’s contribution to provident fund, superannuation fund and pension fund are considered as defined contribution plans and are charged as an expense as they fall due based on the amount of contribution required to be made.

Defined benefit planThe net present value of the Company’s obligation towards Gratuity to employees is funded and actuarially determined as at the year end based on the projected unit credit method. Actuarial gains and losses are recognised in the Statement of Profit and Loss for the year.

Compensated absences Employees are not permitted to accumulate leave. Based on the leave rules, unavailed privilege leave to the extent encashable is paid to the employees and charged to the Statement of Profit and Loss for the year.

(l) Operating leasesLeases of assets under which all the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the Statement of Profit and Loss on a straight-line basis over the lease term in accordance with Accounting Standard 19 on ‘Leases’ as notified under the Companies (Accounting Standard) Rules, 2006. Initial direct cost incurred specifically for operating leases are recognised as expense in the year in which they are incurred.

(m) Earnings per shareBasic earnings per share is computed by dividing the profit after tax by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit after tax as adjusted for expense or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.

(n) Income-taxThe accounting treatment for income-tax in respect of the Company’s income is based on the Accounting Standard 22 on ‘Accounting for Taxes on Income’ as notified by the Companies (Accounting Standards) Rules, 2006. The provision made for income-tax in the accounts comprises both the current tax and the deferred tax. The deferred tax assets and liabilities for the year arising on account of timing differences are recognised in the Statement of Profit and Loss and the cumulative effect thereof is reflected in the Balance Sheet.Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax asset is recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax asset can be realised. In situations where the Company has unabsorbed depreciation or carried forward losses deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that the same can be realised against future taxable profits.

(o) Provisions and contingenciesA provision is recognised when the Company has a present obligation as a result of past events and 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 their present value and are determined based on the 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 disclosed in the Notes.

(p) Foreign currency transactionsForeign currency transactions are accounted at the exchange rates prevailing on the date of the transaction. Foreign currency monetary items outstanding as at the Balance Sheet date are reported using the closing rate. Gains and losses resulting from the settlement of such transactions and translation of monetary assets and liabilities denominated in foreign currencies are recognised in the Statement of Profit and Loss.

(q) Impairment of AssetsThe carrying value of assets at each Balance Sheet date are reviewed for impairment. If any indication of impairment based on internal / external factors exists, the recoverable amount of such assets is estimated and impairment is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the net selling price and its value in use, which is arrived at by discounting the future cash flows to their present value, based on an appropriate discounting factor. If at the Balance sheet date, there is a indication that previously

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

recognised impairment loss no longer exists, the recoverable amount is re-assessed and the asset is reflected at the recoverable amount, subject to a maximum of the depreciable historical cost and reversal of such impairment loss is recognised in the Statement of Profit and Loss, except in case of revalued assets.

(r) Service tax input creditService tax input credit is accounted for in the books in the period in which the underlying service received is accounted and when there is no uncertainty in availing / utilising the credits.

(s) Operating CycleBased on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.

03 Share capitalPARTICULARS AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NUMBER ` NUMBER `

AUTHORISED

Equity shares of ` 10 each 10,000,000 100,000,000 10,000,000 100,000,000 ISSUED, SUBSCRIBED AND PAID UP

Equity shares of ` 10 each fully paid-up 50,000 500,000 50,000 500,000 All the above equity shares are held by IDFC Alternatives Limited, the Holding Company and its nominees. TOTAL ISSUED, SUBSCRIBED AND FULLY PAID-UP EQUITY SHARE CAPITAL

50,000 500,000 50,000 500,000

(a) Terms / rights attached to equity shares The Company has only one class of equity shares having a par value of ` 10 per share. Each holder of equity share is entitled to one vote per share.In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of preferential amounts. However, no such preferential amounts exist currently. The distribution will be in proportion to the number of equity shares held by the shareholders.

(b) Details of the shareholders holding more than 5% of the Share capital

NAME OF SHAREHOLDER AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NUMBER % OF HOLDING NUMBER % OF HOLDING

IDFC Alternatives Limited and its nominees 50,000 100% 50,000 100% 50,000 100% 50,000 100%

(c) During the year ended March 31, 2014, the Board of Directors, in the meeting held on July 26, 2013 had declared interim dividend of ` 900 per equity share (Previous Year ` 1,600 per share in the meeting held on October 25, 2012).Also during the year ended March 31, 2014, the Board of Directors have proposed dividend of ` NIL (Previous Year ` 400) per share. The total dividend appropriation amounted to ` 5,2647,750 (Previous Year ` 116,377,000) including dividend distribution tax of ` 7,647,750 (Previous Year ` 16,377,000).

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

04 Reserves and surplus AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

A. GENERAL RESERVE

Opening balance 47,323,000 31,823,000 Add : Transferred from surplus in the Statement of Profit and Loss 7,800,000 15,500,000 Closing balance 55,123,000 47,323,000

B. SURPLUS IN THE STATEMENT OF PROFIT AND LOSS

Opening balance 26,391,436 5,412,518 Add : Profit for the year 77,991,984 152,855,918 Less : Interim equity dividend (see note 23) (45,000,000) (80,000,000) Proposed equity dividend (see note 23) – (20,000,000) Tax on equity dividend (7,647,750) (16,377,000) Transfer to General reserve (7,800,000) (15,500,000) Closing balance 43,935,670 26,391,436 TOTAL RESERVES AND SURPLUS 99,058,670 73,714,436

05 Trade payables AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Payable to vendors 1,059,108 459,840 Provision for expenses 163,432,247 122,716,121 TOTAL 164,491,355 123,175,961

No amount is payable in the current year to “Suppliers” under Micro, Small and Medium Enterprises Development Act, 2006.No interest has been paid / payable by the Company during the year to the “Suppliers” covered under Micro, Small and Medium Enterprises Development Act, 2006. The above information takes into account only those suppliers who have responded to the inquiries made by the Company for this purpose.

06 Other current liabilities AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Fees received in advance 78,161,942 108,794,781 OthersPayable to employee funds 937,532 882,217 Others 6,050 50 Statutory remittances 5,378,304 3,380,582 TOTAL 84,483,828 113,057,630

07 Short-term provisions AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Proposed dividend (see note 3 (c)) – 20,000,000 Tax on proposed dividend – 3,399,000 TOTAL – 23,399,000

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

08 Fixed assetsGROSS BLOCK DEPRECIATION / AMORTISATION NET BLOCK

AS

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` ` ` ` ` ` ` ` ` `

A TANGIBLE ASSETS

Computer hardware 2,050,674 459,120 – 2,509,794 1,415,475 351,272 – 1,766,747 743,047 635,199

(Previous Year) (1,686,704) (363,970) – (2,050,674) (1,043,957) (371,518) – (1,415,475) (635,199)

Furniture and fixtures 213,384 – – 213,384 102,864 20,003 – 122,867 90,517 110,520

(Previous Year) (213,384) – – (213,384) (78,441) (24,423) – (102,864) (110,520)

Vehicles 1,540,571 4,658,314 – 6,198,885 1,043,384 494,748 – 1,538,132 4,660,753 497,187

(Previous Year) (1,540,571) – – (1,540,571) (869,694) (173,690) – (1,043,384) (497,187)

Office equipment 1,262,695 237,358 – 1,500,053 616,102 278,723 – 894,825 605,228 646,593

(Previous Year) (779,253) (483,442) – (1,262,695) (333,551) (282,551) – (616,102) (646,593)

Total (A) 5,067,324 5,354,792 – 10,422,116 3,177,825 1,144,746 – 4,322,571 6,099,545 1,889,499

Previous Year (4,219,912) (847,412) – (5,067,324) (2,325,643) (852,182) – (3,177,825) (1,889,499)

B INTANGIBLE ASSETS-OTHER THAN

INTERNALLY GENERATED

Computer software 164,418 29,176 – 193,594 153,682 14,024 – 167,706 25,888 10,736

(Previous Year) (164,418) – – (164,418) (118,803) (34,879) – (153,682) (10,736)

Total (B) 164,418 29,176 – 193,594 153,682 14,024 – 167,706 25,888 10,736

Previous Year (164,418) – – (164,418) (118,803) (34,879) – (153,682) (10,736)

Total (A+B) 5,231,742 5,383,968 – 10,615,710 3,331,507 1,158,770 – 4,490,277 6,125,433 1,900,235

Total of Previous Year (4,384,330) (847,412) - (5,231,742) (2,444,446) (887,061) - (3,331,507) (1,900,235) -

09 Deferred tax asset AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Tax effect of items constituting deferred tax assetOn difference between book balance and tax balance of fixed assets 225,957 205,957 TOTAL 225,957 205,957

In compliance with Accounting Standard 22 relating to ‘Accounting for Taxes on Income’ as notified under the Companies (Accounting Standards) Rules, 2006, ` 20,000 (Previous Year ` 4,846,000 debit) has been credited to the Statement of Profit and Loss towards deferred tax (net) on account of timing differences.

10 Long-term loans and advances (Unsecured, considered good) AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Security deposits 59,011,881 59,011,881 Advance payment of income tax [(net of provision for tax of ` 302,386,939) (Previous Year ` 267,499,419)]

73,972,625 52,456,968

TOTAL 132,984,506 111,468,849

11 Cash and bank balances AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

CASH AND CASH EQUIVALENTS

Cash on hand 3,200 17,756 Balances with bank: in current accounts 2,839,704 4,172,083 in deposit accounts 190,000,000 191,500,000 TOTAL 192,842,904 195,689,839

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

12 Short-term loans and advances (Unsecured, considered good)

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Prepaid expenses 8,775,240 16,002,148 Balances with government authorities - CENVAT credit available 6,097,715 5,052,157 Loan and advances to employees 20,229 71,521 Supplier advances 96,092 238,689 TOTAL 14,989,276 21,364,515

13 Other current assets AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Interest accrued on term deposits with bank 191,095 223,658 Receivable from gratuity fund [(net of payable of `264,107) (see note 21)] 665,123 –Expenses recoverable 509,559 2,993,974 TOTAL 1,365,777 3,217,632

14 Revenue from operationsFOR THE YEAR ENDED

MARCH 31, 2014FOR THE YEAR ENDED

MARCH 31, 2013

` `

Management fees 511,506,479 575,508,582 TOTAL 511,506,479 575,508,582

15 Other incomeFOR THE YEAR ENDED

MARCH 31, 2014FOR THE YEAR ENDED

MARCH 31, 2013

` `

Dividend income from current investments 11,653,890 10,505,987 Interest income on bank deposits 347,815 322,224 Miscellaneous Income – 803 TOTAL 12,001,705 10,829,014

16 Employee benefit expensesFOR THE YEAR ENDED

MARCH 31, 2014FOR THE YEAR ENDED

MARCH 31, 2013

` `

Salaries and bonus (see note 23 and 24) 250,406,667 217,922,695 Contribution to provident and other funds (see note 21) 10,904,127 12,515,371 Staff welfare expenses 3,027,564 3,095,445 TOTAL 264,338,358 233,533,511

17 Finance costFOR THE YEAR ENDED

MARCH 31, 2014FOR THE YEAR ENDED

MARCH 31, 2013

` `

Interest on Inter corporate deposit (see note 23) – 45,548 Bank charges 2,810 5,442 TOTAL 2,810 50,990

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

18 Other expensesFOR THE YEAR ENDED

MARCH 31, 2014FOR THE YEAR ENDED

MARCH 31, 2013

` `

Shared service cost (see note 23) 10,321,228 10,151,004 Rent (see note 24) 2,173,333 1,830,967 Rates and Taxes 227,595 81,436 Repairs and maintenance Equipments – 88,785 Others 1,062,778 101,432 Insurance charges 17,012 5,737 Travelling and conveyance (see note 19) 15,712,694 15,293,494 Printing and stationery 320,866 273,823 Communication expenses 1,644,261 1,537,162 Brokerage paid 267,810 217,742 Conference and sponsorships (see note 19) 8,695,193 5,773,756 Legal and professional fees (see note 19) 28,638,110 8,749,796 Service fees 72,326,873 81,657,122 Foreign currency loss (net) 8,222 7,490 Auditor’s remuneration (see note (a) below) 700,000 707,679 Loss on sale of current investments 26,446 –Miscellaneous expenses 3,006,321 2,163,691 TOTAL 145,148,742 128,641,116

(a) Break up of Auditors Remuneration

FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2013

` `

Statutory audit fee 300,000 300,000 Tax audit fee 100,000 100,000 Other services 300,000 300,000 Out of pocket expenses – 7,679 Service tax 37,080 87,469

737,080 795,148 Less: Service tax set off claimed 37,080 87,469 TOTAL 700,000 707,679

19 Expenditure in foreign currencies (on payment basis)

FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2013

` `

Travelling expenses 111,685 215,941 Professional fees – 728,331 Conference and sponsorships 430,438 86,758

20 Earnings in foreign currencies:There are no earnings in foreign currencies.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

21 Employee benefitsIn accordance with the Accounting Standard 15 on ‘Employee Benefits’ as notified by the Companies (Accounting Standards) Rules, 2006, the following disclosures have been made:The Company has recognised the following amounts in the Statement of Profit and Loss towards contribution to defined contribution plans which are included under contribution to provident and other funds:

FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2013

` `

Provident fund 5,246,122 4,593,480 Pension fund 1,625,148 1,432,101 Superannuation fund 1,000,000 1,024,284

The details of the Company’s post – retirement benefit plans for gratuity for its employees are given below which is certified by the actuary and relied upon by the auditors:

FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2013

` `

CHANGE IN THE DEFINED BENEFIT OBLIGATIONS

Liability at the beginning of the year 19,676,630 14,563,758 Current service cost 3,125,701 2,726,219 Interest cost 1,775,106 1,390,190 Benefits paid (929,230) (352,634)Actuarial loss / (gain) (626,401) 1,349,097 Liability at the end of the year 23,021,806 19,676,630 FAIR VALUE OF PLAN ASSETS

Fair value of plan assets at the beginning of the year 19,676,630 – Expected return on plan assets 1,634,025 – Contributions 2,768,750 20,029,264 Benefits paid (929,230) (352,634)Actuarial loss on plan assets (392,476) – Fair value of plan assets at the end of the year 22,757,699 19,676,630 TOTAL ACTUARIAL LOSS TO BE RECOGNISED (233,925) 1,349,097 ACTUAL RETURN ON PLAN ASSETS

Expected return on plan assets 1,634,025 – Actuarial loss on plan assets (392,476) – Actual return on plan assets 1,241,549 – AMOUNT RECOGNISED IN THE BALANCE SHEET

Liability at the end of the year 23,021,806 19,676,630 Fair value of plan assets at the end of the year 22,757,699 19,676,630 Amount recognised in the Balance Sheet under “Other current assets”- Receivable from gratuity fund (liability of ` 264,107 netted off against receivable of ` 9,29,230)

264,107 –

EXPENSE RECOGNISED IN THE STATEMENT OF PROFIT AND LOSS

Current service cost 3,125,701 2,726,219 Interest cost 1,775,106 1,390,190 Expected return on plan assets (1,634,025) – Net actuarial loss / (gain) to be recognised (233,925) 1,349,097 Expense recognised in the Statement of Profit and Loss under ‘Employee benefit expenses’ 3,032,857 5,465,506 RECONCILIATION OF THE LIABILITY RECOGNISED IN THE BALANCE SHEET

Opening net liability – 14,563,758 Expense recognised 3,032,857 5,465,506 Contribution by the Company (2,768,750) (20,029,264)Amount recognised in the Balance Sheet under “Other current assets”- Receivable from gratuity fund (liability of ` 264,107 netted off against receivable of ` 9,29,230)

264,107

EXPECTED EMPLOYER’S CONTRIBUTION FOR THE NEXT YEAR 3,000,000 3,000,000

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

EXPERIENCE ADJUSTMENTS

FOR THE YEAR ENDED

MARCH 31, 2014 MARCH 31, 2013 MARCH 31, 2012 MARCH 31, 2011 MARCH 31, 2010

IN `

Defined benefit obligation 23,021,806 19,676,630 14,563,758 10,894,324 6,381,328 Plan assets 22,757,699 19,676,630 – – – Surplus / (deficit) (264,107) – (14,563,758) (10,894,324) (6,381,328)Experience adjustment on plan liabilities 2,141,073 626,176 767,421 2,369,165 (177,117)Experience adjustment on plan assets (392,476) – – – –

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

% %

INVESTMENT PATTERN

Insurer managed funds Government securities 34.27 37.41 Deposit and money market securities 14.32 29.58 Debentures / bonds 51.41 33.01 PRINCIPAL ASSUMPTIONS

Discount rate (per annum) 9.15 8.05 Expected rate of return of assets per annum 8.00 8.00 Salary escalation rate (per annum) 8.00 8.00

The estimate of future salary increases takes into account inflation, seniority, promotion and other relevant factors.

22 Segment reportingThe Company’s main business is to provide asset management services in India. All other activities revolve around the main business. The Company does not have any geographic segments. As such, there are no separate reportable segments as per Accounting Standard 17 on ‘Segment Reporting’ as notified by the Companies (Accounting Standards) Rules, 2006.

23 Related party disclosuresAs per the Accounting Standard 18 on ‘Related Party Disclosures’ as notified by the Companies (Accounting Standards) Rules, 2006, the related parties of the Company are as follows:

I. Holding Company: IDFC Alternatives Limited (w.e.f. May 17, 2012) IDFC Limited (upto May 16, 2012)

II. Ultimate Holding Company: IDFC Limited (w.e.f. May 17, 2012) The nature and volume of transactions carried out with the above related parties in the ordinary course of business are as follows:

FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2013

` `

NAME OF THE RELATED PARTY AND NATURE OF THE RELATIONSHIP

(a) Holding Company IDFC Alternatives Limited Interim dividend paid 45,000,000 80,000,000

Final Dividend paid (2012-13) 20,000,000 –

(b) Ultimate Holding Company IDFC Limited Salaries and bonus – 487,519

Shared Services Cost 10,321,228 10,151,004 Interest on Inter corporate deposit – 45,548 Loan Received – 35,000,000 Loan Repaid – 35,000,000

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

24 Lease disclosureIn accordance with the Accounting Standard 19 on ‘Leases’ as notified by the Companies (Accounting Standards) Rules, 2006, the following disclosures in respect of operating leases are made:The Company has taken premises for employees under operating lease, which expires between August 2015 to September 2016 (Previous Year June 2015 to December 2015). Rent include gross rental expenses of ` 2,173,333 (Previous Year ` 1,830,967).The committed lease rentals in the future are:

FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2013

` `

Not later than one year 2,160,000 2,160,000 Later than one year and not later than five years 2,201,613 2,861,613

The Company has taken vehicles for certain employees under operating leases, which expires between August 2014 to May 2016 (Previous Year August 2014 to May 2016). Salaries include gross rental expenses of ` 1,845,840 (Previous Year ` 1,804,062).The committed lease rentals in the future are:

FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2013

` `

Not later than one year 1,150,195 1,878,464 Later than one year and not later than five years 427,704 1,681,058

25 Earnings per shareIn accordance with the Accounting Standard 20 on ‘Earnings Per Share’, as notified under the Companies (Accounting Standards) Rules, 2006 the Earning Per Share has been computed as under:

FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2013

` `

Net profit after tax for the year (`) 77,991,984 152,855,918 Weighted average number of equity shares (Nos) 50,000 50,000 Par value per share (`) 10 10 Earnings per share - Basic (`) 1,559.84 3,057.12 Earnings per share - Diluted (`) 1,559.84 3,057.12

26 Provision and contingenciesFOR THE YEAR ENDED

MARCH 31, 2014FOR THE YEAR ENDED

MARCH 31, 2013

` `

1) Contingent liabilities not provided for in respect ofClaims not acknowledged as debt in respect of:Income-tax demands disputed by the Company. The matter in dispute is under appeal. The demand will be received as refund if the matter is decided in favour of the Company

1,250,300 1,250,300

1,250,300 1,250,300

27 Prior year figuresPrevious Year’s figures have been regrouped / reclassified wherever necessary to correspond with the current year’s classification / disclosure.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC PROJECT EQUITY COMPANY LIMITED

SUNIL KAKAR RAJEEV UBEROIDirector Director

SANJAY AJGAONKARMumbai | April 23, 2014 Company Secretary

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BOARD OF DIRECTORS n Mr. S. B. Mathur – Chairman n Dr. Rajiv B. Lall n Mr. Vikram Limaye

AUDITORS n Deloitte Haskins & Sells Chartered Accountants

PRINCIPAL BANKER n HDFC Bank Limited

REGISTERED OFFICENaman Chambers, C-32, G-Block Bandra-Kurla Complex, Bandra (East)Mumbai 400 051Tel: +91 22 4222 2000Fax: +91 22 2654 [email protected]: U65990MH2002PLC137533

03 IDFC TRUSTEE COMPANY LIMITED

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I D F C T R U S T E E C O M PA N Y L I M I T E D | 4 1

Directors' ReportTO THE MEMBERSYour Directors have pleasure in presenting the Twelfth Annual Report together with the audited accounts for the year ended March 31, 2014.

FINANCIAL RESULTSThe summary of the financial results for the year under review is as follows:

PARTICULARSFOR THE YEAR ENDED

MARCH 31, 2014 `

FOR THE YEAR ENDED MARCH 31, 2013

`

Gross Income 7,805,591 6,532,088Profit Before Tax 7,541,179 6,013,113Provision for Tax 1,948,925 1,749,000Profit After Tax 5,592,254 4,264,113

OPERATIONAL REVIEW The main object of the Company is to act as trustee for various investment funds under the asset management business primarily established by IDFC Limited and its subsidiaries. The Company continues to act as the trustee of India Infrastructure Fund, IDFC Infrastructure Fund 2 – IDFC Private Equity Fund II, IDFC Infrastructure Fund 3 – IDFC Private Equity Fund III, IDFC Project Equity Domestic Investors Trust - I, IDFC Project Equity Domestic Investors Trust - II, India Infrastructure Fund II, IDFC Real Estate Yield Fund, IDFC Private Equity Employees Fund II Benefits Trust, IDFC Private Equity Employees Fund III Benefits Trust, IDFC Project Equity Company Employees Benefits Trust, IDFC Real Estate Yield Fund Employees Benefits Trust, IDFC Alternatives (Infrastructure Fund II) Employees Benefits Trust and IDFC Employees Benefits Trust.

DIVIDENDYour Directors do not recommend payment of dividend for the year ended March 31, 2014.

COMPANIES ACT, 2013Most of the provisions of the Companies Act, 2013 and the Rules notified by the Ministry of Corporate Affairs ("MCA") in this regard, have come into force with effect from April 1, 2014. MCA issued a General Circular no. 8/2014 dated April 4, 2014 which clarified that the Financial Statements, Auditors' Report and the Board’s Report in respect of the previous year ended March 31, 2014 will be in accordance with the Companies Act, 1956 and Rules made there under. Your Company shall comply with the provisions of the Companies Act, 2013, as applicable.

DIRECTORSDr. Rajiv B. Lall (DIN-00131782) would retire at the ensuing Annual General Meeting ("AGM") and being eligible offers himself for reappointment.The Board of Directors recommends reappointment of Dr. Rajiv B. Lall at the ensuing AGM.

AUDITORSM/s. Deloitte Haskins & Sells, Chartered Accountants, Ahmedabad (Registration No. 117365W) Statutory Auditors of the Company will retire at the conclusion of the ensuing AGM. The Board recommends the reappointment of M/s. Deloitte Haskins & Sells, Chartered Accountants, as the Statutory Auditors of the Company.In view of size of the Company and nature of its business, the Company does not have internal audit system. However, the Company has adequate internal controls and procedures to take care of all aspects of business.

PUBLIC DEPOSITSDuring the year under review, your Company has not accepted any public deposits.

PARTICULARS REGARDING CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION Since the Company does not own any manufacturing facility, the disclosure of information on other matters required to be disclosed in terms of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1998, are not applicable and hence not given.

FOREIGN EXCHANGE EARNINGS AND EXPENDITUREThere was no income or expenditure in foreign currency during the year under review.

PERSONNEL AND OTHER MATTERSSince your Company does not have any employees, the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are not applicable and hence not given.

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DIRECTORS’ RESPONSIBILITY STATEMENTThe Directors confirm that:

n the applicable accounting standards have been followed in preparation of annual accounts and there are no material departures; n 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 March 31, 2014 and the profit of the Company for the year ended on that date;

n they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

n they have prepared the annual accounts on a going concern basis.

ACKNOWLEDGEMENTS Your Company is grateful to the Securities and Exchange Board of India for its support and advice during the period under review.The Company would also like to express its gratitude for the unstinted support and guidance received from IDFC Limited and other group companies.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS

S. B. MATHUR

Chairman

Mumbai, April 23, 2014

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TO THE MEMBERS OF IDFC TRUSTEE COMPANY LIMITED

Report on the Financial StatementsWe have audited the accompanying financial statements of IDFC TRUSTEE COMPANY LIMITED (“the Company”), which comprise the Balance Sheet as at March 31, 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 StatementsThe 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 September 13, 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’ ResponsibilityOur 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 the 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 the disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, 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 the internal controls 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 controls. 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.

OpinionIn 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 March 31, 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 Requirements1. 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.2. 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 September 13, 2013 of the Ministry of Corporate Affairs).

(e) On the basis of the written representations received from the directors as on March 31, 2014 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014 from being appointed as a director in terms of Section 274(1)(g) of the Act.

FOR DELOITTE HASKINS & SELLS

Chartered Accountants(Registration No. 117365W)

Z. F. BILLIMORIA

Partner(Membership No. 42791)

Mumbai, April 23, 2014

Independent Auditors' Report

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(Referred to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date)(i) Having regard to the nature of the Company’s business/ activities/ result, transactions etc. clauses (i), (ii), (vi), (viii), (x), (xi), (xii), (xiii), (xv), (xvi),

(xvii), (xviii), (xix) and (xx) of CARO are not applicable. (ii) The Company has neither granted nor taken any loans, secured or unsecured, to / from companies, firms or other parties covered in the

Register maintained under Section 301 of the Companies Act, 1956. (iii) 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 sale of services. During the course of our audit, we have not observed any continuing failure to correct major weakness in such internal control system.

(iv) To the best of our knowledge and belief and according to the information and explanations given to us, there were no contracts or arrangements required to be entered in the Register maintained under Section 301 of the Companies Act, 1956.

(v) The Company does not have an internal audit system. (vi) 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 Income-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, Service Tax, Cess and other material statutory dues in arrears as at

March 31, 2014 for a period of more than six months from the date they became payable.(vii) Based on our examination of the records and evaluation 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.

(viii) 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 the Company has been noticed or reported during the year.

FOR DELOITTE HASKINS & SELLS

Chartered Accountants(Registration No. 117365W)

Z. F. BILLIMORIA

Partner(Membership No. 42791)

Mumbai, April 23, 2014

Annexure to the Auditors’ Report

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AS AT MARCH 31, 2014

AS AT MARCH 31, 2013

NOTES ` ` `

EQUITY AND LIABILITIES

SHAREHOLDERS’ FUNDS

(a) Share capital 3 500,000 500,000 (b) Reserves and surplus 4 27,794,957 22,202,703

28,294,957 22,702,703 CURRENT LIABILITIES

(a) Trade payables 5 86,832 81,911 (b) Other current liabilities 6 – 9,325 (c) Short-term provisions 7 2,296 51,485

89,128 142,721 TOTAL 28,384,085 22,845,424

ASSETS

NON-CURRENT ASSETS

(a) Long-term loans and advances 8 101,205 48,675 101,205 48.675

CURRENT ASSETS (a) Current investments 9 28,100,510 22,493,668 (b) Cash and bank balances 10 177,370 271,776 (c) Short-term loans and advances 11 5,000 31,305

28,282,880 22,796,749 TOTAL 28,384,085 22,845,424

See accompanying notes forming part of the financial statements.

IN TERMS OF OUR REPORT ATTACHED.

FOR DELOITTE HASKINS & SELLS

Chartered AccountantsFOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC TRUSTEE COMPANY LIMITED

Z. F. BILLIMORIA

PartnerRAJIV B. LALL

DirectorVIKRAM LIMAYE

Director

Mumbai | April 23, 2014

Balance Sheet AS AT MARCH 31, 2014

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YEAR ENDED MARCH 31, 2014

YEAR ENDED MARCH 31, 2013

NOTES ` `

I INCOME

Revenue from operations 12 6,443,151 5,500,000 Other income 13 1,362,440 1,032,088 TOTAL INCOME (I) 7,805,591 6,532,088

II EXPENSES

Finance cost 14 400 5,905 Other expenses 15 264,012 513,070 TOTAL EXPENSES (II) 264,412 518,975

III PROFIT BEFORE TAX (I - II) 7,541,179 6,013,113

IV TAX EXPENSE

Current tax 1,974,000 1,749,000Short / (excess) provision in earlier years (25,075) –TOTAL TAX EXPENSES 1,948,925 1,749,000

V PROFIT FOR THE YEAR FROM CONTINUING OPERATIONS (III - IV) 5,592,254 4,264,113

Earnings per equity share (nominal value of share ` 10) 18Basic (`) 111.85 85.28 Diluted (`) 111.85 85.28

See accompanying notes forming part of the financial statements.

IN TERMS OF OUR REPORT ATTACHED.

FOR DELOITTE HASKINS & SELLS

Chartered AccountantsFOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC TRUSTEE COMPANY LIMITED

Z. F. BILLIMORIA

PartnerRAJIV B. LALL

DirectorVIKRAM LIMAYE

Director

Mumbai | April 23, 2014

Statement of Profit and Loss FOR THE YEAR ENDED MARCH 31, 2014

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FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2013

NOTES ` `

A. CASH FLOW FROM OPERATING ACTIVITIES

PROFIT BEFORE TAX 7,541,179 6,013,113 Adjustments for:Profit on sale of current investments 13 (206,840) (1,032,088)Profit on sale of long-term investments (1,155,600) –

OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 6,178,739 4,981,025

CHANGES IN WORKING CAPITAL:

Adjustment for (increase) / decrease in operating assetsShort term loans and advances 26,305 (31,305)Adjustment for increase / (decrease) in operating liabilitiesTrade payables 4,921 (5,606)Other current liabilities (9,325) 887

21,901 (36,024)Direct taxes paid (2,050,644) (1,713,490)NET CASH FROM OPERATING ACTIVITIES (A) 4,149,996 3,231,511

B. CASH FLOW FROM INVESTING ACTIVITIES

Purchase of investments (32,900,000) (36,556,553)Sale of investments 28,655,598 31,947,967 NET CASH USED IN INVESTING ACTIVITIES (B) (4,244,402) (4,608,586)

C. CASH FLOW FROM FINANCING ACTIVITIES – – NET CASH FROM FINANCING ACTIVITIES (C) – – Net (decrease) / increase in cash and cash equivalents (A+B+C) (94,406) (1,377,075)Cash and cash equivalents as at the beginning of the year (see note 10) 271,776 1,643,851 Cash and cash equivalents as at the end of the year (see note 10) 177,370 271,776

(94,406) (1,372,075)

IN TERMS OF OUR REPORT ATTACHED.

FOR DELOITTE HASKINS & SELLS

Chartered AccountantsFOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC TRUSTEE COMPANY LIMITED

Z. F. BILLIMORIA

PartnerRAJIV B. LALL

DirectorVIKRAM LIMAYE

Director

Mumbai | April 23, 2014

Cash Flow Statement FOR THE YEAR ENDED MARCH 31, 2014

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

01 BackgroundIDFC Trustee Company Limited is a wholly owned subsidiary of IDFC Limited. This Company is formed for providing trusteeship services.

02 Significant accounting policies(a) Basis of preparationThe financial statements of the Company have been prepared in accordance with 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 continues to be applicable in respect of Section 133 of the Companies Act, 2013 ("the 2013 Act") in terms of General Circular 15/ 2013 dated September 13, 2013 of the Ministry of Corporate Affairs) and the relevant provisions of the 1956 Act / 2013 Act, as applicable. The financial statements have been prepared on the accrual basis under the historical cost convention.

(b) Use of estimatesThe preparation of the 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. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates and the difference between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

(c) InvestmentsInvestments which are readily realisable and intended to be held for not more than one year from the date on which such investments are made are classified as current investments in accordance with the Accounting Standard 13 on ‘Accounting for Investments’ as notified by the Companies (Accounting Standards) Rules, 2006. All other investments are classified as long-term investments.All investments are initially recorded at cost. The cost of an investment includes purchase price and directly attributable acquisition charges such as brokerage, fees and duties and reduced by recovery of costs, if any. On disposal of an investment, the difference between its carrying amount and the net disposal proceeds is charged or credited to the Statement of Profit and Loss.

n ‘Long-Term Investments' are carried at acquisition cost. A provision is made for diminution other than temporary on an individual basis. n ‘Current Investments' are carried at the lower of cost or fair value on an individual basis.

(d) Revenue recognitionRevenue 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. In addition, the following criteria must also be met before revenue is recognised:

n Trusteeship fees are accounted for on an accrual basis in accordance with the agreements. n Dividend is accounted on accrual basis when the right to receive is established. n Profit / loss earned on sale of investments is recognised on trade date basis. Profit / loss on sale of investments is determined based on

the FIFO cost for current investments and weighted average cost for long-term investments.

(e) Taxes on IncomeCurrent tax is the amount payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961. The accounting treatment for income-tax in respect of the Company's income is based on the Accounting Standard 22 on 'Accounting for Taxes on Income' as notified by the Companies (Accounting Standards) Rules, 2006. The provision made for income-tax in the accounts comprises both, the current tax and the deferred tax. The deferred tax assets and liabilities for the year, arising on account of timing differences, are recognised in the Statement of Profit & Loss and the cumulative effect thereof is reflected in the Balance Sheet. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the reporting date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax asset can be realised. In situations where the Company has unabsorbed depreciation or carried forward losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that the same can be realised against future taxable profits.

(f) Cash and cash equivalentsCash and cash equivalents for the purpose of Cash Flow Statement comprises cash on hand, cash in bank, fixed deposits and other short-term highly liquid investments with an original maturity of three months or less that are readily convertible into known amounts of cash and which are subject to insignificant risk of change in value.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

(g) Cash flow statementCash flows are reported using the indirect method, whereby profit / (loss) before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

(h) Earnings per shareBasic earnings per share is computed by dividing the profit / (loss) after tax by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax as adjusted for expense or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.

(i) Provisions and contingenciesA provision is recognised when the Company has a present obligation as a result of past events and 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 their present value and are determined based on the 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 if any, are disclosed in the notes.

(j) Operating cycleBased on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.

(k) Service tax input creditService tax input credit is accounted in the period in which the underlying services are received and when there is no uncertainty in availing / utilising the credit.

03 Share capitalAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NUMBER ` NUMBER `

AUTHORISED SHARES

Equity shares of `10 each 100,000 1,000,000 100,000 1,000,000 ISSUED,SUBSCRIBED & FULLY PAID-UP SHARES

Equity shares of `10 each 50,000 500,000 50,000 500,000 [All of these shares are held by IDFC Limited, the holding company and its nominees]TOTAL ISSUED, SUBSCRIBED AND FULLY PAID-UP SHARE CAPITAL

500,000 500,000

(a) Reconciliation of the number of equity shares outstanding at the beginning and at the end of the year.

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NUMBER ` NUMBER `

Outstanding at the beginning of the year 50,000 500,000 50,000 500,000 Issued during the year – – – – Outstanding at the end of the year 50,000 500,000 50,000 500,000

(b) Terms / rights attached to equity shares n The Company has only one class of equity shares having a par value of ` 10 per share. Each holder of equity shares is entitled to one vote

per share. n In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the

Company, after distribution of all preferential amounts. However, no such preferential amounts exists currently. The distribution will be in proportion to the number of equity shares held by the shareholders.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

(c) Details of shareholders holding more than 5% of the shares in the Company

NAME OF EQUITY SHAREHOLDER AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NUMBER % OF HOLDING NUMBER % OF HOLDING

IDFC Limited and its nominees 50,000 100.00% 50,000 100.00%

04 Reserves and surplusAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

(A) SURPLUS IN THE STATEMENT OF PROFIT AND LOSS

Opening balance 22,202,703 17,938,590 Profit for the year 5,592,254 4,264,113 Closing balance 27,794,957 22,202,703

05 Trade PayablesAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Provision for expenses 86,832 81,911TOTAL 86,832 81,911

No amount is payable to "Suppliers" under Micro, Small and Medium Enterprises Development Act, 2006. No interest has been paid / is payable by the Company during the year to the “Suppliers” covered under the Micro, Small and Medium Enterprises Development Act, 2006. The above information takes into account only those suppliers who have responded to inquiries made by the Company for this purpose.

06 Other current liabilitiesAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Statutory remittances – 9,325TOTAL – 9,325

07 Short-term provisionsAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Provision for income tax 2,296 51,485 [net of advance income tax ` 1,751,704 (Previous Year ` 3,326,790)]TOTAL 2,296 51,485

08 Long-term loans and advances (unsecured, considered good)

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Advance payment of income tax 101,205 48,675 [net of provision for tax ` 4,286,451 (Previous Year ` 2,312,451)]TOTAL 101,205 48,675

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

09 Current investments (Non-Trade)(Valued at lower of cost and market value, unless stated otherwise)

FACE VALUE AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` NUMBER OF UNITS ` NUMBER OF UNITS `

INVESTMENT IN MUTUAL FUNDS (UNQUOTED)

CURRENT MATURITIES OF LONG-TERM INVESTMENTS (AT COST)

IDFC Fixed Maturity 366 Days-Series 79- Growth 10 – – 1,200,000.000 12,000,000 – 12,000,000

CURRENT INVESTMENT IN MUTUAL FUNDS (UNQUOTED)

IDFC Cash Fund - Direct Plan - Growth 1000 2,045.063 3,100,510 352.431 493,668 IDFC Fixed Term Plan Series 25 Direct Plan - Growth 10 1,500,000.000 15,000,000 - - IDFC Ultra Short Term Fund- Growth Direct Plan 10 616,488.604 10,000,000 616,488.604 10,000,000TOTAL 28,100,510 22,493,668

Aggregate amount of investments in unquoted mutual funds Cost 28,100,510 22,493,668 Market value 30,178,476 23,467,965 Market value of investments in unquoted mutual funds represents the repurchase price of the units issued by the mutual funds.

10 Cash and bank balanceAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

CASH AND CASH EQUIVALENTS

Balance with bank: in current account 177,370 271,776TOTAL 177,370 271,776

11 Short-term loans and advancesAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Balances with government authorities - Cenvat credit available – 31,305 Prepaid expenses 5,000 – TOTAL 5,000 31,305

12 Revenue from operationsFOR THE YEAR ENDED

MARCH 31, 2014FOR THE YEAR ENDED

MARCH 31, 2013

` `

Trusteeship fees 6,443,151 5,500,000TOTAL 6,443,151 5,500,000

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

13 Other incomeFOR THE YEAR ENDED

MARCH 31, 2014FOR THE YEAR ENDED

MARCH 31, 2013

` `

Profit on sale of investments Current investments 206,840 1,032,088 Long-term investments 1,155,600 – TOTAL 1,362,440 1,032,088

14 Finance costFOR THE YEAR ENDED

MARCH 31, 2014FOR THE YEAR ENDED

MARCH 31, 2013

` `

Interest on delayed payment of advance tax / statutory dues 400 5,905 TOTAL 400 5,905

15 Other expensesFOR THE YEAR ENDED

MARCH 31, 2014FOR THE YEAR ENDED

MARCH 31, 2013

` `

Travelling & conveyance 18,544 239,794 Professional fees 28,275 38,276 Auditors' remuneration [see note (a)] 166,393 155,000Directors' sitting fees 30,000 80,000 Miscellaneous expenses 20,800 –TOTAL 264,012 513,070

(a) Break up of auditors’ remuneration:

FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2013

` `

Audit fee 50,000 50,000Tax audit fee 30,000 30,000Other services 85,000 75,000Out of pocket expenses 1,393 –Service tax 19,330 19,158 Less: Service tax set off claimed (19,330) (19,158)TOTAL 166,393 155,000

16 The Company is engaged in the business of providing trusteeship services. As such, there is no separate reportable primary business segment or geographical segment as per Accounting Standard 17 on ‘Segment Reporting’ as notified by the Companies (Accounting Standards) Rules, 2006.

17 As per Accounting Standard 18 on 'Related Party Disclosures' as notified by the Companies (Accounting Standards) Rules, 2006, the related parties of the Company are as follows:RelationshipHolding Company: IDFC LimitedThere were no transactions with the above related party for the year ended March 31, 2014 and March 31, 2013.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

18 In accordance with Accounting Standard 20 on 'Earnings Per Share' as notified by the Companies (Accounting Standards) Rules, 2006:

FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2013

` `

Profit for the year (`) 5,592,254 4,264,113 Weighted average number of equity shares (Nos.) 50,000 50,000 Basic & Diluted Earnings Per Share (`) 111.85 85.28 Nominal Value Per Share (`) 10 10

19 Previous year figuresPrevious year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC TRUSTEE COMPANY LIMITED

Mumbai | April 23, 2014RAJIV B. LALL

DirectorVIKRAM LIMAYE

Director

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04 IDFC SECURITIES LIMITED

BOARD OF DIRECTORS n Mr. Vikram Limaye – Chairman n Mr. Tara Sankar Bhattacharya n Mr. Yuvraj Narayan n Mr. Sunil Kakar n Mr. Sadashiv S. Rao n Dr. Rajeev Uberoi

AUDITORS n Deloitte Haskins & Sells Chartered Accountants

PRINCIPAL BANKER n HDFC Bank Limited

REGISTERED OFFICENaman Chambers, C-32, G-Block Bandra-Kurla Complex, Bandra (East)Mumbai 400 051Tel: +91 22 4222 2000Fax: +91 22 2654 [email protected]: U99999MH1993PLC071865

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Directors' ReportTO THE MEMBERSYour Directors have pleasure in presenting the Twenty First Annual Report together with the audited accounts for the year ended March 31, 2014.

FINANCIAL RESULTS

PARTICULARSFOR THE YEAR ENDED

MARCH 31, 2014FOR THE YEAR ENDED

MARCH 31, 2013

` `

Total Income 781,850,575 421,085,496 Less: Total Expenses 499,187,190 414,507,383 Profit / (Loss) before Tax 282,663,385 6,578,113 Less: Provision for Tax 63,295,290 6,050,000 Profit / (Loss) after Tax 219,368,095 528,113

OPERATIONAL REVIEW Institutional Broking The economic slowdown continued into FY14, marking yet another unexciting year for the domestic institutional brokerage industry. The last fiscal was the second consecutive year of sub-5% growth for the Indian economy given manufacturing sector growth was virtually stalled and investment activity remained subdued. In addition, there were cost-push pressures on the corporate sector due to depreciating currency and other supply-side bottlenecks. While stubborn inflationary pressures kept retail investors on the sidelines, foreign flows only picked up in the latter part of the year due to anticipation of a pro-growth political formation taking the reins of government. However, overall low trading volumes and high competition continued to affect brokerage shares in FY14, with domestic institutional brokers’ share slipping to ~25% from historical levels of ~33% in the tough environment.Nevertheless, key market indices are already reflecting a visible pick-up in investment activity in the past quarter, led by the political events as also an improvement in critical macro indicators like current account deficit, fiscal deficit and even inflation. The Company believes the clear electoral mandate to kick-start the growth cycle will lead to decisive policy action, driving corporate earnings and the return of investor confidence. With a combination of ideas-driven research, constant improvement in talent and widening / deepening of client relationships, the Company is well-poised to benefit from the improving investment climate.

Investment BankingThe year gone by continued to be a challenging year for the Investment Banking industry. Subdued sentiment coupled with economic slowdown and political uncertainty had its impact both on capital markets and the Private Equity and Mergers & Acquisitions ("PE / M&A") deal environment. With the onslaught of many boutique investment banks, competition in the industry has intensified in recent past. Consequently, the overall fee pool for the Investment Banking industry has reduced significantly. Longer deal cycles, below expectation returns due to high valuations paid in boom period of 2006-2008, fewer exits as capital markets were down, impacted the overall activity. Considering these challenges, we closed the fiscal year 2014 with revenues of ` 52.11 crore which is marginally better than ` 50.53 crore in FY13.Our focus on non-infra sector during FY14 led to successful closures of deals in pharma, auto, engineering, etc. Although infrastructure sector as a whole remained subdued due to high borrowing costs, delays in securing mandatory government approvals and completing land acquisition, our continued focus on non-infra sectors compensated us in maintaining the revenues. Selective hiring done last fiscal and current fiscal is also helping us build the deal pipeline across sectors and products including focused PE coverage, Capital Market coverage (IPOs, QIPs, Block Trades) etc. With the election results round the corner and keeping in mind India’s political scenario in coming 6-9 months, we are gearing up to capture the market share. We are positive of the coming year given our strategic focus around capital markets, continued diversification across sectors, client-centricity, working with international clients/alliance partners; our deal pipeline is a reflection of these initiatives.

DIVIDENDThe Directors do not recommend any dividend for the year ended March 31, 2014.

COMPANIES ACT, 2013Most of the provisions of the Companies Act, 2013 and the Rules notified by the Ministry of Corporate Affairs ("MCA") in this regard, have come into force with effect from April 1, 2014. MCA issued a General Circular no. 8/2014 dated April 4, 2014 which clarified that the Financial Statements, Auditors' Report and the Board’s Report in respect of the previous year ended March 31, 2014 will be in accordance with the Companies Act, 1956 and Rules made there under. Your Company shall comply with the provisions of the Companies Act, 2013, as applicable.

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Directors' ReportSUBSIDIARY COMPANIESIDFC Securities Limited has four direct wholly owned subsidiary companies – IDFC Capital (USA) Inc., IDFC Capital (Singapore) Pte. Limited, IDFC Fund of Funds Limited and IDFC Securities Singapore Pte. Limited. On October 18, 2013, the entire equity stake of IDFC Pension Fund Management Company Limited, which was held by IDFC Limited and IDFC Asset Management Company Limited, was acquired by the Company, thereby making IDFC Pension Fund Management Company Limited a wholly owned subsidiary of the Company.On November 16, 2013, the Scheme of Amalgamation under Sections 391 to 394 of Companies Act, 1956 was filed with the Hon’ble High Court of Bombay to amalgamate IDFC Distribution Company Limited, IDFC Capital Limited and IDFC Pension Fund Management Company Limited with IDFC Securities Limited and their respective shareholders. The Hon’ble High Court of Bombay approved the amalgamation of the above entities on March 28, 2014. The merged entities were wholly-owned subsidiaries of IDFC Securities Limited.By virtue of the above amalgamation, the subsidiaries of IDFC Capital Limited i.e. IDFC Fund of Funds Limited, IDFC Capital (Singapore) Pte. Limited and IDFC Securities Singapore Pte. Limited, became direct subsidiaries of the Company.The objective of merger was to rationalise / streamline overall corporate structure of IDFC. The consolidation was to enable to reduce the number of entities that requires to be administered and also help realize operational synergies which would also result in simplification of operations. Consequent upon the Merger, the Investment Banking and Distribution of securities business are now carried out under IDFC Securities Limited, in addition to its existing Institutional Equity business. As required under the provisions of Section 212 of the Companies Act, 1956, a statement of holding company’s interest in the subsidiary companies is attached to this report.

DIRECTORSMr. Anil Singhvi (DIN-00239589), who was on the Board of the Company, resigned as a Director of the Company w.e.f. August 23, 2013. Mr. Tapasije Mishra (DIN-00336496), who was Whole-Time Director of the Company, resigned from the Board of the Company w.e.f. October 15, 2013. The Board placed on record it's appreciation for the valuable services rendered by Mr. Singhvi and Mr. Mishra during their tenure. Mr. Sunil Kakar (DIN-03055561) is retiring by rotation and being eligible offers himself for reappointment at the ensuing Annual General Meeting ("AGM").The Board of Directors recommends reappointment of Mr. Kakar at the ensuing AGM.

AUDIT COMMITTEEThe Audit Committee comprises of the following Directors as its Members:

SR. NO. NAME DIN NO. DESIGNATION

1. Mr. Tara Sankar Bhattacharya 00157305 Chairman2. Mr. Yuvraj Narayan 00306652 Member3. Mr. Sunil Kakar 03055561 Member4. Mr. Sadashiv S. Rao 01245772 Member5. Dr. Rajeev Uberoi 01731829 Member

The Audit Committee met four times during the year under review.

AUDITORSM/s. Deloitte Haskins & Sells, Chartered Accountants, Ahmedabad (Registration No. 117365W) Statutory Auditors of the Company will retire at the conclusion of the ensuing AGM. The Board recommends the reappointment of M/s. Deloitte Haskins & Sells, Chartered Accountants, as the Statutory Auditors of the Company.

PUBLIC DEPOSITSDuring the year under review, your Company has not accepted any public deposits.

PARTICULARS REGARDING CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION Since the Company does not own any manufacturing facility, the disclosure of information on other matters required to be disclosed in terms of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the report of Board of Directors) Rules, 1988, are not applicable and hence not given.

FOREIGN EXCHANGE EARNINGS AND EXPENDITUREThe particulars regarding foreign exchange earnings and expenditure are furnished at Note No. 28 in the Notes forming part of the Financial Statements.

PERSONNEL AND OTHER MATTERSYour Company had 95 employees as on March 31, 2014 (including 20 employees of IDFC Capital Limited transferred to the Company consequent to merger of IDFC Capital Limited). As required by the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of employees are set out in Annexure to the Directors’ Report.

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DIRECTORS’ RESPONSIBILITY STATEMENTThe Directors confirm that:

n the applicable accounting standards have been followed in the preparation of the annual accounts and that there are no material departures; n 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 March 31, 2014 and the profit of the Company for the year ended on that date;

n they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

n they have prepared annual accounts on a going concern basis.

ACKNOWLEDGEMENTSThe Board wishes to thank the clients, custodians, Securities and Exchange Board of India, Stock Exchanges, Banks, Bombay High Court and other statutory and regulatory authorities for their support to your Company. The Board also places on record its appreciation for the sincere efforts of the staff.The Board would also like to express its gratitude for the unstinted support and guidance received from IDFC Limited and other group companies.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS

VIKRAM LIMAYE

Chairman

Mumbai, April 21, 2014

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TO THE MEMBERS OF IDFC SECURITIES LIMITEDReport on the Financial StatementsWe have audited the accompanying financial statements of IDFC SECURITIES LIMITED (“the Company”) which comprise the Balance Sheet as at March 31, 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 StatementsThe 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, I 956 (“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 September 13, 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’ ResponsibilityOur 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 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.OpinionIn 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 March 31, 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 Requirements1. 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.2. 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, Statement of Profit and Loss and 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 September 13, 2013 of the Ministry of Corporate Affairs).

(e) On the basis of written representations received from the directors as on March 31, 2014 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014 from being appointed as a director in terms of Section 274(1)(g) of the Act.

FOR DELOITTE HASKINS & SELLS

Chartered Accountants(Registration No.: 117365W)

Z. F. BILLIMORIA

Partner(Membership No.: 42791)

Mumbai, April 21, 2014

Independent Auditors' Report

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(Referred to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date)

(i) Having regard to the nature of the Company’s business/ activities/ results/ transactions, etc. clauses (ii), (vi), (viii), (x), (xii), (xiii), (xv), (xvi), (xviii),

(xix) and (xx) of CARO are not 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) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties listed in the Register maintained under

Section 301 of the Companies Act, 1956.

(iv) In case of loans, secured or unsecured, taken by the Company from companies, firms or other parties listed in the Register maintained under

Section 301 of the Companies Act, 1956, according to the information and explanations given to us:

(a) The Company has not taken any loan during the year. At the year-end, the outstanding balance of loan aggregated to ` 1,250,000,000 and

the maximum amount involved during the year was ` 1,250,000,000.

(b) The rate of interest and other terms and conditions of such loans are, in our opinion, prima facie not prejudicial to the interests of the

Company.

(v) 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 purchases of fixed assets and the sale of services. During the course of

our audit, we have not observed any major weakness in such internal control system.

(vi) To the best of our knowledge and belief and according to the information and explanations given to us, there were no contracts or

arrangements that needed to be entered in the Register maintained under Section 301 ofthe Companies Act, 1956.

(vii) In our opinion, the internal audit functions 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 generally been regular in depositing undisputed dues, including Provident Fund, Income-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 Provident Fund, Income-tax, Service tax, Cess and other material statutory dues

in arrears as at March 31, 20 14 for a period of more than six months from the date they became payable.

(c) Details of dues of Income-tax which have not been deposited as on March 31, 2014 on account of disputes are given below:

NAME OF THE STATUTE NATURE OF DUES FORUM WHERE DISPUTE IS PENDING

PERIOD TO WHICH THE AMOUNT RELATES

AMOUNT INVOLVED `

Income tax Act, 1961 Income tax Income Tax Officer Assessment Year 1997-98 160,000

Assessment Year 2007-08 100,807

Assessment Year 2008-09 1,002,830

Assessment Year 2009-10 1,360,137

Assessment Year 2010-11 2,955,071

High Court Assessment Year 1998-99 28,171,492

Assessment Year 1999-00 1,926,224

Assessment Year 2001-02 5,235,703

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

and financial institutions.

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

transactions and contracts in respect of its dealing in mutual fund investments and timely entries have been made therein. The aforesaid

securities have beeri held by the Company in its own name.

Annexure to the Auditors' Report

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(xi) 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.

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

or reported during the year.

FOR DELOITTE HASKINS & SELLS

Chartered Accountants(Registration No.: 117365W)

Z.F. BILLIMORIA

Partner(Membership No.: 42791)

Mumbai, April 21, 2014

Annexure to the Auditors' Report

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NOTES AS AT MARCH 31, 2014

AS AT MARCH 31, 2013

` `

EQUITY AND LIABILITIES

SHAREHOLDERS’ FUNDS

(a) Share capital 3 141,372,000 141,372,000 (b) Reserves and surplus 4 2,424,611,672 996,152,098

2,565,983,672 1,137,524,098

NON-CURRENT LIABILITIES

(a) Long-term borrowings 5 1,250,000,000 1,250,000,000 (b) Other long-term liabilities 6 176,541 153,909

1,250,176,541 1,250,153,909 CURRENT LIABILITIES

(a) Trade payables 7 108,010,182 61,841,835 (b) Other current liabilities 8 18,562,846 10,706,857 (c) Short-term provisions 9 46,062,193 –

172,635,221 72,548,692 TOTAL 3,988,795,434 2,460,226,699

ASSETS

NON-CURRENT ASSETS

(a) Fixed assetsTangible assets 10 12,768,173 7,215,774 Intangible assets 11 3,982,409 2,929,082

16,750,582 10,144,856 (b) Non-current investments 12 1,938,743,383 1,384,554,650 (c) Deferred tax asset 13 10,100,000 3,400,000 (d) Long-term loans and advances 14 349,284,862 169,238,346 (e) Other non-current assets 15 12,597,882 30,830,275

2,327,476,709 1,598,168,127 CURRENT ASSETS

(a) Current investments 16 990,209,313 338,184,539 (b) Trade receivables 17 51,192,884 91,343,546 (c) Cash and bank balances 18 588,504,785 401,212,318 (d) Short-term loans and advances 14 13,864,223 11,341,805 (e) Other current assets 15 17,547,520 19,976,364

1,661,318,725 862,058,572 TOTAL 3,988,795,434 2,460,226,699

See accompanying notes forming part of the financial statements.

Balance Sheet AS AT MARCH 31, 2014

IN TERMS OF OUR REPORT ATTACHED.

FOR DELOITTE HASKINS & SELLS

Chartered AccountantsFOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC SECURITIES LIMITED

Z.F. BILLIMORIA

PartnerSUNIL KAKAR

DirectorRAJEEV UBEROI

Director

Mumbai | April 21, 2014AMOL RANADE

Company Secretary

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YEAR ENDED MARCH 31, 2014

YEAR ENDED MARCH 31, 2013

NOTES ` `

I INCOME

Revenue from operations 19 678,329,364 359,390,226 Other income 20 103,521,211 61,695,270 TOTAL INCOME (I) 781,850,575 421,085,496

II EXPENSES

Operating expenses 21 45,715,268 34,976,885 Employee benefits expenses 22 288,908,671 225,704,720 Finance costs 23 3,536,020 4,272,725 Depreciation and amortisation expense 10, 11 6,339,548 5,119,260 Other expenses 24 154,088,329 144,433,793 Provisions and contingencies 599,354 – TOTAL EXPENSES (II) 499,187,190 414,507,383

III PROFIT BEFORE TAX (I - II) 282,663,385 6,578,113

IV TAX EXPENSE

Current tax 84,400,000 – Deferred tax 13 150,000 6,050,000 Current tax expense relating to prior years (21,254,710) – TOTAL TAX EXPENSE 63,295,290 6,050,000

V PROFIT FOR THE YEAR FROM CONTINUING OPERATIONS (III - IV) 219,368,095 528,113

Earnings per equity share (nominal value of share ` 10) 32 Basic (`) 15.52 0.04 Diluted (`) 12.24 0.03

See accompanying notes forming part of the financial statements.

Statement of Profit and Loss FOR THE YEAR ENDED MARCH 31, 2014

IN TERMS OF OUR REPORT ATTACHED.

FOR DELOITTE HASKINS & SELLS

Chartered AccountantsFOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC SECURITIES LIMITED

Z.F. BILLIMORIA

PartnerSUNIL KAKAR

DirectorRAJEEV UBEROI

Director

Mumbai | April 21, 2014AMOL RANADE

Company Secretary

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FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2013

` `

CASH FLOW FROM OPERATING ACTIVITIES

PROFIT BEFORE TAX 282,663,385 6,578,113 Adjustments forDepreciation and amortisation expense 6,339,548 5,119,260 Provisions and contingencies 599,354 – Interest on bank deposits (36,746,349) (39,785,208)Finance costs 3,536,020 4,272,725 Dividend from investments (5,638,523) (19,759,490)(Profit)/loss on sale of fixed assets (net) 8,323 (25,921)Gain on sale of current investment (51,904,175) (2,103,314)Provision for employee benefits – (6,335,576)

(83,805,802) (58,617,524)

OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 198,857,583 (52,039,411)CHANGES IN WORKING CAPITAL:

Adjustments for (increase) / decrease in operating assets: Trade receivables 177,296,661 (41,499,681) Short-term loans and advances 2,041,226 227,940,976 Long-term loans and advances (231,050) (200,000) Other current assets 6,734,710 (5,816,043)

Adjustments for increase / (decrease) in operating liabilities: Short-term provision (603,386) – Trade payables 38,291,247 (7,746,708) Other current liabilities (46,798,228) (9,004,580) Other long-term liabilities 22,632 (27,545,039)

176,753,812 136,128,925 CASH GENERATED FROM OPERATIONS 375,611,395 84,089,514 Net income taxes paid (107,214,049) (60,367)NET CASH FROM OPERATING ACTIVITIES (A) 268,397,346 84,029,147 CASH FLOW FROM INVESTING ACTIVITIES

Capital advances (623,165) (572,207)Proceeds from sale of fixed assets 80,073 315,040 Bank balances not considered as cash and cash equivalents- Placed (487,900,637) (387,550,000)- Matured 378,450,000 504,350,000 Purchase of fixed assets (9,973,273) (3,808,744)Purchase of investments - others (4,171,474,780) (3,277,751,889)Investments in subsidiaries (159,246,223) (1,200,000,000)Proceeds from sale of current investments 4,187,916,748 2,941,670,663 Interest received on bank deposits 38,302,726 81,351,317 Dividend received on investments 5,638,523 19,759,490 NET CASH USED IN INVESTING ACTIVITIES (B) (218,830,008) (1,322,236,330)

Cash Flow Statement FOR THE YEAR ENDED MARCH 31, 2014

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FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2013

` `

CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from fresh issue of debentures – 1,250,000,000 Finance costs (3,536,020) (4,272,725)NET CASH FROM /(USED IN) FINANCING ACTIVITIES (C) (3,536,020) 1,245,727,275 Net decrease in cash and cash equivalents (A+B+C) 46,031,318 7,520,092 Cash and cash equivalents as at the beginning of year (see note 18) 32,662,318 25,142,226 Cash and cash equivalents of the merged companies 3,910,512 –Cash and cash equivalents as at the end of year (see note 18) 82,604,148 32,662,318

46,031,318 7,520,092

Cash Flow Statement FOR THE YEAR ENDED MARCH 31, 2014

IN TERMS OF OUR REPORT ATTACHED.

FOR DELOITTE HASKINS & SELLS

Chartered AccountantsFOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC SECURITIES LIMITED

Z.F. BILLIMORIA

PartnerSUNIL KAKAR

DirectorRAJEEV UBEROI

Director

Mumbai | April 21, 2014AMOL RANADE

Company Secretary

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

01 BackgroundIDFC Securities Limited ("the Company") is a wholly owned subsidiary of IDFC Limited, ("the Holding Company") incorporated in India and regulated by the Securities Exchange Board of India ("SEBI") as a stock broking company.IDFC Capital Limited, IDFC Distribution Company Limited, IDFC Pension Fund Management Company Limited, wholly owned Subsidiary Companies had filed a petition with the Bombay High Court on December 11, 2013 to obtain its sanction to a Scheme of Amalgamation of the Companies with IDFC Securities Limited, the Holding Company. This has been approved by the Company's Board of Directors during the meeting held on July 22, 2013.The Amalgamation is effective from November 01, 2013 (Appointed Date) as approved by the Bombay High Court (“High Court”) vide its order dated March 28, 2014 which has been filed by the Company with the Registrar of Companies on April 5, 2014 (“Effective Date”). The said scheme of merger as approved by the High Court shall be effective from the Appointed Date but shall be operative from the Effective Date, hence the business of these subsidiaries has been transferred to and vested with the Holding Company on going concern basis. Also refer to note no 26.

02 Significant accounting policies(a) Basis of preparationThe 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 (Accounting Standards) Rules, 2006 (as amended) (“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 September 13, 2013 of the Ministry of Corporate Affairs) and the relevant provisions of the 1956 Act/ 2013 Companies Act, as applicable. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.The Financial Statements comprise the individual financial statement of the Company for the period April 01, 2013 to March 31, 2014 and IDFC Capital Limited, IDFC Distribution Company Limited, IDFC Pension Fund Management Company Limited, merged Companies for the period November 01, 2013 (Appointed Date) to March 31, 2014.

(b) Use of estimatesThe Company adopts the accrual concept in the preparation of the accounts. The preparation of financial statements in conformity with Indian GAAP 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. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the difference between the actual results and the estimates are recognised in the period in which the results are known / materialise.

(c) Revenue recognition (a) Income from brokerage activities is recognised on trade-date basis and is net of statutory payments. (b) Income from fee-based activities is recognised on the basis of terms of contracts with the clients and when reasonable right of recovery is

established and is accounted net of service tax. (c) Interest income is recognised on an accrual basis. (d) Dividend is recognised when the right to receive is established as at the Balance sheet date.

(d) Fixed assets and intangible assets Fixed assets are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated depreciation. Intangible assets comprising of system software are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated amortisation. Any technology support cost or annual maintenance cost for such software is charged annually to the Statement of Profit and Loss. Consideration paid for transfer of tenancy rights is capitalised as an intangible asset.The Company has regular programme of evaluating useful life of its assets.

(e) Depreciation and AmortisationTangible assetsDepreciation on fixed assets, excluding certain electronic items, is provided on the written down value method, at the rates prescribed by Schedule XIV of the Companies Act, 1956. Certain electronic items are depreciated over a period of two years on straight-line method based on the management’s estimate of the useful life of assets. Depreciation on additions during the year is provided on a pro-rata basis. Assets costing less than ` 5,000 each are written off in the year of capitalisation.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

Intangible assetsIntangible assets comprising of computer software are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated amortisation. Any technology support cost or annual maintenance cost for such software is charged annually to the Statement of Profit and Loss. Intangible assets are being amortised over a period of three years on a straight-line method. Tenancy rights are amortised over a period of 10 years by using Straight-line method.

(f) InvestmentsInvestments which are readily realisable and intended to be held for not more than one year from the date on which such investments are made are classified as current investments in accordance with the Accounting Standard 13 on ‘Accounting for Investments’ as notified by the Companies (Accounting Standards) Rules, 2006. All other investments are classified as long-term investments.All investments are initially recorded at cost. The cost of an investment includes purchase price, directly attributable acquisition charges and reduced by recovery of costs, if any. On disposal of an investment, the difference between its carrying amount and the net disposal proceeds is charged or credited to the Statement of Profit and Loss.Long-Term Investments' are carried at acquisition cost. A provision is made for diminution other than temporary on an individual basis. Current Investments' are carried at the lower of cost or fair value on an individual basis.

(g) Cash and cash equivalents (for purposes of Cash Flow Statement)Cash and cash equivalents for the purpose of the Cash Flow Statement comprises cash on hand, cash in bank, fixed deposits and other short-term highly liquid investments with an original maturity of three months or less that are readily convertible into known amount of cash and which are subject to an insignificant risk of change in value.

(h) Cash flow statementCash flows are reported using the indirect method whereby cash flows from operating, investing and financing activities of the Company are segregated and profit before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments.

(i) Misdeal stockMisdeal stock comprises of stock that has devolved on the Company due to erroneous execution of trades on behalf of the institutional clients in the normal course of business. These securities are valued at lower of cost or market value/ realisable value on an individual basis. Any valuation loss based on the above is debited to the Statement of Profit and Loss.

(j) Employee benefits Defined contribution plans

n The Company’s contribution to provident fund is considered as defined contribution plan and is charged to the Statement of Profit and Loss as they fall due based on the amount of contribution required to be made as and when services are rendered by the employees.

n The Company participates in the holding company’s superannuation policy for future payments of superannuation and the Company’s contribution paid / payable during the year is charged to the Statement of Profit and Loss every year.

Defined benefit plan n The net present value of the Company’s obligation towards gratuity to employees is funded and actuarially determined as at the Balance

Sheet date based on the projected unit credit method. Actuarial gains and losses are recognised in the Statement of Profit and Loss for the period in which they occur.

Other benefits n Based on the leave rules of the Company, employees are not permitted to accumulate leave. Any unavailed privilege leave to the extent

encashable is paid to the employees and charged to the Statement of Profit and Loss for the year.

(k) Income-taxThe provision for tax in the accounts comprises both, current tax and deferred tax. Current tax is the amount payable on taxable income for the year as determined in accordance with the provisions of Income-tax Act, 1961. The accounting treatment for income-tax in respect of the Company's income is based on Accounting Standard 22 on 'Accounting for Taxes on Income' as notified by the Companies (Accounting Standards) Rules, 2006. The deferred tax assets and liabilities for the year arising on account of timing differences are recognised in the Statement of Profit and Loss and the cumulative effect thereof is reflected in the Balance Sheet.Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax asset is recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the Company has unabsorbed depreciation or carried forward losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that the same can be realised against future taxable profits.

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I D F C S E C U R I T I E S L I M I T E D | 6 7

Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

(l) Earnings per shareBasic earnings per share is computed by dividing the profit / (loss) after tax by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax as adjusted for expense or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.

(m) Provisions and contingenciesA provision is recognised when the Company has a present obligation as a result of past events and 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 their present value and are determined based on the 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 if any are disclosed in the notes.

(n) Foreign currency transactionsForeign currency transactions are accounted at the exchange rates prevailing on the date of the transaction. Foreign currency monetary items outstanding as at the Balance Sheet date are reported using the closing rate. Gains and losses resulting from the settlement of such transactions and translation of monetary assets and liabilities denominated in foreign currencies are recognised in the Statement of Profit and Loss.

(o) Insurance ClaimsInsurance claims are accounted for on the basis of claims admitted/expected to be admitted and to the extent that there is no uncertainty in receiving the claims.

(p) Service tax input creditService tax input credit is accounted in the period in which the underlying services are received and when there is no uncertainty in availing / utilising the credits.

(q) Operating CycleBased on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.

03 Share Capital AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NUMBER ` NUMBER `

AUTHORISED

Equity shares of ` 10 each (see note below) 52,000,000 520,000,000 20,000,000 200,000,000 ISSUED, SUBSCRIBED AND FULLY PAID-UP SHARES

Equity shares of ` 10 each 14,137,200 141,372,000 14,137,200 141,372,000 (All the above equity shares are held by IDFC Limited, the Holding Company and its nominees)TOTAL 141,372,000 141,372,000

Note:- Pursuant to the scheme of amalgamation by the Bombay High Court becoming effective and consequent to the amalgamation of IDFC Capital Limited, IDFC Distribution Company Limited and IDFC Pension Fund Management Company Limited, with the Company, the authorised capital has changed as laid down in the scheme.

(a) Reconciliation of the number of equity shares outstanding at the beginning and at the end of the year.

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NUMBER ` NUMBER `

Outstanding at the beginning of the year 14,137,200 141,372,000 14,137,200 141,372,000 Issued during the year – – – – Outstanding at the end of the year 14,137,200 141,372,000 14,137,200 141,372,000

(b) Terms / rights attached to equity shares

The Company has only one class of equity shares having a par value of ` 10 per share. Each holder of equity share is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to approval of the share holders in the ensuing Annual General Meeting.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amounts. However, no such preferential amounts exists currently. The distribution will be in proportion to the number of equity shares held by the shareholders.

(c) Details of shareholders holding more than 5% of the shares in the company

NAME OF EQUITY SHAREHOLDER AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NUMBER % OF HOLDING NUMBER % OF HOLDING

IDFC Limited and its nominees 14,137,200 100 14,137,200 100

04 Reserves and surplus AS AT MARCH 31, 2014

` AS AT MARCH 31, 2013

`

(a) SECURITIES PREMIUM ACCOUNT 142,578,000 142,578,000 (b) GENERAL RESERVE

Opening balance 55,628,577 55,628,577 Add: Debenture redemption reserve transferred on amalgamation* 300,000,000 – * Represents amount pertaining to IDFC Capital Limited no longer required consequent

to merger Closing balance 355,628,577 55,628,577

(c) CAPITAL RESERVE (SEE NOTE 26) 38,147,550 – (d) DEBENTURE REDEMPTION RESERVE

Opening balance 312,500,000 – Add: Transferred from surplus in statement of Profit and Loss 312,500,000 312,500,000 Closing balance 625,000,000 312,500,000 Debenture redemption reserve has been created for ` 312,500,000 (Previous Year ` 312,500,000) in accordance with Section 117C of the Companies Act, 1956 in respect of the privately placed Zero Coupon Optionally Convertible Debentures (“ZCOCDS”).

(e) SURPLUS IN THE STATEMENT OF PROFIT AND LOSS

Opening balance 485,445,521 797,417,408 Add: Profit for the year 219,368,095 528,113 Add: On amalgamation (see note 26) 870,943,929 – Less: Transfer to debenture redemption reserve 312,500,000 312,500,000 Closing balance 1,263,257,545 485,445,521

TOTAL 2,424,611,672 996,152,098

05 Long-term borrowings AS AT MARCH 31, 2014

` AS AT MARCH 31, 2013

`

Zero coupon optionally convertible debentures (Unsecured) (see note 30) 1,250,000,000 1,250,000,000 TOTAL 1,250,000,000 1,250,000,000

The Company has issued the ZCOCDs to the Holding Company. The term of the ZCOCDs is for a period of 5 years and is convertible into 3,786,961 shares @ ` 330.08 per share. The tenure can be renewed / extended as may be mutually agreed upon between the parties. The redemption/conversion is at the option of the holder of ZCOCDs i.e. the Holding Company.

06 Other long-term liabilities AS AT MARCH 31, 2014

` AS AT MARCH 31, 2013

`

Others * 176,541 153,909 TOTAL 176,541 153,909

* Represents amounts withheld from erstwhile promoters in terms of the Share Purchase Agreement.

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I D F C S E C U R I T I E S L I M I T E D | 6 9

Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

07 Trade payables AS AT MARCH 31, 2014

` AS AT MARCH 31, 2013

`

Provision for expenses (see note 30) 85,407,919 55,135,189 Payable to vendors 22,602,263 6,706,646 TOTAL 108,010,182 61,841,835

No amount is payable to “Suppliers” registered under Micro Small and Medium Enterprises Development Act, 2006. No interest has been paid / is payable by the Company during the year to the “suppliers” covered under the Micro, Small and Medium Enterprises Development Act, 2006. The above information takes into account only those suppliers who have responded to inquiries made by the Company for this purpose.

08 Other current liabilities AS AT MARCH 31, 2014

` AS AT MARCH 31, 2013

`

Payable to gratuity fund (net of receivable of ` 661,963) (see note 27) 5,130,452 –Statutory remittances 13,432,394 10,706,857 TOTAL 18,562,846 10,706,857

09 Short-term provisions AS AT MARCH 31, 2014

` AS AT MARCH 31, 2013

`

Provision for income tax 46,047,193 –[net of advance tax ` 43,556,491 (Previous Year ` Nil)]Provision for fringe benefit tax 15,000 – [net of advance tax ` 905,000 (Previous Year ` Nil)]TOTAL 46,062,193 –

10 Tangible assets GROSS BLOCK DEPRECIATION AND AMORTISATION NET BLOCK

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Furniture and fixtures

385,000 94,867 52,369 14,200 518,036 271,057 20,664 30,750 14,200 308,271 209,765 113,943

(Previous Year) (385,000) – – – (385,000) (245,876) – (25,181) – (271,057) (113,943) (139,124)

Office equipment 5,123,062 1,911,775 712,980 383,029 7,364,788 3,200,446 1,379,609 823,870 350,609 5,053,316 2,311,472 1,922,616

(Previous Year) (4,676,083) – (584,499) (137,520) (5,123,062) (2,596,868) – (684,406) (80,828) (3,200,446) (1,922,616) (2,079,215)

Computers 23,067,720 4,800,885 2,283,337 2,668,549 27,483,393 17,888,505 3,774,408 2,784,393 2,612,573 21,834,733 5,648,660 5,179,215

(Previous Year) (22,876,478) – (1,016,119) (824,877) (23,067,720) (15,358,476) – (3,122,478) (592,449) (17,888,505) (5,179,215) (7,518,002)

Vehicles – 1,575,433 4,181,923 5,757,356 – 257,258 901,822 – 1,159,080 4,598,276 –

(Previous Year) – – – – – – – – – – – –

TOTAL 28,575,782 8,382,960 7,230,609 3,065,778 41,123,573 21,360,008 5,431,939 4,540,835 2,977,382 28,355,400 12,768,173 7,215,774

(Previous Year) (27,937,561) – (1,600,618) (962,397) (28,575,782) (18,201,220) – (3,832,065) (673,277) (21,360,008) (7,215,774) (9,736,341)

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

11 Intangible assets - Other than internally generated GROSS BLOCK DEPRECIATION AND AMORTISATION NET BLOCK

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` ` ` ` ` ` ` ` ` ` ` `

Tenancy rights 1,083,200 – – – 1,083,200 443,667 – 108,320 – 551,987 531,213 639,533

(Previous Year) (1,083,200) – – – (1,083,200) (335,347) – (108,320) – (443,667) (639,533) (747,853)

Computer software 12,179,387 1,314,363 2,742,664 – 16,236,414 9,889,838 1,204,988 1,690,393 – 12,785,218 3,451,196 2,289,549

(Previous Year) (9,971,261) – (2,208,126) – (12,179,387) (8,710,963) – (1,178,875) – (9,889,838) (2,289,549) (1,260,298)

TOTAL 13,262,587 1,314,363 2,742,664 – 17,319,614 10,333,505 1,204,988 1,798,713 – 13,337,205 3,982,409 2,929,082

(Previous Year) (11,054,461) – (2,208,126) – (13,262,587) (9,046,310) – (1,287,195) – (10,333,505) (2,929,082) (2,008,151)

TOTAL TANGIBLE AND INTANGIBLE ASSETS 41,838,369 9,697,323 9,973,273 3,065,778 58,443,187 31,693,513 6,636,927 6,339,548 2,977,382 41,692,605 16,750,582 10,144,856

(Previous Year) (38,992,022) – (3,808,744) (962,397) (41,838,369) (27,247,530) – (5,119,260) (673,277) (31,693,513) (10,144,856) (11,744,492)

Note: Represent assets transferred on amalgamation (see note 26)

12 Non-current investments

FACE VALUE `

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

QUANTITY ` QUANTITY `

TRADE INVESTMENTS (VALUED AT COST UNLESS STATED OTHERWISE)

UNQUOTED EQUITY SHARES (FULLY PAID)

INVESTMENT IN SUBSIDIARIES

IDFC Capital Limited (Merged w.e.f. November 01, 2013) 10 – – 6,035,220 123,304,650 IDFC Distribution Company Limited (Merged w.e.f. November 01, 2013)

10 – – 1,500,000 15,000,000

IDFC Capital (USA) INC. USD 0.01 100,000,000 46,240,000 100,000,000 46,240,000 IDFC Capital (Singapore) Pte. Ltd. (see note below) SGD1 17,475,000 653,176,070 – – IDFC Fund of Funds Limited (see note below) (see note 30) USD 1 23,298,763 1,181,470,208 – – IDFC Securities Singapore Pte. Ltd. (see note below) SGD1 800,001 37,262,045 – –

1,918,148,323 184,544,650

OTHERS

Bombay Stock Exchange Limited 1 130,000 10,000 130,000 10,000 SSIPL Retail Private Limited (see note below) 10 1,250,000 20,585,060 – – Epsilon Advisers Private Limited (see note below) 10 121,840 15,135,000 – – Provision for diminution in value of investments (15,135,000) –

20,595,060 10,000

INVESTMENTS IN DEBENTURES

ZERO COUPON OPTIONALLY CONVERTIBLE DEBENTURES

INVESTMENT IN SUBSIDIARIES

IDFC Capital Limited (Merged w.e.f. November 01, 2013) 1,000,000 – – 1,200 1,200,000,000 – 1,200,000,000

TOTAL 1,938,743,383 1,384,554,650

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I D F C S E C U R I T I E S L I M I T E D | 7 1

Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

Note:

NAME OF THE COMPANY AS AT APRIL 1, 2013* PURCHASES AS AT MARCH 31, 2014

QUANTITY ` QUANTITY ` QUANTITY `

IDFC Capital (Singapore) Pte Ltd. 15,475,000 563,767,070 2,000,000 89,409,000 17,475,000 653,176,070 IDFC Fund of Funds Limited 19,819,291 964,814,141 3,479,472 216,656,067 23,298,763 1,181,470,208 IDFC Securities Singapore Pte Ltd. 300,001 13,452,045 500,000 23,810,000 800,001 37,262,045 SSIPL Retail Private Limited 121,840 20,585,060 – – 121,840 20,585,060 Epsilon Advisers Private Limited 1,250,000 15,135,000 – – 1,250,000 15,135,000

* Held by IDFC Capital Limited prior to merger.

13 Deferred tax asset AS AT MARCH 31, 2014

` AS AT MARCH 31, 2013

`

Tax effects of items constituting deferred tax assets(a) On difference between book balance and tax balance of fixed assets 3,950,000 3,335,000 (b) Provision for gratuity and others 6,150,000 65,000 TOTAL 10,100,000 3,400,000

Note:i) As per Accounting Standard 22 relating to ‘Accounting for Taxes on Income’ as notified by The Companies (Accounting Standards) Rules, 2006, the Company has taken debit of ` 150,000 (see note ii below ) (Previous Year ` 6,050,000) in the Statement of Profit and Loss towards deferred tax asset on account of timing differences.

`

ii) Deferred tax asset as at March 31, 2013 3,400,000 Add: Transferred on merger (see note 26) 6,850,000 Less: Deferred tax asset as at March 31, 2014 10,100,000 Charge to Statement of Profit and Loss 150,000

14 Loans and advances (unsecured, considered good)

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NON-CURRENT PORTION

CURRENT PORTION

NON-CURRENT PORTION

CURRENT PORTION

` ` ` `

Capital advances 1,696,203 – 1,073,038 – Security deposits Deposits with stock exchanges 29,852,200 – 29,552,200 – Other deposits 20,675,920 – 675,920 – Loan and advances to employees – 672,410 – 201,670 Prepaid expenses 235,159 7,364,670 – 6,622,561 Advance payment of income tax 291,910,755 – 133,158,085 – [net of provision for tax of ` 1,079,448,167 (Previous Year ` 537,950,000)]Advance payment of fringe benefit tax 4,914,625 – 4,779,103 – [net of provision for tax of ` 6,625,000 (Previous Year ` 5,720,000)]Balances with government authorities Service tax credit receivable – 2,659,057 – 595,950 Advances to suppliers – 3,168,086 – 3,921,624 TOTAL 349,284,862 13,864,223 169,238,346 11,341,805

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

15 Other assets (considered good, unless stated otherwise)

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NON-CURRENT PORTION

CURRENT PORTION

NON-CURRENT PORTION

CURRENT PORTION

` ` ` `

Bank deposit (see note 18) 11,900,000 – 29,900,000 – Interest accrued on bank deposits 697,882 14,329,143 930,275 13,910,322 Gratuity receivable (net of payable of ` 198,447) (see note 27) – – – 2,883,665 Insurance claim receivable – – – 1,463,269 Expenses recoverable (considered good) – 3,218,377 – 1,719,108 Expenses recoverable (considered doubtful) – 946,804 – – Less: Provisions – (946,804) – – TOTAL 12,597,882 17,547,520 30,830,275 19,976,364

16 Current investments (Valued at lower of cost and fair value, unless stated otherwise)

FACE VALUE `

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

QUANTITY ` QUANTITY `

MUTUAL FUNDS (UNQUOTED)

IDFC Cash Fund - Daily dividend (Direct plan) 1,000 – – 190,910.488 190,958,220 IDFC Dynamics Bond Fund - Growth (Direct plan) 10 – – 5,484,706.955 77,226,319 IDFC Fixed Maturity Plan 366 days series 82 - Monthly dividend

10 – – 7,000,000.000 70,000,000

IDFC Cash Fund - Growth scheme (Direct plan) 1000 542,647.906 845,077,077 – – IDFC Dynamic Bond Fund - Regular Plan B - Growth 10 6,884,675.570 139,632,236 – – IDFC Fixed Term Plan Series 54 Direct Plan - Growth 10 550,000.000 5,500,000 – – TOTAL 990,209,313 338,184,539

Aggregate amount of investments in unquoted mutual funds

Cost 990,209,313 338,184,539 Market Value 990,865,816 338,767,574

Market value of investment in unquoted mutual funds represents the repurchase price of the units issued by the mutual funds.

17 Trade receivables (unsecured) (considered good unless stated otherwise)

AS AT MARCH 31, 2014

` AS AT MARCH 31, 2013

`

Outstanding for a period less than six months from the date they are due for payment 25,535,456 58,912,935 Outstanding for a period more than six months from the date they are due for payment 25,657,428 32,430,611 Considered doubtful outstanding for a period exceeding six months from the date they are due for payment

1,978,903 –

Provision for doubtful debts (1,978,903) – TOTAL 51,192,884 91,343,546

Trade receivables include ` Nil (Previous Year ` 82,705,268) receivable from a subsidiary company.

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I D F C S E C U R I T I E S L I M I T E D | 7 3

Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

18 Cash and bank balances AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NON-CURRENT PORTION

CURRENT PORTION

NON-CURRENT PORTION

CURRENT PORTION

` ` ` `

Cash and cash equivalentsCash on hand – 15,379 – 7,468 Balances with banks: in current accounts – 82,588,769 – 32,654,850 TOTAL – 82,604,148 – 32,662,318

Others Balances with banks: in deposit accounts [see note (a) and (b)] 11,900,000 505,900,637 29,900,000 368,550,000

11,900,000 505,900,637 29,900,000 368,550,000 Amount disclosed under “other assets” (see note 15) (11,900,000) – (29,900,000) – TOTAL – 588,504,785 – 401,212,318

(a) Balances with banks include deposits amounting to ` 249,450,000 (Previous Year ` 248,450,000) which have an original maturity of more than 12 months.

(b) Balances with banks include deposits amounting to ` 357,800,637 (Previous Year ` 398,450,000) which are under lien.

19 Revenue from operationsFOR THE YEAR ENDED

MARCH 31, 2014`

FOR THE YEAR ENDED MARCH 31, 2013

`

Brokerage (see note 30) 240,835,996 250,246,495 Advisory Fee income (see note 28) 437,493,368 109,143,731 TOTAL 678,329,364 359,390,226

20 Other incomeFOR THE YEAR ENDED

MARCH 31, 2014`

FOR THE YEAR ENDED MARCH 31, 2013

`

Dividend from long-term investments 520,000 780,000 Dividend from current investments 5,118,523 18,979,490 Interest on bank deposit 36,746,349 39,785,208 Gain on sale of current investment 51,904,175 2,103,314 Interest on income-tax refund 9,212,164 – Net gain on foreign exchange fluctuation – 12,067 Profit on sale of fixed assets – 25,921 Expenses written back – 9,270 Miscellaneous income 20,000 – TOTAL 103,521,211 61,695,270

21 Operating expensesFOR THE YEAR ENDED

MARCH 31, 2014`

FOR THE YEAR ENDED MARCH 31, 2013

`

Membership and subscription (see note 28) 40,026,275 34,220,826 Clearing house maintenance charges 157,234 170,051 Depository charges 319,999 319,998 Loss on sale of misdeal stock (net) 4,414,739 182,998 Others 797,021 83,012 TOTAL 45,715,268 34,976,885

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

22 Employee benefit expensesFOR THE YEAR ENDED

MARCH 31, 2014`

FOR THE YEAR ENDED MARCH 31, 2013

`

Salaries and bonus * (see note 30 and 31) 257,997,780 203,132,842 Contribution to provident and other funds (see note 27) 27,254,305 12,761,039 Staff welfare expenses 3,656,586 9,810,839 TOTAL 288,908,671 225,704,720

* Salaries and bonus is net of deputation charges of ` 4,683,633 (Previous Year ` 6,700,000) recovered for the period April 01, 2013 to October 31, 2013 from IDFC Capital Limited.

23 Finance costsFOR THE YEAR ENDED

MARCH 31, 2014`

FOR THE YEAR ENDED MARCH 31, 2013

`

Interest on temporary overdraft 487,288 304,165 Bank guarantee charges 3,034,965 3,933,930 Bank charges 13,767 34,630 TOTAL 3,536,020 4,272,725

The bank guarantee facilities were availed from the nationalised / scheduled banks and were submitted to BSE / NSE (Exchanges) as margin deposit. The temporary borrowings are taken in the normal course of broking business.

24 Other expensesFOR THE YEAR ENDED

MARCH 31, 2014`

FOR THE YEAR ENDED MARCH 31, 2013

`

Repairs and maintenance Equipment 855,438 1,118,905 Others 747,152 82,448 Insurance charges 711,843 825,250 Travelling and conveyance (see note 28) 29,043,852 23,893,055 Printing and stationery 8,214,483 1,332,078 Postage, telephone and fax 7,869,243 8,663,572 Advertising and publicity 1,319,454 18,400,047 Professional fees (see note 28 and 30) 64,086,323 54,689,954 Loss on sale / discarding of fixed assets (net) 8,323 – Loss on foreign exchange fluctuation 110,928 – Service tax credit written off 5,101,622 3,444,267 Miscellaneous expenses 4,010,344 1,653,700 Bad debts 240,673 – Directors’ fees (see note 28) 239,877 220,000 Auditor’s remuneration * 1,912,168 2,255,000 Shared services costs (see note 30) 29,616,606 27,855,517 TOTAL 154,088,329 144,433,793 * Break up of Auditor’s remuneration:Audit fee 1,100,000 800,000 Tax audit fee 200,000 200,000 Taxation matters – 200,000 Other services 611,057 1,055,000 Out of pocket expenses 1,111 – Service Tax 75,664 278,718 TOTAL 1,987,832 2,533,718 Less: Service tax set off claimed 75,664 278,718 TOTAL 1,912,168 2,255,000

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

25 Contingent liabilities not provided for in respect of:AS AT MARCH 31, 2014

`AS AT MARCH 31, 2013

`

Claims not acknowledged as debts in respect of :Income-tax demands disputed by the Company, (net of amount provided). The matters in dispute are under appeal. The demands have been partly paid / adjusted and will be received as refund if the matter is decided in favour of the Company. 40,912,264 48,355,514 CommitmentsEstimated amount of contracts remaining to be executed on capital account and not provided for :Tangible assets 5,135,164 555,854 Intangible assets 2,550,000 1,073,038

26 In terms of the Scheme of Amalgamation (the scheme), IDFC Capital Limited, IDFC Distribution Company Limited and IDFC Pension Fund Management Company Limited, wholly owned subsidiaries of the Company (referred to as ‘Transferor Companies’), have been amalgamated with the Company (Transferee Company), upon which the entire business, including all assets and liabilities of the Transferor Companies stand transferred to and vested in the Transferee Company. The amalgamation has been accounted under the pooling of interest method and the assets and liabilities transferred have been recorded at their book value as determined by the Board of Directors of the Transferee Company. IDFC Capital Limited is regulated by the Securities and Exchange Board of India ("SEBI") as a Category - I Merchant Banker, IDFC Distribution Company Limited is engaged in distribution of Initial Public Offerings ("IPO") / Follow on Public Offers ("FPO") / Bonds etc. and IDFC Pension Fund Management Company Limited was registered with Pension Fund Regulatory and Development Authority ("PFRDA"). The management mandate is surrendered by the Company w.e.f. November 01, 2012 and the balance in schemes in Pension Fund has been transferred to SBI Pension Fund Management Company Limited.The amalgamation has been accounted for under the “Pooling of Interest” method as per Accounting Standard - 14 on “Accounting for Amalgamation” notified by the Companies (Accounting Standards) Rules, 2006.Details of assets and liabilities acquired on amalgamation and treatment of the difference between the net assets acquired and cost of investment by the Transferee Company in the Transferor Companies are as under:

AS AT NOVEMBER 1, 2013

` `

Value of assets and liabilities acquired:Non-current assets(a) Fixed assets Tangible assets 2,951,021 Intangible assets 109,375

3,060,396 (b) Non-current investments 1,866,819,160 (c) Deferred tax assets 6,850,000 (d) Long-term loans and advances 93,413,635

1,970,143,191 Current assets(a) Current investments 616,562,566 (b) Trade receivables 137,146,000 (c) Cash and bank balances 13,810,512 (d) Short-term loans and advances 4,563,644 (e) Other current assets 6,229,205

778,311,927 Non-current liabilities(a) Long-term borrowings 1,200,000,000 Current liabilities(a) Trade payables 7,877,100 (b) Other current liabilities 54,654,217 (c) Short-term provisions 4,955,672

67,486,989 1,480,968,129

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

AS AT NOVEMBER 1, 2013

` `

Less:Carrying value of investments in the Transferor Companies 271,876,650 Reserves and Surplus of transferor companies 870,943,929 Debenture redemption reserve transferred on amalgamation 300,000,000 1,442,820,579 Difference considered as Capital Reserve (38,147,550)

27 Employee benefitsi) In accordance with Accounting Standard –15 on “Employee Benefits”, notified by the Companies (Accounting Standards) Rules 2006, the

following disclosures have been made: The Company has recognised the following amounts in the Statement of Profit and Loss towards contribution to defined contribution plans

which are included under contribution to provident and other funds:

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Provident fund 11,817,674 9,889,959 Superannuation fund 642,796 360,775 Pension fund 1,113,324 726,098

ii) The details of the Company’s post-retirement benefit plans for gratuity for its employees are given below which is certified by the actuary and relied upon by the auditors.

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

CHANGE IN THE BENEFIT OBLIGATIONS:

Liability at the beginning of the year 45,907,570 28,599,509 Current service cost 10,935,319 7,599,349 Interest cost 4,343,553 2,865,757 Actuarial loss / (gain) 3,623,829 (3,280,817)Benefits paid (20,702,014) (8,064,354)Liability at the end of the year 44,108,257 27,719,444 FAIR VALUE OF PLAN ASSETS:

Fair value of plan assets at the beginning of the year 45,709,123 11,955,878 Expected return on plan assets 3,825,873 836,368 Contributions 8,136,537 17,892,487 Actuarial gain on plan assets 1,346,323 4,900,618 Benefits paid (20,702,014) (8,064,354)Fair value of plan assets at the end of the year 38,315,842 27,520,997 Total actuarial gain to be recognised 2,277,506 8,181,435 ACTUAL RETURN ON PLAN ASSETS:

Expected return on plan assets 3,825,873 836,368 Actuarial gain on plan assets 1,346,323 4,900,618 Actual return on plan assets 5,172,196 5,736,986 AMOUNT RECOGNISED IN THE BALANCE SHEET:

Liability at the end of the year 44,108,257 27,719,444 Fair value of plan assets at the end of the year 38,315,842 27,520,997 Amount recognised in the balance sheet under “Other current liabilities - Payable to gratuity fund” 5,792,415 198,447 EXPENSES RECOGNISED IN THE STATEMENT OF PROFIT AND LOSS UNDER“EMPLOYEE BENEFIT EXPENSES”

Current service cost 10,935,319 7,599,349 Interest cost 4,343,553 2,865,757 Expected return on plan assets (3,825,873) (836,368)Net actuarial loss to be recognised 2,277,506 (8,181,435)Past service cost 176,623 336,904 Expense recognised in the Statement of Profit and Loss under “Employee benefit expenses” 13,680,511 1,784,207 Expense recognised in Reserves on Amalgamation 226,617 –

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

RECONCILIATION OF THE LIABILITY RECOGNISED IN THE BALANCE SHEET

Opening net liability 21,824 16,306,727 Expense recognised in the Statement of Profit and Loss under “Employee benefit expenses” 13,680,511 1,784,207 Expense recognised in Reserves on Amalgamation 226,617 –Contribution by the Company 8,136,537 17,892,487 Amount recognised in the Balance Sheet under “Other current liabilities - Payable to gratuity fund” 5,792,415 198,447 Expected employer’s contribution next year 10,000,000 6,000,000

AS AT MARCH 31, 2014

`

AS AT MARCH 31, 2013

`

AS AT MARCH 31, 2012

`

AS AT MARCH 31, 2011

`

AS AT MARCH 31, 2010

`

EXPERIENCE ADJUSTMENTS

Defined benefit obligation 44,108,257 27,719,444 28,599,509 23,006,622 10,993,766 Plan assets 38,315,842 27,520,997 11,955,878 19,205,340 5,736,494 Deficit (5,792,415) (198,447) (16,643,631) (3,801,282) (5,257,273)Experience adjustment on plan liabilities 3,410,174 (4,187,437) 1,884,005 (3,007,273) (5,986,757)Experience adjustment on plan assets 1,346,323 4,900,618 (1,000,569) (567,142) (202,914)

AS AT MARCH 31, 2014

%

AS AT MARCH 31, 2013

%

Investment patternInsurer managed fund 100 100Principal assumptionsDiscount rate 9.05 to 9.10 8.05 Return on plan assets 8.00 8.00 Salary escalation rate 8.00 8.00

As the Gratuity fund is managed by Life Insurance Company details of investments are not available with the Company.

The estimates of future salary increase, considered in the actuarial valuation takes account of inflation, seniority, promotion and other relevant factors.

28 Expenditure in foreign currencies (on payment basis)

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Professional fees 35,909,691 34,628,548 Directors fees 79,877 –Others 12,399,303 28,617,706 TOTAL 48,388,871 63,246,254

Earnings in foreign currencies:

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Advisory fee income 14,997,398 22,648,489 TOTAL 14,997,398 22,648,489

29 Segment reportingThe Company’s business is to provide investment banking services, including institutional broking services in the capital market segment. All other activities of the Company revolve around the main business. As such, there are no reportable segments as per the Accounting Standard -17 relating to “Segment Reporting” as notified by the Companies (Accounting Standard) Rule, 2006.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

30 Related party disclosuresAs per the Accounting Standard 18 on “Related Party Disclosures” as notified by the Companies (Accounting Standards) Rules, 2006, the related parties of the Company are as follows:

i. Holding company: IDFC Limited

ii. Subsidiary companies:(a) Direct IDFC Capital Limited (upto October 31, 2013) IDFC Distribution Company Limited (upto October 31, 2013) IDFC Pension Fund Management Company Limited (from October 15, 2013 upto October 31, 2013) IDFC Capital (USA) INC. IDFC Capital (Singapore) Pte. Ltd. (w.e.f. November 1, 2013) IDFC Securities Singapore Pte. Ltd. (w.e.f. November 1, 2013) IDFC Fund of Funds Limited (w.e.f. November 1, 2013)

(b) Indirect IDFC Capital (Singapore) Pte. Ltd. (upto October 31, 2013) IDFC Securities Singapore Pte. Ltd. (upto October 31, 2013) IDFC Fund of Funds Limited (upto October 31, 2013)

There are no transactions with fellow subsidiaries.

iii. Key management personnel: Mr. Tapasije Mishra – Whole-time director (upto October 15, 2013)

The nature and volume of transactions carried out with the above related parties in the ordinary course of business:

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

NAME OF RELATED PARTY AND NATURE OF RELATIONSHIP

(A) HOLDING COMPANY

IDFC Limited Inter corporate deposits placed and redeemed – 532,500,000 Interest paid on inter corporate deposits – 178,152 Zero coupon optionally convertible debentures 1,250,000,000 1,250,000,000 Trade receivable – 455,718 Shared service costs 29,616,606 27,855,517 Brokerage received 642,134 2,448,189 Transfer of fixed assets – 269,523 Professional fees 115,000 –

(B) SUBSIDIARY COMPANY

IDFC Capital Limited Fees income 10,000,000 86,495,242 Trade receivable – 82,705,268 Other receivable – 1,719,108 Zero coupon optionally convertible debentures – 1,200,000,000 Deputation charges recovered 4,683,633 6,700,000 Professional fees paid 780,963 1,334,995

IDFC Capital (USA) INC Professional fees paid 45,394,640 49,286,725 Provision for expenses 9,484,950 13,644,798 Trade payables – 863,336

IDFC Fund of Funds Limited Subscription to equity shares 25,674,223 –

(C) KEY MANAGEMENT PERSONNEL

Mr. Tapasije Mishra Remuneration paid 17,903,226 30,799,226

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I D F C S E C U R I T I E S L I M I T E D | 7 9

Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

31 LeasesIn accordance with Accounting Standard 19 on “Leases” as notified by the Companies (Accounting Standards) Rules, 2006, the following disclosures in respect of operating leases are made:

i. The Company has taken vehicles for certain employees under operating leases, which shall expire between September 14, 2014 and July 4, 2016. Salaries include gross rental expenses of ` 1,326,741 (Previous Year ` 2,269,009). The committed lease rentals in the future are:

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Not later than one year 1,202,261 1,239,336 Later than one year and not later than five years 534,370 1,384,212

ii. The Company has taken a residential flat for its employee under leave and license, which shall expire on August 16, 2016. Salaries include gross rental expenses of ` 125,000 (Previous Year ` Nil). The committed lease rentals in the future are:

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Not later than one year 300,000 –Later than one year and not later than five years 433,903 –

32 Earning per shareIn accordance with the Accounting Standard 20 on “Earnings Per Share” as notified by the Companies (Accounting Standards) Rules, 2006, the Earnings Per Share has been computed as under

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Net profit attributable to equity shareholders 219,368,095 528,113 Weighted average number of equity shares issued 14,137,200 14,137,200 Basic Earnings Per Share (EPS) 15.52 0.04 Diluted Earnings Per Share (EPS) 12.24 0.03 The reconciliation between the basic and the diluted earnings per share is as follows:

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Basic Earnings Per Share 15.52 0.04 Effect of Zero coupon optionally converted debenture (3.28) (0.01)Diluted Earnings Per Share 12.24 0.03

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

Weighted average number of shares for computation of basic earning per share 14,137,200 14,137,200 Dilutive effect of conversion of Zero coupon optionally converted debentures 3,786,961 2,023,171 Weighted average number of shares for computation of diluted earning per share 17,924,161 16,160,371

33 The accounts have not been signed by a Managing Director / Whole Time Director / Manager as required under Section 215(1)(ii) of the Companies Act, 1956, since the Company is in the process of appointing a suitable person.

34 Prior year’s figuresPrevious year’s figures have been regrouped / reclassified wherever necessary to correspond with the current year’s classification / disclosure

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC SECURITIES LIMITED

SUNIL KAKAR

DirectorRAJEEV UBEROI

Director

Mumbai | April 21, 2014AMOL RANADE

Company Secretary

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NAME OF SUBSIDIARY COMPANY IDFC CAPITAL LIMITED

IDFC DISTRIBUTION

COMPANY LIMITED

IDFC PENSION FUND

MANAGEMENT COMPANY

LIMITED

IDFC CAPITAL (USA) INC.

IDFC CAPITAL (SINGAPORE)

PTE. LTD.

IDFC FUND OF FUNDS

LIMITED

IDFC SECURITIES

(SINGAPORE) PTE. LTD.

1 Financial year of the Subsidiary Companies ended on

October 31, 2013

October 31, 2013

October 31, 2013

March 31, 2014

March 31, 2014

March 31, 2014

March 31, 2014

2 Equity Shares a) Number of Shares 6,035,220 1,500,000 2,679,045 100,000,000 17,475,000 23,298,763 800,001

Shares of ` 10

Shares of ` 10

Shares of ` 10

Shares of USD 0.01

Shares of SGD 1

Shares of USD 1

Shares of SGD 1

b) Extent of Holding 100% 100% 100% 100% 100% 100% 100%3 Net aggregate amount of Profit/

(Losses) of the Subsidiary, so far as they concern members of IDFC Securities Limited i. For the Financial Year of the

Subsidiary a) Dealt with in the accounts

of the Holding Company.Nil Nil Nil Nil Nil Nil Nil

b) Not dealt with in the accounts of the Holding Company.

14,458,467 657,361 11,315,513 1,680,986 (111,093,288) 317,649 (25,580,089)

ii. For the previous financial years of the Subsidiary since it became the Holding Company’s Subsidiary.

a) Dealt with in the accounts of the Holding Company.

706,090 Nil 1,136,132 Nil Nil Nil Nil

b) Not dealt with in the accounts of the Holding Company.

1,172,403,966 6,720,383 133,572,000 (6,318,891) (486,806,286) (159,244,439) (5,892,289)

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC SECURITIES LIMITED

Mumbai | April 21, 2014SUNIL KAKAR

DirectorRAJEEV UBEROI

Director

Statement Pursuant to Section 212 OF THE COMPANIES ACT, 1956

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BOARD OF DIRECTORS n Mr. K. Brennan n Mr. K. Haith

INDEPENDENT AUDITORS n Deloitte LLP

ADMINISTRATIVE AND SECRETARYIpes (Guernsey) Limited1 Royal PlazaRoyal AvenueSt Peter PortGuernseyGY12HL

PRINCIPAL BANKER n NTG Bank

REGISTERED OFFICE1 Royal PlazaRoyal AvenueSt Peter PortGuernseyGY12HL

05 IDFC FUND OF FUNDS LIMITED

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The Directors present their Report and the Audited financial statements of IDFC Fund of Funds Limited ("the Company") for the year ended

March 31, 2014.

HISTORYThe Company was incorporated in Guernsey on June 26, 2009 and commenced activity on October 28, 2009.

ACTIVITIESThe Company is a Limited Partner of Emerging Markets Private Equity Fund, L.P. (the “Partnership”), a Limited Partnership registered in Guernsey.

On October 28, 2011, the Company entered into a memorandum of agreement with Hermes GPE LLP, IDFC General Partners Limited and IDFC

Capital (Singapore) Pte Ltd. Pursuant to this, it was agreed that on the completion date of January 26, 2012, USD 20 million of the Company’s

Commitment invested in the Partnership as Founder Partner be cancelled and shall not be available for any future drawdown. Following this

cancellation the Company’s Commitment in the Partnership is USD 30 million. Hermes GPE PEF 2011-2012 LP, the new Limited Partner of the

Partnership admitted on January 26, 2012 also had a commitment of USD 30 million in the Partnership, however in 2013 this was extended to

USD 35 million. The Company’s total commitment remained at USD 30 million, however its effective commitment reduced to USD 26.7m.

During the year, there was an equalisation payment received by the Company for $1.2m. This was treated as a refund of contributions and

increased the uncalled commitment.

RESULTS AND DIVIDENDSThe results for the year are set out in the Statement of Comprehensive Income on page 7 (Page no. 85 of this Report). No dividend was declared during

the year (2013: USD Nil), in accordance with Clause 13 of the Articles of Association.

DIRECTORSThe Directors of the Company during the whole year and up to the date of this report are as set out on page 2 (Previous page).

SECRETARYThe Secretary of the Company who has served for the whole year is Ipes (Guernsey) Limited.

DIRECTORS’ RESPONSIBILITIES FOR THE FINANCIAL STATEMENTSThe Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the

financial statements in accordance with International Financial Reporting Standards ("IFRSs").

Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state

of affairs of the Company and of the profit or loss of the company for that period. In preparing these financial statements, International Accounting

Standard 1 requires that Directors:

n properly select and apply accounting policies;

n present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

n provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the

impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and

n make an assessment of the Company's ability to continue as a going concern.

The Directors are responsible for keeping proper accounting records that are sufficient to show and explain the Company’s transactions and

disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply

with the Companies (Guernsey) Law, 2008. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable

steps for the prevention and detection of fraud and other irregularities.

GOING CONCERNThe Company receives financial support from IDFC Capital Limited (which was amalgamated with its holding Company IDFC Securities Limited,

effective November 1, 2013) as necessary to continue as a going concern. This support takes the form of capital investment in the Company to

enable it to meet its commitments as stated in Note 10 to invest in its subsidiary entity. On this basis, the Company is deemed to be a going concern.

Directors' Report

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I D F C F U N D O F F U N D S L I M I T E D | 8 3

INDEPENDENT AUDITORSo far as the Directors are aware, there is no relevant audit information of which the Company’s auditor is unaware, and each Director has taken all

the steps that he or she ought to have taken as a Director in order to make himself or herself aware of any relevant audit information and to establish

that the Company’s auditor is aware of that information.

This confirmation is given and should be interpreted in accordance with the provisions of Section 249 of the Companies (Guernsey) Law, 2008.

The Auditor, Deloitte LLP has indicated their willingness to continue in office. A resolution to reappoint Deloitte LLP as auditor will be proposed at the

next Annual General Meeting.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS

K. BRENNAN K. HAITH

Director Director

April 17, 2014

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TO THE MEMBERS OF IDFC FUND OF FUNDS LIMITEDWe have audited the financial statements of IDFC FUND OF FUNDS LIMITED for the year ended March 31, 2014 which comprise the Statement of

Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity and Statement of Cash Flows and the related notes 1 to

13. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards

("IFRSs") as issued by the International Accounting Standards Board.

This report is made solely to the Company’s members, as a body, in accordance with Section 262 of The Companies (Guernsey) Law, 2008. Our

audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s

report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company

and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditor

As explained more fully in the Directors’ Responsibilities Statement, the directors are responsible for the preparation of the financial statements and

for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance

with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices

Board’s Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the

financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting

policies are appropriate to the company’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of

significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial

and non-financial information in the annual report to identify material inconsistencies with the audited financial statements and to identify any

information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing

the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on financial statements

In our opinion the financial statements:

n give a true and fair view of the state of the Company’s affairs as at March 31, 2014 and of its comprehensive income for the year then ended;

n have been properly prepared in accordance with IFRSs; and

n have been prepared in accordance with the requirements of The Companies (Guernsey) Law, 2008.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where The Companies (Guernsey) Law, 2008 requires us to report to you if, in our

opinion:

n proper accounting records have not been kept; or

n the financial statements are not in agreement with the accounting records; or

n we have not received all the information and explanations we require for our audit.

FOR DELOITTE LLP

Chartered AccountantsSt Peter Port, Guernsey

April 17, 2014

Independent Auditors' Report

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NOTES

YEAR ENDED MARCH 31, 2014 YEAR ENDED MARCH 31, 2013

USD USD USD USD

INCOME

Bank interest received – 442– 442

EXPENDITURE

Reversal of impairment 3 (3,634,583) (354,149)Administration fee 5 50,893 62,269Directors’ fees 5 & 6 4,592 4,410Audit fees 8,708 8,789Disbursements – 240Sundry expenses 1,271 1,322GPPS contributed by the Manager 3 (73,600) (176,400)Loss on foreign exchange 2 2,924 1,570

(3,639,795) (451,949)TOTAL COMPREHENSIVE INCOME FOR THE YEAR (3,639,795) (452,391)

The above results derive wholly from continuing operations.

NOTES

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

USD USD USD USD

NON-CURRENT ASSETS

Investment 3 21,231,949 15,158,188 CURRENT ASSETS

Cash and cash equivalents 1,081,080 35,572Total Current Assets 1,081,080 35,572TOTAL ASSETS 22,313,029 15,193,760

EQUITY AND LIABILITIES

Share capital 8 23,298,763 19,815,943Retained losses (1,011,189) (4,650,984)

22,287,574 15,164,959CURRENT LIABILITIES

Trade and other payables 7 25,455 28,80125,455 28,801

TOTAL EQUITY AND LIABILITIES 22,313,029 15,193,760

Statement of Comprehensive Income FOR THE YEAR ENDED MARCH 31, 2014

Statement of Financial Position

The Financial Statements on pages 7 to 17 (Page 85 to 91 of this Report) were approved by the Board of Directors on April 17, 2014 and are signed on their behalf by

DIRECTORS OF IDFC FUND OF FUNDS LIMITED

K. BRENNAN K. HAITH

Director Director

April 17, 2014

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SHARE CAPITAL RETAINED LOSSES TOTAL

NOTES USD USD USD

At April 1, 2013 19,815,943 (4,650,984) 15,164,959Issue of shares 8 3,482,820 - 3,482,820Total comprehensive income for the year – 3,639,795 3,639,795AT MARCH 31, 2014 23,298,763 (1,011,189) 22,287,574

At April 1, 2012 16,262,712 (5,103,375) 11,159,337Issue of shares 8 3,553,231 – 3,553,231Total comprehensive income for the year – 452,391 452,391AT MARCH 31, 2013 19,815,943 (4,650,984) 15,164,959

Statement of Changes in Equity FOR THE YEAR ENDED MARCH 31, 2014

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NOTES

YEAR ENDED MARCH 31, 2014 YEAR ENDED MARCH 31, 2013

USD USD USD USD

CASH FLOWS FROM OPERATING ACTIVITIES

Gain for the year 3,639,795 452,391Adjustments for:Reversal for impairment (3,634,583) (354,149)GPPS contributed by the Manager (73,600) (176,400)Changes in working capital:(Decrease)/increase in payables (3,346) 8,737NET CASH (OUTFLOW) FROM OPERATING ACTIVITIES (71,734) (69,421)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of investments 3 (2,439,178) (4,017,432)GPPS contributed by the Manager 3 73,600 176,400NET CASH OUTFLOW FROM INVESTING ACTIVITIES (2,365,578) (3,841,032)CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issue of shares 8 3,482,820 3,553,231NET CASH INFLOW FROM FINANCING ACTIVITIES 3,482,820 3,553,231Net increase/(decrease) in cash and cash equivalents 1,045,508 (357,222)CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR 35,572 392,794CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 1,081,080 35,572

Statement of Cash Flows FOR THE YEAR ENDED MARCH 31, 2014

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

01 Principal activities IDFC Fund of Funds Limited ("the Company") was incorporated in Guernsey on June 26, 2009.The principal activity of the Company is to invest into Emerging Markets Private Equity Fund, L.P. (the “Partnership”), a Limited Partnership registered in Guernsey.

02 Principal accounting policiesThe following accounting policies have been applied consistently in dealing with items which are considered material in relation to the Company’s financial statements.

Standards in issue but not yet effectiveA number of new standards, amendments to standards and interpretations are effective for annual periods beginning after April 1, 2014 and have not been applied in preparing these financial statements. The Company does not plan to adopt these standards early.The Directors are considering the future impact of these Standards and Interpretations.

Basis of AccountingThe financial statements have been prepared under the historical cost convention and in accordance with applicable International Financial Reporting Standards.

Amalgamation of Holding CompanyIDFC Capital Limited, the immediate holding company of IDFC Fund of Funds Limited, had, with the approval of its Board of Directors at their meeting held on July 22, 2013, filed a petition with the Bombay High Court on December 11, 2013 to obtain its sanction to a Scheme of Amalgamation for an amalgamation of IDFC Capital Limited with its holding company, IDFC Securities Limited. The Bombay High Court has approved the said Scheme of Amalgamation vide its order dated March 28, 2014. The Amalgamation is effective from November 1, 2013.

Going ConcernThe Company receives financial support from IDFC Capital Limited (which was amalgamated with its holding Company IDFC Securities Limited, effective November 1, 2013) as necessary to continue as a going concern. This support takes the form of capital investment in the Company to enable it to meet its commitment as stated in Note 11.On this basis, the Company is deemed to be a going concern.

Critical accounting and judgements in applying accounting estimatesThe Company makes estimates and assumptions that affect the reported amounts of assets and liabilities. It also requires the Directors to exercise their judgement in the process of applying the Company’s accounting policies, and in the valuation of the Company’s investment. Estimates are continually evaluated and based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Investment The investment held in the Partnership has been accounted for as an associate at cost less provision for impairment with the provision being the difference between the capital contributed less the Net Asset Value of the Partnership. The underlying investments in the Partnership are derived from the capital account valuations at December 31, 2013 and adjusting those valuations for cost and deemed fair value movements between that date and the Statement of Financial Position date.

Bank InterestBank interest is accounted for on an accruals basis.

Foreign ExchangeMonetary assets and liabilities in currencies other than USD are translated into USD at the rate of exchange ruling at the reporting date. Transactions in currencies other than USD are translated into USD at the rate of exchange ruling at the date of the transaction. Foreign exchange gains and losses resulting from settlement of such transactions and from the translation at year end exchange rates are recognised in the Statement of Comprehensive Income for the year.

ConsolidationThe Company has elected not to prepare consolidated financial statements because it itself is a wholly owned subsidiary of IDFC Limited, the ultimate holding company presents consolidated financials. These consolidated accounts are available for public use at KRM Tower, 8th Floor, No. 1, Harrington Road, Chetpet, Chennai – 600 031.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

03 InvestmentThe Company’s investment relates to a commitment of USD 30,000,000 (2013: USD 30,000,000) and an effective commitment for investment of USD 26,705,585 as commitment in the Partnership and comprises (i) investments in portfolio entities through Emerging Markets Private Equity Fund, L.P. and (ii) other funding provided to the Partnership. Pursuant to the memorandum of agreement dated October 28, 2011 as detailed on page 3, the Company’s commitment into the Partnership was reduced from USD 50,000,000 to USD 30,000,000. On January 26, 2012, a new investor was admitted to the Partnership. At entrance, the new limited partner reimbursed the Company for the sum of 50% of the cost of the underlying investments held by the Partnership and 50% of the associated net current assets of the Partnership that existed at that date via an equalisation payment. The associated gain on disposal on this transaction was included within the Statement of Comprehensive Income under gain on disposal of investment. The new investor is classified as a Limited Partner. In 2013 the new investor increased its commitment to USD 35,000,000. The Company’s commitment remained the same.The investment relates to the capital contributed to the Partnership as the capital partner as at March 31, 2014. The Partnership is a limited partnership registered in Guernsey and the Company has a commitment of USD 30,000,000 out of a total commitment of USD 65,000,000. The former General Partner, IDFC General Partners Limited, was replaced as General Partner of the Partnership by EMPEF GP Limited on January 26, 2012.During the year, there was an equalisation payment received by the Company for $1.2m. This was treated as a refund of contributions and increased the uncalled commitment.

2014 2013

USD USD

INVESTMENT

Cost less impairment brought forward 15,158,188 10,786,607Additions 2,439,178 4,017,432Reversal for impairment 3,634,583 354,149Cost less impairment carried forward 21,231,949 15,158,188

Under the terms of the memorandum of agreement dated October 28, 2011, the Company is entitled to reimbursement by the Investment Advisor to the Partnership of its share of any General Partner’s Profit Share (“GPPS”) incurred by the Partnership up to USD 250,000 and that this reimbursement would be deemed as contribution to the Partnership. Additions include GPPS which has been deemed as contributed by the Investment Advisor to the Partnership on behalf of the Company.The valuation of the investments are directly dependent on the valuation of the investments held by Emerging Markets Private Equity Fund, L.P..

04 TaxationThe Company has been taxed in Guernsey at the standard rate of 0% (2013: 0%).

05 Material AgreementsAdministration Services AgreementUnder the Secretarial and Administration Agreement dated October 28, 2009, Ipes (Guernsey) Limited provides secretarial, directors and administrative services to the Company and is entitled to receive administration fees, Directors’ fees and reimbursement of expenses as may be determined from time to time by the parties.

06 Information regarding directors and employeesThe average number of employees (including Directors) was:

2014 2013

NUMBER NUMBER

Directors 2 2

There were no other employees apart from the Directors

2014 2013

USD USD

Directors’ fees paid 4,592 4,410

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

07 Trade and other payables2014 2013

USD USD

Administration fee accrual 14,969 15,927Audit fees accrual 9,281 8,464Sundry creditors 1,205 4,410

25,455 28,801

08 Share capital2014 2013

USD USD

Authorised: UnlimitedIssued and fully paid share capital23,298,763 Shares of USD 1 each (2013: 19,815,943 Shares of USD 1 each) 23,298,763 19,815,943

23,298,763 19,815,943

3,482,820 USD 1 ordinary shares (2013: 3,553,231 USD 1 ordinary shares) were issued in the year at par value for cash consideration.

09 Controlling partyThe ultimate controlling party of the Company is considered to be IDFC Limited, which has a 100% stake in the Company.

10 CommitmentsThe Company receives funding through issuing USD 1 ordinary shares to the Company’s sole shareholder, IDFC Capital Limited. All shares are issued at par value. At March 31, 2014, 23,298,763 (2013: 19,815,943) USD 1 shares had been issued and all shares in issue were fully paid up. As disclosed in note 8, an unlimited number of shares can be issued by the Company.

Contribution to Emerging Markets Private Equity Fund, L.P2014

USD

Original Commitment 30,000,000Contribution for start up expenses (3,294,415)Effective Commitment for investments 26,705,585Drawdowns as at March 31, 2014 (18,908,324)Undrawn Commitment 7,797,261

2013

USD

Commitment 30,000,000Drawdowns as at March 31, 2013 (16,469,138)Undrawn Commitment 13,530,862

IDFC Fund of Funds Limited had an original commitment of USD 30,000,000. Before Hermes PEF became a co-investor there were sunk costs of USD 3,294,415. In order that Hermes PEF can contribute its full commitment, an effective commitment of USD 26,705,585 was calculated for the purposes of investments. The Company still maintained its USD 30m legal commitment and this will be included in the waterfall calculation. The undrawn commitment is the outstanding commitment for the Company to invest into the Partnership.

11 Post balance sheet eventsThere are no material post balance sheet events that require adjustment or disclosure in the financial statements.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

12 Financial risk managementThe Company's activities expose it to a number of financial risks: market risk (including currency risk and interest rate risk), credit risk and liquidity risk.The Company's overall risk management programme seeks to maximise the returns derived from the level of risk to which the Company is exposed and seeks to minimise potential adverse effects on the Company's performance.The Company uses different methods to measure and manage the various types of risk to which it is exposed.

Interest rate riskThe Company takes on exposure to interest rate risk, which is the risk that the value of a financial instrument will fluctuate due to changes in the market interest rates. This risk is not considered material.The directors monitor interest rate risk and determine whether funds on deposit are attracting the best market rate. The interest rate risk was not considered to be material.

Credit riskThe Company has exposure to credit risk, which is the risk that a counterparty will be unable to pay amounts due. The main concentration to which the Company is exposed arises from its exposure to counterparty credit. The maximum exposure to the Company is USD 1,081,080 (2013: USD 35,572).The Company is exposed to counterparty credit risk on cash and cash equivalents. The Directors monitor the Company's credit position on a regular basis and there is nothing overdue.Trade and other payables are interest free and settlement dates are monitored on a regular basis.

Liquidity riskThe liquidity risk is the risk that the Company may not be able to generate sufficient cash resources to settle its obligations in full as they fall due or can only do so on terms that are materially disadvantageous. The Company mitigates this risk by the issuance of shares in order to satisfy calls on its investments and other liabilities. As at the year end, the Company held excess cash over current liabilities of USD 1,055,625 (2013: USD 6,771). All cash and cash equivalents are held in current accounts or on short term fixed deposits, therefore the directors did not deem a liquidity table necessary.

Capital risk managementThe Company's objective when managing capital is to safeguard the Company's ability to continue as a going concern.The capital of the Company is represented by the share capital of the Company. The Company is not exposed to any gearing, has a substantial cash balance at the year end and has the ability to issue further share capital, therefore the Directors believe that this will ensure the Company will continue as a going concern.

Market price riskThe Company is exposed to market price risk which is the risk that the value of its investments will fluctuate due to market conditions over which it has no control. The Company seeks to mitigate this risk by the careful selection and monitoring of investments. The valuation of the Company’s investment is dependent on the valuation of the Company’s investment in EMPEF LP. A 10% change in the value of underlying investments is expected to have a 10% change in the value of the Company’s investment. Any increase in valuation would be capped at investment cost less impairment.

Currency riskThe share capital of the Company is denominated in USD, the reporting currency, and the Company invests in USD-denominated investments. Hence the currency risk relating to financial instruments is limited.

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BOARD OF DIRECTORS n Dr. Rajiv B. Lall n Dr. Rajeev Uberoi n Mr. Evan Francis Gallagher n Mr. Ajay Sawhney

AUDITORS n Deloitte & Touche LLP

PRINCIPAL BANKER n Hongkong and Shanghai Banking Corporation

REGISTERED OFFICEOne Finlayson Green# 16–02Singapore 049 246Tel: +65 6499 0700Fax: +65 6536 3359

06 IDFC CAPITAL (SINGAPORE) PTE. LIMITED

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I D F C C A P I T A L ( S I N G A P O R E ) P T E . LT D . | 9 3

The Directors present their report together with the audited financial statements of the Company for the financial year ended March 31, 2014.

1 DIRECTORS The Directors of the Company in office at the date of this report are:

Dr. Rajiv Behari Lall

Mr. Evan Francis Gallagher

Dr. Rajeev Uberoi

Mr. Ajay Sawhney (Appointed on June 24, 2013)

2 ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE BENEFITS BY MEANS OF ACQUISITION OF SHARES AND DEBENTURES

Neither at the end of the financial year nor at any time during the financial year did there subsist any arrangement whose object is to enable the

Directors of the Company to acquire benefits by means of the acquisition of shares or debentures in the Company or any other body corporate,

except for the options mentioned in paragraph 3 of the Report of the Directors.

3 DIRECTORS’ INTERESTS IN SHARES AND DEBENTURES The Directors of the Company holding office at the end of the financial year had no interests in the share capital and debentures of the

Company and related corporations as recorded in the register of directors’ shareholdings kept by the Company under Section 164 of the

Singapore Companies Act except as follows:

ORDINARY SHARES

SHAREHOLDINGS REGISTERED IN NAME OF DIRECTOR

SHAREHOLDINGS IN WHICH DIRECTORS ARE DEEMED TO HAVE AN INTEREST

NAME OF DIRECTORS AND COMPANIES IN WHICH INTERESTS ARE HELD

AT BEGINNING OF YEAR, OR DATE OF

APPOINTMENT, IF LATER

AT END OF YEAR

AT BEGINNING OF YEAR, OR DATE OF

APPOINTMENT, OF YEAR

AT END OF YEAR

ULTIMATE HOLDING COMPANY - IDFC LIMITED

Rajiv Behari Lall 2,348,984 2,348,984 – –

Rajeev Uberoi 150,000 150,000 – –

OPTIONS TO SUBSCRIBE FOR ORDINARY SHARES IN ULTIMATE HOLDING COMPANY

NAME OF DIRECTORS AND COMPANIES IN WHICH INTERESTS ARE HELD

AT BEGINNING OF YEAR, OR DATE OF

APPOINTMENT, IF LATER

AT END OF YEAR

ULTIMATE HOLDING COMPANY - IDFC LIMITED

Rajiv Behari Lall 5,105,403 5,105,403

Evan Francis Gallagher 17,470 17,470

Rajeev Uberoi 664,704 664,704

4 DIRECTORS’ RECEIPT AND ENTITLEMENT TO CONTRACTUAL BENEFITS Since the beginning of the financial year, no director has received or become entitled to receive a benefit which is required to be disclosed

under Section 201(8) of the Singapore Companies Act, by reason of a contract made by the Company or a related corporation with the Director

or with a firm of which he is a member, or with a company in which he has a substantial financial interest except for salaries, bonuses and other

benefits as disclosed in the financial statements. Certain directors received remuneration from related corporations in their capacity as director

and/or executive of that related corporation.

5 SHARE OPTIONS (a) Options to take up unissued shares

During the financial year, no options to take up unissued shares of the Company were granted.

Report of the Directors

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(b) Options exercised

During the financial year, there were no shares of the Company issued by virtue of the exercise of an option to take up unissued shares.

(c) Unissued shares under option

At the end of the financial year, there were no unissued shares of the Company under options.

6 AUDITORS The auditors, Deloitte & Touche LLP, have expressed their willingness to accept reappointment.

ON BEHALF OF THE DIRECTORS

RAJEEV UBEROI EVAN FRANCIS GALLAGHER

Director Director

April 25, 2014

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In the opinion of the Directors, the financial statements as set out on page 7 to 29 (Page 97 to 110 of this Report) are drawn up so as to give a true and fair view of the state of affairs of the Company as at March 31, 2014 and of the results, changes in equity and cash flows of the Company for the financial year then ended and at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts when they fall due.

ON BEHALF OF THE DIRECTORS

RAJEEV UBEROI EVAN FRANCIS GALLAGHER

Director Director

April 25, 2014

Statement of Directors

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TO THE MEMBER OF IDFC CAPITAL (SINGAPORE) PTE. LTD.Report on the Financial StatementsWe have audited the accompanying financial statements of IDFC CAPITAL (SINGAPORE) PTE. LTD. ("the Company”) which comprise the statement of financial position as at March 31, 2014, and the 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 a summary of significant accounting policies and other explanatory information, as set out on pages 7 to 29 (Page 97 to 110 of this Report).

Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation of financial statements that gives a true and fair view in accordance with the provisions of the Singapore Companies Act ("the Act”) and Singapore Financial Reporting Standards, and for devising and maintaining a system of internal accounting controls sufficient to provide reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss account and balance sheet and to maintain accountability of assets.

Auditors’ ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. 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 judgement, 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 entity’s preparation of financial statements that give a true and fair view 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 entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of 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.

OpinionIn our opinion, the financial statements of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Company as at March 31, 2014 and of the results, changes in equity and cash flows of the Company for the year ended on that date.

Report on Other Legal and Regulatory RequirementsIn our opinion, the accounting and other records required by the Act to be kept by the Company have been properly kept in accordance with the provisions of the Act.

DELOITTE & TOUCHE LLP

Public Accountants and Certified Public Accountants

Singapore, April 25, 2014

Independent Auditors' Report

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2014 2013

NOTES US$ US$

ASSETS

CURRENT ASSETS

Cash and cash equivalents 7 1,351,000 1,060,011 Trade and other receivables 8 155,145 750,517 Total current assets 1,506,145 1,810,528

NON-CURRENT ASSET

Plant and equipment 9 52,829 58,820TOTAL ASSETS 1,558,974 1,869,348

LIABILITY AND NET EQUITY

CURRENT LIABILITY

Trade and other payables 10 322,229 425,231

CAPITAL AND RESERVES

Share capital 11 13,179,761 11,564,016 Accumulated losses 13 (11,943,016) (10,119,899) Net equity 1,236,745 1,444,117TOTAL LIABILITY AND NET EQUITY 1,558,974 1,869,348

See accompanying notes to financial statements.

Statement of Financial Position MARCH 31, 2014

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NOTE

2014 2013

US$ US$

Revenue 14 279,844 – Other operating income 15 8,313 13,899Staff costs 16 313,575 (2,246,154)Professional fees (70,606) (145,810)Depreciation expense 9 (14,265) (16,268)Other operating expenses 17 (1,103,056) (477,729)LOSS BEFORE INCOME TAX (586,194) (2,872,062)

Income tax 18 – –

NET LOSS FOR THE YEAR, REPRESENTING TOTAL COMPREHENSIVE LOSS FOR THE YEAR

(586,194) (2,872,062)

See accompanying notes to financial statements.

Statement of Comprehensive Income YEAR ENDED MARCH 31, 2014

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SHARE CAPITAL ACCUMULATED LOSSES TOTAL

US$ US$ US$

Balance at April 1, 2012 8,431,466 (7,982,026) 449,490Transactions with owners, recognised directly in equitya) Issue of share capital 3,132,550 – 3,132,550b) Shared-based payments (Note 12) – 734,189 734,189Total comprehensive loss for the year – (2,872,062) (2,872,062)Balance at March 31, 2013 11,564,016 (10,119,899) 1,444,117Transactions with owners, recognised directly in equitya) Issue of share capital 1,615,745 – 1,615,745b) Shared-based payments (Note 12) – (1,236,923) (1,236,923)Total comprehensive loss for the year – (586,194) (586,194)BALANCE AT MARCH 31, 2014 13,179,761 (11,943,016) 1,236,745

See accompanying notes to financial statements.

Statement of changes in Equity YEAR ENDED MARCH 31, 2014

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2014 2013

US$ US$

OPERATING ACTIVITIES

Loss before income tax (586,194) (2,872,062)Adjustments for:Share-based payment (income) expense (1,236,923) 734,189Depreciation expense 14,265 16,268OPERATING CASH FLOWS BEFORE MOVEMENTS IN WORKING CAPITAL (1,808,852) (2,121,605)Trade and other receivables 595,372 137,630Trade and other payables (103,002) (244,733)NET CASH USED IN OPERATING ACTIVITIES (1,316,482) (2,228,708)

INVESTING ACTIVITIES

Purchase of plant and equipment (8,399) (12,936)Proceeds from disposal of plant and equipment 125 1,814NET CASH USED IN INVESTING ACTIVITIES (8,274) (11,122)

FINANCING ACTIVITY

PROCEEDS FROM ISSUANCE OF SHARES, REPRESENTING NET CASH FROM FINANCING ACTIVITY

1,615,745 3,132,550

Net (decrease) increase in cash and cash equivalents (290,989) 892,720Cash and cash equivalents at beginning of the year 1,060,011 167,291CASH AND CASH EQUIVALENTS AT END OF THE YEAR 1,351,000 1,060,011

See accompanying notes to financial statements.

Statement of Cash Flows YEAR ENDED MARCH 31, 2014

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

01 GeneralThe Company (Registration No. 200800200R) is incorporated in Singapore with its registered office and principal place of business at One Finlayson Green #16-02, Singapore 049246. The financial statements are expressed in United States dollars.The principal activity of the Company is to establish funds, act as advisor and manager of funds, and to provide advice in relation to the setting up of funds. The financial statements of the Company for the year ended March 31, 2014 were authorised for issue by the Board of Directors on April 25, 2014.

02 Summary of significant accounting policiesBasis of accountingThe financial statements are prepared in accordance with the historical cost basis except as disclosed in the accounting policies below, and are drawn up in accordance with the provisions of the Singapore Companies Act and Singapore Financial Reporting Standards (“FRS”).Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability which market participants would take into account when pricing the asset or liability at the measurement date. Fair value measurement and/or disclosure purposes in these financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of FRS 102, leasing transactions that are within the scope of FRS 17, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in FRS 2 or value in use in FRS 36. In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety which are described as follows:

n Level 1 inputs are quoted market prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;

n Level 2 inputs are inputs, other than the quoted market prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

n Level 3 inputs are unobservable inputs for the asset or liability.

Adoption of new and revised standardsOn April 1, 2013, the Company has adopted all the new and revised FRSs and Interpretations of FRS (“INT FRS”) that are effective from that date and are relevant to its operation. The adoption of these new and revised FRSs and INT FRSs does not result in changes to the Company’s accounting policies and has no material effect on the amounts reported for the current or prior years, except as disclosed below:

Amendments to FRS 1 Presentation of Items of Other Comprehensive IncomeThe Company has applied the amendments to FRS 1 Presentation of Items of Other Comprehensive Income retrospectively for the first time in the current year, and renamed the “statement of comprehensive income” as the “statement of profit and loss and other comprehensive income”. Under the amendments to FRS 1, the Company also grouped items of other comprehensive income into two categories in the other comprehensive income section: (a) items that will not be reclassified subsequently into profit and loss and (b) items that may be reclassified subsequently to profit or loss when specific conditions are met. Other than the above mentioned presentation changes, the application of the amendments to FRS 1 does not result in any impact of profit and loss, other comprehensive income and total comprehensive income.At the date of authorisation of the financial statements, management anticipates that the adoption of the FRSs, INT FRSs and amendments to FRS that were issued but effective only in future periods will not have a material impact on the financial statements of the Company in the period of their initial adoption. The following FRSs, Interpretation of FRS (“INT FRS”) and amendments to FRS were issued but not effective:

n Amendments to FRS 24 - Related Party Disclosures arising from Improvements to FRSs (January 2014)

n Amendments to FRS 32 - Financial Instruments: Presentation n Amendments to FRS 36 - Impairment of Assets n Amendments to FRS 113 - Fair Value Measurement arising from Improvements to

FRSs (January 2014)

Financial Instrument Financial assets and financial liabilities are recognised on the Company’s statement of financial position when the Company becomes a party to the contractual provisions of the instrument.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

Effective interest rate methodThe effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial instrument, or where appropriate, a shorter period. Income and expense is recognised on an effective interest rate basis for debt instruments.

Financial assets

Loans and receivablesTrade and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as “loans and receivables”. Loans and receivable are measured at amortised cost using the effective interest method less impairment. Interest is recognised by applying the effective interest method, except for short-term receivables when the effect of discounting is immaterial.

Impairment of financial assetsFinancial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at the end of each reporting period. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the financial asset have been impacted.For available-for-sale equity instruments, a significant or prolonged decline in the fair value of the investment below its cost is considered to be objective evidence of impairment.For all other financial assets, objective evidence of impairment could include:

n significant financial difficulty of the issuer or counterparty; or n default or delinquency in interest or principal payments; or n it becoming probable that the borrower will enter bankruptcy or financial re-organisation.

For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables where the carrying amount is reduced through the use of an allowance account. When a trade receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent the carrying amount of the financial asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

Derecognition of financial assetsThe Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

Financial liabilities and equity instruments

Classification as debt or equityFinancial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.

Equity instrumentsAn equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.

Financial liabilitiesTrade and other payables are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, using the effective interest method, with interest expense recognised on an effective yield basis.

Derecognition of financial liabilitiesThe Company derecognises financial liabilities when, and only when, the Company’s obligations are discharged, cancelled or they expire.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

Plant and equipmentPlant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses.Depreciation is charged so as to write off the cost of assets, using the written down value method, on the following bases: Leasehold improvements - 33.33% or 36 monthsComputers - 40.00%Office equipment - 13.91%Furniture and fittings - 18.10%Fully depreciated assets still in use are retained in the financial statements.The estimated useful lives, residual values and depreciation method are reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis.The gain or loss arising on disposal or retirement of an item of plant and equipment is determined as the difference between the sales proceeds and the carrying amounts of the asset and is recognised in profit or loss.

Impairment of Non-Financial Assets At the end of each reporting period, the Company reviews the carrying amounts of its non-financial assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in the profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.When an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.

Provisions Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

LeasesLeases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

Revenue RecognitionRevenue is measured at the fair value of the consideration, received or receivable. Revenue is recognised as follows:

Fee incomeManagement fee income is recognised over the period the services are rendered based on the applicable terms as agreed with the fund company.

Retirement Benefit Costs Payments to defined contribution retirement benefit plans are charged as an expense when employees have rendered the services entitling them to the contributions. Payments made to state-managed retirement benefit schemes, such as the Singapore Central Provident Fund, are dealt with as

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

payments to defined contribution plans where the Company’s obligations under the plans are equivalent to those arising in a defined contribution retirement benefit plan.

Employee Leave EntitlementEmployee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave as a result of services rendered by employees up to the end of the reporting period.

Income Tax Income tax expense represents the sum of the tax currently payable and deferred tax.The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are not taxable or tax deductible. The Company’s liability for current tax is calculated using tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.Deferred tax is recognised on the differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised based on the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.Current and deferred tax are recognised as an expense or income in profit or loss.

Foreign currency transactions and translationThe financial statements of the Company are measured and presented in the currency of the primary economic environment in which the entity operates (its functional currency). The financial statements of the Company are presented in United States dollars, which is the functional currency of the Company.Transactions in currencies other than the Company’s functional currency are recorded at the rate of exchange prevailing on the date of the transaction. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the end of each reporting period. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.Exchange differences arising on the settlement of monetary items, and on retranslation of monetary items are included in profit or loss for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised in other comprehensive income. For such non-monetary items, any exchange component of that gain or loss is also recognised in other comprehensive income.

Share-Based PaymentsThe Company’s ultimate holding company issues equity-settled share-based payments to certain employees of the Company. The Company does not have an obligation to provide the ultimate holding company’s equity instruments to its employees.Equity-settled share-based payments are measured at fair value of the equity instruments at the date of grant. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in Note 12. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Company’s estimate of the number of equity instruments that will eventually vest. At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to retained earnings.

Cash and Cash Equivalents in The Statement of Cash FlowsCash and cash equivalents in the statement of cash flows comprise cash on hand and demand deposits and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

03 Critical accounting judgements and key sources of estimation uncertainty In the application of the Company’s accounting policies, which are described in Note 2, management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

(i) Critical judgements in applying the Company’s accounting policiesThe management is of the opinion that there are no instances of application of judgements which are expected to have a significant effect on the amounts recognised in the financial statements.

(ii) Key sources of estimation uncertaintyThe management is of the opinion that there are no key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

04 Financial instruments, financial risks and capital risks management(a) Categories of financial instrumentsThe following table sets out the financial instruments as at the end of the reporting period:

2014 2013

US$ US$

FINANCIAL ASSETS

Loans and receivables (including cash and bank balances) 1,478,760 1,709,679FINANCIAL LIABILITIES

At amortised cost 322,229 425,231

At the end of reporting period, the Company does not have any financial instruments subject to offsetting, enforceable master netting arrangements and similar agreements.

(b) Credit riskCredit risk refers to the risk that debtors will default on their obligations to repay the amount owing to the Company, resulting in a loss to the Company. The Company has adopted a stringent procedure in extending credit terms to its customers and in monitoring its credit risk. The Company does not have any significant credit risk exposure as at the end of the reporting period. The Company places its cash with creditworthy financial institutions.The maximum exposure to credit risk in the event that the counterparties fail to perform their obligations as at the end of the reporting period is the carrying amount of the financial assets as stated in the statement of financial position.

(c) Interest rate riskThe Company does not have any significant interest bearing assets and liabilities except fixed deposits. Management is of the view that given the current low interest rates, it is not exposed to significant interest rate risk.

(d) Foreign currency riskThe Company’s foreign currency exposures arise mainly from the exchange rate movements of the Singapore dollar against the United States dollar.At the end of the reporting period, the carrying amounts of monetary assets and monetary liabilities denominated in currencies other than the Company’s functional currency are as follows:

SINGAPORE DOLLAR 2014 SINGAPORE DOLLAR 2013

US$ US$

ASSETS

Cash and cash equivalents 880,726 1,037,311Trade and other receivables 55,423 129,912TOTAL 936,149 1,167,223

LIABILITIES

Trade and other payables 52,289 72,231NET CURRENCY EXPOSURE 883,860 1,094,992

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

Foreign currency sensitivityThe following table details the sensitivity to a 10% increase and decrease in the relevant foreign currencies against the functional currency of the Company. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the possible change in foreign exchange rates.If the relevant foreign currency weakens by 10% against the functional currency of the Company, loss will increase (decrease) by:

SINGAPORE DOLLAR IMPACT

2014 2013

US$ US$

LOSS 88,386 109,499

In management’s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk as the year end exposure does not reflect the exposure during the year.

(d) Liquidity riskThe Company maintains sufficient cash and bank balances to fund its daily operating requirement. In addition, the Company also relies on the holding company to fund any shortfall in liquidity requirements.All financial assets and financial liabilities in 2013 and 2014 are repayable on demand and due within 1 year from the end of the reporting period.

(e) Fair values of financial assets and financial liabilities Management considers that the carrying amounts of cash and cash equivalents, trade and other receivables and trade and other payables approximate their respective fair values due to the relatively short-term maturity of these financial instruments.

(f) Capital riskThe Company reviews its capital structure at least annually to ensure that it will be able to continue as a going concern. The capital structure of the Company comprises only issued share capital and reserves.The Company is required to maintain a minimum amount of capital as prescribed under the Securities and Futures Act (Chapter 289) and relevant Regulations. The Company is in compliance with the capital requirements for the year ended March 31, 2014.There were no changes to the Company’s overall strategy during the year.

05 Holding company and related company transactionsThe Company is a wholly-owned subsidiary of IDFC Securities Ltd. India. The Company’s ultimate holding company is IDFC Limited, incorporated in India. Related companies in these financial statements refer to members of the ultimate holding company’s group of companies.Some of the Company’s transactions and arrangements are between members of the group and the effect of these on the basis determined between the parties is reflected in these financial statements. The intercompany balances are unsecured, interest-free and repayable on demand unless otherwise stated.During the year, the Company has entered into the following transactions with its related companies:

2014 2013

US$ US$

Recharges to a related company 5,706 –

06 Other related party transactionsSome of the Company’s transactions and arrangements are with related parties and the effect of these on the basis determined between the parties is reflected in these financial statements. The balances are unsecured, interest-free and repayable on demand unless otherwise stated.During the year, the Company has entered into the following transactions with its related parties:

2014 2013

US$ US$

Management fee earned from a related party 279,844 –

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

Compensation of directors and key management personnelThe remuneration of directors and other members of key management during the period was as follows:

2014 2013

US$ US$

Short-term benefits 575,694 843,132Post-employment benefits – 2,929Share-based payments (1,236,923) 734,189

The figures for 2014 do not include any remuneration attributable to the key management from the bonus pool that has been accrued for in the financial statements as the allocation is yet to be determined.

07 Cash and cash equivalents2014 2013

US$ US$

Cash and bank balances 556,593 1,060,011Fixed deposits 794,407 –TOTAL CASH AND CASH EQUIVALENTS 1,351,000 1,060,011

The carrying amounts of cash and cash equivalents approximate their fair values.The fixed deposit bears interest at an average rate of 0.25% per annum and matures within six months from the end of year. The fixed deposits are readily convertible into cash with insignificant risk of changes in value in the current environment and hence are included in cash and cash equivalents.

08 Trade and other receivables2014 2013

US$ US$

Trade receivables from a related company (Note 5) 23,548 20,516Recoverables from related parties (Note 6) 48,788 499,240Prepayments 27,385 100,849Deposits 49,812 74,496Others 5,612 55,416TOTAL 155,145 750,517

Recoverables from related parties relate to formation costs paid on behalf of related party funds which will be recovered from the funds.

09 Plant and equipmentLEASEHOLD OFFICE FURNITURE

IMPROVEMENTS COMPUTERS EQUIPMENT AND FITTINGS TOTAL

US$ US$ US$ US$ US$

Cost:At April 1, 2012 148,219 80,358 30,549 62,305 321,431Additions – 11,875 – 1,061 12,936Disposals – (2,176) – – (2,176)At March 31, 2013 148,219 90,057 30,549 63,366 332,191Additions – 5,104 3,295 – 8,399Disposals – (1,675) – – (1,675)At March 31, 2014 148,219 93,486 33,844 63,366 338,915Accumulated depreciation:At April 1, 2012 148,219 67,876 7,854 33,516 257,465Depreciation – 7,756 3,157 5,355 16,268Disposals – (362) – – (362)At March 31, 2013 148,219 75,270 11,011 38,871 273,371

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

LEASEHOLD OFFICE FURNITURE

IMPROVEMENTS COMPUTERS EQUIPMENT AND FITTINGS TOTAL

US$ US$ US$ US$ US$

Depreciation – 6,738 3,093 4,434 14,265Disposals – (1,550) – – (1,550)At March 31, 2014 148,219 80,458 14,104 43,305 286,086Carrying amount:At March 31, 2014 – 13,028 19,740 20,061 52,829At March 31, 2013 – 14,787 19,538 24,495 58,820

During the year, fixed assets with carrying amount of US$Nil (2013 : US$1,814) were sold to a related company.

10 Trade and other payables2014 2013

US$ US$

Trade payables 20,431 31,551Accruals and others 301,798 393,680TOTAL 322,229 425,231

Accrued expenses principally comprise amounts outstanding for ongoing costs.

11 Share capital2014 2013 2014 2013

NUMBER OF ORDINARY SHARES US$ US$

Issued and paid-up:At the beginning of the year 15,475,000 11,600,000 11,564,016 8,431,466Issued for cash 2,000,000 3,875,000 1,615,745 3,132,550AT THE END OF THE YEAR 17,475,000 15,475,000 13,179,761 11,564,016

Fully paid ordinary shares, which have no par value, carry one vote per share and carry a right to dividends as and when declared by the Company.

12 Share-Based payments Share options are granted to certain employees by the Company’s ultimate holding company. Options granted under the plans vest over a period ranging from 2 to 3 years. The maximum life of the options is 5 years. These options are settled in equity once exercised and, dependent on the option scheme, will be settled either with new shares issued or shares purchased in the market. Options are forfeited if the employee leaves the Company before the options vest. The expense of these equity-settled share-based payments is recognised in profit or loss with a corresponding credit to retained earnings, as a contribution from the ultimate holding company.Details of the share options outstanding during the year are as follows:

2014 2013

NUMBER OF SHARE OPTIONS

WEIGHTED AVERAGEEXERCISE PRICE

NUMBER OF SHARE OPTIONS

WEIGHTED AVERAGEEXERCISE PRICE

US$ US$

Outstanding at the beginning of the year 1,245,285 2,74 1,245,285 3.38Vested but not exercised during the year (496,690) 2.48 – – Forfeiture of unvested options during the year (735,125) 2.48 – – Outstanding at the end of the year 17,470 1.93 1,245,285 3.38Exercisable at the end of the year 17,470 1.93 647,491 3.44

The options outstanding at the end of the year have a weighted average remaining contractual life of 2.61 years (2013 : 2.8 years).No share options were granted in 2014 and 2013. In the year of grant, these fair values for share options granted were calculated using the Black-Scholes pricing model. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

During the year, 735,125 options given to a staff, which were unvested were forfeited and a true up adjustment was recorded with a corresponding credit in staff costs (Note 16).

13 Accumulated lossesIncluded in accumulated losses is an amount of US$35,324 (2013 : US$1,844,521) arising from equity-settled share-based payments which have been directly credited into equity.

14 Revenue2014 2013

US$ US$

Management fee income from a related party (Note 6) 279,844 –

15 Other operating income2014 2013

US$ US$

Others 2,607 12,707Recharges to a related company (Note 5) 5,706 1,192TOTAL 8,313 13,899

16 Staff costs2014 2013

US$ US$

Included in staff costs are:Costs of defined contribution plans 10,625 19,097Share-based payments (Note 12) (1,236,923) 734,189

17 Other operating expenses2014 2013

US$ US$

Rental and related expenses 198,248 205,443Fund set up expenses written off 521,117 – Travelling expenses 74,942 104,189Corporate communication expense 7,134 10,906Net foreign exchange loss 42,071 23,839Withholding tax expenses 6,724 10,153General administrative expenses 252,820 123,199TOTAL 1,103,056 477,729

18 Income TaxThe income tax benefit varied from the amount of income tax expense determined by applying the Singapore income tax rate of 17% (2013 : 17%) to profit before income tax as a result of the following differences:

2014 2013

US$ US$

Loss before income tax (586,194) (2,872,062)Tax benefit at the statutory tax rate of 17% (2013 : 17%) (99,653) (488,251)Effects of expenses that are not deductible in determining taxable profit (201,982) 5,779Effects of unused tax losses not recognised as deferred tax assets 301,635 482,472TOTAL – –

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

Subject to the agreement by the tax authorities, at the end of the reporting period, the Company has unutilised tax losses of US$13,269,124 (2013: US$11,509,068) available for offset against future profit. Deferred tax asset of US$2,225,751 (2013 : US$1,956,542) has not been recognised in respect of the tax losses due to the unpredictability of future profit streams. The unrecognised tax losses may be carried forward indefinitely subject to the conditions imposed by law including the retention of majority shareholders as defined.

19 Operating lease commitments2014 2013

US$ US$

Minimum lease payments under operating leases 186,595 188,440

At the end of the reporting period, the Company has outstanding commitments under non-cancellable operating leases, which fall due as follows:

2014 2013

US$ US$

Within one year 181,180 289,404In the second to fifth years inclusive 195,032 217,563

Operating lease payments represent rentals payable by the Company for rental of office premises and equipment. Leases are negotiated for an average term of two years, with an option to renew for another one year subject to terms and conditions then prevailing.

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BOARD OF DIRECTORS n Dr. Rajiv B. Lall n Dr. Rajeev Uberoi n Mr. Ravi Nichani

AUDITORS n Deloitte & Touche LLP

PRINCIPAL BANKER n Standard Chartered Bank

REGISTERED OFFICEOne Finlayson Green# 16–02Singapore 049 246Tel: +65 6499 0700Fax: +65 6536 3359

07 IDFC SECURITIES SINGAPORE PTE. LIMITED

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The Directors present their report together with the audited financial statements of the Company for the financial year ended March 31, 2014.

1 DIRECTORS The Directors of the Company in office at the date of this report are: Dr. Rajiv Behari Lall Dr. Rajeev Uberoi Mr. Ravi Shyam Nichani

2 ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE BENEFITS BY MEANS OF ACQUISITION OF SHARES AND DEBENTURES

Neither at the end of the financial year nor at any time during the financial year did there subsist any arrangement whose object is to enable the directors of the Company to acquire benefits by means of the acquisition of shares or debentures in the Company or any other body corporate, except for the options mentioned in paragraph 3 of the Report of the Directors

3 DIRECTORS’ INTEREST IN SHARES AND DEBENTURES The Directors holding office at the end of the financial year had no interests in the share capital and debentures of the Company and related

corporations as recorded in the register of directors’ shareholdings kept by the Company under Section 164 of the Singapore Companies Act except as follows:

ORDINARY SHARESSHAREHOLDINGS REGISTERED

IN NAME OF DIRECTORSHAREHOLDINGS IN WHICH DIRECTORS

ARE DEEMED TO HAVE AN INTERESTNAME OF DIRECTORS AND COMPANIES IN WHICH INTERESTS ARE HELD

AT BEGINNING OF YEAR

AT END OF YEAR

AT BEGINNING OF YEAR

AT END OF YEAR

ULTIMATE HOLDING COMPANY - IDFC LIMITEDRajiv Behari Lall 2,348,984 2,348,984 – –Rajeev Uberoi 150,000 150,000 – –

OPTIONS TO SUBSCRIBE FOR ORDINARY SHARES IN ULTIMATE HOLDING COMPANY

NAME OF DIRECTORS AND COMPANIES IN WHICH INTERESTS ARE HELD AT BEGINNING OF YEAR

AT END OF YEAR

ULTIMATE HOLDING COMPANY - IDFC LIMITEDRajiv Behari Lall 5,105,403 5,105,403Rajeev Uberoi 664,704 664,704

4 DIRECTORS’ RECEIPT AND ENTITLEMENT TO CONTRACTUAL BENEFITS Since the beginning of the financial year, no director has received or become entitled to receive a benefit which is required to be disclosed under

Section 201(8) of the Singapore Companies Act, by reason of a contract made by the Company or a related corporation with the director, or with a firm of which he is a member, or with a Company in which he has a substantial financial interest except for salaries, bonuses and other benefits as disclosed in the financial statements. Certain directors received remuneration from related corporations in their capacity as directors and/or executives of those related corporations.

5 SHARE OPTIONS (a) Options to take up unissued shares During the financial year, no options to take up unissued shares of the Company were granted. (b) Options exercised During the financial year, there were no shares of the Company issued by virtue of the exercise of an option to take up unissued shares. (c) Unissued shares under option At the end of the financial year, there were no unissued shares of the Company under options.

6 AUDITORS The Auditors, Deloitte & Touche LLP, have expressed their willingness to accept reappointment.

ON BEHALF OF THE DIRECTORS

RAJEEV UBEROI RAVI NICHANIDirector Director

April 25, 2014

Report of the Directors

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In the opinion of the directors, the financial statements of the Company as set out on pages 7 to 27 (Page 115 to 126 of this Report) are drawn up so as to give a true and fair view of the state of affairs of the Company as at March 31, 2014 and of the results, changes in equity and cash flows of the Company for the financial year ended and at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts when they fall due.

ON BEHALF OF THE DIRECTORS

RAJEEV UBEROI RAVI NICHANI

April 25, 2014

Statement of Directors

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TO THE MEMBER OF IDFC SECURITIES SINGAPORE PTE. LIMITED

Report on the Financial StatementsWe have audited the accompanying financial statements of IDFC SECURITIES SINGAPORE PTE. LIMITED ("the Company”) which comprise the statement of financial position of the Company as at March 31, 2014, and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows of the Company for the year then ended, and a summary of significant accounting policies and other explanatory information as set out on pages 7 to 27 (Page 115 to 126 of this Report).

Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation of financial statements that give a true and fair view in accordance with the provisions of the Singapore Companies Act ("the Act”) and Singapore Financial Reporting Standards, and for devising and maintaining a system of internal accounting controls sufficient to provide reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss account and balance sheet and to maintain accountability of assets.

Auditors’ ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. 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 judgement, 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 entity’s preparation of financial statements that give a true and fair view 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 entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of 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.

OpinionIn our opinion, the financial statements of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Company as at March 31, 2014 and of the results, changes in equity and cash flows of the Company for the year then ended.

Report on Other Legal and Regulatory RequirementsIn our opinion, the accounting and other records required by the Act to be kept by the Company have been properly kept in accordance with the provisions of the Act.

DELOITTE & TOUCHE LLP

Public Accountants and Certified Public Accountants

Singapore, April 25, 2014

Independent Auditors' Report

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2014 2013

NOTES US$ US$

ASSETS

CURRENT ASSETS

Cash and cash equivalents 121,238 269,075Trade and other receivables 7 71,115 – Prepayments 2,561 1,288TOTAL CURRENT ASSETS 194,914 270,363

NON-CURRENT ASSET

Plant and equipment 8 2,829 1,673TOTAL ASSETS 197,743 272,036

LIABILITY AND EQUITY

CURRENT LIABILITY

Other payables and accruals 9 86,783 134,804

CAPITAL AND RESERVES

Share capital 10 639,216 245,701Accumulated losses (528,256) (108,469)TOTAL EQUITY 110,960 137,232TOTAL LIABILITY AND EQUITY 197,743 272,036

See accompanying notes to financial statements.

Statement of Financial Position MARCH 31, 2014

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PERIOD FROM NOVEMBER 21, 2012 (DATE OF INCORPORATION) TO MARCH 31,

NOTES 2014 2013

US$ US$

Revenue 11 152,941 78,750Staff costs (410,686) (149,813)Depreciation expense (1,458) (111)Other operating expenses 12 (160,584) (37,295)Loss before income tax 13 (419,787) (108,469)Income tax expense 14 – – LOSS FOR THE YEAR / PERIOD, REPRESENTING TOTAL COMPREHENSIVE LOSS FOR THE YEAR / PERIOD

(419,787) (108,469)

See accompanying notes to financial statements.

Statement of Profit or Loss and other Comprehensive Income MARCH 31, 2014

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SHARE CAPITAL ACCUMULATED LOSSES TOTAL

US$ US$ US$

Upon incorporation on November 21, 2012 1 – 1Issue of shares during the period 245,700 – 245,700Total comprehensive loss for the period – (108,469) (108,469)Balance at March 31, 2013 245,701 (108,469) 137,232Issue of shares during the year 393,515 – 393,515Total comprehensive loss for the year – (419,787) (419,787)BALANCE AT MARCH 31, 2014 639,216 (528,256) 110,960

See accompanying notes to financial statements.

Statement of changes in Equity MARCH 31, 2014

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PERIOD FROM NOVEMBER 21, 2012 (DATE OF INCORPORATION) TO MARCH 31,

2014 2013

US$ US$

OPERATING ACTIVITIES

Loss before income tax (419,787) (108,469)Adjustment for:Depreciation expense 1,458 111Operating cash flows before movements in working capital (418,329) (108,358)Trade and other receivable (71,115) – Prepayments (1,273) (1,288)Other payables and accruals (48,021) 134,804NET CASH (USED IN) FROM OPERATING ACTIVITIES (538,738) 25,158

INVESTING ACTIVITY

Purchase of plant and equipment, representingNET CASH USED IN INVESTING ACTIVITY (2,614) (1,784)

FINANCING ACTIVITY

Proceeds from issue of share capital, representingnet cash from financing activity 393,515 245,701

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (147,837) 269,075Cash and cash equivalents at beginning of the year / period 269,075 – CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR / PERIOD 121,238 269,075

See accompanying notes to financial statements.

Statement of Cash Flows MARCH 31, 2014

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

01 GeneralThe Company (Registration No. 201228582N) is incorporated in Singapore with its registered office and principal place of business at One Finlayson Green #16-02, Singapore 049246. The financial statements are expressed in United States dollars.The principal activity of the Company is the provision of corporate finance advisory services.The financial statements of the Company for the financial year ended March 31, 2014 were authorised for issue by the Board of Directors on April 25, 2014.

02 Summary of significant accounting policiesBasis of AccountingThe financial statements have been prepared in accordance with the historical cost basis, except as disclosed in the accounting policies below, and are drawn up in accordance with the provisions of the Singapore Companies Act and Singapore Financial Reporting Standards (“FRS”).Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability which market participants would take into account when pricing the asset or liability at the measurement date. Fair value measurement and/or disclosure purposes in these financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of FRS 102, leasing transactions that are within the scope of FRS 17, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in FRS 2 or value in use in FRS 36. In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety which are described as follows:

n Level 1 inputs are quoted market prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;

n Level 2 inputs are inputs, other than the quoted market prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

n Level 3 inputs are unobservable inputs for the asset or liability.

Adoption of new and revised standardsOn April 1, 2013, the Company has adopted all the new and revised FRSs and Interpretations of FRS (“INT FRS”) that are effective from that date and are relevant to its. The adoption of these new and revised FRSs and INT FRSs does not result in changes to the Company’s accounting policies and has no material effect on the amounts reported for the current or prior years except as disclosed below:

Amendments to FRS 1 Presentation of Items of Other Comprehensive IncomeThe Company has applied the amendments to FRS 1 Presentation of Items of Other Comprehensive Income retrospectively for the first time in the current year, and renamed the “statement of comprehensive income” as the “statement of profit and loss and other comprehensive income”. Under the amendments to FRS 1, the Company also grouped items of other comprehensive income into two categories in the other comprehensive income section: (a) items that will not be reclassified subsequently into profit and loss and (b) items that may be reclassified subsequently to profit or loss when specific conditions are met. Other than the above mentioned presentation changes, the application of the amendments to FRS 1 does not result in any impact of profit and loss, other comprehensive income and total comprehensive income.At the date of authorisation of the financial statements, management anticipates that the adoption of the FRSs, INT FRSs and amendments to FRS that were issued but effective only in future periods will not have a material impact on the financial statements of the Company in the period of their initial adoption. The following FRSs, Interpretation of FRS (“INT FRS”) and amendments to FRS relevant to the Company were issued but not effective:

n Amendments to FRS 24 - Related Party Disclosures arising from Improvements to FRSs (January 2014)

n Amendments to FRS 32 - Financial Instruments: Presentation n Amendments to FRS 36 - Impairment of Assets n Amendments to FRS 113 - Fair Value Measurement arising from

Improvements to FRSs (January 2014)

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

Financial instrumentsFinancial assets and financial liabilities are recognised on the Company’s statement of financial position when the Company becomes a party to the contractual provisions of the instrument.

Effective interest methodThe effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial instrument, or where appropriate, a shorter period. Income and expense is recognised on an effective interest basis.

Financial assetsAll financial assets are recognised and de-recognised on a trade date where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the time frame established by the market concerned, and are initially measured at fair value plus transaction costs.

Loans and receivablesTrade and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as “loans and receivables”. Loans and receivables are measured at amortised cost using the effective interest method less impairment. Interest is recognised by applying the effective interest method, except for short-term receivables when the recognition of interest would be immaterial.

Impairment of financial assetsFinancial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted.For financial assets, objective evidence of impairment could include:

n significant financial difficulty of the issuer or counterparty; or n default or delinquency in interest or principal payments; or n it becoming probable that the borrower will enter bankruptcy or financial re-organisation.

For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of loans and other receivables where the carrying amount is reduced through the use of an allowance account. When a loan and other receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent the carrying amount of the financial asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

Derecognition of financial assetsThe Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

Financial liabilities and equity instruments

Classification as debt or equityFinancial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.

Equity instrumentsAn equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

Other financial liabilitiesOther payables and accruals are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, using the effective interest method, with interest expense recognised on an effective yield basis.

Derecognition of financial liabilitiesThe Company derecognises financial liabilities when, and only when, the Company’s obligations are discharged, cancelled or they expire.

LeasesLeases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Operating leaseRentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

Plant and equipmentPlant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses.Depreciation is charged so as to write off the cost of assets, over their estimated useful lives, using the written down value method, on the following bases:Computers - 30 monthsFully depreciated assets still in use are retained in the financial statements.The estimated useful lives, residual values and depreciation method are reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis.The gain or loss arising on the disposal or retirement of an item of plant and equipment is determined as the difference between the sales proceeds and the carrying amounts of the asset and is recognised in profit or loss.

Impairment of non-financial assetsAt the end of each reporting period, the Company reviews the carrying amounts of its non-financial assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).Recoverable amount is the higher of the fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.If the recoverable amount of the asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.When an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised as immediately in profit or loss.

ProvisionsProvisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

Revenue recognitionRevenue is measured at the fair value of the consideration received or receivable.

Fee incomeFee income is recognised as income in the period in which the service has been rendered.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

Retirement benefit costsPayments to defined contribution retirement benefit plans are charged as an expense as they fall due. Payments made to state-managed retirement benefit schemes, such as the Singapore Central Provident Fund, are dealt with as payments to defined contribution plans where the Company’s obligations under the plans are equivalent to those arising in a defined contribution retirement benefit plan.

Employee leave entitlementEmployee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave as a result of services rendered by employees up to the end of the reporting period.

Income taxIncome tax expense represents the sum of the tax currently payable and deferred tax.The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are not taxable or tax deductible. The Company’s liability for current tax is calculated using tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised based on the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and the Company intends to settle its current tax assets and liabilities on a net basis.Current and deferred tax are recognised as an expense or income in profit or loss.

Foreign currency transactions and translationThe financial statements of the Company are measured and presented in the currency of the primary economic environment in which the entity operates (its functional currency). The financial statements of the Company are presented in United States dollar, which is the functional currency of the Company.In preparing the financial statements of the Company, transactions in currencies other than the Company’s functional currency are recorded at the rate of exchange prevailing on the date of the transaction. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the end of the reporting period. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.Exchange differences arising on the settlement of monetary items, and on retranslation of monetary items are included in profit or loss for the period.

Cash and bank balances in the statement of cash flowsCash and cash equivalents in the statement of cash flows comprise of cash at bank that are subject to an insignificant risk of changes in value.

03 Critical accounting judgements and key sources of estimation uncertaintyIn the application of the Company’s accounting policies, which are described in Note 2, management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

(i) Critical judgement in applying the entity’s accounting policiesManagement is of the opinion that any instances of application of judgements are not expected to have a significant effect on the amounts recognised in the financial statements.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

(ii) Key sources of estimation uncertaintyManagement is of the opinion that there are no key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

04 Financial instruments, financial risks and capital risks management(a) Categories of financial instrumentsThe following table sets out the financial instruments as at the end of the reporting period:

2014 2013

US$ US$

FINANCIAL ASSETS

Loans and receivables (including cash and bank balances) (192,353) 269,075FINANCIAL LIABILITIES

At amortised cost 86,783 134,804

At the end of reporting period, the Company does not have any financial instruments subject to offsetting, enforceable master netting arrangements and similar agreements.

(b) Financial risk management policies and objectivesThe Company has a system of controls in place to create an acceptable balance between the probability of risks occurring and the cost of managing the risks. The management continually monitors the Company’s risk management process to ensure that an appropriate balance between risk and control is achieved.The Company’s activities expose it to certain financial risks such as market risk (including exchange rate risk and interest rate risk), credit risk and liquidity risk.

(i) Foreign currency riskThe Company transacts business in various foreign currencies, including Singapore dollar and therefore is exposed to foreign exchange risk. At the end of the reporting period, the carrying amounts of significant monetary assets and monetary liabilities denominated in currencies other than the Company’s functional currency are as follows:

2014 2013

SINGAPORE DOLLAR SINGAPORE DOLLAR

ASSETS

Cash and bank balances 65,467 185,333LIABILITIES

Other payables 20,685 20,496Net foreign exchange position 44,782 164,837

Foreign currency sensitivityThe following table details the sensitivity to a 10% increase and decrease in the relevant foreign currencies against the functional currency of the Company. The sensitivity rate of 10% represents management’s assessment of the possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates.The credit risk on liquid funds (bank deposits) is limited as the counterparties are banks with high credit-ratings assigned by international credit-rating agencies.If the relevant foreign currency strengthens by 10% against the functional currency of the Company, loss before tax will decrease by:

LOSS BEFORE TAX

2014 2013

US$ US$

Singapore dollar 4,478 16,484

A 10% weakening of the functional currency of the Company against the above currencies would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

(ii) Interest rate riskThe Company does not have any significant interest bearing assets and liabilities, hence it is not exposed to interest rate risk.

(iii) Credit riskCredit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company.The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. The credit risk on liquid funds (bank deposits) is limited as the counterparties are banks with high credit-ratings assigned by international credit-rating agencies. At the end of the reporting period, there were no concentrations of credit risk. The carrying amount of financial assets recorded in the financial statements, grossed up for any allowances for losses, represents the Company’s maximum exposure to credit risk without taking account of the value at any collateral obtained.

(iv) Liquidity riskThe Company maintains sufficient cash and bank balances to fund its daily operating requirement. In addition, the Company also relies on the holding company to fund any shortfall in liquidity requirements. All financial assets and financial liabilities of the Company are non-interest bearing and repayable on demand or within 1 year.

(c) Capital risk management and objectivesThe Company manages its capital to ensure that it will be able to continue on a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance.The capital structure of the Company comprises of issued share capital and retained earnings.The Company’s overall strategy remains unchanged from 2013.

(d) Fair value of financial assets and financial liabilitiesManagement consider that the carrying amounts of cash and cash equivalents, trade and other receivables, and other payables and accrual approximate their respective fair values due to the relatively short-term maturity.

05 Holding company and related company transactionsThe Company is a wholly-owned subsidiary of IDFC Capital Limited incorporated in India. The Company’s ultimate holding company is IDFC Limited, incorporated in India. Related companies in these financial statements refer to members of the ultimate holding company’s group of companies.Some of the Company’s transactions and arrangements are between members of the group and the effects of these on the basis determined between the parties are reflected in these financial statements. The intercompany balances are unsecured, interest-free and repayable on demand unless otherwise stated.Significant related company transactions are as follows:

PERIOD FROM NOVEMBER 21,2012 (DATE OF INCORPORATION) TO MARCH 31,

2014 2013

US$ US$

Purchase of fixed asset from a related company – 1,784Other operating expenses recharged by a related company 23,548 1,192

06 Other related party transactionsSome of the Company’s transactions and arrangements are with related parties and the effect of these on the basis determined between the parties is reflected in these financial statements. The balances are unsecured, interest-free and repayable on demand unless otherwise stated.

Compensation of directors and key management personnelThe remuneration of directors and other members of key management during the year was as follows:

PERIOD FROM NOVEMBER 21, 2012 (DATE OF INCORPORATION) TO MARCH 31,

2014 2013

US$ US$

Salaries and other short-term benefits 309,448 133,384Fees paid to a director of Company – 752

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I D F C S E C U R I T I E S S I N G A P O R E P T E . L I M I T E D | 1 2 5

Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

07 Trade and other receivables2014 2013

US$ US$

Third Parties - Trade 47,942 – Related Company - Non-trade 23,173 – TOTAL 71,115 –

The average credit period is 30 days (2013 : 30 days). At year-end, there were no balances which were past due and no impairment allowance was made.

08 Plant and equipmentCOMPUTERS TOTAL

US$ US$

COST:

At November 21, 2012 (date of incorporation) – – Additions 1,784 1,784At March 31, 2013 1,784 1,784Additions 2,614 2,614AT MARCH 31, 2014 4,398 4,398ACCUMULATED DEPRECIATION:

At November 21, 2012 (date of incorporation) – – Depreciation 111 111At March 31, 2013 111 111DEPRECIATION 1,458 1,458AT MARCH 31, 2014 1,569 1,569CARRYING AMOUNT:

AT MARCH 31, 2014 2,829 2,829At March 31, 2013 1,673 1,673

09 Other payables and accruals2014 2013

US$ US$

Accrued expenses 42,849 36,973Salary related accruals 43,934 97,831TOTAL 86,783 134,804

10 Share capital2014 2013 2014 2013

NUMBER OF ORDINARY SHARES US$ US$

ISSUED AND FULLY PAID:

At date of incorporation 300,001 1 245,701 1Issued for cash 500,000 300,000 393,515 245,700AT THE END OF THE YEAR/PERIOD 800,001 300,001 639,216 245,701

Fully paid ordinary shares, which have no par value, carry one vote per share and carry a right to dividends as and when declared by the Company.

11 RevenuePERIOD FROM NOVEMBER 21,2012

(DATE OF INCORPORATION) TO MARCH 31,

2014 2013

US$ US$

Fee income 152,941 78,750

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

12 Other operating expensesPERIOD FROM NOVEMBER 21,2012

(DATE OF INCORPORATION) TO MARCH 31,

2014 2013

US$ US$

Communication expenses 12,852 2,152Professional fees 62,152 20,099Travelling and entertainment 19,650 6,806Others 65,930 8,238TOTAL 160,584 37,295

13 Loss before income taxLoss before income tax is arrived at after crediting:

PERIOD FROM NOVEMBER 21,2012 (DATE OF INCORPORATION) TO MARCH 31,

2014 2013

US$ US$

Staff costs (excluding directors’ remuneration and costs of defined contribution plans) 137,837 3,590Costs of defined contribution plans 16,651 3,617

14 Income tax expenseThe income tax benefit varied from the amount of income tax expense determined by applying the Singapore income tax rate of 17% to loss before income tax as a result of the following differences:

PERIOD FROM NOVEMBER 21,2012 (DATE OF INCORPORATION) TO MARCH 31,

2014 2013

US$ US$

Loss before income tax (419,787) (108,469)Income tax benefit at statutory rate (17%) (71,364) (18,440)Effects of expenses that are not deductible in determining taxable profit (756) 819Effects of unused tax losses not recognised as deferred tax assets 72,120 17,621TOTAL – –

Subject to the agreement by the tax authorities, at the end of the reporting period, the Company has unutilised tax losses of US$527,891 (2013 : US$103,655) available for offset against future profit. Deferred tax asset of US$89,741 (2013 : US$17,621) has not been recognised in respect of the tax losses due to the unpredictability of future profit streams. The unrecognised tax losses may be carried forward indefinitely subject to the conditions imposed by law including the retention of majority shareholders as defined.

15 Comparative figuresThe comparative figures represent the results of operations from November 21, 2012 (date of incorporation) to March 31, 2013.

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CHIEF EXECUTIVE OFFICER n Mr. Ravi Lochan Pola

INDEPENDENT AUDITORS n Deloitte & Touche LLP

PRINCIPAL BANKER n J. P. Morgan Chase Bank N.A.

REGISTERED OFFICE350 Fifth Avenue, # 4711Empire State BuildingNew York, NY 10118USATel: +164 6756 5865

08 IDFC CAPITAL (USA) INC.

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Directors' ReportTO THE MEMBERSYour Directors have pleasure in presenting the Third Annual Report of IDFC Capital (USA), Inc. together with the audited accounts for the year ended March 31, 2014.

FINANCIAL RESULTS

PARTICULARSFOR THE YEAR ENDED

MARCH 31, 2014AMOUNT IN US$

Total Income 739,935Less: Total Expenses 761,907Loss before Tax (21,972)Add: Income tax benefit (11,780)Loss after Tax (10,192)

OPERATIONAL REVIEW AND FUTURE OUTLOOKThe US business has seen a good pick up both in terms of coverage as well as activity with the turnaround in the Indian capital markets since January 2014. The Company now covers almost 60 clients across US and Canada. The Company was compliant with all regulatory requirements of the US regulator.IDFC Capital (USA), Inc., ("the Company”) is the wholly owned subsidiary of IDFC Securities Limited. It was incorporated in the State of New York on August 3, 2009. IDFC Securities Limited, is in turn is a wholly owned subsidiary of IDFC Limited ("IDFC"). On September 15, 2011, the Company became a broker-dealer and as such is registered with the Securities and Exchange Commission and a member of the Financial Industry Regulatory Authority.

SHARE CAPITALDuring the year, there was no change in the paid up equity share capital of the Company.

DIRECTORSDuring the year, there was no change in the composition of Directors of the Company.

ACKNOWLEDGEMENTSThe Board wishes to thank the clients, custodians Banks and other statutory and regulatory authorities for their support to your Company. The Board also places on record its appreciation for the sincere efforts of the staff. The Board would also like to express its gratitude for the unstinted support and guidance received from IDFC Securities Limited and IDFC, the ultimate parent organization and also other group companies.

RAVI LOCHAN POLA

CEO

May 8, 2014

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I D F C C A P I T A L ( U S A ) I N C . | 1 2 9

TO THE BOARD OF DIRECTORS AND STOCKHOLDER OF IDFC CAPITAL (USA), INC.We have audited the accompanying financial statements of IDFC CAPITAL (USA), INC. ("the Company”), which comprise the statement of financial condition as of March 31, 2014, and the related statements of operations, cash flows, and changes in stockholder’s equity for the year then ended, and the related notes to the financial statements.

Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatementAn 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. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant 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.

OpinionIn our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of IDFC Capital (USA), Inc. as of March 31, 2014, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

DELOITE & TOUCHE LLP

New YorkMay 8, 2014

Independent Auditors' Report

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AMOUNT IN US$

ASSETS

Cash 603,782 Due from parent 157,820 Fixed assets - net of accumulated depreciation of $32,445 47,373 Deferred tax asset 93,995 Income tax receivable 9,959 Other assets 24,172TOTAL ASSETS 937,101

LIABILITIES AND STOCKHOLDER'S EQUITY

LIABILITIES: Accrued expenses and other liabilities 22,787TOTAL LIABILITIES 22,787

CommitmentsSTOCKHOLDER'S EQUITY: Common stock ($.01 par value; 100,000,000 shares authorized, issued and outstanding) 1,000,000 Share option reserve 95,530 Accumulated deficit (181,216) Total stockholder's equity 914,314TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY 937,101

The accompanying notes are an integral part of these financial statements.

Statement of Financial Condition MARCH 31, 2014

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I D F C C A P I T A L ( U S A ) I N C . | 1 3 1

AMOUNT IN US$

REVENUES

Advisory fees 739,935EXPENSES

Employee compensation and benefits 474,214Consulting and professional fees 85,970Rent, utilities and other office expenses 69,080Market data and communications 62,496Regulatory fees and expenses 7,406Travel, entertainment and promotional expenses 33,506Other 29,235TOTAL EXPENSES 761,907Net loss before income benefit (21,972)Income tax benefit (11,780)NET LOSS (10,192)

The accompanying notes are an integral part of these financial statements.

Statement of Operations FOR THE YEAR ENDED MARCH 31, 2014

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AMOUNT IN US$

SHARES COMMONSTOCK

SHARE OPTION RESERVE

ACCUMULATEDDEFICIT

TOTAL

BALANCE, APRIL 1, 2013 1,000,000 31,760 (171,024) 860,736Net loss – – – (10,192) (10,192)Share based compensation – – 63,770 – 63,770BALANCE, MARCH 31, 2014 100,000,000 1,000,000 95,530 (181,216) 914,314

The accompanying notes are an integral part of these financial statements.

Statement of Changes in Stockholder's Equity FOR THE YEAR ENDED MARCH 31, 2014

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I D F C C A P I T A L ( U S A ) I N C . | 1 3 3

(AMOUNT IN US$)

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss (10,192)Adjustments to reconcile net loss to net cash provided by operating activities Depreciation 19,535 Deferred tax (13,814) Share based compensation 63,770Decrease (increase) in operating assets Due from parent 108,926 Income tax receivable (15,066) Other assets 6,063(Decrease) in operating liabilities Compensation payable (92,000) Accrued expenses and other liabilities (13,137)NET CASH PROVIDED BY OPERATING ACTIVITIES 54,085

NET INCREASE IN CASH 54,085

CASH

Beginning of year 549,697End of year 603,782 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Cash paid during the year for income taxes 17,100NON-CASH FINANCING ACTIVITY

Share based compensation 63,770

The accompanying notes are an integral part of these financial statements.

Statement of Cash Flows YEAR ENDED MARCH 31, 2014

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Notes to Statement of Financial Condition FOR THE YEAR ENDED MARCH 31, 2014

01 OrganizationIDFC Capital (USA), Inc. ("the Company”), a wholly owned subsidiary of IDFC Securities Limited (“the Parent”) was incorporated in the State of New York on August 9, 2009. The Parent is a wholly owned subsidiary of IDFC Limited (“the Ultimate Parent”). The Company is a broker- dealer registered with the Securities and Exchange Commission (the “SEC”) and is a member of the Financial Industry Regulatory Authority (“FINRA”).The Company’s principal business activity is distributing research and market commentary and brokering transactions in Indian equities for U.S. institutional clients. The customers introduced by the Company transact their business on delivery versus payment basis with settlement of the transactions facilitated by an affiliate in India for securities traded in Indian stock markets.

02 Significant Accounting PoliciesBasis of PresentationThe Company’s financial statements were prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

Use of EstimatesIn preparing the financial statements, management makes estimates and assumptions that may affect the reported amounts. Such estimates include assumptions used in determining the provision for income taxes. Actual results could differ from these estimates.

Fixed AssetsFixed assets represent furniture, equipment and leasehold improvements and are stated at cost less accumulated depreciation and amortization. Depreciation is computed on a straight-line basis over the assets estimated useful lives of 3 to 10 years.

Advisory FeesThe Company receives fee from the Parent for performing sales and marketing functions on behalf of the Parent in order to attract institutional customers. The fees are based on expenses incurred by the Company in relation to the marketing activities such as compensation and benefits, professional services, occupancy, travel and other operating costs, plus a transfer pricing agreement profit factor of 6%.

Income TaxesDeferred tax assets and liabilities are recognized for the future tax effect of differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the period that includes the enactment date. In the event it is more likely than not that a deferred tax asset will not be realized, a valuation allowance is recorded.The Company applies a single, comprehensive model for how a company should recognize, measure, present and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on its tax returns. Income tax expense is based on pre-tax accounting income, including adjustments made for the recognition or derecognition related to uncertain tax positions.The Company evaluates uncertain tax positions by reviewing against applicable tax law all positions taken by the Company with respect to tax years for which the statute of limitations remains open. A tax benefit from an uncertain tax position will be recognized when it is considered to be more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits of the position.

Share-Based CompensationThe Ultimate Parent grants employee stock options to certain employees of the Company under various Employee Stock Option Plans of the Ultimate Parent. The compensation expense associated with this is generally accrued when earned by the employees and are allocated to the Company by the Ultimate Parent and are recorded through the Share Option Reserve. Delivery of the underlying shares of the Ultimate Parent is conditioned on the grantees satisfying requirements outlined in the award agreements.

03 Income TaxesThe components of the income tax benefit for the year ended March 31, 2014 are as follows:

AMOUNT IN US$

TAX PROVISION

CURRENT DEFERRED TOTAL

Federal (291) (5,910) (6,201)State and local 2,325 (7,904) (5,579)

2,034 (13,814) (11,780)

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I D F C C A P I T A L ( U S A ) I N C . | 1 3 5

Notes to Statement of Financial Condition FOR THE YEAR ENDED MARCH 31, 2014

Deferred income taxes are provided for the effects of temporary differences between the tax basis of an asset or liability and its reported amount in the Statement of Financial Condition. As of March 31, 2014, the Company has a deferred tax asset of $93,995, recorded in the accompanying Statement of Financial Condition, and is a result of temporary differences primarily related to stock options and amortization of organization costs.The Company has determined that it is more likely than not that the deferred tax asset will be realized and therefore there is no valuation allowance against the deferred tax asset.The difference between the Company’s statutory U.S. tax rate and its effective tax rate is primarily due to state, and local income taxes and meals and entertainment.Based upon the Company’s review of its federal, state, local income tax returns and tax filing positions, the Company determined no unrecognised tax benefits for uncertain tax positions were required to be recorded. In addition, the Company does not believe that it has any tax positions for which it is reasonably possible that it will be required to record significant amounts of unrecognised tax benefits within the next twelve months.The Company is not currently under examination by any taxing jurisdiction. The earliest tax year which is subject to examination by state and local tax authorities and the internal Revenue Service is 2011.

04 Concentration of Credit RiskIn the normal course of business, the Company’s activities involve transactions with the Parent. These activities may expose the Company to risk in the event the Parent is unable to fulfill its contractual obligations.The Company maintains substantially all of its cash balance at one major financial institution. However, the Company does not believe that these amounts are exposed to significant risk.

05 Net Capital RequirementsThe Company is subject to the Securities and Exchange Commission Uniform Net Capital Rule (SEC Rule15c3-1) (“the Rule”) under the Securities Exchange Act of 1934. The Company has elected to use the alternative method permitted by the Rule, which requires the Company maintain minimum net capital, as defined, shall not be less than $250,000 or 2% of aggregate debit balances arising from customer transactions. At March 31, 2014, the Company had net capital of $580,995 which was $330,995 in excess of required minimum net capital of $250,000.The Company is exempt from the provisions of Rule 15c3-3 under the Securities Exchange Act of 1934 as the Company’s activities are limited to those set forth in the condition for exemption appearing in paragraph (k)(2)(i).

06 Related Party TransactionThe Company entered into a service level agreement with the Parent on December 26, 2011 whereby the Company will distribute research on behalf of the Parent.The Company earned $739,935 in advisory fees from the Parent for the year ended March 31, 2014, of which $157,820 remained unpaid.

07 Commitments and ContingenciesThe Company has entered into a non-cancellable sublease for its office premises, which expires August 31, 2014. The future minimum annual base rent payments required under this operating lease are as follows:

YEAR ENDING MARCH 31, TOTAL COMMITMENTS

AMOUNT IN US$

2015 20,607

Total rental expense for the year ended March 31, 2014, was $50,648 and is included in rent, utilities and other office expenses on the Statement of Operations.

08 Furniture, Equipment and Leasehold ImprovementsFurniture, equipment and leasehold improvements consisted of the following at March 31, 2014:

AMOUNT IN US$

Equipment 44,373Furniture 28,000Leasehold Improvements 7,445

79,818Less: accumulated depreciation (32,445)

47,373Depreciation expense for the year ended March 31, 2014 amounted to $19,535.

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Notes to Statement of Financial Condition FOR THE YEAR ENDED MARCH 31, 2014

09 Recent Regulatory DevelopmentsIn July 2013, the SEC adopted amendments to its broker-dealer reports rules, which will now require, among other things, that audits of all SEC-registered broker-dealers be conducted under Public Company Accounting Oversight Board (“PCAOB”) standards for fiscal years ending on or after June 1, 2014, effectively replacing the American Institute of Certified Public Accountants with the PCAOB as the auditing standard-setter for auditors of broker-dealers, and replacing Generally Accepted Auditing Standards with PCAOB standards for broker-dealers that are subject to audit. Broker-dealers will be required to file either compliance reports or exemption reports, as applicable, and file reports of independent public accountants covering compliance reports or exemption reports (prepared in accordance with the PCAOB standards). Additionally, effective December 31, 2013, if a broker-dealer is a SIPC member firm, broker-dealer audited financial statements will also be required to be submitted to SIPC, and broker-dealers will be required to file a new quarterly Form Custody.In addition, SEC adopted amendments to various financial responsibility rules. For a broker-dealer such as the Company, these amendments were mostly technical in nature and effectively ratified various interpretive and no-action positions taken by SEC staff over many years or which conformed to existing practices or self-regulatory organization rules.Management has evaluated the implications of the amendments to the broker-dealer reports and the financial responsibility rules and does not expect that the adoption of the amendments will have a material impact on the Company or its financial statements.

10 Fair Value of Financial InstrumentsSubstantially all of the Company’s assets and liabilities are carried at fair value or contracted amounts which approximate fair value.

11 Subsequent EventsThe Company has evaluated subsequent events up to the date on which the financial statements are issued. As a result of the Company’s evaluation, the Company noted no subsequent events that require adjustment to, or disclosure in, these financial statements.

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BOARD OF DIRECTORS n Dr. Rajiv B. Lall – Chairman n Mr. Vikram Limaye n Mr. Eric Ward n Mr. Pradip Madhavji n Mrs. Bakul Patel n Mr. Vishwavir Saran Das

AUDITORS n S. R. Batliboi & Co. LLP Chartered Accountants

PRINCIPAL BANKERS n Standard Chartered Bank n HDFC Bank Limited

REGISTERED OFFICEOne India Bulls Centre841, Jupiter Mills CompoundSenapati Bapat MargElphinstone Road (West)Mumbai 400 013Tel: +91 22 6628 9999Fax: +91 22 2421 [email protected]: U65993MH1999PLC123191

09 IDFC ASSET MANAGEMENT COMPANYLIMITED

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TO THE MEMBERS,We are pleased to present the Fourteenth Annual Report to the Members, together with the audited accounts for the year ended March 31, 2014.

FINANCIAL RESULTS

PARTICULARSFOR THE YEAR ENDED

MARCH 31, 2014 `

FOR THE YEAR ENDED MARCH 31, 2013

`

Total Income 2,700,166,651 1,637,122,009Less: Total Expenses 1,322,513,715 1,217,659,902Profit / (Loss) before Tax 1,377,652,936 419,462,107Less: Total Tax Expenses 466,856,000 153,074,000Profit / (Loss) after Tax 910,796,936 266,388,107

OPERATIONAL REVIEW I. Mutual FundsThe Company is the Investment Manager of the schemes of IDFC Mutual Fund ("IDFC MF"). The Average Assets under Management of IDFC MF were ` 41,244.96 crore (excluding Fund of Funds Schemes) as on March 31, 2014.

New Scheme launches:Fifty nine (59) new schemes were launched in FY14 including IDFC Equity Opportunity - Series 1, 2 & 3; IDFC Yearly Series Interval Fund - Series 4 and Fifty five (55) Fixed Maturity Plans in form of IDFC Fixed Term Plan Series with maturity ranging from 91 days to 3 years.These Schemes together collected over ` 7,450 crore.

Awards & Recognition: n The IDFC MF website was awarded Official Honoree at the 17th Annual Webby Awards. n IDFC MF won the ‘Most innovative tools produced by any AMC for the distributors and customers’ award at the 5th Annual Conference -

Mutual Fund Round Table ("MFRT") conducted by Kolkata based IFA-Association ASK Circle on August 3, 2013.

II. Portfolio Management Services:IDFC Investment Advisors Limited ("IDFC IA") is a wholly owned subsidiary of the Company and is a Portfolio Manager, registered with the Securities and Exchange Board of India ("SEBI") to carry out Portfolio Management Services pursuant to SEBI (Portfolio Managers) Regulations, 1993.IDFC IA also acts as an Investment Manager to IDFC S.P.I.C.E. fund. It is customised to suit the needs of the non-institutional investor with focus on early stage, late stage, Pre-IPO, listed market growth opportunities. The objective of the fund is to achieve attractive risk adjusted returns through investments in medium to long-term unlisted and listed opportunities in social infrastructure, physical infrastructure, consumption and environment sectors. It was launched in the domestic market on July 22, 2011 and the final closing was done on April 20, 2012. The fund has mobilised ` 386 crore across 1,290 investors.

DIVIDENDThe Company has made a profit after tax of ` 91.08 crore during the year under review. The Directors recommend a dividend of ` 250 (i.e. 2500%) per equity share on face value of ` 10 for the year ended March 31, 2014 for the approval of the Members.

COMPANIES ACT, 2013Most of the provisions of the Companies Act, 2013 and the Rules notified by the Ministry of Corporate Affairs ("MCA") in this regard, have come into force with effect from April 1, 2014. MCA issued a General Circular no. 8/2014 dated April 4, 2014 which clarified that the Financial Statements, Auditors' Report and the Board’s Report in respect of the previous year ended March 31, 2014 will be in accordance with the Companies Act, 1956 and Rules made there under. Your Company shall comply with the provisions of the Companies Act, 2013, as applicable.

SUBSIDIARY COMPANIESAs on March 31, 2014, the Company has two subsidiaries, namely IDFC Investment Advisors Limited and IDFC Investment Managers (Mauritius) Limited.During FY14, the Company transferred its entire equity stake held in IDFC Pension Fund Management Company Limited (“IDFC PF”) to IDFC Securities Limited. Thereafter, IDFC PF was merged with IDFC Securities Limited. As required under the provisions of Section 212 of the Companies Act, 1956, a statement of holding company’s interest in the subsidiary companies and the Annual Report of such subsidiary companies have been attached to this report.

Directors' Report

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DIRECTORSIn accordance with Section 313 of the Companies Act, 1956, the Board of Directors of the Company, at its Meeting held on January 29, 2014,

appointed Dr. Rajeev Uberoi (DIN-01731829) as an Alternate Director to Mr. Eric Ward (DIN-03522521). Further, pursuant to provisions of Section

164 of the Companies Act, 2013, Dr. Rajeev Uberoi vacated the office of Alternate Director on arrival of Mr. Eric Ward in India on April 22, 2014 to

attend the Board Meeting of the Company.

In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Vikram Limaye (DIN-00488534)

would retire by rotation and being eligible, offers himself for reappointment at the ensuing Annual General Meeting (“AGM”).

The Board of Directors recommends the reappointment of Mr. Vikram Limaye as a Director at the ensuing AGM.

AUDIT COMMITTEEThe Audit Committee consists of four members, Mr. Pradip Madhavji (DIN-00549826) as Chairman, Mrs. Bakul Patel (DIN-00580300), Dr. Rajiv B. Lall

(DIN-00131782) and Mr. Eric Ward (DIN-03522521). The Audit Committee met four times during the year under review.

AUDITORSS.V. Ghatalia & Associates LLP, Chartered Accountants (Reg. No.: 103162W), an affiliate of Ernst & Young, were the Statutory Auditors of the Company for FY 2013-14 and would hold office till the conclusion of the ensuing AGM of the Company. The Company received a letter from S.V. Ghatalia & Associates LLP, Chartered Accountants expressing their unwillingness to be reappointed as Statutory Auditors at the ensuing AGM. As per Clause 14.2 of the Shareholders Agreement signed between the Company, IDFC Limited and Natixis Global Asset Management on December 16, 2010, the financials of the Company must be audited by any one of the big four firms i.e. KPMG, Deloitte, E&Y or PWC.In accordance with the above, the Board of Directors of the Company, at its meeting held on April 23, 2014, recommended appointment of S.R. Batliboi & Co. LLP, Chartered Accountants (Reg. No.: 301003E), being a member firm of Ernst & Young Global Limited, in place of S.V. Ghatalia & Associates LLP as the Statutory Auditors of the Company, to audit the financials of the Company. The Board recommends the appointment of S.R. Batliboi & Co. LLP, Chartered Accountants, as the Statutory Auditors of the Company.

PUBLIC DEPOSITSThe Company has not accepted any public deposits during the year under review.

PARTICULARS REGARDING CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION Since the Company does not own any manufacturing facility, the disclosure of information on other matters required to be disclosed in terms of

Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1998,

are not applicable and hence not given.

FOREIGN EXCHANGE EARNINGS AND EXPENDITURE There were no foreign exchange earnings by the Company during the period under review. The details of expenditure in foreign currency are given in

Note No. 22 of the Notes forming part of the Financial Statements.

PERSONNEL AND OTHER MATTERSThe Company had 157 employees as on March 31, 2014. As required under the provisions of Section 217 (2A) of the Companies Act, 1956, read

with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of employees are annexed to this Report.

DIRECTORS’ RESPONSIBILITY STATEMENTPursuant to Section 217(2AA) of the Companies Act, 1956 the Directors confirm that:

n in preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to the

material departures;

n 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 March 31, 2014 and the profit of the Company for the

year ended on that date;

n they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the

Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

n they have prepared annual accounts on a going concern basis.

Directors' Report

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ACKNOWLEDGEMENTThe Board places on record its gratitude to the Government of India, Securities and Exchange Board of India, Reserve Bank of India, Association of Mutual Funds of India, other regulatory authorities and institutions, investors in the Mutual Fund schemes and to the Members for their continued guidance and support and expresses its sincere appreciation to all the employees for their commendable teamwork and enthusiastic contribution during the year.The Directors also express their gratitude for the unstinted support and guidance received from IDFC Limited and other group companies.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS

RAJIV B. LALL

Chairman

Mumbai, April 23, 2014

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TO THE MEMBERS OF IDFC ASSET MANAGEMENT COMPANY LIMITED

Report on the Financial StatementsWe have audited the accompanying financial statements of IDFC ASSET MANAGEMENT COMPANY LIMITED (“the Company”), which comprise the Balance Sheet as at March 31, 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 StatementsManagement 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 accounting principles generally accepted In India, Including the Accounting Standards notified under the Companies Act, 1956 (“the Act”) read with General Circular 8/2014 dated April 4, 2014, Issued by the Ministry of Corporate Affairs. 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 ResponsibilityOur 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 entity’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.

OpinionIn 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 March 31, 2014;(b) In the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and(c) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements1. As required by the Companies (Auditor’s Report) Order, 2003 (“the Order”) Issued by the Central Government of India In terms of sub-section

(4A) of Section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.2. 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 purpose of

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

those books; (c) The Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are In agreement with the books of

account; (d) In our opinion, the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards

notified under the Companies Act, 1956 read with General Circular 8/2014 dated April 4, 2014, issued by the Ministry of Corporate Affairs; (e) On the basis of written representations received from the directors as on March 31, 2014, and taken on record by the Board of Directors,

none of the directors Is disqualified as on March 31, 2014, from being appointed as a director In terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

FOR S.V. GHATALIA & ASSOCIATES LLP

Chartered AccountantsICAI Firm Registration Number: 103162W

per MANISH GUJRAL

PartnerMembership No.: 105117

Mumbai, April 23, 2014

Independent Auditors' Report

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Annexure referred to in paragraph 1 under the heading “Report on other legal and regulatory requirements” of our report of even date

Re: IDFC Asset Management Company Limited(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. (b) All fixed assets have not been physically verified by the management during the year but there Is a regular programme of verification

which, in our opinion, is reasonable having regard to the size of the Company and the nature of Its assets. No material discrepancies were noticed on such verification.

(c) There was no disposal of substantial part of fixed assets during the year.(ii) The Company’s business does not Involve Inventories and, accordingly, the requirements under paragraph 4(ii) of the Order are not applicable

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

companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of Clause 4(iii)(a) to (g) of the Order are not applicable to the Company and hence not commented upon.

(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 the sale of services. During the course of our audit, we have not ‘observed any major weakness or continuing failure to correct any major weakness in the Internal control system in respect of these areas.

The Company has not purchased any Inventory or sold any goods during the year, hence adequacy of internal controls in respect of these areas have not been commented upon.

(v) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Act that need to be entered Into the register maintained under Section 301 of the Act have been so entered.

(vi) The Company has not accepted any deposits from the public.(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of Its business.(viii) To the best of our knowledge and as explained, the Central Government has not prescribed the maintenance of cost records under clause

(d) of sub-section (1) of Section 209 of the Act, for the products of the Company.(ix) (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education

and protection fund, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues applicable to it. The provisions relating to employees’ state insurance are not applicable to the Company.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees’ state Insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) According to the records of the Company, the dues outstanding of income-tax on account of any dispute, are as follows:

NAME OF THE STATUTE NATURE OF DUES AMOUNT (`)

PERIOD TO WHICH THE AMOUNT

RELATES

FORUMWHERE DISPUTE

IS PENDING

Income tax Act, 1961 Income tax demand payable 2,122,835 Assessment Year 2008-09 Tribunal

66,528 Assessment Year 2009-10 Tribunal

851,993 Assessment Year 2010-11 CIT(A)

2,744,670 Assessment Year 2011-12 CIT

Income tax demand payable on PTC trust in which the Company was one of the beneficiaries

30,358,620 Assessment Year 2009-10 CIT(A)

3,074,930 Assessment Year 2010-11 High court

According to the information and explanations given to us, there are no dues of service tax and cess which have not been deposited on account of any dispute.

As informed, the provisions of sales tax, wealth tax, excise duty and customs duty are currently not applicable to the Company.(x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately

preceding financial year.(xi) As informed, the Company has not borrowed any sums from a financial institution, bank or debenture holders.(xii) Based on our examination of documents and records, we are of the opinion that the Company has not granted loans and advances on the

basis of security by way of pledge of shares, debentures and other securities.

Annexure to the Auditors' Report

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(xiii) In our opinion, the Company Is not a chit fund or a nidhi/ mutual benefit fund/ society. Therefore, the provisions of Clause 4(xiii) of the Order are not applicable to the Company.

(xiv) In our opinion, the Company Is not dealing In or trading In shares, securities, debentures and other Investments. Accordingly, the provisions of Clause 4(xiv) of the Order are not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by other from bank or financial institution.

(xvi) The Company did not have any term loans outstanding during the year.(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that

no funds raised on short-term basis have been used for long-term investment.(xviii) The Company has not made any preferential allotment of shares to parties or companies covered In the register maintained under Section 301

of the Act.(xix) The company did not have any outstanding debentures during the year.(xx) The Company has not raised any money through a public issue during the year.(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the

Information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year.

FOR S.V. GHATALIA & ASSOCIATES LLP

Chartered AccountantsICAI Firm Registration Number: 103162W

per MANISH GUJRAL

PartnerMembership No.: 105117

Mumbai, April 23, 2014

Annexure to the Auditors' Report

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AS PER OUR REPORT OF EVEN DATE.

FOR S.V. GHATALIA & ASSOCIATES LLP

Chartered AccountantsICAI Firm Reg. No.103162W

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC ASSET MANAGEMENT COMPANY LIMITED

MANISH GUJRAL

PartnerMembership No.105117

PRADIP MADHAVJI

DirectorBAKUL PATEL

Director

Mumbai | April 23, 2014NIKHIL SANGHAI

Manager

AS AT MARCH 31, 2014

AS AT MARCH 31, 2013

NOTES ` ` `

EQUITY AND LIABILITIES

SHAREHOLDERS’ FUNDS

(a) Share capital 4 26,790,450 26,790,450 (b) Reserves and surplus 5 780,277,704 644,570,442

807,068,154 671,360,892 NON-CURRENT LIABILITIES

(a) Other long-term liabilities 6 8,835,191 10,268,686 8,835,191 10,268,686

CURRENT LIABILITIES

(a) Other current liabilities 7 109,109,409 29,618,339 (b) Short-term provisions 8 1,199,929,777 538,012,125

1,309,039,186 567,630,464 TOTAL 2,124,942,531 1,249,260,042

ASSETS

NON-CURRENT ASSETS

(a) Fixed assets Tangible assets 9 47,516,472 59,117,604 Intangible assets 10 6,677,404 11,125,265

54,193,876 70,242,869 (b) Non-current investments 11 102,569,224 162,569,234 (c) Deferred tax assets (net) 12 24,184,000 20,186,000 (d) Long-term loans and advances 13 207,371,078 131,232,272 (e) Other non-current assets 14 – 1,092,704

334,124,302 315,080,210 388,318,178 385,323,079

CURRENT ASSETS

(a) Current investments 15 1,429,959,928 731,719,657 (b) Trade receivables 16 80,051,032 62,858,097 (c) Cash and bank balances 17 108,064,890 31,838,753 (d) Short-term loans and advances 13 118,548,503 37,520,456

1,736,624,353 863,936,963 TOTAL 2,124,942,531 1,249,260,042 Summary of significant accounting policies 3

The accompanying notes are an integral part of the financial statements.

Balance Sheet AS AT MARCH 31, 2014

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AS PER OUR REPORT OF EVEN DATE.

FOR S.V. GHATALIA & ASSOCIATES LLP

Chartered AccountantsICAI Firm Reg. No.103162W

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC ASSET MANAGEMENT COMPANY LIMITED

MANISH GUJRAL

PartnerMembership No.105117

PRADIP MADHAVJI

DirectorBAKUL PATEL

Director

Mumbai | April 23, 2014NIKHIL SANGHAI

Manager

YEAR ENDED MARCH 31, 2014

YEAR ENDED MARCH 31, 2013

NOTES ` `

I INCOME

Revenue from operations 18 2,600,851,694 1,596,643,521 Other income 19 99,314,957 40,478,488 TOTAL INCOME (I) 2,700,166,651 1,637,122,009

II EXPENSES

Employee benefits expense 20 482,676,677 462,928,674 Depreciation and amortisation expense 9, 10 31,517,891 34,448,016 Other expenses 21 808,319,147 720,283,212 TOTAL EXPENSES (II) 1,322,513,715 1,217,659,902

III PROFIT BEFORE TAX (I - II) 1,377,652,936 419,462,107

IV TAX EXPENSE

Current tax 470,854,000 147,279,000 Deferred tax (3,998,000) 5,795,000 TOTAL TAX EXPENSE (IV) 466,856,000 153,074,000

V PROFIT FOR THE YEAR FROM CONTINUING OPERATIONS (III - IV) 910,796,936 266,388,107

Basic and diluted earnings per equity share (Nominal value of share `10)

27 339.97

99.43

Summary of significant accounting policies 3

The accompanying notes are an integral part of the financial statements.

Statement of Profit and Loss FOR THE YEAR ENDED MARCH 31, 2014

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YEAR ENDED MARCH 31, 2014

YEAR ENDED MARCH 31, 2014

YEAR ENDED MARCH 31, 2013

` `

(A) CASH FLOW FROM OPERATING ACTIVITIES

PROFIT / (LOSS) BEFORE TAXATION 1,377,652,936 419,462,107 Adjustment for: Add: Depreciation and amortisation 31,517,891 34,448,016 Add: Provision written back – (15,915,000) Add: Lease escalation charge (1,045,587) (16,002,032) Add: Loss on sale of Fixed assets 418,298 125,469 Add: Profit on sale of investments in subsidiaries (6,786,001) – Add: Profit on sale of other investments (41,411,911) (2,341,206) Add: Dividend income (50,000,000) (5,494,234) Operating profit before working capital changes 1,310,345,626 414,283,120 Changes in working capital: (Increase) / decrease in long-term loans and advances (81,762,937) 13,502,052 (Increase) / decrease in other non-current assets 1,092,704 (1,092,704) (Increase) / decrease in trade receivables (17,192,935) (40,937,405) (Increase) / decrease in short-term loans and advances (81,028,047) 44,339,422 (Increase) / decrease in other current assets – 1,303,858 Increase / (decrease) in long-term provisions – (13,980,879) Increase / (decrease) in other current liabilities 79,103,162 106,938,843 Increase / (decrease) in short-term provisions 80,107,416 (2,943,033)

(19,680,637) 107,130,154 Cash generated from / (used in) operations 1,290,664,989 521,413,274 Direct taxes paid (net of refund) (431,930,654) (4,081,556) NET CASH FLOW FROM OPERATING ACTIVITIES (A) 858,734,335 517,331,718

(B) CASH FLOW FROM INVESTING ACTIVITIES

Purchase of fixed asset including capital work-in-progress (16,121,497) (22,215,317) Purchase of investments (2,344,669,125) (2,009,322,904) Sale proceeds on sale of investments 1,687,840,765 1,542,122,626 Sale proceeds from fixed assets 234,300 27,228 Sale proceeds of investment in subsidiaries 66,786,011 – Dividend received 50,000,000 5,494,234 NET CASH FLOW FROM INVESTING ACTIVITIES (B) (555,929,546) (483,894,133)

(C) CASH FLOW FROM FINANCING ACTIVITIES

Dividend paid (including dividend tax) (226,578,652) (23,352,399) NET CASH FLOW FROM FINANCING ACTIVITIES (C) (226,578,652) (23,352,399)

Net increase / (decrease) in cash and cash equivalents (A + B + C) 76,226,137 10,085,186 Cash and cash equivalents as at beginning of the year (refer note 17) 31,838,753 21,753,567 Cash and cash equivalents as at end of the year (refer note 17) 108,064,890 31,838,753

76,226,137 10,085,186

AS PER OUR REPORT OF EVEN DATE.

FOR S.V. GHATALIA & ASSOCIATES LLP

Chartered AccountantsICAI Firm Reg. No.103162W

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC ASSET MANAGEMENT COMPANY LIMITED

MANISH GUJRAL

PartnerMembership No.105117

PRADIP MADHAVJI

DirectorBAKUL PATEL

Director

Mumbai | April 23, 2014NIKHIL SANGHAI

Manager

Cash Flow Statement FOR THE YEAR ENDED MARCH 31, 2014

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

01 Nature of OperationsIDFC Asset Management Company Limited ("the Company") is a public limited company, incorporated in India and regulated by The Securities Exchange Board of India ("SEBI"). The Company provides asset management services to IDFC Mutual Fund.

02 Basis of preparationThe financial statements of the Company have been prepared in accordance with generally accepted accounting principles in India. The Company has prepared these financial statements to comply in all material respects with the accounting standards notified by the Companies (Accounting Standards) Rules, 2006, (as amended), the relevant provisions of the Companies Act, 1956 and the applicable guidelines issued by SEBI. The financial statements have been prepared on the accrual basis under the historical cost convention. The accounting policies followed in the preparation of financial statements are consistent with those followed in the previous year.

03 Significant accounting policies(a) Use of estimatesThe preparation of financial statements in conformity with Indian GAAP requires the Management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities at the end of reporting period. Although these estimates are based on management's best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.

(b) InvestmentsInvestments which are readily realisable and intended to be held for not more than one year from the date on which such investments are made are classified as current investments. All other investments are classified as long-term investments. On initial recognition, all investments are measured at cost. The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties.Long-term investments are carried at acquisition cost. However, a provision is made for diminution other than temporary on an individual basis.Current investments are carried in the financial statement at lower of cost or fair value on an individual investment basis.On disposal of an investment, the difference between its carrying amount and the net disposal proceeds is charged or credited to statement of profit and loss.

(c) Tangible fixed assetsFixed assets are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition for the intended use, less accumulated depreciation and accumulated losses, if any. Gains or losses arising from derecognition of fixed assets are measured as difference between the net disposal proceeds and the cost of the assets less accumulated depreciation upto the date of disposal and are recognised in the statement of profit and loss when asset is derecognised. Leasehold Improvements are shown at historical cost less accumulated depreciation.

Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses on existing fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.

(d) Depreciation on tangible fixed assetsDepreciation is charged at the rates prescribed in Schedule XIV of the Companies Act, 1956 as per written down value method. Certain electronic items are depreciated over a period of two years on straight-line method based on the management’s estimate of the useful life of assets. Depreciation in respect of leasehold improvements is provided on the straight-line method over the extended lease term or five years whichever is earlier.Depreciation on additions during the period is provided on a pro-rata basis. Assets costing ` 5,000 or less are fully depreciated in the year of purchase.

(e) Intangible assets and amortisationIntangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses, if any. Intangible assets are amortised over a period of three years on a straight line method. The amortisation period and the amortisation method are reviewed at least at each financial year end. If the expected useful life of the asset is significantly different from previous estimates, the amortisation period is changed accordingly. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit and loss when the asset is derecognised.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

(f) Impairment of tangible and intangible assetsThe Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists or when annual impairment testing of an asset is required, the Company estimates the asset's recoverable amount. An asset's recoverable amount is the higher of an assets or Cash Generating Units ("CGU") net selling price and it's value in use. The recoverable amount is determined for an individual asset unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted for their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risk specific to the asset. In determining net selling price, recent market transactions are taken into account. If available, If no such transaction can be identified, an appropriate valuation model is used.

Impairment losses of continuing operations, including impairment on inventories, are recognised in the statement of profit and loss, except for previously revalued tangible fixed assets, where the revaluation was taken to revaluation reserve. In this case, the impairment is also recognised in the revaluation reserve up to the amount of any previous revaluation. After impairment depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Company estimates the asset's or cash generating unit's recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset's recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount or the carrying amount that would have been determined net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the statement of profit and loss unless the assets is carried at a revalued amount, in which case the reversal is treated as a revaluation increase.

(g) Revenue recognitionsRevenue is recognised to the extent that it is probable that economic benefits will flow to the company and the revenue can be reliably measured.Asset management fees are recognised net of service tax on an accrual basis in terms of Investment Management Agreement entered into by the Company with IDFC AMC Trustee Company Limited and in accordance with SEBI guidelines.

InterestInterest income is recognised on a time proportion basis taking into account the amount outstanding and the applicable interest rate. Interest income is included under the head "other income" in the statement of profit and loss.

DividendsDividend income is recognised when the Company's right to receive dividend is established at the reporting date.

(h) Foreign currency transactionsInitial recognitionForeign currency transactions are recorded in the reported currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of transactions.ConversionForeign currency monetary items are retranslated using the exchange rate prevailing at the reporting date. Non monetary items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of transaction. Non-monetary items, which are measured at fair value or other similar valuation denominated in a foreign currency, are translated using the exchange rate at the date when such value was determined.Exchange differencesExchange differences are recognised as income or as expenses in the period in which they arise.

(i) Operating leasesLeases of assets under which all the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases. Rental charges over the term of such leases, after taking in to account the escalation clause, are charged to the statement of profit and loss on a straight line basis over the extended lease term.

(j) Retirement and other employee benefitRetirement benefit in the form of provident fund, superannuation fund and pension fund is a defined contribution scheme and are charged to the Statement of Profit and Loss as they fall due, based on the amount of contribution required to be made. The Company has no obligation, other than the contribution payable to the provident fund, superannuation fund and pension fund.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

The Company operates a defined plan for its employees, viz., gratuity. The cost of providing benefits under this plan is determined on the basis of actuarial valuation at each year-end which is determined using the projected unit credit method. Actuarial gains and losses for both defined benefit plans are recognised in full in the period in which they occur in the Statement of Profit and Loss.

(k) ProvisionsA provision is recognised when the Company has 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 reporting date. These are reviewed at each reporting date and adjusted to reflect the current best estimates.

(l) Income taxTax expense comprises current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act 1961, enacted in India and tax laws prevailing in the respective tax jurisdictions where the Company operates. The tax rate and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current income tax relating to items recognised directly in equity is recognised in equity and not in the statement of profit and loss.

Deferred income taxes reflect the impact of timing differences between taxable income and accounting income originating during the current year and reversal of timing differences for the earlier years. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting date. Deferred income tax relating to items recognised directly in equity is recognised in equity and not in the statement of profit and loss.

Deferred tax liabilities are recognised for all taxable timing differences. Deferred tax assets are recognised for deductible timing differences only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits.

(m) Contingent liabilitiesA contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognised because it cannot be measured reliably. The Company does not recognise a contingent liability but discloses its existence in the financial statements.

(n) Cash and cash equivalentsCash and cash equivalents for the purpose of cash flow statement comprises cash at bank, cash in hand, fixed deposits with an original maturity of three months or less.

(o) Earning per shareBasic earnings per share is computed by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

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.

04 Share capitalAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NUMBER ` NUMBER `

AUTHORISED SHARES

Equity shares of ` 10 each 25,000,000 250,000,000 25,000,000 250,000,000ISSUED, SUBSCRIBED & FULLY PAID-UP SHARES

Equity shares of `10 each 2,679,045 26,790,450 2,679,045 26,790,450TOTAL ISSUED, SUBSCRIBED AND FULLY PAID-UP SHARE CAPITAL

26,790,450 26,790,450

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150 | I D F C A N N U A L R E P O R T 2 0 1 3 - 2 0 1 4

Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

(a) Reconciliation of the number of equity shares outstanding at the beginning and at the end of the year

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NUMBER ` NUMBER `

Outstanding at the beginning of the year 2,679,045 26,790,450 2,679,045 26,790,450 Issued during the year – – – – Outstanding at the end of the year 2,679,045 26,790,450 2,679,045 26,790,450

(b) Terms / rights attached to equity sharesThe Company has only one class of equity shares having a par value of ` 10 per share. Each holder of equity shares is entitled to one vote per share. During the year ended March 31, 2014, dividend of ` 250 per share (Previous Year ` 75 per share) is recognised as amount distributable to equity shareholder. The dividend proposed by the board of directors is subject to approval of the shareholders in the ensuing AGM.

(c) Shares held by holding/ultimate holding companyOut of the equity shares issued by the Company, shares held by its holding company, ultimate holding company are as below:

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NUMBER ` NUMBER `

IDFC Limited (of which 6 shares are held jointly with employees) 2,009,283 20,092,830 2,009,283 20,092,830

(d) Details of shareholders holding more than 5% of the equity shares in the Company

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NUMBER % OF HOLDING NUMBER % OF HOLDING

IDFC Limited (of which 6 shares are held jointly with employees) 2,009,283 75.00% 2,009,283 75.00%Natixis Global Asset Management Asia Pte. Ltd. 669,762 25.00% 669,762 25.00%

05 Reserves and surplusAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

(a) SECURITIES PREMIUM ACCOUNT

Opening balance 221,897,167 221,897,167 Add: Premium on issue of equity shares – – Closing balance 221,897,167 221,897,167 (b) CAPITAL REDEMPTION RESERVE

Opening balance 197,925,000 197,925,000 Add: Transfer from statement of profit and loss – – Closing balance 197,925,000 197,925,000 (c) GENERAL RESERVE

Opening balance 65,359,000 38,720,000 Add: Transfer from statement of profit and loss 91,080,000 26,639,000 Closing balance 156,439,000 65,359,000 (d) SURPLUS IN THE STATEMENT OF PROFIT AND LOSS

Opening balance 159,389,275 154,716,320 Profit for the year 910,796,936 266,388,107 Less: Appropriations General reserve 91,080,000 26,639,000 Proposed dividend on equity shares 669,761,250 200,928,375 [` 250 per share (Previous Year ` 75 per share)] Tax on proposed equity dividend (refer note (a) below) 105,328,424 34,147,777 Total appropriations 866,169,674 261,715,152 Net surplus in the statement of profit and loss 204,016,537 159,389,275 TOTAL 780,277,704 644,570,442

(a) Tax on proposed dividend for the year is net of dividend distribution tax of ` 8,497,500 (Previous Year ` Nil) paid by the subsidiary company under Section 115-O of the Income-tax Act, 1961.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

06 Other long-term liabilities (read Note 30)

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013` `

Lease equalisation account 8,835,191 10,268,686 8,835,191 10,268,686

07 Other current liabilities (read Note 30)

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013` `

Lease equalisation account 1,433,495 1,045,587 Statutory dues payable 12,543,649 7,815,419 Other payables 95,132,265 20,757,333

109,109,409 29,618,339

08 Short-term provisionsAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Other short-term provisions 360,798,686 280,693,771 Provision for gratuity (read with Note 23) 24,418 21,917 Other ProvisionsProvision for income tax (Net of advance tax of `766,928,254; Previous Year ` 128,258,715) 55,519,499 22,220,285

Proposed equity dividend 669,761,250 200,928,375 Tax on proposed equity dividend 113,825,924 34,147,777

1,199,929,777 538,012,125

09 Tangible assetsGROSS BLOCK ACCUMULATED DEPRECIATION NET BLOCK

BA

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2013

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` ` ` ` ` ` ` ` ` `

Leasehold improvements 76,800,022 2,404,877 231,857 78,973,042 55,668,223 13,583,784 161,851 69,090,156 9,882,886 21,131,799

Furniture and fixtures 19,042,173 641,858 90,142 19,593,889 10,451,917 1,743,300 43,846 12,151,371 7,442,518 8,590,256

Office equipment 38,298,676 3,986,241 1,268,391 41,016,526 18,112,895 5,011,813 777,120 22,347,588 18,668,938 20,185,781

Computers 50,824,641 4,609,775 1,070,694 54,363,722 41,614,873 4,804,806 1,025,668 45,394,011 8,969,711 9,209,768

Vehicles – 3,161,245 – 3,161,245 – 608,826 – 608,826 2,552,419 –

TOTAL 184,965,512 14,803,996 2,661,084 197,108,424 125,847,908 25,752,529 2,008,485 149,591,952 47,516,472 59,117,604

Previous Year 175,107,607 10,949,250 1,091,345 184,965,512 98,106,765 28,679,791 938,648 125,847,908 59,117,604

10 Intangible assetsGROSS BLOCK ACCUMULATED DEPRECIATION NET BLOCK

BA

LAN

CE

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2013

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` ` ` ` ` ` ` ` ` `

Computer software 41,838,656 1,317,501 – 43,156,157 30,713,391 5,765,362 – 36,478,753 6,677,404 11,125,265

TOTAL 41,838,656 1,317,501 – 43,156,157 30,713,391 5,765,362 – 36,478,753 6,677,404 11,125,265

Previous Year 30,572,589 11,266,067 – 41,838,656 24,945,166 5,768,225 – 30,713,391 11,125,265

TOTAL TANGIBLE & INTANGIBLE ASSETS

226,804,168 16,121,497 2,661,084 240,264,581 156,561,299 31,517,891 2,008,485 186,070,705 54,193,876 70,242,869

Previous Year 205,680,196 22,215,317 1,091,345 226,804,168 123,051,931 34,448,016 938,648 156,561,299 70,242,869

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

11 Non-current investments (Trade, at cost unless stated otherwise)

FACE VALUE `

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

QUANTITY ` QUANTITY `

Unquoted equity shares (fully paid)Investment in subsidiaries IDFC Pension Fund Management Company Limited 10 – – 6,000,001 60,000,010 IDFC Investment Advisors Limited 10 10,000,000 100,000,000 10,000,000 100,000,000 IDFC Investment Managers (Mauritius) Limited 45 57,290 2,569,224 57,290 2,569,224 TOTAL NON-CURRENT INVESTMENTS 102,569,224 162,569,234

12 Deferred tax asset (net)

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` ` ` `

Deferred tax asset(a) Provisions 3,490,000 3,846,000 (b) Fixed assets: Impact of difference between tax depreciation

and depreciation / amortisation charged for the financial reporting

20,694,000

16,340,000

24,184,000 20,186,000 DEFERRED TAX ASSET (NET) 24,184,000 20,186,000

13 Loans and advances (unsecured, considered good)

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NON-CURRENT PORTION

CURRENT MATURITIES

NON-CURRENT PORTION

CURRENT MATURITIES

` ` ` `

Loans and advances to employees – 552,036 – 425,833 Advance against investments – 500,000 – – Security deposits 73,105,820 5,625,200 55,198,508 699,040 Capital / supplier advances 1,585,938 2,779,085 473,641 668,836 Other loans and advances Advance tax (Net of provision ` 149,710,848; Previous Year

` 350,825,601) 53,147,046 – 58,771,177 –

Fringe benefit tax (Net of provision ` 12,072,000; Previous Year ` 12,072,000)

366,813 – 366,813 –

Balances with government authorities - Service tax credit receivable – 6,158,786 – 7,944,504

Prepaid expenses 79,165,461 102,933,396 16,422,133 27,782,243 207,371,078 118,548,503 131,232,272 37,520,456

14 Other assets (unsecured, considered good)

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NON-CURRENT PORTION

CURRENT MATURITIES

NON-CURRENT PORTION

CURRENT MATURITIES

` ` ` `

Non-current fixed deposit with a bank – – 1,050,000 – Interest accrued on bank deposits – – 42,704 –

– – 1,092,704 –

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

15 Current investmentsAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

QUANTITY ` QUANTITY `

INVESTMENT IN MUTUAL FUNDS (UNQUOTED)

IDFC Money Manager Fund - Treasury Plan C - Growth – – 106,171 1,353,723 IDFC Dynamic Bond Fund - Growth - (Regular Plan) 19,065,878 249,914,946 23,164,171 299,914,946 IDFC Super Saver Income Fund - Medium Term Plan B - Growth – – 4,838,615 55,137,949 IDFC Dynamic Bond Fund - Growth - (Direct Plan) 25,777,179 363,369,125 13,305,186 185,000,000 IDFC Ultra Short Term Fund - Growth - (Direct Plan) 1,816,982 32,500,000 3,705,119 60,313,039 IDFC Cash Fund - Growth - (Direct plan) 245,742 379,675,857 – – IDFC Super Saver Income Fund - Medium Term Plan - Growth - Direct 3,215,481 66,500,000 – –

1,091,959,928 601,719,657

Aggregate amount of investments in unquoted mutual funds Cost 1,091,959,928 601,719,657 Market value (Net asset value) 1,143,177,607 637,879,101 Market value of investments in unquoted mutual funds represents the repurchase price of the units issued by the mutual funds.INVESTMENT IN MUTUAL FUNDS (QUOTED)

IDFC Fixed Term Plan Series 9 Direct Plan - Growth 3,000,000 30,000,000 3,000,000 30,000,000 IDFC Fixed Maturity Plan 366 Days Series 82 - Growth – – 10,000,000 100,000,000 IDFC Fixed Term Plan Series 20 Direct Plan - Growth 5,000,000 50,000,000 – – IDFC Fixed Term Plan Series 49 Direct Plan - Growth 5,000,000 50,000,000 – – IDFC Fixed Term Plan Series 54 Direct Plan - Growth 1,000,000 10,000,000 – – IDFC Fixed Term Plan Series 52 Direct Plan - Growth 4,300,000 43,000,000 – – IDFC Fixed Term Plan Series 66 Direct Plan - Growth 6,500,000 65,000,000 – – IDFC Fixed Term Plan Series 74 Direct Plan - Growth (411 Days) 3,000,000 30,000,000 – – IDFC Fixed Term Plan Series 78 Direct Plan - Growth (366 Days) 6,000,000 60,000,000 – –

338,000,000 130,000,000

Aggregate amount of investments in quoted mutual funds Cost 338,000,000 130,000,000 Market value (Net asset value) 349,414,230 132,731,900 TOTAL CURRENT INVESTMENTS 1,429,959,928 731,719,657

16 Trade receivables (unsecured, considered good)

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NON-CURRENT PORTION

CURRENT MATURITIES

NON-CURRENT PORTION

CURRENT MATURITIES

` ` ` `

Outstanding for a period less than six months – 80,051,032 – 62,858,097 – 80,051,032 – 62,858,097

17 Cash and bank balancesAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NON-CURRENT PORTION

CURRENT MATURITIES

NON-CURRENT PORTION

CURRENT MATURITIES

` ` ` `

CASH AND CASH EQUIVALENTS

Balances with banks: in current accounts – 108,064,890 – 31,838,753

– 108,064,890 – 31,838,753 OTHER BANK BALANCES

Fixed deposits with original maturity for more than 12 months – – 1,050,000 – – – 1,050,000 –

Amount disclosed under non current assets – – (1,050,000) – – 108,064,890 – 31,838,753

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

18 Revenue from operationsYEAR ENDED

MARCH 31, 2014YEAR ENDED

MARCH 31, 2013

` `

Management fees 2,600,851,694 1,596,643,521 (Net of service tax ` 321,465,297; Previous Year ` 197,356,010)

2,600,851,694 1,596,643,521

19 Other incomeYEAR ENDED

MARCH 31, 2014YEAR ENDED

MARCH 31, 2013

` `

Interest on income tax refund 1,003,668 16,486,196 Other interest 50,501 89,000 Dividend Income 50,000,000 5,494,234 Net gain / loss on sale of current investments 41,411,911 2,341,206 Profit on sale of long-term investments (refer Note (a) below) 6,786,001 –Miscellaneous income 62,876 152,852 Provision written back – 15,915,000

99,314,957 40,478,488

(a) Profit on sale of long-term investments of ` 6,786,001 for the year ended March 31, 2014 is the profit on sale of 50.01% stake in IDFC Pension Fund Management Company Limited to IDFC Securities Limited.

20 Employee benefits expenseYEAR ENDED

MARCH 31, 2014YEAR ENDED

MARCH 31, 2013

` `

Salaries and bonus 438,300,065 418,562,559 Contribution to provident and other funds 15,854,302 14,179,780 Gratuity 10,163,220 11,568,967 Expense under the ESOS – 458,441 Staff welfare expenses 18,359,090 18,158,927 TOTAL 482,676,677 462,928,674

(a) Salaries and bonus includes shortfall of bonus provision for year ended March 31, 2013 of ` 4,050,000 on account of change in estimate in provision of bonus.

21 Other expensesYEAR ENDED

MARCH 31, 2014YEAR ENDED

MARCH 31, 2013

` `

Rent 104,022,060 91,168,502 Rates and taxes 877,352 1,727,286 Electricity 11,287,130 11,825,344 Repairs and maintenance Buildings – 959 Equipments 3,192,765 2,537,387 Others 26,905,891 23,351,203

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

YEAR ENDED MARCH 31, 2014

YEAR ENDED MARCH 31, 2013

` `

Insurance charges 1,322,112 1,374,110 Travelling and conveyance 23,145,919 22,584,721 Printing and stationery 15,228,681 8,070,304 Communication costs 31,064,762 24,424,829 Advertising and publicity 41,823,849 23,893,652 Listing and rating Fees 1,120,440 1,289,450 Loss on sale of fixed assets (net) 391,203 119,469 Professional fees 87,724,451 77,548,363 Directors' sitting fees 460,000 420,000 Membership and subscription 25,947,972 21,303,962 Auditors' remuneration (refer Note (a) below) 1,441,852 862,539 Scheme issue expenses (refer Note (b) below) 78,961,917 54,101,935 Shared service cost (refer Note (c) below) 11,492,588 19,754,481 Operational costs (refer Note (e) below) 329,870,804 320,089,484 Miscellaneous expenses 12,037,399 13,835,232

808,319,147 720,283,212

(a) Break up of auditors’ remuneration:

YEAR ENDED MARCH 31, 2014

YEAR ENDED MARCH 31, 2013

` `

Audit fee 650,000 550,000 Tax audit fee 250,000 200,000 Other services 487,650 90,000 Out of pocket expenses 54,202 22,539

1,441,852 862,539

(b) Scheme issue expenses are the expenses incurred by the Company towards launching of schemes and plans of IDFC Mutual Fund during the year.

(c) Shared service cost represents reimbursement to holding company under a shared service agreement (Net of ` 5,208,258 recovered).(d) Expenses incurred on behalf of schemes of IDFC Mutual Fund are charged to the statement of profit and loss unless considered recoverable

from schemes.(e) Operational costs comprises of expenses which are incurred by mutual fund schemes over and above the expense limits prescribed by SEBI,

interest charged by bank to the Mutual Fund on account of temporary borrowings or overdrafts and payments made to investors of Mutual Fund on account of delay in payment of redemption proceeds which are borne by the Company.

22 Expenditure in foreign currencies (on accrual basis)

YEAR ENDED MARCH 31, 2014

YEAR ENDED MARCH 31, 2013

` `

Advertising - Media 1,125,733 – Books and periodicals – 10,194 Computer software and subscription – 1,136,206 Filing fees – 20,829 Foreign travel 132,108 84,903 Other professional fees 93,105 – Realised loss - Foreign exchange – 2,649.62

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

23 In accordance with Accounting Standard 15 on 'Employee Benefits' as notified by the Companies (Accounting Standards) Rules, 2006 the following disclosures have been made:i. The Company has recognised the following amounts in the statement of profit and loss towards contribution to defined contribution plans

which are included under contribution to provident and other funds:

MARCH 31, 2014 MARCH 31, 2013

` `

Provident fund 12,842,233 11,799,550 Superannuation fund 1,371,890 1,420,785 Pension fund 1,640,179 959,445

ii The details of the Company's post - retirement gratuity benefit plans for gratuity for its employees are given below which are certified by the actuary and relied upon by the auditors:

MARCH 31, 2014 MARCH 31, 2013

` `

CHANGE IN THE DEFINED BENEFIT OBLIGATIONS:

Liability at the beginning of the year 25,897,310 16,945,829 Current service cost 7,640,292 7,606,790 Interest cost 2,535,231 2,081,682 Liabilities extinguished on settlement – – Liabilities assumed on acquisition / (settled on divestiture) (22,684) – Benefits paid (2,688,620) (2,595,569)Actuarial Losses / (Gain) 1,467,677 87,647 Past Service Cost – 1,770,931 Closing Defined Benefit Obligation 34,829,206 25,897,310 Unrecognised Past Service Cost – – Liability at the end of the year 34,829,206 25,897,310

FAIR VALUE OF PLAN ASSETS:

Fair value of plan assets at the beginning of the year 26,487,620 – Expected return on plan assets 2,189,063 – Contributions 7,472,099 24,629,006 Benefits paid (2,688,620) (2,595,569)Actuarial gain / (loss) on plan assets (753,684) 3,863,873 Unrecognised past service cost (590,310) 590,310 Fair value of plan assets at the end of the year 32,116,168 26,487,620 Total actuarial loss / (gain) to be recognised 2,221,361 (3,776,226)

ACTUAL RETURN ON PLAN ASSETS:

Expected return on plan assets 2,189,063 – Actuarial gain / (loss) on plan assets (753,684) 3,863,873 Actual return on plan assets 1,435,379 3,863,873

AMOUNT RECOGNISED IN THE BALANCE SHEET:

Liability at the end of the year 34,829,206 25,897,310 Fair value of plan assets at the end of the year (32,116,168) (26,487,620)Amount recognised in the balance sheet under "Provision for employee benefits" 2,713,038 (590,310)

EXPENSE RECOGNISED IN THE STATEMENT OF PROFIT AND LOSS:

Current service cost 7,640,292 7,606,790 Interest cost 2,535,231 2,081,682 Expected return on plan assets (2,189,063) – Net actuarial loss / (gain) to be recognised 2,221,361 (3,776,226)Past Service Cost 590,310 1,180,621

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

MARCH 31, 2014 MARCH 31, 2013

` `

Loss / (Gains) on Acquisition / Divestiture – – Liabilities assumed on acquisition / (settled on divestiture) (22,684) – Expense recognised in the statement of profit and loss under 'Employee benefits expense' 10,775,447 7,092,867

RECONCILIATION OF THE LIABILITY RECOGNISED IN THE BALANCE SHEET:

Opening net Liabilty (590,310) 16,945,829 Expense recognised 10,775,447 7,092,867 Contribution by the Company (7,472,099) (24,629,006)Amount recognised in the balance sheet under "Gratuity" 2,713,038 (590,310)Expected employer's contribution next year 7,000,000 7,000,000

Experience adjustments:MARCH 31, 2014 MARCH 31, 2013 MARCH 31, 2012 MARCH 31, 2011 MARCH 31, 2010

` ` ` ` `

Defined benefit obligation 34,829,206 25,897,310 18,716,760 10,974,963 3,718,700 Plan assets 32,116,168 25,897,310 – – – Surplus / (deficit) (2,713,038) – (18,716,760) (10,974,963) (3,718,700)Exp. Adj. on plan liabilities 3,130,977 (782,789) 1,136,092 2,504,509 (326,961)Exp. Adj. on plan assets (753,684) 3,863,873 – – –

MARCH 31, 2014 MARCH 31, 2013

(%) (%)

PRINCIPAL ASSUMPTIONS:

Discount rate (p.a.) 9.00 8.05 Expected rate of return on assets (p.a.) 8.00 8.00 Salary escalation rate (p.a.) 8.00 8.00

The estimate of future salary increase, considered in the actuarial valuation takes account of inflation, seniority, promotion and other relevant factors.

24 The Company is an Asset Management Company to IDFC Mutual Fund business. During the year ended March 31, 2014, the Company was engaged in only one business segment no geographical segments and as such there are no separate reportable segments, as required by Accounting Standard 17 on ‘Segment Reporting’ as notified by the Companies (Accounting Standards) Rules 2006.

25 Related party disclosuresNames of the related parties where control exists irrespective of whether transactions have been occurred or not:

I. Holding Company: IDFC Limited

Names of the related parties with which there are transactions during the year:

II. Subsidiaries: IDFC Investment Advisors Limited IDFC Pension Fund Management Company Limited IDFC Investment Managers (Mauritius) Limited

III. Fellow Subsidiaries IDFC AMC Trustee Company Limited

IDFC Foundation

IV. Key management personnel: Mr. Naval Bir Kumar - Vice Chairman

Mr. Kalpen Parekh - CEO

Mr. Nikhil Sanghai - Manager

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

The nature and volume of transactions carried out with the above related parties in the ordinary course of business are as follows:

MARCH 31, 2014 MARCH 31, 2013

` `

I. Holding Company: IDFC Limited Reimbursement of expenses 12,728,846 9,213,464

ESOP cost paid – 458,441 Shared service cost paid 16,700,873 23,510,841 Recovery of expenses 587,064 731,931

II. Subsidiaries: IDFC Investment Advisors Limited Reimbursement of expenses – 26,838

Deputation charges paid 2,933,509 2,154,286 Recovery of expenses 3,255,791 3,075,723 Business centre fees recovered 2,676,000 2,676,000 Dividend Received 50,000,000 – Free of cost service - salary cost of manager reimbursible to subsidiary – –

IDFC Pension Fund Management Company Limited

Recovery of expenses 10,950 3,521,869 Business centre fees and support cost recovered 390,000 1,080,360 Balance receivable – –

III. Fellow Subsidiaries: IDFC AMC Trustee Company Limited Recovery of expenses (net of reimbursement) 134,656 175,704

IDFC Foundation Business centre fees recovered 2,142,285 –

IV. Key Management Personnel: Mr. Naval Bir Kumar Remuneration paid 41,457,822 38,000,000

Reimbursement of business expenses 177,058 79,620

Mr. Kalpen Parekh Remuneration paid 20,368,996 18,119,602 Reimbursement of business expenses 88,855 118,349

26 In accordance with Accounting Standard 19 on 'Leases' as notified by the Companies (Accounting Standards) Rules, 2006, the following disclosures in respect of operating leases are made:i. The Company has taken a copier machine under irrevocable rental agreement (expiring on April 4, 2013 and April 5, 2014) from En Em

Business Solutions. The committed rentals in the future are:

MARCH 31, 2014 MARCH 31, 2013

` `

Not later than one year 583 42,000 Later than one year and not later than five years – 583

ii. The Company has taken vehicles for five employees under cancellable operating leases which is included under salaries as follows:

MARCH 31, 2014 MARCH 31, 2013

NAME OF THE LESSOR EARLIEST EXPIRY DATE LATEST EXPIRY DATE ` `

Lease Plan India Limited October 2012 – – 132,968 ALD Automative Private Limited January 2015 September 2016 886,467 914,491

The total future minimum lease payments under cancellable operating lease for each of the periods is given below:

MARCH 31, 2014 MARCH 31, 2013

` `

Not later than one year 642,532 886,467 Later than one year and not later than five years 381,460 1,023,992

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

iii. The Company has entered into cancellable as well as non-cancellable leasing arrangements for office premises at various locations in India generally for a period of 36 months. As per the term of the lease all maintenance charges and municipal levies are borne by the lessee.

The total future minimum lease payments under non-cancellable operating lease for each of the periods is given below:

YEAR ENDED MARCH 31, 2014

YEAR ENDED MARCH 31, 2013

` `

Not later than one year 65,659,608 76,865,431 Later than one year and not later than five years 2,779,903 63,585,235 The terms of renewal and escalation clauses are those normally prevalent in similar agreements.

27 In accordance with Accounting Standard 20 on 'Earnings Per Share' as notified by the Companies (Accounting Standards) Rules, 2006:

The basic / diluted earnings per share has been calculated based on the following:YEAR ENDED

MARCH 31, 2014YEAR ENDED

MARCH 31, 2013

` `

Net profit after tax 910,796,936 266,388,107 Net amount available for equity shareholders 910,796,936 266,388,107 Weighted average number of equity shares (Nos.) 2,679,045 2,679,045 Basic and diluted earnings per equity share (`) 339.97 99.43

28 Estimated amount of contracts remaining to be executed and not provided for ` 3,808,451 (Previous Year ` 4,337,373).

29 Contingent liabilities not provided for in respect of:

YEAR ENDED MARCH 31, 2014

YEAR ENDED MARCH 31, 2013

` `

(a) Claims not acknowledged as debts in respect of:i. Income-tax demand, disputed by the Company in respect of A.Y. 2007-08. The matters in

dispute are under appeal. 791,327 791,327

ii. Income-tax demand, disputed by the Company in respect of A.Y. 2010-11. The matters in dispute are under appeal.

853,607 853,607

(b) Bank guarantees issued on behalf of a subsidiary – 1,000,000 (c) Income Tax demand on Mutual Fund on account of non-payment of tax on income from pass

through certificates by the issuing trust 4,860,729 1,785,801

30 As per information available with the Company, there are no micro, small or medium enterprises as defined in 'The Micro, Small and Medium Enterprises Development Act, 2006', to whom the Company owes dues on account of principal amount together with interest and accordingly no additional disclosures have been made. The above information regarding micro, small and medium enterprises have been determined to the extent such parties have been identified on the basis of information available with the Company and relied upon by the auditors.

31 The figures for the previous year have been regrouped wherever necessary, in order to make them comparable to the current period.

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NAME OF SUBSIDIARY COMPANIES

IDFC INVESTMENT ADVISORS LIMITED

IDFC INVESTMENT MANAGERS (MAURITIUS) LIMITED

` USD `

The financial year of the Subsidiary Companies ended on March 31, 2014 March 31, 2014

Number of shares in the Subsidiary Companies held by IDFC Asset Management Company Limited and its subsidiaries at the above date

10,000,000 57,290 –

shares of ` 10 each

shares of USD 1 each

Holding Company’s interest in percentage 100.00% 100.00% –

The net aggregate of profits of the Subsidiary Companies so far as these concern the member of IDFC Asset Management Company Limited

(i) dealt with in the accounts of IDFC Asset Management Company Limited amounted to:

(a) for subsidiaries’ financial year ended on March 31, 2014 – – –

(b) for previous financial years of the subsidiaries since these became subsidiaries of IDFC Asset Management Company Limited

– – –

(ii) not dealt with in the accounts of IDFC Asset Management Company Limited amounted to:

(a) for subsidiaries’ financial year ended on March 31, 2014 87,454,436 (126,614) (7,715,428)

(b) for previous financial years of the subsidiaries since these became subsidiaries of IDFC Asset Management Company Limited

163,196,748 61,578 2,600,622

Statement Pursuant to Section 212 OF THE COMPANIES ACT, 1956

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10BOARD OF DIRECTORS

n Mr. Sunil Kakar – Chairman n Mr. Geoffroy Sartorius n Mr. Jamsheed Kanga n Mr. D. M. Sukthankar n Mr. Tara Sankar Bhattacharya n Mr. Sridar Venkatesan n Mr. Bharat Raut

AUDITORS n S.R. Batliboi & Co. LLP Chartered Accountants

PRINCIPAL BANKER n Standard Chartered Bank

REGISTERED OFFICEOne India Bulls Centre841 Jupiter Mills CompoundSenapati Bapat MargElphinstone Road (West)Mumbai 400 013Tel: +91 22 6628 9999Fax: +91 22 2421 [email protected]: U69990MH1999PLC123190

IDFC AMCTRUSTEECOMPANYLIMITED

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TO THE MEMBERS,We are pleased to present the Fourteenth Annual Report to the Members, together with the audited accounts for the year ended March 31, 2014.

FINANCIAL RESULTS

PARTICULARSFOR THE YEAR ENDED

MARCH 31, 2014`

FOR THE YEAR ENDED MARCH 31, 2013

`

Total Income 858,973 840,000Less: Total expenses 598,128 805,932Profit / (Loss) before Tax 260,845 34,068Provision for Tax 80,600 10,500Profit / (Loss) after Tax 180,245 23,568

OPERATIONAL REVIEW Mutual Funds:The Company is the Trustee to the schemes of IDFC Mutual Fund ("IDFC MF"). The Average Assets under Management of IDFC MF were ` 41,244.96 crore (excluding Fund of Funds Schemes) as on March 31, 2014.

New Scheme launches:Fifty nine (59) new schemes were launched in FY14 including IDFC Equity Opportunity - Series 1, 2 & 3; IDFC Yearly Series Interval Fund - Series 4 and Fifty five (55) Fixed Maturity Plans in form of IDFC Fixed Term Plan Series with maturity ranging from 91 days to 3 years.These Schemes together collected over ` 7,450 crore.

Awards & Recognition: n The IDFC Mutual Fund website was awarded Official Honoree at the 17th Annual Webby Awards. n IDFC MF won the ‘Most innovative tools produced by any AMC for the distributors and customers’ award at the 5th Annual Conference -

Mutual Fund Round Table ("MFRT") conducted by Kolkata based IFA-association ASK Circle on August 3, 2013.

DIVIDENDThe Board of Directors of the Company does not recommend the payment of dividend for the current year.

COMPANIES ACT, 2013Most of the provisions of the Companies Act, 2013 and the Rules notified by the Ministry of Corporate Affairs ("MCA") in this regard, have come into force with effect from April 1, 2014. MCA issued a General Circular no. 8/2014 dated April 4, 2014 which clarified that the Financial Statements, Auditors' Report and the Board’s Report in respect of the previous year ended March 31, 2014 will be in accordance with the Companies Act, 1956 and Rules made there under. Your Company shall comply with the provisions of the Companies Act, 2013, as applicable.

DIRECTORSIn accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Sunil Kakar (DIN-03055561) would retire by rotation and being eligible, offers himself for reappointment at the ensuing Annual General Meeting (“AGM”).The Board of Directors recommends the reappointment of Mr. Sunil Kakar as a Director at the ensuing AGM.

AUDIT COMMITTEEThe Audit Committee consists of four members, Mr. Jamsheed Kanga (DIN-00045641) as Chairman, Mr. D. M. Sukthankar (DIN-00034416), Mr. Sunil Kakar (DIN-03055561) and Mr. Geoffroy Sartorius (DIN-03536833). The Committee met four times during the year under review.

AUDITORSS.V. Ghatalia & Associates LLP, Chartered Accountants (Reg. No.: 103162W), an affiliate of Ernst & Young were the Statutory Auditors of the Company for FY14 and would hold office till the conclusion of the ensuing AGM of the Company. The Company received a letter from S.V. Ghatalia & Associates LLP, Chartered Accountants expressing their unwillingness to be reappointed as Statutory Auditors at the ensuing AGM. As per Clause 10.1 of the Shareholders Agreement signed between the Company, IDFC Limited and Natixis Global Asset Management on December 16, 2010, the financials of the Company must be audited by any one of the big four firms i.e. KPMG, Deloitte, E&Y or PWC.In accordance with the above, the Board of Directors of the Company, at its meeting held on April 23, 2014, appointed S.R. Batliboi & Co. LLP, Chartered Accountants (Reg. No.: 301003E), being a member firm of Ernst & Young Global Limited, in place of S.V. Ghatalia & Associates LLP as the Statutory Auditors of the Company, to audit the financials of the Company.

Directors' Report

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The Board recommends the appointment of S.R. Batliboi & Co. LLP, Chartered Accountants, as the Statutory Auditors of the Company.

PUBLIC DEPOSITSThe Company has not accepted any public deposits during the year under review.

PARTICULARS REGARDING CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION Since the Company does not own any manufacturing facility, the disclosure of information on other matters required to be disclosed in terms of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1998 are not applicable and hence not given.

FOREIGN EXCHANGE EARNINGS AND EXPENDITURE There was no income or expenditure in foreign currency during the period under review.

PERSONNEL AND OTHER MATTERSSince your Company does not have any employee, the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, are not applicable and hence not given.

DIRECTORS’ RESPONSIBILITY STATEMENTPursuant to Section 217(2AA) of the Companies Act, 1956 the Directors confirm that:

n in preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to the material departures;

n 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 March 31, 2014 and the profit of the Company for the year ended on that date;

n they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

n they have prepared annual accounts on a going concern basis.

ACKNOWLEDGEMENTSThe Board places on record its gratitude to the Government of India, Securities and Exchange Board of India, Reserve Bank of India, Association of Mutual Funds in India, other regulatory authorities and institutions, the investors of IDFC Mutual Fund and to the Members for their continued guidance and support during the year.The Directors also express their gratitude for the unstinted support and guidance received from IDFC Limited and other group companies.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS

SUNIL KAKAR

Chairman

Mumbai, April 23, 2014

Directors' Report

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TO THE MEMBERS OF IDFC AMC TRUSTEE COMPANY LIMITEDReport on the Financial StatementsWe have audited the accompanying financial statements of IDFC AMC TRUSTEE COMPANY LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 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 StatementsManagement 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 accounting principles generally accepted In India, including the Accounting Standards notified under the Companies Act, 1956 ("the Act") read with General Circular 8/2014 dated April 4, 2014, issued by the Ministry of Corporate Affairs. 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 ResponsibilityOur 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 judgement, 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 entity'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.

OpinionIn 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 March 31, 2014;(b) In the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and(c) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements1. As required by the Companies (Auditor's Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section

(4A) of Section 227 of the Act, we give in the Annexure a statement on the matters specified In paragraphs 4 and 5 of the Order.2. 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 purpose of

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

those books; (c) The Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are In agreement with the books of

account; (d) In our opinion, the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards

notified under the Companies Act, 1956 read with General Circular 8/2014 dated April 4, 2014, Issued by the Ministry of Corporate Affairs; (e) On the basis of written representations received from the directors as on March 31, 2014, and taken on record by the Board of Directors,

none of the directors is disqualified as on March 31, 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

FOR S.V. GHATALIA & ASSOCIATES LLP

Chartered AccountantsICAI Firm Registration Number: 103162W

per MANISH GUJRAL

PartnerMembership No.: 105117

Mumbai, April 23, 2014

Independent Auditors' Report

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Annexure referred to in paragraph 1 under the heading "Report on other legal and regulatory requirements" of our report of even date

Re: IDFC AMC Trustee Company Limited

(i) The company does not have any fixed assets. Hence, provisions of Clause 4(i) are not applicable to the Company.

(ii) The Company's business does not Involve Inventories and, accordingly, the requirements under paragraph 4(ii) of the Order are not applicable

to the Company.

(iii) According to the Information and explanations given to us, the Company has neither granted nor taken any loans, secured or unsecured

to/from companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of Clause

4(iii)(a) to (g) of the Order are not applicable to the Company and hence not commented upon.

(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 sale of services. During the course of our audit, we have not observed any major

weakness or continuing failure to correct any major weakness in the Internal control system in respect of this area.

The Company has not purchased any Inventory or fixed assets or sold any goods during the year, hence adequacy of Internal controls in

respect of these areas have not been commented upon.

(v) According to the Information and explanations provided by the management, we are of the opinion that the particulars of contracts or

arrangements referred to In Section 301 of the Act that need to be entered Into the register maintained under Section 301 of the Act have been

so entered.

(vi) The Company has not accepted any deposits from the public.

(vii) The provisions relating to Internal audit are not applicable to the Company.

(viii) To the best of our knowledge and as explained, the Central Government has not prescribed the maintenance of cost records under clause (d)

of sub-section (1) of Section 209 of the Act, for the products of the Company.

(ix) (a) The Company Is regular In depositing with appropriate authorities undisputed statutory dues Including provident fund, Investor education

and protection fund, Income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues

applicable to it. The provisions relating to employees' state insurance are not applicable to the Company.

(b) According to the Information and explanations given to us, no undisputed amounts payable in respect of provident fund, Investor

education and protection fund, employees' state insurance, Income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty,

cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they

became payable.

(c) According to the information and explanations given to us, there are no dues of Income tax, sales-tax, wealth tax, service tax, customs

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

(x) The Company has no accumulated losses at the end of the financial year and it has not Incurred cash losses In the current and immediately

preceding financial year.

(xi) As Informed, the Company has not borrowed any sums from a financial Institution, bank or debenture holders.

(xii) Based on our examination of documents and records, we are of the opinion that the Company has not granted loans and advances on the

basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund / society. Therefore, the provisions of Clause 4(xiii) of the Order are

not applicable to the Company.

(xiv) In our opinion, the Company is not dealing in or trading In shares, securities, debentures and other investments. Accordingly, the provisions of

Clause 4(xiv) of the Companies (Auditor's Report) Order, 2003 (as amended) are not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by other from bank or

financial Institution.

(xvi) The Company did not have any term loans outstanding during the year.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that

no funds raised on short-term basis have been used for long-term Investment.

Annexure to the Auditors' Report

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(xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under Section 301

of the Act.

(xix) The Company did not have any outstanding debentures during the year.

(xx) The Company has not raised any money through a public Issue during the year.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the

Information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the

course of our audit.

FOR S.V. GHATALIA & ASSOCIATES LLP

Chartered Accountants

ICAI Firm Registration Number: 103162W

per MANISH GUJRAL

Partner

Membership No.: 105117

Mumbai, April 23, 2014

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NOTES `

AS AT MARCH 31, 2014`

AS AT MARCH 31, 2013`

EQUITY AND LIABILITIES

SHAREHOLDERS’ FUNDS

(a) Share capital 4 500,000 500,000 (b) Reserves and surplus 5 417,817 237,572

917,817 737,572 NON-CURRENT LIABILITIES

(a) Other long-term liabilities 6 30,000 30,000 CURRENT LIABILITIES

(a) Other current liabilities 7 8,540 7,359 (b) Short-term provisions 8 70,932 179,986

79,472 187,345 TOTAL 1,027,289 954,917

ASSETS

NON-CURRENT ASSETS

(a) Long-term loans and advances 9 146,784 163,185 CURRENT ASSETS

(a) Trade receivables 10 78,652 438,204 (b) Cash and bank balances 11 791,914 343,310 (c) Short-term loans and advances 9 9,939 10,218

880,505 791,732 TOTAL 1,027,289 954,917 Summary of significant accounting policies 3

The accompanying notes are an integral part of the financial statements.

AS PER OUR REPORT OF EVEN DATE.

FOR S.V. GHATALIA & ASSOCIATES LLP

Chartered AccountantsICAI Firm Reg. No.103162W

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC AMC TRUSTEE COMPANY LIMITED

MANISH GUJRAL

PartnerMembership No.105117

D. M. SUKTHANKAR

DirectorJAMSHEED KANGA

Director

Mumbai | April 23, 2014

Balance Sheet AS AT MARCH 31, 2014

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AS PER OUR REPORT OF EVEN DATE.

FOR S.V. GHATALIA & ASSOCIATES LLP

Chartered AccountantsICAI Firm Reg. No.103162W

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC AMC TRUSTEE COMPANY LIMITED

MANISH GUJRAL

PartnerMembership No.105117

D. M. SUKTHANKAR

DirectorJAMSHEED KANGA

Director

Mumbai | April 23, 2014

NOTES

APRIL 1, 2013 TO MARCH 31, 2014

`

APRIL 1, 2012 TO MARCH 31, 2013

`

I INCOME

Revenue from operations

Trusteeship fees 840,000 840,000 Other income 12 18,973 - TOTAL INCOME (I) 858,973 840,000

II EXPENSES

Other expenses 13 598,128 805,932 TOTAL EXPENSES (II) 598,128 805,932

III PROFIT BEFORE TAX (I - II) 260,845 34,068

IV TAX EXPENSE (CURRENT TAX) 80,600 10,500

V PROFIT AFTER TAX (III - IV) 180,245 23,568

Basic and diluted earnings per equity share (Nominal value of share `10) 3.60 0.47Summary of significant accounting policies 3

The accompanying notes are an integral part of the financial statements.

Statement of Profit and Loss FOR THE YEAR ENDED MARCH 31, 2014

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I D F C A M C T R U S T E E C O M PA N Y L I M I T E D | 1 6 9

`

YEAR ENDEDMARCH 31, 2014

`

YEAR ENDEDMARCH 31, 2013

`

CASH FLOW FROM OPERATING ACTIVITIES

PROFIT BEFORE TAX 260,845 34,068 Changes in working capital:

(Increase) / decrease in loans and advances (short-term) 279 (1,039)(Increase) / decrease in trade receivables 359,552 223,596 Increase / (decrease) in current liabilities (107,873) 91,104

251,958 313,661 Cash generated from / (used in) operations 512,803 347,729 Direct taxes paid (net of refund received) (64,199) (116,740)NET CASH FLOW FROM OPERATING ACTIVITIES (A) 448,604 230,989

NET CASH FLOW FROM INVESTING ACTIVITIES (B) – –

NET CASH FLOW FROM FINANCING ACTIVITIES (C) – –

Net increase / (decrease) in cash and cash equivalents (A+B+C) 448,604 230,989 Cash and cash equivalents as at beginning of the year (refer note 11) 343,310 112,321 Cash and cash equivalents as at end of the year (refer note 11) 791,914 343,310

448,604 230,989

AS PER OUR REPORT OF EVEN DATE.

FOR S.V. GHATALIA & ASSOCIATES LLP

Chartered AccountantsICAI Firm Reg. No.103162W

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC AMC TRUSTEE COMPANY LIMITED

MANISH GUJRAL

PartnerMembership No.105117

D. M. SUKTHANKAR

DirectorJAMSHEED KANGA

Director

Mumbai | April 23, 2014

Cash Flow Statement FOR THE YEAR ENDED MARCH 31, 2014

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

01 Nature of OperationsIDFC AMC Trustee Company Limited ("the Company") is a public limited company, incorporated in India and regulated by The Securities Exchange Board of India ("SEBI").

02 Basis of preparation The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in India. The Company has prepared these financial statements to comply in all material respects with the accounting standards notified by the Companies (Accounting Standards) Rules, 2006, (as amended), the relevant provisions of the Companies Act, 1956 and the applicable guidelines issued by SEBI. The financial statements have been prepared on the accrual basis under the historical cost convention. The accounting policies followed in the preparation of financial statements are consistent with those followed in the previous year.

03 Significant accounting policies(a) Use of estimatesThe preparation of financial statements in conformity with Indian GAAP requires the Management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities at the end of reporting period. Although these estimates are based on management's best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.

(b) Revenue recognition n Revenue is recognised to the extent that it is probable that economic benefits will flow to the Company and the revenue can be

reliably measured. n Income from trusteeship services is recognised at price agreed in accordance with the arrangement with the IDFC Mutual Fund.

(c) Provisions n A provision is recognised when the Company has 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 reporting date. These are reviewed at each reporting date and adjusted to reflect the current best estimates.

(d) Income tax n Tax expense comprises current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax authorities

in accordance with the Income-tax Act 1961, enacted in India and tax laws prevailing in the respective tax jurisdictions where the Company operates. The tax rate and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current income tax relating to items recognised directly in equity is recognised in equity and not in the statement of profit and loss.

n Deferred income taxes reflect the impact of timing differences between taxable income and accounting income originating during the current year and reversal of timing differences for the earlier years. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting date. Deferred income tax relating to items recognised directly in equity is recognised in equity and not in the statement of profit and loss.

Deferred tax liabilities are recognised for all taxable timing differences. Deferred tax assets are recognised for deductible timing differences only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits.

(e) Cash and cash equivalentsCash and cash equivalents for the purpose of cash flow statement comprise cash at bank and in hand and short term investments with an original maturity of three months or less.

(f) Earning per shareBasic earnings per share is computed by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.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.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

04 Share capital AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NUMBER ` NUMBER `

AUTHORISED SHARES

Equity shares of `10 each 50,000 500,000 50,000 500,000 ISSUED, SUBSCRIBED & FULLY PAID-UP SHARES

Equity shares of `10 each 50,000 500,000 50,000 500,000 TOTAL ISSUED, SUBSCRIBED AND FULLY PAID-UP SHARE CAPITAL

500,000 500,000

(a) Reconciliation of the number of equity shares outstanding at the beginning and at the end of the year

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NUMBER ` NUMBER `

Outstanding at the beginning of the year 50,000 500,000 50,000 500,000 Issued during the year – – – – Outstanding at the end of the year 50,000 500,000 50,000 500,000

(b) Terms/rights attached to equity sharesThe Company has only one class of equity shares having a par value of `10 per share. Each holder of equity shares is entitled to one vote per share.

(c) Shares held by holding/ultimate holding companyOut of the equity shares issued by the Company, shares held by its holding company, ultimate holding company are as below:

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NUMBER ` NUMBER `

IDFC Limited (of which 6 shares are held jointly with employees) 37,499 374,990 37,499 374,990

(d) Details of shareholders holding more than 5% of the equity shares in the Company

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NUMBER % OF HOLDING NUMBER % OF HOLDING

IDFC Limited (of which 6 shares are held jointly with employees) 37,499 75.00% 37,499 75.00%Natixis Global Asset Management Asia Pte. Ltd. 12,501 25.00% 12,501 25.00%

05 Reserves and surplus AS AT MARCH 31, 2014

`

AS AT MARCH 31, 2013`

SURPLUS IN THE STATEMENT OF PROFIT AND LOSS

Opening balance 237,572 214,004 Add: Profit for the year 180,245 23,568 Closing balance 417,817 237,572

06 Other long-term liabilities AS AT MARCH 31, 2014

`

AS AT MARCH 31, 2013`

Other payables - Corpus 30,000 30,000 TOTAL 30,000 30,000

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

07 Other current liabilities AS AT MARCH 31, 2014

`

AS AT MARCH 31, 2013`

Statutory dues payable 8,540 7,359 TOTAL 8,540 7,359

08 Short-term provisions (read with note 17)

AS AT MARCH 31, 2014 `

AS AT MARCH 31, 2013`

Provision for income tax (Net of advance tax of `169,259/-; Previous Year `169,259/-) 11,741 11,741 Other short-term provisions 59,191 168,245 TOTAL 70,932 179,986

09 Loans and advances (unsecured, considered good)

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NON-CURRENT PORTION

`

CURRENT MATURITIES

`

NON-CURRENT PORTION

`

CURRENT MATURITIES

`

Balances with government authorities - Service tax credit receivable – 9,939 – 10,218 Advance tax (Net of provision `198,100/-; Previous Year `117,500/-) 146,784 – 163,185 – TOTAL 146,784 9,939 163,185 10,218

10 Trade receivables (unsecured, considered good)

AS AT MARCH 31, 2014 `

AS AT MARCH 31, 2013`

Outstanding for a period less than six months 78,652 438,204 TOTAL 78,652 438,204

11 Cash and bank balances AS AT MARCH 31, 2014

`

AS AT MARCH 31, 2013`

Cash and cash equivalentsBalances with banks: In current accounts 791,914 343,310 TOTAL 791,914 343,310

12 Other incomeAPRIL 1, 2013 TO MARCH 31, 2014

`

APRIL 1, 2012 TO MARCH 31, 2013

`

Interest on income tax refund 3,973 – Provision written back 15,000 – TOTAL 18,973 –

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I D F C A M C T R U S T E E C O M PA N Y L I M I T E D | 1 7 3

Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

13 Other expenses

APRIL 1, 2013 TO MARCH 31, 2014

`

APRIL 1, 2012 TO MARCH 31, 2013

`

Travelling and conveyance 68,954 224,251

Printing, stationery and postage 2,773 709

Professional fees 43,107 72,255

Directors’ sitting fees 420,000 400,000

Internet expenses 25,000 25,000

Miscellaneous expenses 770 3,612

Conference expenses – 48,625

Auditors’ remuneration (refer note (a) below) 35,024 28,980

Profession tax paid 2,500 2,500

TOTAL 598,128 805,932

(a) Break up of auditors’ remuneration:

APRIL 1, 2013 TO MARCH 31, 2014

`

APRIL 1, 2012 TO MARCH 31, 2013

`

Audit fee 15,000 15,000

Other services 12,035 12,000

Out of pocket expenses 7,989 1,980

TOTAL 35,024 28,980

14 The Company is engaged in the business of providing trusteeship services. As such there is no separate reportable primary business segment or geographical segment as required by Accounting Standard 17 on “Segment Reporting” as notified by the Companies (Accounting Standards) Rules, 2006.

15 Related party disclosuresNames of the related parties where control exists irrespective of whether transactions have been occurred or not:

I. Holding Company:

IDFC Limited

Names of the related parties with which there are transactions during the year:

II. Fellow Subsidiaries:

IDFC Asset Management Company LimitedDetails of transactions:

YEAR ENDED MARCH 31, 2014

`

YEAR ENDED MARCH 31, 2013

`

NAME OF RELATED PARTY AND NATURE OF RELATIONSHIP

TRANSACTIONS DURING THE YEAR

I. Fellow Subsidiaries:IDFC Asset Management Company Limited Reimbursement of expenses

(net of recovery, if any) 134,656 175,704

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

16 The basic and diluted earnings per share has been calculated based on the following:

YEAR ENDED MARCH 31, 2014

`

YEAR ENDED MARCH 31, 2013

`

Net profit after tax 180,245 23,568 Weighted average number of equity shares (Nos.) 50,000 50,000 Basic and diluted earnings per share (`) 3.60 0.47

17 As per information available with the Company, there are no micro, small or medium enterprises as defined in ‘The Micro, Small and Medium Enterprises Development Act, 2006’, to whom the company owes dues on account of principal amount together with interest and accordingly no additional disclosures have been made. The above information regarding micro, small and medium enterprises have been determined to the extent such parties have been identified on the basis of information available with the Company and relied upon by auditors.

18 The figures for the previous year have been regrouped wherever necessary, in order to make them comparable to the current period.

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11BOARD OF DIRECTORS

n Mr. Vikram Limaye – Chairman n Mr. Sunil Kakar n Dr. Rajeev Uberoi n Mr. Eric Ward

AUDITORS n S.R. Batliboi & Co. LLP Chartered Accountants

PRINCIPAL BANKER n HDFC Bank Limited

REGISTERED OFFICEOne India Bulls Centre841, Jupiter Mills CompoundSenapati Bapat MargElphinstone Road (West)Mumbai 400 013Tel: +91 22 6628 9999Fax: +91 22 2421 [email protected]: U74920MH2006PLC160937

IDFC INVESTMENT ADVISORS LIMITED

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TO THE MEMBERSWe are pleased to present the Eighth Annual Report to the Members, together with the audited accounts for the year ended March 31, 2014.

FINANCIAL RESULTS

PARTICULARSFOR THE YEAR ENDED

MARCH 31, 2014 `

FOR THE YEAR ENDED MARCH 31, 2013

`

Total Income 217,214,496 207,475,565

Less: Total expenses 92,203,372 105,809,088

Profit / (Loss) before Tax 125,011,124 101,666,477

Provision for Tax 37,556,688 41,650,513

Profit / (Loss) after Tax 87,454,436 60,015,964

OPERATIONAL REVIEWThe Company is registered as a Portfolio Manager with the Securities and Exchange Board of India ("SEBI") to carry out Portfolio Management

Services pursuant to SEBI (Portfolio Managers) Regulations, 1993. IDFC Hybrid Infrastructure Portfolio ("HIP") was the first portfolio offering for

domestic retail investors under the PMS platform of the Company. The investment objective of HIP is to invest in permitted securities / instruments

issued by companies operating in the Infrastructure space, and endeavour to achieve risk adjusted medium to long term capital appreciation.

The investment strategy is summarized as below:

n Focus on Growth Opportunities / Companies:

The idea is to provide growth capital for business opportunities especially to mid-sized companies with sound track record and reputation

and ride the growth curve with them.

n Optimise Returns through Portfolio Diversification:

In order to achieve superior risk adjusted portfolio returns the Portfolio Manager has sought to achieve a diversified portfolio. This PMS offering

received overwhelming response from investors. HIP - discretionary portfolio collected approximately ` 451.78 crore in capital commitment.

HIP investors have been given online access wherein they can log into the website for a 24x7 access to Portfolio and Capital Registers. In addition to

the Portfolio and Capital registers there are various reports available to the investor online itself. The quarterly newsletters from the Fund Managers

are also made available on the site.

IDFC Financials Portfolio was offered with an objective to generate capital appreciation over the medium term by investing in a diversified pool of

listed equities. The portfolio shall endeavour to invest in companies that are expected to benefit from an important driver of domestic consumption

financial services. The Portfolio was closed in April 2013.

IDFC Regal Portfolio was offered with an objective to seek to invest in companies that are expected to benefit the most from the next round of capex

/ investment cycle that is expected to take place in India over the next few years. It shall be the endeavour of the Portfolio Manager to have about 15

stocks on an average in the portfolio of Public Sector Units.

Since the portfolio was launched in November 2012, a couple of events did push back the cyclical recovery of the Indian economy. High interest

rates, a prolonged sluggishness in capital expenditure and an impending election made 2013 a tough year for corporate India. All this took a toll on

the growth rates of earnings going into the result season in the first quarter of FY14. Earnings growth was in low single digits.

Hence, the portfolio which has been in existence since the last quarter of Calendar Year 2013, despite a large cash holding was not being able to

protect capital. Thus, the investment manager decided that the mandate required a small addition - to broad base or diversify the portfolio.

The Company also acts as an Investment Advisor to IDFC India Equities Fund which is a sub-fund of Natixis International Funds (Lux) I, and its

activities are to provide investment advisory services, identify, evaluate investment opportunities to the Fund and to monitor investments of the Fund

in the Indian companies.

The Company also acts as an Investment Manager to IDFC S.P.I.C.E. Fund, the objective of the fund is to achieve attractive risk adjusted returns

through investments in medium to long term unlisted and listed opportunities in social infrastructure, physical infrastructure, consumption and

environment sectors.

DIVIDENDThe Board of Directors, at its meeting held on July 25, 2013 had approved the Interim Dividend amounting to ` 5 crore for the financial year

2013-14 at the rate of ` 5 per equity share i.e. 50% to the shareholders of the Company holding 10,000,000 equity shares of ` 10 each. The Board

of Directors of the Company proposed to consider the same as final dividend.

Directors' Report

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I D F C I N V E S T M E N T A D V I S O R S L I M I T E D | 1 7 7

COMPANIES ACT, 2013Most of the provisions of the Companies Act, 2013 and the Rules notified by the Ministry of Corporate Affairs ("MCA") in this regard, have come

into force with effect from April 1, 2014. MCA issued a General Circular no. 8/2014 dated April 4, 2014 which clarified that the Financial Statements,

Auditors' Report and the Board’s Report in respect of the previous year ended March 31, 2014 will be in accordance with the Companies Act, 1956

and Rules made there under.

Your Company shall comply with the provisions of the Companies Act, 2013, as applicable.

DIRECTORSIn accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Vikram Limaye (DIN-00488534)

would retire by rotation and being eligible, offers himself for reappointment at the ensuing Annual General Meeting (“AGM”).

The Board of Directors recommends the reappointment of Mr. Vikram Limaye as a Director at the ensuing AGM.

AUDIT COMMITTEE The Audit Committee comprises of three Directors, Mr. Sunil Kakar (DIN-03055561) as Chairman, Mr. Eric Ward (DIN-03522521) and Dr. Rajeev

Uberoi (DIN-01731829).

AUDITORSS.V. Ghatalia & Associates LLP, Chartered Accountants (Reg. No.: 103162W), an affiliate of Ernst & Young, were the Statutory Auditors of the Company for FY14 and would hold office till the conclusion of the ensuing AGM of the Company. The Company received a letter from S.V. Ghatalia & Associates LLP, Chartered Accountants expressing their unwillingness to be reappointed as Statutory Auditors at the ensuing AGM.In accordance with the above, the Board of Directors of the Company, at its meeting held on April 23, 2014 recommended appointment of S.R. Batliboi & Co. LLP, Chartered Accountants (Reg. No.: 301003E), being a member firm of Ernst & Young Global Limited, in place of S.V. Ghatalia & Associates LLP as the Statutory Auditors of the Company, to audit the financials of the Company. The Board recommends the appointment of S.R. Batliboi & Co. LLP, Chartered Accountants, as the Statutory Auditors of the Company.

PUBLIC DEPOSITSThe Company has not accepted any public deposits during the year under review.

PARTICULARS REGARDING CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION Since the Company does not own any manufacturing facility, the disclosure of information on other matters required to be disclosed in terms of

Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1998,

are not applicable and hence not given.

FOREIGN EXCHANGE EARNINGS AND EXPENDITUREThe details of income in foreign currency are given in Note No. 22 to the Financial Statements. There are no expenses in foreign currency.

PERSONNEL AND OTHER MATTERSThe Company had 8 employees as on March 31, 2014. As required by the provisions of Section 217(2A) of the Companies Act, 1956, read with the

Companies (Particulars of Employees) Rules, 1975, as amended, names and other particulars of the employees are set out in the annexure to the

Directors’ Report.

DIRECTORS’ RESPONSIBILITY STATEMENTPursuant to Section 217(2AA) of the Companies Act, 1956 the Directors confirm that:

n in preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to

the material departures;

n 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 March 31, 2014 and the profit of the Company for the

year ended on that date;

n they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the

Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

n they have prepared annual accounts on a going concern basis.

Directors' Report

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ACKNOWLEDGEMENTS The Board places on record its gratitude to the investors of the Funds, clients of discretionary PMS and regulatory authorities such as the Reserve Bank of India, the Securities and Exchange Board of India and other regulatory authorities & institutions and to the Members for their continued guidance and support and expresses its sincere appreciation to all the employees for their commendable teamwork and enthusiastic contribution during the year.The Directors also express their gratitude for the unstinted support and guidance received from IDFC Asset Management Company Limited and other IDFC group companies.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS

VIKRAM LIMAYE

Chairman

Mumbai, April 23, 2014

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TO THE MEMBERS OF IDFC INVESTMENT ADVISORS LIMITEDReport on the Financial StatementsWe have audited the accompanying financial statements of IDFC INVESTMENT ADVISORS LIMITED (“the Company”), which comprise the Balance Sheet as at March 31, 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 StatementsManagement 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 accounting principles generally accepted in India, including the Accounting Standards notified under the Companies Act, 1956 (“the Act”) read with General Circular 8/2014 dated April 4, 2014, issued by the Ministry of Corporate Affairs. 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 ResponsibilityOur 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 entity’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.

OpinionIn 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 March 31, 2014;(b) in the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and (c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements1. As required by the Companies (Auditor’s Report) Order, 2003 (“the Order”) issued by the Central Government of India in terms of sub-section

(4A) of Section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.2. 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 purpose of

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

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

of account; (d) In our opinion, the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards

notified under the Companies Act, 1956 read with General Circular 8/2014 dated April 4, 2014, issued by the Ministry of Corporate Affairs; (e) On the basis of written representations received from the directors as on March 31, 2014, and taken on record by the Board of Directors,

none of the directors is disqualified as on March 31, 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

FOR S.V. GHATALIA & ASSOCIATES LLP

Chartered AccountantsICAI Firm Registration No.: 103162W

per MANISH GUJRAL

PartnerMembership No.: 105117

Mumbai, April 23, 2014

Independent Auditors' Report

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Annexure referred to in paragraph 1 under the heading “Report on other legal and regulatory requirements” of our report of even date

Re: IDFC Investment Advisors Limited

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

(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verification

which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were

noticed on such verification.

(c) There was no disposal of substantial part of fixed assets during the year.

(ii) The Company’s business does not involve inventories and, accordingly, the requirements under paragraph 4(ii) of the Order are not applicable

to the Company.

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

companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of Clause 4(iii)(a)

to (g) of the Order are not applicable to the Company and hence not commented upon.

(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 the sale of services. During the course of our

audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system in respect of

these areas.

The Company has not purchased any inventory or sold any goods during the year, hence adequacy of internal controls in respect of these

areas have not been commented upon.

(v) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or

arrangements referred to in Section 301 of the Act that need to be entered into the register maintained under Section 301 of the Act have been

so entered.

(vi) The Company has not accepted any deposits from the public.

(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(viii) To the best of our knowledge and as explained, the Central Government has not prescribed the maintenance of cost records under clause (d)

of sub-section (1) of Section 209 of the Act, for the products of the Company.

(ix) (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education

and protection fund, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues

applicable to it. The provisions relating to employees’ state insurance are not applicable to the Company.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education

and protection fund, employees’ state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty cess and other

material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

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

duty, excise duty and cess which have not been deposited on account of any dispute.As informed, the provisions of sales tax, wealth tax,

excise duty and customs duty are currently not applicable to the Company.

(x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately

preceding financial year.

(xi) As informed, the Company has not borrowed any sums from a financial institution, bank or debenture holders.

(xii) Based on our examination of documents and records, we are of the opinion that the Company has not granted loans and advances on the

basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/ mutual benefit fund/ society. Therefore, the provisions of Clause 4(xiii) of the Order are

not applicable to the Company.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of

Clause 4(xiv) of the Order are not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by other from bank or

financial institution.

(xvi) The Company did not have any term loans outstanding during the year.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that

no funds raised on short-term basis have been used for long-term investment.

(xviii)The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301

of the Act.

Annexure to the Auditors' Report

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(xix) The company did not have any outstanding debentures during the year.

(xx) The Company has not raised any money through a public issue during the year.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the

information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during

the year.

FOR S.V. GHATALIA & ASSOCIATES LLP

Chartered AccountantsICAI Firm Registration No.: 103162W

per MANISH GUJRAL

PartnerMembership No.: 105117

Mumbai, April 23, 2014

Annexure to the Auditors' Report

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AS PER OUR REPORT OF EVEN DATE.

FOR S.V. GHATALIA & ASSOCIATES LLP

Chartered AccountantsFirm Reg. No.103162W

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC INVESTMENT ADVISORS LIMITED

MANISH GUJRAL

PartnerMembership No.105117

RAJEEV UBEROI

DirectorSUNIL KAKAR

Director

Mumbai | April 23, 2014NIRAV SHAH

Company Secretary

AS AT MARCH 31, 2014

AS AT MARCH 31, 2013

NOTES ` ` `

I. EQUITY AND LIABILITIES

SHAREHOLDERS’ FUNDS

(a) Share capital 4 100,000,000 100,000,000 (b) Reserves and surplus 5 131,604,990 102,648,055

231,604,990 202,648,055 CURRENT LIABILITIES

(a) Other current liabilities 6 902,672 1,192,318 (b) Short-term provisions 7 27,364,256 71,496,621

28,266,928 72,688,939 TOTAL 259,871,918 275,336,994

II. ASSETS

NON-CURRENT ASSETS

(a) Fixed assets Tangible assets 8 680,000 802,976 Intangible assets 9 256,168 248,608

936,168 1,051,584 (b) Non-current investments 10 10,000 10,000 (c) Deferred tax assets (net) 11 – 56,688 (d) Long-term loans and advances 12 26,229,655 45,195,336 TOTAL NON-CURRENT ASSETS 26,239,655 45,262,024

CURRENT ASSETS

(a) Current investments 13 196,955,403 169,856,037 (b) Trade receivables 14 14,313,704 18,601,773 (c) Cash and bank balances 15 1,186,313 3,438,878 (d) Short-term loans and advances 12 20,240,675 35,886,580 (e) Other current assets 16 – 1,240,118 TOTAL CURRENT ASSETS 232,696,095 229,023,386 TOTAL 259,871,918 275,336,994

Summary of significant accounting policies 3

The accompanying notes are an integral part of the financial statements.

Balance Sheet AS AT MARCH 31, 2014

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AS PER OUR REPORT OF EVEN DATE.

FOR S.V. GHATALIA & ASSOCIATES LLP

Chartered AccountantsFirm Reg. No.103162W

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC INVESTMENT ADVISORS LIMITED

MANISH GUJRAL

PartnerMembership No.105117

RAJEEV UBEROI

DirectorSUNIL KAKAR

Director

Mumbai | April 23, 2014NIRAV SHAH

Company Secretary

YEAR ENDED MARCH 31, 2014

YEAR ENDED MARCH 31, 2013

NOTES ` `

I INCOME

Revenue from operations 17 196,262,294 197,930,532 Other income 18 20,952,202 9,545,033 TOTAL INCOME (I) 217,214,496 207,475,565

II EXPENSES

Employee benefits expense 19 40,289,759 53,376,087 Depreciation and amortisation expense 8,9 405,367 1,419,901 Other expenses 20 51,508,246 51,013,100 TOTAL EXPENSES (II) 92,203,372 105,809,088

III PROFIT BEFORE TAX (I - II) 125,011,124 101,666,477

IV TAX EXPENSE

(a) Current tax 37,500,000 35,000,000 (b) Current tax expense relating to prior years – 5,906,866 (c) Deferred tax 11 56,688 743,647

37,556,688 41,650,513

V PROFIT AFTER TAX (III - IV) 87,454,436 60,015,964

Basic / Diluted earnings per equity share (Nominal value of share ` 10) 21 8.75 6.00 Summary of significant accounting policies 3

The accompanying notes are an integral part of the financial statements.

Statement of Profit and Loss FOR THE YEAR ENDED MARCH 31, 2014

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YEAR ENDED MARCH 31, 2014

YEAR ENDED MARCH 31, 2013

` ` `

CASH FLOW FROM OPERATING ACTIVITIES

PROFIT BEFORE TAX 125,011,124 101,666,477 Adjustments for non-cash items: Add: Depreciation and amortisation 405,367 1,419,901 Add: Gain on sale of Investment (18,383,644) (4,039,309) Add: Fixed assets written off 82,640 – OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 107,115,487 99,047,067 Changes in working capital:(Increase) / decrease in operating assetsTrade receivables 4,288,068 (13,296,467)Other current assets 1,240,118 1,112,947 Loans and advances 32,207,975 (9,323,761)

37,736,161 (21,507,281)Increase / (decrease) in operating liabilitiesProvision (37,924,908) (3,021,212)Current liabilities (289,645) (57,289,561)

(38,214,553) (60,310,773)Cash generated from / (used in) operations 106,637,095 17,229,013 Direct taxes paid (net of refund) (41,303,839) (33,504,348)NET CASH FLOW FROM OPERATING ACTIVITIES (A) 65,333,256 (16,275,335)

Purchase of current investments (401,494,023) (175,825,501)Proceeds from sale of current investment 392,778,299 193,825,501 Purchase of fixed assets (372,598) (451,507)NET CASH FLOW FROM INVESTING ACTIVITIES (B) (9,088,322) 17,548,493

Dividend paid (including dividend tax) (58,497,500) – NET CASH FLOW FROM FINANCING ACTIVITIES (C) (58,497,500) – Net increase / (decrease) in cash & cash equivalents (A + B + C) (2,252,565) 1,273,158

Cash & cash equivalents as at the beginning of the year see note 15 3,438,878 2,165,720 Cash & cash equivalents as at the end of the year see note 15 1,186,313 3,438,878 TOTAL (2,252,565) 1,273,158

AS PER OUR REPORT OF EVEN DATE.

FOR S.V. GHATALIA & ASSOCIATES LLP

Chartered AccountantsFirm Reg. No.103162W

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC INVESTMENT ADVISORS LIMITED

MANISH GUJRAL

PartnerMembership No.105117

RAJEEV UBEROI

DirectorSUNIL KAKAR

Director

Mumbai | April 23, 2014NIRAV SHAH

Company Secretary

Cash Flow Statement FOR THE YEAR ENDED MARCH 31, 2014

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

01 Nature of OperationsThe Company provides Portfolio Management Services through its various products. It also provides investment advisory services to Indian as well as Offshore Funds.

02 Basis of preparationThe financial statements of the Company have been prepared in accordance with Generally Accepted Accounting Principles in India ("Indian GAAP"). The Company has prepared these financial statements to comply in all material respects with the Accounting Standards notified by the Companies (Accounting Standards) Rules, 2006, (as amended), the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on the accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

03 Significant accounting policies(a) Use of estimatesThe preparation of financial statements in conformity with Indian GAAP requires the Management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities at the end of reporting period. Although these estimates are based on management's best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.

(b) InvestmentsInvestments which are readily realisable and intended to be held for not more than one year from the date on which such investments are made are classified as current investments. All other investments are classified as long-term investments. On initial recognition, all investments are measured at cost. The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties.

n Long-term investments are carried at acquisition cost. However, a provision is made for diminution other than temporary on an individual basis.

n Current investments are carried in the financial statement at lower of cost or fair value on an individual investment. n On disposal of an investment, the difference between its carrying amount and the net disposal proceeds is charged or credited to

statement of profit and loss.Tangible fixed assetsFixed assets are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition for the intended use, less accumulated depreciation and accumulated losses, if any. Gains or losses arising from derecognition of fixed assets are measured as difference between the net disposal proceeds and the cost of the assets less accumulated depreciation upto the date of disposal and are recognised in the statement of profit and loss when asset is derecognised. Leasehold Improvements are shown at historical cost less accumulated depreciation.Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses on existing fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.Depreciation on tangible fixed assetsDepreciation is charged at the rates prescribed in Schedule XIV of the Companies Act, 1956 as per written down value method. Certain electronic items are depreciated over a period of two years on straight-line method based on the management’s estimate of the useful life of assets. Depreciation in respect of leasehold improvements is provided on the straight-line method over the extended lease term or five years whichever is earlier.Depreciation on additions during the period is provided on a pro-rata basis. Assets costing ` 5,000 or less are fully depreciated in the year of purchase.

(c) Intangible assetsIntangible assets acquired separately are measured on initial recoginition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses, if any. Intangible assets are amortised over a period of three years on a straight line method. The amortisation period and the amortisation method are reviewed at least at each financial year end. If the expected useful life of the asset is significantly different from previous estimates, the amortisation period is changed accordingly. Gains or losses arising from derecoginition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit and loss when the asset is derecognised.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

(d) Impairment of tangible and intangible assetsThe Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists or when annual impairment testing of an asset is required, the Company estimates the asset's recoverable amount. An asset's recoverable amount is the higher of an assets or Cash Generating Units ("CGU") net selling price and it's value in use. The recoverable amount is determined for an individual asset unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted for their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risk specific to the asset. In determining net selling price, recent market transactions are taken into account. If available, If no such transaction can be identified, an appropriate valuation model is used.Impairment losses of continuing operations, including impairment on inventories, are recognised in the statement of profit and loss, except for previously revalued tangible fixed assets, where the revaluation was taken to revaluation reserve. In this case, the impairment is also recognised in the revaluation reserve up to the amount of any previous revaluation. After impairment depreciation is provided on the revised carrying amount of the asset over it's remaining useful life.An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Company estimates the asset's or cash generating unit's recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset's recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount nor the carrying amount that would have been determined net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the statement of profit and loss unless the assets is carried at a revalued amount, in which case the reversal is treated as a revaluation increase.

(e) Revenue RecognitionRevenue is recognised to the extent that it is probable that economic benefits will flow to the Company and the revenue can be reliably measured.Income from management and advisory services is recognised at price agreed in accordance with the arrangement with the customers.Dividend income is recognised when the Company's right to receive dividend is established by the reporting date.

(f) Income TaxThe accounting treatment for income-tax in respect of the Company's income is based on Accounting Standard 22 on 'Accounting for Taxes on Income' as notified by the Companies (Accounting Standards) Rules, 2006. The provision made for income-tax in the accounts comprises both, the current tax and the deferred tax. The deferred tax assets and liabilities for the year arising on account of timing differences are recognised in the statement of profit and loss and the cumulative effect thereof is reflected in the Balance Sheet.Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the reporting date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the Company has unabsorbed depreciation or carried forward losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that the same can be realised against future taxable profits.

(g) Foreign currency transactions n Initial recognition

Foreign currency transactions are recorded in the reported currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of transactions.

n Conversion Foreign currency monetary items are retranslated using the exchange rate prevailing at the reporting date. Non-monetary items, which are

measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of transaction. Non-monetary items, which are measured at fair value or other similar valuation denominated in a foreign currency, are translated using the exchange rate at the date when such value was determined.

n Exchange differences Exchange differences are recognized as income or as expenses in the period in which they arise.

(h) Brokerage ExpensesBrokerage is paid to brokers as per the terms of agreement entered into with respective brokers. In case of IDFC Hybrid Infrastructure Portfolio (“HIP”) product, IDFC Regal Portfolio & IDFC Spice Fund product, the Company amortises the brokerage expenses of corporate brokers over the tenure of the product or commitment period. Unamortised Brokerage is treated as loans and advances considering the normal operating cycle of the period.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

(i) ProvisionsA provision is recognised when the Company has 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.

(j) Cash and cash equivalentsCash and cash equivalents for the purpose of Cash Flow Statement comprises cash at bank, cash in hand, Short-term investments with an original maturity of three months or less.

(k) Earning per shareBasic earnings per share is computed by dividing the net profit or loss for the period by the weighted average number of equity shares outstanding during the year.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.

(l) Operating leasesLeases of assets under which all the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases. Rental charges over the term of such leases, after taking in to account the escalation clause, are charged to the statement of profit and loss on a straight line basis over the extended lease term.

(m) Retirement and other employee benefitRetirement benefit in the form of provident fund, superannuation fund and pension fund is a defined contribution scheme and are charged to the Statement of Profit and Loss as they fall due, based on the amount of contribution required to be made. The Company has no obligation, other than the contribution payable to the provident fund, superannuation fund and pension fund. The Company operates a defined plan for its employees, viz., gratuity. The cost of providing benefits under this plan is determined on the basis of actuarial valuation at each year-end which is determined using the projected unit credit method. Actuarial gains and losses for both defined benefit plans are recognised in full in the period in which they occur in the statement of profit and loss.

(n) Contingent liabilitiesA contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.

04 Share capitalAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NUMBER ` NUMBER `

AUTHORISED SHARES

Equity shares of ` 10 each 10,000,000 100,000,000 10,000,000 100,000,000 ISSUED, SUBSCRIBED AND FULLY PAID-UP SHARES

Equity shares of ` 10 each fully paid-up 10,000,000 100,000,000 10,000,000 100,000,000 TOTAL ISSUED, SUBSCRIBED AND FULLY PAID-UP SHARE CAPITAL

100,000,000 100,000,000

(a) Reconciliation of the number of equity shares outstanding at the beginning and at the end of the year

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NUMBER ` NUMBER `

Outstanding at the beginning of the year 10,000,000 100,000,000 10,000,000 100,000,000 Outstanding at the end of the year 10,000,000 100,000,000 10,000,000 100,000,000

(b) Term / right attached to equity sharesThe Company has only one class of equity shares having a par value of ` 10 per share. Each holder of equity shares is entitled to one vote per share.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

(c) Shares held by holding/ultimate holding Company

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NUMBER % OF HOLDING NUMBER % OF HOLDING

IDFC Asset Management Company Limited 10,000,000 100% 10,000,000 100%(of which 6 shares are held jointly with employees)

(d) Details of shareholders holding more than 5% of the equity shares in the Company

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NUMBER % OF HOLDING NUMBER % OF HOLDING

IDFC Asset Management Company Limited 10,000,000 100% 10,000,000 100%

05 Reserves and surplusAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

(a) SURPLUS IN THE STATEMENT OF PROFIT AND LOSS

Opening balance 102,648,054 42,632,091 Add: Profit for the year 87,454,436 60,015,964 Less: Appropriations General reserve 8,755,000 Dividend on equity shares 50,000,000 – [` 5/- per share (Previous Year Nil)] Tax on Dividend 8,497,500 – Closing balance 122,849,990 102,648,055

(b) GENERAL RESERVE

Opening balance – – Add: Transfer from statement of profit and loss 8,755,000 – Closing balance 8,755,000 –

TOTAL ( A + B ) 131,604,990 102,648,055

06 Other current liabilitiesAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Statutory dues 870,683 1,130,872 Other payables (read with note 27) 31,989 61,446 TOTAL 902,672 1,192,318

07 Short-term provisionsAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Provision for gratuity (read with note 25) 26,738 –Provision for income tax (net of advance tax ` 66,503,404) 1,951,182 8,158,640 Other Short-term provisions 25,386,336 63,337,981 TOTAL 27,364,256 71,496,621

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

08 Tangible assetsGROSS BLOCK ACCUMULATED DEPRECIATION NET BLOCK

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` ` ` ` ` ` ` ` ` `

Furniture and fixtures 299,632 – – 299,632 151,813 26,755 – 178,568 121,064 147,819

Office equipment 1,204,480 68,697 402,793 870,384 828,034 103,328 330,548 600,814 269,570 376,446

Computers 1,724,225 146,400 421,436 1,449,189 1,445,514 125,343 411,034 1,159,823 289,366 278,711

TOTAL 3,228,337 215,098 824,229 2,619,205 2,425,361 255,426 741,582 1,939,205 680,000 802,976

Previous Year - Mar13 3,119,206 109,131 – 3,228,337 2,098,064 327,297 – 2,425,361 802,976

09 Intangible assetsGROSS BLOCK ACCUMULATED DEPRECIATION NET BLOCK

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` ` ` ` ` ` ` ` ` `

Computer software 6,804,643 157,500 – 6,962,143 6,556,035 149,940 – 6,705,975 256,168 248,608

TOTAL 6,804,643 157,500 – 6,962,143 6,556,035 149,940 – 6,705,975 256,168 248,608

Previous Year - Mar 13 6,462,267 342,376 – 6,804,643 5,463,431 1,092,604 – 6,556,035 248,608

TOTAL TANGIBLE & INTANGIBLE ASSETS

10,032,980 372,598 824,229 9,581,348 8,981,396 405,367 741,582 8,645,180 936,168 1,051,584

Previous Year - Mar 13 9,581,472 451,507 – 10,032,979 7,561,495 1,419,901 – 8,981,396 1,051,584

10 Non-current investments AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

QUANTITY ` QUANTITY `

Investments in Venture Capital Units (Unquoted) IDFC Spice Fund 10,000 10,000 10,000 10,000 TOTAL 10,000 10,000

11 Deferred tax asset (net)

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Deferred tax asset Fixed assets: Impact of difference between tax depreciation and

depreciation/amortisation charged for the financial reporting – 56,688

DEFERRED TAX ASSET (NET) – 56,688

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

12 Loans and advances (unsecured, considered good)

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NON-CURRENT CURRENT NON-CURRENT CURRENT` ` ` `

Other loans and advances to employees – 50,000 – – Supplier advance – 3,177 – 11,694Capital advance – – 199,701 – Prepaid expenses 308,805 19,471,788 16,671,173 34,708,456 Loans and advances to related parties – – – – Balances with government authorities Service tax credit receivable – 715,710 – 1,166,430 Advance payment of tax (net of provision ` 33,538,233) 25,920,850 – 28,324,462 – TOTAL 26,229,655 20,240,675 45,195,336 35,886,580

13 Current investmentsAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

QUANTITY ` QUANTITY `

INVESTMENT IN MUTUAL FUNDS (UNQUOTED)

IDFC Money Manager Fund - Regular - Growth – – 851,987 15,213,000 IDFC Dynamic Bond Fund - Regular - Growth – – 8,183,771 101,329,000 IDFC Dynamic Bond Fund - Direct - Growth 11,141,071 158,228,333 2,173,106 30,114,037 IDFC Ultra Short-term Fund - Direct - Growth – – 1,431,001 23,200,000 IDFC Cash Fund - Direct - Growth 2,398 3,727,070 – – IDFC Super Saver Income Fund - Short-term Plan - Direct - Growth 777,529 20,000,000 – – IDFC Yearly Series Interval Fund Series 1 - Direct - Growth 1,379,602 15,000,000 – – TOTAL 196,955,403 169,856,037 Aggregate amount of investments in unquoted mutual funds Cost 196,955,403 169,856,037 Current value (NAV) 203,707,515 185,046,307

14 Trade receivables (unsecured, considered good)

AS AT MARCH 31, 2014 AS AT MARCH 31, 2014

` `

Outstanding for a period less than six months from the date they are due for payment 14,313,704 18,601,773TOTAL 14,313,704 18,601,773

15 Cash and bank balancesAS AT MARCH 31, 2014 AS AT MARCH 31, 2014

` `

Balances with banks: in current accounts 1,186,313 3,438,878 TOTAL 1,186,313 3,438,878

16 Other current assets (unsecured, considered good)

AS AT MARCH 31, 2014 AS AT MARCH 31, 2014

` `

Other receivables – 2,493,031 Less: Provision for doubtful receivables – (1,252,913)TOTAL – 1,240,118

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I D F C I N V E S T M E N T A D V I S O R S L I M I T E D | 1 9 1

Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

17 Revenue from operationsYEAR ENDED

MARCH 31, 2014YEAR ENDED

MARCH 31, 2013` `

Portfolio management fees 181,219,013 182,302,132 Performance fees 6,375,756 4,280,194 Upfront fees 436,827 1,172,501 Advisory fees 8,230,698 10,175,705 TOTAL 196,262,294 197,930,532

18 Other incomeYEAR ENDED

MARCH 31, 2014YEAR ENDED

MARCH 31, 2013` `

Dividend Income from current investments – 211,466 Gain on sale of current investments 18,383,644 4,039,309 Miscellaneous Income 218,558 135,466 Write backs 2,350,000 5,158,792 TOTAL 20,952,202 9,545,033

19 Employee benefits expenseYEAR ENDED

MARCH 31, 2014YEAR ENDED

MARCH 31, 2013` `

Salaries and bonus 35,949,587 49,245,186 Gratuity 2,099,090 1,567,439 Contribution to provident and other funds 1,449,992 1,488,431 Staff welfare expenses 791,090 1,075,031 TOTAL 40,289,759 53,376,087

20 Other expensesYEAR ENDED

MARCH 31, 2014YEAR ENDED

MARCH 31, 2013` `

Rent 3,000 2,916 Rates & taxes 2,500 7,827 Repairs and maintenance Equipments 29,031 34,394 Others 122,881 253,758 Insurance charges 2,154 4,934 Brokerage expenses 35,735,943 33,488,026 Travelling and conveyance 730,851 1,034,313 Printing and stationery 287,510 824,107 Communication costs 814,210 994,406 Advertising and publicity 36,514 365,369 Professional fees 3,327,482 2,842,419 Data storage & retrieval charges 65,791 63,000 Loss on foreign exchange fluctuation 235,814 29,302 Computer software expenses 952,206 932,338 Membership and subscription 5,670,069 4,979,221 Auditors' remuneration (refer Note (a) below) 577,657 380,370 Business centre expenses 2,676,000 2,676,000 Loss on sale of fixed assets 82,640 – Provision for doubtful loans – 1,252,913 Miscellaneous expenses 155,993 847,489

51,508,246 51,013,100

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

(a) Break up of auditors’ remuneration:

YEAR ENDED MARCH 31, 2014

YEAR ENDED MARCH 31, 2013

` `

Audit fee 300,000 250,000 Tax audit fee 120,000 75,000 Other services 145,000 45,000 Out of pocket expenses 12,657 10,370 TOTAL 577,657 380,370

21 The basic and diluted earnings per share has been calculated based on the following:YEAR ENDED

MARCH 31, 2014YEAR ENDED

MARCH 31, 2013

` `

Net profit after tax 87,454,436 60,015,964 Weighted average number of equity shares (Nos.) 10,000,000 10,000,000 Basic / diluted earnings per share 8.75 6.00

22 Earnings in foreign currencies (on accrual basis)

YEAR ENDED MARCH 31, 2014

YEAR ENDED MARCH 31, 2013

` `

Advisory Fees - ING Asset Management (Mauritius) Limited 206,451 2,962,565Advisory Fees - Absolute Asia Asset Management Limited 6,408,467 1,121,482

23 Related party disclosuresNames of the related parties where control exists irrespective of whether transactions have been occurred or not:

I. Ultimate Holding Company IDFC Limited

II. Holding Company IDFC Asset Management Company Limited

III. Fellow Subsidiaries IDFC Investment Managers (Mauritius) Limited

The nature and volume of transactions carried out with the above related parties in the ordinary course of business are as follows:

NAME OF RELATED PARTY AND NATURE OF RELATIONSHIP TRANSACTIONS DURING THE YEAR MARCH 31, 2014 MARCH 31, 2013

` `

I. Ultimate Holding Company IDFC Limited Bonus in lieu of ESOP (743,820) 23,166

Reimbursement of expenses 936,669 952,546 Management fees income 6,323,746 6,793,622 Advisory fees 1,577,543 2,005,298

II. Holding Company IDFC Asset Management Company Limited Recovery of expenses – 26,838

Deputation charges recovered 2,933,509 2,154,286 Reimbursement of expenses 3,255,792 3,075,723 Business centre expenses Paid 2,676,000 2,676,000 Dividend Paid 50,000,000 –

III. Fellow Subsidiaries IDFC Investment Managers (Mauritius) Limited Management Fees Income – 1,964,042

Balance outstanding – –

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I D F C I N V E S T M E N T A D V I S O R S L I M I T E D | 1 9 3

Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

24 In accordance with Accounting Standard 19 on 'Leases' as notified by the Companies (Accounting Standards) Rules, 2006, the following disclosures in respect of operating leases are made:The Company has taken vehicles for two employees under cancellable operating leases which expire between March 2013 and March 2016. Salaries include gross rental expenses of ` 681,146 (Previous Year ` 724,387). The committed lease rentals in the future are:NAME OF THE LESSOR MARCH 31, 2014 MARCH 31, 2013

` `

Not later than one year 350,046 711,240 Later than one year and not later than five years 350,046 1,061,280

25 In accordance with Accounting Standard 15 on 'Employee Benefits' as notified by the Companies (Accounting Standards) Rules, 2006 the following disclosures have been made:i. The Company has recognised the following amounts in the statement of profit and loss towards contribution to defined contribution plans

which are included under contribution to provident and other funds:

MARCH 31, 2014 MARCH 31, 2013

` `

Provident fund 1,300,787 1,260,647Superannuation fund 47,691 47,691 Pension fund 101,514 180,093

ii. The details of the Company's post - retirement gratuity benefit plans for its employees are given below which are certified by the actuary and relied upon by the auditors:

MARCH 31, 2014 MARCH 31, 2013

` `

CHANGE IN THE DEFINED BENEFIT OBLIGATIONS:

Liability at the beginning of the year 4,588,649 3,021,210

Current service cost 859,601 728,091

Interest cost 409,140 296,316

Liabilities extinguished on settlement – –

Liabilities assumed on acquisition / (settled on divestiture) (767,309) –

Benefits paid (1,896,850) –

Actuarial loss / (gain) 1,856,463 543,032

Past Service Cost – –

Closing defined benefit obligation 5,049,694 4,588,649

Unrecognised Past Service Cost – –

Liability at the end of the year 5,049,694 4,588,649

FAIR VALUE OF PLAN ASSETS:

Fair value of plan assets at the beginning of the year 4,588,649 –

Expected return on plan assets 375,082 –

Contributions 175,502 4,588,649

Benefits paid (1,896,850) –

Actuarial (loss) / gain on plan assets (116,277) –

Fair value of plan assets at the end of the year 3,126,106 4,588,649

Total actuarial loss / (gain) to be recognised 1,972,740 –

ACTUAL RETURN ON PLAN ASSETS:

Expected return on plan assets 375,082 –

Actuarial (loss) / gain on plan assets (116,277) 543,032

Actual return on plan assets 258,805 –

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

MARCH 31, 2014 MARCH 31, 2013

` `

AMOUNT RECOGNISED IN BALANCE SHEET:

Liability at the end of the Year 5,049,694 –

Fair Value of Plan Assets at the end of the Year 3,126,106 4,588,649

Amount recognised in Balance Sheet under "Provision for Gratuity" 1,923,588 –

EXPENSE RECOGNISED IN THE STATEMENT OF PROFIT AND LOSS:

Current service cost 859,604 728,091

Interest on Defined Benefit Obligation 409,140 296,316

Expected return on plan assets (375,082) –

Net actuarial loss / (gain) to be recognised 1,972,740 543,032

Past Service Cost – –

Loss / (Gains) on Acquisition / Divestiture (767,309) –

Liabilities assumed on acquisition / (settled on divestiture) – –

Expense recognised in the statement of profit and loss under employee benefit expense 2,099,093 1,567,439

RECONCILIATION OF THE LIABILITY RECOGNISED IN THE BALANCE SHEET:

Opening net liability – –

Expense recognised 2,099,093 1,567,439

Contribution by the Company (175,502) (4,588,649)

Amount recognised in the balance sheet under "Provision for employee benefits" 1,923,591 –

Expected employer's contribution next year 800,000 800,000

Experience adjustments:MARCH 31, 2014 MARCH 31, 2013 MARCH 31, 2012

` ` `

Defined benefit obligation 5,049,694 4,588,649 3,021,210

Plan assets 3,126,106 4,588,649 –

Surplus / (deficit) (1,923,588) – (3,021,210)

Experience adjustments on plan liabilities 2,214,933 388,041 (614,013)

Experience adjustments on plan assets (116,277) – –

Principal Assumptions:MARCH 31, 2014 MARCH 31, 2013

` `

Discount Rate 8.95% 8.05%

Expected Rate of Return on Assets 8.00% 8.00%

Salary Escalation Rate 8.00% 8.00%

26 Segment InformationThe Company is engaged in the business of providing investment advisory services. During the year, the Company was engaged in only one business segment and no geographical segments. As such, there are no separate reportable segments as per Accounting Standards 17 on ‘Segment Reporting’ as notified by the Companies (Accounting Standards) Rules 2006.

27 As per information available with the Company, there are no micro, small or medium enterprises as defined in 'The Micro, Small and Medium Enterprises Development Act, 2006', to whom the Company owes dues on account of principal amount together with interest and accordingly no additional disclosures have been made. The above information regarding micro, small and medium enterprises have been determined to the extent such parties have been identified on the basis of information available with the Company and relied upon by auditor.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

28 Contingent Liability not provided for in respect of:MARCH 31, 2014 MARCH 31, 2013

` `

Income-tax department has preferred an appeal with High Court in FY14 pertaining to AY 2008-09 as ITAT passed an order in favour of the Company.

4,458,623 4,458,623

29 The Company has a comprehensive system of maintenance of information and documents required by transfer pricing legislation under Section 92-92F of the Income Tax Act, 1961. Management is of the opinion that all international transactions are at arm's length so that the above registration will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxes.

30 Estimated amount of contracts remaining to be executed and not provided for Nil (Previous Year ` 199,701).

31 The figures for the previous year have been regrouped wherever necessary, in order to make them comparable to current period.

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BOARD OF DIRECTORS n Mr. Riad Muhammad Aubdool n Mr. Mahmood Bashir Nabeebokus

AUDITORS n Ernst & Young (Mauritius)

PRINCIPAL BANKER n Deutsche Bank (Mauritius) Limited

SECRETARY & ADMINISTRATOR n Cim Fund Services Ltd. 33, Edith Cavell Street Port Louis, Mauritius

REGISTERED OFFICEC/o. Cim Fund Services Ltd. 33, Edith Cavell Street Port Louis, Mauritius

12 IDFC INVESTMENT MANAGERS (MAURITIUS) LIMITED

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I D F C I N V E S T M E N T M A N A G E R S ( M A U R I T I U S ) L I M I T E D | 1 9 7

GENERAL INFORMATIONIDFC Investment Managers (Mauritius) Ltd. ("the Company”) was incorporated on September 13, 2010 as a private company limited by shares and holds a Category 1 Global Business Licence Company issued by the Financial Services Commission. The Company is licenced to operate as a CIS Manager pursuant to Section 98 of the Securities Act, 2005 and the Financial Services (Consolidated Licensing and Fees) Rules, 2008.The Company was formerly providing investment management services to India Infrastructure Opportunities Fund Limited and The India Hybrid Infrastructure Fund Limited, funds incorporated in Mauritius. However, both funds have entered into liquidation and the Company is currently not providing investment management services to any entity.The Company holds standards of corporate governance through awareness of business ethics and supervision of its management team by the Board of directors. The main objects and functions of the Board as regards Corporate Governance are to:

n determine, agree and develop the Company’s general policy on corporate governance in accordance with the applicable Code of Corporate Governance;

n select candidates for eventual Board appointments; and n review the terms and conditions of all service agreements between the Company and service providers.

The Board is satisfied that it has discharged its responsibilities for the year in respect of Corporate Governance.

THE BOARD OF DIRECTORSThe directors have been selected based on their professional background and expertise to positively contribute to the Board’s activities. The Board is currently made up of two resident directors.

DIRECTORSResidentMr. Riad AubdoolMr. Bashir Nabeebokus The Board is responsible for directing the affairs of the Company in the best interests of shareholders, in conformity with legal and regulatory framework, and consistent with its constitution and best governance practices.

THE DIRECTORS’ PROFILE

Mr. Riad Muhammad AubdoolMr. Riad Aubdool is a Fellow of the Association of Chartered Certified Accountants. He is also registered with the Mauritius Institute of Professional Accountants as both a professional and a public accountant and a member of the Mauritius Institute of Directors since June 2010. Riad has over 19 years of professional experience in fund / company set up, structuring and administration, secretarial, accounting, international tax planning, legal and tax compliance, auditing and consulting. Prior to joining the Cim Group, Riad has spent 9 years with Pricewaterhouse Coopers, when he left as audit Manager.He acts as a director for several client companies of Cim Fund Services Ltd., including Collective Investment Schemes, both listed and unlisted. He is a director in the following listed entities:

n Threadneedle India Fund Limited (Irish Stock Exchange) n Global Investment Opportunities Fund Limited (Stock Exchange of Mauritius) n Kotak Investment Opportunities Fund Limited (Stock Exchange of Mauritius)

Mr. Mahmood Bashir NabeebokusMr. Bashir Nabeebokus is a Fellow of the Association of Chartered Certified Accountants - UK and hold a B.Sc (Hons) Economics from the University of Mauritius. He is also a member of the Mauritius Institute of Professional Accountants, and Mauritius Institute of Directors, as well as former Panel Member of ACCA Mauritius office. Bashir has been in the global business sector for over 13 years with an enriched exposure in fund/company set up, structuring and administration, company secretarial, accounting, international tax planning, compliance and customer due diligence checks along with a strong client and people relationship management skills among others. He also holds directorship in several client companies including investment managers / advisors and collective investment schemes. Bashir spent the last 9 years with International Financial Services Limited prior to joining the Cim Group as Senior Manager in July 2009.

CONSTITUTIONThe Constitution of the Company was adopted on August 19, 2010.

Corporate Governance Report

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BOARD MEETINGS The Board has at least one scheduled meeting each year during which it:1. examines all statutory matters; 2. approves the audited financial statements and reviews important accounting issues;3. reviews the Company’s performance;4. ensures compliance of the Company with the legislations; and5. takes note of changes in the legislations which may affect the Company.In addition, the Board meets whenever necessary to discuss urgent business.The Board papers are usually sent to the directors one week in advance, except where urgent meetings are convened.The Board promotes, encourages and expects open and frank discussions at meetings. Board meetings provide a forum for challenging and constructive debate.

BOARD COMMITTEESThe Board of Directors collectively considers the measures in respect of the Code of Corporate Governance issues. Due to the size of the Board, no sub-committees (Audit Committees, The Corporate Governance Committee, Board Risk Committee, Remuneration Committee and the Nomination Committee) have been established.

STATEMENT OF REMUNERATION POLICY The Director fee is USD 4,000 per annum per officer of the Administrator serving as Director.

IDENTIFICATION OF KEY RISKS FOR THE COMPANYThe Board is ultimately responsible for the Company’s system of internal control and for reviewing its effectiveness. The Board confirms that there is an ongoing process for identifying, evaluating and managing the various risks faced by the Company.

FINANCIAL RISK FACTORSThe financial risk factors have been set out in note 14 of these financial statements.

RELATED PARTY TRANSACTIONSThe related party transactions have been set out in note 13 of these financial statements.

CODE OF ETHICS, HEALTH AND SAFETY AND SOCIAL ISSUESThese issues are not applicable to the Company given the nature of activities of the Company and the fact that the Company has no employees. The Company is managed under service agreements with third parties detailed in the Corporate Data section.

ENVIRONMENTDue to the nature of its activities, the Company has no adverse impact on the environment.

CORPORATE SOCIAL RESPONSIBILITY AND DONATIONSDuring the year, the Company has not made any donations.

NATURE OF BUSINESSThe principal activity of the Company is that of a CIS Manager.

AUDITORS’ REPORT AND FINANCIAL STATEMENTSThe Auditors’ Report is set out on pages 8 and 9 (Page 201 of this Report) and the Statement of Comprehensive Income is set out on page 11 (Page 203 of this Report) of this financial statements.

AUDIT FEESAudit fees payable to Ernst & Young (Mauritius) for the year amounted to USD 4,500 (excluding VAT and any disbursements).

APPRECIATIONThe Board expresses its appreciation and gratitude to all those involved for their contribution during the year.

Corporate Governance Report

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I D F C I N V E S T M E N T M A N A G E R S ( M A U R I T I U S ) L I M I T E D | 1 9 9

The directors present their commentary, together with the audited financial statements of IDFC Investment Managers (Mauritius) Ltd. for the year ended March 31, 2014.

STATUS AND PRINCIPAL ACTIVITYIDFC Investment Managers (Mauritius) Ltd. ("the Company”) was incorporated on September 13, 2010 in the Republic of Mauritius and obtained its Category 1 Global Business License on September 14, 2010.The principal activity of the Company is to provide investment management services to India Infrastructure Opportunities Fund Limited and The India Hybrid Infrastructure Fund Limited, funds incorporated in Mauritius. However, both entities have entered into liquidation and hence, the Company is not currently providing investment management services to any entity.

RESULTS The Company’s loss for the year under review is USD 126,614 (2013: loss of USD 54,385).The directors do not recommend the payment of a dividend for the year under review.

DIRECTORS' RESPONSIBILITY IN RESPECT OF THE FINANCIAL STATEMENTSThe Company’s directors are responsible for the preparation and fair presentation of the financial statements, comprising the Company’s statement of financial position at March 31, 2014, and the statement of comprehensive income, the 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 in compliance with the requirements of the Companies Act, 2001.The directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and in compliance with the requirements of the Companies Act, 2001, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error and applying appropriate accounting policies; and making account estimates that are reasonable in the circumstances.The directors have made an assessment of the Company’s ability to continue as a going concern and have no reason to believe the business will not be a going concern in the year ahead as detailed out under note 6 of these financial statements.

AUDITORSThe auditors, Ernst & Young, have indicated their willingness to continue in office.

Commentary of Directors

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We, Cim Fund Services Ltd., certify, to the best of our knowledge and belief, that we have filed with the Registrar of Companies all such returns as are required for IDFC Investment Managers (Mauritius) Ltd. under the Companies Act, 2001 for the financial year ended March 31, 2014.

FOR AND ON BEHALF OF CIM FUND SERVICES LTD.

SECRETARY

April 18, 2014

Secretary's Certificate Under Section 166 (D) of the Companies Act, 2001

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I D F C I N V E S T M E N T M A N A G E R S ( M A U R I T I U S ) L I M I T E D | 2 0 1

TO THE MEMBER OF IDFC INVESTMENT MANAGERS (MAURITIUS) LTD.

Report on the Financial StatementsWe have audited the financial statements of IDFC INVESTMENT MANAGERS (MAURITIUS) LTD. ("the Company") on pages 10 to 24 (Page 202 to 213 of this Report) which comprise the statement of financial position as at March 31, 2014 and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended and a summary of significant accounting policies and other explanatory notes.

Directors' Responsibility for the Financial StatementsThe directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and in compliance with the requirements of the Companies Act, 2001, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors' ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgement, 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 auditors consider 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 accounting estimates made by the directors, 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.

OpinionIn our opinion, the financial statements on page 10 to 24 (Page 202 to 213 of this Report) give a true and fair view of the financial position of the Company as at March 31, 2014 and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards and comply with the Companies Act, 2001.

Emphasis of MatterWithout qualifying our opinion, we draw attention to Note 6 in the financial statements, which indicates that the Company had a net loss for the year ended March 31, 2014 of USD 126,614, and as at date its total liabilities exceeded its total assets by USD 7,746. These conditions, along with other matters as set forth in note 6, indicate the existence of a material uncertainty which may cast significant doubt about the Company's ability to f);/ continue as a going concern.

Other matterThis report, including the opinion, has been prepared for and only for the Company's member in accordance with Section 205 of the Companies Act, 2001 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Report on Other Legal and Regulatory RequirementsCompanies Act, 2001We have no relationship with or interests in the Company other than in our capacity as auditors and dealings in the ordinary course of business.We have obtained all the information and explanations we have required.In our opinion, proper accounting records have been kept by the Company as far as it appears from our examination of those records.

ERNST & YOUNG ROGER DE CHAZAL, A.C.A.EBÈNE, MAURITIUS LICENSED BY FRC

April 22, 2014

Independent Auditors' Report

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2014 2013

NOTES USD USD

ASSETS

Current assetsOther receivables 7 – 80,576Prepayments 7 3,948 5,752Cash at bank 8 1,481 41,944TOTAL ASSETS 5,429 128,272

EQUITY AND LIABILITIES

Equity and reservesStated capital 9 57,290 57,290(Accumulated losses) / retained earnings (65,036) 61,578Shareholder’s funds / (deficit) (7,746) 118,868Current liabilities Accrued expenses 10 13,175 9,404TOTAL EQUITY AND LIABILITIES 5,429 128,272

These financial statements have been approved and authorised for issue by the Board of Directors on April 18, 2014 and signed on its behalf by:

NAME OF DIRECTORS

RIAD AUBDOOL BASHIR NABEEBOKUS

Director Director

The notes on pages 14 to 24 (Page 206 to 213 of this Report) form an integral part of these financial statements.Independent Auditors' report on pages 8 and 9 (Page 201 of this Report).

Statement of Financial Position AS AT MARCH 31, 2014

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The notes on pages 14 to 24 (Page 206 to 213 of this Report) form an integral part of these financial statements.Independent Auditors' report on pages 8 and 9 (Page 201 of this Report).

NOTES

2014 2013

USD USD

INCOME

Management fees 11(i)&13(a) – 42,830Realised gain on foreign exchange – 212TOTAL INCOME – 43,042

EXPENSES

Loan written-off 13(c) 94,959 29,157Professional fees 12,047 11,162Audit fees 5,577 5,270Administration fees 5,000 5,000Insurance cover 4,516 5,595Licence and annual registration fees 4,060 3,765Bank charges 360 752Disbursement 95 165Advisory fees 11(ii)&13(d) – 36,561TOTAL EXPENSES 126,614 97,427Operating loss for the year (126,614) (54,385)

Income tax expenses 12 – –LOSS FOR THE YEAR (126,614) (54,385)Other comprehensive income – –TOTAL COMPREHENSIVE LOSS FOR THE YEAR, NET OF TAX (126,614) (54,385)

Statement of Comprehensive Income FOR THE YEAR ENDED MARCH 31, 2014

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The notes on pages 14 to 24 (Page 206 to 213 of this Report) form an integral part of these financial statements.Independent Auditors' report on pages 8 and 9 (Page 201 of this Report).

STATED CAPITAL(ACCUMULATED LOSSES) /

RETAINED EARNINGS TOTAL

USD USD USD

At April 01, 2012 57,290 115,963 173,253Loss for the year – (54,385) (54,385)Other comprehensive income for the year – – –

AT MARCH 31, 2013 57,290 61,578 118,868Loss for the year – (126,614) (126,614)Other comprehensive income for the year – – –TOTAL COMPREHENSIVE LOSS FOR THE YEAR – (126,614) (126,614)

AT MARCH 31, 2014 57,290 (65,036) (7,746)

Statement of Change in Equity FOR THE YEAR ENDED MARCH 31, 2014

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The notes on pages 14 to 24 (Page 206 to 213 of this Report) form an integral part of these financial statements.Independent Auditors' report on pages 8 and 9 (Page 201 of this Report).

2014 2013

USD USD

OPERATING ACTIVITIES

Loss before tax (126,614) (54,385)Adjustment to reconcile loss before tax to net cash flows:Loan written off 94,959 29,157Working capital adjustments:Increase in other receivables and prepaid expenses (12,579) (50,907)Increase / (Decrease) in accrued expenses 3,771 (9,903)NET CASH FLOWS USED IN OPERATING ACTIVITIES (40,463) (86,038)Net (decrease) / increase in cash and cash equivalents (40,463) (86,038)Cash and cash equivalents as at 01 April 41,944 127,982CASH AND CASH EQUIVALENTS AT 31 MARCH 1,481 41,944

Statement of Cash Flows FOR THE YEAR ENDED MARCH 31, 2014

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

01 Corporate informationIDFC Investment Managers (Mauritius) Ltd. ("the Company”) is a private company limited by shares, incorporated in the Republic of Mauritius on the September 13, 2010, with registered address C/o. Cim Fund Services Ltd., 33, Edith Cavell Street, Port Louis, Mauritius. The Company holds a Category 1 Global Business Licence and is regulated by the Financial Services Commission ("FSC"). The principal activity of the Company is to provide investment management services to India Infrastructure Opportunities Fund Limited and The India Hybrid Infrastructure Fund limited, funds incorporated in Mauritius.However, both funds have entered into liquidation, and the Company is not providing investment management services to any entity during the year.

02 Basis of preparation The financial statements of the Company are prepared under the historical cost convention.

2.1 Statement of ComplianceThe financial statements are prepared in accordance with and comply with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

03 Summary of significant accounting policiesThe principal accounting policies applied in the preparation of these financial statements are set out below.

Foreign currency transactionsFunctional and presentation currency The Company’s functional currency is the USD, which is the currency of the primary economic environment in which it operates. The Company’s performance is evaluated and its liquidity is managed in USD. Therefore, the USD is considered as the currency that most faithfully represents the economic effects of the underlying transactions, events and conditions. The Company’s presentation currency is also in USD.

Transactions and balances Foreign currency transactions are accounted for at the exchange rates prevailing at the date of the transactions. Monetary assets and liabilities are translated at the spot rate of exchange ruling at the reporting date. Gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rate at the date when the fair value was determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition gain or loss on change in fair value of the item (i.e. translation differences are recognised in other comprehensive income or profit or loss).

Financial assets Initial recognition and measurementFinancial assets within the scope of IAS 39 are classified as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, available-for-sale financial assets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Company determines the classification of its financial assets at initial recognition.Financial assets are recognised initially at fair value plus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs.The Company’s financial assets include cash at bank and other receivables.

Subsequent measurement

Loans and receivablesLoans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate method ("EIR"), less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation and the losses arising from impairment are recognised in profit or loss.

Impairment of financial assetsAt each reporting date, the Company reviews the carrying amounts of its assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount which is the higher of an asset’s net realisable price and value in use, that is the present value of estimated future cash flows expected to arise from continuing to use the assets and from its disposals at the end of its useful life.An impairment loss is recognised as an expense in profit or loss immediately, unless the asset is carried at revalued amount in which case the impairment loss is recognised against the revaluation or fair value reserve for the assets to the extent that the impairment loss does not exceed the amount held in the revaluation or fair value reserve for that same asset. Any excess is recognised immediately in profit or loss.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

Financial liabilities

Initial recognition and measurementFinancial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through profit or loss, loans and borrowings, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Company determines the classification of its financial liabilities at initial recognition.All financial liabilities are recognised initially at fair value and in the case of loans and borrowings, net of directly attributable transaction costs.The Company’s financial liabilities include accrued expenses only.

Subsequent measurementThe measurement of financial liabilities depends on their classification as follows:

Loans and borrowingsAfter initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in profit or loss.

Derecognition of financial instruments

Financial assetsA financial asset (or, where applicable a part of a financial asset or part of a company of similar financial assets) is derecognised when:

n the rights to receive cash flows from the asset have expired; or n the Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows

in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Company has transferred its right to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Company‘s continuing involvement in the asset.

Financial liabilitiesA financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability is substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in profit or loss.

Stated capital Ordinary shares are classified as equity, net of costs directly related to the issue of the shares.

Provision A provision is recognised when and only when there is a present obligation (legal or constructive) as a result of a past event, and it is probable that an outflow embodying economic benefits will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate.

Revenue recognitionRevenue 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, regardless of when payment is being made. Revenue is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, and sales taxes or duty. Management fees are accounted for on an accrual basis.

Related parties Parties are considered to be related to the Company if they have the ability, directly or indirectly, to control the Company or exercise significant influence over the Company in making financial and operating decisions, or vice versa, or where the Company is subject to common control or common significant influence. Related parties may be individuals or other entities.

ExpensesExpenses are accounted for on an accrual basis.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

Taxation

Current income taxCurrent income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date in the countries where the Company operates and generates taxable income.

Deferred taxationDeferred tax is provided, using the liability method, for all temporary differences arising between the tax bases of assets and liabilities and their carrying values for financial reporting purposes. Currently enacted tax rates are used to determine deferred tax.The principal temporary differences arise from provisions for bad debts and unrealised exchange differences. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

04 Changes in accounting policies and disclosuresNew and amended standards and interpretationsThe accounting policies adopted are consistent with those of the previous financial year except for the following new and amended IFRS and IFRIC interpretations adopted in the year commencing, April 2013:

EFFECTIVE FOR ACCOUNTING PERIOD BEGINNING ON OR AFTER

New or Revised StandardsIFRS 10 Consolidated Financial Statements 01 January 2013IFRS 11 Joint Arrangements 01 January 2013IFRS 12 Disclosure of Interests in Other Entities 01 January 2013IFRS 13 Fair Value Measurement 01 January 2013IAS 19 Employee Benefits 01 January 2013IAS 27 Separate Financial Statements (2011) 01 January 2013IAS 28 Investments in Associates and Joint Ventures (2011) 01 January 2013The new or revised standards have not impacted on the Company’s financial position or performance.

AmendmentsPresentation of Items of Other Comprehensive Income (Amendments to IAS 1) 01 July 2013Disclosures — Offsetting Financial Assets and Financial Liabilities (Amendments to IFRS 7) 01 January 2013Government Loans (Amendments to IFRS 1) 01 January 2013Annual Improvements 2009-2011 Cycle 01 January 2013Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance 01 January 2013

InterpretationsIFRIC 20 Stripping Costs in the Production Phase of a Surface Mine 01 January 2013

Amendments to IAS 1 - Presentation of Items of Other Comprehensive IncomeThis standard amends IAS 1 Presentation of Financial Statements to revise the way other comprehensive income ("OCI") is presented.The amendments:

n Preserve the amendments made to IAS 1 in 2007 to require profit or loss and OCI to be presented together, i.e. either as a single 'statement of profit or loss and comprehensive income', or a separate 'statement of profit or loss' and a 'statement of comprehensive income' – rather than requiring a single continuous statement as was proposed in the exposure draft;

n Require entities to group items presented in OCI based on whether they are potentially reclassifiable to profit or loss subsequently. i.e. those that might be reclassified and those that will not be reclassified;

n Require tax associated with items presented before tax to be shown separately for each of the two groups of OCI items (without changing the option to present items of OCI either before tax or net of tax).

The above amendment has been applied where required by the Company.

Amendments to IFRS 7 - Disclosures - Offsetting Financial Assets and Financial LiabilitiesThis standard amends the disclosure requirements in IFRS 7 Financial Instruments: Disclosures to require information about all recognized financial instruments that are set off in accordance with paragraph 42 of IAS 32 Financial Instruments: Presentation.The amendments also require disclosure of information about recognised financial instruments subject to enforceable master netting arrangements and similar agreements even if they are not set off under IAS 32. The IASB believes that these disclosures will allow financial statement users to

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

evaluate the effect or potential effect of netting arrangements, including rights of set-off associated with an entity's recognised financial assets and recognised financial liabilities, on the entity's financial position. The amendment had no impact on the Company’s financial statements.

Annual Improvements 2009-2011 CycleThe following are annual improvements to existing standards:

n IFRS 1 - Permits the repeated application of IFRS 1, borrowing costs on certain qualifying assets; n IAS 1 - Clarifies the requirements for comparative information; n IAS 32 - Clarifies that tax effect of a distribution to holders of equity instruments should be accounted for in accordance with IAS 12

Income Taxes; and n IAS 34 - Clarify interim reporting of segment information for total assets in order to enhance consistency with the requirements in IFRS 8

Operating Segments.The amendments described above did not have any impact on the Company’s financial position. However necessary disclosures were made to take into consideration these changes in the standards.

05 Standards, interpretations and amendments issued but not yet effectiveThe following standards, amendments to existing standards and interpretations were in issue but not yet effective. They are mandatory for accounting periods beginning on the specified dates, but the Company has not early adopted them:

EFFECTIVE FOR ACCOUNTING PERIOD BEGINNING ON OR AFTER

- IFRS 9 Financial Instruments – Classification and measurement of financial assets, Accounting for financial liabilities and derecognition No stated effective date- IAS 32 Financial Instruments: Presentation – Offsetting Financial Assets and Financial Liabilities 01 January 2014- Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27) 01 January 2014- Recoverable Amount Disclosures for Non-Financial Assets (Amendments to IAS 36) 01 January 2014- Novation of Derivatives and Continuation of Hedge Accounting (Amendments to IAS 39) 01 January 2014- Defined Benefit Plans: Employee Contributions (Amendments to IAS 19) 01 July 2014- Annual Improvements 2010-2012 Cycle 01 July 2014- IFRS 14 Regulatory Deferral Account 01 January 2014- Annual Improvements 2011-2013 Cycle 01 July 2014- IFRIC 21 Levies 01 January 2014

06 Significant accounting judgements, estimates and assumptionsThe preparation of the Company’s financial statements requires management to make judgements, estimates and assumptions that affect the amounts recognised in the financial statements. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in future periods.

JudgementsGoing concernThe Company has provided investment management services to India Infrastructure Opportunities Fund Limited ("IIOFL") since March 14, 2011 and The India Hybrid Infrastructure Fund ("TIHIF") since February 8, 2011. Both funds have been wound up in 2014.As a result, the Company incurred a net loss for the year ended March 31, 2014 of USD 126,614 (2013: USD 54,385) and, as at that date its total liabilities exceeded its total assets by USD 7,746. The Company continues to incur losses subsequent to March 2014.The Group has been engaged in exhaustive due diligence with potential investors to set up fund vehicles in Mauritius for mirroring onshore equity and debt strategies and the ongoing flavour of the season product – Fixed Maturity Plans ("FMP").The Group is in the final stages of discussions with sovereign wealth funds for equity advisory business for which IDFC Investment Managers (Mauritius) Ltd. will act as the Investment Manager. The Group is targeting a minimum investment amount of USD 20 million and above. Negotiations are currently in progress.The holding company, IDFC Asset Management Company, has also given financial support to the IDFC Investment Managers (Mauritius) Ltd. to enable it to continue its operations and to pay its obligations as they become due for a period of one year. IDFC Asset Management Company Limited, which has sufficient resources to enable it to continue its operations and to pay its obligations as they become due in the foreseeable future.Consequently, the directors are confident that the Company will have sufficient funds to meet its day to day expenses in the next twelve months.These conditions give rise to a material uncertainty which may cast significant doubt about the Company‘s ability to continue as a going concern and, therefore that it may be unable to realise its assets and discharge its liabilities in the normal course of business.The financial statements are prepared on the basis of accounting policies applicable to a going concern. This basis presumes that the Company will continue to receive the support of its holding company and that the realisation of assets and settlement of liabilities will occur in the ordinary course of business.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

Determination of functional currencyThe determination of the functional currency of the Company is important since recording of transactions and exchange differences arising there from are dependent on the functional currency selected. As described in note 3, the directors have considered those factors described therein and have determined that the functional currency of the Company in the USD.

07 Other receivables and prepayments2014 2013

USD USD

Amount receivable from related companies (note 13) – 80,576PREPAID EXPENSES:

Professional Indemnity Cover 2,778 3,750Activity licence fees 500 500Annual registration fees 233 232Financial Services Commission licence fees 437 438Tax paid in excess (note 12) – 832

3,948 86,328

08 Cash at bank2014 2013

USD USD

Cash at bank 1,481 41,944

09 Stated capital2014 2013

USD USD

57,290 ordinary shares at USD 1 each 57,290 57,290

10 Accrued expenses 2014 2013

USD USD

ACCRUED EXPENSES:

Director fees 4,000 2,000MLRO fees 1,500 1,554Administration fees 2,500 1,250Audit fees 5,175 4,600

13,175 9,404

11 Management and advisory fees(i) Management feesThe Company has not received any management fees during the year under review given that the funds to which investment management fees were being provided are under liquidation.

(ii) Advisory feesThe Company and IDFC Investment Advisors Limited ("Investment Advisor"), had agreed that, for the performance of the Investment Advisor's duties under the investment Advisory Agreement dated March 14, 2011, the Company would pay the Investment Advisor such advisory fees as shall be agreed between both parties from time to time and at such frequency as shall be agreed between the Company and the Investment Advisor.No advisory fees were paid to the Investment Advisor during the year (2013: USD 36,561).

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

12 TaxationThe Company has received a Tax Residence Certificate from the Mauritius Revenue Authority, which entitles it to certain reliefs pursuant to the treaties concluded between countries for the avoidance of double taxation. The tax residence certification is renewable on an annual basis, subject to the tax residency conditions being satisfied. Gains from the sale of units and securities are exempted from Mauritius tax and any dividends paid by the Company to its shareholders are exempt in Mauritius from any withholding tax.The Company is subject to income tax in Mauritius at the rate of 15% (2013: 15%). It is, however, entitled to a tax credit equivalent to the higher of the foreign tax or 80% (2013: 80%) of the Mauritian tax on its foreign source income.The Company had tax losses of USD 56,883 for the year ended March 31, 2014 (2013: tax losses of USD 25,228).At March 31, 2014, the Company does not have a tax liability (2013: NIL).A numerical reconciliation between accounting (loss) / profit and tax charge is shown below:

(a) Statement of comprehensive income:

2014 2013

USD USD

Loss for the year (126,614) (54,385)Add: Loan waived 94,959 29,157Adjusted loss/income (31,655) (25,228)Chargeable income – –Tax at 15% (4,748) (3,784)Less: Foreign tax credit – –Deferred tax not recognised 4,748 3,784INCOME TAX EXPENSE – –

(b) Statement of financial position:

2014 2013

USD USD

At 01 April (832) (832)Refund received from the MRA 832 –AT 31 MARCH – (832)

13 Related party disclosuresThe Company had the following related party transaction during the year.

(a) India Infrastructure Opportunities Fund Ltd. (“IIOF”)

NAME OF RELATED COMPANY NATURE OF TRANSACTIONS RELATIONSHIP 2014 2013

MANAGEMENT FEES INVESTMENT MANAGER USD USD

Management fees during the year – 42,830Management fees paid during the year – (42,830)

– –

(b) India Infrastructure Opportunities Fund Ltd. (“IIOF”)

NAME OF RELATED COMPANY NATURE OF TRANSACTIONS RELATIONSHIP 2014 2013

EXPENSES PAID ON BEHALF IIOF INVESTMENT MANAGER USD USD

Additions during the year 5,065 –Receipt from IIOF (3,232) –Write-off (1,833) –AT 31 MARCH – –

The amount receivable from IIOF has been written off given that the latter is in the process of winding up.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

(c) The India Hybrid Infrastructure Fund Limited (“TIHIF”)

NAME OF RELATED COMPANY NATURE OF TRANSACTIONS RELATIONSHIP 2014 2013

EXPENSES PAID ON BEHALF OF THE TIHIF INVESTMENT MANAGER USD USD

At 01 April 80,576 47,876Additions during the year 8.670 32,700Write off (89,246) –AT 31 MARCH – 80,576

The amount receivable from TIHIF has been written off given that the latter is in the process of winding up.

(d) Hybrid India Listed Ltd. ("HIL")

NAME OF RELATED COMPANY NATURE OF TRANSACTIONS RELATIONSHIP 2014 2013

EXPENSES PAID ON BEHALF OF THE TIHIF SISTER COMPANY USD USD

At 01 April – 10,649Additions during the year 3,880 18,508Write off (3,880) (29,157)AT 31 MARCH – –

HIL has been wound up on August 28, 2013. Therefore, the Company has written off the amount receivable from HIL as it will not be recovered.

(e) IDFC Investment Advisors Limited (“IDFC IAL”)

NAME OF RELATED COMPANY NATURE OF TRANSACTIONS RELATIONSHIP 2014 2013

ADVISORY FEES INVESTMENT ADVISOR USD USD

At 01 April – 7,804Additions during the year – 36,561Payment during the year – (44,153)

Foreign exchange gain arising on settlement of INR invoices

– (212)

AT 31 MARCH – –

During the year, no professional services were rendered to the Company by IDFC IAL and hence no advisory fees have been paid.

14 Financial risk management objectives and policiesFair valuesThe carrying amounts of cash at bank, other receivables and accrued expenses approximate their fair values.

Financial risk factorsThe Company's activities expose it to a variety of financial risks such as market risk, credit risk, interest rate risk, foreign exchange risk, price risk and liquidity risk. The Company's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company's financial performance.

Market riskMarket risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Company‘s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

Interest rate riskThe Company's financial assets are non-interest bearing. As a result, the Company is not subject to significant amounts of risk due to fluctuations in the prevailing levels of market interest rates.

Foreign exchange riskThe Company has no exposure to currency risk as all its financial assets and liabilities are in USD.

Price riskEquity price risk is the risk that the fair values of equities decrease as a result of changes in the levels of the equity indices and the values of individual stocks. The Company is not exposed to price risk as the funds to whom management fees were received have been wound up.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

Credit riskThe Company takes on exposure to credit risk, which is the risk that a counterparty will be unable to pay amounts in full when due. Financial assets which potentially subject to the Company to concentrations of credit risk consist principally of bank balances. Cash at bank are held in reputable financial institutions. Accordingly, the Company has no significant concentration of credit risk. The maximum exposure to credit risk assisting from default of the counterpart, with a maximum exposure equal to the carrying amount of these instruments.

The maximum exposure to credit risk at the reporting date was:2014 2013

USD USD

Amount receivable from related companies – 80,576Cash and cash equivalents 1,481 41,944

1,481 122,520

Liquidity riskThe Company maintains and manages liquidity risk through the ability to close out market position. Residual and discounted contractual maturities of financial liabilities are presented below:

2014 ON DEMAND TOTAL

USD USD

Accrued expenses 13,175 13,175

2013 ON DEMAND TOTAL

USD USD

Accrued expenses 9,404 9,404

15 Capital risk managementAs per Regulation 38 of the Securities (Collective Investment Schemes and Closed-End Funds) Regulations 2008, a CIS Manager holding a licence issued by the Financial Services Commission is required to maintain a minimum stated unimpaired capital of at least Mauritian rupees 1 million or an equivalent amount.As at March 31, 2014, this requirement was not met. In order to remedy the situation, the shareholder of the Company, IDFC Asset Management Company Limited, had decided to inject USD 100,000. The investment was approved during the Board Meeting of the holding Company, IDFC Asset Management Company Limited on March 28, 2014. Approval from the Reserve Bank of India has not yet been obtained for the transfer of funds to the Company.

16 Holding and ultimate holding companyThe directors consider IDFC Asset Management Company Limited, a company incorporated in India, as the holding and ultimate holding company.

17 Events after reporting dateThere have been no material events after the reporting year which would require disclosure or adjustment to the March 31, 2014 financial statements apart from those disclosed in note 6 and the following:

n Pursuant to a Board Meeting of the holding company, IDFC Asset Management Company Limited, held on March 28, 2014, the injection of additional funds in the equity capital of the Company was approved. The funds would be utilised for the day to day operational expenses of the Company and to meet the minimum stated unimpaired capital requirement of at least Mauritian rupees 1 million (approximately USD 33,000).

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BOARD OF DIRECTORS n Mr. Sunil Kakar n Mr. Sadashiv S. Rao n Dr. Rajeev Uberoi

AUDITORS n Deloitte Haskins & Sells Chartered Accountants

PRINCIPAL BANKER n HDFC Bank Limited

REGISTERED OFFICENaman Chambers, C-32, G-BlockBandra-Kurla Complex, Bandra (East)Mumbai 400 051Tel: +91 22 4222 2000Fax: +91 22 2654 [email protected]: U45203MH2007PLC176640

13 IDFCPROJECTS LIMITED

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Directors' ReportTO THE MEMBERSYour Directors have pleasure in presenting the Seventh Annual Report together with the audited accounts for the year ended March 31, 2014.

PRINCIPAL ACTIVITIESYour Company’s principal activity is to design, develop, engineer, finance, construct, operate and maintain infrastructure projects.

FINANCIAL RESULTS

PARTICULARSFOR THE YEAR ENDED

MARCH 31, 2014FOR THE YEAR ENDED

MARCH 31, 2013

` `

Total Income 206,607 655,185Less: Total Expenses 2,347,858 226,806,201Profit / (Loss) before Tax (2,141,251) (226,151,016)Less: Provision for Tax – –Profit / (Loss) after Tax (2,141,251) (226,151,016)

DIVIDENDThe Directors do not recommend any dividend for the year ended March 31, 2014.

COMPANIES ACT, 2013Most of the provisions of the Companies Act, 2013 and the Rules notified by the Ministry of Corporate Affairs ("MCA") in this regard, have come into force with effect from April 1, 2014. MCA issued a General Circular no. 8/2014 dated April 4, 2014 which clarified that the Financial Statements, Auditors' Report and the Board’s Report in respect of the previous year ended March 31, 2014 will be in accordance with the Companies Act, 1956 and Rules made there under. Your Company shall comply with the provisions of the Companies Act, 2013, as applicable.

DIRECTORSMr. Sunil Kakar (DIN-03055561) would retire at the ensuing Annual General Meeting ("AGM") and being eligible, offers himself for reappointment. The Board recommends the reappointment of Mr. Sunil Kakar as a Director at the ensuing AGM.

AUDIT COMMITTEE The Audit Committee consists of three members, Mr. Sunil Kakar (DIN-03055561) as Chairman, Mr. Sadashiv S. Rao (DIN-01245772) and Dr. Rajeev Uberoi (DIN-01731829). The functions of the Committee include reviewing the half yearly and annual financial statements, internal control systems and significant accounting policies of the Company and discussing the audit findings and recommendations of the internal and statutory auditors of the Company.

AUDITORSM/s. Deloitte Haskins & Sells, Chartered Accountants, Ahmedabad (Registration No. 117365W) Statutory Auditors of the Company will retire at the conclusion of the ensuing AGM. The Board recommends the reappointment of M/s. Deloitte Haskins & Sells, Chartered Accountants, as the Statutory Auditors of the Company.

PUBLIC DEPOSITSDuring the year under review, your Company has not accepted public deposits.

PARTICULARS REGARDING CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTIONSince the Company does not own any manufacturing facility, the disclosure of information on other matters required to be disclosed in terms of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1998, are not applicable and hence not given.

FOREIGN EXCHANGE EARNINGS AND EXPENDITUREThere was no foreign exchange earnings and expenditure for the Company during the last financial year.

PARTICULARS OF EMPLOYEES AND REMUNERATIONThe Company had 1 employee as on March 31, 2014. As required by the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, names and other particulars of the employees are set out in the annexure to the Directors’ Report.

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Directors' ReportDIRECTORS’ RESPONSIBILITY STATEMENTThe Directors confirm that:

n in the preparation of the annual accounts, the applicable accounting standards have been followed; n 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 March 31, 2014 and the loss of the Company for the year ended on that date;

n they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

n they have prepared the annual accounts on a going concern basis.

ACKNOWLEDGEMENTS The Directors express their gratitude for the unstinted support and guidance received from IDFC Limited and other group companies.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS

SUNIL KAKAR SADASHIV S. RAO

Director Director

Mumbai, April 21, 2014

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TO THE MEMBERS OF IDFC PROJECTS LIMITED

Report on the Financial StatementsWe have audited the accompanying financial statements of IDFC PROJECTS LIMITED (“the Company”), which comprise the Balance Sheet as at March 31, 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 StatementsThe 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 September 13, 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’ ResponsibilityOur 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 the 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 the disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, 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 the internal controls 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 controls. 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.

OpinionIn 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 March 31, 2014;(b) in the case of the Statement of Profit and Loss, of the loss 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.

Emphasis of MatterWe draw attention to Note 25 to the financial statement which indicates that the accumulated losses of the Company are substantially in excess of its net worth. However, for the reasons indicated in the said note the accounts are prepared on a going concern basis. Our opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements1. 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.2. 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 September 13, 2013 of the Ministry of Corporate Affairs).

(e) On the basis of the written representations received from the directors as on March 31, 2014 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014 from being appointed as a director in terms of Section 274(1)(g) of the Act.

FOR DELOITTE HASKINS & SELLS

Chartered Accountants(Registration No. 117365W)

Z. F. BILLIMORIA

Partner(Membership No. 42791)

Mumbai, April 21, 2014

Independent Auditors' Report

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(Referred to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date)(i) Having regard to the nature of the Company’s business / activities / result, transactions etc. Clauses (i)(c), (ii), (vi), (viii), (xi), (xii), (xiii), (xiv),

(xvi), (xvii), (xviii), (xix), (xx) of CARO are not 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 explanations given to us, no material discrepancies were noticed on such verification.

(iii) The Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956.

(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. During the course of our audit, we have not observed any continuing failure to correct major weakness in such internal control system.

(v) To the best of our knowledge and belief and according to the information and explanations given to us, there were no contracts or arrangements required to be entered in the Register maintained under Section 301 of the Companies Act, 1956.

(vi) The Company has not carried out any internal audit during the year.(vii) 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, Income-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 Provident Fund, Income-tax, Service Tax, Cess and other material statutory

dues in arrears as at March 31, 2014 for a period of more than six months from the date they became payable. (c) Details of dues of Income-tax which have not been deposited as on March 31, 2014 on account of disputes are given below:

STATUTE NATURE OF DUES FORUM WHERE DISPUTE IS PENDING

PERIOD TO WHICH THE AMOUNT RELATES

AMOUNT INVOLVED (AMOUNT IN `)

Income-tax Act, 1961 Income Tax CIT(A) A.Y. 2008-09 47,883

(viii) The accumulated losses of the Company at the end of the financial year are greater than fifty percent of its net worth and the Company has incurred cash losses in the financial year and in the immediately preceding financial year.

(ix) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by others from banks and financial institutions are not prima facie prejudicial to the interests of the Company.

(x) 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 the Company has been noticed or reported during the year.

FOR DELOITTE HASKINS & SELLS

Chartered Accountants(Registration No. 117365W)

Z. F. BILLIMORIA

Partner(Membership No. 42791)

Mumbai, April 21, 2014

Annexure to the Auditors' Report

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NOTES

`

AS AT MARCH 31, 2014

`

AS AT MARCH 31, 2013

`

EQUITY AND LIABILITIES

SHAREHOLDERS’ FUNDS

(a) Share capital 3 340,500,000 340,500,000 (b) Reserves and surplus 4 (529,617,679) (527,476,428)

(189,117,679) (186,976,428)NON-CURRENT LIABILITIES

(a) Long-term provisions 5 – 343,872

CURRENT LIABILITIES

(a) Trade payables 6 179,985 13,781,718(b) Other current liabilities 7 619,027,626 603,399,543(c) Short-term provisions 8 258,976 46,694

619,466,587 617,227,955 TOTAL 430,348,908 430,595,399

ASSETS

NON-CURRENT ASSETS

(a) Fixed assetsTangible assets 9 173,978 291,283

(b) Non-current investments 10 426,374,000 265,174,000 (c) Long-term loans and advances 11 3,576,933 7,634,623

430,124,911 273,099,906 CURRENT ASSETS

(a) Cash and bank balances 12 177,997 151,544,550 (b) Short-term loans and advances 13 46,000 5,950,943

223,997 157,495,493 TOTAL 430,348,908 430,595,399

See accompanying notes forming part of the financial statements.

IN TERMS OF OUR REPORT ATTACHED.

FOR DELOITTE HASKINS & SELLS

Chartered AccountantsFOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC PROJECTS LIMITED

Z. F. BILLIMORIA

PartnerSUNIL KAKAR

Director RAJEEV UBEROI

Director

Mumbai | April 21, 2014

Balance Sheet AS AT MARCH 31, 2014

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IN TERMS OF OUR REPORT ATTACHED.

FOR DELOITTE HASKINS & SELLS

Chartered AccountantsFOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC PROJECTS LIMITED

Z. F. BILLIMORIA

PartnerSUNIL KAKAR

Director RAJEEV UBEROI

Director

Mumbai | April 21, 2014

NOTES

FOR THE YEAR ENDED MARCH 31, 2014

`

FOR THE YEAR ENDED MARCH 31, 2013

`

I INCOME

Revenue from operations – – Other income 14 206,607 655,185 TOTAL INCOME (I) 206,607 655,185

II EXPENSES

Employee benefits expense 15 (964,469) 24,922,386 Finance costs 16 451,162 13,379,437 Provision and contingencies 999,578 – Loss on sale of investments 17 – 177,012,931 Other expenses 18 1,754,540 11,321,794 Depreciation and amortisation expenses 9 107,047 169,653 TOTAL EXPENSES (II) 2,347,858 226,806,201

III LOSS FOR THE YEAR FROM CONTINUING OPERATIONS (I - II) (2,141,251) (226,151,016)

IV TAX EXPENSE – –

V LOSS AFTER TAX FROM CONTINUING OPERATIONS (III - IV) (2,141,251) (226,151,016)Earnings per equity share (nominal value of share ` 10 each)Basic (`) 23 (0.06) (6.64)Diluted (`) (0.06) (6.64)

See accompanying notes forming part of the financial statements.

Statement of Profit and Loss FOR THE YEAR ENDED MARCH 31, 2014

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IN TERMS OF OUR REPORT ATTACHED.

FOR DELOITTE HASKINS & SELLS

Chartered AccountantsFOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC PROJECTS LIMITED

Z. F. BILLIMORIA

PartnerSUNIL KAKAR

Director RAJEEV UBEROI

Director

Mumbai | April 21, 2014

FOR THE YEAR ENDED MARCH 31, 2014

`

FOR THE YEAR ENDED MARCH 31, 2013

`

A. CASH FLOW FROM OPERATING ACTIVITIES

LOSS BEFORE TAX (2,141,251) (226,151,016)Adjustments for :Depreciation and amortisation 107,047 169,653 Loss on sale of Investment – 177,012,931 Loss on sale of fixed assets 45,487 – Provision for employee benefits (131,590) (3,479,420)Operating loss before working capital changes (2,120,307) (52,447,852)Changes in working capital:Adjustments for (increase) / decrease in operating assetsShort-term loans and advances 5,904,942 (109,480)Trade receivables – 54,522,913 Adjustments for increase / (decrease) in operating liabilitiesTrade payables (13,601,733) 1,826,374 Other current liabilities (1,221,916) (561,255)CASH GENERATED FROM OPERATIONS (11,039,014) 3,230,700 Income-tax paid (net of refund) 4,057,691 980,897 NET CASH FLOW FROM / (USED IN) OPERATING ACTIVITIES (A) (6,981,323) 4,211,597

B. CASH FLOW FROM INVESTING ACTIVITIES

Purchase of fixed assets (35,230) (150,679)Subscription to equity shares in an associate company (161,200,000) (90,324,000)Sale of investment in a subsidiary company – 40,994,789 Sale of investment in an associate company – 150,000,000 Refund of bond application money from associate company – 160,000,000 Refund of bond application money from subsidiary company – 24,482,280 NET CASH FROM / (USED IN) INVESTING ACTIVITIES (B) (161,235,230) 285,002,390

C. CASH FLOW FROM FINANCING ACTIVITIES

Advance taken from holding company 169,850,000 176,264,057 Advance repaid to holding company (153,000,000) (318,693,831)NET CASH FLOW FROM FINANCING ACTIVITIES (C) 16,850,000 (142,429,774)Net increase / (decrease) in cash and cash equivalents (A+B+C) (151,366,553) 146,784,213 Cash and cash equivalents as at the beginning of the year (see note 12) 151,544,550 4,760,337 Cash and cash equivalents as at the end of the year (see note 12) 177,997 151,544,550

(151,366,553) 146,784,213

Cash Flow Statement FOR THE YEAR ENDED MARCH 31, 2014

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

01 BackgroundIDFC Projects Limited ('the Company') is a company, incorporated in India under the Companies Act, 1956. The Company is promoted by IDFC Limited. The Company is in the business of conceiving, developing, owning, managing, executing and operating infrastructure projects, in India.

02 Significant accounting policies(a) Basis of preparationThe financial statements of the Company have been prepared in accordance with 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 continues to be applicable in respect of Section 133 of the Companies Act, 2013 ('the 2013 Act') in terms of General Circular 15/ 2013 dated September 13, 2013 of the Ministry of Corporate Affairs) and the relevant provisions of the 1956 Act / 2013 Act, as applicable. The financial statements have been prepared on the accrual basis under the historical cost convention.

(b) Use of estimatesThe preparation of the 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. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.

(c) InvestmentsInvestments which are readily realisable and intended to be held for not more than one year from the date on which such investments are made are classified as current investments in accordance with Accounting Standard 13 on ‘Accounting for Investments’ as notified by the Companies (Accounting Standards) Rules, 2006. All other investments are classified as long-term investments.All investments are initially recorded at cost. The cost of an investment includes purchase price and directly attributable acquisition charges such as brokerage, fees and duties and reduced by recovery of costs, if any. On disposal of an investment the resultant profit / (loss) i.e., the difference between its carrying amount and the net disposal proceeds is charged or credited to the Statement of Profit and Loss.Current investments are carried at the lower of cost and fair value / market value on an individual basis. Long-term investments are carried at acquisition cost. A provision is made for diminution other than temporary on an individual basis.

(d) Tangible fixed assetsFixed assets are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated depreciation. Gains or losses arising from derecognition of fixed assets are measured as difference between the net disposal proceeds and the cost of the assets less accumulated depreciation up to the date of disposal and are recognised in the Statement of Profit and Loss when asset is derecognised.

(e) Depreciation on tangible fixed assetsDepreciation on tangible fixed assets, excluding certain electronic items, is provided on the written down value method, at the rates prescribed by Schedule XIV of the Companies Act, 1956. Certain electronic items are depreciated over a period of two years on straight-line method based on the management’s estimate of the useful life of assets. Depreciation on additions during the year is provided on a pro-rata basis. Assets costing less than ` 5,000/- each are written off in the year of capitalisation.

(f) Intangible assets and amortisationIntangible assets comprising of system software and are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated amortisation. Any technology support cost or annual maintenance cost for such software is charged annually to the Statement of Profit and Loss. These are being amortised over a period of three years on a straight-line method.

(g) Impairment of tangible and intangible assetsThe carrying amounts of assets are reviewed at each reporting date if there is any indication of impairment based on internal / external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount.

(h) LeasesLeases of assets under which all the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the Statement of Profit and Loss, on a straight-line basis, over the lease term in accordance with Accounting Standard 19 on ‘Leases’ as notified under the Companies (Accounting Standards) Rules, 2006. Initial direct costs incurred specifically for operating leases are recognised as expense in the year in which they are incurred.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

(i) Revenue recognitionRevenue 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. In addition, the following criteria must also be met before revenue is recognised.Interest and other dues are accounted on accrual basis. Fees are recognised when reasonable right of recovery is established, the revenue can be reliably measured and there is no uncertainty regarding recoverability.Dividend income on investments is recognised when the unconditional right to receive payment is established.

(j) Provisions and contingenciesA provision is recognised when the Company has a present obligation as a result of past events and 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 their present value and are determined based on the 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 disclosed in the notes.

(k) Employee benefitsDefined contribution planThe Company’s contribution to provident fund is deposited with the prescribed authorities and is charged to the Statement of Profit and Loss. The Company participates in the holding company’s superannuation policy and the Company’s contribution paid / payable during the year is charged to the Statement of Profit and Loss.

Defined benefit plan The net present value of the Company’s obligation towards gratuity to employees is unfunded and actuarially determined as at the reporting date based on the projected unit credit method. Actuarial gains and losses are recognised in the Statement of Profit and Loss for the year.

Compensated absences Based on the leave policy of the Company, employees are not permitted to accumulate leave. Any unavailed privilege leave to the extent encashable is paid to the employees and charged to the Statement of Profit and Loss for the year.

(l) Income taxIncome tax comprises of current and deferred tax.The accounting treatment for income-tax in respect of the Company's income is based on Accounting Standard 22 on 'Accounting for Taxes on Income' as notified under the Companies (Accounting Standards) Rules, 2006. The provision made for income-tax in the accounts comprises both, the current tax and the deferred tax. The deferred tax assets and liabilities for the year arising on account of timing differences are recognised in the Statement of Profit and Loss and the cumulative effect thereof is reflected in the Balance Sheet.Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the reporting date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the Company has unabsorbed depreciation or carried forward losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that the same can be realised against future taxable profits.

(m) Foreign currency transactionsForeign currency transactions are accounted at the exchange rates prevailing on the dates of the transactions. Foreign currency monetary items outstanding as at the reporting date are reported using the closing rate. Gains and losses resulting from the settlement of such transactions and translation of monetary assets and liabilities denominated in foreign currencies are recognised in the Statement of Profit and Loss.

(n) Treatment of exchange differencesExchange differences arising on the settlement of monetary items or on reporting Company's monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or as expenses in the year in which they arise.

(o) Cash and cash equivalentsCash and cash equivalents for the purpose of the Cash Flow Statement comprises cash on hand, cash in bank, fixed deposits and other short-term highly liquid investments with an original maturity of three months or less that are readily convertible into known amount of cash and which are subject to an insignificant risk of change in value.

(p) Cash flow statementCash flows are reported using the indirect method, whereby profit / (loss) before tax is adjusted for the effect of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The Cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

(q) Earnings per shareBasic earnings per share is computed by dividing the profit / (loss) after tax by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax as adjusted for expense or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.

(r) Expenditure incurred during project developmentExpenditure incurred by the Company during pre-project development stage is charged to the Statement of Profit and Loss as and when incurred. Expenditure incurred in respect of acquisitions are charged to the Statement of Profit and Loss as and when incurred.Expenditure incurred by the Company during project development stage are capitalised and transferred to project companies, in case the bid is successful else the same is charged to the Statement of Profit and Loss.

(s) Service tax input creditService tax input credit is accounted in the period in which the underlying services are received and when there is no uncertainty in availing / utilising the credit.

(t) Operating cycleBased on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.

03 Share capital

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NUMBER ` NUMBER `

AUTHORISED SHARES

Equity shares of ` 10 each 100,000,000 1,000,000,000 100,000,000 1,000,000,000 ISSUED, SUBSCRIBED & FULLY PAID-UP SHARES

Equity shares of ` 10 each 34,050,000 340,500,000 34,050,000 340,500,000 [All of these shares are held by IDFC Limited, the holding company and its nominees]

TOTAL 340,500,000 340,500,000

(a) Reconciliation of the number of shares outstanding at the beginning and at the end of the year.

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NUMBER ` NUMBER `

EQUITY SHARES

Outstanding at the beginning of the year 34,050,000 340,500,000 34,050,000 340,500,000 Issued during the year – – – – Outstanding at the end of the year 34,050,000 340,500,000 34,050,000 340,500,000

(b) Terms / rights attached to equity shares

The Company has only one class of equity shares having a par value of ` 10 per share. Each holder of equity shares is entitled to one vote per share.In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amounts. However, no such preferential amounts exists currently. The distribution will be in proportion to the number of equity shares held by the shareholders.

(c) Details of shareholders holding more than 5% of the shares in the Company

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NUMBER % OF HOLDING NUMBER % OF HOLDING

EQUITY SHARES

IDFC Limited and its nominees 34,050,000 100 34,050,000 100

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

04 Reserves and surplus AS AT MARCH 31, 2014

`

AS AT MARCH 31, 2013`

DEFICIT IN THE STATEMENT OF PROFIT AND LOSS

Opening balance (527,476,428) (301,325,412)Loss for the year (2,141,251) (226,151,016)Closing balance (529,617,679) (527,476,428)

05 Long-term provisions AS AT MARCH 31, 2014

`

AS AT MARCH 31, 2013`

Provision for employees benefits- gratuity (see note 24) – 343,872 TOTAL – 343,872

06 Trade payables AS AT MARCH 31, 2014

`

AS AT MARCH 31, 2013`

Payable to vendors 3,366 12,915 Provision for expenses 176,619 13,768,803 TOTAL 179,985 13,781,718

No amount is payable to ‘Suppliers’ registered under the Micro, Small and Medium Enterprises Development Act, 2006. No interest has been paid / payable by the Company during the year to the ‘Suppliers’ covered under the Micro, Small and Medium Enterprises Development Act, 2006. The above information takes into account only those suppliers who have responded to inquiries made by the Company for this purpose.

07 Other current liabilities AS AT MARCH 31, 2014

`

AS AT MARCH 31, 2013`

Statutory dues 3,366 1,225,282 Amount payable to a related party (see note 22) 619,024,260 602,174,261TOTAL 619,027,626 603,399,543

08 Short-term provisions AS AT MARCH 31, 2014

`

AS AT MARCH 31, 2013`

Provision for employees benefits - gratuity (see note 24) 258,976 46,694 TOTAL 258,976 46,694

09 (a) Tangible assetsGROSS BLOCK ACCUMULATED DEPRECIATION NET BLOCK

BA

LAN

CE

AS

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1,

2013

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` ` ` ` ` ` ` ` ` `

Office equipment 480,180 17,700 318,860 179,020 358,895 37,249 293,476 102,668 76,352 121,285

(Previous Year) (449,180) (31,000) – (480,180) (318,940) (39,955) – (358,895) (121,285)

Furniture and fittings 53,173 – 53,173 – 35,823 2,874 38,697 – – 17,350

(Previous Year) (53,173) – – (53,173) (31,989) (3,834) – (35,823) (17,350)

Computers 341,386 17,530 56,657 302,259 188,738 66,924 51,029 204,633 97,626 152,648

(Previous Year) (221,707) (119,679) – (341,386) (122,057) (66,681) – (188,738) (152,648)

TOTAL 874,739 35,230 428,690 481,279 583,456 107,047 383,202 307,301 173,978 291,283

(Previous Year) (724,060) (150,679) – (874,739) (472,986) (110,470) – (583,456) (291,283)

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

09 (b) Intangible assets - other than internally generated

GROSS BLOCK ACCUMULATED DEPRECIATION NET BLOCK

BA

LAN

CE

AS

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2013

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` ` ` ` ` ` ` ` ` `

Computer software 459,953 – – 459,953 459,953 – – 459,953 – –

(Previous Year) (459,953) – – (459,953) (400,770) (59,183) – (459,953) –

TOTAL 459,953 – – 459,953 459,953 – – 459,953 – –

(Previous Year) (459,953) – – (459,953) (400,770) (59,183) – (459,953) –

TOTAL TANGIBLE AND

INTANGIBLE ASSETS

1,334,692 35,230 428,690 941,232 1,043,409 107,047 383,202 767,254 173,978 291,283

(Previous Year) (1,184,013) (150,679) – (1,334,692) (873,756) (169,653) – (1,043,409) (291,283)

10 Non-current investments

FACE VALUE `

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

QUANTITY ` QUANTITY `

INVESTMENT IN ASSOCIATE

INVESTMENT IN EQUITY SHARES (UNQUOTED)(FULLY PAID)

Jetpur Somnath Tollways Private Limited [see note (a) and (b) below and note 22]

10 42,637,400 426,374,000 26,517,400 265,174,000

TOTAL 426,374,000 265,174,000

(a) Investment includes ` 426,374,000 (Previous Year ` 265,174,000) in respect of equity shares which are subject to restrictive convenants.(b) Investment includes ` 217,450,740 (Previous Year ` 135,238,740) in respect of equity shares pledged with security trustee.

11 Long-term loans and advances (unsecured, considered good)

AS AT MARCH 31, 2014`

AS AT MARCH 31, 2013`

Advance tax [net of provision for tax of ` Nil (Previous Year ` Nil)] 3,576,933 7,634,623 TOTAL 3,576,933 7,634,623

12 Cash and bank balancesAS AT MARCH 31, 2014

`

AS AT MARCH 31, 2013`

CASH AND CASH EQUIVALENTS

Cash on hand – 13,869 Cheques in hand – 150,000,000 Balance with bank: in Current account 177,997 1,530,681 TOTAL 177,997 151,544,550

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

13 Short-term loans and advances (unsecured)

AS AT MARCH 31, 2014`

AS AT MARCH 31, 2013`

Considered good: Other deposits 46,000 46,000 Prepaid expenses – 654,411 Other receivables – 5,104,294 Balances with government authorities - Cenvat credit available – 146,238Considered doubtful: Other receivables 698,038 – Less: Provision against doubtful receivables (698,038) – Balances with government authorities - Cenvat credit available 6,693,654 6,392,114 Less: Provision for doubtful receivables (6,693,654) (6,392,114)TOTAL 46,000 5,950,943

14 Other incomeFOR THE YEAR ENDED

MARCH 31, 2014`

FOR THE YEAR ENDED MARCH 31, 2013

`

Sundry writeback – 340,000 Interest on income tax refund 206,607 315,185 TOTAL 206,607 655,185

15 Employee benefits expenseFOR THE YEAR ENDED

MARCH 31, 2014`

FOR THE YEAR ENDED MARCH 31, 2013

`

Salaries and bonus [see note (a)] (1,531,282) 23,207,406 Gratuity expenses 130,596 –Contribution to provident and other funds (see note 24) 98,927 1,283,341 Staff welfare expenses 337,290 431,639 TOTAL (964,469) 24,922,386

(a) Includes reversal of excess bonus provision of earlier year of ` 4,150,636 (Previous Year ` Nil).

16 Finance costsFOR THE YEAR ENDED

MARCH 31, 2014`

FOR THE YEAR ENDED MARCH 31, 2013

`

Guarantee commission 439,005 13,379,437Other interest 12,157 –TOTAL 451,162 13,379,437

17 Loss on sale of investmentsFOR THE YEAR ENDED

MARCH 31, 2014`

FOR THE YEAR ENDED MARCH 31, 2013

`

Sale of investments in group company [see note (a) below] – 177,012,931 – 177,012,931

(a) Company has sold 25% in Dheeru Powergen Limited in April 2012. Accordingly Dheeru Powergen Limited ceased to be a subsidiary of IDFC Projects Limited. Subsequently, in March 2013, IDFC Projects Limited has sold balance 26% in Dheeru Powergen Limited.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

18 Other expensesFOR THE YEAR ENDED

MARCH 31, 2014`

FOR THE YEAR ENDED MARCH 31, 2013

`

Rates and taxes – 109,657 Repairs and maintenance - others 4,754 44,083 Insurance charges 1,755 – Travelling and conveyance (see note 20) 701,712 2,162,694 Communication costs 104,369 232,024 Advertising and publicity 32,689 – Printing and stationery 9,701 20,355 Shared service costs (see note 22) – 5,636,260 Professional fees 306,054 787,659 Miscellaneous expenses 217,109 1,131,524 Bad debts written off – 4,420 Fuel expense 129,183 317,084 Loss on foreign exchange fluctuation – 1,034 Loss on sale of fixed assets 45,487 – Auditors’ remuneration * 201,727 875,000 TOTAL 1,754,540 11,321,794 * Breakup of auditor’s remuneration:Audit fees 200,000 400,000 Tax audit fees (250,000) 250,000 Other services 235,000 225,000 Out-of pocket expenses 16,727 – Service tax 31,114 27,810 Less: Service tax set off claimed (31,114) (27,810)TOTAL 201,727 875,000

19 Contingent liabilities and commitments not provided in respect of:AS AT

MARCH 31, 2014`

AS AT MARCH 31, 2013

`

(i) Contingent liabilities (a) Guarantees 107,016,000 870,050,400 (b) Sponsor’s undertaking for Jetpur Somnath Tollways Private Limited 250,770,000 250,770,000 (ii) Commitments Uncalled liability on shares and other investments 273,026,000 434,226,000 (iii) Income-tax demands disputed by the Company 47,883 –TOTAL 630,859,883 1,555,046,400

20 Expenditure in foreign currenciesFOR THE YEAR ENDED

MARCH 31, 2014`

FOR THE YEAR ENDED MARCH 31, 2013

`

Travelling and conveyance 87,386 95,321 TOTAL 87,386 95,321

21 The primary mandate of the Company is to conceive, develop, execute and manage infrastructure projects in India. All other activities revolve around the main business. The Company does not have any geographical segments. As such, there are no separate reportable segments as per Accounting Standard 17 on ‘Segment Reporting’ as notified under the Companies (Accounting Standards) Rules, 2006.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

22 In accordance with Accounting Standard 18 on ‘Related Party Disclosures’ as notified under the Companies (Accounting Standards) Rules, 2006, the related parties of the Company are as follows:

I. Holding Company IDFC Limited

II. Subsidiary Company Dheeru Powergen Limited up to April 13 , 2012.

III. Associate Jetpur Somnath Tollways Private Limited Dheeru Powergen Limited with effect from April 14, 2012 up to March 26, 2013.

IV. Key management personnel Mr. V. Narayanan Iyer (upto December 31, 2013)The nature and volume of transactions carried out with the above related parties in the ordinary course of business are as follows:Name of related party and nature of relationship

NATURE OF TRANSACTIONS FOR THE YEAR ENDED MARCH 31, 2014

`

FOR THE YEAR ENDED MARCH 31, 2013

`

HOLDING COMPANY

IDFC Limited Shared service costs – 7,443,931 Guarantee commission – 13,238,859 Prepaid expenses – 654,420 Advance taken 169,850,000 – Advance paid 153,000,000 143,246,519 Advances - balance outstanding 619,024,260 602,174,261

SUBSIDIARY COMPANY

Dheeru Powergen Limited Refund of bond application money – 24,482,280 ASSOCIATE

Jetpur Somnath Tollways Private Limited Subscription towards equity share capital 161,200,000 90,324,000 Dheeru Powergen Limited Refund of bond application money – 160,000,000

23 In accordance with Accounting Standard 20 on ‘Earnings Per Share’ as notified under the Companies (Accounting Standards) Rules, 2006, the earnings per share has been calculated as under:

FOR THE YEAR ENDED MARCH 31, 2014

`

FOR THE YEAR ENDED MARCH 31, 2013

`

(a) Net loss after tax (2,141,251) (226,151,016)(b) Weighted average number of equity shares (Nos.) 34,050,000 34,050,000 (c) Basic and diluted earnings per share (a)/(b) (0.06) (6.64)(d) Nominal value per share 10 10

24 In accordance with Accounting Standard 15 on “Employee Benefits” as notified under the Companies (Accounting Standards) Rules, 2006 the following disclosures have been made:

I. The Company has recognised the following amounts in the Statement of Profit and Loss towards contribution to defined contribution plans which are included under contribution to provident and other funds:

FOR THE YEAR ENDED MARCH 31, 2014

`

FOR THE YEAR ENDED MARCH 31, 2013

`

Provident fund 98,927 1,133,342Superannuation fund – 149,999

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

II. The details of the Company’s unfunded employee benefit plan for gratuity for its employees are given below which is as certified by the actuary and relied upon by the auditors:

FOR THE YEAR ENDED MARCH 31, 2014

`

FOR THE YEAR ENDED MARCH 31, 2013

`

CHANGE IN THE DEFINED BENEFIT OBLIGATIONS:

Liability at the beginning of the year 390,566 3,869,986 Current service cost 79,472 525,253 Interest cost 35,959 282,910 Benefits paid (262,186) (4,728,105)Actuarial losses 15,165 440,522 Liability at the end of the year 258,976 390,566 AMOUNT RECOGNISED IN THE BALANCE SHEET:

Liability at the end of the year - Current 258,976 390,566 Amount recognised in the Balance Sheet under long-term provisions – 343,872 Amount recognised in the Balance Sheet under short-term provisions 258,976 46,694 EXPENSE RECOGNISED IN THE STATEMENT OF PROFIT AND LOSS:

Current service cost 79,472 525,253 Interest cost 35,959 282,910 Net actuarial losses to be recognized 15,165 440,522 EXPENSE RECOGNISED IN THE STATEMENT OF PROFIT AND LOSS UNDER “EMPLOYEE BENEFITS EXPENSE”

130,596 1,248,685

RECONCILIATION OF THE LIABILITY RECOGNISED IN THE BALANCE SHEET:

Opening net liability 390,566 3,869,986 Expense recognized 130,596 1,248,685 Contribution by the Company – (4,728,105)Amount recognised in the Balance Sheet under long-term provisions – 343,872 Amount recognised in the Balance Sheet under short-term provisions 258,976 46,694 EXPECTED EMPLOYER’S CONTRIBUTION NEXT YEAR 258,976 46,694

EXPERIENCE ADJUSTMENTS:

FOR THE YEAR ENDED

MARCH 31, 2014`

MARCH 31, 2013 `

MARCH 31, 2012 `

MARCH 31, 2011 `

MARCH 31, 2010 `

Defined benefit obligation 258,976 390,566 3,869,986 2,827,400 1,795,308 Plan assets – – – – – Deficit (258,976) (390,566) (3,869,986) (2,827,400) (1,795,308)Experience adjustments on plan liabilities 15,165 427,892 183,877 538,498 (620,994)

PRINCIPAL ASSUMPTIONS: MARCH 31,2014

% MARCH 31,2013

%

Discount rate (p.a) 9.20 8.05 Salary escalation rate (p.a.) 8.00 8.00

The estimate of future salary increase, considered in the actuarial valuation takes account of inflation, seniority, promotion and other relevant factors.

25 The accumulated losses of the Company are substantially in excess of its net worth. However, the accounts of the Company have been prepared on a going concern basis. The Company continues to be a going concern in view of the commitment and financial support from its Holding Company, IDFC Limited, regarding the amounts due to it and other liabilities as and when they fall due for payment.

26 Previous year’s figures Previous year’s figures have been regrouped / reclassified wherever necessary to correspond with the current year’s classification / disclosure.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC PROJECTS LIMITED

Mumbai | April 21, 2014SUNIL KAKARDirector

RAJEEV UBEROI Director

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BOARD OF DIRECTORS n Mr. Sunil Kakar – Chairman n Mr. Sadashiv S. Rao n Dr. Rajeev Uberoi

AUDITORS n Deloitte Haskins & Sells Chartered Accountants

PRINCIPAL BANKER n HDFC Bank Limited

REGISTERED OFFICEThe Capital Court6th Floor, Olof Palme RoadMunirka, New Delhi 110 067Tel: +91 11 4331 1000Fax: +91 11 2671 [email protected]: U45201DL2000PLC105292

14 IDFC FINANCE LIMITED

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Directors' ReportTO THE MEMBERSYour Directors have pleasure in presenting the Fourteenth Annual Report together with the audited accounts for the year ended March 31, 2014.

FINANCIAL RESULTS

PARTICULARS

FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2013

` `

Total Income 24,070,478 17,079,157

Less: Total Expenses 378,129 361,194

Profit before Tax 23,692,349 16,717,963

Less: Provision for Tax 950,784 2,604,206

Profit after Tax 22,741,565 14,113,757

DIVIDENDThe Directors do not recommend any dividend for the year ended March 31, 2014.

COMPANIES ACT, 2013Most of the provisions of the Companies Act, 2013 and the Rules notified by the Ministry of Corporate Affairs ("MCA") in this regard, have come

into force with effect from April 1, 2014. MCA issued a General Circular no. 8/2014 dated April 4, 2014 which clarified that the Financial Statements,

Auditors' Report and the Board’s Report in respect of the previous year ended March 31, 2014 will be in accordance with the Companies Act, 1956

and Rules made there under.

Your Company shall comply with the provisions of the Companies Act, 2013, as applicable.

DIRECTORSIn terms of the provisions of the Articles of Association of the Company, Mr. Sadashiv S. Rao (DIN-01245772) would retire at the ensuing Annual

General Meeting and being eligible, offers himself for reappointment.

The Board of Directors recommends reappointment of Mr. Sadashiv S. Rao at the ensuing Annual General Meeting.

AUDIT COMMITTEEThe Audit Committee consists of three members, Mr. Sunil Kakar (DIN-03055561), Mr. Sadashiv S. Rao (DIN-01245772) and Dr. Rajeev Uberoi

(DIN-01731829). There were four meetings of the Committee held during the year.

AUDITORSM/s. Deloitte Haskins & Sells, Chartered Accountants, Ahmedabad (Registration No. 117365W) Statutory Auditors of the Company will retire at the

conclusion of the ensuing AGM.

The Board recommends the reappointment of M/s. Deloitte Haskins & Sells, Chartered Accountants, as the Statutory Auditors of the Company.

PUBLIC DEPOSITSDuring the period under review, your Company has not accepted public deposits.

PARTICULARS REGARDING CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTIONSince the Company does not own any manufacturing facility, the disclosure of information on other matters required to be disclosed in terms of

Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1998,

are not applicable and hence not given.

FOREIGN EXCHANGE EARNINGS AND EXPENDITURE There was no income or expenditure in foreign currency during the period under review.

PARTICULARS OF EMPLOYEES AND REMUNERATION Since your Company does not have any employees, the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies

(Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are not applicable and hence not given.

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I D F C F I N A N C E L I M I T E D | 2 3 3

DIRECTORS’ RESPONSIBILITY STATEMENTThe Directors confirm that:

n in the preparation of the annual accounts, the applicable accounting standards have been followed; n 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 March 31, 2014 and the profit of the Company for the year ended on that date;

n they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

n they have prepared the annual accounts on a going concern basis.

ACKNOWLEDGEMENTSThe Directors also express their gratitude for the unstinted support and guidance received from IDFC Limited and other group companies.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS

SUNIL KAKAR

Chairman

Mumbai, April 21, 2014

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TO THE MEMBERS OF IDFC FINANCE LIMITED

Report on the Financial StatementsWe have audited the accompanying financial statements of IDFC FINANCE LIMITED (“the Company”), which comprise the Balance Sheet as at March 31, 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 StatementsThe 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 September 13, 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’ ResponsibilityOur 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 the 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 the disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, 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 the internal controls 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 controls. 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.

OpinionIn 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 March 31, 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 Requirements1. 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.2. 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 September 13, 2013 of the Ministry of Corporate Affairs).

(e) On the basis of the written representations received from the directors as on March 31, 2014 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014 from being appointed as a director in terms of Section 274(1)(g) of the Act.

FOR DELOITTE HASKINS & SELLS

Chartered Accountants(Registration No. 117365W)

Z. F. BILLIMORIA

Partner(Membership No. 42791)

Mumbai, April 21, 2014

Independent Auditors' Report

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(Referred to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date)(i) Having regard to the nature of the Company’s business/ activities/ result/ transactions etc., clauses (i), (ii), (vi), (viii), (x), (xi), (xii), (xiii), (xv), (xvi),

(xvii), (xviii), (xix) and (xx) of CARO are not applicable.(ii) 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 respect of loans, secured or unsecured, taken by the Company from companies, firms or other parties covered in the Register maintained

under Section 301 of the Companies Act, 1956, according to the information and explanations given to us: (a) The Company has taken loans aggregating ` 50,000,000 from one party during the year. At the year-end, the outstanding balances of

such loans taken aggregated ` Nil and the maximum amount involved during the year was ` 50,000,000 (number of parties one). (b) The rate of interest and other terms and conditions of such loans are, in our opinion, prima facie not prejudicial to the interest of the Company. (c) The payments of principal amounts and interest in respect of such loans are regular / as per stipulations.(iii) 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 sale of services. During the course of our audit, we have not observed any major weakness in such internal control system.

(iv) To the best of our knowledge and belief and according to the information and explanations given to us, there were no contracts or arrangements required to be entered in the Register maintained under Section 301 of the Companies Act, 1956.

(v) The Company does not have an internal audit system.(vi) 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 Income-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, Service Tax, Cess and other material statutory dues in arrears as at

March 31, 2014 for a period of more than six months from the date they became payable. (vii) Based on our examination of the records and evaluation 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.

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

FOR DELOITTE HASKINS & SELLS

Chartered Accountants(Registration No. 117365W)

Z. F. BILLIMORIA

Partner(Membership No. 42791)

Mumbai, April 21, 2014

Annexure to the Auditors' Report

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NOTES

`

AS AT MARCH 31, 2014

`

AS AT MARCH 31, 2013

`

EQUITY AND LIABILITIES

SHAREHOLDERS’ FUNDS

(a) Share capital 3 210,002,000 210,002,000 (b) Reserves & surplus 4 130,475,305 107,733,740

340,477,305 317,735,740 CURRENT LIABILITIES

(a) Trade payables 5 184,249 184,046 (b) Other current liabilities 6 – 20,900 (c) Short-term provisions 7 – 289,469

184,249 494,415 TOTAL 340,661,554 318,230,155

ASSETS

NON-CURRENT ASSETS

(a) Long-term loans and advances 8 5,871,543 2,323,005 (b) Non-current investments 9 150,000,000 50,000,000

155,871,543 52,323,005 CURRENT ASSETS

(a) Current investments 10 184,624,465 265,579,268 (b) Cash and bank balances 11 165,546 327,882

184,790,011 265,907,150 TOTAL 340,661,554 318,230,155

See accompanying notes forming part of the financial statements.

IN TERMS OF OUR REPORT ATTACHED.

FOR DELOITTE HASKINS & SELLS

Chartered AccountantsFOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC FINANCE LIMITED

Z. F. BILLIMORIA SUNIL KAKAR SADASHIV S. RAO Partner Director Director

BIPIN N. GEMANIMumbai | April 21, 2014 Manager

Balance Sheet AS AT MARCH 31, 2014

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I D F C F I N A N C E L I M I T E D | 2 3 7

IN TERMS OF OUR REPORT ATTACHED.

FOR DELOITTE HASKINS & SELLS

Chartered AccountantsFOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC FINANCE LIMITED

Z. F. BILLIMORIA SUNIL KAKAR SADASHIV S. RAO Partner Director Director

BIPIN N. GEMANIMumbai | April 21, 2014 Manager

NOTES

FOR THE YEAR ENDED MARCH 31, 2014

`

FOR THE YEAR ENDED MARCH 31, 2013

`

I INCOME

Revenue from operations 12 24,070,478 17,060,425 Other income 13 – 18,732 TOTAL INCOME (I) 24,070,478 17,079,157

II EXPENSES

Finance cost 14 33,214 1,081 Other expenses 15 344,915 360,113 TOTAL EXPENSES (II) 378,129 361,194

III PROFIT BEFORE TAX (I- II) 23,692,349 16,717,963

IV TAX EXPENSE

Current tax 4,741,000 3,346,000Minimum Alternate Tax (MAT) credit (see note 8) (3,478,000) (764,000)Short / (excess) provision for earlier years (312,216) 22,206 TOTAL TAX EXPENSE 950,784 2,604,206

V PROFIT FOR THE PERIOD FROM CONTINUING OPERATIONS (III - IV) 22,741,565 14,113,757

Earnings per equity share (nominal value of share `10) 18 Basic (`) 1.08 0.67 Diluted (`) 1.08 0.67

See accompanying notes forming part of the financial statements.

Statement of Profit and Loss FOR THE YEAR ENDED MARCH 31, 2014

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FOR THE YEAR ENDED MARCH 31, 2014

`

FOR THE YEAR ENDED MARCH 31, 2013

`

A. CASH FLOW FROM OPERATING ACTIVITIES

PROFIT BEFORE TAX 23,692,349 16,717,963 Changes in working capital:Adjustment for (increase) / decrease in operating assetsCurrent Investments 130,954,803 36,413,422Adjustment for increase / (decrease) in operating liabilitiesTrade payables 203 (11,213)Other current liabilities (20,900) (265)Direct taxes paid (net of refund) (4,788,791) (3,395,233)NET CASH FROM OPERATING ACTIVITIES (A) 149,837,664 49,724,674

B. CASH FLOW FROM INVESTING ACTIVITIES

Purchase of investments (150,000,000) (50,000,000)NET CASH USED IN INVESTING ACTIVITIES (B) (150,000,000) (50,000,000)

C. CASH FLOW FROM FINANCING ACTIVITIES

Inter-corporate deposit taken 50,000,000 – Inter-corporate deposit repaid (50,000,000) – NET CASH FROM FINANCING ACTIVITIES (C) – – Net (decrease) / increase in cash and cash equivalents (A+B+C) (162,336) (275,326)Cash and cash equivalents as at the beginning of the year (see note 11) 327,882 603,208 Cash and cash equivalents as at the end of the year (see note 11) 165,546 327,882

(162,336) (275,326)

IN TERMS OF OUR REPORT ATTACHED.

FOR DELOITTE HASKINS & SELLS

Chartered AccountantsFOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC FINANCE LIMITED

Z. F. BILLIMORIA SUNIL KAKAR SADASHIV S. RAO Partner Director Director

BIPIN N. GEMANIMumbai | April 21, 2014 Manager

Cash Flow Statement FOR THE YEAR ENDED MARCH 31, 2014

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I D F C F I N A N C E L I M I T E D | 2 3 9

Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

01 BackgroundIDFC Finance Limited is a wholly owned subsidiary of IDFC Limited, incorporated in India and regulated by the Reserve Bank of India ("RBI") as a Non-Banking Finance Company .

02 Significant accounting policies(a) Basis of preparationThe financial statements of the Company have been prepared in accordance with 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 continues to be applicable in respect of section 133 of the Companies Act, 2013 ("the 2013 Act") in terms of General Circular 15/ 2013 dated September 13, 2013 of the Ministry of Corporate Affairs) and the relevant provisions of the 1956 Act / 2013 Act, as applicable. The financial statements have been prepared on the accrual basis under the historical cost convention.

(b) Use of estimatesThe preparation of the 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. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates and the difference between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

(c) InvestmentsInvestments which are readily realisable and intended to be held for not more than one year from the date on which such investments are made are classified as current investments in accordance with the RBI guidelines and Accounting Standard 13 on ‘Accounting for Investments’ as notified by the Companies (Accounting Standards) Rules, 2006. All other investments are classified as long-term investments.All investments are initially recorded at cost. The cost of an investment includes purchase price, directly attributable acquisition charges and reduced by recovery of costs, if any. On disposal of an investment, the difference between its carrying amount and the net disposal proceeds is charged or credited to the Statement of Profit and Loss.

n ‘Long-Term Investments' are carried at acquisition cost. A provision is made for diminution other than temporary on an individual basis. n 'Current investments' are valued scrip-wise and depreciation / appreciation is aggregated for each category.

(d) Revenue recognitionRevenue 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. In addition, the following criteria must also be met before revenue is recognised:

n Interest Income is accounted for on accrual basis. n Dividend is accounted on accrual basis when the right to receive is established. n Profit / loss earned on sale of investments is recognised on trade date basis. Profit / loss on sale of investments is determined based on

the FIFO cost for current investments and weighted average cost for long term investments.

(e) Taxes on IncomeCurrent tax is the amount payable on taxable income for the year as determined in accordance with the provisions of Income-tax Act 1961. The accounting treatment for income-tax in respect of the Company's income is based on Accounting Standard 22 on 'Accounting for Taxes on Income' as notified by the Companies (Accounting Standards) Rules, 2006. The provision made for income-tax in the accounts comprises both, the current tax and the deferred tax. The deferred tax assets and liabilities for the year arising on account of timing differences are recognised in the Statement of Profit and Loss and the cumulative effect thereof is reflected in the Balance Sheet.Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the reporting date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the Company has unabsorbed depreciation or carried forward losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that the same can be realised against future taxable profits.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

(f) Cash and cash equivalentsCash and cash equivalents for the purpose of Cash Flow Statement comprises cash on hand, cash in bank, fixed deposits and other short term highly liquid investments with an original maturity of three months or less that are readily convertible into known amounts of cash and which are subject to insignificant risk of change in value.

(g) Cash flow statementCash flows are reported using the indirect method, whereby profit / (loss) before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

(h) Earnings per shareBasic earnings per share is computed by dividing the profit / (loss) after tax by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax as adjusted for expense or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.

(i) Provisions and contingenciesA provision is recognised when the Company has a present obligation as a result of past events and 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 their present value and are determined based on the 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 if any, are disclosed in the notes.

(j) Operating cycleBased on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.

03 Share capital AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NUMBER ` NUMBER `

AUTHORISED SHARES

Equity shares of `10 each 40,000,000 400,000,000 40,000,000 400,000,000 ISSUED SHARES

Equity shares of `10 each 27,000,400 270,004,000 27,000,400 270,004,000 SUBSCRIBED & FULLY PAID-UP SHARES

Equity shares of `10 each 21,000,200 210,002,000 21,000,200 210,002,000 [All of these shares are held by IDFC Limited, the holding company and its nominees]TOTAL ISSUED, SUBSCRIBED AND FULLY PAID-UP SHARE CAPITAL

210,002,000 210,002,000

(a) Reconciliation of the number of equity shares outstanding at the beginning and at the end of the year.

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NUMBER ` NUMBER `

Outstanding at the beginning of the year 21,000,200 210,002,000 21,000,200 210,002,000 Issued during the year – – – – Outstanding at the end of the year 21,000,200 210,002,000 21,000,200 210,002,000

(b) Terms / rights attached to equity shares n The Company has only one class of equity shares having a par value of ` 10 per share. Each holder of equity shares is entitled to one vote

per share. n In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the

Company, after distribution of all preferential amounts. However, no such preferential amounts exists currently. The distribution will be in proportion to the number of equity shares held by the shareholders.

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I D F C F I N A N C E L I M I T E D | 2 4 1

Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

(c) Details of shareholders holding more than 5% of the equity shares in the company

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NUMBER % OF HOLDING NUMBER % OF HOLDING

IDFC Limited and its nominees 21,000,200 100.00% 21,000,200 100.00%

04 Reserves and surplus AS AT MARCH 31, 2014

` AS AT MARCH 31, 2013

`

(a) SPECIAL RESERVE U/S. 45-IC OF RBI ACT,1934

Opening balance 21,555,000 18,730,000 Add : Transferred from surplus in Statement of Profit and Loss 4,550,000 2,825,000 Closing balance 26,105,000 21,555,000

(b) SURPLUS IN THE STATEMENT OF PROFIT AND LOSS

Opening balance 86,178,740 74,889,983 Profit for the year 22,741,565 14,113,757 Less: Appropriations Transfer to Special Reserve u/s. 45-IC of RBI Act, 1934 4,550,000 2,825,000 Closing balance 104,370,305 86,178,740 TOTAL RESERVES AND SURPLUS 130,475,305 107,733,740

05 Trade payables AS AT MARCH 31, 2014

` AS AT MARCH 31, 2013

`

Provision for expenses 184,249 184,046 TOTAL 184,249 184,046

No amount is payable to “Suppliers” under Micro, Small and Medium Enterprises Development Act, 2006. No Interest has been paid/is payable by the company during the year to the “Suppliers” covered under the Micro, Small and Medium Enterprises Development Act, 2006. The above information takes into account only those suppliers who have responded to inquiries made by the company for this purpose.

06 Other current liabilities AS AT MARCH 31, 2014

` AS AT MARCH 31, 2013

`

Statutory dues – 20,900 TOTAL – 20,900

07 Short-term provisions AS AT MARCH 31, 2014

` AS AT MARCH 31, 2013

`

Provision for tax – 289,469 (net of advance income tax ` Nil (Previous Year ` 7,106,404)) TOTAL – 289,469

08 Long-term loans and advances (unsecured) (considered good)

AS AT MARCH 31, 2014 `

AS AT MARCH 31, 2013 `

Advance payment of income tax 679,543 609,005 [net of provision for tax ` 12,844,234 (Previous Year ` 12,157,235)]Minimum alternate tax (MAT) credit * 5,192,000 1,714,000 TOTAL 5,871,543 2,323,005

* Since the tax provision as per the normal provisions of the Income - tax Act, 1961 (“the Act”) is lower than the tax computed u/s 115JB of the Act, the current tax provision represents the Minimum Alternate Tax (MAT) u/s 115JB. The Company is eligible for MAT credit as per the provisions of Section 115JAA of the Act to the extent MAT exceeds the tax arising under normal provisions of the Act.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

09 Non-current investments (Non-Trade) (at cost)

FACE VALUE

`

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NUMBER OF UNITS ` NUMBER OF UNITS `

INVESTMENT IN MUTUAL FUNDS (UNQUOTED)

IDFC Fixed Term Direct Plan Series-10 Growth 10 – – 5,000,000.000 50,000,000IDFC Fixed Term Plan Series 21 Direct Plan - Growth 10 5,000,000.000 50,000,000 – – IDFC Fixed Term Plan Series 48 Direct Plan - Growth 10 10,000,000.000 100,000,000 – – TOTAL 150,000,000 50,000,000

(a) Aggregate amount of investments in unquoted mutual funds Cost 150,000,000 50,000,000 Market value 158,999,000 50,590,000 Market value of investments in unquoted mutual funds represents the repurchase price of the units issued by the mutual funds.

10 Current investments (Non-Trade) (Valued at lower of cost and market value)

FACE VALUE

`

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NUMBER OF UNITS ` NUMBER OF UNITS `

Current maturities of long-term investments (at cost)IDFC Fixed Term Direct Plan Series-10 Growth 10 5,000,000.000 50,000,000 – –

50,000,000 – CURRENT INVESTMENTS

INVESTMENT IN MUTUAL FUNDS (UNQUOTED)

IDFC Fixed Maturity 366 Days Series - 79 - Growth 10 – – 20,000,000.000 200,000,000 ICICI Prudential Institutional Liquid Fund - Super Institutional Plan - Growth

100 6,271.074 812,744 6,271.074 812,744

IDFC Money Manager Fund - Treasury Plan - Super Inst Plan C - Growth

10 – – 101,313.362 1,179,946

IDFC Cash Fund - Direct Plan - Growth 10 219.460 307,409 2,560.464 3,586,578 IDFC Fixed Term Plan Series 25 Direct Plan - Growth 10 5,000,000.000 50,000,000 – – IDFC Super Saver Income Fund - Short-term Plan - Direct Plan - Growth

10 2,927,418.775 71,947,757 – –

IDFC Ultra Short Term Fund - Direct Plan - Growth 10 712,448.448 11,556,555 3,698,931.625 60,000,000 TOTAL 184,624,465 265,579,268 (a) Aggregate amount of investments in unquoted mutual funds Cost 184,624,465 265,579,268 Market value 196,977,447 281,805,218 Market value of investments in unquoted mutual funds represents the repurchase price of the units issued by the mutual funds.

11 Cash and bank balances AS AT MARCH 31, 2014

` AS AT MARCH 31, 2013

`

CASH AND CASH EQUIVALENTS

Balances with bank: in current account 165,546 327,882 TOTAL 165,546 327,882

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I D F C F I N A N C E L I M I T E D | 2 4 3

Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

12 Revenue from operationsFOR THE YEAR ENDED

MARCH 31, 2014`

FOR THE YEAR ENDED MARCH 31, 2013

`

Profit on sale of current investments 24,070,478 17,060,425 TOTAL 24,070,478 17,060,425

13 Other IncomeFOR THE YEAR ENDED

MARCH 31, 2014`

FOR THE YEAR ENDED MARCH 31, 2013

`

Interest on Income-tax refund – 12,777 Miscellaneous income – 5,955 TOTAL – 18,732

14 Finance costFOR THE YEAR ENDED

MARCH 31, 2014`

FOR THE YEAR ENDED MARCH 31, 2013

`

Bank charges 337 – Interest on inter corporate deposits [see note 17(a)] 32,877 – Interest on delayed payment of TDS / advance tax – 1,081 TOTAL 33,214 1,081

15 Other expensesFOR THE YEAR ENDED

MARCH 31, 2014`

FOR THE YEAR ENDED MARCH 31, 2013

`

Rates & taxes 15,000 –Legal and professional fees 24,717 48,314 Auditors’ remuneration [see note (a)] 305,198 311,799 TOTAL 344,915 360,113

(a) Break up of auditors’ remuneration:

FOR THE YEAR ENDED MARCH 31, 2014

`

FOR THE YEAR ENDED MARCH 31, 2013

`

Audit fee 150,000 150,000 Tax audit fee 30,000 30,000 Other services 90,000 97,500 Service tax 33,573 31,548 Out of pocket expenses 1,625 2,751 TOTAL 305,198 311,799

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

16 The Company is engaged in investing activities in India as such there is no separate reportable primary business or geographical segment as per Accounting Standard 17 on ‘Segment Reporting’ as notified by the Companies (Accounting Standards) Rules, 2006.

17 As per Accounting Standard 18 on ‘Related Party Disclosures’ as notified by the Companies (Accounting Standards) Rules, 2006, the related parties of the Company are as follows:

RELATIONSHIP:

I. Holding Company : IDFC Limited

II. Key Management Personnel : Mr. Bipin N. Gemani - Manager

(a) Holding company:

PARTICULARSMARCH 31, 2014

`

MARCH 31, 2013`

IDFC Limited Inter corporate deposit (ICD) taken 50,000,000 – ICD Repaid 50,000,000 – Interest on ICD paid 32,877 –

18 In accordance with Accounting Standard 20 on ‘Earnings Per Share’ as notified by the Companies (Accounting Standards) Rules, 2006:

FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2013

Profit for the year (`) 22,741,565 14,113,757 Weighted average number of equity shares (Nos.) 21,000,200 21,000,200 Basic & Diluted Earnings Per Share (`) 1.08 0.67 Nominal Value Per Share (`) 10 10

19 The following additional information is disclosed in terms of the RBI circular (Ref. No. DNBS (PD) CC No. 333 / 03.02.001 / 2012-13 dated July 1, 2013) :

(a) Investor group wise classification of all investments (Current and Long Term) in shares and securities (both Quoted and Unquoted):

CATEGORY AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

MARKET VALUE/ BREAKUP VALUE / FAIR VALUE / NAV

BOOK VALUE NET OF PROVISION

MARKET VALUE/ BREAKUP VALUE / FAIR VALUE / NAV

BOOK VALUE NET OF PROVISION

1. Related Parties – – – – 2. Other than related Parties 355,976,447 334,624,465 332,395,218 315,579,268

20 Previous year figuresPrevious year’s figures have been regrouped / reclassified wherever necessary to correspond with the current year’s classification / disclosure.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC FINANCE LIMITED

SUNIL KAKAR SADASHIV S. RAO Director Director

BIPIN N. GEMANIMumbai | April 21, 2014 Manager

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15BOARD OF DIRECTORS

n Mr. Vikram Limaye n Mr. Sunil Kakar n Mr. Sadashiv S. Rao n Dr. Rajeev Uberoi n Mr. Naval Bir Kumar

AUDITORS n Deloitte Haskins & Sells Chartered Accountants

PRINCIPAL BANKER n HDFC Bank Limited

REGISTERED OFFICENaman Chambers, C-32, G-BlockBandra-Kurla Complex, Bandra (East)Mumbai 400 051Tel: +91 22 4222 2000Fax: +91 22 2654 [email protected]: U93030MH2012PLC228357

IDFC PRIMARY DEALERSHIP COMPANY LIMITED

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TO THE MEMBERSYour Directors have pleasure in presenting the Third Annual Report together with the audited accounts for the year ended March 31, 2014.

FINANCIAL RESULTS

PARTICULARSFOR THE YEAR ENDED

MARCH 31, 2014FOR THE YEAR ENDED

MARCH 31, 2013

` `

Total Income 938,838,608 338,377,357Less: Total Expenses 551,767,536 177,944,612Profit / (Loss) before Tax 387,071,072 160,432,745Less: Provision for Tax 131,794,000 51,785,900Profit / (Loss) after Tax 255,277,072 108,646,845

OPERATIONAL OVERVIEWThe Company successfully completed its second year of operations, registering healthy trading activity and volumes in fixed income securities. Further, the Company closed the year in profits following up on previous year performance. During the year, the Company registered a trading volume of about ` 26,500 crore in G-Secs, ` 1,000 crore in SDL, ` 6,000 crore in T-bills and about ` 1,000 crore in CPs, CDs and corporate bonds. The Company continued to fund its operations through a judicious mix of borrowing instruments i.e. CBLO and CPs, and with occasional instances of ICDs. The year gone by was characterised by significant financial market turmoil. India’s high CAD at a time of heightened fears of reversal in global capital flows following US Fed’s decision to commence tapering of asset purchases under their QE program resulted in a marked readjustment in INR. USD/INR lost nearly 18% before retracing half of the up move. The change of leadership at RBI, with Dr. Raghuram Rajan taking over as the new Governor, coincided with the announcement, among other measures, of a discounted currency swap program for FCNR (B) deposits and utilization under Overseas Borrowing Limits ("OBL"). Together, these schemes added approximately $34 bn to RBI’s reserve position. RBI also significantly raised short-term rates as a temporary measure to arrest the fall in INR. The combination of these measures resulted in a large correction in India’s CAD position as well as a healthy reduction in volatility in INR, causing INR to retrace almost half of its up move. The Company’s performance of profitability under this difficult environment is very satisfying. On the distribution side, the Company further strengthened its position registering a volume of approximately ` 600 crore with clients in mid-market segment such as provident funds, pension funds, co-operative banks, etc.

DIVIDENDThe Directors do not recommend any dividend for the year ended March 31, 2014.

COMPANIES ACT, 2013Most of the provisions of the Companies Act, 2013 and the Rules notified by the Ministry of Corporate Affairs ("MCA") in this regard, have come into force with effect from April 1, 2014. MCA issued a General Circular no. 8/2014 dated April 4, 2014 which clarified that the Financial Statements, Auditors' Report and the Board’s Report in respect of the previous year ended March 31, 2014 will be in accordance with the Companies Act, 1956 and Rules made there under. Your Company shall comply with the provisions of the Companies Act, 2013, as applicable.

DIRECTORSDr. Rajeev Uberoi (DIN-01731829) and Mr. Sadashiv S. Rao (DIN-01245772) will retire at the ensuing Annual General Meeting ("AGM") and being eligible, offers themselves for reappointment. The Board recommends the reappointment of the above Directors at the ensuing AGM.

AUDIT COMMITTEE The Audit Committee consists of four members, Mr. Sunil Kakar (DIN-03055561) as Chairman, Mr. Sadashiv S. Rao (DIN-01245772), Dr. Rajeev Uberoi (DIN-01731829) and Mr. Naval Bir Kumar (DIN-00580259).

AUDITORSa) Statutory Auditors M/s. Deloitte Haskins & Sells, Chartered Accountants, Ahmedabad (Registration No. 117365W) Statutory Auditors of the Company will retire at

the conclusion of the ensuing AGM. The Board recommends the reappointment of M/s. Deloitte Haskins & Sells, Chartered Accountants, as the Statutory Auditors of the Company.

b) Concurrent Auditors During the period, KPMG was reappointed as Concurrent Auditor for FY15 for systematic examination of all financial transactions of

investments in Government securities and corporate bonds as well as borrowings made by the Company and to ensure accuracy and conformity with internal systems and policies of the Company.

Directors' Report

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I D F C P R I M A R Y D E A L E R S H I P C O M PA N Y L I M I T E D | 2 4 7

PUBLIC DEPOSITSDuring the period under review, your Company has not accepted deposits.

PARTICULARS REGARDING CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTIONSince the Company does not own any manufacturing facility, the disclosure of information on other matters required to be disclosed in terms of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are not applicable and hence not given.

FOREIGN EXCHANGE EARNINGS AND EXPENDITUREThere were no foreign exchange earnings and expenditure for the Company during the last financial year.

PERSONNEL AND OTHER MATTERSThe Company had 3 employees as on March 31, 2014. As required by the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, names and other particulars of the employees are set out in the annexure to the Directors’ Report.

DIRECTORS’ RESPONSIBILITY STATEMENTPursuant to Section 217(2AA) of the Companies Act, 1956, the Directors confirm that:

n in the preparation of the annual accounts, the applicable accounting standards have been followed; n 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 March 31, 2014 and the profit of the Company for the year ended on that date;

n they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

n they have prepared annual accounts on a going concern basis.

ACKNOWLEDGEMENTS The Board would like to express their sincere thanks and appreciation to all the employees for their contribution made during the year. The Directors also express their gratitude for the unstinted support and guidance received from the Reserve Bank of India, IDFC Limited and other group companies.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS

VIKRAM LIMAYE SUNIL KAKAR

Director Director

Mumbai, April 21, 2014

Directors' Report

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TO THE MEMBERS OF IDFC PRIMARY DEALERSHIP COMPANY LIMITED

Report on the Financial StatementsWe have audited the accompanying financial statements of IDFC PRIMARY DEALERSHIP COMPANY LIMITED (“the Company”) which comprise the Balance Sheet as at March 31, 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 StatementsThe 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 September 13, 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’ ResponsibilityOur 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 the disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, 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.

OpinionIn 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 March 31, 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 Requirements1. 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.2. 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, Statement of Profit and Loss and 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 September 13, 2013 of the Ministry of Corporate Affairs).

(e) On the basis of written representations received from the directors as on March 31, 2014 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014 from being appointed as a director in terms of Section 274(1)(g) of the Act.

FOR DELOITTE HASKINS & SELLS

Chartered Accountants(Registration No. 117365W)

Z. F. BILLIMORIA

Partner(Membership No. 42791)

Mumbai, April 21, 2014

Independent Auditors' Report

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(Referred to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date)(i) Having regard to the nature of the Company’s business/ activities/ results/ transactions, etc. Clauses i(c), (ii), (vi), (viii), (x), (xii), (xiii), (xv), (xvi),

(xviii), (xix) and (xx) of CARO are not 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.

(iii) In case of loans, secured or unsecured, taken by the Company from a company listed in the Register maintained under Section 301 of the Companies Act, 1956, according to the information and explanations given to us:

(a) The Company has taken loans to ` 27,150,000,000 during the year from a Company. At the year-end, there is no outstanding balance of such loans and the maximum amount involved during the year was ` 3,000,000,000.

(b) The rate of interest and other terms and conditions of such loans are, in our opinion, prima facie not prejudicial to the interests of the Company.

(c) The payments of principal amounts and interest in respect of such loans are regular/ 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. During the course of our audit, we have not observed any major weakness in such internal control system.

(v) To the best of our knowledge and belief and according to the information and explanations given to us, there were no contracts or arrangements that needed to be entered in the Register maintained under Section 301 of the Companies Act, 1956.

(vi) In our opinion, the internal audit functions 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.

(vii) According to the information and explanations given to us in respect of statutory dues: (a) The Company has been generally regular in depositing undisputed dues, including Provident Fund, Income-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 Provident Fund, Income-tax, Service tax, Cess and other material statutory dues

in arrears as at March 31, 2014 for a period of more than six months from the date they became payable. (c) There were no disputed Provident Fund, Income-tax, Service Tax, Cess and other material statutory dues which were not deposited as on

March 31, 2014.(viii) In our opinion and according to the information and explanation given to us, the Company has not defaulted in the repayment of dues to banks

and financial institutions. (ix) Based on our examination of the records and evaluation of the related internal controls, the Company has maintained proper records of the

transactions and contracts in respect of its dealing in investments and timely entries have been made therein. The aforesaid securities have been held by the Company in its own name.

(x) According to the information and explanations given to us and on the basis of the maturity profile of assets and liabilities with a maturity profile of one year, as given in the Statement of Structural Liquidity submitted to the Reserve Bank of India, liabilities maturing in the next one year are not in excess of the assets of similar maturity.

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

FOR DELOITTE HASKINS & SELLS

Chartered Accountants(Registration No. 117365W)

Z. F. BILLIMORIA

Partner(Membership No. 42791)

Mumbai, April 21, 2014

Annexure to the Auditors' Report

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IN TERMS OF OUR REPORT ATTACHED.

FOR DELOITTE HASKINS & SELLS

Chartered AccountantsFOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC PRIMARY DEALERSHIP COMPANY LIMITED

Z. F. BILLIMORIA

PartnerVIKRAM LIMAYE

DirectorSUNIL KAKAR

Director

Mumbai | April 21, 2014ARCHIBOLD SERRAO

Company Secretary and Manager

AS AT MARCH 31, 2014

AS AT MARCH 31, 2013

NOTES ` ` `

EQUITY AND LIABILITIES

SHAREHOLDERS’ FUNDS

(a) Share capital 3 2,000,000,000 2,000,000,000 (b) Reserves and surplus 4 349,742,529 94,465,457

2,349,742,529 2,094,465,457

NON-CURRENT LIABILITIES

(a) Long-term provisions 5 933,512 418,547

CURRENT LIABILITIES

(a) Short-term borrowings 6 8,937,039,391 5,972,282,864 (b) Trade payables 7 23,651,063 1,096,001,140 (c) Other current liabilities 8 10,510,098 9,337,908 (d) Short-term provisions 9 4,025,723 97,992

8,975,226,275 7,077,719,904 TOTAL 11,325,902,316 9,172,603,908

ASSETS

NON-CURRENT ASSETS

(a) Fixed assetsTangible assets 10 115,683 22,844

(b) Deferred tax assets 11 662,000 2,816,000 (c) Long-term loans and advances 12 8,047,903 8,027,113

8,825,586 10,865,957 CURRENT ASSETS

(a) Current investments 13 11,164,378,584 8,259,086,624 (b) Trade receivables 14 – 727,002,619 (c) Cash and bank balance 15 150,261,714 102,976,278 (d) Short-term loans and advances 16 1,372,460 1,540,634 (e) Other current assets 17 1,063,972 71,131,796

11,317,076,730 9,161,737,951 TOTAL 11,325,902,316 9,172,603,908

See accompanying notes forming part of the financial statements.

Balance Sheet AS AT MARCH 31, 2014

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IN TERMS OF OUR REPORT ATTACHED.

FOR DELOITTE HASKINS & SELLS

Chartered AccountantsFOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC PRIMARY DEALERSHIP COMPANY LIMITED

Z. F. BILLIMORIA

PartnerVIKRAM LIMAYE

DirectorSUNIL KAKAR

Director

Mumbai | April 21, 2014ARCHIBOLD SERRAO

Company Secretary and Manager

FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2013

NOTES ` `

I INCOME

Revenue from operations 18 938,838,099 338,377,357 Other income 19 509 – TOTAL INCOME (I) 938,838,608 338,377,357

II EXPENSES

Employee benefits expense 20 47,698,298 16,128,684 Finance costs 21 503,780,475 153,505,797 Provisions and contingencies 22 (6,266,593) 6,266,593 Other expenses 23 6,515,249 2,032,192 Depreciation 10 40,107 11,346 TOTAL EXPENSES (II) 551,767,536 177,944,612

III PROFIT BEFORE TAX ( I- II) 387,071,072 160,432,745

IV TAX EXPENSE

Current tax 129,640,000 54,601,900 Deferred tax 2,154,000 (2,816,000)TOTAL TAX EXPENSES (IV) 131,794,000 51,785,900

V PROFIT FOR THE YEAR FROM CONTINUING OPERATIONS (III - IV) 255,277,072 108,646,845

Earnings per equity share (nominal value of share ` 10 each) 27Basic (`) 1.28 1.20 Diluted (`) 1.28 1.20

See accompanying notes forming part of the financial statements.

Statement of Profit and Loss FOR THE YEAR ENDED MARCH 31, 2014

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NOTES FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2013

` ` `

A. CASH FLOW FROM OPERATING ACTIVITIES

PROFIT / (LOSS) BEFORE TAX 387,071,072 160,432,745 Adjustments for: Depreciation expense 10 40,107 11,346 Provision for employee benefits 420,154 516,539 Provisions and contingencies 22 (6,266,593) 6,266,593 Provision for interest on delayed payment of advance tax 672,000 2,028,000

(5,134,332) 8,822,478 Operating profit before working capital changes 381,936,740 169,255,223 Changes in working capital: Adjustments for (increase) / decrease in operating assets Current investments (2,899,025,367) (8,265,353,215)Trade receivables 727,002,619 (727,002,619)Bank deposits (net) (50,000,000) (100,000,000)Long-term loans and advances – (100,000)Short-term loans and advances 168,173 (1,540,634)Other current assets 70,067,824 (71,095,289)Adjustments for increase / (decrease) in operating liabilities Trade payables (1,072,350,077) 1,095,950,578 Other current liabilities 1,172,191 (4,829,425)

(3,222,964,637) (8,073,970,604) Direct taxes paid (126,310,249) (64,557,015)

NET CASH USED IN OPERATING ACTIVITIES (A) (2,967,338,146) (7,969,272,396)

B. CASH FLOW FROM INVESTING ACTIVITIES

Purchase of fixed assets (132,946) (34,190) NET CASH USED IN INVESTING ACTIVITIES (B) (132,946) (34,190)

C. CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from fresh issue of shares – 1,950,000,000 Proceeds from borrowings (net of repayments) 2,964,756,528 5,972,282,864

NET CASH FROM FINANCING ACTIVITIES (C) 2,964,756,528 7,922,282,864

Net increase / (decrease) in cash and cash equivalents (A+B+C) (2,714,564) (47,023,722)Cash and cash equivalents as at the beginning of the year (see note 15)

2,976,278 50,000,000

Cash and cash equivalents as at the end of the year (see note 15)

261,714 2,976,278

(2,714,564) (47,023,722)

See accompanying notes forming part of the financial statements.

IN TERMS OF OUR REPORT ATTACHED.

FOR DELOITTE HASKINS & SELLS

Chartered AccountantsFOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC PRIMARY DEALERSHIP COMPANY LIMITED

Z. F. BILLIMORIA

PartnerVIKRAM LIMAYE

DirectorSUNIL KAKAR

Director

Mumbai | April 21, 2014ARCHIBOLD SERRAO

Company Secretary and Manager

Cash Flow Statement FOR THE YEAR ENDED MARCH 31, 2014

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

01 BackgroundIDFC Primary Dealership Company Limited (“the Company”) is a wholly owned subsidiary of IDFC Limited, incorporated in India and regulated by the Reserve Bank of India (“the RBI”) as a systemically important Non-deposit taking Non-banking financial company.

02 Significant accounting policies(a) Basis of preparationThe financial statements of the Company have been prepared in accordance with 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 September 13, 2013 of the Ministry of Corporate Affairs) and the relevant provisions of the 1956 Act / 2013 Act, as applicable. The financial statements have been prepared on the accrual basis under the historical cost convention.

(b) Use of estimatesThe preparation of the financial statements in confirmity with Indian GAAP 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. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates and the difference between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

(c) InvestmentsInvestments which are readily realisable and intended to be held for not more than one year from the date on which such investments are made are classified as current investments in accordance with the RBI guidelines and Accounting Standard 13 on “Accounting for Investments” as notified by the Companies (Accounting Standards) Rules, 2006. All other investments are classified as long-term investments.All investments are initially recorded at cost. The cost of an investment includes purchase price and directly attributable acquisition charges such as brokerage, fees and duties and reduced by recovery of costs, if any. On disposal of an investment, the difference between its carrying amount and the net disposal proceeds is charged or credited to the Statement of Profit and Loss.Current investments for each category are carried at the lower of cost or fair value / market value. Commercial papers, certificate of deposits and Treasury bills are valued at carrying cost. Long-term investments are carried at acquisition cost. A provision is made for diminution other than temporary on an individual basis. Premium paid over the face value of long term investments is amortised over the life of the investment.Inter-class transfer of investments from one category to the other, if any, is done in accordance with the RBI guidelines at lower of book value and fair value / market value on the date of transfer.

(d) Cash and cash equivalentsCash and cash equivalents for the purpose of the Cash Flow Statement comprises cash on hand, cash in bank, fixed deposits and other short-term highly liquid investments with an original maturity of three months or less that are readily convertible into known amount of cash and which are subject to an insignificant risk of change in value.

(e) Cash flow statementCash flows are reported using the indirect method, whereby profit / (loss) before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

(f) Tangible fixed assetsFixed assets are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated depreciation. Profit or loss arising from derecognition of fixed assets are measured as difference between the net disposal proceeds and the cost of the assets less accumulated depreciation upto the date of disposal and are recognised in the Statement of Profit and Loss.

(g) Depreciation on tangible fixed assetsDepreciation on tangible fixed assets, excluding certain electronic items is provided on the written down value method, at the rates prescribed in Schedule XIV to the Companies Act, 1956. Certain electronic items are depreciated over a period of two years on a straight-line method based on the Management’s estimate of the useful life of these assets. Depreciation on additions during the year is provided on a pro-rata basis. Assets costing less than ` 5,000 each are fully depreciated in the year of capitalisation.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

(h) Impairment of assetsThe carrying amount of assets at each Balance Sheet date are reviewed for impairment. If any indication of impairment based on internal / external factors exists, the recoverable amount of such assets is estimated and impairment is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the net selling price and its value in use, which is arrived at by discounting the future cash flows to their present value, based on an appropriate discounting factor. If at the Balance sheet date, there is a indication that previously recognised impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount, subject to a maximum of the depreciable historical cost and reversal of such impairment loss is recognised in the Statement of Profit and Loss, except in case of revalued assets.

(i) Employee benefitsDefined contribution plansThe Company’s contribution to provident fund is considered as defined contribution plan and is charged to the Statement of Profit and Loss as they fall due, based on the amount of contribution required to be made as and when services are rendered by the employees.

Defined benefit planThe net present value of the Company’s obligation towards gratuity to employees is unfunded and actuarially determined as at the Balance Sheet date based on the Projected Unit Credit Method. Actuarial gains and losses are recognised in the Statement of Profit and Loss for the period in which they occur.

Compensated absencesBased on the leave rules of the Company, employees are not permitted to accumulate leave. Any unavailed privilege leave to the extent encashable is paid to the employees and charged to the Statement of Profit and Loss for the year.

(j) Revenue recognitionRevenue 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.

n Interest income is accounted on accrual basis n Income on discounted instruments is recognised over the tenure of the instrument on a straight-line method. n Profit / loss on sale of investments is recognised on trade date basis. Profit / loss on sale of investments is determined based on the ‘first

in first out’ cost for current investments and weighted average cost for long-term investments. n Fees are recognised when reasonable right of recovery is established, revenue can be reliably measured as and when they become due.

(k) Earnings per shareBasic earnings per share is computed by dividing the profit after tax by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit after tax as adjusted for expense or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.

(l) Taxes on incomeIncome tax expense comprises of current income tax and deferred tax. Current tax is the amount payable on the taxable income for the year as determined in accordance with the provisions of the Income-tax Act, 1961. The accounting treatment for income-tax in respect of the Company’s income is based on the Accounting Standard 22 on “Accounting for Taxes on Income” as notified by the Companies (Accounting Standards) Rules, 2006. The provision made for income-tax in the accounts comprises both, the current tax and the deferred tax. The deferred tax assets and liabilities for the year, arising on account of timing differences, are recognised in the Statement of Profit and Loss and the cumulative effect thereof is reflected in the Balance Sheet. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the reporting date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the Company has unabsorbed depreciation or carried forward losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that the same can be realised against future taxable profits.

(m) Provisions and contingenciesA provision is recognised when the Company has a present obligation as a result of past events and 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 their present value and are determined based on the 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 if any, are disclosed in the notes. Contingent assets are not recognised in the Financial Statements.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

(n) Service tax input creditService tax input credit is accounted in the period in which the underlying services are received and when there is no uncertainty in availing / utilising the credit.

(o) Operating cycleBased on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.

03 Share capital AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NUMBER ` NUMBER `

AUTHORISED SHARES

Equity shares of ` 10 each 200,000,000 2,000,000,000 200,000,000 2,000,000,000 ISSUED, SUBSCRIBED & FULLY PAID-UP SHARES

Equity shares of ` 10 each 200,000,000 2,000,000,000 200,000,000 2,000,000,000 [All of these shares are held by IDFC Limited, the Holding Company and its nominees]TOTAL 2,000,000,000 2,000,000,000

(a) Reconciliation of the number of equity shares outstanding at the beginning and at the end of the year.

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NUMBER ` NUMBER `

Outstanding at the beginning of the year 200,000,000 2,000,000,000 5,000,000 50,000,000 Issued during the year – – 195,000,000 1,950,000,000 Outstanding at the end of the year 200,000,000 2,000,000,000 200,000,000 2,000,000,000

(b) Terms / rights attached to equity shares n The Company has only one class of equity shares having a par value of ` 10 per share. Each holder of equity shares is entitled to one vote

per share. n In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the

Company, after distribution of all preferential amounts. However, no such preferential amounts exists currently. The distribution will be in proportion to the number of equity shares held by the shareholders.

(c) Details of shareholders holding more than 5% of the shares in the Company

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

Number % of Holding Number % of Holding

IDFC Limited and its nominees 200,000,000 100 200,000,000 100

04 Reserves and surplus AS AT MARCH 31, 2014

`

AS AT MARCH 31, 2013`

(A) SPECIAL RESERVE U/S. 45-IC OF RBI ACT,1934

Opening balance 21,729,400 –Add : Transferred from surplus balance in Statement of Profit and Loss 51,100,000 21,729,400 Closing balance 72,829,400 21,729,400

(B) SURPLUS IN THE STATEMENT OF PROFIT AND LOSS

Opening balance 72,736,057 (14,181,388)Profit for the year 255,277,072 108,646,845 Less: Appropriations : Transfer to Special reserve u/s. 45-IC of RBI Act, 1934 51,100,000 21,729,400 Closing balance 276,913,129 72,736,057 TOTAL RESERVES AND SURPLUS 349,742,529 94,465,457

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

05 Long-term provisions AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Provision for employees benefits fund (see note 24) 933,512 418,547 TOTAL 933,512 418,547

06 Short-term borrowingsAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Collateralised borrowings and lending obligations (CBLO) [see note (a)] 8,937,039,391 5,972,282,864 TOTAL 8,937,039,391 5,972,282,864

(a) Borrowings under CBLO is secured against investments in Treasury Bills.

07 Trade payablesAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Trade Payables [see note (a)] 154,523 326,500 Provision for expenses 23,496,540 10,512,598 Payables against purchase of investments – 1,085,162,042 TOTAL 23,651,063 1,096,001,140

(a) No amount is payable to ‘Suppliers’ registered under the Micro, Small and Medium Enterprises Development Act, 2006. No interest has been paid / payable by the Company during the year to the ‘Suppliers’ covered under the Micro, Small and Medium Enterprises Development Act, 2006. The above information takes into account only those suppliers who have responded to inquiries made by the Company for this purpose.

08 Other current liabilitiesAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Interest accrued but not due on borrowings 10,421,143 7,773,709 Statutory dues 20,000 1,294,223 Payable to employee fund 68,955 269,976 TOTAL 10,510,098 9,337,908

09 Short-term provisionsAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Provision for employees benefits fund (see note 24) 3,181 97,992 Provision for Income tax [net of advance tax of ` 126,289,458 (Previous Year ` Nil)]

4,022,542 –

TOTAL 4,025,723 97,992

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

10 Tangible assetsGROSS BLOCK ACCUMULATED DEPRECIATION NET BLOCK

BA

LAN

CE

AS

AT

AP

RIL

1,

2013

AD

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DIS

PO

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` ` ` ` ` ` ` ` ` `

Office Equipment 21,600 13,700 – 35,300 8,078 17,500 – 25,578 9,722 13,522 (Previous Year) – (21,600) – (21,600) – (8,078) – (8,078)Computers 12,590 119,246 – 131,836 3,268 22,607 – 25,875 105,961 9,322 (Previous Year) – (12,590) – (12,590) – (3,268) – (3,268)TOTAL 34,190 132,946 – 167,136 11,346 40,107 – 51,453 115,683 22,844 (Previous Year) – (34,190) – (34,190) – (11,346) – (11,346) (22,844) –

11 Deferred tax assets AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

(a) Provisions 318,600 2,306,000 (b) Others 340,300 510,000 (c ) Difference between taxable and accounting depreciation 3,100 –TOTAL 662,000 2,816,000

12 Long-term loans and advances (unsecured, considered good)

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Advance payment of income tax [(net of provision for tax of ` 56,629,900 (Previous Year ` 56,629,900)]

7,947,903 7,927,113

Initial Margin Account - CBLO 100,000 100,000TOTAL 8,047,903 8,027,113

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

13 Current investments (Non-trade)

FACE VALUE AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` QUANTITY ` QUANTITY `

(Valued at lower of cost and market value)INVESTMENT IN BONDS (UNQUOTED) (FULLY PAID)

National Bank for Agriculture and Rural Development 1,000,000 – – 250 250,000,000 Power Finance Corporation Limited 1,000,000 – – 250 250,000,000 Power Grid Corporation of India Limited 1,000,000 – – 250 250,225,000 Housing Development Finance Corporation Limited 1,000,000 – – 24 24,188,184 Mahindra and Mahindra Financial Services Limited 1,000,000 – – 50 50,000,000 LIC Housing Finance Limited 1,000,000 250 250,000,000 – –

250,000,000 824,413,184 .

INVESTMENT IN CERTIFICATE OF DEPOSITS WITH SCHEDULED BANKS 738,957,696 736,128,540 (UNQUOTED)

INVESTMENT IN GOVERNMENT SECURITIES (UNQUOTED) [see note (a)] – 3,776,766,643 INVESTMENT IN TREASURY BILLS (UNQUOTED) [see note (b)] 9,419,771,734 2,928,044,850 INVESTMENT IN COMMERCIAL PAPERS (UNQUOTED) [see note 26] 246,649,154 – INVESTMENT IN MUTUAL FUNDS (UNQUOTED)

ICICI Prudential Liquid Plan Direct Growth 100 1,101,971 209,000,000 – – IDFC Cash Fund Growth - Direct Plan 1000 192,638 300,000,000 – – TOTAL CURRENT INVESTMENTS 11,164,378,584 8,265,353,217 Less: Provision for diminution in value of investments – 6,266,593 NET CURRENT INVESTMENTS 11,164,378,584 8,259,086,624

(a) Of the total amount ` Nil (Previous Year ` 3,422,423,345) is placed as collateral towards CBLO.(b) Of the total amount ` 9,419,651,363 (Previous Year ` 2,889,939,685) is placed as collateral towards CBLO.

(c) Aggregate amount of investments in unquoted mutual funds Cost 509,000,000 – Market value 509,377,985 – (d) Aggregate amount of unquoted investments - Cost 10,655,378,584 8,265,353,217

14 Trade receivables (unsecured, considered good)

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Outstanding for a period less than six months from the date they are due for paymentReceivable on sale of investments – 727,002,619 TOTAL – 727,002,619

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

15 Cash and bank balanceAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

CASH AND CASH EQUIVALENTS

Balance with bank in current account [see note (a)] 261,714 2,976,278 OTHERS

Balance with bank in deposit account [see note (b)] 150,000,000 100,000,000 TOTAL 150,261,714 102,976,278

(a) Includes ` Nil (Previous Year ` 539,952) earmarked towards Provident Fund payable pending registration with the prescribed authorities.

(b) Includes deposits under lien of ` 150,000,000 (Previous Year ` 100,000,000 ) with HDFC Bank Limited for intra day overdraft facility.

16 Short-term loans and advances (unsecured, considered good)

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Prepaid expenses 146,103 1,297,754 Supplier advance 58,427 –Balances with government authorities - Cenvat credit available 1,167,930 242,880 TOTAL 1,372,460 1,540,634

17 Other current assetsAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Interest accrued on bank deposits 665,753 306,849 Interest accrued on investments 398,219 70,824,947 TOTAL 1,063,972 71,131,796

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

18 Revenue from operationsFOR THE YEAR ENDED

MARCH 31, 2014FOR THE YEAR ENDED

MARCH 31, 2013

` `

Interest on current investments (see note 26) 641,017,916 197,597,561 Interest on deposits 13,253,493 5,524,038 Net profit on sale of current investments 284,316,690 135,255,758 Other financial services 250,000 –TOTAL 938,838,099 338,377,357

19 Other incomeFOR THE YEAR ENDED

MARCH 31, 2014FOR THE YEAR ENDED

MARCH 31, 2013

` `

Interest on income tax refund 509 –TOTAL 509 –

20 Employee benefits expenseFOR THE YEAR ENDED

MARCH 31, 2014FOR THE YEAR ENDED

MARCH 31, 2013

` `

Salaries 45,799,251 15,307,807 Contribution to provident and other funds (see note 24) 825,461 269,976 Gratuity expense 420,154 516,539 Staff welfare expenses 653,432 34,362 TOTAL 47,698,298 16,128,684

21 Finance costsFOR THE YEAR ENDED

MARCH 31, 2014FOR THE YEAR ENDED

MARCH 31, 2013

` `

Interest expense (see note 26) 489,804,406 147,011,781 Other borrowing costs 13,304,069 4,450,223 Interest on delayed payment of statutory dues 672,000 2,043,793 TOTAL 503,780,475 153,505,797

22 Provisions and contingenciesFOR THE YEAR ENDED

MARCH 31, 2014FOR THE YEAR ENDED

MARCH 31, 2013

` `

Provision for diminution in value of investments (6,266,593) 6,266,593 TOTAL (6,266,593) 6,266,593

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

23 Other expensesFOR THE YEAR ENDED

MARCH 31, 2014FOR THE YEAR ENDED

MARCH 31, 2013

` `

Printing and stationary 38,781 12,932 Travelling and conveyance 6,810 – Communication cost 33,132 4,986 Advertising and publicity 31,188 – Professional fees 1,255,273 534,621 Brokerage Paid 291,750 225,540 Rates and taxes 1,128,632 50,726 Other expenses 60,037 150,164 Shared cost (see note 26) 2,940,916 676,705 Auditors’ remuneration* 728,730 376,518 TOTAL 6,515,249 2,032,192

* Breakup of auditor’s remuneration

Audit fees 400,000 100,000 Tax audit fees 50,000 50,000 Other services 237,500 195,000 Out-of-pocket expenses 1,726 – Service tax 79,008 42,642 TOTAL 774,414 387,642 Less: Cenvat credit availed 39,504 11,124 TOTAL 728,730 376,518

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

24 In accordance with Accounting Standard 15 on “Employee Benefits” as notified under the Companies (Accounting Standards) Rules, 2006 the following disclosures have been made: i. The Company has recognised the following amounts in the Statement of Profit and Loss towards contribution to defined contribution plan which

are included under contribution to provident and other funds: FOR THE YEAR ENDED

MARCH 31, 2014 FOR THE YEAR ENDED

MARCH 31, 2013

` `

Provident fund 825,461 269,976

ii. The details of the Company’s unfunded post - retirement benefit plans for gratuity for its employees are given below which are certified by the actuary and relied upon by the auditors:

FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2013

` `

CHANGE IN THE DEFINED BENEFIT OBLIGATIONS:

Liability at the beginning of the year 516,539 – Current service cost 372,889 516,539 Interest cost 67,655 – Actuarial Gain (20,390) – Liability at the end of the year 936,693 516,539 Amount recognised in the Balance Sheet: Liability at the end of the year 936,693 516,539 Fair value of plan assets at the end of the year – – Amount recognised in the Balance Sheet under “Provision for employee benefits”: Current 3,181 97,992 Non-Current 933,512 418,547 EXPENSE RECOGNISED IN THE STATEMENT OF PROFIT AND LOSS:

Current service cost 372,889 516,539 Interest cost 67,655 – Net actuarial gain to be recognised (20,390) – Expense recognised in the Statement of Profit and Loss under “Employee benefits expense” 420,154 516,539 RECONCILIATION OF THE LIABILITY RECOGNISED IN THE BALANCE SHEET:

Opening net liability 516,539 – Expense recognised 420,154 516,539 Amount recognised in the Balance Sheet under “Provision for employee benefits” Current 3,181 97,992 Non-Current 933,512 418,547 Expected employer’s contribution next year 3,181 97,992

EXPERIENCE ADJUSTMENTS: FOR THE YEAR ENDED

MARCH 31, 2014 MARCH 31, 2013 MARCH 31, 2012 MARCH 31, 2011 MARCH 31, 2010

` ` ` ` `

Defined benefit obligation 936,693 516,539 – – – Plan assets – – – – – Surplus / (deficit) (936,693) (516,539) – – – Experience adjustments on plan liabilities 178,264 – – – – Experience adjustments on plan assets – – – – –

FOR THE YEAR ENDED

MARCH 31, 2014

FOR THE YEAR ENDED

MARCH 31, 2013

Principal assumptions: % % Discount rate (p.a.) 9.05 8.05Expected rate of return on assets (p.a.) – –

Salary escalation rate (p.a.) 8.00 8.00

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

25 The Company’s primary operations fall under single business segment of securities trading. Further, all the transactions and the assets of the Company are recorded/located in India. Since the Company’s business activity primarily falls within a single business and geographical segment, no additional disclosure is to be provided under Accounting Standard 17, other than those already provided in the financial statements.

26 As per Accounting Standard 18 on “Related Party Disclosures” as notified by the Companies (Accounting Standards) Rules, 2006, the related parties of the Company are as follows:

Relationship:

I. Holding Company : IDFC Limited

II. Key Management Personnel : Mr. Archibold Serrao, Company Secretary and Manager

The nature and volume of transactions carried out with the above related parties in the ordinary course of business are as follows:

NAME OF RELATED PARTY AND NATURE OF RELATIONSHIP

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Holding Company: IDFC Limited Issuance of equity shares – 1,950,000,000

Inter corporate deposits taken and repaid 27,150,000,000 23,000,000,000 Interest paid on Inter corporate deposits 22,161,164 53,290,411 Shared services costs* 2,940,916 676,705 Interest on investments 2,006,757 – Buyback of Bonds 281,453,515 – Purchase of Investments 489,168,000 –

* Net of service tax

27 In accordance with Accounting Standard 20 on ‘Earnings Per Share’ as notified by the Companies (Accounting Standards) Rules, 2006:

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Net Profit after tax (`) 255,277,072 108,646,845 Weighted average number of equity shares (Nos.) 200,000,000 90,479,452 Basic & Diluted Earnings Per Share (`) 1.28 1.20 Nominal Value Per Share (`) 10 10

28 The following additional information is disclosed in terms of the RBI circular (Ref. No. DNBS (PD) CC No.333 / 03.02.001 / 2013-14 dated July 1, 2013):

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

(A) CAPITAL TO RISK ASSETS RATIO (CRAR):

CRAR (%) 80.39% 73.83%CRAR - Tier I Capital (%) 80.39% 73.83%CRAR - Tier II Capital (%) – –

(B) EXPOSURES TO REAL ESTATE SECTOR*:

Direct exposure(i) Commercial Real Estate – – Lending fully secured by mortgage (including securities in the process of being

created) on commercial real estates (office building, retail space, multipurpose commercial premises, multi-family residential buildings, multi-tenanted commercial premises, industrial or warehouse space, hotels, land acquisition, development and construction etc.) Exposure would also include non-fund based ("NFB") limits.

(ii) Investments in Mortgage Backed Securities ("MBS") and other securitised exposures (a) Residential – – (b) Commercial Real Estate – –Indirect exposure Fund based and non-fund based exposures on National Housing Bank ("NHB") and Housing Finance Companies ("HFCs").

– –

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

(C) MATURITY PATTERN OF CERTAIN ITEMS OF ASSETS AND LIABILITIES

1 DAY TO 30/31 DAYS

(ONE MONTH)

OVER ONE MONTH TO

TWO MONTHS

OVER TWO MONTHS TO

THREE MONTHS

OVER THREE MONTHS TO SIX MONTHS

OVER SIX MONTHS TO

ONE YEAR

OVER ONE YEAR TO

THREE YEARS

OVER THREE YEARS TO

FIVE YEARS

OVER FIVE YEARS

TOTAL

` ` ` ` ` ` ` ` `

Liabilities

Borrowing from Banks – – – – – – – – –

Market Borrowing 8,937,039,391 – – – – – – – 8,937,039,391

Assets

Advances – – – – – – – – –

Investments 10,178,771,735 739,522,345 246,084,504 – – – – – 11,164,378,584

Previous Year

1 DAY TO 30/31 DAYS

(ONE MONTH)

OVER ONE MONTH TO

TWO MONTHS

OVER TWO MONTHS TO

THREE MONTHS

OVER THREE MONTHS TO SIX MONTHS

OVER SIX MONTHS TO

ONE YEAR

OVER ONE YEAR TO

THREE YEARS

OVER THREE YEARS TO

FIVE YEARS

OVER FIVE YEARS

TOTAL

` ` ` ` ` ` ` ` `

Liabilities

Borrowing from Banks – – – – – – – – –

Market Borrowing 5,972,282,864 – – – – – – – 5,972,282,864

Assets

Advances – – – – – – – – –

Investments 7,440,940,033 – – – – 250,000,000 24,188,184 550,225,000 8,265,353,217

The above classification is in accordance with the RBI circular (Ref. DNBS (PD). CC. No. 15 /02.01 / 2000-2001 dated June 27, 2001)

(D) INVESTOR GROUP WISE CLASSIFICATION OF ALL INVESTMENTS (CURRENT AND LONG TERM) IN SHARES AND SECURITIES (BOTH QUOTED AND UNQUOTED):

CATEGORY

CURRENT YEAR PREVIOUS YEAR

MARKET VALUE/ BREAKUP VALUE / FAIR VALUE / NAV

BOOK VALUE NET OF PROVISION

MARKET VALUE/ BREAKUP VALUE / FAIR VALUE / NAV

BOOK VALUE NET OF PROVISION

` ` ` `

1. Related Parties – – – – 2. Other than related Parties 11,165,431,569 11,164,378,584 8,260,476,809 8,259,086,624

(E) OTHER INFORMATION:

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

1 Gross non-performing assets – – (a) Related parties – – (b) Other than related parties – –

2 Net non-performing assets(a) Related parties – – (b) Other than related parties – –

– –

29 Previous year figures Previous year’s figures have been regrouped / reclassified wherever necessary to correspond with the current year’s classification / disclosure.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC PRIMARY DEALERSHIP COMPANY LIMITED

VIKRAM LIMAYE

DirectorSUNIL KAKAR

Director

Mumbai | April 21, 2014ARCHIBOLD SERRAO

Company Secretary and Manager

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BOARD OF DIRECTORS n Mr. Anil Baijal – Chairman n Dr. Rajiv B. Lall n Mr. Vikram Limaye n Mr. Cherian Thomas n Mr. Sunil Kakar n Mr. Animesh Kumar

AUDITORS n Deloitte Haskins & Sells Chartered Accountants

PRINCIPAL BANKER n HDFC Bank Limited

REGISTERED OFFICEThe Capital Court2nd Floor, Olof Palme MargMunirka, New Delhi 110 067Tel: +91 11 4331 1000Fax: +91 11 2671 [email protected]: U93000DL2011NPL215231

16 IDFC FOUNDATION

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Directors' ReportTO THE MEMBERSYour Directors have pleasure in presenting the Fourth Annual Report together with the audited accounts for the year ended March 31, 2014.

FINANCIAL RESULTS

PARTICULARSFOR THE YEAR ENDED

MARCH 31, 2014FOR THE YEAR ENDED

MARCH 31, 2013` `

Total Income 151,889,918 101,282,131Less: Total Expenditure 144,136,867 100,154,548Surplus for the year 7,753,051 1,127,583

OPERATIONAL REVIEWIDFC Foundation (“the Company”) was incorporated in India on March 4, 2011 (incorporated as a limited Company under Section 25 of the Companies Act, 1956). The Company is a wholly-owned subsidiary of IDFC Limited. The primary focus of the Company is to contribute to the development of Infrastructure through engagement in policy research and advocacy, programme support (for economic benefits to society), capacity building for government departments and agencies and in developing social infrastructure such as education and healthcare. The Company also oversees the working of its joint ventures with the State Governments of Karnataka, Uttarakhand and Delhi.The Board of Directors during a strategic session held on April 4, 2014 discussed in details the provisions of Section 135 of the Companies Act, 2013 (“The Act”) alongwith the Companies (Corporate Social Responsibility Policy) Rules, 2014 ("Rules"). As per the Rules, IDFC Foundation would carry out CSR activities as envisaged under Schedule VII of the Act as an implementing agency of IDFC Limited. The Company would primarily focus on CSR activities as well-defined projects or programmes promoting the development of (a) livelihoods; (b) rural areas; (c) social infrastructure such as healthcare and education; and (d) other infrastructure that would meet the objectives of Inclusion and environmental sustainability such as water supply, sanitation, sustainable urbanization, renewable energy, slum re-development and affordable housing.

COMPANIES ACT, 2013Most of the provisions of the Companies Act, 2013 and the Rules notified by the Ministry of Corporate Affairs ("MCA") in this regard, have come into force with effect from April 1, 2014. MCA issued a General Circular no. 8/2014 dated April 4, 2014 which clarified that the Financial Statements, Auditors' Report and the Board’s Report in respect of the previous year ended March 31, 2014 will be in accordance with the Companies Act, 1956 and Rules made there under. Your Company shall comply with the provisions of the Companies Act, 2013, as applicable.

SHAREHOLDERS UPDATEIDFC PPP Trusteeship Company Limited which was a subsidiary of the Company had made an application to the Registrar of Companies, Maharashtra, Mumbai ("ROC") under Fast Track Exit Mode 2011 on April 25, 2013 to get its name struck off from the Register of Companies maintained by ROC. On August 23, 2013, the name of IDFC PPP Trusteeship Company Limited was struck off by ROC and was dissolved pursuant to Section 560 of the erstwhile Companies Act, 1956.

DIRECTORS During the year, Dr. Rajeev Uberoi (DIN-01731829) and Ms. Ritu Anand (DIN-05154174) resigned as Directors of the Company w.e.f. June 5, 2013 and November 29, 2013 respectively. The Board placed on record it's appreciation for the valuable services rendered by Dr. Uberoi and Ms. Ritu Anand during their tenure as Directors of the Company. Mr. Animesh Kumar (DIN-03529945) and Mr. Sunil Kakar (DIN-03055561) would retire at the ensuing Annual General Meeting ("AGM") and being eligible, offer themselves for reappointment.The Board of Directors recommends reappointment of the above Directors at the ensuing AGM.

AUDIT COMMITTEEDuring the period, Dr. Rajeev Uberoi resigned from the Board and accordingly, the Audit Committee of the Company was reconstituted comprising the following: Mr. Sunil Kakar – Chairman (DIN-03055561)Mr. Cherian Thomas (DIN-00707735)Mr. Animesh Kumar (DIN-03529945)The Audit Committee met four times during the year.

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I D F C F O U N D A T I O N | 2 6 7

Directors' ReportAUDITORSM/s. Deloitte Haskins & Sells, Chartered Accountants, Ahmedabad (Registration No. 117365W) Statutory Auditors of the Company will retire at the conclusion of the ensuing AGM. The Board recommends the reappointment of M/s. Deloitte Haskins & Sells, Chartered Accountants, as the Statutory Auditors of the Company.

PUBLIC DEPOSITSDuring the period under review, your Company has not accepted deposits under Section 58-A of the Companies Act, 1956.

PARTICULARS REGARDING CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTIONSince your Company does not carry out any manufacturing activity, the particulars regarding conservation of energy, technology absorption and other particulars as required by the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1998 are not applicable and hence not given.

FOREIGN EXCHANGE EARNINGS AND EXPENDITUREThe particulars regarding foreign exchange expenditure and earnings are furnished at Note Nos. 22 & 23 of the Notes forming part of the Financial Statements.

PARTICULARS OF EMPLOYEES AND REMUNERATIONThe Company had 20 employees as on March 31, 2014. As required by the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of the employees are set out in Annexure to the Directors’ Report.

DIRECTORS’ RESPONSIBILITY STATEMENTThe Directors confirm that:

n in the preparation of the annual accounts, the applicable accounting standards have been followed; n they have selected such accounting policies and applied them consistently and made judgments 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 March 31, 2014 and the profit of the Company for the period ended on that date;

n they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

n they have prepared the annual accounts on a going concern basis.

ACKNOWLEDGEMENTS The Board would like to express their sincere thanks and appreciation to all the employees for their contribution made during the year. The Directors also express their gratitude for the unstinted support and guidance received from IDFC Limited and other group companies.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS

ANIL BAIJAL

Chairman

New Delhi, June 20, 2014

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Independent Auditors' ReportTO THE MEMBERS OF IDFC FOUNDATION

Report on the Financial Statements We have audited the accompanying financial statements of IDFC FOUNDATION (“the Company”), which comprise the Balance Sheet as at March 31, 2014, the Statement of Income and Expenditure 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 StatementsThe 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 controls relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatements, whether due to fraud or error.

Auditors’ ResponsibilityOur 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 the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatements.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 the internal controls 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 controls. 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.

OpinionIn 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 March 31, 2014;(b) in the case of the Statement of Income and Expenditure, of the surplus 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 Requirements1. The Companies (Auditor’s Report) Order, 2003 (CARO) issued by the Central Government in terms of Section 227(4A) of the Companies Act,

1956 is not applicable to the Company in terms of Clause 1(2)(iii) of the Order.2. 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, Statement of Income and Expenditure and the Cash Flow Statement dealt with by this report are in agreement with the

books of account of the Company. (a) In our opinion, the Balance Sheet, the Statement of Income and Expenditure 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).

(b) 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 & SELLS

Chartered Accountants(Registration No. 117365W)

Z. F. BILLIMORIA

Partner(Membership No. 42791)

Mumbai, June 20, 2014

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I D F C F O U N D A T I O N | 2 6 9

IN TERMS OF OUR REPORT ATTACHED.

FOR DELOITTE HASKINS & SELLS

Chartered AccountantsFOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC FOUNDATION

Z. F. BILLIMORIA

PartnerSUNIL KAKAR

DirectorCHERIAN THOMAS

Director

GOPAL CH. MONDAL

Company Secretary

Mumbai | June 20, 2014 New Delhi | June 19, 2014

Balance Sheet AS AT MARCH 31, 2014

NOTES

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

EQUITY AND LIABILITIES

SHAREHOLDERS’ FUNDS

(a) Share capital 3 130,000,000 130,000,000(b) Reserves and surplus 4 30,973,128 23,220,077

NON-CURRENT LIABILITIES

(a) Long-term provisions 5 – 1,382,057

CURRENT LIABILITIES

(a) Short-term borrowings 6 9,659,180 135,904(b) Trade payables 7 23,037,218 15,520,842(c) Other current liabilities 8 248,167,959 236,754,240(d) Short-term provisions 9 8,550,000 345,653

TOTAL 450,387,485 407,358,773ASSETS

NON-CURRENT ASSETS

(a) Fixed assets Tangible assets 10 2,985,276 560,168(b) Non-current investments 11 318,966,980 318,966,980(c) Long-term loans and advances 12 7,418,390 4,631,252

CURRENT ASSETS

(a) Current investments 13 8,311,768 8,311,768(b) Trade receivables 14 16,976,494 25,180,005(c) Cash and bank balances 15 84,026,394 44,149,029(d) Short-term loans and advances 12 6,227,481 1,832,239(e) Other current assets 16 5,474,702 3,727,332

TOTAL 450,387,485 407,358,773

See accompanying notes forming part of the financial statements.

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IN TERMS OF OUR REPORT ATTACHED.

FOR DELOITTE HASKINS & SELLS

Chartered AccountantsFOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC FOUNDATION

Z. F. BILLIMORIA

PartnerSUNIL KAKAR

DirectorCHERIAN THOMAS

Director

GOPAL CH. MONDAL

Company Secretary

Mumbai | June 20, 2014 New Delhi | June 19, 2014

Statement of Income and Expenditure FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2013

NOTES ` `

(I) INCOME

Revenue from operations 17 140,839,203 91,327,985Other income 18 11,050,715 9,954,146

TOTAL INCOME 151,889,918 101,282,131

(II) EXPENDITURE

Employee benefits expense 19 58,516,481 35,486,535Finance costs 20 - 115,299Depreciation 10 554,503 113,952Other expenses 21 85,065,883 64,438,762

TOTAL EXPENDITURE 144,136,867 100,154,548

(III) SURPLUS FOR THE YEAR FROM CONTINUING OPERATIONS [(I)- (II)] 7,753,051 1,127,583

(IV) EARNINGS PER SHARE (NOMINAL VALUE OF ` 10 PER SHARE)

Basic and diluted (`) 27 0.60 0.14

See accompanying notes forming part of the financial statements.

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Cash Flow Statement FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2013

` `

A. CASH FLOW FROM OPERATING ACTIVITIES

Surplus for the year 7,753,051 1,127,583 Adjustments for:Depreciation and amortisation expense 554,503 113,952 Provision for diminution in value of investments – 500,000 Provision for employee benefits (1,727,710) 1,727,710 Dividend income (1,979,998) (4,949,996)Interest on bank deposits (8,026,859) (4,946,150)(Profit) / Loss on redemption of long term investments – 16,712,957 Changes in working capital:Adjustments for (increase) / decrease in operating assets Short-term loans and advances (4,395,242) (299,612) Trade receivables 8,203,511 (18,435,165)Adjustments for increase / (decrease) in operating liabilities Trade payables 7,516,376 13,913,074 Other current liabilities 11,413,718 (180,360,812)Cash used in Operations 19,311,350 (174,896,459)Income - tax (paid) / refund 5,762,862 (4,820,812)NET CASH USED IN OPERATING ACTIVITIES (A) 25,074,212 (179,717,271)

B. CASH FLOW FROM INVESTING ACTIVITIES

Purchase of fixed assets (2,979,611) (674,120)Sale proceeds of non-current investments – 80,760,194 Dividend income 1,979,998 4,949,996 Interest on bank deposits 6,279,489 1,365,520 Bank balance not considered as cash and cash equivalents: Placed (150,239,371) (40,500,000) Matured 106,876,755 3,025,858 NET CASH FLOW FROM INVESTING ACTIVITIES (B) (38,082,740) 48,927,448

C. CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from short-term borrowings 9,523,276 135,904 Proceeds from issue of equity share capital – 49,500,000 NET CASH FLOW FROM FINANCING ACTIVITIES (C) 9,523,276 49,635,904

Net increase / (decrease) in cash and cash equivalents (A+B+C) (3,485,252) (81,153,919)Cash and cash equivalents as at the beginning of the year (see note 15) 3,649,029 84,802,948 Cash and cash equivalents as at the end of the year (see note 15) 163,777 3,649,029

(3,485,252) (81,153,919)

See accompanying notes forming part of the financial statements

IN TERMS OF OUR REPORT ATTACHED.

FOR DELOITTE HASKINS & SELLS

Chartered AccountantsFOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC FOUNDATION

Z. F. BILLIMORIA

PartnerSUNIL KAKAR

DirectorCHERIAN THOMAS

Director

GOPAL CH. MONDAL

Company Secretary

Mumbai | June 20, 2014 New Delhi | June 19, 2014

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

01 Company overviewIDFC Foundation ("the Company") was incorporated in India on March 4, 2011 as a limited company under Section 25 of the Companies Act,1956. The Company is a wholly-owned subsidiary of IDFC Limited and managed by a Board of Directors comprising senior executives of IDFC Limited. The primary focus of the Company has been to contribute to the development of infrastructure through engagement in policy research and advocacy, programme support (for economic benefits to society), capacity building for government departments and agencies and in developing social infrastructure (education and healthcare). The Company also oversees the working of its joint ventures with the state governments of Karnataka, Uttarakhand and Delhi.

02 Significant accounting policies2.1 Basis of preparationThe financial statements of the Company have been prepared in accordance with Generally Accepted Accounting Principles in India ("Indian GAAP") to comply in all material respect 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 September 13, 2013 of the Ministry of Corporate Affairs) and the relevant provisions of the 1956 Act / 2013 Act, as applicable. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

2.2 Use of estimatesThe Company adopts the accrual concept in the preparation of the accounts. The preparation of the 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. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

2.3 InvestmentsInvestments which are readily realisable and intended to be held for not more than one year from the date on which such investments are made are classified as current investments in accordance with Accounting Standard 13 on ‘Accounting for Investments’ as notified under the Companies (Accounting Standards) Rules, 2006. Current investments also include current maturities of long-term investments. All other investments are classified as long-term investments.All investments are initially recorded at cost. The cost of an investment includes purchase price, directly attributable acquisition charges and reduced by recovery of costs, if any. On disposal of an investment, the difference between its carrying amount and the net disposal proceeds is charged or credited to the Statement of Income and Expenditure.Current investments are individually carried at the lower of cost and fair value / market value on an individual basis. Long-term investments are carried at acquisition cost. A provision is made for diminution other than temporary on an individual basis.

2.4 Tangible fixed assetsFixed assets are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated depreciation. Income or Expenditure arising from the derecognition of fixed assets are measured as difference between the net disposal proceeds and the cost of the assets less accumulated depreciation up to the date of disposal and are recognised in the Statement of Income and Expenditure.

2.5 Depreciation on tangible fixed assets"Depreciation for all tangible fixed assets, excluding certain electronic items, is provided on the written down value method, at the rates prescribed by Schedule XIV of the Companies Act, 1956. Certain electronic items are depreciated over a period of two years on a straight-line method based on the Management’s estimate of useful life of assets. Depreciation on additions during the year is provided on a pro-rata basis. Assets costing less than ` 5,000/- each are written off in the year of capitalisation.

2.6 Cash and cash equivalentsCash and cash equivalents for the purpose of the Cash Flow Statement comprises cash on hand, cash in bank, fixed deposits and other short-term highly liquid investments with an original maturity of three months or less that are readily convertible into known amount of cash and which are subject to an insignificant risk of change in value.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

2.7 Cash flow statementCash flows are reported using the indirect method whereby cash flows from operating, investing and financing activities of the Company are segregated and surplus / (deficit) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments.

2.8 Employee benefits(i) Defined contribution plans The Company's contribution to provident fund, superannuation fund and pension fund are considered as defined contribution plans and are

charged to the Statement of Income and Expenditure as they fall due, based on the amount of contribution required to be made.

(ii) Defined benefit plan The net present value of the Company's obligation towards gratuity to employees is funded and actuarially determined as at the Balance Sheet

date based on the projected unit credit method. Actuarial gains and losses are recognised in the Statement of Income and Expenditure for the year.

(iii) Compensated absences Based on the leave rules of the Company, employees are not permitted to accumulate leave. Any unavailed privilege leave to the extent

encashable is paid to the employees and charged to the Statement of Income and Expenditure for the year.

2.9 Revenue recognitionRevenue 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. In addition, the following criteria must also be met before revenue is recognised:(a) Voluntary contributions are accounted on the date of receipt. All voluntary contributions received during the year are towards the objectives of

the Company.(b) Income from advisory / consultancy / policy advocacy and capacity building services are recognised on accrual basis based on percentage of

completion method / agreement with clients.(c) Interest income on Savings Bank accounts and Fixed Deposits are accounted on accrual basis.(d) Dividend is accounted when the right to receive is established.

2.10 Income taxThe Company has been granted exemption from Income Tax under section 12A read with section 12AA of the Income Tax Act, 1961.

2.11 Foreign currency transactions and translationsTransactions in foreign currencies of the Company are accounted at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction. Foreign currency monetary items outstanding at the Balance Sheet date are reported using the closing rate. Gain or loss resulting from the settlement of such transactions and translations of monetary assets and liabilities denominated in foreign currencies are recognised in the Statement of Income and Expenditure.

2.12 Earnings per shareBasic earnings per share is computed by dividing the surplus / (deficit) after tax by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the surplus / (deficit) after tax as adjusted for expense or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.

2.13 Provisions and contingenciesA provision is recognised when the Company has a present obligation as a result of past events and 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 their present value and are determined based on the best estimate required to settle the obligation as at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimate. Contingent liabilities are disclosed in the notes.

2.14 Service tax input creditService tax input credit is accounted in the period in which the underlying services are received and when there is no uncertainty in availing / utilising the credits.

2.15 Operating CycleBased on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

03 Share capital AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NUMBER ` NUMBER `

AUTHORISED

Equity shares of ` 10 each 20,000,000 200,000,000 20,000,000 200,000,000 ISSUED, SUBSCRIBED & FULLY PAID-UP

Equity shares of ` 10 each 13,000,000 130,000,000 13,000,000 130,000,000 (All the above shares are held by IDFC Limited, the Holding Company and its nominees)TOTAL 13,000,000 130,000,000 13,000,000 130,000,000

(a) Reconciliation of the number of shares and amount outstanding as at the beginning and at the end of the year.

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NUMBER ` NUMBER `

Outstanding as at the beginning of the year 13,000,000 130,000,000 8,050,000 80,500,000 Issued during the year – – 4,950,000 49,500,000 OUTSTANDING AS AT THE END OF THE YEAR 13,000,000 130,000,000 13,000,000 130,000,000

(b) Terms / rights attached to equity shares The Company has only one class of equity shares having a par value of ` 10 per share. Each holder of equity share is entitled to one vote per share and ranks pari passu.As per clause X of Memorandum of Association ("MoA") of the Company, in the event of liquidation of the Company, the holder of equity shares will not be entitled to receive any of the remaining assets of the Company after distribution of all preferential amounts. The amount remaining, if any, shall be given or transferred to such other Company having similar objects, to be determined by the member of the Company at or before the time of dissolution or in default thereof by the High Court of judicature that has or may acquire jurisdiction in the matter.

(c) Details of shareholders holding more than 5% of the shares in the Company

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NUMBER % OF HOLDING NUMBER % OF HOLDING

IDFC Limited and its nominees 13,000,000 100% 13,000,000 100% TOTAL 13,000,000 100% 13,000,000 100%

04 Reserves and surplusAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Surplus in the Statement of Income and Expenditure Opening balance 23,220,077 22,092,494 Surplus for the year 7,753,051 1,127,583 TOTAL 30,973,128 23,220,077

05 Long-term provisionsAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Provision for employee benefits [see note 25 (b)] – 1,382,057 TOTAL – 1,382,057

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

06 Short-term borrowingsAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Book overdraft 9,659,180 135,904 TOTAL 9,659,180 135,904

07 Trade payablesAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Payable to vendors [see note (a)] 10,635,614 1,166,362 Provision for expenses 12,401,604 14,354,480 TOTAL 23,037,218 15,520,842

(a) No amount is payable to “Suppliers” registered under the Micro, Small and Medium Enterprises Development Act, 2006. No interest has been paid / payable by the Company during the year to the “Suppliers” covered under the Micro, Small and Medium Enterprises Development Act, 2006. The above information takes into account only those suppliers who have responded to inquiries made by the Company for this purpose.

08 Other current liabilitiesAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Amount payable to a related party [see note 28 (b)] 215,000,000 225,000,000 Statutory remittances 2,689,639 1,157,617 Payable to employee benefit fund [see note 25(b)] 443,006 –Fund held in trust for KFW Development Bank, Germany 35,314 222,758 Fund held for Meghalaya Project – 373,865 Fund held in corpus donation received from IDFC Limited [see note 28 (b)] 30,000,000 10,000,000 TOTAL 248,167,959 236,754,240

09 Short-term provisionsAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Provision for income tax 8,550,000 –Provision for employee benefits [see note 25 (b)] – 345,653 TOTAL 8,550,000 345,653

10 Tangible assetsGROSS BLOCK DEPRECIATION NET BLOCK

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` ` ` ` ` ` ` ` ` `

Computers 674,120 265,194 – 939,314 113,952 260,666 – 374,618 564,696 560,168(Previous year) – (674,120) – (674,120) – (113,952) – (113,952) (560,168) –Vehicles – 2,527,367 – 2,527,367 – 269,682 – 269,682 2,257,685 –(Previous year) – – – – – – – – – –Furniture & Fixture – 106,776 – 106,776 – 5,770 – 5,770 101,006 –(Previous year) – – – – – – – – – –Office Equipment – 80,274 – 80,274 – 18,385 – 18,385 61,889 –(Previous year) – – – – – – – – – –TOTAL 674,120 2,979,611 – 3,653,731 113,952 554,503 – 668,455 2,985,276 560,168(Previous Year) – (674,120) – (674,120) – (113,952) – (113,952) (560,168) –

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

11 Non-current investments

FACE VALUE `

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

QUANTITY ` QUANTITY `

Trade investments (at cost)Investment in jointly controlled entities (unquoted) Delhi Integrated Multi-Modal Transit System Limited 1,000 73,045 147,289,740 73,045 147,289,740 Infrastructure Development Corporation (Karnataka) Limited 10 4,949,996 154,863,840 4,949,996 154,863,840 Uttarakhand Infrastructure Development Company Limited 10 239,517 4,618,320 239,517 4,618,320 Investment in trust units (unquoted)India PPP Capacity Building Trust [` 200 paid up (Previous year ` 200 paid-up)]

1,000 50,000 12,195,080 50,000 12,195,080

TOTAL 318,966,980 318,966,980

12 Loans and advances (unsecured, considered good unless stated otherwise)

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NON-CURRENT CURRENT NON-CURRENT CURRENT ` ` ` `

Bid deposits – – – 370,000 Advance payment of income tax 7,418,390 – 4,631,252 – Receivable from IDFC Limited – 3,602,621 – – Receivable from Ministry of Urban Development ("MoUD") – 1,513,351 – 537,499 Receivable from Delhi Urban Shelter Improvement Board ("DUSIB") – 36,850 – 28,755Receivable from Government of Meghalaya – 248,341 – – Balances with Government authorities - cenvat credit – 576,318 – 895,985 Employee advance – 250,000 – – TOTAL 7,418,390 6,227,481 4,631,252 1,832,239

13 Current investmentsFACE

VALUE `

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

QUANTITY ` QUANTITY `

Trade investments (at cost)Equity shares (fully paid) Investment in subsidiary company (unquoted)IDFC PPP Trusteeship Company Limited [see note (a)] – – – 50,000 500,000 Investment in trust units (unquoted)India Infrastructure Initiative Trust (fully paid) [see note (b)] 1,000 5,700 8,311,768 5,700 8,311,768 TOTAL CURRENT INVESTMENTS 8,311,768 8,811,768 Less: Provision for diminution in value of investments – 500,000 NET CURRENT INVESTMENTS 8,311,768 8,311,768

(a) IDFC PPP Trusteeship Company Limited at its Board Meeting held on March 26, 2013 decided to make an application to the Registrar of Companies to strike off its name from the Register of Companies under section 560 of the Companies Act 1956, through Fast Track Exit Scheme, 2011. The same has been confirmed by Registrar of Companies through letter dated August 23, 2013. In view of that investment in IDFC PPP Trusteeship Company Limited has been written off.

(b) During the financial year 2012-13, the investment in India Infrastructure Initiative Trust (“Triple I Trust”) has been reduced on account of partial redemption of 54,300 units at the Net Assets Value ("NAV") as on June 30, 2012 as per audited financial statements. Accordingly, the investment in ‘Triple I Trust’ is below 20% of total investment held by the Company.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

14 Trade receivables (unsecured) (considered good, unless stated otherwise)

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Outstanding for a period less than six months from the date they are due for payment [see note 24 and 28 (b)]

10,591,839 23,432,956

Outstanding for a period more than six months from the date they are due for payment [see note 28 (b)]

6,384,655 1,747,049

TOTAL 16,976,494 25,180,005

15 Cash and bank balancesAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

CASH AND CASH EQUIVALENTS

Cash on hand 163,777 70,403 Balances with banks: in deposit accounts – 3,578,626

163,777 3,649,029 OTHERS

Balances with banks: in deposit accounts [see note (a)] 83,862,617 40,500,000 TOTAL 84,026,394 44,149,029

(a) Balances with banks in deposit accounts include deposits amounting to ` 83,862,617 (Previous Year ` 40,500,000) which have an original maturity of more than 12 months.

16 Other current assetsAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Interest accrued on fixed deposits 5,474,702 3,727,332 TOTAL 5,474,702 3,727,332

17 Revenue from operationsFOR THE YEAR ENDED

MARCH 31, 2014FOR THE YEAR ENDED

MARCH 31, 2013

` `

Voluntary contribution (see note (a) and 28 (b)] 110,040,712 40,026,949 Advisory / consultancy [see note 23 and 28 (b)] 12,427,604 36,545,622 Capacity building [see note 23 and 28 (b)] 10,370,976 11,417,927 Policy advocacy 7,999,911 3,337,487 TOTAL 140,839,203 91,327,985

(a) Voluntary contribution includes donation of ` 100,000,000 (Previous Year ` 40,000,000) received from IDFC Limited with specific direction.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

18 Other incomeFOR THE YEAR ENDED

MARCH 31, 2014FOR THE YEAR ENDED

MARCH 31, 2013 ` `

Dividend income from long-term investments [see note 28 (b)] 1,979,998 4,949,996 Interest income from bank 8,026,859 4,946,150 Sitting fees [see note 28 (b)] 92,000 58,000 Profit on foreign currency transactions and translation [see note (23)] 32,218 – Interest on Income Tax refund 919,640 – TOTAL 11,050,715 9,954,146

19 Employee benefits expenseFOR THE YEAR ENDED

MARCH 31, 2014FOR THE YEAR ENDED

MARCH 31, 2013 ` `

Salaries 48,711,107 32,340,438 Contribution to provident and other funds [see note (25)] 8,031,066 3,013,246 Staff welfare expenses 1,774,308 132,851 TOTAL 58,516,481 35,486,535

20 Finance costsFOR THE YEAR ENDED

MARCH 31, 2014FOR THE YEAR ENDED

MARCH 31, 2013 ` `

Interest on delayed payment of statutory dues – 7,210 Net loss on foreign currency transactions and translation [see note 23] – 108,089 TOTAL – 115,299

21 Other expensesFOR THE YEAR ENDED

MARCH 31, 2014FOR THE YEAR ENDED

MARCH 31, 2013 ` `

Sub consultancy charges [see note 28(b)] 24,686,808 18,179,005 Donations 11,955,064 800 Grants [see note 28(b)] 19,458,241 5,906,808 Fees for increase in authorised share capital – 500,000 Legal documentation expenses – 14,503 Rent 3,305,652 – Travelling and conveyance [see note 22 and 28(b)] 7,252,457 6,299,541 Printing and stationery 2,191,111 1,490,697 Books and periodicals 46,454 10,854 Communication costs [see note 28(b)] 835,560 522,122 Membership Fee 1,132,360 1,423,600 Auditors’ remuneration [see note (a)] 200,000 150,000 Training and conference 1,079,690 108,395 Professional fees [see note 28(b)] 9,460,552 8,628,372 Repair and maintenance 231,336 315,097 Foundation day conference expenses 1,114,004 2,820,830 Loss on redemption of non-current investments – 16,712,957 Bad debts written off [see note 28(b)] 6,854 157,172 Commission and brokerage 211,043 – Stipend to trainees 297,715 185,677 Provision for diminution in value of investments – 500,000 Miscellaneous expenses 1,600,982 512,332 TOTAL 85,065,883 64,438,762

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

(a) Break-up of auditors’ remuneration

FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2013

` `

Audit fees 100,000 50,000 Tax audit fees 50,000 50,000 Other services 50,000 50,000 Service tax 24,720 18,540

224,720 168,540 Less: Service tax set-off receivable 24,720 18,540 TOTAL 200,000 150,000

22 Expenditure in foreign currenciesFOR THE YEAR ENDED

MARCH 31, 2014FOR THE YEAR ENDED

MARCH 31, 2013

` `

Travelling expenses 450,948 404,740 TOTAL 450,948 404,740

23 Earnings in foreign currenciesFOR THE YEAR ENDED

MARCH 31, 2014FOR THE YEAR ENDED

MARCH 31, 2013

` `

Advisory / consultancy 3,156,969 11,107,596 Capacity building 810,219 835,823 TOTAL 3,967,188 11,943,419

24 Unhedged foreign currency exposureFOR THE YEAR ENDED

MARCH 31, 2014FOR THE YEAR ENDED

MARCH 31, 2014

CURRENCY FCY ` FCY `

Trade receivables AUD – – 23,000 1,258,199 TOTAL – – 23,000 1,258,199

25 Disclosure of employees benefits In accordance with Accounting Standard 15 on ‘Employee Benefits’ as notified under the Companies (Accounting Standards) Rules, 2006 the following disclosures have been made:

(a) The Company has recognised the following amounts in the Statement of Income and Expenditure towards contribution to defined contribution plan which are included under contribution to provident and other funds:

FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2013

` `

Provident fund 2,055,619 1,177,907 National pension scheme 126,250 45,000 Superannuation fund 120,463 –TOTAL 2,302,332 1,222,907

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

(b) The details of the Company’s post – retirement benefit plans for gratuity for its employees are given below which is certified by the actuary and relied upon by the auditors:

FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2013

` `

CHANGE IN THE DEFINED BENEFIT OBLIGATIONS:

Liability at the beginning of the year 1,727,710 1,305,663 Current service cost 1,095,248 405,102 Interest cost 386,530 81,428 Benefits paid (2,851,239) (71,445)Actuarial loss 273,060 6,962 Liabilities assumed on acquisition 3,973,896 – Liability at the end of the year 4,605,205 1,727,710

FAIR VALUE OF PLAN ASSETS:

Contributions 4,162,199 71,445 Benefits paid (2,851,239) (71,445)Fair value of plan assets at the end of the year 1,310,960 – Total actuarial loss to be recognised 273,060 6,962

AMOUNT RECOGNISED IN THE BALANCE SHEET:

Liability at the end of the year 4,605,205 1,727,710 Long-term provisions - Provision for employee benefits – 1,382,057 Short-term provisions - Provision for employee benefits – 345,653 Fair value of plan assets at the end of the year 1,310,960 – Amount recognised in the Balance Sheet under “Other current liabilities” - Payable to employee benefit fund [Net of receivable of ` 2,851,239 (Previous year ` Nil)]

3,294,245 –

EXPENSE RECOGNISED IN THE STATEMENT OF INCOME AND EXPENDITURE:

Current service cost 1,095,248 405,102 Interest cost 386,530 81,428 Net actuarial loss recognised 273,060 6,962 Liabilities assumed on acquisition 3,973,896 – Expense recognised in the Statement of Income and Expenditure under “Employee benefits expense”

5,728,734 493,492

RECONCILIATION OF THE LIABILITY RECOGNISED IN THE BALANCE SHEET:

Opening net liability 1,727,710 1,305,663 Expense recognised 5,728,734 493,492 Contribution by the Company (4,162,199) (71,445)Amount recognised in the Balance Sheet under “Other current liabilities” - Payable to employee benefit fund (Net of receivable of ` 2,851,239)

3,294,245 –

Liability at the end of the year – 1,727,710 Long-term provisions - Provision for employee benefits – 1,382,057 Short-term provisions - Provision for employee benefits – 345,653

Expected employer’s contribution for the next year 1,000,000 345,653

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

EXPERIENCE ADJUSTMENTS

FOR THE YEAR ENDEDMARCH 31, 2014

FOR THE YEAR ENDEDMARCH 31, 2013

FOR THE YEAR ENDEDMARCH 31, 2012

FOR THE YEAR ENDEDMARCH 31, 2011

` ` ` `

Defined benefit obligation 4,605,205 1,727,710 – – Plan assets 1,310,960 – – – Surplus / (deficit) (3,294,245) (1,727,710) – – Experience adjustment on plan liabilities 381,471 (10,313) – – Experience adjustment on plan assets – – – –

FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2013

% %

INVESTMENT PATTERN

Insurer managed fundsGovernment securities 34.27 – Deposit and money market securities 14.32 – Debentures / bonds 51.41 – PRINCIPAL ASSUMPTIONS

Discount rate (per annum) 9.00 8.05 Expected rate of return on assets (per annum) 8.00 – Salary escalation rate (per annum) 8.00 8.00

The estimate of future salary increase considered in the actuarial valuation takes into account inflation, seniority, promotion and other relevant factors.

26 Segment Information The primary focus of the Company has been to contribute to the development of infrastructure through engagement in policy research and advocacy, programme support (for economic benefits to society), social infrastructure (education and healthcare) and capacity building for government departments and agencies. All other activities revolve around the main business. The Company does not have any geographical segments. As such, there are no separate reportable segments as per Accounting Standard 17 on ‘Segment Reporting’ as notified under the Companies (Accounting Standards) Rules, 2006.

27 Earnings per shareIn accordance with Accounting Standard 20 on ‘Earnings Per Share’ as notified under the Companies (Accounting Standards) Rules, 2006, the earnings per share has been calculated as under:

FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2013

` `

(a) Net surplus after tax ( `) 7,753,051 1,127,583 (b) Weighted average number of equity shares (Nos.) 13,000,000 8,104,247 (c) Basic and diluted earnings per share (a) / (b) ( `) 0.60 0.14 (d) Nominal value per share ( `) 10 10

28 Related party disclosureAs per the Accounting Standard 18 on ‘Related Party Disclosure’ as notified by the Companies (Accounting Standards) Rules 2006, the related parties of the Company are as follows:

(a) Relationship:

Holding Company IDFC Limited

Fellow Subsidiaries (with whom there are transactions) IDFC Asset Management Company Limited

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

Jointly controlled entities Infrastructure Development Corporation (Karnataka) Limited Delhi Integrated Multi-Modal Transit System Limited Uttarakhand Infrastructure Development Company Limited

Entities over which control is exercised India PPP Capacity Building Trust

(b) The nature and volume of transactions carried out with the above related parties in the ordinary course of business are as follows:

FOR THE YEAR ENDED MARCH 31, 2014

FOR THE YEAR ENDED MARCH 31, 2013

NAME OF THE RELATED PARTY NATURE OF TRANSACTIONS ` `

IDFC Limited Advisory / consultancy* 10,416,489 28,700,165 Capacity building* 6,979,636 7,779,916 Bad debts written off – 88,992 Trade receivables * 10,733,552 22,085,097 Loans and advances - receivables 3,602,621 – Fees paid * 11,051,347 1,338,583 Trade payables-balance outstanding * – 1,325 Proceeds from issue of share capital – 49,500,000 Voluntary contribution 100,000,000 40,000,000 Corpus received 30,000,000 10,000,000 Advance repaid 10,000,000 190,000,000 Advance taken -balance outstanding 215,000,000 225,000,000

Infrastructure Development Corporation (Karnataka) Limited

Advisory / consultancy* – 402,922 Sub consultancy charges* 124,270 702,250 Dividend income 1,979,998 4,949,996 Sitting fees 12,000 8,000

Delhi Integrated Multi-Modal Transit System Limited

Sitting fees 80,000 50,000

India PPP Capacity Building Trust Fees paid* – 79,416 Sale of investment – 22,450,564 Profit on sale of investment – 4,157,944 Foreign currency exchange – 739

Uttarakhand Infrastructure Development Company Limited

Grants* 834,729 393,260 Advisory / consultancy* 103,158 39,648

Note: * Inclusive of service tax

29 Claims against the company not acknowledged as debt in respect of:FOR THE YEAR ENDED

MARCH 31, 2014FOR THE YEAR ENDED

MARCH 31, 2013

` `

Provident fund demand disputed by the Company. The matter is under dispute. 101,125 – TOTAL 101,125 –

30 Previous year’s figures have been regrouped / reclassified wherever necessary to correspond with the current year’s classification / disclosure.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC FOUNDATION

SUNIL KAKAR

DirectorCHERIAN THOMAS

Director

New Delhi | June 19, 2014GOPAL CH. MONDAL

Company Secretary

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FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC FOUNDATION

SUNIL KAKAR

DirectorCHERIAN THOMAS

Director

New Delhi | June 19, 2014

NAME OF SUBSIDIARY COMPANY IDFC PPP TRSUTEESHIP CO LTD.

1 Financial year of the Subsidiary Company ended on August 23, 2013

2 Equity Shares of ` 10 each

a) Number of Shares 0

Shares of ` 10

b) Extent of Holding 0%

3 Net aggregate amount of Profit / (Loss) of the Subsidiary, so far as they concern members of IDFC Foundation

i. For the Financial Year of the Subsidiary

a) Dealt with in the accounts of the Holding Company. Nil

b) Not dealt with in the accounts of the Holding Company. Nil

ii. For the previous financial years of the Subsidiary since it became the Holding Company’s Subsidiary.

a) Dealt with in the accounts of the Holding Company. Nil

b) Not dealt with in the accounts of the Holding Company. 225,768

Statement Pursuant to Section 212 OF THE COMPANIES ACT, 1956

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BOARD OF DIRECTORS n Dr. Rajiv B. Lall – Chairman n Mr. Vikram Limaye n Mr. Mahendra N. Shah

AUDITORS n Deloitte Haskins & Sells LLP Chartered Accountants

PRINCIPAL BANKER n HDFC Bank Limited

REGISTERED OFFICENaman Chambers, C-32, G-Block Bandra-Kurla Complex, Bandra (East)Mumbai 400 051Tel: +91 22 4222 2000Fax: +91 22 2654 [email protected]: U65922MH2014PLC253816

17 IDFC HOUSING FINANCE COMPANY LIMITED

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Directors' ReportTO THE MEMBERSYour Directors have pleasure in presenting the First Annual Report together with the audited accounts for the period March 4, 2014 (date of incorporation) to March 31, 2014.

INCORPORATIONYour Company was incorporated on March 4, 2014 and received certificate to commence business from the Registrar of Companies, Maharashtra, Mumbai on March 13, 2014.

FINANCIAL RESULTS

PARTICULARS

FOR THE PERIOD MARCH 4, 2014 TO MARCH 31, 2014

`

Total Income 320,055Less: Total Expenses 1,170,946Loss before Tax (850,891)Less: Provision for Tax (226,001)(Loss) after Tax (624,890)Add / Less: Profit / (Loss) brought forward –(Loss) carried forward (624,890)

PRINCIPAL ACTIVITIESThe main object of your Company is to carry on the business of a housing finance institution. Your Company has applied to National Housing Bank ("NHB") for obtaining certificate of registration to commence the business of a housing finance institution under Section 29A of the National Housing Bank Act, 1987.

DIVIDENDBeing the first year of operations and due to non-availability of profits for distribution, the Directors do not recommend any dividend for the period ended March 31, 2014.

COMPANIES ACT, 2013Most of the provisions of the Companies Act, 2013 and the Rules notified by the Ministry of Corporate Affairs ("MCA") in this regard, have come into force with effect from April 1, 2014. MCA issued a General Circular no. 8/2014 dated April 4, 2014 which clarified that the Financial Statements, Auditors' Report and the Board’s Report in respect of the previous year ended March 31, 2014 will be in accordance with the Companies Act, 1956 and Rules made there under. Your Company shall comply with the provisions of the Companies Act, 2013, as applicable.

DIRECTORSIn accordance with the provisions of the Companies Act, 2013, Dr. Rajiv B. Lall (DIN-00131782), Mr. Vikram Limaye (DIN-00488534) and Mr. Mahendra N. Shah (DIN-00124629), the first Directors, will retire at the ensuing Annual General Meeting and being eligible, offers themselves for reappointment.

AUDIT COMMITTEEThe Audit Committee of the Company comprises of the following:1. Dr. Rajiv B. Lall - Chairman2. Mr. Vikram Limaye3. Mr. Mahendra N. Shah

AUDITORSDeloitte Haskins & Sells LLP, Chartered Accountants, (Registration No. 117366W / W-100018) Statutory Auditors of the Company will retire at the conclusion of the ensuing AGM. The Board recommends the reappointment of Deloitte Haskins & Sells LLP, Chartered Accountants, as the Statutory Auditors of the Company.

PUBLIC DEPOSITSThe Company has not accepted any Public Deposits under Section 58A of the Companies Act, 1956.

PARTICULARS REGARDING CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION Since your Company does not carry out any manufacturing activity, the particulars regarding conservation of energy, technology absorption and other particulars as required by the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1998, are not applicable.

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Directors' ReportFOREIGN EXCHANGE EARNINGS AND EXPENDITUREThere was no income or expenditure in foreign currency during the period under review.

PERSONNEL AND OTHER MATTERSSince your Company does not have any employees, the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are not applicable and hence not given.

DIRECTORS’ RESPONSIBILITY STATEMENTPursuant to Section 217(2AA) of the Companies Act, 1956, the Directors confirm that:

n in the preparation of the annual accounts, the applicable accounting standards have been followed; n they have selected such accounting policies and applied them consistently and made judgments 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 March 31, 2014 and the loss of the Company for the period ended on that date;

n proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

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

ACKNOWLEDGEMENTS The Directors express their gratitude for the support and guidance received from IDFC Limited and other group companies.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS

RAJIV B. LALL

Chairman

Mumbai, April 7, 2014

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Independent Auditors' ReportTO THE MEMBERS OF IDFC HOUSING FINANCE COMPANY LIMITED

Report on the Financial StatementsWe have audited the accompanying financial statements of IDFC HOUSING FINANCE COMPANY LIMITED (“the Company”), which comprise the Balance Sheet as at March 31, 2014, the Statement of Profit and Loss and the Cash Flow Statement for the period from March 4, 2014 (date of incorporation) to March 31, 2014 and a summary of the significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial StatementsThe 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”) read with 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.

Auditors’ ResponsibilityOur 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 the 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 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 the internal controls 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 controls. 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.

OpinionIn 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 March 31, 2014;(b) in the case of the Statement of Profit and Loss, of the loss of the Company for the period from March 4, 2014 (date of incorporation) to

March 31, 2014 and(c) in the case of the Cash Flow Statement, of the cash flows of the Company for the period from March 4, 2014 (date of incorporation) to

March 31, 2014.

Report on Other Legal and Regulatory Requirements1. 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.2. 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. 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 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.

(e) On the basis of the written representations received from the directors as on March 31, 2014 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014 from being appointed as a director in terms of Section 274(1) (g) of the Act.

FOR DELOITTE HASKINS & SELLS LLP

Chartered Accountants(Firm Registration No. 117366W/W-100018)

Z. F. BILLIMORIA

(Partner)(Membership No. 42791)

Mumbai, April 7, 2014

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Annexure to the Auditors' Report(Referred to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date)(i) Having regard to the nature of the Company’s business/ activities/ result/ transactions, etc. clauses (i), (ii), (iii), (iv), (vi), (vii), (viii), (x), (xi), (xii),

(xiii), (xiv), (xv), (xvi), (xvii), (xviii), (xix), and (xx) of CARO are not applicable.(ii) To the best of our knowledge and belief and according to the information and explanations given to us, there were no contracts or

arrangements that needed to be entered in the Register maintained under Section 301 of the Companies Act, 1956.(iii) According to the information and explanations given to us, the Company has been regular in depositing undisputed statutory dues, including

Income-tax and other material statutory dues applicable to it with the appropriate authorities during the period.(iv) To the best of our knowledge and according to the information and explanations given to us, no material fraud by or on the Company has been

noticed or reported during the period.

FOR DELOITTE HASKINS & SELLS LLP

Chartered Accountants(Firm Registration No. 117366W/W-100018)

Z. F. BILLIMORIA

(Partner)(Membership No. 42791)

Mumbai, April 7, 2014

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IN TERMS OF OUR REPORT ATTACHED.

FOR DELOITTE HASKINS AND SELLS LLP

Chartered AccountantsFOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC HOUSING FINANCE COMPANY LIMITED

Z. F. BILLIMORIAPartner

VIKRAM LIMAYEDirector

MAHENDRA N. SHAHDirector

Mumbai | April 7, 2014

NOTES

AS AT MARCH 31, 2014

`

AS AT MARCH 31, 2014

`

EQUITY AND LIABILITIES

SHAREHOLDERS’ FUNDS

(a) Share capital 3 120,000,000 (b) Reserves and surplus 4 (624,890) 119,375,110

CURRENT LIABILITIES

(a) Trade payables 5 93,146 (b) Other current liabilities 6 9,000 (c) Short-term provisions 7 19,200

TOTAL 119,496,456

ASSETS

NON-CURRENT ASSETS

(a) Deferred tax asset 8 245,201

CURRENT ASSETS

(a) Cash and bank balances 9 118,931,200 (b) Other current assets 10 320,055

TOTAL 119,496,456

See accompanying notes forming part of the financial statements.

Balance Sheet AS AT MARCH 31, 2014

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NOTES

MARCH 4, 2014 TO MARCH 31, 2014

`

I INCOME

Other income 11 320,055 TOTAL INCOME (I) 320,055

II EXPENSES

Other expenses 12 1,170,946 TOTAL EXPENSES (II) 1,170,946

III LOSS BEFORE TAX (I - II) (850,891)

IV TAX EXPENSE

Current tax 19,200 Deferred tax (245,201)TOTAL TAX EXPENSES (IV) (226,001)

V LOSS FOR THE YEAR FROM CONTINUING OPERATIONS (III - IV) (624,890)

EARNINGS PER EQUITY SHARE (NOT ANNUALISED) (NOMINAL VALUE OF SHARE ` 10 EACH) 15 Basic (`) (0.11) Diluted (`) (0.11)

See accompanying notes forming part of the financial statements.

IN TERMS OF OUR REPORT ATTACHED.

FOR DELOITTE HASKINS AND SELLS LLP

Chartered AccountantsFOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC HOUSING FINANCE COMPANY LIMITED

Z. F. BILLIMORIAPartner

VIKRAM LIMAYE Director

MAHENDRA N. SHAHDirector

Mumbai | April 7, 2014

Statement of Profit and LossFOR THE PERIOD FROM MARCH 4, 2014

(DATE OF INCORPORATION) TO MARCH 31, 2014

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MARCH 4, 2014 TO MARCH 31, 2014

A. CASH FLOW FROM OPERATING ACTIVITIES

LOSS BEFORE TAX FOR THE PERIOD (850,891)Adjustment for changes in working capital:Adjustments for increase in operating assets:

Other current assets (320,055)Adjustments for increase in operating liabilities:

Trade payables 93,146 Current liabilities 9,000

NET CASH USED IN OPERATING ACTIVITIES (A) (1,068,800)

B. CASH FLOW FROM INVESTING ACTIVITIES –NET CASH FROM INVESTING ACTIVITIES (B) –

C. CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from issue of Share Capital 120,000,000 NET CASH FROM FINANCING ACTIVITIES (C) 120,000,000Cash and cash equivalents as at the end of the year (see note 9) (A+B+C) 118,931,200

IN TERMS OF OUR REPORT ATTACHED.

FOR DELOITTE HASKINS AND SELLS LLP

Chartered AccountantsFOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC HOUSING FINANCE COMPANY LIMITED

Z. F. BILLIMORIAPartner

VIKRAM LIMAYE Director

MAHENDRA N. SHAHDirector

Mumbai | April 7, 2014

Cash Flow StatementFOR THE PERIOD FROM MARCH 4, 2014

(DATE OF INCORPORATION) TO MARCH 31, 2014

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

01 BackgroundIDFC Housing Finance Company Limited ('the Company') is a public company, incorporated in India on March 4, 2014. The Company is a wholly owned subsidiary of IDFC Limited. The Company has applied for certificate of registration to National Housing Board ("NHB") on March 21, 2014 for commencing the business of Housing Finance.

02 Significant accounting policies (a) Basis of preparationThe financial statements of the Company have been prepared in accordance with 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 September 13, 2013 of the Ministry of Corporate Affairs) and the relevant provisions of the 1956 Act / 2013 Act, as applicable. The financial statements have been prepared on the accrual basis under the historical cost convention.

(b) Use of estimatesThe preparation of the financial statements in conformity with Indian GAAP 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. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates and the difference between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

(c) Revenue recognitionInterest income on bank deposits is recognised on accrual basis.

(d) Taxes on income"Income tax expense comprises of current income tax and deferred tax. Current tax is the amount payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961. The accounting treatment for income-tax in respect of the Company's income is based on Accounting Standard 22 on 'Accounting for Taxes on Income' as notified under the Companies (Accounting Standards) Rules, 2006. The provision made for income-tax in the accounts comprises both, the current tax and the deferred tax. The deferred tax assets and liabilities for the year arising on account of timing differences are recognised in the Statement of Profit and Loss and the cumulative effect thereof is reflected in the Balance Sheet."Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the reporting date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the Company has unabsorbed depreciation or carried forward losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that the same can be realised against future taxable profits.

(e) Cash and cash equivalentsCash and cash equivalents for the purpose of the Cash Flow Statement comprises cash on hand, cash in bank, fixed deposits and other short-term highly liquid investments with an original maturity of three months or less that are readily convertible into known amount of cash and which are subject to an insignificant risk of change in value.

(f) Cash flow statementCash flows are reported using the indirect method, whereby profit / (loss) before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

(g) Earnings per shareBasic earnings per share is computed by dividing the profit / (loss) after tax by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax as adjusted for expense or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.

(h) Provisions and contingenciesA provision is recognised when the Company has a present obligation as a result of past events and 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 their present value and are determined based on the 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 if any, are disclosed in the notes. Contingent assets are not recognized in the financial statement.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

03 Share capital AS AT MARCH 31, 2014

NUMBER `

AUTHORISED SHARES

Equity shares of ` 10 each 12,000,000 120,000,000 ISSUED, SUBSCRIBED & FULLY PAID-UP SHARES

Equity shares of ` 10 each 12,000,000 120,000,000 (All of above shares are held by IDFC Limited, the Holding Company and its nominees)TOTAL ISSUED, SUBSCRIBED & FULLY PAID-UP SHARE CAPITAL 120,000,000

(a) Reconciliation of the number of equity shares outstanding at the beginning and at the end of the year.

AS AT MARCH 31, 2014

NUMBER `

Outstanding at the beginning of the year – –Issued during the year 12,000,000 120,000,000 Outstanding at the end of the year 12,000,000 120,000,000

(b) Terms / rights attached to equity shares n The Company has only one class of equity shares having a par value of ` 10 per share. Each holder of equity shares is entitled to one vote

per share. n In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the

Company, after distribution of all preferential amounts. However, no such preferential amounts exists currently. The distribution will be in proportion to the number of equity shares held by the shareholders.

(c) Details of shareholders holding more than 5% of the shares in the Company

Equity shares AS AT MARCH 31, 2014

NUMBER % OF HOLDING

IDFC Limited and its nominees 12,000,000 100%

04 Reserves and surplus AS AT MARCH 31, 2014

`

(A) DEFICIT IN THE STATEMENT OF PROFIT AND LOSS

Opening balance –Loss for the period (624,890)Closing balance (624,890)

05 Trade payables AS AT MARCH 31, 2014

`

Trade payables 41,966 Provision for expenses 51,180 TOTAL 93,146

No amount is payable to “Suppliers” under Micro, Small and Medium Enterprises Development Act, 2006. No interest has been paid / is payable by the Company during the year to the “Suppliers” covered under the Micro, Small and Medium Enterprises Development Act, 2006. The above information takes into account only those suppliers who have responded to inquiries made by the Company for this purpose.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

06 Other current liabilties AS AT MARCH 31, 2014

`

Statutory liabilities 9,000 TOTAL 9,000

07 Short-term provisions AS AT MARCH 31, 2014

`

Provision for tax 19,200 TOTAL 19,200

08 Deferred tax asset AS AT MARCH 31, 2014

`

Preliminary expenses 245,201 TOTAL 245,201

09 Cash and bank balances AS AT MARCH 31, 2014

`

CASH AND CASH EQUIVALENTS

Balance with bank:in current account 931,200in deposit account 118,000,000

TOTAL 118,931,200

10 Other current assets AS AT MARCH 31, 2014

`

Interest accrued on bank deposit 320,055 TOTAL 320,055

11 Other incomeMARCH 4, 2014

TO MARCH 31, 2014`

Interest on bank deposit 320,055 TOTAL 320,055

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

12 Other expensesMARCH 4, 2014 TO

MARCH 31, 2014`

Preliminary expenses written off 991,913 Stamp duty 119,500 Auditors’ remuneration * 56,180 Miscellaneous expenses 3,353 TOTAL 1,170,946

* Breakup of Auditor’s remuneration Audit fee 50,000 Service tax 6,180

56,180

13 The Company is yet to commence its commercial operations. Accordingly, there are no separate reportable segments as per Accounting Standard 17 on ‘Segment Reporting’ as notified under the Companies (Accounting Standards) Rules, 2006.

14 As per Accounting Standard 18 on ‘Related Party Disclosures’ as notified under the Companies (Accounting Standards) Rules, 2006, the related parties of the Company are as follows:

Relationship:I. Holding company: IDFC Limited

The nature and volume of transactions carried out with the above related party in the ordinary course of business is as follows:

NAME OF RELATED PARTY AND NATURE OF RELATIONSHIP

PARTICULARS MARCH 31, 2014`

Holding companyIDFC Limited Proceeds from issue of equity shares 119,999,940

15 In accordance with Accounting Standard 20 on ‘Earnings Per Share’ as notified under the Companies (Accounting Standards) Rules, 2006:The earnings per share have been computed as under:

PARTICULARS CURRENT PERIOD

Loss after tax (`) (624,890)Weighted average number of equity shares (Nos.) 5,598,214 Basic & diluted earnings per share (`) (0.11)Nominal value per share (`) 10

16 Since the Company was incorporated on March 4, 2014 this is the first accounting year of the Company. Accordingly there are no comparative figures.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC HOUSING FINANCE COMPANY LIMITED

Mumbai | April 7, 2014VIKRAM LIMAYEDirector

MAHENDRA N. SHAHDirector

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BOARD OF DIRECTORS n Dr. Rajiv B. Lall – Chairman n Mr. Vikram Limaye n Mr. Mahendra N. Shah

AUDITORS n Deloitte Haskins & Sells LLP Chartered Accountants

PRINCIPAL BANKER n HDFC Bank Limited

REGISTERED OFFICENaman Chambers, C-32, G-Block Bandra-Kurla Complex, Bandra (East)Mumbai 400 051Tel: +91 22 4222 2000Fax: +91 22 2654 [email protected]: U67190MH2014PLC253944

18 IDFC INFRA DEBT FUND LIMITED

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TO THE MEMBERSYour Directors have pleasure in presenting the First Annual Report together with the audited accounts for the period from March 7, 2014 (date of incorporation) to March 31, 2014.

INCORPORATIONYour Company was incorporated on March 7, 2014 and the Certificate to Commence the Business was received from the Registrar of Companies, Maharashtra, Mumbai on March 14, 2014.

FINANCIAL RESULTS

PARTICULARSFOR THE PERIOD ENDED

MARCH 31, 2014`

Total Income Other Income 293,384Less: Total Expenses 1,162,233Loss before Tax (868,849)Less: Provision for Tax 55,900Loss after Tax (924,749)

PRINCIPAL ACTIVITIESThe Company has applied to Reserve Bank of India ("RBI") for registration as a NBFC. Subsequently, it would seek license from RBI for undertaking Infra Debt Fund activities, i.e. re-financing existing debt of infrastructure companies, thereby creating fresh headroom for banks to lend to fresh infrastructure projects.

DIVIDENDBeing the first year of operations and due to unavailability of profits for distribution, the Directors do not recommend any dividend for the period ended March 31, 2014.

COMPANIES ACT, 2013Most of the provisions of the Companies Act, 2013 and the Rules notified by the Ministry of Corporate Affairs ("MCA") in this regard, have come into force with effect from April 1, 2014. MCA issued a General Circular no. 8/2014 dated April 4, 2014 which clarified that the Financial Statements, Auditors' Report and the Board’s Report in respect of the previous year ended March 31, 2014 will be in accordance with the Companies Act, 1956 and Rules made there under. Your Company shall comply with the provisions of the Companies Act, 2013, as applicable.

DIRECTORSIn accordance with the provisions of the Companies Act, 2013, Dr. Rajiv B. Lall (DIN-00131782), Mr. Vikram Limaye (DIN-00488534) and Mr. Mahendra N. Shah (DIN-00124629), the first Directors, will retire at the ensuing Annual General Meeting ("AGM") and being eligible, offers themself for reappointment.

AUDIT COMMITTEEThe Audit Committee of the Company comprises of the following:1. Dr. Rajiv B. Lall - Chairman2. Mr. Vikram Limaye3. Mr. Mahendra N. Shah

AUDITORSDeloitte Haskins & Sells LLP, Chartered Accountants, (Registration No. 117366W / W-100018) Statutory Auditors of the Company will retire at the conclusion of the ensuing AGM. The Board recommends the reappointment of Deloitte Haskins & Sells LLP, Chartered Accountants, as the Statutory Auditors of the Company.

PUBLIC DEPOSITSThe Company has not accepted any Public Deposits under Section 58A of the Companies Act, 1956.

PARTICULARS REGARDING CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION Since the Company does not own any manufacturing facility, the disclosure of information on other matters required to be disclosed in terms of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1998, are not applicable and hence not given.

Directors' Report

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FOREIGN EXCHANGE EARNINGS AND EXPENDITUREThere was no income or expenditure in foreign currency during the period under review.

PERSONNEL AND OTHER MATTERSSince your Company does not have any employees, the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are not applicable and hence not given.

DIRECTORS’ RESPONSIBILITY STATEMENTThe Directors confirm that:

n in the preparation of the annual accounts, the applicable accounting standards have been followed; n 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 March 31, 2014 and the loss of the Company for the period ended on that date;

n they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

n they have prepared the annual accounts on a going concern basis.

ACKNOWLEDGEMENTS The Directors also express their gratitude for the unstinted support and guidance received from IDFC Limited and other group companies.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS

RAJIV B. LALL

Chairman

Mumbai, April 7, 2014

Directors' Report

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Independent Auditors' ReportTO THE MEMBERS OF IDFC INFRA DEBT FUND LIMITED

Report on the Financial StatementsWe have audited the accompanying financial statements of IDFC INFRA DEBT FUND LIMITED (“the Company”), which comprise the Balance Sheet as at March 31, 2014, the Statement of Profit and Loss and the Cash Flow Statement for the period from March 7, 2014 (date of incorporation) to March 31, 2014 and a summary of the significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial StatementsThe 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”) read with 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.

Auditors’ ResponsibilityOur 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 the 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 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 the internal controls 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 controls. 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.

OpinionIn 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 March 31, 2014;(b) in the case of the Statement of Profit and Loss, of the loss of the Company for the period from March 7, 2014 (date of incorporation) to

March 31, 2014; and(c) in the case of the Cash Flow Statement, of the cash flows of the Company for the period from March 7, 2014 (date of incorporation) to

March 31, 2014.

Report on Other Legal and Regulatory Requirements1. 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.2. 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 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.

(e) On the basis of the written representations received from the directors as on March 31, 2014 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014 from being appointed as a director in terms of Section 274(1) (g) of the Act.

FOR DELOITTE HASKINS & SELLS LLPChartered Accountants(Registration No. 117366W/W-100018)

Z. F. BILLIMORIAPartner(Membership No. 42791)

Mumbai, April 7, 2014

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Annexure to the Auditors' Report(Referred to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date)(i) Having regard to the nature of the Company’s business/ activities/ result/ transactions, etc. clauses (i), (ii), (iii), (iv), (vi), (vii), (viii), (x), (xi), (xii),

(xiii), (xiv), (xv), (xvi), (xvii), (xviii), (xix), and (xx) of CARO are not applicable.(ii) To the best of our knowledge and belief and according to the information and explanations given to us, there were no contracts or

arrangements that needed to be entered in the Register maintained under Section 301 of the Companies Act, 1956.(iii) According to the information and explanations given to us, the Company has been regular in depositing undisputed statutory dues, including

Income-tax and other material statutory dues applicable to it with the appropriate authorities during the period.(iv) To the best of our knowledge and according to the information and explanations given to us, no material fraud by or on the Company has been

noticed or reported during the period.

FOR DELOITTE HASKINS & SELLS LLPChartered Accountants(Registration No. 117366W/W-100018)

Z. F. BILLIMORIAPartner(Membership No. 42791)

Mumbai, April 7, 2014

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NOTES

AS ATMARCH 31, 2014

`

AS ATMARCH 31, 2014

`

EQUITY AND LIABILITIES

SHAREHOLDERS’ FUNDS

(a) Share capital 3 120,000,000 (b) Reserves and surplus 4 (924,749) 119,075,251 CURRENT LIABILITIES

(a) Trade payables 5 86,233 (b) Other current liabilties 6 8,000 (c) Short-term provisions 7 68,800

TOTAL 119,238,284

ASSETS

NON-CURRENT ASSETS

(a) Deferred tax asset 8 12,900 CURRENT ASSETS

(a) Cash and bank balances 9 118,932,000 (b) Other current assets 10 293,384

TOTAL 119,238,284

See accompanying notes forming part of the financial statements.

IN TERMS OF OUR REPORT ATTACHED.

FOR DELOITTE HASKINS & SELLS LLP

Chartered AccountantsFOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC INFRA DEBT FUND LIMITED

Z. F. BILLIMORIA VIKRAM LIMAYE MAHENDRA N. SHAHPartner Director Director

Mumbai | April 7, 2014

Balance Sheet AS AT MARCH 31, 2014

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NOTES MARCH 7, 2014 TO MARCH 31, 2014

`

I INCOME

Other income 11 293,384 TOTAL INCOME (I) 293,384

II EXPENSES

Other expenses 12 1,162,233 TOTAL EXPENSES (II) 1,162,233

III LOSS BEFORE TAX (I - II) (868,849)

IV TAX EXPENSE

Current tax 68,800 Deferred tax (12,900)TOTAL TAX EXPENSES (IV) 55,900

V LOSS FOR THE YEAR FROM CONTINUING OPERATIONS (III - IV) (924,749)EARNINGS PER EQUITY SHARE (NOT ANNUALISED) (NOMINAL VALUE OF SHARE ` 10 EACH)

15

Basic (`) (0.17) Diluted (`) (0.17)

See accompanying notes forming part of the financial statements.

IN TERMS OF OUR REPORT ATTACHED.

FOR DELOITTE HASKINS & SELLS LLP

Chartered AccountantsFOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC INFRA DEBT FUND LIMITED

Z. F. BILLIMORIA VIKRAM LIMAYE MAHENDRA N. SHAHPartner Director Director

Mumbai | April 7, 2014

Statement of Profit and LossFOR THE PERIOD FROM MARCH 7, 2014

(DATE OF INCORPORATION) TO MARCH 31, 2014

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MARCH 7, 2014 TO MARCH 31, 2014

`

A. CASH FLOW FROM OPERATING ACTIVITIES

Loss before tax for the period (868,849)Adjustment for changes in working capital:Adjustments for increase in operating assets:Other current assets (293,384)Adjustments for increase in operating liabilities:Trade payables 86,233 Other current liabilities 8,000 NET CASH USED IN OPERATING ACTIVITIES (A) (1,068,000)

B. CASH FLOW FROM INVESTING ACTIVITIES

NET CASH FROM INVESTING ACTIVITIES (B) –

C. CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from issue of Share Capital 120,000,000 NET CASH FROM FINANCING ACTIVITIES (C) 120,000,000

Cash and cash equivalents as at the end of the year (see note 9) (A+B+C) 118,932,000

IN TERMS OF OUR REPORT ATTACHED.

FOR DELOITTE HASKINS & SELLS LLP

Chartered AccountantsFOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC INFRA DEBT FUND LIMITED

Z. F. BILLIMORIA VIKRAM LIMAYE MAHENDRA N. SHAHPartner Director Director

Mumbai | April 7, 2014

Cash Flow StatementFOR THE PERIOD FROM MARCH 7, 2014

(DATE OF INCORPORATION) TO MARCH 31, 2014

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

01 BackgroundIDFC Infra Debt Company Limited ('the Company') is a public company incorporated in India on March 7, 2014. The Company is a wholly owned subsidiary of IDFC Limited and regulated by the Reserve Bank of India ("the RBI"). The Company has applied for Non-banking financial company license to the RBI on March 28, 2014.

02 Significant accounting policies(a) Basis of preparationThe financial statements of the Company have been prepared in accordance with 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 September 13, 2013 of the Ministry of Corporate Affairs) and the relevant provisions of the 1956 Act / 2013 Act, as applicable. The financial statements have been prepared on the accrual basis under the historical cost convention.

(b) Use of estimatesThe preparation of the financial statements in conformity with Indian GAAP 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. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates and the difference between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

(c) Revenue recognitionInterest income on bank deposits is recognised on accrual basis.

(d) Taxes on IncomeIncome-tax expense comprises of current income tax and deferred tax. Current tax is the amount payable on the taxable income for the year as determined in accordance with the provisions of the Income-tax Act, 1961.The accounting treatment for income-tax in respect of the Company's income is based on Accounting Standard 22 on "Accounting for Taxes on Income as notified under the Companies (Accounting Standards) Rules, 2006. The provision made for income-tax in the accounts comprises both, the current tax and the deferred tax. The deferred tax assets and liabilities for the year arising on account of timing differences are recognised in the Statement of Profit and Loss and the cumulative effect thereof is reflected in the Balance Sheet.Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the reporting date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the Company has unabsorbed depreciation or carried forward losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that the same can be realised against future taxable profits.

(e) Cash and cash equivalentsCash and cash equivalents for the purpose of the Cash Flow Statement comprises cash on hand, cash in bank, fixed deposits and other short-term highly liquid investments with an original maturity of three months or less that are readily convertible into known amount of cash and which are subject to an insignificant risk of change in value.

(f) Cash flow statementCash flows are reported using the indirect method, whereby profit / (loss) before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

(g) Earnings per shareBasic earnings per share is computed by dividing the profit / (loss) after tax by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax as adjusted for expense or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.

(h) Provisions and contingenciesA provision is recognised when the Company has a present obligation as a result of past events and 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 their present value and are determined based on the 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 if any, are disclosed in the notes. Contingent assets are not recognised in the financial statements.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

03 Share capital AS AT MARCH 31, 2014

NUMBER `

AUTHORISED SHARES

Equity shares of ` 10 each 12,000,000 120,000,000 ISSUED, SUBSCRIBED & FULLY PAID-UP SHARES

Equity shares of ` 10 each 12,000,000 120,000,000 (All of above shares are held by IDFC Limited, the Holding Company and its nominees )TOTAL 120,000,000

(a) Reconciliation of the number of equity shares outstanding at the beginning and at the end of the year.

AS AT MARCH 31, 2014

NUMBER `

Outstanding at the beginning of the year – – Issued during the year 12,000,000 120,000,000 OUTSTANDING AT THE END OF THE YEAR 12,000,000 120,000,000

(b) Terms / rights attached to equity shares n The Company has only one class of equity shares having a par value of ` 10 per share. Each holder of equity shares is entitled to one vote

per share. n In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the

Company, after distribution of all preferential amounts. However, no such preferential amounts exists currently. The distribution will be in proportion to the number of equity shares held by the shareholders.

(c) Details of shareholders holding more than 5% of the shares in the Company

NAME OF EQUITY SHAREHOLDERS AS AT MARCH 31, 2014

NUMBER % OF HOLDING

IDFC Limited and its nominees 12,000,000 100%

04 Reserves and surplus AS AT MARCH 31, 2014

`

DEFICIT IN THE STATEMENT OF PROFIT AND LOSS

Opening balance –Loss for the period (924,749)Closing balance (924,749)

05 Trade payables AS AT MARCH 31, 2014

`

Trade payables 35,053 Provision for expenses 51,180 TOTAL 86,233

No amount is payable to “Suppliers” under Micro, Small and Medium Enterprises Development Act, 2006. No interest has been paid / is payable by the Company during the year to the “Suppliers” covered under the Micro, Small and Medium Enterprises Development Act, 2006. The above information takes into account only those suppliers who have responded to inquiries made by the Company for this purpose.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

06 Other current liabilities AS AT MARCH 31, 2014

`

Statutory dues 8,000 TOTAL 8,000

07 Short-term provisions AS AT MARCH 31, 2014

`

Provision for Income tax 68,800 TOTAL 68,800

08 Deferred tax asset AS AT MARCH 31, 2014

`

Preliminary expenses 12,900 TOTAL 12,900

09 Cash and bank balances AS AT MARCH 31, 2014

`

CASH AND CASH EQUIVALENTS

Balance with bank: in current account 932,000 in deposit account 118,000,000 TOTAL 118,932,000

10 Other current assets AS AT MARCH 31, 2014

`

Interest accrued on bank deposit 293,384 TOTAL 293,384

11 Other incomeMARCH 7, 2014 TO

MARCH 31, 2014`

Interest on bank deposit 293,384 TOTAL 293,384

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC INFRA DEBT FUND LIMITED

VIKRAM LIMAYE MAHENDRA N. SHAHMumbai | April 7, 2014 Director Director

12 Other expensesMARCH 7, 2014 TO

MARCH 31, 2014`

Preliminary expenses written off 52,113 Auditor’s remuneration* 56,180 Stamp duty and registration fees for increase in authorised share capital 1,049,600 Miscellaneous expenses 4,340 TOTAL 1,162,233

* Breakup of Auditors’ remuneration

Audit fees 50,000 Service tax 6,180

56,180

13 The Company is yet to commence its commercial operations. Accordingly, there are no separate reportable segments as per Accounting Standard 17 on ‘Segment Reporting’ as notified under the Companies (Accounting Standards) Rules, 2006.

14 As per Accounting Standard 18 on ‘Related Party Disclosures’ as notified under the Companies (Accounting Standards) Rules, 2006, the related parties of the Company are as follows:

Relationship:I. Holding company: IDFC Limited The nature and volume of transactions carried out with the above related party in the ordinary course of business is as follows:

MARCH 31, 2014`

Holding CompanyIDFC Limited Proceeds from issue of equity shares 119,999,940

15 In accordance with Accounting Standard 20 on ‘Earnings Per Share’ as notified under the Companies (Accounting Standards) Rules, 2006:The earnings per share have been computed as under:

CURRENT PERIOD`

Loss after tax (`) (924,749)Weighted average number of equity shares (Nos.) 5,308,000 Basic & diluted earnings per share (`) (0.17)Nominal value per share (`) 10

16 Since the Company was incorporated on March 7, 2014 this is the first accounting year of the Company. Accordingly there are no comparative figures.

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BOARD OF DIRECTORS n Mr. Nimesh Grover n Mr. Shrikant Paranjape n Mr. Raju Dodti n Mr. Ritesh Vohra

AUDITORS n Deloitte Haskins & Sells LLP Chartered Accountants

PRINCIPAL BANKER n Indusind Bank Limited

REGISTERED OFFICEBlueridge, Near CognizantRajiv Gandhi Infotech Park Phase IHinjewadi, Pune 411 057MaharashtraTel: +91 20 4220 0402www.neopro.inCIN: U72200PN1999PTC144498

19 NEOPRO TECHNOLOGIES PRIVATE LIMITED

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Directors' ReportTO THE MEMBERS,Your Directors take immense pleasure in presenting the Annual Report together with the Audited Accounts and Auditors’ Report for the year ended

March 31, 2014.

FINANCIAL RESULTS

PARTICULARSFOR THE YEAR ENDED

MARCH 31, 2014 `

FOR THE YEAR ENDED MARCH 31, 2013

`

Sales 569,811,930 450,746,606

Other Income 2,546,026 10,722,254

Expenditure 375,471,141 420,217,199

Depreciation 212,186,331 217,038,562

Profit / (Loss) before Tax (15,299,516) (175,786,901)

Profit / (Loss) after Tax (34,268,949) (206,188,461)

DIVIDENDThe directors do not recommend any dividend for the year under consideration.

COMPANIES ACT, 2013Most of the provisions of the Companies Act, 2013 and the Rules notified by the Ministry of Corporate Affairs (“MCA”) in this regard, have come

into force with effect from April 1, 2014. MCA issued a General Circular no. 8/2014 dated April 4, 2014 which clarified that the Financial Statements,

Auditors’ Report and the Board’s Report in respect of the previous year ended March 31, 2014 will be in accordance with the Companies Act, 1956

and Rules made there under.

Your Company shall comply with the provisions of the Companies Act, 2013, as applicable.

DIRECTORSMr. Ritesh Vohra, Director (DIN 01259544) of the Company is liable to retire by rotation at the ensuing Annual General Meeting (“AGM”) and being

eligible, offers himself for reappointment.

The Board recommends the reappointment of Mr. Vohra at the ensuing AGM.

AUDITORSDeloitte Haskins & Sells LLP, Chartered Accountants, (Registration No. 117366W / W-100018) Statutory Auditors of the Company will retire at the

conclusion of the ensuing AGM.

The Board recommends the reappointment of Deloitte Haskins & Sells LLP, Chartered Accountants, as the Statutory Auditors of the Company.

PUBLIC DEPOSITSThe Company has not accepted any public deposits under Section 58A of the Companies Act, 1956 during the year under review.

PARTICULARS REGARDING CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTIONSince your Company does not carry out any manufacturing activity, the particulars regarding conservation of energy, technology absorption and

other particulars as required by the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1998, are not applicable.

FOREIGN EXCHANGE EARNINGS AND EXPENDITUREThere were no foreign exchange earnings and outgo during the year under review.

PERSONNEL AND OTHER MATTERSThere were no employees drawing remuneration exceeding the limits specified under Section 217 (2A) of the Companies Act, 1956, read with the

Companies (Particulars of Employees) Rules, 1975, as amended from time to time.

COMPLIANCE CERTIFICATEPursuant to the provisions of 383A of the Companies Act, 1956, Compliance Certificate of Mr. Amit Punde, Company Secretary in Practice, is

annexed to this Directors' Report.

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Directors' ReportDIRECTORS’ RESPONSIBILITY STATEMENTPursuant to Section 217(2AA) of the Companies Act, 1956, the Directors confirm that:

n in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to

material departures;

n 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 March 31, 2014 and the loss of the Company for the

period ended on that date;

n proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the

Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

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

ACKNOWLEDGEMENTSYour Directors wish to place on record their sincere thanks to its bankers, institutions, suppliers, associates, customers and employees for their

support. The Directors also wish to express their heartfelt gratitude to the stakeholders for their continued support to the Company.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS

NIMESH GROVER

DirectorRITESH VOHRA

Director

Pune | April 16, 2014

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Compliance Certificate UNDER THE COMPANIES ACT, 1956

THE MEMBERS,NEOPRO TECHNOLOGIES PRIVATE LIMITEDBlueridge, Near Cognizant, Rajiv Gandhi InfoTech Park Phase I,Hinjewadi, Pune - 411 057

I, have examined the registers, records, books and papers of NEOPRO TECHNOLOGIES PRIVATE LIMITED, (the Company) as required to be maintained under the erstwhile Companies Act, 1956 (the Act) and the rules made there under and applicable provisions of the Companies Act, 2013, (the new Act and also the provisions contained in the Memorandum and Articles of Association of the Company for the financial year ended on March 31, 2014 as produced before me.In my opinion and to the best of my information and according to the examinations carried out by me and explanations furnished to me by the Company, its officers and agents, I certify that in respect of the aforesaid financial year:1. The Company has kept and maintained all registers as stated in Annexure ‘A’ to this certificate, as per the provisions and the rules made there

under and all entries therein have been duly recorded.2. The Company has duly filed the forms and returns as stated in Annexure ‘B’ to this certificate, with the Registrar of Companies, Regional

Director, Central Government, Company Law Board or other authorities as the case may be, within the time prescribed under the Act and the rules made there under or with delay, as the case may be as stated in the annexure.

3. The Company is a subsidiary of a public limited company and therefore treated as a Public Limited Company under Section 3(1)(iv)(c) of the Act and therefore comments are not required to be offered on this Para.

4. The Board of Directors duly met 5 times on 10.05.2013, 07.06.2013, 28.08.2013, 20.12.2013 and 04.03.2014 in respect of which meetings, proper notices were given and the proceedings were properly recorded and signed, including circular resolutions passed, in the Minutes Book maintained for the purpose.

5. The Company did not close its Register of Members during the year under review, thus the provisions of Section 154 of the Act or Section 91 of the New Act are not attracted.

6. The Annual General Meeting for the financial year ended on March 31, 2013 was held on August 28, 2013 after giving due notice to the members of the Company and the resolutions passed thereat were duly recorded in Minutes Book maintained for the Purpose.

7. Two Extra Ordinary General Meetings were held on 07.06.2013 and 12.02.2014, One Class A Equity Shareholders’ Meeting on 07.06.2013 and One Class Ordinary Equity Shareholders’ Meeting on 07.06.2013 were held during the financial year after giving due notice to the members of the Company and the resolutions passed thereat were duly recorded in Minutes Book maintained for the Purpose.

8. The Company has not made any loans and not given any guarantee or provided any security to the persons mentioned in Section 295 of the Act. Further the Company has not entered into any fresh transactions attracting the provisions of Section 185 of the Companies Act, 2013.

9. The Company has not entered into any contracts specified under Section 297 of the Act.10. The Company has made necessary entries in the register maintained under Section 301 of the Act.11. The Company has no employee or any other person holding office or place of profit as envisaged in Section 314 of the Act.12. The Company has not issued any duplicate share certificates during the year.13. The Company: (i) was not required to deliver certificates upon transfer of 35,799 equity shares and has delivered certificates upon reclassification of

3,60,000 Class A Equity Shares into Class Ordinary Equity Shares. There was no allotment of shares and the Company has not received any securities for transmission or for any other purpose during the year under Report.

(i) not declared or paid any dividend during the year covered under this certificate. (i) not declared or paid any dividend during the year covered under this certificate and hence question of payment of dividend within 30 days

of declaration does not arise. (ii) no amount to the credit of unpaid dividend account, application money due for refund, matured deposits, matured debentures and the

interest accrued thereon. (iii) duly complied with the requirements of Section 217 of the Act.14. The Board of Directors of the Company is duly constituted and appointment of 1(One) additional director was duly made during the year under

certification. Otherwise, there was no appointment of any other director, alternate director or director to fill casual vacancy was done during the year under certification.

15. The Company has not appointed any whole-time / Managing Director during the year under certification, hence no comments on this para are offered.

16. The Company has not appointed any sole-selling agents during the year covered under this certificate.17. There were no instances which required approvals of the Central Government, Company Law Board, Regional Director, Registrar or such other

authorities as may be prescribed under the various provisions of the Act.

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18. The Directors have disclosed their interest in other firms/ companies to the Board of Directors pursuant to the provisions of the Act and the rules made there under.

19. The Company has not made any allotment of shares and other securities during the financial year ending March 31, 2014.20. The Company has not bought back any shares during the financial year ending March 31, 2014.21. The Company has not issued any debentures and the preference shares issued are not due for redemption. Hence comments on this para are

not offered.22. The Company was not required to keep in abeyance rights to dividend, rights shares and bonus shares wherever applicable.23. The Company has not invited/ accepted any deposit/ unsecured loan during the year within the meaning of Section 58A and 58AA of the Act.24. The amount borrowed by the Company from the Body Corporate during the financial year ending on March 31, 2014 is within the borrowing

limits of the Company and the Company has complied with the provisions of Section 180 of the Companies Act, 2013.25. The Company has not made any loans or investments or given any security or provided any guarantee to other body corporate.26. The Company has not altered the provisions of the memorandum with respect to situation of the Company’s registered office from one State to

another during the year under scrutiny.27. The Company has not altered the provisions of the memorandum with respect to the objects of the Company during the year under scrutiny.28. The Company has not altered the provisions of the memorandum with respect to name of the Company during the year under scrutiny.29. The Company has altered the provisions of the memorandum with respect to share capital of the Company during the year under scrutiny and

complied with the provisions of the Act.30. The Company has not altered its articles of association during the year under review.31. No prosecution has been initiated/ launched against the Company.32. The Company has not collected any amount as security from its employees during the year under certification.33. The Company has not constituted its own provident fund pursuant to Section 418 of the Act.34. As regards compliance of Sections 209, 210 and 211 of the Act, while issue of this certificate; I have relied on the report of the Statutory

Auditors of the Company.

AMIT P. PUNDE

Company SecretaryC.P. No. 5268

Pune, April 16, 2014

Compliance Certificate UNDER THE COMPANIES ACT, 1956

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Registers as maintained by the Company1. Register of Members U/S 150 of the Act.2. Register of Share Transfers.3. Register of Directors U/S 303 of the Act.4. Register of Directors Shareholding U/S 307 of the Act.5. Register of Charges U/S 143 of the Act (No entries)6. Register of Contracts U/S 301 of the Act.7. Register of Disclosure of Interest U/S 301 (3) of the Act.8. Register of Loans, Investments, Guarantees and securities u/s 372A of the Act. (No entries)9. Minutes Book of meetings of Members U/S 193 of the Act10. Minutes Book of meetings of Directors U/S 193 of the Act.11. Books of accounts U/S 209.

ANNEXURE – BForms and Returns as filed by the Company with the Registrar of Companies, Regional Director, Central Government or other authorities during the financial year ending on March 31, 2014.

FORMS FILED WITH THE ROC OFFICEFORM / DOC. SECTION PURPOSE EVENT DATE DELAY / IN TIME

Form 23AC & 23ACA [Balance Sheet] 220 Annual Filing 31/03/2013 In timeForm 20B [Annual Return] 159 Annual Filing 28/08/2013 In timeForm 66 [Compliance Certificate] 383A Annual Filing 31/03/2013 In timeForm 5 94 Increase in Authorised Capital 07/06/2013 In timeForm 5 16 Raclassification of Capital 07/06/2013 DelayForm 23 192 Registration of Resolutions 07/06/2013 In timeForm 32 303 Appointment of Additional Director 07/06/2013 DelayForm 32 303 Regularisation of appointment of Director 28/08/2013 In timeForm 2 75 Return of Allotment 30/03/2013 Pertaining to last year filed in current yearForm 23 192 Registration of Resolutions 12/02/2014 Not yet filed

AMIT P. PUNDE

Company SecretaryC.P. No. 5268

Pune, April 16, 2014

ANNEXURE – A

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Independent Auditors' ReportTO THE MEMBERS OF NEOPRO TECHNOLOGIES PRIVATE LIMITED

Report on the Financial Statements We have audited the accompanying financial statements of NEOPRO TECHNOLOGIES PRIVATE LIMITED (“the Company”), which comprise the Balance Sheet as at March 31, 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 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 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 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 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 March 31, 2014; (b) in the case of the Statement of Profit and Loss, of the loss 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 1. 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. 2. 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

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

(e) On the basis of the written representations received from the directors as on March 31, 2014 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014 from being appointed as a director in terms of Section 274(1)(g) of the Act.

FOR DELOITTE HASKINS & SELLS LLP

Chartered Accountants(Firm’s Registration No. 117366W / W-100018)

HEMANT M. JOSHI

(Partner)(Membership No: 38019)

Pune, April 16, 2014

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Annexure to the Auditors' Report(Referred to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date) Having regard to the nature of the Company’s business/activities during the year, clauses (ii), (vi), (xii), (xiii), (xiv), (xix) and (xx) of CARO are not applicable. (i) 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) The Company has not disposed off any fixed assets during the year. (ii) 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. Accordingly, sub clause (iii)(b) to (d), (f) and (g) are not applicable. (iii) 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 purchases of fixed assets and sale of services. There are no transactions in respect of purchase of inventory and sale of goods. During the course of our audit, we have not observed any major weakness in such internal control system.

(iv) 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 ` 5 lakhs in respect of any party, the transactions have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time.

(v) In our opinion, the internal audit functions 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.

(vi) We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(vii) According to the information and explanations given to us in respect of statutory dues: (a) The Company has generally been regular in depositing undisputed statutory dues, including, Income Tax, Wealth Tax, Service Tax, Cess

and other material statutory dues applicable to it with the appropriate authorities. As explained to us, the Company did not have any dues on account of Provident Fund, Employees’ State Insurance, Excise duty, Investor Education and Protection Fund, Sales Tax, Customs Duty and Excise Duty,.

(b) There were no undisputed amounts payable in respect of Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Cess and other material statutory dues in arrears as at March 31, 2014 for a period of more than six months from the date they became payable.

(c) According to the information and explanation given to us and records of the Company, there are no dues of Sales Tax, Income Tax, Customs Duty, Wealth Tax, Service Tax, Excise Duty, Cess, which have not been deposited on account of any dispute.

(viii) The accumulated losses of the Company at the end of the financial year are not more than fifty percent of its net worth and the Company has not incurred cash losses in the current financial year, and in the immediately preceding financial year.

(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 the bank. There were no amounts payable to financial institutions and debenture holders.

(x) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks and financial institutions.

(xi) In our opinion and according to the information and explanations given to us, the term loan has been applied for the purposes for which it was obtained.

(xii) In our opinion and according to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, as at March 31, 2014, we report that funds raised on short term basis have not been used during the year for long-term investment.

(xiii) According to the information and explanations given to us, the Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956.

(xiv) 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 the Company has been noticed or reported during the year.

FOR DELOITTE HASKINS & SELLS LLPChartered Accountants(Firm’s Registration No. 117366W / W-100018)

HEMANT M. JOSHI(Partner)(Membership No: 38019)

Pune, April 16, 2014

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NOTES

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

EQUITY AND LIABILITIES

SHAREHOLDERS’ FUNDS

Share capital 2 4,714,680 4,714,680 Reserves and surplus 3 734,343,273 768,612,222 Money received against share warrants 4 9,000 9,000

739,066,953 773,335,902 NON-CURRENT LIABILITIES

Long-term borrowings 5 1,776,069,773 1,669,981,133 Deferred tax liabilities (net) 83,882,969 64,913,536 Other long-term liabilities 6 84,362,348 85,397,548

1,944,315,090 1,820,292,217 CURRENT LIABILITIES

Trade payables 8,596,490 98,299,336 Other current liabilities 7 105,380,443 202,019,941

113,976,933 300,319,277 TOTAL 2,797,358,976 2,893,947,396

ASSETS

NON-CURRENT ASSETS

Fixed assets Tangible assets 8 2,518,990,652 2,701,120,597 Intangible assets 8 102,204 7,142 Capital work-in-progress – 20,604,953 Long-term loans and advances 9 125,747,158 91,061,616 Other non-current assets 10 7,878,299 13,052,373

2,652,718,313 2,825,846,681 CURRENT ASSETS

Trade receivables 11 31,115,268 22,502,063 Cash and cash equivalents 12 73,018,731 29,382,567 Short-term loans and advances 13 25,945,929 1,067,878 Other current assets 14 14,560,735 15,148,207

144,640,663 68,100,715 TOTAL 2,797,358,976 2,893,947,396

Significant accounting policies 1

The accompanying notes are an integral part of the financial statements

IN TERMS OF OUR REPORT ATTACHED

FOR DELOITTE HASKINS & SELLS LLP

Chartered AccountantsFOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

NEOPRO TECHNOLOGIES PRIVATE LIMITED

HEMANT M. JOSHI

PartnerNIMESH GROVER

DirectorRITESH VOHRA

Director

Pune | April 16, 2014 Mumbai | April 16, 2014

Balance Sheet AS AT MARCH 31, 2014

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NOTESYEAR ENDED

MARCH 31, 2014YEAR ENDED

MARCH 31, 2013

` `

INCOME

Revenue from operations 15 569,811,930 450,746,606 Other income 16 2,546,026 10,722,254

TOTAL REVENUE (1+2) 572,357,956 461,468,860

EXPENSES

Employee benefits expense 17 – 1,654,163 Finance costs 18 252,095,503 207,743,225 Other expenses 19 123,375,638 210,819,811 Depreciation and amortisation expense 8 212,186,331 217,038,562

TOTAL EXPENSES 587,657,472 637,255,761 PROFIT / (LOSS) BEFORE TAX (15,299,516) (175,786,901)TAX EXPENSE

Current tax expense for current year – – Current tax expense relating to prior years – 23,880 Deferred tax 18,969,433 30,377,680

PROFIT / (LOSS) AFTER TAX (34,268,949) (206,188,461)Earning / (loss) per equity share (nominal value ` 10/- per share)Basic and Diluted (79.79) (480.10)Significant accounting policies 1

The accompanying notes are an integral part of the financial statements

IN TERMS OF OUR REPORT ATTACHED

FOR DELOITTE HASKINS & SELLS LLP

Chartered AccountantsFOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

NEOPRO TECHNOLOGIES PRIVATE LIMITED

HEMANT M. JOSHI

PartnerNIMESH GROVER

DirectorRITESH VOHRA

Director

Pune | April 16, 2014 Mumbai | April 16, 2014

Statement of Profit and Loss FOR THE YEAR ENDED MARCH 31, 2014

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IN TERMS OF OUR REPORT ATTACHED

FOR DELOITTE HASKINS & SELLS LLP

Chartered AccountantsFOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

NEOPRO TECHNOLOGIES PRIVATE LIMITED

HEMANT M. JOSHI

PartnerNIMESH GROVER

DirectorRITESH VOHRA

Director

Pune | April 16, 2014 Mumbai | April 16, 2014

YEAR ENDED MARCH 31, 2014

YEAR ENDED MARCH 31, 2013

` `

A CASH FLOW FROM OPERATING ACTIVITIESNET PROFIT / (LOSS) BEFORE EXTRAORDINARY ITEMS AND TAX (15,299,516) (175,786,901)Adjustments for:Depreciation and amortisation 212,186,331 217,038,562 Finance costs 252,095,503 207,743,225 Interest income (on fixed deposits ) (2,107,024) (2,180,741)Liabilities / provisions no longer required written back – (711,289)

462,174,810 421,889,757 OPERATING PROFIT / (LOSS) BEFORE WORKING CAPITAL CHANGES 446,875,294 246,102,856 Changes in working capital:Adjustments for (increase) / decrease in operating assets:Trade receivables (8,613,205) (16,740,730)Short-term loans and advances (24,878,051) (558,533)Long-term loans and advances 23,937,080 – Other current assets 1,416,654 (12,962,311)Other non-current assets 5,174,074 (9,561,677)Adjustments for increase / (decrease) in operating liabilities:Trade payables (89,702,846) 31,476,442 Other current liabilities 7,122,652 (67,928,175)Other long-term liabilities (1,035,200) 20,306,503

(86,578,842) (55,968,481)Cash generated from operations 360,296,452 190,134,375 Net income tax (paid) / refunds (58,622,622) (20,962,752)NET CASH FLOW FROM / (USED IN) OPERATING ACTIVITIES (A) 301,673,830 169,171,623

B CASH FLOW FROM INVESTING ACTIVITIESCapital expenditure on fixed assets, including capital advances (34,443,573) (94,376,129)Interest on fixed deposits 1,277,842 2,180,741 NET CASH FLOW FROM / (USED IN) INVESTING ACTIVITIES (B) (33,165,731) (92,195,388)

C CASH FLOW FROM FINANCING ACTIVITIESProceeds from issue of preference shares – 250,320,000 Proceeds from long-term borrowings 150,000,000 1,964,358,954 Repayment of long-term borrowings (119,719,449) (959,420,563)Proceeds from other short-term borrowings – (1,101,701,630)Finance costs Paid (255,152,486) (207,284,802)NET CASH FLOW FROM / (USED IN) FINANCING ACTIVITIES (C) (224,871,935) (53,728,041)Net increase / (decrease) in cash and cash equivalents (A+B+C) 43,636,164 23,248,194 Cash and cash equivalents at the beginning of the year 29,382,567 6,134,373 Cash and cash equivalents at the end of the year 73,018,731 29,382,567 Note 1: Cash and cash equivalents at the end of the year (a) Cash on hand 4,281 204 (b) Balances with banks 7,814,450 29,382,363 (c ) Fixed Deposit with Bank 65,200,000 – TOTAL 73,018,731 29,382,567 Note 2: The above Cash Flow Statement has been prepared under the “Indirect Method” as set out in the Accounting Standard - 3 on Cash

Flow Statement.

The accompanying notes are an integral part of the financial statements

Cash Flow Statement FOR THE YEAR ENDED MARCH 31, 2014

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

01 Significant Accounting Policies1.01 Basis of Preparation of Financial StatementsThe 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 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 September 13, 2013 of the Ministry of Corporate Affairs) and the relevant provisions of the 1956 Act/ 2013 Companies Act, as applicable. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.All Assets and Liabilities have been classified as Current or Non-current as per the operating cycle criteria set out in the Revised Schedule VI to the Companies Act, 1956. As per the aforesaid criteria, the normal operating cycle of the Company is one year.

1.02 Use of EstimatesThe preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

1.03 Cash and cash equivalents (for purposes of Cash Flow Statement)Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

1.04 Cash flow statementCash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

1.05 Depreciation and amortisationDepreciation has been provided on the written down value method as per the rates prescribed in Schedule XIV to the Companies Act, 1956. Accordingly, the depreciation rates used are as follows :

Building (Other than Factory Building) 5%Plant and Machinery 13.91%Furniture and Fit Outs (Leased out)-SLM * 20%Furniture and Fit Outs (Owned) 18.10%Office Appliances 13.91%Vehicle 25.89%Computers 40%Software 40%

* Depreciation on Furniture & Fit Outs leased to SEZ clients is charged on SLM basis for life of 5 years.Assets individually costing ` 5,000/- or less are fully depreciated in the year of purchase.

1.06 Revenue RecognitionIncome from Lease Rental is recognised on accrual basis in accordance with the terms of agreement with the Lessee. Lease Rental income is shown net of recovery of power and fuel charges from Lessees. Fixed escalation clauses present in the customer contracts are recognised on a straight line basis over the term of the applicable contracts.

1.07 Other incomeInterest income is accounted on accrual basis.

1.08 Tangible fixed assetsFixed assets are carried at cost less accumulated depreciation and impairment losses, if any. The cost of fixed assets includes interest on borrowings attributable to acquisition of qualifying fixed assets up to the date the asset is ready for its intended use and other incidental expenses incurred up to that date. Subsequent expenditure relating to fixed assets is capitalised only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance. (Also refer to policy on borrowing costs, impairment of assets).

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

Intangible assets:Intangible assets are carried at cost less accumulated amortisation and impairment losses, if any. The cost of an intangible asset comprises its purchase price, including any import duties and other taxes (other than those subsequently recoverable from the taxing authorities), and any directly attributable expenditure on making the asset ready for its intended use and net of any trade discounts and rebates. Subsequent expenditure on an intangible asset after its purchase / completion is recognised as an expense when incurred unless it is probable that such expenditure will enable the asset to generate future economic benefits in excess of its originally assessed standards of performance and such expenditure can be measured and attributed to the asset reliably, in which case such expenditure is added to the cost of the asset.

1.09 Foreign Currency Transactions and TranslationsForeign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.Exchange differences arising on the settlement of monetary items or on reporting Company's monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expenses in the year in which they arise.

1.10 Employee BenefitsShort-term Employee BenefitsThe undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the year when the employees render the service. These benefits include performance incentive and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service. The cost of such compensated absences is accounted as under:(a) in case of accumulated compensated absences, when employees render the services that increase their entitlement of future compensated

absences; and(b) in case of non-accumulating compensated absences, when the absences occur.

Defined Contribution PlansThe Company's contribution to provident fund is considered as defined contribution plan and is charged as an expense as it falls due based on the amount of contribution required to be made and when services are rendered by the employees.

Defined Benefit PlansFor defined benefit plan in the form of gratuity fund, the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each Balance Sheet date. Actuarial gains and losses are recognised in the Statement of Profit and Loss in the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested and otherwise is amortised on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognised in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognised past service cost, as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the schemes.

Other Employee BenefitsCompensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised as a liability at the present value of the defined benefit obligation as at the Balance Sheet date less the fair value of the plan assets out of which the obligations are expected to be settled.

1.11 Borrowing CostsBorrowing costs include interest, amortisation of ancillary costs incurred and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profit and Loss . Borrowing costs, allocated to and utilised for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset upto the date of capitalisation of such asset are added to the cost of the assets. Capitalisation of borrowing costs is suspended and charged to the Statement of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted.

1.12 LeasesLease Income is recognised in the Statement of Profit and Loss on a straight-line basis over the lease term. Initial direct costs and Recurring costs are recognised and Expenses in the Statement of Profit and Loss.

1.13 Earnings Per ShareBasic earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

1.14 Income TaxesCurrent tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961.Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.Deferred tax is recognised on timing differences, being the differences 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 is measured using the tax rates and the tax laws enacted or substantially enacted as at the reporting date. Deferred tax liabilities are recognised for all timing differences. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognised only if there is virtual certainty that there will be sufficient future taxable income available to realise such assets. Deferred tax assets are recognised for timing differences of other items only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each Balance Sheet date for their realisability.

1.15 ImpairmentThe carrying values of assets / cash generating units at each Balance Sheet date are reviewed for impairment. If any indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognised. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor. When there is indication that an impairment loss recognised for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in the Statement of Profit and Loss, except in case of revalued assets.

1.16 Provision, Contingent Liabilities and Contingent AssetsA provision is recognised when the Company has a present obligation as a result of past events and 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 their present value and are determined based on the 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 disclosed in the Notes."

02 Share capital(a) Authorised, issued subscribed and paid-up share capital

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NUMBER OF SHARES ` NUMBER OF SHARES `

AUTHORISED

Equity shares of ` 10/- each 857,900 8,579,000 97,900 979,000 Class A equity shares of ` 10/- each – – 360,000 3,600,000 Class B equity shares of ` 10/- each 100 1,000 100 1,000 Redeemable preference shares of ` 10/- each 42,000 420,000 42,000 420,000 TOTAL 900,000 9,000,000 500,000 5,000,000

ISSUED SUBSCRIBED AND FULLY PAID-UP

Issued, subscribed & paid-up equity shares of ` 10/- each 429,458 4,294,580 70,358 703,580 Class A equity shares of ` 10/- each – – 359,100 3,591,000 Class B equity shares of ` 10/- each 10 100 10 100 Redeemable preference shares of ` 10/- each 42,000 420,000 42,000 420,000 TOTAL 471,468 4,714,680 471,468 4,714,680

Of the above 60,358 Equity shares of ` 10/- each, 359,100 Class A equity shares of ` 10/- each (Converted during the year into 359,100 Ordinary Equity Shares of ` 10 /- each) & 10 Class B equity shares of ` 10/- each are deemed to be issued, subscribed & fully paid-up in terms of scheme of arrangement, becoming operative from November 11, 2011 (Effective Date), since allotted on December 27, 2011.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

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

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NUMBER OF SHARES ` NUMBER OF SHARES `

Equity shares outstanding at the beginning of the year 70,358 703,580 70,358 703,580 Fresh issue during the year – – – – Converted Class A Equity share into equity shares 359,100 3,591,000 – – Equity shares outstanding at the end of the year 429,458 4,294,580 70,358 703,580 Class A equity shares outstanding at the beginning of the year 359,100 3,591,000 359,100 3,591,000 Converted Class A Equity share into equity shares (359,100) (3,591,000) – – Fresh issue during the year – – – – Equity shares outstanding at the end of the year – – 359,100 3,591,000 Class B Equity shares outstanding at the beginning of the year 10 100 10 100 Fresh issue during the year – – – – Equity shares outstanding at the end of the year 10 100 10 100 Redeemable Preference shares outstanding at the beginning of the year 42,000 420,000 – – Fresh issue during the year – – 42,000 420,000 Preference shares outstanding at the end of the year 42,000 420,000 42,000 420,000

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

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

CLASS OF SHARES/ NAME OF SHAREHOLDER NUMBER OF SHARES

HELD % HOLDING IN THAT

CLASS OF SHARES NUMBER OF SHARES

HELD % HOLDING IN THAT

CLASS OF SHARES

EQUITY SHARES

Paranjape Schemes (Construction) Limited 83,993 20% 20,196 29%IDFC Limited 345,465 80% 50,162 71%CLASS A EQUITY SHARES

Paranjape Schemes (Construction) Limited – – 99,596 28%IDFC Limited – – 259,504 72%CLASS B EQUITY SHARES

IDFC Limited 10 100% 10 100%REDEEMABLE PREFERENCE SHARES

IDFC Limited 42,000 100% 42,000 100%

(d) Equity shares:The Company has two classes (Previous Year - Three classes) of equity shares having a par value of ` 10 per share. Each holder of ordinary class of shares is entitled to one vote per share. The Class B shares carry such voting rights as may be necessary to entitle its holder to exercise, along with any other voting Security of the Company held by such a holder, an aggregate of 90% of the overall voting rights (exercisable through the entire voting Securities of the Company) at any meeting of the Shareholders subject to the completion of the Second Closing as per Share Purchase Agreement. These shares are non-transferable and shall not be entitled to dividends or any distributions.

(e) 0.0001% Non-Convertible Redeemable Preference shares:The Company has total preference share capital of ` 420,000/- (Previous Year ` 420,000/-) divided into 42,000 (Previous Year 42,000) preference shares of ` 10 each. The Preference shares shall only bear a coupon dividend rate @ 0.0001% per annumThe Preference shares shall have a term of 19 (nineteen) years. The Preference shares shall become redeemable at the option of the holder of the Preference shares. The redemption price will be determined between the Company and the holder of the Preference shares.The Preference shares shall not rank superior to the equity shares of the Company. Upon the winding up or dissolution of the Company, the Preference shares shall be entitled to receive distributions only (i) up to an amount equal to the aggregate of the issue price of each of the Preference shares; and (ii) subsequent to any dividend or distribution of any of the assets or surplus funds of the Company to the existing holders of equity shares of the Company by reason of their ownership thereof.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

03 Reserves and surplusAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

A) SECURITIES PREMIUM ACCOUNT

Opening balance 1,215,112,366 965,212,366 Add: Premium on issue of redeemable preference shares – 249,900,000 Closing balance 1,215,112,366 1,215,112,366

B) SURPLUS / (DEFICIT) IN STATEMENT OF PROFIT AND LOSS

Opening balance (446,500,144) (240,311,683)Add : profit / (loss) for the year (34,268,949) (206,188,461)Closing balance (480,769,093) (446,500,144)

TOTAL 734,343,273 768,612,222

04 Monies received against share warrantsAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

NUMBER OF SHARE WARRANTS

` NUMBER OF SHARE WARRANTS

`

Equity share warrants of ` 10/- each 900 9,000 900 9,000 TOTAL 900 9,000 900 9,000

The Board of Directors of the Company in accordance with the scheme of de-merger sanctioned by the High Court on October 14, 2011, and at their meeting held on December 23, 2011 have resolved to create, offer, issue and allot up to 900 warrants, convertible into 900 equity shares of ` 10/- each and subsequently these warrants were allotted on March 8, 2012 to Indiareit Offshore Fund & IL & FS Trust Company Limited.

05 Long-term borrowingsAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Secured term loan - from bank 1,776,069,773 1,669,981,133 TOTAL 1,776,069,773 1,669,981,133

(a) Term loan is secured by way of first charge / assignment ranking pari passu interse the lenders, as under:Mortgage charge of the loan is created on immovable properties including land measuring 12.15 acres and IT buildings admeasuring 1.44 million leasable square feet area situated at SEZ phase I of Blueridge IT park. Assignment of lease rental of the property situated at SEZ phase I IT 1 to IT 6 built-up on a area of 1.44 million leasable area (in sq. ft.).

(b) Repayment terms of outstanding long-term borrowings (including current maturities) as on March 31, 2014Details of terms of repayment for the long-term borrowings:

TERMS OF REPAYMENT AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

TERM LOANS FROM OTHER PARTIES:

IndusInd Bank FCY Loan Foreign currency loan converted into IndusInd Bank INR loan(given below) during the year

– (1,153,067,005)

IndusInd Bank INR loan 101 monthly instalments having a moratorium period of 36 months Loan repayment starts from April 2017. Interest is fixed @ 11% for first 36 months.

(1,366,775,150) (153,137,511)

DCB Bank INR loan 120 annual equal instalments @ 11.75 %. (442,973,725) (473,263,808)TOTAL - Term loans from other parties (including current maturities) (1,809,748,875) (1,779,468,324)

Average annual rate of interest for the year was 11.75% per annum payable on the end of each month.The Company has not defaulted in repayment of loans and interest.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

06 Other long-term liabilitiesAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Security deposits received from customers 84,362,348 85,397,548 TOTAL 84,362,348 85,397,548

07 Other current liabilitiesAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Current maturities of long-term debt 33,679,102 109,487,191 Interest accrued and due on borrowings – 3,056,983 Advance from customers 3,361,026 2,028,862 Security deposits received from customers 58,137,256 34,251,276 Other payablesi) Statutory remittances (withholding taxes, vat, service tax, works contract tax) 488,184 18,583,676 ii) Payable on purchase of fixed assets 9,714,875 34,611,953 TOTAL 105,380,443 202,019,941

08 Fixed AssetsA. Tangible Assets

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(a) Freehold land 56,405,674 – – 56,405,674 – – – – 56,405,674 56,405,674

(b) Buildings (given under operating lease) 2,320,666,776 (941,969) – 2,319,724,807 219,402,224 105,016,129 – 324,418,353 1,995,306,454 2,101,264,552

(c) Plant and Equipment (given under operating lease) 478,270,631 17,638,522 – 495,909,153 139,081,373 49,316,817 – 188,398,190 307,510,963 339,189,258

(d) Furniture and fixtures Owned 5,054,840 2,330,202 – 7,385,042 2,024,726 644,398 – 2,669,124 4,715,918 3,030,114

Given under operating lease 207,917,226 10,139,900 – 218,057,126 62,526,408 44,536,998 – 107,063,406 110,993,720 145,390,818

(e) Computers (owned) 620,285 272,699 – 892,984 395,883 137,882 533,765 359,219 224,402

(f) Vehicles 50,833,251 – – 50,833,251 12,544,131 9,913,053 – 22,457,184 28,376,067 38,289,120

(g) Office equipment

Owned 4,974,174 591,288 – 5,565,462 1,661,515 645,964 – 2,307,479 3,257,983 3,312,659

Given under operating lease

17,315,614 – – 17,315,614 3,301,614 1,949,346 – 5,250,960 12,064,654 14,014,000

TOTAL 3,142,058,471 30,030,642 – 3,172,089,113 440,937,874 212,160,587 – 653,098,461 2,518,990,652 2,701,120,597

Previous Year 3,017,771,496 124,286,975 – 3,142,058,471 223,904,073 217,033,801 – 440,937,874 2,701,120,597

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

B. Intangible Assets

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RC

H 3

1, 2

014

AS

AT

MA

RC

H 3

1, 2

014

AS

AT

MA

RC

H 3

1, 2

013

` ` ` ` ` ` ` ` ` `

OTHERS

(a) Computer software 28,000 120,806 – 148,806 20,858 25,744 – 46,602 102,204 7,142

TOTAL 28,000 120,806 – 148,806 20,858 25,744 – 46,602 102,204 7,142

Previous Year 28,000 – – 28,000 16,097 4,761 – 20,858 7,142

TOTAL 3,142,086,471 30,151,448 – 3,172,237,919 440,958,732 212,186,331 – 653,145,063 2,519,092,856 2,701,127,739

09 Long-term loans and advances (Unsecured, considered good unless otherwise stated)

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Deposits and balances with government authorities 23,719,635 47,656,715 Advance income tax (Net of Provision of Tax of ` 13,308/- Previous Year ` 97,216/-) 102,027,523 43,404,901 TOTAL 125,747,158 91,061,616

10 Other non-current assets (Unsecured, considered good unless otherwise stated)

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Lease rent receivable [Lease rent equalisation] 7,878,299 13,052,373 Total 7,878,299 13,052,373

11 Trade receivables (Unsecured, considered good unless otherwise stated)

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Outstanding for a period exceeding six months from the date they were due for payment 15,417,456 –Other trade receivables 15,697,812 22,502,063 TOTAL 31,115,268 22,502,063

12 Cash and cash equivalentsAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Cash on hand 4,281 204 Balances with banks - in current accounts 7,814,450 29,382,363 Fixed deposit with bank 65,200,000 –TOTAL 73,018,731 29,382,567

13 Short-term loans and advances (Unsecured, considered good unless otherwise stated)

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Prepaid Expenses 1,299,494 –Receivable from Flagship Developers Pvt. Ltd. 23,742,480 –Others 903,955 1,067,878 TOTAL 25,945,929 1,067,878

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

14 Other current assetsAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Lease rent receivable [Lease rent equalisation] 13,431,522 11,167,447 Unbilled revenue – 3,980,760 Indirect taxes credit / refund receivable 300,031 –Interest receivable on fixed deposits 829,182 –TOTAL 14,560,735 15,148,207

15 Revenue from operationsFOR THE YEAR ENDED

MARCH 31, 2014FOR THE YEAR ENDED

MARCH 31, 2013

` `

Lease Rent Received 569,811,930 450,746,606 TOTAL 569,811,930 450,746,606

16 Other incomeFOR THE YEAR ENDED

MARCH 31, 2014FOR THE YEAR ENDED

MARCH 31, 2013

` `

Interest received on deposits 2,107,024 2,180,741 Liabilities / provisions no longer required written back – 711,289 Refund of duty from MSEDCL net of expenses – 7,691,104 Miscellaneous income 439,002 139,120 TOTAL 2,546,026 10,722,254

17 Employee benefits expenseFOR THE YEAR ENDED

MARCH 31, 2014FOR THE YEAR ENDED

MARCH 31, 2013

` `

Salaries and wages – 1,639,135 Staff welfare expenses – 15,028 TOTAL – 1,654,163

18 Finance costsFOR THE YEAR ENDED

MARCH 31, 2014FOR THE YEAR ENDED

MARCH 31, 2013

` `

Interest on fixed period loans 193,201,664 123,637,013 Currency swap - settlement charges 24,685,839 58,992,342 Other borrowing costs Guarantee commission 10,000,000 12,808,314 Loan processing fees & prepayment charges 24,208,000 12,305,556 TOTAL 252,095,503 207,743,225

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

19 Other expensesFOR THE YEAR ENDED

MARCH 31, 2014FOR THE YEAR ENDED

MARCH 31, 2013

` `

Power and fuel (net of recovery from clients) 31,834,450 –Repairs and maintenance - buildings 8,902,580 21,252,767 Repairs and maintenance - machinery 7,853,652 4,752,515 Repairs and maintenance - others 2,815,361 18,793,457 Housekeeping and security expenses 41,070,220 37,812,670 Auditors’ remuneration Statutory audit 500,000 561,800 Taxation matters 100,000 112,360 Other services 550,000 –Brokerage and commission 7,632,716 89,914,393 Legal and professional expenses 15,121,947 19,815,951 Contribution to fire protection fund of MIDC IT Division – 9,533,588 Net loss on foreign currency transactions and translation – 95,760 Stamp duty and registration fees 2,773,410 5,009,648 Miscellaneous expenses 4,221,302 3,164,902 TOTAL 123,375,638 210,819,811

20 Additional information to the financial statements20.1 Contingent liabilities and commitments (to the extent not provided for)

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

CommitmentsEstimated amount of contracts remaining to be executed and not provided for 1,300,000 –

20.2 Disclosures required under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006Based on the information available with the Company, no creditors have been identified as “supplier” within the meaning of “Micro, Small and Medium Enterprises Development ("MSMED") Act, 2006”. This information has been relied upon by the auditors.

20.3 Details on derivative instruments and unhedged foreign currency exposuresThe year-end foreign currency exposures that have been hedged by a derivative instrument or otherwise

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

Borrowings from bank Amount in USD NIL 20,338,259 Equivalent amount in INR NIL 1,153,067,005

20.4 Value of imports calculated on CIF basis

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

` `

Capital goods – 18,125,212

21 Employee benefits plansThere are no employees on Company’s Payroll during the year ended March 31, 2014, hence disclosures as per AS-15, Employee Benefits are not applicable.

22 The Company, with effect from April 1, 2010, consequent to the demerger, operates in a single business and geographical segment.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

23 Related party transactionsDetails of related parties:

DESCRIPTION OF RELATIONSHIP NAMES OF RELATED PARTIES

Holding Company IDFC Limited ( From March 31, 2013)

Associates Paranjape Schemes (Construction) LimitedIndiareit Offshore Fund (Upto March 31, 2013)Absolute Building Company Private Limited (Upto March 31, 2013)

Key Management Personnel (KMP) Mr. Shashank Paranjape (Upto March 31, 2013) Mr. Shrikant Paranjape (Upto March 31, 2013)

Companies in which KMP / Relatives of KMP can exercise Significant Influence

Flagship Infrastructure Private Limited (Upto March 31, 2013)Flagship Developers Private Limited (Upto March 31, 2013)Prism Services Properties Solutions Private Limited (Upto March 31, 2013)Spice of Life Hotels Private Limited (Upto March 31, 2013)Advent Projects & Consultancy Services Pvt. Ltd. (Upto March 31, 2013)

Note: Related Parties have been identified by the Management, which has been relied upon by the Auditors

Details of related party transactions during the year ended March 31, 2014 and balances outstanding as at March 31, 2014:

HOLDING COMPANY ASSOCIATES KMP

ENTITIES IN WHICH KMP / RELATIVES OF KMP HAVE SIGNIFICANT INFLUENCE TOTAL

IDFC LIMITED MR. SHASHANK

PARANJAPE MR. SHRIKANT

PARANJAPE

FLAGSHIP INFRASTRUCTURE

PRIVATE LIMITED

ADVENT PROJECTS &

CONSULTANCY SERVICES

PVT. LTD.

PRISM SERVICES PROPERTIES SOLUTIONS

PVT. LTD.

` ` ` ` ` ` ` `

TRANSACTIONS DURING THE YEARProperty Maintenance related services received. – – – – – – – –

(–) (–) (–) (–) (–) (25,326,000) (40,321,224) (65,647,224)Reimbursement of Expenses incurred 20,150 – – – – – – 20,150

(–) (–) (–) (–) (149,224,835) (–) (–) (149,224,835)Issue of Preference Share Capital including Premium – – – – – – – –

(250,320,000) (–) (–) (–) (–) (–) (–) (250,320,000)Guarantee Commission – – – – – – – –

(–) (–) (6,404,157) (6,404,157) (–) (–) (–) (12,808,314)

BALANCES OUTSTANDING AT THE END OF THE YEARBalances outstanding at the end of the year – – – – – – – –

(–) (–) (6,404,157) (6,404,157) (–) (5,340,000) (7,262,238) (25,410,552)Note: (i) Figures in bracket relate to the previous year. (ii) No amount is/ has been written off or written back during the year in respect of debts due from or to Related Parties.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

24 Details of leasing arrangementsFOR THE YEAR ENDED

MARCH 31, 2014FOR THE YEAR ENDED

MARCH 31, 2013

` `

AS LESSOR

The Company has entered into operating lease arrangements for its owned facilities. The lease arrangement are non-cancellable for a period from 3 years to 5 years and may be renewed for a further period of 10-15 years based on mutual agreement of the parties.FUTURE MINIMUM LEASE PAYMENTS

not later than one year 505,159,444 559,937,309 later than one year and not later than five years 629,200,752 1,112,931,212 later than five years – 6,280,159 Depreciation recognised on the leased assets 210,779,440 215,700,738

25 Earnings per shareFOR THE YEAR ENDED

MARCH 31, 2014FOR THE YEAR ENDED

MARCH 31, 2013

` `

BASIC AND DILUTED

Net profit / (loss) for the year (After Tax) (34,268,949) (206,188,461)Weighted average number of equity shares 429,468 429,468 Earnings per share - Basic (79.79) (480.10)Par value per share 10.00 10.00

26 Deferred tax (liability) / assetFOR THE YEAR ENDED

MARCH 31, 2014FOR THE YEAR ENDED

MARCH 31, 2013

` `

TAX EFFECT OF ITEMS CONSTITUTING DEFERRED TAX LIABILITY

On difference between book balance and tax balance of fixed assets (83,882,969) (64,913,536)Net deferred tax (liability) / asset (83,882,969) (64,913,536)

Tax Holiday under Section 80IAB of the Income tax Act, 1961 is available to the Company. In view of this, the deferred tax asset / liability in respect of timing differences that originate and reverse during the tax holiday period is ignored and deferred tax liability in respect of timing difference that originate during tax holiday period but reverse after the tax holiday period is recognised.

27 Previous year’s figures have been regrouped / reclassified wherever necessary to correspond with the current year’s classification / disclosure.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

NEOPRO TECHNOLOGIES PRIVATE LIMITED

Mumbai | April 16, 2014NIMESH GROVER

DirectorRITESH VOHRA

Director

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BOARD OF DIRECTORS n Mr. Nimesh Grover n Ms. Rupa Vora n Mr. Ritesh Vohra

AUDITORS n Walker, Chandiok & Co. LLP Chartered Accountants

PRINCIPAL BANKER n Corporation Bank Limited

REGISTERED OFFICE10th Floor, Gateway Tower DLF City, Phase IIIGurgaon 122 002HaryanaTel: +91 12 0240 [email protected]: U99999HR1980PLC036641

20 GALAXY MERCANTILES LIMITED

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Directors' ReportTO THE MEMBERSYour Directors have pleasure in presenting the Annual Report together with the audited accounts for the year ended March 31, 2014.

FINANCIAL RESULTS

PARTICULARSFOR THE YEAR ENDED

MARCH 31, 2014 (` IN LACS)

FOR THE YEAR ENDED MARCH 31, 2013

(` IN LACS)

Sales 5,125.30 4,176.79Other Income 205.57 212.40Expenditure 4,616.15 3,845.36Depreciation 800.26 798.58Profit / (Loss) before Tax (85.54) (254.75)Profit / (Loss) after Tax (74.74) (151.08)

DIVIDENDThe Directors do not recommend any dividend for the year under consideration.

COMPANIES ACT, 2013Most of the provisions of the Companies Act, 2013 and the Rules notified by the Ministry of Corporate Affairs (“MCA”) in this regard, have come

into force with effect from April 1, 2014. MCA issued a General Circular no. 8/2014 dated April 4, 2014 which clarified that the Financial Statements,

Auditors’ Report and the Board’s Report in respect of the previous year ended March 31, 2014 will be in accordance with the Companies Act, 1956

and Rules made there under.

Your Company shall comply with the provisions of the Companies Act, 2013, as applicable.

DIRECTORSMr. Ritesh R. Vohra, Director (DIN 01259544) of the Company is liable to retire by rotation at the ensuing Annual General Meeting ("AGM") and being

eligible, offers himself for reappointment.

During the year under review, Mr. S. C. Jain (DIN-00092079) and Mr. Navin Kedia (DIN-02758206) ceased to act as Directors of the Company. The

Board would like to place on record its sincere appreciation for the valuable guidance received from them during their tenure as the Directors of the

Company. Further, during the year under review, Mr. Pankaj Virmani ceased to act as Company Secretary of the Company.

During the year under review, Ms. Rupa Vora (DIN-01831916) was appointed as an Additional Director by the Board of Directors at its Meeting held

on December 23, 2013, who holds the office till the ensuing AGM. The Board therefore, recommends her reappointment at the ensuing AGM.

AUDITORSWalker, Chandiok & Co., LLP, Chartered Accountants (Registration No. 001076N), Statutory Auditors of the Company will retire at the ensuing AGM.

The Board recommends the reappointment of Walker, Chandiok & Co., LLP, as the Statutory Auditors of the Company.

PUBLIC DEPOSITSThe Company has not accepted any public deposits under Section 58A of the Companies Act, 1956 during the year under review.

PARTICULARS REGARDING CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTIONSince your Company does not carry out any manufacturing activity, the particulars regarding conservation of energy, technology absorption and

other particulars as required by the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1998, are not applicable.

FOREIGN EXCHANGE EARNINGS AND EXPENDITUREThere were no foreign exchange earnings and outgo during the year under review.

PERSONNEL AND OTHER MATTERSThere were no employees drawing remuneration exceeding the limits specified under Section 217 (2A) of the Companies Act, 1956, read with the

Companies (Particulars of Employees) Rules, 1975, as amended from time to time.

DIRECTORS’ RESPONSIBILITY STATEMENTPursuant to Section 217(2AA) of the Companies Act, 1956, the Directors confirm that:

n in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to

material departures;

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Directors' Report n 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 March 31, 2014 and the loss of the Company for the period ended on that date;

n proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

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

ACKNOWLEDGEMENTSYour Directors wish to place on record their sincere thanks to its bankers, institutions, suppliers, associates, customers and employees for their support. The Directors also wish to express their heartfelt gratitude to the stakeholders for their continued support to the Company.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS

NIMESH GROVER RITESH VOHRA

Director Director

Mumbai, April 16, 2014

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TO THE MEMBERS OF GALAXY MERCANTILES LIMITED

Report on the Financial StatementsWe have audited the accompanying financial statements of GALAXY MERCANTILES LIMITED, (“the Company”), which comprise the Balance Sheet as at March 31, 2014, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial StatementsManagement 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 principles generally accepted in India, including the Accounting Standards notified under 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. 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’ ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgement, 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.

OpinionIn 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:i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2014;ii) in the case of Statement of Profit and Loss, of the loss for the year ended on that date; andiii) 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 RequirementsAs required by the Companies (Auditor’s Report) Order, 2003 (“the Order”) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.As required by Section 227(3) of the Act, we report that:(a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our

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

books;(c) The financial statements dealt with by this report are in agreement with the books of account;(d) In our opinion, the financial statements comply with the Accounting Standards notified under the Companies Act, 1956 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(e) On the basis of written representations received from the directors, as on March 31, 2014 and taken on record by the Board of Directors, none

of the directors is disqualified as on March 31, 2014 from being appointed as a director in terms of Clause (g) of sub-section (1) of Section 274 of the Act.

FOR WALKER, CHANDIOK & CO. LLP

(formerly Walker, Chandiok & Co.)Chartered AccountantsFirm Registration No. 001076N

per NEERAJ SHARMA

PartnerMembership No. 502103

Gurgaon, April 16, 2014

Independent Auditors' Report

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Annexure to the Independent Auditors’ Report of even date to the members of Galaxy Mercantiles Limited, on the financial statements for the year ended March 31, 2014Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, we report that:(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. (b) The Company has a regular program of physical verification of its fixed assets under which fixed assets are verified in a phased manner

over a period of three years, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) In our opinion, a substantial part of fixed assets has not been disposed off during the year.(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year. (b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the

Company and the nature of its business. (c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.(iii) (a) The Company has not granted any loan, secured or unsecured to companies, firms or other parties covered in the register maintained

under Section 301 of the Act. Accordingly, the provisions of Clauses 4(iii)(b) to 4(iii)(d) of the Order are not applicable. (b) The Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained

under Section 301 of the Act. Accordingly, the provisions of Clauses 4(iii)(f) and 4(iii)(g) of the Order are not applicable.(iv) Owing to the nature of its business, the Company does not sell any goods. Accordingly, Clause 4(iv) of the Order with respect to sale of goods

is not applicable. In our opinion, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas.

(v) The Company has not entered into any contracts or arrangements referred to in Section 301 of the Act. Accordingly, the provisions of Clause 4(v) of the Order are not applicable.

(vi) The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the Companies (Acceptance of Deposits) Rules, 1975. Accordingly, the provisions of Clause 4(vi) of the Order are not applicable.

(vii) In our opinion, the Company has an internal audit system commensurate with its size and the nature of its business.(viii) To the best of our knowledge and belief, the Central Government has not prescribed maintenance of cost records under clause (d) of

sub-section (1) of Section 209 of the Act, in respect of Company’s services. Accordingly, the provisions of Clause 4(viii) of the Order are not applicable.

(ix) (a) The Company is regular in depositing undisputed statutory dues including 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, as applicable, with the appropriate authorities. Further, no undisputed amounts payable in respect thereof were outstanding at the year-end for a period of more than six months from the date they become payable.

(b) The dues outstanding in respect of sales tax, income-tax, customs duty, wealth tax, excise duty, cess on account of any dispute, are as follows:

NAME OF THE STATUTE

NATURE OF DUES

AMOUNT (` IN LACS)

AMOUNT PAID UNDER PROTEST

(` IN LACS)PERIOD TO WHICH

THE AMOUNT RELATESFORUM WHERE DISPUTE IS

PENDING

Finance Act 1994 Service tax 1,457.86 63.02 Financial year 2007-08 to 2010-11 (up to August 2010)

Custom Excise and Service Tax Appellate Tribunal, New Delhi

Finance Act 1994 Service tax 119.93 Nil February 22, 2008 to March 31, 2013

Commissioner of Custom, Excise and Service Tax

(x) In our opinion, the Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and the immediately preceding financial year.

(xi) The Company has no dues payable to a financial institution or a bank during the year. The Company has not defaulted in repayment of dues to debenture-holders during the year.

(xii) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, the provisions of Clause 4(xii) of the Order are not applicable.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/ mutual benefit fund/ society. Accordingly, the provisions of Clause 4(xiii) of the Order are not applicable.

(xiv) In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions of Clause 4(xiv) of the Order are not applicable.

Annexure to the Auditors' Report

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(xv) The Company has not given any guarantees for loans taken by others from banks or financial institutions. Accordingly, the provisions of Clause 4(xv) of the Order are not applicable.

(xvi) The Company did not have any term loans outstanding during the year. Accordingly, the provisions of Clause 4(xvi) of the Order are not applicable.

(xvii) In our opinion, no funds raised on short-term basis have been used for long-term investment.(xviii) During the year, the Company has not made any preferential allotment of shares to parties or companies covered in the register maintained

under Section 301 of the Act. Accordingly, the provisions of Clause 4(xviii) of the Order are not applicable. (xix) The Company has issued unsecured, optionally convertible debentures during the year. Accordingly, the provisions of Clause 4(xix) of the

Order are not applicable.(xx) The Company has not raised any money by public issues during the year. Accordingly, the provisions of Clause 4(xx) of the Order are not

applicable.(xxi) No fraud on or by the Company has been noticed or reported during the period covered by our audit.

FOR WALKER, CHANDIOK & CO. LLP

(formerly Walker, Chandiok & Co.)Chartered AccountantsFirm Registration No. 001076N

per NEERAJ SHARMA

PartnerMembership No. 502103

Gurgaon, April 16, 2014

Annexure to the Auditors' Report

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THIS IS THE BALANCE SHEET REFERRED TO IN OUR REPORT OF EVEN DATE.

FOR WALKER, CHANDIOK & CO. LLP

Chartered AccountantsFOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

GALAXY MERCANTILES LIMITED

per NEERAJ SHARMA

PartnerNIMESH GROVER

DirectorRITESH VOHRA

Director

Gurgaon | April 16, 2014 Mumbai | April 16, 2014

NOTES

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

(` IN LACS) (` IN LACS)

EQUITY AND LIABILITIES

SHAREHOLDERS’ FUNDS

Share capital 2 7,402.00 8,466.53 Reserves and surplus 3 4,526.81 5,405.85

11,928.81 13,872.38 NON-CURRENT LIABILITIES

Long-term borrowings 4 16,368.40 13,612.00 Other long-term liabilities 5 1,976.01 1,862.82 Long-term provisions 6 – 9.92

18,344.41 15,484.74 CURRENT LIABILITIES

Short-term borrowings 7 – 3,387.73 Trade payables [refer note 25] 264.66 184.49 Other current liabilities 8 39.49 690.23 Short-term provisions 9 – 1.11

304.15 4,263.56 TOTAL 30,577.37 33,620.68

ASSETS

NON-CURRENT ASSETS

Fixed assets 10 28,556.18 29,347.79 Deferred tax assets (net) 11 78.42 65.97 Long-term loans and advances 12 958.96 732.98

29,593.56 30,146.74 CURRENT ASSETS

Current investments 13 14.18 80.67 Inventories 14 61.35 63.32 Trade receivables 15 29.23 65.81 Cash and bank balances 16 661.65 2,958.94 Short-term loans and advances 17 66.16 305.20 Other current assets 18 151.24 –

983.81 3,473.94 TOTAL 30,577.37 33,620.68

Summary of significant accounting policies 1

The accompanying notes are an integral part of these financial statements.

Balance Sheet AS AT MARCH 31, 2014

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NOTESYEAR ENDED

MARCH 31, 2014YEAR ENDED

MARCH 31, 2013

(` IN LACS) (` IN LACS)

INCOME

Revenue from operations 19 5,125.30 4,176.79 Other income 20 205.57 212.40

TOTAL INCOME 5,330.87 4,389.19

EXPENSES

Employee benefits expense 21 40.86 60.15 Finance costs 22 2,477.20 2,314.04 Depreciation and amortisation expense 11 800.26 798.58 Other expenses 23 2,098.09 1,471.17

TOTAL EXPENSES 5,416.41 4,643.94 LOSS BEFORE TAX (85.54) (254.75)TAX EXPENSE

Current tax – – Income tax earlier years 1.65 (36.74) Deferred tax credit (12.45) (66.93)LOSS AFTER TAX (74.74) (151.08)Earnings per equity share (`) (Basic and diluted) 24 (88.88) (186.74)Summary of significant accounting policies 1

The accompanying notes are an integral part of the financial statements.

THIS IS THE STATEMENT OF PROFIT AND LOSS REFERRED TO IN OUR REPORT OF EVEN DATE.

FOR WALKER, CHANDIOK & CO. LLP

Chartered AccountantsFOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

GALAXY MERCANTILES LIMITED

per NEERAJ SHARMA

PartnerNIMESH GROVER

DirectorRITESH VOHRA

Director

Gurgaon | April 16, 2014 Mumbai | April 16, 2014

Statement of Profit and Loss FOR THE YEAR ENDED MARCH 31, 2014

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THIS IS THE CASH FLOW STATEMENT REFERRED TO IN OUR REPORT OF EVEN DATE.

FOR WALKER, CHANDIOK & CO. LLP

Chartered AccountantsFOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

GALAXY MERCANTILES LIMITED

per NEERAJ SHARMA

PartnerNIMESH GROVER

DirectorRITESH VOHRA

Director

Gurgaon | April 16, 2014 Mumbai | April 16, 2014

YEAR ENDED MARCH 31, 2014

YEAR ENDED MARCH 31, 2013

(` IN LACS) (` IN LACS)

(A) CASH FLOW FROM OPERATING ACTIVITIES

NET LOSS BEFORE TAX (85.54) (254.75) Adjustment for: Interest income (174.06) (186.85) Depreciation 800.26 798.58 Interest on optionally convertible debentures 2,477.19 2,314.04 Dividend income (8.00) (25.55) Profit on sale of investment (12.48) – Excess provision written back (11.03) – Provision for doubtful debts 3.16 – Operating profit before working capital changes 2,989.50 2,645.47 Adjustments for: Decrease / (increase) in trade receivables 33.42 (22.45) Decrease / (increase) in inventories 1.97 (11.09) Increase in loans and advances (69.23) (21.43) Increase in other assets (151.24) – Increase in other current and non-current liabilities and provisions 74.21 17.58 Cash generated from operating activities 2,878.63 2,608.08 Taxes paid (net of refund and interest on income tax) (43.42) (291.34) NET CASH GENERATED FROM OPERATING ACTIVITIES (A) 2,835.21 2,316.74

(B) CASH FLOW FROM INVESTING ACTIVITIES

Purchase of fixed assets (including capital work-in-progress) (14.14) (45.52) Sale of mutual fund units (net) 86.97 86.99 Bank deposit matured (having original maturity more than 3 month) 1,739.80 (1,497.94) Interest received 303.60 80.09 NET CASH GENERATED / (USED IN) FROM INVESTING ACTIVITIES (B) 2,116.23 (1,376.38)

(C) CASH FLOW FROM FINANCING ACTIVITIES

Issuance of shares (including securities premium) 791.49 – Redemption of preference shares (including securities premium) (2,660.34) – Repayment of short-term borrowing (net) (3,387.73) – Issue of debentures 2,756.40 – Interest paid (3,008.77) (1,781.81) NET CASH USED IN FROM FINANCING ACTIVITIES (C) (5,508.95) (1,781.81)

Net decrease in cash and cash equivalents (A+B+C) (557.49) (841.46) Cash and cash equivalents at beginning of the year 814.25 1,655.71 Cash and cash equivalents at the end of the year 256.76 814.25 NET DECREASE IN CASH AND CASH EQUIVALENTS (557.49) (841.46)

Cash Flow Statement FOR THE YEAR ENDED MARCH 31, 2014

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

01 Significant accounting policies1.1 Basis of accounting The financial statements have been prepared and presented under the historical cost convention on the accrual basis of accounting in accordance with the Accounting Principles Generally Accepted in India (“Indian GAAP”) and in compliance with the mandatory accounting standards (“AS”) as prescribed under the Companies (Accounting Standards) Rules, 2006 (as amended) (“the Rules”), the provisions of the Companies Act, 1956 and the Companies Act, 2013 (to the extent applicable). The accounting policies have been consistently applied by the Company and are consistent with those used in previous year.All assets and liabilities have been classified as current or non-current, wherever applicable as per the operating cycle of the Company as per the guidance as set out in the Revised Schedule VI of the Act.

1.2 Use of estimates The preparation of financial statements in conformity with the generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities on the date of financial statements and the results of operations during reporting periods. Although these estimates are based upon management’s knowledge of current events and actions, actual results could differ from those estimates and revisions if any, are recognised in the current and future periods.

1.3 Fixed assets, capital work-in-progress and depreciation / amortisation Fixed assets are stated at historical cost less accumulated depreciation. Specific identifiable portions of projects are considered completed and capitalised with effect from the date of receipt of occupation certificate or commencement of leases, whichever is earlier. Cost for such identifiable portions is determined in the ratio that area of such completed identifiable portions of the project bears to the total area of the same. Capital work-in-progress represents expenditure incurred in respect of capital projects under development and is carried at cost. Cost includes land, related acquisition expenses, construction costs, borrowing costs capitalised and other direct expenditure.Depreciation on fixed assets (including buildings and related equipment rented out) is provided on a straight line method, at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956, or based on the estimated useful life of assets (as mentioned below), whichever is higher.NATURE OF ASSETS NO. OF YEARS

Leasehold land 90Buildings and related equipments 40Plant and machinery 5-20Furniture and fixture 15

1.4 InventoriesInventories have been valued at cost or net realizable value (‘NRV’) whichever is lower after providing for obsolescence and other losses, where considered necessary. Cost includes customs duty, taxes, freight and other charges, as applicable and is determined using weighted average method.

1.5 Income taxTax expense for the year comprises current income tax and deferred tax. Current income tax is determined in respect of taxable income with deferred tax being determined as the tax effect of timing differences representing the difference between taxable income and accounting income that originate in one period, and are capable of reversal in one or more subsequent period(s). Such deferred tax is quantified using rates and laws enacted or substantively enacted as at the end of the financial year. Deferred tax assets on unabsorbed depreciation and carry forward of losses are recognised to the extent there is virtual certainty that there will be sufficient future taxable income available to realise such assets.

1.6 Revenue recognition (a) Revenue from rentals is recognised on accrual basis in accordance with the terms of the respective lease agreements. (b) Income from interest is accounted for on time proportion basis taking into account the amount outstanding and the applicable rate of

interest. (c) Revenue in respect of maintenance services is recognised on an accrual basis, in accordance with the terms of the respective contracts. (d) Revenue in respect of utility charges is recognised on delivery / distribution, in accordance with the terms of the respective contracts. (e) Dividend income is recognised when the right to receive is established.

1.7 Employee benefitsExpenses and liabilities in respect of employee benefits are recorded in accordance with Revised Accounting Standard 15, “Employee Benefits” of the Companies (Accounting Standards) Rules, 2006.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

i) Provident fund The Company makes contribution to statutory provident fund in accordance with Employees Provident Fund and (Miscellaneous Provisions)

Act, 1952. The plan is a defined contribution plan and contribution paid or payable is recognised as an expense in the period in which services are rendered by the employee.

ii) Gratuity Gratuity is a post employment benefit and is in the nature of a defined benefit plan. The liability recognised in the balance sheet in respect of

gratuity is the present value of the defined benefit obligation at the balance sheet date, together with adjustments for unrecognised actuarial gains or losses and past service costs. The defined benefit obligation is calculated at the balance sheet date by an independent actuary using the projected unit credit method.

iii) Compensated absences Liability in respect of compensated absences becoming due or expected to be availed within one year from the balance sheet date is recognised

on the basis of undiscounted value of estimated amount required to be paid or estimated value of benefit expected to be availed by the employees. Liability in respect of compensated absences becoming due or expected to be availed more than one year after the balance sheet date is estimated on the basis of an actuarial valuation performed by an independent actuary using the projected unit credit method.

iv) Other short-term benefits Expense in respect of other short-term benefits is recognised on the basis of the amount paid or payable for the period during which services

are rendered by the employee.

1.8 LeasesAssets given under operating leases are included under fixed assets. Lease income is recognised in the statement of profit and loss on a straight line basis over the lease term. Costs, including depreciation, are recognised as an expense in the Statement of Profit and Loss.

1.9 Impairment of assetsThe Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount and the reduction is treated as an impairment loss and is recognised in the Statement of Profit and Loss. If at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciated historical cost and the impairment loss is accordingly reversed in the Statement of Profit and Loss.

1.10 Contingent liabilities and provisions The Company makes a provision when there is a present obligation as a result of a past event where the outflow of economic resources is probable and a reliable estimate of the amount of the obligation can be made. A disclosure is made for a contingent liability when there is a:(a) Possible obligation, the existence of which will be confirmed by the occurrence / non-occurrence of one or more uncertain events, not fully with

in the control of the Company; (b) Present obligation, where it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; (c) Present obligation, where a reliable estimate cannot be made or where the possibility of outflow of resources is remote.

1.11 Investments(a) Investments which are readily realisable and intended to be held for not more than a year are classified as current investments. All other

investments are classified as long-term investments.(b) Current investments are carried at the lower of cost and market value determined separately for each individual investment.(c) Profit / loss on sale of investment is computed with reference to the average cost of the investment.

1.12 Earnings per shareBasic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting preference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the year. The weighted average numbers of equity shares outstanding during the year are adjusted for events including a 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 year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all potential dilutive equity shares.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

02 Share capitalAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

(` IN LACS) (` IN LACS)

AUTHORISED, ISSUED, SUBSCRIBED AND PAID-UP SHARE CAPITAL AND PAR VALUE PER SHARE

AUTHORISED SHARE CAPITAL

200,000 (Previous Year 200,000) equity shares of ` 100 each (Class A) 200.00 200.00 100 (Previous Year 100) equity shares of ` 100 each (Class B) 0.10 0.10 100 (Previous Year 100) equity shares of ` 100 each (Class C) 0.10 0.10 1,106,200 (Previous Year 1,106,200) preference shares of ` 100 each (Series A) 1,106.20 1,106.20 7,094,934 (Previous Year 7,094,934) preference shares of ` 100 each (Series B) 7,094.93 7,094.93 310,900 (Previous Year 310,900) preference shares of ` 100 each (Series C) 310.90 310.90 1,287,966 (Previous Year 1,287,966) preference shares of ` 100 each (Series D) 1,287.97 1,287.97 TOTAL 10,000.20 10,000.20 ISSUED, SUBSCRIBED AND FULLY PAID-UP SHARE CAPITAL

84,472 (Previous Year 80,703) equity shares of ` 100 each (Class A) 84.47 80.70 100 (Previous Year 100) equity shares of ` 100 each (Class B) 0.10 0.10 100 (Previous Year 100) equity shares of ` 100 each (Class C) 0.10 0.10 6,140,681 (Previous Year 7,094,934) 0.01% cumulative redeemable preference shares of ` 100 each (Series B)

6,140.68 7,094.93

177,222 (Previous Year 291,275) 0.01% cumulative redeemable preference shares of ` 100 each (Series C)

177.22 291.27

999,426 (Previous Year 999,426) 0.01% cumulative redeemable preference shares of ` 100 each (Series D)

999.43 999.43

TOTAL 7,402.00 8,466.53

2.1 Reconciliation of numbers of equity and preference shares outstanding at the beginning and at the end of the year

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

(` IN LACS) (` IN LACS)

EQUITY SHARES

Class ANumber of shares outstanding as at the beginning of the year 80,703 80,703 Add: Number of shares allotted for cash 3,769 - Number of shares outstanding as at the end of the year 84,472 80,703 Class BNumber of shares outstanding as at the beginning and at the end of the year 100 100 Class CNumber of shares outstanding as at the beginning and at the end of the year 100 100

PREFERENCE SHARES

Series BNumber of shares outstanding as at the beginning of the year 7,094,934 7,094,934 Less: Number of shares redeemed during the year 954,253 –Number of shares outstanding as at the end of the year 6,140,681 7,094,934 Series CNumber of shares outstanding as at the beginning of the year 291,265 291,265 Less: Number of shares redeemed during the year 114,043 –Number of shares outstanding as at the end of the year 177,222 291,265 Series DNumber of shares outstanding as at the beginning and at the end of the year 999,426 999,426

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

2.2 Rights, preferences and restrictions attaching to various classes of shares

SL. NO.

CLASS OF SHARES RIGHTS, PREFERENCES AND RESTRICTIONS (INCLUDING RESTRICTIONS ON DISTRIBUTIONS OF DIVIDENDS AND REPAYMENT OF CAPITAL) ATTACHED TO THE CLASS OF SHARES

1 Equity Shares - Class A Each Class A Equity Share shall carry one vote at any meeting of the shareholders of the Company and the holder of the Class A Equity Shares shall be entitled to receive nominal dividend but subordinate to the dividend payable to the holder of Class B Equity Shares and Class C Equity Shares.

2 Equity Shares - Class B Each Class B Equity Share shall carry one vote at any meeting of the shareholders of the Company and the dividend payable in respect of Class B Equity Shares shall be sub-ordinate to Class C Equity Shares to the extent of a dividend of ` 1,000 (Rupees one thousand only) payable in respect of Class C Equity Shares, and after declaration of such dividends in respect of Class C Equity Shares, the Board shall declare the dividends in respect of Class A Equity Shares, Class B Equity Shares and Class C Equity Shares in such manner as may be decided by the Board.

3 Equity Shares - Class C Each Class C Equity Share shall carry one vote at any meeting of the shareholders of the Company and the dividend payable in respect of Class C Equity Shares shall be superior to the Class B Equity Shares to the extent of dividend of ` 1,000 and after declaration of such dividends in respect of Class C Equity Shares, the Board shall declare the dividends in respect of Class A Equity Shares, Class B Equity Shares and Class C Equity Shares in such manner as may be decided by the Board.

4 Preference Shares - Series A Series A Preference Shares shall carry a nominal dividend of 0.01% per annum payable in a manner as may be decided by the Board and shall not be entitled to any voting rights in the shareholder meeting. Series A Preference Shares shall be redeemable at premium of ` 450 per series as per mutually agreed terms, but in any case prior to expiry of 20 years from the date of their issuance.

5 Preference Shares - Series B Series B Preference Shares shall carry a nominal dividend of 0.01% per annum payable in a manner as may be decided by the Board and shall not be entitled to any voting rights in the shareholder meeting. Series B Preference Shares shall be redeemable at par as per mutually agreed terms, but in any case prior to expiry of 20 years from the date of their issuance.

6 Preference Shares - Series C Series C Preference Shares shall carry a nominal dividend of 0.01% per annum payable in a manner as may be decided by the Board and shall not be entitled to any voting rights in the shareholder meeting. Series C Preference Shares shall be redeemable at a premium of ` 1,396 per Series C Preference Shares as per mutually agreed terms, but in any case prior to expiry of 20 years from the date of their issuance.

7 Preference Shares - Series D Series D Preference Shares shall carry a nominal dividend of 0.01% per annum payable in a manner as may be decided by the Board and shall not be entitled to any voting rights in the shareholder meeting. Series D Preference Shares shall be redeemable after the occurrence of the final tranche closing as per mutually agreed terms, but in any case prior to expiry of 20 years from the date of their issuance.

2.3 Shares held by holding company

SL. NO. CLASS OF SHARES RELATIONSHIP

NAME OF SHAREHOLDER’S

MARCH 31, 2014 MARCH 31, 2013

NO. OF SHARE HELD

PERCENTAGE OF SHARES HELD

NO. OF SHARE HELD

PERCENTAGE OF SHARES HELD

1 Equity Shares - Class A

Holding company IDFC Limited

84,472 100% 35,048 43.43%2 Equity Shares - Class B 100 100% 7 7%3 Equity Shares - Class C 100 100% 100 100%4 Preference Share - Series B 6,140,681 100% – – 5 Preference Share - Series C 177,222 100% – – 6 Preference Share - Series D 999,426 100% 999,426 100%

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

2.4 Shares in the Company held by the each shareholder holding more than 5% shares

SL. NO. NAME OF THE SHAREHOLDER

MARCH 31, 2014 MARCH 31, 2013

NO. OF SHARE HELD

PERCENTAGE OF SHARES HELD

NO. OF SHARE HELD

PERCENTAGE OF SHARES HELD

EQUITY SHARES - CLASS A

1 DLF Home Developers Limited – – 32,415 40.17%2 IST Technology Infrastructure Private Limited – – 5,000 6.20%3 IDFC Limited 84,472 100.00% 35,048 43.43%

EQUITY SHARES - CLASS B

1 DLF Home Developers Limited – – 71 71%2 IST Technology Infrastructure Private Limited – – 11 11%3 Ridhi Softech Private Limited – – 7 7%4 DSL Properties Private Limited – – 7 7%5 IDFC Limited 100 100%

EQUITY SHARES - CLASS C

1 IDFC Limited 100 100% 100 100%

PREFERENCE SHARES - SERIES B

1 DLF Home Developers Limited – – 7,094,934 100.00%2 IDFC Limited 6,140,681 100.00%

PREFERENCE SHARES - SERIES C

1 Eastern India Power and Mining Company Private Limited – – 146,804 50.40%2 DSL Properties Private Limited – – 144,461 49.60%3 IDFC Limited 177,222 100.00%

PREFERENCE SHARES - SERIES D

1 IDFC Limited 999,426 100.00% 999,426 100.00%

2.5 Details of Optionally convertible debentures convertible into equity shares.Refer note 4.1 to 4.4 – Long-term borrowing for disclosure of terms and conditions of Optionally convertible debentures.

2.6 During the year ended March 31, 2014, the following changes have been taken place to the capital structure of the Company.Equity Shares: Allotment of 3,769 equity shares (Class A) of ` 100/-each at a premium of ` 20,900 per shares to M/s. IDFC Limited on preferential basis.

Preference shares:(a) Redemption of 114,043 (56,563 issued to DSL Properties Private Limited and 57,480 issued to Eastern India Mining Private Limited) preference

shares (Series-C) of ` 100/- each at a premium of ` 1,396/- per share.(b) Redemption of 954,253 preference shares (Series-B) issued to DLF Home Developers Limited of ` 100/- each at par.

Debentures(a) Allotment of 441, 17% unsecured cumulative optionally convertible debentures of ` 20,000/- each (OCD - Series-I/2013) issued at par to

M/s. IDFC Limited.(b) Allotment of 13,341, 17% unsecured cumulative optionally convertible debentures of ` 20,000/- each (OCD - Series-II/2013) issued at par to

M/s. IDFC Limited.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

03 Reserves and surplusAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

(` IN LACS) (` IN LACS)

CAPITAL RESERVES 1.88 1.88 Capital redemption reserve 1,365.51 1,365.51 Add: Transfer from General reserve 1,064.53 –

2,430.04 1,365.51 SECURITIES PREMIUM

Balance as per last financials statements 2,114.83 2,114.83 Add: Premium received on issue of shares 787.72 – Less: Premium paid on redemption of preference shares (1,592.04) –

1,310.51 2,114.83 GENERAL RESERVE 587.40 587.40 Less: Transfer to capital redemption reserve (587.40) –

– 587.40 SURPLUS IN STATEMENT OF PROFIT AND LOSS

As per statement of profit and loss 1,336.25 1,487.31 Less: Loss for the year (74.74) (151.08)Less: Transfer to capital redemption reserve (477.13) –

784.38 1,336.23 TOTAL 4,526.81 5,405.85

04 Long-term borrowing (Unsecured)

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

(` IN LACS) (` IN LACS)

441, 17% (Previous Year NIL) unsecured cumulative optionally convertible debentures of ` 20,000/- each (OCD - Series-I/2013) issued at par [Refer to note 4.1]

88.20 –

5,701 (Previous Year 5,701) 17% Optionally convertible debentures (OCDs) with face value of ` 20,000 each (OCD - Series I/2012) issued at par [Refer to note 4.2]

1,140.20 1,140.20

62,359 (Previous Year 62,359) 17% Optionally convertible debentures (OCD) with face value of ` 20,000 each issued at par [Refer to note 4.3]

12,471.80 12,471.80

13,341, 17% (Previous Year NIL) unsecured cumulative optionally convertible debentures of ` 20,000 each (OCD - Series-II/2013) issued at par [Refer to note 4.4]

2,668.20 –

TOTAL 16,368.40 13,612.00

4.1 The OCDs (OCD - Series I/2013) shall have a term of 6 years to be computed from the date of issuance and each OCD shall be convertible into 1 Class A equity share. Interest is payable monthly. The earliest date of conversion into equity shares is not later than May 27, 2019.

4.2 The OCDs (OCD - Series I/2012) shall have a term of 6 years to be computed from the date of issuance and each OCD shall be convertible into 1 Class A equity share. Interest is payable monthly. The earliest date of conversion into equity shares is not later than March 26, 2018.

4.3 The OCD shall have a term of 6 years to be computed from the date of issuance. Each OCD shall be convertible into 1 Class A equity share. Interest on OCD is payable quarterly. The earliest date of conversion into equity shares is not later than December 1, 2017. Till March 31, 2012, the OCD earned interest at the rate of 15% per annum and post March 31, 2012 and till the OCD have been redeemed, the outstanding OCD shall earn interest at the rate of 17% per annum.

4.4 The OCDs (OCD - Series II/2013) shall have a term of 2 years to be computed from the date of issuance and each OCD shall be convertible into 1 Class A equity share. Interest is payable quarterly. The earliest date of conversion into equity shares is not later than December 5, 2015.

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

05 Other long-term liabilitiesAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

(` IN LACS) (` IN LACS)

Security deposit 1,976.01 1,862.82 TOTAL 1,976.01 1,862.82

06 Long-term provisionsAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

(` IN LACS) (` IN LACS)

PROVISION FOR EMPLOYEE BENEFITS

Gratuity [refer note 21.1] – 4.86 Compensated absences [refer note 21.2] – 5.06 TOTAL – 9.92

07 Short-term borrowingsAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

(` IN LACS) (` IN LACS)

LOANS AND ADVANCES FROM RELATED PARTIES - UNSECURED

Loan from DLF Home Developers Limited * – 3,222.73 Loan from IDFC Limited * – 165.00 * Repayable on demand – 3,387.73

08 Other current liabilitiesAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

(` IN LACS) (` IN LACS)

Advances from customers 12.08 77.66 Interest accrued and due on optionally convertible debenture 7.62 539.20 Security deposits 9.64 13.49 Other payables Statutory dues 8.93 3.29 Others 1.22 56.59 TOTAL 39.49 690.23

09 Short-term provisionsAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

(` IN LACS) (` IN LACS)

PROVISION FOR EMPLOYEE BENEFITS

Gratuity [refer note 20.1] – 0.64 Compensated absences [refer note 20.2] – 0.47 TOTAL – 1.11

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

10 Fixed assetsAPRIL 1, 2013 ADDITIONS MARCH 31, 2014

(` IN LACS) (` IN LACS) (` IN LACS)

TANGIBLE ASSETS

GROSS BLOCK

Land (leasehold) 1,797.75 – 1,797.75 Building* 29,676.82 3.40 29,680.21 Plant and machinery 216.62 0.87 217.49 Furniture and fixtures 6.66 2.48 9.14 Computer – 1.90 1.90

31,697.85 8.65 31,706.50 Previous Year 31,652.17 45.68 31,697.85

ACCUMULATED DEPRECIATION

Land (leasehold) 139.84 19.98 159.82 Building 2,158.69 741.94 2,900.63 Plant and machinery 47.43 38.00 85.43 Furniture and fixtures 4.10 0.24 4.34 Computer – 0.10 0.10

2,350.06 800.26 3,150.32 Previous Year 1,551.48 798.58 2,350.06

NET BLOCK

Land (leasehold) 1,657.92 1,637.93 Building 27,518.13 26,779.58 Plant and machinery 169.19 132.06 Furniture and fixtures 2.55 4.81 Computer – 1.80

29,347.79 28,556.18 Previous Year 30,100.69 29,347.79

The information required to be disclosed as per Accounting Standard 19 of Companies (Accounting Standards) Rules, 2006, “Leases”, is given below:

(a) Assets given on operating leases*The building owned by the Company are given on operating lease with the initial lease term of 3 years with an option of renewal ranging from 3 to 6 years. These leases are further renewable subject to enhancement of rent on the expiry of respective lease period. There are no restrictions imposed by the Company under the lease arrangements.

GROSS VALUE AS AT MARCH 31, 2014

DEPRECIATION FOR THE YEAR

ACCUMULATED DEPRECIATION AS AT MARCH 31, 2014

(` IN LACS) (` IN LACS) (` IN LACS)

Building 29,680.21 741.94 2,900.63 Previous Year 29,676.82 741.94 2,158.69

(b) Operating lease receivable

MARCH 31, 2014 MARCH 31, 2013

(` IN LACS) (` IN LACS)

Receivable within one year 2,610.83 1,530.40 Receivables between 1-5 years 717.30 1,527.99 TOTAL 3,328.13 3,058.39

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G A L A X Y M E R C A N T I L E S L I M I T E D | 3 4 7

Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

11 Deferred tax assets / (liability) (net)

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

(` IN LACS) (` IN LACS)

DEFERRED TAX ASSETS ARISING ON ACCOUNT OF

Provision for employee benefits – 3.75 Business losses 75.72 63.73 Depreciation 2.70 (1.51)TOTAL 78.42 65.97

12 Long-term loan and advancesAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

(` IN LACS) (` IN LACS)

UNSECURED, CONSIDERED GOOD

Capital advances 8.31 2.83 Security deposits 146.64 63.15 Other loans and advances Advance taxes (net of provision of ` 1,201.17 lacs {Previous Year ` 1,732.49 lacs}) 740.99 667.00 Cenvat recoverable 63.02 –TOTAL 958.96 732.98

13 Current investment – Non-trade - (Quoted)

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

(` IN LACS) (` IN LACS)

Nil (Previous Year 6,270.97 units) of IDFC cash fund - Daily Dividend - (Regular Plan) – 62.73 Nil units (Previous Year 1,793.36 units) of IDFC cash fund - Daily Dividend - (Direct Plan) – 17.94 948.30 units (Previous Year Nil units) of IDFC Cash Fund - Growth - (Direct Plan) 14.18 – Investment at cost 14.18 80.67 Market value as on March 31, 2014 is ` 14.77 lacs (Previous Year ` 80.66 lacs)

14 Inventories AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

(` IN LACS) (` IN LACS)

Stores and Spares 61.35 63.32 TOTAL 61.35 63.32

15 Trade receivablesAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

(` IN LACS) (` IN LACS)

Outstanding for period exceeding six months from the date they are due for payment Secured, considered good – 3.63 Other debts Secured, considered good 29.23 62.18 Doubtful 3.16 –

32.39 Less: Provision for doubtful debts 3.16 – TOTAL 29.23 65.81

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

16 Cash and bank balancesAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

(` IN LACS) (` IN LACS)

CASH AND CASH EQUIVALENTS

BALANCES WITH BANK

Current account 256.76 814.25

OTHER BANK BALANCES

Deposits with original maturity for more than 3 months but up to 12 months 404.89 2,144.69 TOTAL 661.65 2,958.94

17 Short-term loan and advancesAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

(` IN LACS) (` IN LACS)

ADVANCES RECOVERABLE IN CASH OR IN KIND

Unsecured considered good 29.15 36.88 OTHER LOANS AND ADVANCES

Prepaid expenses 24.06 79.79 Interest accrued but not due 0.37 162.13 Cenvat recoverable 12.58 26.40 TOTAL 66.16 305.20

18 Other current assetsAS AT MARCH 31, 2014 AS AT MARCH 31, 2013

(` IN LACS) (` IN LACS)

Unbilled receivables 151.24 – TOTAL 151.24 –

19 Revenue from operationsYEAR ENDED

MARCH 31, 2014YEAR ENDED

MARCH 31, 2013

(` IN LACS) (` IN LACS)

Rental income 2,715.04 2,409.88 Maintenance service income 1,661.34 1,259.31 Utility charges 746.03 498.01 Other operating income 2.89 9.59 TOTAL 5,125.30 4,176.79

20 Other incomeYEAR ENDED

MARCH 31, 2014YEAR ENDED

MARCH 31, 2013

(` IN LACS) (` IN LACS)

Interest on bank deposits 141.84 186.85 Interest others 32.22 – Excess provision written back 11.03 – Dividend on current investment 8.00 25.55 Profit on sale of investment 12.48 – TOTAL 205.57 212.40

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

21 Employee benefits expenseYEAR ENDED

MARCH 31, 2014YEAR ENDED

MARCH 31, 2013

(` IN LACS) (` IN LACS)

Salaries, wages and bonus 34.75 50.09 Contribution to provident and other funds 1.48 2.59 Employee benefits 0.37 2.75 Staff welfare expenses 4.26 4.72 TOTAL 40.86 60.15

21.1 Gratuity Amount recognised in the statement of profit and loss is as under:

YEAR ENDED MARCH 31, 2014

YEAR ENDED MARCH 31, 2013

(` IN LACS) (` IN LACS)

Current service cost – 0.85 Interest cost – 0.37 Actuarial (gain) / loss recognised during the year – (0.34)

– 0.88 Movement in the liability recognised in the balance sheet is as under:Present value of defined benefit obligations at the beginning of the year 5.50 4.62 Current service cost – 0.85 Interest cost – 0.37 Actuarial loss / (gain) recognised during the year – (0.34)Less: Present value of defined benefit obligations for the employees whose employment has been terminated during the year

5.50

Present value of defined benefit obligation as at the end of the year – 5.50 Current portion of obligation as at the end of the year – 0.64 Non-current portion of obligation as at the end of the year – 4.86

21.2 Compensated absencesAmount recognised in the statement of profit and loss account is as under:

YEAR ENDED MARCH 31, 2014

YEAR ENDED MARCH 31, 2013

(` IN LACS) (` IN LACS)

Current service cost – 1.05 Interest cost – 0.34 Actuarial loss / (gain) recognised during the year – 0.48

– 1.87 Movement in the liability recognised in the balance sheet is as under:Present value of defined benefit obligation at the beginning of the year 5.53 4.23 Current service cost – 1.05 Interest cost – 0.34 Actuarial loss recognised during the year – 0.48 Benefits paid – (0.57)Less: Present value of defined benefit obligations for the employees whose employment has been terminated during the year

5.53

Present value of defined benefit obligation as at the end of the year – 5.53 Current portion of obligation as at the end of the year – 0.47 Non-current portion of obligation as at the end of the year – 5.06 For determination of the liability in respect of gratuity and compensated absences the Company has used following actuarial assumptions:DescriptionDiscount rate – 8%Future salary increase – 7.50%

21.3 Provident fund and employee state insurance fundContribution made by the Company during the year was ` 1.48 lacs (Previous Year ` 2.59 lacs).

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

22 Finance costsYEAR ENDED

MARCH 31, 2014YEAR ENDED

MARCH 31, 2013

(` IN LACS) (` IN LACS)

Interest on optionally convertible debentures 2,477.19 2,314.04 Bank charges 0.01 –TOTAL 2,477.20 2,314.04

23 Other expensesYEAR ENDED

MARCH 31, 2014YEAR ENDED

MARCH 31, 2013

(` IN LACS) (` IN LACS)

Power and fuel 1,279.55 827.48 Horticulture 18.08 14.92 Repairs and maintenance Machinery 112.90 86.43 Electrical 21.53 48.20 Others 155.98 77.63 Housekeeping 54.67 53.36 Facade trolley expenses 18.63 15.00 Water and sewage charges 4.43 2.46 Security charges 139.18 123.55 Elevator maintenance expenses 40.60 31.40 Heating, ventilating and air conditioner expenses 30.50 17.86 Consumables 23.98 20.12 Insurance 25.23 20.69 Hire charges of vehicle 15.52 14.95 Land lease rent 37.74 37.70 Rates and taxes 1.93 0.96 Commission and brokerage 47.22 5.42 Travelling and conveyance 1.98 3.04 Printing and stationery 1.38 3.10 Communication 1.83 1.30 Legal and professional 58.30 62.55 Testing charges 1.55 2.72 Miscellaneous expenses 5.38 0.33 TOTAL 2,098.09 1,471.17

23.1 Auditor’s remuneration

YEAR ENDED MARCH 31, 2014

YEAR ENDED MARCH 31, 2013

(` IN LACS) (` IN LACS)

Audit fees 4.00 4.00 Limited review 0.75 0.75 Tax audit fees 0.25 0.25 TOTAL 5.00 5.00

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G A L A X Y M E R C A N T I L E S L I M I T E D | 3 5 1

Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

24 Earnings per equity share (Basic and Diluted)

YEAR ENDED MARCH 31, 2014

YEAR ENDED MARCH 31, 2013

(` IN LACS) (` IN LACS)

Earnings for the year (74.74) (151.08)Earning attributable to equity share holder (74.74) (151.08)Number of weighted average shares considered for calculation of basic earnings 84,083 80,903 Earnings per equity share (in `) (88.88) (186.74)

24.1 Since the optionally convertible debentures are anti-dilutive, the diluted earning per share is same as basic earning per share.

25 Contingent liability and commitments (to the extent not provided for)

AS AT MARCH 31, 2014 AS AT MARCH 31, 2013

(` IN LACS) (` IN LACS)

(a) Contingent liabilities exist in respect of Demand of service tax 1,577.79 1,457.86

(b) Estimate amount of contracts remaining to be executed on capital account and other commitment, not provided for (net of advances paid) 6.95 33.57

(c) Arrears of fixed cumulative dividend on preference share: Preference dividend on 61,40,681, 0.01% cumulative redeemable preference shares (outstanding for 2 years) 1.23 0.71 Preference dividend on 1,77,222, 0.01% cumulative redeemable preference shares (outstanding for 2 years) 0.04 0.03 Preference dividend on 9,99,426, 0.01% cumulative redeemable preference shares (outstanding for 2 years) 0.20 0.10

26 The Company has requested its vendors to confirm their status under Micro, Small and Medium Enterprises Development ("MSMED") Act, 2006. Based on the confirmations received, there are no amounts due to any micro or small enterprise under the MSMED Act, 2006. Further the Company’s liability towards any interest for delayed payments under the provisions of the MSMED Act, 2006 is not likely to be material.

27 Segment reportingThe Company is engaged in the business of renting and maintenance of properties which as per Accounting Standard 17 on “Segment reporting” is considered to be the only reportable business segment. The Company is operating only in India and there is no other significant geographical segment.

28 Related party disclosures28.1 Relationships

(i) Holding company : IDFC Limited (w.e.f. March 11, 2014)

(ii) Fellow subsidiary companies : DLF Utilities Limited (till March 10, 2014).

(with whom transactions have taken place during the year)

(iii) Companies exercising significant influence : IDFC Limited (till March 10, 2014)

: DLF Home Developers Limited (till March 10, 2014)

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Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

28.2 The following transaction were carried out with related party’s in the ordinary course of business

DESCRIPTION

HOLDING COMPANY

FELLOW SUBSIDIARY COMPANIES

COMPANIES EXERCISING SIGNIFICANT INFLUENCE

2014 2013 2014 2013 2014 2013

(` IN LACS) (` IN LACS) (` IN LACS) (` IN LACS) (` IN LACS) (` IN LACS)

TRANSACTIONS

LEGAL AND PROFESSIONAL EXPENSE

DLF Utilities Limited 32.00 48.00 INTEREST EXPENSES

IDFC Limited 160.10 – 2,317.09 2,314.04 LOAN REPAID

DLF Home Developers Limited 3,222.73 – IDFC Limited 165.00 SECURITY PREMIUM RECEIVED

IDFC Limited 787.72 – ISSUE OF EQUITY SHARES (CLASS A)

IDFC Limited 3.77 – REDEMPTION OF PREFERENCE SHARES (SERIES B)

DLF Home Developers Limited – 954.25 – ISSUE OF DEBENTURES

IDFC Limited – 2,756.40 – YEAR END BALANCES

SHARE CAPITAL

DLF Home Developers Limited – 7,127.42 IDFC Limited 7,402.00 – 1,034.57 UNSECURED LOAN

DLF Home Developers Limited – – – 3,222.72 IDFC Limited – – – 165.00 Optionally convertible debentures - IDFC Limited 16,368.40 – – 13,612.00 INTEREST PAYABLE

IDFC Limited 7.62 – – 539.20

29 Previous year figures have been rearranged / regrouped wherever considered necessary to make them comparable with those of the current year.

FOR WALKER, CHANDIOK & CO. LLP

Chartered AccountantsFOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

GALAXY MERCANTILES LIMITED

per NEERAJ SHARMA

PartnerNIMESH GROVER

DirectorRITESH VOHRA

Director

Gurgaon | April 16, 2014 Mumbai | April 16, 2014

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Printed at Repro India Ltd.

CONTENTS

TEN YEARS’ HIGHLIGHTS

CHAIRMAN’S STATEMENT COMPANY INFORMATION INFRASTRUCTURE REVIEW

DIRECTORS’ REPORT

MANAGEMENT DISCUSSION& ANALYSIS

CORPORATE GOVERNANCEREPORT

ADDITIONAL SHAREHOLDERINFORMATION

CEO & CFO CERTIFICATE

AUDITORS’ CERTIFICATE

BUSINESS RESPONSIBILITYREPORT

CONSOLIDATED GROUP ACCOUNTSWITH AUDITORS’ REPORT

STANDALONE ACCOUNTSWITH AUDITORS’ REPORT

02

04

06

08

20

28

40

54

59

60

62

77

115

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CORPORATE OFFICE

Naman Chambers, C-32, G-BlockBandra-Kurla ComplexBandra (East)Mumbai 400 051

TEL +91 (22) 4222 2000FAX +91 (22) 2654 0354

IDFC LIMITEDwww.idfc.com | [email protected]

REGISTERED OFFICE

KRM Tower, 8th floorNo.1, Harrington RoadChetpetChennai 600 031

TEL +91 (44) 4564 4000FAX +91 (44) 4564 4022

I D F C S U B S I D I A R I E S

A N N U A L R E P O R T

2 0 1 3 - 2 0 1 4

IDF

C S

UB

SID

IAR

IES

AN

NU

AL

RE

PO

RT