Kotak Mahindra Capital Company Limited-A

8/4/2019 Kotak Mahindra Capital Company Limited-A

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Kotak MahindraCapital Company Limited


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Kotak Mahindra Capital Company L imited 1

Directors Report

To the Members o

Kotak Mahindra Capital Company Limited

The Directors present their Fiteenth Annual Report together with the audited accounts o your Company or the year ended 31st March 2010.

FINANCIAL RESULTS

Particulars Year Ended 31st

March, 2010

Rupees in Lakhs

Year ended

31st March 2009

Rupees in Lakhs

Gross Income 10,140 9,781

Prot beore Tax 3,461 2,161

Provision or Tax 1,075 880

Prot ater Tax 2,386 1,281

Balance o Prot rom previous years 34,770 33,489

Amount available or appropriation 37,156 34,770

Appropriations:

Surplus carried orward to the Balance Sheet 37,156 34,770

1. DIVIDEND

The Directors do not recommend any dividend or the year.

2. BUSINESS OPERATIONS

A. EQUITIES

The last nancial year saw a revival o the capital markets in India ater the adverse impact o the global nancial crises in the previous year.Total unds raised in public oerings, including ollow on oering and debt oering during the year was Rs. 49,442 crores against

Rs. 2034 Crores raised in the previous year. There were 67 Qualied Institutional Placement (QIPs) made raising Rs. 43,968 crores in FY 10 as

against just 2 in the previous year. Your Company completed 29 transactions in FY 2010. Oerings managed were across sectors: real estate,

consumer (ood), media, leisure, power, nancial services, construction and also included 4 o the 5 PSU oerings in FY10, viz. NMDC,

NTPC, NHPC and REC. Also successully concluded the First QIP o NCD with Warrants or HDFC.

Your Company was No. 6 in Asia (ex Japan) and No. 17 globally or CY 2010 (Bloomberg) in equity oering, No. 1 in the Prime League

tables or IPOs and No. 2 in ollow-on oering. Your Company was once again the recipient o prestigious awards such as Best Investment

Bank in India by Finance Asia 2009.

B. M&A, FINANCIAL SPONSORS, INFRASTRUCTURE AND RESTRUCTURING ADVISORY

Your Company acted as nancial advisor in many signicant transactions such as Tech Mahindra Limiteds acquisition o Mahindra Satyam

Limited (Formerly known as Satyam Computer Services Limited) or Rs. 2,911 crore (US$591 mn). Kotak Group brought to the ore its vast

experience in handling complex transactions and provided an entire bouquet o investment banking (advisory, nancing, execution and

open oer management) services to the client through a seamlessly coordinated eort across various unctions under extremely aggressive

timelines. Other transaction in which your company was involved was (i) the demerger o 6 regional channels rom Zee News into Zee

Entertainment and also provided the airness opinion or the transaction, (2) as independent valuer or the integration o Cara Builders &

Constructions (including DLF Assets Pvt. Ltd.) with DLF Cyber City, a wholly owned subsidiary o DLF, (3) nancial advisor to Tube Investments

o India (TII), a Murugappa Group company or acquisition o 77% stake in Financiere C10, a leading European manuacturer o industrial

and auto chains based out o France, (4) nancial advisor to The Mobile Store or private placement o shares to IL&FS Private Equity, (5)

exclusive nancial advisor to GMR Energy or private placement o shares to Temasek Holdings to und the companys expansion plans.

This investment o Rs. 930 crore (US$ 200 million) is one o the largest PE investments in Indias power sector and is Temaseks rst

investment in the power generation sector in India and (6). Managers to the rst successul delisting oer o Rs. 398 crore (US$90 mn)

or Micro Inks Limited.

BOARD OF DIRECTORS: MR. UDAY S. KOTAK, MS. FALGUNI NAYAR, MS. SHANTI EKAMBARAM, MR. DIPAK GUPTA, MR. JAIMIN BHATT


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2 Kotak Mahindra Capital Company L imited

Your Company has a good pipeline o advisory transactions o which some may see successul closure during the current year.

Your company and Renaissance Capital, the leading investment bank in Russia/CIS and Sub-Saharan Arica, entered into a co-operation

agreement or cross-border mergers and acquisitions advisory between the markets in which they operate.

3. HUMAN RESOURCES

Your Company recognizes that human capital is the key to success and growth in the nancial sector. Towards this goal, retaining good talent and

providing career growth is the ocus o Company.

4. DIRECTORS

Mr. Uday Kotak and Mr. Dipak Gupta retire at the ensuing Fiteenth Annual General Meeting and are eligible or re-appointment.

5. AUDIT COMMITTEE

The constitution o the Audit Committee o the Company is as set out below:

Mr. Uday Kotak

Mr. Dipak Gupta

Mr. Jaimin Bhatt

6. AUDITORSThe statutory auditors Messrs. Deloitte Haskins & Sells, Chartered Accountants retire at the ensuing Annual General Meeting and are eligible

or reappointment.

7. STATUTORY INFORMATION

A statement giving the particulars o employees as required under Section 217 (2A) o the Companies Act, 1956, read with the Companies

(Particulars o Employees) Rules, 1975, is annexed.

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

31st March 2010.

Your Companys oreign exchange income was Rs. 306 lakhs while the outgo was Rs. 101 Lakhs. The other particulars under the Companies

(Disclosure o Particulars in the Report o Board o Directors) Rules, 1988, are not applicable since your Company is not a manuacturing company.

8. DIRECTORS RESPONSIBILITY STATEMENT

Based on representations rom the Management, the Directors state, in pursuance o Section 217 (2AA) o the Companies Act, 1956, that:

I. Your Company has, in the preparation o the annual accounts or the year ended 31st March 2010, ollowed the applicable accounting

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

II. The Directors 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 air view o the state o aairs o the Company as at 31st March 2010 and o prot/loss o the

Company or the nancial year ended 31st March 2010;

III. The Directors have taken proper and sucient care to the best o their knowledge and ability, or the maintenance o adequate accounting

records in accordance with the provisions o the Act or saeguarding the assets o the Company and or preventing and detecting raud and

other irregularities; and

IV. The Directors have prepared the annual accounts on a going concern basis.

9. ACKNOWLEDGEMENTS

Your Directors would like to place on record their gratitude or the valuable support received rom the Reserve Bank o India, Securities and

Exchange Board o India and other Government and Regulatory agencies. Your Directors acknowledge and wish to place their appreciation

o employees or their commendable eorts, teamwork and proessionalism.

For and on behal o the Board o Directors

Uday S. Kotak Place : Mumbai

Chairman Date : April 28, 2010


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Auditors Report

To The Members o

Kotak Mahindra Capital Company Limited

1. We have audited the attached Balance Sheet o Kotak Mahindra Capital Company Limited (the Company) as at 31st March, 2010,

the Prot and Loss Account and the Cash Flow Statement o the Company or the year ended on that date, both annexed thereto. These nancialstatements are the responsibility o the Companys Management. Our responsibility is to express an opinion on these nancial statements based

on our audit.

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

the audit to obtain reasonable assurance about whether the nancial statements are ree o material misstatements. An audit includes examining,

on a test basis, evidence supporting the amounts and disclosures in the nancial statements. An audit also includes assessing the accounting

principles used and the signicant estimates made by the Management, as well as evaluating the overall nancial statement presentation.

We believe that our audit provides a reasonable basis or our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 (CARO) issued by the Central Government o India in terms o Section 227(4A)

o the Companies Act, 1956, we enclose in the Annexure a statement on the matters specied in paragraphs 4 and 5 o the said Order.

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

(a) we have obtained all the inormation and explanations which to the best o our knowledge and belie were necessary or the purposes o

our audit;

(b) in our opinion, proper books o account as required by law have been kept by the Company so ar as appears rom our examination o those

books;

(c) the Balance Sheet, Prot and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books o account;

(d) in our opinion, the Balance Sheet, Prot and Loss Account and Cash Flow Statement dealt with by this report are in compliance with the

Accounting Standards reerred to in Section 211 (3C) o the Companies Act, 1956;

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

required by the Companies Act, 1956 in the manner so required and give a true and air view in conormity with the accounting principles

generally accepted in India:

(i) in the case o the Balance Sheet, o the state o aairs o the Company as at 31st March, 2010;

(ii) in the case o the Prot and Loss Account, o the prot o the Company or the year ended on that date; and

(iii) in the case o the Cash Flow Statement, o the cash fows o the Company or the year ended on that date.

5. On the basis o written representations received rom the Directors, as on 31st March, 2010 and taken on record by the Board o Directors,

we report that none o the Directors is disqualied as on 31st March, 2010 rom being appointed as a Director in terms o Section 274(1)(g)

o the Companies Act, 1956.

For Deloitte Haskins & Sells

Chartered Accountants

(Registration No. 117366W)

R. Laxminarayan

Partner Place : Mumbai

Membership Number: 33023 Date : April 28, 2010


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Annexure to the Auditors Report

Annexure to the Auditors Report

(Referred to in paragraph 3 of our Report of even date)

(i) Having regard to the nature o the Companys activities, clauses (ii), (viii), and (xiii) o CARO are not applicable.

(ii) In respect o its xed assets:

(a) The Company has maintained proper records showing ull particulars, including quantitative details and situation o the xed assets.

(b) The xed assets were physically veried during the year by the Management in accordance with a regular programme o verication

which, in our opinion, provides or physical verication o all the xed assets at reasonable intervals. According to the inormation and

explanations given to us, no material discrepancies were noticed on such verication.

(c) The xed assets disposed o during the year, in our opinion, do not constitute a substantial part o the xed assets o the Company and

such disposal has, in our opinion, not aected the going concern status o the Company.

(iii) The Company has neither granted nor taken any loans, secured or unsecured, to/rom companies, rms or other parties listed in the Register

maintained under Section 301 o the Companies Act, 1956.

(iv) In our opinion and according to the inormation and explanations given to us, there is an adequate internal control system commensurate with

the size o the Company and the nature o its business with regard to purchase o xed assets and or the sale o goods and services. During the

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

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

best o our knowledge and belie and according to the inormation and explanations given to us:

(a) The Company has not entered into any contracts or arrangements that need to be entered in the Register maintained in pursuance o

Section 301 o the Companies Act, 1956. Hence, clause (v) o Para 4 o the Order is not applicable to the Company or the year.

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

(vii) In our opinion, the internal audit unctions carried out during the year by the rm o Chartered Accountants appointed by the Management

have been commensurate with the size o the Company and the nature o its business.

(viii) According to the inormation and explanations given to us in respect o statutory dues:

(a) The Company has generally been regular in depositing undisputed dues, including Provident Fund, Investor Education and Protection Fund,

Employees State Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory

dues applicable to it with the appropriate authorities.

(b) There were no undisputed amounts payable in respect o Income-tax, Wealth Tax, Custom Duty, Excise Duty, Cess and other material

statutory dues in arrears as at 31st March, 2010 or a period o more than six months rom the date they became payable.

(c) Details o dues o Income-tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and Cess which have not been deposited as on

31st March, 2010 on account o disputes are given below:

Statute Nature of Dues Forum where Dispute is

pending

Period to which the

amount relates

Amount involved

(Rs. in lakhs)

Service Tax Tax, Interest and Penalty Commissioner o Central Excise 2000-01 to 2002-03 148.16

Service Tax Tax, Interest and Penalty Commissioner o Central Excise 2004-05 to 2008-09 35.37

Service Tax Penalty Commissioner o Central Excise 2008-09 to 2009-10 7.42

(ix) The Company has no accumulated losses as at 31st March, 2010 and has not incurred any cash loss during the nancial year ended on that

date and in the immediately preceding nancial year.

(x) In our opinion and according to the inormation and explanations given to us, the Company has not deaulted in the repayment o dues to

debenture holders.


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(xi) According to the inormation and explanations given to us, the Company has not granted any loans or advances on the basis o security by way

o pledge o shares, debentures and other securities.

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

transactions and contracts in respect o its dealing in shares, securities, debentures and other investments and timely entries have been madetherein. The aoresaid securities have been held by the Company in its own name.

(xiii) In our opinion and according to the inormation and explanations given to us, the terms and conditions o the guarantees given by the

Company or loans taken by others rom banks and nancial institutions are not prima acie prejudicial to the interest o the Company.

(xiv) To the best o our knowledge and belie and according to the inormation and explanations given to us, there have been no term loans availed

during the year. Hence clause (xvi) o paragraph 4 o the said Order is not applicable to the Company.

(xv) In our opinion and according to the inormation and explanations given to us and on an overall examination o the Balance Sheet,

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

(xvi) The Company has not made any preerential allotment o shares to parties and companies covered in the register maintained under Section 301

o the Companies Act, 1956 during the year. Hence clause (xviii) o paragraph 4 o the said Order is not applicable to the Company.

(xvii) According to the inormation and explanations given to us, during the year, the Company had issued 75 unsecured debentures o

Rs. 10,000,000 each and redeemed the said debentures during the year. Hence, the question o creating security does not arise.

(xviii) According to the inormation and explanations given to us, the Company has not raised any money by public issue during the year. Hence,

Clause (xx) o paragraph 4 o the Order is not applicable to the Company or the year.

(xix) To the best o our knowledge and belie and according to the inormation and explanations given to us, no raud by the Company and no raud

on the Company was noticed or reported during the year.

For Deloitte Haskins & Sells


(Registration No. 117366W)

R. Laxminarayan

Partner Place : Mumbai

Membership Number: 33023 Date : April 28, 2010


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6 Kotak Mahindra Capital Company Limited

Bala Sht as at 31st Marh, 2010

Schedule Rps i lakhs

As at

31st Marh, 2010

(Rps i lakhs)

As at

31st March, 2009

(Rupees in lakhs)

SouRceS o undS

Sharhlrs s:

Capital 1 411.61 411.61

Reserves and Surplus 2 43,334.18 40,948.00

Ttal 43,745.79 41,359.61

Appliati s

ix Assts:

Gross Block 3 2,759.16 2,745.58

Less: Depreciation and Amortisation 729.01 732.27

Net Block 2,030.15 2,013.31

Ivstmts 4 30,971.90 23,739.10

drr Tax Asst (nt) 74.51 243.98

crrt Assts, Las a Avas:

Sundry Debtors 5 1,573.27 412.26

Cash and Bank Balances 6 9,219.36 14,372.95

Other Current Assets 7 16.79 37.70

Loans and Advances 8 1,946.46 1,632.99

12,755.88 16,455.90

Lss: crrt Liabilitis a Prvisis:

Liabilities 9 1,693.68 786.38

Provisions 10 392.97 306.30

2,086.65 1,092.68

Net Current Assets 10,669.23 15,363.22

Ttal 43,745.79 41,359.61

Signifcant Accounting policies and notes to Accounts 17

In terms o our report attached For and on behal o the Board o Directors

r dlitt Haskis a Slls


R. Laxmiaraya uay Ktak algi nayar Shati ekambaram

Partner Chairman Managing Director Director

Place : Mumbai Ajay Vaiya Rajv Saptarshi

Date : April 28, 2010 Company Secretary Chie Financial Ofcer


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Kotak Mahindra Capital Company Limited 7

Prft a Lss At r th Yar e 31st Marh, 2010

Schedule Rps i lakhs

Yar

31st Marh, 2010

(Rps i lakhs)

Year ended

31st March, 2009

(Rupees in lakhs)

Im

Financial Advisory and Transactional Services 11 8,359.74 8,118.56

Interest Income 12 302.90 883.10

Other Income 13 1,477.53 779.97

Ttal Im 10,140.17 9,781.63

expitr

Personnel Expenses 14 4,221.94 4,466.09

Interest and Other Financial Charges 15 28.36

Other Expenses 16 2,233.73 2,963.59

Depreciation and Amortisation 194.57 190.63

Ttal expitr 6,678.60 7,620.31

Prft Br Taxati 3,461.57 2,161.32

Prvisi r Taxati

Current Tax 926.00 896.00

(Excess)/Short Provision in Respect o Earlier Years (22.47) 6.04

Deerred Tax 169.48 (62.26)

Fringe Benefts Tax 38.00

Wealth Tax 2.38 2.46

1,075.39 880.24

Prft Atr Taxati 2,386.18 1,281.08

Balance Brought Forward rom Previous Year 34,770.11 33,489.03

Balance Carried to Balance Sheet 37,156.29 34,770.11

Earnings Per Share: Face Value o Rs. 10/-

Basic and Diluted Earnings Per Share (in Rs.) 57.97 31.12

(Reer Note 15 o Schedule 17)

Signifcant Accounting Pol icies and Notes to Accounts 17









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8 Kotak Mahindra Capital Company Limited

cash lw Statmt r th Yar e 31st Marh, 2010

r th yar

31st Marh, 2010

Rs. i lakhs

For the year ended

31st March, 2009

Rs. in lakhs

cASH LoW RoM oPeRATInG AcTIVITIeS

Net Proft beore taxation 3,461.57 2,161.32

Adjustments or:

Depreciation 194.57 190.63

Dimunition in value o long term Investments 178.40

(Proft)/Loss on sale o current investments (531.44) 111.23

(Proft)/Loss on sale o long term investments (259.75)

Interest/dividend received on Investments (42.96) (608.82)

Reversal o Diminution in value o long term investments (52.68)

Interest on Income Tax Reund (50.58)

Interest paid on debentures 28.36

Income distribution rom Venture Funds (38.34) (4.38)

(Proft)/loss on sale o fxed assets (7.96) (11.60)

oPeRATInG PRoIT BeoRe WoRKInG cAPITAL cHAnGeS 2,751.37 1,966.20

Adjustments or:

(Increase)/Decrease in loans and advances (120.35) (273.82)

(Increase)/Decrease in sundry debtors (1,161.01) 2,592.50

(Increase)/Decrease in other current assets 20.91 582.57

Increase/(Decrease) in current liabilities 907.30 (4,167.10)

Increase/(Decrease) in provision or gratuity and leave encashment 86.67 9.74

cash Grat rm opratis 2,484.89 710.09

Direct taxes paid (net o reunds and Interest thereon) (1,098.92) (1,188.65)

Expenses in relation to shares issued during the previous year debited to share premium account (12.17)

nt cash lw rm/(s i) opratig Ativitis (A) 1,385.97 (490.73)

cash lw rm Ivstig Ativitis

Purchase o fxed assets (227.52) (173.81)

Sale o fxed assets 23.94 60.98

Purchase o investments (58,975.62) (5,588.30)

Sale o investments 52,586.70 16,556.79

Interest/dividend received on Investments 42.96 608.82

Income distribution rom Venture Funds 38.34 4.38

nt cash lw (s i)/rm Ivstig Ativitis (B) (6,511.20) 11,468.86


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Kotak Mahindra Capital Company Limited 9

cash lw Statmt r th Yar e 31st Marh, 2010 (ct.)

r th yar

31st Marh, 2010

Rs. i lakhs

For the year ended

31st March, 2009

Rs. in lakhs

cASH LoW RoM InAncInG AcTIVITIeS

Issue o optionally convertible debentures 7,500.00

Repayment o optionally convertible debentures (7,500.00)

Interest paid on borrowings (28.36)

nt cash lw (s i)/rm iaig Ativitis (c) (28.36)

Net Increase/(Decrease) in Cash and Cash Equivalents (A + B + C) (5,153.59) 10,978.13

Cash and Cash Equivalents at the beginning o the year 14,372.95 3,394.82

Cash and cash Equivalents at the end o the year 9,219.36 14,372.95

(5,153.59) 10,978.13

nts:

1. Components o Cash and Cash Equivalents comprises o 31st Marh, 2010 31st March, 2009

Rs. i lakhs Rs. in lakhs

Cash on hand

Balances with:

Scheduled banks in current account 6,925.86 22.95

Scheduled bank in Deposit account 2,293.50 14,350.00

2. Cash and Cash Equivalents include fxed deposits o Rs. 50.00 lakhs (Previous year Rs. 75.00 lakhs) under lien o National Securities Clearing

Corporation Limited, Rs. 2,243.50 lakhs (Previous year Rs. 3,755.00 lakhs), held by bank as margin money against intraday overdrat acilities.

3. The above Cash Flow Statement has been prepared under the Indirect Method as set out in Accounting Standard-3 on Cash Flow Statementsissued by the under the Companies (Accounting Standards) Rules, 2006.

4. Direct Taxes paid and Expenses in relation to shares issued during the previous year debited to securities premium account are treated as arising

rom operating activities and are not biurcated between investing and fnancing activities.

5. Figures o the previous year are recast wherever necessary to conorm to fgures o the current year.









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Schedules orming part o the Balance Sheet as at 31st March, 2010

Rupees in lakhs

As at

31st March, 2010

(Rupees in lakhs)

As at

31st March, 2009

(Rupees in lakhs)

Schedule 1 Capital

Authorised10,000,000 equity shares o Rs. 10 each 1,000.00 1,000.00

Total 1,000.00 1,000.00

Issued and Subscribed

4,116,149 equity shares o Rs. 10 each ully paid up

(O the above : 3,126,134 shares are held by Kotak Mahindra Bank

Limited, the holding company and its nominees and 990,015 shares are

held by Kotak Securities Limited, a subsidiary o the holding company

156,129 equity shares o Rs. 10 each are allotted as ully paid up or

consideration other than cash in fnancial year 2007-08, pursuant to the

Scheme o Arrangement as approved by the Bombay High Court.)

411.61 411.61

Total 411.61 411.61

Schedule 2 Reserves and Surplus

Share Premium Account

As per last Balance Sheet 6,177.89 6,190.06

Less : Expenses in relation to shares issued during the previous year

pursuant to the scheme o arrangement as approved by the

Bombay High Court.

(12.17)

6,177.89 6,177.89

Balance in Proft and Loss Account 37,156.29 34,770.11

Total 43,334.18 40,948.00

Schedule 3 Fixed Assets(Rs. in lakhs)

Description Gross Block (At Cost) Depreciation Net Block

As at

1st April,

2009

Additions Deductions As at

31st

March,

2010

As at

1st April,

2009

For the

year

Deductions As at

31st

March,

2010

As at

31st

March,

2010

As at

31st

March,

2009

Intangible Assets

Sotware - Acquired 61.02 5.30 66.32 44.41 10.25 54.66 11.66 16.61

Tangible Assets

Premises* 1,772.87 1,772.87 67.35 30.49 97.84 1,675.03 1,705.52

Leasehold Improvements 127.01 47.22 81.14 93.09 109.15 24.79 81.00 52.94 40.15 17.86

Computers 265.52 1.16 3.91 262.77 216.15 27.89 3.20 240.84 21.93 49.37Furnitures 47.11 0.10 37.91 9.30 46.78 0.25 37.91 9.12 0.18 0.33

Ofce Equipments # 111.34 4.68 34.07 81.95 90.19 6.77 33.70 63.26 18.69 21.15

Vehicles 360.71 169.06 56.91 472.86 158.24 94.13 42.02 210.35 262.51 202.47

Total 2,745.58 227.52 213.94 2,759.16 732.27 194.57 197.83 729.01 2,030.15 2,013.31

Previous Year 2,735.63 173.81 163.86 2,745.58 656.12 190.63 114.48 732.27 2,013.31

* Represents premises given on operating lease

# Ofce equipments include assets aggregating to Rs. 6.22 lakhs (Previous year Rs. 6.22 lakhs) (50% o the original cost) jointly owned with other

enterprises. The depreciation or the year is Rs. Nil (Previous Year Rs. Nil) and the written down value o the asset as on March 31, 2010 is Rs. Nil

(Previous year Rs. Nil).


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Schedules orming part o the Balance Sheet as at 31st March, 2010 (Contd.)

Schedule 4 Investments (Non-Trade)

Quantity Amount

Face Value

(Rupees)

As at

31st March, 2010

As at

31st March, 2009

31st March, 2010

(Rupees in lakhs)

31st March, 2009

(Rupees in lakhs)Long Term Investments (at cost, ully paid)

In Equity Shares o Companies (Unquoted)

Kotak Mahindra (International) Limited @ US $ 1 2,000,000 2,000,000 718.00 718.00

Kotak Mahindra Inc @ US $ 0.01 750,000 750,000 343.78 343.78

Kotak Investment Advisors Limited @ 10 2,250,070 2,250,070 226.01 226.01

Kotak Securities Limited@ 10 400,010 400,010 12,300.00 12,300.00

Infna Finance Private Limited @ 10 1,100,240 1,100,240 110.02 110.02

Kotak Mahindra Old Mutual Lie Insurance Limited@ 10 63,366,753 63,366,753 6,336.68 6,336.68

INX Media Private Limited 10 128,400 128,400 12.84 12.84

National Stock Exchange o India Limited 10 51,334 51,334 1,509.22 1,509.22

@ Companies under the same management

In Equity Shares o Companies (Quoted)

KPR Mills Limited 10 1,093,322 591.27

In Units o Venture Capital Fund(Unquoted)

Kotak India Growth Fund 1,000 50,000 50,000 478.02 463.02

Kotak India Real Estate Fund 100,000 880 958 880.06 957.93

Kotak Alternate Opportunities (India) Fund* 1,395.45 940.00

Less : Provision or Diminution in value o units o

Venture Capital Funds

(125.72) (178.40)

(A) 24,775.63 23,739.10

Current Investments (Fully paid)(at cost or air value, whichever is lower)

In Units o Mutual Fund (Unquoted)Kotak Floater Long Term Growth 10.00 42,800,111 6,196.27

(B) 6,196.27

(A)+(B) 30,971.90 23,739.10

Aggregate Value o Quoted Investments At Book Value 591.27

Market Value o Quoted Investments Market Value 1,223.43

Aggregate Value o Unquoted Investments At Book Value 30,380.63 23,739.10

* represents Companys share o benefcial interest

in a trust.

Investments purchased and sold during the year

Kotak Floater Short Term Daily Dividend 10.00 30,655,675 3,078.69

HDFC Mutual Fund - Top 200 Fund - Growth 10.00 77,067 100.00

DSP Blackrock Small & Midcapund - Growth Plan 10.00 662,208 100.00

Principal Emerging Blue Chip Fund - Growth Plan 10.00 373,832 100.00

Sundaram BNP Paribas-Select Midcap - Growth Plan 10.00 95,497 100.00

Sundaram BNP Paribas-S.M.I.L.E. - Growth Plan 10.00 678,743 200.00

SBI MF - Magnum Global Fund - Growth 10.00 260,078 100.00

ICICI PRU Emerging Star Fund - Growth 10.00 316,857 100.00

Kotak Liquid (Institutional Premium) - Daily Dividend 10.00 216,090,356 26,423.74

Kotak Floater Long Term Growth 10.00 169,946,309 24,157.43

KPR Mills Limited 10.00 606,678 328.09


13/31


Schedule 5 Sundry Debtors (Unsecured)

Rupees in lakhs

As at

31st March, 2010

(Rupees in lakhs)

As at

31st March, 2009

(Rupees in lakhs)

Debts outstanding or a period exceeding six months

considered good

considered doubtul 44.15 128.39

44.15 128.39

Less: Provision or doubtul debts (44.15) (128.39)

Other debts (considered good) 1,573.27 412.26

Total 1,573.27 412.26

Debtors Include

Due rom a company under the same management

Kotak Mahindra (UK) Limited 2.07 80.89

Maximum amount outstanding during the year 80.89 80.89

Schedule 6 Cash and Bank Balances

Balances with scheduled banks in :

current account 6,925.86 22.95

deposit account 2,293.50 14,350.00

[Including Rs. 50.00 lakhs (Previous year Rs. 75.00 lakhs) under lien o

National Securities Clearing Corporation Limited and Rs. 2,243.50 lakhs

(Previous year Rs. 3,755.00 lakhs) under lien or Bank Overdrat acilities]

Total 9,219.36 14,372.95

Schedule 7 Other Current Assets

Interest accrued on deposits 16.79 37.70

Total 16.79 37.70



14/31


Schedule 8 Loans and Advances

(Unsecured, considered good unless otherwise stated)

As at

31st March, 2010(Rupees in lakhs)

As at

31st March, 2009(Rupees in lakhs)

Advances recoverable in cash or in kind or or value to be received 995.51 271.29

Deposits 404.52 1,008.39

Advance tax 546.43 353.31

[Net o Provision or tax Rs. 8,806.02 lakhs

(Previous year Rs. 10,548.91 lakhs)]

Total 1,946.46 1,632.99

Advances include:

Due rom Holding Company

Kotak Mahindra Bank Limited 58.27 197.96

Due rom companies under the same management

Phoenix ARC Pvt. Ltd. 0.32

Maximum amount outstanding during the year

Kotak Mahindra Bank Limited 197.96 197.96

Phoenix ARC Pvt. Ltd. 0.32 0.32

Due rom the Managing Director* 20.00 9.00

Maximum amount outstanding during the year 20.00 9.00

* represents remuneration paid in excess o limits u/s/198 o the

Companies Act, 1956 which has been recovered subsequently.

Schedule 9 Liabilities

Sundry creditors (Other than outstanding dues o Micro, Medium and

Small enterprises) (Reer Note 14 o Schedule 17)

1,400.18 565.49

Other liabilities 293.50 220.89

Total 1,693.68 786.38

Schedule 10 Provisions

Provision or Gratuity, Leave encashment and Employee benefts 392.97 306.30

Total 392.97 306.30



15/31


Schedule 11 Financial Advisory and Transactional Services

As at

31st March, 2010

(Rupees in lakhs)

As at

31st March, 2009

(Rupees in lakhs)

Issue management and placement ees and underwriting commission

(Reer Note No. 4 in Schedule 17)

4,385.68 1,502.91

Financial advisory ees 3,974.06 6,615.65

Total 8,359.74 8,118.56

Schedule 12 Interest Income

Interest on :

Long term investments 569.93

Income tax reund 50.58

Interest on debentures 34.75

(Tax deducted at source Rs. 2.80 lakhs; Previous Year Rs. Nil)

Fixed deposit with scheduled banks (Gross) 268.15 262.59

(Tax deducted at source Rs. 42.42 lakhs; Previous Year Rs. 52.22 lakhs)

Total 302.90 883.10

Schedule 13 Other Income

Dividend Income on:

Current investments 2.74 33.69

Long term investments 40.22 5.20

Proft on sale o fxed assets (net) 7.96 11.60

Provision or doubtul debts no longer required written back 181.76 45.28

Proft on sale o current investments 531.44

Proft on sale o long term investments 259.75

Proft on Trading in Debentures 29.78

Excess provision or Leave Encashment benefts written back 32.83

Reversal o diminution in value o long term investments 52.68

Foreign Exchange gain (Net) 120.61

Rent Income 176.56 145.44

Service Income 149.95 364.20

Income distribution on Venture Fund Investments 38.34 4.38

Miscellaneous income 6.35 16.74

Total 1,477.53 779.97



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Schedule 14 Personnel Expenses

Rupees in lakhs

For the year ended

31st March, 2010

(Rupees in lakhs)

For the year ended

31st March, 2009

(Rupees in lakhs)

Salaries, allowances and bonus 4,214.65 4,552.93

Contribution to employees provident and other unds 179.67 195.84

Sta welare 13.91 20.73

Gratuity benefts 22.89 23.65

Less: Recovery o expenses (209.18) (327.06)

Total 4,221.94 4,466.09

Schedule 15 Interest and other Financial Charges

Interest on debentures 28.36

Total 28.36

Schedule 16 Other Expenses

Travelling, conveyance and vehicle expenses 266.52 228.91

Auditors remuneration

Audit ees (excluding Service Tax) 13.00 11.00

Out o pocket expenses 0.06

13.06 11.00

Legal and proessional ees 65.96 201.90

Ofce Expenses 230.00 157.75

Advertisement 19.06 32.32

Electricity 67.26 59.91

Communication 57.40 50.75

Rent 636.01 704.01

Rates and taxes 4.20 10.33

Insurance 15.86 17.22

Repairs and maintenance - others 47.40 35.03

Common establishment expenses -reimbursement 556.84 956.49

Diminution in value o investments

Long term investments 178.40

Loss on Sale o Current Investments (Net) 111.23

Bad debts written o 134.73 152.71

Provision or doubtul debts 97.51 120.95

Foreign exchange loss (net) 13.89

Other expenses 133.35 70.35

Less: Recovery o expenses (125.32) (135.67)

Total 2,233.73 2,963.59



17/31


SCHEDULE 17 - SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES:

A. BASIS OF ACCOUNTING

The Financial Statements have been prepared on historical cost basis o accounting. The company adopts the accrual system o accounting

and the nancial statements conorm with the Accounting Standards notied under the Companies (Accounting Standard) Rules, 2006,

the generally accepted accounting principles prevailing in India and the relevant provisions o the Companies Act, 1956.

The preparation o nancial statements requires the Management to make estimates and assumptions considered in the reported amounts

o assets and liabilities (including contingent liabilities) as on the date o the nancial statements and the reported income and expenses

during the reported period. Management believes that the estimates used in preparation o the nancial statements are prudent and

reasonable. Actual results could dier rom these estimates.

B. REVENUE RECOGNITION

Revenue is recognized when there is reasonable certainty o its ultimate realization/collection.

i. Issue management and placement ees, underwriting commission and nancial advisory ees are accounted on completion

o milestones specied in the contract.

ii. Brokerage and clearing ees are recognized on the date o transaction.

C. TANGIBLE AND INTANGIBLE ASSETS, DEPRECIATION AND AMORTISATION

Fixed assets are stated at cost inclusive o incidental expenses less accumulated depreciation/amortization. The Company adopts the Straight

Line Method o depreciation so as to write o 100% o the cost o the assets at rates higher than those prescribed under Schedule XIV to

the Companies Act, 1956 based on the Managements estimate o the useul lives o all the assets. Estimated useul lives over which assets

are depreciated are as ollows:

Leasehold improvements: Over the primary period o lease Subject to a maximum o 6 years

Computers: 3 years

Sotware: 3 years

Furniture: 6 years

Oce Equipment: 5 years

Vehicles: 4 years

Premises: 58 years

i. Fixed assets costing less than Rs. 5,000 are ully depreciated in the year o purchase.

D. IMPAIRMENT OF ASSETS

The carrying amounts o assets are reviewed at each balance sheet date i there is any indication o impairment based on internal/external

actors.

An impairment loss is charged to the Prot and Loss account in the year in which an asset is identied as impaired.

E. INVESTMENTS

Investments are classied into long-term investments and current investments.

Investments, which are intended to be held or more than one year, are classied as long-term investments and investments, which are

intended to be held or less than one year, are classied as current investments. Long-term investments are accounted at cost and any

decline in the value, other than temporary is provided or.

Current investments are valued at cost (calculated by applying weighted average cost method) or air value whichever is lower.

Brokerage, stamping and additional charges paid are included in the cost o investments.

In case o investments in units o mutual unds, the net asset value o units is considered as the air value.

Investments include investments in shares o companies registered outside India. They are stated at cost by converting at the rate

o exchange prevalent at the time o acquisition thereo.

Schedules orming part o the Balance Sheet and the Proft and Loss Account


18/31


F. STOCK IN TRADE

Securities acquired with the intention to trade are classied as stock- in- trade. Stock-in -trade is valued at cost (inclusive o brokerage

and stamp charges in case o equity shares), calculated by applying the weighted average cost method or air value whichever is lower.

G. FOREIGN CURRENCY TRANSACTIONS

i. Transactions in oreign currencies are recorded at the rate o exchange prevailing on the date o the transaction.

ii. Monetary assets and liabilities contracted in oreign currencies are restated at the rate o exchange prevailing at the Balance Sheet date.

iii. Exchange dierences arising on settlement o the transaction and on account o restatement o assets and liabilities are dealt with in

the Prot and Loss Account.

H. TAXES ON INCOME

Income Taxes are accounted or in accordance with Accounting Standard (AS-22) Accounting or Taxes on Income issued under the

Companies (Accounting Standards) Rules, 2006. The Income Tax expense comprises Current tax and Deerred tax. Current tax is measured

at the amount expected to be paid in respect o taxable income or the year in accordance with the Income tax Act, 1961.

Deerred tax adjustments comprises o changes in the deerred tax assets and liabilities. Deerred tax assets and liabilities are recognised

or the uture tax consequences o timing dierences being the dierence between the taxable income and the accounting income that

originate in one period and are capable o reversal in one or more subsequent periods.

Deerred tax assets arising mainly on account o carry orward o losses and unabsorbed depreciation under tax laws are recognised only i

there is virtual certainty supported by convincing evidence that there will be sucient uture taxable income against which such deerred tax

assets can be realised. Deerred tax assets on account o other timing dierences are recognised only to the extent that there is reasonable

certainty that sucient uture taxable income will be available against which such deerred tax assets can be realised.

Deerred tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantially enacted beore the

balance sheet date. Changes in deerred tax assets/liabilities on account o changes in enacted tax rates are given eect to in the Prot and

Loss Account in the period o the change. The carrying amount o deerred tax assets are reviewed at each balance sheet date. The company

writes-down the carrying amount o a deerred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case

may be, that sucient uture taxable income will be available against which deerred tax asset can be realized.

I. EMPLOYEE BENEFITS

a. Defned Contribution Plan

The contribution as required by the statute made to Government Provident Fund is debited to prot and loss account.

The company contributes a sum equivalent to 15% subject to a maximum o Rs. 1 lakh per annum per employee, o eligible

employees eligible salary to a Superannuation Fund administered by trustees and managed by a Lie Insurance Company. The company

recognises such contributions as an expense in the year they are incurred.

b. Defned Beneft Plan

The company accounts or the liability or uture gratuity benets based on an actuarial valuation conducted by an independent

actuary. The gratuity obligation is wholly ununded. The net present value o the companys obligation is determined based on the

projected unit credit method as at the Balance Sheet date.

Actuarial gains/losses are immediately recognised in the prot and loss account.

c. Other Long-term Employee Benefts

The company accrues the liability or compensated absences based on the actuarial valuation conducted by an independent actuary.

The net present value o the companys obligation is determined based on the projected unit credit method as at the Balance Sheet date.

d. Other Employee Benefts

The undiscounted amount o employee benets expected to be paid in exchange or the services rendered by employees is recognised

during the period when the employee renders the service. These benets include perormance incentives.

J. BORROwING COSTS

Borrowing costs other than those directly attributable to qualiying xed assets are recognized as an expense in the period in which they

are incurred.

Schedules orming part o the Balance Sheet and the Proft and Loss Account (Contd.)


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K. PROVISIONS, CONTINGENT LIABILITIES & CONTINGENT ASSETS

Provision is recognised when there is a present obligation as a result o past event; it is probable that an outfow o resources will be required

to settle the obligation, in respect o 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 sheetdate and adjusted to refect the current best estimates. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent

assets are neither recognised nor disclosed in the nancial statements.

L. OPERATING LEASE

Leases where the lessor eectively retains substantially all the risks and benets o ownership o the leased asset, are classied as operating

leases. Operating lease payments/receipts are recognised as an expense/income in the Prot and Loss account on a straight-line basis over

the lease term.

M. SEGMENT ACCOUNTING POLICIES

(a) Segment assets and liabilities:

All Segment assets and liabilities are directly attributable to the segment.

Segment assets include all operating assets used by the segment and consist principally o xed assets, investments, stock in trade,

sundry debtors, loans and advances and cash and bank balances. Segment assets and liabilities do not include share capital, reservesand surplus and income tax (both current and deerred).

(b) Segment revenue and expenses:

Segment revenue and expenses are directly attributable to segment. It does not include provision or income tax.

2. CONTINGENT LIABILITIES:

a) Guarantee o Rs. 4,490.00 lakhs (Rupee equivalent o US $ 10,000,000) [(Previous year Rs. 5,072.00 lakhs (Rupee equivalent o

US $ 10,000,000)] given to Standard Chartered Bank (Mauritius) Limited on behal an associate.

b) Guarantee o Rs. 449.00 lakhs (Rupee equivalent o US $ 1,000,000) [Previous year Rs. 507.20 lakhs] (Rupee equivalent o US $ 1,000,000)

given to Bank o India (London) on behal o an associate.

c) Guarantee o Rs. 11,225.00 lakhs (Rupee equivalent o US $ 25,000,000) [Previous year Rs. 12,680.00 (Rupee equivalent o

US $ 25,000,000)] given to Hongkong and Shanghai Banking Corporation Limited (Mauritius) or an overdrat acility. The amount o

overdrat acility availed Rs. 5206.16 lakhs (Rupee equivalent o US $ 11,595,009) [Previous Year Rs. 5,607.14 lakhs (Rupee equivalent oUS $ 11,055,095 )] by an associate.

d) Guarantee o Rs. 641.55 lakhs (Rupee equivalent o Sing $ 2,000,000) [Previous year Rs. 667.00 lakhs (Rupee equivalent o Sing

$ 2,000,000)] given to Hongkong and Shanghai Banking Corporation Limited (Singapore) on behal o an associate.

e) Commitment towards investment in venture capital unds Kotak India Growth und Rs. 25.00 Lakhs (Previous year Rs. 40.00 Lakhs ),

Kotak Alternate Opportunities India Fund Rs. 500.00 Lakhs (previous year Rs. 1,060.00 Lakhs).

) Show cause cum demand in respect o service tax Rs. 190.95 lakhs (Previous year Rs. 143.00 lakhs).

g) As part o its lead management business, the company has underwriting commitment or its clients towards equity issuance amounting

to Rs. Nil (Previous Year Rs. 95,000.00 lakhs).

3. COMPONENTS OF DEFERRED TAX BALANCES:

Rs. in lakhs

31st March, 2010 31st March, 2009Deerred tax liabilityDepreciation 76.50 53.20

Deerred tax asset

Provision or doubtul debts 14.66 43.64

Provision or gratuity and compensated absences 129.15 104.11

Unabsorbed Capital loss 133.96

Others 7.20 15.47

Deerred Tax Asset (Net) 74.51 243.98



20/31


4. Issue management and placement ees and underwriting commission is net o incentives/brokerages paid to brokers and ees/commission shared

aggregating to Rs. 2,980.73 lakhs (Previous year Rs. 343.95 lakhs).

5. At the Annual General Meetings o the holding company, Kotak Mahindra Bank Limited, the shareholders o the Bank had unanimously passed

Special Resolutions on 28th July, 2000, 26th July, 2004, 26th July, 2005, 5th July, 2007 and 21st August, 2007, to grant options to the El igibleEmployees o the Bank and its, subsidiary companies. Pursuant to these resolutions, the ollowing our Employees Stock Option Schemes had

been ormulated and adopted:

a) Kotak Mahindra Equity Option Scheme 2001-02

b) Kotak Mahindra Equity Option Scheme 2002-03

c) Kotak Mahindra Equity Option Scheme 2005

d) Kotak Mahindra Equity Option Scheme 2007

In accordance with the SEBI Guidelines and the guidance note on Accounting or Employee Share based payments issued by The Institute

o Chartered Accountants O India, the excess, i any, o the market price o the share preceding the date o grant o the option under ESOPs

over the exercise price o the option is amortised on a straight-line basis over the vesting period. During the year the Company has reimbursed

the Bank Rs. 250.06 lakhs (Previous year Rs. 441.79 Lakhs) on account o such costs and the same is orming part o Employee costs under

Schedule 14 Personnel Expenses. The above reimbursement excludes an amount o Rs. 102.26 Lakhs (Previous Year Rs. 205.40 Lakhs) towards

Employee Stock Option Plan or the managing director incurred by the Bank on behal o the company, but not passed on to the Company.

Had the company recorded the compensation cost computed on the basis o Fair Valuation method instead o Intrinsic value method,

employee compensation cost would have been higher by Rs. 409.82 Lakhs (Previous year Rs. 374.19 Lakhs) and the prot ater tax would

have been lower by Rs. 270.52 Lakhs (Previous Year Rs. 247.00 Lakhs). Consequently the basic and diluted EPS would have been Rs. 51.40

(Previous year Rs. 25.76).

6. Reconciliation o opening and closing balance o the present value o the dened benet obligation or gratuity benets is given below.

Rs. in lakhs

As o

31st March, 2010

As o

31st March, 2009

As o

31st March, 2008

As o

31st March, 2007

Change in Ununded beneft obligations

Opening deerred benet obligation 94.63 84.72 65.15 72.19

Service cost 26.04 24.24 14.74 14.77

Interest cost 8.08 8.25 4.93 5.20

Actuarial (gain)/loss on obligations (4.26) (8.84) 14.23 14.48

Liability assumed on acquisition/(Settled on

Divestiture) (5.65) 2.85 (14.33) 0.30

Benets paid (5.67) (16.59) (41.79)

Present value o ununded beneft

obligations as at the end o the year 113.17 94.63 84.72 65.15

Rs. in lakhs

As o

31st March, 2010

As o

31st March, 2009

As o

31st March, 2008

As o

31st March, 2007

Reconciliation o present value o the

obligation and the air value o the plan assets

Fair value o plan assets

Present value o benet obligations 113.17 94.63 84.72 65.15

Net asset/(liability) as at 31st March, 2010 (113.17) (94.63) (84.72) (65.15)

Cost recognised or the year

Current service cost 26.04 24.24 14.74 14.77

Interest cost 8.08 8.25 4.97 5.20

Expected return on plan assets

Actuarial (gain)/loss (4.26) (8.84) 14.23 14.48

Net gratuity cost 29.86 23.65 33.94 34.45



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Experience Adjustments or the current annual period and previous our annual periods:

Rs. in lakhs

Period Ended

31st March,

2010

31st March,

2009

31st March,

2008

31st March,

2007

31st March,

2006

Dened Benet Obligation 113.17 94.63 84.72 65.15 72.19

Plan Assets

Surplus/(Decit) (113.17) (94.63) (84.72) (65.15) (72.19)

Experience Adjustment on Plan Liabilities (1.56) (9.44) 11.55 17.34

Experience Adjustment on Plan Assets

Actuarial assumptions used

Discount rate 8.01% p.a. 7.18% p.a.

Salary escalation rate 15% p.a. or rst two years;10% p.a. or next 2 years

and 6% p.a. thereater

0% p.a. or rst year;10% p.a. or next 2 years

and 6% p.a. thereater

Expected return on plan assets NA NA

The estimates o uture salary increases, considered in actuarial valuation, take account o infation, seniority, promotion and other relevant actors

such as supply and demand in the employment market.

The above inormation is certied by the actuary and relied upon by the Auditors.

Gratuity

In accordance with Payment o Gratuity Act, the Company provides or gratuity, a dened benet retirement plan covering all employees. The

plan provides a lump sum payment to vested employees at retirement or termination o employment based on the respective employees salary

and the years o employment with the Company subject to maximum o Rs. 3.50 lakhs.

The gratuity benet is provided through ununded plan and annual contributions are charged to prot and loss account. Under the scheme, thesettlement obligation remains with the Company.

7. Quantitative inormation in respect o trading in debentures:

2009-2010 2008-2009

Quantity Value Rs. in Lakhs Quantity Value Rs. in Lakhs

Opening

Purchase during the year 208,803 2,088.03

Sold during the year 208,803 2,117.81

Closing Stock

Proft/(loss) on trading 29.78

8. Managerial Remuneration under Section 198 o the Companies Act, 1956Rs. in lakhs

2009-2010* 2008-2009*

Salaries and allowances 120.98 114.60

Contribution to provident und 6.72 6.72

Perquisites 5.00 4.75

132.70 126.07

* Excludes provision or gratuity and leave encashment since these are based on actuarial valuations done on an overall Company basis.



22/31


9. Earnings in oreign exchange

Rs. in lakhs

2009-2010 2008-2009

Financial advisory ees 306.17 4,205.71

10. Expenditure in oreign currency

Rs. in lakhs

2009-2010 2008-2009

Travelling 7.98 8.64

Proessional ees 45.01 1.60

Membership and subscription 43.12 41.03

Conerence Expenses 5.43

Other expenses 1.89

11. Segmental Inormation:

The Companys business is organised into two segments namely - Advisory and Transactional Services and Trading and Principal Investments

The Advisory and Transactional services segment provides nancial advisory services such as mergers and acquisition advice and equity-debt

issue management services and Trading/Proessional Clearing operations o National Securities Clearing Corporation Limited.

The Trading and Principal Investments segment deals in equity and derivatives, loans/deposits and investments.

Segments have been identied and reported taking into account the nature o products and services, the diering risks and returns and the

internal nancial reporting system.

Segment Inormation: Rs. in lakhs

31st March 2010 31st March 2009

Advisory and

Transactional

Services

Trading and

Principal

Investments

Total Advisory andTransactional

Services

Trading andPrincipal

Investments

Total

Segment Revenue

Income rom external customers 8,705.75 1,257.86 9,963.61 8,705.85 879.76 9,585.61

Income rom inter segments

Total Revenue 8,705.75 1,257.86 9,963.61 8,705.85 879.76 9,585.61

Segment result

Results 2,085.99 1,229.51 3,315.50 1,407.03 588.76 1,995.79

Add: Unallocated income 176.56 196.02

Less: Unallocated expenses 30.49 30.49

Less: Income tax (including deerred tax) 1,075.39 880.24

Net Proft 2,386.18 1,281.08

Other Inormation

Carrying amount o segment assets 2,475.67 41,061.81 43,537.48 1,999.47 38,151.00 40,150.47

Unallocated corporate assets 2,294.96 2,301.82

Total Assets 45,832.44 42,452.29

Carrying amount o segment liabilities 1,986.65 1,986.65 1,092.68 1,092.68



23/31



Advisory and

Transactional

Services

Trading and

Principal

Investments

Total Advisory andTransactional

Services

Trading and

Principal

Investments

Total

Unallocated corporate liabilities 100.00

Total Liabilities 2,086.65 1,092.68

Capital Expenditure

Tangible 222.22 222.22 160.49 160.49

Intangible 5.30 5.30 13.32 13.32

Depreciation/ 184.32 184.32 173.24 173.24

Amortisation 10.25 10.25 17.39 17.39

Segment revenue comprises o:

Rs. in lakhs


Income rom services 8,509.69 8,482.76

Interest and discounting income 302.90 836.59

Prot on trading in debentures 29.78

Prot on sale o long term Investments 259.75

Prot on sale o current Investments 531.44

Income distribution on Venture Fund Investments 38.34

Other Income:

Dividend income on :

Current investments 2.74 33.69

Long term investments 40.22 5.20

Provision or doubtul debts no longer required written back 181.76 45.28

Others 66.99 182.09

Total Segment Revenue 9963.61 9,585.61

Add: Unallocated Income 176.56 196.02

Total Income 10,140.17 9,781.63

Segment assets comprise mainly o trade and other receivables, investments, Fixed Assets, Cash & Bank Balances. Unallocated assets or the

current year represent taxes, deerred taxes, Premises given on operating lease. Segment liabilities include loans, trade and other payables and

sundry creditors. Unallocated liabilities or the current year represents deposit received or premises given on operating lease.

12. Related parties disclosures

(i) Relationships (During the year)

A. Related parties where control exists :

Nature o relationship Related Party

Holding Company Kotak Mahindra Bank Limited (KMBL)

{Holds 75.95% o the equity share capital}

Uday S. Kotak along with relatives and entities controlled by him holds 48.21% o the equity share capital o Kotak Mahindra Bank

Limited as on March 31, 2010

Subsidiary Companies: No Subsidiaries



24/31


B. Other Related parties:

(i) Fellow Subsidiaries: Kotak Investment Advisors Limited

Kotak Mahindra (International) Limited

Kotak Mahindra (UK) Limited

Kotak Mahindra Inc.

Kotak Securities Limited

Kotak Mahindra Asset Management Company Limited

Kotak Forex Brokerage Limited

Kotak Mahindra Prime Limited

Kotak Mahindra Old Mutual Lie Insurance Limited (Also Joint Venture)

(ii) Associates (Enterprises in which the Company has

signicant infuence)

Inna Finance Private Limited.

(KMCC holds 49.98% o the equity share capital)

Phoenix ARC Private Limited (Upto 29th July, 2008)

(iii) Joint venture Kotak Mahindra Old Mutual Lie Insurance Limited Joint Venture

with Kotak Mahindra Bank Limited; Old Mutual Plc; Kotak Mahindra

Prime Limited.

(iv) Key management personnel Mr. Uday S. Kotak, Non executive Chairman

Ms. Falguni Nayar, Managing Director

(ii) The ollowing transactions were carried out with related parties in the ordinary course o business.



25/31


The ollowing transactions were carried out with related parties in the ordinary course o business (all gures in Rupees Lakhs)

Nature o Transaction Holding

Company

Fello subsidiary Companies

KotakMahindra Bank

Limited

KotakInvestment

Advisors

Limited

KotakMahindra

(International)

Limited

KotakMahindra

(UK) Limited

KotakMahindra Inc.

KotakSecurities

Limited

KotakMahindra Asset

Management

Company Ltd.

Finance

Interest received 268.15

(262.08)

Fixed Deposit Placed 20,262.00

(25,380.98)

Fixed Deposit encashed/Matured 32,318.50

(14,302.39)

Advances Given

Bank Balance 6,925.24

(22.92)

Fixed Deposit Balance including accrued

interest 2,310.29

(14,350.00)

Investments

Purchase/subscription 575.00# 56777.45#

210.00# (3078.69)#

Sale/ redemption 220.76# 51041.08#

(4.38)# (3428.69)#

Interest/Dividend/Premium on Investments 2.74

(33.69)

Stock-in-trade (Debentures)

Sales and interest 2,124.58

Other receipt and payments

Sale o Fixed assets 10.65 1.34

(16.81) (3.63)

Purchase o Fixed assets 5.94 1.19

(39.50)

Income rom Services

(81.39)

Expenses reimbursement to other

companies 637.50 15.25 1.49 342.86

(708.92) (8.78) (0.90) (712.77)

Expenses reimbursement by other

companies 112.02 7.46 7.00 757.55 42.36

(169.41) (6.02) (1,115.74) (38.01)



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Fello subsidiary Companies Joint Venture Associates Key Management

Personnel

Kotak ForexBrokerage Limited

Kotak Mahindra Prime Ltd Total Kotak MahindraOld Mutual Lie

Insurance Limited

Phoenix ARCPrivate Limited

Falguni Nayar

57,352.45

Right renounciation o 33,75,000 equity

shares o Kotak mahindra Old Mutual Lie

Insurance Limited

(3,288.69) (690.39)

51,261.84

(3,433.07)

2.74

(33.69)

1.34

(3.63) (3.38)

1.19

(81.39)

359.60 2.54

(722.44) (1.03) (3.06)

0.01 814.39

(0.00) (1,159.77)



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Nature o Transaction Holding

Company

Fello subsidiary Companies

Kotak

Mahindra Bank

Limited

Kotak

Investment

Advisors

Limited

Kotak

Mahindra

(International)

Limited

Kotak

Mahindra

(UK) Limited

Kotak

Mahindra Inc.

Kotak

Securities

Limited

Kotak

Mahindra Asset

Management

Company Ltd.

Other expenses paid/brokerage paid/ee/

commission sharing 250.06 2,833.48

(441.79) (278.43)

Remuneration*

Payables 44.95 360.97

(13.06) (1.85) (350.99)

Receivables 103.22 2.07 52.19

(248.72) (80.89) (91.82)

Guarantees Outstanding 15,715.00 1,090.55

(17,752.00) (1,174.20)

Figures in brackets relates to the previous year.

* Excludes provision or gratuity and leave encashment, since these are based on actuarial valuations done on an overall Company basis.

# Represents investment & redemption o units o the Mutual/Venture Capital Fund.



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Fello subsidiary Companies Joint Venture Associates Key Management

Personnel

Kotak Forex

Brokerage Limited

Kotak Mahindra Prime Ltd Total Kotak Mahindra

Old Mutual Lie

Insurance Limited

Phoenix ARC

Private Limited

Falguni Nayar

2,833.48

(278.43)

132.70

(126.07)

360.97

(352.84)

54.26 20.00

(172.71) (0.32) (9.00)

16,805.55

(18,926.20)



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13. Operating Lease

A. Assets taken on lease

(i) The Company has taken oce and residential premises under operating lease or leave and license agreements. These are generally

renewable or cancelable at the option o the Company and range between 11 months to 36 months.

(ii) Rent payments are recognized in the Prot and Loss Account under Rent and are disclosed in Schedule 16 Other Expenses.

B. Asset given on lease

(i) The Company has leased out certain assets under operating leases.

(ii) Rent receipts are recognized in the Prot and Loss Account under Rent are disclosed in Schedule 13 Other Income.

(iii) The uture minimum lease payments under non-cancellable operating lease not later than one year as at 31st March, 2010 aggregate

to Rs. 114.00 lakhs (Previous year Rs. 105.40 lakhs) and those or period between one to ve years aggregate to Rs. 209.00 lakhs

(Previous year Rs. 323.00 lakhs).

14. The Company has requested its suppliers to conrm the status as to whether they are covered under the Micro, Small and Medium Enterprises

Development Act 2006.In the absence o conrmations rom the suppliers, disclosures, i any , relating to unpaid as at the year end together with

interest paid/ payable as required under the said Act have not been given.

15. Earnings per Share (EPS) The numerator and denominator used to calculate Basic and Diluted Earnings per share:


Prot attributable to Equity shareholders (Rs. in lakhs) (A) 2,386.18 1,281.08

Basic/Weighted average number o Equity shares outstanding during the year (B) 4,116,149 4,116,149

Nominal value o Equity shares (Rs.) 10 10

Basic Earnings per share (A)/(B) 57.97 31.12

16. In terms o a joint venture agreement entered into by the Company with Kotak Mahindra Bank Limited, Old Mutual Plc. and Kotak Mahindra

Prime Limited, the Company holds 12.42% (Previous year 12.42%) ownership interest in Kotak Mahindra Old mutual Lie insurance

Limited(incorporated in India) which alls under the category o Jointly Controlled Entity as per Accounting Standard 27 Financial Reporting o

Interests in Joint Ventures issued under The Companies Accounting Standard Rules, 2006.

Aggregate amounts o assets, liabilities, income and expenses related to the interest in the jointly controlled entity based on the accounts or the

year ended 31st March, 2010:

31st March 2010

(unaudited)

31st March 2009

(unaudited)

Assets 86,480.15 52,474.43

Liabilities 82,666.95 49,519.62

Income 48,765.88 24,732.31

Expenses 46,672.92 23,860.98

17. Recovery o expenses in Schedule 14 Personnel Expenses and Schedule 16 Other Expenses are amounts recovered rom the holding company,

subsidiaries and ellow subsidiaries towards the value o costs apportioned o the Companys employees and acilities in accordance with the

agreements on allocation o expenses with the companies.

18. The year end oreign currency exposures which have not been hedged by a derivative instrument or otherwise are as given below:

Particulars Rs. in Lakhs USD GBP Euro

Amount receivable in oreign currency on account o

revenue

250.49

(80.89)

(159,488)

()

413,625

()

Figures in brackets relates to the previous year.



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19. Figures or the previous year have been regrouped wherever necessary to conorm to current years classication.

Balance Sheet Abstract and Companys General Business Profle

(a) Position o Mobilisation and Deployment o Funds (Amount in Rs. 000)Total Liabilities 4,583,244

Total Assets 4,583,244

Sources o Funds

Paid up Capital 41,161

Reserves and Surplus 4,333,418

Secured Loans

Unsecured Loans

Current Liabilities 208,665

Application o Funds

Net Fixed Assets 203,015

Investments 3,097,190

Deerred Tax Asset 7,451

Current Assets 1,275,588

Miscellaneous Expenditure

(b) Perormance o Company (Amount in Rs. 000)

Turnover/Income 1,014,017

Total Expenditure 667,860

Prot beore Tax 346,157

Prot ater Tax 238,618

Earnings Per Share (in Rs) 57.97

Dividend Rate (%)

(c) Generic Names o Three Principal Products/Services o company

Product Description Item Code No.

Investment Banking and Clearing NA


For and on behal o the Board o Directors

Uday Kotak

Chairman

Falguni Nayar

Managing Director

Shanti Ekambaram

Director

Ajay Vaidya Rajeev Saptarshi

Place : Mumbai Company Secretary Chie Financial Ocer

Date : April 28, 2010.


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Kotak Mahindra Capital Company Limited-A

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