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Bigger. Bolder. Better.

Kotak Mahindra Prime Limited

Annual Report 2013-14 1

Directors’ ReportTo the Members of

KOTAK MAHINDRA PRIME LIMITED

The Directors present their Eighteenth Annual Report together with audited accounts of your Company for the year ended 31st March 2014.

FINANCIAL RESULTS

` in Lakhs

31st March 2014 31st March 2013

Gross Income 252,458.86 225,872.92

Profit before Depreciation and Tax 75,427.30 64,367.82

Depreciation 261.05 266.72

Profit before Tax 75,166.25 64,101.10

Provision for Tax 26,048.64 21,031.14

Profit after Tax 49,117.61 43,069.96

Balance of Profit from previous years 133,895.12 99,450.86

Amount available for appropriation 183,012.73 142,520.82

Appropriations:

Proposed Dividend on Preference Shares 10.00 10.00

Interim Dividend on Equity Shares 20.97

Corporate Dividend Tax 5.26 1.70

Special Reserve u/s 45IC of the RBI Act, 1934. 9,824.00 8614.00

Surplus carried forward to the Balance Sheet 173,152.50 133895.12

DIVIDEND

During the year, the Company had declared an interim dividend @ `0.60 per equity share. The Directors do not recommend any Final Dividend on the Equity Shares (Previous Year: Nil). Dividend recommended on Redeemable, Non- Cumulative Non-Convertible Preference Shares is ̀ 1 per share (Previous Year: `1 per share).

CHANGE IN REGISTERED OFFICE OF THE COMPANY

The Registered Office of the Company has been changed from 36-38A, Nariman Bhavan, 227, Nariman Point, Mumbai 400021 to 27BKC, C 27, G Block, Bandra Kurla Complex, Bandra (E), Mumbai – 400 051, with effect from 31st March 2014.

DEBENTURES

Pursuant to various circulars issued by the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) from time to time, the Company continues to issue debentures on private placement basis and list mostly all debentures issued, on the Bombay Stock Exchange Limited under Information Memorandums issued by the Company from time to time. The Company has appointed IDBI Trusteeship Services Limited, Asian Building, Ground Floor, 17R.Kamani Marg, Ballard Estate, Mumbai 400 001 as Debenture Trustees to the issues.

CAPITAL ADEQUACY

The Capital to Risk Assets Ratio (CRAR) of your Company as on 31st March 2014 was at 17.70%.

CREDIT RATING

The Company’s long-term borrowings are rated “AA+” (with Stable Outlook) by CRISIL and ICRA respectively. The Company’s short-term borrowing program from CRISIL continued to enjoy the highest rating of “A1+”. CRISIL’s assessment of your Company’s risk profile strengthens the confidence placed by a large pool of investors in your Company. Further the Tier II Subordinated Debts issued are dual rated by CRISIL and ICRA with a rating of “AA+” (with Stable Outlook).

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

Kotak Mahindra Prime Limited2

FINANCE

Your Company continues to be a “Non Deposit Accepting – Asset Financing” company. It has well diversified and large pool of lenders comprising of Public Sector Banks, Private and MNC Banks, Mutual Funds, Insurance Companies, Financial Institutions, Foreign Institutional Investors (FII) and Corporates. Your Company introduced new investors during the year and continued to borrow through instruments like Debentures (NCDs), Commercial papers, etc. Further Asset Liability Management continues to be focus of your Company.

During the financial year 2013-14 the growth and growth expectations in the economy moderated. Even with bottoming out of Indian economy, inflation remained a key concern. RBI adopted CPI as key measure of inflation for determining policy actions. The RBI adjusted policy rates by cumulative 50bps (repo - reverse repo rates) during the year to 8.0% - 7.0% respectively. During the year the RBI increased MSF (Marginal Standing Facility) rate during the period of Rupee vulnerability to External factors. RBI came up with the introduction of Term repos and has restricted the amount under Repo window (currently to 0.25% of NDTL), which has further resulted in increase of short term rates. Liquidity in the system was maintained in deficit mode, though largely in a comfort zone.

Globally, Central banks in the biggest economies continued their accommodative monetary policies amid an uneven and weak economic recovery. Tapering of Quantitative Easing by US Federal Reserve in the month of December indicated to the sustained economic recovery in world’s biggest economy. Economic growth rates in certain European economies point to the Eurozone may be on the verge of economic recovery.

In terms of the Companies Act, 2013 and the Rules made thereunder, all NBFCs, which were earlier exempted, would now be required to create Debenture Redemption Reserve for redemption of debentures and comply with the provisions related to issuances of debentures. Your Company with its strong treasury philosophies and practices is well geared to meet the challenges of a dynamic interest rate and liquidity environment.

MANAGEMENT DISCUSSION AND ANALYSIS

Company Business

Your Company is primarily into car finance, engaged in financing of retail customers of passenger cars and multi-utility vehicles and inventory and term funding to car dealers. Your Company finances new and used cars under retail loan, hire purchase and lease contracts.

The main streams of income for your Company are retail income, dealer finance income and fee based income. Your Company also receives income from loans against securities, securitization / assignment transactions, purchase of non- performing assets, personal loans, corporate loans and developer funding. The major expenses for your Company are interest expense, business sourcing expense and cost of running operations.

During the Financial Year 2013-14, your Company’s retail vehicle disbursements were at `633,489 lakhs as against `666,557 lakhs in the previous year. During the year under review, gross advances stood at `1,742,117 lakhs as against `1,705,647 lakhs in the previous year.

Your Company continued to focus on cost control and credit losses, while improving its positioning in the car finance market by scaling up the business.

As detailed in the ‘Financial Results’ section above, Gross Income of your Company increased from `225,872.92 lakhs in 2012-13 to `252,458.86 lakhs in 2013-14. Profit before Tax was at `75,166.25 lakhs in 2013-14 as compared to `64,101.10 lakhs in 2012-13, an increase of 17%. The credit loss ratio of your Company was at 0.31% in a very challenging year.

There have been certain instances of frauds involving an aggregate amount of `63.44 lakhs, also reported in annexure to auditors report. The said instances are inherent in the nature of business of the Company and adequate provision in respect thereof has been made in the accounts for the year.

Industry Scenario

The passenger car market in India saw a degrowth of 5.9% for the Financial Year 2013-14 as compared to a growth of 2% for 2012-13. Total unit sales of cars and MUV’s crossed 25.27 lakh units in financial year 2013-14.

Prospects

Passenger car sales are likely to remain flat. Your Company has, carved out a niche for itself in the car-financing segment focusing on distribution and relationship management across manufacturers, dealers, channel partners and customers. Fee based income is an important initiative of your Company. Dedicated infrastructure is in place to give a further impetus to the growth of fee based income with a twin objective of offering value added services to customers and leveraging the large existing customer database to generate further fee based income.

Customer knowledge, easy accessibility through its wide network of branches and a firm commitment to deliver superior customer service are key drivers for your Company’s performance.

Internal Controls

The Internal Control department of Kotak Mahindra Bank Limited regularly conducts a review to assess the financial and operating controls at various locations of your Company including Head Office functions and at branches. Reports of the audits conducted by the Internal Control department are presented to the Audit Committee. Representatives of the statutory auditors are permanent invitees to the Audit Committee.

Human Resources

The Company is professionally managed with key management personnel having relatively long tenure with the Company. Your Company follows a policy of building strong teams of talented professionals. Your Company encourages and facilitates long term careers with your Company through carefully designated management development programs and performance management systems.


Information Technology

Your Company uses the operating system ‘CORE’ which is owned and managed by Kotak Mahindra Bank Limited and is used for its retail assets division since 2003 and uses “ORACLE” as its Financial system. The CORE system has the latest technology platform and also has capacity to scale based on business requirements. The modular nature of the system supports efficiency in operations coupled with strong systems and operational controls. The system is robust to cater to efficient customer service and support marketing initiatives at reasonable cost.

Cautionary Note

Certain statements in the ‘Management Discussion and Analysis’ section may be forward-looking and are stated as may be required by applicable laws and regulations. Many factors may affect the actual results, which could be different from what the Directors envisage in terms of future performance and outlook. Your Company does not undertake to update these statements.

DIRECTORS

Mr. C. Jayaram resigned as a Director of the Company with effect from 24th April 2013. Your Directors place on record their appreciation for the valuable advice and guidance rendered by him during his tenure as a Director.

Mr. Uday Kotak, Mr. Mohan Shenoi and Mr. Jaimin Bhatt, retire by rotation at the Eighteenth Annual General Meeting and being eligible, have offered themselves for re-appointment.

EXECUTIVE MANAGEMENT

Mr. Vyomesh Kapasi is the Chief Executive Officer of your Company. The Members at the Extraordinary General Meeting of the Company held on 30th May 2013 had approved the re-appointment of Mr. Kapasi as Manager of the Company with effect from 1st June 2013 for a period of two years.

COMMITTEES

(a) AUDIT COMMITTEE

The Audit Committee was re-constituted by the Board on 24th April 2013, with effect from 1st May 2013 and presently consists of Mr. Dipak Gupta, Mr. Arvind Kathpalia, Mr. Jaimin Bhatt, Mr. Narayan S.A. and Mr. Sumit Bali. The quorum comprises of any two members.

The details of the meetings held and the attendance by the members of the Committee is detailed below:

Name of Members of Committee Meetings held during the tenure of the member

Meetings Attended during the year 2013-14

Mr. Dipak Gupta 5 5

Mr. Jaimin Bhatt 5 4

Mr. Arvind Kathpalia 5 2

Mr. K.V.S. Manian 1 1

Mr. Narayan S.A. 4 3

Mr. Sumit Bali 5 5

The First Tier Audit Committee comprises of Mr. Sumit Bali, Mr. Vyomesh Kapasi, Mr. Harish Shah and Ms. Suman Sidana. The Committee screens the matters entrusted to the Audit Committee and also the routine matters such as overseeing the programme of inspections and compliance of inspection reports.

(b) REMUNERATION COMMITTEE

The Remuneration Committee was re-constituted by the Board on 24th April 2013 and presently consists of Mr. Dipak Gupta and Mr. Narayan S.A. The Committee has been formed to approve the remuneration payable to the Whole-time Director/Manager of the Company, as required under the amended Part II in Section II of Schedule XIII of the Companies Act, 1956.




Mr. Dipak Gupta 2 2


Mr. C Jayaram 1 1


(c) NOMINATION COMMITTEE

The Nomination Committee was re-constituted by the Board on 24th April 2013 and presently consists of Mr. Uday Kotak, Mr. Dipak Gupta and Mr. Narayan S.A.

During the year, one meeting of the Committee was held on 23rd April 2013 and was attended by all the three members.

(d) COMMITTEE OF THE BOARD OF DIRECTORS

The Committee of the Board of Directors was re-constituted by the Board on 24th April 2013 with effect from 1st May 2013 and presently consists of Mr. Dipak Gupta, Mr. Arvind Kathpalia, Mr. Narayan S.A. and Mr. Sumit Bali. The quorum comprises of any two members. The Committee looks into the routine transactions of Company which inter alia include authorizing opening, operation & closure of bank accounts of the Company, authorizing officials of the Company to execute various documents/agreements, issuing power of attorney for representing the Company in various Courts of Law and before various Statutory Authorities and borrowing of money within the delegated limit.




Mr. Dipak Gupta 26 25

Mr. Arvind Kathpalia 26 14



Mr. Sumit Bali 26 9

(e) RISK MANAGEMENT COMMITTEE

The Company has a two level structure for the Risk Management Committee. The Tier I level Committee consists of three members, namely Mr. Vyomesh Kapasi, Ms. Suman Sidana and Mr. Harish Shah. The quorum comprises of any two members. During the year, 4 meetings of the Tier I level Committee were held. Mr. Vyomesh Kapasi and Ms. Suman Sidana attended 4 meetings each and Mr. Harish Shah attended 1 meeting.

The Tier II level (supervisory level) Committee was re-constituted by the Board on 24th April 2013 with effect from 1st May 2013 and presently consists of Mr. Arvind Kathpalia, Mr. Narayan S.A. and Mr. Sumit Bali. The quorum comprises of any two members. During the year, 4 meetings of the Tier II level Committee were held. Mr. Sumit Bali and Mr. Narayan S.A. attended 3 meetings each and Mr. Arvind Kathpalia attended 2 meetings.

(f) ASSET LIABILITY COMMITTEE (ALCO)

The ALCO was re-constituted by the Board on 24th April 2013 with effect from 1st May 2013 and presently consists of Mr. Mohan Shenoi, Mr. Narayan S.A., Mr. Vyomesh Kapasi and Ms. Suman Sidana. The quorum comprises of any three members. Members of ALCO meet every month to discuss various issues for the effective management of the assets and liabilities of the Company.





Mr. Mohan Shenoi 14 9


Mr. Vyomesh Kapasi 14 13

Ms. Suman Sidana 14 13

(g) CREDIT COMMITTEE

The Credit Committee was re-constituted by the Board on 24th April 2013 with effect from 1st May 2013 and presently consists Mr. Narayan S.A., Mr. Sumit Bali, Mr. Vyomesh Kapasi and Ms. Suman Sidana. The quorum comprises of any three members. The Committee scrutinizes and approves credit proposals up to such limit as specified in the Approval Authorities from time to time.







Mr. Sumit Bali 51 45

Mr. Vyomesh Kapasi 51 49

Ms. Suman Sidana 51 42

AUDITORS

The Company’s auditors Messrs. Deloitte Haskins & Sells, Chartered Accountants, Baroda, retire at the Eighteenth Annual General Meeting and do not offer themselves for re-appointment. Messrs. Deloitte Haskins & Sells LLP, Chartered Accountants have consented to act as the Statutory Auditors of the Company. It is proposed to appoint Messrs. Deloitte Haskins & Sells LLP, Chartered Accountants as the Statutory Auditors of the Company in place of Messrs. Deloitte Haskins & Sells, Chartered Accountants, Baroda.

STATUTORY INFORMATION

The particulars of employees as required under Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, is annexed.

During the year under review, your Company did not accept any deposits from the public. There are no deposits due and outstanding as on 31st March 2014.

Your Company’s foreign exchange outgo was ̀ 785.98 lakhs. It had no foreign exchange earnings. The other particulars prescribed under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are not applicable since your Company is not a manufacturing company.

DIRECTORS’ RESPONSIBILITY STATEMENT

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

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

ii) the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March 2014 and of the profit of the Company for the financial year ended 31st March 2014;

iii) the Directors have taken proper and sufficient care to the best of their knowledge and ability, for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

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

ACKNOWLEDGEMENTS

The Directors thank the shareholders, dealers and their staff for the strong support that they have continued to extend to your Company. The Board also takes this opportunity to place on record its appreciation of the outstanding performance and dedication of your Company’s employees at all levels, without whose commitment, the achievement of results as indicated above could not have been possible. The Board also acknowledges the faith reposed in the Company by the Company’s lending institutions.

For and on behalf of the Board of Directors

Uday KotakChairman

Mumbai, 23rd April 2014


INDEPENDENT AUDITORS’ REPORTTO THE MEMBERS OFKOTAK MAHINDRA PRIME LIMITEDReport on the Financial Statements

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

Management’s Responsibility for the Financial Statements

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 controls 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 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 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 31st March, 2014;

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

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

Report on Other Legal and Regulatory Requirements

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

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

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

Abhijit A DamlePartnerMembership No. 102912MUMBAI, 23rd April, 2014


Annexure to the Independent 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/results during the year, clauses 4(ii), 4(viii), 4(x), 4(xiii), 4(xviii) and 4(xx) of paragraph 4 of the Order are not applicable to the Company.

(ii) In respect of its fixed assets:

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

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

(c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.

(iii) (a) 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 Companies Act, 1956.

(b) 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; the Company has borrowed secured loan of Rs.55,000 lakh (by way of issue of Non-Convertible Debentures) during the year from one party covered in the said register; the Company also has a Cash Credit facility with the said party. At the year-end, the outstanding balance of such loans taken was Rs.52,500 lakhs and the maximum amount involved during the year was Rs.81,166 lakhs.

(c) 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.

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

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the company and the nature of its business with regard to purchase of fixed assets and for the sale of services. The company does not purchase inventory nor does it sell goods in the ordinary course of business. During the course of our audit, we have not observed any major weakness in such internal control system.

(v) In respect of contracts or arrangements entered in the Register maintained in pursuance of Section 301 of the Companies Act, 1956, to the best of our knowledge and belief and according to the information and explanations given to us:

(a) The particulars of contracts or arrangements referred to in Section 301 that needed to be entered in the Register maintained under the said Section have been so entered.

(b) Where each of such transaction is in excess of Rs.5 lakhs in respect of any party, the transactions have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time.

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

(vii) In our opinion, the Company has an adequate internal audit system commensurate with the size and the nature of its business.

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

(a) The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income-Tax, Sales Tax, Wealth Tax, Service Tax, Cess and other material statutory dues applicable to it with the appropriate authorities. There have been no dues payable in respect of Excise Duty and Customs Duty during the year.

(b) There were no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income-Tax, Sales Tax, Wealth Tax, Service Tax, Cess and other material statutory dues in arrears as at 31st March, 2014 for a period of more than six months from the date they became payable.

(c) According to the information and explanation given to us, there are no dues of Income-Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and Cess which have not been deposited on account of any dispute. Details of dues of Sales Tax which have not been deposited on account of disputes are as below:

Statute Nature of Dues Forum where dispute is pending

Period to which the amount relates

Amount involved (` In lakhs)

Rajasthan Value Added Tax Act, 2003

Sales Tax, Interest and Penalty

Deputy Commissioner (Appeals)

AY 2008-09 to 2013-14 11.05

(ix) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to banks, financial institutions and debenture holders.


(x) In our opinion, the Company has maintained adequate documents and records where it has granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

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

(xii) According to the information and explanations given to us, the Company has not given any guarantee for the loans taken by Others from banks or financial institutions during the year.

(xiii) In our opinion and according to the information and explanations given to us, the term loans have been applied by the Company during the year for the purposes for which they were obtained, other than temporary deployment pending application.

(xiv) In our opinion and according to the information and explanations given to us, and on an overall examination of the Balance Sheet of the Company, we report that funds raised on short-term basis have, prima facie, not been used during the year for long-term investment.

(xv) According to the information and explanations given to us, during the year covered by our audit report, the Company had issued Rs 515,543 lakh debentures of Rs.10,00,000/- each. The Company has created security in respect of the debentures issued.

(xvi) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no material fraud on the Company has been noticed or reported during the year, except that there have been instances of providing forged documents by few customers and misappropriation of funds by employees of collection agencies appointed by the Company. The aggregate amount on account of the above frauds is Rs.63.44 lakhs. However, as informed to us, such instances are inherent in the nature of business of the Company. Adequate provision in respect thereof has been made in the accounts for the year.

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

Abhijit A DamlePartner(Membership No. 102912)MUMBAI, 23rd April, 2014


In terms of our report attachedFor DELOITTE HASKINS & SELLSChartered Accountants


Abhijit A DamlePartner

Dipak GuptaDirector

Jaimin BhattDirector

Place : MumbaiDate : April 23, 2014

Harish ShahCompany Secretary

Balance Sheet as at 31st March, 2014

` in lakh

Particulars Note No. As at 31 March, 2014

As at 31 March, 2013

A EQUITY AND LIABILITIES

1 Shareholders’ funds

(a) Share capital 3 449.52 449.52

(b) Reserves and surplus 4 283,923.64 234,842.26

284,373.16 235,291.78

2 Non-current liabilities

(a) Long-term borrowings 5 540,312.34 597,139.51

(b) Other long-term liabilities 6 8,055.21 5,992.68

(c) Long-term provisions 7 2,457.21 2,336.42

550,824.76 605,468.61

3 Current liabilities

(a) Short-term borrowings 8 394,405.19 478,695.58

(b) Trade payables 9 29,850.82 29,276.47

(c) Other current liabilities 10 664,057.75 520,240.33

(d) Short-term provisions 11 7,285.29 6,623.58

1,095,599.05 1,034,835.96

TOTAL 1,930,796.97 1,875,596.35

B ASSETS

1 Non-current assets

(a) Fixed assets

(i) Tangible assets 12A 2,782.81 2,906.63

(ii) Intangible assets 12B 21.11 -

(b) Non-current investments 13 27,080.26 29,310.73

(c) Deferred tax assets (net) 27.7 3,176.86 2,627.07

(d) Long-term loans and advances 14 858,198.02 774,886.32

(e) Other non-current assets 15 6,514.90 7,703.58

897,773.96 817,434.33

2 Current assets

(a) Current investments 16 54,226.02 87,148.84

(b) Trade receivables 17 92.72 405.38

(c) Cash and bank balances 18 77,788.67 19,863.19

(d) Short-term loans and advances 19 882,879.84 931,191.46

(e) Other current assets 20 18,035.76 19,553.15

1,033,023.01 1,058,162.02

TOTAL 1,930,796.97 1,875,596.35

See accompanying notes forming part of the financial statements


Statement of Profit and Loss for the year ended 31 March, 2014

` in lakh

Particulars Note No. For the year ended 31 March, 2014

For the year ended 31 March, 2013

1 Revenue from operations 21 246,459.46 222,723.66

2 Other income 22 5,999.40 3,149.26

3 Total revenue (1+2) 252,458.86 225,872.92

4 Expenses

(a) Employee benefits expense 23 5,549.06 4,995.64

(b) Finance costs 24 146,332.09 134,534.30

(c) Depreciation and amortisation expense 12C 261.05 266.72

(d) Other expenses 25 25,150.41 21,975.16

Total expenses 177,292.61 161,771.82

5 Profit before tax (3 - 4) 75,166.25 64,101.10

6 Tax expense:

(a) Current tax expense 26,690.00 21,700.00

(b) (Excess) / Short provision for tax relating to prior years (91.59) 16.12

(c) Net current tax expense 26,598.41 21,716.12

(d) Deferred tax credit (549.77) (684.98)

26,048.64 21,031.14

7 Profit for the year (5 - 6) 49,117.61 43,069.96

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

(a) Basic 27.6a 1,404.95 1,231.93

(b) Diluted 27.6b 1,404.95 1,231.93

See accompanying notes forming part of the financial statements




Dipak GuptaDirector





Cash Flow Statement for the year ended 31st March, 2014

` in lakh

2013-14 2012-13

Cash flows from operating activities

Profit before tax 75,166.25 64,101.10

Add/(Less) : Adjustment for

Depreciation and amortization expense 261.05 266.72

Loss / (Profit) on sale of current investments (498.96) (663.07)

Loss on sale of long term investments - 75.89

Loss on buy back of debentures 328.60 -

Dividend on long term investments (3.38) (3.73)

Discount income on Certificate of Deposits (17.30) (91.22)

Profit on sale of fixed assets (3.73) (3.39)

Provision for long term employee benefits (64.45) 104.20

Provision for short term employee benefits 32.31 3.26

Provision for doubtful debts, receivables and advances 1,570.68 299.66

Provision for diminution in investments (419.00) 1,225.51

Provision for standard assets 20.04 953.33

Operating profit before working capital changes 76,372.11 66,268.26

Increase in Receivables under Financing Activity 3,459.21 (383,045.54)

(Increase) / Decrease in Loans and Advances (11,632.19) 49.12

Increase in Current Liabilities 11,066.34 4,432.66

Cash used in operations 79,265.47 (312,295.50)

Income Tax paid (net of refunds) (26,072.00) (20,119.08)

Net cash used in operating activities A 53,193.47 (332,414.58)

Cash flows from investing activities

Purchase of Fixed assets (177.54) (383.73)

Sale of Fixed assets 22.94 9.65

Dividend on long term investments 3.38 3.73

Discount income on Certificate of Deposits 17.30 91.22

Application money pending allotment (90.66) -

Purchase of Investments (4,144,035.65) (3,156,885.80)

Sale of Investments 4,155,086.68 3,134,280.75

Net cash used in investing activities B 10,826.45 (22,884.18)


` in lakh

2013-14 2012-13

Cash flows from financing activities

Increase in Non convertible debentures 134,980.46 205,889.23

Increase in Short term borrowings (25,918.72) 90,664.51

Decrease in Bank borrowings (115,119.95) (770.60)

Dividend paid and Corporate Dividend Tax on equity and preference shares

(36.23) (11.62)

Net cash from financing activities C (6,094.44) 295,771.52

Net (decrease) / increase in cash and cash equivalents A+B+C

57,925.48 (59,527.24)

Cash and cash equivalents at the beginning of the year 19,863.19 79,390.43

Cash and cash equivalents at the end of the year 77,788.67 19,863.19

Notes:

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

2. The Cash Flow Statement has been prepared under the ‘Indirect Method’ as set out in the Accounting Standard - 3 on Cash Flow Statements issued by the Institute of Chartered Accountants of India.

3. The previous year’s figures have been regrouped wherever necessary in order to conform to this year’s presentation.

Cash Flow Statement for the year ended 31st March, 2014




Dipak GuptaDirector





Notes Forming Part of the Financial Statements for the Year Ended 31st March, 2014

Note 1 - CORPORATE INFORMATION

Kotak Mahindra Prime Limited (the Company) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. The Company is registered as a Non-Banking Financial Company with Reserve Bank of India. The Company is primarily engaged in financing of passenger cars and multi-utility vehicles for retail customers and inventory and term funding to car dealers. The Company also provides finance for loans against securities, personal loans, corporate loans and developer funding.

Note 2 - SIGNIFICANT ACCOUNTING POLICIES

a) BASIS OF ACCOUNTING AND PREPARATION OF FINANCIAL STATEMENTS

The Financial Statements have been prepared on historical cost basis of accounting. The company adopts the accrual system of accounting. The Financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under Section 211(3C) of the Companies Act, 1956 (“the 1956 Act”) (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 (“the 2013 Act”) in terms of General Circular 15/2013 dated 13 September, 2013 of the Ministry of Corporate Affairs) and the relevant provisions of the 1956 Act/ 2013 Act, as applicable and the guidelines issued by the Reserve Bank of India (RBI) for Non-Banking Financial Companies.

b) USE OF ESTIMATES

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. Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Actual results could differ from these estimates.

c) CASH FLOW STATEMENT

Cash 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.

d) REVENUE RECOGNITION

i. Auto Finance Income (including service charges, incentives) is accounted for by using the internal rate of return method to provide a constant periodic rate of return after adjustment of brokerage expenses on the net investment outstanding on the contract. The volume-based incentives and brokerage are accounted as and when the said volumes are achieved. Income also includes gains made on termination of contracts.

ii. The profit on account of securitisation of assets at the time of sale computed based on the difference between the sale consideration and the book value of the securitised asset is amortised over the tenure of the securities issued. Loss on account of securitisation of assets is charged off immediately to Statement of Profit and Loss.

iii. Gain on account of assignment of assets on bilateral basis is recognised, based on the difference between the book value of the assigned assets and sale consideration received.

iv. In respect of non performing assets acquired from other banks / NBFCs / Financial Institutions / Companies, collections in excess of the consideration paid for acquisition at each asset level is treated as income.

v. Interest income is recognised on accrual basis except in case of non-performing assets where it is recognised, upon realisation, as per RBI guidelines. Overdue/ penal interest is recognised as income on realisation.

vi. Fees and commission income are recognised when due.

vii. Dividend income is accounted on an accrual basis when the Company’s right to receive the dividend is established.

e) FIXED ASSETS AND INTANGIBLE ASSETS

i. All the fixed assets have been stated at cost inclusive of incidental expenses less accumulated depreciation / amortization.

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

Computers 3 yearsOffice Equipment 5 yearsFurniture and Fixtures 6 yearsVehicles 4 yearsPremises 58 yearsLeasehold Improvements Over the period of lease subject to a maximum of 6 yearsSoftware (including development) expenditure 3 years



iii. Depreciation on assets whose cost does not exceed Rs.5,000/- is fully provided in the year of purchase.

f) INVESTMENTS

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

g) EMPLOYEE BENEFITS

i. Provident Fund – Defined Contribution Plan

Contribution as required by the Statute made to the Government Provident Fund is debited to the Statement of Profit and Loss.

ii. Gratuity – Defined Benefit Plan

The Company accounts for the liability for future gratuity benefits based on an actuarial valuation. During the year, the Company made contribution to a Gratuity Fund administered by trustees and managed by Kotak Mahindra Old Mutual Limited, fellow subsidiary. The net present value of the Company’s obligation towards the same is actuarially determined based on the projected unit credit method as at the Balance Sheet date.

iii. Actuarial gains/losses are immediately recognised in the Statement of Profit and Loss.

iv. Compensated Absences - Other Long-Term Employee Benefits

The Company accrues the liability for compensated absences based on the actuarial valuation as at the balance sheet date conducted by an independent actuary. The net present value of the Company’s obligation is determined based on the projected unit credit method as at the Balance Sheet date.

v. Other Employee Benefits

The undiscounted amount of employee benefits expected to be paid in exchange for the services rendered by employees is recognised during the period when the employee renders the service. These benefits include performance incentives.

h) EMPLOYEE STOCK OPTION SCHEME

Cash-settled scheme

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

i) FOREIGN CURRENCY TRANSACTIONS

Transactions in foreign currency are recorded at the exchange rate prevailing on the date of the transaction. Monetary items denominated in foreign currencies are restated at the exchange rate prevailing on the balance sheet date. Exchange differences arising on settlement of the transaction and on account of restatement of monetary items are dealt with in the Statement of Profit and Loss. In case of items which are covered by forward exchange contracts entered to hedge the foreign currency risk, the difference between the year end rate and the rate on the date of the contract is recognized as exchange difference and the premium paid on forward contracts is recognized over the life of the contract.

j) DISCOUNTED INSTRUMENTS

The liability is recognised at face value at the time of issuance of discounted instruments. The discount on the issue is amortised over the tenure of the instrument.

k) TAXES ON INCOME

The Income Tax expense comprises Current tax and Deferred tax. Current tax is measured at the amount expected to be paid in respect of taxable income for the year in accordance with the Income tax Act, 1961. Deferred tax adjustments comprises of changes in the deferred tax assets and liabilities. Deferred tax assets and liabilities are recognised for the future tax consequences of timing differences being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantively enacted before the balance sheet date. Changes in deferred tax assets / liabilities on account of changes in enacted tax rates are given effect to in the Statement of Profit and Loss in the period of change. The carrying amount of deferred tax assets are reviewed at each balance sheet date. Deferred tax assets on account of timing



differences 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.

l) SERVICE TAX

The Cenvat (Central Value Added Tax) in respect of service tax is accounted on accrual basis on eligible services. The balance of cenvat credit is reviewed at the end of each year and amount estimated to be unutilised is charged to the Statement of Profit and Loss for the year.

m) BORROWING COST

Borrowing costs are recognised as an expense in the period in which they are incurred.

n) DERIVATIVE TRANSACTIONS

The derivative transactions comprising of Interest rate swaps, equity index / stock futures and Options are considered off balance sheet items.

Interest rate / Currency swaps

The outstanding swap trades at the reporting date are disclosed at the contract amount. The swaps which are in the nature of hedges are accounted on an accrual basis. Accrued interest is adjusted against the interest cost/income of the underlying liability/asset. The foreign currency balances on account of principal of currency swaps outstanding as at the Balance Sheet date are revalued using the closing rate.

Currency options

The outstanding Option trades, in the nature of hedge, at the Balance Sheet date are disclosed at revalued amount using the closing exchange rate. The premium paid is amortised over the life of the contract.

Embedded Derivatives and Equity Index Derivatives

Initial Margin - Index Derivative Instrument representing the initial margin paid and /or additional margin paid over and above the initial margin, for entering into contracts for equity index futures, which are released on final settlement / squaring – up of the underlying contracts, are included under Other Current Assets. “Deposit for Mark to Market Margin - Index Derivative Instrument” representing the deposit paid in respect of mark to market margin is included under Other Current Assets.

On final settlement or squaring up of contracts for equity index derivatives, the realised profit or loss after adjusting the unrealized loss already accounted, if any, is recognised in the Statement of Profit and Loss and shown as realised profit / (loss) on index derivatives.

When more than one contract in respect of the relevant series of equity index futures to which the squared-up contract pertains is outstanding at the time of the squaring-up of the contract, the contract price of the contract so squared-up is determined using the weighted average cost method for calculating the profit/loss on squaring-up.

Outstanding derivative contracts are measured at fair value as at each balance sheet date. Fair value of derivatives is determined using quoted market prices for that instrument wherever available, as the best evidence of fair value is a quoted price in an actively traded market. In the absence of quoted market prices in an actively traded market, a valuation technique is used to determine fair value. In most cases valuation techniques use as input parameters observable market data in order to ensure reliability of the fair value measure.

The mark to market on derivative contracts is determined on a portfolio basis with net unrealized losses being recognised in Statement of Profit and Loss. Net unrealized gains are not recognised in Statement of Profit and Loss on grounds of prudence as enunciated in Accounting Standard – 1 Disclosure of Accounting Policies.

o) STRUCTURED LIABILITIES

The Company has issued structured liabilities wherein the return on these liabilities is linked to non-interest benchmarks; these liabilities are stated at net present value. Such structured liabilities have an embedded derivative which is the non-interest related return component. The embedded derivative is separated and accounted separately. (Refer accounting policy on Derivative Transactions No. n) The resultant debt component of such structured liabilities is recognised in the Balance Sheet under borrowings and is measured at amortised cost using yield to maturity basis.

p) STOCK IN TRADE

Securities held as Stock-in-trade are valued at cost or market value, whichever is lower. On sale of stock in trade, profit or loss is determined using weighted average cost method.

q) ADVANCES

Advances are classified into standard, sub-standard, doubtful and loss assets in accordance with the RBI guidelines and are stated net of provisions made towards non-performing assets. Provision for non-performing assets comprising sub-standard, doubtful and loss assets is made in accordance with the RBI guidelines. In addition, the Company adopts an approach to provisioning that is based on the past experience, realisation of security, erosion over time in value of security and other related factors.



Amounts paid for acquiring non performing assets from other banks / NBFCs / Financial Institutions / Companies are considered as advances. In accordance with RBI guidelines, such assets are treated as “standard” for a period of 90 days from the date of purchase. Thereafter actual collections received on such non performing assets are compared with cash flows estimated while purchasing the asset to ascertain default. If the default is in excess of 180 days, then the assets are classified into sub-standard, doubtful and loss as required by the guidelines on purchase / sale of non performing assets issued by the RBI.

r) PROVISION / CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognised but are disclosed in the notes. Contingent assets are neither recognised nor disclosed in the financial statements.

s) PREMIUM ON REDEMPTION OF PREFERENCE SHARES

Premium on redemption of preference shares is to be adjusted against Securities Premium Account at the time of redemption.

t) SEGMENTAL REPORTING

The following accounting policies have been followed for segment reporting:

i. Segment Revenue includes Contract Receipts and other income directly identifiable with / allocable to the segment.

ii. Expenses that are directly identifiable with / allocable to segments are considered for determining the Segment Results. The expenses which relate to the Company as a whole and not allocable to segments are included under Unallocable expenses.

iii. Segment assets and liabilities include those directly identifiable with the respective segments. Unallocable corporate assets and liabilities represent the assets and liabilities that relate to the Company as a whole and not allocable to any segment. Unallocated assets mainly comprise Advance payment of taxes and tax deducted at source (net of provision for taxation). Unallocable liabilities include Deferred tax and Other liabilities.

u) LEASES

Leases where the lessor effectively retains substantially all the risks and rewards of ownership of the leased term, are classified as operating leases. Operating lease payments are recognised as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term. Operating lease receipts are recognised as an income in the Statement of Profit and Loss on accrual basis.

Assets given under a finance lease are recognised as a receivable at an amount equal to the net investment in the lease.

v) EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting preference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the period. Partly paid equity shares are treated as a fraction of an equity share to the extent that they were entitled to participate in dividends relative to a fully paid equity share during the reporting period. The weighted average number of equity shares outstanding during the period is adjusted for events of bonus issue; bonus element in a rights issue to existing shareholders; share split; and reverse share split (consolidation of shares).

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares

w) IMPAIRMENT OF ASSETS

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting periods is reversed if there has been a change in estimate of recoverable amount.



Note 3 Share capital

Particulars As at 31 March, 2014 As at 31 March, 2013

Number of shares ` in lakh Number of shares ` in lakh

(a) Authorised

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

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

(b) Issued



(c) Subscribed and fully paid up



Total 449.52 449.52

Refer Notes (i) to (iv) below

Particulars

Notes:

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

Particulars Opening Balance Fresh issue Closing Balance

Equity shares with voting rights

Year ended 31 March, 2014

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

- Amount (` in lakh) 349.52 - 349.52


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

- Amount (` in lakh) 349.52 - 349.52

Redeemable preference shares


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

- Amount (` in lakh) 100.00 - 100.00


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

- Amount (` in lakh) 100.00 - 100.00

Notes:

(ii) Rights, preferences and restrictions attached to equity shares :

(a) The Equity shares of Rs.10 each, fully paid up have equal voting rights.

(b) Right to receive dividend as may be approved by the Board / Annual General Meeting.

(c) The equity shares are not repayable except in the case of a buy back, reduction of capital or winding up in terms of the provisions of the Companies Act, 1956.

(d) Every member of the Company holding equity shares has a right to attend the General Meeting of the Company and has a right to speak and on a show of hands, has one vote if he is present in person and on a poll shall have the right to vote in proportion to his share of the paid-up capital of the Company.

The 10% Redeemable, Non-Cumulative, Non-Convertible Preference shares of Rs. 10 each are issued at a premium of Rs.990 per share. These shares will be redeemed at a premium of Rs.1,393.45 per share on April 15, 2016.



Particulars

Notes:

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

Particulars Equity shares with voting rights Redeemable preference shares

Number of shares


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

Kotak Securities Limited, subsidiary of the holding company

1,712,600 250,000

Kotak Mahindra Capital Company Limited, subsidiary of the holding company

- 500,000

Kotak Investment Advisors Limited, subsidiary of the holding company

- 250,000


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

Kotak Securities Limited, subsidiary of the holding company

1,712,600 250,000

Kotak Mahindra Capital Company Limited, subsidiary of the holding company

- 500,000

Kotak Investment Advisors Limited, subsidiary of the holding company

- 250,000

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

Class of shares / Name of shareholder As at 31 March, 2014 As at 31 March, 2013

Number of shares held

% holding in that class of shares

Number of shares held

% holding in that class of shares

Equity shares with voting rights

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

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

Redeemable preference shares

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

Kotak Securities Limited 250,000 25 250,000 25

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



Note 4 Reserves and surplus

` in lakh

Particulars As at 31 March, 2014


(a) Securities premium reserve 67,009.66 67,009.66

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

Opening balance 33,754.94 25,140.94

Add: Transferred from Surplus in Statement of Profit and Loss 9,824.00 8,614.00

Closing balance 43,578.94 33,754.94

(c) General reserve 182.54 182.54

(d) Surplus in Statement of Profit and Loss

Opening balance 133,895.12 99,450.85

Add: Profit for the year 49,117.61 43,069.97

Less: Transferred to Special Reserve u/s 45 IC of the RBI Act, 1934 9,824.00 8,614.00

Less: Dividends proposed to be distributed to preference shareholders (`1 per share) 10.00 10.00

Tax on dividend 1.70 1.70

Less: Interim dividend paid to equity shareholders (`0.60 per share) 20.97 -

Tax on dividend 3.56 -

Closing balance 173,152.50 133,895.12

Total 283,923.64 234,842.26

Note 5 Long-term borrowings

` in lakh


(a) Debentures (Refer Note (i) below)

(i) Non Convertible Debentures

Secured 319,890.00 236,660.00

(ii) Index Linked Debentures

Secured 1,416.00 8,261.00

Less: Unamortised Discount 146.84 750.28

1,269.16 7,510.72

(iii) Deep Discount Debentures

Secured 59,780.00 179,790.00

Less: Unamortised Discount 9,406.82 20,601.21

50,373.18 159,188.79

(iv) Non Convertible Debentures - Subordinated Debts

Unsecured 53,780.00 53,780.00

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

Secured 115,000.00 140,000.00

Total 540,312.34 597,139.51



Note (i)

The Debentures are redeemable at par. The Non Convertible Debentures, Index Linked Debentures, Deep Discount Debentures and Debentures issued at discount are secured by way of a first and pari passu mortgage in favour of the Security Trustee on the Company’s immovable property of ` 18.07 lakh and further secured by way of hypothecation/mortgage of charged assets such as receivables arising out of loan, lease, book debts, current assets and investments (excluding investment in mutual fund units and strategic investments of the Company which are in the nature of equity shares).

` in lakh

Interest and Re-payment terms of Long term borrowings -

1) Non Convertible Debentures As at 31 March, 2014 As at 31 March, 2013

Residual Maturity Interest Rate Range (%)

Balance Outstanding

Interest Rate Range (%)

Balance Outstanding

Fixed Interest Rate; Repayable at Maturity

RELATED PARTIES:

2-3years 9.91 to 10.61 10,000.00 NA -

1-2years 9.82 to 10.15 32,500.00 9.73 to 11.00 45,000.00

42,500.00 45,000.00

OTHERS:

4-5 years 10.50 3,500.00 9.40 2,000.00

3-4years 10.88 to 11.48 480.00 10.05 to 10.50 53,000.00

2-3years 9.05 to 11.77 90,060.00 9.50 to 11.33 26,120.00

1-2years 9.15 to 11.60 183,350.00 9.38 to 11.05 110,540.00

277,390.00 191,660.00

319,890.00 236,660.00

2) Index Linked Debentures


Balance Outstanding


Balance Outstanding

Floating rate; Repayable at Maturity

2-3 years Linked to the movement of

the CNX Nifty as expressed on NSE -

Linked to the movement of

the CNX Nifty as expressed on NSE 1,191.82

1-2 years Linked to the movement of


Linked to the movement of


1,269.16 7,510.72

3) Deep Discount Debentures


Balance Outstanding


Balance Outstanding


3-4years 11.23 732.83 NA -

2-3years 10.03 to 12.26 17,618.83 9.90 to 10.49 15,118.06

1-2years 9.23 to 11.44 32,021.52 9.21 to 10.45 144,070.73

50,373.18 159,188.79



4) Non Convertible Debentures - Subordinated Debts As at 31 March, 2014 As at 31 March, 2013


Balance Outstanding


Balance Outstanding


RELATED PARTIES:

5-10.3 years 10.40 to 11.25 30,500.00 10.40 to 11.25 30,500.00

4-5 years NA - 9.50 5,000.00

3-4 years 9.50 5,000.00 NA -

35,500.00 35,500.00

OTHERS:

5-10.5 years 9.90 to 10.8 8,560.00 9.90 to 11.10 16,580.00

4-5 years 10 to 11.10 8,020.00 9.50 to 10.70 1,700.00

3-4 years 9.50 to 10.70 1,700.00 NA -

1 -2 years NA - NA -

18,280.00 18,280.00

53,780.00 53,780.00

Note (ii)

The long term loans from banks are secured by first pari-passu and non-exclusive charge by way of hypothecation/ mortgage of charged assets such as receivables arising out of loans, lease, book debts, current assets and investments (excluding investment in mutual fund units and strategic investments of the Company which is in the nature of equity shares) and / or mortgage on the Company’s immovable property of `18.07 lakh ranking pari-passu with charge created in favour of Security Trustee.

Interest and Re-payment terms of Long term borrowings -

Term loans from Banks As at 31 March, 2014 As at 31 March, 2013


Balance Outstanding


Balance Outstanding

Fixed Interest Rate; Repayable in a Single Instalment

1 -2 years 10.25 to 11 44,000.00 NA -

Floating Interest Rate; Repayable in a Single Instalment

1 -2 years Base Rate + spread upto 50 basis points

71,000.00 Base Rate + spread upto 50 basis points

140,000.00

115,000.00 140,000.00

Note 6 Other long-term liabilities

` in lakh



(a) Others (Other than Trade Payables):

(i) Interest accrued but not due on borrowings 6,837.06 2,343.73

(ii) Lease / Loan Deposit 670.00 685.47

(iii) Income received in advance (Unearned revenue) 34.59 73.78

(iv) Premium received on Index Derivatives - 972.50

(v) Embedded Option Liability 513.56 1,917.20

Total 8,055.21 5,992.68



Note 7 Long-term provisions

` in lakh



Provision for employee benefits:

(i) Provision for gratuity (Refer Note 27.2(i)) - 58.88

(ii) Provision for compensated absences (Refer Note 27.2(ii)) 189.65 198.20

(iii) Provision for Stock Appreciation Rights (Refer Note 28) 30.02 27.03

Provision (Others):

(i) Provision for contingencies (Refer Note 27.9) 30.48 36.97

(ii) Contingent provisions against standard assets 2,207.06 2,015.34

Total 2,457.21 2,336.42

Note 8 Short-term borrowings

` in lakh


(a) Deposits

Inter Corporate Deposits (Refer Note (iii) below)

Unsecured 1,000.00 16,500.00

(b) Debentures (Refer Note (i) below)

Non Convertible Debentures

Secured 25,820.00 30,000.00

(c) Commercial Paper (Refer Note (iv) below)

Unsecured 197,755.00 217,425.00

Less: Discount not written off 8,369.81 7,621.09

189,385.19 209,803.91

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

Secured 168,200.00 212,000.00

(e) Term loans from Corporates (Refer Note (ii) below) 10,000.00 -

Secured

(f) Overdrawn balance as per books - 10,391.67

Total 394,405.19 478,695.58



Note (i)

The Debentures are redeemable at par. The Non Convertible Debentures are secured by way of a first and pari passu mortgage in favour of the Security Trustee on the Company’s immovable property of ` 18.07 lakh and further secured by way of hypothecation/mortgage of charged assets such as receivables arising out of loan, lease, book debts, current assets and investments (excluding investment in mutual fund units and strategic investments of the Company which are in the nature of equity shares).

Interest and Re-payment terms of Short term borrowings -

` in lakh ` in lakh

Non Convertible Debentures As at 31 March, 2014 As at 31 March, 2013


Balance Outstanding


Balance Outstanding

Fixed Interest Rate; Repayable at Maturity 8.75 to 10.07 25,820.00 9.77 to 9.8 30,000.00

25,820.00 30,000.00

Note (ii)

The short term loans from banks and corporates are secured by first pari-passu and non-exclusive charge by way of hypothecation/ mortgage of charged assets such as receivables arising out of loans, lease, book debts, current assets and investments (excluding investment in mutual fund units and strategic investments of the company which is in the nature of equity shares) and / or mortgage on the Company’s immovable property of ̀ 18.07 lakh ranking pari-passu with charge created in favour of Security Trustee.

` in lakh ` in lakh

1) Term Loans from Banks - Secured As at 31 March, 2014 As at 31 March, 2013


Balance Outstanding


Balance Outstanding

Fixed Interest Rate; Repayable in a Single Instalment 9.57 to 10.3 22,200.00 9.60 to 10.50 32,500.00

Floating Interest Rate; Repayable in a Single Instalment Base Rate + spread upto 150 basis

points

146,000.00 Base Rate + spread upto 100 basis

points

179,500.00

168,200.00 212,000.00

` in lakh ` in lakh

2) Term Loans from Corporates - Secured As at 31 March, 2014 As at 31 March, 2013


Balance Outstanding


Balance Outstanding

Fixed Interest Rate; Repayable in a Single Instalment 11.75 10,000.00 NA -

10,000.00 -

Note (iii) ` in lakh ` in lakh

Inter Corporate Deposit As at 31 March, 2014 As at 31 March, 2013


Balance Outstanding


Balance Outstanding


1,000.00 16,500.00

Note (iv)

Commercial Paper


Balance Outstanding


Balance Outstanding


189,385.19 209,803.91



Note 9 Trade payables

` in lakh



Trade payables:

Other than Acceptances 29,850.82 29,276.47

(Refer Note 26.2)

Total 29,850.82 29,276.47

Note 10 Other current liabilities

` in lakh


(a) Current maturities of long term debt

(i) Debentures (Refer Note (i) below)

Non Convertible Debentures

Secured 324,770.00 148,180.00

Index Linked Debentures

Secured 6,380.00 19,220.00

Less:Unamortised Discount 159.34 584.20

6,220.66 18,635.80

Deep Discount Debentures

Secured 155,540.00 116,300.00

Less:Unamortised Discount 3,476.42 4,717.69

152,063.58 111,582.31

Debentures issued at discount

Secured - 32,500.00

Less:Unamortised Discount - 50.09

- 32,449.91

Non Convertible Debentures - Subordinated Debts

Unsecured - 890.00

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

Secured 145,000.00 180,928.27

(b) Interest accrued but not due on borrowings 30,505.00 23,277.11

(c) Income received in advance (Unearned revenue) 381.55 691.53

(d) Unclaimed matured lease / loan deposits and interest accrued thereon

16.89 8.57

(e) Unclaimed matured debentures 7.60 -

(f) Other payables

(i) Statutory remittances (Contributions to PF and ESIC, Withholding Taxes, VAT, Service Tax, etc.)

393.68 227.36

(ii) Lease / Loan Deposit 277.71 90.34

(iii) Advances received against loan / lease agreements 1,143.72 875.39

(iv) Embedded Option Liability 2,299.33 1,245.29

(v) Premium received on Index Derivatives 977.50 700.13

(vi) Mark to Market Loss on Nifty Futures and Options 0.53 458.32

Total 664,057.75 520,240.33



Note (i)

The Debentures are redeemable at par.The Non Convertible Debentures, Index Linked Debentures, Deep Discount Debentures and Debentures issued at Discount are secured by way of a first and pari passu mortgage in favour of the Security Trustee on the Company’s immovable property of ` 18.07 lakh and further secured by way of hypothecation/mortgage of charged assets such as receivables arising out of loan, lease, book debts, current assets and investments (excluding investment in mutual fund units and strategic investments of the Company which are in the nature of equity shares).

Interest and Re-payment terms of Long term borrowings (Current Maturities) ` in lakh ` in lakh

1) Non Convertible Debentures - Secured As at 31 March, 2014 As at 31 March, 2013


Balance Outstanding


Balance Outstanding


RELATED PARTIES: 9.33 to 11.05 22,000.00 10.20 to 10.45 1,500.00

22,000.00 1,500.00

OTHERS: 9.05 to 11.20 302,770.00 8.25 to 11.10 146,680.00

302,770.00 146,680.00

324,770.00 148,180.00

2) Index Linked Debentures - Secured


Balance Outstanding


Balance Outstanding

Floating Interest Rate; Repayable at Maturity Linked to the movement of the Nifty as expressed

on NSE 6,220.66

Linked to the movement of the Nifty as expressed

on NSE 18,635.80

6,220.66 18,635.80

3) Deep Discount Debentures - Secured


Balance Outstanding


Balance Outstanding


152,063.58 111,582.31

4) Debentures issued at discount - Secured


Balance Outstanding


Balance Outstanding


RELATED PARTIES: NA - 10.15 3,498.30

- 3,498.30

OTHERS: NA - 9.00 to 10.15 28,951.61

- 28,951.61

- 32,449.91

5) Non Convertible Debentures - Subordinated Debts


Balance Outstanding


Balance Outstanding

Fixed Interest Rate; Repayable at Maturity NA - 10.85 890.00

- 890.00



Note (ii)

The term loans from banks are secured by first pari-passu and non-exclusive charge by way of hypothecation/ mortgage of charged assets such as receivable arising out of loans, lease, book debts, current assets and investments (excluding investment in mutual fund units and strategic investments of the Company which is in the nature of equity shares) and / or mortgage on the Company’s immovable property of `18.07 lakh ranking pari-passu with charges created in favour of Security Trustee.

` in lakh ` in lakh

Term Loans from Banks - Secured As at 31 March, 2014 As at 31 March, 2013


Balance Outstanding


Balance Outstanding

Fixed Interest Rate; Repayable in a Single Instalment 10.36 to 10.75 20,000.00 10.36 to 10.75 40,928.27

Floating Interest Rate; Repayable in a Single Instalment Base Rate + spread upto 50 basis points

125,000.00 Base Rate + spread upto 50 basis points

140,000.00

145,000.00 180,928.27

Note 11 Short-term provisions

` in lakh



(a) Provisions for employee benefits:

(i) Provision for compensated absences (Refer Note 27.2(ii)) 38.31 36.07

(ii) Provision for Stock Appreciation Rights (Refer Note 28) 47.55 17.48

85.86 53.55

(b) Provisions - Others:

(i) Provision for tax (net of advance tax ` 4,375,581,202 (As at 31 March, 2013 ` 1,786,689,417)

4,921.01 4,119.93

(ii) Contingent provisions against standard assets 2,266.72 2,438.40

(iii) Provision for proposed preference dividend (Refer Note 26.5) 10.00 10.00

(iv) Provision for tax on proposed preference dividend 1.70 1.70

7,199.43 6,570.03

Total 7,285.29 6,623.58

Note 12 Fixed assets

` in lakh

A. Tangible assets Gross block Accumulated depreciation Net block

Balance as at

1 April, 2013

Additions Disposals Balance as at

31 March, 2014

Balance as at

1 April, 2013

Depreciation / amortisation expense for

the year

Eliminated on disposal

of assets

Balance as at

31 March, 2014

Balance as at

31 March, 2014

Balance as at

31 March, 2013

(a) Buildings

Own use 18.07 - - 18.07 6.29 0.29 - 6.58 11.49 11.78

Given under operating lease 2,635.41 - - 2,635.41 173.74 45.33 - 219.07 2,416.34 2,461.67

(b) Computers 426.72 53.93 73.01 407.64 310.03 82.09 70.75 321.37 86.27 117.06

(c) Furniture and Fixtures 88.17 6.39 13.25 81.31 73.01 7.98 13.25 67.74 13.57 15.16

(d) Vehicles 186.13 55.61 26.84 214.90 114.11 39.13 9.92 143.32 71.58 72.02

(e) Office equipment 262.58 17.21 27.77 252.02 180.94 23.68 27.75 176.87 75.15 81.27

(f) L easehold improvements 330.70 21.22 - 351.92 183.03 60.48 - 243.51 108.41 147.67

Total 3,947.78 154.36 140.87 3,961.27 1,041.15 258.98 121.67 1,178.46 2,782.81 2,906.63

Previous year 3,620.16 383.73 56.11 3,947.78 825.10 265.90 49.85 1,041.15 2,906.63



` in lakh

B Intangible assets Gross block Accumulated depreciation Net blockBalance

as at 1 April, 2013

Additions Balance as at

31 March, 2014

Balance as at

1 April, 2013

Depreciation / amortisation

expense for the year

Balance as at

31 March, 2014

Balance as at

31 March, 2014

Balance as at

31 March, 2013

Computer software 39.30 23.18 62.48 39.30 2.07 41.37 21.11 - Total 39.30 23.18 62.48 39.30 2.07 41.37 21.11 - Previous year 39.30 39.30 38.48 0.82 39.30 -

C. Depreciation and amortisation:

` in lakhParticulars For the year ended

31 March, 2014For the year ended

31 March, 2013

Depreciation and amortisation for the year on tangible assets as per Note 12 A 258.98 265.90

Depreciation and amortisation for the year on intangible assets as per Note 12 B 2.07 0.82 Depreciation and amortisation 261.05 266.72

Note 13 Non-current investments

Particulars Face Value

`

Quantity As at 31 March, 2014 Face Value

`

Quantity As at 31 March, 2013Quoted (*) Unquoted Total Quoted (*) Unquoted Total

` in lakh ` in lakh ` in lakh ` in lakh ` in lakh ` in lakhInvestments (At cost unless otherwise stated):

Other than trade:(a) Investment in equity instruments

fully paid upJoint Venture:(i) Kotak Mahindra Old Mutual

Life Insurance Limited 10 54,000,000 - 5,400.00 5,400.00 10 54,000,000 - 5,400.00 5,400.00Others:(i) Phoenix ARC Private Limited 10 19,950,000 - 1,995.10 1,995.10 10 19,950,000 - 1,995.10 1,995.10(ii) ACE Derivatives and

Commodity Exchange Limited

(11,022,747 shares under lock-in till 12 Aug 2013) 10 11,953,250 - 1,310.68 1,310.68 10 11,022,747 - 1,217.63 1,217.63

(iii) Equifax Credit Information Services Private Limited 10 7,500,000 - 750.00 750.00 10 7,500,000 - 750.00 750.00

- -Less: Provision for diminution - (878.72) (878.72) - (102.00) (102.00)

- 8,577.06 8,577.06 - 9,260.73 9,260.73(b) Investment in mutual funds

(i) HDFC Debt Fund for Cancer Cure - - - - - 10 500,000 50.00 - 50.00

(c) Investment in debentures / bonds fully paid upMarathon Realty Private Limited 4,000,000 50 2,000.00 - 2,000.00 10,000,000 25 2,500.00 - 2,500.00Marathon Realty Private Limited - - - - - 10,000,000 25 - 2,500.00 2,500.00Horizon Projects Private Limited 6,668,000 135 9,001.80 - 9,001.80 10,000,000 100 - 10,000.00 10,000.00Enkay Buildwell Private Limited 5,557,333 75 4,168.00 - 4,168.00 - - - - -VGN Developers Private Limited 6,666,800 50 3,333.40 - 3,333.40 10,000,000 50 - 5,000.00 5,000.00

18,503.20 - 18,503.20 2,500.00 17,500.00 20,000.00Total 18,503.20 8,577.06 27,080.26 2,550.00 26,760.73 29,310.73(*) No quotes availableAggregate amount of provisions 878.72 102.00



Note 14 Long-term loans and advances

` in lakhParticulars As at

31 March, 2014As at

31 March, 2013(a) Capital advances (unsecured, considered good) - 8.90 (b) Security deposits Unsecured, considered good 131.50 136.22 (c) Advance income tax (net of provisions ̀ 3,339,611,112 (As at 31 March, 2013 ̀ 3,348,770,341)

- Unsecured, considered good 2,444.07 2,169.41

(d) Other loans and advances under financing activity (Refer Note (i) below) Secured, considered good 820,499.18 745,725.44 Unsecured, considered good 35,123.27 26,846.35 Secured, considered doubtful 876.01 524.16 Unsecured, considered doubtful 41.14 27.98

856,539.60 773,123.93 Less: Provision for doubtful loans and advances 917.15 552.14

855,622.45 772,571.79 Total 858,198.02 774,886.32

Note (i)Secured, considered good (*)Vehicle Finance 665,819.18 633,218.68 Includes Lease and Hire Purchase ` 13,956.91 lakh(Previous year ` 12,476.73 lakh) (Refer Note 27.10)Loans against Securities / Collaterals 154,680.00 112,506.76

820,499.18 745,725.44 Unsecured, considered goodVehicle Finance 30.54 51.56 Personal Loans 35,092.73 26,794.79

35,123.27 26,846.35 Secured, considered doubtful (*)Vehicle Finance 876.01 524.16

876.01 524.16 Unsecured, considered doubtfulPersonal Loans 41.14 27.98

41.14 27.98 (*) Secured by hypothecation of vehicles, and/ or, pledge of securities and/or, equitable mortgage of property and/ or undertaking to create a security.

Note 15 Other non-current assets

` in lakh



(a) Unamortised expenses

(i) Ancillary lending expense 6,415.54 5,584.49

(b) Accruals

(i) Interest accrued on deposits - 6.91

(c) Others

(i) Fixed Deposits with banks (under lien, with residual maturity of more than 12 months) 8.70 1,143.60

(ii) Premium paid on Index Derivatives - 968.58

(iii) Share application money - for ACE Derivatives and Commodity Exchange Limited 90.66 -

Total 6,514.90 7,703.58



Note 16 Current investments


`


`

Quantity As at 31 March, 2013

Quoted (*) Unquoted Total Quoted (*) Unquoted Total

` in lakh ` in lakh ` in lakh ` in lakh ` in lakh ` in lakh

Investments (at lower of cost and fair value)

(a) Investment in equity instruments fully paid up

Bharti Infratel Limited - - - - - 10 2,722,529 4,871.97 - 4,871.97

- - - 4,871.97 - 4,871.97

(b) Investment in debentures / bonds fully paid up (Refer Note (i) below)

(Including current portion of Long-Term Investments)

Arun Excello Homes Private Limited - - - - - 1,500,000 50 750.00 - 750.00

Bombay Slum Redevelopment Corporation Limited 6,668,000 15 - 1,000.20 1,000.20 10,000,000 15 - 1,500.00 1,500.00

Century Real Estate Holdings Private Limited (**) 1,885,807 20 - 339.44 339.44 5,791,809 20 - 1,042.53 1,042.53

Chalama Infraprojects Private Limited 10,000,000 50 5,000.00 - 5,000.00 10,000,000 50 - 5,000.00 5,000.00

Enkay Buildwell Private Limited 4,442,667 75 3,332.00 - 3,332.00 - - - - -

Marathon Realty Private Limited 5,200,000 25 1,300.00 - 1,300.00 - - - - -

Marathon Realty Private Limited 5,400,000 25 1,350.00 - 1,350.00 - - - - -

Horizon Projects Private Limited 3,332,000 135 4,498.20 - 4,498.20 - - - - -

VGN Developers Private Limited 3,333,200 50 1,666.60 - 1,666.60 - - - - -

Lodha Dwellers Private Limited - - - - - 3,400,000 110 3,740.00 - 3,740.00

Lodha Developers Limited - - - - - 636,364 1,127 6,799.94 - 6,799.94

Lodha Pranik Landmark Developers Private Limited - - - - - 8,600,000 54 4,644.00 - 4,644.00

Marathon Realty Private Limited 9,600,000 16 1,536.00 - 1,536.00 10,000,000 16 1,600.00 - 1,600.00

Neelkanth Urban Developers Private Limited 5,000,000 25 1,250.00 - 1,250.00 6,800,000 25 1,700.00 - 1,700.00

New Era Dwellers & Construction Private Limited - - - - - 8,000,000 25 - 2,000.00 2,000.00

Prince Foundations Limited - - - - - 8,333,334 80 - 6,666.67 6,666.67

Prince Foundations Limited 10,000,000 28 - 2,800.00 2,800.00 10,000,000 28 - 2,800.00 2,800.00

Proficient Buildwell Private Limited 50,000,000 24 - 12,000.00 12,000.00 50,000,000 24 - 12,000.00 12,000.00

Puravankara Projects Limited - - - - - 3,400,000 100 3,400.00 - 3,400.00

Rajesh Estates & Nirman Private Limited 5,716,000 25 1,429.00 - 1,429.00 10,000,000 25 2,500.00 - 2,500.00

Rohan Builders & Developers Private Limited - - - - - 2,000,000 50 1,000.00 - 1,000.00

Rohan Builders & Developers Private Limited 1,668,000 90 1,501.20 - 1,501.20 5,000,000 90 4,500.00 - 4,500.00




`


`

Quantity As at 31 March, 2013

Quoted (*) Unquoted Total Quoted (*) Unquoted Total

` in lakh ` in lakh ` in lakh ` in lakh ` in lakh ` in lakh

Universal Buildwell Private Limited 1,000,000 30 - 223.38 223.38 1,000,000 101 - 936.96 936.96

22,863.00 16,363.02 39,226.02 30,633.94 31,946.16 62,580.10

(c) Investment in Certificate of Deposits

Punjab National Bank - - - - - 100,000 10,000 - 9,837.48 9,837.48

Indian Bank - - - - - 100,000 10,000 - 9,859.29 9,859.29

- - - - 19,696.77 19,696.77

(d) Investment in Mutual Funds

ICICI Prudential Liquid Plan - Growth 190 2,636,294 - 5,000.00 5,000.00 - - - - -

Reliance Liquid Fund-Direct Growth Plan 3,124 320,136 - 10,000.00 10,000.00 - - - - -

- 15,000.00 15,000.00 - - -

Total 22,863.00 31,363.02 54,226.02 35,505.91 51,642.93 87,148.84

(*) No quotes available except for Bharti Infratel Limited

Aggregate amount of provisions 37.72 1,233.43

(**) Includes amount due

Note (i): Includes instalments due after twelve months as the investments are expected to be realised in the subsequent year.

Note 17 Trade receivables

` in lakh



Trade receivables outstanding for a period exceeding six months from the date they were due for payment

Doubtful 7.16 11.64

Less: Provision for doubtful trade receivables 7.16 11.64

- -

Other Trade receivables

Unsecured, considered good 92.72 405.38

Total 92.72 405.38



Note 18 Cash and bank balances

` in lakh


As at 3 1 March, 2013

A. Cash and cash equivalents

(a) Cash on hand 465.91 363.42

(b) Cheques, drafts on hand 748.50 829.07

(c) Balances with banks

(i) In current accounts 13,220.08 2,170.70

(ii) In deposits with original maturity less than 3 months 42,000.00 16,500.00

B. Other Bank Balances

(i) Fixed Deposits with banks (under lien, with residual maturity of less than 12 months) 1,246.58

(ii) In deposits with original maturity more than 3 months 20,100.00 -

(ii) In earmarked accounts

- Unpaid matured debentures 7.60 -

Total 77,788.67 19,863.19

Note 19 Short-term loans and advances

` in lakh



(a) Loans and advances to employees

Unsecured, considered good 64.71 62.06

(b) Prepaid expenses - Unsecured, considered good 93.18 89.91

(c) Balances with government authorities

Unsecured, considered good

(i) VAT credit receivable 1,193.11 1,364.25

(ii) Service Tax credit receivable 61.39 45.26

(d) Inter-Corporate Deposits

Unsecured, considered good 15,000.00 -

(e) Other loans and advances under financing activity

(Refer Note (i) below)

Secured, considered good 799,151.01 875,577.03

Unsecured, considered good 67,316.44 54,052.95

Secured, considered doubtful 3,600.46 2,417.44

Unsecured, considered doubtful 509.50 475.88

870,577.41 932,523.30

Less: Provision for other doubtful loans and advances 4,109.96 2,893.32

866,467.45 929,629.98

Total 882,879.84 931,191.46





Note (i)

Secured, considered good (*)

Vehicle Finance (Refer Note (ii) below) 581,860.93 578,562.38

Includes Lease and Hire Purchase ` 5,688.90 lakh

(Previous year ` 6,063.85 lakh) (Refer Note 27.10)

Loans against Securities / Collaterals 217,290.08 297,014.65

799,151.01 875,577.03

Unsecured, considered good

Vehicle Finance 4,244.11 4,318.78

Corporate Loans 22,774.98 15,003.30

Personal Loans 40,297.35 34,730.87

67,316.44 54,052.95

Secured, considered doubtful (*)


Loans against Securities / Collaterals 29.73 323.32

3,600.46 2,417.44

Unsecured, considered doubtful

Personal Loans 509.50 475.88

509.50 475.88

(*) Secured by hypothecation of vehicles, and/ or, pledge of securities and/or, equitable mortgage of property and/ or undertaking to create a security.

Note (ii)

The receivables of vehicles and instalment dues from borrowers includes ` 805.94 lakh (Previous year ` 349.04 lakh) being receivables and instalment on vehicles repossessed, necessary provision for which is made.

Note 20 Other current assets

` in lakh



(a) Unamortised expenses

(i) Ancillary lending expense 2,970.35 2,566.44

(b) Accruals

(i) Interest accrued on deposits 180.97 8.26

(ii) Interest accrued on investments 1,125.98 1,877.76

(iii) Interest accrued on loans and advances 9,666.93 8,987.57

(iv) Interest accrued on Inter-corporate deposits 169.73 -

(c) Others

(i) Gratuity (Refer Note 27.2(i)) 4.41 -

(ii) Deposits 2,890.41 2,790.41

(iii) Premium paid on Index derivatives 904.22 1,470.04

(iv) Mark to market balance of currency derivatives - 1,728.27

(iv) Mark to market on index derivatives 0.53 5.17

(vi) Others (includes fees and incentive receivable) 122.23 119.23

Total 18,035.76 19,553.15

` in lakh



Note 21 Revenue from operations

` in lakh

Particulars For the year ended 31 March, 2014


(a) Interest (Refer Note (i) below) 230,742.56 206,908.97

(b) Other Financial Services (Refer Note (ii) below) 14,945.09 14,869.22

(c) Other Operating Revenues

(i) Write offs recovered 714.72 665.25

(ii) Gain on sale of current investments - debentures 57.09 280.22

Total 246,459.46 222,723.66

Note (i) Interest

Vehicle Finance 146,871.17 132,815.16


Personal Loans 13,108.97 10,352.18

Income on recovery of acquired stress assets 0.90 7.15

Lease Rentals 8,605.31 6,660.91

Less: Capital Recovery 6,058.66 4,457.37

2,546.65 2,203.54

Current Investments - Debentures 7,270.03 12,785.23

Long-term Investments - Debentures 5,048.55 506.61

230,742.56 206,908.97

Note (ii) Other Financial Services



Personal Loans 1,685.06 1,371.99

Income from securitisation 97.19 651.95

Fee based Income 1,985.78 1,584.31

Trading in Securities 51.22 938.05

14,945.09 14,869.22



Note 22 Other income

` in lakh



(a) Interest income (Refer Note (i) below) 3,533.12 242.01

(b) Dividend income:

from long-term investments

Units 3.38 3.73

(c) Net gain on sale of:

current investments 498.96 663.07

(d) Discount income on certificate of deposits 17.30 91.22

(e) Discount income on CBLO lending 46.68 -

(f) Provision for Mark to Market on derivatives written back (net) - 1,458.58

(g) Adjustments to the carrying amount of investments - reversal of reduction in the carrying amount of current investments

1,195.72 -

(h) Provision for contingencies 6.49 -

(i) Other non-operating income (net of expenses directly attributable to such income) (Refer Note (ii) below)

697.75 690.65

Total 5,999.40 3,149.26

Note

(i) Interest income comprises:

Interest from banks on:

deposits 3,338.75 235.12

Interest on staff loans 5.78 5.44

Interest on Inter-corporate deposits 188.59 -

Interest on income tax refund - 1.45

Total - Interest income 3,533.12 242.01

(ii) Other non-operating income comprises:

Rental income from operating leases (Refer Note 27.5a) 556.63 555.12

Profit on sale of fixed assets (net) 3.73 3.39

Liabilities / Provisions no longer required written back (net of ` 59.92 for sundry debit balance written off, Previous year ` Nil)

137.39 97.26

Miscellaneous income - 34.88

Total - Other non-operating income 697.75 690.65

Note 23 Employee benefits expense

` in lakh



Salaries, Allowances and\ Bonus 5,056.61 4,494.05

Contributions to provident fund (Refer Note 27.1) 240.40 213.58

Provision for Gratuity (Refer Note 27.2(i)) 13.49 78.65

Reimbursement of expense on ESOP scheme (Refer Note 28) 7.08 18.85

Staff welfare expenses 231.48 190.51

Total 5,549.06 4,995.64



Note 24 Finance costs

` in lakh



(a) Interest expense on:

(i) Borrowings

Debentures 56,599.83 45,433.26

Term loans 45,161.19 45,839.20

Inter-Corporate deposits 483.66 248.51

Interest on cash credit and overdraft 61.86 128.17

102,306.54 91,649.14

(ii) Others

- Interest on delayed payment of Income Tax 21.91 0.33

- Interest on loan / lease deposits 3.09 4.45

(b) Other borrowing costs

Commercial Papers 21,804.34 24,586.03

Deep Discount Debentures 21,772.71 18,142.70

Others 423.50 151.65

Total 146,332.09 134,534.30

Note 25 Other expenses

` in lakh



Power and fuel 188.08 153.58

Rent including lease rentals (Refer Note 27.5b) 709.71 618.94

Repairs and maintenance - Others 349.00 310.69

Insurance 6.21 9.39

Rates and taxes 1,103.55 745.27

Communication 342.13 319.99

Travelling and conveyance 442.56 378.64

Printing and stationery 306.35 304.26

Data Processing 66.00 60.00

Brokerage and commission 8,625.23 7,704.54

Office expenses 197.57 172.35

Common Establishment expenses - Reimbursements 829.55 645.02

Advertisement 195.81 150.40

Business promotion 365.43 357.66

Donations and contributions 3.38 3.73

Legal and professional 4,755.07 3,963.49

Payments to auditors (Refer Note (i) below) 87.05 69.16

Bad trade and other receivables, loans and advances written off (net) 1,994.14 1,267.49

(Includes net loss on sale of lease assets ` 780,671,

Previous year Net gain of ` 3,504,641)

Net loss on sale of long term investments - 75.89



` in lakh



Loss on buyback of debentures 328.60 -

Adjustments to the carrying amount of investments - reduction in the carrying amount of - -

current investments - 1,207.70

long-term investments (net) 776.72 17.81

Net loss on sale of Index Derivatives 10.18 1,955.57

Provision for Mark to Market on derivatives (net) 1,535.50 -

Provision for doubtful trade and other receivables, loans and advances 1,577.17 262.69

Provision for standard assets 20.04 953.33

Provision for contingencies - 36.97

Miscellaneous expenses 335.38 230.60

Total 25,150.41 21,975.16

Note (i)

Payments to the auditors comprises (net of service tax input credit, where applicable):

As auditors - statutory audit 48.00 40.00

For other services (Interim Audit, Certification Work, etc) 38.40 28.69

Reimbursement of expenses 0.65 0.47

Total 87.05 69.16

Note 26 Additional Information to the financial statements

` in lakh



26.1 Contingent liabilities and commitments (to the extent not provided for)

Contingent liabilities

(a) Claims against the Company not acknowledged as debt in case of suits filed by customer/s with respect to release of repossessed vehicles and related matters. The Company had preferred an appeal against the same with State / National Consumer Dispute Redressal Forum.

370.65 278.48

(b) The Company has received a sales tax demand of Rs.11.05 lakh for the assessment years 2008-09 to 2013-14 against which bank guarantee has been furnished. The said amount is disputed and the Company has preferred an appeal against the same with Deputy Commissioner (Appeal-III, Jaipur).

11.05 -

(c) The Company has received a demand (net of provision) of Rs.24.31 lakh on completion of income tax assessment for the assessment year 2011-12. The said amount is disputed and the company has preferred an appeal against the same. The amounts for the same have been paid to the credit of the Central Government.

- 24.31

(d) The Company has received a property tax demand of Rs. 96.80 for the year 2010-11 to 2013-14. The said amount is disputed with the local municipal authorities

35.90 -

The Company is confident of a favourable outcome from the appellate process in all the aforesaid cases.

26.2 Disclosures required under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006

The Company has not received any intimation from “suppliers” regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures, if any, relating to amounts unpaid as at the year end together with interest paid/ payable as required under the said Act have not been given.



26.3 Details on derivatives instruments and unhedged foreign currency exposures

(a) The foreign currency borrowings of the Company of USD Nil (` Nil (Previous year ` 10,928.27 lakh)) are hedged against foreign currency risk as under:

Currency swaps to hedge against fluctuations in changes in exchange rate. No. of contracts: Nil (As at 31 March, 2013: 1)

Currency ` in lakh Buy / Sell Cross currency USD Nil - - - (USD 20,131,291) (10,928.27) Buy Rupees

(b) Open interest in Index Futures

Index Futures Expiration Date No. of contracts Open long position (No. of units)

As at 31st March 2014

CNX Nifty 24 April 2014 20 1,000

As at 31st March 2013

CNX Nifty 25 April 2013 436 21,800

(c) Outstanding Option Contracts

Option Expiration Date Nature of position No. of units As at 31st March 2014CNX Nifty 24 December 2014 Short - CE 50,000 CNX Nifty 24 December 2014 Short - PE 100,000 CNX Nifty 24 December 2014 Long - CE 100,000 CNX Nifty 24 December 2014 Long - PE 50,000 CNX Nifty 24 April 2014 Short - CE 15,000 CNX Nifty 24 April 2014 Short - PE 20,000 As at 31st March 2013CNX Nifty 24 December 2014 Short - PE 150,000 CNX Nifty 24 December 2014 Long - CE 150,000 CNX Nifty 26 December 2013 Short - PE 100,000 CNX Nifty 26 December 2013 Long - CE 219,950 CNX Nifty 25 April 2013 Long - PE 135,000 CNX Nifty 25 April 2013 Long - CE 50,000

The margin of ` 796.90 lakh (Previous year ` 634.36 lakh) on the above positions in the form of Cash / Deposits has been placed with the trading member. The Company enters into index derivatives for the purpose of covering benchmark return on structured liabilities.

(d) Total Premium Carried forward net of provisions made: ` in lakh

Option Premium Paid Premium Received As at 31st March 2014CNX Nifty 727.05 699.64 Total 727.05 699.64 As at 31st March 2013CNX Nifty 1,565.58 1,535.13 Total 1,565.58 1,535.13

26.4 Expenditure in foreign currency

` in lakh



Professional fees - 1.98 Interest 780.78 2,860.22 Travelling 5.20 2.41

26.5 (a) The amount of dividend proposed to be distributed to Preference Shareholders for the year is ` 10 lakh (Previous year ` 10 lakh). The dividend amount per share is ` 1 (Previous year ` 1)

(b) The Company has declared and paid interim dividend on equity shares @ ` 0.60 per share amounting to ` 20.97 lakh (Previous year ` Nil).



Note 27 Disclosures under Accounting Standards

27 Employee benefit plans

27.1 Defined contribution plans

The Company makes Provident Fund contributions to Recognized Provident Fund for qualifying employees. The Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised ` 240.40 lakh (Year ended 31 March, 2013 ` 213.58 lakh) for Provident Fund contributions in the Statement of Profit and Loss. The contributions payable to the Fund are at rates specified in the Rules of the Scheme.

27.2 Defined benefit plans

The Company offers the following employee benefit schemes to its employees:

27.2 (i) Gratuity

The following table sets out the funded status of the defined benefit schemes and the amount recognised in the financial statements:

` in lakh

Particulars Year ended 31 March, 2014


Gratuity Gratuity

Components of employer expense

Current service cost 62.51 47.42

Interest cost 35.88 30.51

Expected return on plan assets (24.49) (23.85)

Actuarial losses/(gains) (60.41) 24.57

Total expense recognised in the Statement of Profit and Loss 13.49 78.65

Actual contribution and benefit payments for year

Benefits paid 43.95 30.75

Net (asset) / liability recognised in the Balance Sheet

Present value of defined benefit obligation 403.42 397.60

Fair value of plan assets (407.83) (338.71)

Net (asset) / liability recognised in the Balance Sheet (4.41) 58.88

Change in defined benefit obligations (DBO) during the year

Present value of DBO at beginning of the year 397.60 318.38

Current service cost 62.51 47.42

Interest cost 35.88 30.51

Liabilities (settled on divestiture) / assumed on acquisitions (7.84) 0.76

Actuarial (gains) / losses (40.78) 31.27

Benefits paid (43.95) (30.75)

Present value of DBO at the end of the year 403.42 397.60

Change in fair value of assets during the year

Plan assets at beginning of the year 338.71 330.00

Expected return on plan assets 24.49 23.85

Actual Company contributions 68.95 8.91

Actuarial gain / (loss) 19.63 6.70



` in lakh

Particulars Year ended 31 March, 2014


Gratuity Gratuity

Benefits paid (43.95) (30.75)

Plan assets at the end of the year 407.83 338.71

Composition of the plan assets is as follows:

Equity 220.09 185.23

Government securities 100.04 58.14

Bonds, debentures and other fixed income instruments 40.86 56.74

Money market instruments 46.84 38.60

Total 407.83 338.71

Actuarial assumptions

Discount rate 9.34% 8.24%

Expected return on plan assets 7.50% 7.50%

Salary escalation 8.50% 8.50%

Estimate of amount of contribution in the immediate next year 50.00 25.00

The discount rate is based on the prevailing market yields of Government of India securities as at the Balance Sheet date for the estimated term of the obligations.

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

Experience adjustments ` in lakh

31-Mar-14 31-Mar-13 31-Mar-12 31-Mar-11 31-Mar-10

Gratuity

Present value of DBO 403.42 397.60 318.38 303.32 158.68

Fair value of plan assets 407.83 338.71 330.00 - -

Funded status [Surplus / (Deficit)] 4.41 (58.88) 11.62 (303.32) (158.68)

Experience gain / (loss) adjustments on plan liabilities 6.26 (18.62) 4.87 27.97 0.39

Experience gain / (loss) adjustments on plan assets 19.62 6.70 - - -

27.2(ii) Compensated absences



Actuarial assumptions for long-term compensated absences

Discount rate 9.34% 8.24%

Salary escalation 8.50% 8.50%

The discount rate is based on the prevailing market yields of Government of India securities as at the Balance Sheet date for the estimated term of the obligations.

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



27.3 Segment information

The Company has identified business segments as its primary segment and geographic segments as its secondary segment. Business segments are primarily Vehicle financing, Other lending activities and Treasury and Investments. Vehicle Financing includes Retail and Wholesale trade finance. Other Lending activities include financing against securities, securitisation, debenture investment / lending in commercial real estate and other loans/ fee based services. Treasury and Investment activities include proprietary trading in securities. Segments have been identified and reported taking into account the nature of product and services, the differing risks and returns and the internal financial reporting system. Revenues and expenses directly attributable to segments are reported under each reportable segment. Expenses which are not directly identifiable to each reportable segment have been allocated on the basis of associated revenues of the segment and manpower efforts. All other expenses which are not attributable or allocable to segments have been disclosed as unallocable expenses. Assets and liabilities that are directly attributable or allocable to segments are disclosed under each reportable segment. All other assets and liabilities are disclosed as unallocable. There is one Geographical segment i.e. India as Secondary segment

` in lakh

Particulars For the year ended 31 March 2014

Business segments Eliminations Total

Vehicle financing

Other lending activities/ Fee based services

Treasury and Investment

activities

Revenue

Inter-segment revenue

Total

Segment result

Unallocable expenses (net)

Profit before taxes

Tax expense

Net profit for the year

` in lakh


Business segments Total

Vehicle financing

Other lending activities/ Fee based

services


activities

Segment assets

Unallocable assets

Total assets



` in lakh


Business segments Total

Vehicle financing

Other lending activities/ Fee based

services


activities

Segment liabilities

Unallocable liabilities

Total liabilities

Other information

Capital expenditure

Depreciation and amortisation

Other significant non-cash expenses (Provision for Investments, standard assets, NPA, employee benefits etc)

Note: Figures in italics relates to the previous year.

27.4 Related party transactions

27.4 a Details of related parties:

Description of relationship Names of related parties

Holding Company (Controlling Entity) Kotak Mahindra Bank Limited holds 51% of the Share Capital

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

Fellow Subsidiaries Kotak Mahindra Capital Company Limited

Kotak Securities Limited

Kotak Mahindra Asset Management Company Limited

Kotak Mahindra Investments Limited

Kotak Mahindra Old Mutual Life Insurance Limited

Kotak Investment Advisors Limited

Key Management Personnel (KMP) Mr. Uday Kotak, Non Executive Chairman

Mr. Vyomesh Kapasi, CEO and Manager

Joint Venture Kotak Mahindra Old Mutual Life Insurance Limited – Joint Venture with Kotak Mahindra Bank Limited, Old Mutual Financial Services (UK) plc and Kotak Mahindra Capital Company Limited

Entities in which KMP / relatives of KMP have significant influence

Aero Agencies Limited

Note: Related parties have been identified by the Management.

Details of related party transactions during the year ended 31 March, 2014 and balances outstanding as at 31 March, 2014:



` in lakh

27.4b Holding Company

Fellow Subsidiaries

KMP Entities in which KMP /

relatives of KMP have significant influence

Total

Non Convertible Debentures issued 55,000.00 - 55,000.00

(17,000.00) (16,500.00) (33,500.00)

Kotak Securities Limited - -

(6,500.00) (6,500.00)

Kotak Mahindra Old Mutual Life Insurance Ltd

- -

(10,000.00) (10,000.00)

Non Convertible Debentures Redeemed 4,498.30 - 4,498.30

(5,000.00) - (5,000.00)


- -

Non Convertible Debentures Outstanding

52,500.00 47,500.00 100,000.00

(**) (39,498.30) (46,000.00) (85,498.30)

Kotak Investment Advisors Limited - -

(**) - -

Kotak Securities Limited 35,500.00 35,500.00

(35,500.00) (35,500.00)


12,000.00 12,000.00

(**) (10,500) (10,500.00)

Interest payable on debenture issued 2,411.70 1,960.34 4,372.04

(2,522.13) (1,812.15) (4,334.28)


(1,071.71) (1,071.71)


891.89 891.89

(740.44) (740.44)

Inter-Corporate Deposit obtained 15,000.00 15,000.00

- -

Kotak Mahindra Investments Limited 15,000.00 15,000.00

- -

Outstandings – Payables 136.63 0.57 137.20

(41.94) (9.55) (51.49)

Kotak Securities Limited 0.57 0.57

(9.55) (9.55)

Demat charges Payable 0.017 0.017

(0.002) (0.002)


(0.002) (0.002)

Sale of units of Kotak Real Estate Fund - -

(644.45) (644.45)


(644.45) (644.45)

Sale of debentures - -

(3,801.35) (3,801.35)



` in lakh


Fellow Subsidiaries



Total


(3,801.35) (3,801.35)

Interest Accrued on Inter Corporate Deposit (Net of TDS)

169.73 169.73

- -

Kotak Mahindra Investments Limited 169.73 169.73

- -

Term Deposits / Margin Deposits placed 43,346.58 1,983.29 45,329.87

(17,634.90) (2,146.15) (19,781.05)


(2,146.15) (2,146.15)

Interest receivable on Term deposits (net of TDS)

135.29 135.29

(15.17) (15.17)

Deposits 0.10 10.00 10.10

(0.10) (10.00) (10.10)


10.00 10.00

(10.00) (10.00)

Bank Balance in Current/OD Account 10,659.05 10,659.05

(10,391.68) (10,391.68)

Outstandings – Receivables 9.47 0.29 9.76

- (0.41) (0.41)


0.29 0.29

(0.41) (0.41)

Insurance Premium paid in advance 4.25 4.25

(4.82) (4.82)


4.25 4.25

(4.82) (4.82)

Dividend on Equity Shares 10.70 10.28 20.98

- - -


- -

Dividend paid on Preference Shares 10.00 10.00

(10.00) (10.00)


- -

Kotak Mahindra Asset Management Co Limited

- -

(2.50) (2.50)

Kotak Mahindra Capital Company Limited 5.00 5.00

(5.00) (5.00)

Kotak Investment Advisors Limited 2.50 2.50

(2.50) (2.50)

Interest received on Term Deposits 3,144.98 3,144.98

(235.05) (235.05)



` in lakh


Fellow Subsidiaries



Total

Fee based income - 3.76 3.76

(12.50) (5.16) (17.66)


3.76 3.76

(5.16) (5.16)

License fees received 553.13 3.50 556.63

(553.73) (1.39) (555.12)


2.08 2.08

- -


1.42 1.42

(1.39) (1.39)

Interest on Cash Credit 59.51 59.51

(118.37) (118.37)

Interest income on Inter-Corporate Deposit

188.59 188.59

- -


- -

Brokerage paid 84.69 84.69

(94.17) (94.17)


(94.17) (94.17)

Interest on debentures paid 4,401.24 4,670.47 9,071.71

(3,649.50) (4,813.50) (8,463.00)


(306.67) (306.67)


(3,298.27) (3,298.27)


940.47 940.47

(1,208.56) (1,208.56)

Data Processing Expenses 66.00 66.00

(60.00) (60.00)

Common Establishment Expenses - Reimbursed

751.55 78.00 829.55

(628.74) (16.28) (645.02)


(16.28) (16.28)

Arranger Fees paid 154.14 154.14

- -

Guest House Charges paid 0.99 0.99

(0.66) (0.66)

Gym Charges paid 0.10 0.10

(0.22) (0.22)

Office Exps paid 2.60 2.60

- -



` in lakh


Fellow Subsidiaries



Total

Guarantee Charges paid - -

(0.02) (0.02)

Purchase of Gold Coin - Staff Welfare expenses

5.03 5.03

(3.33) (3.33)

License fees paid 504.47 504.47

(466.35) (466.35)

Insurance Premium paid 5.35 5.35

(4.83) (4.83)


5.35 5.35

(4.83) (4.83)

Demat Charged paid 0.02 0.02

(0.01) (0.01)


(0.01) (0.01)

Cost of travel tickets purchased 6.61 6.61

(7.80) (7.80)

Aero Agencies Limited 6.61 6.61

(7.80) (7.80)

Expense reimbursements by other company

122.23 0.19 122.42

(12.29) (0.24) (12.53)

Kotak Mahindra Investments Limited - -

(0.07) (0.07)


0.19 0.19

(0.17) (0.17)

Expense reimbursements to other company

1,011.28 1.64 1,012.92

(472.82) (6.73) (479.55)


(0.06) (0.06)


(6.67) (6.67)

Reimbursement to Other Company - Employee transfer

12.10 9.03 21.13

(14.22) - (14.22)


- -

Reimbursement by Other Company - Employee transfer

9.92 3.78 13.70

(9.27) (1.18) (10.45)

Kotak Mahindra Investments Limited - -

- -


(1.18) (1.18)

Reimbursement to Other Company - Purchase of Assets

0.52 7.63 8.15

(0.01) - (0.01)



` in lakh


Fellow Subsidiaries



Total


7.63 7.63

- -

Reimbursement by Other Company - Sale of Assets

14.53 7.41 21.94

(0.15) - (0.15)


- -

Guarantees given by KMBL 12.05 12.05

(3.75) (3.75)

Remuneration to key management personnel*

112.91 112.91

(101.27) (101.27)

Vyomesh Kapasi 112.91 112.91

(101.27) (101.27)

* Excludes provision for gratuity and compensated absences, since it is based on actuarial valuation done on an overall basis.

Note: Figures in bracket relates to the previous year

** Includes purchase and sale of NCDs in Secondary Market as follows:

Name of Related Party Particulars of Secondary Market 2013-14 2012-13

Kotak Mahindra Bank Limited Purchase of NCDs 400.00 8,498.30

Sale of NCDs 37,900.00 7,000.00

Kotak Investment Advisors Limited Purchase of NCDs - -

Sale of NCDs - 5,000.00

Kotak Mahindra Old Mutual Life Insurance Ltd Purchase of NCDs 7,500.00 500.00

Sale of NCDs 6,000.00 7,500.00

` in lakh

Note Particulars For the year ended

31 March, 2014

For the year ended

31 March, 2013

27.5 Details of leasing arrangements

Income:- As Lessor / Sub-lessor

27.5a The Company has sublet some of the premises under cancellable operating lease. These are generally cancellable and are renewable by mutual consent on mutually agreaable terms. The lease income is recognised in the Statement of Profit and Loss under Other Income

The lease income recognised in the Statement of Profit and Loss under Other Income 546.00 546.00

The sublease income recognised in the Statement of Profit and Loss under Other Income 10.63 9.12

Expense:- As Lessee



` in lakh


31 March, 2014

For the year ended

31 March, 2013

27.5b The Company has taken various offices under operating lease or leave and license agreements. These are generally cancellable and range between 11 months and 9 years under leave and license agreement and are renewable by mutual consent on mutually agreeable terms.Future minimum lease payments under non-cancellable leasesnot later than one year 14.75 20.17 later than one year and not later than five years - 14.75 later than five years - - Lease payments recognised in the Statement of Profit and Loss 704.04 616.12

` in lakh


31 March, 2014

For the year ended

31 March, 2013

27.6 Earnings per share27.6a Basic

Profit for the year 49,117.61 43,069.96 Less: Preference dividend and tax thereon 11.70 11.70 Profit for the year attributable to the equity shareholders 49,105.91 43,058.26 Weighted average number of equity shares 3,495,200 3,495,200 Par value per share 10.00 10.00 Earnings per share - Basic 1,404.95 1,231.93

27.6b DilutedDiluted EPS is the same as Basic EPS in view of absense of any dilutive potential equity shares.

` in lakh

Note Particulars As at 31 March, 2014


27.7 Deferred tax asset Tax effect of items constituting deferred tax liabilityOn expenditure deferred in the books but allowable for tax purposes 3,190.26 2,770.50 Provision for Mark to Market on embedded options - 175.42

3,190.26 2,945.92 Tax effect of items constituting deferred tax assetsProvision for compensated absences, gratuity and other employee benefits 102.35 114.77 Provision for doubtful debts / advances / standard assets 3,242.15 2,701.46 Disallowances under Section 40(a)(i), 43B of the Income Tax Act, 1961 1.32 1.32 On difference between book balance and tax balance of fixed assets 2,104.24 1,441.90 Provision for interest on debentures 321.45 777.12 Provision for Mark to Market on investments 12.82 453.91 Provision for Mark to Market on embedded options 530.58 - On income amortised in books but taxed on accrual,basis 42.48 76.77 Others 9.73 5.74

6,367.12 5,572.99 Net deferred tax asset 3,176.86 2,627.07

27.8 Interest in joint ventures



The Company has interests in the following jointly controlled entities:

` in lakh

Name of company and country of incorporation

% of shareholding

Amount of interest based on Unaudited Financial Statements - year ended 31 March, 2014

Assets Liabilities Income Expenditure Contingent liabilities

Capital commitments

Kotak Mahindra Old Mutual Life Insurance Limited, India

10.58 132,848.76 121,826.66 39,952.97 37,189.25 90.53 84.43

(10.58) (120,208.00) (111,713.69) (39,566.66) (37,467.38) (121.99) (63.35)

Note: Figures in brackets relate to the previous year

27.9 Details of provisions

The Company has made provision for disputed liabilities relating to customer claims with respect to repossessed vehicles and other matters based on its assessment of the amount it estimates to incur to meet such obligations.

` in lakh

Particulars As at 1 April, 2013

Additions Deletions As at 31 March, 2014

Provision for contingencies 36.97 4.65 11.14 30.48

(-) (36.97) - (36.97)

Note: Figures in brackets relate to the previous year

27.10 Details of Gross Investment, unearned finance income and present value of rentals under Hire Purchase and Lease

` in lakh

31-03-2014 31-03-2013

(a) not later than 1 year 9,185.04 7,938.99

(b) between 1 and 5 years 14,687.00 14,941.04

23,872.04 22,880.03

Unearned Finance Income



4,226.23 4,339.45

Present value of rentals



19,645.81 18,540.58

The company is in the business of vehicle financing. The company enters into finance lease agreements ranging between one to five years.

The accumulated provision for uncollectible minimum lease/hire purchase payments receivable is ` 159.90 lakh (Previous Year ` 16.99 lakh)

28 Equity Settled Options



At the General Meetings of the holding company, Kotak Mahindra Bank Limited, (“the Bank”), the shareholders of the Bank had unanimously passed Special Resolutions on 5th July, 2007 and 21st August, 2007 to grant options to the eligible Employees of the Bank and its subsidiary companies. Pursuant to these resolutions, ‘Kotak Mahindra Equity Option Scheme 2007’ had been formulated and adopted.

Consequent to the above, the Bank has granted stock options to employees of the Company. In accordance with the SEBI Guidelines and the guidance note on “Accounting for Employee Share based payments”, the excess, if any, of the market price of the share, preceding the date of grant of the option under ESOSs over the exercise price of the option is amortised on a straight-line basis over the vesting period. The Company has reimbursed the Bank ` 7.08 lakh (Previous year ` 18.85 lakh) during the year on account of such costs and the same is forming part of Employee costs and included under the head “Reimbursement of expense on ESOP Scheme” under Note 23 Employee benefits expense.

Had the company recorded the compensation cost computed on the basis of Fair Valuation method instead of Intrinsic Value method, employee compensation cost would have been higher by ` 68.46 lakh (Previous year ` 44.30 lakh) and the profit after tax would have been lower by ` 45.19 lakh (Previous year ` 29.93 lakh). On account of the same, the basic and diluted EPS of the company would have been lower by ` 1.29 per share (Previous year ` 0.86 per share).

Stock Appreciation Rights

During the year, the management had approved SARs to be granted to eligible employees as and when deemed fit. The SARs are to be settled in cash and will vest in the manner as provided in the scheme/ grant letters to employees. The contractual life (which is equivalent to the vesting period) of the SARs outstanding ranges from 1.13 to 3.65 years.

Detail of activity under SARs is summarised below:

31-03-2014 31-03-2013

Outstanding at the beginning of the year 13,553 7830

Granted during the year 20,208 18,134

Exercised during the year 15,901 12,411

Expired during the year - -

Forfeited during the year - -

Outstanding at the end of the year 17,860 13,553

Effect of share based payment to employees on the profit and loss account and on its financial position

` in lakh

31-03-2014 31-03-2013

Total Employee Compensation Cost pertaining to share based payment plans 153.25 118.34

Closing balance of liability for cash settled options 77.57 44.51

29.1 Note to the Balance Sheet of a non-banking financial company (as required in terms of paragraph 13 of Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007)

` in lakh

ParticularsLiabilities side: Amount

OutstandingAmountOverdue

(1) Loans and advances availed by the NBFCs inclusive of interest accrued thereon but not paid:(a) Debentures : Secured 914,609 NIL : Unsecured (TierII: Sub-ordinated debts) (Other than falling

within the meaning of Public deposit *)56,027 NIL

(b) Deferred Credits NIL NIL(c) Term Loans 439,051 NIL(d) Inter-corporate loans and borrowing 1,037 NIL(e) Commercial Paper 189,385 NIL(f) Other Loans NIL NIL* Please see Note 1 belowAssets side:



Amount Outstanding(2) Break-up of Loans and Advances including bills receivables [other than those included

in (3) below:](a) Secured 220,151(b) Unsecured 113,165

(3) Break up of Leased Assets and stock on hire and other assets counting towards AFC activities (net of provision)(i) Lease assets including lease rentals under sundry debtors (a) Financial lease 19,646 (b) Operating lease NIL(ii) Stock on hire including hire charges under sundry debtors:

(a) Assets on hire NIL(b) Repossessed Assets NIL

(iii) Other loans counting towards AFC activities (a) Loans where assets have been repossessed 806(b) Loans other than (a) above 1,383,322

(4) Break-up of Investments :Current Investments :1. Quoted : (i) Shares : (a) Equity NIL (b) Preference NIL (ii) Debentures and Bonds 22,863 (iii) Units of mutual funds NIL (iv) Government Securities NIL (v) Others NIL2. Unquoted : (i) Shares : (a) Equity NIL (b) Preference NIL (ii) Debentures and Bonds 16,363 (iii) Units of mutual funds 15,000

(iv) Government Securities NIL (v) Others – Certificate of Deposits NILLong Term investments :1. Quoted : (i) Shares : (a) Equity NIL (b) Preference NIL (ii) Debentures and Bonds 18,503 (iii) Units of mutual funds NIL (iv) Government Securities NIL (v) Others NIL2. Unquoted : (i) Shares : (a) Equity 8,577 (b) Preference NIL (ii) Debentures and Bonds NIL (iii) Units of mutual funds NIL (iv) Government Securities NIL (v) Others – Certificate of Deposits NIL



(` in lakh)

(5) Borrower group-wise classification of assets financed as in (2) and (3) above

Please see Note 2 below

Category Amount net of provisions

Secured Unsecured Total

1. Related Parties **

(a) Subsidiaries NIL NIL NIL

(b) Companies in the same

Group NIL 15,000 15,000

(c) Other related parties NIL NIL NIL

2. Other than related parties 1,619,650 102,440 1,722,090

Total 1,619,650 117,440 1,737,090

(6) Investor group-wise classification of all investments (current and long term) in shares and securities (both quoted and unquoted):

Please see note 3 below

Category Market Value / Break up or fair

value or NAV

Book Value (Net of Provisions)

1. Related Parties **

(a) Subsidiaries NIL NIL

(b) Companies in the same

Group 5,400 5,400

(c) Other related parties NIL NIL

2. Other than related parties 75,906 75,906

Total 81,306 81,306

** As per Accounting Standard of ICAI (Please see Note 3)

(7) Other information

Particulars ` in lakh

(i) Gross Non-Performing Assets

(a) Related parties NIL

(b) Other than related parties 10,711

(ii) Net Non-Performing Assets

(a) Related parties NIL

(b) Other than related parties 5,646

(iii) Assets acquired in satisfaction of debt NIL

Notes:

1. As defined in Paragraph 2(1)(xii) of the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998.

2. Provisioning norms shall be applicable as prescribed in Non-Banking Financial (Non deposit accepting or holding) Companies Prudential Norms (Reserve Bank) Directions, 2007

3. All Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 and Guidance Notes issued by ICAI (also refer Schedule 17 (B)(iii)) are applicable including for valuation of investments and other assets as also assets acquired in satisfaction of debt. However, market value in respect of quoted investments and break up/fair value/NAV in respect of unquoted investments should be disclosed irrespective of whether they are classified as long term or current in column (4) above.



29.2 Disclosures pursuant to Guidelines for NBFC-ND-SI vide circular no NBS(PD).CC.No.125/03.05.002/2008-2009 dated August 1, 2008

(a) CRAR

Items Current Year Previous Year

(i) CRAR (%) 17.70 15.43

(ii) CRAR – Tier I Capital (%) 14.22 11.76

(iii) CRAR – Tier II Capital (%) 3.48 3.67

(b) Exposure to Real Estate Sector

Category Current Year Previous Year

(a) Direct Exposure

(i) Residential Mortgages - - -

Lending fully secured by mortgages on residential property that is or will be occupied by the borrower or that is rented

(ii) Commercial Real Estate -

Lending secured by mortgages on commercial real estates (office buildings, retails space, multipurpose commercial premises, multi-family residential buildings, multi-tenanted commercial premises, industrial or warehouse space, hotels, land acquisition, development and construction, etc).

26,311,955,077 25,034,894,265

(iii) Investments in Mortgage Backed Securities (MBS) and other securitized exposures -

- -

a. Residential

b. Commercial Real Estate

(b) Indirect Exposure

Fund based and non-fund based exposures on National Housing Bank (NHB) and Housing Finance Companies (HFCs)

- -

(c) Asset Liability Management

Maturity Pattern of Certain items of Assets and Liabilities

(` in crores)

1 Day to 30/31

Days (One

Month

Over one

Month to 2

Months

Over 2 Months upto 3

Months


Months


Year

Over 1 Year upto 3 Years

Over 3 Years

upto 5 Years

Over 5 Years

Total

Liabilities

Borrowings from banks 910 375 222 820 1125 1150 - - 4602

Market Borrowings 1126 325 778 1422 3122 3668 194 391 11026

Assets

Advances 2242 1092 1097 2305 3232 6220 1156 27 17371

Investments 155 18 14 50 302 185 3 86 813

Note: In computing the above information certain estimates, assumptions and adjustments have been made by the Management for its regulatory submission which have been relied upon by the Auditors.

29.3 Disclosure pursuant to Circular No. DNBS.PD.CC. No. 256 /03.10.042 / 2011-12 dated March 02, 2012 on Monitoring of frauds, the frauds detected and reported for the year amounted to `.63.44 lakh.



29.4 Details of non performing financial assets purchased

` in crores

Particulars 31-03-2014 31-03-2013

No. of accounts purchased during the year NIL NIL

Aggregate Outstanding (net of provision) NIL NIL

29.5 Assets De-recognised

` in lakh

Securitisation 31-03-2014 31-03-2013

Book value of advances securitised NIL NIL

Number of accounts NIL NIL

Sale consideration received for the accounts securitised NIL NIL

Gain on securitisation amortised 97.19 651.95

Credit enhancement, liquidity support provided NIL NIL

Nature of post securitisation support Collection and paying agent or

servicer

Collection and paying agent or

servicer

31-03-2014 31-03-2013

Assets De-recognised on Assignment of Receivables bilaterally with Banks and Corporates

Nil Nil

` in crores

31-03-2014 31-03-2013No./Amount No./Amount

1 No of SPVs sponsored by the NBFC for securitization transactions - - 2 Total amount of securitised assets as per books of the SPVs - -

sponsored by the NBFC3 Total amount of exposures retained by the NBFC to comply with

MRR as on the date of balance sheeta) Off-balance sheet exposures * First loss - - * Others - - b) On-balance sheet exposures * First loss - - * Others - -

4 Amount of exposures to securitization transactions other than MRRa) Off-balance sheet exposures i) Exposure to own securitisations * First loss - - * loss - - ii) Exposure to third party securitisations * First loss - - * Others - - b) On-balance sheet exposures i) Exposure to own securitisations * First loss - - * Others - - ii) Exposure to third party securitisations * First loss - - * Others - -



` in lakh

29.6 Sr No

Type of Restructuring Other than CDR and SME Debt Restructuring Total

Assets Classification Standard Sub-Standard

Doubtful Loss Total Standard Sub-Standard

Doubtful Loss Total

Details

1 Restructured accounts as on April 1 of FY (Opening Figures) (*)

No of borrowers - - - - - - - - - -

Amount Outstanding

- - - - - - - - - -

Provision there on - - - - - - - - - -

2 Fresh Restructuring during the year

No of borrowers - 1 - - - - 1 - - -

Amount Outstanding

- 139.12 - - - - 139.12 - - -

Provision there on - 20.87 - - - - 20.87 - - -

3 Upgradations to restructured standard category during the FY

No of borrowers - - - - - - - - - -

Amount Outstanding

- - - - - - - - - -


4 Restructured standard advances which cease to attract higher provisioning and / or additional risk weight at the end of the FY and hence need not be shown as restructured standard advances at the beginning of the next FY.

No of borrowers - - - - - - - - - -

Amount Outstanding

- - - - - - - - - -


5 Downgradation of restructured accounts during the FY

No of borrowers - - - - - - - - - -

Amount Outstanding

- - - - - - - - - -


6 Write off of restructured accounts during the FY

No of borrowers - - - - - - - - - -

Amount Outstanding

- - - - - - - - - -


7 Restructured accounts as on March 31 of the FY (Closing Figures) (*)

No of borrowers - 1 - - - - 1 - - -

Amount Outstanding

- 139.12 - - - - 139.12 - - -

Provision there on - 20.87 - - - - 20.87 - - -

(*) Excluding the figures of Standard Restructured Advances which do not attract higher provisioning or risk weight (if applicable)

Note: Previous year figures are not given as the above requirement is effective 23rd January, 2014.



Note 30 Disclosures under Listing Agreement for Debt Securities

30.1 Disclosure under clause 2A of the Listing Agreement for Debt Securities

Debenture Trustees:

IDBI Trusteeship Services Ltd. Asian Building, Ground Floor 17, R. Kamani Marg, Ballard Estate, Mumbai - 400 001 Tel. : 022-40807000 Fax : 022-66311776 / 40807080 Email : [email protected]

30.2 Disclosure under clause 16 of the Listing Agreement for Debt Securities

The Debentures are secured by way of a first and pari passu mortgage in favour of the Security Trustee on the Company’s immovable property of ` 18.07 lakh and further secured by way of hypothecation/mortgage of charged assets such as receivables arising out of loan, lease, book debts, current assets and investments (exluding strategic investments of the Company which is in the nature of equity shares and mutual fund units) with an asset cover ratio of minimum 1.00 times value of the debentures during the tenure of the debentures.

30.3 Disclosure under clause 28 of the Listing Agreement for Debt Securities

` in lakh

31-03-2014 3/31/2013

Loans and advances in the nature of loans to subsidiaries - -

Loans and advances in the nature of loans to associates - -

Loans and advances in the nature of loans where there is -

(i) no repayment schedule or repayment beyond seven years - -

(ii) no interest or interest below section 372A of Companies Act - -

Loans and advances in the nature of loans to firms/companies in which directors are interested - -

Note 31 Previous year’s figures

31 Comparative financial information is presented in accordance with the ‘Corresponding Figure’ financial reporting framework set out in Auditing and Assurance Standard on Comparatives. Accordingly, amounts and other disclosures for the preceding year are included as an integral part of the current year financial statements, and are to be read in relation to the amounts and other disclosures relating to the current year. Figures of the previous year have been regrouped / reclassified wherever necessary to correspond with the figures of the current financial year.


Dipak GuptaDirector




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