04 kotak mahindra prime ltd_9

7/28/2019 04 Kotak Mahindra Prime Ltd_9

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ANNUAL REPORT 2008 - 2009

ThePath of

Prudence

Kotak Mahindra Prime Limited


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Kotak Maindra Pr ime Limited 1

Directors Report

To te Members o

Kotak Mahindra Prime Limited

Te Directors present teir Tirteent Annual Report togeter wit audited accounts o your Company or te year ended 31st Marc 2009.

1. FINANCIAL RESULTS

Rupees in Laks

31st March

2009

31st Marc

2008

Gross Income 98220.87 73997.32

Prot beore Depreciation and Tax 24516.26 15637.29

Depreciation 194.91 174.06

Prot beore Tax 24321.35 15463.23

Provision or Tax 8621.44 5401.10Prot ater Tax 15699.91 10062.14

Balance o Prot rom previous years 17370.58 9320.87

Amount available or appropriation 33070.49 19383.01

Appropriations:

Special Reserve u/s 45IC o te RBI Act, 1934 3139.98 2012.43

Surplus carried orward to te Balance Seet 29930.51 17370.58

2. DIVIDEND

Wit a view to conserve your Companys resources, te Directors do not recommend any Dividend (Previous Year: Nil).

3. DEBENTURES

Pursuant to circulars issued by te Securities and Excange Board o India and te Reserve Bank o India, te Company as listed all debentures

issued, aving maturity o greater tan 364 days on te Bombay Stock Excange Limited under a Inormation Memorandum. Te Company as

appointed M/s. IDBI Trusteesip Services Limited, Asian Building, Ground Floor, 17R Kamani Marg, Ballard Estate, Mumbai 400 001 as Debenture

Trustees to te issues.

4. CAPITAL ADEQUACY

Te Capital to Risk Assets Ratio (CRAR) o your Company as on 31st Marc 2009 was at 15.54%.

5. CREDIT RATING

Te Companys sort-term borrowing program rom CRISIL, continued to enjoy te igest rating o P1+. Te long-term borrowings are rated

by ICRA Limited and continue to be rated LAA. ICRAs assessment o your Companys risk prole strengtens te condence placed by a large

pool o investors in your Company. Furter te Tier II Subordinated Debts are dual rated also by CRISIL wit a rating o AA.

P1+ indicates very strong degree o saety wit regard to timely payment o interest and principal. LAA indicates ig credit quality and low credit

risk. AA indicates ig degree o saety wit regard to timely payment o nancial obligations.

6. FINANCE

Your Company continued its strategy o diversied unding. Te Company introduced new investors and borrowed troug fexible instruments

like MIBOR linked Debentures, Securitization/Assignment transactions, etc. Your Company also made use o derivative products like interest

rate swaps to manage its Asset/Liability GAP and optimize borrowings costs. Your Company also sored up its Capital Adequacy troug

issue o Tier II Subordinated bonds/debentures. During Financial Year 2008-09 te trends in te nancial markets witnessed a dynamic interest

rate environment and liquidity especially due to te atermat o collapse o leading global rms. Your Company wit its establised treasury

pilosopies and practices is well geared to meet te callenges o a dynamic interest rate and liquidity environment.

BOARD OF DIRECTORS: MR. UDAY KOTAK (C), MR. DIPAK GUPTA, MR. C. JAYARAM, MS. ShANTI EKAMBARAM, MR. MOhAN ShENOI,

MR. JAIMIN BhATT, MR. ARVIND KAThPALIA


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2 Kotak Maindra Pr ime Limited

7. MANAGEMENT DISCUSSION AND ANALYSIS

Company Business

Your Company is into car nance, engaged in nancing o retail customers o passenger cars and multi-utility veicles and inventory and term

unding to car dealers. Your Company nances new and used cars under retail loan, ire purcase and lease contracts.Te main streams o income or your Company are retail income, dealer nance income and ee based income. Te Company also receives

income rom loans against securities, securitization/assignment transactions, purcase o non perorming assets, personal loans, corporate loans

and developer unding. Te major expenses or your Company are interest expense, business sourcing expense and cost o running operations.

During te Financial Year 2008-09, your Companys retail veicle disbursements were at Rs. 2,431 crores as against Rs. 2,903 crores in te

previous year. During te year under review, gross advances stood at Rs. 5,615 crores as against Rs. 5,925 crores in te previous year.

Te Financial Year 2008-09 witnessed volatile interest and increased interest rates being carged to te car nance customer. Te pressure

continued on maintaining te margins in te retail car nance business. Your Company continued to ocus on control over cost and credit losses,

wile maintaining its positioning in te car nance market. Your Company also maintained its good relationsips across car manuacturers,

dealers and cannel partners in te country.

As detailed in te Financial Results section above, Gross Income o your Company increased rom Rs. 73,997.32 laks in 2007-08 to

Rs. 98,220.87 laks in 2008-09. Prot beore Tax was at Rs. 24,321.35 laks in 2008-09 as compared to Rs. 15,463.23 laks in 2007-08, an

increase o 57%. Te credit loss ratio o your Company as been consistently maintained in te range o 0.33% to 0.69% over te last tree

years in te car nance business.

Tere ave been certain instances o misappropriation o veicles or use o deception to obtain veicle loans by some o te customers involving

an aggregate amount o Rs. 149.31 laks, also reported in annexure to auditors report. Te said instances are inerent in te nature o business

o te Company and adequate provision in respect tereo as been made in te accounts or te year.

Your Company as also selectively expanded in some oter nancing opportunities available to te Non Banking Financial Sector, wile keeping

te core ocus on car nancing.

Industry Scenario

Te passenger car market in India saw a de-growt o 1.7% or te Financial Year 2008-09 as compared to a growt o 11% or 2007-08. Total

unit sales o cars and MUVs crossed 14.92 lak units in Financial Year 2008-09.

Prospects

Your Company as, carved out a nice or itsel in te car-nancing segment ocusing on distribution and relationsip management across

manuacturers, dealers, cannel partners and customers. Fee based income is an important initiative o your Company. Dedicated inrastructure

is in place to give a urter impetus to te growt o ee based income wit a twin objective o oering value added services to customers and

leveraging te large existing customer database to generate urter ee based income.

Customer knowledge, easy accessibility troug its wide network o brances and a rm commitment to deliver superior customer service are key

drivers or your Companys perormance.

Internal Controls

Te Internal Control department o Kotak Maindra Bank Limited regularly conducts a review to assess te nancial and operating controls at

various locations o your Company including head Oce unctions and at brances. Reports o te audits conducted by te Internal Control

department are presented to te Audit Committee. Representatives o te statutory auditors are permanent invitees to te Audit Committee.

Human ResourcesTe Company is proessionally managed wit key management personnel aving relatively long tenure wit te Company. Your Company ollows

a policy o building strong teams o talented proessionals. Your Company encourages and acilitates long term careers wit your Company

troug careully designated management development programs and perormance management systems.

Inormation Technology

Your Company uses te operating system CORE wic is owned and managed by Kotak Maindra Bank Limited and is used or its retail assets

division since 2003 and uses ORACLE as its Financial system. Te CORE system as te latest tecnology platorm and also as capacity to scale

based on business requirements. Te modular nature o te system supports eciency in operations coupled wit strong systems and operational

controls. Te system is robust to cater to ecient customer service and support marketing initiatives at reasonable cost.


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Cautionary Note

Certain statements in te Management Discussion and Analysis section may be orward-looking and are stated as may be required by applicable

laws and regulations. Many actors may aect te actual results, wic could be dierent rom wat te Directors envisage in terms o uture

perormance and outlook. Your Company does not undertake to update tese statements.

8. DIRECTORS

Mr. Uday Kotak and Mr. C. Jayaram, retire by rotation at te ortcoming Annual General Meeting and being eligible, ave oered temselves or

re-appointment.

Mr. Sivaji Dam resigned as a Director o te Company wit eect rom 12t May 2008, consequent to te witdrawal o is nomination by

Kotak Maindra Bank Limited, te Companys olding company.

Mr. Candrasekar Sate resigned as a Director o te Company wit eect rom 15t April 2009. Te Board o Directors appointed Mr. Arvind

Katpalia as a Director o te Company wit eect rom 16t April 2009 in te casual vacancy caused by te resignation o Mr. Sate.

Mr. Katpalia is currently te Group head Risk o Kotak Maindra Bank Limited and as been associated wit te Kotak Group since 2003.

Your Directors place on record teir appreciation or te valuable advice and guidance rendered by Mr. Sivaji Dam and Mr. Candrasekar

Sate during teir tenure as Directors o te Company.

9. EXECUTIVE MANAGEMENT

Mr. Sumit Bali is te Manager and Cie Executive Ocer o your Company. Mr. Sudakar Sanbag was te Cie Operating Ocer o your

Company till 30t September 2008 and as subsequently moved to Kotak Maindra Bank Limited.

10. COMMITTEES

(a) AUDIT COMMITTEE

Te Audit Committee was reconstituted by te Board on 16t April 2009. Te reconstituted Audit Committee consists o Mr. Dipak Gupta,

Mr. Jaimin Batt and Mr. Arvind Katpalia. Te Quorum comprises o any two members.

Te First Tier Audit Committee constituted by te Board comprises o Mr. Vikram Sud, Mr. Sumit Bali, Mr. haris Sa and Ms. Suman

Sidana. Te Committee screens te matters entrusted to te Audit Committee and also te routine matters suc as overseeing te

programme o inspections and compliance o inspection reports.

(b) REMUNERATION COMMITTEE

Te Remuneration Committee consists o Mr. Dipak Gupta and Mr. C. Jayaram and as been ormed to approve te remuneration payable

to te Wole-time Director/Manager o te Company, as required under te amended Part II in Section II o Scedule XIII o te Companies

Act, 1956.

(c) NOMINATION COMMITTEE

Te Nomination Committee consists o Mr. Uday Kotak, Mr. Dipak Gupta and Mr. C. Jayaram.

(d) COMMITTEE OF THE BOARD OF DIRECTORS

Te Committee o te Board o Directors was reconstituted by te Board on 16t April 2009. Te reconstituted Board Committee consists o

Mr. Dipak Gupta, Mr. C. Jayaram and Mr. Arvind Katpalia. Te Quorum comprises o any two members.

(e) RISK MANAGEMENT COMMITTEE

Te Risk Management Committee was reconstituted by te Board on 29t October 2008 and 16t April 2009. Te reconstituted Risk

Management Committee consists o Mr. Arvind Katpalia, Mr. Sumit Bali, Ms. Suman Sidana and Mr. haris Sa. Te Quorum comprises o

any tree members.

() ASSET LIABILITY COMMITTEE (ALCO)

Te ALCO was reconstituted by te Board on 16t April 2009. Te reconstituted ALCO consists o Mr. Moan Senoi, Mr. Arvind Katpalia,

Mr. Sumit Bali and Ms. Suman Sidana. Te Quorum comprises o any two members. Members o ALCO meet every mont to discuss various

issues or te eective management o te assets and liabilities o te Company.


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11. AUDITORS

Te Companys auditors Messrs. Deloitte haskins & Sells, Cartered Accountants, Baroda, retire at te Tirteent Annual General Meeting.

Messrs. Deloitte haskins & Sells, Cartered Accountants, Baroda, ave consented to act as Auditors o te Company and are eligible or

reappointment.

12. STATUTORY INFORMATION

Te particulars o employees as required under Section 217(2A) o te Companies Act, 1956, read wit te Companies (Particulars o Employees)

Rules, 1975, is annexed.

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

31st Marc 2009.

Your Companys oreign excange outgo was Rs. Nil. It ad no oreign excange earnings. Te oter particulars prescribed under te Companies

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

13. DIRECTORS RESPONSIBILITY STATEMENT

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

tat:

(i) te Company as, in te preparation o te annual accounts or te year ended 31st Marc 2009, ollowed te applicable accounting

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

(ii) te Directors ave selected suc accounting policies and applied tem consistently and made judgements and estimates tat are reasonable

and prudent so as to give a true and air view o te state o aairs o te Company as at 31st Marc 2009 and o te prot o te

Company or te nancial year ended 31st Marc 2009;

(iii) te Directors ave taken proper and sucient care to te best o teir knowledge and ability, or te maintenance o adequate accounting

records in accordance wit te provisions o te Act or saeguarding te assets o te Company and or preventing and detecting raud and

oter irregularities; and

(iv) te Directors ave prepared te annual accounts on a going concern basis.

14. ACKNOWLEDGEMENT

Te Directors tank te sareolders, dealers and teir sta or te strong support tat tey ave continued to extend to your Company.

Te Board also takes tis opportunity to place on record its appreciation o te outstanding perormance and dedication o your Companys

employees at all levels, witout wose commitment, te acievement o results as indicated above could not ave been possible. Te Board also

acknowledges te ait reposed in te Company by te Companys lending institutions.

For and on beal o te Board o Directors

Uday Kotak Place : Mumbai

Cairman Date : 29t April 2009


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To the Members o Kotak Mahindra Prime Limited

1. We ave audited te attaced Balance Seet o Kotak Maindra Prime Limited as at 31st Marc, 2009, and also te Prot and Loss Account

and te cas fow statement or te year ended on tat date annexed tereto. Tese nancial statements are te responsibility o te companys

management. Our responsibility is to express an opinion on tese nancial statements based on our audit.2. We conducted our audit in accordance wit te auditing standards generally accepted in India. Tose standards require tat we plan and perorm

te audit to obtain reasonable assurance about weter te nancial statements are ree o material misstatement. An audit includes examining,

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

principles used and signicant estimates made by management, as well as evaluating te overall nancial statement presentation. We believe tat

our audit provides a reasonable basis or our opinion.

3. As required by te Companies (Auditors Report) Order, 2003 issued by te Central Government o India in terms o sub-section (4A) o

Section 227 o te Companies Act, 1956 and on te basis o suc cecks o te books and records o te company as we considered appropriate

and according to te inormation and explanations given to us, we give in te Annexure a statement on te matters specied in paragraps 4 and

5 o te said Order.

4. Furter to our comments in te Annexure reerred to above, we report tat:

(a) We ave obtained all te inormation and explanations, wic to te best o our knowledge and belie were necessary or te purposes o

our audit;

(b) In our opinion, proper books o account as required by law ave been kept by te company so ar as appears rom our examination o tose

books;

(c) Te balance seet, prot and loss account and cas fow statement dealt wit by tis report are in agreement wit te books o account;

(d) In our opinion, te balance seet, prot and loss account and cas fow statement dealt wit by tis report comply wit te accounting

standards reerred to in sub-section (3C) o Section 211 o te Companies Act, 1956;

(e) On te basis o written representations received rom te directors, as on 31st Marc, 2009 and taken on record by te Board o Directors,

we report tat none o te directors is disqualied as on 31st Marc, 2009 rom being appointed as a director in terms o clause (g) o

sub-section (1) o Section 274 o te Companies Act, 1956;

() In our opinion and to te best o our inormation and according to te explanations given to us, te said accounts give te inormation

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

generally accepted in India:

(i) in te case o te balance seet, o te state o aairs o te company as at 31st Marc, 2009;

(ii) in te case o te prot and loss account, o te prot or te year ended on tat date; and

(iii) in te case o te cas fow statement, o te cas fows or te year ended on tat date.

For Deloitte Haskins & Sells

Cartered Accountants

R. Salivati

Partner Place : Mumbai

Membersip Number: 34004 Date : April 29, 2009

u tors eport


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Annexure to the Auditors Report reerred to in paragraph 3 o our Report o even date to the Members o Kotak Mahindra Prime

Limited on the accounts or the year ended 31st March, 2009.

1. (a) Te company as maintained proper records sowing ull particulars, including quantitative details and situation o its xed assets.

(b) Te xed assets o te company ave been pysically veried by te Management during te year. In our opinion, te requency o

verication is reasonable. No material discrepancies were noticed between book records and pysical inventory.

(c) In our opinion, te company as not disposed o a substantial part o its xed assets during te year.

2. (a) According to te inormation and explanations given to us, te company as not granted any loans, secured or unsecured, to Companies

covered in te register maintained under Section 301 o te Companies Act, 1956.

In view o wat as been stated above, clause (iii)(b) regarding terms and conditions o suc loans, clause (iii)(c) regarding receipt o principal

amount and interest and clause (iii)(d) regarding steps or recovery o overdue amount o Para 4 o te Order are not applicable to te

company or te year.

(b) According to te inormation and explanations given to us, te company as taken unsecured loan rom a company covered in te

register maintained under Section 301 o te Companies Act, 1956. At te year-end, te outstanding balance o suc loan taken was

Rs. 21,623.78 laks and te maximum amount involved during te year was Rs. 46,325.31 laks.

(c) In our opinion, te rate o interest and oter terms and conditions o suc loan taken rom te said company covered in te register

maintained under Section 301 o te Companies Act, 1956 are not, prima acie, prejudicial to te interest o te company.

(d) Te payments o principal amounts and interest in case o te aoresaid loan are as per stipulations.

3. In our opinion and according to te inormation and explanations given to us, tere is an adequate internal control system commensurate

wit te size o te company and te nature o its business wit regard to purcase o xed assets and or te sale o goods and services. Te

company does not purcase inventory nor does it sell any goods (oter tan repossessed automobile assets) in te ordinary course o business.

Furter on te basis o our examination o te books and records o te company, and according to te inormation and explanations given to

us, we ave neiter come across nor ave been inormed o any continuing ailure to correct major weaknesses in te aoresaid internal control

system.

4. (a) In our opinion and according to te inormation and explanations given to us, te particulars o contracts or arrangements tat need to be

entered in te register in pursuance o Section 301 o te Companies Act, 1956 ave been so entered.

(b) According to te inormation and explanations given to us, in respect o transactions made in pursuance o contracts or arrangements

entered in te register maintained under Section 301 o te Companies Act, 1956 and exceeding te value o Rs. 500,000 or more in

respect o any party during te year ave been made at prices wic are reasonable aving regard to prevailing market prices at te relevant

time.

5. According to te inormation and explanations given to us, te company as not accepted any deposits rom te public during te year.

6. In our opinion, te company as an internal audit system commensurate wit its size and te nature o its business.

7. (a) According to te books and records as produced and examined by us, in accordance wit generally accepted auditing practices in India and

as per te inormation and explanations given to us, undisputed statutory dues in respect o provident und, employees state insurance,

income tax, sales tax, wealt tax, service tax, cess and oter material statutory dues as applicable, ave been regularly deposited by te

company during te year wit te appropriate autorities.

(b) According to te inormation and explanations given to us and te records o te company examined by us, tere are no undisputedamounts in respect o sales tax, income tax, wealt-tax, service tax and cess tat were in arrears as at 31st Marc, 2009 or a period o more

tan six monts rom te date tey became payable.

(c) According to te inormation and explanations given to us and te records o te company examined by us, tere are no dues in respect o

sales tax, income tax, wealt-tax, service tax and cess wic ave not been deposited on account o any dispute as at 31st Marc, 2009.

8. Te Company does not ave accumulated losses at te end o te nancial year. Te Company as not incurred cas losses during te nancial

year covered by te audit and in te immediately preceding nancial year.

9. According to te books and records and as per te inormation and explanations given to us, te company as not deaulted in repayment o

dues to any nancial institution, bank or debenture olders during te year.


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10. In our opinion, te Company as maintained adequate documents and records were it as granted loans and advances on te basis o security

by way o pledge o sares and oter securities.

11. Based on our examination o te records and evaluation o te related internal controls, te company as maintained proper records o

transactions and contracts in respect o its dealing in sares, securities, debentures and oter investments and timely entries ave been madeterein. Te aoresaid securities ave been eld by te company in its own name, except to te extent o te exemption granted under

Section 49 o te Companies Act, 1956.

12. According to te inormation and explanations given to us, te company as not given any guarantee or te loans taken by oters rom banks or

nancial institutions during te year.

13. In our opinion and according to te inormation and explanations given to us, term loans were applied or te purpose or wic tey were

obtained. Pending utilisation o te term loan or te stated purpose, te unds were temporarily used or te purpose oter tan or wic te

loans were sanctioned but were ultimately utilised or te stated end-use.

14. On te basis o review o Asset/Liability Gap Analysis report, giving utilisation o unds on overall basis and te related inormation made available

to us and as per te explanations given to us, we report tat unds raised on sort term basis ave, prima acie, not been used during te year or

long term investment.

15. Te Company as not made any preerential allotment o sares to parties and companies covered in te Register maintained under Section 301

o te Companies Act, 1956 during te year. Accordingly, te provisions o clause 4(xviii) o te Companies (Auditors Report) Order, 2003 are not

applicable to te Company.

16. Te company as issued only unsecured debentures and ence te question o creation o security/carges does not arise. however, unsecured

debentures are covered by a negative lien on specied receivables under auto nance.

17. Te company as not raised any money by public issue during te year.

18. During te course o our examination o te books o account carried out in accordance wit te generally accepted auditing standards in India

and as per te inormation and explanations given to us, we ave not come across any instance o raud, eiter noticed or reported during te

year, on or by te company, except tat tere ave been instances o misappropriation o veicles or use o deception to obtain veicle loans by

some o te customers involving an aggregate amount o Rs. 149.31 laks. however, as inormed to us, suc instances are inerent in te nature

o business o te company and adequate provision in respect tereo as been made in te accounts or te year.

19. As per te inormation and explanations given to us and taking into consideration te nature o te business o te company, clauses 4(ii), 4(viii)

and 4(xiii) o paragrap 4 o te Order are not applicable to te company or te year.


Cartered Accountants

R. Salivati

Partner Place : Mumbai

Membersip Number: 34004 Date : April 29, 2009


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Balance Sheet as at 31st March, 2009

Scedule Rupees in lakhs

As at

31st March, 2009

Rupees in lakhs Rupees in laks

As at

31st Marc, 2008

Rupees in laks

SOURCES OF FUNDS

Shareholder's FundsSare Capital 1 326.19 326.19

Reserves and Surplus 2 86,165.35 70,465.44

86,491.54 70,791.63

Loan Funds

Secured Loans 3 8,500.00

Unsecured Loans 4 474,774.37 483,274.37 528,763.56 528,763.56

Total 569,765.91 599,555.19

APPLICATION OF FUNDS

Fixed Assets 5

(including Capital work in progress)

Gross Block 829.33 955.90

Less: Depreciation 522.24 462.26Net Block 307.09 493.64

Capital Work in Progress 2,584.56 2,242.56

2,891.65 2,736.20

Investments 6 8,103.06 6,839.82

Deerred Tax 7

Deerred tax asset 3,960.15 4,490.69

Less: Deerred tax liability 1,388.58 1,615.41

2,571.57 2,875.28

Current Assets, Loans and Advances 8

Cas and Bank Balances 7,568.72 22,006.29

Receivables under Financing Activity 557,133.41 590,256.66

Oter Loans and Advances 27,603.11 11,314.26

592,305.24 623,577.21

Less: Current Liabilities and Provisions

Liabilities 9 32,732.10 33,818.13

Provisions 10 3,373.51 2,655.19

36,105.61 36,473.32

Net Current Assets 556,199.63 587,103.89

Total 569,765.91 599,555.19

Signicant Accounting Policies and Notes to te Accounts 17

Scedules reerred to above orm an integral part o te Balance Seet

As per our attaced report o even date For and on beal o te Board o Directors


Cartered Accountants Shanti Ekambaram

Director

Jaimin Bhatt

Director

R. SalivatiPartner Harish ShahMembersip No. 34004 Company Secretary

Mumbai

Dated: April 29, 2009


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Prot and Loss Account or the year ended 31st March, 2009

Scedule

Year ended

31st March, 2009

Rupees in lakhs

Year ended

31st Marc, 2008

Rupees in laks

INCOME

Income rom Operations 11 98,775.84 71,799.07

Oter Income 12 (554.97) 2,198.25

Total 98,220.87 73,997.32

EXPENDITURE

Payments to Employees 13 2,814.47 2,867.79

Interest and Finance carges 14 52,711.21 41,007.76

Administrative and oter expenses 15 10,743.28 11,263.42

Provisions/Write os or Non-Perorming/Oter Assets 16 7,435.65 3,221.06

Depreciation 194.91 174.06

Total 73,899.52 58,534.09

Net Prot beore tax 24,321.35 15,463.23

Provision or taxation

Current Tax 8,284.52 6,971.02

Deerred Tax (Previous year gure includes Rs. 191.63 laks credit or earlier year) 303.71 (1,840.64)

Fringe Benet tax 44.00 52.00

Taxation adjustment o previous years (10.79) 218.71

Net Prot ater tax 15,699.91 10,062.14

Prot brougt orward rom previous year 17,370.58 9,320.87

33,070.49 19,383.01

Appropriations

Special Reserve u/s 45 IC o te RBI Act, 1934 3,139.98 2,012.43

Surplus carried to Balance Seet 29,930.51 17,370.58

Total 33,070.49 19,383.01

Earnings per sare (Reer Note No. II(h) o Scedule 17)

Basic and Diluted 481.31 323.03

Signicant Accounting Policies and Notes to te Accounts 17

Scedules reerred to above orm an integral part o te Prot and Loss Account

As per our attaced report o even date For and on beal o te Board o Directors



Director

Jaimin Bhatt

Director


Mumbai



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10 Kotak Maindr a Prime Limite d

Cash Flow statement or the year ended 31st March, 2009

Rupees in lakhs2008-09

Rupees in lakhs

Rupees in laks2007-08

Rupees in laks

Cash fows rom operating activitiesNet prot beore taxation 24,321.35 15,463.23Add/(Less): Adjustment or

Depreciation 194.91 174.06Prot on sale o investments (241.06) (216.48)Loss/(Prot) on sale o assets 108.54 (12.75)Provision or gratuity and compensated absences (25.90) (21.67)Provision or doubtul debts, receivables and advances 2,086.77 763.82Provision or standard assets (18.08) 795.63Provision or M to M on derivatives (7.73)Operating prot beore working capital changes 26,426.53 16,938.11Decrease/(Increase) in Receivables under Financing Activity 31,044.91 (181,703.34)Increase in Loans and Advances (15,579.37) (3,650.95)Increase in Current Liabilities (1,086.02) 13,452.68Cash used in operations 40,806.05 (154,963.50)Income Tax/Frimge Benet Tax paid (net o reunds) (8,273.35) (6,576.59)

Net cash used in operating activities A 32,532.70 (161,540.09)

Cash fows rom investing activitiesPurcase o Fixed assets (551.86) (1,291.13)Sale o Fixed assets 92.95 42.95Purcase o Investments (668,493.19) (1,313,939.72)Sale o Investments 667,471.01 1,316,631.85Net cash (used in)/rom investing activities B (1,481.09) 1,443.95

Cash fows rom nancing activities(Decrease)/Increase in deep discount debentures (7,611.46) 28,782.12(Decrease)/Increase in Unsecured Non-convertible debentures (58,308.73) 85,160.00(Decrease)/Increase in Sort Term Borrowings (48,771.29) 73,066.51Increase/(Decrease) in oter Loans and Advances 69,202.30 (17,574.46)Issue o Sares/Premium on sares and debentures 5,001.14Net cash rom nancing activities C (45,489.18) 174,435.31

Net increase in cash and cash equivalents A+B+C (14,437.57) 14,339.17Cash and cash equivalents at the beginning o the year 22,006.29 7,667.12

Cash and cash equivalents at the end o the year 7,568.72 22,006.29Notes:

1. Cas and cas equivalents include:

Cas on hand 775.37 237.32Bank balances Current Account 2,927.16 19,972.15Bank balances Fixed Deposits (Reer Note No. 3) 3,866.19 1,796.82

Total cas and cas equivalents 7,568.72 22,006.29

(From te current year, book overdrat as been disclosed under Unsecured Loans)

2. Te Cas Flow Statement as been prepared under te Indirect Metod as set out in te Accounting Standard 3 on Cas Flow Statementsissued by te Institute o Cartered Accountants o India.

3. Te above includes Rs. 8.79 laks (Previous year Rs. 9.19 laks) lodged wit government departments, Rs. 1,724.23 laks (Previous yearRs. 1,645.17 laks) wit a bank as credit collateral and Rs. 133.16 laks (Previous year Rs. 142.46 laks) as liquidity acility on assignment oreceivables.

4. Te previous years gures ave been regrouped werever necessary in order to conorm to tis years presentation.

Tis is te Cas Flow Statement reerred to in our report o even date. For and on beal o te Board o Directors



Director

Jaimin Bhatt

Director


Mumbai



13/46


Schedules Forming Part o the Balance Sheet

31st March, 2009

Rupees in lakhs

31st Marc, 2008

Rupees in laks

Schedule 1 Share Capital

Authorised

3,500,000 (Previous year 3,500,000) Equity Sares o Rs. 10/- eac 350.00 350.00

500,000 (Previous year 500,000) Preerence Sares o Rs. 10/- eac 50.00 50.00

400.00 400.00

Issued and subscribed

3,261,900 (Previous year 3,261,900) equity sares o Rs. 10/- eac ully paid up 326.19 326.19

Total 326.19 326.19

Notes:

O te above:

(i) 1,782,600 sares are eld by Kotak Maindra Bank Limited, te olding company along wit its nominees.

(ii) 1,479,300 (Previous year 1,443,300) sares are eld by Kotak Securities Limited, a subsidiary o te olding company.

(iii) NIL (Previous year 36,000) sares are eld by Kotak Maindra Asset Management Company Limited, a subsidiary o te olding company.(iv) 1,971,000 sares are allotted as ully paid up pursuant to conversion o ully convertible debentures.

Rupees in lakhs

31st March, 2009

Rupees in lakhs

31st Marc, 2008

Rupees in laks

Schedule 2 Reserves and Surplus

Securities Premium Account

As per last Balance Sheet 48,294.37 43,318.72

Add: Amount received during te year 4,975.65

48,294.37 48,294.37

Special Reserve u/s 45 IC o the RBI Act, 1934

As per last Balance Seet 4,617.95 2,605.52

Add: Transerred rom Prot and Loss Account 3,139.98 2,012.43

7,757.93 4,617.95

General Reserve

As per last Balance Seet 182.54 182.54

Surplus in Prot and Loss Account 29,930.51 17,370.58

Total 86,165.35 70,465.44

Note Rupees in lakhs31st March, 2009

Rupees in lakhs31st Marc, 2008

Rupees in laks

Schedule 3 Secured Loans

Loans and Advances

Term Loans rom Banks 1 8,500.00

Total 8,500.00

Note:

Term Loans rom banks are secured by way o ypotecation o receivables arising out o loan, lease and ire purcase, book debts and oter current

assets.


14/46


Schedules Forming Part o the Balance Sheet (Contd.)

Notes Rupees in lakhs

31st March, 2009

Rupees in lakhs

31st Marc, 2008

Rupees in laks

Schedule 4 Unsecured Loans

Unsecured Reedemable Non-Convertible Debentures 1 263,920.00 326,700.00

Unsecured Index Linked Debentures 1 & 2 4,250.00 4,250.00

Less: Unamortised Discount 78.73

4,171.27 4,250.00

Unsecured Reedemable Non-Convertible Debentures

Subordinated Debts 4 8,910.00 4,360.00

Deep Discount Debentures 1 & 3 36,480.00 45,450.00

Less: Discount not written o 1,043.28 2,401.82

35,436.72 43,048.18

Sort Term Loans:

From Banks 5 18,500.00 49,573.35

Commercial Paper 47,500.00 62,125.00

Less: Discount not written o 925.12 1,872.67

(Maximum amount outstanding during te year

Rs. 1,167,000 laks, Previous year Rs. 62,125 laks)

46,574.88 60,252.33

Inter Corporate Deposits 1,000.00

Oter Loans and Advances:

From Banks 5 95,091.43 34,208.75

hire Purcase/Loan/Lease deposits 146.75 327.14

(Including matured and unclaimed Rs. 15.79 laks,

Previous year Rs. 27.95 laks)

Book Overdrat rom Bank 1,023.32 6,043.81

Total 474,774.37 528,763.56

Notes:

1. Te Debentures are redeemable at par. Te Non-Convertible Debentures, Index Linked Debentures and Deep Discount Debentures are secured byway o a pari passu mortgage and carge in avour o te Debenture Trustees on te Companys immoveable property amounting to

Rs. 18.07 laks and urter covered by a negative lien to te extent o Rs. 267,250 laks (Previous year Rs. 250,900 laks) on specied receivables

under auto nance o te Company.

Te details o Unsecured Reedemable Non-convertible Debentures are as under:

Description As at

31st March, 2009

Rupees in lakhs

As at

31st Marc, 2008

Rupees in laks

Earliest

Put/Call Option

Date

Redemption

Date

100 debentures o Rs. 1,000,000 eac 1,000.00 03-04-2008
















15/46



Description As at

31st March, 2009

Rupees in lakhs

As at

31st Marc, 2008

Rupees in laks

Earliest

Put/Call Option

Date

Redemption

Date

80 debentures o Rs. 1,000,000 eac 800.00 28-04-2008

250 debentures o Rs. 1,000,000 eac 2,500.00 02-05-2008500 debentures o Rs. 1,000,000 eac 5,000.00 02-05-2008












































16/46



Description As at

31st March, 2009

Rupees in lakhs

As at

31st Marc, 2008

Rupees in laks

Earliest

Put/Call Option

Date

Redemption

Date































60 debentures o Rs. 1,000,000 eac 600.00 600.00 06-04-2009


100 debentures o Rs. 2,500,000 eac 2,500.00 2,500.00 10-04-2009













17/46



Description As at

31st March, 2009

Rupees in lakhs

As at

31st Marc, 2008

Rupees in laks

Earliest

Put/Call Option

Date

Redemption

Date


400 debentures o Rs. 1,000,000 eac 4,000.00 20-05-2009 21-05-2009100 debentures o Rs. 2,500,000 eac 2,500.00 2,500.00 25-05-2009


150 debentures o Rs. 1,000,000 eac 1,500.00 26-05-2009 28-05-2009









350 debentures o Rs. 1,000,000 eac 3,500.00 24-06-2009100 debentures o Rs. 1,000,000 eac 1,000.00 01-04-2009 25-06-2009

































18/46



Description As at

31st March, 2009

Rupees in lakhs

As at

31st Marc, 2008

Rupees in laks

Earliest

Put/Call Option

Date

Redemption

Date













100 debentures o Rs. 2,500,000 eac 2,500.00 2,500.00 07-12-2009350 debentures o Rs. 1,000,000 eac 3,500.00 01-04-2009 07-12-2009































263,920.00 326,700.00


19/46


2. Te details o Unsecured Index Linked Debentures are as under:

Description As at

31st March, 2009

Rupees in lakhs

As at

31st Marc, 2008

Rupees in laks

Earliest

Put/Call Option

Date

Redemption

Date1 debenture o Rs. 2,500,000 eac 25.00 25.00 24-07-2009











1 debenture o Rs. 2,500,000 eac 25.00 25.00 24-07-2009






















1 debenture o Rs. 2,500,000 eac 25.00 25.00 28-08-20096 debentures o Rs. 2,500,000 eac 150.00 150.00 28-08-2009










20/46


Description As at

31st March, 2009

Rupees in lakhs

As at

31st Marc, 2008

Rupees in laks

Earliest

Put/Call Option

Date

Redemption

Date















4,250.00 4,250.00

3. Te details o Deep Discount Debentures are as under:

Unsecured, Reedemable Non-Convertible Debenture o

ace value o Rs. 250,000,000 issued at Rs. 222,998,250 2,484.78 28-04-2008




ace value o Rs. 100,000,000 issued at Rs. 83,187,000 951.09 20-11-2008



ace value o Rs. 250,000,000 issued at Rs. 224,485,250 2,492.80 2,254.01 13-04-2009






ace value o Rs. 100,000,000 issued at Rs. 99,720,000 999.74 998.34 08-06-2009







35,436.71 43,048.18



21/46



4. Subordinated Debts:

Tese debentures are sub-ordinated to te existing and uture unsecured borrowings o te Company and qualiy as Tier II Capital under te

Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998.

Description As at31st March, 2009

Rupees in lakhs

As at31st Marc, 2008

Rupees in laks

EarliestPut/Call Option

Date

Redemption

Date




































5 debentures o Rs. 1,000,000 eac 50.00 50.00 07-08-20186 debentures o Rs. 1,000,000 eac 60.00 60.00 07-08-2018










22/46



Description As at

31st March, 2009

Rupees in lakhs

As at

31st Marc, 2008

Rupees in laks

Earliest

Put/Call Option

Date

Redemption

Date


2 debentures o Rs. 1,000,000 eac 20.00 15-11-20181 debenture o Rs. 1,000,000 eac 10.00 15-11-2018






1 debenture o Rs. 1,000,000 eac 10.00 23-12-2018





5 debentures o Rs. 1,000,000 eac 50.00 23-12-20182 debentures o Rs. 1,000,000 eac 20.00 23-12-2018









8,910.00 4,360.00

5. Te sort term and oter loans and advances rom Banks/Financial Institution/Corporates are covered by a negative lien on specied receivablesunder auto nance o te Company in avour o te banks/nancial institution/corporates.

Schedule 5 Fixed Assets

Rupees in laks

Description Gross Block Depreciation Net Block

As at

01-04-2008

Additions Deductions As at

31-03-2009

As at

01-04-2008

For te

year

Deductions As at

31-03-2009

As at

31-03-2009

As at

31-03-2008

Buildings 18.07 18.07 4.82 0.29 5.11 12.96 13.25

Oce Equipment 217.17 18.41 62.59 172.99 105.35 32.38 23.97 113.76 59.23 111.82

Computers 318.17 44.86 51.45 311.58 189.52 77.30 35.46 231.36 80.22 128.65

Furniture & Fixtures 55.37 0.78 13.24 42.91 50.82 1.96 12.53 40.25 2.66 4.55

Veicles 104.52 19.84 33.28 91.08 36.34 24.16 15.15 45.35 45.73 68.18

Leaseold Improvements 217.41 125.96 175.86 167.51 75.41 50.42 47.81 78.02 89.49 142.00

930.71 209.85 336.42 804.14 462.26 186.51 134.92 513.85 290.29 468.45

Intangible Assets

Sotware 25.19 25.19 8.39 8.39 16.80 25.19

Total 955.90 209.85 336.42 829.33 462.26 194.90 134.92 522.24 307.09 493.64

Previous Year 637.23 452.24 133.57 955.90 391.58 174.06 103.38 462.26 493.64

Capital Work in progress 2,242.56 342.00 2,584.56 2,584.56

Previous year 1,403.68 838.88 2,242.56 2,242.56


23/46


Face Value Quantity Rupees in laks

Rupees 31st March, 2009 31st Marc, 2008 31st March, 2009 31st Marc, 2008

Schedule 6 Investments

Long term Investments (at cost)

(Non trade, unquoted)

In equity sares ully paid

Kotak Maindra Old Mutual Lie Insurance

Limited (company under te same

management) 10 54,000,000 54,000,000 5,400.00 5,400.00

Poenix ARC Private Limited 10 12,660,000 1,266.16

Indiabulls Securities Limited 2 15,000 2.92

In units o Venture Capital Fund

Kotak India Real Estate Fund - I 100000 1,437 1,437 1,436.90 1,436.90

Total 8,103.06 6,839.82

Notes:

(1) For Sares/Units purcased and sold during te year reer Note No. II (G) o Scedule 17

31st March, 2009

Rupees in lakhs

31st Marc, 2008

Rupees in laks

(2) Aggregate value o unquoted investments At cost/net asset value 8,103.06 6,839.82

31st March, 2009 31st Marc, 2008

Rupees in lakhs Rupees in lakhs Rupees in laks

Schedule 7 Deerred Tax

Assets

Depreciation on xed assets 1,500.03 1,411.98

Provision or doubtul debts, advances and receivables under nancing

activity 2,069.16 1,366.02

Provision or gratuity 45.16 41.23

Provision or compensated absences 41.02 53.75

Provision or MTM on embedded options 32.46

Provision or interest on index linked debentures 67.49 448.87

Unamortised Income 203.07 1,164.70

Expenses allowable or tax purposes wen paid 1.76 4.14

3,960.15 4,490.69

Liabilities

Brokerage 1,388.58 1,615.41

1,388.58 1,615.41

Total 2,571.57 2,875.28



24/46



31st March, 2009 31st Marc,2008Rupees in lakhs Rupees in lakhs Rupees in laks

Schedule 8 Current Assets, Loans and Advances

(a) Cash and Bank Balances

Cas on and 775.37 237.32Bank balances (wit sceduled banks)

(i) Current accounts 2,927.16 19,972.15

(ii) Fixed deposits (includes lodged wit government department

Rs. 8.79 laks (Previous year Rs. 9.19 laks) and wit a bank as credit

collateral Rs. 1,724.23 laks (Previous year Rs. 1,645.17 laks) and as

liquidity acility Rs. 133.16 laks (Previous year Rs. 142.46 laks) on

assignment o receivables

3,866.19 1,796.82

7,568.72 22,006.29

(b) Receivables under Financing Activity

Secured considered good

hire Purcase Veicles 6.67 15.48

Loans Veicles 430,877.41 436,320.35

Lease Veicles 1,017.48 1,369.43Loans against Securities 28,841.35 50,684.80

Corporate Loans 40,202.30 35,488.99

Oter Loans 131.76 7,416.54

Installments and Oter dues rom Borrowers (*) 9,181.98 1,246.70

Secured considered doubtul

Loans Veicles 992.74 471.74

Lease Veicles 0.07 2.18

Corporate Loans 239.49

Oter Loans 808.19

Installments and Oter dues rom Borrowers 751.36 416.12

Unsecured considered good

Personal Loans 46,155.50 56,075.02

Inter-Corporate Deposit 1,417.66


Unsecured considered doubtul

Personal Loans 1,708.74 448.76


561,475.42 592,520.33

Less: Provision or doubtul receivables 4,342.01 2,263.67

557,133.41 590,256.66

(c) Other Loans and Advances

Unsecured Considered Good (unless otherwise stated)

Advances recoverable in cas or in kind or or value to be received 26,420.70 10,829.87

Less: Provision or doubtul advances 12.03 3.60

26,408.67 10,826.27

Advance payment o taxes and tax deducted at source (net) 1,085.00 367.08

Security deposit or premises 109.44 120.9127,603.11 11,314.26

Total 592,305.24 623,577.21

(i) Secured means exposures secured by ypotecation o veicles, and/or, pledge o securities and/or, equitable mortgage o property and/or,

undertaking to create a security.

(ii) Te above receivables o veicles and installment dues rom borrowers includes Rs. 665.56 laks (Previous year Rs. 353.76 laks) being receivables

and installment on veicles repossessed, necessary provision or wic is made.

(iii) (*) includes Rs. 07 laks (Previous year Rs. 0.18 laks) being debt earmarked in avour o te assignee as credit collateral on assignment o

receivables.

(iv) Reer Scedule 10 or Provision or standard assets


25/46



(v) Details o Gross Investment, unearned nance income and present value o rentals under hire Purcase and Lease

31st March, 2009

Rupees in lakhs

31st Marc, 2008

Rupees in laks

(a) not later tan 1 year 158.45 797.77(b) between 1 and 5 years 1,134.71 720.97

1,293.16 1,518.74

Unearned Finance Income

(a) not later tan 1 year 4.93 17.63

(b) between 1 and 5 years 264.01 114.02

268.94 131.65

Present value o rentals

(a) not later tan 1 year 153.52 780.14

(b) between 1 and 5 years 870.70 606.95

1,024.22 1,387.09

(vi) Also reer Note No. II (K) o Scedule 17

(vii) Unsecured Considered Good Oter Loans and advances include

31-03-2009

Rupees in lakhs

Maximum

Outstanding

31-03-2009

Rupees in lakhs

Outstanding

31-03-2008

Rupees in laks

Maximum

Outstanding

31-03-2008

Rupees in laks

Outstanding

Due rom companies under te same management

Kotak Maindra Old Mutual Lie Insurance Limited 27.11 21.68 27.16 27.16

Kotak Securities Limited 1,239.54 1,089.95 1,087.80 1087.80

Kotak Maindra Asset Management Co. Limited 0.19

Kotak Maindra Investments Limited 0.13 0.74 0.74

31st March, 2009Rupees in lakhs 31st Marc, 2008Rupees in laks

Schedule 9 Liabilities

Sundry creditors:

Micro enterprises and small enterprises

Oter tan micro enterprises and small enterprises 14,325.42 15,483.46

Interest accrued but not due on loans 16,952.17 17,712.71

Advances received against ire purcase/loan/lease agreements 537.67 429.46

Oter liabilities 143.10 192.50

Embedded Option Liability (Reer Note No.II (O) o Scedule 17) 773.74

Total 32,732.10 33,818.13

Schedule 10 Provisions

Provision or gratuity 132.87 121.31

Provision or compensated absences 120.69 158.15

Provision or standard assets 1,733.53 1,751.61

Provision or FBT (net) 12.07 9.48

Provision or Income Tax (net) 1,374.35 614.64

Total 3,373.51 2,655.19


26/46


Schedules Forming Part o the Prot and Loss Account (Contd.)

Year ended

31st March 2009

Rupees in lakhs

Year ended

31st Marc 2008

Rupees in laks

Schedule 11 Income rom OperationsLease rentals 1,124.26 1,722.11Less: Capital Recovery 996.16 1,551.32

128.10 170.79Income rom hire Purcase/Loans etc. (Tax deducted at source Rs. 370.49 laks,


66,375.69 50,141.85

Income rom Wolesale Trade Advances (Tax deducted at source Rs.1,264.24 laks,


10,089.81 7,143.41

Income rom ee based activities (Tax deducted at source Rs. 89.66 laks,


822.99 1,099.35

Income rom Loans against securities (Tax deducted at source Rs. 931.33 laks,


6,242.27 5,685.40

Income rom securitisation o receivables 3,129.96 1,638.61Income rom assignment o receivables 358.84 85.84Income rom Corporate Loans (Tax deducted at source Rs. 2,052.89 laks,


10,663.49 5,030.41

Income on recovery o Non-Perorming Asset 964.69 803.41

Total 98,775.84 71,799.07

Schedule 12 Other IncomeDividend on current investments 503.86Prot on sale o current investments (Net) 278.87 226.81Dividend on long term investments 1.85 1.84Net Distribution rom venture capital unds 6.57 Loss on sale o long term investments (Net) (37.81) (10.33)Surplus on buyback o issued debentures 80.38 Realised Prot/(Loss) on Index Futures (Net) (1,668.48) 1,028.65Gain/(Loss) on Foreign Excange Transactions (94.25) (152.78)Interest (Gross):

On deposits/advances etc. (Tax deducted at source Rs. 65.32 laks,


486.47 277.63

Prot/(Loss) on sale o xed assets (Net) (108.54) 12.75Sundry Creditors written back 397.03 211.57Oter Miscellaneous Income (Net) 102.94 98.25(Includes interest on Income Tax reunds Rs. 9.47 laks,

Previous year Rs. 92.49 laks) (Tax deducted at source Rs.15.15 laks,

Previous year Rs.10.53 laks) (Reer Note No. II (L)(b)(ii) o Scedule 17)

Total (554.97) 2,198.25

Schedule 13 Payments to EmployeesSalaries, Allowances and Bonus 2,514.25 2,575.45Contribution to Employees Provident Fund 129.79 121.68Provision or Gratuity 35.39 53.98Sta Welare expenses 136.86 138.52Recovery o expenses (Reer Note No. II (N) o Scedule 17) (1.82) (21.84)

Total 2,814.47 2,867.79

Schedule 14 Interest and Finance Charges(a) Interest On Debentures 35,694.56 32,455.56

Term borrowings 10,241.71 5,291.51Commercial Paper 7,723.63 2,921.71Accrued interest on debentures reversed (net o unamortised discount)

(Reer Note No. II (O) o Scedule 17)

(1,160.55)

Oters 144.04 161.85(b)Bank and oter nance carges 181.95 137.24(c) Interest Rate Swap receipts (net) (114.13) 39.89

Total 52,711.21 41,007.76


27/46


Schedules Forming Part o the Prot and Loss Account (Contd.)

Year ended

31st March 2009

Rupees in lakhs

Year ended

31st Marc 2008

Rupees in laks

Schedule 15 Administrative and Other Expenses

Travelling and Conveyance 237.40 247.19

Proessional ees 3,191.95 2,974.74

Auditors Remuneration

Audit ees 22.00 24.00

Interim Audit 7.00 25.00

Oters:

Tax audit ees 2.00

Certication Work 3.35 3.22

Out o pocket expenses 0.22 0.71

32.57 54.93

Brokerage and Commission 4,627.33 5,299.94

Sotware Expenses 4.68 27.62

Oce Expenses 134.78 185.85

Electricity Expenses 119.68 128.32

Common Establisment Expenses Reimbursements 333.62 232.74

Telepone,Telex and Postage 265.40 277.06

Data Processing Expenses 60.00 60.00

Rent and licence ees or premises (Reer Note No. II (L)(a)(ii) o Scedule 17) 695.67 415.37

Advertisement Expenses 159.60 354.59

Maintenance Expenses 150.74 73.27

Insurance Expenses 10.26 12.33

Printing and Stationery 170.03 238.74

Rates and Taxes 116.29 309.19

Business Promotion Expenses 106.11 187.18

Wealt Tax 0.67

Miscellaneous Expenses 327.49 195.28

Recovery o Expenses (Reer Note No. II (N) o Scedule 17) (0.32) (11.59)

Total 10,743.28 11,263.42

Schedule 16 Provisions/Write Os For Non Perorming/Other Assets

Loss on sale o repossessed veicles/termination o contracts under nancing activities (Net)

(Net loss on sale o lease assets Rs. 0.14 laks, Previous year net gain o Rs. 24.23 laks)

5,365.76 1,762.00

Provision or doubtul receivables under nancing activity (net) 2,086.77 763.82

Provision or standard assets (18.08) 795.63

Provision or Mark to Market on derivatives 95.49 (7.73)

Write os recovered (94.29) (92.66)

Total 7,435.65 3,221.06


28/46


Schedules orming part o the Financial Statements or the year ended 31st March, 2009

Schedule 17 Signicant Accounting Policies and Notes to the Accounts

I. SIGNIFICANT ACCOUNTING POLICIES:

A. BASIS OF ACCOUNTING

Te Accounts are prepared on accrual basis under te istorical cost convention and to comply in all material aspects wit applicable

accounting principles in India, te Accounting Standards notied under te Companies (Accounting Standards) Rules, 2006, te guidelines

issued by te Reserve Bank o India or Non-Banking Financial Companies and te relevant provisions o te Companies Act, 1956.

Te preparation o nancial statements requires te Management to make estimates and assumptions considered in te reported amounts

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

during te reporting period. Management believes tat te estimates used in preparation o te nancial statements are prudent and

reasonable. Future results could dier rom tese estimates.

B. REVENUE RECOGNITION

(i) Auto Finance Income (including service carges, incentives) is accounted or by using te internal rate o return metod to provide

a constant periodic rate o return ater adjustment o brokerage expenses on te net investment outstanding on te contract. Te

volume-based incentives and brokerage are accounted as and wen te said volumes are acieved. Income also includes gains made

on termination o contracts.

(ii) Te Company complies wit prudential norms or income recognition and provisioning or non perorming assets as prescribed by

te Reserve Bank o India or Non Banking Financial Companies. In addition, te Company adopts an approac to provisioning tat is

based on te past experience, realisation o security, erosion over time in value o security and oter related actors.

(iii) Gain on account o securitisation o assets is recognised, based on te dierence between te book value o te securitised asset and

consideration received. Te same is amortised over te lie o te securities issued in accordance wit te guidelines issued by te

Reserve Bank o India.

(iv) In respect o non perorming assets acquired rom oter banks/NBFCs/Financial Institutions/Companies, collections in excess o te

consideration paid or acquisition at eac asset level is treated as income.

(v) Interest income is recognised on accrual basis except in case o non-perorming assets. Overdue interest is recognised as income on

realisation.

(vi) Fees and commission income are recognised wen due.

(vii) Dividend income is accounted on an accrual basis wen te Companys rigt to receive te dividend is establised.

C. FIXED ASSETS

(i) All te xed assets ave been stated at cost inclusive o incidental expenses less accumulated depreciation.

(ii) Depreciation on xed assets is provided on te straigt line metod over te useul lie o te assets as under (tese rates being equal

to or iger tan tose prescribed under Scedule XIV o te Companies Act, 1956):

Computers 3 years

Oce Equipment 5 years

Furniture and Fixtures 6 years

Veicles 4 yearsBuildings 58 years

Leaseold Improvements Over te period o lease subject to a maximum o 6 years

(iii) Depreciation on assets wose cost does not exceed Rs. 5,000/- is ully provided in te year o purcase.

D. INTANGIBLE ASSETS

Intangible assets are stated at cost o acquisition less accumulated amortisation. Intangible Assets comprising o Sotware purcased or

developed/licensed cost are amortised over a period o tree years, on a Straigt Line Metod commencing rom te date te sotware is

rst utilised.


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Schedules orming part o the Financial Statements or the year ended 31st March, 2009 (Contd.)

E. INVESTMENTS

Investments are classied into long term investments and current investments. Investments wic are intended to be eld or more tan

one year, are classied as long term investments and investments, wic are intended to be eld or less tan one year, are classied as

current investments. Long term investments are accounted at cost and any decline in value, oter tan temporary is provided or. Current

investments in equity/preerence sares are valued at cost or market/air value wicever is lower, wile in case o units o mutual und te

Net Asset Value is considered as te air value.

F. EMPLOYEE BENEFITS

(i) Provident und is a dened contribution sceme and te contributions as required by te statute to Government Provident Fund are

carged to prot and loss account during te period in wic employees perorm te services tat te payment covers.

(ii) Gratuity liability is dened benet obligation and is wolly ununded. Te present value o gratuity obligation is actuarially determined

based on te projected unit credit metod as at te balance seet date subject to maximum o Rs. 3.50 laks.

(iii) Te amount o sort term employee benets expected to be paid in excange or te services rendered by employee is recognized

during te period wen te employee renders te service. Tese benets include perormance incentives.

(iv) Te company accrues te liability or compensated absences based on te actuarial valuation as at te balance seet date conducted

by an independent actuary.

(v) Actuarial gains/losses are immediately taken to te prot and loss account and are not deerred.

G. FOREIGN CURRENCY TRANSACTIONS

Transactions in oreign currency are recorded at te excange rate prevailing on te date o te transaction. Monetary items denominated

in oreign currencies are restated at te excange rate prevailing on te balance seet date. Excange dierences arising on settlement o

te transaction and on account o restatement o monetary items are dealt wit in te Prot and Loss Account. In case o items wic are

covered by orward excange contracts entered to edge te oreign currency risk, te dierence between te year end rate and te rate on

te date o te contract is recognized as excange dierence and te premium paid on orward contracts is recognized over te lie o te

contract.

h. ZERO COUPON INSTRUMENTS

Te dierence between te acquisition cost and redemption value o Commercial Papers and Deep Discount Debentures are apportioned on

time basis and recognised as discounting carges/debenture interest expense.

I. TAXES ON INCOME

Current tax is determined as te amount o tax payable in respect o taxable income or te year. Deerred tax is recognised subject to

te consideration o prudence in respect o deerred tax assets, on timing dierences, being te dierence between taxable income and

accounting income tat originates in one period and are capable o reversal in one or more subsequent periods. Deerred tax assets and

liabilities are measured using tax rates and tax laws tat ave been enacted or substantially enacted beore te balance seet date. Canges

in deerred tax assets/liabilities on account o canges in enacted tax rates are given eect to in te Prot and Loss Account in te period o

cange.

J. BORROWING COST

Borrowing costs are recognised as an expense in te period in wic tey are incurred.

K. DERIVATIVE TRANSACTIONS

Te derivative transactions comprising o Interest rate swaps, equity index/stock utures and Options are considered o balance seet items.

Interest rate/Currency swaps

Te outstanding swap trades at te reporting date are disclosed at te contract amount. Tese swaps are in te nature o edges and are

accounted on an accrual basis; tese transactions are not marked to market. Accrued interest is adjusted against te interest cost/income o

te underlying liability/asset. Te oreign currency balances on account o principal o currency swaps outstanding as at te Balance Seet

date is revalued using te closing rate.


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Schedules orming part o the Financial Statements or the year ended 31st March, 2009 (Contd.)

Currency options

Te outstanding Option trades, in te nature o edge, at te reporting date are disclosed at te contract amount. Te premium paid is

amortised over te lie o te contract.

Embedded Derivatives and Equity Index Futures

Tese derivative contracts are measured at air value as at eac balance seet date. Fair value o derivatives is determined using quoted

market prices or tat instrument werever available, as te best evidence o air value is a quoted price in an actively traded market. In

te absence o quoted market prices a valuation tecnique is used to determine air value. In most cases valuation tecniques use as input

parameters observable market data in order to ensure reliability o te air value measure.

Te mark to market on derivative contracts is determined on a portolio basis wit net unrealized losses being recognised in prot and loss

account. Net unrealized gains are not recognised in prot and loss account on grounds o prudence as enunciated in Accounting

Standard 1 Disclosure o Accounting Policies.

L. STRUCTURED LIABILITIES

Te Company as issued structured liabilities werein te return on tese liabilities is linked to non interest bencmarks; tese liabilities are

stated at net present value. Suc structured liabilities ave an embedded derivative wic is te non interest related return component. Te

embedded derivative is separated and accounted separately. (Reer accounting policy on Derivative Transactions No. K)

M. ADVANCES

Amounts paid or acquiring non perorming assets rom oter banks/NBFCs/Financial Institutions/Companies are considered as advances. In

accordance wit RBI guidelines, suc assets are treated as standard or a period o 90 days rom te date o purcase. Tereater actual

collections received on suc non perorming assets are compared wit cas fows estimated wile purcasing te asset to ascertain deault.

I te deault is in excess o 180 days, ten te assets are classied into sub-standard, doubtul and loss as required by te guidelines on

purcase/sale o non perorming assets issued by te Reserve Bank o India.

N. PROVISION/CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provisions involving substantial degree o estimation in measurement are recognised wen tere is a present obligation as a result o past

events and it is probable tat tere will be an outfow o resources. Contingent liabilities are not recognised but are disclosed in te notes.

Contingent assets are neiter recognised nor disclosed in te nancial statements.

O. SEGMENTAL ACCOUNTING

Te ollowing accounting policies ave been ollowed or segment reporting:

(i) Segment Revenue includes Contract Receipts and oter income directly identiable wit/allocable to te segment.

(ii) Expenses tat are directly identiable wit/allocable to segments are considered or determining te Segment Results. Te expenses

wic relate to te Company as a wole and not allocable to segments are included under Unallocable expenses.

(iii) Segment assets and liabilities include tose directly identiable wit te respective segments. Unallocable corporate assets and liabilities

represent te assets and liabilities tat relate to te Company as a wole and not allocable to any segment. Unallocated assets mainly

comprise Advance payment o taxes and tax deducted at source (net o provision or taxation). Unallocable liabilities include Deerred

tax, Provision or retirement benets and Oter liabilities.

P. OPERATING LEASE

Assets acquired on leases, were a signicant portion o te risks and rewards incidental to ownersip is retained by te lessor, are classied

as operating

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